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EXHIBIT 2.1
TRIAM AUTOMOTIVE INC.
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TIERCON HOLDINGS INC.
SHARE PURCHASE AGREEMENT
JULY 2, 1998
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THIS SHARE PURCHASE AGREEMENT is made the 2nd day of July, 1998
BETWEEN:
TRIAM AUTOMOTIVE INC., a corporation governed by the laws
of Ontario, (the "Vendor"),
- and -
TIERCON HOLDINGS INC., a corporation governed by the laws of
Ontario, (the "Purchaser").
RECITALS:
A. The Vendor beneficially owns and controls all of the issued and outstanding
shares of TRIAM Automotive Canada Inc., a corporation governed by the laws of
Ontario (the "Company").
B. The Vendor has agreed to sell to the Purchaser and the Purchaser has agreed
to purchase from the Vendor all of the issued and outstanding shares of the
Company, on the terms and conditions of this Agreement.
NOW THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something
inconsistent in the subject matter or context, the following words and terms
shall have the meanings set out below:
"AFFILIATE" has the meaning given in the Business Corporations Act
(Ontario), as amended from time to time;
"AGREEMENT" means this Share Purchase Agreement, including all
schedules, and all instruments supplementing or amending or confirming
this Agreement and references to "ARTICLE" or "SECTION" mean and refer
to the specified Article or Section of this Agreement;
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"AUDITOR" means Ernst & Young, Chartered Accountants;
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies or practices, whether oral or written, formal or informal,
funded or unfunded, to which the Company is a party to or bound by or
under which the Company has any liability or contingent liability,
relating to any health, dental, disability, unemployment insurance,
vacation pay, severance pay, pay equity, hospital or medical expense
programme or pension, retirement, profit sharing, stock bonus or other
benefit plan with respect to any of its Employees or former employees,
individuals working on contract with it or other individuals providing
services to it of a kind normally provided by employees;
"BOOKS AND RECORDS" means all books and records of the Company,
including financial, corporate, operation and sales books, records,
books of account, sales and purchase records, lists of suppliers and
customers, business reports, plans and projections and all other
documents, files, records, correspondence, and other data and
information, financial or otherwise, including without limitation, all
data and information stored on computer-related media;
"BUSINESS" means the manufacture of interior and exterior moldings,
painted body side and rocker moldings, and enclosure applications
carried on by the division of the Company known as the Plastics
Division;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
the principal commercial banks located at the City of Toronto are open
for business during normal banking hours;
"CLAIMS" means any claim, demand, action, cause of action, damage, loss,
costs, liability or expense, including, without limitation, reasonable
professional fees and all costs incurred in investigating or pursuing
any of the foregoing or any proceeding relating to any of the foregoing;
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares under this Agreement;
"CLOSING DATE" means the 24th day of July, 1998 or such other date as
the Parties may agree in writing as the date upon which the Closing
shall take place;
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"CLOSING STATEMENT" has the meaning given in Section 3.5;
"CLOSING TIME" means 10 o'clock a .m. Toronto time, on the Closing Date
or such other time on such date as the Parties may agree in writing as
the time at which the Closing shall take place;
"COMPANY" means TRIAM Automotive Canada Inc.;
"COMPETITION ACT APPROVAL" means (a) the issuance of an advance ruling
certificate pursuant to section 102 of the Competition Act (Canada) by
the Director of Investigation and Research appointed under the
Competition Act (Canada) (the "Director") to the effect that he is
satisfied that he would not have sufficient grounds upon which to apply
to the Competition Tribunal for an order under section 92 of such Act
with respect to the transactions contemplated by this Agreement; or (b)
that the waiting period under section 123 of the Competition Act
(Canada) shall have expired and (i) the Purchaser shall not have been
advised in writing by the Director that the Director has determined to
make an application for an order under section 92 of the Competition Act
(Canada)in respect of the transactions contemplated by this Agreement;
(ii) the Director shall not have made an application for an order under
section 100 of the Competition Act (Canada) in respect of the
transactions contemplated by this Agreement (or if made, that such order
shall have been rescinded on terms and conditions acceptable to the
Purchaser and the Vendor); (iii) to the knowledge of the Purchaser and
the Vendor, the Director shall not have commenced an inquiry in respect
of such transactions under section 10 of the Competition Act (Canada)
(or if commenced, that such inquiry shall have been terminated and any
action required to be taken shall be acceptable to the Purchaser and the
Vendor); and (iv) to the knowledge of the Purchaser and the Vendor, no
application under section 9 of the Competition Act (Canada) has been
made to the Director in respect of the transactions contemplated by this
Agreement (or if made, that any resulting inquiry shall have been
terminated and any action required to be taken shall be acceptable to
the Purchaser and the Vendor);
"CONTRACTS" means all contracts, licences, leases, agreements,
commitments, entitlements and engagements of the Company;
"CONTROL" has the meaning given in the Business Corporations Act
(Ontario);
"EFFECTIVE DATE" means 3 July 1998;
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"EFFECTIVE DATE BALANCE SHEET" means the statement of assets and
liabilities of the Company, as at the Effective Date, together with an
unqualified opinion of the Auditor to the effect that the Effective Date
Balance Sheet has been prepared in accordance with GAAP consistently
applied with those used in the Pro Forma Balance Sheet and presents
fairly in all material respects the assets and liabilities of the
Company, including the Shareholder Advances, as at the Effective Date;
"EMPLOYEES" means all persons employed or retained by the Company,
including, for greater certainty, those employees on long term
disability leave, Workers' Compensation leave, pregnancy or parental
leave or any other leave of absence;
"ENCUMBRANCES" means any pledge, lien, charge, security agreement,
lease, title retention agreement, mortgage, encumbrance, option or
adverse claim, of any kind or character whatsoever;
"ENVIRONMENT" means the environment or natural environment as defined in
any Environmental Law and includes, without limitation, air, surface,
water, ground water, land surface, soil, subsurface strata, a sewer
system and the environment in the workplace;
"ENVIRONMENTAL DISCLOSURE" has the meaning given Section 4.16;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to the
protection of the Environment, and includes, without limitation, those
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, release and disposal of Hazardous Substances;
"GAAP" has the meaning given in Section 1.5;
"GOVERNMENTAL AUTHORITY" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown
corporation, or court or other law, rule or regulation-making entity
having or purporting to have jurisdiction on behalf of any nation, or
province or state or other subdivision thereof or any municipality,
district or other subdivision thereof;
"GOVERNMENTAL AUTHORIZATIONS" means all authorizations, approvals,
licenses or permits issued to the Company in connection with the
Business by any Governmental
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Authorities;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
dangerous substance or dangerous good as defined, judicially interpreted
or identified in any Environmental Law;
"LAWS" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, notices, directions, policies, codes of
practice and judgements and all common and civil law or other
requirements of any Governmental Authority;
"LEASED PREMISES" means the premises which are the subject of the Real
Property Leases;
"MATERIAL ADVERSE EFFECT" means any event, change or circumstance which
individually or in the aggregate materially and adversely affects the
Business, business practices, operations, assets, income or financial
condition of the Company such that the balance sheet of the Company
would be negatively impacted by an amount in excess of $500,000 or such
that the Purchaser would be unable to continue to operate the Business
after Closing on substantially the same basis as the Business is
presently carried on;
"NOTICE" has the meaning given in Section 11.3;
"PARTIES" means the Vendor and the Purchaser collectively, and "Party"
means any one of them;
"PERMITTED ENCUMBRANCES" means those Encumbrances set out in Schedule
1.1;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and a
natural person in such person's capacity as trustee, executor,
administrator or other legal representative;
"PRO FORMA BALANCE SHEET" means the pro forma balance sheet of the
Company, for the period ending April 30, 1998 after giving effect to the
Reorganization, a copy of which is annexed as Schedule 4.10;
"PURCHASE PRICE" has the meaning given in Section 3.1;
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"PURCHASED SHARES" means all of the issued and outstanding shares in the
capital of the Company;
"REAL PROPERTY LEASES" means those leases and subleases of real property
relating to real property used or occupied by the Company described in
Schedule 4.15;
"REORGANIZATION" has the meaning given in Section 2.1;
"SHAREHOLDER ADVANCES" means all amounts advanced to the Company by the
Vendor as shareholder loans or otherwise and reflected in the Books and
Records;
"SHAREHOLDER ADVANCES NOTICE" has the meaning given in Section 2.3;
"SHAREHOLDERS EQUITY" means, at any time, that amount properly
classified as shareholders equity in accordance with GAAP, consistently
applied.
