Exhibit 2
SHARE PURCHASE AGREEMENT
BETWEEN
X.X. XXXXXXXX, INC.
- and -
ACKLANDS LIMITED
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TABLE OF CONTENTS
1. INTERPRETATION ......................................................... 2
1.1 Defined Terms .................................................... 2
1.2 Knowledge ........................................................ 7
1.3 Schedules ........................................................ 7
1.4 Currency ......................................................... 7
1.5 Choice of Law and Attornment ..................................... 7
1.6 Interpretation ................................................... 7
1.7 Number and Gender ................................................ 7
1.8 Time of Essence .................................................. 8
2. PURCHASE AND SALE ...................................................... 8
2.1 Purchased Shares ................................................. 8
2.2 Purchase Price ................................................... 8
2.3 Payment of Purchase Price ........................................ 8
2.4 No Election ...................................................... 9
2.5 Obligations and Liabilities Not Assumed .......................... 9
3. REPRESENTATIONS AND WARRANTIES .......................................... 9
3.1 Representations and Warranties by the Vendor ..................... 9
(1) Corporate Authority and Binding Obligation ................... 9
(2) No Other Purchase Agreements ................................. 10
(3) Regulatory Matters ........................................... 10
(4) Status, Constating Documents and Licences .................... 10
(5) Material Contracts and Compliance ............................ 11
(6) Corporate Records ............................................ 11
(7) Authorized and Issued Capital ................................ 11
(8) Shareholder's Agreements, etc ................................ 12
(9) Financial Statements ......................................... 12
(10)Financial Records ............................................ 12
(11)Liabilities .................................................. 12
(12)Absence of Certain Changes or Events ......................... 12
(13)Dividends and Distributions .................................. 14
(14)Tax Matters .................................................. 14
(15)Litigation ................................................... 14
(16)Environmental Matters ........................................ 15
(17)Title to Assets .............................................. 16
(18)Accounts Receivable .......................................... 16
(19)Inventory .................................................... 16
(20)Machinery and Equipment ...................................... 17
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(21) Real Property ............................................... 17
(22) [Intentionally deleted ...................................... 18
(23) Leased Premises ............................................. 18
(24) Work Orders and Deficiencies ................................ 18
(25) Condition of Properties ..................................... 18
(26) Business .................................................... 19
(27) [Intentionally deleted ...................................... 19
(28) Leases of Personal Property ................................. 19
(29) Intellectual Property ....................................... 19
(30) Subsidiaries and Other Interests ............................ 20
(31) Partnerships or Joint Ventures .............................. 20
(32) Customers ................................................... 20
(33) Restrictions on Doing Business .............................. 20
(34) Guarantees, Warranties and Discounts ........................ 20
(35) Licenses, Agency and Distribution Agreements ................ 21
(36) Employees ................................................... 21
(37) Employment Agreements ....................................... 21
(38) Labour Matters and Employment Standards ..................... 22
(39) Benefit Plans ............................................... 23
(40) Insurance ................................................... 23
(41) Dealing with Affiliates ..................................... 24
(42) Compliance with Laws ........................................ 24
(43) Statutory Liens ............................................. 24
(44) No Broker ................................................... 24
(45) U.S. Sales .................................................. 25
(46) Securities Matters .......................................... 25
(47) Cuban Sales ................................................. 25
3.2 Representations and Warranties by the Purchaser .................. 25
(1) Corporate Authority and Binding Obligation................... 25
(2) Contractual and Regulatory Approvals......................... 25
(3) Compliance with Constating Documents, Agreements and
Laws......................................................... 26
(4) Grainger Common Stock........................................ 26
(5) Investment Canada............................................ 26
(6) Litigation................................................... 26
(7) No Broker.................................................... 27
4. SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND
WARRANTIES.............................................................. 27
4.1 Survival of Warranties by the Vendor................................ 27
4.2 Survival of Warranties by the Purchaser............................. 28
4.3 Limitations on Warranty Claims...................................... 28
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5. COVENANTS............................................................... 29
5.1 Covenants by the Vendor ............................................ 29
(a) Investigation of Business and Examination of Documents........ 29
(b) Conduct of Business .......................................... 30
(c) Transfer to Corporation ...................................... 31
(d) Transfer of Purchased Shares ................................. 32
(e) Resignation of Officers and Directors ........................ 32
(f) Rejection of Realty .......................................... 32
(g) Environmental Clean-Up ....................................... 33
(h) Thunder Bay Property ......................................... 34
(i) Insurance .................................................... 34
(j) Name and Trade-xxxx Matters .................................. 34
(k) Minimum Shareholders' Equity ................................. 35
(l) Maintain Confidentiality ..................................... 35
5.2 Covenants by the Purchaser ......................................... 35
(1) Maintain Confidentiality ..................................... 36
(2) Issued Shares ................................................ 36
(3) Competition Act/Anti-Trust Approvals ......................... 36
5.3 Transitional Agreement ............................................. 36
6. CONDITIONS ............................................................. 37
6.1 Conditions to Obligations of the Purchaser ......................... 37
(a) Accuracy of Representations and Warranties and Performance
of Covenants ................................................. 37
(b) Material Adverse Changes ..................................... 37
(c) No Restraining Proceedings ................................... 38
(d) Consents ..................................................... 38
(e) Releases by Directors and Officers ........................... 38
(f) Interim Trade-xxxx Licence ................................... 38
(g) Non-Competition Agreement .................................... 38
(h) Standstill Agreement ......................................... 39
(i) Retail Sales Taxes ........................................... 39
(j) Opinion of Vendor's Counsel .................................. 39
(k) Environmental and Other Leases ............................... 39
(l) Corporation .................................................. 39
6.2 Waiver or Termination by Purchaser ................................. 39
6.3 Conditions to Obligations of the Vendor ............................ 40
(a) Accuracy of Representations and Warranties and Performance
of Covenants ................................................. 40
(b) No Restraining Proceedings ................................... 40
(c) Consents ..................................................... 40
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(d) Releases from Guarantees, etc................................. 40
(e) Opinion of Purchaser's Counsel................................ 41
Environmental and Other Leases................................ 41
6.4 Waiver or Termination by the Vendor................................. 41
7. CLOSING................................................................. 41
7.1 Closing Arrangements................................................ 41
7.2 Documents to be Delivered........................................... 41
8. INDEMNIFICATION AND SET-OFF............................................. 42
8.1 Indemnities of the Vendor and the Purchaser ........................ 42
8.2 Indemnity Claims ................................................... 44
8.3 Right of Set-off ................................................... 46
9. GENERAL PROVISIONS...................................................... 47
9.1 Further Assurances ................................................ 47
9.2 Notices ........................................................... 47
9.3 Counterparts ...................................................... 48
9.4 Expenses of Parties ............................................... 48
9.5 Brokerage and Finder's Fees ....................................... 48
9.6 Announcements ..................................................... 48
9.7 Assignment ........................................................ 48
9.8 Successors and Assigns ............................................ 48
9.9 Entire Agreement .................................................. 48
9.10 Waiver ............................................................ 49
9.11 Amendments ........................................................ 49
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SCHEDULES
Schedule 1.1(d) - Asset Transfer Agreement
Schedule 1.1(h) - Audited Financial Statements
Schedule 1.1(m) - Business Financial Statements
Schedule 1.1(ac) - Interim Statement Statements
Schedule 1.1(af) - Leases
Schedule 1.1(ah) - Licensed Intellectual Property
Schedule 1.1(ai) - Owned Intellectual Property
Schedule 1.1(ak) - Permitted Encumbrances
Schedule 1.1(an) - Real Property
Schedule 3.1(3) - Regulatory Matters
Schedule 3.1(5) - Material Contracts and Consents
Schedule 3.1(8) - Shareholders' Agreements
Schedule 3.1(15) - Litigation
Schedule 3.1(16) - Environmental Matters
Schedule 3.1(23) - Subleasing Arrangements
Schedule 3.1(28) - Leases of Personal Property
Schedule 3.1(30) - Subsidiaries and Other Interests
Schedule 3.1(31) - Partnerships and Joint Ventures
Schedule 3.1(32) - Customers
Schedule 3.1(34) - Guarantees, Warranties and Discounts
Schedule 3.1(35) - Licenses, Agency and Distribution
Schedule 3.1(36) - Employees
Schedule 3.1(37) - Employment Agreements
Schedule 3.1(38) - Collective Agreements and Labour Disputes
Schedule 3.1(39) - Benefit Plans
Schedule 3.1(40) - Insurance
Schedule 3.2(2) - Purchaser Regulatory Consents
Schedule 5.1(c)(vi) - Form of Consent and Estoppel Certificate
Schedule 6.1(a) - Bring Down Certificate of Vendor
Schedule 6.1(e) - Releases
Schedule 6.1(f) - Interim Trade-xxxx Licence
Schedule 6.1(g) - Non-Competition Agreement
Schedule 6.1(h) - Standstill Agreement
Schedule 6.1(j) - Opinion of Vendor's Counsel
Schedule 6.3(a) - Bring Down Certificate of Purchaser
Schedule 6.3(e) - Opinion of Purchaser's Counsel
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This Share Purchase Agreement is made as of November 4, 1996,
BETWEEN:
X.X. XXXXXXXX, INC., a corporation incorporated under
the laws of the State of Illinois (the "Purchaser")
- and -
ACKLANDS LIMITED, a corporation formed under the laws of
Manitoba (the "Vendor")
WHEREAS:
(A) The Vendor carries on, directly and indirectly, the Business;
(B) Prior to the Closing Time, the Vendor will incorporate the Corporation
and transfer all the Assets and the Assumed Liabilities to the
Corporation pursuant to the Asset Transfer Agreement; and
(C) The Purchaser wishes to purchase, and the Vendor wishes to sell, all
the issued and outstanding shares in the capital of the Corporation on
the terms and conditions herein contained.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, the parties hereby covenant and agree
as follows:
1. INTERPRETATION
1.1 Defined Terms. In this agreement and in the Schedules, unless there is
something in the subject-matter or context inconsistent therewith, the following
terms and expressions will have the following meanings:
(a) "Affected Employees" means employees employed by the Vendor in
the Business who are offered and accept employment with the
Corporation in accordance with Section 6(b) of the Asset Transfer
Agreement;
(b) "Affiliate" of any person means any person or corporation which,
directly or indirectly, is Controlled by, Controls or is under
direct or indirect common Control with such person;
(c) "arm's length" has the meaning ascribed to such term under the
Income Tax Act (Canada), as amended;
(d) "Asset Transfer Agreement" means an asset transfer agreement
between the Vendor and the Corporation in the form attached
hereto as Schedule 1.1(d);
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(e) "Assets" has the meaning ascribed thereto in the Asset Transfer
Agreement;
(f) "Acklands Plan" means the Acklands Group Employees Retirement
Plan;
(g) "Assumed Liabilities" has the meaning ascribed thereto in the
Asset Transfer Agreement;
(h) "Audited Financial Statements" means the audited consolidated
financial statements of the Vendor as at and for the fiscal year
ended January 31, 1996, consisting of a consolidated balance
sheet and consolidated statements of operations, changes in
financial position and retained earnings, together with the notes
thereto and the opinion of the auditor of the Vendor thereon, a
copy of which is attached as Schedule "1.1(h)";
(i) "Beaver Creek Property" has the meaning ascribed thereto in
Section 5.1(c);
(j) "Benefit Plans" has the meaning ascribed thereto in Section
3.1(39);
(k) "Business" means the business carried on by the Vendor and its
Subsidiaries which involves the distribution of products used in
maintenance, repair and operation functions, work-related safety
products and fleet products through divisions known as Industrial
East, Industrial West including Western Automotive (excluding
British Columbia), International, CISCO Industrial Sales Corp.
