EXHIBIT 10.4
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made as of March 7, 1997, by and
among the following parties:
Xxxxxxx Strong-Tie Company Inc., a California corporation
("SST");
Xxxxxxx Strong-Tie Canada, Limited, a corporation incorporated
under the laws of the Province of Ontario ("SST-Canada" and,
collectively with SST, "Buyer");
Xxxxxx Xxxxxxx Xxxxxxxxxx ("X. Xxxxxxxxxx");
Xxxxx Saroginie Xxxxxxxxxx ("X. Xxxxxxxxxx");
X. Xxxxxxxxxx, Xxxx Xxxxxxx Xxxxxxxx, Xxxxxx X. Silver and
Xxxxxx Xxxxxxxxx, as trustees of The Xxxxxx Xxxxxxxxxx Trust
dated May 17, 1985 (the "Trust" and, collectively with X.
Xxxxxxxxxx and X. Xxxxxxxxxx, the "ADB Sellers");
X. Xxxxxxxxxx Holdings Inc., an Ontario corporation
("DCHI"); and
Xxxx Xxxxxxx Xxxxxxxx ("Xxxxxxxx" and, collectively with
the ADB Sellers and DCHI, the "Sellers"), with reference
to the following facts:
Xxxxxxxx Holdings Limited, an Ontario corporation ("Holdings"), all of
the outstanding capital stock of which (the "Holdings Stock") is owned by
Xxxxxxxx, Isometric Limited, an Ontario corporation ("Isometric"), all of
the outstanding capital stock of which is owned by Holdings, A.D.B. Heading
Limited, an Ontario corporation ("ADB"), all of the outstanding capital
stock of which (the "ADB Stock") is owned by the ADB Sellers, and Dual
Fastening, Inc., a Georgia corporation ("DFI" and, collectively with
Holdings, Isometric and ADB, the "Companies"), all of the outstanding
capital stock of which (the "DFI Stock") is owned by DCHI, are engaged in
the business of developing, producing, manufacturing, marketing and
selling, principally in Canada and the United States of America (the
"U.S."), fastening products used in building construction. SST is engaged
in a similar business.
Sellers and Buyer (collectively, the "Parties") consider it desirable
and in their respective best interests that Buyer purchase from Sellers and
Sellers sell to Buyer all of the outstanding capital stock of each of the
Holdings, ADB and DFI, on the terms and conditions in this Agreement. All
references herein to "dollars" or "$" mean U.S. dollars, except as
otherwise expressly indicated.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein, the Parties agree as follows:
1. Purchase and Sale.
1.1. Assignment of Stock. At the Closing (as hereinafter
defined), Xxxxxxxx shall sell, assign, transfer and convey to SST-Canada
all right, title and interest, of record and beneficial, in and to all of
the Holdings Stock, the ADB Sellers shall sell, assign, transfer and convey
to SST-Canada all right, title and interest, of record and beneficial, in
and to all of the ADB Stock, and DCHI shall sell, assign, transfer and
convey to SST all right, title and interest, of record and beneficial, in
and to all of the DFI Stock, in each case subject to no, and free of any,
liens, claims, pledges, mortgages, encumbrances, security interests,
defects in title, community property rights, restrictions on transfer and
other defects in title or restrictions (collectively, "Liens"). To that
end, Sellers shall deliver to SST-Canada and SST, as provided above, at the
Closing all certificates or other instruments representing or evidencing
the Holdings Stock, the ADB Stock and the DFI Stock (collectively, the
"Company Stock"), duly endorsed for transfer to SST-Canada or SST, as
provided above, or accompanied by stock powers duly executed by the
respective Sellers transferring and assigning the Company Stock to SST-
Canada or SST, as provided above, all in form and substance satisfactory to
Buyer.
1.2. Purchase of Stock. At the Closing (as hereinafter
defined), Buyer shall purchase from Sellers, respectively, all right, title
and interest, of record and beneficial, in and to all of the Company Stock,
as herein provided.
1.3. Base Purchase Prices. The base purchase prices for the
Company Stock (each, a "Base Stock Price"), expressed in Canadian dollars,
shall be as follows:
Base Stock Price
Company Stock (Canadian Dollars)
-------------- ------------------
Holdings Stock $ 6,000,000
ADB Stock $ 1,800,000
DFI Stock $ 2,200,000
--------------
Total $ 10,000,000
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1.4. Payment. At the Closing (as hereinafter defined), Buyer
shall pay the total Base Stock Prices, by delivering to Xxxxxx Silver
Xxxxx, Barristers-at-Law and Solicitors, counsel for Sellers, a certified
cheque drawn on a Canadian Chartered Bank, in immediately available
Canadian dollars, payable to the order of "Xxxxxx Silver Xxxxx, in trust",
or payable to such other person or persons as Sellers may direct by notice
signed by all Sellers and received by Buyer at least three days prior to
the Closing. On making such payment, Buyer shall be deemed to have paid in
full the Base Stock Prices for all of the Stock, and the $25,000 deposit
(the "Deposit") heretofore lodged by SST with its counsel, together with
any interest earned thereon, shall thereupon be returned to SST.
1.5. Closing. The purchases and sales of the Company Stock
shall be consummated in accordance with this Agreement at a closing (the
"Closing") to be held at the offices of Stikeman, Elliott, Barristers &
Solicitors, Canadian counsel for Buyer, at Xxxxx 0000, Xxxxxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxx, at 10:00 A.M. Toronto time, on March 10, 1997, or on such
later date as all of the conditions in section 9 are satisfied or waived or
on such earlier or later date as the Parties may determine by mutual
agreement (the date of the Closing being hereinafter called the "Closing
Date"); provided that the Closing Date shall not be later than April 15,
1997.
1.6. Earn-Out Payments. For each of the four calendar years
1997, 1998, 1999 and 2000 (each, an "Earn-Out Year") for which Mechanical
Anchor Sales (as hereinafter defined) exceed the Mechanical Anchor Sales
for the preceding calendar year, SST-Canada shall pay to Sellers an
additional amount (each, an "Earn-Out Payment") equal to ten percent of
such excess; provided that no Earn-Out Payment shall accrue or be due or
payable for any Earn-Out Year for which the Mechanical Anchor Sales are not
more than $6,395,380. For purposes of this section 1.6, "Mechanical Anchor
Sales" means the aggregate net revenues (determined by Buyer in accordance
with U.S. generally accepted accounting principles ("GAAP") from Buyer's
sales reports prepared in the ordinary course of Buyer's business) for
sales by Buyer and its affiliates (including the Companies) of Mechanical
Anchor Products identified on Schedule 1.6 attached hereto, reduced by
charges for returns of any of such products; provided that Schedule 1.6 may
be amended at any time or from time to time by agreement between X.
Xxxxxxxxxx and SST. Mechanical Anchor Sales for calendar year 1996 shall
be deemed to have been $6,395,380 (including $5,552,380 by the Companies
and $843,000 by SST and its subsidiaries). Buyer shall furnish to X.
Xxxxxxxxxx within forty-five days after the end of each calendar quarter
ending on or prior to December 31, 2000, commencing with the calendar
quarter ending March 31, 1997, a report showing the Mechanical Anchor Sales
for that quarter. Not later than March 31 of the year following each Earn-
Out Year, Buyer shall furnish to X. Xxxxxxxxxx copies of all such sales
reports for such Earn-Out Year. SST-Canada shall make each Earn-Out
Payment that accrues as provided in this section 1.6 by check or wire
transfer in accordance with instructions provided by the respective Sellers
entitled thereto not later than March 31 of the calendar year following the
respective Earn-Out Year to the following parties in the following
proportions:
X. Xxxxxxxxxx 4.5%
X. Xxxxxxxxxx 4.5%
Trust 9.0%
DCHI 22.0%
Xxxxxxxx 60.0%
2. Publicity. Prior to the Closing Date, no publicity, release,
announcement, notice, statement or report concerning the transactions
contemplated hereby shall be issued by any Party without the prior approval
of the form and substance thereof by SST and X. Xxxxxxxxxx; provided that
SST and its affiliates shall have the right, in their absolute discretion,
to make or file with the U.S. Securities and Exchange Commission or any
other U.S. or Canadian governmental agency such releases, announcements,
notices, statements or reports as they may determine to be necessary or
advisable for Buyer or any of its affiliates to comply with applicable
laws, rules and regulations.
3. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to, and agrees with, Sellers, as follows:
3.1. Organization. SST and SST-Canada are corporations duly
organized, validly existing and in good standing under the laws of the
State of California and the Province of Ontario, respectively, and each has
full corporate power and authority to carry on its business as now
conducted and to own its assets. Buyer is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction
where, by virtue of its business conducted therein, it is required to be so
qualified, except in any jurisdiction where the failure to be so qualified
does not affect Buyer materially and adversely. All of the outstanding
capital stock of SST-Canada is owned of record and beneficially by SST.
3.2. Litigation. There are no actions, suits, proceedings or
investigations pending before any court or governmental agency or before
any arbitrator of any kind, or any order, injunction or decree outstanding,
or, to the knowledge of Buyer, threatened, against Buyer or against or
relating to its property, assets or business, that would materially and
adversely affect the right, power or capacity of Buyer to enter into and
perform its obligations under this Agreement.
3.3. No Breach. The execution and delivery of, and the
transactions contemplated by, this Agreement do not and will not result in
a breach of the terms or conditions of or constitute a default under, or
violate, the Articles of Incorporation or Bylaws of Buyer or any agreement
or other document or undertaking, oral or written, to which Buyer is a
party or by which it is bound.
3.4. Authority for Agreement. All corporate and other
proceedings required to be taken by or on behalf of Buyer to authorize
Buyer to enter into and carry out this Agreement have been duly and
properly taken. This Agreement has been duly executed and delivered by
Buyer. This Agreement is the legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
3.5. Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on directly by Buyer
with Sellers, without the intervention of any broker or investment banker
or other third party engaged by Buyer. Buyer has not engaged, consented to
or authorized any broker, investment banker or other third party to act on
its behalf, directly or indirectly, as a broker or finder in connection
with the transactions contemplated by this Agreement.
3.6. Investment Canada. Buyer is a WTO Investor within the meaning
of the Investment Canada Act.
4. Representations and Warranties of Sellers. Sellers, jointly and
severally, hereby represent and warrant to Buyer, and agree with Buyer, as
follows:
4.1. Organization. Each of the Companies and Sellers
(collectively, the "Selling Parties") that is incorporated is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to
carry on its business as now conducted and to own its assets. The Trust is
duly organized, validly existing and in good standing as a trust under the
laws of each jurisdiction that govern the Trust and has full power and
authority to carry on its business as now conducted and to own its assets.
Each of such corporations is duly qualified to do business and is in good
standing as an extra-provincial or foreign corporation in each jurisdiction
where, by virtue of its business conducted therein, it is required to be so
qualified, except in any jurisdiction where the failure to be so qualified
does not affect it materially and adversely. True and complete copies of
the articles or certificate of incorporation, trust instrument, bylaws and
other charter documents, as currently in effect, of each such corporation
and the Trust have been delivered to Buyer. The minute books of each such
corporation contain substantially accurate records of all meetings of its
board of directors, all committees of its board of directors, and its
shareholders since its incorporation and accurately reflect all material
transactions to which such minutes refer.
4.2. Capitalization. The authorized capital stock of the
Selling Parties that are corporations, the issued and outstanding capital
stock of those corporations and the record and beneficial owners thereof
and the number of shares owned by each are as follows:
Issued and Record and
Outstanding Beneficial
Corporation Authorized Capital Stock Shares Owner
----------- ----------------------------- ----------- -------------
DCHI unlimited Class X, X, X, X 0 Xxxxxx X. Xxxxxxxxxx
and E Shares and unlimited
Common Shares
DFI 1,500 Common Shares 500 Common DCHI
ADB 100,000 Common Shares, no par 10 Common X. Xxxxxxxxxx
value 10 Common X. Xxxxxxxxxx
20 Common Trust
Isometric 3,600 Non-Voting Special 10 Common Holdings
Shares, par value $10 each,
and 400 Common Shares, no par
value
Holdings 10,000 Common Shares, no par 100 Common Xxxxxxxx
value, 4,000 Class A Non- 100 Class A Xxxxxxxx
Cumulative,Non-Voting, Non- Special
Partici pating, Special
Shares, par value $10 each,
and 5,000 Class B Non-
Cumulative, Voting, Non-
Participating Shares, par
value $10 each
All of such shares that are issued and outstanding have been duly and
validly issued and are outstanding, fully paid, nonassessable and free of
all Liens and preemptive and similar rights. The record and beneficial
owners identified above in this section 4.2 own all right, title and
interest in and to the shares set forth above, subject to no Lien or
preemptive or similar rights. Sellers have contributed to the capital of
the respective Companies the amounts of all debts and liabilities of any of
Companies to any of Sellers shown on the 1996 Financial Statements (as that
term is defined in section 4.6), including, without limitation, the
contribution by DCHI to the capital of DFI in the amount of $38,688, or
subsequently incurred (other than debts for ordinary and customary employee
compensation incurred in the ordinary course of the Companies' businesses),
and none of the Companies has any debt, duty, obligation or liability to
any of Sellers.
4.3. Subsidiaries. None of the Companies has any subsidiaries
or owns of record or beneficially any capital stock or other equity
securities issued by any person, except that Isometric is a wholly owned
subsidiary of Holdings.
4.4. Options, Warrants, Convertible Securities, etc. Except as
provided in this Agreement, there are no outstanding options, rights,
warrants, convertible securities, commitments or agreements calling for the
issuance, assignment, transfer, sale, pledge, hypothecation or other
disposition of any capital stock of any of the Selling Parties that is a
corporation or of any securities convertible into or exchangeable for any
capital stock of any such corporation.
4.5. Officers and Directors. Schedule 4.5 attached hereto
contains a complete and correct list of the names of all officers and
directors of each of the Selling Parties that is a corporation.
4.6. Financial Statements. Except as set forth in Schedule 4.6
attached hereto, the books of account of each of the Companies are correct
and complete in all material respects and fairly present its income,
expenses, assets and liabilities in accordance with GAAP and with Canadian
generally accepted accounting principles ("Cdn.GAAP"), as appropriate,
consistently applied. Except as set forth in Schedule 4.6, the unaudited
financial statements of the Companies for the two years ended December 31,
1995, and the combined audited financial statements of the Companies for
the eleven-month period ended November 30, 1996, all of which have been
delivered by Sellers to Buyer, fairly present the Companies' financial
position as of said dates and the results of their operations for such
periods and were prepared in conformity with GAAP or Cdn.GAAP, as
appropriate, consistently applied throughout the periods covered thereby.
Such financial statements for the eleven-month period ended November 30,
1996 (the "1996 Financial Statements") have been prepared in accordance
with GAAP, consistently applied, and have been audited by Coopers &
Xxxxxxx, Chartered Accountants, independent certified public accountants.
None of the Companies has any material liabilities or obligations, whether
accrued, absolute, contingent or otherwise, and whether due or to become
due, which arose or, in accordance with GAAP, should be accrued, with
respect to any period ended on or prior to November 30, 1996, other than
(a) those disclosed, or reflected as liabilities or obligations, or
reserved against, on the 1996 Financial Statements, (b) those disclosed
herein or on any schedule hereto or (c) those fully covered by insurance
and not otherwise materially adversely affecting the financial condition,
business, assets or operations of any of the Companies. The current
working capital of each of the Companies is consistent with its past
practices and sufficient for the purposes of operating its business in its
present form and at its present level of activity and for the purpose of
fulfilling in accordance with their respective terms all purchase orders,
projects and contractual obligations which have been placed with or
undertaken by it.
