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EXHIBIT 10.4
Memorandum of Agreement made and entered into on the 24th day of July, 1997,
AMONG:
XXXXXX XXXXXXX
(hereinafter referred to as "Boulard")
PARTY OF THE FIRST PART,
- and -
XXXX XXXXX
(hereinafter referred to as Xxxxx")
PARTY OF THE SECOND PART,
(Boulard and Xxxxx, being hereinafter
referred to collectively as the "Vendors")
- and -
ADVANCED ACCESSORY SYSTEMS CANADA INC. / LES
SYSTEMS D'ACCESSOURY ADVANCED DU CANADA INC.
(hereinafter referred to as the "Purchaser")
PARTY OF THE THIRD PART.
WHEREAS the Vendors have agreed to sell and the Purchaser has agreed to
purchase all the Vendors' issued and outstanding shares in the capital stock of
the Corporation.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH AS FOLLOWS:
SECTION 1 - DEFINED TERMS
1.1 Where used herein the following terms have the following meanings
respectively:
1.1.1 "Agreement" means this memorandum of agreement;
1.1.2 "Banking Day" means any day, Monday through Friday, inclusively, when
Canadian chartered banks are open for business in the City of Toronto,
Province of Ontario;
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1.1.3 "Benefit Plans" means all pension, retirement, profit sharing, bonus,
savings, compensation, incentive, severance, stock option, stock
purchase, stock appreciation, group insurance, medical,
hospitalization, disability, death and other similar plans, programs,
arrangements or practices covering any or all of the past or present
employees, shareholders, directors or officers of the Corporation; and
"Benefit Plan" means any one of them;
1.1.4 "Best Efforts" means the taking by a party of all such actions as would
be prudent in accordance with reasonable commercial practices as applied
to the particular matter in question;
1.1.5 "Closing" means the completion of the transaction contemplated herein on
the Closing Date, at the offices of Pinckard, Wyjad, 00 Xxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxx X0X 0X0, or such other place as the parties may
agree upon;
1.1.6 "Closing Date" means July 9, 1997, or such other Banking Day as the
parties may agree upon;
1.1.7 "1997 Financial Statements" means the financial statements of the
Corporation for the period ended January 31, 1997, consisting of the
unaudited balance sheet of the Corporation as at January 31, 1997, and
the unaudited statements of earnings, retained earnings and changes in
financial position for the period ending March January 31, 1997, and
annexed hereto as Schedule 1.1.7;
1.1.8 "Constating Documents" means the constating documents of the Corporation
annexed hereto as Schedule 1.1.8;
1.1.9 "Contracts" means the agreements, obligations and undertakings listed on
Schedule 1.1.9 annexed hereto;
1.1.10 "Corporation" means Nomadic Sport Inc.;
1.1.11 "Environment" means surface waters, groundwater, drinking water supply,
land surface, subsurface strata, air, both inside and outside of
buildings and structures, and plant and animal life;
1.1.12 "Boulard Employment Agreement" means the employment agreement to be
entered into between Boulard and Advanced Accessory Systems, LLC on the
Closing Date annexed hereto as Schedule 1.1.12;
1.1.13 "Boulard Purchase Price" means One Hundred and Ninety Thousand, Six
Hundred and Twenty Five ($190,625.00) Dollars;
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1.1.14 "Boulard Shares" means One Thousand, One Hundred and Twenty Five (1,125)
Common shares in the capital of the Corporation;
1.1.15 "Governmental Authority" means any government or political subdivision
thereof, whether federal, state, provincial, county, local, municipal or
regional or any other governmental authority, any agency or
instrumentality of any such government, political subdivision or other
governmental authority, any court, arbitral tribunal or arbitrator, and
any non-governmental regulating body, to the extent that the rules,
regulations or orders of such body have the force of law;
1.1.16 "Hazardous Substance" means any toxic waste, pollutant, contaminant,
hazardous substance, hazardous material, toxic substance, hazardous
waste, special waste, industrial substance or waste, petroleum or
petroleum-derived substance or waste, or any constituent of any of same
as such terms are regulated under or defined by any Environmental Law;
1.1.17 "Indemnified Party" has the meaning ascribed thereto in subsection 7.6
hereof;
1.1.18 "Indemnifying Party" has the meaning ascribed thereto in subsection 7.6
hereof;
1.1.19 "Xxxxx Purchase Price" means One Hundred and Nine Thousand, Three
Hundred and Seventy Five ($109,375.00) Dollars;
1.1.20 "Xxxxx Shares" means Eight Hundred and Seventy Five (875) Common shares
in the capital of the Corporation;
1.1.21 "Losses" has the meaning ascribed thereto in subsection 7.1 hereof;
1.1.22 "Non-Competition and Confidentiality Agreement" means the agreement to
be entered into between the Corporation, Boulard, Hamer, Xxxxx Xxxxxxx
and the Purchaser on the Closing Date and annexed hereto as Schedule
1.1.22;
1.1.23 "Permits" means all permits, licenses, consents, certificates,
authorizations and approvals required pursuant to applicable
Environmental Laws;
1.1.24 "Purchase Price" means Three Hundred Thousand ($300,000.00) Dollars;
1.1.25 "Purchased Shares" means, collectively, the Boulard Shares, and the
Xxxxx Shares;
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1.1.26 "Real Property" means the real property, together with all buildings,
structures, fixtures and improvements thereon owned by the Corporation
and described in Schedule 1.1.26;
1.1.27 "Real Property Mortgage" means the mortgages affecting the Real Property
and annexed hereto as Schedule 1.1.27;
1.1.28 "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the Environment;
1.1.29 "Tax Claim" means any claim based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation or
warranty of the Vendors contained in paragraphs 4.3.17 and 4.3.26
hereof;
1.1.30 "Taxes" (or "Tax" where the context requires) means all taxes, whether
federal, provincial, local, municipal or otherwise (including, without
limitation, income, profit, corporation, business, excise, sales, goods
and services, value-added, franchise, withholding, capital, transfer,
stamp, unemployment compensation, payroll, property and duties), whether
or not measured in whole or in part by net income, and including
interest and penalties with respect thereto;
1.1.31 "Third Party Claim" has the meaning ascribed thereto in subsection 7.8
hereof;
1.1.32 "Title Defect(s)" means any mortgage, deed of trust, lien, pledge,
security interest, hypothec, charge (including any local improvement
charge), right of first refusal, easement, servitude, restrictive
covenant, encroachment or other survey or title defect, encumbrance or
other restriction or limitation whatsoever, other than (i) any
unperfected security interest for a purchase money obligation under the
Personal Property Security Act (Ontario) incurred by the
Corporation in the ordinary and usual conduct and course of its
business; (ii) any registered restriction or covenant which runs with
the Leased Real Property and/or the Real Property provided same is
complied with and does not restrict in any material adverse respect the
current use of the Leased Real Property and/or the Real Property by the
Corporation; (iii) unregistered liens for taxes, assessments and
governmental charges or levies not yet due; (iv) undetermined or
inchoate privileges, liens or charges of mechanics, labourers or
workmen, builders and contractors, suppliers of materials or others
incidental to construction of improvements on the Leased Real Property
and/or the Real Property incidental to maintenance or operation of the
same and arising by operation of law, provided that claims for them
have not yet been registered or filed pursuant to law and provided they
relate to obligations not due and delinquent; (v) statutory privileges,
liens and charges which relate to obligations incurred with respect to
hydro-electric and other
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utility services and which are not overdue; (vi) servitudes, easements,
rights-of-way and other similar rights in the nature of a servitude or
easement which do not prevent or materially adversely affect the
current use of the Leased Real Property and/or Real Property; (vii)
zoning by-laws and ordinances and municipal by-laws and regulations and
land use restrictions which do not materially, adversely affect the
current use of the Leased Real Property and/or the Real Property;
(viii) any reservations and exceptions expressed in the original grant
from the Crown; (ix) title defects or irregularities which are of a
minor nature and which, in the aggregate, do not materially, adversely
affect the current use or value of the Leased Real Property and/or the
Real Property; (x) any registered municipal or similar agreements and
registered agreements with publicly regulated utilities provided the
same have been complied with to date; (xi) any leases, the benefit
of which form part of the property of the Corporation; and (xii) any
encumbrance which the Purchaser has expressly agreed to assume or
accept pursuant to the terms of this Agreement;
1.1.33 "To the best of their knowledge" means a statement of the declarants'
knowledge of the facts or circumstances to which such qualification
relates, after reasonable inquiry and investigation into issues brought
to their attention or with respect to which they have knowledge.
