EXHIBIT 2 (A)
THIS AGREEMENT OF PURCHASE AND SALE made on the 22 day of December, 1999
BETWEEN: XXXXX XXXXX, an executive domiciled and residing
at 4105 Xxxx-Brillant, Xxxxxxxx, Xxxxxx, X0X
0X0;
(hereinafter referred to as the "VENDOR")
AND: XXXXX XXXXX, an executive domiciled and residing
at 4105 Xxxx-Brillant, Xxxxxxxx, Xxxxxx, X0X
0X0;
(hereinafter referred to as "XXXXX")
AND: INSILCO CORPORATION, a corporation incorporated
under the laws of Delaware, having its head
office at Columbus, Ohio, herein acting and
represented by Xxxxxxx X. Xxxx, its duly
authorized representative;
(hereinafter referred to as the "PURCHASER")
THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants
and agreements herein set out and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. DEFINED TERMS
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Where used herein, except where the context otherwise requires, the
following terms shall have the following meanings respectively:
"BREAK-UP FEE" has the meaning attributed to such term in Section 9.4.
"BUSINESS" means the business currently conducted by the Company as
described in Section 4.4.1.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which the principal banks located in Montreal (Quebec) are not open
for business during normal banking hours.
"C$" mean the lawful money of Canada.
"CLOSING" means the consummation and completion of the sale and
purchase of the Purchased Shares as provided for herein.
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"CLOSING DATE" means 5:00PM February 17, 2000, or such other date
mutually agreed to by the parties, at the offices of Xxxxxx Xxxxxxx
0000 XxXxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx, Xxxxxx X0X
0X0.
"CLOSING STATEMENTS" has the meaning ascribed thereto in Section 3.3.
"COMPANY" means 0000-0000 Xxxxxx Inc. also doing business as T.A.T.
Technology and T.A.T. Technologie.
"COMPUTER EQUIPMENT" means the computer equipment and embedded systems
currently owned or used by the Company, including, without limitation,
all ancillary and communication equipment connected to it.
"COMPUTER SOFTWARE" means all computer software owned or used by the
Company including, without limitation, all operating systems software
comprised in the Computer Equipment and all applications software and
all other software owned or used by the Company or which the Company is
entitled to have or to use by virtue of its interest in the Computer
Equipment or in software owned or used by it.
"CONFIDENTIAL INFORMATION" means all information, belonging or relating
to the Company which is not generally known to the public, including
without limitation business or trade secrets, price lists, methods,
formulas, know-how, customer lists, manufacturing processes, products
costs, marketing plans, research and development and financial
information.
"DISCLOSURE SCHEDULE" means the schedule so entitled which is appended
to this Agreement as Schedule A and which forms an integral part of
this Agreement.
"EBITDA" means, for any applicable period, the sum of
1. Earnings before Income Taxes ("EBIT") as determined in accordance
with United States Generally Accepted Accounting Principals
(GAAP), plus
2. The amount deducted in determining EBIT representing interest
expense, minus
3. The amount deducted in determining EBIT representing interest
income, plus
4. The amount deducted in determining EBIT representing depreciation
and amortization, plus
5. The amount deducted in determining EBIT representing bonuses for
Vendor or Xxxxx for the twelve month period ending October 31,
1999 or pursuant to the Employment Agreement, plus
6. The amount deducted in determining EBIT representing reasonable
non-arm's length or related party charges from the Purchaser or
its affiliates, including, without limitation, administrative
fees, arrangements fees, consulting fees or other reasonable
charges, except to the extent such charges benefit the Company
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including, without limitation, that portion of corporate wide
insurance, annual audit fees, and other similar fees and expenses
that relate to the Company and are provided by the Purchaser.
"EMPLOYMENT AGREEMENT" has the meaning attributed to such term in
Section 7.
"FINAL DETERMINATION" means any judgment rendered by a court of
competent jurisdiction provided that all available rights of appeal
have failed or the delays to submit such judgment to appeal have
expired and any settlement entered into with respect to a claim by the
parties thereto.
"FINANCIAL STATEMENTS" means the financial statements of the Company
prepared in accordance with U.S. GAAP by Wasserman, Stotland, Bratt,
Grossbaum, Chartered Accountants, for the financial years ended October
31, 1998 and 1999, respectively, as reviewed and confirmed by the
auditors of the Purchaser.
"LAWS" means any federal, provincial or municipal law, by-law,
regulation, rule, policy, directive, protocol, order, decree or code
which applies to the Purchased Shares, the Business or the Company.
"LIEN" means any prior claim, hypothec, mortgage, pledge, lien, charge,
encumbrance, security interest, security granted under the BANK ACT
(Canada), ownership or title retention agreements, conditional sale
agreements, leasing, sale and lease back or any other agreement that in
substance secures payment or performance of an obligation or any
option, claim or right of another.
"LOSS" means any loss, liability, damage, cost or expense, including,
without limitation, reasonable legal fees on a solicitor-and-client
basis, disbursements, court and litigation costs, interest and
penalties.
"MATERIAL ADVERSE CHANGE" means any change, condition or event which,
when considered individually or together with other changes,
conditions, events or occurrences, has or could reasonably be expected
to have a material adverse effect on the Business, operations, results
of operations, assets, liabilities or financial condition of the
Company.
"PERSON" means an individual, partnership, joint venture, association,
corporation, legal person, trust, or a government or any department or
agency thereof or any other entity howsoever designated or constituted.
"PROPRIETARY INTANGIBLES" means all rights held by virtue of any
copyright, design, trade xxxx, trade name, trade secret, patent, logos,
computer software or other intellectual property or any application
therefor.
"PURCHASE PRICE" has the meaning ascribed hereto in Section 3.
"PURCHASED SHARES"has the meaning attributed to such term in Section 2.
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"SUBSIDIARY" of any Person means any corporation more than 50% of whose
shares of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors, managers
or trustees of such corporation, irrespective of whether or not at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency, is owned or
controlled directly or indirectly by such Person or by any other
Subsidiary of such Person.
"TAXES" means all taxes, charges, fees, levies, imposts and other
assessments, including, without limitation, all income, sales, retail,
use, goods and services, value added, corporation, capital, capital
gains, alternative, net worth, transfer, profits, withholding, payroll,
employer health, excise, franchise, real property and personal property
taxes, and any other taxes, customs duties, fees, assessments,
reassessments or similar charges in the nature of a tax including,
without limitation, Canada Pension Plan and provincial pension plan
contributions, unemployment insurance payments and workers'
compensation premiums, together with any instalments with respect
thereto, and any interest, costs of any nature, fines and penalties
imposed, levied or assessed by any governmental authority (including
federal, state, provincial, municipal, local and foreign governmental
authorities), and whether disputed or not.
"THIRD PARTY CLAIM" means any demand or statement or any notice thereof
which has been made on or communicated to the Vendor, the Purchaser,
the Company by or on behalf of any Person other than the foregoing and
which, if maintained or enforced, will or might result in a Loss of the
nature described in either Sections 6.2 or 6.3.
"THIS AGREEMENT", "THESE PRESENTS", "HEREIN", "HEREBY", "HEREUNDER" and
similar expressions refer to this Agreement of Purchase and Sale and
the accompanying schedules and exhibits.
"US$ means the lawful money of the United States of America.
2. PURCHASED SHARES
----------------
The Vendor covenants and agrees to sell, assign and transfer to the
Purchaser and the Purchaser agrees to acquire from the Vendor on the
Closing Date, all of the issued and outstanding shares in the capital
of the Company (the "PURCHASED SHARES"), owned beneficially and of
record by the Vendor, for the Purchase Price and upon and subject to
the terms and conditions herein provided. It is agreed that, at the
time of Closing, the Company will not have any liability for borrowed
money (either to financial institutions, shareholders or any third
parties), mortgage loans or capital leases.
3. PURCHASE PRICE
--------------
3.1 The purchase price payable by the Purchaser to the Vendor or to
her order for the Purchased Shares is C$132,941,015, which equals
five (5) timesC$26,588,203, the EBITDA for the 12 month period
ended October 31, 1999, (the "PURCHASE PRICE").
