SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT entered into this 29th day of April, ▇▇▇▇,
▇ ▇ ▇ ▇ ▇ ▇ ▇ :
MESTEK CANADA INC., a corporation incorporated under the
laws of Ontario
(hereinafter called "Mestek")
- and -
1291893 ONTARIO INC., a corporation incorporated under the
laws of Ontario
(hereinafter called "Buyer")
- and -
▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of
Mississauga, in the Province of Ontario
(hereinafter called "▇▇▇▇▇")
- and -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of
Mississauga, in the Province of Ontario
(hereinafter called "Giuseppe")
- and -
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of
▇▇▇▇▇▇▇, in the Province of Ontario
(hereinafter called "▇▇▇▇▇▇")
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of ▇▇▇▇▇▇▇,
in the Province of Ontario
(hereinafter called "Antonio")
- and -
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual residing in the City of
Mississauga, in the Province of Ontario
(hereinafter called "▇▇▇▇▇▇▇")
- and -
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of
Mississauga, in the Province of Ontario
(hereinafter called "Alessandra")
WITNESSES THAT:
WHEREAS Susan, Giuseppe, Teresa, Antonio, ▇▇▇▇▇▇▇ and Alessandra
(hereinafter collectively referred to as the Sellers, and individually as a
"Seller") collectively own all of the issued and outstanding shares in the
capital stock of Companies;
AND WHEREAS Buyer wishes to purchase from the Sellers and the Sellers
wish to sell to Buyer all of the shares in the capital stock of the Companies
issued and outstanding as at the Closing Date (the "Shares");
AND WHEREAS Buyer is an affiliate of Mestek;
NOW THEREFORE in consideration of the mutual terms and covenants herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by each of the parties hereto, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions: In this Agreement, including the recitals hereto and the
Schedules and Exhibits hereto annexed, the following words and
expressions shall have the following meanings:
"Accountants" means ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Chartered Accountants, the
accountants of the Companies;
"Accounts Receivable" means all accounts receivable, trade accounts,
notes receivable, book debts and other debts due or accruing to the
Companies and the benefit of all security for such accounts, notes and
debts;
"Affiliated Corporation" with reference to any particular corporation
shall have the meaning attributed to "Affiliated body corporate" as set
forth in the Business Corporations Act (Ontario);
"Agreement" means this share purchase agreement between Buyer and
Sellers together with all Schedules and Exhibits hereto;
"Approvals" means (i) all governmental and other regulatory,
administrative or court approvals, orders, consents, authorizations or
permits, including all notifications thereto and all filings therewith,
in Canada and elsewhere, required in connection with the completion of
any of the transactions contemplated by this Agreement; and, (ii) if
applicable, any order or decision of any governmental, regulatory or
administrative authority or any court to allow or to not disallow, or
the failure of such authority to disallow, the completion of any of the
transactions contemplated by this Agreement. Where the term "Approvals"
contemplates a governmental, regulatory, administrative or court
approval, order or decision, it shall be deemed to mean an approval,
order or decision granting the approval sought without conditions or
with only such conditions as are acceptable to Buyer acting reasonably,
which approval, order or decision is by its terms final and effective
and from which there is no further appeal permitted;
"Associate" of any particular Person shall have the meaning attributed
to such term in the Business Corporations Act (Ontario);
"Business" means the business including (a) the manufacture, sale and
distribution of hot water heaters and boilers and replacement parts for
such and similar equipment, and (b) the manufacture, sale, distribution
and service of spot welders, both carried on jointly by RBR and RES
under the name ▇▇▇▇▇▇ Brothers Industries Canada ("RBI");
"Business Day" means any day, other than a Saturday, Sunday or day on
which Buyer is not open for business during its regular business hours
at its head office in the City of Mississauga;
"Buyer's Calculation" has the meaning attributed to such term in
Section 2.2 hereof;
"Buyer's Solicitors" means ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Barristers and Solicitors;
"Closing" shall mean the completion of the sale and purchase of the
Shares as specified in Section 2.4;
"Closing Date" shall mean April 29, 1998 or such earlier or later date
as the parties may agree in writing;
"Company" and "Companies" shall collectively mean RES and RBR;
"Contracts" means all contracts, agreements, commitments and
understandings to which Seller is a party or is otherwise bound, with
respect to the Business, including without limiting the generality of
the foregoing, all quotes, tenders or bids in respect thereof;
"Effective Date" shall mean April 27, 1998 or such earlier or later
date as the parties may agree in writing;
"Encumbrances" means mortgages, pledges, liens, charges, security
interests, claims, hypothecs, options, encumbrances, leases, title
retention agreements, rights of third parties and other claims of any
kind and nature whatsoever;
"Environmental Laws" means all Laws relating to the environment or the
protection or pollution thereof;
"Fixed Assets" means all fixed assets of the Companies carried in the
Companies' books, records and Financial Statements;
"Generally Accepted Accounting Principles" or "GAAP" means such
recommendations as the Canadian Institute of Chartered Accountants
includes in its handbook concerning accounting treatment or statement
of presentation, and references herein to generally accepted accounting
principles shall be interpreted accordingly;
"Hazardous Material" means any pollutant, contaminant, hazardous or
toxic material used, treated, stored, processed, generated,
manufactured, disposed, handled, transported, released, spilled,
produced, discharged or emitted by the Companies in the conduct of,
relating to or in any way affecting the Business;
"Inventory" means all inventory of the Companies (whether raw
materials, purchased components, manufactured parts, work in process,
finished goods or other) which does not contain any damaged, defective
or obsolete items which are not currently usable or saleable in the
ordinary course of business;
"ITA" means the Income Tax Act of Canada RSC 1985, c. 1 (5th supp.), as
amended and shall be deemed to include, where applicable, the Income
Tax Application Rules, the Income Tax Regulations and any notice of
ways and means motion or ▇▇▇▇ tabled in the House of Commons or any
press release or publicly disseminated statement by the Minister of
Finance which may result in any amendments thereto;
"Law" means any federal, provincial, state, territorial, municipal or
other law, statute, regulation, code, ordinance, by-law, order,
restriction, official plan or stated policy including any amendments
thereto and "Laws" means all of the foregoing;
"Liabilities" means any and all debts, liabilities or obligations of
any nature or kind whatsoever, whether due or to become due, accrued,
absolute, contingent or otherwise of the Companies;
"Material Adverse Effect" means, with respect to any Person or thing,
any event or condition which has or may be expected to have a material
and adverse effect on the property, assets, liabilities (whether due,
to become due, absolute, accrued, contingent or otherwise), condition
(financial or otherwise), results of operations, business or prospects
of such Person;
"Net Worth" means the sum of the value of the Accounts Receivable,
Inventory, and Fixed Assets, together with the cash, deposits and
pre-paid expenses of the Companies determined in accordance with GAAP,
less the Liabilities upon the terms and conditions as further set forth
in this definition;
Accounts Receivable shall be valued at their face value
determined in accordance with Generally Accepted Accounting
Principles, at the Effective Date less the amount of such
Accounts Receivable which remain uncollected as at the date
the Buyer's Calculation is finalized;
Inventory shall be valued at the Effective Date at the lower
of actual cost and net realizable value, based upon and in
accordance with Schedule 1.1 and GAAP, and to the extent
Schedule 1.1 and GAAP conflict, Schedule 1.1 shall prevail;
Fixed Assets shall be valued at their fair market value as
agreed by the parties and as set forth in Schedule 3.4.4;
Liabilities shall be valued at their face value at the
Effective Date determined in accordance with GAAP and shall
include all obligations of the Companies of any nature
including but not limited to bank debt, accounts payable,
accrued expenses, accrued vacation, accrued payroll taxes,
accrued sales taxes and accrued income taxes;
"Ordinary Course" when used in relation to the conduct by Companies of
the Business, means any transaction which constitutes an ordinary
day-to-day business activity of Companies with respect to the Business
conducted in a commercially reasonable and businesslike manner and
consistent with the past practices of the Companies with respect to the
Business, having no unusual or special features, and being such as a
corporation or other entity of a similar nature and size and engaged in
a similar business might reasonably be expected to carry on from time
to time;
"Permitted Encumbrances" means those Encumbrances described and listed
in Schedule 3.4.1;
"Person" includes any individual, partnership, limited partnership,
joint venture, syndicate, sole proprietorship, company or corporation
with or without share capital, unincorporated association, trust,
trustee, executor, administrator or other legal personal
representative, regulatory body or agency, government or governmental
agency, authority or entity however designated or constituted;
"Plan" means every bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination
pay, health or other medical, life, disability or other insurance,
supplemental unemployment benefit, profit sharing, pension,
supplemental retirement and other employee benefit plan, program,
agreement or arrangement, whether written or unwritten, formal or
informal, legally binding or not, maintained or contributed to or
required to be contributed to by any Person for the benefit of any
Employees or their
dependents or beneficiaries, as well as the compensation practices and
policies applicable to the Employees including practices and policies
regarding vacations, sick leave, leaves of absence and all perquisites
of employment, other than employee benefit programs mandated by law;
"Purchase Price" has the meaning set out in Section 2.2;
"RBR" shall mean ▇▇▇▇▇▇ Brothers Refractory Ltd., a corporation
incorporated pursuant to the laws of the Province of Ontario;
"RES" shall mean Rainbow Electronics Spotwelding Equipment Ltd., a
corporation incorporated pursuant to the laws of the Province of
Ontario;
"Related Persons" shall have the meaning attributed thereto in the ITA;
"Sellers" shall collectively mean Susan, Giuseppe, Teresa, Antonio,
▇▇▇▇▇▇▇ and Alessandra;
"Sellers' Solicitors" means Pallett Valo, Barristers and Solicitors;
"Shares" means all of the issued and outstanding shares in the capital
stock of each of the Companies, the same being more particularly
described in Schedule 3.3.1;
"Tax" means all federal, provincial, territorial, state, municipal,
local or other taxes, including without limitation income, sales,
excise taxes, custom duties and franchise, real and personal property
taxes and payroll taxes (including tax withholdings, employer health
taxes, workers' compensation assessments and Canada Pension Plan and
Unemployment Insurance premiums, contributions and remittances),
governmental charges, assessments or reassessments or any matters under
discussion with any governmental authority relating to any Tax or any
claims for additional Tax, and penalties, interest and surcharges in
respect of any of the foregoing;
"Time of Closing" means 9:30 a.m., Toronto time, or such earlier or
later time as the parties hereto may agree in writing, on the Closing
Date.