"SHAREHOLDER ADVANCES PRICE" means the amount of the Shareholders
Advances as at the Closing Date less the reduction in Shareholders
Equity from $1,700,000, being the amount of Shareholders Equity as at 30
April 1998 as reflected on the Pro Forma Balance Sheet, to the amount of
Shareholders Equity on the Effective Date;
"TAX RETURNS" includes, without limitation, all returns, reports,
declarations, elections, notices, filings, information returns and
statements filed in respect of Taxes; and
"TAXES" includes, without limitation, all taxes, duties, fees, premiums,
assessments, imposts, levies and other charges of any kind whatsoever
imposed by any Governmental Authority, together with all interest,
penalties, fines, additions to tax or other additional amounts imposed
in respect thereof, including, without limitation, those levied on, or
measured by, or referred to as income, gross receipts, profits, capital,
transfer, land transfer, sales, goods and services, use, value-added,
excise, stamp, withholding, business, franchising, property, payroll,
employment, health, social services, education and social security, all
surtaxes, all customs duties and import and export taxes, all license,
franchise and registration fees and all unemployment insurance, health
insurance and Canada, Quebec and other government pension plan premiums.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement and the Schedules:
(a) TIME - time is of the essence in the performance of the Parties'
respective
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obligations;
(b) CURRENCY - unless otherwise specified, all references to money
amounts are to Canadian currency;
(c) HEADINGS - the descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended
as complete or accurate descriptions of the content of such
Articles or Sections;
(d) SINGULAR, ETC. - the use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude
the application of any provision of this Agreement to such person
or persons or circumstances as the context otherwise permits;
(e) CONSENT - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification
of such approval or consent is not delivered within the
applicable time limit, then, unless otherwise specified, the
Party whose consent or approval is required shall be conclusively
deemed to have withheld its approval or consent;
(f) CALCULATION OF TIME - unless otherwise specified, time periods
within or following which any payment is to be made or act is to
be done shall be calculated by excluding the day on which the
period commences and including the day on which the period ends
and by extending the period to the next Business Day following if
the last day of the period is not a Business Day;
(g) BUSINESS DAY - whenever any payment to be made or action to be
taken under this Agreement is required to be made or taken on a
day other than a Business Day, such payment shall be made or
action taken on the next Business Day following such day.
1.3 ENTIRE AGREEMENT - This Agreement together with the agreements and other
documents to be delivered pursuant to this Agreement, constitute the entire
agreement between the Parties pertaining to the subject matter of this Agreement
and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties including the letter of
intent dated June 3, 1998 and confidentiality agreement dated_____ , 1998 and
there are no warranties, representations or other agreements between the Parties
in connection with the
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subject matter of this Agreement except as specifically set forth in this
Agreement and any document delivered pursuant to this Agreement. No supplement,
modification or waiver or termination of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby.
1.4 APPLICABLE LAW - This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein and
shall be treated, in all respects, as an Ontario contract.
1.5 ACCOUNTING PRINCIPLES - All reference to generally accepted accounting
principles means those principles recommended, from time to time, in the
Handbook of the Canadian Institute of Chartered Accountants and all accounting
terms not otherwise defined in this Agreement have the meanings assigned to them
in accordance with Canadian generally accepted accounting principles.
1.6 KNOWLEDGE -
(a) Any reference to the knowledge of the Vendor shall mean to the
best of the knowledge of the Vice President- Finance of the
Vendor after making due inquiries of senior management of the
Company.
(b) Any reference to the knowledge of the Purchaser shall mean to the
best of the knowledge of the president, chief financial officer
and advisors of the Purchaser after making due inquiries. The
Purchaser shall be deemed to have knowledge of the written
materials provided to or made available to the Purchaser and/or
its advisors by the Vendor.
1.7 DISCLOSURE - The Purchaser acknowledges and agrees that any information,
matter, circumstance, agreement, document or other thing disclosed in any
Schedule to this Agreement shall be deemed to be disclosed in every other
Schedule for purposes of the representations and warranties of the Company and
the Vendor contained in this Agreement.
1.8 SCHEDULES - The schedules to this Agreement, as listed below, are an
integral part of this Agreement:
Schedule Description
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Schedule 1.1 Permitted Encumbrances
Schedule 2.1 Reorganization
Schedule 4.8 Required Consents
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Schedule 4.11 Liabilities
Schedule 4.10 Pro Forma Balance Sheet
Schedule 4.14 Restrictive Covenants
Schedule 4.15 Real Property Leases
Schedule 4.20 Litigation
Schedule 7.7 Terms of Strategic Alliance Agreement
Schedule 8.4 Terms of Non-Competition Agreement
Schedule 9.7 Contracts with Guarantees by Vendor
ARTICLE 2
PURCHASE AND SALE
2.1 PRE-CLOSING TRANSACTION - Immediately prior to the Closing Time, the Vendor
shall have completed a reorganization of the Company to transfer out of the
Company all assets and liabilities and obligations unrelated to the Business
(the "Reorganization") and to effect the changes set out in Schedule 2.1.
2.2 ACTION BY VENDOR AND PURCHASER - At the Closing Time,
(a) PURCHASE AND SALE OF PURCHASED SHARES - The Vendor shall sell
and the Purchaser shall purchase the Purchased Shares for the
Purchase Price payable as provided in this Agreement;
(b) PAYMENT OF PURCHASE PRICE - The Purchaser shall deliver to the
Vendor the Purchase Price as provided Section 3.3;
(c) TRANSFER AND DELIVERY OF THE PURCHASED SHARES - The Vendor shall
transfer and deliver to the Purchaser share certificates
representing the Purchased Shares duly endorsed in blank for
transfer, or accompanied by irrevocable security transfer powers
of attorney duly executed in blank, in either case by the
holders of record, and shall take such steps as shall be
necessary to cause the Company to enter the Purchaser or its
nominee(s) upon the books of the Company as the holder of the
Purchased Shares and to issue one or more share certificates to
the Purchaser or its nominee(s) representing the Purchased
Shares.
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(d) SHAREHOLDER ADVANCES - The Purchaser shall acquire from the
Vendor or cause the Company to repay the Shareholder Advances by
payment of the Shareholder Advances Price. For the purposes of
Closing, the Shareholder Advances Price shall be an estimated
amount calculated from the amounts set out on the Shareholder
Advances Notice subject to adjustment by the Closing Statement.
(e) OTHER DOCUMENTS - The Vendor and Purchaser shall deliver such
other documents as may be necessary to complete the transactions
provided for herein.