SECTION 2 - SCHEDULES
2.1 The following are the Schedules annexed hereto and deemed to be a part
hereof:
Schedule 1.1.7 - 1997 Financial Statements
Schedule 1.1.8 - Constating Documents
Schedule 1.1.9 - List of Contracts
Schedule 1.1.12 - Boulard Employment Agreement
Schedule 1.1.22 - Non-Competition and Confidentiality Agreement
Schedule 1.1.26 - Real Property
Schedule 1.1.27 - Real Property Mortgage
Schedule 4.3.3 - Authorized Capital of the Corporation
Schedule 4.3.5 - Powers of Attorney
Schedule 4.3.9 - List and Condition and of Assets
Schedule 4.3.11 - Intellectual Property
Schedule 4.3.12 - Aged Listing of Accounts Receivable and Accounts
Payable
Schedule 4.3.16 - Litigation
Schedule 4.3.18.1 - Labour Relations Issues
Schedule 4.3.19 - Benefit Plans
Schedule 4.3.20 - Insurance
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Schedule 4.3.21 - List of Employees
Schedule 4.3.22.1 - Suppliers and Customers
Schedule 4.3.24 - Related Transactions
Schedule 9.1.1 - Vendors' Solicitors' Opinion
Schedule 9.1.3 - Releases of Officers and Directors
SECTION 3 - PURCHASE AND SALE
3.1 Subject to subsection 9.2, on the Closing Date the Purchaser shall
purchase the Boulard Shares and the Xxxxx Shares from Boulard and Xxxxx,
respectively, and pay for same as follows and the Vendors, jointly and
severally, agree as follows:
3.1.1 Boulard shall sell to the Purchaser, and the Purchaser shall purchase
from Boulard, the Boulard Shares in consideration of the payment of the
sum of One Hundred and Ninety Thousand, Six Hundred and Twenty Five
($190,625.00) Dollars (the "Boulard Purchase Price"), payable on
closing:
3.1.2 Xxxxx shall sell to the Purchaser, and the Purchaser shall purchase from
Xxxxx, the Xxxxx Shares in consideration of the payment of the sum of
One Hundred and Nine Thousand, Three Hundred and Seventy Five
($109,375.00) Dollars (the "Xxxxx Purchase Price"), payable on closing:
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF THE VENDORS
4.1 Boulard hereby represents and warrants to the Purchaser that the
following representations and warranties are true and correct and
acknowledges that the Purchaser is relying upon such representations and
warranties in connection with the transaction contemplated hereby and that the
Purchaser would not have entered into this Agreement without the same:
4.1.1 OWNERSHIP OF BOULARD SHARES
Boulard is, on the date hereof, the legal and beneficial owner of One
Thousand, One Hundred and Twenty Five (1,125) Common shares in the
capital stock of the Corporation, and these are the only shares which he
owns legally and beneficially in the Corporation, with good and
marketable title, free and clear of any mortgage, lien, encumbrance,
security interest, restriction or claim of any kind whatsoever. On
Closing, Boulard will deliver to the Purchaser good and marketable title
to the Boulard Shares free and clear of any mortgage, lien, encumbrance,
security interest, restriction or claim of any kind whatsoever. The
share certificates representing the Boulard Shares are true, genuine and
subsisting, and nothing affects the validity of same;
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4.1.2 OPTIONS TO ACQUIRE BOULARD SHARES
There are no outstanding options or other rights or agreements to
purchase any of the Boulard Shares, and Boulard has not agreed to sell
any of the Boulard Shares;
4.1.3 SHAREHOLDERS AGREEMENT
None of the Boulard Shares is subject to any shareholders agreement,
voting trust, escrow agreement or other agreement or restriction.
Without limiting the generality of the foregoing, there is no
restriction or limitation on the power of Boulard to vote any of
the Boulard Shares. Boulard does not have and does not know of any
other shareholder of the Corporation who has any interest, directly or
indirectly, in any corporation, partnership, business trust,
association, syndicate, joint venture or other business entity or
organization of any kind whatsoever in competition or engaged in a
similar business to that of the Corporation. Boulard has no material
direct or indirect interest or ownership, or profit participation, in
any outside business with which the Corporation has had significant
transactions, or with which Boulard has had significant transactions, or
which are competitors of the Corporation, and, to the best of the
information and belief of Boulard, no other officer, director, or
employee of the Corporation, has any such material direct or indirect,
interest or ownership, or profit participation, in any outside
businesses which have had significant transactions with the Corporation
or which are its competitors;
4.1.4 LITIGATION
There are no claims, actions, suits, arbitrations, investigations or
other proceedings pending or threatened which affect any of the Boulard
Shares;
4.1.5 AUTHORITY TO ENTER INTO AGREEMENT
Boulard has the legal capacity and authority to enter into this
Agreement and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the performance of the
transaction contemplated hereby will not, with or without the giving of
notice and/or the passage of time, or both, (i) violate any provision of
law applicable to Boulard, or require any consent or approval of, or
any filing with or notice to, any third party, governmental or
otherwise, (ii) result in the loss of any right under or conflict with
or result in a default of any provision or termination of or accelerate
the date of performance of any obligation under any agreement,
obligation or undertaking which affects the Boulard Shares. This
Agreement constitutes a valid and binding obligation of Boulard
enforceable against him in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws relating to or
affecting the enforcement of creditors' rights generally, and principles
of equity;
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4.1.6 RESIDENCE
Boulard is not a "non-resident" for purposes of the Income Tax Act
(Canada);
4.2 Xxxxx hereby represents and warrants to the Purchaser that the following
representations and warranties are true and correct and acknowledges that the
Purchaser is relying upon such representations and warranties in connection
with the transactions contemplated hereby and that the Purchaser would not have
entered into this Agreement without the same;
4.2.1 OWNERSHIP OF XXXXX SHARES
Xxxxx is, on the date hereof, the legal and beneficial owner of Eight
Hundred and Seventy Five (875) Common shares in the capital stock of the
Corporation and these are the only shares which he owns legally or
beneficially in the Corporation with good and marketable title, free and
clear of any mortgage, lien, encumbrance, security interest, restriction
or claim of any kind whatsoever. On Closing, Xxxxx will deliver to the
Purchaser good and marketable title to the Xxxxx Shares, free and
clear of any mortgage, lien, encumbrance, security interest, restriction
or claim of any kind whatsoever. The share certificate representing the
Xxxxx Shares is true, genuine and subsisting, and nothing affects the
validity of same;
4.2.2 OPTIONS TO ACQUIRE XXXXX SHARES
There are no outstanding options or other rights or agreements to
purchase any of the Xxxxx Shares, and Xxxxx has not agreed to sell any
of the Xxxxx Shares;
4.2.3 SHAREHOLDERS AGREEMENT
None of the Xxxxx Shares is subject to any shareholders agreement,
voting trust, escrow agreement or other agreement or restriction.
Without limiting the generality of the foregoing, there is no
restriction or limitation on the power of Xxxxx to vote any of the Xxxxx
Shares. Xxxxx does not have and does not know of any other shareholder
of the Corporation who has any interest, directly or indirectly, in any
corporation, partnership, business trust, association, syndicate, joint
venture or other business entity or organization of any kind whatsoever
in competition or engaged in a similar business to that of the
Corporation. Xxxxx has no material direct or indirect interest or
ownership, or profit participation, in any outside business with which
the Corporation has had significant transactions, or with which Xxxxx
has had significant transactions, or which are competitors of the
Corporation, and, to the best of the information and belief of Xxxxx, no
other officer, director, or employee of the Corporation, has any such
material direct or indirect, interest or ownership, or profit
participation, in any outside businesses which have had significant
transactions with the Corporation or which are its competitors;
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4.2.4 LITIGATION
There are no claims, actions, suits, arbitrations, investigations or
other proceedings pending or threatened which affect any of the Xxxxx
Shares;
4.2.5 AUTHORITY TO ENTER INTO AGREEMENT
Xxxxx has the legal capacity and authority to enter into this Agreement
and consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the performance of the transactions
contemplated hereby will not, with or without the giving of notice
and/or the passage of time, or both, (i) violate any provision of law
applicable to Xxxxx or require any consent or approval of, or any filing
with or notice to, any third party, governmental or otherwise or (ii)
result in the loss of any right under or conflict with or result in a
default of any provision or termination of or accelerate the date of
performance of any obligation under any agreement, obligation or
undertaking which affects the Xxxxx Shares. This Agreement constitutes a
valid and binding obligation of Xxxxx enforceable against him in
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, and principles of equity; and
4.2.6 RESIDENCE
Xxxxx is not a "non-resident" for purposes of the Income Tax Act
(Canada).
