EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
BST ACQUISITION, LTD.,
A NEW BRUNSWICK CORPORATION,
PURCHASER
AND
XXXXXX STEEL TUBE CO., LTD.,
AN ONTARIO CORPORATION,
SELLER
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of the ____ day of June, 2004, (the
"EFFECTIVE DATE") by and between BST ACQUISITION, LTD., a New Brunswick
corporation ("PURCHASER"), XXXXXX STEEL TUBE CO. LTD., an Ontario corporation
("SELLER"), and XXXXXXX XXXXX and XXXXX XXXXX (together, the "PRINCIPALS").
R E C I T A L S:
Purchaser desires to buy, and Seller desires to sell, substantially
all of the assets and business of Seller located at Seller's 0000 Xxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxx (the "PREMISES") plant as a going concern (the "BUSINESS"),
all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
ARTICLE I
SALE OF ASSETS; PRICE AND TERMS;
ADJUSTMENTS; CLOSING TRANSACTIONS
1.1 CLOSING DATE. The consummation of the transactions contemplated
herein shall take place at the offices of Stikeman Elliott, 0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxxxx, Xxxxxx at 10:00 a.m. E.S.T. on the Closing Date. As used herein,
"Closing Date" shall mean the 7th day following the United States Securities &
Exchange Commission effective date of the firm commitment initial public
offering ("IPO") by Tarpon Industries, Inc. ("TARPON") in the United States of
America, which date is currently anticipated to be on or about the 45th day
following the execution and delivery hereof (which date (the "IPO EFFECTIVE
DATE") will be confirmed by written notification by Purchaser to Seller as
contemplated in Section 1.12) or such earlier or later date as may be mutually
agreed upon provided that the Closing Date shall be no later than December 15,
2004. The parties shall be permitted to close this transaction by mail on such
reasonable terms and procedures the parties may mutually agree upon.
1.2 SALE AND PURCHASE. Subject to the terms hereof, on the Closing
Date, in reliance upon the representations, warranties and agreements of the
parties, Seller shall sell, assign, transfer, convey and deliver to Purchaser,
and Purchaser shall buy from Seller, free and clear of all Encumbrances other
than the Permitted Encumbrances (each as defined in Section 3.6, below), the
following assets and properties (collectively defined as the "PURCHASED
ASSETS"), all upon the price and payment terms set forth in this Agreement: All
of the personal property and assets, tangible and intangible, of Seller, located
or used solely at the Premises, whether known or unknown, and whether or not on
the books and records of Seller, including by way of example but not limitation,
and for greater certainty excluding all Excluded Assets:
A. All equipment, machinery, furniture, fixtures, and
leasehold improvements, all as set forth on Schedule
"1.2A" attached hereto;
B. All equipment, machinery, furniture, fixtures and
leasehold improvements, all as set forth on Schedule
"1.2AA" attached hereto (additions to Schedule 1.2A);
C. All spare parts and supplies of all kinds including
office supplies owned by the Seller solely in respect of
the Business conducted at the Premises;
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D. All of Seller's right, title and interest under all
outstanding contracts, agreements, licenses, leases and
similar documents, including all financial commitments
for supplies or materials ordered in the ordinary course
of business from parties dealing with Seller at arm's
length and which relate to (but only to the extent
relating to) the Business conducted at the Premises and
accepted in writing by Purchaser and set forth on
Schedule "1.2D" as the Assumed Contracts;
E. All of the slit coil inventory, raw materials inventory,
consumable inventory, and work in progress in respect of
pre-galvanized, galvanized, aluminized, cold rolled and
other coated steel products of the Business which is not
obsolete and finished product inventory of the Business
which is not subject to any pending purchase order (the
"PURCHASED INVENTORY");
F. All available books and records to the extent they
pertain to the Purchased Assets, including credit
records, purchasing records, supplier lists, customer
lists, employment and personnel records, utilized in the
Business. Purchaser shall make all such records
available for inspection on Seller's reasonable written
request, and such records shall not be destroyed,
without the prior written consent of Seller for a period
of seven (7) years following the Closing Date or for
such longer limitation period under applicable tax laws;
G. All originals and copies, both in machine readable and
human readable form, of computer programs, software
programs, computer printouts, data bases and related
items to the extent used in the Business, together with
the media on which such software and programs are
stored, including all available documentation and
information related thereto; and
H. All of Seller's trademarks, trade names, and all other
proprietary and intangible rights to the extent used
solely in connection with the Business, the telephone
and facsimile numbers of Seller at the Premises, and the
business and goodwill of Seller conducted solely at the
Premises as a going concern excluding, for greater
certainty, the name "Xxxxxx Steel Tube" and all
derivations thereof in respect of which the Purchaser
shall have only a limited right to use such name in a
reputable manner for its business at the Premises for a
maximum of six (6) months from the Closing.
1.3 PURCHASE OF PREMISES. Subject to the terms and conditions
hereof, the Purchaser and 1387746 Ontario Ltd., a wholly-owned subsidiary of the
Seller, on or prior to Closing, shall enter into a standard form agreement for
the purchase and sale of the 0000 Xxxxxx Xxxx Premises, in the form or
substantially in the form of Schedule 1.3 attached hereto (the "REAL ESTATE
AGREEMENT"), which agreement shall include provisions providing for (i) a
purchase price of Five Million Seven Hundred Thousand and 00/100 ($5,700,000.00)
Dollars, of which Four Million Five Hundred Thousand ($4,500,000) Dollars shall
be paid by certified cheque or bank draft at the date of closing of such
purchase transaction, which date of closing ("REAL ESTATE CLOSING DATE") shall
be 90 days following the Closing Date or such earlier date as may be reasonably
stipulated by Purchaser in writing to Seller and, provided that the equity in
the Premises at the Real Estate Closing Date is at least Five Hundred Thousand
($500,000) Dollars and provided that any first mortgage does not exceed Four
Million ($4,000,000) Dollars, the balance of which shall be evidenced by a
promissory note and secured by a second mortgage (behind only a first mortgage
in favour of a financial institutional lender) in the principal amount of One
Million Two Hundred Thousand ($1,200,000) Dollars maturing on the 15th month
anniversary date of the Real Estate Closing Date bearing interest at the rate of
8% per annum payable monthly, otherwise such balance shall be payable by
certified cheque or bank draft at the Real Estate
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Closing Date, (ii) a deposit in the amount of Two Hundred Thousand ($200,000.00)
Dollars, (iii) a reasonable requisition date, and (iv) standard real estate
permitted encumbrances (and for greater certainty none of which is in respect of
borrowed money).
1.4 EXCLUDED ASSETS. The Seller is retaining and is not selling or
transferring the following (the "EXCLUDED ASSETS"):
A. Any property or assets which form part of the Premises,
including without limitation, the land, buildings and
the mechanical, heating, ventilation, air conditioning,
plumbing and electrical systems and other fixtures
forming part thereof;
B. Cash, cash equivalents, accounts receivable, finished
goods inventory which is subject to pending purchase
orders as of Closing;
C. any assets used in or relating to Seller's business
carried on at Seller's Xxxxxxx Road facility and not
listed on any Schedule attached hereto or described as
Purchased Assets in Section 1.2;
D. The rights of Seller to any claims for any federal,
state, provincial, local, or foreign tax refunds; and
E. The equipment, machinery, furniture of other fixed
assets noted as being excluded on Schedule "1.2A" (which
shall not exceed $50,000 in aggregate appraised value).