2.3 SHAREHOLDER ADVANCES NOTICE - The Vendor shall deliver written notice of the
estimated amount of the Shareholder Advances as at the Closing Date (the
"Shareholder Advances Notice") and the Effective Date Balance Sheet no later
than 5 Business Days prior to the Closing Date. If the report of the Auditor on
the Effective Date Balance Sheet is not available at the time for the delivery
of the Shareholder Advances Notice, then the Effective Date Balance Sheet shall
be delivered without the report of the Auditor and the report of the Auditor
shall be delivered to the Purchaser when it is issued by the Auditor.
2.4 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of Gowling, Strathy & ▇▇▇▇▇▇▇▇▇ or at such other place as may be agreed
upon by the Vendor and the Purchaser.
ARTICLE 3
PURCHASE PRICE AND LOAN PURCHASE OR REPAYMENT
3.1 PURCHASE PRICE - The amount payable by the Purchaser for the Purchased
Shares (the "Purchase Price"), exclusive of all applicable sales and transfer
taxes, shall be the amount of $45,556,840 less $19,600,000 being the amount of
the Shareholder Advances as at April 30, 1998 as reflected in the Pro Forma
Balance Sheet.
3.2 DEPOSIT -
(a) The Vendor acknowledges prior receipt from the Purchaser of a
deposit in the amount of $250,000 held by counsel to the Vendor
(the "Deposit"). At Closing, the deposit, plus all accrued
interest on the Deposit, shall be applied in satisfaction of an
equivalent amount of the Purchase Price payable for the
Purchased Shares.
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(b) If the transaction contemplated by this Agreement is not
completed by reason of the default of the Purchaser, the full
amount of the Deposit, plus all accrued interest on the Deposit,
shall become the property of and be retained by the Vendor to
compensate it for expenses incurred in connection with the
transaction contemplated in this Agreement and the delay caused
to the Vendor's efforts to sell the Purchased Shares. The
entitlement of the Vendor to retain the Deposit in such
circumstances shall not limit the Vendor's right to exercise any
other rights which the Vendor may have against the Purchaser in
respect of such default.
(c) If the transaction contemplated by this Agreement is not
completed for any reason other than the default of the
Purchaser, the full amount of the Deposit, plus all accrued
interest on the Deposit, shall be returned forthwith by the
Vendor to the Purchaser.
3.3 SATISFACTION OF PURCHASE PRICE - At the Closing Time, the Purchaser shall
satisfy the Purchase Price as follows:
(a) as to the amount of the Deposit, plus all accrued interest on
the Deposit, by release to the Vendor of such amount by Vendor's
counsel; and
(b) as to the balance of the Purchase Price, by payment of such
amount to the Vendor by wire transfer of immediately available
funds to an account designated by the Vendor or by the delivery
to the Vendor of a certified cheque or bank draft made payable
in lawful money of Canada.
3.4 PAYMENT FOR SHAREHOLDER ADVANCES - At the Closing Time, the Purchaser shall
pay or cause the Company to repay the Shareholder Advances by payment of the
Shareholder Advances Price by wire transfer of immediately available funds to an
account designated by the Vendor or by the delivery to the Vendor of a certified
cheque or bank draft made payable in lawful money of Canada, in the amount of
the Shareholder Advances Price estimated in accordance with Section 2.3 which
amount is subject to adjustment in accordance with the Closing Statement.
3.5 DELIVERY OF CLOSING STATEMENT - As soon as reasonably practical after the
Closing Date and in any event not later than 45 days thereafter, the Vendor
shall prepare and deliver to the Purchaser a closing statement ("Closing
Statement") as to the amount of the Shareholder Advances on the Closing Date,
verified by its bankers.
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3.6 PAYMENT OF ADJUSTED SHAREHOLDER ADVANCES - If there is an adjustment of the
amount of Shareholder Advances Price by virtue of the Closing Statement, and if
no Objection Notice is given within the 15 day period provided for in Section
3.7(a), the Vendor or the Purchaser, as the case may be, shall, within 5 days
following the end of such 15 day period, pay to the other by wire transfer of
immediately available funds, certified cheque or bank draft the amount by which
the amount of the Shareholder Advances Price is to be adjusted.
3.7 OBJECTION TO EFFECTIVE DATE BALANCE SHEET OR CLOSING STATEMENT -
(a) DELIVERY OF OBJECTION NOTICE - In the event that the Purchaser
objects in good faith to the Effective Date Balance Sheet and/or
the Closing Statement, the Purchaser shall so advise the Vendor
by delivery to the Vendor of a written notice (the "Objection
Notice") within 15 days after the delivery to the Purchaser of
the Closing Statement. The Objection Notice shall set out the
reasons for the Purchaser's objection as well as the amount
under dispute and reasonable details of the calculation of such
amount.
(b) AGREEMENT OF PARTIES - In the event that the Parties agree on a
resolution of the dispute set out in the Objection Notice, the
Parties shall confirm this resolution in writing and shall
thereafter be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to settle
the dispute with respect to the Effective Date Balance Sheet
and/or Closing Statement within 30 days after the delivery by
the Purchaser to the Vendor of the Objection Notice, the dispute
shall forthwith, and in any event within 60 days after the
delivery by the Purchaser to the Vendor of the Objection Notice,
be referred to an international accounting firm unrelated to
either party to be chosen by lot which shall act as the sole
arbitrator (the "Arbitrator"). The arbitration and the
appointment of the Arbitrator shall, except to the extent
provided for in this Section, be conducted in Toronto in
accordance with the Arbitration Act (Ontario). The Purchaser and
the Vendor shall cooperate in completing any arbitration as
expeditiously as possible and the Arbitrator may hire such
experts as may appear to be appropriate. All of the costs and
expenses of the arbitration shall be borne equally by the
Parties or in such other manner as the Arbitrator may determine
to be appropriate. Arbitration under this Section shall be in
substitution for and precludes the bringing of any action in any
court in connection with any objection made by the Purchaser
pursuant to this Section.
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(d) DETERMINATION OF ARBITRATOR - The determination of the
Arbitrator shall be made within 30 days after the date on which
the dispute was referred to it and the determination of the
Arbitrator shall be final and binding on all Parties. The
Effective Date Balance Sheet and/or the Closing Statement shall
be adjusted in accordance with the determination of the
Arbitrator.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within 5 days after
resolution, by agreement of the Parties, of the dispute which
was the subject of the Objection Notice or, failing such
resolution, within 5 days after the final determination of the
arbitration, the Vendor or the Purchaser, as the case may be,
shall pay to the other by wire transfer of immediately available
funds, certified cheque or bank draft the amount by which the
Shareholder Advances Price is to be adjusted as a result of such
resolution or final determination.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor hereby represents and warrants to the Purchaser, the matters set out
below.
4.1 INCORPORATION AND REGISTRATION - The Company is a corporation duly
incorporated and validly existing under the laws of the Province of Ontario and
has all necessary corporate power, authority and capacity to own its property
and assets and to carry on its business as presently conducted. The Company is
registered, licensed and qualified as an extra-provincial or foreign corporation
in all jurisdictions, in which the nature of the business or the property or
assets owned or leased by it makes such qualification necessary.
4.2 SUBSIDIARIES - The Company does not own, or have any interest in any shares
of any other corporation.
4.3 RIGHT TO SELL - The Vendor is a corporation duly incorporated and validly
existing under the laws of the Province of Ontario. The Vendor is or will be on
Closing the sole registered and beneficial owner of the Purchased Shares free
and clear of all Encumbrances. The Vendor has or will have on Closing the
exclusive right to dispose of the Purchased Shares as provided in this Agreement
and such disposition will not violate, contravene, breach or offend against in
any material respect or result in any default under any material indenture,
mortgage, lease,
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agreement, obligation, instrument, charter or by-law provision, statute,
regulation, order, judgment, decree, licence, permit or law to which the Vendor
is a party or subject or by which the Vendor is bound or affected, except for
those violations, contraventions, breaches, offences and defaults which do not
prevent the Vendor from transferring the Purchased Shares to the Purchaser in
accordance with this Agreement. The Purchased Shares are not subject to the
terms of any shareholders' agreement.