4.3 The Vendors, jointly and severally, hereby represent and warrant to the
Purchaser that the following representations and warranties are true and
correct and acknowledge that the Purchaser is relying upon such representations
and warranties in connection with the transactions contemplated hereby and that
the Purchaser would not have entered into this Agreement without the same:
4.3.1 CONSTATING DOCUMENTS
The Corporation is a corporation duly organized, existing, subsisting
under the laws of the Province of Ontario, has full corporate power to
carry on its business as now conducted, and does not now carry on
business in any jurisdiction other than Ontario, and does not own any
assets in any jurisdiction other than Ontario, which would require
qualification in another jurisdiction. Schedule 1.1.8 annexed hereto
contains a true and complete copy of the constating documents of the
Corporation, which have not been amended other than as reflected in said
Schedule, and there is no application pending for the amendment of any
of the same. The minute books and corporate records of the Corporation
contain true and complete records of all the by-laws of the Corporation
and all meetings and consents in lieu of meetings of the board of
directors of the Corporation and their shareholders, and accurately and
completely reflect all matters referred to in such minutes
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and consents. The share certificate book and the register of
shareholders, directors and transfers of shares of the Corporation are
complete and accurate. There is no claim, liability or obligation of
the Corporation approved at any meeting of the shareholders or directors
of the Corporation which is not set out or contained in the corporate
records or minute book of the Corporation;
4.3.2 OPTIONS
There are no outstanding subscriptions, calls, options, warrants or
other agreements or rights to purchase or subscribe for any shares of
the capital stock of the Corporation or to convert any obligation into
shares of the capital stock of the Corporation and the Corporation has
not agreed to issue or sell any shares of its capital stock or any
securities of any kind;
4.3.3 CAPITAL STOCK
Schedule 4.3.3 annexed hereto sets forth the authorized capital of the
Corporation, and all of the shareholders of issued shares in the capital
stock of the Corporation. All of the Purchased Shares are validly
issued, fully paid and non-assessable;
4.3.4 SUBSIDIARIES
The Corporation does not have any subsidiary or own any equity or other
interest in any corporation, partnership, joint venture or other entity.
4.3.5 POWERS OF ATTORNEY
Schedule 4.3.5 annexed hereto sets forth a true and complete list of (i)
the name of each person with whom the Corporation maintains an account
or safety deposit box and the names of all persons authorized to draw
thereon or having access thereto and (ii) the name of each person
holding a general or special power of attorney from the Corporation, and
a true and complete copy thereof;
4.3.6 FINANCIAL STATEMENTS AND CLOSING FINANCIAL STATEMENTS
The 1997 Financial Statements have been prepared from the books and
records of the Corporation in accordance with Canadian generally
accepted accounting principles applied on a consistent basis throughout
the period indicated and have been prepared upon a basis consistent with
that of preceding years and present fairly, accurately and completely
the financial position and results of operation of the Corporation as at
the year ending January 31, 1997, including, without limitation,
accruals or provisions for warranty claims, bonuses, vacation pay and
Taxes within the bounds of reasonable materiality. Except to the extent
reflected or reserved against in the 1997 Financial Statements, the
Corporation has no liabilities or obligations of any nature whatsoever,
whether accrued, absolute, contingent
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or otherwise, other than those incurred by the Corporation in the
ordinary course of business since January 31, 1997.
4.3.7 SUBSEQUENT ACTIVITIES
Without limiting the generality of paragraph 4.3.6 hereof, since January
31, 1997, there has not occurred any material adverse change in the
condition, financial or otherwise, of the Corporation other than changes
occurring in the ordinary course of business which changes, individually
or in the aggregate, have not materially adversely affected the
Corporation's business, financial condition or results of operations.
Without limiting the generality of the foregoing, since January 31,
1997, the Corporation has not, directly or indirectly:
4.3.7.1 declared or paid any dividend on its capital stock or
redeemed, purchased or otherwise acquired any shares of its capital
stock, or otherwise reduced its paid up capital or altered its capital
stock,
4.3.7.2 incurred any material obligation or liability or entered
into any agreement, obligation, undertaking or transaction outside the
ordinary and usual conduct and course of its business,
4.3.7.3 except for the payment of bonuses to employees with respect
to the year ended January 31, 1997, which bonuses are reflected in the
1997 Financial Statements, increased the salary, benefits, bonuses or
other compensation of its officers, directors or employees or amended
its existing group insurance or bonus plans or adopted any new Benefit
Plan,
4.3.7.4 sold, leased, mortgaged, pledged or otherwise encumbered or
disposed of any of its material assets, rights or properties, except in
the ordinary and usual conduct and course of its business,
4.3.7.5 purchased or leased any additional material assets, rights
or properties, except for purchases of inventory and supplies in the
ordinary and usual conduct and course of its business,
4.3.7.6 made any purchase commitment in excess of Five Thousand
($5,000.00) Dollars or made any changes in its selling, pricing,
advertising or personnel practices,
4.3.7.7 cancelled or released any material debts or material claims
of customers,
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4.3.7.8 made any material change in its accounting principles,
policies or practices as heretofore applied including, without
limitation, the basis upon which its assets and liabilities are
recorded on its books, its earnings are ascertained or the methods or
rates of depreciation or amortization employed,
4.3.7.9 violated any material provision of any agreement,
obligation or undertaking to which it is a party or by which it or any
of its material assets, rights or properties may be bound, or
4.3.7.10 agreed to do any of the things described in paragraphs
4.3.7.1 through 4.3.7.9 hereof, inclusive;
4.3.7.11 received any material items of income which are
unusual or non-recurring;
4.3.7.12 materially changed the manner in which the business and
affairs of the Corporation are being conducted as at the date hereof.
4.3.7.13 since the preparation of the 1997 Financial Statements,
the Corporation has been subject to an audit of its Scientific Research
and Experimental Claims for the years 1989 to 1996. Although a Notice of
Assessment has not been issued, Revenue Canada has indicated that such
Notice will have the following effect on shareholders deficit, income
tax losses and undepreciated capital cost
As reported As revised
Shareholders Deficit 75,073 56,346
Non Capital Loss carry-forward 284,220 42,909
Undepreciated capital cost 228,226 550,699
Investment tax credits 47,849 39,071
4.3.8 TITLE TO ASSETS
The Corporation is the legal and beneficial owner of, has good and
marketable title to and possesses all its material properties, rights
and assets free and clear of any Title Defect;
4.3.8.1 TITLE TO REAL PROPERTY
The Corporation is the legal and beneficial owner of the Real Property,
has good and marketable title to the Real Property, and it possesses
the Real Property free of any Title Defect and free of any mortgages,
liens or encumbrances, except the Real Property Mortgage, subject to
usual qualifications on title.
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4.3.9 LIST AND CONDITION OF ASSETS
Schedule 4.3.9 annexed hereto sets forth a true and complete list of all
the major fixed assets owned or used by the Corporation having a
value in excess of Five Thousand ($5,000.00) Dollars, all of which are
located at the Real Property. To the best of Boulard's knowledge all of
the material assets and properties of the Corporation (i) are operating
as required for the normal and ordinary conduct of the Corporation's
business and have been serviced and maintained in the manner of a
prudent owner and (ii) are adequate and sufficient for the continuing
conduct of the business of the Corporation as now conducted, subject to
normal wear and tear. There are no outstanding work orders relating to
any of the assets, rights or properties of the Corporation which were
received from or required by any Governmental Authority;
4.3.10 REAL PROPERTY
4.3.10.1 The Corporation leases no real property. The Real Property
is the only Real Property, which the Corporation owns, uses or occupies.
4.3.10.2 except as set forth in Schedule 1.1.11 annexed hereto, the
Corporation has not entered into any sublease, license or other
agreement granting to any person any right to the possession, use,
occupancy or enjoyment of the Real Property or any portion thereof,
4.3.10.3 all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and
other similar systems serving the Real Property are operating as
required for the normal and ordinary conduct of the Corporation's
business and have been serviced and maintained in the manner of a
prudent owner. The continued existence, use, occupancy and operation of
each such line and system is not dependent on the granting of any
special permit, exception, approval or variance, and
4.3.10.4 the Corporation has received all certificates of
occupancy, permits, licenses, approvals and authorizations of all
governmental authorities having jurisdiction over the Real Property,
required to have been issued to the Corporation to enable the Real
Property to be lawfully occupied and used by the Corporation for all of
the purposes for which they are currently occupied and used, and each of
the certificates, permits, licenses, approvals and authorizations have
been lawfully issued and is in full force and effect and no action by
the Corporation or the Purchaser is required in order that such
certificates, permits, licenses, approvals and authorizations will
remain valid following the completion of the transactions contemplated
hereby, except such renewals as are required by applicable law;
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4.3.10.5 the Corporation does not own or hold, and is not obligated
under or party to, any option, right of first refusal or other
contractual right to purchase, use, lease, occupy, acquire, sell or
dispose of the Real Property or any portion thereof or interest therein;
4.3.10.6 there are no pending or, to the best of their knowledge,
threatened expropriation proceedings affecting the Real Property or any
part thereof or any sale or other disposition of the Real Property or
any part thereof in lieu of expropriation.