and Industrial Corporate;
(l) "Business Day" means any day other than a day which is a
Saturday, a Sunday or a statutory holiday in either or both of
Toronto and Chicago;
(m) "Business Financial Statements" means the unaudited consolidated
divisional financial statements of the Vendor pertaining to the
Business as at and for the fiscal year ended January 31, 1996 and
the period ended August 31, 1996, respectively, consisting in
each case of a balance sheet and a statement of operations, a
copy of which is attached as Schedule 1.1(m);
(n) "Closing Date" means December 2, 1996, or such other date as the
parties may agree upon;
(o) "Closing Balance Sheet" has the meaning ascribed thereto in
Section 2.2(2);
(p) "Closing Time" means 10:00 a.m. (Toronto time) on the Closing
Date or such other time on the Closing Date as the parties may
agree upon;
(q) "Condition of the Business" means the condition of the assets,
liabilities, operations, activities, earnings, affairs and
financial position of the Business;
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(r) "Corporation" means the corporation to be incorporated not more
than 10 Business Days prior to the Closing Date under the Canada
Business Corporations Act as a wholly-owned subsidiary of the
Vendor to acquire the Assets and Assumed Liabilities in
accordance with the Asset Transfer Agreement;
(s) "Control" means, with respect to any corporation, the ownership
of more than 50% of the voting shares of that corporation,
including any shares which are voting only upon the occurrence of
a contingency where such contingency has occurred and is
continuing;
(t) "Data Room" means the room at 000 Xxxxxx Xxxxxx in which the
records relating to the Business were placed before October 28,
1996 for inspection by representatives of the Purchaser;
(u) "Encumbrances" means mortgages, charges, pledges, security
interests, liens, encumbrances, rights of others and equities of
any nature whatsoever or howsoever arising and any rights or
privileges capable of becoming any of the foregoing;
(v) "Environmental Audit Reports" means the reports documenting the
results and findings of the Phase I environmental site
investigations and any Phase II environmental site investigations
and any associated summary tables and reports prepared by the
Purchaser's environmental consultant, as contemplated in Section
5.1(a);
(w) "Environmental Laws" means all applicable federal, provincial,
state, municipal, foreign and local laws, ordinances,
regulations, by-laws, guidelines and policies that are accessible
to the public, judgments, permits, approvals, certificates of
approval, directions and orders issued by any governmental or
regulatory agency relating to the protection of the environment,
occupational health and safety, product safety, product liability
and generation, storage, and transportation, handling, recycling
and disposal of Hazardous Substances and applicable common law
relating thereto;
(x) "generally accepted accounting principles" means the accounting
principles in Canada so described and promulgated by the Canadian
Institute of Chartered Accountants which are applicable as at the
date on which any calculation made hereunder is to be effective
or as at the date of any financial statements referred to herein,
as the case may be;
(y) "Grainger Common Stock" means the shares of common stock of the
Purchaser, par value U.S.$0.50 per share, having voting rights of
one vote per share;
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(z) "Hazardous Substances" means any waste (including, without
limitation, non- hazardous waste) pollutant, contaminant,
dangerous goods, material or substance which is or may be
dangerous, hazardous or toxic, or which could otherwise pose a
risk to health, safety or the environment or which is regulated,
prohibited or controlled pursuant to or the subject of any
Environmental Laws including, without limitation, petroleum, its
derivatives, by-products or other hydrocarbons, asbestos,
polychlorinated biphenyls (PCBs) and radioactive materials;
(aa) "Insured Employees" means the 40 employees of the Vendor
identified in Schedule "3.1(36)" as receiving long term
disability benefits under a pre-paid insurance policy;
(ab) "Intellectual Property" means intellectual property of whatever
nature and kind including, without limitation, all domestic and
foreign trade-marks, service marks, business names, trade names,
trading styles, patents, industrial designs and copyrights
(including copyright in software), whether registered or
unregistered, including any applications for registration
thereof, and inventions, formulae, recipes, product formulations,
processes and processing methods, technology and techniques,
trade secrets, know-how and manuals;
(ac) "Interim Financial Statements" means the unaudited consolidated
financial statements of the Vendor as at July 31, 1996,
consisting of a consolidated balance sheet and consolidated
statements of operations, changes in financial position and
retained earnings, a copy of which is attached as Schedule "1.1
(ac)";
(ad) "Interim Period" means the period from and including the date of
this agreement to and including the Closing Time;
(ae) "Leased Premises" means all premises leased or licensed to the
Vendor or a Subsidiary under the Leases;
(af) "Leases" means all the leases, subleases, agreements to lease and
licences under which the Vendor or a Subsidiary leases or
otherwise occupies any real property for the Business whether as
a tenant, subtenant or licensee, as listed in Schedule "1.1
(af)";
(ag) "Licences" has the meaning ascribed thereto in Section 3.1(3);
(ah) "Licensed Intellectual Property" means all the right, title,
benefit and interest of the Vendor or any Subsidiary in and to
all the Intellectual Property not owned by the Vendor or any
Subsidiary but used in, or required for the
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carrying on of, the Business including, but not limited to, the
Intellectual Property listed in Schedule "1.1(ah)";
(ai) "Owned Intellectual Property" means all the right, title, benefit
and interest of the Vendor or any Subsidiary in and to all the
Intellectual Property owned by the Vendor or any Subsidiary and
used in, or required for the carrying on of, the Business
including, but not limited to, the Intellectual Property listed
in Schedule "1.1(ai)";
(aj) "person" means and includes any individual, corporation,
partnership, firm, joint venture, syndicate, association, trust,
government, governmental agency or board or commission or
authority, and any other form of entity or organization;
(ak) "Permitted Encumbrances" means the matters listed in Schedule
"1.1(ak)" which is divided into Part A - Permitted Encumbrances -
Real Property, Part B - Permitted Encumbrances - Other Assets and
Part C - Beaver Creek Encumbrances;
(al) "Purchase Price" has the meaning ascribed thereto in Section
2.2(1);
(am) "Purchased Shares" means all of the issued and outstanding shares
in the capital of the Corporation;
(an) "Real Property" means all the real property owned by the Vendor
or a Subsidiary and belonging to or used in the Business, which
are described in Schedule "1.1 (an)" except the Beaver Creek
Property;
(ao) "Release" means any release, spill, leak, emission, discharge,
xxxxx, dumping, emission, dispersion, migration, escape or other
disposal;
(ap) "Shareholders Equity" means shareholders' equity as determined in
accordance with generally accepted accounting principles on the
basis that the Beaver Creek Property and the Thunder Bay Property
have been transferred to the Corporation;
(aq) "Subsidiary" means a corporation that is Controlled by the Vendor
and carries on any part of the Business;
(ar) "Taxes" means all federal, provincial, municipal, territorial,
foreign or other taxes, imposts, rates, levies, assessments and
government fees, charges or dues lawfully levied, assessed or
imposed against the Vendor or any Subsidiary including all
income, capital gains, sales, excise, use, property, capital,
goods and services, business transfer, value added, unemployment,
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compensation, social security, payroll, privilege, franchise,
licence and school taxes and custom and import duties and
includes all interest, fines and penalties with respect
thereto;
(as) "Warranty Claim" means a claim made by either the Purchaser or
the Vendor based on, or with respect to, the inaccuracy or
non-performance or non-fulfilment or breach of any representation
or warranty made by the other party contained in this agreement
or contained in any document or certificate referred to in
Section 7.2.
1.2 Knowledge. Any reference to "the best of the knowledge" of a party will be
deemed to mean the knowledge of that party after due enquiry.
1.3 Schedules. The Schedules which are attached to this agreement are
incorporated into this agreement by reference and are deemed to be part hereof.
1.4 Currency. Unless otherwise indicated all dollar amounts referred to in this
agreement are to Canadian dollars.
1.5 Choice of Law and Attornment. This agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable in Ontario. The parties agree that the courts of the Province
of Ontario will have non-exclusive jurisdiction to determine all disputes and
claims arising between the parties.
1.6 Interpretation. The division of this agreement into articles, sections,
paragraphs, subsections and clauses and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this agreement. The terms "this agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this agreement and the
Schedules and not to any particular article, section, paragraph, clause or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto. Each party acknowledges that it and its legal counsel have
reviewed and participated in settling the terms of this agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party shall not be applicable
in the interpretation of this agreement.
1.7 Number and Gender. In this agreement, unless there is something in the
subject matter or context inconsistent therewith,
(a) words in the singular number include the plural and such words
shall be construed as if the plural had been used,
(b) words in the plural include the singular and such words shall be
construed as if the singular had been used, and
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(c) importing the use of any gender shall include all genders where
the context or party referred to so requires, and the rest of the
sentence shall be construed as if the necessary grammatical and
terminological changes had been made.
1.8 Time of Essence. Time shall be of the essence.
2. PURCHASE AND SALE
2.1 Purchased Shares. On the terms and subject to the fulfilment of the
conditions hereof, the Vendor hereby agrees to sell, assign and transfer to the
Purchaser, and the Purchaser hereby agrees to purchase and accept from the
Vendor, the Purchased Shares.
2.2 Purchase Price.
(1) The Purchase Price payable by the Purchaser to the Vendor for the Purchased
Shares will be an amount equal to $190,500,000 less any amount by which the
Shareholder's Equity of the Corporation as at the Closing Time is less than
$155,000,000 as determined from the Closing Balance Sheet.
(2) The parties agree that a balance sheet of the Corporation as of the Closing
Date (the "Closing Balance Sheet") shall be prepared by the Vendor as soon as
possible and, in any event, no later than 60 days after the Closing Date. In
preparing the Closing Balance Sheet, the Assets shall be valued as if they
remained on the books of the Vendor and it shall not reflect the promissory note
to be given under the Asset Transfer Agreement. If requested by the Purchaser,
the Vendor will permit the Purchaser and its auditors to review the working
papers and other documentation used or prepared in connection with the
preparation of the Closing Balance Sheet. Should the Purchaser disagree with the
amount ascribed to Shareholder's Equity on the Closing Balance Sheet, it shall
within 30 days of receipt of the Closing Balance Sheet, provide written notice
to the Vendor that the matter be submitted to arbitration by an audit partner of
a major firm of chartered accountants in Canada (which firm shall not be, nor be
affiliated with, the auditor or public accountant of either party) whose
decision shall be final and binding on all parties. Each party shall, within 20
days of the written notice being so received designate a chartered accountant
and then they both shall decide upon the said arbitrator. Matters in the
arbitration process not addressed herein shall be governed by the Arbitrations
Act (Ontario). The cost of any such arbitration shall be borne equally by the
Vendor and the Purchaser.
(3) If the amount ascribed to Shareholders Equity on the Closing Balance Sheet
as determined hereunder is less than $155,000,000, the Vendor shall pay to the
Purchaser an amount equal to the deficiency by wire transfer within three
Business Days after such determination.
2.3 Payment of Purchase Price. The Purchase Price will be paid at the Closing
Time by the Purchaser delivering to the Vendor the sum of $500,000 by certified
cheque or wire transfer and share certificates for 2,039,886 shares of Grainger
Common Stock.
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2.4 No Election.
The parties agree that both the transfer of the Assets from the Vendor
to the Corporation and the transfer of the Purchased Shares from the Vendor to
the Purchaser are taxable transactions for income tax purposes.
2.5 Obligations and Liabilities Not Assumed.
Except as provided in this agreement or the Asset Transfer Agreement,
the Purchaser will not assume and will not be liable for any obligations, claims
or liabilities of the Vendor or any Subsidiary whatsoever including any Taxes
that may be or become payable by the Vendor or any Subsidiary including, without
limitation, any Taxes relating to or arising as a consequence of the sale of the
Assets by the Vendor to the Corporation or the sale of the Purchased Shares by
the Vendor to the Purchaser.
3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by the Vendor. The Vendor hereby represents
and warrants to the Purchaser as follows, and confirms that the Purchaser is
relying upon the accuracy of each of such representations and warranties in
connection with the purchase of the Purchased Shares and the completion of the
other transactions hereunder:
(1) Corporate Authority and Binding Obligation. The Vendor has full corporate
power and authority to enter into this agreement and to sell, assign and
transfer all the Assets to the Corporation and the Purchased Shares to the
Purchaser in the manner contemplated herein and to perform all of the Vendor's
obligations under this agreement. The Corporation will be incorporated by the
Vendor for the purpose of acquiring the Assets and the Assumed Liabilities, will
never have carried on any business and will have no liabilities (contingent or
otherwise). The Corporation will have full corporate power and authority to
enter into and to perform all of the Corporations' obligations under the Asset
Purchase Agreement. Subject to obtaining shareholder approval, the Vendor has
taken all necessary actions, steps and corporate and other proceedings to
approve or authorize the entering into and the execution, delivery and
performance of, this agreement and the sale and transfer of the Assets by the
Vendor to the Corporation and of the Purchased Shares by the Vendor to the
Purchaser. This agreement is a legal, valid and binding obligation of the Vendor
and the Asset Transfer Agrement will be a legal, valid and binding obligation of
each of the Vendor and the Corporation, enforceable against them in accordance
with its terms, subject to:
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally, and
(b) the fact that equitable remedies, including the remedies of
specific performance and injunction, may only be granted in the
discretion of a court.
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(2) No Other Purchase Agreements. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement, option or
commitment,
(a) for the purchase, subscription, allotment or issuance of, or
conversion into, any of the unissued shares in the capital of the
Corporation or any securities of the Corporation,
(b) for the purchase from the Vendor of any of the Purchased Shares,
or
(c) for the purchase or other acquisition from the Vendor or any
Subsidiary of any of the Assets, other than in the ordinary
course of business, or that would encumber any of the Assets.
(3) Regulatory Matters. There are no material licences, registrations, permits
or qualifications (the "Licences") necessary to enable the Business to be
carried on by the Corporation as now conducted or for the Assets to be owned,
leased and operated by the Corporation. Except as specified in Schedule "3.1
(3)", neither the Vendor nor any Subsidiary is required to request or obtain the
consent of any governmental agency, board, commission or authority
(a) in connection with the execution, delivery or performance by the
Vendor of this agreement or by the Vendor or the Corporation of
the Asset Transfer Agreement or the completion of any of the
transactions contemplated herein,
(b) to avoid the loss of any material permit, Licence, certification
or other authorization, or
(c) in order that the authority of the Corporation to carry on the
Business in the ordinary course and in substantially the same
manner as presently conducted continues following the closing of
the transactions contemplated hereunder.
(4) Status, Constating Documents and Licences.
(a) The Vendor is and the Corporation will be a corporation duly
incorporated and validly subsisting in all respects under the
laws of their respective jurisdictions of incorporation. The
Vendor has and the Corporation will have all necessary corporate
power to own its properties and to carry on its business as it is
being conducted.
(b) Except where the failure to so qualify would not have a material
adverse effect on the Business, the Vendor is and the Corporation
will be, duly qualified to carry on business in each jurisdiction
in which:
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(i) it owns or leases property, or
(ii) the nature or conduct of its business or the nature of the
Assets makes such qualification necessary or desirable to
enable the Business to be carried on.
(5) Material Contracts and Compliance. Attached hereto as Schedule "3.1(5)" is a
true and complete list of all material contracts and commitments or other
material obligations or restrictions to which the Vendor or any Subsidiary is a
party or by which any of them are bound in relation to the Business that are not
disclosed in another Schedule attached hereto. The execution, delivery and
performance of this agreement and each of the other agreements contemplated or
referred to herein by the Vendor and the Corporation, and the completion of the
transactions contemplated hereby, will not constitute or result in a violation
or breach of or default under, or cause the acceleration of any obligations of
the Vendor or any Subsidiary under:
(a) any term or provision of any of the articles, by-laws or other
constating documents of the Vendor or any Subsidiary,
(b) subject to obtaining contractual consents to the transfer of the
agreements listed in Schedule "3.1(5)", the terms of any material
contract (written or oral) (other than the Leases), indenture,
instrument or understanding or other material obligation or
restriction to which the Vendor or any Subsidiary is a party or
by which any of them is bound in relation to the Business, or
(c) subject to obtaining the regulatory consents referred to in
Schedule "3.1 (3)", any term or provision of any of the Licences
or any order of any court, governmental authority or regulatory
body or any law or regulation of any jurisdiction in which the
Business is carried on.
(6) Corporate Records. The corporate records and minute books of each of the
Vendor and the Subsidiaries, all of which have been provided to the Purchaser,
contain complete and accurate minutes of all meetings of the directors and
shareholders of the Vendor and the Subsidiaries held during the immediately
preceding five years, and original signed copies of all resolutions and by-laws
duly passed or confirmed by the directors or shareholders of the Vendor and the
Subsidiaries other than at a meeting. All such meetings were duly called and
held. The share certificate books, register of security holders, register of
transfers and register of directors and any similar corporate records of the
Vendor and the Subsidiaries are complete and accurate.
(7) Authorized and Issued Capital. The authorized capital of the Corporation
will consist of an unlimited number of common shares, of which one hundred
shares will be duly issued and outstanding as fully paid and non-assessable
shares at the Closing Time. At the Closing Time, the Vendor will own the only
issued and outstanding shares of the Corporation as the
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shareholder of record and as the beneficial owner, with good and marketable
title thereto free and clear of any and all Encumbrances.
(8) Shareholder's Agreements, etc. There are no shareholder's agreements,
pooling agreements, voting trusts or other similar agreements with respect to
the ownership or voting of any of the shares of the Corporation or, except as
set out in Schedule "3.1(8)", of any other person.
(9) Financial Statements. The Audited Financial Statements, the Interim
Financial Statements and the Business Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, are true, correct and complete in all material respects and present
fairly in all material respects the financial condition of the Vendor or the
Business, as the case may be, at the date thereof or the period then ended.
(10) Financial Records. All material financial transactions of the Vendor and
the Subsidiaries have been recorded in the financial books and records of the
Vendor and the Subsidiaries in accordance with good business practice, and such
financial books and records together with all disclosures made in this agreement
or in the Schedules, present fairly the financial condition and the revenues,
expenses and results of the operations of the Vendor and the Subsidiaries as of
and to the date hereof.
(11) Liabilities. There are no material liabilities (contingent or otherwise) of
the Vendor or any Subsidiary pertaining to the Business other than:
(a) liabilities disclosed in or provided for in the Business
Financial Statements,
(b) liabilities incurred since August 31, 1996 which were incurred in
the ordinary course of business and are described in or provided
for in the Closing Balance Sheet, and
(c) other liabilities specifically disclosed in this agreement or in
the Schedules.
(12) Absence of Certain Changes or Events. Since August 31, 1996, there has been
no material adverse change in the Condition of the Business and, in particular,
neither the Vendor nor any Subsidiary has
(a) incurred any obligation or liabilities (fixed or contingent),
except normal trade or business obligations incurred in the
ordinary course of business none of which are materially adverse
to the Business;
(b) paid or satisfied any obligation or liability (fixed or
contingent) pertaining to the Business, except
(i) current liabilities included in the Business Financial
Statements,
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(ii) current liabilities incurred since August 31, 1996 in the
ordinary course of business, and
(iii)scheduled payments pursuant to obligations under loan agreements
or other contracts or commitments described in this agreement or
in the Schedules;
(c) created any material Encumbrance upon any of the Assets, except
as described in this agreement or in the Schedules,
(d) sold, assigned, transferred, leased or otherwise disposed of any
material part of the Assets, except in the ordinary course of
business,
(e) purchased, leased or otherwise acquired any material properties
or assets for the Business, except in the ordinary course of
business,
(f) waived, cancelled or written-off any rights, claims, accounts
receivable or any amounts payable pertaining to the Business,
except in the ordinary course of business,
(g) entered into any transaction, contract, agreement or commitment
for the Business, except in the ordinary course of business,
(h) terminated, discontinued, closed or disposed of any plant,
facility or business operation of the Business,
(i) had any supplier terminate, or communicate in writing to the
Vendor or any Subsidiary the intention or threat to terminate its
relationship with the Vendor or any Subsidiary pertaining to the
Business, or the intention to substantially reduce the quantity
of products or services it sells to the Vendor or any Subsidiary
pertaining to the Business except in the case of suppliers whose
sales to the Vendor and the Subsidiaries are not, in the
aggregate, material to the Condition of the Business,
(j) had any customer terminate, or communicate in writing to the
Vendor or any Subsidiary the intention or threat to terminate its
relationship with the Vendor or any Subsidiary pertaining to the
Business, or the intention to substantially reduce the quantity
of products or services it purchases from the Vendor or any
Subsidiary, or its dissatisfaction with the products or services
sold by the Vendor or any Subsidiary pertaining to the Business
except in the case of customers whose purchases from the Vendor
and the Subsidiaries are not, in the aggregate, material to the
Condition of the Business;
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(k) made any material change in the method of billing customers or
the credit terms made available by the Vendor or any Subsidiary
to the customers of the Business,
(l) made any material change with respect to any method of
management, operation or accounting in respect of the Business;
(m) suffered any damage, destruction or loss (whether or not covered
by insurance) which has materially adversely affected or could
reasonably be expected to materially and adversely affect the
Condition of the Business,
(n) increased any form of compensation or other benefits payable or
to become payable to any of the employees of the Business except
increases made in the ordinary course of business; or
(o) authorized, agreed or otherwise became committed to do any of the
foregoing.
(13) Dividends and Distributions. The Corporation will not have declared or paid
any dividend or made any other distribution on any of its shares, or redeemed or
purchased or otherwise acquired any of its shares, or reduced its authorized
capital or issued capital, or agreed to do any of the foregoing.
(14) Tax Matters.
(a) The Corporation will have paid all Taxes imposed by the Retail
Sales Tax Act (Ontario) or other similar provincial legislation
on the acquisition of tangible personal property as defined in
the Retail Sales Tax Act (Ontario) prior to the Closing Time.
(b) The Vendor will have paid all Taxes exigible under the Land
Transfer Tax Act (Ontario) or other similar provincial
legislation on the transfer of the Real Property to the
Corporation and no such transfers will have been made on a
tax-exempt basis.
(c) The Corporation will not have acquired or have the use of any
assets from a person (a "Related Person") with whom the
Corporation is not dealing with at arm's length prior to the
Closing Time other than as provided in the Asset Transfer
Agreement. The Corporation will not have disposed of any asset to
a Related Person for proceeds less than the fair market value of
that asset.
(d) The Vendor is not a non-resident of Canada for the purposes of
section 116 of the Income Tax Act (Canada).
(15) Litigation. Except for the matters referred to in Schedule "3.1(15)", there
are no actions, suits or proceedings, judicial or administrative (whether or not
purportedly on behalf of the
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Vendor or any Subsidiary) pending or, to the best of the knowledge of the
Vendor, threatened by or against or affecting the Vendor or any Subsidiary in
connection with the Business, at law or in equity, or before or by any court or
any federal, provincial, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
no such actions, individually or in the aggregate, would, if determined
adversely to the Vendor or any Subsidiary, have a material adverse effect on the
Business. The Vendor does not have any knowledge of any existing ground on which
any such action, suit or proceeding may be commenced which, with any reasonable
likelihood of success, would prevent the Vendor or any Subsidiary from
fulfilling all of its obligations set out in or arising from this agreement.
(16) Environmental Matters. Except as disclosed in Schedule "3.1(16)",
(a) The Vendor, each Subsidiary, the operation of the Business and
the Leased Premises, the Real Property and all other Assets and
the use, maintenance and operation thereof have been and are in
compliance in all material respects with all Environmental Laws.
The Vendor and the Subsidiaries have complied and are in
compliance in all material respects with all reporting and
monitoring requirements under all Environmental Laws. Neither the
Vendor nor any Subsidiary has received any written notice of any
non-compliance, or any verbal notice of any material
non-compliance, with any Environmental Laws or material adverse
environmental condition or requirement for environmental
investigation, remediation or clean-up at, on or under the Leased
Premises or the Real Property, nor to the best of the knowledge
of the Vendor, was any such notice received by its predecessors
in interest which remains outstanding or was not otherwise fully
complied with.
(b) There are no material permits, certificates, approvals,
registrations and licences necessary to conduct the Business and
to own, use and operate the properties and assets of the
Business, including the Leased Premises and the Real Property in
compliance with all Environmental Laws.
(c) Except for Hazardous Substances while part of the inventories of
the Business, there are no Hazardous Substances located at, on,
under or near any of the Leased Premises, the Real Property or
any other assets owned or used by the Vendor or any Subsidiary in
connection with the Business except in material compliance with
Environmental Laws, and no Release of any Hazardous Substances
has occurred at, on or under the Leased Premises or the Real
Property which has resulted in the presence of Hazardous
Substances at, on or under the Leased Premises, Real Property or
any other assets owned or used by the Vendor or any Subsidiary or
off-site in connection with the Business at levels which exceed
either (i) the applicable decommission or remediation criteria
prescribed in the Ontario Ministry of Environment and Energy
Guidelines for use at Contaminated Sites in Ontario (June 1996)
or (ii) the applicable decommission or
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remediation criteria under any Environmental Laws or applicable
standards published or administered by those governmental
authorities responsible for establishing or applying such
standards as used by the applicable regulatory authority. Neither
the Vendor nor any Subsidiary nor, to the best of the Vendor's
knowledge, none of their predecessors in interest, have used any
of the Leased Premises, the Real Property or any other assets
owned or used by the Vendor in connection with the Business to
produce, generate, store, handle, process, transport, recycle or
dispose of any Hazardous Substances except in material compliance
with Environmental Laws and none of the Real Property or Leased
Premises have been or are being used as a landfill or waste
disposal site.
(d) Without limiting the generality of the foregoing, there are no
underground or above ground storage tanks or polychlorinated
biphenyls (PCBs) or radioactive substances or asbestos or UFFI
located at, on or under any of the Real Property, Leased Premises
or other assets owned or used by the Vendor or any Subsidiary in
connection with the Business. Neither the Vendor nor any
Subsidiary is and there is no basis upon which the Vendor or any
Subsidiary could become, responsible for any clean-up,
remediation, investigation or corrective action under any
Environmental Laws respecting the Real Property, Leased Premises
or other off-site property, including without limitation any
waste disposal or waste receiving site. Neither the Vendor nor
any Subsidiary, and to the Vendor's knowledge none of their
predecessors in interest, have conducted or had conducted an
environmental audit, assessment or study of any of the Real
Property, Leased Premises or other assets owned or used by the
any of them in connection with the Business.
(17) Title to Assets. The Vendor or a Subsidiary is the owner of and has good
and marketable title to all Assets (other than the Real Property), free and
clear of all Encumbrances, except for Permitted Encumbrances listed in Part B of
Schedule "1.1(ak)" and to the best of the knowledge of the Vendor, save and
except for Permitted Encumbrances, there are no claims adverse to the title of
the Vendor or the Subsidiaries to such Assets. No other person owns any assets
which are being used in the Business, except for the Leased Premises and
personal property leased by the Vendor. There are no agreements or commitments
to purchase property or assets by the Vendor or any Subsidiary (other than this
agreement) for the Business other than in the ordinary course of business.
(18) Accounts Receivable. The accounts receivable of the Business reflected in
the Business Financial Statements as at August 31, 1996 and all accounts
receivable of the Business arising since August 31, 1996 arose from bona fide
transactions in the ordinary course of business and are valid (subject to a
reasonable allowance, consistent with past practice, for doubtful accounts as
reflected in the Interim Financial Statements or as previously disclosed in
writing to the Purchaser).
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(19) Inventory. The current inventory pertaining to the Business is good and
usable and is capable of being processed and sold in the ordinary course of
business at normal profit margins. Inventory will be valued net of reserves for
excess and obsolete items. For these purposes, obsolete inventory will be
determined consistent with the formula and methodology used by the Vendor in
accordance with past practice to determine obsolescence.
(20) Machinery and Equipment. All machinery and equipment owned or used by the
Vendor or a Subsidiary in the Business are in good working order and repair for
the purposes of ongoing operations, subject to ordinary wear and tear.
(21) Real Property:
(a) Schedule "1.1(an)" lists the municipal addresses of the Real
Property. Except for Permitted Encumbrances listed in Part A of
Schedule "1.1(ak)" and as may be disclosed by any instruments of
record affecting the title to the Real Property, there are no
agreements, options, contracts or commitments:
(i) to sell, transfer or otherwise dispose of any of the Real
Property; or
(ii) which would require the consent of another party:
A. to the acquisition of the Real Property by the
Corporation; or
B. to any sale, transfer or disposition of any of the Real
Property by the Vendor or any Subsidiary; or
C. to the creation of any Encumbrances thereon.
(b) The Vendor or a Subsidiary is the beneficial and registered owner
of, and has good and marketable title in fee simple to, the Real
Property (save and except for the Thunder Bay Property), free and
clear of any and all Encumbrances, except for the Permitted
Encumbrances listed in Part A of Schedule "1.1(ak)" and to the
best of the knowledge of the Vendor, save and except for
Permitted Encumbrances, there are no claims adverse to the title
of the Vendor or the Subsidiaries to the Real Property.
(c) Neither the Vendor nor any Subsidiary has received any
notification (which remains outstanding) that any of the Real
Property or Leased Premises or any buildings and structures
located thereon or the conduct of the Business as presently
conducted violates any zoning or building laws, ordinances,
regulations, covenants or official plans (subject to any legal
non-conforming uses) or title reservations or restrictions or any
of the Encumbrances. Except as may be disclosed by any survey
which has been made available to the Purchaser, such buildings
and structures do not encroach upon any lands not owned by the
Vendor
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or a Subsidiary. To the best of the knowledge of the Vendor,
there are no expropriation, condemnation or similar proceedings
pending or threatened with respect to any of the Real Property or
Leased Premises.
(22) [Intentionally deleted.]
(23) Leased Premises. Schedule "1.1(af)" describes all Leases. Complete and
correct copies of the Leases, to the extent such are in the possession or
control of the Vendor or any Subsidiary, have been delivered to the Purchaser.
The Leases are the only agreements between the Vendor or a Subsidiary and the
landlords, sublandlords or licensors of the Leased Premises in respect thereof.
Except as disclosed in "Schedule 3.1(23)", the Vendor or a Subsidiary, as the
case may be, is exclusively entitled to all rights and benefits as tenant,
subtenant or licensee, as the case may be, under the Leases and the Vendor or a
Subsidiary, as the case may be, has not sublet, assigned, licensed or otherwise
conveyed any rights in the Leased Premises or in the Leases to any other person.
Each Lease is valid and subsisting and enforceable in accordance with its terms,
subject to the qualifications set out in Section 3.1(1). Either the Vendor or a
Subsidiary has observed and performed in all material respects all its
obligations (rental and otherwise) under the Leases to date. All the Leases are
in full force and effect and no material obligations to be performed prior to
the date hereof are outstanding by the Vendor or any Subsidiary under any Lease.
There is no existing condition that, with notice and the passage of time or
both, would constitute a default by the Vendor or any Subsidiary under any Lease
that would entitle the other party to terminate any Lease. Neither the Vendor
nor any Subsidiary has received any written notice (which remains outstanding)
of any default of any of its obligations under the Leases on account of rental
and other payments or other obligations under the Leases required to be paid and
performed by the Vendor or a Subsidiary, as the case may be, pursuant to the
Leases. There are no disputes under any of the Leases.
(24) Work Orders and Deficiencies. Neither the Vendor nor any Subsidiary has
received any notice (which remains outstanding and which, in the aggregate,
would materially and adversely affect the ability to carry on the Business on
any of the Real Property or the Leased Premises substantially in the manner in
which the Business is currently being carried on) of any work order,
non-compliance order, deficiency notice or other such notice relative to the
construction or state of repair of any of the Real Property or the Leased
Premises which has been issued by any regulatory authority, police or fire
department, sanitation, environmental, labour, health or other governmental
authority or agency.
(25) Condition of Properties. To the best of the knowledge of the Vendor, the
buildings and structures comprising the Real Property are free of any material
structural defect of any kind whatsoever or any material mechanical defect and
all mechanical systems are in good working order and repair and, so far as the
Vendor is aware, the foregoing provisions of this subsection (25) are also true
in respect of each of the Leased Premises. The Vendor has delivered to the
Purchaser copies of all architectural, engineering and other reports that are in
either its possession or control as to the condition of such buildings and
structures.
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(26) Business. All the Real Property and all the Leased Premises are being used
in connection with the Business. The Business is not being conducted otherwise
than from the Real Property and the Leased Premises.
(27) [Intentionally deleted]
(28) Leases of Personal Property. Except as set out in Schedule "3.1(28)", the
Vendor is not the lessee under any lease of personal property for the Business
in respect of which the annual financial obligation exceeds $20,000. Complete
and correct copies of each of the leases referred to in Schedule "3.1(28)", to
the extent in the possession or control of the Vendor, have been provided to the
Purchaser by being placed in the Data Room or supplied to XxXxxxxx Xxxxxxxx.
(29) Intellectual Property:
(a) The Vendor has good and valid title to all of the Owned
Intellectual Property listed in Schedule "1.1(ai)" free and clear
of all liens, charges, Encumbrances and any other rights of
others, other than those set out in Schedule "1.1(ai)" or as
otherwise disclosed herein;
(b) the Vendor has the sole and exclusive right to use the Owned
Intellectual Property listed in Schedule "1.1(ai)" except to the
extent the Vendor has licensed others to use the Owned
Intellectual Property, which licences are listed in Schedule
"1.1(ai)";
(c) to the Vendor's knowledge, the Vendor has the sole and exclusive
right to use the Licensed Intellectual Property listed in
Schedule "1.1(ah)" except to the extent the rights are identified
in Schedule "1.1(ah)" as being non-exclusive;
(d) the Owned Intellectual Property listed in Schedule "1.1(ai)" has
been duly registered or applications to register the same have
been filed in all appropriate offices to preserve the rights
therein and of the Vendor thereto, and, except as disclosed in
such Schedule, all registrations and applications therefor are in
good standing;
(e) to the Vendor's knowledge, the Intellectual Property listed on
Schedules "1.1(ah)" and "1.1(ai)" includes all of the
Intellectual Property required for the carrying on of the
Business;
(f) the Vendor is not a party to any contract or commitment to pay
any royalty, licence or other fee with respect to the use of the
Intellectual Property except as set out in Schedule "1.1(ai)";
(g) to the Vendor's knowledge, no consents or licences will be
required from any person at any time for the Corporation to
permit the Owned Intellectual Property
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listed in Schedule "1.1(ai)" or Licensed Intellectual Property
listed in Schedule "1.1(ah)" to be used by third parties except
as set out in those Schedules;
(h) to the Vendor's knowledge, the conduct of the Business does not
involve any infringement, misuse or misappropriation of any
Intellectual Property rights of third parties; and
(i) except as set out in Schedule "1.1(ah)" or "(ai)", no notice
has been received by the Vendor or any Subsidiary, and the
Vendor is not otherwise aware, that any part of the Owned or
Licensed Intellectual Property is invalid or unenforceable,
or that any infringement, misuse or misappropriation thereof
by any third party has occurred.
(30) Subsidiaries and Other Interests. Except as specified in Schedule
"3.1(30)", the Corporation is not subject to any obligation to make any
investment in or to provide funds by way of loan, capital contribution or
otherwise to any person or corporation and the Corporation, at the Closing Time,
will have no subsidiaries or own any securities issued by, or any equity or
ownership interest in, any other person or corporation engaged in the Business.
(31) Partnerships or Joint Ventures. Except as specified in Schedule "3.1(31)",
neither the Vendor nor any Subsidiary is a partner or participant in any
partnership, joint venture, profit-sharing arrangement or other association of
any kind pertaining to the Business and is not party to any agreement under
which the Vendor or a Subsidiary has agreed to carry on any part of the Business
or any other activity in such manner or by which the Vendor or a Subsidiary has
agreed to share any revenue or profit with any other person.
(32) Customers. A true and complete list of all material customers of the
Business as of the date hereof is attached as Schedule "3.1(32)".
(33) Restrictions on Doing Business. Neither the Vendor nor any Subsidiary is a
party to or bound by any agreement which would materially restrict or limit its
right to carry on any business or activity or to solicit business from any
person or in any geographical area or otherwise to conduct the Business as it
may determine.
(34) Guarantees, Warranties and Discounts. Except as described in Schedule
"3.1(34)" attached hereto,
(a) neither the Vendor nor any Subsidiary is a party to or bound by
any agreement of guarantee, indemnification, hold harmless
agreement, assumption or endorsement or any other like commitment
of the obligations, liabilities (contingent or otherwise) or
indebtedness of any person in connection with the Business;
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(b) neither the Vendor nor any Subsidiary has given any guarantee or
warranty in respect of any of the products sold or the services
provided by it for the Business, except warranties made in the
ordinary course of the Business and for warranties implied by law
and the Vendor does not have any standard written warranty;
(c) since January 31, 1996, except as disclosed in Section 3.1(15) no
claim has been made against the Vendor or any Subsidiary for
breach of warranty or contract requirement or negligence or for a
price adjustment or other concession in respect of any defect in
or failure to perform or deliver any products, services or work
relating to the Business except claims reflected in the Business
Financial Statements or incurred in the ordinary course of the
Business;
(d) there are no repair contracts or maintenance obligations of the
Vendor or any Subsidiary in favour of the customers or users of
products of the Business, except obligations incurred in the
ordinary course of the Business; and
(e) neither the Vendor nor any Subsidiary is subject to any agreement
with or commitment to any customer of the Business which could
require the Vendor or any Subsidiary to repurchase any products
sold to such customer or to adjust any price or grant any refund,
discount or other concession to such customer which, if
exercised, would have a material adverse effect on the Condition
of the Business.
(35) Licenses, Agency and Distribution Agreements. Schedule "3.1(35)" lists all
material agreements to which the Vendor or any Subsidiary is a party or by which
it is bound under which the right to manufacture, use or market any product,
service, or other property in connection with the Business has been granted,
licensed or otherwise provided to the Vendor or any Subsidiary or by the Vendor
or any Subsidiary to any other person, or under which the Vendor or any
Subsidiary has been appointed or any person has been appointed by the Vendor or
any Subsidiary as an agent, distributor, licensee or franchisee for any of the
foregoing. None of the agreements listed in Schedule "3.1(35)" grant to any
person any authority to incur any liability or obligation or to enter into any
agreement on behalf of the Vendor or any Subsidiary.
(36) Employees. Schedule "3.1(36)" sets forth the name, job title, duration of
employment, vacation entitlement and rate of remuneration (including bonus and
commission entitlement) of each employee of the Vendor or any Subsidiary who
performs functions for or relating to the Business. Schedule "3.1(36)" also sets
forth the names of all employees of the Vendor or any Subsidiary who perform
functions for or relating to the Business who are now Insured Employees.
(37) Employment Agreements. Neither the Vendor nor any Subsidiary is a party to
any written or oral employment, service or consulting agreement relating to any
one or more persons who performs a function for or relating to the Business,
except for oral employment agreements which are of indefinite term and without
any special arrangements or commitments with respect
29
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to the continuation of employment or payment of any particular amount on
termination of employment except as described in Schedule "3.1(37)". Neither the
Vendor nor any Subsidiary has any employee who performs a function for or
relating to the Business who cannot be dismissed on such period of notice as is
required by law in respect of a contract of hire for an indefinite term.
(38) Labour Matters and Employment Standards:
(a) Neither the Vendor nor any Subsidiary is bound by or a party to
any collective bargaining agreement affecting or relating to the
Business except as outlined on Schedule "3.1(38)" and, to the
best of the knowledge of the Vendor, during the period of three
years preceding the date of this agreement, there has not been
any attempt to organize, certify, decertify or establish any
labour union or employee association in relation to any of the
other employees of the Vendor or any Subsidiary.
(b) Except as disclosed in Schedule "3.1(38)", no trade union,
council of trade unions, employee bargaining agency or affiliated
bargaining agent:
(i) holds bargaining rights with respect to any of the Vendor's
or any Subsidiary's employees by way of certification,
interim certification, voluntary recognition, designation or
successor rights;
(ii) during the period of three years preceding the date of this
agreement has applied to be certified as the bargaining
agent of any of the employees of the Vendor or any
Subsidiary; or
(iii)during the period of three years preceding the date of this
agreement has applied to have the Vendor or any Subsidiary
declared a related or successor employer pursuant to any
applicable labour or employment legislation.
(c) Except as disclosed in Schedule "3.1(38)", there are no existing
or, to the best of the knowledge of the Vendor, threatened,
labour strikes or labour disputes or grievances affecting the
Business.
(d) Each of the Vendor and Subsidiaries has materially complied with
all laws, rules, regulations and others applicable to it relating
to employment, including those relating to wages, hours,
collective bargaining, occupational health and safety, workers'
hazardous materials, employment standards, pay equity and workers
compensation. There are no outstanding charges or complaints
against the Vendor or any Subsidiary relating to unfair labour
practices or discrimination or under any legislation relating to
employees. The Vendor and Subsidiaries have paid in full all
amounts owing under the Workers' Compensation Act (Ontario) or
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comparable legislation, and the workers' compensation claims
experience of the Vendor and the Subsidiaries would not permit a
penalty reassessment under such legislation.
(39) Benefit Plans:
(a) All deferred compensation, share purchase, share option, stock
appreciation, phantom stock, savings, profit sharing, severance
or termination pay, health or other medical, life, disability or
other insurance (whether insured or self-insured), supplementary
unemployment benefit, pension, retirement, supplementary
retirement and every other benefit plan, programme, agreement or
arrangement (whether written or unwritten) maintained or
contributed to by the Vendor, or any subsidiary for the benefit
of any of the employees of the Business and their eligible
dependents or beneficiaries but excluding any such plans with
which the Vendor is required to comply under applicable
legislation (the "Benefit Plans") are listed in Schedule
"3.1(39)" together with all compensation policies generally
applicable to employees or dependent or independent contractors
of the Vendor. The Vendor has delivered to the Purchaser by
placing in the Data Room true, complete and up-to-date copies of
all material written Benefit Plans and summary descriptions of
all other Benefit Plans, together with the most current funding
agreements, summary descriptions provided to past or present
participants therein and the most recent actuarial reports, and
financial statements, if any, and evidence of any registration in
respect thereof for the Acklands Plan.
(b) The Benefit Plans are accurately described in Schedule "3.1(39)"
or in the documents provided in the Data Room and no promises or
commitments have been made by the Vendor to amend any Benefit
Plan or to provide increased benefits thereunder to any of the
Affected Employees, except as required by applicable legislation.
(c) Except as disclosed in Schedule "3.1(39)", any Benefit Plan that
is not a pension plan is, and has been since its establishment,
duly registered where required by legislation (including
registration with the relevant tax authorities where such
registration is required to qualify for tax exemption or other
beneficial tax status) and is in compliance in all material
respects with, all applicable legislation and administrative
guidelines issued by the regulatory authorities having
application to such Benefit Plans.
(40) Insurance. Schedule "3.1(40)" contains a true and complete list of all
current insurance policies maintained by the Vendor or a Subsidiary or under
which the Vendor or a Subsidiary is covered in respect of the Assets, the
Business or personnel of the Business as of the date hereof. Complete and
correct copies of all such insurance policies have been provided to the
Purchaser. Current insurance policies are in full force and effect and neither
the Vendor nor any Subsidiary is in default with respect to the payment of any
premium required pursuant to
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any such insurance policy. To the best of the knowledge of the Vendor, there are
no circumstances under which the Vendor would be required to, or, in order to
maintain its coverage should, give any notice to the insurers under any such
insurance policies which has not been given. The Vendor has not received written
notice from any of the insurers regarding cancellation or threatened
cancellation of such current insurance policies. Neither the Vendor nor any
Subsidiary has failed to present any claim under any such insurance policy in
due and timely fashion. Neither the Vendor nor any Subsidiary has received
written notice from any of the insurers denying any claims relating to the
Business.
(41) Dealing with Affiliates. Except pursuant to the Asset Transfer Agreement,
the Corporation will not be a party to or bound by any agreement with, or
indebted to, and no amount will be owing to the Corporation by the Vendor or any
of the Vendor's Affiliates or any officers, former officers, directors, former
directors, shareholders, former shareholders, employees (except for oral
employment agreements with employees) or former employees of the Corporation or
any person not dealing at arm's length with any of the foregoing. The
Corporation will not have made or authorized any payments to the Vendor or any
of the Vendor's Affiliates or any officers, former officers, directors, former
directors, shareholders, former shareholders, employees or former employees of
the Vendor or to any person not dealing at arm's length with any of the
foregoing.
(42) Compliance with Laws. Neither the Vendor nor any Subsidiary has violated
any federal, state, provincial, municipal or other law, regulation or order of
any government or governmental or regulatory authority, domestic or foreign
pertaining to the Business which would have a material adverse effect on the
Business except as disclosed in Schedule "3.1(16)".
(43) Statutory Liens:
(a) The Vendor and each Subsidiary have paid all amounts currently
owing by them for the supply of utilities or telephone services
to the Real Property and the Leased Premises and there are no
arrears thereof.
(b) The Vendor and each Subsidiary have collected and remitted all
amounts required by all governmental authorities as provincial or
state sales tax, education and health tax and other taxes of
similar nature.
(c) Except for amounts currently or prospectively due and payable,
there are no land taxes, assessments, development charges or
local improvement levies or other municipal charges owing with
respect to the Real Property except as otherwise permitted under
this agreement.
(44) No Broker. The Vendor has carried on all negotiations relating to this
agreement and the transactions contemplated in this agreement without the
intervention on its behalf of any other party in such manner as to give rise to
any valid claim for a brokerage commission, finder's fee or other like payment
against the Purchaser.
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(45) U.S. Sales. No sales were made directly in or into the United States by the
Business during or since the end of the most recent fiscal year of the Vendor.
To the best of the knowledge of the Vendor, none of the sales made by the
Business during that time period were sales of products for delivery to
purchasers in the United States.
(46) Securities Matters. The Vendor is not a U.S. person as such term is defined
in Regulation S under the U.S. Securities Act of 1933; the Vendor is not
acquiring the Grainger Common Stock for the account or benefit of a U.S. person;
the Vendor received the offer to acquire the Grainger Common Stock outside of
the United States; and the Vendor has no present intention to distribute the
Grainger Common Stock.
(47) Cuban Sales. The Corporation will not have purchased any products from or
sold any products to Cuba or any Cuban person.
3.2 Representations and Warranties by the Purchaser. The Purchaser hereby
represents and warrants to the Vendor as follows, and confirms that the Vendor
is relying on the accuracy of each of such representations and warranties in
connection with the sale of the Purchased Shares and the completion of the other
transactions hereunder:
(1) Corporate Authority and Binding Obligation. The Purchaser is a corporation
duly incorporated and validly subsisting in all respects under the laws of its
jurisdiction of incorporation. The Purchaser has full corporate power and
authority to enter into this agreement and to purchase the Purchased Shares from
the Vendor in the manner contemplated herein and to perform all of the
Purchaser's obligations under this agreement. The Purchaser and its board of
directors have taken all necessary steps and corporate and other proceedings to
approve or authorize the entering into of, and the execution, delivery and
performance of, this agreement and the purchase of the Purchased Shares by the
Purchaser from the Vendor. This agreement is a legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its terms
subject to
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditors' rights
generally and
(b) the fact that equitable remedies, including the remedies of
specific performance and injunction, may only be granted in the
discretion of a court.
(2) Contractual and Regulatory Approvals. Except as specified in Schedule
"3.2(2)", the Purchaser is not under any obligation, contractual or otherwise,
to request or obtain the consent of any person, and no permits, licenses,
certifications, authorizations or approvals of, or notifications to, any
federal, provincial, state, municipal or local government or governmental
agency, board, commission or authority are required to be obtained by the
Purchaser in connection with the execution, delivery or performance by the
Purchaser of this agreement or the completion of any of the transactions
contemplated herein. Complete and correct copies of
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any agreements under which the Purchaser is obligated to request or obtain any
such consent has been provided to the Vendor.
(3) Compliance with Constating Documents, Agreements and Laws. The execution,
delivery and performance of this agreement and each of the other agreements
contemplated or referred to herein by the Purchaser, and the completion of the
transactions contemplated hereby, will not constitute or result in a violation
or breach of or default under:
(a) any term or provision of any of the articles, by-laws or other
constating documents of the Purchaser, which are attached as
Schedule "3.2(3)",
(b) subject to obtaining the contractual consents referred to in
Schedule "3.2(2)", the terms of any indenture, agreement (written
or oral), instrument or understanding or other obligation or
restriction to which or the Purchaser is a party or by which it
is bound, or
(c) subject to obtaining the regulatory consents referred to in
Schedule "3.2(2)", any term or provision of any licences,
registrations or qualification of the Purchaser or any order of
any court, governmental authority or regulatory body or any
applicable law or regulation of any jurisdiction.
(4) Grainger Common Stock. The shares of Grainger Common Stock issued by the
Purchaser to the Vendor in satisfaction of the Purchase Price will be duly
issued as fully paid, and will be free and clear of all Encumbrances and the
Purchaser has full right and authority to issue such shares to the Vendor. It is
understood that the shares of Grainger Common Stock have not been registered
under the United States Securities Act of 1933 and may not be offered or sold in
the United States or to U.S. persons unless the shares are registered under the
Securities Act of 1933, or an exemption from the registration requirements of
such Act is available.
(5) Investment Canada. The Purchaser is a WTO Investor within the meaning of the
Investment Canada Act (Canada).
(6) Litigation. There is no suit, action, litigation, investigation, claim,
complaint or proceeding before any governmental authority in progress or, to the
knowledge of the Purchaser, pending or threatened against or relating to the
Purchaser, which, if determined adversely to the Purchaser, would,
(a) prevent the Purchaser from satisfying the payment of the Purchase
Price;
(b) enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Shares as contemplated by this agreement; or
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(c) prevent the Purchaser from fulfilling all of its obligations set
out in or arising from this agreement,
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
(7) No Broker. The Purchaser has carried on all negotiations relating to this
agreement and the transactions contemplated in this agreement without the
intervention on its behalf of any other party in such manner as to give rise to
any valid claim for a brokerage commission, finder's fee or other like payment
against the Vendor.
4. SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES
4.1 Survival of Warranties by the Vendor. The representations and warranties
made by the Vendor and contained in this agreement or contained in any document
or certificate given in order to carry out the transactions contemplated hereby,
will survive the closing of the purchase of the Purchased Shares provided for
herein and, notwithstanding such closing or any investigation made by or on
behalf of the Purchaser or any other person or any knowledge of the Purchaser or
any other person, shall continue in full force and effect for the benefit of the
Purchaser, subject to the following provisions of this section:
(a) Except as provided in paragraphs (b), (c), (d) and (e) of this
Section, no Warranty Claim may be made or brought by the
Purchaser after the date which is 30 months following the Closing
Date.
(b) Any Warranty Claim which is based on or relates to a tax
liability of the Vendor or a Subsidiary may be made or brought by
the Purchaser at any time prior to 60 days following the
expiration of the period (if any) during which an assessment,
reassessment or other form of recognized document assessing
liability for tax, interest or penalties in respect of such tax
liability under applicable tax legislation could be issued,
assuming that the Vendor or a Subsidiary does not file any waiver
or similar document extending such period as otherwise
determined.
(c) Any Warranty Claim which is based on or relates to any products
liability may be made or brought by the Purchaser at any time
prior to five years following the Closing Date.
(d) Any Warranty Claim which is based on or relates to, subject to
Section 4.1(e), any environmental liability may be made or
brought by the Purchaser at any time prior to 10 years following
the Closing Date.
(e) Any Warranty Claim which is based on or relates to the title to
the Assets or Purchased Shares or any environmental liability
with respect to the properties
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referred to in Section 5.1(f) or which is based on intentional
misrepresentation or fraud by the Vendor may be made or brought
by the Purchaser at any time.
After the expiration of the periods of time referred to in paragraphs (a), (b),
(c), (d) and (e), respectively, of this Section, the Vendor will be released
from all obligations and liabilities in respect of the applicable
representations and warranties made by the Vendor and contained in this
agreement or in any document or certificate given in order to carry out the
transactions contemplated hereby, except with respect to any Warranty Claims
made by the Purchaser in writing prior to the expiration of any such period.
4.2 Survival of Warranties by the Purchaser. The representations and warranties
made by the Purchaser and contained in this agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated hereby will survive the closing of the purchase and sale of the
Purchased Shares provided for herein and, notwithstanding such closing or any
investigation made by or on behalf of the Vendor or any other person or any
knowledge of the Vendor or any other person, shall continue in full force and
effect for the benefit of the Vendor provided that no Warranty Claim may be made
or brought by the Vendor after the date which is 30 months following the Closing
Date.
4.3 Limitations on Warranty Claims.
(1) No party hereto shall be entitled to make a Warranty Claim if such party has
been advised in writing of the inaccuracy, non-performance, non-fulfilment or
breach which is the basis for such Warranty Claim after the date hereof and
prior to the Closing Time and waives such inaccuracy, non-performance,
non-fulfilment or breach in writing and completes the transactions hereunder
(2) No party shall be entitled to make any Warranty Claim until the aggregate
amount of all damages, losses, liabilities and expenses incurred by such party
as a result of all misrepresentations and breaches of warranties contained in
this agreement or contained in any document or certificate given in order to
carry out the transactions contemplated hereby is equal to or greater than
$100,000.
(3) Notwithstanding any other provisions of this agreement or of any agreement,
certificate or other document made in order to carry out the transactions
contemplated hereby, the maximum aggregate liability of the Vendor in respect of
all Warranty Claims, other than the claims with respect to the properties
referred to in Section 5.1(f), will be limited to an amount equal to $250
million.
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5. COVENANTS
5.1 Covenants by the Vendor. The Vendor covenants with the Purchaser that it
will do or cause to be done the following:
(a) Investigation of Business and Examination of Documents. During
the Interim Period, the Vendor will cause the Subsidiaries to
provide access to, and will permit the Purchaser, through their
representatives, to make such investigation of, the operations,
properties, (including the Leased Premises and Real Property),
assets and records of the Vendor and the Subsidiaries and of
their financial and legal condition as is reasonably necessary or
advisable to familiarize itself with such operations, properties,
assets, records and other matters. Such investigation shall
include, without limitation, environmental site investigations
consisting of surveys, tests, analysis and, if considered
necessary by the Purchaser, samples. For purposes of any such
environmental site investigation, the Vendor shall provide,
immediately upon request by the Purchaser, consent to
governmental authorities to release to the Purchaser any
information relating to environmental matters and the Vendor
shall cooperate with the Purchaser in connection with such
environmental site investigations. Completion of any such
environmental site investigation shall in no way limit, waive or
diminish the scope or otherwise effect in any way the
representations, warranties, covenants, indemnities and
obligations of the Vendor hereunder. In respect of any real
property survey which is less than 10 years old from the date
hereof, the Vendor shall provide the Purchaser with a written
certificate that there have been no material improvements or
changes which would adversely affect the continuation of the
operation of the Business thereon since the date of the survey.
Without limiting the generality of the foregoing, during the
Interim Period the Vendor will permit the Purchaser and its
representatives to have access to the premises used in connection
with the Business at such reasonable times as may be designated
by the Vendor so as not to disrupt the routine daily affairs of
the Business, and will produce for inspection or provide copies
to the Purchaser of:
(i) all agreements and other documents referred to in Section
3.1 or in any of the Schedules and all other contracts,
leases, licenses, title documents, title opinions, real
property surveys, insurance policies, pension plans,
information relating to employees engaged in the Business,
customer lists, information relating to customers and
suppliers of the Business, documents relating to all
indebtedness, documents relating to legal or administrative
proceedings, environmental audit or assessment reports and
all other documents of or in the possession of the Vendor or
any Subsidiary relating to the Business;
(ii) all minute books, share certificate books, registers of
security holders, registers of transfers of securities,
registers of directors and other
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corporate documents of the Vendor and the Subsidiaries for
the immediately preceding five years;
(iii)all books, records, accounts, tax returns and financial
statements of the Vendor and the Subsidiaries pertaining to
the Business; and
(iv) all other information which, in the reasonable opinion of
the Purchaser's representatives, is required in order to
make an examination of the Assets, the Business and the
Corporation.
(b) Conduct of Business. Except as contemplated by this agreement or
with the prior written consent of the Purchaser, during the
Interim Period the Vendor will, and will cause the Subsidiaries
to:
(i) operate the Business only in the ordinary course thereof,
consistent with past practices;
(ii) take all actions within its control to ensure that the
representations and warranties in Section 3.1 remain true
and correct at the Closing Time, with the same force and
effect as if such representations and warranties were made
at and as of the Closing Time, and to satisfy or cause to be
satisfied the conditions in Section 6.1;
(iii)take all actions within its control to preserve the
Business and the goodwill of the Business and the
relationships with customers, suppliers and others having
business dealings with it, to keep available the services of
its present officers and employees and to maintain in full
force and effect all agreements to which the Vendor or a
Subsidiary is a party, and take all other action reasonably
requested by the Purchaser in order that the Condition of
the Business will not be impaired in any material respect
during the Interim Period; and
(iv) promptly advise the Purchaser in writing of any material
adverse change in the Condition of the Business during the
Interim Period;
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(c) Transfer to Corporation.
(i) Prior to the Closing Time, the Vendor will transfer or cause
to be transferred to the Corporation good and marketable
title to all the Assets (except the property known
municipally as 00 Xxxx Xxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxx,
the "Beaver Creek Property" and the Thunder Bay Property)
and the Assumed Liabilities and will take all necessary
steps and corporate proceedings to be taken in order to
permit the Assets and Assumed Liabilities to be transferred
to the Corporation as provided in the Asset Transfer
Agreement. Without limiting the generality of the foregoing,
the Vendor will discharge all Encumbrances on the Assets
prior to the Closing Time except the Permitted Encumbrances
and the mortgage of the Beaver Creek Property in favour of
The Manufacturers Life Insurance Company in the original
amount of $4,000,000 (the "BCP Mortgage") and the mortgage
referred to in part (vi) of this subsection.
(ii) Until such time as the title to the Beaver Creek Property
has been transferred to and registered in the name of the
Corporation, the Vendor will cause Safeco Mfg. Limited to
lease it to the Corporation for a nominal rent. Such lease
will be for a term initially that expires on April 14, 1997
and will be renewable by the Corporation on an monthly basis
until the Beaver Creek Property has been transferred to the
Corporation.
(iii)The Vendor will cause Safeco Mfg. Limited to make all
payments and perform all obligations of the mortgagor under
the BCP Mortgage in accordance with its terms and to repay
the balance of the loan by not later than April 14, 1997 and
to obtain and register a discharge thereof and all related
personal property security forthwith thereafter.
(iv) By not later than April 14, 1997, the Vendor will transfer
to the Corporation good and marketable title to the Beaver
Creek Property subject only to the Permitted Encumbrances
listed in Part C of Schedule "1.1(ak)" and the generic
Permitted Encumbrances described in Part A of Schedule
"1.1(ak)". The Vendor will reimburse the Corporation on
account of the registration fee and land transfer tax paid
by it to register such transfer.
(v) The Vendor will proceed diligently and use all commercially
reasonable efforts to obtain a new lease of the premises
known municipally as 000 Xxxxxx Xxxxx Xxx, Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxx in favour of the Corporation for the
remainder of its current renewal term and otherwise on the
same terms.
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(vi) Prior to the Closing Time, the Vendor will obtain all
consents required in order to assign the Leases located at
11754-170th Street, Xxxxxxxx, 00000-000xx Xxxxxx, Xxxxxxxx,
14345-123rd Avenue, Edmonton, 0000 Xxxxxx Xxxxxx, Xxxxxxxxx
and 0000 Xxxxxxxx Xxxxxx East, Xxx Xxxxx and not less than
40% of all other Leases. Excepting the foregoing, the Vendor
will obtain the consents required in order to assign all
other Leases within 180 days of the Closing Date. All
consents shall be effective as of the date of assignment,
shall be obtained in a manner such that the Corporation
shall not be in default as a result of the transaction
provided for herein and the Vendor shall use all reasonable
efforts to provide to the Purchaser estoppel certificates
for all Leases substantially in the form provided in
Schedule "5.1(c)(vi)".
(d) Transfer of Purchased Shares. At or before the Closing Time, the
Vendor will cause all necessary steps and corporate proceedings
to be taken in order to permit the beneficial and registered
ownership of the Purchased Shares to be transferred to the
Purchaser free from all Encumbrances.
(e) Resignation of Officers and Directors. At or before the Closing
Time, the Vendor will cause each person who is a director or
officer of the Corporation, other than such persons as may be
designated in writing by the Purchaser, to submit his or her
written resignation as a director or officer to the Corporation
which will be effective at the Closing Time.
(f) Rejection of Realty. The Purchaser may, due to the extent of
environmental remediation, clean-up or corrective action required
in relation to any Real Property or Leased Premises, at its
option, by written notice given at any time on or prior to
November 25, 1996 or such later date as is agreed by the Vendor
and the Purchaser in writing determine that (i) the title to any
such Real Property or the lease, sublease or licence, as the case
may be, of any such Leased Premises must not be transferred by
the Vendor to the Corporation (the "Rejected Properties") and/or
(ii) the Vendor will lease any such Rejected Property to the
Corporation at the market rate for a period not exceeding six
months after the Closing Time so as to enable the Purchaser to
relocate the operations theretofore carried on from such Rejected
Property to another location. In the event that the Purchaser
identifies in the written notice any Real Property or Leased
Premises requiring remediation, clean-up or corrective action at
a cost that exceeds the fair market value of the property, the
Vendor may, at its option, by written notice at any time on or
prior to November 27, 1996 or such later date as is agreed by the
Vendor and the Purchaser in writing, deem the property to be a
Rejected Property and the provisions of Section 5.1(f)(ii) shall
apply. The costs of any such relocation shall be borne by the
Purchaser except in the case of the rejection of a property by
the Vendor when the Vendor will pay the Purchaser an amount equal
to the sum of the replacement value of the Rejected Property
(determined
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as if no remediation, clean up or corrective action is required)
and the relocation costs. After the Closing Time, the Vendor
shall remain solely responsible and liable at all times for any
and all environmental liabilities (whether accrued, actual,
contingent or otherwise) in connection with all Rejected
Properties arising or connected with activities occurring prior
to the Closing Time and neither the Corporation or the Purchaser
shall assume any such responsibility or liability.
(g) Environmental Clean-Up. With respect to any Real Property or
Leased Premises that is not a Rejected Property as contemplated
under section 5.1(f), in the event, as a result of activities
occurring prior to the Closing Time, environmental remediation,
clean-up or corrective action is required to put any Real
Property or Leased Premises into compliance with the applicable
decommissioning or remediation criteria prescribed in the Ontario
Ministry of Environment and Energy Guideline For Use at
Contaminated Sites in Ontario (June 1996) or other applicable
decommissioning or remediation criteria under any Environmental
Laws or applicable standards published or administered by those
governmental authorities responsible for establishing or applying
such criteria as used by the applicable regulatory authority or
to comply with applicable requirements of Environmental Law, the
Purchaser shall provide written notice at any time on or prior to
November 25, 1996 to the Vendor identifying such property
including generally the environmental remediation, clean-up or
corrective action required to be undertaken and the estimated
costs thereof. If the cost of such environmental remediation,
clean-up or corrective action does not exceed a maximum amount of
$10 million in the aggregate, the Purchaser will undertake such
environmental remediation, clean-up or corrective action and the
Vendor will reimburse the Purchaser for all reasonable costs
incurred in connection therewith. If the cost of such
environmental remediation, clean-up or corrective action exceeds
a maximum amount of $10 million in the aggregate, the Purchaser,
at its option, may either agree to pay for the costs of
environmental remediation, clean- up or corrective action in
excess of the maximum amount of $10 million in the aggregate or
terminate the agreement on November 25, 1996. For greater
certainty, it is understood that the provisions of Section 4.3(2)
will not apply to the obligations of the Vendor under this
Section 5.1(g).
Any such remediation, clean-up or corrective action shall be
undertaken in a timely and environmentally diligent and sound
manner and in such a manner that minimizes any impact on the Real
Property, the Leased Premises and the Business. The methodology
and scope of work for such remediation, clean-up or corrective
action shall be determined by the Purchaser in consultation with
the Vendor, acting reasonably.
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(h) Thunder Bay Property
The Vendor shall provide responses satisfactory to the Purchaser,
acting reasonably, to the requisitions set forth in paragraphs 1
to 7 inclusive of the letter of XxXxxxxx Xxxxxxxx to Xxxxx Xxxxxx
& Harcourt dated October 28, 1996 and transfer good and
marketable title to the Real Property known municipally as 000
Xxxxx Xxxxxxxx, Xxxxxxx Xxx, Xxxxxxx (the "Thunder Bay Property")
to the Corporation by the first anniversary of the Closing Date.
If the Vendor fails to do so, the Vendor shall indemnify the
Purchaser in an amount equal to the fair market value of the
Thunder Bay Property as of the Closing Date (assuming that the
owner thereof then had good and marketable freehold title). The
Vendor shall proceed diligently and use all commercially
reasonable efforts to satisfy such requisitions and shall from
time to time at the request of the Purchaser provide written
reports as to its progress. The Vendor shall ensure that the
Corporation has exclusive occupancy of the Thunder Bay Property
as though the Corporation were a tenant of the Thunder Bay
Property under a lease made pursuant to Section 6.1(k) until the
earlier of the first anniversary of the Closing Date and the date
on which such transfer occurs.
(i) Insurance. Prior to the Closing Time, discontinued products
liability coverage with a responsible and reputable insurance
company will be purchased in such amounts as are acceptable to
the Purchaser, acting reasonably, and covering a five year period
subsequent to Closing Date. The cost of such insurance will be
shared equally by the Vendor and the Purchaser. At or before
Closing Time the Vendor will produce written evidence thereof
naming the Purchaser and the Corporation as additional insureds.
(j) Name and Trade-xxxx Matters.
(i) Prior to the Closing Date, the Vendor will, and will cause
its Subsidiaries to: (i) subject to the interim trade xxxx
licence referred to in Section 6.1(f) cease use of all of
the Intellectual Property transferred to the Corporation
pursuant to the terms of this Agreement; (ii) file all
necessary documentation with the appropriate government
offices to cancel the registration of all business names
(other than the British Columbia business names Acklands
Automotive, Acklands Body Shop Supply, Acklands Finance, and
Bumper to Bumper) that are composed of or include any
trade-xxxx transferred to the Corporation pursuant to the
terms of this agreement (the "Trade-marks"); and (iii) with
the exception of the use of the trade-xxxx ACKLANDS in the
corporate name of the Vendor, file Articles of Amendment
changing any corporate name that includes any Trade-xxxx to
a name that does not include any Trade-xxxx.
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(ii) Within six months following the Closing Date, the Vendor
will (i) cease all use of the trade-xxxx ACKLANDS, including
the use of that trademark in its corporate name, or, subject
to Section 5.1(j)(i), any business name, trade-name or
trade-style; and (ii) file Articles of Amendment changing
its corporate name to one that does not include any
Trade-xxxx or any name similar to or confusing with any
Trade-xxxx.
(k) Minimum Shareholders' Equity. The Vendor shall maintain a minimum
Shareholders' Equity of not less than
(i) $34 million at all times from and including the Closing Date
to but excluding the date of the first anniversary of the
Closing Date;
(ii) $29 million at all times from and including the date of the
first anniversary of the Closing Date to but excluding the
date that is the second anniversary of the Closing Date; and
(iii)$20 million at all times from and including the second
anniversary of the Closing Date to but including the date
that is 30 months after the Closing Date.
(l) Maintain Confidentiality. If the transaction contemplated hereby
is completed, at all times after the Closing Time, the Vendor
will not disclose to anyone other than the Purchaser and the
Corporation or use for its own or any purpose any confidential
information concerning the Business, except such information
which:
(i) is generally available to the public, other than as a result
of a disclosure by the Vendor, or
(ii) is made available to the Vendor on a non-confidential basis
from a source other than the Vendor or its representatives.
Notwithstanding the foregoing provisions of this paragraph, the
obligation to maintain the confidentiality of such information
will not apply to the extent that disclosure of such information
is required in connection with governmental or other applicable
filings relating to the transactions hereunder, provided that, in
such case, unless the Purchaser otherwise agrees, the Vendor
will, if possible, request confidentiality in respect of such
governmental or other filings.
5.2 Covenants by the Purchaser. The Purchaser covenants to the Vendor that it
will do or cause to be done the following:
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(1) Maintain Confidentiality. Prior to the Closing Time and, if the transaction
contemplated hereby is not completed, at all times after the Closing Time, the
Purchaser will keep confidential all information obtained by them relating to
the Business, except such information which:
(a) is generally available to the public, other than as a result of a
disclosure by the Purchaser, or
(b) is made available to the Purchaser on a non-confidential basis
from a source other than the Vendor or its representatives.
The Purchaser further agrees that such information will be disclosed only to
those of its employees and representatives of its advisors who need to know such
information for the purposes of evaluating and implementing the transaction
contemplated hereby and that such employees or representatives will be advised
of the Purchaser's obligations as set out in this Section. Notwithstanding the
foregoing provisions of this paragraph, the obligation to maintain the
confidentiality of such information will not apply to the extent that disclosure
of such information is required in connection with governmental or other
applicable filings relating to the transactions hereunder, provided that, in
such case, unless the Vendor otherwise agrees, the Purchaser will, if possible,
request confidentiality in respect of such governmental or other filings. If the
transactions contemplated hereby are not consummated for any reason the
Purchaser will return forthwith, without retaining any copies thereof, all
information and documents obtained from the Vendor.
(2) Issued Shares. The Purchaser covenants to comply with, satisfy and fulfil
promptly all prerequisites, conditions and requirements imposed by or arising
out of legal, regulatory and administrative requirements applicable to the
Purchaser in connection with the issuance of the shares of Grainger Common Stock
to be issued to the Vendor in satisfaction of the Purchase Price.
(3) Competition Act/Anti-Trust Approvals. The Purchaser shall obtain the
necessary consents under the Competition Act (Canada), Investment Canada Act
(Canada) and Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, if
applicable, to permit the transactions contemplated herein to close on the
Closing Date.
5.3 Transitional Agreement. Each of the Vendor and the Purchaser will during the
Interim Period negotiate in good faith and execute and deliver a transitional
agreement providing for the continuation of the operations of the Business in
the ordinary course during the six month period following the Closing Date.
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6. CONDITIONS
6.1 Conditions to Obligations of the Purchaser. The obligations of the Purchaser
and to complete the transactions provided for herein will be subject to the
fulfilment of the following conditions at or prior to the Closing Time, and the
Vendor covenants to use its best efforts to ensure that such conditions are
fulfilled.
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Vendor
contained in this agreement or in any documents delivered in
order to carry out the transactions contemplated hereby shall be
true and accurate on the date hereof and at the Closing Time with
the same force and effect as though such representations and
warranties had been made as of the Closing Time (regardless of
the date on which the information in this agreement or in any
Schedule or other document made pursuant hereto is given but
subject to the transfer of the Assets, Assumed Liabilities and
Affected Employees to the Corporation as provided in the Asset
Transfer Agreement). In addition, the Vendor and the Corporation
shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by it at or
prior to the Closing Time. In addition, the Vendor shall have
delivered to the Purchaser a certificate in the form of Schedule
"6.1(a)" confirming that the facts with respect to each of such
representations and warranties by the Vendor are as set out
herein at the Closing Time and that the Vendor and the
Corporation have performed all covenants required to be performed
by them hereunder. In addition, the Vendor will deliver evidence
satisfactory to the Purchaser that the originals of all Leases to
the extent such Leases are in the possession or control of the
Vendor and all files of the Vendor relating to the Leases have
been delivered to the Corporation.
(b) Material Adverse Changes. During the Interim Period there will
have been no change in the Condition of the Business, howsoever
arising, except changes which have occurred in the ordinary
course of the Business and which, individually or in the
aggregate, have not affected the Condition of the Business in any
materially adverse respect or changes in respect of which the
Purchaser has consented in writing. Without limiting the
generality of the foregoing, during the Interim Period:
(i) no material damage to or destruction of any material part of
the Assets shall have occurred, whether or not covered by
insurance;
(ii) none of the key employees (being those employees identified
as key by written notice to the Vendor prior to the date
hereof) engaged in the Business shall have resigned or have
indicated in writing their intention to resign from
employment with the Vendor or a Subsidiary; and
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(iii)customers of the Business representing more than 5% of the
revenues of the Business in the fiscal year ended January
31, 1996 will not have ceased, or advised the Vendor or any
Subsidiary or the Purchaser of their intention to cease
purchasing from or doing business with the Vendor or any
Subsidiary.
(c) No Restraining Proceedings. No order, decision or ruling of any
court, tribunal or regulatory authority having jurisdiction shall
have been made, and no action or proceeding shall be pending or
threatened which, in the opinion of counsel to the Purchaser, is
likely to result in an order, decision or ruling,
(i) to disallow, enjoin, prohibit or impose any limitations or
conditions on the purchase and sale of the Assets
contemplated hereby or the right of the Purchaser to own the
Assets, or
(ii) to impose any limitations or conditions which may have a
material adverse affect on the Condition of the Business.
(d) Consents. All consents required to be obtained under:
(i) the legislation listed in Schedule "3.1(3)";
(ii) the material contracts as listed in Schedule "3.1(5)";
(iii)the material agreements as listed on Schedule "3.1(35)";
and
(iv) the consents to be obtained prior to the Closing Time
pursuant to Section 5.1(c)(vi)
shall have been obtained.
(e) Releases by Directors and Officers. At the Closing Time, each
person who is a director or officer of the Corporation and who is
resigning as such shall have executed and delivered to the
Corporation and the Purchaser a release in the form of the draft
release attached as Schedule "6.1(e)".
(f) Interim Trade-xxxx Licence. There will be an interim trade-xxxx
licence agreement entered into between the Vendor and the
Purchaser substantially in the form attached as Schedule
"6.1(f)".
(g) Non-Competition Agreement. There will be a non-competition
agreement entered into between the Purchaser, the Corporation,
the Vendor and K. (Rai) Sahi substantially in the form attached
as Schedule "6.1(g)".
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(h) Standstill Agreement. There will be a standstill agreement
between the Vendor and the Purchaser substantially in the form
attached as Schedule "6.1(h)".
(i) Retail Sales Taxes. The Vendor and each Subsidiary will have
delivered to the Purchaser a certificate issued by the Minister
of Revenue pursuant to section 6 of the Retail Sales Act
(Ontario) and other similar provincial legislation which
indicates that the Vendor and each Subsidiary has paid all taxes
collectable or payable under the said Act and other legislation
up to the Closing Date or has entered into an arrangement
satisfactory to the said Minister for the payment of such taxes.
(j) Opinion of Vendor's Counsel. At the Closing Time, the Purchaser
shall have received an opinion of legal counsel for the Vendor
substantially in the form of the draft opinion attached as
Schedule "6.1(j)", which opinion may rely on certificates of one
or more senior officers of the Vendor as to factual matters and
may rely on opinions of local counsel with respect to matters
governed by laws other than the laws of the Provinces of Ontario
and Manitoba and the federal laws of Canada applicable.
(k) Environmental and Other Leases. At the Closing Time, a lease or
sublease satisfactory to the Purchaser, acting reasonably, for
each of the Rejected Properties identified under Section 5.1(f)
and other properties to be leased hereunder (including those
listed in the Asset Transfer Agreement) shall be executed by the
Vendor and delivered to the Corporation as contemplated in this
agreement and the Vendor will use reasonable efforts to obtain
the consent of the landlords thereto, if necessary.
(l) Corporation. The Corporation will have been duly incorporated and
organized under the Canada Business Corporations Act with
articles and by-laws satisfactory to the Purchaser and registered
extra-provincially in every province in which the Business is
carried on.
6.2 Waiver or Termination by Purchaser. The conditions contained in Section 6.1
are inserted for the exclusive benefit of the Purchaser and may be waived in
whole or in part by the Purchaser at any time. The Vendor acknowledges that the
waiver by the Purchaser of any condition or any part of any condition shall
constitute a waiver only of such condition or such part of such condition, as
the case may be, and shall not constitute a waiver of any covenant, agreement,
representation or warranty made by the Vendor herein that corresponds or is
related to such condition or such part of such condition, as the case may be. If
any of the conditions contained in Section 6.1 are not fulfilled or complied
with as herein provided, the Purchaser may, at or prior to the Closing Time, at
its option, rescind this agreement by notice in writing to the Vendor and in
such event the Purchaser shall be released from all obligations hereunder and,
unless the condition or conditions which have not been fulfilled
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are reasonably capable of being fulfilled or caused to be fulfilled by the
Vendor, then the Vendor shall also be released from all obligations hereunder.
6.3 Conditions to Obligations of the Vendor. The obligations of the Vendor to
complete the transactions provided for herein will be subject to the fulfilment
of the following conditions at or prior to the Closing Time, and the Purchaser
will use its best efforts to ensure that such conditions are fulfilled.
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Purchaser
contained in this agreement or in any documents delivered in
order to carry out the transactions contemplated hereby will be
true and accurate on the date hereof and at the Closing Time with
the same force and effect as though such representations and
warranties had been made as of the Closing Time (regardless of
the date on which the information in this agreement or any such
Schedule or other document made pursuant hereto is given). In
addition, the Purchaser shall have complied with all covenants
and agreements herein agreed to be performed or caused to be
performed by it at or prior to the Closing Time. In addition, the
Purchaser shall have delivered to the Vendor a certificate in the
form of Schedule "6.3(a)" confirming that the facts with respect
to each of the representations and warranties of the Purchaser
are as set out herein at the Closing Time and that the Purchaser
has performed each of the covenants required to be performed by
it hereunder.
(b) No Restraining Proceedings. No order, decision or ruling of any
court, tribunal or regulatory authority having jurisdiction shall
have been made, and no action or proceeding shall be pending or
threatened which, in the written opinion of counsel to the
Vendor, is likely to result in an order, decision or ruling to
disallow, enjoin or prohibit the purchase and sale of the
Purchased Shares contemplated hereby.
(c) Consents. All consents required to be obtained in order to carry
out the transactions contemplated hereby in compliance with all
laws and agreements binding on the parties shall have been
obtained, including the consents referred to in Section 5.2(3)
and Schedules "3.1(3)" and "3.2(2)".
(d) Releases from Guarantees, etc. The Vendor and its Affiliates will
have received releases from all necessary parties, in form
acceptable to the Vendor's counsel, acting reasonably, whereby
the Vendor and its Affiliates are unconditionally released from
all material guarantees, covenants and other arrangements
providing financial assistance or support to or on behalf of the
Business.
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(e) Opinion of Purchaser's Counsel. At the Closing Time, the Vendor
shall have received an opinion of the Purchaser's counsel
substantially in the form of the draft opinion attached as
Schedule "6.3(e)", which opinion may rely on certificates of
senior officers of the Purchaser as to factual matters and may
rely upon opinions of local counsel with respect to matters
governed by laws other than the laws of the Province of Ontario
and the federal laws of Canada applicable therein.
(f) Environmental and Other Leases. At the Closing Time, a lease or
sublease satisfactory to the Vendor, acting reasonably, for each
of the Rejected Properties identified under Section 5.1(f) and
other properties to be leased hereunder (including those listed
in the Asset Transfer Agreement) shall be executed by the
Corporation and delivered to the Vendor as contemplated in this
agreement and the Vendor will use reasonable efforts to obtain
the consent of the landlord thereto, if necessary.
6.4 Waiver or Termination by the Vendor. The conditions contained in Section 6.3
are inserted for the exclusive benefit of the Vendor and may be waived in whole
or in part by the Vendor at any time. The Purchaser acknowledges that the waiver
by the Vendor of any condition or any part of any condition shall constitute a
waiver only of such condition or such part of such condition, as the case may
be, and shall not constitute a waiver of any covenant, agreement, representation
or warranty made by the Purchaser herein that corresponds or is related to such
condition or such part of such condition, as the case may be. If any of the
conditions contained in Section 6.3 are not fulfilled or complied with as herein
provided, the Vendor may, at or prior to the Closing Time, at its option,
rescind this agreement by notice in writing to the Purchaser and in such event
the Vendor shall be released from all obligations hereunder and, unless the
condition or conditions which have not been fulfilled are reasonably capable of
being fulfilled or caused to be fulfilled by the Purchaser, then the Purchaser
shall also be released from all obligations hereunder.
7. CLOSING
7.1 Closing Arrangements. Subject to the terms and conditions hereof, the
transactions contemplated herein shall be closed at the Closing Time at the
offices of XxXxxxxx Xxxxxxxx, Suite 4700, Toronto Dominion Bank Tower, Toronto,
Ontario or at such other place or places as may be mutually agreed upon by the
parties.
7.2 Documents to be Delivered. At or before the Closing Time, the Vendor shall
execute, or cause to be executed and shall deliver, or cause to be delivered, to
the Purchaser a share certificate and all documents, instruments and things
which are to be delivered by the Vendor pursuant to the provisions of this
agreement, and the Purchaser shall execute, or cause to be executed, and shall
deliver, or cause to be delivered, to the Vendor a share certificate and all
documents, instruments and things which the Purchaser is to deliver or to cause
to be delivered pursuant to the provisions of this agreement.
