1
SHARE PURCHASE AGREEMENT
BETWEEN
WOOD XXXXX INC., AS PURCHASER
AND
XXXXXXX X. XXXXX AND XXXX X. XXXXXXXX,
AS VENDORS
RELATING TO THE PURCHASE OF
MIDWAY PURNEL SANITARY SUPPLY LTD.
MADE AS OF
JUNE 30, 1998
2
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
ARTICLE 1 - INTERPRETATION 2
1.1 DEFINITIONS 2
1.2 HEADINGS 5
1.3 EXTENDED MEANINGS 5
1.4 ACCOUNTING PRINCIPLES 6
1.5 INCLUSIVE LANGUAGE 6
1.6 CURRENCY 6
1.7 SCHEDULES 6
ARTICLE 2 - PURCHASE AND SALE 7
2.1 PURCHASE AND SALE AND PURCHASE PRICE 7
2.2 CLOSING 7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES 8
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS 8
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 19
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 20
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 20
ARTICLE 4 - COVENANTS 21
4.1 TAXES 21
4.2 COVENANTS OF THE VENDORS 21
4.3 COVENANTS OF THE PURCHASER 22
ARTICLE 5 - THIRD PARTY CLAIMS 23
ARTICLE 6 - RIGHTS OF SET-OFF 24
ARTICLE 7 - CONDITIONS 24
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER 24
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS 27
ARTICLE 8 - GENERAL 29
8.1 FURTHER ASSURANCES 29
8.2 TIME OF THE ESSENCE 29
8.3 COMMISSIONS 29
8.4 LEGAL FEES 29
3
- ii-
8.5 PUBLIC ANNOUNCEMENTS 30
8.6 BENEFIT OF THE AGREEMENT 30
8.7 ENTIRE AGREEMENT 30
8.8 AMENDMENTS AND WAIVER 30
8.9 ASSIGNMENT 30
8.10 NOTICES 31
8.11 GOVERNING LAW 33
8.12 ATTORNMENT 33
8.13 INDEPENDENT LEGAL ADVICE 33
4
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: XXXXXXX X. XXXXX, a business executive residing in the Province of
British Columbia;
(hereinafter referred to as "Xxxxxxx")
AND: XXXX X. XXXXXXXX, a business executive residing in the Province of
British Columbia;
(hereinafter referred to as "Xxxx")
(Xxxxxxx and Xxxx 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;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the parties hereto
agree as follows:
5
- 2 -
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 Non-Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheet of the Corporation as at
the Balance Sheet Date;
1.1.4 "Balance Sheet Date" means March 31, 1998;
1.1.5 "Business" means the business of the Corporation consisting in 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 "Closing Balance Sheet" means the balance sheet of the Corporation
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;
1.1.8 "Closing Date" means June 30, 1998;
1.1.9 "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.
6
- 3 -
1.1.10 "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;
1.1.11 "Consents" means the consents, approvals and authorizations
required to be obtained pursuant to Schedule 3.1.7;
1.1.12 "Corporation" means Midway Purnel Sanitary Supply Ltd.;
1.1.13 "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;
1.1.14 "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;
1.1.15 "Environmental Permits" has the meaning set out in Section 3.1.46.2;
1.1.16 "Financial Statements" has the meaning set out in Section 3.1.8 ;
1.1.17 "GAAP" has the meaning specified in Section 1.4;
1.1.18 "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;
7
- 4 -
1.1.19 "Interim Financial Statements" has the meaning specified in Section
3.1.9;
1.1.20 "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;
1.1.21 "Leased Premises" has the meaning set out in Section 3.1.14;
1.1.22 "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 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;
1.1.23 "Material Contract" has the meaning set out in Section 3.1.24;
1.1.24 "Net Assets" means shareholders' equity as shown on the Combined
Closing Balance Sheet;
1.1.25 "Non-Canadian" has the meaning set out in Section 3.3.3;
1.1.26 "Non-Competition Agreements" has the meaning set out in Section
7.1.1.7;
1.1.27 "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;
1.1.28 "Person" means an individual, corporation, joint venture,
partnership, trust, trustee, unincorporated organization, or any
other entity;
1.1.29 "Personal Property Leases" has the meaning set out in Section
3.1.15;
1.1.30 "Premises Leases" has the meaning set out in Section 3.1.14;
1.1.31 "Purchase Price" has the meaning set out in Section 2.1.1;
8
- 5 -
1.1.32 "Purchased Shares" has the meaning set out in Section 2.1.1;
1.1.33 "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;
1.1.34 "Shares" has the meaning set forth in the preamble hereto;
1.1.35 "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; and
1.1.36 "Time of Closing" means 10 a.m. (Vancouver Time) on the Closing Date.
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.
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 neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations.
9
- 6 -
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 3.1.3: Share Conditions of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Interim Financial Statements
Schedule 3.1.12: Liens
Schedule 3.1.14: Leased Premises and Premises Leases
Schedule 3.1.15: Personal Property Leases
Schedule 3.1.17: Inventory
Schedule 3.1.19: Capital Expenditures
Schedule 3.1.20: Dividends
Schedule 3.1.22: Tax Accounts
Schedule 3.1.23 Liabilities
Schedule 3.1.24: Material Contracts
Schedule 3.1.30: Employment Contracts
Schedule 3.1.31: Employee Benefit Plans
10
- 7 -
Schedule 3.1.35: Related Person Indebtedness
Schedule 3.1.37: Intellectual Property
Schedule 3.1.40: Insurance Policies
Schedule 3.1.42: Amounts payable to Related Persons
Schedule 3.1.43: Litigation
Schedule 3.1.46: Environmental Matters
Schedule 3.1.51 Bank Accounts
Schedule 0.0.0.0: Non-Competition Agreements
Schedule 0.0.0.0: Opinion of the Vendors' Counsel
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 $1.00 (hereinafter referred to as the
"Purchase Price"), 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 transfer to the Purchaser and satisfied as to an
aggregate amount of $1.00 payable pro rata to the Vendors in
accordance with their respective shareholdings set forth in Schedule
2.1.1 by cash, certified cheque or bank draft to the order of each of
the Vendors, and delivered by the Purchaser at the Time of Closing.
2.2 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.
11
- 8 -
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 a corporation duly incorporated, organized
and subsisting 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 the rights, privileges, restrictions and conditions attached
to the Shares are as set out in 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;
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
12
- 9 -
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, as amended, 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 the Corporation, consisting of the
Balance Sheet and statements of income, retained earnings and changes
in financial position for the period ended on the Balance Sheet Date,
together with the review engagement report of 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
the Corporation as at the Balance Sheet Date,
(ii) are true and correct and present fairly the
financial position of the Corporation 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
the Corporation as at the Balance Sheet Date including, without
limiting the generality of the
13
- 10 -
foregoing, all contingent liabilities of the Corporation as at
the Balance Sheet Date;
3.1.9 the interim financial statements of the Corporation,
consisting of a balance sheet and statement of income, for the period
ended on April 30, 1998 (hereinafter collectively referred to as the
"Interim Financial Statements"), a copy of which is attached hereto
as Schedule 3.1.9:
(i) are in accordance with the books and accounts of
the Corporation as at Xxxxx 00, 0000,
(xx) are true and correct and present fairly the
financial position of the Corporation as at April 30, 1998,
subject only to usual and proper adjustments, which will not
exceed, in aggregate, $15,000 and without provision for income
or capital taxes;
(iii) present fairly all of the assets and liabilities
of the Corporation as at April 30, 1998, and
(iv) have been prepared in accordance with accounting
principles consistent with the principles of GAAP used in the
preparation of the Balance Sheet;
3.1.10 since the Balance Sheet Date, the Business of the Corporation has
been carried on in its usual and ordinary course and in a manner
consistent with prior practices and, the Corporation has not, since
the Balance Sheet Date, entered into any transaction out of the usual
and ordinary course of business;
3.1.11 since the Balance Sheet Date, there has been no material change in
the affairs, business, prospects, operations or condition of 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
the Corporation, financial or otherwise;
3.1.12 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
14
- 11 -
described on Schedule 3.1.12 of all assets shown or reflected on the
Balance Sheet, except only such of the assets of 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 the
Corporation since the Balance Sheet Date;
3.1.13 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;
3.1.14 Schedule 3.1.14 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;
3.1.15 Schedule 3.1.15 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;
3.1.16 except for the Premises Leases, the Corporation holds no ownership
or other interest in or right affecting any real estate or real
property;
15
- 12 -
3.1.17 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 3.1.17, there is no recurring or ongoing high
incidence of product failure or warranty claims against the
Corporation related to the Business;
3.1.18 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;
3.1.19 except as disclosed on Schedule 3.1.19, 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 the
Corporation since the Balance Sheet Date;
3.1.20 except as disclosed on Schedule 3.1.20, 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 the
Corporation since the Balance Sheet Date and all dividends which to
the date hereof have been declared or paid by the Corporation have
been duly and validly declared and are fully paid;
3.1.21 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 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
16
- 13 -
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;
3.1.22 the tax accounts of the Corporation as disclosed in Schedule 3.1.22
attached hereto are true and complete in all material respects;
3.1.23 except as disclosed on Schedule 3.1.23, there are no outstanding
liabilities (whether absolute or contingent) against the Corporation
except trade debts incurred in the usual and ordinary course of
business;
3.1.24 set forth on Schedule 3.1.24 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 3.1.31) 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;
3.1.25 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 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;
3.1.26 the Corporation is not a party to or bound by any guarantee,
indemnification, surety or similar obligation;
17
- 14 -
3.1.27 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;
3.1.28 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;
3.1.29 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;
3.1.30 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 3.1.30 attached hereto, whether
or not such contracts are in writing; Schedule 3.1.30 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 3.1.30, to the best of the knowledge of the
