THIS SHARE PURCHASE AGREEMENT is made as of November 14, 1998
BETWEEN: DECTRON INTERNATIONALE INC., a corporation
incorporated under the laws of Canada;
(hereinafter, "DECTRON")
AND: INVESTISSEMENTS NOVACAP INC., a company incorporated
under Part IA of the COMPANIES ACT (Quebec);
(hereinafter, "NOVACAP")
AND: 0000-0000 XXXXXX INC., a company incorporated under
Part 1A of the COMPANIES ACT (Quebec);
AND: XXXXX XXXXXXXX, businessman, residing and domiciled
at 5037 Notre-Dame, Laval, Province of Quebec;
AND: XXXX XXXXXXX, businessman, residing and domiciled at
26 Malard, Xxxxxxx-des-Ormeaux, Province of Quebec;
AND: XXXXX XXXX, businessman, residing and domiciled at
2300 Xxxx, Condo 207, St-Laurent, Province of
Quebec;
(Novacap, 0000-0000 Xxxxxx inc., Xxxxx Xxxxxxxx,
Xxxx Xxxxxxx and Xxxxx Xxxx are hereinafter
collectively referred to as the "VENDORS")
WHEREAS Cascade Technologies Inc. ("CASCADE") is a company incorporated under
Part IA of the COMPANIES ACT (Quebec);
WHEREAS the authorized capital of Cascade consists of an unlimited number of
Class A shares, Class B shares, Class C shares, Class E shares and Class F
shares and of 305,270 Class D shares of which 1,000,000 Class A shares, 617,296
Class C shares, 305,270 Class D shares and 208,843 Class E shares are issued and
outstanding as fully-paid shares;
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WHEREAS Dectron wishes to purchase, and the Vendors desire to sell, directly and
indirectly, all but not less than all of the issued and outstanding shares of
every class of Cascade;
IN CONSIDERATION of the mutual covenants in this Agreement, and of other
consideration (the receipt and sufficiency of which are acknowledged by each of
Dectron and the Vendors), they agree as follows.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement,
"AFFILIATE" has the meaning ascribed to such term by subsection 1(4) of
the CANADA BUSINESS CORPORATIONS ACT;
"AGREEMENT" means this agreement to purchase shares including all
attached schedules, as the same may be supplemented, amended, restated
or replaced from time to time;
"ARTICLES" means the respective articles of incorporation, amendment,
continuance and/or amalgamation, as the case may be, of Cascade or of
its Subsidiaries;
"ASSETS" means all of the assets, real and personal, tangible and
intangible, and undertaking of Cascade or of its Subsidiaries, as the
case may be;
"BOOKS AND RECORDS" means the accounting records and all books,
records, books of account, sales and purchase records, lists of
suppliers and customers, business reports and research and development
information of Cascade and each of the Subsidiaries, including without
limitation, all data and information stored electronically or on
computer related media;
"BUSINESS" means the business carried on by P.M. Xxxxxx Ltd.,
consisting in the manufacturing, distribution and servicing of heating,
ventilation and air purification systems;
"BUSINESS DAY" means a day other than a Saturday or Sunday and on which
most Canadian chartered banks are open for the transaction of domestic
business in Montreal, Quebec;
"CLAIMS" means any domestic or foreign demand, action, cause of action,
damage, loss, cost, liability, expense or requirements, governmental or
otherwise, including the cost of legal representation in respect
thereof and any interest or penalty arising in connection therewith;
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"CLOSING" means the completion of the sale to, and purchase by, Dectron
of, the Shares and the completion of all other transactions
contemplated by this Agreement which are to occur contemporaneously
with the purchase and sale of the Shares;
"CLOSING DATE" means December 4, 1998, or such other Business Day as
the Parties agree in writing as the date that the Closing shall take
place;
"CLOSING TIME" means 10:00 a.m. on the Closing Date or such other time
on that date as the Parties agree in writing that the Closing shall
take place;
"DATA ROOM" means the data room referred to in Section 7.3;
"EMPLOYEES" means the employees of the Business;
"ENCUMBRANCE" means any security interest, mortgage, lien, hypothec,
pledge, security by way of assignment, charge, deemed trust or a voting
trust or pooling or any other shareholders agreement with respect to
securities, an adverse claim or any other right or option, affecting
the Assets or the Shares;
"ENVIRONMENTAL LAWS" means all federal, provincial or municipal
statutes, regulations, by-laws, or policies and orders of any
Governmental Authority, having the force of law, relating in whole or
in part to the protection of the environment;
"FINANCIAL STATEMENTS" means (i) the audited consolidated financial
statements of Cascade for the fiscal year ended April 30th, 1998,
consisting of a balance sheet, statement of earnings and retained
earnings, statement of changes in financial position, the notes thereto
and the report of the auditor thereon, and (ii) the unaudited interim
financial statements of Cascade for the five-month period from May 1st,
1998 to September 30th, 1998 inclusively, consisting of a balance
sheet, statement of income and retained earnings, copies of which are
attached as Schedule 3.6;
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
accounting principles from time to time approved by the Canadian
Institute of Chartered Accountants, or any successor institute,
applicable as at the date on which any calculation or determination is
required to be made in accordance with generally accepted accounting
principles, and where the Canadian Institute of Chartered Accountants
includes a recommendation in its Handbook concerning the treatment of
any accounting matter, such recommendation shall be regarded as the
only generally accepted accounting principle applicable to the
circumstances that it covers;
"GOVERNMENTAL AUTHORITY" means any government whether federal,
provincial or municipal and any governmental agency, governmental
authority, governmental tribunal or governmental commission of any kind
whatever;
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"INCLUDING" means "including without limitation" and the term
"including" shall not be construed to limit any general statement which
it follows to the specific or similar items or matters immediately
following it;
"LICENCE" means any licence, permit approval, right, privilege,
concession or franchise issued, granted, conferred or otherwise created
by a Governmental Authority;
"MATERIAL CONTRACTS" has the meaning set forth in Schedule 7.3;
"PERMITTED ENCUMBRANCES" means:
(a) inchoate or statutory liens for taxes or utility rates or
charges not at the time overdue;
(b) inchoate or statutory liens for overdue taxes or utility rates
or charges the validity of which Cascade or the Subsidiaries
is contesting in good faith but only for so long as such
contestation effectively postpones enforcement of any such
liens taxes or utility rates or charges;
(c) statutory liens incurred or deposits made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance and similar legislation;
(d) liens and privileges arising out of any judgment with respect
to which Cascade or the Subsidiaries intends to prosecute an
appeal or proceedings for review but only for so long as there
is a stay of execution pending the determination of such
appeal or proceedings for review;
(e) security given by Cascade or the Subsidiaries to a public
utility or any Governmental Authority when required in the
ordinary course of business; and
(f) construction or repair or storage liens arising in the
ordinary course of business which are not overdue or which are
being contested in good faith;
any such overdue taxes or utility rates or charges that are contested,
any such judgment giving rise to any liens or privileges, any such
security given to public utilities and any such construction repair or
storage liens, that are known to the Vendors, shall be disclosed in
Schedule 3 hereto;
"PERSON" shall be broadly interpreted and includes an individual, body
corporate, partnership, Joint venture, trust, association,
unincorporated organization, the Crown, any Governmental Authority or
any other entity recognized by law;
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"PRIME RATE" for any day means the rate of interest expressed as a rate
per annum that the National Bank of Canada establishes at its head
office in Montreal, Quebec as the reference rate of interest that it
shall charge on that day for Canadian dollar demand loans to its
customers in Canada and which it at present refers to as its prime
rate;
"PURCHASE PRICE" means the purchase price to be paid by Dectron for the
Shares as provided in Section 2.2;
"SUBSIDIARIES" means the subsidiaries (as such term is understood in
the CANADA BUSINESS CORPORATIONS ACT) of Cascade, namely P.M. Xxxxxx
Ltd., Purafil Canada Ltee and 000000 Xxxxxx Inc.;
"SHARES" means all of the issued and outstanding shares in the share
capital of Cascade, namely the outstanding shares specified in the
preamble hereto;
1.2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. All accounting and financial
terms used herein, unless specifically provided to the contrary, shall
be interpreted and applied in accordance with Generally Accepted
Accounting Principles.
1.3 PREAMBLE AND SCHEDULES. The Preamble and Schedules to this Agreement
form an integral part hereof. All Schedules shall form an integral part
of the Data Room and shall as well be subject to the due diligence
review.
1.4 HEADINGS. The division of this Agreement into articles, sections,
subsections and schedules and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The article, section, subsection and
schedule headings in this Agreement are not intended to be full or
precise descriptions of the text to which they refer and are not to be
considered part of this Agreement. All uses of the words "hereto",
"herein", "hereof", "hereby" and "hereunder" and similar expressions
refer to this Agreement and not to any particular section or portion of
it. References to an Article, Section, Subsection or Schedule refer to
the applicable article, section, subsection or schedule of this
Agreement.
1.5 NUMBER AND GENDER. In this Agreement, words in the singular include the
plural and vice-versa and words in one gender include all genders.
1.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, negotiations, discussions and
understandings, written or oral, between the Parties in respect of the
purchase and sale of the Shares. There are no representations,
warranties, conditions, other agreements or acknowledgements, whether
direct or collateral, express or implied, that form part of or affect
this Agreement, or which induced any party to enter into this Agreement
or
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on which reliance is placed by any party, except as specifically set
forth in this Agreement or in the Closing Documents.
1.7 AMENDMENT. This Agreement may be amended, modified or supplemented only
by a written agreement signed by each party.
1.8 WAIVER OF RIGHTS. Any waiver of, or consent to depart from the
requirements of any provision of this Agreement shall be effective only
if it is in writing and signed by the party giving it, and only in the
specific instance and for the specific purpose for which it has been
given. No failure on the part of any party to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver of
such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of
any other right.
1.9 APPLICABLE LAW. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws in force in the Province of
Quebec (excluding any conflict of laws, rule or principle which might
refer such interpretation to the laws of another jurisdiction). Each
party irrevocably submits to the non-exclusive jurisdiction of the
courts of Quebec with respect to any matter arising hereunder or
related hereto.
1.10 CURRENCY. Unless specified otherwise, all statements of or references
to dollar amounts in this Agreement are to lawful money of Canada.
1.11 PERFORMANCE ON HOLIDAYS. If any action is required to be taken pursuant
to this Agreement on or by a specified date which is not a Business
Day, then such action shall be valid if taken on or by the next
succeeding Business Day.
1.12 CALCULATION OF TIME. In this Agreement, a period of days shall be
deemed to begin on the first day after the event which began the period
and to end at 6:00 p.m. (Montreal time) on the last day of the period.
If, however, the last day of the period does not fall on a Business
Day, the period shall terminate at 6:00 p.m. (Montreal time) on the
next Business Day.
1.13 THIRD PARTY BENEFICIARIES. Nothing in this Agreement or in any Closing
Document is intended expressly or by implication to, or shall, confer
upon any Person other than the Parties, any rights or remedies of any
kind.
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ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. Dectron agrees to purchase the Shares and
the Vendors agree to sell and transfer their Shares to Dectron on the
Closing Time and subject to the terms and conditions of this Agreement.