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3.2 The Purchase Price shall be payable in US dollars by certified
cheque, banker's draft or by bank wire transfer on the Closing
Date.
3.3 The Purchaser and the Vendor shall cause a balance sheet and
income statement of the Business as of close of business of the
day immediately preceding the Closing Date to be prepared in a
manner consistent with U.S. GAAP and the Financial Statements
("CLOSING STATEMENTS"). For purposes of the Closing Statements,
the closing inventory as of October 31, 1999 will constitute the
opening inventory. The closing inventory for the Closing
Statements will be based on the Company's computer print-out of
inventory for the last day of the period covered by the Closing
statements. There will not be a physical inventory. The finished
goods, work-in-process and raw materials will be valued using the
same methods used to determine the October 31, 1999 inventory as
disclosed in the Financial Statements. The Closing Statements
will be subject to the reasonable approval of Vendor's auditors.
Any disputes between the parties will be resolved in accordance
with Section 3.7. The cost of the preparation of the Closing
Statements shall be assumed by the Company.
3.4 The Purchase Price shall be adjusted upward or downward by an
amount by which the retained earnings exceeds or is less than
C$13,000,000 net of all accrued tax liabilities as determined in
the Closing Statements. The payment of such adjustment shall be
made by the Purchaser (in the event of an upward adjustment) or
the Vendor (in the event of a downward adjustment) in the manner
provided in Section 3.2 within 60 days of the Closing Date.
3.5 The conversion rate for the conversion of the Purchase Price in
US$ will be the rate prevailing as of the close of business on
the Business Day immediately preceding the Closing Date as
established by the Bank of Canada.
3.6 The costs for the preparation of the 1998 Financial Statements
and the review by the auditors of the Purchaser of the 1998 and
1999 Financial Statements will be borne by the Purchaser.
3.7 Any dispute between the parties as regards the finalization of
the Closing Statements will be submitted before Xxxxxx Xxxxxxxxx,
Partner of the firm of Ernst & Young in Montreal (Xxxxxx
Xxxxxxxxx or any replacement is herein referred to as
"ARBITRATOR"). In the absence of Xxxxxx Xxxxxxxxx, the parties
will mutually agree upon a replacement within five (5) business
days of being notified by either party. Should they fail to agree
upon a replacement within such delay, the president of the Quebec
Institution of Charter Accountants may be requested by either
party to designate a replacement. The decision of the Arbitrator
shall be final and binding upon the parties hereto. The
Arbitrator will also have the power to determine how the costs of
the arbitration are to be borne.
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4. REPRESENTATIONS AND WARRANTIES OF EACH OF THE VENDOR AND XXXXX
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Each of the Vendor and Xxxxx represents and warrants to the Purchaser
as follows:
4.1 Enforceability of the Agreement
4.1.1 The Vendor is the sole and absolute owner (beneficially
or of record) of the Purchased Shares with a good and
marketable title thereto free and clear of all Liens and
with full power and authority to sell, assign and
transfer such Purchased Shares as herein provided.
4.1.2 Each of the Vendor and Xxxxx has the power, capacity and
authority to execute and become a party to this Agreement
and to consummate the transactions herein provided,
without any restriction whatsoever, whether pursuant to
his matrimonial regime or otherwise. This Agreement
constitutes a valid and binding obligation of each of the
Vendor and Xxxxx, enforceable against the Vendor and
Xxxxx in accordance with its terms.
4.1.3 Except as provided for or reflected in the DISCLOSURE
SCHEDULE, neither the entering into of this Agreement nor
the consummation of any of the transactions contemplated
hereby will:
4.1.3.1 result in the violation of or conflict with
(i) any of the terms or provisions of the
respective constating documents or by-laws of
any of the Company; (ii) any agreement,
written or oral, to which any of the Vendor or
the Company is a party or subject, including,
any grant, subvention or other benefit in
favour of either of the Vendor or the Company;
(iii) any license, permit, authorization,
qualification or registration held by or in
respect of the Company; or (iv) any law,
regulation or administrative or judicial order
of any jurisdiction to which the Company is
subject;
4.1.3.2 subject the Company to any penalty or
liability; or
4.1.3.3 require any consent or approval from any
Person.
4.1.4 Except as provided for or reflected in the DISCLOSURE
SCHEDULE, the Vendor and Xxxxx are not aware of any legal
or administrative proceedings pending or threatened or of
any circumstances which may reasonably be expected to
give rise to such proceedings which in any way might
interfere with the sale or delivery of the Purchased
Shares or the consummation of any of the transactions
herein contemplated.
4.1.5 Relying upon the representation and warranty of the
Purchaser set out in Section 5.6 and except as provided
in the DISCLOSURE SCHEDULE, there is
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not any notice to, filing with, or authorization,
consent, permit or approval from, any Person, including,
without limitation, any government, governmental agency
or other contracting party of the Company, required in
connection with the transactions contemplated by this
Agreement.
4.1.6 The transfer of the Purchased Shares contemplated herein
will, as at the Closing Date, have been duly authorized
by all corporate actions of the Company.
4.2 Corporate Status
4.2.1 The Company:
4.2.1.1 has been duly incorporated and organized and
is validly subsisting and in good standing
under the laws of the jurisdiction in which it
was incorporated;
4.2.1.2 has the power to own, lease, occupy or
otherwise hold the properties and rights now
owned, leased, occupied or otherwise held by
it and to conduct the business now being
conducted by it.
4.3 Capital Stock and Records
4.3.1 No Person has any agreement or option or any right or
privilege (whether by law or by contract) capable of
becoming an agreement or option
4.3.1.1 to acquire any of the Purchased Shares or any
of the issued shares of the Company;
4.3.1.2 to subscribe for or otherwise acquire any of
the unissued shares of the capital stock of
the Company.
4.3.2 There is no shareholders' agreement in force with respect
to the Purchased Shares.
4.3.3 The Company does not exist as a result or incident of any
amalgamation or merger between the Company and any other
Person or Persons or between other Persons pursuant to
which the properties or rights of the Company became or
remained subject to the rights of the creditors of such
previously existing Person or Persons.
4.3.4 The Purchased Shares constitute all of the issued and
outstanding securities of the Company. There exists no
Lien affecting the Purchased Shares.
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4.4 Business and Goodwill
4.4.1 The Business of the Company consists principally of wire,
cable and electromechanical assembly. The Company has
conducted the Business substantially as so described
continuously since its incorporation and during said
period the Company has not conducted any other business.
4.4.2 The Company presently conducts and has, since its date of
incorporation, conducted its business in the Province of
Quebec and the Company has not conducted business from
any other jurisdiction.
4.4.3 The Company is, in all material respects, conducting its
business in compliance with all applicable laws, rules
and regulations of the jurisdiction in which such
business is being carried on. The Company is not in
breach of any laws, rules or regulations, except for
breaches which in the aggregate are immaterial. The
Company is duly licensed, registered or qualified in the
jurisdiction in which it owns or leases property or
conducts its business to enable such businesses to be
conducted as now conducted, and its properties and assets
to be owned, leased and operated, and all such licences,
registrations and qualifications are valid, subsisting
and in good standing, and none of the same contains any
burdensome term, provision, condition or limitation which
has or reasonably may be expected to have an adverse
effect on the operation of such business. The DISCLOSURE
SCHEDULE contains a list of all licences, registrations
or qualifications held by the Company.
4.4.4 The Company is not conducting nor has ever conducted its
business under any name other than its existing corporate
name and the names "T.A.T. Technology" and "T.A.T.
Technologie".
4.5 Assets and Liabilities
4.5.1 The balance sheets included in the Financial Statements
fairly present the financial position of the Company as
at the respective dates specified therein and the related
statements of earnings, retained earnings and changes in
financial position for each of the period then ended,
fairly present the results of the individual operations
and the changes in financial position for the periods
then ended of the Company and have been prepared in
accordance with U.S. generally accepted accounting
principles applied on a consistent basis throughout the
periods specified therein. Since October 31, 1999, there
has been no Material Adverse Change in the condition
(financial or otherwise), liabilities, licences, permits,
businesses (including relationships with suppliers,
customers, governmental authorities or others),
operations or prospects of the Company.