4.4 CAPITALIZATION - The authorized and issued share capital of the Company
consists of an unlimited number of common shares of which 910,089 common shares
have been duly and validly issued and are outstanding as fully paid and
non-assessable shares of the Company. No options, warrants or other rights to
purchase shares or other securities of the Company and no securities or
obligations convertible into or exchangeable for shares or other securities of
the Company have been authorized or agreed to be issued or are outstanding.
4.5 TITLE TO THE ASSETS - Except as identified elsewhere in this Agreement, the
Company is the sole beneficial and (where its interests are registrable) the
sole registered and beneficial owner of all of its assets and interests in
assets, real and personal, with good and valid title, free and clear of all
Encumbrances other than Permitted Encumbrances. In particular, without limiting
the generality of the foregoing, since April 30, 1998 there has been no
assignment, subletting or granting of any licence (of occupation or otherwise)
of or in respect of any of the Company's assets or any granting of any agreement
or right capable of becoming an agreement or option for the purchase of any of
the assets other than pursuant to the provisions of, or as disclosed in, this
Agreement or pursuant to purchase orders for inventory and tooling in the
ordinary course and minor dispositions of fixed assets.
4.6 DUE AUTHORIZATION - The Vendor has all necessary corporate power, authority
and capacity to enter into this Agreement and to carry out its obligations under
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been, or
prior to Closing will be, duly authorized by all necessary corporate action on
the part of the Vendor.
4.7 ENFORCEABILITY OF OBLIGATIONS - This Agreement constitutes a valid and
binding obligation of the Vendor enforceable against it in accordance with its
terms, subject, however, to limitations with respect to enforcement imposed by
law in connection with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought.
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4.8 ABSENCE OF CONFLICTING AGREEMENTS - Except for the need for consent under
certain of the Contracts for a change of control of the Company on Closing, the
Company will not be a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree, licence, permit or law
which would be violated, contravened, breached by, or under which default would
occur or an Encumbrance would be created as a result of the execution and
delivery of this Agreement or any other agreement to be entered into under the
terms of this Agreement, or the performance by the Vendor of any of its
obligations provided for under this Agreement or any other agreement
contemplated herein; except in each case where such violation, contravention,
breach, default or Encumbrance would not have a Material Adverse Effect. A list
of the material Contracts which require a consent on the change of control of
the Company on Closing is set out on Schedule 4.8 to this Agreement.
4.9 REGULATORY APPROVALS - No governmental or regulatory authorization,
approval, order, consent or filing is required, other than Competition Act
Approval and consents or assignments to the Governmental Authorizations, on the
part of the Vendor or the Company, in connection with the execution, delivery
and performance of this Agreement or any other documents and agreements to be
delivered under this Agreement or the performance of the Vendor's obligations
under this Agreement or any other documents and agreements to be delivered under
this Agreement.
4.10 PRO FORMA BALANCE SHEET - The Pro Forma Balance Sheet has been prepared in
accordance with GAAP applied on a basis consistent with those of the preceding
period and present fairly the assets, liabilities and financial position of the
Company as at April 30, 1998 on a pro forma basis assuming the completion of the
Reorganization. Schedule 2.1 sets out all the steps of the transactions required
to implement the Reorganization.
4.11 ASSETS AND LIABILITIES - The assets of the Company on the Closing referred
to in Section 4.5 hereof comprise all assets necessary to operate the Business
in all material respects in the same manner as it has been operated by the
Company in the past. The Company does not have any assets or liabilities, except
those (a) which are related to the Business and are reflected on the Pro Forma
Balance Sheet; (b) which have been acquired or incurred, as the case may be, in
the ordinary course of business since April 30, 1998; or (c) which are disclosed
in Schedule 4.11.
4.12 NO INDEBTEDNESS - Other than the Shareholder Advances, the Company has no
liability or obligation for borrowed money.
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4.13 BUSINESS IN COMPLIANCE WITH LAW - To the knowledge of the Vendor, in all
material respects the operations of the Company have been and are now conducted
in compliance with all applicable Laws of each jurisdiction in which the Company
carries on or has carried on business and the Company has not received any
notice of any alleged breach of any such Laws; and the Company has all necessary
permits, and licences required by the Company to enable it to carry on its
business in compliance with applicable Laws; except in each case where failure
to comply would not have a Material Adverse Effect.
4.14 RESTRICTIVE COVENANTS - Except as disclosed in Schedule 4.14, the Company
is not a party to or bound or affected by any commitment, agreement or document
containing any covenant expressly limiting the freedom of the Company to compete
in any line of business, transfer or move any of its assets or operations which
would have a Material Adverse Effect.
4.15 REAL PROPERTY LEASES -
(a) The Vendor has provided complete copies of the Real Property
Leases, including all amendments thereto and renewals thereof,
to the Purchaser.
(b) The Real Property Leases are valid and subsisting leases, in
full force and effect, and enforceable in all material respects
in accordance with their terms, and the Company has a good and
marketable leasehold interest in the leased premises described
therein.
(c) There are no material ongoing negotiations with respect to the
renewal, repudiation or amendment of the Real Property Leases.
(d) All interests held by the Company as lessee under the Real
Property Leases are free and clear of all Encumbrances of any
nature and kind whatsoever except for Encumbrances which would
not have a Material Adverse Affect.
(e) To the Vendor's knowledge, all payments required to be made by
the Company pursuant to the Real Property Leases have been duly
paid and the Company is not otherwise in material default, or
with the passing of time or the giving of notice, or both, would
be in material default in meeting its obligations under any of
the Real Property Leases and the Company has not received any
notice from any lessor under the Real Property Leases or other
party in that regard.
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(f) To the Vendor's knowledge, the leased premises described in the
Real Property Leases comply in all material respects with all
applicable municipal laws and zoning by-laws and neither the
Company nor the Vendor has received any notification of and is
not aware of any outstanding or pending deficiency notice or
work order in respect of the leased premises, or any of them,
described in the Real Property Leases.
(g) To the Vendor's knowledge, the lessors under the Real Property
Leases are not in material default of their obligations under
the Real Property Leases and have completed in all material
respects the leased premises as required by the Real Property
Leases.
(h) To the Vendor's knowledge, there are no pending or threatened
expropriation, condemnation or similar proceedings against the
leased premises, or any of them, described in the Real Property
Leases.
(i) To the Vendor's knowledge, no application has been made for the
rezoning of the lands affected by the Real Property Leases and
the Vendor is not aware of any pending application for rezoning.
4.16 ENVIRONMENTAL MATTERS -
(a) The Vendor has delivered or made available to the Purchaser true
and complete copies of all audits, evaluations, assessments,
studies, tests and reports prepared after 18 February 1998 (the
"Environmental Disclosure") dealing with the Environment and/or
Environmental Laws.
(b) The Vendor has all material permits, licences, approvals or
Certificates of Approval required pursuant to Environmental Laws
for the operations of the Company.
(c) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, the Vendor has not used, stored,
generated, handled, manufactured, processed, labelled, sold,
transported, treated, released or disposed of Hazardous
Substances, except in compliance in all material respects with
Environmental Laws.
(d) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure,
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there have been no releases by the Company of any Hazardous
Substance on the Leased Premises, except in compliance in all
material respects with Environmental Laws.
(e) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, there have been no releases of
Hazardous Substances on any property adjoining the Leased
Premises, except in compliance in all material respects with
Environmental Laws.
