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SHARE PURCHASE AGREEMENT
BETWEEN
WOOD XXXXX INC., AS PURCHASER
AND
XXXXXXXX XXXXX, XXXXXXXX XXXXX
AND XXXXX XXXXX, AS VENDORS
RELATING TO THE PURCHASE OF
FRASER VALLEY INDUSTRIAL CHEMICALS INC.
MADE AS OF
JUNE 30, 1998
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TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
ARTICLE 1 - INTERPRETATION........................................................................................2
1.1 DEFINITIONS............................................................................2
1.2 HEADINGS...............................................................................6
1.3 EXTENDED MEANINGS......................................................................7
1.4 ACCOUNTING PRINCIPLES..................................................................7
1.5 INCLUSIVE LANGUAGE.....................................................................7
1.6 CURRENCY...............................................................................7
1.7 SCHEDULES..............................................................................7
ARTICLE 2 - PURCHASE AND SALE.....................................................................................8
2.1 PURCHASE AND SALE AND PURCHASE PRICE...................................................8
2.2 ADJUSTMENT OF THE PURCHASE PRICE.......................................................9
2.3 CLOSING...............................................................................10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.......................................................................10
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS.........................................11
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES
AND COVENANTS.........................................................................23
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................................24
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES
AND COVENANTS.........................................................................25
ARTICLE 4 - COVENANTS............................................................................................26
4.1 TAXES.................................................................................26
4.2 COVENANTS OF THE VENDORS..............................................................26
4.3 COVENANTS OF THE PURCHASER............................................................28
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS...........................................28
ARTICLE 5 - THIRD PARTY CLAIMS...................................................................................29
ARTICLE 6 - RIGHTS OF SET-OFF....................................................................................30
ARTICLE 7 - CONDITIONS...........................................................................................31
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER...........................................31
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS.............................................33
ARTICLE 8 - GENERAL..............................................................................................35
8.1 FURTHER ASSURANCES....................................................................35
8.2 TIME OF THE ESSENCE...................................................................35
8.3 COMMISSIONS...........................................................................35
8.4 LEGAL FEES............................................................................36
8.5 PUBLIC ANNOUNCEMENTS..................................................................36
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8.6 BENEFIT OF THE AGREEMENT..............................................................36
8.7 ENTIRE AGREEMENT......................................................................36
8.8 AMENDMENTS AND WAIVER.................................................................36
8.9 ASSIGNMENT............................................................................36
8.10 NOTICES...............................................................................37
8.11 GOVERNING LAW.........................................................................39
8.12 ATTORNMENT............................................................................39
8.13 INDEPENDENT LEGAL ADVICE..............................................................39
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of June 30, 1998;
BETWEEN: WOOD XXXXX INC., a corporation incorporated under
the laws of Canada;
(hereinafter referred to as the "Purchaser")
AND: XXXXXXXX XXXXX, a business executive residing in
the Province of British Columbia;
(hereinafter referred to as "Xxxxxxxx")
AND: XXXXXXXX XXXXX, a business executive residing in
the Province of British Columbia;
(hereinafter referred to as "Xxxxxxxx")
AND: XXXXX XXXXX, a business executive residing in the
Province of British Columbia;
(hereinafter referred to as "Xxxxx")
(Xxxxxxxx, Xxxxxxxx and Xxxxx are
hereinafter sometimes collectively referred
to as the "Vendors")
WHEREAS the Corporation is engaged in the Business (as
defined herein) in the Province of British Columbia;
WHEREAS the Vendors are the beneficial and registered
owners of all of the issued and outstanding shares in the
capital stock of the Corporation (collectively the "Shares");
AND WHEREAS the Vendors desire to sell and the
Purchaser desires to purchase the Shares, upon and subject to
the terms and conditions hereinafter set forth;
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NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the premises and the covenants and agreements
herein contained the parties hereto agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 Definitions
In this Agreement, unless something in the subject
matter or context is inconsistent therewith:
1.1.1 "Agreement" means this agreement and all amendments
made hereto by written agreement between the Vendors
and the Purchaser;
1.1.2 "Ancillary Agreements" means the Employment
Agreement, the Escrow Agreement and the Non-
Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheets of each of
Fraser Valley Industrial Chemicals Inc. and 430639
B.C. Ltd. as at the Balance Sheet Date;
1.1.4 "Balance Sheet Date" means September 30, 1997;
1.1.5 "Business" means the business of the Corporation
consisting in the manufacture of janitorial chemical
products and the sale and distribution of industrial
and institutional sanitation and janitorial products
and services, including sanitary paper products,
janitorial and cleaning chemicals and equipment and
general sanitation supplies in British Columbia;
1.1.6 "Business Day" means a day other than a Saturday,
Sunday or statutory holiday in Vancouver, British
Columbia;
1.1.7 "Class F Shares" has the meaning set out in Section
2.1.2;
1.1.8 "Closing Balance Sheet" means the balance sheet of
the Corporation as at the Closing Date and an
accompanying audit report prepared by the auditors of
the Corporation at the cost of the Vendors in
accordance with GAAP applied on a basis consistent
with prior periods;
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1.1.9 "Closing Date" means June 30, 1998;
1.1.10 "Combined Closing Balance Sheet" means the
balance sheet of the Corporation and Midway
Supply, on a combined basis, as at the Closing
Date and an accompanying review engagement report
prepared by the accountants of the Corporation at
the cost of the Vendors in accordance with GAAP
applied on a basis consistent with prior periods;
1.1.11 "Contaminant" means any substance or material
which does not occur naturally in the environment
or which falls within the definition of
"pollutants", "waste", "special waste",
"hazardous chemicals", "hazardous waste",
"dangerous goods", "toxic substances", or any
variation of such terms or any terms of similar
import in any Environmental Law including,
without limitation, urea formaldehyde, asbestos,
PCB transformers and poly-chlorinated biphenyls.
1.1.12 "Control" (including the terms "Controlling" and
"Controlled") means the power to elect the
majority of the board of directors or the
possession, direct or indirect, of the power to
direct or cause the direction of the management
and policies of a person, whether through the
ownership of voting securities, by contract, or
otherwise;
1.1.13 "Consents" means the consents, approvals and
authorizations required to be obtained pursuant
to Schedule 3.1.7;
1.1.14 "Corporate Reorganization" means the amalgamation
on June 30, 1998 of Fraser Valley Industrial
Chemicals Inc. and 430639 B.C. Ltd. under the
terms of an amalgamation agreement dated June 30,
1998, a copy of which is attached as
Schedule 3.1.9, in accordance with the provisions
of the Companies Act (British Columbia);
1.1.15 "Corporation" means Fraser Valley Industrial
Chemicals Inc., the corporation resulting from
the amalgamation of Fraser Valley Industrial
Chemicals Inc. and 430369 B.C. Ltd. pursuant to
the Corporate Reorganization;
1.1.16 "Covenant Agreement" has the meaning set out in
Section 7.2.1.6;
1.1.17 "Employment Agreement" has the meaning set out in
Section 7.1.1.8;
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1.1.18 "Environment" means all components of the Earth,
including air, all layers of the atmosphere,
land, soil, water, organic and inorganic matter,
living species and organisms, any combination of
the above components, interacting natural systems
that include the above components and the ambient
milieu with which living species have dynamic
relations;
1.1.19 "Environmental Laws" means all Laws relating in
whole or in part to the Environment or its
protection, as the same would be applied as of
the date hereof, including any Laws relating to
(i) the natural or accidental release, emission,
discharge, deposit, issuance, spraying,
injection, inoculation, abandonment, burial,
spilling, incineration, disposal, leaking,
seeping, pouring, emptying, throwing, dumping,
placing or exhausting of any Contaminant into the
Environment and (ii) the storage, disposal,
destruction, incineration, burial, recycling,
handling, transportation or use of a Contaminant;
1.1.20 "Environmental Permits" has the meaning set out
in Section 3.1.45.2
1.1.21 "Escrow Agreement" has the meaning set out in
Section 7.1.1.9;
1.1.22 "Financial Statements" has the meaning set out in
Section 3.1.8;
1.1.23 "GAAP" has the meaning specified in Section 1.4;
1.1.24 "Governmental Authority" means any federal,
provincial, regional, municipal or local or other
governmental authority, domestic or foreign,
having jurisdiction over the Corporation or the
Business and includes any agency, department,
commission, board, bureau, instrumentality,
court, tribunal or other Person exercising
executive, legislative, judicial, regulatory or
administrative functions constituted or appointed
by any such authority;
1.1.25 "Law" means any law, statute, by-law, regulation
or any legally binding rule, directive,
guideline, policy, notice, order or ordinance of
any Governmental Authority, including Environmental
Laws;
1.1.26 "Leased Premises" has the meaning set out in
Section 3.1.13;
1.1.27 "Lien" in relation to any property or asset,
means any encumbrance or title defect of whatever
kind or nature, regardless of form, whether or
not recorded or registered or consensual or
statutory or arising by law, including
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any lien, charge, mortgage, hypothecation, pledge,
security interest, assignment, lease, option,
easement, servitude, right of way, encroachment,
restrictive covenant, right of use or any other
claim or right of any kind or nature whatsoever
which affects ownership or possession of, or
title to, or any interest in, or the right to use
or occupy such property or asset;
1.1.28 "Material Contract" has the meaning set out in
Section 3.1.23;
1.1.29 "Midway Supply" means Midway Supply Ltd., a
corporation incorporated under the Companies Act
(British Columbia);
1.1.30 "Midway Supply Share Purchase Agreement" means
the share purchase agreement dated as of June 30,
1998 among Wood Xxxxx Inc., Xxxxxxx X. Xxxxx and
The Xxxxx Family Trust relating to the purchase
and sale of all of the issued and outstanding
shares of Midway Supply;
1.1.31 "Net Assets" means shareholders' equity as shown
on the Combined Closing Balance Sheet;
1.1.32 "Non-Canadian" has the meaning set out in
Section 3.3.4;
1.1.33 "Non-Competition Agreements" has the meaning set
out in Section 7.1.1.7;
1.1.34 "Parent Common Shares" means the common shares of
Xxxxx Corporation issuable to a holder of Class F
Shares in accordance with the exercise of the
retraction rights relating to the Class F Shares
as set out in Section 8 of the Class F Share
Conditions (as defined in the Covenant
Agreement);
1.1.35 "Permits" means all permits, licenses,
certificates, approvals, authorizations,
consents, registrations, qualifications and the
like issued by any Governmental Authority which
are held by the Corporation in connection with
the operation of the Business;
1.1.36 "Person" means an individual, corporation, joint
venture, partnership, trust, trustee,
unincorporated organization, or any other entity;
1.1.37 "Personal Property Leases" has the meaning set
out in Section 3.1.14;
1.1.38 "Premises Leases" has the meaning set out in
Section 3.1.13;
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1.1.39 "Purchase Price" has the meaning set out in
Section 2.1.1;
1.1.40 "Purchased Shares" has the meaning set out in
Section 2.1.1;
1.1.41 "Related Person" means:
(a) with respect to any Person who is an individual,
a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law
of that person, including adoptive relationships;
and
(b) with respect to any Person, a Person that
directly, or indirectly through one or more
intermediaries, Controls, is Controlled by or is
under common Control with that person;
1.1.42 "Shares" has the meaning set forth in the
preamble hereto;
1.1.43 "Taxes" means all federal, provincial, local,
foreign and other taxes, including income taxes,
sales taxes, goods and services taxes, use taxes,
occupancy taxes, excise taxes, property taxes,
franchise taxes and employment and payroll
related taxes;
1.1.44 "Time of Closing" means 10 a.m. (Vancouver Time)
on the Closing Date; and
1.1.45 "Xxxxx" means Xxxxx Corporation.
1.2 Headings
The division of this Agreement into Articles and
Sections 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", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other
portion hereof and include any agreement supplemental hereto.
Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
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1.3 Extended Meanings
In this Agreement words importing the singular number only
shall include the plural and vice versa, words importing the masculine gender
shall include the feminine and neutergenders and vice versa and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.
1.4 Accounting Principles
Wherever in this Agreement reference is made to a
calculation to be made in accordance with generally accepted
accounting principles, such reference shall be deemed to be to
the generally accepted accounting principles from time to time
approved by the Canadian Institute of Chartered Accountants, or
any successor institute, applicable as at the date on which such
calculation is made or required to be made in accordance with
generally accepted accounting principles ("GAAP").
1.5 Inclusive Language
As used herein, the word "or" is not exclusive and
the word "including" is not limiting (whether or not non-
limiting language such as "without limitation" or "but not
limited to" or words of similar import is used with reference
thereof).
1.6 Currency
All references to currency herein are to lawful money
of Canada.
1.7 Schedules
The following are the Schedules annexed hereto and
incorporated by reference and deemed to be part hereof:
Schedule 2.1.1: Shareholders of the Corporation; Allocation of Purchase Price
Schedule 2.1.2: Class F Share Conditions
Schedule 3.1.3: Memorandum and Articles of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Corporate Reorganization Transactions
Schedule 3.1.11: Liens
Schedule 3.1.13: Leased Premises and Premises Leases
Schedule 3.1.14: Personal Property Leases
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Schedule 3.1.16: Inventory
Schedule 3.1.18: Capital Expenditures
Schedule 3.1.19: Dividends
Schedule 3.1.21: Tax Accounts
Schedule 3.1.22 Liabilities
Schedule 3.1.23: Material Contracts
Schedule 3.1.29: Employment Contracts
Schedule 3.1.30: Employee Benefit Plans
Schedule 3.1.34: Related Person Indebtedness
Schedule 3.1.36: Intellectual Property
Schedule 3.1.39: Insurance Policies
Schedule 3.1.41: Amounts payable to Related Persons
Schedule 3.1.42: Litigation
Schedule 3.1.45: Environmental Matters
Schedule 3.1.51 Bank Accounts
Schedule 3.3.7: Financial Statements of the Purchaser
Schedule 3.3.8: Memorandum on Rule 144 Resale of Restricted Securities
Schedule 0.0.0.0: Non-Competition Agreements
Schedule 0.0.0.0: Employment Agreement
Schedule 0.0.0.0: Escrow Agreement
Schedule 0.0.0.00: Opinion of the Vendors' Counsel
Schedule 0.0.0.0: Covenant Agreement
ARTICLE 2 - PURCHASE AND SALE
2.1 Purchase and Sale and Purchase Price
2.1.1 Subject to the terms and conditions hereof, on
the Closing Date, each of the Vendors shall sell
to the Purchaser the number of Shares set
opposite the name of each Vendor on
Schedule 2.1.1 hereto (the aggregate number of
such Shares is herein collectively called the
"Purchased Shares") and the Purchaser shall
purchase the Purchased Shares from the Vendors,
free and clear of all Liens, for a total purchase
price of $1,000,000 (hereinafter referred to as
the "Purchase Price"), subject to adjustment in
accordance with Section 2.2, to be allocated
amongst the Vendors in accordance with Schedule
2.1.1.
2.1.2 The Purchase Price shall be paid against delivery
to the Purchaser of share certificates evidencing
the Purchased Shares duly endorsed for
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transfer to the Purchaser and satisfied (i) as to an
aggregate amount of $558,840 payable pro rata to the
Vendors in accordance with their respective
shareholdings set forth in Schedule 2.1.1 by
certified cheque or bank draft to the order of
each of the Vendors, and delivered by the
Purchaser at the Time of Closing, (ii) as to
$14,705 payable by cheque to the order of
XxXxxxxx Xxxxxxxx, as escrow agent, and delivered
by Xxxxx Xxxxxxx at the Time of Closing, such
amount having been deposited "in trust" with
Xxxxx Xxxxxxx by the Purchaser, (iii) as to
$14,705, by the delivery to XxXxxxxx Xxxxxxxx, as
escrow agent, of a certified cheque or bank
draft, such amounts in (ii) and (iii) and
interest thereon to be held in escrow pursuant to
the Escrow Agreement in order to secure the
payment of any amounts due by the Vendors to the
Purchaser pursuant to this Agreement. The
escrowed funds will be dealt with on the terms
and conditions set forth in the Escrow Agreement,
and (iv) as to an aggregate amount of $411,750,
by the delivery pro rata to the Vendors in
accordance with their respective shareholdings
set forth in Schedule 2.1.1 at the Time of
Closing of a total of 36,600 class F exchangeable
shares of the capital stock of the Purchaser
("Class F Shares"), to be issued from treasury
and having the attributes set out in
Schedule 2.1.2.
2.2 Adjustment of the Purchase Price
2.2.1 The amount of the Purchase Price allocable to the
Common Shares is based on the assumption that the
net asset value ("Net Assets") of the Corporation
and Midway Supply, on a combined basis, on the
Combined Closing Balance Sheet shall be not less
than $1,600,000. In the event that Net Assets as
shown on the Combined Closing Balance Sheet are
greater or less than $1,600,000 on the Closing
Date, then the Vendors of the Common Shares of
Midway Supply will pay the Purchaser the amount
of the shortfall (in accordance with the
percentages of their Common Shares set out on
Schedule 2.1.1 to the Midway Supply Share
Purchase Agreement) or the Purchaser will pay the
Vendors of the Common Shares of Midway Supply the
amount of the excess (in accordance with the
percentages of their Common Shares set out on
Schedule 2.1.1 to the Midway Supply Share
Purchase Agreement), as the case may be, together
with interest on such amount at the rate of 6%
per annum calculated from the Closing Date to the
date of payment.
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2.2.2 On or before August 31, 1998, the Vendors shall
deliver the Closing Balance Sheet and the
Combined Closing Balance Sheet to the Purchaser.
2.2.3 The Closing Balance Sheet and the Combined
Closing Balance Sheet shall be final, conclusive
and binding unless the Purchaser gives written
notice of its disagreement with any item or items
thereon within 30 days following the receipt of
the Closing Balance Sheet, specifying in
reasonable detail the nature and extent of such
disagreement.
2.2.4 If within 5 days following the receipt by the Vendors
of a notice of the type referred to in Section 2.2.3,
the Vendors and the Purchaser are unable to resolve
any disagreement with respect to the Closing Balance
Sheet, Combined Closing Balance Sheet and the
determination of Net Assets, the disagreement shall
be submitted to Price Waterhouse for arbitration.
Price Waterhouse shall act as an arbitrator to
determine and resolve only those issues in dispute.
Price Waterhouse shall deliver a decision within 30
days of the submission of the dispute, and such
decision shall be consistent with this Agreement,
shall be set forth in a written statement delivered
to the Purchaser and the Vendors and shall be final,
conclusive and binding on the Purchaser and the
Vendors. The adjusting payments, if any, required by
Section 2.2.1 shall be made forthwith after receipt
of the final determination of Net Assets by Price
Waterhouse, together with all interest thereon at the
rate of 6% per annum from the Closing Date to the
date of payment. The fees and expenses of Price
Waterhouse in connection with any such determination
shall be paid one half by the Vendors and one half by
the Purchaser. Otherwise, the Purchaser and the
Vendors shall each pay their own costs incurred,
including the fees and expenses of their respective
accountants or attorneys, if any.
2.3 Closing
The sale and purchase of the Purchased Shares and the
execution and delivery of the Ancillary Agreements shall be
completed at the Time of Closing at the offices of XxXxxxxx
Xxxxxxxx, Pacific Centre 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx.
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Vendors
The Vendors jointly and severally represent and warrant
to the Purchaser the following, and acknowledge that the
Purchaser is entitled to rely on such representations and
warranties notwithstanding any due diligence investigation done
by the Purchaser prior to the closing:
3.1.1 the Corporation is the corporation continuing as
a result of the amalgamation of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.
pursuant to the Corporate Reorganization; the
Corporation has been duly organized and validly
subsists under the laws of British Columbia as a
private issuer as that term is defined in the
Securities Act (British Columbia) with the
corporate power to own its assets and to carry on
the Business and has made all necessary filings
under all applicable corporate, securities and
taxation Laws or any other Laws to which the
Corporation is subject and is qualified to own
its properties and assets and to carry on the
Business as presently carried on by it;
3.1.2 Schedule 2.1.1 sets out (i) the authorized
capital of the Corporation and (ii) the number of
Shares of the Corporation which are issued and
outstanding, which shares have been validly
issued as fully paid and non-assessable and
registered in the names of the Vendors as set
forth on Schedule 2.1.1;
3.1.3 a true and complete copy of the Memorandum and
Articles of the Corporation, including the
rights, privileges, restrictions and conditions
attached to the Shares is attached hereto as
Schedule 3.1.3 attached hereto;
3.1.4 the Purchased Shares constitute all of the issued
and outstanding Shares in the capital stock of
the Corporation;
3.1.5 each of the Vendors is the beneficial and
registered owner of the number of Purchased
Shares set opposite the name of such Vendor on
Schedule 2.1.1, free and clear of all Liens,
options and any other rights of others;
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3.1.6 there is no contract, option or any other right
of another binding upon or which at any time in
the future may become binding upon:
(i) any of the Vendors to sell, transfer, assign, or
grant any Lien on or affecting, or in any other
way dispose of or encumber any of the Purchased
Shares other than pursuant to the provisions of
this Agreement or any of its assets other than in
the ordinary course of business, or
(ii) the Corporation to allot or issue any of the
unissued shares or securities of the Corporation
or to create any additional class of shares or
securities;
3.1.7 except as disclosed on Schedule 3.1.7, neither
the entering into nor the delivery of this
Agreement and the Ancillary Agreements nor the
completion of the transactions contemplated
hereby by each of the Vendors will result in the
violation of or require the Consent of any third
party pursuant to:
(i) any of the provisions of the Memorandum or
Articles of Amalgamation of the Corporation;
(ii) any agreement or other instrument to which the
Corporation or any of the Vendors is a party or
by which the Corporation or any of the Vendors is
bound, or
(iii) any applicable Law;
3.1.8 the financial statements of each of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.,
consisting of the Balance Sheet and statements of
income and retained earnings for the period ended
on the Balance Sheet Date, together with a notice
to reader from Cinnamon Xxxx Xxxxxxxxxx &
Company, chartered accountants, thereon and the
notes thereto (hereinafter collectively referred
to as the "Financial Statements"), a copy of
which is attached hereto as Schedule 3.1.8:
(i) are in accordance with the books and accounts of
each of Fraser Valley Industrial Chemicals Inc.
and 430639 B.C. Ltd. as at the Balance Sheet
Date,
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(ii) are true and correct and present fairly the
financial position of each of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.
as at the Balance Sheet Date,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities
of each of Fraser Valley Industrial Chemicals
Inc. and 430639 B.C. Ltd. as at the Balance
Sheet Date including, without limiting the
generality of the foregoing, all contingent
liabilities of each of Fraser Valley Industrial
Chemicals Inc. and 430639 B.C. Ltd. as at the
Balance Sheet Date;
3.1.9 since the Balance Sheet Date, the Business of
each of Fraser Valley Industrial Chemicals Inc.
and 430639 B.C. Ltd. and of the Corporation has
been carried on in its usual and ordinary course
and in a manner consistent with prior practices
and each of Fraser Valley Industrial Chemicals
Inc. and 430639 B.C. Ltd. and the Corporation has
not, since the Balance Sheet Date, entered into
any transaction out of the usual and ordinary
course of business other than the Corporate
Reorganization;
3.1.10 since the Balance Sheet Date, there has been no
material change in the affairs, business,
prospects, operations or condition of each of
Fraser Valley Industrial Chemicals Inc. and
430639 B.C. Ltd. and the Corporation, financial
or otherwise, whether arising as a result of any
legislative or regulatory change, revocation of
any Permit or right to do business, fire,
explosion, accident, casualty, labour dispute,
flood, drought, riot, storm, expropriation,
condemnation, act of God, public force or
otherwise, except changes occurring in the usual
and ordinary course of business which have not
adversely affected the affairs, business,
prospects, operations or condition of each of
Fraser Valley Industrial Chemicals Inc., 430639
B.C. Ltd. and the Corporation, financial or
otherwise;
3.1.11 the Corporation is the owner with a good and
marketable title, free and clear of all Liens,
options and any other rights of others, except
for the Liens described on Schedule 3.1.11 of all
assets shown or reflected on the Balance Sheet,
except only such of the assets of each of Fraser
Valley Industrial Chemicals Inc., 430639 B.C.
Ltd. and the Corporation as have been disposed of
in the usual and ordinary course of business
since the Balance Sheet Date, and of all assets
acquired by each of Fraser
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Valley Industrial Chemicals Inc., 430639 B.C. Ltd.
and the Corporation since the Balance Sheet Date;
3.1.12 all machinery, equipment and automotive equipment
owned or used by the Corporation has been
properly maintained and is in good working order
for the purposes of ongoing operation, subject to
ordinary wear and tear for machinery and
equipment of comparable age;
3.1.13 Schedule 3.1.13 sets forth a true and complete
list of all premises leased by the Corporation
("Leased Premises") and any lease in respect
thereof to which the Corporation is a party
("Premises Leases") and: (i) each Premises Lease
is in full force and effect, unamended by oral or
written agreement, and the Corporation is
entitled to the full benefit and advantage of
such Premises Lease in accordance with the terms
thereof, (ii) each Premises Lease is in good
standing, all rental and other payments payable
by the Corporation under the leases have been
duly paid, (iii) there is currently no
outstanding default by the Corporation under the
Premises Leases nor is there currently any
outstanding default by any landlord thereunder or
dispute between the Corporation and any landlord
under any of the Premises Leases; (iv) the
Corporation has not sublet, assigned or
transferred any of its interests in such Premises
Lease and (v) the Leased Premises are the only
premises used by the Corporation;
3.1.14 Schedule 3.1.14 sets forth a true and complete
list of all lease agreements concerning personal
property leased by the Corporation ("Personal
Property Leases") and: (i) each Personal Property
Lease is in full force and effect, unamended by
oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of
each Personal Property Lease in accordance with
the terms thereof, (ii) each Personal Property
Lease is in good standing, all rental and other
payments payable by the Corporation under the
Personal Property Leases have been duly paid,
(iii) there is currently no outstanding default
by the Corporation thereunder nor of the other
parties thereunder nor dispute between the
Corporation and any other party thereunder, and
(iv) the Corporation has treated all Personal
Property Leases as operating leases for Canadian
income tax purposes;
3.1.15 except for the Premises Leases, the Corporation
holds no ownership or other interest in or right
affecting any real estate or real property;
18
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3.1.16 the inventory of the Corporation consist of items
saleable in the ordinary course of business
reasonably fit for their usual purpose, except
for obsolete and slow-moving items and materials
below standard quality which have been written
down on the books of account of the Business to
net realizable value, or adequate reserves having
been provided therefor, all in accordance with
GAAP. Except as disclosed in Schedule 3.1.16,
there is no recurring or ongoing high incidence
of product failure or warranty claims against the
Corporation related to the Business;
3.1.17 there are no outstanding orders, notices or
similar requirements relating to the Corporation
issued by any Governmental Authority, including
building, environmental, fire, health, labour or
police authorities, and there are no matters
under discussion with any such Governmental
Authority relating to orders, notices or similar
requirements;
3.1.18 except as disclosed on Schedule 3.1.18, since the
Balance Sheet Date, no single capital expenditure
in excess of $25,000 or capital expenditures in
the aggregate in excess of $50,000 have been made
or authorized by Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. or the
Corporation;
3.1.19 except as disclosed on Schedule 3.1.19, since the
Balance Sheet Date, no dividends have been
declared or paid on or in respect of the Shares
and no other distribution on any of its
securities or shares has been made by Fraser
Valley Industrial Chemicals Inc., 430639 B.C.
Ltd. or the Corporation and all dividends which
to the date hereof have been declared or paid by
Fraser Valley Industrial Chemicals Inc., 430639
B.C. Ltd. or the Corporation have been duly and
validly declared and are fully paid;
3.1.20 the Corporation does not have any liability,
obligation or commitment for the payment of Taxes
of whatever nature or kind, or interest or
penalties with respect thereto, except such as
are disclosed in the Financial Statements or such
Taxes not yet due as have arisen since the
Balance Sheet Date in the usual and ordinary
course of business and for which adequate
provision in the accounts of the Corporation has
been made, and the Corporation is not in arrears
with respect to any required withholdings or
instalment payments or other payments of any Tax
or duty of any kind or any penalty or interest
thereon and has not filed any waiver for a
taxation year of Fraser Valley Industrial
Chemicals Inc.,
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430639 B.C. Ltd. or the Corporation under the Income
Tax Act (Canada) or any other legislation imposing
Tax on the Corporation; all obligations of the
Corporation with respect to its employees for
withholding Taxes, Canada Pension Plan contributions,
unemployment insurance contributions and workers
compensation remittances or contributions of any kind
which are due as of the Closing Date will have been
paid by the Corporation prior to the Closing Date;
there are no outstanding disputes with or assessments
from the Workmen's Compensation Board of British
Columbia or the Employment Standards Branch;
3.1.21 the tax accounts of the Corporation as disclosed
in Schedule 3.1.21 attached hereto are true and
complete in all material respects;
3.1.22 except as disclosed on Schedule 3.1.22, there are
no outstanding liabilities (whether absolute or
contingent) against the Corporation except trade
debts incurred in the usual and ordinary course
of business;
3.1.23 set forth on Schedule 3.1.23 is a true and
complete list of all contracts or agreements
(except for the Premises Leases, the Personal
Property Leases and the employment agreement with
the Vendors listed on Schedule 3.1.29) to which
the Corporation is a party or is otherwise bound
which are (i) outside the ordinary course of
business, (ii) involve a financial commitment by
the Corporation of at least $25,000, (iii) have a
term in excess of 60 days or (iv) to which any
Related Person of the Corporation is a party
(collectively, the "Material Contracts" and
individually, a "Material Contract"). Subject
only to the requirement to obtain the Consents,
the Corporation has not received notice of any
default, and the Corporation is not in default,
under any Material Contract, nor has there
occurred any event which, with a lapse of time or
giving of notice, or both, would constitute such
a default. Subject only to the requirement to
obtain the Consents, each Material Contract is in
full force and effect, unamended by written or
oral agreement and the Corporation is (i)
entitled to the full benefit and advantage of
each Material Contract in accordance with the
terms thereof, (ii) each Material Contract is in
good standing, and (iii) there is no currently
outstanding default by the Corporation nor by any
other party thereunder nor is there a dispute
between the Corporation and any party thereunder;
3.1.24 the Corporation is not in default or breach of
any contract or commitment to which it is a party
and there exists no condition, event or
20
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act which, with the giving of notice or lapse of
time or both would constitute such a default or
breach and all such contracts and commitments are in
good standing and in full force and effect
without amendment thereto and the Corporation is
entitled to all benefits thereunder;
3.1.25 the Corporation is not a party to or bound by any
guarantee, indemnification, surety or similar
obligation;
3.1.26 the Corporation does not have any subsidiaries or
agreements, options or commitments to acquire any
shares or securities of any corporation or
interests of or in any other entity or to acquire
or lease any business operations, real property
or assets;
3.1.27 there is no agreement, option, understanding or
commitment, or any right or privilege capable of
becoming an agreement, for the purchase from the
Corporation of the Business or any of its assets
other than in the usual and ordinary course of
business;
3.1.28 the Corporation is not a party to or bound by any
contract or commitment to pay any royalty,
licence fee or management fee or which contains
restrictive covenants or covenants not to compete
in any line of business with any other Person;
3.1.29 the Corporation does not have any employment
contract, whether written or oral, with any
person whomsoever except contracts with the
employees as are listed in Schedule 3.1.29
attached hereto, whether or not such contracts
are in writing; Schedule 3.1.29 truly and
correctly sets out for each employee of the
Corporation, the annual salary, job function, the
length of employment of each of the employees
with the Corporation and other remuneration
(including any bonus, deferred compensation,
incentive profit sharing, remuneration, medical
insurance, pension, retirement, vacation and such
leave arrangements) as well as all accrued and
unpaid vacation pay and sick pay payable to each
employee; no labour relations or labour
standards, discrimination in employment or
employment practices, harassment, occupational
health and safety standards or workers
compensation issue or matter is pending or, to
Vendors' knowledge, threatened with respect to
any employee of the Corporation; except as
disclosed in Schedule 3.1.29, to the best of the
knowledge of the Vendors, no employee has made or
has any basis for
21
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making any claim (whether under Law, any employment
contract, or otherwise) on account of or for
(i) overtime pay, other than overtime for the current
payroll period, (ii) wages or salary for any period
other than the current payroll period, (iii) vacation
time off, sick time or pay in lieu of any of the
foregoing, other than that earned in respect of the
current payroll period or (iv) any violation of any
Law;
3.1.30 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without limiting the
generality of the foregoing, any pension plan
maintained by or on behalf of the Corporation for
any of its employees,
except such agreements and plans as are listed in
Schedule 3.1.30 attached hereto;
3.1.31 all benefit plans listed in Schedule 3.1.30
attached hereto have been duly registered where
required by, and are in good standing under, all
applicable Laws including, without limiting the