4.3.11 INTELLECTUAL PROPERTY
Schedule 4.3.11 annexed hereto is a true and complete list and copy of
all Intellectual Property used by the Corporation in the conduct of its
business, as currently conducted, none of which has been opposed or
held unenforceable and each of which is in full force and effect. To
the best of their knowledge, the Corporation is the absolute owner and
has the sole and exclusive right to use the said Intellectual Property
without making any payment to others or granting rights to others in
exchange. To the best of their knowledge, there is no infringement by
others of any of the said Intellectual Property. To the best of their
knowledge, the operations of the Corporation do not infringe in any
respect upon the Intellectual Property of any other person or entity
and, without limiting the generality of paragraph 4.3.16 hereof, no
other person or entity has claimed or threatened to claim the right to
use any Intellectual Property set forth in Schedule 4.3.11 annexed
hereto or to deny the right of the Corporation to use same. No license
or sub-license has been granted by the Corporation with respect to any
Intellectual Property. The completion of the transactions contemplated
hereby will not limit the ownership of or the use by the Corporation of
any of the Intellectual Property. To the best of their knowledge, no
third party has any interest in any of the Intellectual Property. The
Corporation has not conducted business under any name other than its
corporate name;
4.3.12 ACCOUNTS RECEIVABLE AND PAYABLE
Schedule 4.3.12 annexed hereto sets forth a true and complete (i) aged
accounts receivable listing of the Corporation as of June 30, 1997, and
(ii)
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aged accounts payable listing of the Corporation as of June 30, 1997.
The accounts receivable of the Corporation reflected on the 1997
Financial Statements and those created after January 31, 1997, are
genuine and bona fide receivables which arose in the ordinary course of
business;
4.3.13 CONTRACTS
The Vendors have delivered to the Purchaser a true and complete copy of
each of the material written Contracts. The Corporation has no
material verbal contracts. The Contracts represent all material
agreements, obligations and undertakings to which the Corporation is a
party or by which the Corporation or its assets may be bound. The
Corporation is not in material violation of or in material default with
respect to and no event has occurred which, with lapse of time or
action by a third party, or both, would result in violation of or a
material default with respect to any of the Contracts. Each of the
Contracts is in full force and effect and is valid, binding and
enforceable in accordance with its terms and, to the best of their
knowledge, all parties to the Contracts (other than the Corporation)
are in compliance with their material obligations thereunder. The
Corporation has complied with and satisfied (and will have complied
with and satisfied in calendar year 1994) all requirements relating to
minimum purchase order and sales levels in the Contracts. The
Corporation does not have any executory or open contracts with any
customers. The aggregate outstanding purchase orders or purchase
commitments do not exceed Twenty-Five Thousand ($25,000.00) Dollars;
4.3.14 QUALIFICATIONS
The Corporation has not been required to suspend operations of its
business or been liable for a fine or penalty as a result of the
operation of its business. The Corporation has all licenses, permits,
certificates and authorizations necessary for the conduct of its
business as presently conducted and such licenses, permits,
certificates and authorizations are validly issued, in full force and
effect and the Corporation is in compliance therewith, and none of
them will be affected by the transactions contemplated hereby;
4.3.15 COMPLIANCE WITH LAWS
The Corporation has to date received no notice from any source that it
is in material violation of any law, by-law, ordinance or regulation of
any Governmental Authority applicable to the Corporation or to which
the Corporation is subject;
4.3.16 LITIGATION
Schedule 4.3.16 annexed hereto contains true and complete details of
all claims, actions, suits, investigations, arbitrations and other
proceedings pending or, to the best of their knowledge, threatened
against the
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Corporation, including any opinions given to or discussions with any
person or other entity which may lead to litigation in the future. The
claims, actions, suits, investigations, arbitrations and other
proceedings listed on Schedule 4.3.16 annexed hereto will not,
individually or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the
Corporation. There are no product liability claims to which the
Corporation is or has been subject. There is no order, decree,
decision, ruling or judgment of any kind in existence enjoining or
restraining the Corporation in any manner, or requiring the Corporation
to take any action of any kind;
4.3.17 TAX MATTERS
4.3.17.1 The Corporation (a) has paid all Taxes required to be paid
by it through the date hereof or such Taxes have been recorded as a
liability on the 1997 Financial Statements and (b) has duly and
punctually filed all returns, reports and other forms related to Taxes
required to be filed through the date hereof, each of which is true and
complete in all respects,
4.3.17.2 The liability of the Corporation for Taxes as of the date
of the 1997 Financial Statements do not and will not, in either case,
exceed the amount reserved for Taxes thereon and, other than in the
ordinary course of business, such liability for Taxes will not increase
from the date of the 1997 Financial Statements through the Closing Date,
4.3.17.3 No penalties or other charges are or will become due with
respect to the late filing of any Tax return of the Corporation required
to be filed on or before the Closing Date,
4.3.17.4 The Corporation has withheld from each payment made to
each of its past and present shareholders, agents, employees, officers
and directors all deductions required to be made therefrom and has paid
same to the proper tax or other authorities,
4.3.17.5 There has not been any Tax audit of any Tax return of the
Corporation in the past ten (10) years,
4.3.17.6 Each Tax return heretofore filed by the Corporation,
correctly and accurately reflects the amount of liability for Taxes
thereunder and makes all disclosures required thereon and, without
limiting the generality of paragraph 4.3.15 hereof, otherwise complies
with applicable provisions of law,
4.3.17.7 No extension of time is in force with respect to any date
on which any Tax return was or is to be filed, and no waiver or
agreement is in force for the extension of time for the assessment or
payment of any Tax, and
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4.3.17.8 The Corporation is registered under the Excise Tax Act
(Canada) and the Retail Sales Tax Act (Ontario);
4.3.18 LABOUR RELATIONS AND RELATIONS WITH EMPLOYEES
4.3.18.1 Without limiting the generality of paragraph 4.3.15 hereof,
and to the best of Boulard's knowledge and belief the Corporation is in
compliance with all laws and regulations respecting employment and
employment practices, terms and conditions of employment, wages and
hours of work, other than that set out on Schedule 4.3.18.1 annexed
hereto,
4.3.18.2 There is no collective agreement or labour contract to
which the Corporation is a party,
4.3.18.3 To the best of Boulard's knowledge and belief there are no
labour disruptions pending or, to the best of their knowledge,
threatened against the Corporation and the Corporation is not involved
in any controversy with any of its employees except in the ordinary and
usual conduct and course of its business,
4.3.18.4 There are no written employment agreements entered into by
the Corporation. Without limiting the generality of paragraph 4.3.12
hereof, there is no agreement providing for a specified notice of
termination or fixed term of employment. There is no director, officer
or employee of the Corporation who, provided his or her common law
rights are fulfilled, cannot be dismissed upon such notice as is
required by the Employment Standards Act of Ontario, and
4.3.18.5 To the best of their knowledge, there has never been and
there is not presently pending or existing any strike, slowdown,
picketing, work stoppage, labour arbitration or proceeding in respect of
the grievance of any employee or other labour dispute against or
affecting the Corporation, or threatened against the Corporation. To
the best of their knowledge, no application for the certification of a
collective bargaining unit has been instituted or is pending or
threatened. To the best of their knowledge, no fact, condition or
circumstance exists which could provide the basis for any work stoppage
or other labour dispute.
