Exhibit 2
AGELLAN INVESTMENTS INC.
- and -
STEELBANK TUBULAR INC.
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AGREEMENT OF PURCHASE AND SALE
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XXXXXX XXXXXXX LLP
00 Xxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
This agreement made as of March 20, 2006, between:
AGELLAN INVESTMENTS INC.
incorporated under the laws of Ontario
(the "Purchaser")
OF THE ONE PART
-and-
STEELBANK TUBULAR INC.
incorporated under the laws of New Brunswick
(the "Vendor")
OF THE OTHER PART
WITNESSES that the Vendor and Purchaser have agreed to enter this agreement
to set forth the terms whereby the Purchaser has agreed to purchase, and the
Vendor has agreed to sell, the Property (as hereinafter defined);
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth in this agreement and the sum of Ten ($10.00) Dollars paid by each of the
Vendor and the Purchaser to the other and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereby agree and declare as follows:
ARTICLE 1-
INTERPRETATION
1.1 Definitions
The terms defined herein shall have, for all purposes of this agreement,
the following meanings, unless the context expressly or by necessary implication
otherwise requires:
"Adjustment Date" means 11:59 p.m. on the day preceding the Closing Date;
"Adjustments" means the adjustments to the Purchase Price provided for and
determined pursuant to Sections 2.5(d), 3.3 and 3.4;
"Agreement" means this agreement of purchase and sale and the schedules attached
hereto, as amended from time to time; "Article", "Section" and "Subsection" mean
and refer to the specified article, section and subsection of this Agreement;
"Assignment and Assumption of Contracts" means an assignment and assumption of
those of the Contracts to be assumed by the Purchaser pursuant to Section 3.5
hereof, in a form to be agreed upon by the Vendor and the Purchaser;
"Balance" has the meaning ascribed thereto in Section 3.2;
"Broker" means TD Securities Realty Group, TD Tower, 00 Xxxxxxxxxx Xxxxxx Xxxx,
0xx Xxxxx, Xxxxxxx, Xxxxxxx, X0X 0X0;
"Buildings" means, collectively, the Industrial Building and Commercial
Building; and "Building" means either one of such Buildings;
"Business Day" means any day, other than a Saturday, Sunday or statutory holiday
in Toronto, Ontario;
"Chattels" means the equipment listed in Schedule "G", that is owned by the
Vendor, used exclusively in connection with the Property and is included in this
transaction;
"Closing" means the closing and consummation of the agreement of purchase and
sale for the Property, including without limitation the payment of the Purchase
Price and the delivery of the Closing Documents, on the Closing Date at the
offices of the Vendor's Solicitor;
"Closing Date" has the meaning set out in Section 3.8 hereof;
"Closing Documents" means the agreements, instruments and other documents to be
delivered by the Vendor to the Purchaser pursuant to Section 5.1 and the
agreements, instruments and other documents to be delivered by the Purchaser to
the Vendor pursuant to Section 5.2;
"Commercial Building" means the vacant commercial building on the Lands to the
west of the Industrial Building;
"Confidential Information" has the meaning ascribed thereto in Section 2.9;
"Contracts" means (a) the Warranties, (b) all contracts, licenses, leases and
agreements (other than the management contracts) which were entered into by the
Vendor with unrelated third parties for the development, maintenance, operation,
cleaning, security, fire protection or servicing of the Property (including,
without limitation any contracts regarding the supply of electricity to the
Property); copies of all of which have been or will be delivered to the
Purchaser pursuant to Section 2.4(f) hereof
"Deposit" means collectively the Initial Deposit and the Second Deposit,
together with all accrued interest;
"Due Diligence Date" means 5:00 p.m. (Toronto time) on the thirty-fifth (35th)
day next following the date of execution and delivery of this Agreement by both
the Vendor and the Purchaser;
"Encumbrances" means, in the case of any given Purchase Assets, all mortgages,
pledges, charges, liens, debentures, hypothecs, trust deeds, assignments by way
of security, security interests, conditional sales contracts or other title
retention agreements or similar interests or instruments charging, or creating a
security interest in, the Purchase Assets or any part thereof or interest
therein, all work orders, outstanding permits (including, without limitation,
building permits and electrical permits), any agreements, leases, options,
easements, right-of-way, restrictions, executions and any other similar
encumbrances (including notices or other registrations in respect of any of the
foregoing) affecting the Purchase Assets or any part thereof or interest
therein;
"Estoppel Certificate" means a certificate in the form attached as Schedule "A"
hereto.
"GST Undertaking and Indemnity" means the GST undertaking and indemnity in a
form acceptable to the Vendor's Solicitor, acting reasonably, as provided for in
Section 5.3;
"Industrial Building" means the building on the Lands comprising approximately
87,848 square feet, which for greater certainty, includes the cranes, crane
supports and crane rails;
"Initial Deposit" means the amount of $50,000.00, together with any accrued
interest thereon;
"Lands" means that real property known municipally as 0000 Xxxxxx Xxxx,
Xxxxxxxxxxx and described legally in Schedule "B" attached hereto, comprising
approximately 12.2 acres in area;
"Lease" means the lease of the Leased Premises to be granted by the Purchaser,
as landlord, in favour of the Vendor, as tenant, on the Closing Date on the
terms and conditions set out in Section 6.3 hereof and otherwise in a form to be
settled by the Vendor and Purchaser prior to the Due Diligence Date;
"Leased Premises" means the Industrial Building together with that contiguous
portion of the Lands indicated on the sketch attached hereto as Schedule "F" and
together with a right of access thereto, in common with others entitled thereto,
over the "common area drive" as indicated and shown on Schedule "F" and for
certainty excludes the Commercial Building;
"Notice" has the meaning set out in Section 7.16;
"Permitted Encumbrances" means those of the Encumbrances registered against the
title to the Property as of the day prior to the date hereof, which are listed
in Schedule "C" attached hereto, as well as the other general encumbrances set
out in Schedule "C";
"Person" means an individual, partnership, corporation, trust, unincorporated
organization, government, or any department or agency thereof, and the
successors and assigns thereof or the heirs, executors, administrators or other
legal responsibilities of an individual;
"Plans and Specs" has the meaning set out in Section 2.4;
"Property" means, collectively, the Lands and the Buildings;
"Purchase Assets" means the Vendor's legal and beneficial interest in and to:
(a) the Property;
(b) the Contracts; and
(c) the Chattels;
"Purchase Price" means in respect of the Purchase Assets the amount of
$6,400,000.00, subject to adjustment as provided for herein and exclusive of any
applicable taxes;
"Purchaser's Solicitors" means Xxxxxx Xxxxxxx LLP;
"Second Deposit" means the amount of $250,000.00, together with any accrued
interest thereon;
"Vendor's Solicitors" means Xxxxxxxx Xxxxxxx LLP or such other firm or firms of
solicitors or agents as are retained by the Vendor from time to time and Notice
of which is provided to the Purchaser; and
"Warranties" means any existing warranties and guarantees in favour of the
Vendor in connection with any improvements made to the Buildings.
1.2 Schedules
The following schedules attached hereto form part of this Agreement:
Schedule A - Form of Estoppel Certificate
Schedule B - Descriptions of Lands
Schedule C - Permitted Encumbrances
Schedule D - List of Property Reports
Schedule E - Litigation affecting Purchase Assets
Schedule F - Sketch of Property showing Leased
Premises
Schedule G - Chattels
ARTICLE 2-
AGREEMENT OF PURCHASE AND SALE
2.1 Purchase and Sale of Property
Upon and subject to the terms and conditions of this Agreement, the Vendor
will sell, and the Purchaser will purchase, the Purchase Assets in consideration
of the payment of the Purchase Price. This Agreement shall be completed on the
Closing Date at the offices of the Vendor's Solicitor subject to real property
registrations being effected in the appropriate Land Registry Office.
2.2 Binding Agreement
The agreements of the Vendor and the Purchaser set forth in Section 2.1
create and constitute a binding agreement of purchase and sale for the Property
in accordance with and subject to the provisions of this Agreement.
2.3 Authorizations
The Vendor shall execute and deliver to the Purchaser, within five (5) days
after receipt, authorizations prepared by the Purchaser's solicitors to
governmental authorities necessary to permit the Purchaser to obtain information
from the files of such governmental authorities relating to the Property
provided said authorizations shall explicitly not authorize any inspections with
respect to the Property. The Purchaser covenants and agrees with the Vendor that
it will not request, directly or indirectly, any such inspection.