2.2 PURCHASE PRICE. The Purchase Price for the Shares is Three Million Five
Hundred Thousand Dollars ($3,500,000), payable in full by bank draft or
wire transfer of funds on the Closing Time. The Purchase Price shall be
apportioned and paid to the Vendors pursuant to Schedule 2.2.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly represent and warrant to Dectron as set out in the following
Subsections of this Section and acknowledge that Dectron is relying upon such
representations and warranties in entering into this Agreement. Dectron
acknowledges that the representations and warranties of the Vendors set forth in
this Article 3 are qualified by the information disclosed in or referred to in
this Agreement and in Schedule 3 ("Disclosure Schedule") hereto.
3.1 CORPORATE MATTERS.
3.1.1 Cascade is a company amalgamated and existing under the laws
of the province of Quebec, and no proceedings have been taken
or authorized by Cascade with respect to (i) the bankruptcy,
insolvency, liquidation, dissolution or winding up of Cascade
or any of the Subsidiaries, or (ii) with respect to any
amalgamation, merger, consolidation, arrangement or
reorganization relating to Cascade or any of the Subsidiaries.
3.1.2 Cascade has no subsidiaries other than the Subsidiaries, each
being a corporation incorporated under the CANADA BUSINESS
CORPORATIONS ACT. All of the issued and outstanding shares of
the Subsidiaries are held by Cascade, except for one (1)
preferred share of P.M. Xxxxxx Ltd. held by 122248 Canada Inc.
(which is a wholly-owned subsidiary of Cascade), in each case
by good and marketable title, free and clear of all
Encumbrances.
3.1.3 Each of Cascade and its Subsidiaries has the corporate power
and capacity to own or lease its Assets and to carry on its
business as at present carried on. Cascade's and 000000 Xxxxxx
Inc.'s businesses are limited to the holding of shares in P.M.
Xxxxxx Ltd. and Purafil Canada Ltee does not carry on
business. P.M. Xxxxxx Ltd. possesses all Licences material to
the conduct of the Business. Neither the nature of the
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Business nor the location or character of any of the Assets
requires Cascade or the Subsidiaries to be registered,
licensed or otherwise qualified as an extra-provincial or
foreign corporation or to be in good standing in any
jurisdiction other than jurisdictions where they are duly
registered, licensed or otherwise qualified for such purpose
and as such are in good standing pursuant thereto.
3.1.4 This Agreement has been duly executed and delivered by each of
the Vendors and constitutes a valid and binding obligation of
each of the Vendors enforceable against each of the Vendors in
accordance with its terms.
3.1.5 A true copy of the Articles and all by-laws of each of Cascade
and the Subsidiaries, which constitute all of their respective
constating documents and by-laws, shall be provided in the
Data Room.
3.1.6 The corporate records of each of Cascade and the Subsidiaries
to be provided in the Data Room shall reflect all material
resolutions passed by the directors and shareholders of each
of Cascade and the Subsidiaries for the period covered by
these corporate records, which shall be for a minimum of four
(4) years.
3.2 AUTHORIZED AND ISSUED CAPITAL OF CASCADE. The authorized capital and
the issued and outstanding shares of Cascade immediately prior to the
Closing is as described in the preamble hereto, all of which shares
have been validly issued and are outstanding as fully paid and
non-assessable shares.
3.3 TITLE TO SHARES. Each of the Vendors has good and marketable title to
the Shares registered in his or its name (as the case may be), free and
clear of all Encumbrances. The Shares shall constitute all of the
issued and outstanding shares of Cascade. On the Closing Date, there
shall be no restrictions on the transfer of the Shares except those set
forth in Cascade's Articles.
3.4 ABSENCE OF CONFLICTING AGREEMENTS. None of the execution and delivery
of, or the observance and performance by the Vendors of, any covenant
or obligation under this Agreement or pursuant to or in connection with
the Closing:
3.4.1 contravenes or results in, or will contravene or result in, a
violation of or a default under (with or without the giving of
notice or lapse of time, or both) or in the acceleration of
any obligation under:
(a) the Articles or directors or shareholders resolutions
of Cascade or of the Subsidiaries; or
(b) the provisions of any Material Contract to which
Cascade or P.M. Xxxxxx Ltd. is a party, or by which
it or its material Assets may be bound or affected.
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3.5 CONSENTS, APPROVALS. To the best of the Vendors' knowledge, no consent,
approval, authorization, registration, declaration or filing with any
Governmental Authority is required by the Vendors or Cascade in
connection with the execution and delivery by the Vendors of this
Agreement, or the observance and performance by the Vendors of their
obligations under this Agreement.
3.6 FINANCIAL STATEMENTS. The Financial Statements have been prepared in
accordance with Generally Accepted Accounting Principles, applied on a
basis consistent with that of the preceding periods, and present fairly
the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and financial condition of Cascade and each of the
Subsidiaries and the results of the operations of Cascade and each of
the Subsidiaries, as at the dates thereof and for the periods covered
thereby. No information has become available to the Vendors or Cascade
that would render the Financial Statements materially and adversely
incomplete or inaccurate.
3.7 UNDISCLOSED LIABILITIES. Neither Cascade nor any of the Subsidiaries
has any material liabilities except liabilities disclosed or provided
for in the Financial Statements and liabilities incurred in the
ordinary course of business since September 30, 1998, which are
consistent with past practice, are not, in the aggregate, material and
adverse to Cascade or the Shares, or to the Business and do not
materially violate any covenant contained in this Agreement or
constitute a material breach of any representation or warranty made in
or pursuant to this Agreement.
3.8 ABSENCE OF CHANGES. Since September 30, 1998:
3.8.1 P.M. Xxxxxx Ltd. has conducted the Business in the ordinary
course and has used its best efforts to preserve the Business
and the Assets;
3.8.2 there has not been any change in the condition of the Business
other than changes in the ordinary course of business and such
changes have not, either individually or in the aggregate,
been materially adverse and have not had a material adverse
effect on the condition of the Business; and
3.8.3 there has not been any damage, destruction, loss, labour
dispute or other event, development or condition of any
character (whether or not covered by insurance) which has had
a material adverse affect on Cascade, P.M. Xxxxxx Ltd. or the
condition of the Business.