1.2 Interpretation: The following provisions shall be applicable to and
shall govern the interpretation of this Agreement, including any
recitals hereto and any schedules hereto annexed:
1.2.1 Subdivisions: The subdivisions in this Agreement are called in
descending order "articles" "sections, "subsections", "paragraphs",
"subparagraphs", "clauses" and "subclauses" and all references in this
Agreement to designated subdivisions are references to designated
subdivisions of this Agreement.
1.2.2 Herein and Hereunder: The words "herein", "hereunder", and other words
of similar import refer to this Agreement as a whole and not to any
particular subdivision. References to
Schedules and Exhibits are references to the Schedules and Exhibits
attached to and forming part of this Agreement, unless the context
otherwise requires.
1.2.3 Headings: The headings used in this Agreement are for convenience only
and do not form a part of this Agreement nor are they intended to
interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
1.2.4 Including - Non-Limiting Language: The word "including" when following
any general statement, term or matter shall not be construed to limit
such general statement, term or matter to the specific items or matters
set forth immediately following such word or similar items or matters
whether or not non-limiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope
of such general statement, term or matter.
1.2.5 Knowledge: In this Agreement, the phrase "to the best of (any Person's)
knowledge" shall mean to the best of such Person's knowledge and
belief.
1.2.6 Gender and Number: Words importing the singular number only shall
include the plural and vice versa, words importing gender shall include
all genders, and words importing any particular type of Person,
including individuals, shall include all Persons.
1.2.7 Calculation of Time: Unless otherwise specifically provided herein, in
calculating the period of time from a reference day within, prior to or
following which any act is to be done or step is to be taken pursuant
to this Agreement, the period of time shall not include such reference
day.
1.2.8 Performance on non-Business Days: If anything is required to be done
or; any action is required to be taken hereunder on or by a day which
is not a Business Day, then such thing may be validly done and such
action may be validly taken on or by the next day that is a Business
Day.
1.2.9 Accounting Terms: All accounting terms used herein and not otherwise
defined shall have the meanings assigned to them in accordance with
Generally Accepted Accounting Principles.
1.2.10 Currency: All statements of or references to dollar amounts in this
Agreement, unless otherwise specifically indicated, shall mean lawful
money of Canada.
1.2.11 Applicable Law: This Agreement shall be construed and enforced in
accordance with, and the rights of the parties hereto shall be governed
by, the laws of the Province of Ontario. Each of the parties hereto
hereby irrevocably submits to the nonexclusive jurisdiction of the
courts of the Province of Ontario and covenants to appear before such
courts.
1.2.12 Entire Agreement, Waiver: This Agreement, together with the agreements
and other documents to be delivered pursuant hereto, constitutes the
entire agreement between the
parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether
oral or written, of the parties and there are no warranties,
representations or other agreements between the parties in connection
with the subject matter hereof except as specifically set forth herein
and therein. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties
hereto. No waiver of any of the provisions of this Agreement shall be
deemed to constitute or shall constitute a waiver of any other
provision (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
1.2.13 No Merger: Each party hereby agrees that all provisions of this
Agreement, other than the conditions precedent in Articles 7 and 8, and
subject to any special conditions stated therein, the warranties and
representations contained in Articles 3 and 4, shall forever survive
the execution and delivery of this Agreement and any and all documents
delivered in connection herewith and the Closing.
1.2.14 Severability: If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon any such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner, to the end
that the transactions contemplated by this Agreement are consummated to
the extent possible.
1.2.15 Time of Essence: Unless otherwise specifically provided herein, time
shall be of the essence of this Agreement and each and all of its
provisions.
1.2.16 Schedules: The following are the Schedules attached to and incorporated
in this Agreement by reference, which Schedules are deemed to be part
of this Agreement:
Schedule 1.1 Inventory Valuation
Schedule 2.3.1 Allocation
Schedule 3.2.2 Financial Statements
Schedule 3.2.3 Material Adverse Effects
Schedule 3.3.1 Shares
Schedule 3.4.1 Permitted Encumbrances
Schedule 3.4.4 Fixed Assets
Schedule 3.4.5 Leased Equipment
Schedule 3.6.1 Intellectual Property
Schedule 3.7.5 Tax Elections
Schedule 3.7.6 Capital Cost Information
Schedule 3.8.1 Legal Proceedings
Schedule 3.9.1 Permits
Schedule 3.10.1 Employees
Schedule 3.11.1 Plans
Schedule 3.12.1 Hazardous Materials
Schedule 3.13.1 Contracts
Schedule 3.14.1 Insurance
Schedule 3.15.2 Actions by Either Company
Schedule 3.16 a) Rainbow Assets and Rainbow Liabilities
Schedule 3.16 b) Other Transactions
Schedule 6.2 Termination/Severance Payments
1.2.17 Exhibits: The following are the Exhibits attached to and incorporated
into this Agreement by reference, which Exhibits are deemed to be part
of this Agreement:
Exhibit 6.3 Mortgage
Exhibit 7.1.6 Sellers' Solicitors' Opinion
Exhibit 7.2 Non-Competition and Confidentiality
Agreement
Exhibit 7.3 Lease
Exhibit 8.1.4 Buyer's Solicitors' Opinion
Exhibit 8.2 Consulting Agreement
ARTICLE II
PURCHASE AND SALE OF THE PURCHASED SHARES
2.1 Purchase: Subject to the terms and conditions of this Agreement, with
effect as of and from the Effective Date, Sellers shall sell, transfer
and assign to Buyer all right, title and interest to and under the
Shares, and Buyer shall purchase from Sellers the Shares.
2.2 Purchase Price: The purchase price for the Shares shall be Four
Million, One Hundred Fifty- Three Thousand and Three Hundred and
Eighty-Eight Dollars ($4,153,388.00) (the "Purchase Price") subject to
any adjustment or set-off pursuant to the terms of this Agreement. The
parties agree and acknowledge that the Purchase Price was arrived at
based on the Net Worth of the Companies at the Effective Date being two
million, two hundred and seventy-nine thousand dollars ($2,279,000.00)
(the "Net Worth Target"), which includes, as a liability, any corporate
income taxes attributable (i.e. payable, accrued or deferred) to any
business activities of the Companies and RBI conducted up to and
including the Effective Date (i.e. Taxes reportable or accrued on the
Companies' fiscal year end March 31, 1998 Tax Return and the interim
period to the Effective Date and the Taxes reportable for the interim
period May 1, 1997 through the Effective Date for RBI), but excluding
(i.e. without deducting) those certain accrued amounts set forth in
sub-section 6.2. It is acknowledged that the Rainbow Assets and Rainbow
Liabilities (as these terms are defined in paragraph 3.16(a) hereof)
have been divested by the Companies prior to Effective Date, and
accordingly are to be excluded from the calculation of the Net Worth
Target and Net Worth of the Companies. Immediately prior to the
Effective Date, the Buyer and the Sellers have jointly conducted a
physical count of the Companies' Inventory and thereafter the Buyer
shall prepare a balance sheet of same and calculate the Net Worth of
the Companies as at the Effective Date (the "Buyer's Calculation") in
accordance with the definition of Net Worth as contained herein. The
Buyer and Sellers have worked and shall work closely and cooperatively
together in conducting the physical count as described above and the
preparation of the Buyer's Calculation. The Buyer shall within sixty
(60) days after the
Closing Date, forward a copy of such balance sheet and a notice to the
Sellers of the Buyer's Calculation.
2.3 Payment and Allocation of the Purchase Price:
2.3.1 The Purchase Price shall be allocated as follows:
(a) Two Million Six Hundred Sixty-Six Thousand Dollars
($2,666,000.00) for the shares of RBR and
(b) One Million, Four Hundred Eighty-Seven Thousand Three Hundred
and Eighty-Eight Dollars ($1,487,388.00)for the shares of RES;
Buyer and Sellers acknowledge that the Purchase Price shall be further
allocated among the Shareholders of RBR and the Shareholders of RES as
provided in Schedule 2.3.1.