4.3.19 BENEFIT PLANS
4.3.19.1 Schedule 4.3.19 annexed hereto contains a list of all the
Benefit Plans to which the Corporation is a party. The Vendors have
delivered to the Purchaser a true and complete copy of all the said
Benefit Plans. Without
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limiting the generality of paragraph 4.3.15 hereof, all Benefit Plans
are duly registered where required by law (including registration with
the relevant tax authorities where such registration is required to
qualify for tax exemption or other beneficial tax status) and are in
good standing under all applicable laws,
4.3.19.2 There are no material outstanding defaults or violations
by the Corporation of any obligation required to be performed by it in
connection with any Benefit Plans. Without limiting the generality of
the foregoing, there are no actions, suits, claims, trials, demands,
investigations, arbitrations or other proceedings pending or, to the
best of our knowledge, threatened with respect to any of the Benefit
Plans (other than routine claims for benefits) against the Corporation,
4.3.19.3 Without limiting the generality of paragraph 4.3.14, all
Benefit Plans which are funded plans are funded in accordance with their
rules and all relevant laws and are fully funded on both a going-concern
and a termination basis. Without limiting the generality of paragraph
4.3.14, all required employer contributions, premium payments and
source-deducted employee contributions under the Benefit Plans have been
made and remitted to the funding agents including, without limitation,
all current service costs and special payments,
4.3.19.4 The Vendors have delivered to the Purchaser true and complete
copies of all documents embodying, related to or summarizing the Benefit
Plans,
4.3.19.5 No step has been taken to terminate any Benefit Plan and
no liability has been incurred by the Corporation in connection with any
Benefit Plan that has not been satisfied in full. There exists no
agreement, decree or other binding provision which prohibits the
termination of any Benefit Plan, and
4.3.19.6 No promises or commitments have been made by the
Corporation to amend any Benefit Plan or to provide increased benefits
thereunder;
4.3.20 INSURANCE
Schedule 4.3.20 annexed hereto contains a list of each insurance policy
currently maintained by the Corporation. The Vendors have delivered to
the Purchaser a true and complete copy of each of the said insurance
policies. All such policies are in full force and effect and to the
best of Boulard's knowledge and belief are not void or voidable and
nothing has been done or omitted to be done by the Corporation that
would make any such policy void or voidable. The Corporation has not
failed to give any notice or present any
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claim under any insurance policy when due or in a timely fashion.
No claim presented by the Corporation has been or continues to be
disputed or is under negotiation, nor does any amount recoverable from
any insurer in respect of any such claim remain unpaid;
4.3.21 EMPLOYEES
Schedule 4.3.21 annexed hereto contains a true and complete a list of
the employees of the Corporation detailing dates of hire, total
remuneration including total salary and bonuses paid and position held.
Each of the employees listed on Schedule 4.3.21 annexed hereto
received compensation from the Corporation solely in consideration of
services performed on their behalf. The salaries and bonuses of all
officers and employees of the Corporation were paid entirely by the
Corporation;
4.3.22 SUPPLIERS AND CUSTOMERS
4.3.22.1 Schedule 4.3.22.1 annexed hereto contains a true and complete
list of (i) the Corporation's five (5) largest suppliers detailing
amounts purchased during the 1996 calendar year and the 1997 year to
date from the Corporation's five (5) largest suppliers, and (ii) the
Corporation's customers, and amounts of sales during the 1996 calendar
year and the 1997 year to date in connection with the Corporation's Ten
(10) largest customers by volume; and written details of all material
customer complaints and warranty claims for each of the last three (3)
fiscal periods of the Corporation which have not been resolved. The
Corporation has not granted or consented to any mortgage, lien, pledge,
security interest, charge or encumbrance in favour of any of its
suppliers;
4.3.22.2 Since March 31, 1994, no supplier or customer of the
Corporation has cancelled or otherwise terminated or, to the best of
their knowledge, threatened to cancel or otherwise terminate its
relationship with the Corporation other than as set out on Schedule
4.3.22.2 annexed hereto. To the best of their knowledge, there is no
condition which adversely affects the supply of materials required to
conduct the business of the Corporation. There is no reason to believe
that the transactions contemplated by this Agreement will materially
adversely affect the Corporation's relationship with any supplier or
customer. The Vendors have no notice that any customers intend to cease
dealing with the Corporation.
4.3.23 INVENTORY
The inventory of the Corporation (including that reflected on the
balance sheets forming part of the Financial Statements and the Closing
Financial Statements) has been reflected in accordance with Canadian
generally accepted accounting principles, consistently applied.
Without limiting the generality of the foregoing, such inventory does
not and will not include any
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obsolete, defective or excess items which have not been valued in
accordance with Canadian generally accepted accounting principles,
consistently applied;
4.3.24 RELATED TRANSACTIONS
The Corporation does not have any indebtedness to any of its
shareholders, directors, officers or employees, past or present, or any
person not dealing at arms-length with any of such persons, except for
current unpaid salaries and bonuses; and no shareholder, director,
officer or employee, past or present, of the Corporation or any person
not dealing at arms-length with any of such persons has any
indebtedness to the Corporation, other than as set out on Schedule
4.3.24 annexed hereto;
4.3.25 NO BROKER
The Corporation has not employed, nor is the Corporation subject to any
claim of any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement;
4.3.26 PAID-UP CAPITAL
There is no tax liability of the Corporation under parts IV, VII or
VIII of the Income Tax Act (Canada). No property has been acquired by
the Corporation pursuant to subsection 85(1) of the Income Tax Act
(Canada). The paid up capital (as such expression is used in the
Income Tax Act (Canada)) of the Shares of the Corporation's capital
stock is identical to their stated capital under applicable corporate
legislation;
4.3.27 NO GUARANTEES
Without limiting the generality of paragraph 4.3.13 hereof, the
Corporation is not a party to nor bound by any comfort letter,
understanding or agreement of guarantee, indemnification, assumption or
endorsement or any like commitment with respect to the liabilities or
obligations of any third party, whether accrued, absolute, contingent
or otherwise;
4.3.28 PRODUCT LIABILITY AND WARRANTIES
To the best of their knowledge, but without limiting the generality of
paragraph 4.3.14 hereof, the Corporation has marketed its products and
services in accordance with all applicable truth-in-labelling, health
and safety, truth-in-advertising, anti-fraud and other such laws which
are applicable to the marketing of the Corporation's products and
services. Subject to any warranty required by law (including, without
limitation, pursuant to the Sale of Goods Act of Ontario), the
Corporation has not issued any warranty to, nor had any other
understanding or made any other agreement with, any customer relating
to warranties, including warranties, understandings or agreements
relating to the quality or condition of any products or services sold
by the Corporation.
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4.3.29 GRANTS AND SUBSIDIES
Without limiting the generality of paragraphs 4.1.5 and 4.2.5 hereof,
neither the execution and delivery of this Agreement nor the completion
of the transactions contemplated hereby will result in any obligation
or liability of the Corporation or the Purchaser to repay, in whole or
in part, any grant, subsidy, loan or other benefit which has been paid
to or for the benefit of the Corporation, nor will the Corporation
suffer any reduction in the amount of, loss of right to or any adverse
change in the terms and conditions of any grant, subsidy, loan or other
benefit paid to or for the benefit of the Corporation or which are or
may become payable to the Corporation after the date hereof;
4.3.30 ENVIRONMENTAL CLAIMS
To the best of their knowledge, there has been no material Release by
the Corporation (or, to the best of their knowledge, any predecessor in
interest of the Corporation or any prior owner, lessee or occupant of
the Leased Real Property or the Real Property) of Hazardous Substances
in, under or on the Leased Real Property or the Real Property and the
Leased Real Property and the Real Property are free of any material
contamination by the Corporation (or, to the best of their knowledge,
any predecessor in interest of the Corporation or any prior owner,
lessee or occupant of the Leased Real Property and the Real Property) of
the Environment by Hazardous Substances therein or thereon,
4.3.31 ACCURACY OF INFORMATION
4.3.31.1 The Vendors have made or caused to be made reasonable
inquiry with respect to each covenant, agreement, obligation,
representation and warranty contained in this Agreement, and any
certificates or other documents referred to herein or furnished to the
Purchaser pursuant hereto, and to the best of Boulard's knowledge and
belief, none of the aforesaid covenants, agreements, obligations,
representations, warranties, certificates or documents contains any
untrue statement of a material fact or omits to state a material fact
necessary to make such representation, warranty, certificate or other
document not misleading, and
4.3.31.2 To the best of their knowledge, there is no fact,
condition or circumstance which (i) materially adversely or in the
future may (so far as the Vendors can now reasonably foresee) materially
adversely affect the business, operations, properties, prospects, or
condition of the Corporation or the ability of the Vendors to perform
this Agreement or (ii) relates to the business of the Corporation and
might reasonably be expected to deter a person carrying on a like
business from consummating the transactions hereby contemplated.