(f) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, there are no Hazardous Substances in
any amount on the Leased Premises which are present in
concentrations requiring remediation pursuant to Environmental
Laws, including any Guideline of the Canadian Council or
Ministry of the Environment Guidelines for Use at Contaminated
Sites in Ontario, except in compliance in all material respects
with Environmental Laws.
(g) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, none of the Vendor or its directors or
officers has received any notice of any violations of
Environmental Laws and there have been no actions commenced or
threatened by any party alleging non-compliance with
Environmental Laws and there are no reasonable grounds which
would give rise to any claim alleging non-compliance with
Environmental Laws.
(h) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, none of the Vendor or its directors or
officers has received any notice that any of them may be
responsible for any containment, clean-up, remediation or
corrective action or any work, repairs, construction, or capital
expenditures required to be made pursuant to Environmental Laws,
including, without limitation, any notice or other communication
that they may be a potentially responsible person, a person
responsible, or otherwise liable in connection with any
Hazardous Substance.
(i) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, there are no above-ground or
underground storage tanks on the Leased Premises except in
compliance in all material respects with Environmental Laws.
(j) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure,
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there are no polychlorinated biphenyls (PCBs or PCB waste) on or
in any part of the Leased Premises except as may be contained in
light ballasts and except in compliance in all material respects
with Environmental Laws.
(k) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, there are no asbestos containing
materials on or in the Leased Premises that are in a condition
or state requiring removal, or abatement or management under, or
that are otherwise in material violation of applicable
Environmental Laws.
(l) To the Vendor's knowledge, except as disclosed in the
Environmental Disclosure, the Vendor has not used any waste
disposal site or waste management system or otherwise disposed
of or transported or arranged for the transportation of any
Hazardous Substances at or to any place or location outside of
Canada, except in compliance in all material respects with
Environmental Laws.
4.17 EMPLOYMENT AND LABOUR MATTERS - The Vendor has made available all records
concerning Employees and copies of all employment plans and notices, employment
agreements and collective agreements. There are no written contracts of
employment entered into with any Employees or any oral contracts of employment
which are not terminable on the giving of reasonable notice in accordance with
applicable law. To the knowledge of the Vendor, the Company has been and is
being operated in full material compliance with all Laws relating to the
Employees; except where any failure to comply would not result in a Material
Adverse Effect.
4.18 PENSION AND OTHER BENEFIT PLANS - The Vendor has no pension plan for the
benefit of the Employees. The Vendor has made available to the Purchaser copies
or summaries of all Benefit Plans.
4.19 CONTRACTS - To the knowledge of the Vendor, the Contracts are all in good
standing and no default exists under such contracts on the part of any of the
parties to such Contracts except for a default or defaults which individually or
in the aggregate would not have a material adverse effect on the Business;
except where such default would not have a Material Adverse Effect.
4.20 LITIGATION - Except as disclosed in Schedule 4.11 or 4.20, there is no
suit, action, litigation, investigation, claim, complaint, grievance,
prosecution or proceeding, including appeals and applications for review, in
progress, or, to the Vendor's knowledge, pending or threatened against or
relating to the Company before any court, Governmental Authority, commission,
board, bureau, agency or arbitration panel which, if determined adversely to the
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Company, would, (a) have a Material Adverse Affect on the properties, business,
future prospects or financial condition of the Company, (b) enjoin, restrict or
prohibit the transfer of all or any part of the Purchased Shares as contemplated
by this Agreement, or (c) prevent the Vendor from fulfilling all of its
obligations set out in this Agreement or arising from this Agreement, and the
Vendor has no knowledge of any existing ground on which any such action, suit,
litigation or proceeding might be commenced with any reasonable likelihood of
success.
4.21 TAX MATTERS -
(a) The Company has duly and timely filed its Tax Returns with the
appropriate Governmental Authority and has duly, completely and
correctly reported all income and all other amounts and
information required to be reported thereon.
(b) The Company has duly and timely paid all Taxes, including all
instalments on account of Taxes for the current year, that are
due and payable by it and the Company has established reserves
that are reflected in the Pro Forma Balance Sheet (and that will
be reflected on the Effective Date Balance Sheet) that are
adequate for the payment by the Company of all Taxes that are
not yet due and payable (and that will not be due and payable by
the Closing Date) and that relate to periods ending on or prior
to the Closing Date. The reserves include amounts for any and
all taxes payable as a consequence of implementing the
Reorganization.
(c) The Company has not requested, or entered into any agreement or
other arrangement or executed any waiver providing for, any
extension of time within which (i) to file any Tax Return
covering any Taxes for which the Company is or may be liable;
(ii) to file any elections, designations or similar things
relating to Taxes for which the Company is or may be liable;
(iii) the Company is required to pay or remit any Taxes or
amounts on account of Taxes; or (iv) any Governmental Authority
may assess or collect Taxes for which the Company is or may be
liable.
(d) The Canadian federal and provincial income and capital tax
liabilities of the Company have been assessed by the relevant
taxing authorities and notices of assessment have been issued to
the Company by the relevant taxing authorities for all taxation
years prior to and including the taxation year ended 31 January
1997.
(e) There are no actions, suits, proceedings, investigations, audits
or claims now
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pending or, to the knowledge of the Vendor, threatened, against
the Company in respect of any Taxes and there are no matters
under discussion, audit or appeal with any Governmental
Authority relating to Taxes, except for an Ontario Ministry of
Finance routine audit currently under way with respect to the
taxation years ended 31 January 1996 and 31 January 1997.
(f) The Company has duly and timely withheld from any amount paid or
credited by it to or for the account or benefit of any Person,
including, without limitation, any of its employees, officers
and directors and any non-resident Person, the amount of all
Taxes and other deductions required by any applicable law, rule
or regulation to be withheld from any such amount and has duly
and timely remitted the same to the appropriate Governmental
Authority.
4.22 RESIDENCE OF THE VENDOR - The Vendor is not a non-resident of Canada for
the purposes of the Income Tax Act (Canada).
4.23 RECORDS- All Books and Records of the Company have been made available to
the Purchaser, including those relating to the Reorganization. To the knowledge
of the Vendor, the Books and Records contain complete and accurate records of
all financial transactions concerning the Company. The minute books include
complete and accurate minutes of all meetings of the directors or shareholders
of the Company, as applicable, held to date or resolutions passed by the
directors or shareholders on consent, since the date of its incorporation. The
share certificate book, register of shareholders, register of transfers and
register of directors of the Company are complete and accurate.
4.24 NO BROKER - The Vendor has carried on all negotiations relating to this
Agreement and the transactions contemplated in this Agreement directly and
without intervention on its behalf of any other party in such manner as to give
rise to any valid claim for a brokerage commission, finder's fee or other like
payment.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendor the matters set out
below.
5.1 INCORPORATION - The Purchaser is a corporation duly incorporated and validly
existing under the laws of Ontario.
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5.2 DUE AUTHORIZATION - The Purchaser has all necessary corporate power,
authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transaction contemplated under this Agreement have
been duly authorized by all necessary corporate action of the Purchaser.
5.3 ENFORCEABILITY OF OBLIGATIONS - This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance with
the terms of this Agreement, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar proceedings
and to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are sought.
5.4 ABSENCE OF CONFLICTING AGREEMENTS - The Purchaser is not a party to, bound
or affected by or subject to any indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision, statute, regulation, order,
judgment, decree, license, permit or law which would be violated, contravened or
breached by, or under which any default would occur or a lien, claim,
restriction or encumbrance would be created as a result of the execution and
delivery by it of this Agreement or the performance by it of any of the terms of
this Agreement.
