Exhibit 4.99
SHARE PURCHASE AGREEMENT
THIS share purchase AGREEMENT made as of May 31, 2002.
A M O N G:
API ELECTRONICS GROUP INC., an Ontario corporation,
with a business address located at 0000-000
Xxxxxxxxxx Xxx., Xxxxxxx, Xxxxxxx X0X 0X0
(the "Purchaser")
- and -
XXXXXX XXXXXX XXXXX, XXXX XXXX XXXXX, XXXXXXX XXXXX
XXXXX, XXXX XXXXXX, XXXXXX XXXXX, XXXXX XXXXX,
individuals residing in the Province of Ontario,
XXXXXXX XXXXXXX, an individual residing in the
Province of British Columbia, XXXXX XXXXXXX XXXXX, an
individual residing in the State of Georgia, and XXXX
XXXXX TREPANNIER, an individual residing in the State
of Florida
(each a "Vendor" and collectively, the "Vendors")
- and -
FILTRAN INC., a New York corporation, with a business
address located at 000 Xxxx Xxxxxx, Xxxxxxxx 0X,
Xxxxxxxxxxx, Xxx Xxxx, X.X.X. 13669 ("Filtran USA"),
FILTRAN LIMITED, an Ontario corporation, with a
business address located at 000 Xxxxxxxxx Xxxx Xxxxx,
Xxxxxx, Xxxxxxx ("Filtran Canada"),
CANADIAN DATAPLEX LTD., a Canadian corporation, with
a business address located at 0-000 Xxxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxx, Xxxxxxx X0X 0X0 ("CDL"), and
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TACTRON COMMUNICATIONS (CANADA) LIMITED, an Ontario
corporation, with a business address located at 0
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxx X0X 0X0 ("TCCL"),
(each a "Filtran Entity" and collectively, the
"Filtran Group")
BACKGROUND:
A. The Vendors are the registered holders of record and
beneficial owners of all the issued and outstanding shares in
the capital of each Filtran Entity (other than Filtran Canada
which is wholly owned by TCCL) in the proportions set out
below:
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FILTRAN USA
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COMMON SHARES PREFERRED/SPECIAL SHARES
-------------------------------------- ------------------------ -------------------------
Rose Xxxx Xxxxx 8 Nil
-------------------------------------- ------------------------ -------------------------
Xxxxxx Xxxxxx Xxxxx 42 Nil
-------------------------------------- ------------------------ -------------------------
Xxxxx Xxxxxxx Xxxxx 20 Nil
-------------------------------------- ------------------------ -------------------------
Coranne Xxxxx Xxxxx 10 Nil
-------------------------------------- ------------------------ -------------------------
Xxxx Xxxxx Trepannier 20 Nil
-------------------------------------- ------------------------ -------------------------
Total 100 Nil
-------------------------------------- ------------------------ -------------------------
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FILTRAN CANADA
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Common Shares Preferred/Special Shares
-------------------------------------- ------------------------ -------------------------
Tactron Communications (Canada) 1,000 Nil
Limited
-------------------------------------- ------------------------ -------------------------
CDL
-------------------------------------- -----------------------------------------------------
COMMON SHARES SPECIAL SHARES
-------------------------------------- ------------------------ -------------------------
Xxxx Xxxxxx 90,000 Nil
-------------------------------------- ------------------------ -------------------------
Rose Xxxx Xxxxx Nil 7,500
-------------------------------------- ------------------------ -------------------------
Xxxxxx Xxxxxx Xxxxx Nil 45,000
-------------------------------------- ------------------------ -------------------------
Total 90,000 52,500
-------------------------------------- ------------------------ -------------------------
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TCCL
-------------------------------------- ------------------------ -------------------------
COMMON SHARES PREFERRED SHARES
-------------------------------------- ------------------------ -------------------------
Xxxxxx Xxxxx 2,824 Nil
-------------------------------------- ------------------------ -------------------------
Xxxxx Xxxxx 1,925 Nil
-------------------------------------- ------------------------ -------------------------
Xxxxxxx Xxxxxxx 1,541 Nil
-------------------------------------- ------------------------ -------------------------
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Xxxxxx Xxxxxx Xxxxx 1,161 28,200
-------------------------------------- ------------------------ -------------------------
Coranne Xxxxx Xxxxx 1,198 Nil
-------------------------------------- ------------------------ -------------------------
Rose Xxxx Xxxxx 752 Nil
-------------------------------------- ------------------------ -------------------------
Total 9,401 28,200
-------------------------------------- ------------------------ -------------------------
B. The Vendors wish to sell and the Purchaser wishes to purchase
all of the issued and outstanding shares in the capital of
the Filtran Group, upon and subject to the terms and
conditions set out in this Agreement; and
C. The Vendors wish, and the Principal accepts, the appointment
of the Principal as attorney on behalf of each Vendor, to act
and do all such things as the Principal sees fit to give
effect to this Agreement as well as the transactions
described herein, including, but not limited to, the
negotiation, execution and delivery of all agreements,
certificates and documents ancillary to this Agreement.
IN CONSIDERATION OF the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which each party hereto hereby acknowledges, the parties hereto
agree with each other as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions - Whenever used in this Agreement, unless there
is something in the subject matter or context inconsistent therewith, the
following words and terms will have the respective meanings ascribed to them as
follows:
(a) "Adjustments" means a dollar for dollar reduction to the
Purchase Price equal to: (i) the amount that the Liabilities
set out in the Final Balance Sheet exceeds the Liabilities
set out in the Interim Balance Sheet, save for any increase
in Liabilities due to those Liabilities incurred in the
ordinary and usual course of business since the date of the
Interim Balance Sheet; (ii) any Liability that may arise
relating to the failure of the Principal to satisfy any
Excluded Liability or any Claim made against the Purchaser or
any Filtran Entity for any Excluded Liability after Closing;
(iii) the final amount of any Claim after any resolution in
respect thereof has been resolved subject to the Adjustment
Escrow) made by the Purchaser or any Filtran Entity pursuant
to the indemnity provisions of Article X of this Agreement;
and (iv) any Liability that may arise or Claim made against
the Purchaser or any Filtran Entity relating to Taxes arising
as a result of the sale of any of the Purchased Shares by the
Vendors that are non-residents of Canada, any such Adjustment
to be realized by way of set-off against any amounts payable
under the Promissory Note;
(b) "Adjustment Escrow" means the escrow procedures set forth in
Article XII of this Agreement;
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(c) "Agreement" means this Share Purchase Agreement and all
instruments supplemental hereto or in amendment or
confirmation hereof; "hereof", "hereto", and "hereunder" and
similar expressions mean and refer to this Agreement and not
to any particular Article or Section; "Article", "Section",
"paragraph" or "clause" means and refers to the specified
article, section, paragraph or clause of this Agreement;
(d) "Assets" includes any and all of the property, undertaking
and assets of the Filtran Group and each Filtran Entity as a
going concern including the assets used by each of them in
the conduct of the Business and includes the Real Property,
the Contracts, the Intellectual Property, the Inventories,
the Licences and Permits, the Personal Property, the
Receivables, the Rights and Benefits, the Prepaid Amounts,
the Books and Records, and all goodwill, including, without
limitation, the assets and properties described in the
Financial Statements;
(e) "Balance Sheet" means the balance sheets of each Filtran
Entity which form part of the Financial Statements;
(f) "Books and Records" means the minute books, financial
information and data, financial records and reports,
statements, books, records, files, papers, customer and
lists, plans, drawings, design approvals, engineering
information, photographs, videos, films, manuals, data, sales
and advertising materials, correspondence, trade and
association files and research and development records
relating to the Business, the Assets, each Filtran Entity and
the Purchased Shares;
(g) "Business" means the business presently and heretofore
carried on by the Filtran Group and each Filtran Entity
consisting of the production and global supply of electronic
equipment, including the operation of the manufacturing
plants, facilities and offices of Filtran USA, Filtran
Canada, CDL and TCCL referred to in the cover page of this
Agreement;
(h) "Business Day" means any day other than a Saturday, Sunday or
any other day that is not a statutory holiday in the Province
of Ontario;
(i) "Claims" has the meaning ascribed thereto in Section 10.1 of
this Agreement;
(j) "Closing" means the completion of the sale and purchase of
the Purchased Shares (as defined below) hereunder by the
transfer and delivery of documents of title thereto and the
payment of the Purchase Price (as defined below) therefore as
contemplated herein;
(k) "Closing Date" means May 31, 2002, or such other date as the
parties hereto may agree as to the date upon which the
Closing will take place;
(l) "Closing Time" means 10:00 o'clock in the forenoon on the
Closing Date or such other time on the Closing Date as the
parties hereto may agree as to the time on the Closing Date
which the Closing will take place;
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(m) "Collateral Mortgage" means that certain collateral mortgage
in favour of the Principal to be registered on title to the
Real Property situate in Ontario only, subject to the
existing Encumbrances, to secure payment of the Promissory
Note, in the form of mortgage attached hereto as Schedule
1.1(m);
(n) "Condition of the Business" means the condition (financial or
otherwise) of the Business taken as a whole having regard to
its earnings, assets, liabilities, properties, operations and
prospects, but excluding prospects as they relate to general
market conditions;
(o) "Contracts" means all rights and interests of each Filtran
Entity in all existing, pending and executory contracts to
which any Filtran Entity is a party or by which each Filtran
Entity or their respective Assets are bound, in each case
relating to the Business and disclosed to the Purchaser and,
if not included in another Schedule of this Agreement,
included in Schedule 1.1(o) attached hereto;
(p) "Deposit" means the payment previously made by the Purchaser
to the Principal of $25,000 under the terms of the Letter of
Intent (as defined below), being a non-refundable deposit
made in consideration of the Vendors agreeing to suspend all
negotiations with all potential purchasers of the Filtran
Group until July 1, 2002;
(q) "Effective Date" means the date first written above;
(r) "Encumbrance" means any and all liens, mortgages, charges,
hypothecs, pledges, security interests, prior assignments,
options, warrants, leases, subleases, rights to possession or
other encumbrances, and claims, rights, restrictions and
other interests of any nature and kind whatsoever or
howsoever arising, whether direct or indirect, fixed,
floating, contingent, absolute or otherwise which affect, by
way of a conflicting ownership interest or otherwise,
directly or indirectly, title to any particular property or
asset including, without limitation, the Assets and the
Purchased Shares;
(s) "Environmental Laws" means any law, by-law, order, ordinance,
ruling, regulation, direction or guideline of any applicable
federal, provincial or municipal government or governmental
department, agency or regulatory authority or any court of
competent jurisdiction relating to environmental matters or
regulating the import, manufacture, storage, distribution,
labelling, sale, use, handling, transport or disposal of
hazardous substances including, but not limited to, the
Environmental Protection Act (Ontario) and similar or
equivalent legislation of each jurisdiction in which the
Business is carried on or in which any Asset is located;
(t) "Environmental Permits" includes all permits, certificates,
approvals, consents, registrations and licences issued or
required by any Environmental Law or any court or
governmental authority and relating to or required for the
ownership or operation of the Business or the Assets;
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(u) "Excluded Liabilities" means all Liabilities of each Filtran
Entity, the Purchased Shares, the Assets and the Business
relating to the period prior to and which exist at Closing or
relate to the period prior to Closing including, without
limitation, those that consist of:
(i) Liabilities in respect of income and other Taxes and
governmental charges and assessments and all
penalties and interest related thereto, whether
federal, provincial, state or municipal levied or
incurred, owing or exigible in respect of the period
up to and including the Closing Date which, for
greater certainty, shall not include Taxes arising
since August 31, 2001 in the ordinary and usual
course of business;
(ii) brokerage and other fees in respect of transactions
occurring prior to Closing or in connection with this
Agreement (other than any such fees paid by the
Vendors) and the transactions contemplated by it,
save and except those arising as a result of the
action or conduct of the Purchaser;
(iii) all Liabilities in respect of employees of each
Filtran Entity up to and including Closing, or
resulting from their termination on or before
Closing, except for those employees terminated by the
Purchaser or a Filtran Entity on or after Closing;
(iv) Liabilities relating to any and all litigation or
legal proceedings pending at the Closing Date or
arising directly or indirectly out of activities
first occurring prior to Closing; and
(v) those specific Liabilities as set out in Schedule
1.1(u) attached hereto,
but not including Liabilities (other than those set out in
(v) above) that are expressly set out in the Interim Balance
Sheet or are incurred in the ordinary and normal course of
business after the date of the Interim Balance Sheet and
before the Closing Date and are reflected in the Final
Balance Sheet, or are subject to an Adjustment as a credit to
the Purchaser on Closing;
(v) "Filtran Accountants" means Xxxxxxxx & Xxxxx, Chartered
Accountants;
(w) "Filtran Entity" means each of Filtran USA, Filtran Canada,
CDL, TCCL and any one of them;
(x) "Filtran Group" means collectively Filtran USA, Filtran
Canada, CDL and TCCL and any combination of them;
(y) "Final Balance Sheet" means the unaudited management prepared
balance sheets for each Filtran Entity and for the Filtran
Group on a consolidated basis prepared in accordance with
GAAP and in form and substance satisfactory to the Purchaser
and Principal and their respective auditors, all acting
reasonably, as at the Closing
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Date (including all related trial balances) to be completed
and delivered within 30 days of Closing;
(z) "Financial Statements" means the individual audited financial
statements of Filtran USA and Filtran Canada for the fiscal
year ended August 31, 2001, the individual unaudited review
engagement financial statements of CDL for the fiscal year
ended August 31, 2001 and the individual unaudited review
engagement financial statements of TCCL for the fiscal year
ended June 30, 2001, in all cases consisting of a balance
sheet and the statements of income retained earnings and
source and application of funds and all notes thereto for
each Filtran Entity, prepared in accordance with GAAP and
reported upon by the Filtran Accountants, copies of which are
annexed hereto as Schedule 4.1(i);
(aa) "GAAP" means Canadian generally accepted accounting
principles applied on a basis consistent with prior years;
(bb) "GSA" means that certain guarantee and general security
agreement of each Filtran Entity in favour of the Principal
in respect of the Assets, subject to any existing
Encumbrances, to secure payment of one-half (1/2) of the
principal amount of the Promissory Note, subject to
Adjustment, in the form of guarantee and general security
agreement attached hereto as Schedule 1.1(bb);
(cc) "Hazardous Substance" means any contaminant, pollutant,
dangerous substance, noxious substance, toxic substance,
hazardous waste, flammable or explosive material, radioactive
material, polychlorinated by-phenyls, polychlorinated
by-phenyl waste, polychlorinated by-phenyl related waste and
any other substance or material now or hereafter declared or
defined to be regulated or controlled in or pursuant to
Environmental Law;
(dd) "Improvements" means all plants, buildings, fixtures,
sidings, parking lots, roadways, structures, erections, fixed
machinery, fixed equipment and appurtenances of any and every
nature or kind situate on, in, under, over or forming part of
the Lands;
(ee) "including" means including, without limitation, and
"includes" means includes, without limitation;
(ff) "Intellectual Property" means the right, title and interest
in and to the business names "Filtran", "Dataplex" and