2.4 Deliveries
The Vendor shall deliver to the Purchaser within three (3) Business Days of
the date hereof, the following documents and files relating to the Property, to
the extent within the Vendor's possession or control (the "Deliveries"):
(a) all plans, specifications and drawings for the Buildings (the "Plans
and Specs");
(b) copies of any reports relating to the environmental or physical
condition of the Property, all as listed in Schedule "D" attached
hereto;
(c) a copy of an existing building location survey or surveyor's real
property report for the Property;
(d) any current realty tax assessment notices and tax bills relating to
the Property together with reasonable detail of any outstanding
complaints, applications, reconsiderations of assessments or appeals
made by or on behalf of the Vendor or by a municipal tax officer or
assessor relating to the assessment of property taxes in respect of
the Property including any application to the relevant municipality
for a cancellation, reduction or refund of all or a portion of
property taxes with respect to the current or prior year;
(e) details and copies of any outstanding letters of credit or other
security or deposits, if any, issued by the Vendor's bank and
currently held by the City of Mississauga or any other municipal
regional utility or other authority to secure the obligations of the
Vendor under any development, site plan or other agreement affecting
or related to the Property;
(f) copies of all Contracts to which the Vendor is a party affecting the
Property, or any of them, including without limitation, the
Warranties, contracts relating to security, fire alarms, fire safety
equipment, garbage removal, janitorial services, pest control and snow
removal/landscaping;
(g) copies of any certificates prepared by an architect or a surveyor
evidencing the area of the Buildings or any of them or any portions
thereof;
(h) copies of all capital and income expense statements prepared by the
Vendor's accountants in accordance with generally accepted accounting
principles applicable to income producing real estate pertaining to
the Vendor's management and operation of the Property during 2005 and
copies of the Vendor's current capital and operating budgets for the
Property for the current calendar year, together with a statement of
actual gross revenues and operating costs for the Property for 2005
and for such period of months in the current calendar year as for
which same are available, as prepared internally by the Vendor;
(i) an inventory list in respect of all Chattels, if any, associated with
the Property, owned by the Vendor and included in this transaction;
(j) copies of work orders, notices, directives or letters of
non-compliance issued by any governmental authority affecting the
Property, if any including, without limitation, any such items
relating specifically to building, zoning, fire, health and elevator
inspections, together with copies of all building, occupancy and
operating permits, licences, consents or authorizations, if any, with
respect to the Property, together with copies of any notices or other
correspondence with any applicable municipal or other authority in
respect of such work orders, notices, directives, licences, permits,
consents or authorizations, which are in the Vendor's possession or
control;
(k) details of any litigation affecting the Purchase Assets, or any of
them, as listed on Schedule "E" attached hereto; and
(l) such other material documents, reports or information relating to the
Property and the ownership, maintenance or operation thereof as may be
reasonably requested by the Purchaser and as may be in the Vendor's
possession or control.
The Vendor shall, on completion of delivery to the Purchaser of all of the
Deliveries, provide the Purchaser with a certificate of an officer of the
Vendor certifying that all of the Deliveries referred to in Subsection
2.4(a) - 2.4(l), above, have been delivered to the Purchaser, which
certificate shall include a reasonably detailed itemized list of such
Deliveries.
2.5 Acknowledgement of Purchaser and Vendor as to Condition of Property
The Purchaser and Vendor acknowledge and agree that, subject to the
Purchaser's right to terminate this Agreement as provided in Section 4.2
(a) on Closing, title to the Property shall be subject to only the
Permitted Encumbrances;
(b) in entering into this Agreement, the Purchaser has relied and will
continue to rely entirely and solely upon its own inspections and
investigations with respect to the Property, including without
limitation, the physical and environmental condition of the Property
and the review of the Deliveries, and the Purchaser acknowledges it is
not relying on any information furnished by the Vendor or any other
person or entities on behalf of or at the direction of the Vendor in
connection therewith apart from the Deliveries (but subject always to
the Vendor's representations and warranties in Section 2.6);
(c) subject to Subsection 2.5(d) hereof, the Property is being purchased
and assumed by the Purchaser on an "as is, where is" basis as of the
Closing Date and without any express or implied agreement,
representation or warranty of any kind whatsoever as to the title,
condition, area, suitability for development, physical
characteristics, profitability, use or zoning, the existence of latent
defects, any environmental matter or as to the accuracy, currency or
completeness of any information or documentation supplied or to be
supplied in connection with the Property (save only for the Vendor's
representations contained in Section 2.6 hereof) without limiting the
foregoing, the Purchaser hereby acknowledges that:
(i) the Commercial Building is not in good order or repair and the
Vendor shall not be required to effect any cleanup, maintenance
or repair of same or compliance with any work orders, notices,
directives or letters of non-compliance that may arise prior to
the Closing Date; and
(ii) the elevation change between the parking lot adjacent to such
Commercial Building and the parking lot adjacent to the
Industrial Building requires storm water management system repair
(which the Vendor shall not be required to undertake);
(d) notwithstanding the foregoing, the Vendor shall be responsible, at its
cost, to comply with any work orders, notices, directives or letters
of non-compliance in respect of the Industrial Building and the
Commercial Building and their respective surrounding lands, issued by
any governmental authority having jurisdiction after the Due Diligence
Date and before Closing (collectively, the "Orders"), or,
alternatively, the Vendor shall provide to the Purchaser on Closing,
in form satisfactory to the Purchaser's Solicitors, acting reasonably,
its undertaking to comply with any such outstanding Orders and to
indemnify the Purchaser in respect of any claims, damages, costs or
expenses incurred by the Purchaser as a result of Vendor's failure to
effect such compliance. Without limiting the generality of the
foregoing, the Vendor's undertaking and indemnity contemplated herein
shall require the Vendor to satisfy any Orders within sixty (60) days
of Closing or, where such non-compliance is not reasonably capable of
remedy within such period, then within such longer period as is
reasonably required in the circumstances, provided that Vendor
commences the remedy thereof within such sixty (60) day period and
proceeds thereafter diligently to complete such remedy. As security
for the performance by the Vendor of its obligations under such
undertaking and indemnity, an amount equal to one hundred and ten
percent (110%) of the estimated cost to remedy such non-compliance
shall be deducted from the Purchase Price and held in trust by the
Vendor's Solicitor and to be released: (i) to the Vendor only upon
receipt by the Purchaser of written confirmation from the applicable
governmental authority that such non-compliance has been remedied; or
(ii) to the Purchaser in the event that such non-compliance has not
been remedied within such sixty (60) day or longer period as is
provided for above. However, the amount to be released to the
Purchaser pursuant to (ii) shall be equal to the lesser of: A) the
amount of the holdback; and B) one hundred and ten percent (110%) of
the estimated cost, at the time, to complete the work required to
rectify the non-compliance. Such cost shall be mutually agreed upon by
the Vendor and Purchaser or, alternatively, shall be determined by a
reputable local consulting engineer or other local expert retained by
the Purchaser for the purpose, and approved by the Vendor, acting
reasonably, in either case no later than two (2) Business Days prior
to Closing (or at the time of release of the holdback to the
Purchaser, as the case may be). Alternatively, at the Purchaser's
option, exercisable upon written Notice delivered to the Vendor no
later than ten (10) Business Days prior to the Closing Date, the
Purchaser may elect to waive the Vendor's obligation to remedy such
non-compliance and in such event the Purchaser shall be entitled to a
credit by way of Adjustment to the Purchase Price on Closing in an
amount equal to one hundred and ten percent (110%) of the estimated
cost to remedy such non-compliance. Such cost shall be determined as
provided for herein above. Notwithstanding the foregoing, if the
estimated cost as provided herein above of complying with any Orders,
exceeds $75,000.00 in respect of the Industrial Building and its
surrounding lands, or $75,000.00 in respect of the Commercial Building
and its surrounding lands, (or exceeds $75,000 in respect of each of
the Industrial Building and Commercial Building and their respective
surrounding lands) the Vendor may advise the Purchaser in writing
that: (i) it will complete the remedial work as contemplated above; or
(ii) it does not intend to cure or remedy the Orders. If the Vendor
elects (ii), the Purchaser shall, within 2 Business Days of receiving
such advice from the Vendor, elect either to: (A) terminate this
transaction, whereupon this Agreement shall be null and void and the
Deposit returned to the Purchaser with accrued interest and without
deduction and the parties shall be released from all further
obligations hereunder; or (B) complete the transaction and accept
responsibility for the Orders, subject to receiving a credit on
Closing in the amount of $75,000 (or $150,000 if the estimated cost of
complying with the Orders exceeds $75,000 in respect of each of the
Commercial Building and Industrial Building and their respective
surrounding lands). If the Purchaser elects to terminate this
transaction in accordance with Subparagraph (A), the Vendor shall
reimburse the Purchaser for its bona fide third party due diligence
costs, as evidenced by invoices, up to a maximum amount of $35,000.