With respect to the finished goods inventory which is subject to pending
purchase orders as of Closing, Purchaser shall process all orders for delivery
of such finished goods for the benefit of Seller. Upon receipt of payment from
the customer for such finished goods, Purchaser shall remit the proceeds from
such sale to Seller, less Purchaser's costs associated therewith, such as
freight, duty, etc. on a weekly basis. Such net proceeds shall be held by
Purchaser in trust for the benefit of Seller and shall not be subject to any set
off.
1.5 INSTRUMENTS OF TRANSFER. The sale, assignment, transfer,
conveyance and delivery of the Purchased Assets shall be made by such bills of
sale and other instruments of assignment, transfer and conveyance as Purchaser
shall reasonably request and as are reasonably acceptable to counsel for
Purchaser and Seller.
1.6 DEPOSITS.
(a) The parties acknowledge that approximately One Hundred Thousand
($100,000) Dollars is currently held by Seller's attorneys, WeirFoulds, LLP in
escrow in respect of a previous transaction that did not close. If the purchase
and sale of the Purchased Assets contemplated hereby (the "PURCHASE
TRANSACTION") does not close by the 45th day following the execution and
delivery hereof (the "SPECIFIED 45TH DATE") then such amount shall be paid to
Seller, and WeirFoulds LLP is hereby irrevocably directed to pay such amount to
Seller; provided, however, that if the Purchase Transaction does in fact close
on or prior to December 15, 2004, such amount, together with all interest earned
thereon, shall be applied in accordance with Section 1.8 and, for greater
certainty, if the Purchase Transaction does not close on or prior to December
15, 2004, for any reason, such amount, together with all interest earned
thereon, shall be the property of Seller absolutely.
(b) Purchaser shall pay to Seller a deposit in the amount of Two
Hundred Fifty Thousand ($250,000) Dollars upon execution and delivery of this
Agreement by all parties, to be held in trust by
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WeirFoulds LLP. On the closing of the Purchase Transaction, such amount,
together with all interest earned thereon, shall be applied in accordance with
Section 1.8. If the Purchase Transaction does not close by the Specified 45th
Date, then such amount shall be paid to Seller, and WeirFoulds LLP is hereby
irrevocably directed to pay such amount to Seller, such amount thereafter to be
held in trust by Seller to be applied in accordance with Section 1.8. If the
Purchase Transaction does not close on or prior to December 15, 2004, solely
because of the default of the Purchaser of its obligations hereunder, then such
amount shall become the property of Seller absolutely.
(c) Notwithstanding any other provision hereof, in the event the
Closing does not occur solely because of the default by the Purchaser in the
performance of its obligations hereunder by December 15, 2004, Purchaser shall
immediately pay to the Seller by bank draft, certified cheque or wire transfer
of immediately available funds, an additional One Hundred and Fifty Thousand
($150,000) Dollars as liquidated damages (and not as a penalty) to compensate it
for the time and expenses incurred and opportunities foregone as a result of the
failure of the transaction to close. In the event such amount becomes payable,
Tarpon, by its execution hereof, hereby agrees to indemnify Seller for the full
and prompt payment of such amount to Seller and hereby waives any and all
defences, equitable or otherwise, to the strict enforcement thereof.
(d) In the event the Closing does not occur solely because of the
default of Seller in the performance of its obligations hereunder on the Closing
Date (which Closing Date can not be later than December 31, 2004), Seller shall
immediately pay to Purchaser by bank draft, certified cheque or wire transfer of
immediately available funds, an additional Three Hundred and Fifty Thousand
($350,000) Dollars as liquidated damages (and not as a penalty) to compensate it
for the time and expenses incurred (including any liabilities or expenses
associated with Tarpon's IPO) and opportunities foregone as a result of the
failure of the transaction to close.
(e) In the event of a dispute with respect to the deposits,
WeirFoulds LLP shall be authorized, without obligation to do so, to apply to a
court of competent jurisdiction for directions and its reasonable costs thereof
shall form a charge upon the deposit amounts and may be deducted therefrom.
(f) The deposits referred to in Sections 1.6(a) and (b) and the
liquidated damages referred to in Sections 1.6(c) and (d) shall be the exclusive
remedies of Seller and/or Principals, on the one hand, or Purchaser and/or
Tarpon on the other hand, in the event the transactions contemplated by this
Agreement do not close due to the default of Purchaser or Seller, as the case
may be, hereunder.
1.7 PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Purchased Assets shall be an amount equal to:
(a) Nine Million Five Hundred Thousand and 00/100 ($9,500,000.00)
Dollars
(b) Less the appraised value as shown on Schedule "1.2A" (which is
it agreed shall not exceed $50,000) of any equipment, machinery, furniture or
other fixed assets excluded from Schedule "1.2A" (and so noted thereon) but used
in the Business or located at the Premises and included in the calculation of
the Purchase Price;
(c) Plus the sum of $217,025.00 (less accumulated depreciation of
10% per annum thereon from the date of its original purchase to the Closing
Date) for the equipment, machinery, furniture or other fixed assets included in
Schedule "1.2AA";
(d) Plus the fair market value of all spare parts and supplies;
(e) Plus the fair market value of the Purchased Inventory on the
Closing Date; and
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(f) In the event the Closing has not occurred by the Specified 45th
Date, the Purchase Price payable by Purchaser to Seller hereunder shall increase
at the rate of Fifty Thousand ($50,000.00) Dollars per month commencing on the
first day of the month immediately following the Specified 45th Date and the
amount payable shall accrue on a daily basis (based on the proportion that the
number of days in the relevant month on or prior to the Closing Date bears to
the total number of days in such month).
Purchaser and Seller shall jointly prepare an inventory schedule, which will be
attached at Closing as Schedule 1.7 which will be prepared within two (2) days
prior to Closing and which will delineate all spare parts and supplies and all
Purchased Inventory as well as the portion of the Purchase Price related to each
category thereof, valued in accordance with the provisions of Section 1.7.
The Purchase Price is payable in, and all other references herein to dollar
amounts shall be to, Canadian dollars. The Purchaser shall also pay all
applicable taxes in respect of the transactions contemplated by this Agreement
(other than income taxes, if any, payable by the Seller). The Purchaser and
Seller agree to enter into such elections in respect of GST and PST to exempt
the transactions contemplated by this Agreement from such taxes to the extent
same are available.
1.8 TERMS OF PAYMENT. At the Closing, (provided same occurs on or
prior to December 15, 2004), the Purchase Price shall be paid and satisfied as
follows:
(a) by application of the aggregate Three Hundred Fifty
Thousand ($350,000.00) Dollars of deposits in accordance
with under Section 1.6(a) and (b);
(b) by delivering at Closing a certified cheque or bank
draft, in favour of Seller, in the amount of Seven
Million, Nine Hundred Fifty Thousand ($7,950,000.00)
Dollars less accrued interest on the deposits, plus or
minus the adjustments on Closing contemplated in
Sections 1.7(b), (c), (d) and (f) and any other, if
applicable;
(c) by delivering a secured note in the form attached hereto
as Schedule 1.8(c) in favour of the Seller in the amount
of One Million, Two Hundred Thousand ($1,200,000.00)
Dollars maturing on the 15th month anniversary date of
the Closing Date, together with interest calculated at
the rate of 8% per annum payable monthly; Provided,
however, that if the Purchaser does not provide written
confirmation on the Closing that the book values of the
assets less the liabilities of the Purchaser at the
Closing Date (as would be shown on a balance sheet of
the Purchaser prepared at such time) are in excess of
One Million Two Hundred Thousand ($1,200,000) Dollars,
such asset values being based, on the values of the
Purchased Assets used for purposes of calculating the
Purchase Price then, in such event, the Purchaser shall
deliver at Closing a certified cheque or bank draft in
such amount in lieu of the secured note; and
(d) the Purchaser shall pay for the full amount of the
Purchased Inventory within forty-five (45) days of the
Closing Date.