4.5.2 Except as disclosed or reflected in the Disclosure
Schedule and except to the extent reflected or reserved
against in the balance sheets of the
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Company included in the Financial Statements and except
for liabilities incurred in the ordinary course of
business since October 31, 1999, the Company does not
have any liabilities or obligations (except for
liabilities and obligations which in the aggregate are
immaterial) whether accrued, absolute, contingent or
otherwise (including without limitation product liability
as manufacturer, supplier or otherwise, warranty
liabilities, environmental liabilities, liabilities as
guarantor or otherwise with respect to obligations of
others or lease liabilities or liabilities for Taxes) and
whether due or to become due.
4.5.3 Except as disclosed or reflected in the DISCLOSURE
SCHEDULE, the Company has good and marketable title to
all its properties and assets, including, without
limitation, all those referred to in the most recent
balance sheet included in the Financial Statements (other
than any thereof which have been disposed of in the
ordinary course of business).
4.5.4 All properties, equipment and machinery and all other
tangible movable property either owned or leased by the
Company are in good operating condition and repair,
except for normal wear and tear and normal usage and are
in each case adequate for the conduct of the Business in
the ordinary course.
4.5.5 The Company has valid leasehold interests in all the
properties, equipment and machinery shown in the
DISCLOSURE SCHEDULE or reflected in the Financial
Statements as being leased by it, free and clear of any
Liens. All such leases (complete and correct copies of
which have been provided to the Purchaser) are valid,
subsisting and in effect in accordance with their
respective terms and are in good standing and no event or
condition exists which constitutes or after notice or
lapse of time or both would constitute a default
thereunder.
4.5.6 The Company does not own or possess any property right or
other asset which is not so owned or possessed solely for
the purpose of conducting the Business as such Business
is now being conducted, except for certain consignment
inventory belonging to suppliers of the Company. The
Company owns or otherwise has the right to use all of the
assets required to carry on the Business.
4.5.7 To the best knowledge and belief of the Vendor and Xxxxx,
there is not :
4.5.7.1 any suit, action or other proceeding or
governmental investigation pending or
threatened against the Company in or before or
by any court, board, commission administrative
agency or administrative or other tribunal and
neither the Vendor nor Xxxxx has knowledge of
nor has any reason to believe that there
exists any basis for a suit, action or other
proceedings or governmental investigation
against the Company;
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4.5.7.2 any order, decree, injunction or judgment of
any court, administrative agency or board or
administrative or other tribunal against or
affecting the Company;
4.5.7.3 any legal impediment to the continued
operation in the ordinary course of the
properties of the Company and of the Business;
or
4.5.7.4 any violation by the Company of any law,
by-law, regulation, rule, policy, directive or
protocol of any competent authority.
4.5.8 Except as disclosed or reflected in the DISCLOSURE
SCHEDULE, the Company does not hold any loan or advance
due by, or any stock, obligation or securities of, or any
other interest in, any Person. The Company does not have
the right to receive any sum from the Vendor or Xxxxx,
whether as shareholder, director, officer or otherwise.
4.5.9 The Company has no Subsidiary nor any other investment in
any other Person.
4.6 Inventories and Accounts Receivable
4.6.1 The inventories of supplies, raw materials, work in
process and finished goods owned or used by the Company
as of the date hereof and as reflected in the balance
sheet of the Company included in the Financial Statements
were owned or held by the Company at the date specified
in the Financial Statements, and all such inventories so
held on such dates and on the date hereof were and are
normal and adequate for the Business, are of good and
marketable quality and condition.
4.6.2 The accounts receivable of the Company reflected in the
balance sheets of the Company included in the Financial
Statements are bona fide, have been properly recorded and
represent amounts due for goods or services duly sold or
rendered in the ordinary course of business, and no claim
has been made or threatened with respect to the quality
or warranty of such goods and services which has not been
disposed of, and the said accounts receivable are good
and collectible, free from any claim or right of set off
or counterclaim, except to the extent of any reserves for
bad debts reflected in said balance sheet, and all
accounts receivable which have accrued to the Company up
to the date hereof subsequent to the date of the
Financial Statements comply with the foregoing in all
respects except to the extent of reserves for bad debts
maintained at the same respective rates as reflected in
the said balance sheet.
4.7 Conduct of Business
The Company has been conducting its Business since October 31,
1999, in the ordinary course, and since such date the Company
has not entered into any transaction other than in the ordinary
course of its Business and, in particular,
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without limiting the generality of the foregoing, the Company has
not, since October 31, 1999,
4.7.1 purchased or redeemed directly or indirectly any
securities issued by it;
4.7.2 issued or sold or agreed to issue or sell any shares of
its capital stock or any option, warrant, conversion or
other right to acquire any such share or any securities
convertible into or exchangeable for such shares, or
amended its charter or by-laws;
4.7.3 declared or paid any dividend or declared or made any
other distribution on any of the shares of any class of
its capital stock or on any of its securities;
4.7.4 suffered or incurred any damage, destruction, loss or
liability (whether or not covered by any insurance), any
strike or other labour trouble, or any loss of employees
or customers;
4.7.5 except as regards the authorization or payment of bonuses
to the Vendor and/or Xxxxx of the net profit of the
Company for the period comprised between November 1, 1999
and the Closing Date, made or authorized any payment to
an officer, director, former director, shareholder or
employee of the Company, otherwise than at the regular
rates payable to them, by way of salary, pension, bonus,
rent or other remuneration;
4.7.6 authorized or made any capital expenditure other than
expenditures which in the aggregate do not exceed
C$1,000,000;
4.7.7 incurred any indebtedness or extended any credit, except
in the ordinary course of business;
4.7.8 agreed to take any of the actions described in Sections
4.7.1 through 4.7.7.
4.8 Contracts
4.8.1 Except as reflected or disclosed in the DISCLOSURE
SCHEDULE, the Company is not a party to any contract or
agreement, either written or oral, express or implied,
either (i) involving a commitment, whether contingent or
otherwise, by the Company or by any other Person, in
excess of C$100,000 (the aggregate value of all contracts
not requiring disclosure hereunder not exceeding
C$500,000), other than any purchase order received or
issued in the ordinary course of business by or in favour
of the Company or (ii) being otherwise material to the
assets or liabilities of the Company other than any
purchase order received or issued in the ordinary course
of business by or in favour of the Company (referred to
for the purposes of Sections 4.8.1, 4.8.2 and 4.8.3 as
the "CONTRACTS"), except for any contract or agreement
which is terminable at the option of the Company without
penalty upon not more than 60 days notice.
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4.8.2 The Contracts are valid and binding obligations of the
parties thereto, enforceable against such parties in
accordance with their terms, are in full force and effect
and have not been the subject of a notice of termination,
cancellation or non-renewal.
4.8.3 Neither the Company nor, to the best of the Vendor's
knowledge, any other party to any of the Contracts is in
default or in breach of any such contracts, nor does
there exist any state of facts which, after notice or
lapse of time or both, would constitute such a breach or
default.
4.8.4 Except as regards such consignment inventory from
suppliers of the Company referred to in Section 4.5.6,
the Company does not, pursuant to any contract,
agreement, franchise, licence or permit hold, possess,
use or have access to, or have the right to hold,
possess, use or have access to, any property or right of
any nature belonging to any other Person which is
necessary, desirable or useful in the conduct of the
Business.
4.8.5 Except as disclosed or reflected in the DISCLOSURE
SCHEDULE, the Company is not bound by any contract or
agreement which constrains or limits the Company in the
conduct of its business and affairs, or purports to do
so, including, without limitation, any agreement
concerning confidentiality, non-competition or
exclusivity.