The Vendor shall have no obligations or responsibility to the Purchaser
after Closing with respect to any matter relating to the Property or the
condition thereof (including those conditions expressly noted in Sections
2.5(c)(i) and 2.5(c)(ii)) save as otherwise provided in Section 2.5 (d),
Section 6.1 or in any other provision of this Agreement. The provisions of
this Section 2.5 shall not merge on, but shall survive, Closing.
2.6 Vendor's Representations
The Vendor hereby represents and warrants to the Purchaser that:
(a) it is a valid and subsisting corporation under and governed by the
laws of New Brunswick and has the necessary authority, power and
capacity to enter into this Agreement and carry out the transactions
contemplated herein;
(b) this Agreement and its obligations hereunder and the documents and
transactions contemplated herein shall have been authorized by all
requisite proceedings and shall constitute legal, valid and binding
obligations of the Vendor, and the completion of the transaction
contemplated by this Agreement will not result in the violation of any
of the terms and provisions of the constating documents or by-laws of
the Vendor;
(c) the Vendor is not now, and shall not at Closing be, a non-resident of
Canada within the meaning of Section 116 of the Income Tax Act
(Canada);
(d) as of the date hereof, there are no leases, licences permitted
subleases or rights to use and there are no agreements or options to
lease, licenses or, permitted sublease or right to use, with respect
to the Property, and there shall be none as at Closing except for the
Lease;
(e) the Vendor is the sole registered and beneficial owner of the
Property;
(f) to the best of the Vendor's knowledge, the Vendor has received no
notice from any municipal, provincial or other authority having
jurisdiction that the Property or any of its current uses do not
comply with any applicable law or regulation;
(g) to the best of the Vendor's knowledge and belief, and without any
further independent investigation or enquiry, the Property has never
been used as a dump or waste disposal site and is free from any
contaminants and hazardous substances in levels in excess of those
permitted by law save as may be expressly stated to the contrary in
any environmental site assessment report delivered to the Purchaser
pursuant to Section 2.4(b) hereof;
(h) to the best of the Vendor's knowledge and belief the Permitted
Encumbrances are in good standing as of the date hereof and there are
no existing material defaults under any of the Permitted Encumbrances;
(i) no other entity has any right to purchase the Purchase Assets, or any
of them, that is inconsistent with the provisions of this Agreement;
(j) the Vendor has received no notice that any expropriation or
condemnation proceedings are pending or have been threatened, or that
any work order, notice, directive or letter of non-compliance as
contemplated in Section 2.5(d) has been issued or is pending, against
the Purchase Assets or any part of any of the Purchase Assets;
(k) the Vendor has received no notice of any existing litigation,
proceeding or judgment relating to or affecting the interests of the
Vendor in the Purchase Assets, and to the best of the Vendor's
knowledge and belief no statement of claim or other notice of such
litigation proceeding or judgment has been actually served;
(l) the Vendor is not insolvent and has not proposed a compromise or
arrangement to its creditors generally, or had any petition for a
receiving order in bankruptcy filed against it or taken any proceeding
with respect to a compromise or arrangement or to have itself declared
bankrupt, insolvent or wound up or to have a receiver appointed over
all or any part of its assets or undertaking;
(m) as at Closing, all amounts due and payable for services, labour and
materials relating to the development, construction, installation,
maintenance and repair of the Purchase Assets which are the
responsibility of the Vendor or which could give rise to a lien or
charge against the Property or the Vendor's interest in any of the
Purchase Assets shall have been paid in full, and no one will have a
right to claim or file a construction, builders, mechanics or similar
lien against the Vendor's interest in any of the Purchase Assets in
respect of the payment of any such amounts (the Vendor nevertheless
acknowledging that if any such lien is claimed or filed, the Vendor
shall be responsible at its expense for removing or vacating same,
subject to Section 2.5 (d));
(n) the documents delivered to the Purchaser pursuant to Section 2.4(l)
include all of the Contracts (including Warranties) in effect as of
the date of this Agreement; copies of the Contracts provided to the
Purchaser pursuant thereto are true, complete and accurate copies of
such Contracts and include all amendments and supplements thereto; the
Vendor has neither given nor received notice of any default under any
of the Contracts and to the best of the Vendor's knowledge and belief
neither the Vendor nor any other party to any of the Contracts is in
material default thereunder; on or before Closing, the Vendor, at its
expense, will terminate all contracts and agreements affecting the
Property other than those Contracts specified by the Purchaser in any
Notice delivered pursuant to Section 3.5 and other than any Contract
entered into after the Due Diligence Date and prior to Closing with
the Purchaser's consent in accordance with Section 6.1;
(o) prior to Closing, the Vendor will terminate the employment of any and
all employees employed by the Vendor in connection with its ownership,
management or operation of the Property (collectively the
"Employees"); the Purchaser will have no obligation to assume and will
not by reason of completion of the transaction contemplated by this
Agreement, assume or become liable for any obligations in respect of
any Employees and the Vendor on Closing shall indemnify and hold
harmless the Purchaser from and against any and all such liabilities
and obligations;
(p) to the best of the Vendor's knowledge and belief the Deliveries set
out in Section 2.4 are accurate full and correct in all respects and,
no material information relating to the Purchase Assets has been
knowingly omitted or withheld;
(q) there is no property management agreement affecting the Property that
is to be assumed by the Purchaser; and
(r) by that date which is five (5) Business Days prior to Closing, the
Vendor shall deliver to the Purchaser an executed Estoppel
Certificate, which Estoppel Certificate shall have been dated no
earlier than five (5) Business Days prior to the date of its delivery
to the Purchaser and which shall include a provision to the effect
that the Lease shall only take effect on Closing.
2.7 Purchaser's Representations
The Purchaser hereby represents and warrants to the Vendor that:
(a) it is a valid and subsisting corporation under and governed by the
laws of Ontario and has the necessary authority, power and capacity to
enter into this Agreement and carry out the transactions contemplated
herein;
(b) this Agreement and its obligations hereunder and the documents and
transactions contemplated herein shall have been authorized by all
requisite proceedings and shall constitute legal, valid and binding
obligations of the Purchaser, and the completion of the transaction
contemplated by this Agreement will not result in the violation of any
of the terms and provisions of the constating documents or by-laws of
the Purchaser;
(c) the Purchaser is not insolvent and has not proposed a compromise or
arrangement to its creditors generally, or had any petition for a
receiving order in bankruptcy filed against it or taken any proceeding
with respect to a compromise or arrangement or to have itself declared
bankrupt, insolvent or wound up or to have a receiver appointed over
all or any part of its assets or undertaking;
(d) the Purchaser or its permitted assignee will on Closing be a GST
registrant under the Excise Tax Act (Canada) and will provide its
registration number or the registration number of its permitted
assignee to the Vendor on or before the Closing Date;
(e) no approval or consent of any Governmental Authority is required in
connection with the execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions contemplated by
this Agreement by the Purchaser; and
(f) neither the Purchaser nor its permitted assignee is/will be a
non-Canadian for the purposes of the Investment Canada Act (Canada).
The representations and warranties contained in Sections 2.6 and 2.7 shall
survive Closing for a period of six (6) months. The representations and
warranties contained in this Agreement will cease to have effect 6 months
following the Closing Date except to the extent that written notice of a
claim has been made thereunder prior to that date.
2.8 Non-Waiver
No investigations made by or on behalf of the Vendor or the Purchaser at
any time shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the other parties pursuant to
this Agreement. Prior to Closing, each party covenants to give written notice to
the other parties if it becomes aware of any breach of any representation or
warranty given by another party contained in this Agreement, and if such party
completes the transactions contemplated by this Agreement, such party shall be
deemed to have waived such representation or warranty, the breach of which was
known to it, but only if such breach arises as a result of a change in
circumstances after the execution of this Agreement or if the party who made the
representation or warranty in question becomes aware of information of which it
was unaware when the Agreement was executed, in connection with the applicable
representation or warranty, that renders the representation or warranty
inaccurate. No waiver of any condition or other provision contained in this
Agreement, in whole or in part, shall constitute a waiver of any other condition
or provision (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
2.9 Confidentiality
(a) Until Closing (and in the event this Agreement is terminated for any
reason other than its completion, then also from and after such
termination), the Purchaser and its consultants, agents, advisors,
investors, prospective lenders, assignees and solicitors shall keep
confidential all information, documentation and records obtained from
the Vendor or its consultants, agents, advisors or solicitors with
respect to the Property as well as any information arising out of the
Purchaser's access to the Vendor's records and the Property and the
Purchaser's own due diligence with respect thereto (collectively, the
"Confidential Information"). The Purchaser shall not use any
Confidential Information for any purposes not related to this
transaction or in any way detrimental to the Vendor.