"Tactron", all patent rights and applications and industrial
designs used in the Business or related to or forming part of
the Assets, if any, and all copyrights and trade-marks
including the goodwill attached thereto, if any, related to
or used in the Business or the Assets and all right, title
and interest of the Vendors and each Filtran Entity in and to
notebooks, data, trade secrets, designs, know-how, drawings
and similar materials related to the Business and Assets;
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(gg) "Interim Financial Statements" means the unaudited management
prepared financial statements of each Filtran Entity and for
the Filtran Group on a consolidated basis in all cases
consisting of a balance sheet and the statements of income,
retained earnings and source and application of funds and all
notes thereto, prepared in accordance with GAAP and in form
and substance satisfactory to the Purchaser, acting
reasonably, as at and for the seven (7) month period ended
March 31, 2002 to be completed and delivered on or before the
third Business Day prior to Closing and attached hereto as
Schedule 4.1(j);
(hh) "Inventories" means all of the inventories of stock-in-hand
and work-in-progress and merchandise, supplies, finished
goods and service parts relating to the Business (including
those in the possession or control of suppliers, customers
and public warehouses);
(ii) "ITA" means the Income Tax Act (Canada), as amended from time
to time and any successor thereto;
(jj) "Lands" means the lands and premises legally described in
Schedule 1.1(jj);
(kk) "Letter of Intent" means that certain letter of intent
between the Purchaser and Filtran Canada dated March 27,
2002, a copy of which is annexed hereto as Schedule 1.1(kk);
(ll) "Liabilities" means all costs, expenses, charges, debts,
liabilities, claims, demands, Taxes and obligations, whether
primary or secondary, direct or indirect, fixed, contingent,
absolute or otherwise, including those arising under any law,
rule or regulation of any governmental department,
commission, board, agency or instrumentality, domestic or
foreign, any award of any arbitrator and any contract,
agreement, arrangement, lease, commitment or undertaking;
(mm) "Licenses and Permits" means all licences, permits, filings,
authorizations, approvals or indicia of authority related to
the Business or any of the Assets which are necessary for the
conduct of the Business or the ownership, use and operation
of the Assets, including those set out in Schedule 1.1(mm);
(nn) "Material Adverse Change" means a change in the Condition of
the Business, operations or Assets of the Filtran Group or
any Filtran Entity that has had or could reasonably be
expected to have a material adverse effect on the value of
the Purchased Shares, Assets, Business or any material
destruction or damage by any cause to the Assets or other
material impairment of the Condition of the Business;
(oo) "OBCA" means the Business Corporations Act (Ontario), as
amended;
(pp) "Permitted Encumbrances" means those Encumbrances in respect
of the Assets and Real Property set out in Schedule 1.1(pp);
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(qq) "Person" includes an individual, corporation, partnership,
trust, unincorporated organization, and governmental body,
and is to be broadly interpreted;
(rr) "Personal Property" means all machinery, equipment,
furniture, handling equipment, accessories, trucks,
automobiles and other chattels owned or leased by the Filtran
Group or any Filtran Entity (including those in the
possession of third parties);
(ss) "Pledge Agreement" means a share pledge of the Purchased
Shares by the Purchaser in favour of the Principal in
substantially the form attached hereto as Schedule 1.1(ss)
which is to secure the Purchaser's obligations under the
Promissory Note issued to the Principal pursuant to
subsection 3.1(c)(ii) of this Agreement, which shall
constitute a first charge and security interest in the
Purchased Shares (subject to any Encumbrances existing on
Closing prior to the Purchaser's acquisition of the Purchased
Shares);
(tt) "Prepaid Amounts" means all prepaid charges, deposits, sums
and fees paid by or on behalf of the Corporation;
(uu) "Principal" means Xxxxxx Xxxxxx Xxxxx, one of the Vendors;
(vv) "Promissory Note" means that certain promissory note bearing
interest at the rate of 5% per annum, calculated and payable
semi-annually, not in advance, both before and after
maturity, default and judgment, in substantially the form
attached hereto as Schedule 1.1(vv), in the original
principal amount of $3,000,000 issued by the Purchaser in
favour of the Principal, one-half of the principal of which
shall be due and payable, subject to Adjustment, if any, on
May 31, 2003 and the balance of which matures and becomes due
and, subject to Adjustment, if any, payable on May 31, 2004,
to be issued and delivered to the Principal on Closing in
partial payment and satisfaction of the Purchase Price
pursuant to subsection 3.1(c)(ii) of this Agreement;
(ww) "Purchase Price" has the meaning given in subsection 3.1(a)
of this Agreement;
(xx) "Purchased Shares" means all of the issued and outstanding
shares in the capital of each Filtran Entity (other than
Filtran Canada whose 1,000 issued and outstanding common
shares are wholly-owned by TCCL), all of which are registered
in the names of and are beneficially owned by the Vendors in
the proportions set out in Recital A of this Agreement;
(yy) "Real Property" means the Lands and the Improvements thereon;
(zz) "Rights and Benefits" means the right, title and interest of
each Filtran Entity under or pursuant to all covenants,
agreements, warranties, representations and guarantees
expressed or implied or otherwise, of or made by suppliers,
workmen or others in connection with the Business and any of
the Assets or Liabilities
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(other than Excluded Liabilities) or otherwise related to the
Business and each Filtran Entity;
(aaa) "Sales Tax Laws" means the Excise Tax Act (Canada), any
applicable federal, provincial or state goods and services,
sales or use taxation statute, and any similar foreign
legislation, all as from time to time amended, and any
successors thereto;
(bbb) "SEC" means the United States Securities and Exchange
Commission;
(ccc) "Subsidiary" means, with respect to any Filtran Entity within
the Filtran Group, any corporation the shares to which are
attached more than 50% of the voting rights ordinarily
exercisable at meetings of the shareholders of such
corporation, of which are beneficially owned, directly or
indirectly, by any Filtran Entity;
(ddd) "Tax Laws" shall mean the ITA and Sales Tax Laws and any
applicable provincial, or foreign income taxation statute(s),
as from time to time amended, and any successors thereto;
(eee) "Tax Returns" means any return, declaration, report, claim
for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof;
(fff) "Taxes" means any federal, provincial, state, local or
foreign income, gross receipts, licence, payroll, employment,
excise, severance, stamp, occupation, premium, windfall,
environmental, customs, duties, capital stock, franchise,
profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value-added, alternative or add-on
minimum, estimated, or other tax or levy or assessment of any
kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not; and
(ggg) "Vendors" means collectively or any combination of Xxxxxx
Xxxxxx Xxxxx, Rose Xxxx Xxxxx, Xxxxx Xxxxxxx Xxxxx, Xxxxxxx
Xxxxx Xxxxx, Xxxx Xxxxx Trepannier, Xxxx Xxxxxx, Xxxxxx
Xxxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxxxx and "Vendor" means
each and every individual one of them.
1.2 Headings - The division of this Agreement into Articles
and Sections and the insertion of headings are for the convenience of reference
only and will not affect the construction or interpretation of this Agreement.
1.3 Number - In this Agreement and unless the context otherwise
requires, words importing the singular number only will include the plural and
vice versa, words importing the neuter gender will include the masculine and
feminine genders and vice versa and words importing persons will include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and vice versa.
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1.4 Accounting Principles - Unless otherwise expressly stated,
wherever in this Agreement reference is made to GAAP or generally accepted
accounting principles, such reference will be deemed to be the 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 such calculation is made or required to be made in accordance
with generally accepted accounting principles.
1.5 Schedules - The following are the Schedules annexed hereto
and incorporated by reference and deemed to be part hereof: ---------
Schedule 1.1(m) - Collateral Mortgage
Schedule 1.1(o) - Contracts
Schedule 1.1(u) - Excluded Liabilities
Schedule 1.1(bb) - GSA
Schedule 1.1(jj) - Legal Description of Lands
Schedule 1.1(kk) - Letter of Intent
Schedule 1.1(mm) - Licenses and Permits
Schedule 1.1(pp) - Permitted Encumbrances
Schedule 1.1(ss) - Pledge Agreement
Schedule 1.1(vv) - Form of Promissory Note
Schedule 4.1(i) - Financial Statements
Schedule 4.1(j) - Interim Financial Statements
Schedule 4.1(k) - Undisclosed Liabilities
Schedule 4.1(n) - Title to and Use of Properties
Schedule 4.1(o) - Motor Vehicles and Equipment
Schedule 4.1(p) - Leases, Rental Agreements, Conditional Sales Contracts, Title Retention Documents and Licenses
Schedule 4.1(q) - Intellectual Property and Related Documents
Schedule 4.1(s) - Leases and Licenses of Real Property
Schedule 4.1(v) - Employees, Officers and Directors
Schedule 4.1(w) - Employment, Management, Service, Employee Benefit, Deferred Compensation, Pension, Profit
Sharing, Union and Other Similar Agreements and Plans
Schedule 4.1(aa) - Litigation and Claims
Schedule 4.1(bb) - Non-Compliance with Applicable Laws
Schedule 4.1(cc) - Bank Accounts
Schedule 4.1(dd) - Non-Resident Vendors
Schedule 4.1(ff) - Insurance
Schedule 4.1(gg) - Long Term Indebtedness
Schedule 4.1(hh) - Non-Arm's Length Contracts, Agreements or other Arrangements
Schedule 4.1(ii) - Payments and Loans with Directors, Officers, etc.
Schedule 4.1(pp) - Required Consents and Approvals
Schedule 8.4(m) - Opinion of Counsel for the Vendors and the Filtran Group
Schedule 8.4(m.1) - Opinion of Counsel for the Vendors and the Filtran Group re: Title
Schedule 8.4(n) - Form of Release of the Vendors and Officers and Directors
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Schedule 8.5(c) - Opinion of Counsel for the Purchaser
Schedule 12.1(b) - Form of Escrow Agreement
1.6 Currency - All payments required to be made and referred to
hereunder mentioned will be in and refer to Canadian dollars. --------
1.7 Reference to Statutes - All references contained in this
Agreement to a statute will be deemed to be made to such statute as now enacted
or as the same may from time to time be amended, re-enacted or replaced, and in
the case of any such amendment, re-enactment or replacement, such reference
herein to a provision of such statute will be read as a reference to such
amended, re-enacted or replaced provision.
ARTICLE II
APPOINTMENT OF ATTORNEY
2.1 Appointment of Principal as Attorney - The Vendors each
individually and collectively hereby appoint the Principal as their respective
attorney, principal and legal representative for all purposes in relation to the
Purchased Shares, including, without limitation, the purposes described in
Article III of this Agreement, together with all other transactions described or
contemplated by this Agreement.
2.2 Powers - Without limiting the generality of Section 2.1,
until this Agreement is terminated, the Principal in its capacity as attorney
and legal representative of each Vendor shall possess and exercise on behalf of
each Vendor solely in respect of the transactions contemplated by this Agreement
and all matters incidental or related thereto or in connection therewith, the
following powers and authorities without further or other authorization from,
and free from any control of, the Vendors:
(a) to vote and to take part in and consent to any corporate
shareholders' action in respect of any Purchased Shares,
which voting and consensual rights may be exercised by the
Principal in writing, in person or by proxy and in respect of
such matters and ins such manner as may be determined from
time to time by the Principal in his absolute discretion,
provided that the Principal shall not at any time be required
to exercise such rights and shall be entitled to abstain from
exercising any such rights where he deems it appropriate to
abstain;
(b) to amend this Agreement or any provision thereof in
accordance with its terms;
(c) to execute agreements, certificates and other documents in
exercise of the Principal's powers hereunder on behalf and in
the name of the Vendors, and to agree to supplements,
amendments or restatements from time to time to any such
agreements on terms and provisions satisfactory to the
Principal;
(d) to negotiate and enter into amendments to this Agreement with
specific Vendors should the need arise; and
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(e) to enter into and take all necessary action in furtherance of
completing each of the transactions contemplated by this
Agreement with such amendments as the Principal in his sole,
absolute and unfettered discretion deems necessary or
desirable.
ARTICLE III
PURCHASE AND SALE
3.1 Agreement to Purchase and Sell - Subject to the terms and
conditions of this Agreement, at the Closing Time:
(a) Purchase Price - The Vendors will sell and the Purchaser will
purchase the Purchased Shares for an aggregate purchase price
equal to $4,100,000 (the "Purchase Price") to be paid subject
to, and in accordance with, subsection 3.1(c) of this
Agreement.
(b) Delivery of Certificates, etc. - The Vendors will deliver or
cause the Principal to deliver to the Purchaser at the
Closing certificates or documents of title or other evidences
of ownership of the Purchased Shares to be sold and purchased
hereunder duly endorsed for transfer, or accompanied by
irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of record
thereof, all in form and substance sufficient to permit the
recording or registration of the Purchaser or its Principal
as the new owner of record of the Purchased Shares in
compliance with all applicable requirements, provisions and
procedures relating to the recording or registration of such
ownership. The Vendors will or will also cause the Principal
to deliver to the Purchaser certified copies of the
resolutions of the board of directors or shareholders of the
Filtran Group, as the case may be, required to approve the
transfer of the Purchased Shares by the Vendors to the
Purchaser or its Principal.
(c) Payments to the Vendors - Subject to the Adjustment and after
applying the principal amount of the Deposit in partial
payment and satisfaction thereof, the Purchaser will pay the
balance of the Purchase Price on the Closing Date as follows:
(i) by delivery to XxXxxxx Xxxxxxxxx, in trust for the
Vendors, a certified cheque or certified cheques,
bank draft or bank drafts or wire transfer or wire
transfers, made payable to XxXxxxx Xxxxxxxxx, In
Trust, in lawful money of Canada, equal to an
aggregate amount of $1,075,000; and
(ii) by delivery to the Principal of the Promissory Note.
(d) Excluded Liabilities - The Purchased Shares shall be
acquired by the Purchaser subject to all Liabilities other
than the Excluded Liabilities which the Principal shall
assume and remain liable for to the extent the Purchase Price
has not been subject to Adjustment in respect of same.
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(e) Adjustment - For greater certainty, the parties agree that
Adjustments will be made as of the Closing Date and any
Adjustment required pursuant to the terms of this Agreement
shall be realized by way of set-off against any amounts
payable under the Promissory Note and shall be calculated
and, if appropriate, applied against the payments due under
the Promissory Note, provided that the amount of such
Adjustment (the "Adjustment Amount"), if any, shall be held
in escrow by XxXxxxx Xxxxxxxxx, as escrow agent, in
accordance with Article XII of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
AND EACH FILTRAN ENTITY
4.1 Representations and Warranties of Vendors and the
Filtran Group - Each Filtran Entity and the Principal jointly and severally
(except in respect of subsections 4.1(a), (b), (c) and (d) to the extent
applicable to each of the Vendors, which is made by each Vendor severally as to
itself only) hereby covenant, represent and warrant to the Purchaser as follows,
acknowledging that the Purchaser is relying upon such covenants, representations
and warranties in connection with entering into this Agreement and completing
the transactions contemplated thereby:
(a) Right to Sell - The Purchased Shares constitute in the
aggregate all of the issued and outstanding shares in the
capital stock of the Filtran Group and the Vendors are
collectively the sole registered and beneficial owners of the
Purchased Shares, with good and marketable title thereto in
the proportions set out in Recital A of this Agreement, free
and clear of all Encumbrances of any nature or kind
whatsoever and no Person now has or at Closing will have any
right, option, agreement or arrangement capable of becoming
an agreement for the acquisition of any of the Purchased
Shares or any interest therein from the Vendors or any one or
combination of them.