3.9 ABSENCE OF UNUSUAL TRANSACTIONS. Since September 30, 1998, neither
Cascade nor the Subsidiaries has, other than in the ordinary course of
business:
(a) transferred, assigned, sold or otherwise disposed of any of
the Assets;
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(b) made any material change in the method of billing customers or
the credit terms made available by the Business to customers
of the Business;
(c) increased the compensation paid or payable to the Employees or
increased the benefits to which such Employees are entitled
under any benefit plan or created any new benefit plan for any
such Employees nor has there been the creation of any new
executive managerial position;
(d) entered into, modified, amended or terminated any Material
Contract;
(e) issued or sold any of its shares or other securities or
issued, granted or delivered any right, option or other
commitment for the issuance of any such securities;
(f) declared or paid any dividend or other distribution in respect
of any shares in its capital or purchased or redeemed any such
shares.
3.10 TAX MATTERS. Cascade and each of the Subsidiaries has prepared and
filed all its income and goods and services tax ("Taxes") returns
substantially on time and with all appropriate Governmental Authorities
for all fiscal periods ending prior to the date hereof. Each such tax
return was correct and complete in all material respects.
Cascade and each of the Subsidiaries has paid all Taxes due and payable
by it as reflected on said tax returns and has paid all assessments and
reassessments it has received in respect of same. The provisions for
Taxes reflected in the Financial Statements are sufficient to cover all
liabilities for Taxes that have been assessed against Cascade and each
of the Subsidiaries or that are accruing due in respect of the
Business, during the periods covered by the Financial Statements and
all prior periods. Except to the extent provided for in the Financial
Statements, none of Cascade or the Subsidiaries is liable for any Taxes
at the date hereof or for the payment of any instalment in respect of
Taxes due in respect of its current taxation year up to the date hereof
and, except as aforesaid, no such Taxes are required to be provided
for.
There are no reassessments of Taxes that have been issued and are
outstanding and Cascade is not aware of any pending or threatened
assessment or reassessment for Taxes. None of Cascade or the
Subsidiaries has executed or filed with any Governmental Authority any
agreement extending the period for assessment, reassessment or
collection of any Taxes.
None of the Vendors is a non-resident of Canada, as defined in the
INCOME TAX ACT (Canada). Cascade and each of the Subsidiaries is a
Canadian controlled private corporation, as defined in the INCOME TAX
ACT (Canada).
3.11 CONTRACTS. Except for the Material Contracts to be provided in the Data
Room, neither Cascade nor P.M. Xxxxxx Ltd. is a party to or bound by
any Material Contract, whether oral
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or written. The Material Contracts are all in full force and effect
with no amendments and contain no change of corporate control provision
that will not have been waived by the Closing Date. Each of Cascade and
the Subsidiaries has complied with all material terms thereof, has paid
all amounts due thereunder, has not waived any material rights
thereunder and no material default or breach exists in respect thereof
on the part of any of the parties thereto and no event has occurred
which, after the giving of notice or the lapse of time or both, would
constitute such a material default or breach.
3.12 BANK ACCOUNTS; ABSENCE OF GUARANTEES. Attached as Schedule 3.12 hereto
is a list of all accounts maintained by Cascade and the Subsidiaries
with any financial institution as well as the complete list of the
names of persons exercising signing authority thereunder and details as
to their respective signing authority thereunder. Neither Cascade nor
the Subsidiaries has given or agreed to give, or is a party to or bound
by, any guarantee of indebtedness or other obligations of third parties
or any other commitment by which Cascade or any of the Subsidiaries is,
or is contingently, responsible for such indebtedness or other
obligations.
3.13 RESTRICTIONS ON BUSINESS. Neither Cascade nor the Subsidiaries is a
party to any agreement, lease, mortgage, security document, obligation
or instrument, limiting its right to conduct any business.
3.14 COMPLIANCE WITH APPLICABLE LAW. To the best of the Vendors' knowledge,
P.M. Xxxxxx Ltd. is conducting its Business in compliance with all
material applicable laws, and not in breach of any material provision
of any applicable law, except for breaches which in the aggregate are
not material.
3.15 COLLECTIVE AGREEMENTS. Neither Cascade nor the Subsidiaries is a party
to any Collective Agreement. No trade union, council of trade unions,
employee bargaining agency or affiliated bargaining agent holds
bargaining rights with respect to any of the Employees by way of
certification, interim certification, voluntary recognition, or
successor rights. To the best of knowledge of Vendors, there are no
current threatened or pending union organizing activities involving the
Employees.
3.16 LITIGATION. There is no material pending claim, demand, suit, action,
cause of action, litigation, investigation, grievance, arbitration or
governmental proceeding, including appeals and applications for review,
in progress against, by or relating to Cascade or the Subsidiaries, or
adversely affecting the Shares, the Assets or the Business, nor to the
best of the knowledge of the Vendors are any of the same threatened.
3.17 ASSETS. Except for Permitted Encumbrances and as disclosed in the
Financial Statements or elsewhere in this Agreement, P.M. Xxxxxx Ltd.
has good and marketable title to all of its Assets free and clear of
all Encumbrances.