Nothing herein contained shall restrict or prohibit the Purchaser from
disclosing the Confidential Information to its consultants, agents,
advisors, investors, prospective lenders, assignees and solicitors as
long as such parties provide a letter addressed to the Vendor agreeing
to keep such information confidential or the Vendor receives such
other assurances as are acceptable to it.
(b) The Confidential Information referred to in this Section shall not
include:
(i) public information or information in the public domain at the
time of receipt by the Purchaser or its consultants, agents,
advisors and solicitors;
(ii) information which becomes public through no fault or act of the
Purchaser or its consultants, agents, advisors and solicitors;
(iii) information required to be disclosed by law; or
(iv) information received in good faith from a third party lawfully in
possession of the information and not in breach of any
confidentiality obligations.
(c) If this Agreement is terminated for any reason, the Purchaser shall
promptly return to the Vendor all Confidential Information (other than
the Purchaser's notes and due diligence materials) and similar
material including all copies, and shall destroy all of the
Purchaser's notes and due diligence materials containing Confidential
Information related to this transaction.
2.10 Searches and Examination
The Vendor will permit the Purchaser, its agents and representatives to
carry out, at the Purchaser's sole expense and risk, such tests and
investigations (including structural/physical tests and investigations, soil
tests and environmental audits) and inspections as the Purchaser may deem
necessary with respect to the Property, acting reasonably, and the operation and
maintenance thereof and the Vendor shall in that regard provide the Purchaser
and its agents and representatives such reasonable access to the Property and to
the Vendor's records and files relating to the ownership, development,
maintenance, management and operation of the Property as are required to give
effect to the foregoing, provided that:
(a) such tests and inspections shall not materially interfere with the use
of, or occupancy by, the Tenants of their respective premises in the
Buildings and shall be subject to the terms of the Lease,
(b) the Purchaser shall provide at least one (1) Business Day Notice to
the Vendor of any such tests and inspections and the Vendor will be
entitled to have a representative present during all such tests and
inspections; and
(c) any damage to any of the Property caused by such tests and inspections
will be promptly repaired by the Purchaser and the Purchaser will
indemnify and save the Vendor harmless from all losses, costs, claims,
third party actions, damages and expenses which the Vendor may suffer
as a result of the said inspections.
Without limiting the generality of the foregoing, the Vendor confirms that
it has no objection to: (i) the Purchaser, at its cost, endeavouring to obtain
reliance letters from any third party consultants who have provided
environmental, geotechnical, building condition or other reports to the Vendor
or the Vendor's property manager in connection with the Property, entitling the
Purchaser to rely upon such reports; or (ii) the Purchaser retaining such
consultants or any of them to provide supplemental reports addressed to the
Purchaser updating their original reports. The Vendor agrees to assist the
Purchaser in obtaining such reliance letters and/or supplemental reports by
executing forthwith at the Purchaser's request (which request must be made prior
to Closing), such authorizations, directions or letters confirming the foregoing
as may be reasonably required or requested by any such third party consultant or
consultants. The Purchaser shall be responsible to pay any fee charged by any
such third party consultant or consultants in respect of such reliance letters
and/or supplemental reports, but the Vendor will not be entitled to any fee or
charge for assisting the Purchaser in obtaining same. The provisions of this
Section 2.11 shall survive the closing of this transaction.
ARTICLE 3-
DEPOSIT, PURCHASE PRICE, ADJUSTMENTS AND CLOSING DATE
3.1 Deposit
(a) On or before 5:00 PM (Toronto time) on that date which is two (2)
Business Days next following the date of execution and delivery of
this Agreement by both Parties, the Purchaser shall pay the Initial
Deposit by certified cheque or negotiable bank draft drawn in favour
of the Vendor's Solicitor to be held by the Vendor's Solicitor in
trust in an interest bearing account or term deposit as a deposit,
with accrued interest to follow the Initial Deposit;
(b) In the event that this Agreement is not terminated by the Purchaser on
or before the Due Diligence Date in accordance with Section 4.2
hereof, the Purchaser shall, on or before 5:00 PM on that date which
is two (2) Business Days next following the Due Diligence Date pay the
Second Deposit by certified cheque or negotiable bank draft drawn in
favour of the Vendor's Solicitor to be held by the Vendor's Solicitor
on the same terms as the Initial Deposit as provided for in Subsection
3.1(a);
(c) If the transaction contemplated by this Agreement is not completed for
any reason other than the default of the Purchaser, the Deposit shall
be returned forthwith to the Purchaser. If the transaction
contemplated by this Agreement is not completed owing solely to the
default of the Purchaser, however, the Vendor shall be entitled to
retain the Deposit, as liquidated damages. Without limiting the
generality of the foregoing, the Purchaser and Vendor agree that in
the event of a default by the Purchaser in circumstances entitling the
Vendor to retain the Deposit as aforesaid, the forfeiture of the
Deposit shall constitute the Purchaser's only liability and obligation
to the Vendor with the intent that the Purchaser's liability in
respect of any and all claims, damages, costs or expenses of the
Vendor arising out of such default shall be limited to the amount of
the Deposit and the Vendor hereby releases the Purchaser from and in
respect of that portion of any and all claims, actions, proceedings,
damages, costs and expenses of any kind or nature whatsoever incurred
by the Vendor and arising directly or indirectly out of such default
of the Purchaser which is in excess of the Deposit; and
(d) The Deposit is to be invested by the Vendor's Solicitor in an interest
bearing account or term deposit with one of the five (5) largest
Schedule 1 Canadian Chartered Banks. The Deposit shall be credited to
the Purchase Price on Closing in accordance with Section 3.2.
3.2 Payment of Purchase Price
The Purchase Price shall be satisfied by the Purchaser as follows:
(a) by the crediting of the Deposit; and
(b) by payment to the Vendor, or as the Vendor may direct in writing, by
certified cheque or negotiable bank draft of the balance (the
"Balance") of the Purchase Price on Closing, subject to the
Adjustments.
For the purposes of this agreement, all amounts provided for herein to be
paid by either party to the other, including, without limitation, the
Deposit and the Balance, shall be denominated in Canadian dollars and
payable in lawful money of Canada.
3.3 General Adjustments
Subject to those items referred to in Section 3.4 and expressly subject to
any continuing obligation of the Vendor in respect of the Leased Premises as
tenant under the Lease, the adjustments (herein referred to as the
"Adjustments") shall include all realty taxes, local improvement rates and
charges, water and assessment rates, utility deposits, security deposits and
other adjustments established by usual practice in the City of Mississauga, for
the purchase and sale of similar commercial properties. In addition, the
Adjustments shall include the other matters referred to in this Agreement which
are stated to be the subject of adjustment and shall exclude the other matters
in this Agreement which are stated not to be the subject of adjustment.
Adjustments shall be made as of the Adjustment Date. From and after the
Closing Date, the Purchaser shall be responsible for all expenses in respect of,
and shall be entitled to all income from the Property (except as otherwise
provided herein or in the Lease). Subject to the provisions of the Lease, the
Vendor shall be responsible for all expenses and entitled to all income from the
Property for that period ending on the Adjustment Date.
If any item subject to adjustment cannot be determined on Closing, an
estimate shall be made by the Vendor and the Purchaser, acting reasonably, for
purposes of Closing and a final adjustment shall be made when the particular
item can be determined. All claims for re-adjustments relating of realty taxes
for the years ending December 31st, 2005 and December 31st, 2006 must be made
within ten (10) Business Days of delivery of the final tax xxxx in respect of
such year by the relevant taxing authority. All other claims for readjustment
must be made within a ninety (90) day period following Closing; provided,
however, that after the expiry of the relevant period, the adjustments made by
the Parties shall be final and binding. The provisions of this Section 3.3 shall
not merge on, but shall survive, Closing.
3.4 Specific Adjustments
The Vendor and the Purchaser hereby acknowledge and agree that:
(a) the Vendor shall be responsible and liable to pay and shall pay:
(i) Subject to Section 2.5(d) the costs and expenses of any work,
improvements or other capital expenses for or in respect of the
Property incurred prior to Closing, other than those which the
Purchaser has approved pursuant to Section 6.1 which, in each
case, shall be the responsibility of the Purchaser;
(b) in the event that there are any realty or business tax appeals for any
calendar year prior to the calendar year in which the Closing occurs
for the Property, the Vendor shall, at its option, be entitled to
continue such appeals and shall be entitled to receive any payment
resulting therefrom. In the event there are realty or business tax
appeals for the calendar year in which Closing occurs for the
Property, the Vendor may, at its option, continue such appeals and any
payments received resulting therefrom and/or from any realty tax
refund or rebate issued by the relevant taxing authority in respect of
such current calendar year (whether made in connection with any such
appeal or otherwise) shall, following confirmation of such payment
amounts by the relevant municipality, be paid to the Vendor and
Purchaser on a per diem basis determined by reference to the periods
of their respective ownership of the Property during such calendar
year, after reimbursement to the Vendor of its out-of-pocket costs
relating to any such appeals and the Vendor and Purchaser shall each
execute and deliver on Closing to the relevant municipality or other
taxing authority a joint, irrevocable discretion in that regard. The
Purchaser agrees to co-operate with the Vendor with respect to all
such appeals. To the extent the Purchaser receives any of the
aforementioned payments on or after the Closing Date, it shall hold
said payments in trust and forthwith remit them to the Vendor. To the
extent that any of the aforementioned payments otherwise payable on or
after the Closing Date are not made by the relevant municipality or
taxing authority but are applied instead to any arrears of realty or
business taxes owing in respect of the Property and relating to the
period after the Closing Date, this shall constitute the Purchaser's
undertaking to pay forthwith to the Vendor on demand that portion of
any such payments not made but so applied to such arrears by such
municipality as to which the Vendor would otherwise have been entitled
under this Section 3.4(b) had such payments been made.