5.5 INVESTMENT CANADA - The Purchaser is WTO Investor within the meaning of the
Investment Canada Act (Canada).
5.6 LITIGATION - There is no suit, action, litigation, investigation, claim,
complaint or proceeding before any Governmental Authority in progress or, to the
knowledge of the Purchaser, pending or threatened against or relating to the
Purchaser, which, if determined adversely to the Purchaser, would, prevent the
Purchaser from paying to the Vendor, the Purchase Price; enjoin, restrict or
prohibit the transfer of all or any part of the Purchased Shares as contemplated
by this Agreement; or prevent the Purchaser from fulfilling all of its
obligations set out in this Agreement or arising from this Agreement, and the
Purchaser has no knowledge of any existing ground on which any such action,
suit, litigation or proceeding might be commenced with any reasonable likelihood
of success.
5.7 FINANCING - Subject to completion of due diligence, the Purchaser has made
adequate arrangements for financing to complete the purchase of the Purchased
Shares on the Closing Date in accordance with this Agreement.
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5.8 NO BROKER - Except for the services of the financial advisors to the
Purchaser, Newpoint Capital Partners Inc., the Purchaser has carried on all
negotiations relating to this Agreement and the transactions contemplated in
this Agreement directly and without the intervention on its behalf of any other
party in such manner as to give rise to any valid claim for a brokerage
commission, finder's fee or other like payment.
ARTICLE 6
SURVIVAL
6.1 NATURE AND SURVIVAL -
(a) Subject to subsection (b), all representations, warranties and
covenants contained in this Agreement on the part of each of the
Parties shall survive the Closing, the execution and delivery
under this Agreement of any share or security transfer
instruments or other documents of title to any of the Purchased
Shares and the payment of the consideration for the Purchased
Shares.
(b) Representations and warranties, concerning tax matters set out
in Section 4.21 shall survive for a period of 90 days after the
relevant authorities shall no longer be entitled to assess
liability for tax against the Company for any particular
taxation year ended on or prior to the Closing Date, having
regard without limitation, to any waivers given by the Company
in respect of any taxation year. All other representations and
warranties shall only survive for a period of 18 months from the
Closing Date. If no claim shall have been made under this
Agreement against a Party for any incorrectness in or breach of
any representation or warranty made in this Agreement prior to
the expiry of these survival periods, such Party shall have no
further liability under this Agreement with respect to such
representation or warranty.
(c) Notwithstanding the limitations set out in subsection (b) any
Claim which is based on title to the Purchased Shares,
intentional misrepresentation or fraud may be brought at any
time.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
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The obligation of the Purchaser to complete the purchase of the Purchased Shares
under this Agreement shall be subject to the satisfaction of, or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part).
7.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING TIME - All of
the representations and warranties of the Vendor made in or pursuant to this
Agreement shall be true and correct in all material respects as at the Closing
Time and with the same effect as if made at and as of the Closing Time (except
as such representations and warranties may be affected by the occurrence of
events or transactions expressly contemplated and permitted by this Agreement)
and the Purchaser shall have received a certificate from a senior executive of
the Vendor, confirming, to the best of his knowledge, information and belief
(after due inquiry), the truth and correctness of the representations and
warranties of the Vendor.
7.2 PERFORMANCE OF OBLIGATIONS - The Vendor shall have performed or complied
with, in all material respects, all its obligations, covenants and agreements
under this Agreement.
7.3 RECEIPT OF CLOSING DOCUMENTATION - All documentation relating to the due
authorization and completion of the sale and purchase of the Purchased Shares
under this Agreement and all actions and proceedings taken on or prior to the
Closing in connection with the performance by the Vendor of its obligations
under this Agreement, shall be satisfactory to the Purchaser, acting reasonably,
and the Purchaser shall have received copies of all such documentation or other
evidence as it may reasonably request in order to establish the consummation of
the transactions contemplated hereby and the taking of all corporate proceedings
in connection therewith in compliance with these conditions, in form (as to
certification and otherwise) and substance reasonably satisfactory to the
Purchaser.
7.4 OPINION OF SOLICITORS FOR THE COMPANY - The Vendor shall have delivered to
the Purchaser a letter of opinion dated the Closing Date, in form and substance
reasonably satisfactory to the Purchaser, from the solicitors for the Company
and the Vendor as to certain matters set out in Sections 4.1, 4.2, 4.3, 4.4, 4.6
and 4.7 provided that, insofar as the opinions expressed therein are based on
matters of fact, such opinions may be based upon certificates of an officer of
the Vendor, public officials and an officer of the Company and such other
evidence as counsel may reasonably deem appropriate.
7.5 COMPETITION ACT APPROVAL - Competition Act Approval shall have been
obtained.
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7.6 NO PROCEEDINGS - There shall be no injunction or restraining order issued
preventing, and no pending or threatened claim, action, litigation or judicial
or administrative proceeding, or investigation against any Party by any
Governmental Authority, for the purpose of enjoining or preventing the
consummation of the transactions contemplated in this Agreement or otherwise
claiming that this Agreement or the consummation thereof is improper or would
give rise to proceedings under any statute or rule of law.
7.7 STRATEGIC ALLIANCE AGREEMENT - Decoma Exterior Trim Inc. and the Company
shall have executed and delivered a Strategic Alliance Agreement on the terms
set out on Schedule 7.7.
7.8 SUBSTANTIAL DAMAGE - No substantial damage by fire or other hazard to the
assets of the Company shall have occurred prior to the Closing Time. However, if
such damage does occur and is in an amount of less than $5,000,000 and is fully
covered by insurance, the amount payable under such insurance shall be applied
to repair the damage or retained by the Company and the Parties shall complete
the transaction provided for in this Agreement.
7.9 DIRECTORS AND OFFICERS OF THE COMPANY AND SUBSIDIARIES - The Board of
Directors of the Company at the Closing Time shall consist of individuals
nominated by the Purchaser and there shall have been delivered to the Purchaser
on or before the Closing Time the resignations of all individuals who are
presently directors or officers of the Company (except to the extent that the
Vendor shall have been notified to the contrary by the Purchaser) and duly
executed comprehensive releases from each such individual and from the Vendor of
all their claims respectively, against the Company except for any claims for
current unpaid remuneration.
7.10 SOFTWARE LICENCE - The Company shall have entered into a software licence
agreement with respect to the CMS software upon terms and conditions not
materially different from those under which such software is now licensed to the
Company.
7.11 CONSENTS -The Company shall have obtained any consents required by the Real
Property Leases to the sale of the Purchased Shares by the Vendor to the
Purchaser.
If any of the foregoing conditions in this Article has not been fulfilled by the
Closing Date, the Purchaser may terminate this Agreement by notice in writing to
the Vendor, in which event, except as provided in Section 3.2, the Purchaser is
released from all obligations under this Agreement, and unless the Purchaser can
show that the condition relied upon could reasonably have been performed by the
Vendor, the Vendor is also released from all obligations under this
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Agreement. However, the Purchaser may waive compliance with any condition in
whole or in part if it sees fit to do so, without prejudice to its rights of
termination in the event of non-fulfilment of any other condition, in whole or
in part, or to its rights to recover damages for the breach of any
representation, warranty, covenant or condition contained in this Agreement.
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT
The obligations of the Vendor to complete the sale of the Purchased Shares under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of the Vendor and
may be waived by it in whole or in part).
8.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT CLOSING TIME - All
of the representations and warranties of the Purchaser made in or pursuant to
this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Vendor shall have received a certificate from a senior executive of the
Purchaser confirming to the best of his knowledge, the truth and correctness of
such representations and warranties.