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3.18 INTELLECTUAL PROPERTY RIGHTS. Schedule 3.18 sets forth a true and
complete list of all registered patents and trademarks owned or held by
Cascade or P.M. Xxxxxx Ltd. These intellectual property rights are
owned by or validly licensed to Cascade or P.M. Xxxxxx Ltd. To the best
knowledge of the Vendors, all registrations and filings necessary to
preserve the rights of Cascade or P.M. Xxxxxx Ltd. in said intellectual
property rights described in Schedule 3.18 have been made in the
jurisdictions mentioned in Schedule 3.18 and the Vendors are not aware
of any material infringement of, or other material interference with
said intellectual property rights by third parties or any claim by any
Person that any of these intellectual property rights are, or may be,
invalid or unenforceable. The shareholders hereby confirm that if any
of them hold Intellectual Property Rights of Cascade or its
Subsidiaries in their name or in the name of an affiliate of them, they
hereby renounce, and will cause any such affiliate to renounce, to any
proprietary claim to such Intellectual Property Rights and agree to
execute any documentation that may be reasonably required to effect a
transfer of their rights to Cascade or any of its Subsidiaries.
3.19 ENVIRONMENTAL MATTERS. P.M. Xxxxxx Ltd. possesses the Environmental
permits listed in Schedule 3.19, and all of which are in full force and
effect and, to the best of the Vendors' knowledge, have been complied
with in all material respects. There are no proceedings in progress, or
to the knowledge of the Vendors, Cascade or the Subsidiaries pending or
threatened, which may result in the cancellation, revocation,
suspension, or modification of any said Environmental permit. To the
best of the Vendors' knowledge, neither the Subsidiaries nor Cascade
has been charged with or convicted of an offence for non-compliance
with or breach of any Environmental Law nor have the Subsidiaries or
Cascade been fined or otherwise sentenced for non-compliance with or
breach of any Environmental Law, and neither the Subsidiaries nor
Cascade is under investigation related to any breach or alleged breach
of or non-compliance with any Environmental Law.
3.20 MAJOR SUPPLIERS AND CUSTOMERS. To the best knowledge of the Vendors, no
major supplier or customer has indicated its intention to change its
relationship or any material terms upon which it will conduct business
with Cascade or the Subsidiaries in the future
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DECTRON
Dectron hereby represents and warrants to the Vendors as set out in the
following Subsections of this Section and acknowledges that the Vendors are
relying upon such representations and warranties in entering into this
Agreement. The Vendors acknowledge that the representations and warranties of
Dectron set forth in this Article 4 are qualified by the information disclosed
in or referred to in this Agreement.
4.1 CORPORATE MATTERS. Dectron is a corporation duly incorporated,
organized, and validly existing in good standing under the laws of its
jurisdiction of incorporation. No proceedings
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have been taken or authorized by Dectron or, to the best of Dectron's
knowledge, by any other Person, with respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of Dectron.
4.2 CORPORATE POWER AND DUE AUTHORIZATION. Dectron has the corporate power
and capacity to execute and deliver, and to observe and perform its
covenants and obligations under, this Agreement. Dectron has taken all
corporate action necessary to authorize the execution and delivery of,
and the observance and performance of its covenants and obligations
under this Agreement.
4.3 ABSENCE OF CONFLICTING AGREEMENTS. None of the execution and delivery
of, or the observance and performance by Dectron of, any covenant or
obligation under this Agreement contravenes or results in (with or
without the giving of notice or lapse of time, or both) or will
contravene or violate in any material respect or result in any material
breach or default of, or acceleration of any obligation under the
articles, by-laws, directors' or shareholders' resolutions of Dectron,
or any agreement, lease, mortgage, security document, obligation or
instrument to which Dectron is a party or by which Dectron or its
assets is affected or bound.
4.4 ENFORCEABILITY OF OBLIGATIONS. This Agreement has been duly executed
and delivered by Dectron, and this Agreement constitutes a valid and
binding obligation of Dectron enforceable against Dectron in accordance
with its terms.
4.5 CONSENTS AND APPROVALS. No consent, approval, authorization,
registration, declaration or filing with any Governmental Authority is
required by Dectron in connection with the execution and delivery by
Dectron of this Agreement, or the observance and performance by Dectron
of its obligations under this Agreement, except for the filing of a
copy of this Agreement in accordance with US Securities Exchange
Commission requirements, if any.
ARTICLE 5
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PARTIES. All
representations and warranties made by the Parties in this Agreement
shall survive the Closing for a period of two (2) years after the
Closing Date except for the representation and warranty set forth in
Section 3.10, which shall survive until the expiry of the last day upon
which any Governmental Authority may, in the absence of fraud or any
misrepresentation that is attributable to neglect, carelessness or
wilful default, issue an assessment for Taxes owing by Cascade in
respect of a period ending on or prior to the Effective Time.
After the expiration of such time periods, the Parties shall have no
further liability hereunder with respect to such representations and
warranties except with respect to claims properly made within such time
periods.
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ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND WARRANTIES. The
Vendors agree with Dectron and Dectron agrees with the Vendors (the
party agreeing to indemnify another party being called the
"INDEMNIFYING PARTY" and the party to be indemnified being called the
"INDEMNIFIED PARTY") to indemnify and save harmless the Indemnified
Party, effective as and from the Closing Time, from and against any
Claims which may be made or brought against the Indemnified Party or
which it may suffer or incur as a result of, in respect of, or arising
out of any non-fulfilment of any covenant or agreement on the part of
the Indemnifying Party under this Agreement or any closing document or
any incorrectness in or breach of any representation or warranty of the
Indemnifying Party contained herein or in any closing document. Any
amount which an Indemnifying Party is liable to pay to an Indemnified
Party pursuant to this Section 6.1 shall bear interest at a rate per
annum equal to the Prime Rate, calculated and payable monthly, both
before and after judgment, from the date the Indemnified Party
disbursed funds, suffered damages or losses or incurred a loss,
liability or expense in respect of a Claim, to the date of payment by
the Indemnifying Party to the Indemnified Party. Any amount which an
Indemnifying Party is required to pay to an Indemnified Party pursuant
to this Section 6.1 (including interest thereon) is called an
"INDEMNIFIED LOSS". The foregoing obligation of indemnification in
respect of such Claims shall be subject to the time limitation set
forth in Sections 5.1 and ? hereof respecting the survival of the
representations and warranties of the parties.