The provisions of this Section 3.4 shall not merge on, but shall survive,
Closing.
3.5 Assignment and Assumption of Contracts
(a) Subject to Subsection 3.5(b), the Vendor agrees to assign to the
Purchaser, and the Purchaser agrees to assume, the Contracts on
Closing, but only to the extent such Contracts are, on their
respective terms, assignable by the Vendor.
(b) By no later than thirty (30) Business Days prior to the Closing Date,
the Purchaser shall give Notice to the Vendor listing any Contracts
which the Purchaser wishes to assume. The Vendor shall then terminate
any and all Contracts excluded from such list (together with any
Contracts not so excluded but which on their respective terms are not
assignable and to the assignment of which the Vendor has not obtained
the contracting party's consent) at its sole expense, by Closing.
3.6 No Assumption of Employees
The Purchaser and Vendor acknowledge and agree that the Purchaser is not
acquiring or assuming any employee or employees of the Vendor, all of whom shall
remain the employees of the Vendor both before and after Closing and in that
regard the Vendor shall indemnify and save harmless the Purchaser from and
against claims to the contrary by any of the Vendor's employees.
3.7 Allocation of Purchase Price
The Vendor and the Purchaser agree in good faith to use reasonable efforts
to agree, by the Closing Date, upon the allocation of the Purchase Price among
the Purchase Assets. If no such agreement is reached by Closing, each of the
Vendor and the Purchaser shall be free to make its own allocation.
3.8 Closing Date
(a) The date of Closing (the "Closing Date") shall be 2:00 PM (Toronto
time) on that date which is the earlier of: (i) May 26, 2006; and (ii)
forty-five (45) days next following the Due Diligence Date, on which
date possession of the Purchase Assets shall be delivered to the
Purchaser subject only to the Permitted Encumbrances and the Lease.
(b) Notwithstanding the foregoing, the Closing Date may be accelerated by
the Purchaser, in its sole discretion, upon no less than ten (10)
Business Days Notice to the Vendor, to a date specified in said
Notice, but in no event earlier than May 1, 2006.
ARTICLE 4-
CONDITIONS
4.1 Conditions for Vendor
The obligation of the Vendor to complete the agreement of purchase and sale
constituted on the execution and delivery of this Agreement shall be subject to
the following conditions:
(a) on the Closing Date, all of the material terms, covenants and
conditions of this Agreement to be complied with or performed by the
Purchaser shall have been complied with or performed in all material
respects;
(b) on the Closing Date, the representations and warranties of the
Purchaser set out in Section 2.7 shall be true and accurate in all
material respects;
(c) by the Due Diligence Date the Purchaser and Vendor shall have settled
the form, and all terms and conditions, of the Lease, upon terms
acceptable to the Vendor in its sole and absolute discretion; and
(d) by Closing the Purchaser shall have executed and delivered the Lease
in accordance with Section 6.3 hereof.
The foregoing conditions are for the sole benefit of the Vendor and may be
waived in whole or in part by the Vendor by Notice to the Purchaser prior to
Closing or the Due Diligence Date, as the case may be.
4.2 Conditions for Purchaser
The obligation of the Purchaser to complete the agreement of purchase and
sale constituted on the execution and delivery of this Agreement shall be
subject to the following conditions:
(a) by the Due Diligence Date, the Purchaser shall have examined the title
to, zoning of and any work orders in respect of, the Property and be
satisfied with the provisions of the Permitted Encumbrances and that
no other Encumbrances exist, save and except for the Permitted
Encumbrances and in addition the Purchaser shall have examined and be
satisfied with all Deliveries, including, without limitation, the
Lease, with the condition of the Buildings and the Lands, and the
economic performance of the Property, and with any information,
surveys or reports arising from the Purchaser's searches and
examinations conducted pursuant to Section 2.11 hereof;
(b) by the Due Diligence Date, the Purchaser and Vendor shall have settled
the form, and all terms and conditions, of the Lease upon terms
acceptable to the Purchaser in its sole and absolute discretion;
(c) by Closing, all of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendor shall have
been complied with or performed in all material respects;
(d) by Closing, the Vendor shall have at its cost discharged and removed
all Encumbrances save for the Permitted Encumbrances and subject to
Section 4.4;
(e) on Closing, the Vendor's representations and warranties contained set
out in Sections 2.6 hereof shall be true and correct in all material
respects;
(f) by Closing the Vendor shall have executed and delivered the Lease and
the Estoppel Certificate in accordance with Section 6.3 hereof; and
(g) on Closing, no material adverse change shall have occurred with
respect to the environmental condition of the Property after the Due
Diligence Date and no physical damage shall have occurred to the
Industrial Building, the cost of which would exceed $150,000 to
repair, which eventuality shall be dealt with in accordance with
Section 6.2.
The conditions set forth in this Sections 4.2 are for the benefit of the
Purchaser, and may be waived in whole or in part by the Purchaser by Notice to
the Vendor prior to the applicable date set forth above for the waiver or
satisfaction of each such condition.
4.3 Non-Satisfaction of Conditions
(a) If by the Closing, the party having the benefit of the condition set
out in Section 4.1(a), (b) and (d) and Section 4.2(c) to Section
4.2(g), inclusive, respectively, has not given Notice to the other
that such condition has not been satisfied, such condition shall be
deemed to have been waived.
(b) If by Closing the Party having the benefit of any condition set out in
Section 4.1(a), (b) and (d) or Section 4.2(c) to Section 4.2(g),
inclusive, respectively, has given Notice to the other that such
condition has not been satisfied, or if by the Due Diligence Date the
Purchaser has not given Notice to the Vendor that the conditions in
Sections 4.2(a) and 4.2(b) have been satisfied, or the Vendor has not
given Notice to the Purchaser that the condition in Section 4.1(c) has
been satisfied, then subject to any written agreement between the
Parties to the contrary, this Agreement shall be terminated, null and
void and of no further force and effect whatsoever and the Parties
shall have no further obligations or liabilities hereunder, save for
those specified to survive termination, and the Deposit shall be
returned to the Purchaser forthwith.
4.4 Title Requisitions
The Vendor and Purchaser acknowledge and agree that if, prior to the Due
Diligence Date, the Purchaser delivers to the Vendor in writing any valid and
material objection or requisition as to the title of the Property or to the fact
that the present uses of the Property may not be lawfully continued which the
Vendor is unable (despite the application of reasonable efforts required by
common law in response to title requisitions) to satisfy and which the Purchaser
will not waive, then the Purchaser shall have the right by delivery of Notice to
the Vendor to declare this Agreement null and void, in which case the Initial
Deposit shall, be repaid to the Purchaser, and the parties shall have no further
obligations or liabilities hereunder save for those specified to survive
termination. Save for any requisitions made by such date and any requisitions
made thereafter going to the root of title, the Purchaser shall be deemed to
have accepted the state of the Vendor's title to the Property, subject only to
the following. Notwithstanding the foregoing, the Purchaser acknowledges and
agrees that title to the Property will be subject only to the Permitted
Encumbrances and the Purchaser agrees to accept title to the Property subject
only to the Permitted Encumbrances, provided, however, that all terms thereof,
and in particular all of the Vendor's obligations thereunder have been observed
and complied with to Closing. The Purchaser shall satisfy itself as to
compliance with the Permitted Encumbrances. In the event that a registerable
discharge of any Encumbrance held by a chartered bank, trust company, insurance
company, credit union or caisse de depot is not available on Closing, the Vendor
shall provide to the Purchaser in respect of each such charge or mortgage, a
current statement for discharge purposes issued by the chargee or mortgagee
together with a complementary direction as to funds directing the appropriate
portion of the Balance to be made payable to such chargee or mortgagee and a
personal undertaking from the Vendor's Solicitor to obtain and register a
discharge of such charge or mortgage as soon as is reasonably possible following
Closing.