4.8.6 The DISCLOSURE SCHEDULE sets out all grants, subventions
and other benefits which the Company is entitled to
receive from, or under the terms of which a future
payment may be made to the Company by, any government or
municipality or any department, board or other
instrumentality thereof, other than any such grants,
subventions or other benefits which accrue or become
available by operation of the law generally to Persons
conducting businesses similar to the Business, and the
Company is not in default with the terms and conditions
upon which it is or may become entitled to receive any
such grant, subvention or other benefit.
4.8.7 Except as set out in the DISCLOSURE SCHEDULE, the Company
is not a party to or bound by (i) any collective
bargaining agreement or any other agreement with any
union of employees, (ii) any agreement, written or oral,
for the benefit of or with its employees, directors,
officers or shareholders, including any written
employment contract, (iii) any pension, bonus, profit
sharing, compensation, retirement, deferred compensation,
illness or other plan, agreement, trust, fund, or
arrangement for the benefit of or with its employees,
directors, officers or shareholders, or (iv) any agency,
consultation or representation contract, whether written
or oral.
4.8.8 All outstanding contracts and other agreements binding
upon the Company has been entered into on an arm's length
basis.
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4.8.9 The DISCLOSURE SCHEDULE sets out a true and accurate list
of all of the customers of the Company as of the date
hereof and, at Closing as of the Closing Date as
identified by their account numbers.
4.8.10 The Vendor and Xxxxx hereby confirm that the commercial
relations between the Company and Nortel Networks are
very good and they have no reason to believe that such
relations could materially adversely deteriorate in the
foreseeable future. The Purchaser acknowledges that
Nortel has and may sell facilities to non-related third
parties which could impact the Company's future
relationships.
4.9 Insurance
4.9.1 The Company, its properties and the Business are insured
with financially sound and reputable insurers against
claims and Losses from all such liabilities, hazards and
risks, to such extent and in such amounts and with such
deductible amounts therefrom as is customary for Persons
operating like businesses and owning like properties, all
as provided for in and by the policies and contracts of
insurance described in the DISCLOSURE SCHEDULE (which
describes types of coverage, amount and policy numbers).
Complete and correct copies of all such policies and
contracts have been made available to the Purchaser.
4.9.2 All such policies and contracts of insurance are in full
force and effect, and the Company is in good standing
with respect to each such policy or contract to which it
is a party.
4.9.3 The Company has not received a notice of a claim against
the Company or its properties which would not be entirely
covered (subject, as the case may be, to a deductible) by
the insurances it holds and the Vendor is not aware of
any fact or circumstance which could give rise to such a
claim.
4.10 Taxes
4.10.1 Except as regards potential assessments from Revenue
Quebec and Revenue Canada relating to the years 1996 and
1997 regarding certain expenses which in the aggregate
should not exceed, to the best knowledge of the Vendor
and Xxxxx, the sum of approximately C$10,000, the Company
has duly filed, on a timely basis, all tax returns
required to be filed by it and has paid or accrued in the
Financial Statements all Taxes which are due and payable
as at the date hereof in respect of transactions or other
occurrences prior to the date hereof (whether or not
shown on any tax return) and each of Xxxxx and the Vendor
will be able to confirm same as at the Closing Date.
Adequate provision has been made in the books and records
of the Company for all Taxes payable for the current
taxation year for which tax returns are not yet required
to be filed and for all Taxes relating to taxation years
ending on or before the Closing Date. There are
-14-
no agreements, waivers, or other arrangements providing
for an extension of time with respect to the filing of
any tax return or the payment of any Taxes by the
Company. There are no actions, suits, proceedings,
investigations or claims, threatened or pending against
the Company in respect of Taxes nor are there any matters
under discussion with any governmental, municipal or
local authority relating to Taxes by any such authority.
The Company has duly collected and remitted all Taxes it
was required to collect and remit, respectively. To the
best of the Vendor's and David's knowledge and belief,
the Company has not received a refund or credit for taxes
to which it was not entitled.
4.10.2 The Company has withheld from each payment made to any of
their officers, directors, employees, shareholders or
creditors or any non-residents within the meaning of that
term as used in the INCOME TAX ACT (Canada), all Taxes
and other amounts which it is required by the laws to
which it is subject to withhold or deduct and has duly
remitted all Taxes and amounts so withheld or deducted to
the proper recipients thereof within the delays and in
the manner required by such laws.
4.11 Patents, Trade Marks and Copyright
4.11.1 No Proprietary Intangibles are owned by the Company or
are used or required to be used in the Business.
4.11.2 No Person has made or threatened to make a claim to the
right to use any of the names "T.A.T. Technologie" and
"T.A.T. Technology".
4.12 Environmental Matters
4.12.1 To the best of the Vendor's and David's knowledge and
belief and except as disclosed and reflected in the
DISCLOSURE SCHEDULE, the emission, deposit, issuance,
discharge, transportation or disposal of any contaminant,
waste material (including waste water and waste oil) or
other substance in the environment, by or allowed by the
Company, or occurring on or from any of the Facilities
(as defined hereinbelow), at any time up to the Closing
Date, has been or will have been effected in compliance
with all applicable statutes, laws, by-laws, regulations,
rules, policies, guidelines, directives and protocols of
any competent authority (collectively "LAWS"), and all
required filings and approvals in respect thereof, as the
case may be, have been made with or obtained from the
appropriate authorities, and the operations and
activities of the Company and the use of the properties
presently or previously used or leased by the Company
(collectively the "FACILITIES") and the use of the
structures thereon have been effected and continues to be
in compliance with all applicable Laws, and there are no
pending or threatened suits, actions or claims, nor
notices, orders or demands in relation to any breach by
the Company of any applicable Laws and approvals. More
particularly, but without limiting the generality of
-15-
the foregoing and except as disclosed in the Disclosure
Schedule, the Facilities and the assets of the Company do
not contain polychlorinated biphenyls (PCBs), asbestos,
radioactive substances or urea formaldehyde foam
insulation and there are no underground or surface tanks
on any of the Facilities and none of the Facilities is
contaminated so as to require remediation action under
applicable Laws.
4.12.2 Without limiting the generality of the terms set forth in
Section 6.2 hereof, each of Xxxxx and the Vendor shall be
liable to the Purchaser and the Company and shall
indemnify and hold harmless the Purchaser and the Company
against any and all Losses arising out of any suit,
action, claim, order or demand against the Purchaser or
the Company with respect to environmental matters
affecting any properties now or previously owned or
occupied, beneficially or otherwise, by the Company
except to the extent that such matters have been
disclosed or reflected in the Disclosure Schedule.
4.13 Labour Relations
Without restricting the provisions of Sections 4.7.5, 4.8.7
and 4.10.2:
4.13.1 no union has been certified in respect of the employees
of the Company, nor is any proceeding in process for
obtaining a union certification; to the best of the
David's and Vendor's knowledge, there is no current
campaign or attempt by any trade union or other
organization to organize the employees of the Company;
4.13.2 the Company has paid all sums due to its employees and
has observed in all respects the provisions of (i) all
agreements binding upon it, written or oral, for the
benefit of or with its employees, directors, officers or
shareholders or (ii) any pension, bonus, profit sharing,
compensation, retirement, deferred compensation, illness
or other plan, agreement, trust, fund or arrangement for
the benefit of or with its employees, directors, officers
or shareholders and (iii) all applicable laws and
regulations respecting employment, labour relations, work
place health and safety and benefit plans, including, but
not limited to, labour standards and employment equity,
legislation and regulations and legislation and
regulations prohibiting discrimination, pertaining to
human rights, collective bargaining and workers'
compensation; and there is no complaint, civil action or
other proceeding in process or threatened alleging a
violation of any such agreement, plan, trust, fund,
arrangement, laws or regulations and to the best of
David's and the Vendor's knowledge, there are no facts
which may give rise to a claim for which the Company
might be held liable under the provisions of any of the
said laws and regulations;
-16-
4.13.3 except as disclosed and reflected in the DISCLOSURE
SCHEDULE, the Company has not received any remedial
order, notice of offence or notice of investigation under
(i) the ACT Respecting OCCUPATIONAL HEALTH AND SAFETY
(Quebec) R.S.Q., c. S-2.1, (ii) the WORKMEN'S
COMPENSATION ACT (Quebec) R.S.Q., c. A-3 or (iii) the ACT
RESPECTING INDUSTRIAL ACCIDENTS AND OCCUPATIONAL DISEASES
(Quebec) R.S.Q., c. A-3.001 or under equivalent statutes
or regulations in other jurisdictions, except in respect
of matters which have been settled or remedied since the
issuance of such order, notice or notice of
investigation, and the Company has performed all its
financial or monetary obligations under such statutes or
regulations and, to the best of Xxxxx and the Vendor's
knowledge, there are no facts which may give rise to a
claim for which the Company might be held liable under
the provisions of the said statutes or regulations; to
the extent such claims have arisen in the past, the
Company has made all necessary remedies, financial or
otherwise;
4.13.4 there is no unfunded liability under any employee
retirement plan or other plan of the Company which may
exist;
4.13.5 there is no strike, lockout or labour troubles in respect
of the employees of the Company nor do Xxxxx and the
Vendor have knowledge of any fact which may give rise
thereto; and
4.13.6 the DISCLOSURE SCHEDULE sets out truly and correctly the
names of all employees of the Company and reflects
accurately the salary, seniority, vacation entitlement
and benefits (including, any bonus, RRSP contribution,
general expense or travel expense account) of each of
such employees.