(b) Due Authorization, etc. - Each Filtran Entity and each Vendor
has the necessary power, authority and legal capacity to
enter into this Agreement and the agreements and other
instruments contemplated herein and to perform their
respective obligations hereunder and thereunder. The
execution and delivery of this Agreement and the agreements
and other instruments contemplated herein and the
consummation of the transactions contemplated hereunder and
thereunder have been duly authorized by all necessary action
on the part of each Vendor and each Filtran Entity.
(c) Valid and Binding Obligation - This Agreement constitutes and
the agreements and other instruments contemplated herein when
executed will constitute valid and binding obligations of
each of the Vendors and each Filtran Entity enforceable
against each of them in accordance with the terms hereof and
thereof subject, however, to limitations with respect to
enforcement imposed in
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connection with laws affecting the rights of creditors
generally including, without limitation, applicable
bankruptcy, insolvency, moratorium, reorganization or similar
laws and to the extent that equitable remedies such as
specific performance and injunction are in the discretion of
the court from which they are sought.
(d) No Violation - The disposition of the Purchased Shares and
the entering into and performance of this Agreement and the
agreements and other instruments contemplated herein will not
violate, contravene, breach or offend against or result in
any default under any security agreement, indenture,
mortgage, lease, order, undertaking, licence, permit,
agreement, instrument, charter or by-law provision,
resolution of shareholders or directors, statute, regulation,
judgment, decree or law to which any of the Vendors or any
Filtran Entity is a party or by which any of them may be
bound or affected and none of the Vendors nor any Filtran
Entity are, or will be at Closing, party to or subject to or
bound by the terms of any unanimous shareholder agreement
that restricts the transfer of shares in the capital of any
Filtran Entity. No licenses, agreements or other instruments
or documents will terminate or require assignment as a result
of the entering into of this Agreement or the consummation of
the transactions contemplated hereby.
(e) Organization and Good Standing of the Filtran Group - Each
Filtran Entity is a corporation duly incorporated or
amalgamated, organized, validly existing, in good standing
and is up to date in all of the filings and registrations
required under the laws of the jurisdiction of its
incorporation and/or amalgamation and/or organization, as
appropriate, and has all necessary corporate power, authority
and capacity to own or lease its property and assets
(including, without limitation, the Assets) and to carry on
the Business as presently conducted by each and is duly
registered or otherwise qualified to carry on business and
generally own or lease properties or assets in all
jurisdictions in which the nature of its Assets or Business
makes such registration necessary or advisable. Neither the
nature of the Business nor the location or character of the
property owned or leased by any Filtran Entity including,
without limitation, the Assets, requires any Filtran Entity
to be further registered, recorded, licensed or otherwise
qualified in any jurisdiction.
(f) Subsidiaries - None of the Filtran Entities (other than TCCL
which owns 100% of Filtran Canada) own a Subsidiary nor do
any of them own any shares in the capital of any other
corporation and none of them have agreed to acquire any
Subsidiary or any shares in the capital of any other
corporation or to acquire or lease or invest, directly or
indirectly, in any other business operation.
(g) Authorized and Issued Capital - As at the Effective Date, the
authorized and issued capital of each Filtran Entity is and
on Closing shall be as set out below:
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(i) Filtran USA has an authorized capital consisting of
200 common shares, of which there are and at Closing
will be a total of 100 fully paid and non-assessable
common shares of Filtran USA issued and outstanding;
(ii) Filtran Canada has an authorized capital consisting
of an unlimited number of common shares, of which
there are and at Closing will be a total of 1,000
fully paid and non-assessable common shares of
Filtran Canada issued and outstanding;
(iii) CDL has an authorized capital consisting of an
unlimited number of common shares and an unlimited
number of special shares, of which there are and at
Closing will be a total of 90,000 fully paid and
non-assessable common shares and 52,500 fully paid
and non-assessable special shares of CDL issued and
outstanding; and
(iv) TCCL has an authorized capital consisting of 10,000
common shares, 30,000 non-voting preferred shares,
and an unlimited number of Special Shares of which
there are and at Closing will be 9,401 fully paid and
non-assessable common shares, 28,200 fully paid and
non-assessable preferred shares and no Special Shares
of TCCL issued and outstanding.
Other than what is commonly referred to as standard private
company restrictions, the certificates evidencing the
foregoing shares do not contain any reference to a
restriction on their transfer or of a lien in favour of any
Filtran Entity, or an endorsement regarding a dissenting
shareholder under s.184(ii) of the OBCA or similar or
equivalent provision of any other applicable corporate
statute, and bear no restrictive legends. Neither the
constating documents or by-laws of any Filtran Entity, nor
any agreement, contain or provide for restrictive legends
thereto.
(h) No Options - No options, warrants, convertible obligations or
other rights to purchase or acquire shares or other
securities of any Filtran Entity, whether issued or not
issued, including, without limitation, the Purchased Shares,
have been authorized, allotted or agreed to be issued or are
outstanding.
(i) Financial Statements - The Financial Statements which are
attached hereto as Schedule 4.1(i), including the Balance
Sheet, are true and correct and have been prepared in
accordance with GAAP applied on a basis consistent with those
of preceding periods and present fairly:
(i) all of the assets, liabilities (whether accrued,
determinable, absolute, contingent or otherwise) and
the financial condition of each Filtran Entity as at
August 31, 2001; and
(ii) the sales, earnings and results of operations of each
Filtran Entity during the period(s) covered by such
Financial Statements.
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(j) Interim Financial Statements - The Interim Financial
Statements which are attached hereto as Schedule 4.1(j),
including the Interim Balance Sheet, are true and correct and
have been prepared in accordance with GAAP applied on a basis
consistent with those of preceding periods and present
fairly:
(i) all of the assets, liabilities (whether accrued,
determinable, absolute, contingent or otherwise) and
the financial condition of each Filtran Entity as at
March 31, 2002; and
(ii) the sales, earnings and results of operations of each
Filtran Entity during the period(s) covered by such
Interim Financial Statements.
(k) Absence of Undisclosed Liabilities - Except to the extent
reflected or reserved against in the Balance Sheet (including
the notes thereto) or incurred subsequent to the date thereof
and disclosed in Schedule 4.1(k) and except for unsecured
current obligations and liabilities incurred in the ordinary
and usual course of the Business and which are not materially
adverse to the nature and manner of conducting the Business,
or the operations, assets, properties, future prospects or
financial condition of the Filtran Group or any Filtran
Entity, neither the Filtran Group nor any Filtran Entity has
any material outstanding indebtedness or any material
liabilities or obligations (whether accrued, determinable,
absolute, contingent or otherwise) in respect of which any
Filtran Entity or the Purchaser may be liable on or after the
completion of the transactions contemplated by this
Agreement.
(l) Tax Matters - Except to the extent reflected in or reserved
against in the Interim Balance Sheet and which shall be
payable in the ordinary course of business in respect of the
period from the Interim Balance Sheet date to the Closing
Date, neither the Filtran Group nor any Filtran Entity is
liable for any federal, provincial state or municipal or
local taxes, levies, assessments or other taxes in respect of
its income, business or property or for the payment of any
tax instalment due in respect of its current taxation year
and, except as aforesaid, no such taxes, assessments or
penalties are required to be reserved against. Each Filtran
Entity has duly and completely filed in a timely manner all
Tax Returns required to be filed by it and has duly paid all
Taxes due from it to the appropriate federal, provincial,
state, municipal or local taxing authorities including
without limitation, those due in respect of the Business,
Assets and any other of its properties, income, franchises,
licences, sales, use of property and payrolls. There are no
tax liens upon any of the properties or assets, real,
personal or mixed, tangible or intangible, of the Filtran
Group or any Filtran Entity, including the Assets, wherever
situate, whether or not recorded or made subject of a lien or
public notice. There are no questions relating to, or claims
asserted for, Taxes or assessments against the Filtran Group
or any Filtran Entity. The federal revenue tax liability of
each Filtran Entity has been reviewed and determined by the
appropriate taxing authority, including the Canada Customs
and Revenue Agency, for the financial years ending in 2001
(and all amounts owing thereunder have
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been paid). There are no agreements, waivers or other
arrangements providing for an extension of time with respect
to the assessment or reassessment of any Taxes or the filing
of any Tax Return by, or payment of any Tax by, or levying of
any governmental charge against, the Filtran Group or any
Filtran Entity. There are no actions, audits, assessments,
reassessments, suits, proceedings, investigations or claims
now threatened against the Filtran Group or any Filtran
Entity in respect of Taxes or governmental charges or any
matters under discussion with any governmental authority
relating to Taxes or governmental charges asserted by any
such authority. Each Filtran Entity has withheld from each
payment made by it the amount of all Taxes and other
deductions required to be withheld therefrom and has paid the
same to the proper taxing or other authority within the time
prescribed under any applicable legislation or regulation,
whether Canadian or foreign. The Interim Financial Statements
fully reflect accrued liabilities as at the end of the period
covered by such Interim Financial Statements for all Taxes
which are payable as at the end of the period covered by such
statements and, in the case of Taxes accruing up to and
including the Closing Date that are not due and payable on or
before the Closing Date and are not reflected in the Interim
Financial Statements, have accrued and are payable in the
ordinary and usual course of business since the date of such
Interim Financial Statements. Each Filtran Entity has
complied with all registration, reporting, collection and
remittance requirements in respect of all federal, provincial
and state tax legislation, including but not limited to, the
Excise Tax Act (Canada) and the Retail Sales Tax Act
(Ontario).
(m) Business Carried on in Ordinary Course - The Business is the
only business and undertaking in which any Filtran Entity is
engaged or ever has been engaged and has been carried on in
the ordinary and usual course since the date of the Financial
Statements and there has been no change in the affairs,
business, prospects, operations or condition of the Business,
financial or otherwise, or arising as a result of any
legislative or regulatory change, revocation of any licence
or right to do business, fire, explosion, accident, casualty,
labour problem, flood, drought, riot, storm, act of God or
otherwise, except changes occurring in the ordinary and usual
course of the Business and which, in the aggregate, have not
materially adversely affected and will not materially
adversely affect the nature and manner of conducting the
Business, or the operations, assets, properties, future
prospects or financial condition of the Filtran Group or any
Filtran Entity.
(n) Title to and Use of Properties - Each Filtran Entity has good
and marketable title to its Assets and all its properties and
assets, interests in properties and assets, real and
personal, tangible and intangible acquired since the date of
the Balance Sheet (except as since transferred, sold or
otherwise disposed of in the ordinary and usual course of
business in compliance with this Agreement), free and clear
of all Encumbrances of any nature or kind whatsoever, except
the Permitted Encumbrances. The uses to which any Real
Property of any Filtran Entity (including leasehold property)
have been put are not in breach or violation in any
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respect of any statute, by-law, ordinance, regulation,
covenant, governmental restriction or official plan,
municipal or otherwise. No notice of a public taking has been
received regarding any real estate or properties occupied by
any Filtran Entity. No Filtran Entity has agreed to assign,
transfer or otherwise dispose of any interest in Real
Property owned or leased by it nor has it granted to any
person any right or privilege capable of becoming an
agreement to acquire any such interest, other than as
described in Schedule 4.1(n).
(o) Condition and Description of the Filtran Group's Assets - All
facilities, machinery and equipment owned and used by the
Filtran Group or any Filtran Entity in connection with the
Business, including the Assets, are in good operating
condition, are in a state of good repair and maintenance,
reasonable wear and tear excepted (including roof repairs
required at 000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxx in the amount
of $75,000), are useable in the ordinary course of the
Business and are in compliance with all applicable laws,
regulations, by-laws, ordinances and orders. All motor
vehicles and equipment owned or used by the Filtran Group are
described in Schedule 4.1(p).
(p) Tangible and Intangible Properties - Each Filtran Entity is
entitled to use all equipment, other personal property and
fixtures in the possession or custody of such Filtran Entity
which, as of the date hereof, are leased, rented, acquired
under a conditional sales contract or other title retention
document, or are held under licence or similar arrangement, a
list of which and of the leases, rental agreements,
conditional sales contracts, title retention documents,
licences, agreements or other documentation relating thereto
is set forth in Schedule 4.1(p).
(q) Intellectual and Industrial Property Rights - None of the
Vendors nor any Filtran Entity has received notice that, and
to the best knowledge and belief of each of Vendors and each
Filtran Entity, no Filtran Entity either individually or in
conjunction with any other Filtran Entity is infringing any
patent, trade-xxxx, trade name, copyright, proprietary or
similar right, domestic or foreign, of any other Person.
Included in Schedule 4.1(q) is a list (including, where
applicable, applications for registration and registration
particulars) of all registered service marks, registered
copyrights, trade names, industrial designs, trade marks, and
patents, both domestic and foreign, which are owned or used
by each Filtran Entity and each such Filtran Entity has the
sole and exclusive right to use the same and the same are in
good standing and duly registered in all appropriate offices
to preserve the right thereof and thereto. There are neither
any royalty payment nor licence fees payable to or by any
Filtran Entity nor any licence, registered user or other
agreements in respect thereof.
(r) Collectability of Accounts Receivable - All accounts
receivable, book debts and other debts due or accruing to the
Filtran Group or any Filtran Entity are bona fide and to the
best knowledge and belief of each Vendor and each Filtran
Entity, are good and collectible at the aggregate recorded
amounts thereof (subject to no
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defence, counterclaim or set-off) and, in respect of those
having an age of not more than 120 days past due, having a
value of at least $900,000 as at the Closing Time.
(s) Leases and Licenses of Real Property - No Filtran Entity is a
party to or bound by any leases or licenses of real property
or agreements in the nature of leases or licences of real
property, either as lessor or lessee, or agreements to enter
into such leases or licences, other than those referred to in
Schedule 4.1(s) (in which is specified the parties, their
dates of execution and expiry dates, any options to renew and
the location of any leased or licensed lands or premises) and
all interests held by any Filtran Entity as lessor, lessee,
licensor or licensee under such leases, licences or
agreements and to the knowledge and belief of each of the
Vendors and each Filtran Entity, are free and clear of any
and all Encumbrances, save and except the Permitted
Encumbrances. All rental and other payments required to be
paid by or to any Filtran Entity pursuant to such leases,
licences or agreements have been duly paid and no Filtran
Entity is otherwise in default in meeting its obligations
under any such leases, licences or agreements. To the best
knowledge and belief of each of the Vendors and each Filtran
Entity, there are no events or circumstances which could give
rise to such parties claiming default by any Filtran Entity
under such leases, licences or agreements. No consent of any
parties to such leases, licences or agreements (other than
the consent of a Filtran Entity) is required by reason of the
transactions contemplated hereby except as specified in
Schedule 4.1(s), nor will such transactions impose
any more onerous obligations on any Filtran Entity under such
leases, licences or agreements.