ARTICLE 5-
CLOSING DOCUMENTS
5.1 Vendor's Closing Documents
On or before Closing, subject to the provisions of this Agreement, the
Vendor shall prepare and execute or cause to be executed and shall deliver or
cause to be delivered to the Purchaser the following:
(a) a registerable Transfer/Deed of the Vendor's interest in the Property
in favour of the Purchaser;
(b) the Lease;
(c) an assignment of the Vendor's interest, if any, in the Plans and
Specs, to the extent assignable;
(d) a direction as to the payee or payees of the Purchase Price;
(e) a statement of adjustments to be delivered at least three (3) Business
Days before Closing;
(f) an undertaking by the Vendor to re-adjust the Adjustments;
(g) if required, a specific undertaking and joint direction to the
relevant municipality or taxing authority in respect of realty or
business tax appeals determined as at Closing, in accordance with
Subsection 3.4(a);
(h) the Estoppel Certificate;
(i) a statutory declaration of a senior officer of the Vendor or other
evidence satisfactory to the Purchaser, acting reasonably, that the
Purchase Price is not subject to withholding tax pursuant to the
non-residency provisions of the Income Tax Act of Canada;
(j) all keys and security codes to the Buildings and original copies of
all Contracts and all other files, books, and records with respect to
the Purchase Assets within the possession or control of the Vendor
(including, without limitation, any computer generated or stored
information concerning the Purchase Assets);
(k) a certificate of an officer of the Vendor confirming that all of the
representations and warranties of the Vendor set out in Sections 2.6
hereof remain true and correct in all material respects with effect as
of the Closing Date;
(l) the Assignment and Assumption of Contracts in respect of those
Contracts, if any, which the Purchaser has by Notice delivered to the
Vendor on or before the date specified in Section 3.5(b) elected to
assume;
(m) a xxxx of sale in favour of the Purchaser in respect of the Chattels,
if any, free and clear of all liens, security interests and
Encumbrances;
(n) registerable discharges of all Encumbrances save for the Permitted
Encumbrances or mortgage discharge statements, directions as to funds
and Vendor's Solicitor' undertakings required to be provided pursuant
to Section 4.4;
(o) the Vendor's Undertaking and Indemnity, if required pursuant to
Section 2.5(d);
(p) the Vendor's Undertaking in respect of the roof replacement provided
for in Section 6.1; and
(q) all other documents which may be reasonably required by the
Purchaser's solicitors to give effect to the transaction herein
contemplated.
All documentation shall be in form and substance acceptable to the
Purchaser and the Vendor each acting reasonably and in good faith, provided that
none of such documents shall contain covenants, representations or warranties
which are in addition to or more onerous upon either the Vendor or the Purchaser
than those expressly set forth in this Agreement.
5.2 Purchaser's Closing Documents
On or before Closing, subject to the provisions of this Agreement, the
Purchaser shall execute or cause to be executed and shall deliver or cause to be
delivered to the Vendor's Solicitor the following:
(a) the Balance of the Purchase Price;
(b) the Lease;
(c) the Assignment and Assumption of Contracts in respect of those
Contracts, if any, which the Purchaser has by Notice delivered to the
Vendor on or before the date specified in Section 3.5(b) elected to
assume);
(d) an undertaking by the Purchaser to re-adjust the Adjustments;
(e) if required, a specific undertaking and joint direction to the
relevant municipality or taxing authority in respect of realty or
business tax appeals determined as at Closing, in accordance with
Subsection 3.4(a);
(f) the GST Undertaking and Indemnity;
(g) the Final Engineer's Certificate in accordance with Section 6.1
hereof; and
(h) such other documents as may reasonably be required by the Vendor's
solicitor to give effect to the transaction herein contemplated.
All documentation shall be in form and substance acceptable to the
Purchaser and the Vendor each acting reasonably and in good faith, provided that
none of such documents shall contain covenants, representations or warranties
which are in addition to or more onerous upon either the Vendor or the Purchaser
than those expressly set forth in this Agreement.
5.3 Registration and Other Costs
The Vendor shall be responsible for the costs of the Vendor's Solicitor in
respect of this transaction. The Purchaser shall be responsible for the costs of
the Purchaser's Solicitors in respect of this transaction. The Purchaser shall
be responsible for and pay any land transfer taxes or deed transfer taxes
payable on the transfer of the Property, all registration fees payable in
respect of registration by it of any documents on Closing (other than discharges
of Encumbrances which are required to be made by the Vendor, which shall be the
responsibility of the Vendor) and all federal and provincial sales and other
taxes payable by a purchaser upon or in connection with the conveyance or
transfer of the Property, including goods and services tax ("GST") pursuant to
the Excise Tax Act (Canada).
The Purchaser shall indemnify and save harmless the Vendor and its
shareholders, directors, officers, employees, advisors and agents from all
claims, actions, causes of action, proceedings, losses, damages, costs,
liabilities and expenses incurred, suffered or sustained as a result of a
failure by the Purchaser:
(a) to pay any federal, provincial or other taxes payable by the Purchaser
in connection with the conveyance or transfer of the Property whether
arising from a reassessment or otherwise, including provincial retail
sales tax and GST, if applicable; and/or
(b) to file any returns, certificates, filings, elections, notices or
other documents required to be filed by the Purchaser with any
federal, provincial or other taxing authorities in connection with the
conveyance or transfer of the Property.
Without limiting the generality of the foregoing, the Purchaser
acknowledges that in the event any GST is exigible in connection with the
transaction contemplated herein, such GST shall be in addition to the Purchase
Price. The Purchaser and Vendor acknowledge and agree that the Purchaser shall
not be required to pay, or the Vendor to collect and remit, any GST exigible in
connection with this transaction provided that the Purchaser on Closing,
provides to the Vendor a certificate of an officer of the Purchaser confirming
that the Purchaser is a registrant for GST and the Purchaser's registration
number as at Closing, as well as an undertaking by the Purchaser to remit when
due any exigible GST and the indemnity provided for herein.
This Section 5.3 shall survive and not merge on Closing.
5.4 Escrow Closing and Registration
The Vendor and Purchaser covenant and agree to cause their respective
solicitors to enter into a document registration agreement (the "DRA") to govern
the electronic submission of the transfer/deeds for the Units to the applicable
Land Registry Office. The DRA shall outline or establish the procedures and
timing for completing all registrations electronically and provide for all
closing documents and closing funds to be held in escrow pending the submission
of the transfer/deeds to the Land Registry Office and their acceptance by virtue
of each registration document being assigned a registration number. The DRA
shall also provide that if there is a problem with the Teraview electronic
registration system which does not allow the parties to electronically register
all registration documents on Closing, the Closing Date shall be deemed to be
extended until the next day when the said system is accessible and operating for
the Land Registry Office applicable to the Lands
5.5 Post Closing Financial Information
To the extent that the financial information statements in respect of the
Property delivered by the Vendor pursuant to Section 2.4 hereof in respect of
the year ending December 31, 2005, and the Vendor's internally prepared
financial information statements for the current year, which shall be delivered
by the Vendor to the Purchaser prior to the Closing Date have been reviewed only
by the Vendor's accountants and do not, in either case constitute audited
financial statements in respect of the Property, the Vendor acknowledges and
agrees that in the event that the Purchaser elects following Closing to prepare
or cause to be prepared in respect of the Property audited financial statements
in respect of any one or more of the above-mentioned years, the Vendor shall
cooperate with the Purchaser and its auditors and provide such assistance and
financial information with respect to the Property as is within their possession
or control as may be reasonably requested by the Purchaser or its auditors,
provided that the Vendor shall not be compelled to incur any out of pocket costs
or expenses in connection therewith or to provide any propriety or confidential
financial information, personal to the Vendor as opposed to relating to the
Property.