1.9 ALLOCATION. The parties have agreed, after arm's length
negotiations, to allocate the Purchase Price in accordance with Schedule "1.9"
attached hereto.
1.10 SECURITY. As security for the payment and performance of the
obligations of the Purchaser:
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(a) pursuant to the secured note referenced in Section
1.8(c);
(b) pursuant to the obligation to pay for Purchased
Inventory pursuant to Section 1.8(d).
the Purchaser shall provide:
(A) a security agreement granting security to Seller in all of the
present and future, personal property of Purchaser, in the
form or substantially in the form attached as Schedule 1.10(A)
and, following Closing such additional security as Purchaser
may reasonably require to grant security to Seller in all of
the present and future property of Purchaser; provided that
such note and security shall be subordinated to the first
security position of the Purchaser to its senior financial
institutional lender to Purchaser up to an aggregate maximum
of Eight Million Five Hundred Thousand ($8,500,000) Dollars
and Seller agrees to execute and deliver such postponement and
subordination agreements and documents as may be reasonably
requested by such lender and reasonably acceptable to Seller.
(B) a guarantee of Tarpon Industries, Inc. in the form attached as
Schedule 1.10(B).
(C) such additional security agreements as Seller may reasonably
request in order to better secure and perfect the security
interest contemplated by the immediately preceding paragraph
(A).
1.11 CLOSING TRANSACTIONS. On the Closing Date:
A. Seller shall deliver to Purchaser:
(i) The bills of sale and other instruments of
assignment, transfer and conveyance provided for
in Section 1.5 above;
(ii) Such keys, locks and safe combinations and other
similar items as Purchaser shall require to obtain
full occupation and control of the Purchased
Assets;
(iii) Appropriate evidence of all necessary corporate
action by Seller in connection with the
transactions contemplated herein;
(iv) The certificate required by Section 6.1 of this
Agreement;
(v) The legal opinion of Seller's counsel required by
Section 6.5 of this Agreement;
(vi) A discharge of all Encumbrances (as defined in
Section 3.6 herein) relating to the Purchased
Assets other than Permitted Encumbrances;
(vii) A certificate under Section 6 of the Retail Sales
Tax Act (Ontario); and
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(viii) Such other closing certificates or documents as
Purchaser or its counsel may reasonably request,
the form of which shall be reasonably acceptable
to Purchaser.
B. Purchaser shall deliver, or cause to be delivered, to
Seller:
(i) The Purchase Price as described in Section 1.8;
(ii) The security agreements and guarantee as
described in Section 1.10;
(iii) Appropriate evidence of all necessary corporate
action by Purchaser in connection with the
transactions contemplated herein;
(iii) The certificate required by Section 7.1 of this
Agreement;
(iv) The legal opinion of Purchaser's counsel required
by Section 7.5 of this Agreement;
(v) Such other closing certificates or documents as
Seller or its counsel may reasonably request, the
form of which shall be reasonably acceptable to
Seller.
1.12 CLOSING ARRANGEMENTS
In order to facilitate the IPO, the proceeds of which are being used, in part,
to fund the transactions contemplated herein, Seller and Purchaser agree as
follows:
(a) At least two (2) business days prior to the IPO
Effective Date, Tarpon or Purchaser will notify Seller
in writing of the IPO Effective Date;
(b) Seller and Purchaser will attend at 10:00 a.m., Toronto
time at the offices of Stikeman Elliott LLP on the IPO
Effective Date and execute all closing documents
contemplated herein (the "ESCROWED CLOSING DOCUMENTS"),
such documents to be dated as of the Closing Date (being
the 7th day following the IPO Effective Date) and to be
delivered to a third party escrow agent to be held on
the terms and conditions of the escrow agreement in the
form of Schedule 1.12 attached hereto;
(c) Purchaser shall be entitled to have a representative
on-site at the Premises during normal business hours and
on the weekend from the IPO Effective Date to the
Closing Date; and
(d) Subject to the other terms and condition of Closing
provided herein, the parties shall cause the Escrowed
Closing Documents to be released and available for
Closing and the parties hereto shall complete the
Closing on the Closing Date as otherwise provided
herein, including, without limitation, the delivery by
the Purchaser of the certified cheque or bank draft
contemplated in Section 1.8(b).
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ARTICLE II
PURCHASER'S ASSUMPTION OF CERTAIN
LIABILITIES AND OBLIGATIONS
Subject to and conditional upon Closing, Purchaser shall assume, on
the Closing Date, and agrees to pay, perform or otherwise discharge the
following obligations and liabilities of Seller (the "Assumed Liabilities") as
of and from the date of Closing:
2.1 All liabilities and obligations of Seller accruing on and after
the Closing Date under contracts, leases, licenses and similar documents
(including, for example, purchase orders and customer commitments) which are
transferred to Purchaser and which are listed on Schedule "1.2D" or otherwise
accepted by Purchaser in writing or which relates to any assets (such as
purchased inventory in transit) included in the Purchased Assets.
2.2 All liabilities and obligations of Seller in respect of all
employees of the Business (excluding those identified on Schedule "3.14" as
remaining with Seller) accruing from and after the Closing Date. For greater
certainty, Seller shall be responsible for all obligations to all such employees
to and including the Closing Date, including any accrued and unpaid wages,
bonuses and vacation pay to such employees up to the Closing Date.
2.3 Purchaser assumes no liabilities or obligations of Seller except
as specifically set forth in this Article II or elsewhere in this Agreement. In
the event Purchaser is forced by operation of law or otherwise to assume
additional liabilities of Seller not specifically identified in this Article II
or elsewhere in this Agreement, such additional liabilities shall be a
reduction, dollar for dollar, in the Purchase Price and Seller shall indemnify
Purchaser with respect to any such additional liabilities. Purchaser shall
indemnify Seller with respect to any Assumed Liabilities.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser as follows (and the
Principals, together with Seller, jointly and severally represent and warrant to
the Purchaser as provided in Sections 3.5, 3.6 and 3.17):
3.1 ORGANIZATION, STANDING AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Ontario,
Canada, and is registered to do business in each location where the activities
of Seller require such registration. Seller has all requisite power (corporate
or otherwise) and authority to own, lease and operate its properties, to carry
on its business as now being conducted and to execute, deliver and perform this
Agreement and all writings relating hereto.
3.2 AUTHORIZATION OF SELLER. The execution, delivery and performance
of this Agreement and all writings relating hereto by Seller have been duly and
validly authorized by all necessary corporate action of Seller. This Agreement
and all writings relating hereto to be signed by Seller constitute legal, valid
and binding obligations of Seller enforceable in accordance with their
respective terms. No consent or approval of or notification to any governmental
authority or other person or entity is required in connection with the execution
and delivery by Seller of this Agreement or any writing relating hereto or the
consummation of the transactions contemplated herein save and except for
consents, if any, to be obtained prior to or on the Closing Date.
3.3 LIABILITIES. Prior to the Closing Date, Seller shall pay and
discharge in its normal course
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of business and consistent with past practice, as they become due and payable,
all liabilities and obligations of Seller relating to the Business, the
Purchased Assets, the Assumed Contracts and the Premises.