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SECTION 5 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser hereby represents and warrants to the Vendors that the
following representations and warranties are true and correct and acknowledges
that the Vendors are relying upon such representations and warranties in
connection with the transactions contemplated hereby and that the Vendors would
not have entered into this Agreement without the same:
5.1.1 CORPORATE ORGANIZATION, QUALIFICATIONS, ETC.
The Purchaser is duly incorporated and organized and is a validly
existing corporation and is current with respect to filings required
under the laws of its jurisdiction of incorporation; the Purchaser has
all the requisite power and authority to own, lease and operate its
properties and carry on its business as presently conducted;
5.1.2 AUTHORITY TO ENTER INTO AGREEMENT
The Purchaser has the necessary corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Purchaser and the
performance by the Purchaser of the transactions contemplated hereby
will not, with or without the giving of notice and/or the passage of
time, or both, (i) violate any provision of law applicable to the
Purchaser or, require any consent or approval of, or any filing with or
notice to, any third party, governmental or otherwise, (ii) conflict
with or result in a default of any provision or termination of or
accelerate the date for performance of any obligation under any
agreement to which the Purchaser is a party or by which it may be bound
(iii) result in the creation of any Title Defect upon any of its
property or assets or (iv) conflict with or result in a default of any
provision or termination of any of its constating documents or by-laws.
All necessary corporate action has been taken by the Purchaser in order
to authorize the execution and delivery by the Purchaser of this
Agreement and the consummation by the Purchaser of the transactions
contemplated hereby. This Agreement constitutes a valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, and principles of equity;
SECTION 6 - SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
6.1 The representations and warranties set forth herein and in any document,
certificate or other instrument expressly required to be delivered by or on
behalf of any party pursuant hereto and the covenants and agreements of the
parties set forth herein shall survive
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the Closing Date, notwithstanding any investigation concluded by any of the
parties hereto, until one year from the Closing Date, other than (i) the
representations and warranties relating to any Tax Claim as set out in
paragraphs 4.3.17 or 4.3.26 hereof, which shall survive the Closing Date
until the later of (a) the date upon which the liability to which any such
Tax Claim may relate is barred by all applicable statutes of limitation
(after taking into account any extensions, provided same have not been
requested by either the Purchaser or the Corporation) or (b) the date upon
which any claim for refund or credit related to such Tax Claim is barred by
all applicable statutes of limitations and (ii) the representations and
warranties contained in subsections 4.1.1, 4.1.2, 4.1.3, 4.1.4, 4.1.5 and
4.1.6 hereof and in paragraphs 4.2 and 5.1 hereof, each of which shall
survive the Closing Date for a period of three (3) years from the Closing
Date.
SECTION 7 - INDEMNIFICATION
7.1 The Vendors shall indemnify and save harmless the Purchaser from and
against any claims, demands, actions, causes of actions, judgments, damages,
losses (which shall include any diminution in value), liabilities, costs or
expenses (including, without limitation, interest, penalties and reasonable
attorneys' and experts' fees and disbursements) any claims, demands, actions,
causes of actions, judgments, damages, losses (which shall include any
diminution in value), liabilities, costs or expenses (including, without
limitation, interest, penalties and reasonable attorneys' and experts' fees
and disbursements) shall be collectively referred to as the "Losses") which
may be made against the Purchaser or the Corporation or which any of them may
suffer or incur as a result of, arising out of or relating to:
7.1.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Vendors under or pursuant to this Agreement;
7.1.2 any incorrectness in, or breach of, any representation or warranty
made by the Vendors in this Agreement or in any certificate or other
document delivered or given pursuant to this Agreement (other than in
connection with subsections 4.1 or 4.2 hereof);
7.2 Boulard shall indemnify and save harmless the Purchaser from and against
any Losses which may be made against the Purchaser or the Corporation or
which any of them may suffer or incur as a result of, arising out of or
relating to any incorrectness in, or breach of, any representation or
warranty made by Boulard in subsection 4.1 hereof or in any certificate or
other document delivered or given by Boulard pursuant hereto in connection
with subsection 4.1 hereof.
7.3 Xxxxx shall indemnify and save harmless the Purchaser from and against
any Losses which may be made against the Purchaser or the Corporation or
which any of them may suffer or incur as a result of, arising out of or
relating to any incorrectness in, or breach
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of, any representation or warranty made by Xxxxx in subsection 4.2 hereof or
in any certificate or other document delivered or given by Xxxxx pursuant
hereto in connection with subsection 4.2 hereof.
7.4 The Purchaser shall indemnify and save harmless the Vendors from and
against any Losses which may be made against the Vendors or which the Vendors
may suffer or incur as a result of, arising out of or relating to:
7.4.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Purchaser under or pursuant to this Agreement;
7.4.2 any incorrectness in, or breach of, any representation or warranty
made by the Purchaser in this Agreement or in any certificate or other
document delivered or given pursuant to this Agreement; and
7.4.3 any action, suit, claim, trial, demand, investigation, arbitration or
other proceeding by any person containing allegations which, if true,
would constitute an event described in subsection 7.4.1 or 7.4.2 hereof.
7.5 The party or parties providing indemnification hereunder (the
"Indemnifying Party") shall jointly and severally in the case of paragraph
7.1 and severally only, in the case of paragraphs 7.2 and 7.3, reimburse, on
demand, to the party or parties being indemnified hereunder (the "Indemnified
Party") the amount of any Losses suffered or incurred by the Indemnified
Party, as of the date that the Indemnified Party incurs any such Losses,
together with interest thereon from the aforesaid date until payment in full
at the rate per annum equal to the rate announced by the Toronto-Dominion
Bank in Toronto from time to time as its reference rate for determining the
rate of interest charged to its most credit-worthy customers for commercial
loans in Canadian currency, plus two percent (2%).
7.6 Promptly upon obtaining knowledge thereof, the Indemnified Party
shall notify the Indemnifying Party of any cause which the Indemnified Party
has determined has given or could give rise to indemnification under this
Section 7. In circumstances where the Indemnifying Party is notified of such
cause but not promptly, the Indemnifying Party shall not be relieved from any
duty to indemnify and hold harmless which otherwise might exist with respect to
such cause unless (and only to that extent) the omission to notify promptly
materially prejudices the ability of the Indemnifying Party to exercise its
right to defend provided in this Section 7.
7.7 If any legal proceeding shall be instituted or any claim or demand shall
be asserted by a third party against the Indemnified Party (each a "Third
Party Claim"), in respect of a matter for which the Indemnifying party has
agreed in this section 7 to indemnify the Indemnified party, then the
Indemnifying Party shall have the right, after receipt of the
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Indemnified Party's notice under subsection 7.6 hereof and upon giving
written notice to the Indemnified Party within ten (10) Banking Days of such
receipt, to defend the Third Party Claim at its own cost and expense with
counsel of its own selection, provided that:
7.7.1 the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
7.7.2 the Third Party Claim seeks only monetary damages and does not seek
any injunctive or other relief against the Indemnified Party;
7.7.3 the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and hold the Indemnified Party harmless with
respect to the Third Party Claim;
7.7.4 legal counsel chosen by the Indemnifying Party is satisfactory to the
Indemnified Party, acting reasonably.
7.8 The Indemnifying Party shall not be permitted to compromise and settle
or to cause a compromise and settlement of any Third Party Claim, without the
prior written consent of the Indemnified Party, unless:
7.8.1 the terms of the compromise and settlement require only the payment of
money and do not require the Indemnified Party or the Corporation to
admit any wrongdoing or take or refrain from taking any action;
7.8.2 the Indemnified Party receives, as part of the compromise and
settlement, a legally binding and enforceable unconditional satisfaction
or release, which is in form and substance satisfactory to the
Indemnified Party, acting reasonably.
7.9 If the Indemnifying Party fails:
7.9.1 within fifteen (15) Banking Days from receipt of the notice of a Third
Party Claim to give notice of its intention to defend the Third Party
Claim in accordance with subsection 7.6 hereof, or
7.9.2 to comply at any time with any of paragraphs 7.7.1 through 7.7.4
(inclusive) hereof,
then the Indemnifying Party shall be deemed to have waived its right to
defend the Third Party Claim and the Indemnified Party shall have the right
(but not the obligation) to undertake or to cause the Corporation to
undertake the defense of the Third Party Claim and compromise and settle the
Third Party Claim on behalf, for the account and at the risk and expense of
the Indemnifying Party.
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7.10 The obligations of indemnification set out in subsections 7.1, 7.2, 7.3
and 7.4 hereof shall survive the Closing as to time, in accordance with the
limitations regarding survival of representations and warranties set forth in
Section 6.
7.11 The rights, recourses and remedies provided to an Indemnified Party
under this Section 7 are cumulative with any other right such Indemnified
Party may have or may hereafter acquire under any applicable law or in
equity, any provision of this Agreement or otherwise, and any right, recourse
or remedy of such Indemnified Party may be asserted completely against the
Indemnifying Party, without regard to the rights, recourses or remedies the
Indemnified Party may have against any third party.