ARTICLE 6-
OPERATION UNTIL CLOSING
6.1 Operation Before Closing
From the date hereof until Closing, the Vendor shall operate the Property
in accordance with sound business and management practices as would a prudent
owner of comparable properties. Without limiting the generality of the
foregoing, the Vendor covenants and agrees that as and from the Due Diligence
Date, no capital improvements shall be made to the Property, or the Industrial
Building, (but excluding any capital improvements required to address or avert
an emergency or perceived emergency) without in each case the prior written
consent of the Purchaser, which consent may be withheld within the Purchaser's
discretion. Without limiting the foregoing the Vendor shall undertake at its
sole cost the replacement of the roofing system on the Industrial Building and
shall proceed with all due diligence and dispatch to complete such roof
replacement, all in a good and workmanlike manner in compliance with all
applicable laws, as confirmed by the Vendor's roofing contractor. If the
Vendor's roofing contractor confirms that the foregoing roof replacement has
been completed by the Due Diligence Date, the Vendor shall have satisfied its
foregoing obligation to complete the roof replacement. If the Vendor's roofing
contractor does not confirm that the roof replacement has been completed by the
Due Diligence Date, any determination thereafter as to whether the roof
replacement has been completed shall be made jointly by the Vendor's roofing
contractor and the Purchaser's consulting engineer or similarly qualified expert
(the "Engineer"), both acting reasonably. In the event that such roofing system
has not been replaced on or before the Closing Date, as determined by the
Vendor's roofing contractor and the Engineer, both acting reasonably, the Vendor
shall provide to the Purchaser on Closing the Vendor's undertaking to complete
such roof replacement as set out above on or before that date which is no later
than sixty (60) days next following the Closing Date, subject to force majeure,
and in such event the Purchaser shall be entitled to deduct from the Purchase
Price and to place in trust with the Purchaser's Solicitors a holdback (the
"Holdback") in an amount equal to that amount which in the reasonable opinion of
the Engineer (as set out in a certificate) as agreed to by the Vendor's roofing
contractor, acting reasonably, to be addressed to the Purchaser and Vendor and
delivered to the Vendor on or before Closing (the "Engineer's Certificate")
represents the reasonable estimated cost to complete the replacement of such
roofing system plus an additional ten percent (10%). The Holdback shall be
retained by the Purchaser's Solicitors in trust and shall be disbursed: (i) to
the Vendor or as the Vendor may in writing direct, in the event that the
Vendor's roofing contractor has confirmed in writing prior to the sixteeth day
following Closing (or such later date as is necessitated by force majeure) as
confirmed by the Engineer, acting reasonably, that the roofing system
replacement has been completed in accordance with the Vendor's obligation
hereunder; or (ii) to the Purchaser, or as the Purchaser may in writing direct,
in the event the Engineer, acting reasonably, has confirmed in writing on or
after the sixteeth day following Closing (or such later date as is necessitated
by force majeure), as confirmed by the Vendor's roofing contractor, acting
reasonably, that the roofing system replacement has not been completed in
accordance with the Vendor's obligation hereunder. However, the amount to be
released to the Purchaser pursuant to (ii) shall be equal to the lesser of: A)
the amount of the Holdback; and B) one hundred and ten percent (110%) of the
estimated cost, at the time, to complete the remaining roof replacement work, as
estimated by the Engineer and accepted by the Vendor's roofing contractor, both
acting reasonably. The Holdback shall be placed by the Purchaser's Solicitors in
an interest bearing account or term deposit, and the Purchaser and Vendor hereby
direct the Purchaser's Solicitors to disburse all accrued interest in the same
manner as the Holdback. The Purchaser and Vendor acknowledge that in respect of
the Holdback, the Purchaser's Solicitors shall be acting as a mere stakeholder
only, that in the event any dispute between the Purchaser and Vendor in respect
of the Holdback, including, without limitation, any dispute as to whether the
Holdback is to be disbursed in accordance with this Section 6.1, the Purchaser's
Solicitors shall be entitled to pay the Holdback to a Court of competent
jurisdiction and having done so shall be deemed to have been released from any
and all liability or obligation in respect of the Holdback. If the Vendor's
roofing contractor and the Engineer are unable to agree upon any determination
that is contemplated to be made by them in this Section 6.1, the matter shall be
submitted to a single arbitrator, who will resolve the matter pursuant to the
Arbitrations Act of Ontario.
6.2 Damage Before Closing
The interest of the Vendor in and to the Industrial Building being
purchased, acquired and assumed by the Purchaser pursuant to the terms and
conditions of this Agreement shall be at the risk of the Vendor until Closing.
In the event that any loss of or damage to the Industrial Building resulting
from insured perils or risks the cost of repair or replacement of which would
exceed $150,000.00 (such loss or damage and repair or replacement cost to be
determined by the Vendor's arm's length, independent architect, engineer or
other qualified expert retained for the purpose), occurs before Closing which
the Vendor has not covenanted to repair by the Closing Date or to adjust for, or
in respect of which the Purchaser is not prepared to accept such Vendor's
covenant to repair or adjust, then the Purchaser, within five (5) days after
disclosure to the Purchaser by the Vendor of the loss or damage and the extent
thereof and the Vendor's concurrent Notice that it does or does not intend to
repair or adjust, at its option shall by Notice to the Vendor either: (i) elect
to complete the purchase of the Property in which event the Purchaser shall be
entitled to the proceeds of insurance in respect of the loss or damage and the
Vendor shall pay any deductibles in respect of such loss or damage, or (ii)
elect not to complete the purchase of the Property in which case this Agreement
shall be terminated and of no further force and effect and the Purchaser shall
be entitled to the return of the Deposit forthwith.
In the event of loss or damage to the Industrial Building resulting from
insured perils or risks the cost of repair or replacement of which is less than
or equal to $150,000.00 and provided that proceeds of insurance are available
(prior to or after Closing) to pay for the full cost (less reasonable
deductibles) of repairing or replacing such loss or damage, the Purchaser shall
have no right to terminate this Agreement, the Vendor shall pay any deductibles
in respect of such loss or damage, the Purchaser shall be entitled to an
assignment of all proceeds of insurance in respect of such loss or damage, and
the parties shall complete the within transaction with respect to the Property.
Any damage to the Commercial Building, regardless of the cost required to repair
or replace shall not entitle the Purchaser to terminate, but the Purchaser shall
receive credit for any deductible in respect thereof and the Purchaser shall be
entitled to an assignment of insurance proceeds in connection therewith if the
Purchaser completes this transaction..
6.3 Lease
The Purchaser, as landlord, and the Vendor, as tenant, shall execute and
deliver on Closing the Lease. The terms and conditions of the Lease shall be
agreed upon and settled by the Purchaser and Vendor on or before the Due
Diligence Date, each in their sole and absolute discretion. The Leased Premises
to which the Lease relates shall be the Industrial Building, comprising a
rentable area of approximately 87,848 square feet and the surrounding lands
outlined in green in Schedule "F". The Lease shall be net and carefree to the
Purchaser, as landlord, subject to the exclusions contained therein. Without
limiting the generality of the foregoing, the Lease shall include the following
terms:
(a) The term of the Lease shall be a period of ten (10) years plus that
broken month or period of days, if any, commencing on the Closing Date
up to and including the day preceding the first day of the month next
following the Closing Date;
(b) The net rent payable by the Vendor, as tenant, under the Lease shall
be:
(i) Years 1 - 5: $5.30 per square foot per annum ($465,595.00 per
annum)
(ii) Years 6 -10: $5.80 per square foot per annum ($509,519.00 per
annum);
(c) The Tenant shall be entitled (subject to compliance with any
applicable zoning by-law) to use a portion of the Leased Premises
external to the Buildings for outside storage of steel coils and other
raw materials and finished products, the area of such outside storage
to be limited to that area of the Leased Premises agreed upon by the
Purchaser and Vendor, each acting reasonably, and designated in the
Lease;
(d) The Lease shall contain a covenant by the Purchaser, as landlord, not
to use any part of the Property, or permit any part of the Property to
be used by any tenant or otherwise, in a manner which interferes with
or disrupts the Vendor's permitted use of the Leased Premises. Without
limiting the generality of the foregoing, the Purchaser, as landlord,
shall covenant not to permit any other tenant or occupant of the
Property to use the Property, nor will the Purchaser use the Property,
for any corrosive procedure, including any procedure requiring the use
or storage on the of line, alkalines, acids or phosphates.
6.4 Estoppel Certificate
The Vendor covenants and agrees to deliver to the Purchaser the Estoppel
Certificate, addressed to the Purchaser or the Purchaser's nominee and to the
Purchaser's lender, all as is designated in writing, on or before that date
which is five (5) Business Days prior to the Closing Date. However, such
Estoppel Certificate shall include a provision to the effect that the Lease
shall only come into effect on Closing.
6.5 Expropriation
If the Property is condemned or expropriated in whole or in any material
part by public or other lawful authority before Closing, the Purchaser shall
have the right, in its sole discretion to: (i) terminate this Agreement by
written notice to the Vendor, whereupon the Deposit shall be returned to the
Purchaser forthwith without deduction; or (ii) elect to take the compensation or
damages awarded, as the case may be, in respect of such condemnation or
expropriation and to complete the transaction contemplated by this Agreement. If
any immaterial part of the Property is so condemned or expropriated before
Closing, the Purchaser shall be entitled to all compensation or damages awarded,
as the case may be, and the parties shall complete the transaction contemplated
by this Agreement. Any compensation or damages to which the Purchaser may be
entitled hereunder shall, if determined and paid or payable to the Vendor prior
to Closing, constitute an adjustment to the Purchase Price on Closing. If the
quantum of any such compensation or damages have not been determined and paid
prior to Closing, the Vendor shall on Closing provide to the Purchaser such
assignment of its interest in any and all compensation or damages together with
such security therefor as is acceptable to the Purchaser's Solicitors, acting
reasonably. In respect of the materiality or immateriality of any portion of the
Property condemned or expropriated, as contemplated in this Section 6.5, the
written opinion of the Purchaser's architect, engineer or other independent
arms-length consultant retained for the purpose shall be determinative.