4.14 Bank Accounts, Financing and Security, Etc.
The DISCLOSURE SCHEDULE sets out:
4.14.1 the name of each bank, trust company or other Person with
which the Company has an account or safekeeping
arrangement or safety deposit box, the account numbers
and the names of each Person authorized to operate or
have access to such account, arrangement or box on behalf
of the Company;
4.14.2 a list of all outstanding guarantees, indemnifications,
financing agreements or security documents to which
either of the Company is a party or which is binding upon
any of the Company; and
4.14.3 the name of each Person holding a general or special
power of attorney from the Company with a summary of the
terms thereof.
-17-
4.15 Conflicting Interests
Neither the Vendor nor any officer or director of the Company nor
any member of their respective families owns, or during the last
three (3) years has owned, directly or indirectly, or has, or
during the last three (3) years has had, a substantial ownership
interest in any business, corporate or otherwise, which is
directly or indirectly competitive with the Business.
4.16 No Finder's or Broker's Fee
No Person has, or as a result of any of the transactions
contemplated hereby will have, as a result of any commitment of
Xxxxx, the Vendor or the Company towards such Person, any right,
interest or valid claim against or upon the Purchaser, the
Company or any of its properties for any commission, fee or other
compensation as broker or finder or for services in any similar
capacity.
4.17 Vendor's Residence
The Vendor is not a non-resident within the meaning of that term
as used in the INCOME TAX ACT (Canada).
4.18 Millennium Compliance
To the best of David's and the Vendor's knowledge and belief and
based on certification received from the Company's suppliers, the
Computer Systems are Millennium Compliant. For the purposes of
this Agreement, "Millennium Compliant" means that the Computer
Equipment and Computer Software (collectively, the "Computer
Systems") are capable of the following functions before, during
and after 1 January 2000:
4.18.1 handling date information involving all and any dates
before, during and after 1 January 2000, including,
accepting date input (either from an internal or external
source), providing date output and performing date
calculations in whole or part and any date format (i.e.
julian, gregorian, international or any other format);
4.18.2 operating accurately without interruption on and in
respect of any and all dates before, during and after 1
January 2000 and without any change in performance;
4.18.3 responding to and processing any digit year input (either
from an internal or external source) without creating any
ambiguity as to the century; and
4.18.4 receiving, storing, providing and communicating date
output information without creating any ambiguity as to
the century.
Without limiting the rights otherwise conferred upon the
Purchaser, in the unlikely event there are any "Millennium
Compliant" issues with the Company's
-18-
computers or software before the Closing Date, they will be
repaired or replaced at Vendor's cost.
4.19 Full Disclosure
4.19.1 Each of Xxxxx and the Vendor has made or caused to be
made due enquiry with respect to each of the
representations, warranties and statements contained in
this Agreement and in each of the schedules,
certificates, documents and, except as disclosed in the
DISCLOSURE SCHEDULE, other writings referred to herein or
furnished to the Purchaser hereunder, and none of the
same contains any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements contained herein and therein not misleading.
4.19.2 Except as disclosed in the DISCLOSURE SCHEDULE or as
generally known to the public, there is no fact or
circumstance known to Xxxxx and the Vendor
4.19.2.1 which materially adversely or in the future
may (so far as he can now reasonably foresee)
materially adversely affect the condition
(financial or otherwise), property, assets,
liabilities, Business, operations, or
prospects of the Company or the ability of
Xxxxx and the Vendor to perform his
obligations hereunder, or
4.19.2.2 relating to the Company or the Business which,
if known to the Purchaser, might reasonably be
expected to deter the Purchaser from
consummating the transactions hereby
contemplated.
4.20 Indebtedness and Guarantees
There is no outstanding indebtedness, liability and obligations
(whether accrued, absolute, contingent or otherwise) as at the
date hereof between the Company and Xxxxx or the Vendor other
than as otherwise provided hereunder and other than bonus
accruals to Xxxxx and/or the Vendor or other than as provided for
hereunder.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to Xxxxx and the Vendor as
follows:
5.1 Enforceability of the Agreement
The Purchaser has full power and authority to purchase and
acquire the Purchased Shares as herein provided.
-19-
5.2 No Violation
Neither the entering into of this Agreement nor the consummation
of any of the transactions contemplated hereby will result in the
violation of or conflict with any of the terms or provisions of
the constating documents or by-laws of the Purchaser or any law,
regulation or administrative or judicial order of any
jurisdiction to which the Purchaser is subject.
5.3 No Legal Proceedings
The Purchaser is not aware of any legal proceedings pending or
threatened against it or of any circumstances relating to it
which may reasonably be expected to give rise to such proceedings
which in any way might interfere with the purchase of or payment
for the Purchased Shares or the consummation of any of the
transactions herein contemplated.
5.4 No Finder's or Broker's Fee
No Person has, or as a result of any of the transactions
contemplated hereby will have, by reason of any commitment of the
Purchaser towards such Person, any right, interest, or valid
claim against or upon the Vendor or any property of the Vendor
for any commission, fee, or other compensation as broker or
finder or for services in any similar capacity.
5.5 Due Authorization
The agreement has been validly authorized, executed and delivered
by the Purchaser and constitutes valid and binding obligations of
the Purchaser duly enforceable against it in accordance with its
terms.
5.6 Investment Canada and Competition
The acquisition of the Purchased Shares by the Purchaser does not
violate the provisions of the INVESTMENT CANADA ACT or the
COMPETITION ACT nor are any approvals, consents, filings,
registrations or notices required thereunder in order to
consummate the transactions herein contemplated except as for
such notification to be made within 30 days following the Closing
Date pursuant to INVESTMENT CANADA ACT.
6. SURVIVAL AND RELIANCE ON REPRESENTATIONS AND WARRANTIES AND
-----------------------------------------------------------
INDEMNIFICATION
---------------
6.1 Survival Notwithstanding Investigation
Notwithstanding any investigation conducted before or after the
Closing Date and notwithstanding any actual or implied knowledge
or notice of any fact or circumstance which any Person may have
as a result of such investigation or
-20-
otherwise, the parties hereto shall be entitled to rely upon the
representations and warranties set forth herein and the
obligations of the parties hereto with respect thereto shall
survive the Closing Date and shall continue in full force and
effect in accordance with the terms of this Section 6.
6.2 Indemnification by Vendor and Xxxxx
The Vendor and Xxxxx, acting jointly and severally and hereby
waiving the benefit of division and discussion, shall be liable
to the Purchaser and the Company and shall indemnify and hold
harmless the Purchaser and the Company against any and all Losses
provided such losses have been confirmed by Final Determination
arising out of
6.2.1 the breach of any agreement, covenant, representation or
warranty of the Vendor or Xxxxx contained in this
Agreement;
6.2.2 the non-fulfillment of any agreement, covenant or
obligation of the Vendor or Xxxxx contained in this
Agreement, to the extent not waived in writing by the
Purchaser.