2.3.2 The Purchase Price shall be paid as follows:
(a) At Closing, Buyer shall deliver to Sellers, as they shall
jointly direct in writing at least twenty-four (24) hours
before Closing, a certified cheque, bank draft or wire
transfer in an amount equal to Three Million, Six Hundred and
Fifty-Three Thousand Three Hundred and Eighty-Eight Dollars
($3,653,388.00); and
(b) Five Hundred Thousand Dollars ($500,000.00) (the "Escrow
Amount") shall be held by Buyer's Solicitors, in trust, in an
interest bearing account, with the interest earned being
payable to the recipient of such monies, on a pro rata basis,
pending the calculation of the Net Worth of the Companies and
the agreement of the parties on the Purchase Price giving
effect to the Net Worth Target in accordance with the terms of
this section; and
(c) Subject to the right of the Sellers to dispute the Buyer's
Calculation as set out below:
(i) If the Buyer's Calculation is less than the Net Worth
Target, then the Purchase Price shall be reduced by
the amount that the Buyer's Calculation is less than
the Net Worth Target (the "Reduction");
(ii) If the Buyer's Calculation is greater than the Net
Worth Target, then the Purchase Price shall be
increased by the amount that the Buyer's Calculation
is greater than the Net Worth Target (the
"Increase"); and
(iii) If the Buyer's Calculation is equal to the Net Worth
Target, there shall be no adjustment to the Purchase
Price;
(d) To give effect to the Reduction, if any, if Sellers do not
dispute the Buyer's Calculation within the period set out in
sub-section 2.4:
(i) Buyer's Solicitors shall pay the amount of the
Reduction up to a maximum of the Escrow Amount to
Buyer together with interest earned thereon and
shall pay the balance of the Escrow Amount, if any,
together with interest earned thereon to Sellers; and
(ii) If the Reduction is greater than the Escrow Amount,
the Sellers shall promptly pay the amount by which
the Reduction exceeds the Escrow Amount to Buyer; and
(e) To give effect to the Increase, if any, if Sellers do not
dispute the Buyer's Calculation within the period set out in
sub-section 2.4, Buyer's Solicitors shall pay the Escrow
Amount plus interest earned thereon to the Sellers and Buyer
shall promptly pay the Increase to Sellers; and
(f) If there is no adjustment required to the Purchase Price and
if Sellers do not dispute the Buyer's Calculation, Buyer's
Solicitors shall pay the Escrow Amount plus interest earned
thereon to the Sellers.
In the event that the Sellers have disputed the Buyer's Calculation in
accordance with the terms hereof, any amounts which are not subject to
such dispute shall be paid promptly to the parties entitled thereto in
accordance with this Section 2.3.2.
The Buyer's Solicitors shall make payments out of the Escrow Amount
only in accordance with a joint direction of Buyer and Sellers or
pursuant to an order of a court of competent jurisdiction, and Buyer
and Sellers agree to promptly provide such joint direction to give
effect to their obligations hereunder.
Buyer agrees not to set-off any claims against the Escrow Amount in
respect of any matter whatsoever.
2.4 Sellers shall have a period of thirty (30) days from the date it
receives the Buyer's Calculation to provide the Buyer with a written
notice that it disputes the Buyer's Calculation and that it is
appointing the accounting firm of Deloitte Touche to conduct an audit
and make a determination of the Net Worth of the Companies based upon
the terms and conditions set forth in this Agreement, such
determination shall be deemed to be the Buyer's Calculation for the
purposes of this Agreement. The expenses of Deloitte & Touche shall be
borne by and paid as to 50% by the Sellers and as to 50% by the Buyer.
2.5 Time and Place of Closing: The completion of the purchase and sale of
the Shares contemplated by this Agreement (the "Closing") shall take
place at the offices of Buyer's Solicitors at the Time of Closing on
the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to and in
favour of Buyer as follows and acknowledge that Buyer is relying upon such
representations and warranties in connection with the purchase of the Shares:
3.1 Corporate Status:
3.1.1 The Companies are corporations duly incorporated and organized,
and are valid and subsisting under the laws of the Province of Ontario. The
Sellers have all requisite power and authority to own the Shares and the
Companies have all requisite power and authority to carry on their
Business. The Sellers have the power and capacity to enter into, execute
and deliver this Agreement and to consummate the transactions contemplated
hereby and the execution and delivery by the Sellers of this Agreement and
the consummation of all transactions contemplated hereby have been duly and
validly authorized. This Agreement has been duly and validly executed and
delivered by Sellers and constitutes a valid and binding agreement of the
Sellers, enforceable against each of the Sellers in accordance with its
terms.
3.1.2 Except for the Approvals and any consents to the change of control of
either Company as required by any Contract, as disclosed herein, the
entering into of this Agreement and all other transactions contemplated
by this Agreement by the Sellers and the performance and compliance by
the Sellers with the terms hereof and the terms of all such other
transactions will not:
(a) result in any violation or breach of any of the terms
or conditions of, or constitute a default under, the
Articles of Incorporation or the by-laws of either
Company;
(b) conflict with, violate or result in any breach of any
of the terms, conditions or provisions of; constitute
a default (including a default which would occur with
the giving of notice or the passage of time, or both)
under; result in the acceleration of any indebtedness
under a performance required by; result in any right
of termination of; result in any increase in any
amounts payable under; result in any decrease in any
amounts receivable under; or change any other rights
pursuant to any Contract;
(c) result in any violation or breach of any Law; or
(d) result in any violation or breach of any judgment,
order, award or decree of any court or judicial or
quasi-judicial tribunal or authority.
3.1.3 None of the Sellers is a non-resident of Canada within the meaning of
that term contained in the ITA.
3.2 The Financial Condition of the Businesses: The books and records of the
Companies accurately set out and disclose in all material respects the
financial condition of the Companies and the Business. The Financial
Statements attached as Schedule 3.2.2 hereto are true and complete in
all material respects and have been prepared in accordance with
Generally Accepted Accounting Principles applied on a basis consistent
with those of prior periods. Except as disclosed in Schedule 3.2.3,
since March 31, 1997, there has been no event or condition, whether
individually or in combination with any other events or conditions
which has, has had or could result in, a Material Adverse Effect on the
Business or the Companies.
3.3 The Shares:
(a) The Shares are the only issued and outstanding shares in the
capital of the Companies and have been duly authorized and validly issued
and are outstanding as fully paid and non-assessable. Sellers are
collectively the owners beneficially and of record of all of the Shares as
set out and disclosed in Schedule 3.3.1 with good and marketable title
thereto, free and clear of all Encumbrances, and the Shares may be
transferred to Buyer free and clear of all Encumbrances. No Person has any
agreement, option, warrant or right relating to the acquisition,
subscription, allotment or issuance of any issued or unissued shares in the
capital of either of the Companies, whether upon conversion of the
securities or otherwise.
(b) There are no restrictions on the transfer of the Shares other
than those contained in the Companies' Certificate and
Articles of Incorporation. The Sellers are not parties to any
unanimous shareholders' agreement or any other agreement,
declaration or understanding which does or could restrict or
relate to the transfer of the Shares or to the powers of the
directors of the Companies to manage or supervise the
management of their businesses and affairs.
3.4 Assets
3.4.1 All of the assets of the Companies are owned by the respective Company
with good and marketable title thereto, free and clear of all
Encumbrances or rights of others except for Permitted Encumbrances and
to the extent not so owned are either leased or licensed as described
in the Schedules to this Agreement, in each case free and clear of all
Encumbrances other than Permitted Encumbrances. Schedule 3.4.1 contains
a true and complete list and description of all Permitted Encumbrances.
3.4.2 All Accounts Receivable of the Companies have arisen from bona fide
transactions. None of the accounts receivable are subject to any
counterclaim or set-off or is in dispute. Adequate provision has been
made in the Financial Statements for any accounts which are collectible
beyond their normal payment terms.
3.4.3 All of the Inventory is adequate to permit the conduct of the
Businesses in the Ordinary Course.
3.4.4 All Fixed Assets are used and operated in conformity with all
applicable Laws and are in good condition, repair and working order,
normal wear and tear excepted. The usual location and a complete
description of all fixed assets owned rather than leased or held under
licence or similar arrangement by the Companies set forth in Schedule
3.4.4.
3.4.5 Schedule 3.4.5 sets forth a true and complete description of all Fixed
Assets which, as of the date hereof, are leased or held under licence
or similar arrangement by the Companies, together with a summary of the
leases, licence agreements or other documentation relating thereto.
3.4.6 Other than the lease to be entered into contemporaneously herewith, as
described in section 7.3 below, there are no other leases of real
property, including buildings, structures, improvements and fixed
assets to which either of the Companies is a party or otherwise
bound. Any and all prior leases entered into by the Companies have been
terminated without any further obligation or liability of the Companies
of whatever nature or kind.
3.5 [Intentionally left blank].
3.6 Intellectual Property: To the best of the knowledge of the Sellers, the
Companies do not use any intellectual property which conflicts with,
infringes upon or violates any intellectual property rights of any
other Person, nor has either of the Companies granted any licences or
any other rights with respect thereto except as disclosed in Schedule
3.6.1. There are no outstanding or threatened disputes or disagreements
with respect to any Companies' intellectual property. Other than the
commissions, royalties, prices for purchased parts or similar payments
arising under the supply agreement (the "Supply Agreement") dated
February 17, 1995 between Lochinvar Industries Inc. ("Lochinvar") and
RBR relating to the sale of certain parts and payments relating
thereto, a copy of which is included in Schedule 3.13.1, the Lochinvar
arrangements and/or license agreements have been terminated with no
further obligation, liability or commitment of either party thereto and
none of the technologies related thereto is used by or in connection
with the Businesses.
3.7 Taxes
3.7.1 Each of the Companies has paid in full when due all Tax payable
(including payments required to be made by instalment), including any
and all amounts due and payable under or pursuant to any fines or
penalties, by it at any time prior to the date of this Agreement and
proper provision, on an accrual basis, has been made by each of the
Companies in their Financial Statements for Tax payable for the current
and prior periods for which Tax returns or reports are not yet required
to be filed.
3.7.2 There are no actions, suits, proceedings, investigations or claims now
pending, threatened or contemplated against either of the Companies in
respect of any Tax.
3.7.3 Each of the Companies has withheld all amounts required by law to be
withheld from payments made by it with respect to their Businesses and
Employees, including without limitation, those with respect to
Employee's income tax withholdings, Canada Pension Plan and
Unemployment Insurance premiums, and has remitted such amounts to the
appropriate authorities within the times required by law.