8.2 PERFORMANCE OF OBLIGATIONS - The Purchaser shall have performed or complied
with, in all material respects, all its obligations, covenants and agreements
under this Agreement.
8.3 COMPETITION ACT APPROVAL - Competition Act Approval shall have been
received.
8.4 NON-COMPETITION - The Purchaser and the Company shall have executed and
delivered to the Vendor a non-competition agreement on the terms set out on
Schedule 8.4.
8.5 NO PROCEEDINGS - There shall be no injunction or restraining order issued
preventing, and no pending or threatened claim, action, litigation or judicial
or administrative proceeding, or investigation against any Party by any
Governmental Authority, for the purpose of enjoining or preventing the
consummation of the transactions contemplated in this Agreement or otherwise
claiming that this Agreement or the consummation thereof is improper or would
give rise to proceedings under any statute or rule of law.
8.6 OPINION OF SOLICITORS FOR THE PURCHASER - The Purchaser shall have delivered
to the
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Vendor a letter of opinion dated the Closing Date, in form and substance
reasonably satisfactory to the Vendor from the solicitors for the Purchaser as
to certain matters set out in Sections 5.1, 5.2 and 5.3 provided that, insofar
as the opinions expressed therein are based on matters of fact, such opinions
may be based upon certificates of an officer of the Purchaser and public
officials and such other evidence as counsel may reasonably deem appropriate.
8.7 STRATEGIC ALLIANCE AGREEMENT - Decoma Exterior Trim Inc. and the Company
shall have executed and delivered a Strategic Alliance Agreement on the terms
set out on Schedule 7.7.
8.8 SOFTWARE LICENCE - The Company shall have entered into a software licence
agreement with respect to the CMS software upon terms and conditions not
materially different from those under which such software is now licensed to the
Company.
If any of the foregoing conditions in this Article has not been fulfilled by the
Closing Date, the Vendor may terminate this Agreement by notice in writing to
the Purchaser, in which event, except as provided in Section 3.2, the Vendor is
released from all obligations under this Agreement, and unless the Vendor can
show that the condition relied upon could reasonably have been performed by the
Purchaser, the Purchaser is also released from all obligations under this
Agreement. However, the Vendor may waive compliance with any condition in whole
or in part if it sees fit to do so, without prejudice to its rights of
termination in the event of non-fulfilment of any other condition in whole or in
part or to its rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date of
this Agreement to the Closing Time, the Vendor will cause the Company to do the
following:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE - Except as otherwise
contemplated or permitted by this Agreement, conduct its
business in the ordinary and normal course, consistent with past
practice and regular customer service and business policies and
not, without the prior written consent of the Purchaser, enter
into any transaction which, if effected before the date of this
Agreement, would constitute a breach of the representations,
warranties or agreements of the Vendor contained in this
Agreement.
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(b) CONTINUE INSURANCE - Continue in force all policies of insurance
maintained by the Company and give all notices and present
claims under all insurance policies in a timely fashion.
(c) PERFORM OBLIGATIONS - Comply in all material respects with all
Laws affecting the operation of the Company and perform all
material obligations under the Contracts.
(d) APPROVALS - Co-operate with the Purchaser and use all reasonable
efforts and diligently pursue obtaining Competition Act
Approval.
9.2 ACCESS FOR INVESTIGATION - The Vendor shall permit the Purchaser and its
representatives, between the date of this Agreement and the Closing Time,
without interference to the ordinary conduct of its business, to have free and
unrestricted access during normal business hours to the premises and to all the
Books and Records, including information with respect to the Reorganization, and
to the properties and assets of the Company and to furnish to the Purchaser such
financial and operating data and other information as the Purchaser shall from
time to time reasonably request to enable confirmation of the matters warranted
in Article 4. Without limiting the generality of the foregoing, it is agreed
that the accounting representatives of the Purchaser shall be afforded ample
opportunity to make a full investigation of all aspects of the financial affairs
of the Company.
9.3 ACTIONS TO SATISFY CLOSING CONDITIONS - Each of the Parties agrees to take
all such actions as are within its power to control, and to use its best efforts
to cause other actions to be taken which are not within its power to control, so
as to ensure compliance with each of the conditions and covenants set forth in
Articles 7, 8 or 9 which are for the benefit of any other Party.
9.4 PRESERVATION OF RECORDS - The Purchaser shall take all reasonable steps to
preserve and keep the records of the Company delivered to it in connection with
the completion of the transactions contemplated by this Agreement for a period
of 6 years from the Closing Date, or for any longer period as may be required by
any Law or Governmental Authority, and shall make such records available to the
Vendor as may be reasonably required by it in connection with a Claim by the
Purchaser against the Vendor under this Agreement. The Vendor acknowledges that
the Purchaser shall not be liable to the Vendor in the event of any accidental
destruction of such records, caused otherwise than by the negligence of the
Purchaser.
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9.5 STUB PERIOD RETURNS - The Vendor shall cause to be prepared and filed on a
timely basis, all Tax Returns for the Company for any period which ends on or
before the Closing Date and for which Tax Returns have not been filed as of such
date. The Purchaser shall cause to be prepared and filed on a timely basis, all
Tax Returns for the Company for periods beginning and ending after the Closing
Date. The Vendor and the Purchaser shall cooperate fully with each other and
make available to each other in a timely fashion such data and other information
as may reasonably be required for the preparation of any Tax Return, including
information with respect to the Reorganization, of the Company for a period
ending on, prior to or including the Closing Date and shall preserve such data
and other information until the expiration of any applicable limitation period
under any applicable law with respect to Taxes.
9.6 NAME - Within 90 days of Closing, the Purchaser shall take steps to change
the name of the Company to a name which does not include the name "TRIAM," shall
discontinue all use of the name "TRIAM" as and from the Closing Date and shall,
as soon as practical after Closing, but in any event not less than 90 days after
Closing, change all signage bearing the name "TRIAM." The Purchaser acknowledges
that it has no right, title or interest in or to the trade name, trademark or
corporate name or style "TRIAM", except as provided for in this Agreement or as
the Vendor may otherwise agree.
9.7 GUARANTEES - The Purchaser shall assume from the Vendor the obligations
under all guarantees and indemnities by the Vendor of the Real Property Leases
or other Contracts of the Company relating to the Business to the extent the
same can be assigned. A list of the material guarantees and indemnities of the
Vendor is set out on Schedule 9.7 to this Agreement. Whether or not such
guarantees, indemnities and obligations are assignable, the Purchaser shall
indemnify and save harmless the Vendor from and against any and all liabilities
in connection with the operations of the Business both before and after Closing
and, in particular, under any guarantee, indemnity or other hold harmless
agreement by which the Vendor is bound or under which the Vendor may be liable
in connection with the operations of the Business both before and after Closing.
The obligation of the Purchaser to indemnify and hold the Vendor harmless under
this Section 9.7 shall not extend to any liabilities whose existence constitutes
a breach of a representation or warranty made by the Vendor to the Purchaser.
9.8 EMPLOYEE BENEFITS, INSURANCE AND LETTERS OF CREDIT - On or prior to Closing,
the Company and the Purchaser shall have made arrangements satisfactory to the
Purchaser and the Vendor for (a) the provision of a benefit to Employees
reasonably comparable in value to the deferred profit sharing plan of the Vendor
which was provided by the Company prior to the
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acquisition of the Vendor by Magna International Inc., (b) the provision of
benefits to the Employees which will replace the Vendor's group wide Benefit
Plans and which will, in the aggregate, be equal in all material respects to
those Benefit Plans currently provided by the Company, (c) insurance for the
Company and the Business, (d) any other service or supply arrangements presently
shared by the Company and the Vendor or its Affiliates and (e) the replacement
of any outstanding letters of credit with respect to the Company.
