EXHIBIT 2
SHARE TRANSFER AGREEMENT
AND
ASSIGNMENT OF INTERCOMPANY DEBT
This SHARE TRANSFER AGREEMENT AND ASSIGNMENT OF INTERCOMPANY DEBT (the
"Agreement") is made an entered into as of the 20th day of February, 2002, by
and among ▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter sometimes referred to as "Transferee"),
1166081 Ontario Inc., an Ontario corporation (the "Subsidiary"), Hunter
Technology Inc., an Ontario corporation ("Hunter"), and ▇▇▇▇▇▇ Industries,
Inc., a Delaware corporation (hereinafter sometimes referred to as
"Transferor").
RECITALS:
Transferor owns all of the issued and outstanding shares of
Subsidiary.
Transferor owns certain assets, including equipment, tooling,
inventory and intellectual property, used in the manufacture and distribution
of NuWay do-it-yourself trailers, as set out in Schedule A hereto, (the "NuWay
Assets").
Subsidiary owns all of the issued and outstanding shares of Hunter
which corporation manufactures and distributes heating and hearth products and
NuWay do-it-yourself trailers.
Hunter is indebted to Transferor in the amount of four million three
hundred fifty-three thousand eighty-four and No/100 United States Dollars
(US$4,353,084.00) (the "Intercompany Debt") which consists of (i) loans made by
Transferor to Subsidiary and Hunter totaling three million six hundred
sixty-one thousand five hundred seventy-seven and no/100 United States Dollars
(US $3,661,577.00) which are secured by a mortgage on a real property in
Orillia, Ontario, a general security agreement dated March 31, 1999, and
certain other security (the "Security"), and (ii) accounts receivable owing
from Hunter to Transferor (the "Accounts").
Hunter may presently be in possession of certain assets of Transferor
(other than the NuWay Assets), including tooling used in the production by
Hunter of certain components used in products manufactured by Transferor and
intellectual property, technology and know-how, which the parties will
cooperate in identifying and mutually determining following the date hereof
(the "Transferor Assets").
Transferor desires to transfer to Transferee all of the shares of
Subsidiary held by Transferor and the Intercompany Debt and Security.
Transferor desires to transfer, set over and assign to Hunter the
NuWay Assets.
Transferee desires to acquire all of the shares of Subsidiary held by
Transferor in accordance with and subject to the terms of this Agreement.
Hunter desires to acquire the NuWay Assets and assume all obligations
and liabilities associated therewith.
NOW THEREFORE, in consideration of the sum of $1.00 now paid to the
Transferor, the Transferee's assumption of all obligations and liabilities
attendant with the ownership of the capital shares of the Subsidiary, Hunter's
assumption of all obligations and liabilities attendant with the NuWay Assets,
and of the mutual covenants, agreements, representations and warranties herein
contained, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Transfer of Shares and Intercompany Debt.
Subject to the terms and conditions hereof, and in reliance
upon the representations and warranties made herein, Transferee hereby acquires
and assumes, and Transferor hereby transfers, assigns and sets over to
Transferee, all of its right, title and interest in and to (a) the shares of
the Subsidiary held by Transferor (the "Shares"), which represent one hundred
percent (100%) of the capital shares of the Subsidiary outstanding on the date
hereof and (b) the Intercompany Debt and the Security.
2. Transfer of NuWay Assets.
Transferor does hereby assign, transfer, sell and convey to
Hunter all of Transferor's rights, title and interest in and to the NuWay
Assets. Hunter hereby assumes and agrees to perform, pay, discharge the
liabilities and obligations of Transferor arising from the business of
manufacturing and distributing NuWay do-it-yourself trailers by Hunter as such
liabilities and obligations arise on or after the date hereof (the "NuWay
Liabilities"), including all product warranty claims arising after the date
hereof, whether the basis of the claim occurred before or after the date of
this Agreement, but excluding any NuWay product warranty and product liability
claims which have been received by Transferor prior to the date hereof.
3. Deliveries.
(a) Transferor shall deliver to Transferee herewith (i)
certificates representing all of the Shares properly endorsed for transfer or
accompanied by duly executed powers, (ii) an executed Mutual General Release as
contemplated herein, (iii) evidence of the transfer and assignment of the
Intercompany Debt and Security reasonably satisfactory to Transferee and his
counsel, and (iv) the corporate seal, minute books, organizational documents
and stock record books of Subsidiary and Hunter and the books and records of
the business of Subsidiary and Hunter and those directly related to the NuWay
Assets and NuWay Liabilities.
(b) Transferor shall deliver to Hunter herewith a ▇▇▇▇
of sale and assignment and such other documentation as shall be necessary to
evidence the transfer and assignment of the NuWay Assets to Hunter.