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8. INDEMNIFICATION AND SET-OFF
8.1 Indemnities of the Vendor and the Purchaser.
(1) The Vendor hereby agrees to indemnify and save each of the Purchaser and the
Corporation and their respective directors, officers, employees and agents
harmless from and against all claims, demands, actions, causes of action,
damages, losses, deficiencies, costs, liabilities and expenses (including,
without limiting the generality of the foregoing, legal fees on a solicitor and
client basis) that may be made or brought against the Purchaser or the
Corporation or which the Purchaser or the Corporation may suffer or incur as a
result of, in respect of or arising out of:
(a) any liability, claim or obligation relating to the Vendor or the
Business in existence or relating to activities occurring prior
to the Closing Time other than the Assumed Liabilities and as
otherwise provided in this agreement;
(b) any non-performance or non-fulfilment of any covenant or
agreement on the part of the Vendor contained in this agreement
or the Asset Transfer Agreement or in any document given in order
to carry out the transactions contemplated hereby except as
otherwise provided in this agreement or the Asset Transfer
Agreement;
(c) any misrepresentation, inaccuracy, incorrectness or breach of any
representation or warranty made by the Vendor contained in this
agreement or contained in any document or certificate given in
order to carry out the transactions contemplated hereby;
(d) without limiting the generality of the foregoing, any presence or
Release of Hazardous Substances or threatened Release of
Hazardous Substances or other adverse environmental condition in
violation of Environmental Laws accruing prior to the Closing
Time (whether or not disclosed in Section 3.1(16) or otherwise
known to the Purchaser as at the Closing Time and notwithstanding
Section 5.1(g) except for those environmental matters that have
been remediated, cleaned up or corrected in accordance with
Section 5.1(g))
(i) at, on, under or near the Leased Premises, Real Property or
other assets owned or used by the Vendor or a Subsidiary, or
(ii) off-site to the extent related to activities at the Leased
Premises, Real Property or assets owned or used by the
Vendor or a Subsidiary in connection with the Business,
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and any investigation, remediation, clean-up and corrective
action required pursuant to Environmental Laws to be taken
by the Purchaser in connection with the foregoing;
(e) without limiting the generality of the foregoing, all
environmental liabilities, including liabilities arising from
services provided and workers' compensation matters related to
asbestos and other alleged toxic exposures, events, and
occurrences which take place prior to the Closing Time and which
involve a product, service, or activity alleged to have been
marketed, sold, distributed or performed by Vendor prior to the
Closing Time (whether or not disclosed in Schedule 3.1(16) or
otherwise known to the Purchaser as at the Closing Time and
notwithstanding Section 5.1(g) except for those environmental
matters that have been remediated, cleaned up or corrected in
accordance with Section 5.1(g));
(f) without limiting the generality of the foregoing, all product
related liabilities, including all Hazardous Substances, asbestos
containing products liabilities, and aircraft products
liabilities arising out of accidents, events, exposures, and
occurrences which take place prior to the Closing Time and/or
which involve a product alleged to have been marketed, sold or
distributed by Vendor prior to the Closing Time (whether or not
disclosed in Schedule 3.1(16) or otherwise known to the Purchaser
as at the Closing Time and notwithstanding Section 5.1(g);
(g) all losses attributable to claims and/or allegations of employee
embezzlement, employee theft and other related criminal conduct
resulting in a loss to the Purchaser where such losses arise out
of actions and occurrences which take place, in whole or in part,
prior to the Closing Time; or
(h) the non-compliance by the Vendor and the Corporation with the
provisions of any bulk sales legislation.
In the event of any conflict or inconsistency between (i) the environmental
provisions of this indemnity in Section 8.1(1) and the environmental provisions
respecting clean up in Section 5.1(g) and (ii) the environmental provisions of
any lease between the Vendor and the Corporation, the provisions of this
agreement shall prevail.
The Vendor constitutes the Purchaser as the trustee for the Corporation and the
Purchaser's and the Corporation's respective directors, officers, employees and
agents of the covenants of the Vendor with respect to such persons and the
Purchaser agrees to accept such trust and to hold and enforce such covenants on
behalf of such persons.
(2) The Purchaser hereby agrees to indemnify and save the Vendor and its
directors, officers, employees and agents harmless from and against all claims,
demands, actions,
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causes of action, damages, losses, deficiencies, costs, liabilities and expenses
(including, without limiting the generality of the foregoing, legal fees on a
solicitor and client basis) that may be made or brought against the Vendor or
which the Vendor may suffer or incur as a result of, in respect of or arising
out of:
(a) any non-performance or non-fulfilment of any covenant or
agreement on the part of the Purchaser contained in this
agreement or on the part of the Corporation contained in the
Asset Transfer Agreement or in any document given in order to
carry out the transactions contemplated hereby;
(b) any misrepresentation, inaccuracy, incorrectness or breach of any
representation or warranty made by the Purchaser contained in
this agreement or contained in any document or certificate given
in order to carry out the transactions contemplated hereby; or
(c) any presence or Release of Hazardous Substances or threatened
Release of Hazardous Substances or other adverse environmental
condition in violation of Environmental Laws accruing subsequent
to the Closing Time that are caused by the Purchaser subsequent
to the Closing Time in respect of only the Rejected Properties
referred to in Section 5.1(f).
The Purchaser constitutes the Vendor as the trustee for the Vendor's respective
directors, officers, employees and agents of the covenants of the Purchaser with
respect to such persons and the Vendor agrees to accept such trust and to hold
and enforce such covenants on behalf of such persons.
(3) The obligations of indemnification by the Vendor and the Purchaser pursuant
to paragraphs (1) and (2) of this Section 8.1 will be:
(a) subject to the limitations referred to in Sections 4.1 and 4.2
with respect to the survival of the representations and
warranties,
(b) subject to the limitations referred to in Section 4.3, and
(c) subject to the provisions of Section 8.2.
8.2 Indemnity Claims. The following provisions will apply to any claim by a
party pursuant to Section 8.1 (an "Indemnity Claim"):
(a) Promptly after becoming aware of any matter that may give rise to
an Indemnity Claim, a party will provide to the other written
notice of the Indemnity Claim specifying (to the extent that
information is available) the factual basis for the Indemnity
Claim and the amount of the Indemnity Claim
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or, if an amount is not then determinable, an estimate of the
amount of the Indemnity Claim, if an estimate is feasible in the
circumstances.
(b) If an Indemnity Claim relates to an alleged liability of an
indemnified person (the "Indemnitee") to any other person (a
"Third Party Liability"), including without limitation any
governmental or regulatory body or any taxing authority, which is
of a nature such that the Indemnitee is required by applicable
law to make a payment to a third party before the relevant
procedure for challenging the existence or quantum of the alleged
liability can be implemented or completed, then the Indemnitee
may, notwithstanding the provisions of paragraphs (c) and (d) of
this Section, make such payment and forthwith demand
reimbursement for such payment from the party with the alleged
liability to indemnify (the "Indemnitor") in accordance with this
agreement; provided that, if the alleged Third Party Liability as
finally determined on completion of settlement negotiations or
related legal proceedings is less than the amount which is paid
by the Indemnitor in respect of the related Indemnity Claim, then
the Indemnitee shall forthwith following the final determination
pay to the Indemnitor the amount by which the amount of the Third
Party Liability as finally determined is less than the amount
which is so paid by the Indemnitor.
(c) No party shall negotiate, settle, compromise or pay (except in
the case of payment of a judgment) any liability as to which it
proposes to assert an Indemnity Claim, except with the prior
consent of the Indemnitor (which consent shall not be
unreasonably withheld or delayed), unless there is a reasonable
possibility that such liability may materially and adversely
affect the Business, the Condition of the Business, or the
Indemnitee, in which case the Indemnitee shall have the right,
after notifying the Indemnitor to negotiate, settle, compromise
or pay such liability without prejudice to its rights of
indemnification hereunder.
(d) With respect to any Third Party Liability, provided the
Indemnitor first admits an Indemnitee's right to indemnification
for the amount of such Third Party Liability which may at any
time be determined or settled, then, in any legal, administrative
or other proceedings in connection with the matters forming the
basis of the Third Party Liability, the following procedures will
apply:
(i) except as contemplated by subparagraph (iii) of this
paragraph the Indemnitor will have the right to assume
carriage of the compromise or settlement of the Third Party
Liability and the conduct of any related legal,
administrative or other proceedings, but the Indemnitee
shall have the right and shall be given the opportunity to
participate in the defense of the Third Party Liability, to
consult with the Indemnitor in the settlement of the Third
Party Liability and the conduct of related legal,
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administrative and other proceedings (including consultation
with counsel) and to disagree on reasonable grounds with the
selection and retention of counsel, in which case counsel
satisfactory to the Indemnitor and the Indemnitee shall be
retained by the Indemnitor;
(ii) the Indemnitor will co-operate with the Indemnitee in
relation to the Third Party Liability, will keep it fully
advised with respect thereto, will provide it with copies of
all relevant documentation as it becomes available, will
provide it with access to all records and files relating to
the defence of the Third Party Liability and will meet with
representatives of the Indemnitee at all reasonable times to
discuss the Third Party Liability; and
(iii)notwithstanding subparagraphs (i) and (ii) of this
paragraph, the Indemnitor will not settle the Third Party
Liability or conduct any legal, administrative or other
proceedings in any manner which could, in the reasonable
opinion of the Indemnitee, have a material adverse effect on
the Business, the Condition of the Business, the Purchaser
or the Indemnitee except with the prior written consent of
the Indemnitee.
(e) If, with respect to any Third Party Liability, an Indemnitor does
not admit an Indemnitee's right to indemnification or declines to
assume carriage of the settlement or of any legal, administrative
or other proceedings relating to the Third Party Liability, then
the following provisions will apply:
(i) the Indemnitee at its discretion, may assume carriage of the
settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability and may
defend or settle the Third Party Liability on such terms as
the Indemnitee, acting in good faith, considers advisable;
and
(ii) any cost, loss, damage or expense incurred or suffered by an
Indemnitee in the settlement or defense of such Third Party
Liability or the conduct of any legal, administrative or
other proceedings shall be added to the amount of the
Indemnity Claim
8.3 Right of Set-off. Any party shall have the right to satisfy any amount from
time to time owing by it to another party by way of set-off against any amount
from time to time owing to it by another party, including any amount owing
pursuant to Section 8.1.
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9. GENERAL PROVISIONS
9.1 Further Assurances. Each of the parties hereby covenants and agrees that at
any time and from time to time after the Closing Date it will, on the request of
the other party, do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered all such further acts, deeds, assignments,
transfers, conveyances and assurances as may be reasonably required for the
better carrying out and performance of all of the terms of this agreement.
9.2 Notices.
(1) Any notice, designation, communication, request, demand or other document,
required or permitted to be given or sent or delivered hereunder to any party
shall be in writing and shall be sufficiently given or sent or delivered if it
is (a) delivered personally to an officer or director of such party or (b) sent
by fax.
(2) Notices shall be sent to the following addresses or fax numbers:
(a) in the case of the Vendor,
000 Xxxxxx Xxxxxx
Xxxxx Xxxx, XX X0X 0X0
Attention: Secretary
Fax: 000-000-0000
(b) in the case of the Purchaser,
000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Secretary
Fax: 000-000-0000
or to such other address or fax number as the party entitled to or receiving
such notice, designation, communication, request, demand or other document
shall, by a notice given in accordance with this section has communicated to the
party giving or sending or delivering such notice, designation, communication,
request, demand or other document.
(3) Any notice, designation, communication, request, demand or other document
given or sent or delivered as aforesaid shall:
(a) if delivered personally, be deemed to have been given, sent,
delivered and received on the date of delivery, and
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(b) if sent by fax, be deemed to have been given, sent, delivered and
received on the date the sender receives the fax answer back
confirming receipt by the recipient.
9.3 Counterparts. This agreement may be executed in several counterparts, each
of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute but one and the same instrument.
9.4 Expenses of Parties. Each of the parties shall bear all expenses incurred by
it in connection with this agreement including, without limitation, the charges
of their respective counsel, accountants, financial advisors and finders.
9.5 Brokerage and Finder's Fees. The Vendor agrees to indemnify the Purchaser
and and hold it harmless in respect of any claim for brokerage or other
commissions relative to this agreement or the transactions contemplated hereby
which is caused by actions of the Vendor or any of its Affiliates. The Purchaser
will indemnify the Vendor and hold it harmless in respect of any claim for
brokerage or other commissions relative to this agreement or to the transactions
contemplated hereby which is caused by actions of the Purchaser or any of its
Affiliates.
9.6 Announcements. No announcement with respect to this agreement will be made
by any party without the prior written approval of the other parties. The
foregoing will not apply to any announcement by any party required in order to
comply with laws pertaining to timely disclosure, provided that such party
consults, to the extent possible, with the other parties before making any such
announcement.
9.7 Assignment. The rights and obligations of the Vendor hereunder shall not be
assignable without the prior written consent of the Purchaser. The rights and
obligations of the Purchaser may be assigned by the Purchaser to a wholly-owned
subsidiary of the Purchaser prior to the Closing Time.
9.8 Successors and Assigns. This agreement shall be binding on and enure to the
benefit of the parties and their respective successors and permitted assigns.
9.9 Entire Agreement. This agreement and the Schedules constitute the entire
agreement between the parties and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof. None of the parties shall be bound or charged with any
oral or written agreements, representations, warranties, statements, promises,
information, arrangements or understandings not specifically set forth in this
agreement or in the Schedules, documents and instruments to be delivered on or
before the Closing Date pursuant to this agreement. The parties further
acknowledge and agree that, in entering into this agreement and in delivering
the Schedules, documents and instruments to be delivered on or before the
Closing Date, they have not in any way relied,
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and will not in any way rely, on any oral or written agreements,
representations, warranties, statements, promises, information, arrangements or
understandings, express or implied, not specifically set forth in this agreement
or in such Schedules, documents or instruments.
9.10 Waiver. Any party which is entitled to the benefits of this agreement may,
and has the right to, waive any term or condition hereof at any time on or prior
to the Closing Time; provided, however, that such waiver shall be evidenced by
written instrument duly executed on behalf of such party.
9.11 Amendments. No modification or amendment to this agreement may be made
unless agreed to by the parties in writing.
IN WITNESS WHEREOF each of the parties hereto has duly executed this
agreement.
ACKLANDS LIMITED X.X. XXXXXXXX, INC.
Per: "Rai Sahi" Per: "X.X. Xxxxxx"
Per: "F.R. Berrill" Per:
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