6.2 THIRD PARTY CLAIMS. If a Claim is made against an Indemnified Party by
a third party for which the Indemnified Party may be entitled to
indemnification under Section 6.1, the Indemnified Party shall give
notice (the "INDEMNITY NOTICE") to the Indemnifying Party specifying
the particulars of such claim within 30 days after it receives
notification of the Claim. Failure to give such notice within such time
period shall not prejudice the rights of an Indemnified Party except to
the extent that the failure to give such notice materially adversely
affects the ability of the Indemnifying Party to defend the Claim or to
cure the breach or incorrectness of the representation, warranty,
covenant or agreement giving rise to the Claim. The Indemnifying Party
shall have the right to participate in any negotiations or proceedings
with respect to such Claim at its own expense. The Indemnified Party
shall not settle or compromise any such Claim without the prior written
consent of the Indemnifying Party, unless the Indemnifying Party has
not, within seven Business Days after the giving of the Indemnity
Notice, given notice to the Indemnified Party that it wishes to dispute
such Claim. If the Indemnifying Party does give such a notice, it shall
have the right at its own cost and expense to assume the defence of
such Claim and to defend such Claim in the name of the Indemnified
Party. The Indemnified Party shall provide to the Indemnifying Party
access to all files, books, records and other information in its
possession or control which may be relevant to the defence of such
Claim. The Indemnified Party shall co-operate in all reasonable
respects in the defence of such Claim but at the expense of the
Indemnifying
- 15 -
Party. If the Indemnifying Party fails, after the giving of such
notice, diligently and reasonably to defend such Claim throughout the
period that such Claim exists, its right to defend the Claim shall
terminate and the Indemnified Party may assume the defence of such
Claim at the sole expense of the Indemnifying Party. In such event, the
Indemnified Party may compromise or settle such Claim, without the
consent of the Indemnifying Party. The Indemnifying Party agrees to
make all reasonable efforts to assist the Indemnified Party to defend
or settle any Claim, with services billed at normal rates of
remuneration.
6.3 Notwithstanding Sections 6.1 and 6.2, the Vendors' obligation to
indemnify Dectron shall be limited to Claims which individually exceed
the sum of $ 5,000 per claim and which in the aggregate exceed the sum
of $ 125,000 and the Vendors' liability towards Dectron shall be joint,
in proportion to their respective holdings percentage of Class A shares
sold to Dectron pursuant to this Agreement, and shall not, in the
aggregate, exceed the Purchase Price.
ARTICLE 7
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS FOR THE BENEFIT OF DECTRON. The sale by the Vendors and the
purchase by Dectron of the Shares is subject to the following
conditions, which are for the exclusive benefit of Dectron and which
are to be performed or complied with at or prior to the Closing Time:
7.1.1 the Vendors shall have performed or complied with all of the
covenants contained in this Agreement to be performed or
complied with by the Vendors at or prior to the Closing Time;
7.1.2 Dectron shall have completed its due diligence review of the
Seller, Cascade and the Subsidiaries in accordance with
Section 7.3 hereof and, acting reasonably, be satisfied with
the results thereof;
7.1.3 the indebtedness of Cascade to Novacap in the amount of
$500,000, as well as any other indebtedness owing to Cascade
by any director, officer or shareholder of Cascade or any of
the Subsidiaries or owing by Cascade to any such Person, shall
be reimbursed in full, including without limitation as to
principal, interest, fees and penalties (if any), at or before
the Closing;
7.1.4 no action or proceeding in Canada, domestic or foreign, will
be pending or threatened by any person or Governmental Agency
to enjoin, restrict or prohibit the sale and purchase of the
Shares contemplated hereby;
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7.1.5 all consents, approvals, Orders and authorizations of any
Person or Governmental Authorities (or registrations,
declarations, filings or recordings with any of them),
required for the Closing (other than routine post-closing
notifications or filings), shall have been obtained or made on
or before the Closing Time;
7.1.6 at the Closing Time, all directors of Cascade and each of the
Subsidiaries shall submit a resignation from all positions
with Cascade and each of the Subsidiaries, and a release by
each of them as well as the Vendors of all claims against
Cascade and each of the Subsidiaries up to the Closing Time
except for any matters for which such director is entitled to
indemnity under the by-laws of Cascade and each of the
Subsidiaries and any insurance related thereto; furthermore,
Xx. Xxxxxx Xxxxxxxxx shall have resigned his positions with
Cascade and its Subsidiaries on the terms agreed upon
concurrently hereto;
7.1.7 at Closing, the Vendors shall deliver or cause to be delivered
to Dectron share certificates representing the Shares duly
endorsed by the Vendors for transfer, or accompanied by
irrevocable security transfer powers of attorney duly
executed, which shall be returned to Cascade against delivery
of one or more new share certificates representing the Shares
issued by Cascade to Dectron and evidence that Dectron has
been entered on the books of Cascade as the sole holder of the
Shares; and 0000-0000 Xxxxxx Inc. shall deliver to Dectron
satisfactory evidence confirming Cascade Technologies
(Industriel) Inc. has changed its corporate name to a name
that does not include reference to Cascade or a derivative or
similarity thereof; furthermore, the Vendors shall provide to
Dectron a legal opinion on Cascade and P. M. Xxxxxx Ltd.'s
corporate status in a reasonable form and content;
7.1.8 the representations and warranties contained in Article 3
shall be true and correct on and as of the Closing Date with
the same effect as though made on and as of such date and the
Vendors shall have delivered to Dectron a solemn declaration
to such effect, dated such date, provided that the receipt of
such solemn declaration and the Closing herein provided for
shall not be a waiver of the representations, warranties,
covenants and agreements which shall continue in full force
and effect as provided herein; and
7.1.9 Save and except for Investissements Novacap Inc., Vendors and
X. Xxxxxxxxx shall on or before closing have executed and
delivered to Dectron a reasonable Non- Competition,
Non-Disclosure and Non-Sollicitation Agreement limited to two
(2) years in duration regarding the non-compete portion
thereof.
In case any material condition to be performed or complied with for the
benefit of Dectron at or prior to the Closing Time has not been
performed or complied with in any material respect at or prior to the
Closing Time, Dectron, without limiting any other right that Dectron
has, may at its sole option, either (i) rescind this Agreement by
notice to the Vendors, and
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in such event Dectron shall be released from all obligations hereunder;
or (ii) waive compliance with any such condition in whole or in part on
such terms as may be agreed upon without prejudice to any of its rights
of rescission in the event of non-performance or non-compliance with
any other condition in whole or in part; and, if Dectron rescinds this
Agreement, the Vendors shall also be released from all obligations
hereunder.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS. The sale by the Vendors and
the purchase by Dectron of the Shares is subject to the following
conditions, which are for the exclusive benefit of the Vendors and
which are to be performed or complied with at or prior to the Closing
Time:
7.2.1 Dectron shall have performed or complied with all of the
terms, covenants and conditions of this Agreement to be
performed or complied with by Dectron at or prior to the
Closing Time;
7.2.2 at Closing, Dectron shall deliver to the Vendors the certified
cheques or bank drafts issued by Dectron to the order of the
Vendors in accordance with Section 2.2 hereof;
7.2.3 the representations and warranties contained in Article 4
shall be true and correct on and as of the Closing Date with
the same effect as though made on and as of such date and
Dectron shall have delivered to the Vendors a solemn
declaration to such effect, dated such date, provided that the
receipt of such solemn declaration and the Closing herein
provided for shall not be a waiver of the representations,
warranties, covenants and agreements which shall continue in
full force and effect as provided herein; and
7.2.4 the Vendors shall have been reimbursed all loans and advances
made to Cascade or to any of its Subsidiaries.
In case any material condition to be performed or complied with for the
benefit of the Vendors at or prior to the Closing Time has not been
performed or complied with in any material respect at or prior to the
Closing Time, the Vendors, without limiting any other right that
Vendors have, may at their sole option, either (i) rescind this
Agreement by notice to Dectron, and in such event Vendors shall be
released from all obligations hereunder; or (ii) waive compliance with
any such condition in whole or in part on such terms as may be agreed
upon without prejudice to any of their rights or rescission in the
event of non-performance or non-compliance of any other condition in
whole or in part; and, if Vendors rescind this Agreement, Dectron shall
also be released from all obligations hereunder.
Notwithstanding anything provided for in this Agreement to the
contrary, the Vendors shall be entitled to request that the terms of
the transactions provided for under this Agreement be restructured and
modified in any reasonable fashion to attain a more efficient tax
treatment of the transactions provided for in this Agreement for the
Vendors, without causing adverse
- 18 -
tax or other consequences for the other Parties, and Dectron and the
Vendors and/or any one of them agree to execute and deliver any
reasonable document and do all reasonable things considered necessary
or useful in this connection. Without limiting the generality of the
foregoing, such adjustments could include (i) the declaration (or
deemed declaration) by Cascade (and/or its subsidiaries), prior to the
Closing Date, of a dividend out of the so-called "Safe Income" account
maintained for income tax purposes and, as appropriate, corresponding
proportionate reduction of the Purchase Price; and (ii) the sale by the
shareholders of 0000-0000 Xxxxxx Inc. of their shares of such
corporation to permit Xxxxxx Xxxxxxxxx to benefit fully from his
capital gains tax exemption. This may also include the redemption and
cancellation by 0000-0000 Xxxxxx Inc. of the shares held by 1853-9130
prior to the Closing Time with corresponding adjustments to be made to
the Purchase Price and conditions of the Purchase. No adjustment
required herein will result in increasing the total consideration paid
by Dectron under all of the transactions envisaged under this
Agreement.
7.3 DUE DILIGENCE. Within two (2) Business Days following the execution of
this Agreement and of a Confidentiality Agreement in favour of Cascade
and the Vendors and in a form satisfactory to the Vendors, Dectron
shall be authorized to commence a due diligence review of Cascade's and
P.M. Xxxxxx Ltd.'s Businesses with a view of verifying the accuracy of
the representations and warranties set forth in Article 3 hereof,
according to the following.
In this respect, by the second (2nd) Business Day following the
execution of this Agreement, the Vendors shall first cause Cascade to
establish a data room (the "Data Room") and to assemble therein in
respect of Cascade and the Subsidiaries the documents and information
relating to the Assets and the Business specified in Schedule 7.3, the
whole so as to provide Dectron with the opportunity to verify same for
a period of up to fifteen (15) days thereafter, provided that if
Dectron requires an additional delay (not to exceed an additional seven
(7) days) to conduct such verification, based on reasonable grounds,
then the Vendors shall not unreasonably withhold such consent (which in
any case shall be limited to an additional seven (7) days) and the
other delays set forth in this Section 7.3 shall be extended by the
same additional delay.
The Vendors shall also cause Cascade to make the following persons
available to respond to Dectron's reasonable questions for additional
information during normal business hours and upon reasonable prior
notice at a due diligence question period to be held between the tenth
(10th) to the fifteenth (15) day inclusively following the commencement
of Dectron's due diligence: the President, Vice-Presidents and
Controller of Cascade and P.M. Xxxxxx Ltd.; it being understood,
however, that Dectron shall not communicate with any other employee,
director, officer or agent nor any customer or supplier of the Vendors,
Cascade or the Subsidiaries without the Vendor's prior written consent.
Dectron shall advise the Vendors in writing not later than the
twentieth (20th) day following commencement of the due diligence
process of any adverse element or material discrepancy between its due
diligence review and the representations and warranties set forth in
Article
- 19 -
3 and, as the case may be, as to its decision to proceed or not to
Closing in such respect. Should Dectron fail to so advise the Vendors
within such delay, Dectron shall be deemed to have advised the Vendors
that Dectron wishes to proceed to Closing.
ARTICLE 8
CLOSING AND CLOSING DOCUMENTS
8.1 CLOSING. The sale and purchase of the Shares shall be completed at the
Closing Time at the offices of Xxxxxxxxx Xxxxxx, 000 Xxxxxx Xxxxxxxx,
Xxxxx 0000, Xxxxxxxx, Xxxxxx.
ARTICLE 9
GENERAL
9.1 EXPENSES. Each party shall pay all expenses it incurs in authorizing,
preparing, executing and performing this Agreement and the transactions
contemplated hereunder, whether or not the Closing occurs, including
all fees and expenses of its legal counsel, bankers, investment
bankers, brokers, accountants or other representatives or consultants.
9.2 COMMISSION. Each party represents and warrants to the other party that
such other party will not be liable for any brokerage commission,
finder's fee or other similar payment in connection with the
transactions contemplated hereby because of any action taken by, or
agreement or understanding reached by, the first party.
9.3 TIME. Time is of the essence of each provision of this Agreement.
9.4 NOTICES. Any notice, demand or other communication (in this Section, a
"notice") required or permitted to be given or made hereunder shall be
in writing and shall be sufficiently given or made if:
9.4.1 delivered in person during normal business hours on a Business
Day and left with a receptionist or other responsible employee
of the relevant party at the applicable address set forth
below;
9.4.2 sent by prepaid first class mail; or
9.4.3 sent by any electronic means of sending messages, including
telex or facsimile transmission, which produces a paper record
("TRANSMISSION") during normal business hours on a Business
Day charges prepaid and confirmed by prepaid first class mail;
and
in the case of a notice to the VENDORS, addressed to them at:
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- INVESTISSEMENTS NOVACAP INC.
000 Xxxxxxx-Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xx. Xxxx-Xxxxxx Xxxxxxxxx or Xx. Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
- 0000-0000 XXXXXX INC.
0000, Xxxx-Xxxxx
Xxxxx-Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xx. Xxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
- XX. XXXXX XXXXXXXX
0000 Xxxxx-Xxxx
Xxxxx, Xxxxxx
X0X 0X0
- XX. XXXX XXXXXXX
00 Xxxxxx
Xxxxxxx-xxx-Xxxxxxx, Xxxxxx
X0X 0X0
- XX. XXXXX XXXX
2300 Xxxx, Condo 000
Xx-Xxxxxxx, Xxxxxx
X0X 0X0
and in the case of a notice to DECTRON, addressed to it at:
- DECTRON INTERNATIONALE INC.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xx. Xxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
- 21 -
Each notice sent in accordance with this Section shall be deemed to
have been received, either on the day it was delivered, or on the third
(3rd) Business Day after it was mailed (excluding each Business Day
during which there existed any general interruption of postal services
due to strike, lockout or other cause), or on the same day that it was
sent by Transmission, or on the first (1st) Business Day thereafter if
the day on which it was sent by Transmission was not a Business Day, as
the case may be. Any party may change its address for notice by giving
notice to the other Parties in the manner set out above.
9.5 PUBLIC ANNOUNCEMENTS. No party shall make any public statement or issue
any press release concerning the transactions contemplated by this
Agreement except as may be necessary to comply with the requirements of
all applicable laws or with the consent of the other parties which
consent shall not be unreasonably withheld. If any such public
statement or release is so required, the party making such disclosure
shall consult with the other Parties prior to making such statement or
release, and the Parties shall use all reasonable efforts, acting in
good faith, to agree upon a text for such statement or release which is
satisfactory to all Parties.
9.6 ASSIGNMENT. Neither party may assign any rights or benefits under this
Agreement, including the benefit of any representation or warranty, to
any Person. Each party agrees to perform its obligations under this
Agreement itself, and not to arrange in any way for any other Person to
perform those obligations. No assignment of benefits or arrangement for
substituted performance by one party shall be of any effect against the
other party except to the extent that other party has consented to it
in writing. Subject to the foregoing, this Agreement shall enure to the
benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation or
statutory arrangement of any party).
9.7 FURTHER ASSURANCES. Each party shall do such acts and shall execute
such further documents, conveyances, deeds, assignments, transfers and
the like, and will cause the doing of such acts and will cause the
execution of such further documents as are within its power as any
other party may in writing at any time and from time to time reasonably
request be done and or executed, in order to give full effect to the
provisions of each Closing Document.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts. Each executed counterpart shall be deemed to be an
original. All executed counterparts taken together shall constitute one
agreement.
9.9 FACSIMILE EXECUTION. To evidence the fact that it has executed this
Agreement, a party may send a copy of its executed counterpart to all
other Parties by facsimile transmission. That party shall be deemed to
have executed this Agreement on the date it sent such facsimile
transmission. In such event, such party shall forthwith deliver to the
other party the counterpart of this Agreement executed by such party.
- 22 -
TO WITNESS their agreement, the Parties have duly executed this Agreement at
Montreal, Quebec, as of the date indicated hereinabove.
DECTRON INTERNATIONALE INC. INVESTISSEMENTS NOVACAP INC.
Per: ------------------ Per: ------------------
0000-0000 XXXXXX INC. Per: ------------------
Per: ------------------ -------------------------
Xxxxxx Xxxxxxxxx XXXX XXXXXXX
------------------------ -------------------------
XXXXX XXXXXXXX XXXXX XXXX