(c) Transferee shall deliver to Transferor herewith an
executed Mutual General Release as contemplated herein.
(d) Hunter shall deliver to Transferor herewith (i) an
executed Mutual General Release as contemplated herein, and (ii) evidence of
the assumption of the NuWay Liabilities by Hunter reasonably satisfactory to
Transferor and its counsel.
(e) Subsidiary shall deliver to Transferor herewith an
executed Mutual General Release.
4. Residual Payment. In the event Transferee or his successor or
assigns collects any amount of the Intercompany Debt within the three (3) year
period following the date of this Agreement, Transferee shall promptly deliver
to Transferor in readily available funds a percentage of all amounts collected
based on the following scale:
(a) if any amount is collected in the first year
following the date of this agreement, ten percent (10%) of the first
$500,000.00; twenty-five percent (25%) of the second $500,000.00; and
thirty-three percent (33%) of any amount over $1,000,000.00;
(b) if any amount is collected in the second year
following the date of this agreement, ten percent (10%) of the first
$1,000,000.00; and fifteen percent (15%) of any amount over $1,000,000; and
(c) if any amount is collected in the third year
following the date of this agreement, ten percent (10%) of the total amount
collected.
5. Title of Shares, Intercompany Debt and NuWay Assets.
Transferor represents and warrants, which representations and warranties shall
not merge on closing but shall survive indefinitely, that (a) the Shares,
Intercompany Debt, Security and NuWay Assets are owned by Transferor free and
clear of all security interests, pledges, claims, liens, encumbrances, charges
and assessments, restrictive agreements and any other restrictions, preemptive
or similar rights or any rights or interests of any other person, (b)
Transferor has full legal right, power and authority to enter into this
Agreement and has full legal right, power and authority to sell, assign and
transfer the Shares, Intercompany Debt, Security and NuWay Assets to
Transferee, and (c) at the date hereof, except for the Intercompany Debt,
▇▇▇▇▇▇ is not owed any money by either the Subsidiary or Hunter. The foregoing
notwithstanding, Transferee acknowledges that he is fully aware of the
discussions and potential dispute concerning the claims made by ▇▇▇▇▇ ▇. ▇▇▇▇▇
of the firm of Thornton Grout Finnigren on behalf of Eneroil Company Limited
and related parties with respect to an alleged settlement of the lawsuit by
Eneroil against Hunter and ▇▇▇▇▇▇ ▇▇▇▇ and Transferee agrees that Transferor
makes no representation or warranty with respect to said matter and Transferee
takes the Shares subject thereto. Transferee further acknowledges that
Transferor makes no representation concerning the priority of the Security.
5A. Income Tax Act Indemnity. The Transferor hereby covenants and
agrees to indemnify, protect, and save harmless the Transferee, the Subsidiary,
Hunter, and their successors and assigns from any claims that may be made by
Canada Customs and Revenue Agency in respect of the parties having concluded
the transactions contemplated hereby without complying with the provisions of
the Income Tax Act (Canada), particularly Section 116 thereof.
6. Representations of Transferee.
(a) Transferee is the President and sole director of
Hunter and is the sole director of Subsidiary and, in such capacity, has
knowledge of and experience in the financial and business matters of Subsidiary
and Hunter, and is capable of evaluating the risks and merits of this
investment. In entering into this Agreement and the transaction contemplated
hereby, Transferee has carefully evaluated the financial status of Subsidiary
and Hunter, his own financial resources, and the risk associated with this
investment. Transferee acknowledges that the investment contains a high degree
of risk, and that he is able to bear the economic risks--including the
possibility of a total loss of his investment.
(b) Transferee is aware of the fact that the Shares have
not been registered, nor is registration contemplated under the Securities Act
of 1933, as amended, or under the securities laws of any state, but are being
offered pursuant to exemptions from the registration requirements of federal
and state securities laws. Accordingly, the Shares must be held indefinitely
unless they are subsequently registered under such securities laws or a sale or
transfer may be made without registration thereunder. Transferee further
acknowledges that the Shares are being offered pursuant to exemption from
prospectus and registration requirements under the securities laws of Ontario.
(c) Transferee is purchasing the Shares for his own
account for investment and not with a view to distribution or resale.
(d) Transferee acknowledges that he has been advised to
consult with his attorney regarding legal matters concerning this Agreement,
the transaction contemplated hereby, the Subsidiary and Hunter.
(e) Transferee hereby confirms that no representations
or warranties have been made to him other than those contained in this
Agreement and that he has not relied upon any representation or warranty not
contained herein in making or confirming this Agreement.