7.12 The Vendors, jointly and severally, and the Purchaser agree to provide
each other with such assistance as may reasonably be requested in connection
with Tax matters relating to any taxable period, including but not limited
to, providing information with respect to the preparation of any Tax return,
any audit or other examination by any taxing authority, or any judicial or
administrative proceeding relating to liability for Taxes, or any Tax Claim.
The Purchaser will cause the Corporation to retain all books and records that
relate to any Tax return, audit or examination, proceedings, or determination
of the Corporation for a period of not less than five (5) years following the
filing date of such Tax return.
SECTION 8 - INTERIM PERIOD
8.1 The Vendors, jointly and severally, covenant that during the Interim
Period, they shall:
8.1.1 cause the Corporation to (a) timely pay all Taxes required to be paid
by it after the date hereof and on or before the Closing Date; and (b)
duly and punctually prepare and file, in a manner consistent with the
prior years and applicable laws and regulations, all returns for Taxes
required to be filed after the date hereof and on or before the Closing
Date;
8.1.2 promptly notify the Purchaser, in writing, of the existence of any
fact, event, condition or occurrence, which comes to their attention,
which may alter the accuracy or truth of any representation or warranty
on their part contained herein, or result in such representation or
warranty being incorrect;
8.1.3 cause the Corporation to carry on business in the ordinary course, and
use its best efforts to preserve its business organization and goodwill,
maintain its relationships with suppliers, customers and others having
business relations with it and retain in its employ all of its
employees;
8.1.4 use their Best Efforts to satisfy or cause to be satisfied all of the
conditions precedent set forth in subsection 9.2 hereof;
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8.1.5 cause to be afforded to the Purchaser, and its representatives, at
reasonable times and on reasonable notice, complete access to the Real
Property, as well as to the assets, rights, properties, books, files and
records of, and all other documents and data relating to, the
Corporation (including the right to make copies and extracts thereof)
and all officers and employees of the Corporation shall cooperate with
such individuals;
8.1.6 ensure that the Corporation does not make or promise any change in the
compensation, rate of compensation, commissions or bonuses payable by
it, pay any bonus, profit-sharing or other extraordinary compensation of
any kind or adopt or enter into any additional Benefit Plan.
8.1.7 not to enter into discussions or negotiations with any third party
relating to the sale of any of the Purchased Shares, or the issuance of
any shares in the capital stock of the Corporation; and ensure that the
Corporation does not enter into any discussions or negotiations with any
third party relating to the merger, sale or other disposition of any of
the assets of the Corporation, except for sales of inventory in the
ordinary and usual conduct and course of its business.
8.2 The Purchaser covenants that during the Interim Period it shall:
8.2.1 promptly notify the Vendors, in writing, of the existence of any fact,
event, condition or occurrence, which comes to its attention, which may
alter the accuracy or truth of any representation or warranty on its
part contained herein, or result in such representation or warranty
being incorrect; and
8.2.2 use its Best Efforts to satisfy or cause to be satisfied all of the
conditions precedent set forth in subsection 9.5 hereof.
SECTION 9 - CLOSING AND CLOSING CONDITIONS
9.1 On the Closing Date, the Vendors, jointly and severally, undertake to:
9.1.1 cause to be delivered to the Purchaser the opinion of the Vendors'
solicitors, dated the Closing Date, in the form annexed hereto as
Schedule 9.1.1;
9.1.2 cause all requisite corporate action of the Corporation to be taken to
approve the transfer of the Purchased Shares pursuant hereto;
9.1.3 deliver to the Purchaser the written resignations of such members of
the board of directors and officers of the Corporation as are designated
by the Purchaser, and cause each of such directors and officers to
execute and deliver to the Purchaser releases in the form annexed hereto
as Schedule 9.1.3;
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9.1.4 deliver to the Purchaser share certificates representing the Purchased
Shares, in each case duly endorsed in blank for transfer;
9.1.5 cause Boulard to execute and deliver the Boulard Employment Agreement
to Advanced Accessory Systems, LLC.
9.1.6 cause Boulard, Xxxxx Xxxxxxx and Xxxxx to execute and deliver the Non-
Competition and Confidentiality Agreement to the Purchaser;
9.1.7 deliver to the Purchaser (i) the minute books, registers of transfer,
registers of shareholders, registers of directors, share certificate
books and the corporate seal of the Corporation, and (ii) by leaving
same at the Corporation's head office location the ledgers, account
books, financial records, permits and licenses, policies of insurance,
contracts, agreements, indentures, instruments, commitments, Tax
returns, evidence or indications of ownership of the Corporation in and
to their assets, rights and properties and all other documents,
certificates and records of the Corporation, all of which shall be true
and complete.
9.1.8 cause Boulard to pay the sum of Sixteen Thousand ($16,000.00) Dollars
(Cdn) plus the relevant G.S.T. and P.S.T. to the Corporation for a
transfer of ownership to Boulard of the Nissan vehicle owned by the
Corporation and used by Boulard.
9.2 The obligation of the Purchaser to proceed with the Closing is subject
to each of the conditions hereinbelow set forth, all of which are agreed to be
material and are inserted for the exclusive benefit of the Purchaser, and may
be waived in whole or part by the Purchaser, provided that any waiver, to be
effective, must be in writing:
9.2.1 the representations and warranties of Boulard contained in subsection
4.1 hereof shall be true and correct as if made at and as of the Closing
Date; the representations and warranties of Xxxxx contained in
subsection 4.2 hereof shall be true and correct as if made at and as of
the Closing Date; all other representations and warranties of the
Vendors contained herein, which are not expressly limited or qualified
as to materiality, shall be true and correct in all material respects as
if made at and as of the Closing Date; all other representations and
warranties of the Vendors contained herein, which are expressly limited
or qualified as to materiality, shall be true and correct as if made at
and as of the Closing Date; the Vendors shall have complied with all the
covenants and agreements contained herein and satisfied all the
conditions set forth in this subsection 9.2 as of the Closing Date;
Boulard shall have delivered to the Purchaser a certificate in his
personal capacity, dated as of the Closing Date, certifying that the
representations and warranties contained in subsection 4.1 hereof are
true and correct as of the Closing Date; Xxxxx shall
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have delivered to the Purchaser a certificate in his personal capacity,
dated as of the Closing Date, certifying that the representation and
warranties contained in subsection 4.2 hereof are true and correct as
of the Closing Date, and the Vendors shall have delivered to the
Purchaser a certificate, dated as of the Closing Date, certifying that
the representations and warranties of the Vendors to the Purchaser
contained in this Agreement (other than in subsections 4.1 and 4.2
hereof): (i) which are not expressly limited or qualified as to
materiality are true and correct in all material respects as of the
Closing Date (ii) which are expressly limited or qualified as to
materiality are true and correct as of the Closing Date, and confirming
that the Vendors have complied with all their covenants and agreements
contained herein and satisfied all the conditions in this subsection 9.2
as of the Closing Date;
9.2.2 The Corporation shall not have suffered any material adverse change in
its business, financial condition, results of operations or prospects
since the date hereof, and there will not have been any occurrence or
circumstance which might reasonably be expected to result in a change
thereto, and there shall be no material adverse difference in the
financial position of the Corporation as compared with the financial
position of the Corporation set out in the 1997 Financial Statements;
9.2.3 all actions, proceedings, instruments and documents required to complete
the transactions contemplated herein or instrumental thereto, and all
other legal matters relating to the matters contemplated herein, shall
have been approved as to form, substance and legality by counsel for the
Purchaser, acting reasonably;
9.2.4 that no suit, action or other proceeding of material consequence shall
be pending, or threatened, before a court or Governmental Agency seeking
to restrain or to obtain damages or other relief in connection with this
Agreement, or the consummation of the transaction contemplated hereby;
9.2.5 the Purchaser and its accountants shall undertake such examination of
the books of account and financial statements of the Corporation (and in
particular, but without restricting the generality of that statement,
financial representations of the Vendors herein) as the Purchaser views
requisite, and the Purchaser shall, in its sole discretion, be satisfied
with the accountants' report, provided that the Purchaser and its
accountant's due diligence shall be completed within thirty (30) days of
the date of the execution of this Agreement by all of the parties to the
Agreement. In the event that the Purchaser or its accountants
identifies any discrepancy in the representations and warranties of the
Vendors, that is material in nature, the period of due diligence will
be extended by up to five (5) days. If a resolution of any material
discrepancy in the representations and warranties of the Vendors is not
achieved within the further five (5) day period and the discrepancy
results in the breach of a
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material representation or warranty herein, the Agreement will be deemed
to be terminated in accordance with Section 9.3 and the parties shall no
longer be obligated to each other, except for the joint and several
obligations of the Vendors to pay the Purchaser's reasonable legal and
accounting fees and expenses and the Purchaser shall have no further
recourse against the Vendors in respect thereof. If the Purchaser has
not notified the Vendors in writing prior to the end of such fifteen
(15) day period (or twenty (20) day period in the event it has been
extended) that this condition has not been fulfilled, this condition
shall be deemed to be fulfilled.