generality of the foregoing, the Income Tax Act
(Canada) and the Pension Benefits Standards Act
(British Columbia) and all required employer
contributions under any such plans have been made
and the applicable funds have been funded in
accordance with the terms thereof of the plans
and no past service funding liabilities exist
thereunder;
3.1.32 no trade union, council of trade unions, employee
bargaining agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of
the Corporation's employees by way of
certification, interim certification, voluntary
recognition, designation or successor rights,
(ii) has applied to be certified as the bargaining
agent of any of the Corporation's employees;
3.1.33 except for (i) remuneration paid to employees in
the usual and ordinary course of business and
made at current rates of remuneration,
(ii) dividends disclosed on Schedule 3.1.19, and
(iii) a bonus in the amount of $5,000 payable to
Xxxxxx Xxxxxxxx since the Balance Sheet
22
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Date, no payments have been made or authorized by
each of Fraser Valley Industrial Chemicals Inc.,
430369 B.C. Ltd. and the Corporation to officers,
directors or employees of each of Fraser Valley
Industrial Chemical Inc., 430639 B.C. Ltd. and the
Corporation;
3.1.34 except as disclosed on Schedule 3.1.34, no
Vendor, director, former director, officer,
shareholder or employee of the Corporation or any
Person who is a Related Person with any such
Person is indebted to the Corporation;
3.1.35 the Corporation is not conducting its business in
any jurisdiction other than the Province of
British Columbia;
3.1.36 attached hereto as Schedule 3.1.36 is a list of
all registered trade marks, trade names, patents
and copyrights, of all unregistered trade marks,
trade names and copyrights and of all patent
applications, trade xxxx registration
applications and copyright registration
applications, both domestic and foreign, owned or
made by the Corporation;
3.1.37 all trade marks, trade names, patents and
copyrights, both domestic and foreign, used in or
required for the proper carrying on of the
Corporation's Business are validly and
beneficially owned by the Corporation with the
sole and exclusive right to use the same and are
in good standing and duly registered in all
appropriate offices to preserve the right thereof
and thereto;
3.1.38 the conduct of the Business by the Corporation
does not infringe upon the trade marks, trade
names, patents or copyrights, domestic or
foreign, of any other Person;
3.1.39 attached hereto as Schedule 3.1.39 is a true and
complete list of all insurance policies
maintained by the Corporation that also specifies
the insurer, the amount of the coverage, the type
of insurance, the policy number and any pending
claims thereunder and any previous insurance
claims that have been made by the Corporation;
the Corporation maintains third party liability
and property damage automobile insurance in an
amount of not less than $1,000,000 per occurance
for all vehicles owned or leased by the
Corporation; all such insurance policies are in
full force and effect and the premiums have been
fully paid to date;
23
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3.1.40 none of the Vendors is a non-resident person within
the meaning of Section#116 of the Income Tax Act
(Canada); and
3.1.41 the Corporation is not indebted to any Related
Person, except for salary and other similar
compensation accrued to the Closing Date and payable
to the Vendors, or except as set out in Schedule
3.1.41;
3.1.42 except as disclosed on Schedule 3.1.42 hereto, there
is no action, suit, proceeding, claim, grievance or
investigation in any court or before any arbitrator
or before of by any Governmental Authority existing,
pending or threatened, related to the Business or the
transactions contemplated by this Agreement; and
there is no factual or legal basis which could give
rise in the future to the pendency or threat of any
such action, suit, proceeding, claim or investigation
which could, if determined adversely, have a material
adverse effect on the Corporation or the ability of
the Corporation to carry on the Business following
Closing;
3.1.43 the Corporation and the Leased Premises (being all
premises from which it conducts the operations of the
Business) are in compliance with all applicable Laws
of all Governmental Authorities having jurisdiction,
are not in breach of any such Laws and there is no
requirement to conduct a corrective or remedial
action with respect to such premises in order to
carry on the Business as presently conducted, and the
Corporation is duly licensed, registered or
qualified, and duly possesses and is in compliance
with all Permits and quotas, in the Province of
British Columbia and all municipalities thereof in
which the Corporation carries on its business to
enable the Business to be carried on as now conducted
and its assets to be owned, leased and operated, and
all such Permits are valid and subsisting and in good
standing and none of the same contains or is subject
to any term, provision, condition or limitation which
has or may have an adverse effect on the operation of
the Business or which may adversely change or
terminate such Permit by virtue of the completion of
the transactions contemplated hereby;
3.1.44 the operation of the Corporation on the Leased
Premises is not subject to any restriction or
limitation and is not in contravention of any Law or
of any decree or order of any Governmental Authority
having jurisdiction;
24
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3.1.45 except as specifically disclosed in
Schedule#3.1.45 and without limiting the
scope of any other representation and
warranty herein:
3.1.45.1 the Business, the Leased Premises and the
Corporation have been and are in compliance
with applicable Laws, including, without
limitation, Environmental Laws;
3.1.45.2 the Corporation holds all Permits required
under applicable Environmental Laws for the
operation of the Business (the
"Environmental Permits"); each Environmental
Permit is valid and in force and the
operations of the Corporation are in
compliance with the conditions set out in
the Environmental Permits; there are no
grounds for revocation, expiry or annulment
of any Environmental Permits;
3.1.45.3 the Vendors, each of Fraser Valley
Industrial Chemicals Inc., 430639 B.C. Ltd.
and the Corporation, and their respective
employees, agents, shareholders, directors
and officers have never been declared guilty
of committing an offence for a violation of
Environmental Laws and have never had a fine
imposed against them and have never
otherwise settled such a prosecution in
relation to the Business or the premises
used in the Business;
3.1.45.4 there are no Contaminants, waste or
pollutants of any kind whatsoever in, on or
under the Leased Premises or in, on or under
the assets of the Business or the
Corporation, the presence of which
constitutes a violation of applicable
Environmental Laws;
3.1.45.5 the waste, effluents and air emissions
generated by the operation of the Business
by the Corporation have been and are
treated, transported and eliminated in
accordance with applicable Environmental
Laws;
3.1.45.6 the Corporation has not received any written
or verbal notice or request for information
in the context of any environmental federal,
provincial, regional or municipal
investigation or inspection;
3.1.45.7 the Corporation does not own or use any
underground or aboveground storage tank in
connection with the Business;
25
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3.1.45.8 there are no PCBs, asbestos, urea formaldehyde or
radioactive substances in, on or under the premises
used by the Corporation in connection with the
Business; and
3.1.45.9 there is no present requirement of any applicable
Environmental Law which is due to be imposed which
will materially increase the Corporation's cost of
complying with the Environmental Laws.
3.1.46 the Closing Balance Sheet and statements of income,
retained earnings and changes in financial position
for the period ended on the Closing Date, together
with the audit report of Cinnamon Xxxx Xxxxxxxxxx &
Company, chartered accountants, thereon and the notes
thereto:
(i) will be in accordance with the books and accounts
of the Corporation as at the Closing Date;
(ii) will be true and correct and present fairly the
financial position of the Corporation as at the
Closing Date;
(iii) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in
the preparation of the Financial Statements; and
(iv) will present fairly all of the assets and
liabilities of the Corporation as at the Closing
Date including, without limiting the generality
of the foregoing, all contingent liabilities of
the Corporation as at the Closing Date;
3.1.47 the Combined Closing Balance Sheet as at the Closing
Date, together with the review engagement report of
Cinnamon Xxxx Xxxxxxxxxx & Company, chartered
accountants, thereon and the notes thereto:
(i) will be in accordance with the books and accounts
of the Corporation and Midway Supply as at the
Closing Date;
(ii) will be true and correct and present fairly the
combined financial position of the Corporation
and Midway Supply as at the Closing Date;
(iii) will reflect the elimination of all intercompany
profits included in ending inventory of either
the Corporation or Midway Supply;
26
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(iv) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in
the preparation of the Balance Sheet; and
(v) will present fairly all of the assets and
liabilities of the Corporation and Midway Supply
as at the Closing Date including, without
limiting the generality of the foregoing, all
contingent liabilities of the Corporation and
Midway Supply as at the Closing Date;
3.1.48 the accounts receivable of the Corporation which
will be shown on the Closing Balance Sheet will
be collectible in the ordinary and usual course
of business and the Closing Balance Sheet will
include an appropriate allowance for
uncollectible accounts;
3.1.49 the Closing Balance Sheet will include an
appropriate allowance for earned but unused
vacation;
3.1.50 the minute books of Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. and the
Corporation contain a complete record of all
material decisions taken by the directors and of
the shareholders of Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. and the
Corporation; Fraser Valley Industrial Chemicals
Inc.'s, 430639 B.C. Ltd.'s and the Corporation's
financial and other books and records accurately
reflect the financial transactions and the
operations related to the Business;
3.1.51 Schedule 3.1.51 hereto sets forth a complete list
of all bank accounts and similar accounts held or
operated by the Corporation, stating the name of
the financial institution, the account number and
the persons having authority to sign in respect
of each such account.
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.2.1 The representations and warranties of the Vendors
set forth in Section#3.1 shall survive the
completion of the sale and purchase of the
Purchased Shares herein provided for and,
notwithstanding such completion, the
representations and warranties set forth in
Section 3.1 shall continue in full force and
effect for the benefit of the Purchaser for a
period of three years from the Closing Date,
except for the representations and warranties of
the Vendors set forth in Sections 3.1.1, 3.1.2,
3.1.3, 3.1.4, 3.1.5, 3.1.6, 3.1.7 and 3.1.11 and
any representation and warranty fraudulently
made, all of which shall survive
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in perpetuity and the representations and warranties
in relation to Taxes, all of which shall survive
until the expiry of the longest limitation period
under applicable Law relating thereto.
3.2.2 The covenants of the Vendors set forth in this
Agreement shall survive the completion of the
sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall
continue in full force and effect for the benefit
of the Purchaser in accordance with the terms
thereof.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.3.1 the Purchaser is a corporation duly incorporated,
organized and subsisting under the laws of
Canada;
3.3.2 the Purchaser has good and sufficient power,
authority and right to enter into and deliver
this Agreement and the Ancillary Agreements and
to complete the transactions to be completed by
the Purchaser contemplated hereby;
3.3.3 the Class F Shares will, at closing, be validly
issued to the Vendors in accordance with
Schedule 2.1.1 as fully paid and non-assessable;
3.3.4 Purchaser is not a "non-Canadian" for the
purposes of and within the meaning of the
Investment Canada Act, R.S.C. 1985, c. 28 (1st
Supp.);
3.3.5 Purchaser is not a non-resident of Canada for the
purposes of the Income Tax Act, S.C. 1970-72-72
c. 63 (Canada);
3.3.6 Purchaser is a taxable Canadian corporation as
defined in subsection 89(1) of the Income Tax Act
(Canada);
3.3.7 the audited financial statements of the Purchaser
for the period ended December 31, 1997, together
with the report thereon of Ernst & Young, dated
February 13, 1998 annexed hereto as
Schedule 3.3.7:
(i) are in accordance with the books and accounts of
the Purchaser as at Xxxxxxxx 00, 0000,
00
- 00 -
(xx) are true and correct and present fairly the
financial position of the Purchaser as at
December 31, 1997,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities
of the Purchaser as at December 31, 1997
including, without limiting the generality of the
foregoing, all contingent liabilities of the
Purchaser as at December 31, 1997; and
3.3.8 based on advice received from Winthrop, Stimson,
Xxxxxx & Xxxxxxx, Purchaser's U.S. securities law
counsel, as set forth in the memorandum attached
as Schedule 3.3.8, and subject to the
qualifications set forth in the memorandum, the
Class F Shares and the Parent Common Shares
(i) under Rule 144 of the United States Securities
Act of 1933, as amended, ("Rule 144"), are not
tradeable by the Vendors within the first twelve
months following the Closing Date,
(ii) under Rule 144, are tradeable by the Vendors in
the second twelve month period following the
Closing Date, subject to the volume of sale and
manner of sale restrictions set out in the
memorandum, and
(iii) under Rule 144, are tradeable by the Vendors
without restrictions other than the manner of
sale restrictions referred to in the memorandum
commencing the third year following the Closing
Date.
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.4.1 The representations and warranties of the
Purchaser set forth in Section 3.3 shall survive
the completion of the sale and purchase of the
Shares herein provided for and, notwithstanding
such completion, the representations and
warranties set forth in Section 3.3 shall
continue in full force and effect for the benefit
of the Vendors for a period of three years from
the Closing Date, except for the representations
and warranties of the Purchaser set forth in
Sections 3.3.1, 3.3.2 and 3.3.3 any
representation and warranty fraudulently made,
all of which shall survive in perpetuity and the
representations and warranties in relation to
Taxes, all of which shall survive until the
expiry of the longest limitation period under
applicable Law relating thereto.
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3.4.2 The covenants of the Purchaser set forth in this
Agreement shall survive the completion of the
sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall
continue in full force and effect for the benefit
of the Vendors in accordance with the terms
thereof.
ARTICLE 4 - COVENANTS
4.1 TAXES
The Purchaser does not assume and shall not be liable for any
taxes under the Income Tax Act (Canada) or any other taxes whatsoever which may
be or become payable by the Vendors including, without limiting the generality
of the foregoing, any taxes resulting from or arising as a consequence of the
sale by the Vendors to the Purchaser of the Purchased Shares herein
contemplated, and the Vendors shall indemnify and save harmless the Purchaser
from and against all such taxes.
4.2 COVENANTS OF THE VENDORS
4.2.1 Each of the Vendors shall jointly and severally
indemnify and save harmless the Purchaser and the
officers and directors of the Purchaser from and
against all claims, actions, demands, suits,
proceedings, losses, damages, fines, liabilities
(whether accrued, actual, contingent or
otherwise), costs and expenses, including
reasonable environmental characterization and
remediation costs, reasonable lawyers fees and
other reasonable consultants fees, directly or
indirectly suffered by the Purchaser and the
officers and directors of the Purchaser from any
breach of any covenant of the Vendors contained
in this Agreement or from any inaccuracy or
misrepresentation in any representation or
warranty set forth in Section 3.1 notwithstanding
any information obtained by the Purchaser at or
before the Closing Date as to such inaccuracy or
misrepresentation.
4.2.2 The Vendors shall ensure that the representations
and warranties of the Vendors set out in Section
3.1 are true and correct at the Time of Closing
and that the conditions of closing for the
benefit of the Purchaser set out in Section 7.1.1
over which the Vendors have reasonable control
have been performed or complied with by the Time
of Closing.
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4.2.3 The Vendors shall permit the Purchaser, through
its agents and representatives, to make such
reasonable investigation prior to and at the Time
of Closing of the assets of the Corporation and
of its financial and legal condition as the
Purchaser considers necessary or advisable to
familiarize itself with such assets and other
matters and the Vendors shall supply any and all
documents and records of the Corporation to the
Purchaser and its agents and representatives as
they may reasonably require. The Vendors shall
also permit the inspection of the assets of the
Corporation by the Purchaser prior to and at the
Time of Closing by such federal, provincial or
municipal authorities as the Purchaser may
require. Such investigations and inspections
shall not, however, affect or mitigate the
Vendors' covenants, representations and
warranties hereunder which shall continue in full
force and effect.
4.2.4 The Vendors shall use their best efforts as
employees of the Corporation to ensure that the
Corporation's relationships with suppliers
continue on substantially the same terms and
conditions following the Closing Date.
4.2.5 Each of the Vendors shall indemnify and save
harmless the Purchaser and the officers and
directors of the Purchaser from and against all
liabilities (whether actual, contingent, accrued
or otherwise), claims and demands of or in
connection with any matter relating to any
contracts between the Corporation and any Related
Person entered into prior to the date of this
Agreement and which are not disclosed in the
Schedules hereto.
4.3 COVENANTS OF THE PURCHASER
4.3.1 The Purchaser shall ensure that the
representations and warranties of the Purchaser
set out in Section 3.3 are true and correct at
the Time of Closing and that the conditions of
closing for the benefit of the Vendors set out in
Section 7.2.1 over which the Purchaser has
reasonable control have been performed or
complied with by the Time of Closing.
4.3.2 The Purchaser shall indemnify and save harmless
the Vendors from and against all losses, damages
or expenses directly or indirectly suffered by
the Vendors resulting from any breach of any
covenant of the Purchaser contained in this
Agreement or from any inaccuracy or
misrepresentation in any representation or
warranty set forth in Section 3.3.
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4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS
The Vendors acknowledge and agree that:
4.4.1 the Class F Shares have not been, and the Parent
Common Shares will not be, registered under the
United States Securities Act of 1933, as amended (the
"Securities Act"), or any other securities laws of
the United States or Canada (the "Securities Laws")
because Purchaser is issuing the Class F Shares, and
Xxxxx Corporation will be issuing the Parent Common
Shares, in reliance upon exemptions from the
registration and prospectus requirements of the
Securities Laws which they believe are available in
connection with the transactions contemplated by this
Agreement;
4.4.2 Purchaser has relied upon the fact that the Class F
Shares and the Parent Common Shares are to be held by
the Vendors for investment; and
4.4.3 exemption from registration under the Securities Laws
would not be available if the Class F Shares and the
Parent Common Shares were acquired by the Vendors
with a view to distribution.
Accordingly, the Vendors hereby confirm to Purchaser and Xxxxx
Corporation that the Vendors are acquiring the Class F Shares, and will acquire
the Parent Common Shares, for the account of the Vendors, for investment and not
with a view to the resale or distribution thereof under the Securities Laws. The
Vendors agree not to transfer, sell or offer for sale all or any portion of the
Class F Shares and the Parent Common Shares, unless there is an effective
registration or other qualification or exemption relating thereto under the
Securities Laws. The Vendors understand that neither Purchaser nor Xxxxx
Corporation is under any obligation to register the Class F Shares and the
Parent Common Shares or to assist the Vendors in complying with any exemption
from registration under the Securities Laws. Prior to acquiring the Class F
Shares and, upon exchange, the Parent Common Shares, the Vendors have made such
investigation of Purchaser and Xxxxx Corporation and their respective businesses
as the Vendors have deemed advisable and has had made available to the Vendors
all information with respect thereto that the Vendors have requested to make an
informed decision to acquire the Class F Shares and the Parent Common Shares.
The Vendors consider themselves to be persons possessing experience and
sophistication as an investor that is adequate for the evaluation of the merits
and risk of the Vendors' investment in the Class F Shares and, upon exchange,
the Parent Common Shares. The Vendors acknowledge that each certificate for the
Class F Shares and the Parent Common Shares will be imprinted with a legend in
substantially the following form: "The securities represented by this
certificate were originally issued on June 30, 1998,
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and have not been registered under the Securities Act of 1933, as amended, or
any other securities laws of the United States or Canada. The transfer of the
securities represented by this certificate is subject to the conditions
specified in Section 4.4 of the Share Purchase Agreement dated as of June 30,
1998 among the parties thereto, and The Purchaser reserves the right to refuse
the transfer of such securities until such conditions have been fulfilled with
respect to such transfer. A copy of such conditions will be furnished by the
Purchaser to the holder hereof upon written request and without charge."
ARTICLE 5 - THIRD PARTY CLAIMS
In the event of a third party claim against Purchaser or the
Corporation for which the Vendors are or may be liable hereunder:
5.1 Purchaser shall tender in writing defence of the claim to the
Vendors, within 15 working days after the Purchaser knows of the
claim. The Vendors shall have the right, by notice to the
Purchaser within 30 days following the receipt of the notice by
the Purchaser of the third party claim, to assume the defence of
such third party claim, with counsel reasonably satisfactory to
the Purchaser and at no cost to the Purchaser. If the Purchaser
so chooses, the Purchaser may participate in the defence of such
third party claim at its sole cost and expense; provided,
however, that such participation may not in any way interfere
with or contradict the defence of such claim. The Vendors shall
cooperate fully to make available to the Purchaser, at the
Purchaser's expense, all pertinent information and witnesses
under the Vendors' control, make such assignments and take such
other steps as may be reasonably requested by counsel for the
Purchaser to conduct such defence.
5.2 In the event that the Vendors assume the defence of such third
party claim, the Vendors, at their expense, shall diligently
proceed with the defence of said third party claim and, in
connection therewith, the Purchaser, at the Vendors' expense,
shall cooperate fully to make available to the Vendors, all
pertinent information and witnesses under the Purchaser's
control, make such assignments and take such other steps as may
be reasonably requested by counsel for the Vendors to conduct
such defence.
5.3 The Vendors shall not make any settlement or compromise of any
third party claim without the written consent of the Purchaser,
which consent shall not be unreasonably withheld or delayed.
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5.4 Subject to the provisions of Section 5.3, the final resolution
or determination of any such third party claim, including all
related costs and expenses, will be binding and conclusive upon
the parties hereto.
5.5 Should the Vendors fail to assume the defence of any third party
claim or fail to diligently and reasonably defend such third
party claim, the Vendors' right to defend the claim shall
terminate and the Purchaser shall be solely entitled to defend,
settle and compromise such third party claim as in its
reasonable discretion may appear advisable, and the resolution
or final determination of such defence, settlement or
compromise, including all related costs and expenses, will be
binding and conclusive upon the Vendors, and the Vendors shall
indemnify the Purchaser in respect to such resolution or final
determination and all such costs and expenses.
5.6 The provisions of this Article 5 shall apply mutatis mutandis
for the benefit of the Vendors in the event of any third party
claim against the Vendors for which the Purchaser is or may be
liable hereunder.
ARTICLE 6 - RIGHTS OF SET-OFF
6.1 The Vendors agree that the Purchaser shall have rights to set-off or
compensate any claim the Purchaser may have against the Vendors under this
Agreement or any Ancillary Agreements entered into by the Vendors in connection
with the transaction contemplated hereby or under the terms and conditions of
the Class F Shares against the payments due by the Purchaser hereunder or under
the Ancillary Agreements or under the terms and conditions of the Class F
Shares; provided that Purchaser will have no right of set-off against amounts
payable to any Vendor under his or her Employment Agreement.
6.2 If the Purchaser exercises the right of set-off, the Purchaser shall
give a prior written notice to the Vendors, that the Purchaser has elected to
exercise such right of set-off.
6.3 The Purchaser and the Vendors agree that nothing in this Article 6
shall derogate from any of the provisions of this Agreement or the Ancillary
Agreements in favour of the Purchaser or any rights of Purchaser under the law
in respect of any claim of the Purchaser.
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ARTICLE 7 - CONDITIONS
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER
7.1.1 The sale by the Vendors and the purchase by the
Purchaser of the Purchased Shares is subject to
the following conditions which are for the
exclusive benefit of the Purchaser to be
performed or complied with at or prior to the
Time of Closing:
7.1.1.1 the representations and warranties of the
Vendors set forth in Section 3.1 shall be
true and correct at the Time of Closing with
the same force and effect as if made at and
as of such time;
7.1.1.2 the Vendors shall have performed or complied
with all of the terms, covenants and
conditions of this Agreement to be performed
or complied with by the Vendors at or prior
to the Time of Closing;
7.1.1.3 the Purchaser shall be furnished with such
certificates, affidavits or statutory
declarations of the Corporation and of the
Vendors or of officers of the Corporation
and of the Vendor as the Purchaser or the
Purchaser's counsel may reasonably think
necessary in order to establish that the
terms, covenants and conditions contained in
this Agreement to have been performed or
complied with by the Vendors or by the
Corporation, as the case may be, at or prior
to the Time of Closing have been performed
and complied with and that the
representations and warranties of the
Vendors herein given are true and correct at
the Time of Closing;
7.1.1.4 no material damage by fire or other hazard
to the assets of the Corporation shall have
occurred from the date hereof to the Time of
Closing;
7.1.1.5 all directors and officers of the
Corporation specified by the Purchaser shall
resign;
7.1.1.6 the Vendors and all directors and officers
of the Corporation shall release the
Corporation from any and all possible claims
against the Corporation arising from any
act, matter or thing arising at or prior to
the Time of Closing; for greater certainty,
such release will not
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affect the obligations of the Corporation under
any of the Ancillary Agreements;
7.1.1.7 there shall be a non-competition agreement
entered into between the Purchaser, the
Corporation and each of the Vendors
substantially in the form attached hereto as
Schedule 7.1.1.7 (the "Non-Competition
Agreements");
7.1.1.8 there shall be an employment agreement entered
into between the Corporation and Xxxxxxxx
Xxxxx, substantially in the form attached
hereto as Schedule 7.1.1.8 (the "Employment
Agreement");
7.1.1.9 there shall be an escrow agreement entered into
between the Purchaser, the Vendors and XxXxxxxx
Xxxxxxxx, as escrow agent, in substantially the
form attached hereto as Schedule 7.1.1.9 (the
"Escrow Agreement");
7.1.1.10 the Vendors shall have delivered to the
Purchaser a favourable opinion of the Vendors'
counsel substantially in the form attached
hereto as Schedule 7.1.1.10;
7.1.1.11 the execution of a Share Purchase Agreement
among the Purchaser, Xxxxxxx X. Xxxxx and The
Xxxxx Family Trust dated the date hereof with
respect to the sale of all the shares of Midway
Supply and the closing of the transactions
contemplated thereby; and
7.1.1.12 the form and legality of all matters incidental
to the sale by the Vendors and the purchase by
the Purchaser of the Shares shall be subject to
the approval of the Purchaser's counsel, acting
reasonably.
7.1.2 In case any term or covenant of the Vendors or condition to
be performed or complied with for the benefit of the
Purchaser at or prior to the Time of Closing shall not have
been performed or complied with at or prior to the Time of
Closing, the Purchaser may, without limiting any other right
that the Purchaser may have, at its sole option, either:
7.1.2.1 rescind this Agreement by notice to the
Vendors, and in such event the Purchaser shall
be released from all obligations hereunder; or
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7.1.2.2 waive compliance with any such term, covenant
or condition in whole or in part on such terms
as may be agreed upon without prejudice to any
of its rights of rescission in the event of
non-performance of any other term, covenant or
condition in whole or in part;
and, if the Purchaser rescinds this Agreement pursuant to Section 7.1.2
and the term, covenant or condition for which the Purchaser has
rescinded this Agreement was one that the Vendors had covenanted,
pursuant to Section 4.2.2, to ensure had been performed or complied
with, the Vendors shall be liable to the Purchaser for any losses,
damages or expenses incurred by the Purchaser as a result of such
breach.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
7.2.1 The sale by the Vendors and the purchase by the
Purchaser of the Purchased Shares is subject to the
following conditions which are for the exclusive
benefit of the Vendors to be performed or complied
with at or prior to the Time of Closing:
7.2.1.1 the representations and warranties of the
Purchaser set forth in Section 3.3 shall be
true and correct at the Time of Closing with
the same force and effect as if made at and as
of such time;
7.2.1.2 the Purchaser shall have performed or
complied with all of the terms, covenants
and conditions of this Agreement to be
performed or complied with by the Purchaser
at or prior to the Time of Closing;
7.2.1.3 the Vendors shall be furnished with such
certificates, affidavits or statutory
declarations of the Purchaser or of officers
of the Purchaser as the Vendors or the
Vendors' counsel may reasonably think
necessary in order to establish that the
terms, covenants and conditions contained in
this Agreement to have been performed or
complied with by the Purchaser at or prior
to the Time of Closing have been performed
and complied with and that the
representations and warranties of the
Purchaser herein given are true and correct
at the Time of Closing;
7.2.1.4 the execution of a Share Purchase Agreement
among the Purchaser, Xxxxxxx X. Xxxxx and
The Xxxxx Family Trust dated the date hereof
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with respect to the sale of all the shares
of Midway Supply and the closing of the
transactions contemplated thereby;
7.2.1.5 the Corporation shall have executed the
Employment Agreement; and
7.2.1.6 Xxxxx Corporation shall have executed a
Covenant Agreement in favour of the Vendors
substantially in the form of
Schedule 7.2.1.6 (the "Covenant Agreement").
7.2.2 In case any term or covenant of the Purchaser or
condition to be performed or complied with for the
benefit of the Vendors at or prior to the Time of
Closing shall not have been performed or complied
with at or prior to the Time of Closing, the Vendors
may, without limiting any other right that the
Vendors may have, at its sole option, either:
7.2.2.1 rescind this Agreement by notice to the
Purchaser, and in such event the Vendors
shall be released from all obligations
hereunder; or
7.2.2.2 waive compliance with any such term,
covenant or condition in whole or in part on
such terms as may be agreed upon without
prejudice to any of its rights of rescission
in the event of non-performance of any other
term, covenant or condition in whole or in
part;
and, if the Vendors rescind this Agreement pursuant to Section 7.2.2.1
and the term, covenant or condition for which the Vendors have
rescinded this Agreement was one that the Purchaser had covenanted,
pursuant to Section 4.3.1, to ensure had been performed or complied
with, the Purchaser shall be liable to the Vendors for any losses,
damages or expenses incurred by the Vendors as a result of such breach.
ARTICLE 8 - GENERAL
8.1 FURTHER ASSURANCES
Each of the Vendors and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and things as
the other party
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may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full
intent and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 COMMISSIONS
8.3.1 The Vendors shall jointly and severally indemnify and
save harmless the Purchaser from and against any
claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any
person in respect of the sale and purchase of the
Purchased Shares, to the extent such person purports
to act or have acted for the Vendors in connection
with the sale of the Purchased Shares.
8.3.2 The Purchaser shall indemnify and save harmless the
Vendors from and against any claims whatsoever for
any commission or other remuneration payable or
alleged to be payable to any person in respect of the
sale and purchase of the Purchased Shares, to the
extent such person purports to act or have acted for
the Purchaser in connection with the sale of the
Purchased Shares.
8.4 LEGAL FEES
Each of the parties hereto shall pay their respective legal
and accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto and any other costs and expenses whatsoever and
howsoever incurred.
8.5 PUBLIC ANNOUNCEMENTS
Prior to closing, no public announcement or press release
concerning the sale and purchase of the Shares shall be made by the Vendors or
the Purchaser without the prior consent and joint approval of the Vendors and
the Purchaser, save as may be required by applicable Law.
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8.6 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding
upon the respective heirs, executors, administrators, successors and permitted
assigns of the parties hereto.
8.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between the parties hereto
with respect thereto. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement.
8.8 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be
valid or binding unless set forth in writing and duly executed by both of the
parties hereto and no waiver of any breach of any term or provision of this
Agreement shall be effective or binding unless made in writing and signed by the
party purporting to give the same and, unless otherwise provided, shall be
limited to the specific breach waived.
8.9 ASSIGNMENT
This Agreement may not be assigned by any party hereto
without the written consent of the other parties, but the rights and obligations
of the Purchaser hereunder may be assigned by the Purchaser without the consent
of the other parties hereto to an affiliate of the Purchaser, as determined by
the provisions of the Canada Business Corporations Act, provided that such
affiliate enters into a written agreement with the Vendors to be bound by the
provisions of this Agreement in all respects and to the same extent as the
Purchaser is bound and provided that the Purchaser shall continue to be bound by
all the obligations hereunder as if such assignment had not occurred and perform
such obligations to the extent that such affiliate fails to do so.
8.10 NOTICES
Any demand, notice or other communication to be given in
connection with this Agreement shall be given in writing and shall be given by
personal delivery, by registered mail or by electronic means of communication
addressed to the recipient as follows:
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To the Vendors:
XXXXXXXX XXXXX
c/o Cinnamon Xxxx Xxxxxxxxxx & Company
000 - 0000 Xxxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
XXXXXXXX XXXXX
c/o Cinnamon Xxxx Xxxxxxxxxx & Company
000 - 0000 Xxxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
XXXXX XXXXX
c/o Cinnamon Xxxx Xxxxxxxxxx & Company
000 - 0000 Xxxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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To the Purchaser:
WOOD XXXXX INC.
0000 - 00xx Xxxxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Fax No.: (000) 000-0000
Attention: Xx. Xxxxxx X. XxxXxxxxx
With a copy to:
XxXxxxxx Xxxxxxxx
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax No.: (000) 000-0000
Attention: Xx. Xxxxxx X.X. Xxxxx
or to such other address, individual or electronic communication number as may
be designated by notice given by either party to the other. Any demand, notice
or other communication given by personal delivery shall be conclusively deemed
to have been given on the day of actual delivery thereof and, if given by
registered mail, on the third Business Day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with the
postal system which might affect the delivery of mail, any such demand, notice
or other communication shall not be mailed but shall be given by personal
delivery or by electronic communication.
8.11 GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein.
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8.12 ATTORNMENT
For the purpose of all legal proceedings, this Agreement
shall be deemed to have been performed in the Province of British
Columbia and the courts of the Province of British Columbia shall
have jurisdiction to entertain any action arising under this
Agreement. Each of the parties to this Agreement accepts the
jurisdiction of such courts and irrevocably express to be bound by
any judgment rendered thereby in connection with this Agreement.
8.13 INDEPENDENT LEGAL ADVICE
Each of the Vendors acknowledges, represents and agrees
that: (i) he has had the opportunity to consult with independent
legal counsel with respect to the provisions of this Agreement;
(ii) the nature, scope and effect of the provisions of this
Agreement have been adequately explained to him; and (iii) he
understands and accepts the provisions of this Agreement.
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IN WITNESS WHEREOF the parties have executed this
Agreement.
Wood Xxxxx Inc.
Per:
---------------------
-------------------------
Xxxxxxxx Xxxxx
-------------------------
Xxxxxxxx Xxxxx
-------------------------
Xxxxx Xxxxx