The obligations of the Vendor and Xxxxx under this Section 6.2
shall only apply and shall continue thereafter to the extent that
claims in respect of which they are required to indemnify, in the
aggregate, exceed C$600,000.
6.3 Indemnification by Purchaser
The Purchaser shall be liable to the Vendor and shall indemnify
and hold harmless the Vendor against any and all Losses provided
such losses have been confirmed by Final Determination arising
out of
6.3.1 the breach of any agreement, covenant, representation or
warranty of the Purchaser contained in this Agreement;
and
6.3.2 the non-fulfillment of any agreement, covenant or
obligation of the Purchaser contained in this Agreement,
to the extent not waived in writing by the Vendor or
Xxxxx.
6.4 Expiry of Liability
6.4.1 Except as set out in Sections 6.4.2 and 6.4.3, the
representations and warranties of the Vendor, Xxxxx and
the Purchaser herein shall terminate upon the expiry of
the period which is eighteen (18) months following the
Closing Date, except (i) in the case of fraud, in which
case they shall survive indefinitely or (ii) to the
extent that, during such period, a claim in respect of
any such representation or warranty is made, in which
case such representation and warranty shall continue in
full force and effect until the Final Determination of
such claim.
-21-
6.4.2 The representations and warranties herein of the Vendor
and Xxxxx relating to any liability of the Purchaser or
of the Company for the payment of Taxes and environmental
liabilities arising out of this Agreement or arising from
the business and assets of the Company as conducted or
held up to and including the Closing Date shall terminate
upon the expiration of 60 days after the limitation or
prescription periods under the relevant statutes after
which an assessment, reassessment or a claim or a penalty
cannot be issued to the Company, unless during such
period, a claim in respect of any such representation or
warranty is made, in which case such representation and
warranty shall continue in full force and effect until
the Final Determination of such claim, but the Purchaser
covenants that, from and after the Closing Date, it will
exercise all reasonable efforts to ensure that neither it
nor the Company, without the prior consent of the Vendor
(which consent shall not be unreasonably withheld),
enters into any agreement, waiver or other arrangement
which provides for an extension of time with respect to
the filing of any tax return or the payment or assessment
of any Taxes dealt with by any such representation or
warranty.
Subject to Section 6.5, the Purchaser agrees not to amend
tax returns with respect to any periods up to the date of
Closing which would result in a liability to the Vendor
and Xxxxx under the provisions of Article 6.
6.4.3 The representations and warranties contained in Section
4.1, 4.2 and 4.3, shall survive the Closing Date
indefinitely.
6.5 Claims involving Taxes
In the event of an assessment of tax liabilities or a Third Party
Claim from a competent authority in relation to Taxes, for which
the Purchaser is entitled to indemnification from Xxxxx and the
Vendor, the Purchaser shall give notice to Xxxxx and the Vendor
who shall immediately pay all Taxes, if and when required to do
so by law. Xxxxx and the Vendor shall give notice to the
Purchaser no later than ten (10) days after receipt of the
Purchaser's notice mentioned hereinabove, of their desire to
contest said assessment or Third Party Claim and their right to
so contest shall be subject to the fulfilment of the following
conditions, to the Purchaser's satisfaction, (i) Xxxxx and the
Vendor shall have paid the Taxes as required above in this
Section 6.5; (ii) such contestation shall, be at the entire cost
of Xxxxx and the Vendor; (iii) Xxxxx and the Vendor shall at the
Purchaser's request furnish it with reasonable security against
any costs or other liabilities to which any of the Purchaser or
the Company may be or become exposed by reason of such
contestation or any settlement thereof; (iv) Xxxxx and the Vendor
may not take any measures which, in the reasonable opinion of the
Purchaser, could be prejudicial or unfavourable to the Purchaser
or the Company; (v) Xxxxx and the Vendor must diligently proceed
with the defence and contestation of such assessment or Third
Party Claim; and (vi) Xxxxx and the Vendor shall keep the
-22-
Purchaser fully advised with respect to their contestation
including supplying copies of all relevant documentation promptly
upon request from the Purchaser.
The Purchaser shall cause the Company to cooperate with Xxxxx and
the Vendor for such purposes but shall be entitled to
reimbursement for any out of pocket expenses incurred by
Purchaser, in doing so. Xxxxx and the Vendor shall not be
entitled to enter into any settlement or any other final
determination of any such assessment or Third Party Claim without
the prior written consent of the Purchaser which shall not be
unreasonably withheld or delayed. Provided the foregoing
conditions are met, Xxxxx and the Vendor shall be entitled to any
refund made by the appropriate authority of the Taxes paid by the
Vendor pursuant to this Section 6.5.
7. COVENANTS OF XXXXX AND THE VENDOR
---------------------------------
Each of Xxxxx and the Vendor covenants and agrees with the Purchaser as
follows:
7.1 Best Efforts to Maintain and Preserve
Xxxxx and the Vendor will exercise their reasonable commercial
efforts with due diligence to ensure that from the date hereof
until the Closing Date,
7.1.1 the Business will be conducted, except as otherwise
herein provided or approved in writing by the Purchaser,
only in the ordinary course in substantially the same
manner as heretofore and in such manner that each of the
representations and warranties made by Xxxxx and the
Vendor herein as of the date hereof will, on the Closing
Date, be true and correct;
7.1.2 the business organization of the Company will be
maintained intact, the services of its competent officers
and employees will be retained, key employees will not be
hired, pay or salary adjustments will not be made,
bonuses will not be paid nor cash distributed to the
Company's shareholders other than by way of salaries
presently being paid and its relationship with and the
goodwill of its customers, suppliers and others having
business relations with it will be preserved, the whole
so as to maintain the goodwill and Business of the
Company;
7.1.3 except as provided for in this agreement, no shares of
the Company will be repurchased or redeemed, no dividends
will be declared or paid on the shares of the Company and
the Company will not make any distribution of its shares
or any payment out of the ordinary course of business to
an officer, director or shareholder and, generally, no
transaction will be undertaken by the Vendor or the
Company which would result in a reduction of the
shareholder's equity of the Company; and
7.1.4 the Company will not agree to acquire the business
carried on by another Person or any part thereof, whether
by way of an acquisition of assets,
-23-
shares or any other form of interest in such business or
Person, without the prior written consent of the
Purchaser.
7.2 Notice of Cessation in Ordinary Course
Xxxxx and the Vendor shall promptly notify the Purchaser of the
happening or existence or apprehended happening or existence of
any event or circumstance, on or prior to the Closing Date, by
reason of which the Business has ceased or may cease to be
conducted in the ordinary course or by reason of which the
representations and warranties made by Xxxxx and the Vendor
herein may cease to be true and correct.
7.3 Access and information for Purchaser
Xxxxx and the Vendor will cause the Company to give the
representatives of the Purchaser, subject to their executing
non-disclosure agreements, access during reasonable business
hours, to books, records, accounts, statements and other data
which are required solely for the facilitation of this
transaction. Xxxxx and the Vendor will inform the Purchaser of
any material development in the business and financial condition
of the Company between the date hereof and the Closing Date,
including with respect to any facts or circumstances, whether
existing or threatened, that in the reasonable judgment of Xxxxx
and the Vendor could impact on the business or financial
condition of the Company.
7.4 Maintain Insurance
Xxxxx and the Vendor will cause the Company to continue to
maintain in full force and effect all policies of insurance now
in effect or duly renew the same upon substantially the same
terms and conditions up to the Closing Date.
7.5 Corporate Proceedings for Transfer
Xxxxx and the Vendor will cause the Company to take all necessary
steps and proceedings as may be considered appropriate by counsel
for the Purchaser in order that the Purchased Shares may be duly
and regularly transferred to the Purchaser as of the Closing
Date.
7.6 Resignation of Officers and Directors
The Vendor will cause the directors of the Company to resign at
the Closing Date.
7.7 Further Assurances
Xxxxx and the Vendor shall, upon the request of the Purchaser,
whether before, at or after the Closing, do, execute, acknowledge
and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, assignments, transfers,
conveyances, agreements or other documents as in the opinion of
-24-
counsel for the Purchaser may be reasonably necessary or
desirable to effect complete consummation of the transactions
contemplated by this Agreement.
7.8 Exclusivity
Xxxxx and the Vendor will not (and will not cause or permit the
Company to) (i) solicit, initiate or encourage the submission of
any proposal or offer from any Person (other than the Purchaser)
relating to the acquisition of any capital stock or other voting
securities or any substantial portion of the assets of the
Company (including any acquisition structured as a merger,
consolidation or share exchange); or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in any
other manner, any effort or attempt by any person to do or seek
any of the foregoing. The Vendor will not vote the Purchased
Shares in favour of any such acquisition. Xxxxx and the Vendor
will notify the Purchaser immediately if any Person makes any
proposal, offer, inquiry or contact with respect to any of the
foregoing.
7.9 Compliance with conditions
Each of Xxxxx and the Vendor shall use his best efforts to ensure
the fulfillment and performance of the conditions set forth in
Section 8.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
-------------------------------------------------------
The purchase and sale of the Purchased Shares is subject to the
following terms and conditions for the exclusive benefit of the
Purchaser to be fulfilled and performed on or prior to the Closing
Date:
8.1 Representations and Warranties remain correct
Each of the representations and warranties of Xxxxx and the
Vendor contained in this Agreement or in any certificate or other
document delivered to the Purchaser pursuant hereto shall be true
and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on and as of such date and the Purchaser shall have received
on the Closing Date a certificate dated the Closing Date, in form
and substance satisfactory to counsel for the Purchaser, signed
by the Vendor to the effect that his representations and
warranties referred to above are true and correct on and as of
the Closing Date with the same force and effect as though made on
such date. For greater certainty, there shall have occurred no
Material Adverse Change since October 31, 1998 as of the Closing
Date.
8.2 Compliance with Covenants
The Vendor shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by him on
or prior to the Closing Date.
-25-
8.3 No Actions or Proceedings
No action or proceeding at law or in equity shall be pending or
threatened by any Person, including without limiting the
generality of the foregoing, any governmental authority,
regulatory body or agency to enjoin or prohibit:
8.3.1 the purchase and sale of the Purchased Shares
contemplated hereby or the right of the Purchaser to own
the Purchased Shares; and
8.3.2 the right of the Company to conduct its operations and
carry on its business in the normal course.
8.4 Consents, Approvals, Waivers, etc.
There shall have been given to or obtained from, as the case may
be, all appropriate Persons, including, without limitation, all
federal, provincial, municipal, local or governmental or
administrative bodies, all such notices, permits, approvals and
consents, in form and terms satisfactory to counsel for the
Purchaser, as may be required in order to permit the change of
ownership of the Purchased Shares and the consummation of the
transactions contemplated herein. without affecting or resulting
in the cancellation or the termination of any material license,
permit, franchise, contract or other right held by the Company,
and without thereby imposing on the Purchaser or the Company any
material additional expense, liability, constraint, penalty or
other liability, which notices, permits, approvals and consents
shall include, without limitation, those set out in the
DISCLOSURE SCHEDULE.
8.5 Corporate and Other Proceedings
All corporate and other proceedings of the Company in connection
with the transactions contemplated hereby, and all documents and
instruments incidental hereto, shall have been duly authorized
and executed, shall be in form and substance satisfactory to the
Purchaser and counsel for the Purchaser, and the Purchaser and
counsel for the Purchaser shall have received all such documents
and instruments, or duly certified copies thereof, as may be
reasonably requested.
8.6 Employment Agreement
The Purchaser and Xxxxx shall have entered into an employment
agreement (the "EMPLOYMENT AGREEMENT") with the Company on terms
and conditions substantially as set forth in the Employment
Agreement appended in Schedule B hereto.
8.7 Opinion of Counsel
The Purchaser shall have received from counsel for the Vendor and
the Company, a favourable opinion addressed to the Purchaser and
to counsel for the Purchaser,
-26-
dated the Closing Date, on terms and conditions acceptable to the
Purchaser, acting reasonably.
8.8 Rescission on Failure to Fulfill
In case any of the foregoing conditions shall not be fulfilled
and performed at or before the Closing Date to the reasonable
satisfaction of the Purchaser and counsel for the Purchaser, the
Purchaser may rescind this Agreement by notice to the Vendor and
in such event, the Purchaser shall be released from all
obligations hereunder, the whole without prejudice to any right
of the Purchaser to claim for damages arising out of such
non-fulfillment or non-performance.
9. CONDITIONS PRECEDENT TO VENDOR'S OBLIGATION TO CLOSE
----------------------------------------------------
The purchase and sale of the Purchased Shares is subject to the
following terms and conditions for the exclusive benefit of the Vendor
to be fulfilled and performed on or prior to the Closing Date:
9.1 Representations and Warranties remain correct
Each of the representations and warranties of the Purchaser
contained in this Agreement or in any certificate or other
document delivered to the Vendor pursuant hereto shall be true
and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on and as of such date and the Vendor shall have received on
the Closing Date a certificate dated the Closing Date, in form
and substance satisfactory to counsel for the Vendor, signed by a
duly authorized officer of the Purchaser to the effect that such
representations and warranties referred to above are true and
correct on and as of the Closing Date with the same force and
effect as though made on such date.
9.2 Employment Agreement
The Purchaser and Xxxxx shall have entered into the Employment
Agreement.
9.3 Rescission on Failure to Fulfill
In case any of the foregoing conditions shall not be fulfilled
and performed at or before the Closing Date to the reasonable
satisfaction of the Vendor and counsel for the Vendor, the Vendor
may rescind this Agreement by notice to the Purchaser and in such
event, the Vendor shall be released from all obligations
hereunder, the whole without prejudice to any right of the Vendor
to claim for damages arising out of such non-fulfillment or
non-performance.
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9.4 Break-up Fees
In the event the transaction contemplated in this Purchase
Agreement is not consummated for reason of a breach by the
Purchaser of its obligations hereunder, the Purchaser shall pay
the sum of US$7.0 (seven) million to the Vendor under reserve of
and without prejudice to all other rights and recourses of the
Vendor. Upon the execution of the agreement, the Purchaser has
delivered to the Vendor an irrevocable stand-by letter of credit
of the Huntington National Bank in the amount of US$7,000,000 as
from Schedule C (hereinafter "LETTER OF CREDIT") which the Vendor
may draw upon in accordance with the terms of the Letter of
Credit. The Vendor shall surrender to the Purchaser the Letter of
Credit upon receipt of the Purchase Price.
9.5 Guarantees
Xxxxx shall be released from all guarantees given to the Bank of
Montreal on behalf of the Company.
9.6 Purchase Price
The Vendor shall have received payment of the Purchase Price.
10. CLOSING
-------
The sale and purchase of the Purchased Shares herein provided for shall
be consummated and completed on the Closing Date at the Closing Place,
as follows:
10.1 At the Closing, the Vendor shall deliver or cause to be delivered
to the Purchaser free and clear of all Liens
10.1.1 duly executed and endorsed certificates representing the
Purchased Shares, and
10.1.2 all such other agreements, contracts, certificates,
opinions, consents, approvals and other documents which
are herein required to be delivered by the Vendor at or
prior to the Closing Date and not theretofore received by
the Purchaser or which the Purchaser, acting reasonably,
may require the Vendor to deliver, the whole for the
purposes of completing the transfer of the Purchased
Shares or setting it up against third parties and
completing the other transactions provided for herein.
10.2 The Purchaser shall deliver or cause to be delivered to or to the
order of the Vendor the sums payable pursuant to Section 3 in the
manner permitted therein.