9.3 In the event that any of the conditions precedent to the obligations of
the Purchaser set forth in subsection 9.2 hereof shall not have been fulfilled
and/or performed on or prior to the Closing Date, otherwise than as a result of
the Purchaser's acts or omissions, the Purchaser may, at its option, either (i)
terminate this Agreement by written notice to the Vendors at any time prior to
the Closing without further formality or (ii) proceed with the Closing, in
either case without prejudice to the Purchaser's rights, recourses and
remedies.
9.4 At Closing, the Purchaser undertakes to:
9.4.1 cause all requisite corporate action of the Purchaser to be taken to
approve the transactions contemplated herein;
9.4.2 pay the Purchase Price;
9.4.3 to loan Three Hundred and Fifty Two Thousand Three Hundred and Forty
Eight ($352,348.00) Dollars (Cdn) to the Corporation to be used by the
Corporation to pay out shareholders loans in the amount of Two Hundred
and Forty One Thousand Three Hundred and Forty Eight ($241,348.00)
Dollars and to allow the Corporation to redeem all of the outstanding
Preference shares for One Hundred and Eleven Thousand ($111,000.00)
Dollars;
9.4.4 To loan to the Corporation a sum sufficient to pay out as of closing the
Corporation's outstanding third party debts as listed below, to a
maximum of $547,652.00, in order to secure release of all of the
personal guarantees of the shareholders of the Corporation.
THIRD PARTY CREDITOR OUTSTANDING AS OF JUNE 30/97
Ontario Development Corporation - Loan 1 (July 4) $201,214.90
Ontario Development Corporation - Loan 2 (July 4) 78,025.32
Business Development Bank of Canada (Mortgage) 140,800.00
Toronto Dominion Bank (line of credit) 62,500.00
Jutland Tool and Die 15,699.70
AT & T Capital Lease 3,913.06
Nissan Canada 16,923.01
Teleteck 1,091.78
-----------
TOTAL: $520,167.77
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9.5 The Vendors' obligation to proceed with the Closing is subject to the
conditions hereinbelow set forth, all of which are agreed to be material and
are inserted for the Vendors' exclusive benefit, and may be waived in whole or
part by the Vendors, provided that any waiver, to be effective, must be in
writing:
9.5.1 the representations and warranties of the Purchaser contained herein
shall be true and correct in all material respects as if made at and as
of the Closing Date and the Purchaser shall have complied with all the
covenants and agreements contained herein and satisfied all the
conditions in this subsection 9.5 as of the Closing Date; the Purchaser
shall have delivered to the Vendors a certificate, dated as of the
Closing Date, certifying that the representations and warranties of the
Purchaser to the Vendors contained in this Agreement are true and
correct in all material respects as of the Closing Date, and confirming
that the Purchaser has complied with all its covenants and agreements
contained herein and satisfied all the conditions in this subsection
9.5 as of the Closing Date; and
9.5.2 all material actions, proceedings, instruments and documents required to
complete the transactions contemplated herein or instrumental thereto,
and all other legal matters relating to the matters contemplated
herein, shall have been approved as to form, substance and legality by
counsel for the Vendors, acting reasonably.
9.6 In the event that any of the conditions precedent to the Vendors'
obligations set forth in subsection 9.5 hereof shall not have been fulfilled
and/or performed on or prior to the Closing Date, otherwise than as a result of
the acts or omissions of any of the Vendors, the Vendors may, at their option,
either (i) terminate this Agreement by written notice to the Purchaser at any
time prior to the Closing without further formality or (ii) proceed with the
Closing, in either case without prejudice to the Vendors' rights, recourses or
remedies.
SECTION 10 - NOTICES
10.1 Any notice, demand or other communication required or permitted to be
given hereunder shall be given in writing and sent by prepaid registered mail,
return receipt requested, by telecopier or delivered by hand, at the following
addresses:
If to Boulard: Xxxxx Xxx Xxxx
Xxxxx Xxx, Xxxxxxx
X0X 0X0
If to Xxxxx: Xxxxx Xxx Xxxx
Xxxxx Xxx, Xxxxxxx
X0X 0X0
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In each case
with a copy to: Xxxxxxxx, Wyjad Associates
00 Xxxxxxxx Xxxxxx, Xxx 00
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Att: Xxxxxx X. Xxxxx, M Sc., L.L.B.
If to the Purchaser: Advanced Accessory Systems Canada Inc. / Les Systems
D'Accessoury Advanced Du Canada Inc.
Sterling Town Centre
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx
X.X.X. 00000
Att: Xxxxxxx X. Xxxxxx, V.P. Finance and Administration
Fax: (000) 000 0000
With a copy to: Wilson, Walker, Xxxxxxxx, Slopen
000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
(000) 000-0000
Att: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
or to such other address as any of the parties may have previously indicated in
writing in accordance with the terms hereof. Any such notice, demand or
communication shall be deemed to have been received on the first Banking Day
following actual receipt.
SECTION 11 - CONCLUDING PROVISIONS
11.1 No public statement regarding the transactions contemplated herein shall
be made without the prior written consent of the parties hereto.
11.2 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein. Any and all disputes, claims or controversies between the
parties hereto, whether arising during the term of this Agreement or at any
time thereafter, which touches upon the validity, negotiation, breach,
existence, construction, meaning, performance or effect of this Agreement or
the rights and liabilities of the parties hereto or any matter arising out of
or connected with this Agreement shall be referred to and finally settled by
binding arbitration pursuant to the Arbitrations Act (Ontario) and as provided
in this subsection 11.2 and the decision of the arbitrator shall be final and
binding as among the parties hereto. There will be one arbitrator chosen by
and acceptable to the parties hereto. The place of arbitration shall be in
Xxxxxxx, Xxxxxxx, Xxxxxx. The governing law shall be the substantive law of
the Province of Ontario and the laws of Canada applicable therein.
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11.3 No party hereto may assign or transfer any of its rights or obligations
hereunder without the express written consent of the other parties hereto,
except that any party shall be entitled to assign or transfer its rights and/or
obligations hereunder to: (i) any subsidiary or affiliated company thereof,
(ii) any or all of its lenders, as general and continuing collateral security
for the performance of its obligations to such lenders. Subject to the
foregoing, this Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors, heirs, administrators,
executors and legal representatives.
11.4 The parties agree to perform such acts and execute and deliver such
agreements and instruments as may be necessary or desirable from time to time
in order to give full effect to the provisions hereof including, without
limitation, the timely furnishing of all information.
11.5 The provisions contained herein and in any document, certificate or
other instrument required to be delivered by or on behalf of a party hereto
constitute the entire understanding among the parties in connection with the
matters contemplated herein. All previous communications between the parties,
whether written or verbal, relating to the subject matter hereof, are
superseded and replaced hereby. No modification of the terms hereof shall be
binding upon a party hereto unless made in writing and signed by such party.
11.6 The terms "hereof", "herein", "hereunder" and other words of similar
import mean and refer to this Agreement as a whole and not a particular section,
subsection or paragraph, unless expressly so stated. Any reference herein to
any gender shall include all genders.
11.7 Time shall be of the essence hereof.
11.8 All references to dollar amounts herein mean Canadian dollars unless
otherwise indicated.
11.9 Each of the parties hereto shall be responsible and pay for all costs,
expenses and fees incurred by them in connection with the transactions
contemplated hereby.
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11.10 This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and together shall constitute one and the
same document.
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED ON THE DATE AND AT THE PLACE
FIRST HEREINABOVE MENTIONED.
/s/ Xxxxxx Xxxxxxx
-----------------------------------------------
XXXXXX XXXXXXX
/s/ Xxxx Xxxxx
-----------------------------------------------
XXXX XXXXX
ADVANCED ACCESSORY SYSTEMS CANADA INC. /
LES SYSTEMES D'ACCESSOIRE ADVANCED CANADA INC.
Per: /s/ Xxxxxxx Xxxxxx
--------------------------------------------
(Authorized Signing Officer)