3.7.4 Each of the Companies has properly prepared and duly filed all
Tax returns or reports required to be filed by it in a timely manner and
all such returns and reports truly, correctly and accurately reflect the
Tax payable by each of the Companies for the periods covered thereby. There
are no agreements, waivers or other arrangements, including for any
extension of time, with respect to the filing of any Tax return by either
of the Companies, the payment of any Tax by either of the Companies or the
payment of any governmental charge, penalty, interest or fine by either of
the Companies or with respect to the issuance of any Tax assessment or
reassessment.
3.7.5 Except for the elections set out and disclosed in Schedule 3.7.5,
Schedule 3.16(a) or Schedule 3.16(b), no elections have been filed
after 1971 or are proposed to be filed under the ITA or under any
similar provincial legislation with respect to the Companies. The
Companies do not have any non-capital losses or net capital losses, as
those terms are
defined in the ITA and under the ITA will not have any non-capital
losses or net capital losses arising for the taxation year which will
be deemed to end immediately prior to the Closing Date or will not be
required to write-down any of their respective depreciable properties,
capital properties (other than depreciable properties) or eligible
capital properties, as those terms are defined in the ITA, Act, or be
required to claim a reserve for doubtful debts in the period deemed to
end immediately prior to the Closing Date.
3.7.6 Information as to the cost for Canadian income tax purposes of the
assets of the Companies (by category as shown in the balance sheet
contained in the Financial Statements) is set forth in Schedule 3.7.6.
3.8 Legal Proceedings: Except as set forth in Schedule 3.8.1, there are no
actions, suits, proceedings, litigation, investigations, inquiries,
grievances, complaints, arbitration proceedings or outstanding claims
or demands, obtained, or instituted, or to the best of the Sellers' or
Companies' knowledge, pending or threatened, and to the best of the
Sellers' or Companies' knowledge, there is no fact or facts existing
and no basis for any of the foregoing, affecting or against either of
the Companies; or the Shares or Seller's right to dispose of the
Shares, at law or in equity or of, by or before any federal,
provincial, state, territorial or municipal court, department, agency,
commission, board, bureau or instrumentality, whether domestic,
foreign, civil, quasi-criminal, criminal or otherwise.
3.9 Licences, Registrations and Permits: Schedule 3.9.1 describes all of
the Permits issued to the Companies or used by or in connection with
the Businesses.
3.10.1 Employees: Set forth in Schedule 3.10.1 are the names and
titles of all employees (the "Employees") of the Companies who will be
employees of the Companies on the Closing Date, together with particulars
of the material terms and conditions of employment or engagement of each
such employee, including remuneration, benefits, positions held, location
of employment, and length of service, in the aggregate, with the applicable
Company and any predecessor thereof with respect to the applicable
Business. There are no written employment contracts with Employees
currently in force. There are no oral contracts of employment with any of
the Employees which are not terminable by the employer thereunder upon
providing notice or pay in lieu of notice required by the applicable labour
or employment standards legislation.
The Companies are not a party to or bound by any collective agreement,
contract, commitment or arrangement, either directly or by operation of
law, with any trade union or other association which might qualify as a
trade union or any other representative of any Employee. In addition,
no trade union, association which might qualify as a trade union or
other representative of any of the Employees has been certified as a
bargaining agent for any of the Employees.
Save as disclosed in Schedule 3.10.1 which lists those Employees who
will take their vacations with pay accrued (which accruals are as at
April 14, 1998) after the Closing, the Companies have no liability of
any kind to any Employee except for compensation and benefits payable
to such Employee or to which such Employee may be entitled, in the
Ordinary Course. There are no outstanding loans or advances made or
granted by either of the Companies to any Employee.
No organization, representation, labour relations, human rights, sex
discrimination or age discrimination question, issue or matter is
pending or threatened with respect to any Employee, and no such
question, issue or matter has been raised or threatened within the five
(5) year period prior to the date of this Agreement. The Businesses
have always been, and are, conducted in full compliance with all
Employment Laws. To the best of the Sellers' knowledge, the
consummation of the transactions contemplated by this Agreement will
not entitle any Employee to pay in lieu of notice of termination,
termination pay or severance pay, unemployment compensation, or any
other payment. The Businesses have always been, and are, carried on in
full compliance with all Health and Safety Laws. However, the Buyer
acknowledges that there have been worker's compensation claims which
have affected the Companies' premiums and which were disclosed in or
taken into account in the 1996 Workers' Compensation Board Assessment,
a copy of which has been provided to the Buyer. There have not been any
accidents, issues, or incidents involving the Business or the Companies
necessitating or potentially leading to any Workers' Compensation claim
or increase in premium or rating or notification to the Workers'
Compensation Board since January 1, 1997.
3.11.1 Employee Benefits: Schedule 3.11.1 contains a true and complete list
of all of the Plans.
-----------------
Except as disclosed on Schedule 3.11.1, there exists no formal plan or
commitment, whether legally binding or not, to create any additional Plan
or to change any existing Plan that would affect any Employees or their
dependents or beneficiaries. The Sellers have delivered to Buyer a true and
complete copy of each of the written Plans, all amendments thereto, and a
description of each unwritten Plan; and a true and complete copy of the
most recent description of each of the Plans that has been provided to the
Employees, and any and all such other descriptive materials provided to the
Employees including employee booklets.
There are no outstanding complaints, actions, suits, or claims pending
or threatened by any Person relating to any of the Plans. None of the
Companies or any administrator or fiduciary of any Plan, or any agent
or employee of any of the foregoing has taken any action, or failed to
take any action, that would subject either of the Companies or any
other Person to any liability for any excess Tax or for a breach of any
statutory or fiduciary duty with respect to or in connection with any
Plan. No notification is required to be given to any regulatory
authority having jurisdiction over any of the Plans with respect to the
consummation of the transactions contemplated by this Agreement in
relation to such Plans.
Each of the Plans and the funds established thereunder has been
operated, administered, and invested in all respects in accordance with
its terms and with the requirements of all applicable Laws and each of
the Plans has been duly registered where required by, and is in good
standing under, such Laws. None of the Plans is a multi-employer
pension plan as defined in the ITA and any applicable Canadian pension
legislation.
3.12 Environmental Matters: The Companies have not caused or permitted the
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
injecting, escaping, leaching, disposing or
dumping (the "Release") of any Hazardous Material on or off-site of the
Companies' property used by or for the Businesses or from a facility
owned or operated by any other Person, but with respect to which either
of the Companies in respect of the Businesses is alleged to have
liability. All wastes and other materials and substances disposed of,
treated or stored on or off-site of real property owned or occupied by
the Companies in respect of the Businesses, whether hazardous or not,
have been disposed of, treated and stored in compliance with all
Environmental Laws. Schedule 3.12.1 identifies all of the locations
where Hazardous Material used in whole or in part by Sellers in respect
of or in the conduct of the Businesses or resulting from the Businesses
has been or is being stored or disposed of. No action of either of the
Companies in respect of the Businesses will give rise to any claim,
demand, or action seeking the clean-up of any site, location, body of
water, surface, or subsurface, wherever located. The Sellers have
delivered to Buyer copies of all internal and external environmental
audit reports, site inspection reports or analyses, all occupational
health and safety reports, and Hazardous Waste Manifests and logs and
Material Safety Data Sheets prepared by or for the Companies with
respect to the Companies, the Businesses and/or the premises in and on
which the Businesses are or have been carried on within the ten year
period prior to the date hereof.
3.13 Contracts: Schedule 3.13.1 hereto contains a true and complete list and
description of all of the Contracts, whether or not set forth in any
other Schedule to this Agreement. No customer representing 5% or
greater of the revenues of the Business in its last completed fiscal
year has terminated or has advised either Company that such customer is
terminating, is intending to terminate, or has threatened to terminate
its business relationship with either Business or, to the best of the
Companies' knowledge, is planning to reduce its purchases of services
in the next twelve-month period. All of the Contracts are in full force
and effect, unamended, are valid, binding and enforceable and no breach
or default exists in respect thereof on the part of any of the parties
thereto nor has any event occurred which with the giving of notice or
the passage of time, or both, could constitute such a breach or
default. Schedule 3.13.1 identifies every Contract which requires the
consent of the other party thereto ("Consent") to a change in control
of either of the Companies, and whether such Consent is to be given in
writing and/or prior to such change in control.
3.14 Insurance Coverage: Schedule 3.14.1 contains a true and complete list
and description of all insurance policies (specifying the insured, the
beneficiaries, the loss payees, the amount of coverage, the type of
insurance, the policy number and any pending claims thereunder)
maintained by each Company on the properties, assets, businesses,
Employees of the Businesses and true and complete copies of the most
recent inspection reports, if any, received from insurance underwriters
as to the condition thereof. To the best of the knowledge of the
Sellers and the Companies, the Companies are not in default with
respect to any of the provisions contained in any insurance policy
listed in Schedule 3.14.1 and has not failed to give any notice or
present any claim under any such insurance policy in a due and timely
fashion. The Companies or the Sellers have not received any notice or
other communication from any insurance company within the past three
years cancelling or materially amending or materially increasing the
annual or other premiums payable under any of the insurance policies
relating to or affecting the Businesses, and, to the best of Sellers'
and the Companies' knowledge, no such cancellation, amendment or
increase of
premium is threatened which individually or in the aggregate would have
a Material Adverse Effect.