4.7. Liabilities Since November 30, 1996. None of the Companies
has any liabilities or obligations material to it, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, which
arose, or, in accordance with GAAP, were accrued or should be accrued, with
respect to any period that began after November 30, 1996, and none of
Sellers has any knowledge of any circumstances, conditions, events or
arrangements that would give rise to any such liabilities or obligations of
any of the Companies in the future, other than (a) those incurred in the
ordinary course of its business, which have not been in the aggregate
materially adverse to the business or financial condition of any of the
Companies, (b) those disclosed on any schedule hereto, (c) those reasonably
incurred in connection with this Agreement and the transactions
contemplated hereby, and (d) those covered by insurance and not otherwise
materially adversely affecting the financial condition, business, assets or
operations of any of the Companies.
4.8. Actions Since November 30, 1996. Except as reflected in
the 1996 Financial Statements and except as otherwise expressly set forth
in or contemplated by this Agreement, since November 30, 1996, none of the
Companies has (a) and none of Sellers has, issued or sold, or agreed to
issue or sell, or purchased, or agreed to purchase any capital stock of any
of the Companies or securities convertible into or exchangeable for such
capital stock, or any options, warrants, rights or calls to purchase such
capital stock, or other securities, (b) incurred any obligation or
liability, absolute or contingent, except those to which clauses (a)
through (d) of section 4.7 refer, (c) discharged or satisfied any Lien,
except in the ordinary course of business, or paid or satisfied any
liability other than liabilities as of November 30, 1996, to which clauses
(a) through (c) of section 4.6 refer or liabilities to which clauses (a)
through (d) of section 4.7 refer, in each case only in the ordinary course
of business, (d) entered into, or modified, any employment or consulting
agreement, or made any wage or salary increases or granted any bonuses,
except in the normal employee or executive review process, which has been
fully disclosed to Buyer in writing, (e) subjected to Lien any of its
properties or assets, (f) sold, assigned or transferred any of its
properties or assets, except in the ordinary course of business, (g)
entered into any transaction not in the ordinary course of business, (h)
waived any rights of substantial value, or cancelled, modified or waived
any debts owed to it in excess of $10,000 in the aggregate, (i) declared,
paid or set aside any dividends or other distributions or payments on its
capital stock, (j) made any loans or advances to any person or assumed,
guaranteed, endorsed or otherwise become responsible for obligations of any
person, except for advances to unaffiliated third parties not in excess of
$10,000 in the aggregate, (k) except as described in Schedule 4.7 attached
hereto, made any payment to any of Sellers in respect of any debt of any of
the Companies to any of Sellers in any capacity other than ordinary and
customary employee compensation paid in the ordinary course of business,
(l) made any change or amendment in its articles or certificate of
incorporation, or other charter documents, (m) effected any merger,
consolidation, recapitalization, stock split, stock dividend,
reorganization or other transaction affecting any of its capital stock, (n)
made any illegal payments to governmental or quasi-governmental officials,
or any payments to customers for the sharing of fees or to customers or
suppliers for the rebating of charges, or other reciprocal practices, or
(o) entered into any agreement, commitment or understanding to do any of
the foregoing.
4.9. Adverse Developments. Since November 30, 1996, there has
not occurred (a) any materially adverse change in the business, assets,
results of operations or financial condition of any of the Companies, or
(b) any loss or destruction, whether or not covered by insurance, of any
material portion of the assets of any of the Companies which materially
adversely affects the ability of any of the Companies to carry on its
business as currently conducted, and none of Sellers knows of any
development that may give rise to any of the foregoing.
4.10. Taxes. All taxes, including, without limitation, income,
property, sales, use, occupancy, excise, franchise, added value, employees'
withholding and Social Security taxes, imposed by Canada, the U.S. or any
other country or by any province, state, municipality, subdivision or
instrumentality of Canada, the U.S. or any other country or by any other
taxing authority, which have become due and payable by any of the
Companies, and all interest and penalties thereon, whether disputed or not,
have been paid in full or adequately provided for by reserves shown in its
books of account. All deposits required by law to be made by any of the
Companies with respect to employees' withholding taxes, and income,
franchise or capital taxes of any of the Companies, have been duly made,
and all income or franchise tax returns of each of the Companies were true
and complete and have been filed as and when required by applicable law.
As of November 30, 1996, none of the Companies was liable for the payment
of any taxes, including, without limitation, income, gross receipts,
property, sales, use, occupancy, excise, value added or franchise taxes, in
any jurisdiction, other than as set forth herein or in the 1996 Financial
Statements. No deficiency or adjustment in respect of Canadian, U.S.,
provincial, state, local or foreign income taxes has been assessed against
any of the Companies and remains unpaid, other than such taxes or
assessments as are being contested in good faith and which have been
disclosed to Buyer in writing, and none of Sellers has knowledge of any
unassessed tax deficiency proposed or threatened against any of the
Companies. The Canadian federal income tax liability of Isometric and ABD
has been assessed for all fiscal years to and including the year ended
December 31, 1995. There has been no reassessment filed and no notice of
objection by any taxing authorities. The U.S. Federal and state tax
returns of DFI have been filed with all tax authorities having
jurisdiction, and the time for audit thereof by tax authorities having
jurisdiction has expired for all tax years ended on or prior to December
31, 1993. No examination of any tax return of any of the Companies is
currently in progress, there are no outstanding agreements or waivers
extending the statutory period or providing for an extension of time with
respect to the assessment or reassessment of tax or the filling of any tax
return or any payment of any tax by any of the Companies (except that DFI
routinely requests extension of the time for the filing of its tax
returns), and there are no claims now threatened or pending against any of
the Companies in respect of taxes or any matters under discussion with any
governmental entity relating to taxes. DFI requested such an extension for
the year ended March 31, 1996, and DFI's tax returns for that year were
prepared and filed in a timely manner. Each of the Companies has withheld
from each payment made by it the amount of all taxes and other deductions
required to be withheld therefrom and has paid the same to the proper
taxing or other authority within the time prescribed under any applicable
law. None of Sellers is a nonresident person of Canada within the meaning
of the Income Tax Act (Canada).
4.11. Ownership of Assets. Except as set forth in Schedule 4.11
attached hereto, each of the Companies owns outright and has good and
marketable, indefeasible title to all of its assets and properties,
tangible and intangible (including all assets reflected in the 1996
Financial Statements, except those disposed of in the ordinary course of
business since November 30, 1996), and good title to its leasehold estates,
in each case free and clear of all Liens, in each case except for (a) Liens
for current taxes not delinquent, or taxes being protested in good faith
(such protests being set forth in Schedule 4.11), and (b) such
imperfections in the title thereto and Liens, if any, as do not materially
detract from the value, or interfere with the present or continued use, of
its property, or otherwise impair its business or operations. None of the
properties or assets, the value of which is reflected in the 1996 Financial
Statements, is held by any of the Companies as lessee or subject to any
lease or as conditional vendee under conditional sale or other title
retention agreement or as optionee under any option to purchase. Each of
the Companies owns or has the right to use all assets and properties that
are used or useful in its business, subject to no Liens, excepting only
those described in the 1996 Financial Statements, those that will be
discharged or released prior to the Closing and minor easements and
exceptions, none of which will interfere with its use thereof after the
Closing.
4.12. Intangible Assets. Schedule 4.12 attached hereto sets
forth a list and brief description of all patents and patent rights and
applications, and all trademarks, service marks, trade names and copyrights
and applications for the registration thereof, and other intangible assets
(other than trade secrets) owned or used by any of the Companies or in
which it has an interest. No person has any proprietary or other interest
in any of such intangible assets or any trade secrets of any of the
Companies and no third party has infringed on any of the properties so
listed or has asserted the invalidity or unenforceability of any thereof.
None of the Companies is infringing on any patent, copyright, trademark,
service xxxx or other intangible right of any third party, and no
proceedings have been instituted or are pending or are threatened, and no
claim has been received by any of the Companies, alleging any such
infringement. To the best knowledge of Sellers, none of the Companies, no
activity in which any of the Companies is engaged, no product which any of
the Companies manufactures, uses or sells and no process, method,
packaging, advertising, or material that any of the Companies employs in
the manufacture, marketing or sale of any such product, breaches, violates,
infringes, interferes with, or requires payment for the use of any rights
of any third party. Except as set forth in Schedule 4.12, none of the
Companies is a party to or bound by any license or other agreement (as
licensor or licensee or otherwise) providing for the payment or receipt of
any royalty.
4.13. Litigation. Except as set forth in Schedule 4.13 attached
hereto, there are no actions, suits, proceedings or investigations pending
before any court or governmental agency or before any arbitrator of any
kind, or any order, injunction or decree outstanding or, to the best
knowledge of Sellers, threatened, against any of the Companies or against
or relating to its property, assets or business, nor do any of Sellers know
or have reasonable grounds to know of any basis for any such action, suit,
proceeding, governmental investigation, order, injunction or decree. None
of the Companies is in violation of any applicable law, regulation,
ordinance, order, injunction, decree, award or other requirement of any
governmental body, court or arbitrator relating to its property, assets or
business, except for such law, regulation, ordinance, order, injunction,
decree, award and other requirement of which Sellers have no actual or
constructive knowledge and which would not have a material adverse effect
on the business or financial condition of any of the Companies.
4.14. Agreements and Obligations. Except as set forth on
Schedule 4.14 attached hereto, each of the Companies has performed all
obligations required to be performed by it to the date hereof under all
material agreements to which it is a party or by which it is bound, is not
in default under any such agreement which would permit any other party to
terminate or would give rise to a claim for damages by any other party, and
none of Sellers knows of any default or alleged default thereunder by any
other party or of any event which, with the giving of notice or the passage
of time, or both, would become such a default by any of the Companies which
would permit any other party to terminate or would give rise to a claim for
material damages against the defaulting party or such other party. All
such agreements are valid and in full force and effect and, to the best
knowledge of Sellers, none of such agreements is subject to rescission or
reformation and there are no circumstances or writings extrinsic to any of
such agreements that would materially modify any of their terms, prevent
their assignment or create a Lien on any of the Companies or any of its
properties.
Without limiting the generality of the foregoing, except as
contemplated hereby or as set forth herein or in Schedule 4.14, none of the
Companies is a party to or bound by any written or oral (a) material
contract, commitment or arrangement that cannot by its terms be cancelled
on notice of thirty days or less, (b) contractual obligation or liability
of any kind to holders of its securities as such, (c) contracts or
arrangements with its customers for the sharing of their fees, the rebating
of charges to such customers or other similar arrangements, (d) contract
for the purchase or sale of any materials, products or supplies, which
contains any escalator, renegotiation or redetermination clause, (e) lease
material to it for real or personal property, (f) union or other collective
bargaining agreement, (g) contract, accepted order or commitment for the
purchase of materials, products, supplies or equipment having a total
contract price in excess of $10,000, (h) agreement or instrument evidencing
or relating to indebtedness for borrowed money or creating any Lien on any
property owned or used by any of the Companies, (i) contract which by its
terms requires the consent of any party other than any of the Companies to
the consummation of the transactions contemplated hereby, (j) contract
containing covenants limiting the freedom of any of the Companies to
compete in any line of business or with any person in any geographical
area, (k) contract or option relating to acquisition by any of the
Companies of any operating business, (l) irrevocable proxy, voting
agreement, voting trust agreement or shareholder agreement, (m) option for
the purchase of any asset, tangible or intangible, (n) contract or
arrangement requiring the payment to any person of an override or similar
commission or fee or (o) other agreement which was entered into other than
in the ordinary course of business of any of the Companies.
4.15. Accounts Receivable. All accounts receivable reflected in
the 1996 Financial Statements have arisen in the ordinary course of
business, represent obligations due to the respective Companies and have
been collected or are collectible in the ordinary course of business in the
aggregate recorded amounts thereof, except to the extent set forth as
reserves for bad debts in the 1996 Financial Statements. None of Sellers
is indebted to any extent to any of the Companies.
4.16. Permits. Each of the Companies has all permits, licenses,
orders, approvals, franchises and other rights and privileges necessary for
it to carry on its business as presently conducted, except such permits,
licenses, orders, approvals, franchises and other rights and privileges
which no governmental authority has demanded be obtained and of which none
of Sellers has any actual or constructive knowledge, and with respect to
which the failure to obtain, if required, would not have a material adverse
effect on the business or financial condition of any of the Companies.
4.17. Banking Arrangements. Schedule 4.17 attached hereto sets
forth the name of each bank or other financial institution in or with which
any of the Companies has an account, credit line or other credit
arrangement or safety deposit box, the account or box number thereof, the
names of all persons presently authorized to draw thereon or having access
thereto, the balance thereof as of January 31, 1997, and a statement
describing the purpose of each such account.
4.18. No Breach. The execution and delivery of, and the
transactions contemplated by, this Agreement or any agreement or instrument
entered into or to be entered into in connection herewith do not and will
not result in a breach of the terms or conditions of or constitute (with or
without the giving of notice or the passage of time) a default under, or
violate, the articles or certificate of incorporation, bylaws or other
charter documents of any of the Selling Parties that is a corporation or
any lease, agreement, indenture, Lien or other document or instrument, or
any undertaking, oral or written, or any law, rule, regulation, order,
judgment or decree, or any other requirement or restriction, to which any
of the Selling Parties is a party or by or to which he, she or it is bound
or subject.
4.19. Authority for Agreement. All corporate and other
proceedings required to be taken by or on behalf of each of the Selling
Parties that is a corporation or trust to authorize it to enter into and
carry out this Agreement and each other agreement or instrument entered
into or to be entered into in connection herewith to which it is a party
have been duly and properly taken. This Agreement has been, and each such
other agreement or instrument will at the Closing have been, duly executed
and delivered by each of the Selling Parties that is a party thereto. This
Agreement is, and each such other agreement or instrument will be from and
after the Closing Date, the legal, valid and binding agreements of each of
the Selling Parties that is a party thereto, enforceable in accordance with
the respective terms thereof.
4.20. Interests in Assets. None of the Selling Parties and no
officer, director, shareholder or trustee of any of the Selling Parties
that is a corporation or trust or any member of his or her family owns any
property or rights, tangible or intangible, used in or related, directly or
indirectly, to the business of any of the Companies, or the use of which is
necessary for such business as now conducted. Each of the Companies owns
all right, title and interest in and to all trade names, trademarks,
service marks and copyrights necessary for the conduct of its business as
now conducted, and all rights to registrations thereof.
4.21. Powers of Attorney. No person now holds any power of
attorney granted by any of the Selling Parties or any of its officers,
directors or trustees, as such.
4.22. Employees. (a) Schedule 4.22 attached hereto contains a
true and complete list of all employees of each of the Companies, whether
they are full-time or part-time, their salaries and wage rates, bonus
arrangements, benefits, positions and length of service. Schedule 4.22
also contains a correct and complete list showing all amounts due or
accrued for all salary, wages, bonuses, commissions, vacation with pay,
pension benefits or other employee benefits relating to all employees.
(b) Except for those written employment contracts identified in
Schedule 4.22 (true and complete copies of which have been furnished to
Buyer), none of the Companies has any written contracts of employment with
any employees.
(c) The business of each of the Companies is being operated in
material compliance with all laws relating to employees, including
employment standards, occupational health and safety and pay equity, and
there are no outstanding orders or prosecutions under any such law.
(d) No compliant is pending or, to the best knowledge of
Sellers, threatened against any of the Companies before any employment
standards branch or tribunal or human rights tribunal.
(e) No unfair labour practice, complaint or grievance against
any of the Companies is pending or, to the best knowledge of Sellers,
threatened before any labour relations board or similar governmental
entity.
(f) There is no labour strike, dispute, slowdown or stoppage
existing, pending or involving or, to the best knowledge of Sellers,
threatened against any of the Companies.
(g) No union representation question exists respecting the
employees of any of the Companies.
(h) No grievance which might have a material adverse effect on
any of the Companies or the conduct of the business of any of the Companies
exists, no arbitration proceeding arising out of or under any collective
agreement is pending, and no claim therefor has been asserted.
(i) No collective bargaining agreement is currently being
negotiated by any of the Companies with respect to its employees and there
are no collective bargaining agreements in force with respect to any of the
employees of any of the Companies.
(j) No employee of any of the Companies has any agreement as to
length of notice required to terminate his or her employment, other than
such as results by law from the employment of an employee without agreement
as to such notice or as to length of employment.
(k) All vacation pay (including all banked vacation pay),
bonuses, commissions and other employee benefit payments are reflected and
have been accrued in the books and records of the respective Companies.
(l) No person or party (including, but not limited to,
governmental agencies of any kind) has asserted any claim, or has any basis
for any action or proceeding, against any of the Companies under or arising
out of any statute, ordinance or regulation relating to discrimination in
employment or employment practices.
(m) None of the Companies is a party to or bound by any
contract, agreement or commitment by the terms of which any person, firm,
corporation, business, trust or other individual or entity is or may become
entitled (for any reason or in any capacity) to any share in the proceeds,
earnings or profits of any of the Companies or of any department, division
or other unit of any of the Companies, and none of the Companies has any
pension, retirement, bonus, incentive, profit sharing, deferred
compensation or other program, plan, contract, agreement or commitment in
force for the benefit of any shareholders, directors, officers, employees
or consultants of any of the Companies, except as described on Schedule
4.22.
(n) No person or party has asserted any claim under which any of
the Companies has any liability under any health, sickness, disability,
death, medical, surgical, hospital or similar benefit plan or arrangement
(whether legally binding or not) maintained by any of the Companies, or to
or by which any of the Companies is a party or is subject or is bound, or
under any workers' compensation or similar law, which is not fully covered
by insurance maintained with reputable, financially responsible insurers.
4.23. Insurance. Schedule 4.23 attached hereto contains a
correct and complete list of all insurance policies that are maintained by
each of the Companies, together with a brief description of each such
policy, including the type of policy, name of insurer, coverage allowance,
expiration dates, annual premiums and any pending claims thereunder. None
of the Companies has failed to pay or is in default with respect to the
payment of any premiums for or under any such insurance policy. None of
the Companies has failed to give any notice or to present any claim under
any such insurance policy in a due and timely fashion. To the best
knowledge of Sellers there are no circumstances in respect of which any
person may make a claim against any of the Companies, whether covered by
insurance or not. Such policies are in full force and effect and are free
from any right of termination on the part of the insurers, except on notice
as stipulated in such policies and no such notice has been received by any
of the Companies. True and complete copies of such insurance policies and
the most recent inspection reports received from insurance underwriters
have been delivered to Buyer. There has not been any material adverse
change in the relationship of any of the Companies with any of its
insurers, in the availability of coverage, or in the premiums payable
pursuant to such policies. Included in Schedule 4.23 is a list setting
forth any and all material claims, with reasonable particulars, made under
any policies of insurance maintained by or for the benefit of each of the
Companies since January 1, 1993.
4.24. Condition of Assets. All of the assets of each of the
Companies are in good operating condition and repair and in compliance with
all applicable laws and regulations. The use and operation of such assets
is in full compliance with applicable building codes, environmental, zoning
and land use laws, and all other local, state, province and national laws
and regulations. All inventory of each of the Companies is in good and
merchantable condition, reasonably in balance and currently of a usable and
saleable quality.
4.25. Environmental Matters. Each of the Companies is in
compliance with, and none of the Companies has any liability under, any
Canada, U.S., province, state or other statute, law, rule, regulation or
ordinance relating to the environment or to the discharge of matter into
the air, ground or water or to the generation, disposal or storage of
matter, which liability arises or results from or by reason of the
ownership or operation of any of the properties or assets of, or the
operation of any business or activity by, any of the Companies. There has
been no production, transportation, disposal or storage on, to, from or in
any real property owned, used or occupied by any of the Companies of any
hazardous waste or other toxic substance by any of the Companies or, to the
best knowledge of Sellers, by any previous owner or tenant of any of such
real property. To the best knowledge of Sellers, no claims, actions,
suits, proceedings, investigations or inquiries are pending or are
contemplated or have been threatened and no judgments have been entered by
or before any court or governmental authority or agency concerning any such
statutes, laws, rules, regulations or ordinances or any such production,
transportation, disposal or storage.
4.26. Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on directly by
Sellers with Buyer, without the intervention of any broker or investment
banker or other third party engaged by any of the Selling Parties. None of
the Selling Parties has engaged, consented to or authorized any broker,
investment banker or other third party to act on his, her or its behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement.
4.27. Use of Property. None of the properties owned or occupied
by any of the Companies or the occupancy or operation thereof is in
violation of any law or any building, zoning or other ordinance, code or
regulation, in such manner as to materially interfere with the use and
occupancy thereof in the ordinary course of business of any of the
Companies.
4.28. Disclosure. None of the information furnished by any of
the Selling Parties to Buyer herein or in connection herewith contained any
statement of material fact that was not true and complete as of its date or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading as of its date.
4.29. Knowledge. Where any representation or warranty contained
in this Agreement is expressly qualified by reference to the best knowledge
of Sellers, or where any other reference is made herein to the knowledge of
Sellers, it shall be deemed to refer to the knowledge of each of the
Selling Parties. Sellers further confirm that they have made due and
diligent inquiry of such persons (including appropriate officers,
directors, employees, accountants, consultants and lawyers of or for each
of the Companies) as they consider necessary as to the matters that are the
subject of such representations, warranties or references.
5. Confidential Information. Each Party agrees that, until the
Closing, such Party and its representatives will hold in confidence all
information and documents received from any of the other Parties and, if
the transactions contemplated hereby are not consummated, such Party shall
continue to hold such information and documents in confidence and shall
return to the other Parties all such documents and information in written
form (including the documents annexed to this Agreement) then in such
Party's possession without retaining copies thereof, and from and after the
Closing, each of the Selling Parties shall hold in confidence and deliver
to Buyer (without retaining copies) all such documents and information and
all documents and information of or relating to any of the Companies;
provided that each Party's obligation under this section 6 to maintain such
confidentiality shall not apply to any information or documents that are in
the public domain at the time furnished by another Party or that are
disclosed by another Party to any person having no duty of confidentiality
with respect thereto through any means other than as a result of any act of
such Party or its agents, officers, directors or shareholders which
constitutes a breach of this section 5.
6. Preclosing Covenants. From and after the date hereof and until
the Closing on the Closing Date:
6.1. Access. Sellers shall afford Buyer and its officers,
employees, lawyers, accountants and other authorized representatives free
and full access, during regular business hours, to all books, records,
personnel and properties of each of the Companies. To permit Buyer full
opportunity to make such review, examination or investigation as Buyer may
desire of the business and affairs of each of the Companies, Sellers shall
cause the employees, accountants and lawyers of each of the Companies to
cooperate fully with such review and examination and make full disclosure
to Buyer of all information affecting the financial condition and business
operations of each of the Companies, and Sellers shall promptly notify
Buyer of any event which results, or with the passage of time might result,
in any of Sellers' representations and warranties herein being or becoming
false. Anything in this Agreement to the contrary notwithstanding, no
inquiry or investigation by or on the behalf of Buyer, whether before or
after the date hereof, shall constitute a waiver of, negate, abrogate or
otherwise affect the validity of any representation, warranty or covenant
of any of Sellers in, pursuant to or in connection with this Agreement or
modify or affect any of Sellers' obligations or Buyer's rights herein or
hereunder in the event of any breach of any such representation, warranty
or covenant.
6.2. Conduct of Business. Sellers shall cause each of the
Companies to conduct its business only in the ordinary course and not
suffer or permit any change in any material respect of any business policy
or practice of any of the Companies, without the prior written consent of
Buyer.
6.3. Insurance. Sellers shall cause each of the Companies to
maintain in force the insurance policies that it now maintains, except to
the extent that they may be replaced with equivalent policies appropriate
to insure adequately its business and properties at the same rates or at
rates approved by Buyer.
6.4. Capital Stock; Dividends. Sellers shall not suffer or
permit (a) any change to be made in the authorized, issued or outstanding
capital stock of any of the Companies, (b) any securities convertible into
or exchangeable for capital stock of any of the Companies to be authorized
or issued, (c) any options, rights, warrants or calls to purchase capital
stock of any of the Companies to be sold, issued or granted with respect to
any capital stock or any other securities of any of the Companies, or
(d) any of the Companies to declare, pay or commit to pay any cash or stock
dividend or other distribution with respect to its capital stock.
6.5. Contracts and Commitments. Except as shall be approved in
advance by Buyer in writing, or as is contemplated hereby, Sellers shall
not suffer or permit any of the Companies to enter into any contract or
commitment, except contracts or commitments in the ordinary course of
business and involving either (a) an expenditure by it in any one
transaction (other than purchases of materials) not in excess of $10,000 or
(b) the purchase by it of a quantity of materials reasonably anticipated to
be consumed or resold in less than six months.
6.6. Liabilities. Subject to section 6.5, Sellers shall not
suffer or permit any of the Companies to incur any obligation or liability,
absolute or contingent, except for those incurred in the ordinary course of
its business which are not in the aggregate materially adverse to its
business or financial condition, or to pay any obligation or liability
other than the foregoing obligations and liabilities and those described in
clauses (a) through (c) of section 4.6 and clauses (a) through (d) of
section 4.7.
6.7. Other Actions. None of Sellers shall take or omit to take
any action, and each shall exercise his, her or its best efforts to prevent
the occurrence of any event, which would have violated any of Sellers'
representations or warranties herein had such action been taken after
November 30, 1996, and prior to the date hereof.
6.8. Banking Arrangements. Sellers shall not suffer or permit
any of the Companies to cause, suffer or permit any change to be made in
any of its banking arrangements.
6.9. Preservation of Business. Except as otherwise expressly
provided herein, Sellers shall use their best efforts to preserve the
business organizations of the Companies intact, keep available the services
of the present officers (other than X. Xxxxxxxxxx and Xxxxxxxx), employees
and consultants of the Companies, maintain the present customers and
suppliers of the Companies and preserve the goodwill of the Companies.
6.10. Litigation. Sellers shall promptly notify Buyer of any
lawsuits, claims, proceedings or investigations that are threatened or
commenced by or against or affecting any of the Companies or any employee,
consultant, officer or director of any of the Companies which might relate
to or affect the business or assets of any of the Companies, including,
without limitation, regular updates regarding the litigation between
Chun Zu Machinery Industry Co. Ltd., plaintiff, and Isometric, defendant,
in the Ontario (Canada) Court (General Division), Court File No. 95-CQ-
59977.
6.11. Monthly Statements. Sellers shall furnish to Buyer (a)
within five days after the end of February 1997 and each subsequent
calendar month, complete and correct reports of all sales by each of the
Companies during that calendar month, and (b) within thirty days after the
end of each such calendar month, complete and correct unaudited monthly
financial statements of each of the Companies for such month.
6.12. Continued Effectiveness of Representations and
Warranties. Each Party shall use his, her or its best efforts to conduct
its business and affairs in such a manner that his, her or its
representations and warranties herein shall continue to be true and
complete on and as of the Closing Date as if made on and as of the Closing
Date, and shall advise the other promptly in writing of any condition or
circumstance that would cause any of such Party's representations or
warranties herein to become untrue in any respect, which condition or
circumstance shall be deemed excepted from such representations and
warranties to the extent accepted by the other.
6.13. Consents. Prior to the Closing Date, Sellers shall
procure all consents and waivers required under any contracts or by any
governmental entities for the full and complete transfer of the Company
Stock to Buyer or otherwise to evidence, effect or perfect the transactions
contemplated hereby, except where, in the opinion of Buyer, the failure to
obtain the consent or waiver would not have a material adverse effect on
the business, condition or financial results of any of the Companies on or
after the Closing Date.
7. Further Covenants.
7.1. Indemnity.
7.1.1. By Buyer. Buyer agrees to indemnify and defend
Sellers and hold Sellers harmless from and against any and all claims,
liabilities, damages, losses and expenses (including, without limitation,
fees and expenses of lawyers and expert witnesses, costs of investigation
and court costs) suffered or incurred by Sellers, as a direct or indirect
result of any breach of any covenant, representation or warranty by Buyer
herein or hereunder.
7.1.2. By Sellers. Sellers, jointly and severally, agree
to indemnify and defend Buyer and its shareholders, controlling persons,
affiliates, directors, officers, employees and agents and hold them
harmless from and against any and all claims, liabilities, damages, losses
and expenses (including, without limitation, fees and expenses of lawyers
and expert witnesses, costs of investigation and court costs) suffered or
incurred by any of them, as a direct or indirect result of any breach of
any covenant, representation or warranty by any of Sellers herein or
hereunder.
7.2. Further Assurances. Sellers shall cooperate with Buyer, at
Buyer's request, after the Closing Date and without further consideration,
(a) to execute, deliver, record and publish as appropriate such other
certificates, instruments and documents of sale, assignment, transfer and
conveyance of the Company Stock, and take such other action, as Buyer may
reasonably request more effectively to convey, assign, sell and transfer to
or vest in Buyer any and all of the Company Stock, (b) in the case of
contracts, if any, to which any of the Companies is a party and which
require the consent of any third party that is not received prior to the
Closing Date, to continue to endeavor to obtain such consents promptly and,
if any such consents are not obtainable, to provide Buyer with the benefit
thereof in some other manner, and (c) to assist Buyer in connection with
any actions, proceedings or arrangements or disputes relating to the
Companies and their ownership of and other rights in their respective
assets. The Parties shall each do or perform such further acts and things
and execute and deliver such further certificates, instruments and other
documents as may be reasonably necessary and proper to implement the intent
of the Parties as expressed in this Agreement.
7.3. Proceedings. Each Party shall promptly inform the other of
the making of any threat or claim or the commencement of any investigation,
litigation or proceeding against or affecting the business of any of the
Companies, its assets or any of the transactions contemplated hereby.
7.4. Sales Tax. Sellers shall pay when due, to the appropriate
governmental authority or authorities, all stock transfer, sales, excise
and other taxes and levies, if any, arising from the sale of any of the
Company Stock hereunder.
7.5. Expenses. The Companies shall pay all reasonable and
customary costs, expenses and fees incurred by Sellers on or prior to the
Closing Date for the services of lawyers, accountants and other advisers
retained by Sellers in negotiating the terms and conditions of this
Agreement, making any investigation in connection herewith, preparing and
executing this Agreement and any certificates, instruments and documents
necessary in connection herewith and consummating the transactions
contemplated hereby; provided that the fees and expenses of Coopers &
Xxxxxxx, Chartered Accountants, in connection with their audit of the 1996
Financial Statements, shall be borne one-half by the Companies and one-half
by Buyer.
7.6. No Solicitation. Prior to the Closing Date, none of
Sellers shall contact, solicit, discuss or negotiate with any person other
than Buyer any of the transactions contemplated hereby or the possible sale
to any person of any capital stock of any of the Companies or the assets of
any of the Companies or any substantial part thereof.
7.7. Noncompetition. Subject to section 7.8, none of Sellers
shall at any time within five years after the Closing Date directly or
indirectly own an interest in, join, operate, control, participate in, or
be connected as officers, employees, agents, independent contractors,
consultants, partners, shareholders (except as holders of not more than one
percent of the outstanding stock of any class of a corporation, the stock
of which is actively and publicly traded) or principals with, any
corporation, proprietorship, association or other entity or person engaged
in any business that is competitive with any business of any of the
Companies as conducted during the two-year period ending on the Closing
Date.
7.8. Employment Arrangement with X. Xxxxxxxxxx. On or prior to
the Closing Date, X. Xxxxxxxxxx and Isometric shall have agreed on a
mutually satisfactory employment arrangement, whereby X. Xxxxxxxxxx shall
be employed by Isometric from and after the Closing Date on terms
satisfactory to Buyer.
7.9. Lawyers' Fees. If either Buyer or any of Sellers shall
fail to perform any of its or their obligations under this Agreement or if
a dispute arises concerning the meaning, interpretation or enforcement of
any provision of this Agreement, the defaulting Party or Parties or the
Party or Parties not prevailing in such dispute, as the case may be, shall
pay any and all costs and expenses incurred by the other Party or Parties
in enforcing or establishing its or their rights hereunder, including,
without limitation, court costs, reasonable fees and expenses of lawyers
and expert witnesses and all costs of investigation.
7.10. Risk of Loss. If, prior to the Closing, all or any
material part of the assets or the business of any of the Companies is
destroyed or damaged by fire or any other casualty or shall be
appropriated, expropriated, condemned or seized by any governmental entity
or other lawful authority, Buyer shall have the option, exercisable, in
Buyer's absolute discretion, by notice given within three business days of
Buyer's receipt of notice of such destruction, damage, appropriation,
expropriation, condemnation or seizure: (a) to reduce the Base Stock Price
for the Company Stock of each of the Companies affected thereby by an
appropriate amount equal to the cost of repair, or, if destroyed or damaged
beyond repair, by an amount equal to the replacement cost of the assets so
damaged or destroyed and to complete the purchase hereunder; or (b) to
complete the purchase without reduction of the Base Stock Prices, in which
event all proceeds of insurance or compensation for appropriation,
expropriation, condemnation or seizure shall be payable to the applicable
Company and any and all right and claim of Sellers to any such amounts
shall be assigned to the applicable Company; or (c) to terminate this
Agreement and not complete the purchase, in which case all obligations of
Buyer shall terminate forthwith on Buyer giving notice as required herein.
7.11. Other Negotiations. Sellers shall not, and shall not
permit any of the Companies to, contact, commence or continue negotiations
with, or otherwise discuss with any person other than Buyer, any merger,
consolidation, sale of stock, sale of assets, joint venture, strategic
alliance or other business combination involving any of the Companies.
8. Conditions Precedent to the Obligations of Sellers. The
obligations of Sellers on the Closing Date to consummate the transactions
contemplated hereby are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions, any one or more of which
may be waived by X. Xxxxxxxxxx (for himself and on behalf of Sellers)
(except when the fulfillment thereof is a requirement of law):
8.1. Representations, Warranties and Covenants. All
representations and warranties of Buyer in this Agreement and in any
written statement (including financial statements), certificate, schedule,
exhibit, agreement or other document or instrument delivered pursuant
hereto or in connection with the transactions contemplated hereby, shall
have been true and complete on and as of the date hereof and shall be true
and complete as of the Closing Date, as if made on and as of the Closing
Date. Buyer shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by Buyer prior to or on the Closing Date.
8.2. No Actions. No action, suit or proceeding shall be
pending, or to the knowledge of Buyer, threatened, before a court or
governmental body, or instituted or threatened by any governmental agency,
to restrain or prevent the carrying out of the transactions contemplated
hereby.
8.3. Certificate. Buyer shall have delivered to Sellers a
certificate, in form reasonably satisfactory to X. Xxxxxxxxxx (for himself
and on behalf of Sellers), dated the Closing Date and signed by the
President or Chief Financial Officer and the Secretary of Buyer, to the
following effects:
8.3.1. Setting forth the names and specimen signatures of
the officers and agents of Buyer authorized to execute and deliver this
Agreement and the documents and instruments deliverable by Buyer hereunder;
8.3.2. Stating that all of the conditions set forth in this
section 8 have been fulfilled on or prior to the Closing Date and Buyer is
not in breach of or default under any provision of this Agreement; and
8.3.3. Stating that such certificate is being executed and
delivered to induce Sellers to consummate the transactions contemplated
hereby.
8.4. Other Documents. Buyer shall have duly executed and
delivered to Sellers such other documents and instruments necessary to
effect or evidence any of the transactions contemplated hereby as
X. Xxxxxxxxxx (for himself and on behalf of Sellers) may reasonably
request.
9. Conditions Precedent to the Obligations of Buyer. The
obligations of Buyer on the Closing Date to consummate the transactions
contemplated hereby are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions, any one or more of which
may be waived by Buyer (except when the fulfillment thereof is a
requirement of law):
9.1. Representations, Warranties and Covenants. All
representations and warranties of Sellers in this Agreement and in any
written statement (including financial statements), certificate, schedule,
exhibit, agreement or other document or instrument delivered pursuant
hereto or in connection with the transactions contemplated hereby, shall
have been true and complete on and as of the date hereof and shall be true
and complete as of the Closing Date, as if made on and as of the Closing
Date. Sellers shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date.
9.2. No Actions. No action, suit or proceeding shall be
pending, or to the knowledge of any of Sellers, threatened, before a court
or governmental body, or instituted or threatened by any governmental
agency, to restrain or prevent the carrying out of the transactions
contemplated hereby or which might adversely affect the right of Buyer to
own any of the Company Stock or of any of the Companies to own, operate or
control its assets, property or business from and after the Closing Date.
9.3. Certificate. Sellers shall have delivered to Buyer a
certificate, in form satisfactory to Buyer, dated the Closing Date and
signed by each of Sellers that is a natural person, by each trustee of the
Trust and by the President and the Secretary of DCHI, to the following
effects:
9.3.1. Setting forth the names and specimen signatures of
the officers of DCHI and the trustees of the Trust authorized to execute
and deliver this Agreement and the documents and instruments deliverable by
DCHI or the Trust hereunder;
9.3.2. Stating that all of the conditions set forth in this
section 9 have been fulfilled on or prior to the Closing Date and that none
of Sellers is in breach of or default under any provision of this
Agreement; and
9.3.3. Stating that such certificate is being executed and
delivered to induce Buyer to consummate the transactions contemplated
hereby.
9.4. Business Relationships. Sellers shall have furnished to
Buyer the names and addresses and all pertinent information regarding all
employees, suppliers, distributors and others who have material business
relationships with any of the Companies and shall have introduced Buyer to
each of them, and Buyer shall be satisfied that each of such relationships
may reasonably be expected to be continued from and after the Closing Date.
9.5. Approvals. Buyer shall have received all applicable
governmental approvals, permits, consents and authorizations that Buyer
considers necessary in connection with the transactions contemplated hereby
and the operation after the Closing of the businesses of the Companies.
9.6. Due Diligence. Buyer shall have completed to its
satisfaction such review, examination and investigation of Sellers, the
Companies and the properties, businesses and affairs of the Companies, as
Buyer considers necessary.
9.7. Financial Statements. The 1996 Financial Statements shall
have been audited by Coopers & Xxxxxxx, Chartered Accountants, in
accordance with GAAP, and Buyer shall be satisfied with the 1996 Financial
Statements.
9.8. Premises Lease. Isometric (as tenant) and Xxxxxxxx or a
corporation owned by her (as landlord) shall have duly executed and
delivered a lease, providing for monthly rent of $4.50 (in Canadian
dollars) per square foot on a triple net basis for a term of one year from
the Closing Date and four one-year renewal options in favor of Isometric,
of the premises to be conveyed by Holdings to Xxxxxxxx or a corporation
owned by her at 00 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx, Xxxxxx, which
lease shall be in substantially the form of Schedule 9.8 attached hereto;
provided that, anything in this Agreement to the contrary notwithstanding,
Buyer consents and agrees to the transfer and conveyance prior to the
Closing Date of such premises by Holdings to Xxxxxxxx or a corporation of
which Xxxxxxxx is the sole shareholder.
9. Opinion of Counsel. On the Closing Date, Sellers shall have
delivered to Buyer an opinion, dated the Closing Date, in form and
substance satisfactory to Buyer, of Xxxxxx Silver Xxxxx, Barristers and
Solicitors, counsel for Sellers, to the effects stated in sections 4.1,
4.2, 4.3, 4.4, 4.5, 4.13, 4.16, 4.18 and 4.19 and to such other effects as
Buyer may reasonably request.
9.10. Other Documents. Sellers shall have duly executed and
delivered to Buyer such other documents and instruments necessary to effect
or evidence any of the transactions contemplated hereby as Buyer may
reasonably request.
10. Modification and Waiver. This Agreement may be amended or
modified at any time only by a written instrument executed by the Parties,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived by a written instrument executed by the Party waiving
compliance. The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same. No waiver by any Party of
the breach of any term, agreement, covenant, representation or warranty in
this Agreement as a condition to such Party's obligations hereunder shall
release or affect any liability resulting from such breach, and no waiver
of any nature, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing
waiver of any such condition or of any breach of any other term, agreement,
covenant, representation or warranty.
11. Termination. This Agreement and transactions contemplated hereby
may be terminated at any time prior to the Closing Date, as follows:
(a) By mutual consent of the Parties;
(b) By any Party if the Closing Date shall not have occurred on
or prior to April 15, 1997, unless such delay shall have been caused by the
breach of the Party seeking to terminate;
(c) By any of Sellers (i) if any of the representations and
warranties of Buyer herein or in any schedule, exhibit, agreement,
certificate or other document or information delivered in connection
herewith is false, which falsity affects Sellers materially and adversely,
or (ii) if Buyer shall have failed to comply with or perform any covenant
or agreement or to satisfy any condition on the part of Buyer to be
complied with, performed or satisfied on or prior to the date of such
termination;
(d) By Buyer (i) if any of the representations and warranties of
Sellers herein or in any schedule, exhibit, agreement, certificate or other
document or information delivered in connection herewith is false, which
falsity affects Buyer or any of the Companies materially and adversely,
(ii) if any of Sellers shall have failed to comply with or perform any
covenant or agreement or to satisfy any condition on the part of Sellers to
be complied with, performed or satisfied on or prior to the date of such
termination, or (iii) as provided in section 7.10.
Any such termination under clause (c) or (d) of the preceding sentence
shall be upon at least ten days' notice of termination given to the other
Party by the Party seeking termination. On any termination in accordance
with this section 11, no Party shall have any further rights or obligations
under or in connection with this Agreement, except that the Parties' rights
and obligations under sections 2, 5, 7.1 and 7.9 shall survive any such
termination and except that no termination of this Agreement shall relieve
or release any Party from such Party's liability for any breach or
violation of such Party of any representation, warranty, covenant or
agreement herein; provided that, if Buyer terminates this Agreement without
due cause (due cause being defined as (1) any breach or violation by any of
Sellers of their agreements in sections 6.1 and 7.11, or (2) any
representation or warranty made by any of Sellers herein or in connection
herewith is found by Buyer to be materially incorrect), Buyer shall
forthwith cause the Deposit and any earnings thereon to be paid to the
Companies in the proportions specified in section 1.6, but otherwise the
Deposit and any earnings thereon shall be returned to Buyer.
12. Notices. Any notice, consent, demand or other communication
required or permitted to be given hereunder shall be in writing and shall
be deemed duly given and received when delivered personally, when
transmitted by facsimile if receipt is acknowledged by the addressee, or
one day after being deposited for next-day delivery with an internationally
recognized overnight delivery service, all charges prepaid, properly
addressed, as follows:
If to Buyer, to:
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Facsimile: 000-000-0000
Attention: Chief Financial Officer
and
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxxxx
With a copy (not by itself constituting notice) to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to any of Sellers, to:
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Facsimile: 905-856-0056
Attention: Xxxxxx X. Xxxxxxxxxx
With a copy (not by itself constituting notice) to:
Xxxxxx Silver Xxxxx
0 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Facsimile: 000-000-0000
Attention: Xxxxxx X. Silver, Esq.
Any Party may change his, her or its address by notice hereunder to each
other Party.
13. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the Parties and their respective heirs, executors,
administrators, successors and assigns; provided that no Party shall assign
this Agreement or any rights hereunder or delegate any duties hereunder,
without the prior consent of each other Party, and any attempted or
purported assignment or delegation without such consent shall be void; but
provided further that SST or SST-Canada may, in its exclusive discretion
and without the consent of any other Party, assign this Agreement or any or
all of its rights hereunder or delegate any or all of its duties hereunder
to any corporation controlled by, controlling or under common control with
it, so long as it is not thereby released from any of its obligations
hereunder without the prior consent of X. Xxxxxxxxxx on behalf of himself
and Sellers. This Agreement is not intended, nor shall it be construed, to
confer any enforceable rights on any person who is not a Party, other than
an assignee of a Party as permitted hereby.
14. Joint and Several Obligations. The duties, obligations and
liabilities of Sellers in or pursuant to this Agreement or any other
agreement, certificate, instrument or other document to be executed by
Sellers hereunder or in connection herewith (except any employment
agreement or arrangement between Isometric and X. Xxxxxxxxxx) shall be
joint and several, and each representation, warranty, covenant, agreement
and condition of or to be performed or satisfied by Sellers in or pursuant
to this Agreement or any other agreement, certificate, instrument or other
document to be executed by Sellers hereunder or in connection herewith
(except any employment agreement or arrangement between Isometric and X.
Xxxxxxxxxx) shall be deemed to be the representation, warranty, covenant,
agreement or condition of or to be performed by each and all of Sellers.
15. Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of California,
without giving effect to principles of conflict of laws thereunder.
16. Entire Agreement. This Agreement contains the entire agreement
of the Parties and supersedes all prior or contemporaneous negotiations,
correspondence, understandings, letters of intent and agreements, whether
written or oral, between or among the Parties, regarding the subject matter
hereof.
17. Exhibits. All schedules and exhibits attached hereto and the
documents and instruments delivered at the Closing are expressly made a
part of this Agreement as fully as though completely set forth herein, and
all references to this Agreement herein or in any of such documents and
instruments (whether or not such references include a specific reference to
such documents and instruments) shall be deemed to refer to and include all
such documents and instruments. Any breach of or default under any
provision of any of such documents and instruments, shall, for all
purposes, constitute a breach or default under this Agreement.
18. Counterparts. This Agreement may be executed in any number of
counterparts, or by different Parties in different counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
19. Section Headings. The section headings in this Agreement are
included for convenience of reference only and are not part of this
Agreement.
20. Number and Gender. Whenever the context requires, the use in
this Agreement of the singular number shall be deemed to include the plural
and vice versa, each gender shall be deemed to include each other gender,
and "person" shall be deemed to include, in addition to natural person,
corporation, partnership, limited liability company, trust, association,
firm or other entity or organization.
IN WITNESS WHEREOF, this Agreement has been duly executed by or
on behalf of the Parties as of the date first above written.
BUYER: SELLERS:
Xxxxxxx Strong-Tie Company Inc.
/s/Xxxxxx X. Xxxxxxxxxx
-----------------------------
By /s/Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx /s/Xxxxx Saroginie Xxxxxxxxxx
Chief Financial Officer -----------------------------
Xxxxx Saroginie Xxxxxxxxxx for
herself and as Trustee of The
Xxxxxxx Strong-Tie Canada, Limited Xxxxxx Xxxxxxxxxx Trust dated
May 17, 1985
By /s/Xxxxxxx X. Xxxxxx /s/Xxxx Xxxxxxx Xxxxxxxx
----------------------------- -----------------------------
Xxxxxxx X. Xxxxxx Xxxx Xxxxxxx Xxxxxxxx for
Chief Financial Officer herself and as Trustee of The
Xxxxxx Xxxxxxxxxx Trust dated
May 17, 1985
/s/Xxxxxx X. Silver
-----------------------------
Xxxxxx X. Silver as Trustee
of The Xxxxxx Xxxxxxxxxx
Trust dated May 17, 1985
/s/Xxxxxx Xxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxx as Trustee
of The Xxxxxx Xxxxxxxxxx
Trust dated May 17, 1985
X. Xxxxxxxxxx Holdings, Inc.
By: /s/Xxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxxxx
President