(f) Transferee understands and acknowledges that the law
firms of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & White LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Gervais LLP are
representing Transferor in connection with this Agreement and that ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & White LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Gervais LLP are not representing
Transferee. Transferee is being represented in the transaction by WeirFoulds
LLP.
7. Mutual General Release. In connection with the execution,
delivery and performance of this Agreement, and as a condition to the closing
hereof, each of the parties hereto shall execute and deliver mutual general
releases in form and substance acceptable to the parties.
8. Release of Escrow. Subsidiary hereby releases in favor of
Transferor any and all of Subsidiary's rights in the Escrow Agreement dated as
of February 1, 1996, by and among Transferor, Subsidiary, and certain of the
shareholders of Hunter Energy and Technologies Inc., an Ontario corporation,
1061099 Ontario Inc., an Ontario corporation, and 679401 Ontario Inc., an
Ontario corporation, and all of the shareholders of Airform Fabrics Inc., an
Ontario corporation, and AmSouth Bank of Alabama as escrow agent (the "Escrow
Agreement"). Neither Transferee nor Subsidiary shall claim any right to any
funds held in escrow pursuant to the Escrow Agreement.
9. Further Assurances. Following the entering into of this
Agreement, each of the parties hereto will forthwith, at its own expense,
execute and deliver such further instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and do all things necessary
or proper in order to (i) vest, perfect or confirm, of record or otherwise, the
right, title and interest of Transferee, his heirs and assigns, in and to the
Shares and the Intercompany Debt and Security, (ii) vest, perfect or confirm,
of record or otherwise, the right, title and interest of Hunter, its successors
and assigns, in and to the NuWay Assets, (iii) deliver to Transferor the
Transferor Assets, and (iv) effect the assumption by Hunter of the NuWay
Liabilities.
10. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or mailed
first-class, postage prepaid, registered or certified mail as follows:
To Transferor: ▇▇▇▇▇▇ Industries, Inc.
Attn: President & CEO
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
To Transferee: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
To Subsidiary: 1166081 Ontario Inc.
c/o Hunter Technology Inc.
Attn: President & CEO
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇#▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
11. Miscellaneous.
(a) Computer Services. Transferor agrees to continue
providing computer services to Hunter consistent with those provided by
Transferor to Hunter as of the date hereof for a period of ninety (90) days
from date of this Agreement.
(b) Access to Books and Records. After the date
herewith, Transferee will afford Transferor, its counsel, accountants and other
representatives, during normal business hours, reasonable access to the books,
records and other data in the possession of Transferee, Subsidiary or Hunter
relating directly or indirectly to the properties, liabilities or operations of
Subsidiary, Hunter, the NuWay Assets and the NuWay Liabilities, with respect to
periods prior to the date hereof, and the right to make copies and extracts
therefrom. Transferee agrees for a period extending five years after the date
herewith not to allow the destruction or other disposal of any such records
without first offering in writing to surrender such records to Transferor,
which shall have ten (10) days after such offer to agree in writing to take
possession thereof.
(c) Applicable Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Alabama
applicable to agreements made and to be performed wholly within such state and
without giving effect to conflict of law principles.
(d) Captions. The paragraph headings contained herein
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(e) Entire Agreement. This Agreement and the Mutual
General Release dated the date hereof, contain the entire agreement of the
parties and supersede and cancel any other agreement, representation,
communication or understanding, whether oral or written, between the parties
hereto and relating to the transactions contemplated herein or the subject
matter hereof. This Agreement may not be changed or terminated orally, but may
only be changed by an Agreement in writing signed by the parties hereto.
(f) Interpretation of Agreement. All parties have
participated fully in the negotiation and drafting of this Agreement. The
Agreement has been prepared by all parties equally, and is to be interpreted
according to its terms. No inference shall be drawn that the Agreement was
prepared by or is the product of any particular party or parties.
(g) Enforceability and Remedies. All the terms,
covenants, representations, warranties and conditions of this Agreement shall
be binding upon, and inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, successors and assigns. This Agreement shall
not be assignable by a party hereto without the prior written consent of the
other parties hereto.
IN WITNESS WHEREOF, undersigned parties have executed this Agreement
on the 20th day of February, 2002.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
1166081 ONTARIO INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its President
HUNTER TECHNOLOGY INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Its President
▇▇▇▇▇▇ INDUSTRIES, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Its President
and Chief Executive Officer
SCHEDULE A - NUWAY ASSETS
All equipment, tooling, inventory and intellectual property used in the
manufacture and distribution of NuWay do-it-yourself trailers, currently
located at Hunter Technology Inc.