3.15.1 Absence of Changes: Since March 31, 1997 there has not been:
(c) any change in the operations, business, assets or financial
condition of either Company or the Businesses, other than a
change in the Ordinary Course, which has resulted or which
will result in any Material Adverse Effect;
(d) any damage, destruction or loss, or other event, development
or condition of any nature (whether or not covered by
insurance) affecting the business, assets, properties or
future prospects of either Company or the Businesses or their
ability to be carried on as now carried on;
(e) any termination of any material relationship or arrangement of
either Company with any customers of, or suppliers to either
Company or either Business;
(f) any change in the accounting methods or practices followed by
either Company or any change in the depreciation or
amortization or valuation policies or rates adopted by either
Company with respect to either Business or their assets save
and except for any changes required by GAAP; or
(g) any actual or threatened labour disturbance, strike, work
stoppage, slow-down, lockout, labour dispute or any apparent
or threatened union organizing activities involving the
Employees, customers or suppliers of either Company or either
Business;
3.15.2 Except as fully described in Schedule 3.15.2, since March 31, 1997, the
Companies have not: (a) transferred, assigned, sold, licensed or
otherwise disposed of (or agreed to do any of
the foregoing) any of the assets shown in the Financial
Statements or discharged, satisfied or cancelled any debts,
obligations, liabilities or claims related to or affecting the
Companies or the Businesses except, in each case, in the
Ordinary Course;
(b) incurred or assumed any debt, obligation or liability with
respect to either Company or Business, whether absolute,
accrued, contingent, due, to become due, or otherwise, except
for Permitted Encumbrances and except for liabilities incurred
in the Ordinary Course;
(c) waived any rights of substantial value, or entered into any
commitment or transaction not in the Ordinary Course where
such loss, waiver, commitment or transaction is or would be
material in relation to either Company or Business;
(d) made, promised or otherwise became committed to provide any
increases in compensation or benefits in respect of Employees
other than in the Ordinary Course.
The Buyer acknowledges that a 5% salary increase in December
of 1997 was in the Ordinary Course;
(e) except for Permitted Encumbrances, mortgaged, pledged,
subjected to lien, granted a security interest in or otherwise
encumbered any of the Companies' property or assets;
(f) failed to replenish the Businesses' inventories and supplies
in the Ordinary Course or made any material purchase
commitment out of the Ordinary Course, save and except for the
purchase of 50,000 feet of copper at $5.04 per foot in
February, 1998 or made any material change in the selling,
pricing, advertising or personnel practices or policies. The
Buyer acknowledges that a price increase of between 3-4% was
anticipated effective April 1, 1998;
(g) made any material change in the manner of the billing
procedures, or the credit terms made available to any of the
Companies' customers; or
(h) made any write-down of the Companies' assets or any write-off
as uncollectible of the Companies' accounts receivable or any
portion thereof, other than in the Ordinary Course.
3.16 Prior Transactions:
(a) Rainbow Business. Notwithstanding anything else contained
herein, Sellers have
----------------
caused the Companies to transfer the assets currently used by them in
their business of the manufacture, sale, distribution and service of spot
welders (the "Rainbow Assets") together with all liabilities relating
thereto whether known or unknown, current, contingent, or otherwise (the
"Rainbow Liabilities") to a new corporation formed by the Sellers for the
purposes of acquiring the Rainbow Assets and the Rainbow Liabilities.
Schedule 3.16(a) sets out and discloses a complete list of all the Rainbow
Assets and the Rainbow Liabilities, the mechanism and process to be used
for such transfer, and all particulars relating thereto including, without
limitation, the payment and allocation of the purchase price for such
transfer. The transaction described above in this paragraph 3.16(a) has
been fully effected without any resultant liability, including without
limitation, any Tax liability, of or to the Business or the Companies,
except and to the extent that same has been incorporated into the Net Worth
Value and Buyer's Calculation;
(b) Other Transactions. Notwithstanding anything else contained
herein, Sellers have completed the transactions as outlined in
Schedule 3.16(b). The transaction described above in this
paragraph 3.16(b) has been fully effected without any
resultant liability, including without limitation, any Tax
liability, of or to the Business or the Companies, except and
to the extent that same has been incorporated into the Net
Worth Value and Buyer's Calculation.
3.17 Miscellaneous Legal Compliance: Neither the aggregate value of the
assets in Canada nor the gross revenues from sales in, from or into
Canada of Companies and their affiliates, each determined in accordance
with the provisions of the Notifiable Transactions Regulations made
pursuant to the Competition Act, exceed $35,000,000.00.
The Companies are not parties to any agreement, indenture, mortgage,
lease or instrument, or subject to any restriction in its respective
constating documents or subject to any restriction imposed by
regulatory authorities having jurisdiction over it or subject to any
Law or to any writ, judgment, injunction or decree of any court or
federal, provincial, municipal or other governmental department,
commission board or instrumentality which might prevent or interfere
with their use of the assets used in the Businesses or which may limit
or restrict or otherwise adversely affect the operations, properties,
assets or financial condition of the Companies or the Businesses, other
than (i) statutory provisions and restrictions of general application
to the Companies or the Businesses; (ii) the Permits; (iii) the
requirement to obtain Approvals; and (iv) the requirement to obtain
Consents.
The operation, conduct of the Businesses and the ownership and
operation of the Companies' properties and assets have at all times
been in full compliance with all Laws and all judgments, orders,
decisions of any court, arbitrator or governmental authority.
No person is entitled to any broker, finder, intermediary or financial
advisory fee or other commission in respect of this Agreement or the
transactions contemplated hereby, except for professional fees incurred
by the Sellers or the Companies, such fees to be paid by Sellers or the
Companies as the case may be.
3.18 No Misstatements or Omissions; Disclosure: All documents, agreements
and other instruments delivered pursuant to this Agreement or annexed
hereto as a Schedule or Exhibit are true, correct and complete copies
of the originals thereof. None of the representations, warranties and
statements of fact made by or on behalf of the Sellers or the Companies
in this Agreement contains any untrue statement of fact or omits to
state any fact necessary to make any such representation, warranty or
statement not misleading to a prospective purchaser of the Shares
seeking full information as to Businesses, the Companies and its
properties and assets.
3.19 Survival of Representations and Warranties: Each and every
representation and warranty of Sellers contained in this Agreement
shall survive the Closing and shall continue and remain in full force
and effect for a period of: (a) in the case of any representation or
warranty relating to Tax, from the Closing Date until the date which is
120 days after the expiration of all time periods provided for making
any assessment or reassessment of Tax, interest or penalties, including
all relevant appeal periods, for any and all taxation periods of
Companies related to or including reference to the Business completed
prior to the Effective Date; (b) in the case of any representation or
warranty relating to the Sellers having title to the Shares,
indefinitely; and (c) all other representations and warranties of
Sellers contained in this Agreement, for a period of eighteen (18)
months following the Closing Date. Each of the representations and
warranties of Sellers contained in this Agreement shall be separate and
independent and, save as expressly provided to the contrary, shall not
be limited by reference to or inference from any other representation
or warranty or any other term or condition of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Representations and Warranties: Buyer hereby represents and warrants to
and in favour of Sellers as follows and acknowledges that the Sellers
are relying upon such representations and warranties in connection with
the sale of the Shares. Buyer is a corporation duly incorporated and
organized, and is a valid and subsisting corporation, under the laws of
Ontario.
Buyer has the corporate power and capacity to enter into, execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Buyer of this Agreement and the
consummation of all transactions contemplated hereby have been duly and
validly authorized. This Agreement has been duly and validly executed
and delivered by Buyer and constitutes a valid and binding agreement of
Buyer, enforceable against Buyer in accordance with its terms.
No person is entitled to any broker, finder, intermediary or financial
advisory fee or other commission in respect of this Agreement or the
transactions contemplated hereby, except for professional fees incurred
by Buyer, which fees shall be paid by Buyer.
ARTICLE V
COVENANTS AND AGREEMENTS OF SELLERS
5.1 Conduct of the Business prior to Closing: Sellers jointly covenant and
agree with Buyer that between the date of this Agreement and the
Closing Date, they shall ensure that the Companies carry on business
only in the Ordinary Course and shall not, without the prior written
approval of Buyer, acquire any asset or enter into or assume any
commitment, obligation or liability other than in the Ordinary Course
of business.
5.2 Further Agreements and Covenants of Sellers and Companies: Sellers
covenant and agree that, from and after the date of this Agreement to
and including the Closing Date, except as and to the extent, if any,
either otherwise provided specifically herein or as and to the extent
that Buyer specifically consents thereto in writing, Sellers and
Company shall preserve the Businesses intact, and Sellers and Companies
shall at their cost obtain all Approvals and Consents and shall provide
Buyer with copies of all submissions and correspondence relating
thereto.
Sellers covenant and agree that, from the date of this Agreement up to
and including the Closing Date, they will permit Buyer (itself and
through its representatives) full access to Companies' offices, plant,
properties, books, contracts and other documents with respect to or
relating to the Companies, as Buyer may request and, without charge to
Buyer, provide to Buyer (itself and its representatives) copies of any
existing operating and procedure manuals relating in any way to
Companies' computer systems (and the personnel responsible
for and familiar with such systems) used or relied upon by the
Companies in any aspect of the Businesses. Without limiting the
generality of the foregoing, Sellers and Companies shall co-operate
with the representatives and advisors of Buyer so that Buyer may review
the applicable records of the Companies from which the Financial
Statements were prepared, together with the working papers of the
Accountants, so as to confirm that the information shown on the
Financial Statements and which formed the basis for the Purchase Price
is accurate in all material respects.