3.4 ABSENCE OF CHANGES. Since March 31, 2004 the Business of Seller
has been operated only in the ordinary course and there has not been with
respect to the Business, the Purchased Assets, or the Premises:
A. Any strike or work stoppage which has, had or may have
an adverse effect on the operations of the Business of
Seller;
B. The adoption of any statute, law, rule or regulation or
any order, writ, injunction or decree of any court which
adversely affects the Business, Purchased Assets, or the
Premises;
C. Any increase in the compensation of officers or any
other employees of Seller not in the ordinary course of
business, except for Xxxx Xxxxxxxxx with whom a three
year contract is currently being entered into, which
contract must be acceptable to Purchaser, acting
reasonably; and
D. Any change in the accounting methods or practices
followed by Seller.
Seller will make its commercially reasonable best efforts to ensure
none of the foregoing events occur during the period from the date of this
Agreement to the Closing Date and, if any do so occur despite such efforts,
Seller will promptly notify the Purchaser in writing if any of the events set
forth in Section 3.4A. has occurred on or prior to the Closing Date.
3.5 TAX MATTERS. All federal, state, provincial, local and foreign
tax obligations relating to the Business or the Purchased Assets or the Premises
have been fully and timely paid, to the extent the non-payment thereof could
result in liability to Purchaser.
3.6 TITLE TO PROPERTY AND RELATED MATTERS. Seller has good and
marketable title to all the Purchased Assets, which at Closing will be free and
clear of all security interests, liens, pledges, claims, charges, escrows,
encumbrances, options, rights of first refusal, mortgages, indentures,
easements, licenses, security agreements or other agreements, arrangements,
contracts, commitments, understandings or obligations (collectively, the
"Encumbrances") other than informational registration filings with respect to
leased equipment, Encumbrances listed on Schedule 3.6 (which include those
Encumbrances in favour of ABN AMRO Bank, provided, however that such
Encumbrances shall all be released and discharged upon the payment by Purchaser
of the amount referred to in Section 1.8 (b) hereof) and any other items agreed
to in writing by Purchaser ("Permitted Encumbrances").
3.7 PERSONAL PROPERTY OWNED OR LEASED. Schedules "1.2A" & "1.2AA"
contain a list of each item of machinery, equipment, office furniture,
automobiles, trucks and other personal property (collectively, the "Personal
Property") of Seller included in the Purchased Assets. The Personal Property
which, is presently operating (as noted on such aforesaid Schedules) in the
aggregate is in good condition and working order for the purposes for which they
are presently being used, normal wear and tear excepted and with no known
defects. Schedule "3.7" contains a list and brief description of each lease or
other agreement under which Seller leases, licenses, holds or operates any item
of Personal Property. With respect thereto: (a) all of such leases and
agreements are in full force and effect and constitute legal, valid and binding
obligations of the respective parties thereto; (b) there have not been and there
currently are not any material defaults thereunder by any party; and (c) no
event has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a material default
thereunder. Seller has furnished or promptly following execution hereof shall
furnish to Purchaser copies of all leases and other agreements referred to in
Schedule "3.7."
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3.8 LICENSES, TRADEMARKS; TRADE NAMES; ETC. (a) There are no
non-governmental licenses held by Seller relating to the Business (except
software licenses); and (b) no trademarks, trade names, service marks,
copyrights, know-how, patents and applications owned by or registered in the
name of Seller, relating to or used in connection with the Business (except the
trademark "Duratube" (which is currently assigned by the Seller to ABN AMRO and
will be released to Purchaser at Closing as part of the Purchased Assets)).
Subject to the disclosures on Schedule "3.8", all software used in the Business
has been properly licensed to Seller and all such licenses remain in full force
and effect and are assignable to Purchaser in connection with this transaction
without cost to Purchaser subject to the disclosure on Schedule "3.8", no
product made or sold by Seller violates any license or infringes any trademark,
trade name, service xxxx, copyright, know-how or patent of another.
3.9 INSURANCE. Seller maintains in effect insurance covering the
Purchased Assets and the Business and any liabilities relating thereto in an
amount believed adequate by Seller, and such insurance coverage shall be
maintained by Seller through the Closing Date. Between now and the Closing Date,
Seller shall furnish to Purchaser and its agents such information as Purchaser
shall reasonably request regarding Seller's insurance.
3.10 AGREEMENTS, ETC. Seller has no outstanding material contract,
lease, license, agreement, indenture, engagement, commitment or other instrument
which relates to the Business, the Purchased Assets, or the Premises except:
1. contracts, agreements or commitments in the ordinary and usual
course of the Business for the sale of products;
2. contracts, agreements or commitments involving less than
$5,000 for the future purchase of materials (other than steel
materials), supplies, equipment or services;
3. service contracts of office equipment and premises in the
ordinary and usual course of the Business;
4. contracts, leases, licences, agreements and other instruments
disclosed in Schedules other than Schedule "3.10";
5. contracts disclosed in Schedule "3.10", which for greater
certainty, but without limitation, shall include all of the
following:
A. Distribution sales, advertising, agency, manufacturer's
representative or similar contracts or any other
contract relating to the payment of a commission;
B. Agreements which restrict Seller from conducting the
Business anywhere in Canada or the United States; or
C. Agreements or arrangements for the sale of any of the
assets, property or rights of Seller outside the
ordinary course of business or requiring the consent of
any party to the transfer and assignment of such assets,
property and rights.
Seller has in all material respects performed all the obligations required to be
performed by it to date and is not in default or alleged to be in default in any
respect under any agreement, lease, contract, commitment, instrument or
obligation required to be listed on any Schedule to this Agreement. All of such
items are assignable to Purchaser or, if any are not assignable to Purchaser
without a consent, Seller shall use all reasonable means to cause an appropriate
consent to such transfer to be delivered to Purchaser prior to the Closing Date
at no cost or other adverse
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consequences to Purchaser provided that if Seller does not obtain any such
consent the Seller and the Purchaser shall cooperate with each other to give
Purchaser the benefits and burdens of such contract. Copies of all written
agreements and written summaries of all oral agreements described on Schedule
"3.10" or otherwise referred to or identified herein have been furnished to
Purchaser or shall be furnished promptly following execution and delivery
hereof.
3.11 LITIGATION, ETC. There are no actions, suits, claims,
investigations or legal or administrative or arbitration proceedings pending or,
to the best of Seller's knowledge, threatened against Seller relating to the
Business or the Purchased Assets, whether at law or in equity, or before or by
any federal, state, provincial, municipal or other governmental agency which
could result in liability to Purchaser.
3.12 COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Seller is in material
compliance with all federal, state, provincial, local or foreign laws,
ordinances, regulations and orders applicable to the Business or the Purchased
Assets. Seller has all material federal, state, provincial, local and foreign
governmental licenses and permits necessary in the conduct of the Business.
3.13 INVENTORIES. The inventories included the Purchased Assets
(including items in transit) are and shall be valued with respect to each
category of inventory at fair market value and shall be paid for in accordance
with Section 1.8(d).
Seller shall use its best efforts to maintain up to the Closing what it
considers in its reasonable business judgment to be adequate levels of
inventories to carry on the Business in the ordinary course including, without
limitation, what it considers in its reasonable business judgment to be adequate
inventories of raw steel coil and slit coil for use in the production of
finished goods in the ordinary course.
3.14 LABOR RELATIONS; EMPLOYEES. Certain of Seller's employees at
the Premises are subject to a collective bargaining, or similar agreement, a
copy of which is attached as Schedule "3.14." Purchaser will assume that
Collective Bargaining Agreement at Closing and shall employ all employees
employed by Seller in connection with the Business, including without
Limitation, the persons whom the Seller is presently negotiating with to be the
xxxxxxx and new hires at the Premises, in respect of whom the terms of
employment shall be acceptable to Purchaser, acting reasonably (except those
employees identified on Schedule "3.14" as remaining with Seller) on terms and
conditions no less favourable than as are presently enjoyed by such employees
including without limitation salary, benefits and accrued seniority and related
rights. Seller shall pay in full to the extent possible, or, if not, accrue by
adequate reserves all wages, salaries, bonuses, vacation pay and other direct
and indirect compensation earned by all employees of Seller up to the Closing
Date (whether or not payable by such date), and Purchaser will be responsible
for those items accruing after the Closing Date.
3.15 COMPENSATION. Schedule "3.15" contains a list of all current
officers, employees and consultants of Seller employed at the Premises or in
connection with the Business who during calendar year 2003 received remuneration
in excess of Thirty Thousand and 00/100 ($30,000.00) Dollars from Seller,
together with the current job title and current remuneration rate (bonus and
salary) for each such person.
3.16 ENVIRONMENTAL MATTERS. The Seller has delivered to Purchaser a
true copy of a Phase I and II environmental site assessment update dated June
2003 for the Premises prepared for the Seller by Jagger Hims Limited. (the
"REPORTS"). The Purchaser confirms that, as recommended in the Reports, it has
built a tank to contain any spills from the two above-ground fuel storage tanks
located in the exterior yard of the Premises and has installed vehicular impact
control measures. Purchaser accepts the Premises "as is". Seller makes no other
representation or warranty with respect to environmental matters save and except
that it is not aware of any condition at the Premises which violates any
environmental laws or regulations, other than as disclosed in the Reports.
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3.17 ADVANCE PAYMENTS AND DEPOSITS. No advance payments or deposits
have been made to Seller on any contracts or accounts to be assumed by Purchaser
pursuant to the terms of this Agreement.
3.18 CONDUCT OF BUSINESS. To Seller's knowledge, the Purchased
Assets to be acquired by Purchaser hereunder, along with the right of Purchaser
to occupy the Premises as of Closing, are all of the rights and assets necessary
for the conduct of the Business as currently being conducted.
3.19 FINANCIAL INFORMATION. The financial information provided or to
be provided to the Purchaser and its auditors to permit them to prepare (i) the
audited financial statements of the Business for the calendar year 2003, and
(ii) the audited interim financial statements of the Business for the 3 month
period ended March 31, 2004, and the six month period ended June 30, 2004, shall
be true and correct in all material respects. The gross sales (including raw
materials) of the Business for the 12 months ending May 31, 2004 are
approximately $20,000,000.
3.20 CUSTOMERS AND SUPPLIERS. Upon Closing, Seller shall provide
Purchaser with a true and complete list of Seller's customers and suppliers
relating to the Business, during each of the fiscal years ending September 30,
2001, 2002, and 2003, as well as those for the six (6) month period ending March
31, 2004, showing, with respect to each, the name and address and contact
information for each. In addition, with respect to the twenty (20) largest
customers of Seller for each such period, the list will set forth the dollar
volume purchased by such customers for each of those periods and nature of the
relationship (including the principal categories of the products bought and
sold). Seller is not required to provide any bonding or other financial security
arrangements in connection with any transactions with any of its customers or
suppliers in the ordinary course of Seller's business. Schedule "3.17" sets
forth the aggregate sales volumes for the Business for each of the periods
mentioned (i.e., fiscal years ending September 30, 2001, 2002, and 2003 and the
six (6) month period ending March 31, 2004).
3.21 DISCLOSURES. No representation or warranty by Seller or the
Principals contained in this Agreement, and no statement contained in any
certificate, Exhibit or Schedule, furnished to Purchaser pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. All Schedules to this Agreement are true and complete in
all material respects.
ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF PURCHASER
Purchaser represents and warrants to Seller as follows:
4.1 ORGANIZATION, STANDING AND POWER. Each of Purchaser and Tarpon
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
4.2 AUTHORITY. The execution, delivery and performance of this
Agreement and all writings relating hereto by Purchaser or Tarpon as applicable
have been duly and validly authorized by all necessary corporate action of
Purchaser. This Agreement and all writings relating hereto to be signed by
Purchaser and Tarpon constitute valid and binding obligations of Purchaser and
Tarpon enforceable in accordance with their respective terms.
4.3 REQUIRED AUTHORIZATIONS. No governmental or regulatory
authorizations, consents, approvals, filings or notices pertaining to the
Purchaser or Tarpon are required to be obtained or given or waiting period is
required to expire in order that the purchase and sale of the Purchased Assets
may be consummated by
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the Purchaser or for the Purchaser and Tarpon to carry out its obligations set
out in this Agreement save and except for any required notification filing under
the Investment Canada Act. The Purchaser hereby agrees to make the required
notification filing under the Investment Canada Act within the prescribed time
period.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
5.1 OPERATION OF BUSINESS OF SELLER. From the date hereof to the
Closing Date, Seller shall:
A. Consult with Purchaser on a regular basis with respect
to all decisions which might affect the Business and/or
the Purchased Assets; and
B. Except as Purchaser may otherwise agree, operate the
Business as currently operated and only in the ordinary
course and use its best efforts to preserve intact its
current business organization and its relationships with
its employees, customers, suppliers, and other persons
having dealings with it.
5.2 SUPPLEMENTS. From time to time prior to the Closing Date, Seller
shall furnish to Purchaser supplemental information with respect to any matters
or events arising or discovered subsequent to the date hereof which, if existing
or known on the date hereof, would have rendered any statement, representation
or warranty made by Seller or any information contained in any Schedule hereto
then inaccurate or incomplete. The furnishing of such supplemental information
shall not, however, affect or otherwise diminish any of the representations and
warranties of Seller hereunder. Seller confirms that as of the date hereof it is
not aware of the representations and warranties of the Seller being inaccurate
or incomplete in any respect.
5.3 ACCESS FOR DUE DILIGENCE. Following the execution and delivery
hereof, the Purchaser shall have access, upon every reasonable request and
during normal business hours (except as the Seller shall otherwise direct) and
without interference to the normal business operations of the Business, to the
Business, the Purchased Assets and the Premises, including the books and records
relating thereto.
5.4 MANAGEMENT STATEMENTS. Seller shall provide Purchaser with
monthly or more frequent internal management financial statements relating to
the Business as the same are otherwise available to management in the ordinary
course.
ARTICLE VI
CONDITIONS OF OBLIGATIONS OF PURCHASER
The obligations of Purchaser to perform this Agreement are subject
to the satisfaction, on or prior to the Closing Date (unless waived by
Purchaser), of the following conditions, (which are for its exclusive benefit),
and Seller shall use its best efforts to cause such conditions to be fulfilled:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Seller and the Principals in this Agreement or in any
Schedule, Exhibit certificate or document delivered in connection herewith shall
be true and correct on the Closing Date as though made on and as of the Closing
Date, no event under Section 3.4 shall have occurred, and Purchaser shall have
received a certificate signed by an officer of Seller and by the Principals to
that effect. The Seller shall have fulfilled all of its covenants under this
Agreement.
6.2 CONSENTS. Seller shall have obtained, or to the reasonable
satisfaction of Purchaser
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obviated the need to obtain, all material consents or waivers from third parties
necessary to convey to Purchaser all contracts, agreements and leases of every
nature whatsoever listed on any Schedule to this Agreement as in effect on the
date hereof at no cost or other adverse consequence to Purchaser provided that
if Seller is not able to obtain any such consent or waiver then Seller and
Purchaser shall cooperate with each other to give Purchaser the benefit and
burdens of such contract.