(t) Real Property - The Filtran Group collectively and each
Filtran Entity individually has and as at the Closing Date
will have good and marketable title to the Real Property and
will be the absolute legal and beneficial owner thereof free
and clear of any and all Encumbrances, save and except for
the Permitted Encumbrances. More particularly:
(i) Lands - The only real property owned by the Filtran
Group (now or in the past) or that will at Closing be
owned by the Filtran Group is the Lands;
(ii) Leased Premises - The Filtran Group has not in the
past and does not now lease or rent or have an
agreement to lease or rent any of its Real Property
to any other Person;
(iii) Rights of Occupancy - The Filtran Group has not
sublet the whole or any part of the Lands or granted
to any Person any right to use or occupy the whole or
any part of the Lands;
(iv) Governmental Plans - To the best of each Vendor's
knowledge and each Filtran Entity's knowledge, there
is no plan, study or effort by any governmental
authority or any non-governmental authority or agency
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which may materially adversely affect the current use
of the Real Property for purposes of the Business;
(v) Local Improvements Charges and Levies - There are
not: (i) any local improvement charges or special
levies outstanding against the Real Property known to
any of the Vendors or any Filtran Entity nor have any
of the Vendors nor any Filtran Entity received any
notice of proposed local improvement charges or
levies; (ii) any currently existing public
improvements which may involve any charge being
levied or assessed or which may result in the
creation of any Lien on the Real Property known to
any of the Vendors or any Filtran Entity; (iii) to
the best of each Vendor's and each Filtran Entity's
knowledge, any proposed federal, provincial or local
statute, ordinance, order, requirement, law or
regulation (including, but not limited to, zoning
changes) which may adversely affect the current use
of the Real Property with related amenities and
facilities; or (iv) any suit, action, claim or legal,
administrative, arbitration or other proceeding or
governmental investigation pending, or to the
knowledge of any of the Vendors or any Filtran
Entity, threatened or contemplated against or
affecting the Real Property nor, to any Vendor's or
any Filtran Entity's knowledge, is there any basis
for any such matters;
(vi) Access - The Real Property has full and free legal
access to and from public highways or streets and, as
far as each Vendor and each Filtran Entity is aware,
there is no fact or condition which would result in
the interference with or termination of such access;
(vii) No Expropriation - No written notice of any existing,
proposed or contemplated expropriation proceedings
that would result in the taking of all or any part of
the Real Property or that would adversely affect the
current use of the Real Property has been received or
is known to any of the Vendors or any Filtran Entity
to exist;
(viii) No Encroachment onto Neighbours - To the best of each
Vendor's and each Filtran Entity's knowledge, the
Improvements are located wholly within the boundaries
of the Lands and the locations of the Improvements do
not infringe or encroach in any material respects
upon any registered or unregistered easement or
right-of-way affecting the Lands or any adjoining
lands;
(ix) Survey - Each Filtran Entity will provide the
Purchaser with all surveys prepared by duly qualified
Ontario land surveyors in their possession or control
showing the boundary of the Lands, the Improvements
thereon and all encroachments, easements and
rights-of-way;
(x) No Encroachment by Neighbours - To the best of each
Vendor's knowledge and each Filtran Entity's
knowledge, there are no
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encroachments onto the Lands by buildings or
improvements owned by the owners or occupants of
adjoining lands that would materially interfere with
the use of the Lands for purposes of the Business;
(xi) Realty Taxes - All municipal property taxes, local
improvement charges, levies and assessments due and
payable by any Filtran Entity as of the Closing Date
have been paid;
(xii) Improvements - To the best of each Vendor's knowledge
and each Filtran Entity's knowledge, all Improvements
have been in all material respects constructed in a
good and workmanlike manner and both the construction
and the use thereof are in material compliance with
all ordinances, zoning by-laws, building codes and
regulations applicable thereto governing such
construction and use, including those of federal,
provincial and municipal authorities. There is no
defect in the design, construction or structure of
the Improvements or the provision of services; all
amounts for labour and materials relating to the
construction and repair of the Improvements have been
paid in full and no one has a right to file a
construction, builder's, mechanic's or similar lien
in respect thereof;
(xiii) Utilities - The Lands are serviced by such utilities
and services as are required in the operation of the
Business. To the best of each Vendor's and each
Filtran Entity's knowledge, such utilities and
services enter the Lands through adjoining public
streets or if they pass through adjoining private
land do so in accordance with legally valid and
sufficient easements and all contributions and
utility installation costs in connection with them
have been paid in full except as disclosed in the
Balance Sheet;
(xiv) Permitted Encumbrances - Each of the Permitted
Encumbrances are in good standing and not in default
and have been complied with in all material respects;
(xv) Zoning - The current use of the Real Property is
permitted by all applicable zoning laws and
regulations in each jurisdiction in which such Real
Property is situate; and
(xvi) Condominium Charges - All condominium charges, fees
and expenses, including common expenses, are in good
standing and have been paid as they have become due
and the rules and regulations of any condominium
corporation have been fully complied with in all
material respects.
(u) Compliance with Contracts - No Filtran Entity is now nor will
any of them be on Closing bound by any outstanding material
contract or commitment other than the Contracts and no
Filtran Entity is in material default under any Contract and
all such Contracts are now in good standing and in full force
and effect and each Filtran Entity is entitled to all rights
and benefits thereunder.
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(v) Employees, etc. - There are set forth in Schedule 4.1(v) the
names and titles of all the directors and officers of each
Filtran Entity and of all personnel employed or engaged by
the Filtran Group and each Filtran Entity, together with
particulars of the material terms and conditions of
employment or engagement of such persons, including positions
held, age, rates of remuneration, length of service and
benefits. No Filtran Entity is a party to our bound by any
collective agreements nor is it engaged in labour
negotiation. No application, complaint or other proceedings
has been filed by or against any Filtran Entity. To the best
of each Vendor's and Filtran Entity's knowledge, no Filtran
Entity has engaged in any unfair labour practice. No employee
of any Filtran Entity is absent on disability. No bonus,
deferred compensation, profit sharing, pension, holiday pay
or other similar obligation is owed or accrued to any
employee of any Filtran Entity, except such amounts as will
be paid before Closing or are included in Liabilities in the
Interim Balance Sheet or incurred in the ordinary and usual
course of business since the end of the period covered by the
Interim Balance Sheet. All employee benefits or plans of any
Filtran Entity, if any, have been established, registered,
qualified, invested and administered in accordance with
applicable law in all material respects. All obligations of
every Filtran Entity thereunder have been satisfied and there
are no material defaults. No Filtran Entity may unilaterally
amend or terminate the said plans and no plan is subject to
investigation. There have been no improper withdrawals from
any such plans and each plan is fully funded or insured. No
plans provide benefits to retired employees or dependants of
retired employees.
(w) Employment Contracts, etc. - Except as disclosed on Schedule
4.1(w), there are no written or oral employment contracts,
sales, services, management or consulting agreements, or any
management or employee benefit, deferred compensation, profit
sharing, bonus arrangements or other similar agreement or
plan to which any Filtran Entity is a party or is otherwise
bound. The provisions of the agreements disclosed in Schedule
4.1(w) are consistent with applicable industry standards
respecting wages, benefits and working rules.
(x) Vacation Pay, etc. - All vacation pay, bonuses, commissions
and other emoluments for employees of each Filtran Entity are
reflected and have been properly accrued in the Interim
Financial Statements or incurred in the ordinary and usual
course of business since the end of the period covered by the
Interim Financial Statements and such accruals are adequate
to meet any bona fide claims of employees.
(y) Accuracy of Books and Records - The Books and Records of each
Filtran Entity, financial and otherwise, fairly and correctly
set out and disclose in all material respects the financial
position of the Filtran Group and each Filtran Entity and all
material financial and other transactions have been
accurately recorded in such Books and Records.
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(z) Absence of Guarantees - No Filtran Entity has given or agreed
to give, or is a party or bound by, any indemnity, or any
guarantee of indebtedness or other obligations of third
parties or any other commitment by which any Filtran Entity
is or is contingently responsible for such indebtedness or
other obligations.
(aa) Litigation and Claims - Except as disclosed in
Schedule 4.1(aa):
(i) there is no suit, action, litigation, labour
grievance or complaint, investigation, (including,
without limitation, investigations under human rights
or health and safety legislation) or administrative,
governmental, arbitration or other proceeding
(whether or not purportedly on behalf of the Filtran
Group or any Filtran Entity), including without
limitation appeals and applications for review, in
progress, or to the best knowledge and belief of each
Vendor and each Filtran Entity, pending or threatened
against or relating to any Vendor or Filtran Entity,
or affecting their respective Assets or the Business,
or affecting the Purchased Shares, or affecting the
right of the Vendors or any Filtran Entity to enter
into this Agreement or perform their respective
obligations hereunder;
(ii) the Vendors are not aware (after due inquiry from the
senior officers of each Filtran Entity) of any
existing grounds upon which any suit, action,
litigation, labour grievance or complaint,
investigation or proceeding referred to in clause (i)
above might be commenced with any reasonable
likelihood of success;
(iii) there is not presently outstanding against any
Filtran Entity any judgment, decree, injunction,
rule, order or award of any court, governmental
department, commission, board, bureau, agency,
instrumentality or arbitrator or any settlement
agreement binding upon it or any of them;
(iv) none of the Vendors nor any Filtran Entity has
received notice of, and to the best knowledge and
belief of each Vendor and each Filtran Entity, there
are no open files, notices of violation or
outstanding work orders relating to the equipment,
building or realty owned or used by the Filtran Group
from or required by any police, fire department,
sanitation, health, worker safety or factory
authorities or any federal, provincial or municipal
authority, or any matters under discussion with any
such authority or department relating to open files,
notice of violation or work orders. No order
affecting any Filtran Entity has been issued or is
expected to be issued by the Ministry of Labour,
Worker's Compensation Board or any other ministry,
agency or authority in the Province of Ontario or the
State of New York; and
(v) there are no proceedings, investigations, assessments
or claims now in affect against any Filtran Entity
pursuant to the ITA.
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(bb) Compliance with Applicable Laws - Save and except as set out
in Schedule 4.1(bb), each Filtran Entity is conducting the
Business in compliance with all applicable laws, rules,
regulations, by-laws and ordinances of each jurisdiction in
which the Business is carried on and is not in breach of any
such laws, rules, regulations, by-laws and ordinances.
Without limiting the foregoing, each Filtran Entity has
obtained all licences, permits or other governmental
authorizations necessary to the ownership of its assets and
properties, including the Assets, and the conduct of its
Business where a failure to obtain same might adversely
affect the Business, or the operations, Assets or condition
(financial or otherwise) of such Filtran Entity. None of the
Vendors nor any Filtran Entity has offered, paid or agreed to
pay directly or indirectly any money or anything of value to
any individual who is or was an official of any foreign,
federal, provincial or local government, or any agency or
instrumentality thereof, or to any individual who is or was
an officer or employee or any present or former customer of
any Filtran Entity or any predecessor thereof, for the
purpose of or with the interest of inducing that individual
to use his or her influence to obtain or maintain significant
business for any Filtran Entity or otherwise significantly
affect the Business or the operations, properties or assets
of any Filtran Entities (financial or otherwise).
(cc) Bank Accounts, etc. - There is set forth in Schedule 4.1(cc)
the name of each bank or other depository in which any
Filtran Entity maintains any bank account, trust account or
safety deposit box and the names of all persons authorized to
draw thereon or who have access thereto.
(dd) Residence of each Vendor - Other than the Vendors listed in
Schedule 4.1(dd), none of the Vendors are non-residents of
Canada for the purposes of Section 116 of the ITA.
(ee) Inventories - The inventories of the Filtran Group as at the
Closing Time will consist solely of items of tangible and
intangible personal property and services of the kind and
quality regularly used or produced in the Business by each
Filtran Entity and which are of marketable quality.
(ff) Insurance - Each Filtran Entity maintains such policies of
insurance, issued by responsible insurers, as are appropriate
to its Business, property and assets, in such amounts and
against such risks as are customarily carried and insured
against by owners of comparable businesses, properties and
assets. Schedule 4.1(ff) lists all such policies together
with worker's compensation coverages presently maintained by
each Filtran Entity together with a brief description of each
such policy including the types of policy, name of insurer,
coverage limits, expiration dates and annual premiums. All
such policies of insurance are in full force and effect and
no Filtran Entity is in default, whether as to the payment of
premium or otherwise, under the terms of any such policy and
has not failed to give any notice or present any claim under
any such insurance policy in due and timely fashion. No
notice of cancellation or non-renewal with respect to, nor
disallowance of any
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claim under or with respect to any such policy has been
received by any Filtran Entity. The Vendors have no knowledge
(after due inquiry from the officers of each Filtran Entity)
of any circumstances or occurrences which might form the
basis of a material increase in premiums.
(gg) Long Term Indebtedness - Except as set forth in Schedule
4.1(gg), no Filtran Entity has outstanding any bonds,
debentures, mortgages or notes, and is not under any
obligation to create or issue any bonds, debentures,
mortgages or notes. Furthermore, except as set forth in
Schedule 4.1(gg), no Filtran Entity has any indebtedness
maturing more than one year after the date of its creation or
issuance and no Filtran Entity is under any agreement or
obligation to create, incur or issue any such indebtedness.
(hh) Non-Arm's Length Transactions - Except as disclosed in
Schedule 4.1(hh), no Filtran Entity is nor has been since the
date of the Balance Sheet a party to any contract, agreement
or arrangement with any associated or affiliated corporation
within the meaning of the OBCA or with any of its officers,
directors, shareholders or employees, or former officers,
directors, shareholders or employees, or any other person not
dealing at arm's length (as such term is construed under the
ITA), with any of the foregoing.
(ii) Payments and Loans to Directors, Officers, etc. - No Filtran
Entity has made or authorized any payment to or conferred or
authorized to be conferred any benefit upon any of its
officers, directors, shareholders or employees, or former
officers, directors, shareholders or employees or to any
other person not dealing at arm's length (as such term is
construed under the ITA) with any of the foregoing, except in
the ordinary and usual course of the Business and at the
regular rates payable to them of salary, pension, bonuses,
rents or other remuneration of any nature and relocation
expenses and reimbursements and except as specifically
disclosed in Schedule 4.1(ii). There have not been any
increases in the rates of salary, pension, bonuses, rents or
other remuneration of any nature or relocation expenses or
reimbursements payable to any such person since the date of
the Balance Sheet except increases disclosed in Schedule
4.1(ii) and increases approved by the Purchaser in advance in
writing. Except as expressly otherwise disclosed in Schedule
4.1(ii), no Filtran Entity has made any loans or has any
indebtedness outstanding to any of its officers, directors,
shareholders or employees, or former officers, directors,
shareholders or employees or to any other person not dealing
at arm's length (as such term is construed under the ITA)
with any of the foregoing.
(jj) Copies of Agreements, etc. - True, correct and complete
copies of all Contracts have been made available for review
by the Purchaser.
(kk) Corporate Records - The Books and Records of each Filtran
Entity contain accurate and complete minutes of all meetings
of the directors and shareholders of each Filtran Entity
since the date of incorporation thereof (all of which
meetings
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were duly called and held) and copies of all by-laws and
resolutions passed by its directors and shareholders at such
meetings. Each Filtran Entity's share certificate books,
share registers, transfer registers and other corporate
registers and records are complete, accurate and up-to-date.
(ll) Changes to Law and Technology - There are no proposed
environmental, safety, health or other laws, rules or
regulations and no new technological developments of which
any of the Vendors or any Filtran Entity has any knowledge
which might have an adverse effect on the Business or
operations of any Filtran Entity.
(mm) Absence of Unusual Transactions - Since the date of the
Balance Sheet and without limiting anything elsewhere
contained in this Agreement, no Filtran Entity has:
(i) transferred, assigned, sold or otherwise disposed of
any of the assets shown in the Balance Sheet or
cancelled any debts or claims except in each case in
the ordinary and usual course of the Business;
(ii) incurred or assumed any indebtedness, obligation or
liability (whether accrued, determinable, absolute,
contingent or otherwise), except those listed in
Schedule 4.1(j) and except unsecured current
obligations and liabilities incurred in the ordinary
and usual course of the Business which are not
materially adverse to the nature and manner of
conducting the Business, or the operations, assets,
properties, future prospects or financial condition
of any Filtran Entity;
(iii) issued or sold any shares in its capital stock or any
warrants, bonds, debentures or other corporate
securities of any Filtran Entity or issued, granted
or delivered any right, option or other commitment
for the issuance of any such or other securities,
other than the issuance of 100 Special Shares of
TCCL;
(iv) discharged or satisfied any lien or encumbrance, or
paid any obligation or liability (fixed or
contingent) other than current liabilities included
in the Balance Sheet, and current liabilities
incurred since the date thereof in the ordinary and
usual course of the Business;
(v) declared or paid any dividend or declared or made any
other distribution in respect of its capital stock or
purchased, redeemed (except for the redemption of 100
Special Shares of TCCL for $100) or otherwise
acquired any of the shares of any Filtran Entity or
effected any subdivision, consolidation or
reclassification of or other change to any Filtran
Entity's capital stock, except as set out in
subsection 4.1(tt) below;
(vi) suffered an operating loss or any extraordinary loss,
or waived any rights of substantial value, or entered
into any commitment or transaction not in the
ordinary and usual course of the Business where such
loss, rights,
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commitment or transaction materially adversely
affects or which will materially adversely affect the
nature and manner of conducting the Business, or the
operations, assets, properties, future prospects or
financial condition of any Filtran Entity;
(vii) amended or changed or taken any action to amend or
change its charter or by-laws, except for the
amendment by TCCL of its charter on May 29, 2002 to
add Special Shares, a copy of which has been
delivered to the Purchaser's counsel;
(viii) made or made a commitment to make any general wage or
salary increases in respect of personnel which it
employs;
(ix) except as disclosed in Schedule 4.1(gg), mortgaged,
pledged, charged, subjected to an adverse claim,
granted rights in, subjected to a demand, subjected
to a title retention agreement, subjected to lien,
granted a security interest in or otherwise
encumbered any of its assets or property, whether
tangible or intangible;
(x) except as disclosed on Schedule 4.1(j) made or
authorized or intended to make any capital
expenditures (except expenditures in the ordinary and
usual course of the Business); or
(xi) authorized or agreed or otherwise have become
committed to do any of the foregoing.
(nn) Other Material Contracts - No Filtran Entity has any
outstanding contract, lease, licence, agreement, indenture,
engagement, commitment or other instrument, whether written
or oral, of any nature or kind whatsoever (including, without
limitation, all tenders, quotations and orders open for
acceptance) which has not been disclosed to and made
available for inspection by the Purchaser.
(oo) Licenses and Permits - The Filtran Group has all Licenses and
Permits necessary to operate the Business and own the Assets.
No such License or Permit will be terminated or affected in
any way by reason of the acquisition of the Purchased Shares
by the Purchaser.
(pp) Consents and Approvals - Save and except for the required
consents and approvals as set out in Schedule 4.1(pp), all of
which have been obtained and shall be delivered to the
Purchasers on Closing, as far as each Vendor and each Filtran
Entity is aware, no other consents or approvals are required
to be obtained from or notices required to be delivered to
any governmental authority, other party to a contract or any
other Person or entity whose consent or approval is required
to be obtained or to which notice is required to be delivered
in connection with the execution and delivery of this
Agreement and completion of the transactions contemplated
hereby.
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(qq) Bankruptcy - Neither the Vendors nor any Filtran Entity has
proposed a compromise or arrangement to its creditors
generally; had any petition for receiving order in bankruptcy
filed against it; taken any proceeding with respect to a
compromise or arrangement; taken any proceeding to have
itself declared bankrupt or wound-up; taken any proceeding to
have a receiver appointed over its assets; had any
encumbrancer take possession of any of its property; or had
any execution or distress become enforceable or levied upon
any of its property.
(rr) Environmental Matters -
(i) Compliance with Laws - To the best of each Vendor's
and Filtran Entity's knowledge, the Business and the
Assets as carried on or used by each Filtran Entity
and their respective predecessors have been, are and
operate in material compliance with all Environmental
Laws;
(ii) Creation of Hazardous Substances - To the best of
each Vendor's and Filtran Entity's knowledge, no
Filtran Entity nor any of their respective
predecessors have used any machinery, equipment or
facility constituting the Assets, or permitted them
to be used, to generate, manufacture, refine, treat,
transport, store, handle, dispose, transfer, produce
or process any Hazardous Substance, except in
compliance with all Environmental Laws in all
material respects;
(iii) Proceedings - No Filtran Entity is, and has never
been, subject to any proceedings alleging the
violation of any Environmental Law applicable to the
Business or the Assets;
(iv) Release of Substances - Neither the Vendors nor any
Filtran Entity knows and they have no reasonable
grounds to know after due inquiry and investigation,
of any acts or circumstances that could reasonably be
expected to give rise to any civil or criminal
proceeding or liability regarding (i) the release or
presence of a Hazardous Substance on land where any
Filtran Entity had disposed or arranged for the
disposal of materials arising from the conduct of the
Business, and (ii) the violation of any Environmental
Law;
(v) Environmental Permits - To the best of each Vendor's
and Filtran Entity's knowledge, no Filtran Entity
presently holds any Environmental Permits and no
Environmental Permits are required to operate the
Business or own the Assets;
(vi) Storage Off-Site - To the best of the Vendors' and
each Filtran Entity's knowledge, all Hazardous
Substances disposed of, treated or stored off-site of
the Lands have been disposed of, treated and stored
in material compliance with all Environmental Laws;
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(vii) Clean-up Orders - Neither the Vendors nor any Filtran
Entity are aware of any proceeding and have no
knowledge, after due inquiry and investigation, of
any circumstance or material facts which could, if
true, give rise to any proceeding, which alleges or
asserts that any Filtran Entity is potentially
responsible for a domestic or foreign federal,
provincial, municipal, state or local clean-up or
remediation as a result of Hazardous Substances or
for any other remedial or corrective action
whatsoever under an Environmental Law;
(viii) Maintenance of Records - To the best of each Vendor's
and Filtran Entity's knowledge, each Filtran Entity
has in all material respects maintained all
environmental and operating documents and records
relating to the Business and the Assets in the manner
and for the time periods required by any
Environmental Law and has never had conducted an
environmental audit of the Business and Assets. For
purposes of this section, an environmental audit
shall include any evaluation, assessment, review or
study performed at the request of or on behalf of the
Purchaser, a prospective Purchaser of the Business or
the Assets or a court of governmental authority;
(ix) Storage Tanks - To the best of each Vendor's and each
Filtran Entity's knowledge, no active or inactive
underground storage tanks are or have been located on
or in the Lands; and
(x) Pending Legislation - Neither the Vendors nor any
Filtran Entity has any knowledge of any pending or
proposed changes to Environmental Laws which would
render illegal or materially restrict the operation
of the Business or the use of the Assets.
(ss) Sale - Other than this Agreement, there is no agreement,
option or other right or privilege outstanding in favour of
any Person for the purchase from the Vendors of the Purchased
Shares or from any Filtran Entity of any of the Assets.
Except in the ordinary and usual course of business or with
the prior written consent of the Purchaser, no Filtran Entity
has sold any Assets reflected in the Interim Balance Sheet
and shall not sell any such Assets prior to Closing.
(tt) Dividends, Distributions - Since the date of the Financial
Statements, no Filtran Entity has issued any dividend or made
any other distribution to any of its Shareholders nor shall
any such distribution be made prior to Closing, save and
except for a cash dividend of up to $400,000 by Filtran
Canada to TCCL and a dividend of up to $400,000 by TCCL to
1497230 Ontario Inc. that may be declared and paid on or
before Closing, provided that after taking into account such
declaration and payment, the consolidated cash balance of the
Filtran Group as determined on Closing and reflected in the
Final Balance Sheet shall not be less than $150,000 and the
ratio of consolidated current assets to consolidated current
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liabilities of the Filtran Group on Closing as reflected in
the Final Balance Sheet shall not be less than 1.5 to 1.0.
(uu) Third Party Discussions - The Purchaser will not incur any
liability in connection with the consummation of the
transactions contemplated by this Agreement to any third
party with whom any of the Vendors or any Filtran Entity or
their respective agents and affiliates have had discussions
regarding the disposition of the Purchased Shares.
(vv) Full Disclosure - None of the foregoing representations and
statements of fact contains any untrue statement of material
fact or omits to state any material fact necessary to make
any such statement or representation not misleading to a
prospective purchaser of the Purchased Shares seeking full
information as to the Filtran Group or any Filtran Entity or
their respective properties, businesses or affairs including,
without limitation, the Business and the Assets.
4.2 No Change - All the covenants, representations and
warranties of each of the Vendors and each Filtran Entity, were true and correct
as of the date of the Financial Statements, are true and correct as of the
Effective Date and will be true and correct as of the Closing Date.
4.3 Reliance - Each Vendor and each Filtran Entity hereby
expressly acknowledges that the Purchaser is relying upon the covenants,
representations and warranties of the Vendors contained in this Agreement and in
any agreement, certificate or other document delivered pursuant hereto in
connection with the purchase of the Purchased Shares hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Representations and Warranties of the Purchaser - The
Purchaser hereby covenants, represents and warrants to each of the Vendors and
each Filtran Entity as follows, acknowledging that the Vendors and each Filtran
Entity are relying upon such covenants, representations and warranties in
connection with entering into this Agreement and completing the transactions
contemplated thereby:
(a) Organization and Good Standing - The Purchaser is a
corporation duly incorporated and organized, validly
existing, in good standing and is up to date in all of the
filings and registrations required under the laws of the
Province of Ontario.
(b) Due Authorization, etc. - The Purchaser has all necessary
corporate power, authority and capacity to enter into this
Agreement and the agreements and other instruments
contemplated herein and to perform its obligations hereunder
and thereunder. The execution and delivery of this Agreement
and the agreements and other instruments contemplated herein
and the performance of the transactions contemplated
hereunder and thereunder have been duly authorized by all
necessary corporate action on the part of the Purchaser.
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(c) Valid and Binding Obligation - This Agreement constitutes and
the agreements and other instruments contemplated herein when
executed will constitute valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance
with the terms hereof and thereof subject to limitation with
respect to enforcement imposed in connection with laws
affecting the rights of creditors generally including,
without limitation, applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws and to the extent
that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they
are sought.
(d) No Violation - The Purchaser is not a party to, bound by or
subject to any indenture, mortgage, lease, agreement,
instrument, charter or by-law provision, statute, regulation,
order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would
occur as a result of the execution and delivery by the
Purchaser of this Agreement or the performance by the
Purchaser of any of the terms hereof.
(e) Securities Law - The Purchaser is a reporting issuer in the
Provinces of Alberta, British Columbia and Ontario and is
duly registered as a public company with the SEC.
(f) Residence - The Purchaser is not a non-Canadian for the
purposes of the Investment Canada Act (Canada).
5.2 Reliance - The Purchaser hereby expressly acknowledges that
the Vendors are relying upon the covenants, representations and warranties of
the Purchaser contained in this Agreement or in any agreement, certificate or
other document delivered pursuant hereto in connection with the sale of the
Purchased Shares hereunder.
ARTICLE VI
NO BROKER AND EXCLUSIVE DEALING
6.1 No Broker - Each of the parties hereto represents and
warrants to the others that neither of them have entered into any commitment or
engagement with a broker or agent that may give rise to any valid claim against
the other for a brokerage commission, finder's fee or other like payment in
respect of any matter contemplated by the Agreement.
6.2 Exclusive Dealing - Until the later of the Closing Time or
other termination of this Agreement, the Vendors and each Filtran Entity,
together and individually, agree not to directly or indirectly through
intermediaries or otherwise enter into any agreement, discussion or negotiation
with, or provide information to, any other corporation, firm or any other person
or solicit, encourage, entertain or consider any inquiries or proposals, with
respect to:
(a) any offers to purchase all or any portion of the Purchased
Shares;
(b) the possible disposition of a material portion of the
Business or the Assets; or
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(c) any business combination involving any Filtran Entity,
whether by way of merger, consolidation, share exchange or
other transaction.
ARTICLE VII
CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE PURCHASER
AND THE VENDORS OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
7.1 Purchaser's Conditions - The obligation of the Purchaser to
complete the purchase of the Purchased Shares hereunder will be subject to the
satisfaction of, or compliance with, at or before the Closing Time, each of the
following conditions precedent (each of which is hereby acknowledged to be
inserted for the exclusive benefit of the Purchaser and may be waived by the
Purchaser in whole or in part):
(a) Truth and Accuracy of Representations of Vendors at Closing
Time - All of the representations and warranties of the
Vendors made in or pursuant to this Agreement (including the
Schedules hereto) or in agreement, certificate or other
document delivered or given pursuant to this Agreement,
including, without limitation, the representations and
warranties set forth in Article IV, will be true and correct
in all material respects as at the Closing Time and with the
same effect as if made at and as of the Closing Time (except
as such representations and warranties may be affected by the
occurrence of events or transactions expressly contemplated
and permitted hereby).
(b) Performance of Obligations - The Vendors will have complied
with and performed in all respects its obligations, covenants
and agreements herein.
(c) Consents, Authorizations and Registrations - Except for a
consent required for the TD Mortgage under the lease
described in Schedule 4.1(s) and not yet received, all
consents, approvals, orders and authorizations of any persons
or governmental or administrative authorities in Canada, the
United States or elsewhere (or registrations, declarations,
filings or recordings with any such authorities), including
any such consents or approvals required under any of the
leases or licences of real property listed in Schedule
4.1(s), in form and terms satisfactory to counsel for the
Purchaser and compliance with any conditions thereof required
in connection with the completion of any of the transactions
contemplated by this Agreement, the execution of this
Agreement, the Closing or the performance of any of the terms
and conditions hereof will have been obtained on or before
the Closing Time.
(d) Legal Matters - The title of the Filtran Group to its assets
and undertaking, the form of and documentation relating to
the transfer of the Purchased Shares by the Vendors to the
Purchaser, the legality of the incorporation and organization
of the Filtran Group, the due creation and issuance as fully
paid of all of the outstanding shares in the capital of the
Filtran Group and all corporate proceedings of the Filtran
Group, its shareholders and directors, and all matters which
in the
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reasonable opinion of counsel for the Purchaser are material
in connection with the transactions herein contemplated will
be subject to the favourable opinion of such counsel and all
relevant documents, records and information will be made
available by the Vendors for review by such counsel for that
purpose.
(e) Due Diligence - The Purchaser shall have conducted and
completed a due diligence investigation with respect to each
Filtran Entity, the Business and the Assets and any other
matter relating to any aspect of the transactions
contemplated hereunder, including the ability of any party
hereto to receive all required approvals in respect of the
transactions contemplated hereunder, and, in its sole and
absolute discretion, shall have been satisfied in all
respects with the results of such due diligence
investigation, provided that such investigations must be
completed on or before the Closing Date.
(f) Material Adverse Change - There shall have been no Material
Adverse Change since the date of the Interim Financial
Statements.
7.2 Vendors' Conditions - The obligation of the Vendors to
complete the sale of the Purchased Shares hereunder will be subject to the
satisfaction of or compliance with, at or before the Closing Time, each of the
following conditions precedent (each of which is hereby acknowledged to be
inserted for the exclusive benefit of the Vendors and may be waived by the
Principal, on behalf of the Vendors, in whole or in part):
(a) Truth and Accuracy of Representations of Purchaser at Closing
Time - All of the representations and warranties of the
Purchaser made in or pursuant to this Agreement (including
the Schedule hereto) or in any agreement, certificate or
other document delivered or given pursuant to this Agreement,
including without limitation the representations and
warranties set forth in Article V hereof, will be true and
correct in all material respects as at the Closing Time and
with the same effect as if made at and as of the Closing
Time.
(b) Performance of Obligations - The Purchaser will have complied
with and performed in all respects all its obligations,
covenants and agreements herein.
7.3 Non-Performance of Conditions for the Benefit of the
Purchaser - In the event that any of the conditions set forth in Section 7.1
will not be fulfilled and/or performed at or before the Closing Time, the
Purchaser in its sole discretion may either (i) terminate this Agreement by
notice in writing to the Principal, in which event the Purchaser will thereupon
be released from all obligations under this Agreement and, unless the Purchaser
can show that the condition for which the Purchaser has terminated this
Agreement could reasonably have been performed or complied with or caused to be
performed or complied with by the Vendors, then the Vendors will also be
released from all obligations under this Agreement, or (ii) waive any of the
said conditions in whole or in part at any time if it shall see fit to do so,
without prejudice to its right of termination in the event of a non-fulfilment
and/or non-performance of any other condition or conditions in whole or in part,
any such waiver to be binding upon the Purchaser only if the same is given by
the Purchaser in writing.
-35-
7.4 Non-Performance of Conditions for the Benefit of the Vendors
- In the event that any of the conditions set forth in Section 7.2 will not be
fulfilled and/or performed at or before the Closing Time, the Principal in his
sole discretion may either (i) terminate this Agreement by notice from the
Principal in writing to the Purchaser, and the Vendors will thereupon be
released from all obligations under this Agreement and, unless the Principal can
show that the condition for which the Principal has terminated this Agreement
could reasonably have been performed or complied with or caused to be performed
or complied with by the Purchaser, then the Purchaser will also be released from
all obligations under this Agreement; or (ii) waive any of the said conditions
in whole or in part at any time if it should see fit to do so, without prejudice
to its right of termination in the event of a non-fulfilment and/or
non-performance of any other condition or conditions, in whole or in part, any
such waiver to be binding upon the Vendors only if the same is given by the
Principal in writing.
7.5 Acceptance of Notice of Non-Fulfilment
(a) The Purchaser covenants and agrees that in the event that at
the Closing Time, any condition or conditions for the benefit
of the Purchaser set out in this Article VII have not been
fulfilled and/or performed to the reasonable satisfaction of
the Purchaser and such condition or conditions is or are not
reasonably capable of being fulfilled and/or performed or
caused to be fulfilled and/or performed by the Vendors, and
the Vendors have, at or prior to the Closing Time, made
complete and accurate disclosure in writing, referring
specifically to the provisions of this Section 7.5 to the
Purchaser of the facts relating to its failure to fulfill
and/or perform such condition or conditions, and the
Purchaser elects to complete the purchase and sale of the
Purchased Shares, except as otherwise agreed by the Purchaser
and the Vendors, the Vendors will not be liable to the
Purchaser hereunder for breach of any covenant,
representation or warranty in respect of the matter so
disclosed.
(b) The Vendors covenant and agree that in the event that at the
Closing Time, any condition or conditions for the benefit of
the Vendors set out in this Article VII have not been
fulfilled and/or performed to the reasonable satisfaction of
the Vendors and such condition or conditions is or are not
reasonably capable of being fulfilled and/or performed or
caused to be fulfilled and/or performed by the Purchaser, and
the Purchaser has, at or prior to the Closing Time, made
complete and accurate disclosure in writing, referring
specifically to the provisions of this Section 7.5 to the
Vendors of the facts relating to its failure to fulfill
and/or perform such condition or conditions, and the Vendors
elect to complete the purchase and sale of the Purchased
Shares, except as otherwise agreed by the Purchaser and the
Vendors, the Purchaser will not be liable to the Vendors
hereunder for breach of any covenant, representation or
warranty in respect of the matter so disclosed.
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ARTICLE VIII
COVENANTS OF THE VENDORs AND THE PURCHASER
8.1 Investigations - The Vendors will cause each Filtran Entity
to permit the Purchaser and its employees, agents, counsel and accountants and
other representatives, between the date hereof and the Closing Time, without
interference to the ordinary conduct of the Business, to have free and
unrestricted access during normal business hours to the premises and personnel
of the Filtran Group, to all the books, accounts, records and other data of the
Filtran Group (including, without limitation, all corporate, accounting and tax
records, guarantees, agreements, title documentation, surveys, minute books,
share certificate books, tax returns and related correspondence, and financial
statements of the Filtran Group) and to the properties and assets of each
Filtran Entity, and to furnish to the Purchaser such financial and operating
data and other information with respect to the Business, legal condition,
properties and Assets of the Filtran Group as the Purchaser will from time to
time consider necessary or desirable to enable confirmation of the matters
represented, warranted and covenanted herein. Without limiting the generality of
the foregoing, it is agreed that the accounting representatives of the Purchaser
will be afforded ample opportunity to make a full investigation of all aspects
of the financial affairs of the Filtran Group and each Filtran Entity.
8.2 Confidentiality - In the event of the termination of this
Agreement without consummation of the transactions contemplated hereby, the
Purchaser will use its best efforts to keep confidential any information (unless
in the public domain) obtained from the Filtran Group and the Vendors. If this
Agreement is so terminated, promptly after such termination, all documents,
working papers and other written material obtained from one party in connection
with this Agreement and not theretofore made public (including all copies
thereof), will be returned to the party which provided such material or, in lieu
thereof, a certificate in writing confirming that the information in question
has been destroyed.
8.3 Non-Waiver - No investigations made by or on behalf of the
Purchaser at any time will have the effect of waiving, diminishing the scope of
or otherwise affecting any representation, warranty or covenant made by the
Vendors herein or in any agreement, certificate or any other document delivered
or given pursuant hereto.
8.4 Covenants of the Vendors - The Vendors covenant and agree
that the Vendors will do the following:
(a) Corporate Documents - Forthwith following the execution of
this Agreement, the Vendors will supply the Purchaser with
the certificates of incorporation and any articles of
amendment or amalgamation of each Filtran Entity and all
minute and share certificate books of each Filtran Entity.
Any deficiencies discovered by the Purchaser following an
investigation of such documents, and records, will be
corrected to the satisfaction of the Purchaser prior to the
Closing Date. A copy of any resolution or by-law passed or
minutes of any meeting held by the directors or shareholders
of any Filtran Entity between the date hereof and the Closing
Date will be delivered to the Purchaser prior to such date.
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(b) Conduct Business in Ordinary Course - Except as otherwise
contemplated or permitted by this Agreement, the Vendors will
cause each Filtran Entity during the period from the date of
this Agreement to the Closing Time, to conduct the Business
in the ordinary and usual course thereto and not, without the
prior written consent of the Purchaser, to enter into any
transaction or do any thing which, if effected before the
date of this Agreement, would constitute or would cause a
material breach of the covenants, representations and
warranties contained herein. On or before the third Business
Day prior to Closing, the Vendors will provide the Purchaser
with updated management prepared unaudited Interim Financial
Statements for the Filtran Group and each Filtran Entity as
of March 31, 2002, which will be certified by the Principal
and comprehensively reflect all Material Adverse Changes and
the financial position of the Filtran Group and each Filtran
Entity from the date of the Financial Statements up to such
date.
(c) Correctness of Representations and Warranties - The Vendors
will cause each of the covenants, representations and
warranties of the Vendors and each Filtran Entity contained
herein, including, without limitation, those set out in
Article IV, to remain true and correct until and at each of
the Effective Date and the Closing Time.
(d) Continue Insurance - The Vendors will cause each Filtran
Entity during the period from the date of this Agreement to
the Closing Time, to continue in force and effect, and to
renew, when necessary, all existing policies of insurance
presently maintained by each Filtran Entity and to give all
notices and present all claims under all such policies of
insurance in due and timely fashion and to promptly advise
the Purchaser of any such claims.
(e) Perform Obligations - The Vendors will cause each Filtran
Entity during the period from the date of this Agreement to
the Closing Time, to comply with all laws and other
obligations affecting the operation of the Business and to
pay, as they become due, all required Taxes and tax
installments, including without limitation, income,
corporate, retail, excise and realty taxes.
(f) Transfer of Purchased Shares - The Vendors will take and
cause each Filtran Entity to take all necessary steps and
proceedings as are necessary to permit all of the Purchased
Shares to be duly and regularly transferred to the Purchaser
or as it may otherwise direct in writing at the Closing.
(g) Resignation of Directors and Officers - The Vendors will
cause such directors and officers of each Filtran Entity as
may be required by the Purchaser to resign in favour of
nominees of the Purchaser, such resignations to be effective
as at the Closing Time, and will cause the board of directors
and officers of each Filtran Entity at the Closing Time to be
those persons nominated by the Purchaser provided that, while
any amount owing under the Promissory Note (excluding any
amounts paid into the Adjustment Escrow) is outstanding, the
Purchaser will
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ensure that the Principal or his nominee shall be entitled to
directors of each Filtran Entity.
(h) Resignation of Auditors - The Vendors will cause Filtran
Accountants to resign, such resignation to be effective as at
the Closing Time.
(i) Evidence of Payments of Tax and Title - Upon request, the
Vendors will furnish the Purchaser with evidence satisfactory
to the Purchaser, acting reasonably, that at the Closing Time
there are no arrears of or liabilities for Taxes, rates,
assessments or other charges adversely affecting the Assets
not shown as accruals or allowances on the Financial
Statements, except Taxes, rates, assessments or other charges
accruing in the ordinary and usual course of the Business
subsequent to the date of the Financial Statements and that
at the Closing Time all of the assets of the Filtran Group
will be owned by the Filtran Group with good and marketable
title thereto, free and clear of all Encumbrances of any
nature or kind whatsoever, save and except the Permitted
Encumbrances.
(j) Representation Evidence by the Vendors - Upon request, the
Vendors will furnish the Purchaser at the Closing Time with
evidence (which may include statutory declarations made by
the Vendors and officers of each Filtran Entity) satisfactory
to the Purchaser that the facts with respect to each of the
representations and warranties of the Vendors and each
Filtran Entity contained herein or in any Agreement,
certificate or any other document delivered or given pursuant
hereto, are true and correct as at each of the Effective Date
and the Closing Time, provided that the receipt of such
evidence and the closing of the transaction of purchase and
sale herein will not act as a waiver of the covenants,
representations and warranties of the Vendors and each
Filtran Entity contained herein or any agreement, certificate
or any other document delivered or given pursuant hereto,
which covenants, representations and warranties will continue
in full force and effect as provided for herein.
(k) Payments of Taxes - The Vendors will cause each Filtran
Entity, up to the Closing Date, to duly and expeditiously
file all Tax Returns required to be filed by it (all such
returns being subject to the prior approval of the Purchaser)
and, except where otherwise specified by the Purchaser, to
promptly pay all Taxes, assessments and governmental charges
which are claimed by any governmental authority to be due and
owing; not suffer or permit any Filtran Entity, without the
prior consent of the Purchaser, to enter into any agreement,
waiver or other arrangement providing for an extension of
time with respect to the filing of any Tax Return or the
payment or assessment of any tax, governmental charge or
deficiency.
(l) No Encumbrances - The Vendor will transfer the Purchased
Shares to the Purchaser at the Closing Time free and clear of
all Encumbrances of any nature or kind whatsoever.
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(m) Opinion of Counsel for the Vendors and the Filtran Group -
The Vendors will cause to be delivered to the Purchaser at
the Closing Time an opinion dated the Closing Date, from
counsel for the Vendors and each Filtran Entity substantially
in the form annexed hereto as Schedule 8.4(m) which shall not
include a title opinion in respect of all Real Property and a
title opinion in respect of the Real Property located in
Ontario substantially in the form annexed hereto as Schedule
8.4(m.1) within 30 days of the Closing Date.
(n) Release of the Filtran Group - The Vendors will deliver and
cause to be delivered to the Purchaser at the Closing Time
executed releases by the Vendors and by each director and
officer of each Filtran Entity and such other Persons as the
Purchaser may specify, each such release to be in the form
annexed hereto as Schedule 8.4(n).
(o) Deliveries and Assurances - The Vendors will deliver and
cause to be delivered to the Purchaser at the Closing Time
all required deliveries as set out herein, including the
Filtran Documents, together with all assurances, transfers,
assignments, certificates and other documents as the
Purchaser's solicitors consider reasonably necessary or
desirable to validly and effectively complete the
transactions contemplated by this Agreement including,
without limitation, the transfer of the Purchased Shares from
the Vendors to the Purchaser.
8.5 Covenants of the Purchaser - The Purchaser covenants and
agrees that the Purchaser will do the following:
(a) Correctness of Representations and Warranties - The Purchaser
will cause each of the covenants, representations and
warranties of the Purchaser contained herein, including,
without limitation, those set out in Article V of this
Agreement, to remain true and correct until and at each of
the Effective Date and the Closing Time.
(b) Representation Evidence by the Purchaser - The Purchaser will
furnish the Vendors at the Closing Time with evidence (which
may include a statutory declaration made by an officer of the
Purchaser) satisfactory to the Vendors that the facts with
respect to each of the representations and warranties of the
Purchaser contained herein are true and correct as at each of
the Effective Date and Closing Time, provided that the
receipt of such evidence and the closing of the transaction
of purchase and sale herein will not act as a waiver of the
covenants, representations and warranties of the Purchaser
contained herein, which covenants, representations and
warranties will continue in full force and effect as provided
for herein.
(c) Opinion of Counsel for the Purchaser - The Purchaser will
cause to be delivered to the Vendors and the Filtran Group at
the Closing Time an opinion dated the Closing Date, from
counsel for the Purchaser in the form annexed hereto as
Schedule 8.5(c).
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(d) Deliveries and Assurances - The Purchaser will deliver and
caused to be delivered at the Closing Time to the Vendors all
required deliveries as set out herein, including the
Purchaser Documents, together with all other documents as the
Vendors' solicitors consider reasonably necessary or
desirable to validly and effectively complete the
transactions contemplated by this Agreement.