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11. COVENANTS AFTER CLOSING
-----------------------
11.1 Non-competition
11.1.1 For a period of three (3) years after the date hereof,
Xxxxx and the Vendor will not, directly or indirectly,
(through a relative, affiliate or otherwise) in any part
of the world (i) engage in any activity competitive with
the Business or the Company, (ii) design, develop,
manufacture, assemble, process, distribute, market or
sell any products that are the same as or similar to
those products sold in the Business, (iii) solicit orders
from or seek or propose to do business with any customer,
former customer, supplier or former supplier of the
Company in the same line of business of the Business, or
(iv) influence or attempt to influence any employee,
representative or advisor of the Company to terminate
their employment or relationship with the Company.
11.1.2 The Purchaser shall be entitled to injunctive relief for
the violation of any covenant of this Section 11 and
shall have all other rights and remedies allowed by law
to prevent further violations. The Purchaser may also
seek damages resulting from any violation. Each of Xxxxx
and the Vendor has reviewed the scope, duration and
geographical scope of the covenants made in this Section
and agrees that it is reasonable and necessary to protect
the Purchaser, its subsidiaries and its affiliates.
However, the parties agree that if this Section is found
to be unenforceable due to restrictions unreasonable in
scope, duration or geographical area, then the
appropriate court may reform this Section so that the
restrictions in it are reasonable and enforceable.
11.2 Name
Each of Xxxxx and the Vendor undertakes, as of the Closing Date,
to cease using, and to cause any other corporation in which the
Vendor may hold an interest, to cease using, directly or
indirectly, alone or with any other expression, the corporate
names of the Company and any other names, trade-xxxx or
trade-name used or owned by the Company.
11.3 Tax Returns
The Company shall prepare or have prepared and shall file within
the prescribed delays, at the cost of the Company, the tax
returns of the Company for the fiscal year ended on the Closing
Date. It is understood that the Vendor shall give the Purchaser
and the Company access to all relevant information and shall
collaborate with the Purchaser in connection with the preparation
and filing of said tax returns.
-29-
12. MISCELLANEOUS
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12.1 Notices, Etc.
Any notice, consent or other communication (a "NOTICE") given
pursuant to or in connection with this Agreement shall be in
writing in the English language and shall be sufficiently given
to the Person to whom it is addressed if transmitted by
facsimile, delivered in person or sent by prepaid registered mail
to or for such Person at the address of such Person indicated
below or at such other address as such Person shall have
theretofore notified to the other party or parties hereto in
accordance herewith. Any Notice so addressed and transmitted,
delivered or mailed as aforesaid shall be deemed to have been
sufficiently given or made on the date on which it was so
transmitted by facsimile or delivered (provided that if such day
is not a Business Day, the Notice shall be deemed given or made
on the Business Day following transmission or delivery) or five
(5) Business Days following the date of mailing, as the case may
be. Notwithstanding the foregoing, in case of strike, lock-out or
other event, real or apprehended, which causes or would cause the
interruption of the postal service, the Notice shall be delivered
in person or transmitted by facsimile.
To the Vendor:
-------------
Xxxxx Xxxxx
4105 Xxxx Xxxxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
With a copy to:
--------------
Xxxxxxxx, Xxxxxxxx & Xxxxxxx
Stock Exchange Tower
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxxxx
To the Purchaser:
----------------
Xxxxx Xxxxx
President and Chief Executive Officer
Insilco Corporation
000 Xxxxx Xxxxx X., Xxxxx Xxxxx
Xxxxxx, Xxxx 00000
-30-
With a copy to:
---------------
Xxxxxx Xxxxxxx
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
12.2 Interpretation
12.2.1 The article, section and paragraph headings contained
herein are included for convenience of reference only,
are not intended to be full or accurate descriptions of
the content thereof and shall not affect or be utilized
in the construction or interpretation of this Agreement.
12.2.2 Words importing the singular include the plural and vice
versa; and words importing gender include all genders.
12.2.3 Unless otherwise specified, all references herein to
articles, sections, paragraphs, Exhibits or Schedules
shall be to articles, sections, paragraphs, Exhibits or
Schedules of this Agreement.
12.2.4 This Agreement shall in all respects be governed by and
construed in accordance with the laws in force in the
Province of Quebec, including all matters of
construction, validity and performance.
12.2.5 The parties hereto submit to the non-exclusive
jurisdiction of the Courts of the Province of Quebec in
determining matters arising hereunder.
12.3 Time of the Essence
Time shall be of the essence of this Agreement. The mere lapse of
time for performing an obligation shall constitute the debtor of
said obligation in default. Whenever any payment is to be made or
any action is to be taken hereunder on a day other than a
Business Day, such payment shall be made or such action shall be
taken on the next succeeding Business Day.
12.4 Expenses
Each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution and performance of this
Agreement, including, without limitation, all fees and expenses
of its counsel, employees, agents and representatives, it being
understood that, in the case of Xxxxx and the Vendor, all such
costs incurred prior to Closing, may be paid by the Company
provided that the Company pays any such costs prior to Closing.
-31-
12.5 Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors, heirs,
representatives and permitted assigns, provided that neither this
Agreement nor any rights or obligations hereunder shall be
assigned by any party without the prior consent of the other
parties except that the Purchaser shall have the right to assign
this Agreement and its rights and obligations hereunder to a
Subsidiary thereof, without obtaining the consent of the Vendor.
12.6 References to Disclosure Schedule
Any matter declared in any numbered section of this Agreement to
be set out, stated, described or reflected in the DISCLOSURE
SCHEDULE shall be deemed to have been sufficiently disclosed to
the parties hereto for all purposes of this Agreement if, in a
section of the DISCLOSURE SCHEDULE bearing the same number, such
matter has been fully and plainly described or there is a cross
reference to another section of the DISCLOSURE SCHEDULE
containing such full and plain description.
12.7 Severability
If any provision of this Agreement shall be held illegal, invalid
or unenforceable by any competent court in any relevant
jurisdiction, such illegality, invalidity or unenforceability
shall attach only to such provision in such jurisdiction and such
provision shall be severed herefrom and be ineffective to the
extent of such illegality, invalidity or unenforceability and
shall not affect or impair or render illegal, invalid or
unenforceable such provision in any other jurisdiction or any
other provision of this Agreement in any jurisdiction.
12.8 Entire Agreement
This Agreement and the Employment Agreement embody the entire
agreement and understanding among the parties hereto and
supersedes all prior agreements between such parties with respect
to the subject matter hereof, including, without limitation, the
letter of intent dated July 21, 1999 as accepted by the Vendor on
July 26, 1999 with the exception, however, of the Confidentiality
Agreement between Xxxxx and the Purchaser which shall survive in
accordance with its terms. Neither this Agreement nor any of the
terms hereof may be changed, waived, discharged or terminated
otherwise than by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or
termination is sought. Any waiver of any term or condition or any
breach of any covenant of this Agreement shall not operate as a
waiver of any other such term or condition or breach, nor shall
any failure to enforce any provision hereof operate as a waiver
of such provision or of any other provision hereof.
-32-
12.9 Counterparts
This Agreement may be executed by the parties hereto in several
counterparts, each of which when so executed and delivered shall
be an original and all such counterparts shall together
constitute one and the same instrument.
12.10 Liability of Vendor
Xxxxx Xxxxx shall be solidarily and jointly and severally liable
for the obligations of the Vendor (including the representations
and warranties) set out in this Agreement or arising herefrom.
12.11 Language
The parties hereto confirm having requested that this Agreement
and all notices or other communications relating thereto be
drawn-up in the English language only. Les parties aux presentes
confirment avoir requis que cette convention ainsi que tous xxx
xxxx et autres communications s'y rapportant soient rediges en
langue anglaise seulement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first herein before written.
/s/ Xxxxx Xxxxx
---------------------------
XXXXX XXXXX
/s/ Xxxxx Xxxxx
---------------------------
XXXXX XXXXX
INSILCO CORPORATION
per: /s/ Xxxxxxx X. Xxxx
---------------------
Xxxxxxx X. Xxxx
Senior Vice-President and
Chief Financial Officer
per:
---------------------