Sellers shall cause the Companies between the date of this Agreement
and the Closing Date, forthwith after becoming aware of the same, to
disclose to Buyer in writing in reasonable detail any event,
circumstance or statement of facts (including any omission to act) that
occurs between the date of this Agreement and the Closing Date which
has or could have a Material Adverse Effect. True, correct and complete
copies of all instruments and documents listed, described or referred
to in all the Schedules hereto, including without limitation all
material Contracts, written Plans, descriptions of unwritten Plans,
have been delivered, or will be delivered forthwith, to Buyer.
ARTICLE VI
OTHER AGREEMENTS OF THE PARTIES
6.1 Real Property Leases: Intentionally Left Blank.
6.2 Termination/Severance/Retirement Payments and Allowances: Schedule 6.2
sets out and describes the termination, severance and retirement
allowances or payments and the respective dates thereof that will arise
immediately after the Closing and prior to the release of funds and
documents from escrow and shall be payable by each of the Companies to
the employees listed therein, less all applicable withholdings, setting
out in each case the payor, payee, and the amount to be paid, all such
payments being proper expenses of the Companies fully deductible by the
respective payee as a legitimate business expense for income tax
purposes. Upon receipt of the payments described in Section 6.2, the
respective payees shall provide the Companies and the Buyer with a
receipt and release relating to any claims for bonuses, severance,
termination or retirement payments or allowances, in a form
satisfactory to the Buyer.
6.3 Security:
6.3.1 Sellers shall provide Buyer with a first mortgage (the "Mortgage") on
the Property in an amount of one million five hundred thousand dollars
($1,500,000.00) in the form attached as Exhibit 6.3, as security for
the following:
(a) for any Loss, as defined in Section 9.1.2 hereof;
(b) the payment of all Taxes accrued for the period prior to the
Effective Date; and
(c) for the repayment to Buyer of any overpayment of the Purchase
Price as may be determined and required in accordance with
Section 2.3.2 hereof.
6.3.2 For greater clarification and notwithstanding anything else contained
herein, the parties agree and acknowledge that Buyer may exercise its
rights under the Mortgage only during the following periods:
(a) during the survival period stipulated in Section 3.19(a), for
matters contemplated by Section 6.3.1(a) if same are
contemplated by Sections 3.19(a) or 3.19(b) and for matters
contemplated by Section 6.3.1(b); and
(b) during the survival period stipulated in Section 3.19(c), for
matters contemplated by Section 6.3.1(a) which are not
contemplated by 3.19(a) or 3.19(b) and for matters
contemplated by Section 6.3.1(c).
6.3.3 Notwithstanding anything else contained herein, the Buyer's remedies
and recourse against the Sellers for any Loss, liability or claim of
any nature whatsoever arising under or in connection with this
Agreement shall be limited to its rights under the Mortgage, except
for:
(a) except for technical deficiencies in the minute book
documentation which do not impair title in or to the Shares,
claims that arise from a breach, misstatement or inaccuracy of
the representations and warranties contained in Section 3.3(a)
which representations and warranties survive indefinitely and
for which the Buyer shall not be limited as to its remedies or
recourse; and
(b) the rights of set-off provided in Section 9.7.
6.3.4 Notwithstanding anything else contained herein, unless proceedings
under Article IX in respect of a Loss for which the applicable survival
period has not expired prior to the commencement of such proceedings or
proceedings have been commenced and are actively being pursued on the
31st day of December, 2002, the Mortgage shall be deemed to have
expired and be of no further force or effect on the 31st day of
December, 2002 (and Buyer agrees to provide Sellers with a discharge of
the Mortgage on demand made by any of Sellers at any time after
December 31, 2002).
6.4 Tax Covenants:
6.4.1 Tax Indemnification of Buyer: Notwithstanding any other provision of
this Agreement but subject to the provisions of Section 6.3.3, Sellers
hereby agree to indemnify Buyer and its Affiliates against and hold it
harmless from (i) all liability for Taxes of the Companies (on account
of their business activities or the business activities of RBI)
attributable to such entities' business activities up to the Effective
Date (the "Pre-Closing Tax Period"), (ii) all liability whenever
incurred for Taxes of Sellers, and (iii) any liability resulting from a
failure of any of Sellers to fulfil their obligations under this
Section 6.4
6.4.2 Tax Indemnification of Sellers: Notwithstanding any other provision of
this Agreement, Buyer hereby agrees to indemnify Sellers and hold them
harmless from (i) any liability for Taxes of the Companies attributable
to any taxable periods or portions thereof commencing
after the Pre-Closing Tax Period, and (ii) any liability resulting from
a failure of Buyer to fulfil its obligations under this Section 6.4.
6.4.3 Closing of Taxable Period: Each of Buyer and Sellers agree to cause the
Companies to file all appropriate Federal, Provincial, local and
foreign tax returns (the "Tax Returns") on the basis that the relevant
taxation period ended as of the end of the day prior to the Effective
Date.
6.4.4 Preparation and filing of Tax Returns by Sellers: Sellers shall prepare
and timely file or shall cause the preparation and timely filing of all
appropriate Tax Returns that include the income of the Companies for
all periods ending on or before the Effective Date. Buyer will
co-operate with Sellers in making available to them any records
necessary to enable them to comply with this sub-section 6.4.4. At the
request of Sellers, Buyer shall cause the companies to grant a Power of
Attorney to such persons as Sellers may designate to file such Tax
Returns in the name of the Companies.
6.4.5 Preparation and Filing of Tax Returns by the Companies: Buyer and/or
the Companies shall
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prepare and timely file or shall cause the preparation and timely
filings of all Tax Returns of any kind with respect to the Companies that
are in respect of taxation years ending after the Effective Date. Sellers
will co-operate with Buyer and the Companies in making available to Buyer
any records necessary to enable Buyer and the Companies to comply with this
sub-section 6.4.5. For all tax periods commencing after the Effective Date,
Buyer and the Companies shall have responsibility for the preparation and
filing of all Tax Returns relating to the assets, operations and income of
the Companies.
6.4.6 Payment of Taxes by Sellers Directly to Taxing Authorities: Sellers
shall cause to be accrued on the closing balance sheet prepared in
respect of the Buyer's Calculation all Taxes due with respect to Tax
Returns which are required to be filed pursuant to this Agreement.
6.4.7 Payment of Taxes by Sellers to Buyer. With respect to any Tax due by
the Companies for any taxation year ending after the Effective Date
with respect to Tax liability relating to the activities of RBI for
periods prior to the Effective Date, Sellers shall pay such amount due
to Buyer or the Companies on or before the due date, including
extensions for the payment of taxes with respect to the Tax Return to
be filed by Buyer and/or Companies. Any tax credits and any exemptions,
allowances or deductions that are calculated on an annual basis, such
as the deduction for depreciation, shall be apportioned on a time
basis.
6.4.8 Consolidated and Unitary Tax Returns. Sellers agree to permit Buyer to
cause either of the Companies to elect, where permitted by law, to
carry forward any net operating loss, net capital loss, charitable
contribution or other item arising after the Effective Date that would,
absent such election, be carried back to a taxable period of either of
the Companies ending on or before the Effective Date.
6.4.9 Co-operation in Preparing and Filing Returns. Sellers and Buyer shall,
and Sellers and Buyer shall cause the Companies to, co-operate fully
with each other in connection with the preparation and filing of the
Tax Returns or other tax returns, including but not limited to
the furnishing or making available of records, books of account and any
other information necessary for the preparation of any tax returns.
Buyer shall, and Buyer shall cause the Companies to, provide Sellers
with completed Tax Returns or tax return information packages for the
Companies including, but not limited to, all supporting documentation
as required in prior years for taxation years ending on or prior to the
Effective Date. Sellers shall furnish Buyer with completed federal and
provincial Tax Returns or with pro-forma returns for the Companies by
the earlier of ninety (90) days after receipt of all information
required for the proper completion of such returns or on or before
thirty (30) days prior to the due date of such returns.
6.4.10 Transfer Taxes. Intentionally Left Blank.
6.4.11 Negotiation, Settlement or Contest of Tax Disputes. Sellers and their
duly appointed
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representatives shall have the sole right to supervise or otherwise
coordinate any tax examination process and to negotiate, resolve, settle or
contest any asserted Tax deficiencies or assert and prosecute any claim for
refund of Taxes (a "Tax Claim") for taxation years ending on or before the
Effective Date. In addition, Sellers shall be entitled to participate at
their expense in the defense of any Tax Claim relating to any taxation
years that includes the Effective Date for which Sellers may be required to
pay amounts to Buyer and/or the Companies pursuant to this Agreement and
with the written consent of Buyer (which shall not be unreasonably
withheld) and/or the Companies, and at the Sellers' sole expense, may
assume the entire defense of such Tax Claim. Buyer shall not, and shall not
allow either of the Companies to, settle any Tax Claim for a year or period
ending on or before the Effective Date or including the Effective Date
without the consent of Sellers (which shall not be unreasonably withheld)
if, with respect to such claim, Sellers would be required to pay amounts to
Buyer and/or the Companies pursuant to this Agreement.
6.4.12 Co-operation in Connection with Examinations. Buyer shall, and shall
cause the Companies
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to, give prompt notice to Sellers of the assertion of any claim, or
the commencement of any suit, action, proceeding, investigation or audit
with respect to any Tax Return for any period or portion thereof ending on
or before the Effective Date that includes the operations of the Companies,
describing in reasonable detail the facts pertaining thereto and the amount
or an estimate of the amount of the liability arising therefrom. Sellers
and Buyer shall, and the Buyer shall cause the Companies to, co-operate
fully in any such action by furnishing or making available records, books
of account or other materials or taking such other actions as may be
necessary or helpful for the defense against the assertions of any taxing
authority as to any consolidated, combined or separate Tax Return for such
periods.