ARTICLE 7-
GENERAL
7.1 Gender and Number
Words importing the singular include the plural and vice versa. Words
importing gender include all genders.
7.2 Captions and Table of Contents
The caption, headings and table of contents contained herein are for
reference only and in no way effect this Agreement or its interpretation.
7.3 Obligations as Covenants
Each agreement and obligation of any of the parties hereto in this
Agreement, even though not expressed as a covenant, is considered for all
purposes to be a covenant.
7.4 Applicable Law
This Agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable thereto and shall
be treated in all respects as an Ontario contract.
7.5 Currency
All reference to currency in this Agreement shall be deemed to be reference
to Canadian dollars.
7.6 Invalidity
If any immaterial covenant, obligation, agreement or part thereof or the
application thereof to any person or circumstance, to any extent, shall be
invalid or unenforceable, the remainder of this Agreement or the application of
such covenant, obligation or agreement or part thereof to any person, party or
circumstance other than those to which it is held invalid or unenforceable shall
not be affected thereby. Each covenant, obligation and agreement in this
Agreement shall be separately valid and enforceable to the fullest extent
permitted by law.
7.7 Amendment of Agreement
No supplement, modification, waiver or termination (other than a
termination pursuant to Sections 4.3, 4.4 or 6.2) of this Agreement shall be
binding unless executed in writing by the parties hereto in the same manner as
the execution of this Agreement.
7.8 Time of the Essence
Time shall be of the essence of this Agreement.
7.9 Further Assurances
Each of the parties hereto shall from time to time hereafter and upon any
reasonable request of the other, execute and deliver, make or cause to be made
all such further acts, deeds, assurances and things as may be required or
necessary to more effectually implement and carry out the true intent and
meaning of this Agreement.
7.10 Entire Agreement
This Agreement and any agreements, instruments and other documents herein
contemplated to be entered into between, by or including the parties hereto
constitute the entire agreement between the parties hereto pertaining to the
agreement of purchase and sale provided for herein and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, with respect thereto, and there are no other warranties or
representations and no other agreements between the parties hereto in connection
with the agreement of purchase and sale provided for herein except as
specifically set forth in this Agreement or the Schedules attached hereto.
7.11 Waiver
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision (whether or not similar) nor
shall any waiver constitute a continuing waiver unless otherwise expressed or
provided.
7.12 Solicitors as Agents and Tender
Any notice, approval, waiver, agreement, instrument, document or
communication permitted, required or contemplated in this Agreement may be given
or delivered and accepted or received by the Purchaser's Solicitors on behalf of
the Purchaser and by the Vendor's Solicitor on behalf of the Vendor and any
tender of Closing Documents and the Balance may be made upon the Vendor's
Solicitor and upon the Purchaser's Solicitors as the case may be.
7.13 Merger
Except as otherwise expressly set out herein, this Agreement shall merge
with the closing of the transaction contemplated herein.
7.14 Successors and Assigns
All of the covenants and agreements in this Agreement shall be binding upon
the parties hereto and their respective successors and permitted assigns and
shall enure to the benefit of and be enforceable by the parties hereto and their
respective successors and their permitted assigns pursuant to the terms and
conditions of this Agreement.
7.15 Assignment
The Vendor shall have no right to assign its rights and/or obligations
hereunder or to convey title to the Property or any part thereof, in favour any
other person or entity prior to Closing without the prior written consent of the
Purchaser, which consent may be withheld in the Purchaser's sole and absolute
discretion. The Purchaser shall be entitled on Notice to the Vendor, but without
the Vendor's approval or consent, to assign the Purchaser's right, title and
interest in this Agreement, in whole or in part, to one or more assignees who
are existing clients of the Purchaser, provided that any such assignees enter
into a written assumption agreement with the Vendor, upon terms acceptable to
the Vendor, acting reasonably, whereupon the Purchaser shall be deemed to have
been released from all of its covenants and obligations herein contained. Any
other assignment by the Purchaser of its right, title or interest in this
Agreement shall require the prior written consent of the Vendor, which consent
may be withheld in the Vendor's sole and absolute discretion
7.16 Notice
Any notice, demand, approval, consent, information, agreement, offer,
request or other communication (herein referred to as a "Notice") to be given
under or in connection with this Agreement shall be in writing and shall be
given by personal delivery during regular business hours on any Business Day or
by telecopier, facsimile transmission or other electronic communication which
results in a written or printed notice being given, addressed or sent as set out
below or to such other address or electronic number as may from time to time be
the subject of a Notice:
(a) (i) Vendor: Steelbank Tubular Inc.
c/o TD Securities Realty Group
TD Tower
00 Xxxxxxxxxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxx
Facsimile: 000.000.0000
(ii) with a copy to the
Vendor's Solicitor:
Xxxxxxxx Xxxxxxx LLP 00
Xxxx Xxxxxx Xxxx, Xxxxx
0000 Xxxxxxx, Xxxxxxx X0X
0X0 Attention: Xxxxxx X.
Xxxxxxxx Facsimile:
416.865.6636
(b) (i) Purchaser: Agellan Investments Inc.
c/o Agellan Capital Partners Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxxx
Facsimile: 416.593.6700
(ii) with a copy to the
Purchaser's Solicitors:
Xxxxxx Xxxxxxx LLP
Barristers and Solicitors
00 Xxxx Xxxxxx Xxxx,
Xxxxx 0000 Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxx
Facsimile: 416.595.8695
Any Notice, if personally delivered, shall be deemed to have been validly and
effectively given and received on the date of such delivery and if sent by
telecopier, facsimile transmission or other electronic communication with
confirmation of transmission prior to 5:00 p.m., shall be deemed to have been
validly and effectively given and received on the Business Day it was sent
unless the confirmation of transmission was after 5:00 p.m. in which case it
shall be deemed to have been received on the next following Business Day.
7.17 Effect of Termination of Agreement
Notwithstanding the termination of this Agreement for any reason, the
confidentiality provisions contained in Section 2.9 of this Agreement and the
indemnity and repair provisions contained in Section 2.10 shall survive Closing
and shall remain in full force and effect.
7.18 No Registration of Agreement
The Purchaser covenants and agrees not to register this Agreement or any
notice of this Agreement or any caution, caveat or other instrument on title to
the Lands or any part of them and this section may be pleaded as an estoppel in
the event of any registration and the Purchaser shall be hereby deemed to have
appointed the Vendor as its attorney at law for the purpose of executing and
delivering in the name of the Purchaser any instrument required to effect the
vacating, discharge or release of any such registered instrument.
7.19 Commissions
Save as expressly provided to the contrary in this Section 7.19, the Vendor
agrees that it is responsible to pay the Broker any fees or commissions in
respect of the purchase and sale of the Property and to indemnify the Purchaser
in respect of any claims or demands thereof and represents and warrants that it
has not retained any other broker or agent in respect thereof and is liable to
pay any other similar fees or commissions in respect thereof. The Purchaser
represents and warrants to the Vendor that it has not engaged any real estate
agent or broker in connection with this Agreement or the Property other than the
Broker and agrees to indemnify and save harmless the Vendor in respect of any
claims or demands for commission or fees made by any other agent or broker other
than the Broker claiming to have been so engaged by or on behalf of the
Purchaser. Such indemnities shall survive the Closing hereof.
7.20 Facsimiles
All parties agree that this Agreement may be transmitted by telecopier and
that the reproduction of signatures by way of telecopier will be treated as
though such reproduction were executed originals and each party undertakes to
provide the other with a copy of this Agreement bearing original signatures
within a reasonable time after the date of execution.
7.21 Counterparts
This Agreement may be executed in several counterparts, and each of which
so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and, notwithstanding their date of
execution, shall be deemed to bear date as of the date first written above.
IN WITNESS WHEREOF the Vendor and Purchaser have executed this Agreement as
evidenced by their property authorized officers as of the day and year first
above written.
AGELLAN INVESTMENTS INC.
Per: /s/ Xxxxx Xxxxxx
------------------------------------------------------
Name: Xxxxx Xxxxxx
Title: Secretary
I have authority to bind the Corporation
STEELBANK TUBULAR INC.
Per: s/s/ Xxxxx Xxxxxxxx
------------------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