6.3 REAL ESTATE AGREEMENT. Seller and Purchaser shall have executed
and delivered the Real Estate Agreement on the terms and conditions set forth in
Section 1.3 and such other terms and conditions as are mutually satisfactory to
both such parties.
6.4 NO LITIGATION. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated herein, or seeking to obtain substantial damages in respect thereof
or involving a claim that consummation thereof would result in the violation of
any law, decree or regulation of any governmental authority having appropriate
jurisdiction.
6.5 INTERIM LEASE. Seller and Purchaser shall have executed and
delivered a lease of the Premises for a period of 90 days following the Closing
Date on terms and conditions mutually satisfactory to both parties (which shall
include a monthly rent of $75,000, "triple net") in the form attached hereto as
Schedule 6.5.
6.6 OPINION OF COUNSEL. Seller shall have delivered to Purchaser the
opinion of counsel for Seller, which shall be satisfactory to Purchaser and its
counsel in all respects to the effect that:
A. Seller is a corporation incorporated and existing under
the laws of the jurisdiction of its incorporation;
B. The execution, delivery, and performance of this
Agreement by Seller has been duly authorized by all
necessary corporate action, and this Agreement
constitutes a legal, valid, and binding obligation of
Seller; and
C. The making and performance of this Agreement and the
transactions contemplated herein by Seller shall not
violate the Articles or Memorandum of Seller or, to the
knowledge of such counsel, result in the breach of, or
constitute a default under, any indenture, bank loan,
credit agreement, or other agreement or instrument to
which Seller is a party or by which its property may be
bound or affected.
ARTICLE VII
CONDITIONS OF OBLIGATIONS OF SELLER
The obligations of Seller to perform this Agreement are subject to
the satisfaction, on or prior to the Closing Date (unless waived by Seller), of
the following conditions, (which are for its exclusive benefit), and Purchaser
shall use its best efforts to cause such conditions to be fulfilled:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Purchaser in this Agreement or in any Schedule, Exhibit
certificate or document delivered in connection herewith shall be true and
correct on the Closing Date as though made on and as of the Closing Date, and
Seller shall have received a certificate signed by an officer of Purchaser to
that effect. The Purchaser shall have fulfilled all of its covenants under this
Agreement.
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7.2 INTERIM LEASE. Seller and Purchaser shall have executed and
delivered a lease of the Premises for a period of 90 days following the Closing
Date on terms and conditions mutually satisfactory to both parties in the form
attached hereto as Schedule 6.5.
7.3 NO LITIGATION. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated herein, or seeking to obtain substantial damages in respect thereof
or involving a claim that consummation thereof would result in the violation of
any law, decree or regulation of any governmental authority having appropriate
jurisdiction.
7.4 ABN AMRO BANK. The Seller will obtain the consent of ABN AMRO
Bank to the transactions contemplated hereby, and obtain a release and discharge
from ABN AMRO Bank with respect to all of its Encumbrances against the Purchased
Assets upon Closing. Immediately after the Effective Date, Seller and Purchaser
shall diligently and in good faith pursue the satisfaction of this condition
(including obtaining appropriate documentation) with the objective of securing
such documentation acceptable to Seller, Purchaser and ABN AMRO Bank prior to
Closing.
7.5 OPINIONS. Purchaser shall have delivered an opinion of counsel
for Purchaser containing the same opinions as requested in Section 6.6, and such
additional opinions in respect of any promissory note, security and related
matters as are customary and as Seller may reasonably request.
7.6 SENIOR BANK. Seller shall be satisfied with the amount and the
terms and conditions of the senior bank lender of the Purchaser and with the
terms and conditions of any subordination agreement.
7.7 REAL ESTATE AGREEMENT. Seller and Purchaser shall have executed
and delivered the Real Estate Agreement on the terms and conditions set forth in
Section 1.3 and such other terms and conditions as are mutually satisfactory to
both such parties.
ARTICLE VIII
SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
All representations and warranties made by any party to this
Agreement or pursuant hereto shall survive the Closing of the transactions
contemplated herein; provided, however, that except with respect to warranties
of title to the Purchased Assets or to the absence of Encumbrances on the
Purchased Assets, (save and except for Permitted Encumbrances) notice of any
claim based on a breach of a representation or warranty must be given within two
(2) years from the Closing Date or, in the case of representations or warranties
dealing with tax matters, within sixty (60) days after the expiration of the
applicable tax statute of limitations or period of assessment or reassessment,
failing which all rights and obligations relating thereto shall terminate and be
of no force and effect. The representations and warranties hereunder shall not
be affected or diminished by any investigation at any time by or on behalf of
the party for whose benefit such representations and warranties were made.
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ARTICLE IX
PRODUCT CLAIMS AND RETURNS
Seller shall be responsible for customer claims relating to services
rendered or products sold by Seller prior to the Closing Date, and customer
claims within twelve (12) months after the Closing Date relating to, or returns
of, products of Seller sold and shipped by Seller prior to the Closing Date or
in the finished goods inventory of Seller as of the Closing Date. If a customer
makes a claim or seeks a return, Purchaser shall notify Seller of the nature and
amount of the claim or refund relating to this Article IX within a reasonable
time period. If in the judgment of Seller the claim or return is proper,
Purchaser, no earlier than thirty (30) days following the notice to Seller,
shall replace or repair, as the case may be, the services rendered or product
purchased at Purchaser's then generally prevailing prices and labor rates. Such
repairs or returns shall be for the account of Seller who shall promptly
reimburse Purchaser for the amounts thereof.
ARTICLE X
INDEMNIFICATION OF PURCHASER
10.1 INDEMNIFICATION BY SELLER. Subject to the limitations
hereinafter set forth, Seller shall indemnify and save Purchaser and each of its
shareholders, affiliates, officers, directors, and employees harmless from,
against, for and in respect of:
A. Any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of
action, encumbrances and reasonable costs and expenses
suffered, sustained, incurred or required to be paid by
any indemnified party because of:
(i) the claims of any broker or finder engaged by
Seller or either Principal;
(ii) the untruth, inaccuracy or breach of any
representation, warranty, agreement or covenant of
Seller contained in or made in connection with
this Agreement;
(iii) the assertion against Purchaser or the Purchased
Assets of any liability or obligation of Seller,
its shareholders, the Principals or relating to
the Business or any of the Purchased Assets prior
to the Closing Date, whether absolute or
contingent, matured or unmatured, known or
unknown, other than liabilities and obligations
expressly assumed by Purchaser under Article II
hereof or elsewhere herein;
(iv) non-compliance with any applicable bulk sales or
similar laws compliance with which is hereby
waived by the parties based on the indemnification
given herein; and
(v) any personal injuries, death or property damage or
any warranties or guaranties attributable to
products manufactured, processed or sold by Seller
and which are either sold to Purchaser hereunder
or which are sold by Seller to any third party
prior to the Closing Date.
B. All reasonable costs and expenses (including, without
limitation, reasonable
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attorneys' fees, interest and penalties) incurred by any
indemnified party in connection with any action, suit,
proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Article
X.
Subject to the limitations hereinafter set forth, the liability of
Seller under this Section 10.1 shall cease upon the expiration of the respective
limitation periods set out in Article VIII unless Seller shall have been given
notice by the Purchaser of any claim hereunder pursuant to this Section 10.1
prior to such date in which event the limitation period shall not apply with
respect to such claim.
10.2 INDEMNIFICATION BY PRINCIPALS. Subject to the limitations
hereinafter set forth, the Principals, together with Seller, shall jointly and
severally indemnify and save Purchaser and each of its shareholders, affiliates,
officers, directors, and employees harmless from, against, for and in respect of
the matter referred to in Section 10.1(A)(ii).(to the extent relating to
Section 3.5, 3.6 or 3.17) and Section 10.1 A(iv)
10.3 NOTIFICATION AND RIGHT TO DEFEND. The party entitled to
indemnification (under this Article X or under Article XI) shall forthwith
notify the indemnifying party of any amounts for which the indemnifying party
may be liable under Section 10.1 or Section 10.2 or Article XI and the
indemnifying party shall have the right to participate in any negotiations with
respect thereto. The indemnifying party shall at all times have the right and
its sole and only expense to participate in any negotiations regarding, and
dispute and contest in the name of indemnifying party, any claim for amounts for
which indemnifying party may be liable under Section 10.1 or Section 10.2 or
Article XI and so long as the indemnifying party is defending such claim in good
faith (and not unnecessarily exposing the indemnified party to liability), the
indemnified party shall not settle or compromise the same. If the indemnifying
party does not elect to defend such claim, the indemnified party shall have no
obligation to do so. The indemnified party will fully cooperate with the
indemnifying party and its counsel in any proceedings with respect to any such
amounts and shall give the indemnifying party reasonable access to all documents
relating thereto.
10.4 LIMITATIONS. The remedies of the parties hereto with respect to
this Agreement (including, without limitation, those arising out of
representations, warranties and covenants) shall be exercised only through and
limited by the indemnities contained in this Agreement, save and except for the
remedies of specific performance, injunctive relief and other equitable
remedies. The aggregate liability of Seller and the Principals to the Purchaser
or any other person pursuant to this Agreement shall be limited to the amount of
the Purchase Price in the aggregate. The aggregate liability of Purchaser
pursuant to this Agreement shall not exceed the Purchase Price. In no event
shall the Purchaser or any other person make any claim pursuant to the
indemnities herein until the total of all damages with respect to such matters
exceeds Twenty-Five Thousand ($25,000) Dollars at which point there will be
indemnification from the first dollar of loss. In no event shall the Seller make
any claim pursuant to the indemnities herein until the total of all damages with
respect to such matters exceeds Twenty-Five Thousand ($25,000) Dollars, at which
point there will be indemnification from the first dollar of loss. The
limitations herein shall not apply to any breach by the indemnifying party or
its representations or warranties of which that party had actual knowledge at
any time prior to the date on which such representation or warranty was made or
any intentional breach by the indemnifying party of any covenant or obligation
and such indemnifying party will be liable for all damages with respect to such
breaches.
ARTICLE XI
INDEMNIFICATION OF SELLER
Purchaser shall indemnify and save Seller and each of its
shareholders, the Principals, affiliates, officers, directors, and employees
harmless from, against, for and in respect of:
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A. Any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of
action, encumbrances and reasonable costs and expenses
suffered, sustained, incurred or required to be paid by
any indemnified party because of:
(i) the claims of any broker or finder engaged by
Purchaser; or
(ii) the untruth, inaccuracy or breach of any
representation, warranty, agreement or covenant of
Purchaser contained in or made pursuant to this
Agreement.
B. All reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and
penalties) incurred by any indemnified party in
connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters
indemnified against in this Article XI.
Subject to the limitations set forth in Section 10.4, the liability of Purchaser
under this Article XI shall cease upon the expiration of the respective
limitation periods set out in Article VIII unless Purchaser shall have been
given notice by Seller of any claim hereunder pursuant to this Article XI prior
to such date, in which event the limitation period shall not apply with respect
to such claim.
ARTICLE XII
OTHER AGREEMENTS
12.1 Subject to and conditional upon Closing:
A. Non-Compete (Seller and Principals). Seller and its
Principals jointly and severally, agree for a period of
six (6) months following Closing, not to, directly or
indirectly, solicit employees of the Business or
customers of the Business for the sale of pre-coated
products of any kind, or engage in the sale of
pre-coated products (unless such products are purchased
from Purchaser for resale by Seller).
B. Non-Compete (Purchaser). Purchaser agrees for and on
behalf of itself and any of its subsidiaries, for a
period of six (6) months following Closing, not to,
directly or indirectly solicit employees or customers of
Seller for the sale of hot-dipped galvanized products of
any kind (excluding conduit) or to engage in the sale of
hot-dipped galvanized products (excluding conduit, or
unless purchased from Seller for resale by Purchaser).
C. Right of First Refusal (Xxxxxx). Seller hereby grants to
Purchaser a right of first refusal to purchase the
Business and Assets of Seller's Xxxxxx facility
commencing with the Effective Date and ending six (6)
months following Closing.
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12.2 CONFIDENTIALITY - TARPON GROUP
(i) Until the Closing and in the event of termination of
this Agreement without Closing, each of Tarpon and
Purchaser, for and on behalf of itself and its
respective subsidiaries (collectively, the "Tarpon
Group") and its and their directors, officers,
employees, agents and representatives
("Representatives") without the written consent of
Seller (it being acknowledged that Tarpon may need to
disclose certain information as part of its initial
public offering) will keep confidential any information
obtained from Seller or its agents and representatives,
unless such information (i) is or becomes generally
available to the public other than as a result of a
disclosure in violation of this Agreement, (ii) becomes
available to any member of the Tarpon Group or any of
its Representatives on a non-confidential basis from a
source other than the Seller or its agents and
representatives, unless such member of the Tarpon Group
or any of its Representatives knows that such source is
prohibited from disclosing the information to such
member of the Tarpon Group or Representatives by a
contractual, fiduciary or other legal obligation to
Seller or (iii) was known to such member of the Tarpon
Group or any of its Representatives on a
non-confidential basis before its disclosure to such
member of the Tarpon Group or any of its Representatives
by Seller or its agents and representatives.
(ii) In the event any member of the Tarpon Group or any of
its Representatives is required by law to disclose any
confidential information, such member of the Tarpon
Group or any of its Representatives will, to the extent
not prohibited by applicable Law, provide Seller with
prompt notice of such requirements so that Seller may
seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Section.
(iii) If this Agreement is terminated, promptly after such
termination all members of the Tarpon Group will return
or cause to be returned or destroyed all documents, work
papers and other material (whether in written, printed,
electronic or computer printout form and including all
copies) obtained from Seller or its agents and
representatives in connection with this Agreement and
not previously made public.
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12.3 CONFIDENTIALITY - SELLER AND PRINCIPALS
(i) Until the Closing and in the event of termination of
this Agreement without Closing, Seller and each of the
Principals, for and on behalf of themselves and Seller's
directors, officers, employees, agents and
representatives ("Representatives") without the written
consent of Purchaser will keep confidential any
information obtained from Tarpon or Purchaser or its or
their agents and representatives (including relating to
Tarpon's IPO and Steelbank Inc.), unless such
information (i) is or becomes generally available to the
public other than as a result of a disclosure in
violation of this Agreement, (ii) becomes available to
Seller or any of the Principals or any of Seller's
Representatives on a non-confidential basis from a
source other than Tarpon or Purchaser or its or their
agents and representatives, unless Seller or any of the
Principals or Seller's Representatives knows that such
source is prohibited from disclosing the information to
Seller or any of the Principals or Seller's
Representatives by a contractual, fiduciary or other
legal obligation to Tarpon, Purchaser or its or their
Representatives or (iii) was known to Seller or any of
the Principals or Seller's Representatives on a
non-confidential basis before its disclosure to Seller
or any of the Principals or Seller's Representatives by
Tarpon or Purchaser or its or their agents or
representatives.