6.4.13 Assignment of Tax Refunds. Buyer shall, and shall cause the Companies
to, assign and pay over to Sellers promptly upon receipt all Tax
refunds, including interest, received by any of them relating to the
Companies with respect to any taxation years ended as of or prior to
the close of business on the Effective Date which were not taken into
account and included in the determination of the Net Worth Value.
Sellers shall assign and pay over to Buyer promptly upon receipt all
Tax refunds, including interest, received by any of them relating to
the Companies with respect to any taxable year or period ended after
the Effective Date.
6.4.14 Record Retention. Seller and Buyer shall retain, and cause the
Companies to retain, full and
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complete records for all taxation years which remain subject to audit
by action of statute or waiver for all periods or portions thereof through
and including the Effective Date. To the extent that such records are
currently maintained in both a hard copy and an electronic media format,
the Parties agree to cause both such types of records that pertain to the
income or operations of the companies prior to the close of business on the
Effective Date to be retained by Companies and not to be destroyed or
altered without prior written approval of Sellers or Buyer, as the case may
be. The Parties agree to cause the Companies to enter into such record
retention agreements as may be requested by Revenue Canada with respect to
all tax periods ending on or prior to the Effective Date.
6.4.15 Survival. All rights and obligations provided for in this Section 6.4
shall remain in force notwithstanding any other provision of this
Agreement, except in the event of termination of this Agreement
pursuant to Section 7.3 or Section 8.2.
6.4.16 Priority of Section. In the event of a conflict between the provisions
of this Section and any other provision of this Agreement, the
provisions of this Section 6.4 shall prevail.
6.5 Change of Name. Within ten (10) days of the Closing Date, the Buyer
shall cause RES to change its name to a name that does not include the
word "Rainbow" or the word "Spotwelding".
6.6 Collection of Accounts Receivable. If Buyer receives or either of the
Companies receive any payment in respect of an Account Receivable
relating to a transaction that occurred prior to the Effective Date and
which was not included in the Net Worth Calculation, then Buyer shall
promptly pay or cause the Companies to pay the amount of such Account
Receivable to the Sellers or as the Sellers shall jointly direct. Any
such payment shall be deemed to have increased the Purchase Price by
the amount of such payment. Any Account Receivable which was not
included in the Net Worth Calculation is hereby assigned to Sellers for
no additional consideration.
6.7 Temporary Occupancy. Notwithstanding the execution and delivery of the
Lease, as described in section 7.3 below, the parties agree that the
corporation owned and controlled by the Sellers which is the owner of
the Rainbow Assets shall be permitted to continue to operate from the
Property for a period of up to sixty (60) days from the Closing Date so
long as all such operations and activities are not in breach of and are
subject to the terms and conditions of the Lease as if such company
were also a tenant, and with the understanding and limitation that its
employees and agents shall only be permitted access to the Property
during the regular business hours of RBR and RES, or upon prior notice
and the reasonable agreement of RBR and RES. The Sellers hereby agree
to indemnify RBR and RES against and hold them harmless from all
losses, damages, expenses or liabilities of whatever nature or kind
caused directly or indirectly by such occupation by such company or the
removal of its assets from the Property.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
TO COMPLETE THE TRANSACTION
7.1 Conditions Precedent: The obligation of Buyer to complete the
transactions contemplated by this Agreement on the Closing Date is
subject to and contingent upon the prior satisfaction of or compliance
with at or before the Time of Closing, each of the following conditions
precedent, each of which is hereby acknowledged to be inserted for the
exclusive benefit of Buyer and which may be waived by it in its sole
discretion:
7.1.1 Truth and Accuracy of Representations of Sellers: All of the
representations and warranties
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of Sellers made in or pursuant to this Agreement, shall be true and
correct in all respects from and after the date of this Agreement to and
including and as at the Effective Date and the Closing Date and with the
same effect as if made throughout such period and as at the Closing Date
(except as such representations and warranties may be affected by the
occurrence of events or transactions expressly contemplated and permitted
hereby) and Buyer shall have received certificates from the Sellers and the
President of the Companies certifying the truth and correctness of each of
the representations and warranties of Sellers contained herein;
7.1.2 Performance of Obligations: Each of the Sellers shall have performed or
complied with all their respective obligations, covenants and
agreements hereunder and Buyer shall have received a certificate from
the Sellers certifying the performance of or compliance with all of its
and their Companies' obligations, covenants and agreements hereunder;
7.1.3 Receipt of Closing Documentation: All documentation relating to the due
authorization and completion of the purchase and sale of the Shares and
all actions and proceedings taken on or prior to the Time of Closing in
connection with the performance by Sellers of their obligations under
this Agreement shall be reasonably satisfactory to Buyer and the
Buyer's Solicitors and Buyer shall receive copies of all such
documentation or other evidence as it may reasonably request, in form
and substance reasonably satisfactory to Buyer and Buyer's solicitors;
7.1.4 Approvals and Consents: All Approvals and Consents required in
connection with the completion of any of the transactions contemplated
by this Agreement, the execution of this Agreement, or the performance
of any of the terms and conditions hereof shall have been obtained and
delivered to Buyer;
7.1.5 Releases: There shall have been delivered to Buyer a general release by
Sellers of all of their claims in respect of the Businesses and the
Companies up to and including the Closing Date;
7.1.6 Opinion of Sellers' Solicitors: Buyer shall have received an opinion
dated the Closing Date from Sellers' Solicitors substantially in the
form of Exhibit 7.1.7 hereto;
7.2 Non-Competition: Contemporaneously with the Closing, each of the
Sellers shall have executed and delivered to Buyer, Mestek and to
Companies a non-competition and confidentiality agreement in the form
of Exhibit 7.2, whereunder each of Sellers will agree, among other
things, not to compete directly or indirectly with the Buyer, Mestek or
the Companies in the Business in Canada, the United States, Mexico,
Japan, Peoples Republic of China, Lithuania, Latvia, Estonia, Russia
and the Ukraine, for a period of five (5) years from the Closing Date.
It is agreed that the business of the manufacture, sale, distribution
and service of spot welders shall be excluded from these
non-competition agreements;
7.3 Lease: Contemporaneously with the Closing, each of the Sellers, as
landlord of the property and building municipally known as ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Property"), and RBR and
RES as lessees, shall enter into a lease (the "Lease") in the form
attached as Exhibit 7.3. Interests held by the Companies as lessee
under such lease shall be free and clear of any and all Encumbrances
other than Permitted Encumbrances. The Lease shall be in full force and
effect, in good standing, unamended and be a valid, binding lease
enforceable by the respective Company. The term of the Lease shall end
on February 28, 2000. The landlords under the Lease are the owners of
the Property and are not themselves tenants. The rental charge under
the Lease is $4.50 per square foot on a triple net basis.
7.4 Failure to Meet Conditions: In case any of the conditions set forth in
this Agreement are not satisfied in full on or before the Time of
Closing, Buyer may at any time terminate this Agreement by notice in
writing to Sellers and in such event Buyer shall be released from all
obligations hereunder, without in any way limiting any other rights or
remedies which may be available to Buyer at law or in equity or
otherwise; provided, however, that Buyer shall be entitled to waive
compliance with any such conditions in whole or in part if it sees fit
to do so without prejudice to any of its rights of termination in the
event of non-performance of any other condition in whole or in part,
any such waiver to be binding upon Buyer only if the same is in
writing.
7.5 Non-Waiver: No investigations made by or on behalf of Buyer, nor any
actions taken by or on behalf of Buyer, at any time, shall have the
effect of waiving, diminishing the scope of or otherwise affecting any
representation, warranty, covenant or agreement made by Sellers or the
Shareholders herein or in any document, instrument or agreement
delivered pursuant hereto.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
TO COMPLETE THE TRANSACTION
8.1 Sellers' Conditions: The obligations of Sellers to complete the sale of
the Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Date, each of the following
conditions precedent, each of which is hereby acknowledged to be
inserted for the exclusive benefit of Sellers and which may be waived
by it in its sole discretion:
8.1.1 Truth and Accuracy of Representations of Buyer at Closing Time: All of
the representations and warranties of Buyer made in or pursuant to this
Agreement shall be true and correct in all respects from and after the
date of this Agreement to and including and as at the Effective Date
and the Closing Date and with the same effect as if made throughout
such period and at and as of the Closing Date and Seller shall have
received a certificate from a senior officer of Buyer certifying the
truth and correctness of the representations and warranties of Buyer
hereunder;
8.1.2 Performance of Agreement: Buyer shall have performed or complied with
all its obligations, covenants and agreements hereunder and Sellers
shall have received a certificate from a senior officer of Buyer
certifying the performance of and compliance with all of its
obligations, covenants and agreements; and
8.1.3 Receipt of Closing Documents: All documentation relating to the due
authorization and completion of the purchase and sale of the Shares and
all actions and proceedings taken on or prior to the Time of Closing in
connection with the performance by Buyer of its obligations under this
Agreement shall be reasonably satisfactory to Sellers and the Sellers'
Solicitors and Seller shall receive copies of all such documentation or
other evidence as it may reasonably request, in form and substance
reasonably satisfactory to Seller and Sellers' solicitors;
8.1.4 Opinion of Buyer's Solicitors: Sellers shall have received an opinion
dated the Closing Date from Buyer's Solicitors, substantially in the
form annexed hereto as Exhibit 8.1.4.
8.2 Consulting Agreements: Contemporaneously with the Closing, RBR shall
have entered into consulting agreements with each of ▇▇▇▇▇▇▇ and
Antonio, in substantially the form of Exhibit 8.2.
8.3 Failure to Meet Conditions: In case any of the conditions set forth in
this Agreement are not satisfied in full on or before the Time of
Closing, Sellers may at any time terminate this Agreement by notice in
writing to Buyer and in such event Sellers shall be released from all
obligations hereunder, without in any way limiting any other rights or
remedies which may be available to Sellers, at law or in equity or
otherwise; provided, however, that Sellers shall be entitled to waive
compliance with any such conditions in whole or in part if it sees fit
to do so without prejudice to any of its rights of termination in the
event of non-performance of any other condition in whole or in part,
any such waiver to be binding upon Sellers only if the same is in
writing.
ARTICLE IX
INDEMNITIES
9.1 Definitions
In this Article 9 the following terms shall have the following meanings
respectively:
9.1.1 "Breach" means any non-performance of any covenant or agreement to be
observed or performed by Sellers under this Agreement or any document,
agreement or instrument delivered pursuant hereto or any incorrectness,
misstatement or breach of any representation
or warranty of Sellers contained in this Agreement or in any
certificate or other document furnished by Seller;
9.1.2 "Loss" means the aggregate of the amount necessary to put Buyer
or Companies into the position (financial or otherwise) which would have
existed if a Breach had not occurred, including any diminution in the value
of the Businesses, the Companies or the Shares, and all damages, claims,
demands, actions, causes of action, costs, liabilities, taxes, fines,
penalties or expenses (including all reasonable legal expenses incurred by
Buyer or Companies on a solicitor and client basis) which may be made or
brought or levied against Buyer or Companies or which either of them may
suffer or incur as a result of, in respect of, or arising out of a Breach;
and
9.1.3 "Claim" means any event, action or proceeding that may result in a Loss.
9.2 Indemnification
From and after the Closing, Sellers jointly and severally covenant and
agree to indemnify and save Buyer fully harmless from and against any
Loss subject to a deductible in the aggregate of $25,000.00. Any amount
payable pursuant to this Article 9 shall bear interest at a rate per
annum equal to the prime rate of interest charged by Buyer's bank from
time to time, calculated and payable monthly, before and after
judgment, with interest on overdue interest at the same rate, from the
date the Breach occurred or the Claim arose (whichever is the earlier)
to the date of payment.
9.3 Notification
Buyer shall notify Sellers promptly after it becomes aware of any
matters for which they may be liable under section 9.2 and subject to
the provisions of section 9.4 hereof Sellers shall have the right to
participate in any negotiations with respect thereto.
9.4 Right to Dispute
Sellers shall at all times have the right at its sole expense to
resist, defend, compromise or settle any Claim which may result in a
Loss, provided, however, that:
9.4.1 Seller must give notice to Buyer of its intent to do so, promptly after
receipt of notification from Buyer pursuant to section 9.3;
9.4.2 Seller must do so diligently and reasonably throughout the period while
such Claim exists;
9.4.3 with respect to any Claim which results from a reassessment of Tax, the
rights of Sellers under this section 9.4 shall apply only after payment
of, or provision of security for the amount of any such re-assessment
where such payment or provision of security is required to be made
notwithstanding any dispute relating thereto. Promptly after the
reimbursement to Buyer of any amount paid by Sellers in respect of any
re-assessment which is finally determined not to be due, Buyer shall
repay the amount so received by it to them together with any interest
paid to it thereon;
9.4.4 failing prompt receipt by Buyer, of the notice referred to in
subsection 9.4.1 hereof, Buyer may resist, defend, compromise or settle
such Claim without the participation or consent of Sellers;
9.4.5 if Sellers at any time fail to resist and defend diligently and
reasonably any Claim pursuant to this section 9.4, their right to
defend the Claim shall terminate at the option of Buyer. In such event,
Buyer may assume the defence of such Claim and may resist, defend,
compromise or settle such Claim without the participation or consent of
Sellers.
9.5 Cooperation of Buyer
During the period that Sellers are entitled to defend any Claim
pursuant to section 9.4, Buyer shall (but at the expense of Sellers)
co-operate with Sellers in connection with the defence of such Claim
and shall provide Sellers with access to and copies of all relevant
books and records relating to such Claim provided that if Buyer
re-assumes the defence of such Claim as provided in subsection 9.4.5,
all such information and material shall be forthwith returned to Buyer.
9.6 Limitation
The obligations of Sellers under this Article 9 are subject to the
limitations set forth in Article 3 relating to the survival of the
representations and warranties referred to in this Agreement.
9.7 Set-Off
Buyer may set-off any amounts owed to Sellers under the Lease against
any amounts owing to Buyer as repayment of any overpayment of the
Purchase Price as determined in accordance with Section 2.3.2(b). There
shall be no other right of legal or equitable set-off arising from or
related to this Agreement in favour of Buyer, Mestek or Companies
against any amount contemplated by this Agreement or any Exhibit to
this Agreement.
ARTICLE X
NOTICES
10.1 Method of Delivery
Any notice, demand or other communication (hereinafter in this section
10.1 called a "notice") required or permitted to be given to any party
hereunder shall be in writing and shall be personally delivered to such
party or director or a responsible officer of such party, or sent by
telecopier, confirmed by pre-paid courier.
10.2 Addresses for Delivery
Any notices given pursuant to section 10.1 shall be sent to the party
or parties, as the case may be, at their respective addresses set out
below:
(a) in the case of a notice to Buyer or Mestek, at:
Mestek Canada Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: The President
with a copy to:
Mestek, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
U. S. A.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Barristers & Solicitors
BCE Place
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Q.C.
(b) in the case of a notice to Sellers, at:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
with a copy to:
Pallett Valo
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or at such other address as the party to whom such notice is
to be given shall have last notified the party giving the same
in the manner provided in this Article 10.
10.3 Timing of Delivery
Any notice given by personal delivery or by telecopier shall be deemed
to be given and received on the date of delivery or telecopier
transmission, as the case may be, provided that if such day is not a
Business Day, then the notice shall be deemed to have been given and
received on the Business Day next following such day. Any notice given
by pre-paid courier shall be deemed to have been given and received on
the date delivered by such courier, provided that if such day is not a
Business Day, then the notice shall be deemed to have been given and
received on the Business Day next following such day.
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances
Each party hereto hereby agrees that it will do all such acts and
execute all such further documents, conveyances, deeds, assignments,
transfers and the like, and will cause the doing of all such acts and
will cause the execution of all such further documents as are within
its power as any other party hereto may in writing from time to time
reasonably request be done and/or executed, in order to consummate the
transactions contemplated hereby or as may be necessary or desirable to
effect the purpose of this Agreement or any document, agreement or
instrument delivered pursuant hereto and to carry out their provisions
or to better or more properly or fully evidence or given effect to the
transactions contemplated hereby, whether before or after the Closing
Date.
11.2 Expenses
Each party hereto shall pay all of their own expenses incurred in
connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated
hereunder, whether or not the Closing occurs, including without
limitation all fees and expenses of their respective legal counsel,
accountants or other representatives or consultants. It is understood
that any amounts paid by the Companies shall be permitted expenses
provided same are rendered and paid prior to the determination of the
Net Worth of the Companies.
11.3 Benefit and Binding Nature of Agreement
This Agreement shall enure to the benefit of and shall be binding upon
the parties hereto together with their respective heirs, executors,
successors and assigns but shall not be assignable by any party hereto
without the prior written consent of the other parties hereto.
11.4 Confidentiality
If the transaction contemplated by this Agreement is not completed,
Buyer shall not, except as contemplated below, directly or indirectly,
use for its own purposes or communicate to any other Person any
confidential information or data relating to Sellers, Companies or to
the Businesses which becomes known to Buyer, its accountants,
professional advisers or representatives as a result of Sellers' making
the same available in connection with the transaction contemplated
hereby. The foregoing shall not prevent Buyer from disclosing or making
available to its accountants, professional advisers and bankers and
other lenders, whether current or prospective, any such information or
data for the purposes of completing the transactions contemplated
herein.
11.5 Publication
No party shall, between the date of this Agreement and the Closing
Date, without the prior written consent of the other party hereto, make
any public statement or release to the press concerning the
transactions contemplated by this Agreement except as may be necessary,
in the opinion of Seller's Solicitors and Buyer's Solicitors, to comply
with the requirements of any Law or the order or judgment of a court or
tribunal of competent jurisdiction. If any such public announcement,
statement or release is so required, the parties will consult prior to
making such announcement, statement or release, and shall use their
best efforts, acting reasonably and in good faith, to agree upon the
form and substance thereof.
11.6 Currency
All amounts expressed herein, unless otherwise expressly stated, shall
be in lawful money of Canada.
11.7 Counterparts
This Agreement may be executed in one or more counterparts. Each such
counterpart shall for all purposes be deemed to be an original, but all
such counterparts shall together constitute one and the same
instrument.
11.8 Guarantee of Mestek
Mestek hereby guarantees the performance of the obligations of Buyer
pursuant hereto and agrees to indemnify and hold Sellers harmless from
and in respect of any damages, claims or expenses (including without
limitation, legal fees on a solicitor and client basis) against Buyer
arising out of or in connection hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
Sellers:
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇ /S/ PALLETT VALO
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▇▇▇▇▇ ▇▇▇▇▇▇ Witness
/S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /S/ PALLETT VALO
------------------------------------ ---------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Witness
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /S/ PALLETT VALO
------------------------------------ ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Witness
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /S/ PALLETT VALO
------------------------------------ ---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Witness
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /S/ PALLETT VALO
------------------------------------ ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Witness
/S/ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /S/ PALLETT VALO
------------------------------------ ---------------------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Witness
1291893 ONTARIO INC.
Per: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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MESTEK CANADA INC.
Per: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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