8.6 Final Balance Sheet
(a) The Purchaser and the Principal, acting reasonably and in
good faith, covenant and agree to fully co-operate to
complete the Final Balance Sheet, in form satisfactory to the
Purchaser and Principal and their respective auditors, all
acting reasonably, within 30 days of the Closing Date (the
"Delivery Date"). Unless notice in writing (the "Dispute
Notice") is received by either party from the other raising a
dispute (the "Dispute") as to the final form or content of
the Final Balance Sheet within twenty (20) Business Days of
the Delivery Date (the "Deadline"), then the Final Balance
Sheet shall be deemed to be final and binding upon all
parties to this Agreement. If a Dispute Notice is received by
either the Purchaser or the Principal from the other on or
before the Deadline, the Dispute shall be settled by an
independent chartered accountant (the "Independent
Accountant") appointed under this section.
(b) If a Dispute Notice is received by either the Purchaser or
the Principal on or before the Deadline, then the Purchaser
and the Principal, acting reasonably and in good faith, shall
jointly appoint the Independent Accountant and shall instruct
the Independent Accountant to determine the Dispute within
thirty (30) days following his appointment. Notwithstanding
any other provision herein, the determination of the
Independent Accountant as to the Dispute shall be final and
binding upon all parties to this Agreement.
(c) If the Purchaser and the Principal fail to jointly appoint
the Independent Accountant on or before the tenth (10th)
Business Day following receipt by either of the Dispute
Notice, then the Purchaser and the Principal shall within a
further five (5) Business Days, each appoint one arbitrator.
The arbitrators so appointed shall then meet and appoint an
Independent Auditor. In the event that either the Purchaser
or the Principal fails to appoint an arbitrator within the
required time period, then the sole arbitrator appointed
shall be entitled to select the Independent Accountant.
(d) The Independent Accountant shall have access to the books,
accounts, records, vouchers, cheques, papers and documents
of, or which may in any manner whatsoever affect the Filtran
Group. The Principal and the Purchaser shall co-operate with
the Independent Accountant and shall provide all information
and documents reasonably requested by the Independent
Accountant.
(e) All reasonable fees, disbursements and other costs and
expenses associated with the determination of the Dispute by
the Independent Accountant in accordance
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with the provisions of this Article VIII shall be borne
equally by the Purchaser and the Principal.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE VENDORs AND PURCHASER
9.1 Survival of Representations, Warranties and Covenants of the
Vendors - The representations, warranties and covenants of the Vendors contained
in this Agreement or in any agreement, certificate or any other document
delivered or given pursuant to this Agreement will survive the completion of the
transactions contemplated by this Agreement and, notwithstanding such completion
or any investigation made by or on behalf of the Purchaser, will continue in
full force and effect for the benefit of the Purchaser as to tax matters until
the expiry of any reassessment or appeal periods, as to matters relating to
title to the Purchased Shares, the Business or Assets or relating to
environmental matters, for a period of five (5) years from the Closing Date, and
as to all other matters for a period of two (2) years from the Closing Date,
subject to Article X. Notwithstanding the foregoing, if a clean environmental
report is obtained in respect of the Real Property prior to the first
anniversary of the Closing Date (e.g. does not advise that any Filtran Entity is
potentially responsible for a domestic or foreign federal, provincial,
municipal, state or local clean-up or remediation as a result of Hazardous
Substances or for any other remedial or corrective action whatsoever under an
Environmental Law), the representations, warranties and covenants of the Vendors
contained in this Agreement relating to environmental matters only shall expire
as of the date of such report.
9.2 Survival of Representations, Warranties and Covenants of the
Purchaser - The covenants, representations and warranties of the Purchaser
contained in this Agreement or in any agreement, certificate or any other
document delivered or given pursuant to this Agreement will survive the
completion of the transactions contemplated by this Agreement and,
notwithstanding such completion or any investigation made by or on behalf of the
Vendors, will continue in full force and effect for the benefit of the Vendors
for a period of two (2) years from the Closing Date, subject to Article X.
Notwithstanding the foregoing, all covenants of the Purchaser or the Filtran
Group in connection with the payment of the Promissory Note and any security
over any assets of the Filtran Group granted by the Purchaser or any Filtran
Entity as collateral security for the Promissory Note shall survive until the
Promissory Note has been paid in full in accordance with its terms and subject
to the Adjustments, if any, or otherwise satisfied pursuant to the realization
of such collateral security.
ARTICLE X
INDEMNIFICATION
10.1 Principal to Indemnify - Subject to the limitations
hereinafter provided in this Article X, the Principal covenants and agrees to
indemnify and save harmless the Purchaser and each Filtran Entity, their
respective officers, directors, shareholders, lenders and affiliates, of and
from (collectively, the "Claims"):
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(a) any Excluded Liability;
(b) all contingent Liabilities which any Filtran Entity or the
Purchaser becomes obligated to pay, existing at the Closing
Time, not disclosed or reflected in the Financial Statements
or elsewhere in this Agreement (including the Schedules
hereto);
(c) any assessment or reassessment for Taxes for any period up to
and including the Closing Date for which no adequate reserve
has been provided and disclosed or reflected in the Interim
Financial Statements or which arises in the ordinary and
usual course of business during the period form the last day
covered by the Interim Financial Statements to the Closing
Date, except to the extent that the assessment or
reassessment disallows an expense or a deduction claimed by
any Filtran Entity the amount of which said Filtran Entity is
or will be entitled, for any subsequent taxation year, to
claim as capital cost allowances pursuant to the regulations
to the ITA or claim as an expense or other deduction in
computing its income under the ITA in which case the
Principal will bear the full risks of any interest or
penalties attributable to such timing difference;
(d) any loss suffered by the Purchaser or any Filtran Entity as a
result of any breach of any representation or warranty or
non-fulfilment of any covenant or agreement of any of the
Vendors or any Filtran Entity contained in this Agreement or
in any agreement, certificate or other document delivered or
given pursuant to this Agreement;
(e) any claims by or liabilities to any third party with whom the
Vendors or any Filtran Entity or their respective agents and
affiliates have had discussions regarding the disposition of
the Purchased Shares made or incurred in relation to or as a
result of or in connection with the consummation of the
transactions contemplated by this Agreement; and
(f) all claims, actions, causes of action, damages, losses,
liabilities, demands, costs and expenses (including legal
expenses on a solicitor-client basis) in respect of the
foregoing.
Subject to the limitations hereinafter provided in this Article X, the liability
of the Principal under this Section 10.1 will cease upon the expiration of the
respective limitation periods set out in Article IX unless the Principal will
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 will not
apply with respect to such claim.
10.2 Notification to Vendors - The Purchaser will forthwith notify
the Principal of any debts, liabilities, contracts, engagements, assessments,
reassessments or losses, or other amounts for which the Vendors may be liable
under Section 10.1 and the Principal will have the right to participate in any
negotiations with respect thereto. If any Filtran Entity receives an assessment
or reassessment in respect of which the indemnity of the Principal hereunder may
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extend or relate, the Purchaser will cause such Filtran Entity forthwith after
receipt thereof to deliver to the Principal a copy of such assessment or
reassessment and the Purchaser will notify the Principal of its Claim, if any,
against the Principal under the within indemnity within 45 days after receipt of
such assessment or reassessment and the Purchaser will be entitled to take all
action necessary to preserve any Filtran Entity's right to object to the
assessment or reassessment.
10.3 Right of Vendors to Defend - The Principal will at all times
have the right at his sole and only expense to participate in any negotiations
regarding, and dispute and contest in the name of any Filtran Entity, any Claim
for amounts for which the Principal may be liable under Section 10.1 and so long
as the Principal is defending such claim in good faith, the Purchaser will not
settle or compromise the same; provided, however, that with respect to any
assessment or reassessment for income, corporate, sales, excise or other tax,
the right of the Principal to so contest will only apply after the payment of
any such assessment or reassessment by the Principal on behalf of any Filtran
Entity if payment is, at law, a pre-condition to the right to contest the
assessment or reassessment. If the Principal does not elect to defend such
claim, the Purchaser will have no obligation to do so. The payment of any such
assessment or reassessment by the Principal on behalf of any Filtran Entity will
be repaid to the Principal if repaid by the taxing authority, together with any
interest thereon paid by the taxing authority; provided, however, that
notwithstanding anything elsewhere contained in this Section 10.3, if any such
contest or settlement will also involve matters which could affect the future
tax liabilities of any Filtran Entity or the Purchaser, then any such contest or
settlement must be handled or conducted to the mutual satisfaction and agreement
of the Principal, the Filtran Entities and the Purchaser. The Purchaser will
fully cooperate and will cause each Filtran Entity to fully cooperate with the
Principal and its counsel in any proceedings with respect to any such amounts
and will give the Principal reasonable access to all documents relating thereto.
10.4 Purchaser to Indemnify - Subject to the limitations
hereinafter provided in this Article X, the Purchaser covenants and agrees to
indemnify and save harmless the Vendors of and from:
(a) any loss suffered by the Vendors as a result of any breach of
representation, warranty or covenant of the Purchaser
contained in this Agreement or in any agreement, certificate
or other document delivered or given pursuant to this
Agreement; and
(b) all claims, actions, causes of action, damages, losses,
liabilities, demands, costs and expenses (including legal
expenses on a solicitor-client basis) in respect of the
foregoing.
Subject to the limitations hereinafter provided in this Article X, the liability
of the Purchaser under this Section 10.4 will cease upon the expiration of the
respective limitation periods set out in Article IX unless the Purchaser will
have been given notice of any claim hereunder by the Vendors pursuant to this
Section 10.4 prior to such date in which event the limitation period will not
apply with respect to such claim.
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10.5 Notification to Purchaser - The Vendors will cause the
Principal to forthwith notify the Purchaser of any amounts for which the
Purchaser may be liable under Section 10.4 and the Purchaser will have the right
to participate in any negotiations with respect thereto.
10.6 Right of Purchaser to Defend - The Purchaser will at all
times have the right in its sole and only expense to participate in any
negotiations regarding, and dispute and contest in the name of the Vendors, any
claim for amounts for which the Purchaser may be liable under Section 10.4 and
so long as the Purchaser is defending such claim in good faith, the Vendors will
not settle or compromise the same. If the Purchaser does not elect to defend
such claim, the Vendors will have no obligation to do so. The Vendors will fully
cooperate with the Purchaser and its counsel in any proceedings with respect to
any such amounts and will give the Purchaser reasonable access to all documents
relating thereto.
10.7 LIMITATIONS
(a) Nothing contained in this Agreement, including without
limitation, Section 9.1, will limit the liability of any of
the Vendors to the Purchaser or to any Filtran Entity by
reason of any fraudulent breach made by a Vendor or a Filtran
Entity of a representation or warranty contained in this
Agreement or in any agreement, certificate or other document
delivered or given pursuant to this Agreement, or limit the
time within which a claim hereunder on account of such
fraudulent breach may be made.
(b) Nothing contained in this Agreement, including without
limitation, Section 9.2, will limit the liability of the
Purchaser to any of the Vendors by reason of any fraudulent
breach of any representation or warranty made by the
Purchaser contained in this Agreement or in any agreement,
certificate or other document delivered or given pursuant to
this Agreement, or limit the time within which a claim
hereunder on account of such fraudulent breach may be made.
(c) The Purchaser agrees that the Principal and Vendors shall
have no liability under this Article X for any Claim unless
and until the aggregate value of all Claims exceeds $50,000.
(d) Any amount recoverable by the Purchaser under this Article X
shall be limited to the Purchase Price actually paid by the
Purchaser and no individual Vendor shall be responsible to
pay an amount in excess of the following proportions of the
Purchase Price actually paid by the Purchaser as set out
below:
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Vendor Maximum %
------ ---------
Xxxxxxx Xxxxxx Xxxxx 27.25%
Rose Xxxx Xxxxx 6.29%
Xxxxx Xxxxxxx Xxxxx 2.32%
Coranne Xxxxx Xxxxx 9.70%
Xxxx Xxxxx Trepannier 2.32%
Xxxx Xxxxxx 7.30%
Xxxxxx Xxxxx 20.13%
Xxxxx Xxxxx 13.72%
Xxxxxxx Xxxxxxx 10.98
--------
TOTAL 100%
(e) The Vendors' liability under this Article X shall be the sole
remedy of the Purchaser under this Agreement for any breach
by the Vendors of any covenant, representation or warranty
given under this Agreement or in any document delivered in
connection therewith and may be realized upon and satisfied
through an Adjustment.
ARTICLE XI
CLOSING
11.1 Closing - The sale and purchase of the Purchased Shares
hereunder will be completed at the Closing Time at the offices of XxXxxxx
Xxxxxxxxx, Xerox Tower, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxx X0X 0X0,
Attention: Xxxxxxxx Xxxxxxxxx or at such other location as may be mutually
agreed upon by the parties hereto.
11.2 Tender - Any tender of documents or money hereunder may be
made upon the parties hereto or their respective counsel and money may be
tendered by official bank draft drawn upon a Canadian chartered bank or by
negotiable cheques payable in Canadian funds and certified by a Canadian
chartered bank or trust company.
11.3 Filtran Documents - On Closing, the Vendors and, as
applicable, the Principal and each Filtran Entity, shall deliver or cause to the
delivered to the Purchaser the following documents (the "Filtran Documents"):
(a) share certificates representing the Purchased Shares duly
endorsed in blank for transfer, together with a duly executed
stock transfer document;
(b) a certified copy of a resolution of the board of directors of
each Filtran Entity authorizing and approving the entering
into of this Agreement and completion of the transactions
contemplated thereby including, without limitation, the
transfer of the Purchased Shares from the Vendors to the
Purchaser;
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(c) newly issued share certificate representing fully paid
non-assessable common shares in the capital stock of each
Filtran Entity (other than Filtran Canada which is wholly
owned by TCCL) registered in the name of the Purchaser;
(d) certificates of each Vendor, except Xxxxx Xxxxxxx Xxxxx and
Xxxx Xxxxx Trepannier, certifying that none of them are
non-residents within the meaning of Section 116 of the Income
Tax Act (Canada);
(e) a certificate of each of the Vendors and each Filtran Entity
dated as of the Closing Date certifying that, except as noted
in such certificate:
(i) all the representations, warranties and covenants of
each of the Vendors and each Filtran Entity set forth
in this Agreement are true and correct as at the
Closing Date; and
(ii) all the terms, covenants and agreements set forth in
the Agreement to be complied with or performed by the
Vendors and each Filtran Entity at or prior to the
Closing Date have been complied with or performed by
the Vendors and/or each Filtran Entity, as the case
may be, at or prior to the Closing Date;
(f) a certificate of an authorized signing officer of each
Filtran Entity attaching an incumbency certification of all
officers and directors of each Filtran Entity, respectively;
(g) resignations and releases duly executed by each officer and
director of each Filtran Entity and the Vendors required
pursuant to subsections 8.4(g) and (n) of this Agreement
effective as of the Closing Date;
(h) a legal opinion in respect of each Filtran Entity and the
Vendors in the form contemplated in subsection 8.4(m) of this
Agreement and a personal undertaking to deliver a title
opinion in the form contemplated in subsection 8.4(m) within
30 days of Closing;
(i) copy of the escrow agreement contemplated in Article XII of
this Agreement duly executed by the Principal and XxXxxxx
Xxxxxxxxx; and
(j) all assurances, transfers, assignments and other documents as
the Purchaser's solicitors may consider reasonably necessary
or desirable to validly and effectively complete the
transactions contemplated hereby including the transfer of
the Purchased Shares to the Purchaser.
11.4 Purchaser Documents - On Closing, the Purchaser shall deliver
or cause to be delivered to the Principal the following documents (the
"Purchaser Documents"):
(a) the certified funds referred to in subsection 3.1(c)(i);
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(b) Promissory Note duly executed by the Purchaser;
(c) Pledge Agreement duly executed by the Purchaser;
(d) Collateral Mortgage duly executed by the Filtran Entities
(as appropriate);
(e) GSA duly executed by each Filtran Entity;
(f) personal undertaking to deliver an Assignment and/or Charge
on the Lands located in the City of Ogdensburg subject to
Permitted Encumbrances in a form mutually satisfactory to
counsel for the Principal and for the Purchaser, acting
reasonably, within 30 days of Closing, the form of such
Charge to be drafted by counsel to the Principal and reviewed
by counsel to Purchaser;
(g) copy of the escrow agreement contemplated in Article XII of
this Agreement duly executed by the Purchaser;
(h) a legal opinion in respect of the Purchaser in the form
contemplated in subsection 8.5(c) of this Agreement;
(i) a certificate of an authorized signing officer of the
Purchaser attaching an incumbency certification of all
officers and directors of the Purchaser; and
(j) all assurances, transfers, assignments and other documents as
the Vendors' solicitors may consider reasonably necessary or
desirable to validly and effectively complete the
transactions contemplated herein.
ARTICLE XII
ESCROW ADJUSTMENT
12.1 Escrow - The parties hereby agree that any Adjustment Amount
shall be delivered as soon as reasonably practicable by the Purchaser to XxXxxxx
Xxxxxxxxx, as escrow agent (the "Escrow Agent") for deposit into escrow, which
delivery shall be deemed to be an equal payment on account of the Principal Sum
of the Promissory Note as if paid directly to the Principal or the Vendors. Any
Adjustment Amount so delivered to XxXxxxx Xxxxxxxxx shall be invested during the
escrow period in accordance with the terms of an escrow agreement substantially
in the form attached hereto as Schedule 12.1(b), which shall include the terms
of release of the Adjustment Amount, together with all accrued interest thereon.
ARTICLE XIII
ARBITRATION
13.1 Dispute Resolution - Unless otherwise stated, any dispute,
controversy, or claim arising out of or relating to this Agreement, or the
breach, termination, or invalidity thereof, will be resolved in accordance with
the arbitration procedures in Section 13.2 of this Agreement.
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13.2 Arbitration
(a) Arbitration proceedings shall be governed by the Province of
Ontario's Arbitration Act, 1991 (the "Act").
(b) The arbitration shall take place before a single arbitrator
in the City of Ottawa.
(c) Any party to the Agreement (the "Applicant") may commence
arbitration by delivering a written notice (a "Complaint") to
the party or parties against whom the Applicant seeks relief
(the "Respondent(s)"). In the Complaint, the Applicant shall
describe the substance of the matter which is submitted to
arbitration and name three (3) persons whom the Applicant is
prepared to nominate as arbitrator, each of such persons to
be qualified by education and training to pass upon the
particular matter in dispute (an "Approved Arbitrator").
Within seven (7) days of the receipt of the Complaint, the
Respondent shall by written notice to the Applicant select
one of the three (3) persons named by the Applicant or
provide the Applicant with a list of three (3) persons who
are Approved Arbitrators. Within seven (7) days of receipt of
the Respondent's list, by written notice to the Respondent,
the Applicant shall select one of such persons, or provide a
further list of three (3) Approved Arbitrators. The parties
shall continue to exchange lists of three (3) Approved
Arbitrators in this fashion until an Approved Arbitrator is
selected. If the Parties are unable to agree upon an Approved
Arbitrator within twenty (20) days of the receipt by the
Respondent of the Complaint, any party may apply to a judge
of the Ontario Superior Court to appoint the Approved
Arbitrator in accordance with Section 10 of the Act.
(d) The Approved Arbitrator, once appointed, shall proceed
immediately to hear and determine the matter or matters in
dispute in accordance with the Act. The award of the Approved
Arbitrator shall be made within ninety (90) days after the
appointment of the Approved Arbitrator, subject to any
extended date to be agreed by the parties or any reasonable
delay due to unforeseen circumstances. Unless otherwise
agreed by the parties, the Approved Arbitrator shall
determine the conduct of the arbitral proceedings including
the exchange of statements of claim and defence, the need for
documentary and oral discovery and whether to hold oral
hearings with a presentation of evidence or oral argument so
that the award may be made within the time period set out
above. Notwithstanding the foregoing, in the event that the
Approved Arbitrator fails to make an award within 120 days
after his or her appointment, then any of the parties
concerned may elect to have a new Approved Arbitrator
appointed in like manner to that set out above.
(e) The award of the Approved Arbitrator shall be in writing and
signed by the Approved Arbitrator and shall state the reasons
upon which it is based. Any requests for correction or
interpretation of the award under Section 44 of the Act shall
be made within seven (7) days of receipt of the award. The
Approved Arbitrator shall make any necessary correction or
additional award (the "Final Award") within twenty (20) days
of any request for correction or interpretation.
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(f) A party to the Arbitration (the "Appellant") may appeal an
award or Final Award on a question of law by delivering a
written notice of appeal ("Notice of Appeal") to the party
opposite (the "Appeal Respondent") within ten (10) days of
receipt of the award or the Final Award. With the Notice of
Appeal, the Appellant shall name three (3) persons whom the
Appellant is prepared to nominate as appeal arbitrators, each
of such persons to be a former appellate judge of the Ontario
Court of Appeal or the Supreme Court of Canada (an "Appeal
Arbitrator"). Within seven (7) days of the receipt of the
Notice of Appeal, the Appeal Respondent shall by written
notice to the Appellant select one or more of the three (3)
persons named by the Appellant or provide the Appellant with
a list of three (3) persons who are Appeal Arbitrators.
Within seven (7) days of receipt of the Appeal Respondent's
list, by written notice to the Appeal Respondent, the
Appellant shall select one or more of such persons and/or
provide a further list of three (3) Appeal Arbitrators. The
parties shall continue to exchange lists of three (3) Appeal
Arbitrators in this fashion until three (3) Appeal
Arbitrators are selected. If the parties are unable to agree
upon three (3) Appeal Arbitrators within thirty (30) days of
the initial receipt by the Appeal Respondent of the Notice of
Appeal, each party shall appoint one Appeal Arbitrator, and
the two Appeal Arbitrators thus appointed shall appoint a
third Appeal Arbitrator. Where a party fails to act as
required under this subparagraph or the two Appeal
Arbitrators fail to agree on the third Appeal Arbitrator
within ten (10) days of their appointment, any party may
request the Ontario Superior Court to take the necessary
measure as if Section 10 of the Act were applicable. There
shall be no appeal on the decision of the Court on such a
matter.
(g) Where an appeal is taken, the award of the Appeal Arbitrators
shall be final and binding upon the parties and there shall
be no further right of appeal. The award of the Appeal
Arbitrators shall be an arbitral award under the Act.
(h) The compensation and expenses of the Approved Arbitrator and
the Appeal Arbitrators (subject to any awards of costs) shall
be paid equally by the parties to the arbitration.
(i) The arbitration, any appeal, any awards and all proceedings
in relation thereto shall be private and confidential between
the parties except to the extent that any disclosure is
necessary for the purpose of any court proceedings under this
Agreement or the Act.
ARTICLE XIV
GENERAL
14.1 Termination of Letter of Intent - Each of the parties hereto
acknowledge and agree with each other that upon execution by all parties of this
Agreement, the Letter of Intent shall terminate and be of no further force or
legal effect and each party hereby forever waives
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without recourse any and all rights or claims to which it/he/she may become
entitled under the terms of the Letter of Intent.
14.2 Public Notices - The parties hereto hereby agree that all
press releases, public announcements, notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement will be
jointly prepared, planned and co-ordinated and no party hereto will act
unilaterally in this regard without the prior approval of the other, such
approval not to be unreasonably withheld, unless such disclosure will be
required to meet timely disclosure obligations of any party under applicable
securities laws and stock exchange rules in circumstances where prior
consultation with the other party is not practicable.
14.3 Expenses - All costs and expenses, including legal,
accounting and broker fees and commissions, incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such expenses. Notwithstanding the foregoing, the reasonable
accounting expenses incurred by the Vendors in connection with this transaction
as verified by duly issued invoices shall be paid by the Filtran Group within 30
days of receipt of such invoices. For greater certainty, all legal expenses
incurred by the Vendors in connection with this transaction , including those of
XxXxxxx Xxxxxxxxx, shall remain the liability of the Vendors and not the
Purchaser or any Filtran Entity after Closing.
14.4 Time - Time will be of the essence of this Agreement and of
every part hereof and no extension or variation of this Agreement will operate
as a waiver of this provision.
14.5 Notices - All payments and communications which may be or are
required to be given by either party to the other herein, will (in the absence
of any specific provision to the contrary) be in writing and delivered or sent
by prepaid registered mail or telecopier to the parties at their following
respective addresses:
to the Purchaser:
API ELECTRONICS GROUP INC.
Xxxxx 0000 - 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx XxXxxxxx
Fax No. 000-000-0000
with copies to:
WEIRFOULDS LLP
Suite 1600 - 000 Xxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxx
Fax No. 000-000-0000
51
To the Vendors, the Principal and the Filtran Group:
Filtran Ltd.
000 Xxxxxxxx Xxxx,
Xxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
Fax No. 000-000-0000
with copies to:
Xxxxxx Xxxxx
0 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
and to:
XxXxxxx Xxxxxxxxx
Xerox Tower
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxxxx Xxxxxxxxx
Fax No. 000-000-0000,
and if any such payment or communication is sent by prepaid
registered mail, it will, subject to the following sentence,
be conclusively deemed to have been received on the third
business day following the mailing thereof and, if delivered
or telecopied, it will be conclusively deemed to have been
received at the time of delivery or transmission.
Notwithstanding the foregoing provisions with respect to
mailing, in the event that it may be reasonably anticipated
that, due to any strike, lock-out or similar event involving
an interruption in postal service, any payment or
communication will not be received by the addressee by no
later than the third Business Day following the mailing
thereof, then the mailing of any such payment or communication
as aforesaid will not be an effective means of sending the
same but rather any payment or communication must then be sent
by an alternative means of transportation which it may
reasonably be anticipated will cause the payment or
communication to be received reasonably expeditiously by the
addressee. Either party may from time to time change its
address hereinbefore set forth by notice to the other of them
in accordance with this section.
14.6 Governing Law - This Agreement and the rights and obligations
and relations of the parties hereto will be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein (but without giving effect to any conflict of laws
rules). The parties hereto agree that the Courts of Ontario will have
jurisdiction
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to entertain any action or other legal proceedings based on any provisions of
this Agreement. Each party hereto does hereby attorn to the jurisdiction of the
Courts of the Province of Ontario.
14.7 Headings - The index to and headings in this Agreement and in
the Schedules hereto are inserted solely for convenience of reference and do not
affect the interpretation thereof or define, limit or construe the contents of
any provision of this Agreement.
14.8 Assignment - Neither this Agreement nor any rights or
obligations hereunder will be assignable by any party hereto without the prior
written consent of each of the other parties, which consent may be unreasonably
withheld. Subject thereto, this Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors (including any
successor by reason of amalgamation of any party hereto) and permitted assigns.
14.9 Entire Agreement - With respect to the subject matter of this
Agreement, this Agreement (a) sets forth the entire agreement between the
parties hereto and any persons who have in the past or who are now representing
either of the parties hereto, (b) supersedes all prior understandings and
communications between the parties hereto or any of them, oral or written,
including, without limitation, the Letter of Intent and (c) constitutes the
entire agreement between the parties hereto. Each party hereto acknowledges and
represents that this Agreement is entered into after full investigation and that
no party is relying upon any statement or representation made by any other which
is not embodied in this Agreement. Each party hereto acknowledges that he or it
will have no right to rely upon any amendment, promise, modification, statement
or representation made or occurring subsequent to the execution of this
Agreement unless the same is in writing and executed by each of the parties
hereto.
14.10 Further Assurances - The parties hereto will with reasonable
diligence do all such things and provide all such reasonable assurances as may
be required to consummate the transactions contemplated hereby, and each party
hereto will provide such further documents or instruments required by the other
party as may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions whether before, at or after the Closing
Time.
14.11 Counterparts - This Agreement may be executed in any number of
counterparts in original or by facsimile and all such counterparts will for all
purposes constitute one agreement, binding on the parties hereto, provided each
party hereto has executed at least one counterpart, and each will be deemed to
be an original, notwithstanding that all parties are not signatory to the same
counterpart.
14.7 Waiver - The failure of any party to this Agreement to enforce
at any time any of the provisions of this Agreement or any of its rights in
respect thereto or to insist upon strict adherence to any term of this Agreement
will not be considered to be a waiver of such provision, right or term or in any
way to affect the validity of this Agreement or deprive the applicable party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. The exercise by any party to this Agreement of any of
its rights provided by this Agreement will not preclude or prejudice such party
from exercising any other right it may have by reason of this Agreement or
otherwise, irrespective of any previous action or proceeding
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taken by it hereunder. Any waiver by any party hereto of the performance of any
of the provisions of this Agreement will be effective only if in writing and
signed by a duly authorized representative of such party.
14.13 Negotiation - This Agreement has been negotiated and approved
by counsel on behalf of all parties hereto and, notwithstanding any rule or
maxim of construction to the contrary, any ambiguity or uncertainty will not be
construed against any party hereto by reason of the authorship of any of the
provisions hereof.
IN WITNESS WHEREOF the parties hereto have hereunto duly
executed this Agreement as of the day and year first above written.
API ELECTRONICS GROUP INC.
SIGNED, SEALED AND DELIVERED Per:
---------------------------------
in the presence of: Name:
Title:
I have the authority to bind the
Corporation.
------------------------------ -------------------------------------
Witness XXXXXX XXXXXX XXXXX
------------------------------ -------------------------------------
Witness ROSE XXXX XXXXX
------------------------------ -------------------------------------
Witness XXXXX XXXXXXX XXXXX
------------------------------ -------------------------------------
Witness CORANNE XXXXX XXXXX
------------------------------ -------------------------------------
Witness XXXX XXXXX TREPANNIER
------------------------------ -------------------------------------
Witness XXXX XXXXXX
------------------------------ -------------------------------------
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------------------------------ -------------------------------------
Witness XXXXXX XXXXX
------------------------------ -------------------------------------
Witness XXXXX XXXXX
------------------------------ -------------------------------------
Witness XXXXXXX XXXXXXX
FILTRAN INC.
Per:
---------------------------------
Name:
Title:
I have the authority to bind the
Corporation.
FILTRAN LIMITED
Per:
---------------------------------
Name:
Title:
I have the authority to bind the
Corporation.
CANADIAN DATAPLEX LTD.
Per:
---------------------------------
Name:
Title:
I have the authority to bind the
Corporation.
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TACTRON COMMUNICATIONS
(CANADA) LIMITED
Per:
---------------------------------
Name:
Title:
I have the authority to bind the
Corporation.