(ii) In the event Seller or any of the Principals or Seller's
Representatives is required by law to disclose any
confidential information, Seller or such Principal or
Seller's Representative will, to the extent not
prohibited by applicable law, provide Purchaser with
prompt notice of such requirements so that Purchaser may
seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Section.
(iii) If this Agreement is terminated, promptly after such
termination Seller and each of the Principals will
return or cause to be returned or destroyed all
documents, work papers and other material (whether in
written, printed, electronic or computer printout form
and including all copies) obtained from Tarpon or
Purchaser or its or their agents or representatives and
not previously made public.
ARTICLE XIII
MISCELLANEOUS
13.1 EXPENSES, TRANSFER TAXES, ETC. No costs, fees or expenses
(including, for example, professional accounting and legal fees) incurred by
Seller in connection with this Agreement shall be borne by or charged to
Purchaser. All expenses, fees and all taxes which may be payable by Seller in
connection with this Agreement shall be borne by Seller and not charged back to
or borne by Purchaser. No costs, fees or expenses (including, for example,
professional accounting and legal fees) incurred by Purchaser in connection with
this Agreement shall be borne by or charged to Seller. All expenses, fees and
all taxes which may be payable by Purchaser in connection with this Agreement
shall be borne by Purchaser and not charged back to or borne by Seller.
13.2 PARTIES IN INTEREST. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, Seller and its successors and
permitted assigns, and Purchaser and its successors and permitted assigns. No
party hereto may assign its rights and obligations under this Agreement without
the prior written consent of the other parties save and except that Purchaser,
upon giving notice to Seller at any time on or prior to the Closing Date is
entitled to assign this Agreement or any of its rights or obligations under this
Agreement to any wholly-owned
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subsidiary of Purchaser, subject to the following conditions:
(a) The assignee will become jointly and severally liable
with Purchaser, as a principal and not as a surety, with
respect to all of the obligations of Purchaser
hereunder, including the representations, warranties,
covenants, indemnities and agreements of Purchaser;
(b) The assignee must execute an agreement confirming the
assignment and the assumption by the assignee of all
obligations of Purchaser under this Agreement; and
(c) Any of the security to be granted by Purchaser to Seller
hereunder shall be granted only by such assignee, save
and to the extent any of the Purchased Assets are
purchased directly by Purchaser.
13.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
writings referred to herein or delivered in connection herewith contain the
entire understanding of the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties.
13.4 NOTICES. All notices, claims, certificates, requests, demands
and other communications ("communication") hereunder shall be in writing and
shall be deemed to have been duly given when mailed (by registered or certified
mail, postage prepaid) addressed as follows:
IF TO PURCHASER: Xx. Xxxx X. Xxxxx
BST Acquisition, Ltd.
X.X. Xxx 00000
Xxxxxx Xxxxxx, Xxxxxxxx 00000
WITH A COPY TO: Xxxxxxx X. Xxxxx
Stikeman Elliot
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
IF TO SELLER: Xx. Xxxxxxx Xxxxx
Xxxxxx Steel Tube Co. Ltd.
000X Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx X0X 0X0
WITH A COPY TO: Xxxxxx X. Xxxxxxxx
WeirFoulds LLP
The Exchange Tower, Suite 1600
P.O. Box 480, 130 King Street West
Toronto, Ontario, Canada M5X IJ5
or to such other address as the person to whom notice is to be given may have
furnished to the other in writing in accordance herewith. A communication given
by any other means shall be deemed duly given when actually received by the
addressee.
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13.5 PUBLIC ANNOUNCEMENTS. No public announcements and no public
disclosure relating to this Agreement or the transactions contemplated herein,
including announcements to employees, shall be made by Seller or the Principals
except as may be agreed upon jointly by the parties hereto. Seller will jointly
sign with Purchaser a letter to all customers of the Business, prepared by
Purchaser, informing those customers of the Closing and encouraging the
customers' continued relationship with Purchaser following Closing. The parties
shall keep all matters disclosed herein and the schedules hereto strictly
confidential.
13.6 FURTHER ASSURANCES. After the Closing Date, without further
consideration, Seller and Purchaser shall execute and deliver such further
instruments and documents as either party shall reasonably request to consummate
the transactions contemplated herein and to perfect Purchaser's title to the
Purchased Assets.
13.7 WAIVERS. Any party to this Agreement may, by written notice to
the other party hereto, waive any provision of this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent, same or different breach.
13.8 BUSINESS DAY. As used in this Agreement, the term "business
day" means a day that is not a Saturday, Sunday, or statutory holiday in
Ontario, Canada.
13.9 GOVERNING LAW. This Agreement will be governed by the laws of
the Province of Ontario.
13.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each counterpart hereof shall be deemed to be an original
instrument, but all counterparts shall together constitute but one Agreement.
13.11 FINANCIAL INFORMATION Upon acceptance and signing of this
Agreement the Seller will provide the Purchaser and or its agents from time to
time upon every reasonable request with all financial information related to the
Business and Purchased Assets.
(CONTINUED ON NEXT PAGE)
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000-000-0000
THIS AGREEMENT has been executed and delivered as of the date first above
written.
BST ACQUISITION, LTD., a New Brunswick BOLTON STEEL TUBE CO. LTD., an
corporation Ontario corporation
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------------- -----------------------
Its: /s/ Its: /s/ Xxxxx Xxxxx
---------------------------- ----------------------
"Purchaser" "Seller"
ACCEPTED AND AGREED AS TO THE
PROVISIONS OF SECTION 1.6 ONLY:
WEIRFOULDS LLP
By: /s/
-----------------------------
ACCEPTED AND AGREED AS TO THE PROVISIONS APPLICABLE TO THEM
/s/ Xxxxxxx Xxxxx /s/ Xxxxx Xxxxx
------------------------ --------------------------
XXXXXXX XXXXX XXXXX XXXXX
ACCEPTED AND AGREED AS TO THE
GUARANTY OBLIGATION OF
SECTION 1.6(c) AND CONFIDENTIALITY
OBLIGATION OF SECTION 12.2 ONLY:
TARPON INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
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EXHIBITS AND SCHEDULES
Schedule 1.2A List of Equipment, Machinery, Furniture, Fixtures and Leasehold Improvements
Schedule 1.2AA List of Additional Equipment, Machinery, Furniture, Fixtures and Leasehold Improvements
Schedule 1.2D Assumed Contracts
Schedule 1.3 Real Property Agreement
Schedule 1.7 Spare Parts, Supplies and Purchased Inventory
Schedule 1.8(c) Secured Note
Schedule 1.9 Purchase Price Allocation
Schedule 1.10(A) Security Agreements
Schedule 1.10(B) Tarpon Guarantee
Schedule 1.12 Escrow Agreement
Schedule 3.6 Permitted Encumbrances
Schedule 3.7 Leases
Schedule 3.8 Intellectual Property
Schedule 3.10 Written Contracts, Agreements and Other Instruments (to which Seller is a Party)
Schedule 3.14 Collective Agreement and Employees
Schedule 3.15 Compensation to Officers, Employees and Consultants
Schedule 3.16 Events, Transactions or Information
Schedule 3.17 Sales Volumes
Schedule 6.5 Interim Lease
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