Vendors, no employee has made or has any basis for 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;
3.1.31 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
18
- 15 -
(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 3.1.31
attached hereto;
3.1.32 all benefit plans listed in Schedule 3.1.31 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;
3.1.33 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;
3.1.34 except for remuneration paid to employees in the usual and ordinary
course of business and made at current rates of remuneration, no
payments have been made or authorized since the Balance Sheet Date by
the Corporation to officers, directors or employees of the
Corporation;
3.1.35 except as disclosed on Schedule 3.1.35, 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;
3.1.36 the Corporation is not conducting its business in any jurisdiction
other than the Province of British Columbia;
3.1.37 attached hereto as Schedule 3.1.37 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
19
- 16 -
applications and copyright registration applications, both domestic
and foreign, owned or made by the Corporation;
3.1.38 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;
3.1.39 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;
3.1.40 attached hereto as Schedule 3.1.40 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 maintaining third party liability and property damage
automobile insurance in an amount of not less than $1,000,000 per
occurrence 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;
3.1.41 none of the Vendors is a non-resident person within the meaning of
Section 116 of the Income Tax Act (Canada); and
3.1.42 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 3.1.42;
3.1.43 except as disclosed on Schedule 3.1.43 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;
20
- 17 -
3.1.44 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;
3.1.45 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;
3.1.46 except as specifically disclosed in Schedule 3.1.46 and without
limiting the scope of any other representation and warranty herein:
3.1.46.1 The Business, the Leased Premises and the Corporation have
been and are in compliance with applicable Laws, including,
without limitation, Environmental Laws;
3.1.46.2 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;
3.1.46.3 The Vendors, the Corporation, its 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
21
- 18 -
never otherwise settled such a prosecution in relation to
the Business or the premises used in the Business;
3.1.46.4 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;
3.1.46.5 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;
3.1.46.6 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;
3.1.46.7 The Corporation does not own or use any underground or
aboveground storage tank in connection with the Business;
3.1.46.8 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
3.1.46.9 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.
3.1.47 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 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 as at the Closing Date;
22
- 19 -
(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;
3.1.48 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 the Corporation contain a complete record of
all material decisions taken by the directors and of the shareholders
of the Corporation; 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 3.1.12
and any representation and warranty fraudulently made, all of which
shall survive in
23
- 20 -
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 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.);
3.3.4 Purchaser is not a non-resident of Canada for the purposes of
the Income Tax Act, S.C. 1970-72-72 c. 63 (Canada);
3.3.5 Purchaser is a taxable Canadian corporation as defined in
subsection 89(1) of the Income Tax Act (Canada);
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 and 3.3.2 any representation and warranty fraudulently
made, all of which shall survive in perpetuity and the
representations and warranties
24
- 21 -
in relation to Taxes, all of which shall survive until
the expiry of the longest limitation period under applicable
Law relating thereto.
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.
25
- 22 -
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.
26
- 23 -
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.
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
27
- 24 -
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 against either of them under each
of the share purchase agreements dated the date hereof with respect to the
purchase by the Purchaser of all of the outstanding shares of Midway Supply
Ltd. and Purnel Distributors Ltd. against amounts payable to the Vendors or the
Vendor under such agreements or under Class F Shares issued thereunder;
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.
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:
28
- 25 -
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 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");
29
- 26 -
7.1.1.8 the Vendors shall have delivered to the Purchaser a
favourable opinion of the Vendors' counsel substantially in the
form attached hereto as Schedule 7.1.1.8;
7.1.1.9 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
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:
30
- 27 -
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; and
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.
7.2.2 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.
31
- 28 -
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 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.
32
- 29 -
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.
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.
33
- 30 -
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:
To the Vendors:
XXXXXXX X. 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
XXXX X. XXXXXXXX
c/o Yule & Associates
4 - 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxxxx Xxxx
Telecopier:(000) 000-0000
Telephone:
With copy to:
Cinnamon Xxxx Xxxxxxxxxx & Company
000 - 0000 Xxxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxx Xxxxxxxxxx
Telecopier:(000) 000-0000
Telephone:(000) 000-0000
34
- 31 -
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.
35
- 32 -
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.
IN WITNESS WHEREOF the parties have executed this Agreement.
WOOD XXXXX INC.
Per: __________________________________
_______________________________________
XXXXXXX X. XXXXX
_______________________________________
XXXX X. XXXXXXXX