9.9 LITIGATION ASSISTANCE - Upon receipt of a written request from the Vendor,
the Purchaser shall make available, upon reasonable notice and upon commercially
reasonable terms, (a) the services of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any other employee of
the Purchaser and (b) copies of all documents of the Company reasonably required
by the Vendor in connection with any litigation or proceeding to which the
Vendor is a party and which relates to the conduct of the Business prior to
Closing.
9.10 U.S. EMPLOYEES - On or prior to Closing, the Purchaser or an Affiliate of
the Purchaser shall offer employment to ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
ARTICLE 10
INDEMNIFICATION
10.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. - The
Vendor covenants and agrees with the Purchaser, and the Purchaser covenants and
agrees with the Vendor (the Party or Parties so covenanting and agreeing to
indemnify another Party being referred to in this Section as the "Indemnifying
Party" and the Party so to be indemnified being called the "Indemnified Party")
to indemnify and save harmless the Indemnified Party, effective as and from the
Closing Time, from and against all Claims which may be made or brought against
the Indemnified Party or which it may suffer or incur, directly or indirectly,
as a result of or in connection with any non-fulfilment of any covenant or
agreement on the part of the Indemnifying Party under this Agreement or any
incorrectness in or breach of any representation or warranty of the Indemnifying
Party contained in this Agreement or in any certificate or other document
furnished by the Indemnifying Party pursuant to this Agreement. The foregoing
obligation of indemnification in respect of such Claims shall be subject to:
(a) the limitation mentioned in Section 6.1 respecting the survival
of the representations and warranties of the Parties;
(b) the requirement that the Indemnifying Party shall, in respect of
any Claim made
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by any third person, be afforded an opportunity at its sole
expense to resist, defend and compromise such Claim;
(c) the limitation that, for Claims made in connection with any
representation or warranty, the Indemnifying Party shall not be
required to pay any such amount until the aggregate of such
Claims exceeds $500,000 and upon the aggregate of such Claims
exceeding $500,000 the Indemnifying Party shall be required to
pay the amount owing in respect of all of such Claims exceeding
$500,000;
(d) the limitation that the Indemnified Party shall be required to
exhaust all recourse any insurance for the benefit of the
Company or the Purchaser prior to making a claim for
indemnification; and
(e) the Purchaser shall have no right to indemnification in respect
of a breach of any representation or warranty of the Vendor
where the Purchaser had actual knowledge of such breach prior to
the Closing including as a result of a disclosure of facts or
information constituting such breach having been made to the
Purchaser in writing or in documents made available to the
Purchaser or its advisors prior to the Closing Time.
10.2 VENDOR INDEMNITY FOR NON-BUSINESS RELATED OBLIGATIONS - The Vendor shall
indemnify and save harmless the Purchaser and/or the Company, without
duplication, from and against any Claim arising in connection with the matters
set out in Schedules 4.11 and 2.1 in accordance with Section 10.4, except that
the Purchaser shall not have the rights described in Section 10.4(d).
10.3 PURCHASER INDEMNITY FOR GUARANTEES - The Purchaser shall indemnify and save
harmless the Vendor from and against any Claim arising in respect of the
guarantees discussed in Section 9.7 in accordance with Section 10.4.
10.4 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS -
(a) In the case of Claims made by a third Party with respect to
which indemnification is sought, the Party seeking
indemnification shall give prompt written notice, and in any
event within 20 days, to the other Party of any such Claims made
upon it, provided that in the event of a failure to give such
notice, such failure shall not preclude the Party seeking
indemnification to obtain such indemnification but its
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right to indemnification may be reduced to the extent that such
delay prejudiced the defense of the Claim or increased the
amount of liability or cost of defense and provided that,
notwithstanding anything else herein contained, no claim for
indemnification in respect of the breach of any representation
or warranty contained herein may be made unless notice of such
claim has been given prior to the expiry of the survival period
applicable to such representation and warranty pursuant to
Section 6.1.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt of
the notice described in subsection (a) to assume the control of
the defense, compromise or settlement of the Claim, provided
that such assumption shall, by its terms, be without cost to the
Indemnified Party and provided the Indemnifying Party
acknowledges in writing its obligation to indemnify the
Indemnified Party in accordance with the terms contained in this
Section in respect of that Claim.
(c) Upon the assumption of control of any Claim by the Indemnifying
Party as set out in subsection (b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of
the Claim at its sole expense, including, if necessary,
employment of counsel reasonably satisfactory to the Indemnified
Party and, in connection therewith, the Indemnified Party shall
cooperate fully, but at the expense of the Indemnifying Party
with respect to any out-of-pocket expenses incurred, to make
available to the Indemnifying Party all pertinent information
and witnesses under the Indemnified Party's control, make such
assignments and take such other steps as in the opinion of
counsel for the Indemnifying Party are reasonably necessary to
enable the Indemnifying Party to conduct such defence.
(d) The Indemnified Party shall also have the right to participate
in the negotiation, settlement or defence of any claim or demand
at its own expense.
(e) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the Parties as to the validity or invalidity, as
the case may be, of such Claim against the Indemnifying Party.
(f) Should the Indemnifying Party fail to give notice to the
Indemnified Party as
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provided in subsection (b), the Indemnified Party shall be
entitled to make such settlement of the Claim as in its sole
discretion may appear advisable, and such settlement or any
other final determination of the Claim shall be binding upon the
Indemnifying Party.
ARTICLE 11
GENERAL
11.1 PUBLIC NOTICES - All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by the Vendor and the Purchaser and no Party
shall act unilaterally in this regard without the prior approval of the other
Party, such approval not to be unreasonably withheld, except:
(a) in the case of the Vendor for communications made in confidence
to the employees of the Company affected by such transactions;
or
(b) where required to do so by law or by the applicable regulations
or policies of any provincial or Canadian or other regulatory
agency of competent jurisdiction or any stock exchange in
circumstances where prior consultation with the other Party is
not practicable.
11.2 EXPENSES - Each of the Parties shall pay their respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Shares and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred.
11.3 NOTICES - Any notice or other writing required or permitted to be given
under this Agreement or for the purposes of this Agreement (in this Section
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered or if transmitted by facsimile or other form of recorded
communication tested prior to transmission to such Party:
(a) in the case of a Notice to the Vendor at:
Magna International Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇
-▇▇-
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice-President, Special
Projects and Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Osler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
1 First Canadian Place
Suite 6100
Toronto, Ontario
M5X 1B8
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) in the case of a Notice to the Purchaser at:
Centrifugal Coaters Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Gowling, Strathy & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
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Attention: R. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
11.4 ASSIGNMENT - This Agreement and the benefits and burdens under this
Agreement may be assigned by the Purchaser to an Affiliate. This Agreement and
the benefits and burdens under this Agreement may be assigned by the Vendor to
Magna International Inc. or to an Affiliate of Magna International Inc.
(collectively, "Magna") following the amalgamation or wind-up of the Vendor into
Magna. Subject to the foregoing, this Agreement shall enure to the benefit of
and be binding upon the Parties and their respective successors (including any
successor by reason of amalgamation of any Party) and permitted assigns.
11.5 FURTHER ASSURANCES - The Parties shall, with reasonable diligence, do all
such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Agreement, and each Party shall
provide such further documents or instruments required by the other Party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
11.5B FACSIMILE - This Agreement may be executed and delivered by facsimile.
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11.6 COUNTERPARTS - This Agreement may be executed by the Parties in separate
counterparts each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
TRIAM AUTOMOTIVE INC.
By:
TIERCON HOLDINGS INC.
By: