Exhibit 10
MICHAEL PETROVIC, MPCO
HOLDINGS INC.,
GEORGE SHAHNAZARIAN, GSHAH INC.,
ARMEN JEKNAVORIAN, JORJEK HOLDINGS INC., AND MARVIN WIGHT
as
Vendors
and
SIMPSON STRONG-TIE CANADA,
LIMITED
as
Purchaser
MGA GROUP
SHARE PURCHASE AGREEMENT
May 9, 2003
TABLE OF CONTENTS
i
ii
iii
|
Schedule Q
(Part 2)
|
Insurance
Claims (Past 5 Years)
|
|
Schedule R
|
MGA
Inventory Policies, Practices and Procedures
|
|
Schedule S
|
Bank Account
Information and Powers of Attorney
|
|
Schedule T
(Part 1)
|
Environmental
Exceptions
|
|
Schedule T
(Part 2)
|
List of
Environmental Reports etc.
|
|
Schedule U
(Part 1)
|
List of
Employees
|
|
Schedule U
(Part 2)
|
Employee
Exceptions
|
|
Schedule V
|
Litigation
Matters
|
|
Schedule W
|
MGA 20
Largest Customers and Suppliers
|
|
Schedule X
|
Allocation
of Purchase Price and Split Among Vendors
|
|
Schedule Y
|
List of
Shareholdings of the Corporations
|
|
Schedule AA
|
Form of
Kingston Street Lease
|
|
Schedule BB
|
Form of
Non-Competition Agreement
|
|
Schedule CC
(Part 1)
|
Form of Opinion
– Solicitors for Vendors and Corporation
|
|
Schedule CC
(Part 2)
|
Form of
Opinion – Solicitors for the Purchaser
|
|
Schedule DD
|
Form of
Non-Disturbance Agreement
|
|
Schedule EE
|
Form of
Release
|
|
Schedule FF
|
Form of
Consulting Agreement
|
iv
MGA GROUP
SHARE PURCHASE AGREEMENT
Share Purchase Agreement dated the 9th day
of April, 2003 between MICHAEL PETROVIC, of the Town of Port
Moody, in the Province of British Columbia (“Petrovic”), MPCO HOLDINGS INC., a Canadian corporation
(“MPCo”), GEORGE SHAHNAZARIAN, of the
City of Burnaby, in the Province of British Columbia (“Shahnazarian”), GSHAH INC., a Canadian corporation (“GSCo”),
ARMEN JEKNAVORIAN, of the Town of Port Moody in the Province of
British Columbia (“Jeknavorian”), JORJEK HOLDINGS INC., a Canadian corporation (“AJCo”) and MARVIN WIGHT, of the City of
Markham, in the Province of Ontario (“Wight”) (such parties hereinafter
collectively called, the “Vendors”) and SIMPSON STRONG-TIE CANADA, LIMITED,
a Canadian corporation (the “Purchaser”).
WHEREAS:
A. The
Vendors carry on the manufacture and distribution of connectors for the
construction industry and retail sales through MGA Construction Hardware &
Steel Fabricating Limited (“MGA Construction”) and MGA Connectors Ltd. (“MGA
Connectors”);
B. The
Vendors own all the issued and outstanding shares of MGA Construction and MGA
Connectors as outlined in Schedule Y hereto; and
C. The
Vendors desire to sell and the Purchaser desires to purchase all the issued and
outstanding shares of each of MGA Construction and MGA Connectors upon the
terms and subject to the conditions of this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the premises and the mutual agreements
herein and other good and valuable consideration (the receipt and sufficiency
of which is acknowledged by each Party), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As used in this Agreement, the following
terms have the following meanings:
“Accounts Receivable” means all accounts receivable, notes receivable and other debts due
or accruing due to the Corporations.
“Affiliate” (and, with a correlative meaning, “Affiliated”)
means, with respect to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such first Person. As used in this definition,
“control” (including, with correlative meanings, “controlled by” and “under
common control with”) means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise).
“Agreement” means this share purchase agreement and all schedules and
instruments in amendment or confirmation of it; and the expressions “Article”
and “Section”
followed by a number mean and refer to the specified Article or Section of this
Agreement, except as otherwise stated.
“Ancillary Agreements” means all agreements, certificates and other instruments delivered
or given pursuant to this Agreement.
“Assets” means all property and assets of each of the Corporations of every
nature and kind and wheresoever situate, including (i) the leasehold
interest of each of the Corporations in and to the Leased Properties, and the
buildings and fixtures located thereon, (ii) all machinery, equipment,
furniture, accessories and supplies of all kinds, including those described in
Schedule C (Part 1) hereto, (iii) all trucks, cars and other vehicles,
including those described in Schedule C (Part 2) hereto, (iv) all
Inventories, (v) all Accounts Receivable and the full benefit of all
security for the Accounts Receivable, (vi) all prepaid expenses,
(vii) the Intellectual Property, (viii) the Contracts and the
Leases, (ix) the Books and Records and (x) the Corporate Records.
“Authorization” means, with respect to any Person, any order, permit, approval,
waiver, licence or similar authorization of any Governmental Entity having
jurisdiction over the Person.
“Best Efforts”
means the efforts that a prudent Person who desires to complete the transaction
would use in similar circumstances to ensure that a closing occurs as
expeditiously as possible without the necessity of assuming any material
obligations or paying any material amounts to an unrelated third party.
“Books and Records” means all Corporate Records, books of account, tax records, sales
and purchase records, customer and supplier lists, computer software, formulae,
business reports and all other documents, files, correspondence and other
information of either or both of the Corporations (whether in written, printed,
electronic or computer printout form).
2
“Business” means the business of designing, developing, manufacturing,
marketing, distributing and/or selling wood-to-wood and concrete-to-wood
connectors, such as concrete anchors, hangers, holddowns, braces and other
products, as shown in the Corporations’ catalogues and other sales literature
or as are the subject of research and development by the Corporations in
connection with its own products and products of third parties.
“Business Day” means any day of the year, other than a Saturday, Sunday or any day
on which banks are required or authorized to close in Toronto, Ontario.
“Closing Balance Sheet” has the meaning specified in Section 2.5(5).
“Closing” means the completion of the transaction of purchase and sale
contemplated in this Agreement.
“Closing Date” means Tuesday, May 20, 2003,
or such earlier or later date as the Parties may agree in writing; provided
that the Closing shall be deemed to occur at the close of business on the
Closing Date.
“Confidentiality Agreement” means the agreement dated January 19, 2002, as amended and
supplemented by agreement dated March 27, 2003, between Simpson Strong-Tie
Company, Inc. and MGA Construction relating to the transactions contemplated
hereby.
“Confidential Information” means the information that the Purchaser is required to keep
confidential pursuant to Section 5.2(3).
“Consent” means the consent of a contracting party to a change in control of
either of the Corporations as required by the terms of any Contract.
“Contracts” means all agreements to which either of the Corporations is a
party, including all contracts, leases of personal property and commitments of
any nature, written or oral, including (i) unfilled purchase orders
received by either of the Corporations, (ii) forward commitments by either
of the Corporations for supplies or materials entered into the Ordinary Course,
(iii) restrictive agreements and negative covenant agreements which either
of the Corporations has with its employees, past or present, and (iv) the
Material Contracts.
“Corporations” means collectively, MGA Construction and MGA Connectors.
“Corporate Records” means the corporate records of each of the Corporations, including
(i) all constating documents and by-laws, (ii) all
3
minutes of
meetings and resolutions of shareholders and directors (and any committees),
and (iii) the share certificate books, securities register, register of
transfers and register of directors.
“Damages” has the meaning specified in Section 9.1.
“Deposit” has the meaning specified in Section 2.3(1).
“Dispute” has the meaning specified in Section 11.1.
“Draft Closing Balance
Sheet” has the meaning specified in
Section 2.5(1).
“Employee Plans”
means all the employee benefit, fringe benefit, supplemental unemployment
benefit, bonus, incentive, profit sharing, termination, change of control,
pension, retirement, stock option, stock purchase, stock appreciation, health,
welfare, medical, dental, disability, life insurance and similar plans,
programmes, arrangements or practices relating to the current or former
employees, consultants, officers or directors of either of the Corporations
maintained, sponsored or funded by either of the Corporations, whether written
or oral, funded or unfunded, insured or self-insured, registered or
unregistered, including those listed in Schedule D hereto.
“Environmental Laws” means all Laws of and applicable agreements with Governmental
Entities and all other statutory requirements relating to public health or the
protection of the environment and all Authorizations issued pursuant to such
Laws, agreements or statutory requirements.
“Excluded
Assets” means those assets of the Corporations set forth in Schedule
E hereto.
“GAAP” means, at any time, accounting principles generally accepted in
Canada, including those set out in the handbook of the Canadian Institute of
Chartered Accountants, at the relevant time, applied on a consistent basis.
“Governmental Entity” means any (i) multinational, federal, provincial, state,
municipal, local or other governmental or public department, central bank,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) any subdivision or authority of any of the foregoing, or (iii) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the above.
“Indemnification
Properties” has the meaning specified in
Section 3.2(gg)(i).
4
“Intellectual Property” means: (i) all
domestic and foreign patents and applications therefor and all reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, propriety information, know-how,
technology, technical data, schematics and customer lists, and all
documentation relating to any of the foregoing; (iii) all copyrights,
copyright registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all mask works, mask work
registrations and applications therefor; (v) all designs and any
registrations and applications therefor; (vi) all trade names, corporate
names, domain names, website names and world wide web addresses, trade dress,
logos, common law trademarks, trademark registrations and applications
therefor; (vii) all software (both source code and object code form) and
any proprietary rights in such software, including documentation and other
materials related thereto: (viii) all income, royalties, damages and
payments now and hereafter due and/or payable with respect to any of the
foregoing, including, damages and payments for past or future infringements or
misappropriations thereof; and (ix) all rights to sue for past, present
and future infringements or misappropriations of any of the foregoing,
including the intellectual property described in Schedule F (Part 1) hereto, in
each case, owned or used by either of the Corporations.
“Interim Period” means the period between the close of business on this date and the
Closing.
“Inventory”
means the stock in trade of finished and unfinished goods, raw materials and
work in progress and all packaging, supplies and spare parts owned, maintained,
held or stored by or for either of the Corporations for the purposes of the
Business.
“Kingston
Street Lease” means the lease by MGA Construction of the premises at
11442 and 11476 Kingston Street, Maple Ridge, British Columbia, substantially
on the terms and conditions set forth in the form of lease set forth in
Schedule AA hereto.
“Laws” means any and all applicable laws, including all statutes, codes,
ordinances, decrees, rules, regulations, municipal by-laws, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgments, orders, decisions, rulings or awards, policies, guidelines, and
general principles of common and civil law and equity, binding on or affecting
the Person referred to in the context in which the word is used.
5
“Leased Properties” means the lands and premises listed and described in Schedule B
(Part 1) hereto by reference to their municipal address and proper legal description,
including the Kingston Street Lease.
“Leases” means the leases of the Leased Properties described in Schedule B
(Part 2) hereto, including the Kingston Street Lease, which Schedule sets forth
in respect of each Lease, a description of the leased premises, the term of the
Lease, the rental payments under the Lease, any rights of renewal and the term
thereof, and any restrictions on assignment.
“Letter of Intent” means the letter agreement dated February 21, 2003 (amended by
letter dated April 21, 2003), setting forth certain non-binding understandings
and certain binding agreements between the Purchaser and certain of the Vendors
with respect to the Purchaser’s possible acquisition of the Purchased Shares.
“Lien” means any mortgage, charge, pledge, hypothecation, security
interest, assignment, lien (statutory or otherwise), charge, title retention
agreement or arrangement, restrictive covenant or other encumbrance of any
nature or any other arrangement or condition which, in substance, secures payment
or performance of an obligation.
“Material Authorizations” has the meaning specified in Section 3.2(n).
“Material Contracts” has the meaning specified in Section 3.2(u).
“MGA Connectors” means MGA Connectors Ltd., a Canadian federal corporation with its
registered office at Suite 200, 4603 Kingsway, Burnaby, British Columbia, V5H
4M4, British Columbia.
“MGA Construction” means MGA Construction Hardware & Steel Fabricating Limited, a
Canadian federal corporation with its registered office at Suite 200, 4603
Kingsway, Burnaby, British Columbia, V5H 4M4, British Columbia.
“MGA Group Financial
Statements” means the audited combined
financial statements of the Corporations as at December 31, 2002, attached as
Schedule A hereto.
“MWCo” means 528211 Ontario Inc., operating
as Marjack Consulting, a corporation owned by Marvin Wight.
“Ordinary Course” means, with respect to an action taken by a Person, that such
action is consistent in nature, scope and magnitude with the past
6
practices of
the Person and is taken in the ordinary course of the normal day-to-day
operations of the Person.
“Parties” means each of the Vendors and the Purchaser, and any other Person
who may become a party to this Agreement.
“Permitted Liens” means (i) Liens for taxes, assessments or governmental charges
or levies on property not yet due, (ii) easements, encroachments and other
minor imperfections of title which do not, individually or in the aggregate,
materially detract from the value of or impair the use or marketability of any
real property, and (iii) Liens listed and described in Schedule G hereto
but only to the extent such Liens conform to their description in the said Schedule G.
“Person” means a natural person, partnership, limited liability partnership,
limited liability company, corporation, co-operative, joint stock company,
trust, unincorporated association, joint venture or other entity or
Governmental Entity, and pronouns have a similarly extended meaning.
“Public Statement” has the meaning specified in Section 12.4.
“Purchase Price” has the meaning specified in Section 2.2.
“Purchased Shares” has the meaning specified in Section 2.1.
“Purchaser” means Simpson Strong-Tie Canada, Limited, a Canadian federal corporation
with its registered office at 5300
Commerce Court West, Toronto, Ontario M5L 1B9.
“Purchaser’s Indemnified
Persons” has the meaning specified in
Section 9.1.
“Required Consents” means those Consents and Authorizations listed and described in
Schedule H hereto.
“Vendors” means collectively, Michael Petrovic, MPCo, George Shahnazarian,
GSCo, Armen Jeknavorian, AJCo and Marvin Wight.
“Working
Capital” has the meaning specified in Section 2.5(7).
Section 1.2 Gender and Number.
Any reference in this Agreement or any
Ancillary Agreement to gender includes all genders, and words importing the
singular number only shall include the plural and vice versa.
7
Section 1.3 Headings, etc.
The provision of a Table of Contents, the
division of this Agreement into Articles and Sections and the insertion of
headings are for convenient reference only and are not to affect its
interpretation.
Section 1.4 Currency.
All references in this Agreement or any Ancillary
Agreement to dollars, unless otherwise specifically indicated, are expressed in
Canadian currency.
Section 1.5 Certain Phrases, etc.
In this Agreement, save where the context
otherwise requires:
(a) a
reference to this Agreement or another
instrument includes any variation or replacement of either of them;
(b) reference
to a statutory provision includes reference to (i) any order, regulation,
statutory instrument or other subsidiary legislation at any time made under it
for the time being in force (whenever made); and (ii) any modification,
amendment, consolidation, re-enactment or replacement of it or provision of
which it is a modification, amendment, consolidation, re-enactment or
replacement, except to the extent that any modification, amendment,
consolidation, re-enactment or replacement made after the date of this
Agreement would increase the liability of any of the Parties;
(c) references
to writing shall include any modes of
reproducing words in a legible and non-transitory form;
(d) words
“including”
and “includes”
mean “including
(or includes) without limitation”;
(e) the
phrase “the
aggregate of”, “the total of”, “the sum of”, or a phrase of
similar meaning means “the aggregate (or total or sum), without duplication,
of”; and
(f) in
the computation of periods of time from a specified date to a later specified
date, unless otherwise expressly stated, the word “from” means “from and
including” and the words “to” and “until” each mean “to but
excluding”.
Section 1.6 Knowledge.
Where any representation or warranty in
this Agreement or any Ancillary Agreement is expressly qualified by reference
to the best knowledge of the Vendors, it shall be deemed to refer to the
knowledge of each of the Vendors, the
8
Corporations and the Corporations respective
officers. Each of the Vendors confirms
that he has made due and diligent inquiry of all appropriate Persons as to the
matters that are the subjects of the representations and warranties (but due and diligent enquiry as provided herein
shall not obligate the Vendors to contact third parties other than officers,
employees or consultants of the Corporations).
Section 1.7 Accounting Terms.
All accounting terms not specifically
defined in this Agreement shall be interpreted in accordance with GAAP.
Section 1.8 Incorporation of Schedules.
The Schedules attached to this Agreement
shall, for all purposes of this Agreement, form an integral part of it (such
Schedules being listed on pages (iii) and (iv) of the Table of Contents
hereto).
ARTICLE 2
PURCHASED SHARES AND PURCHASE PRICE
Section 2.1 Purchase and Sale.
Subject to the terms and conditions of this
Agreement, the Vendors agree to sell, assign and transfer to the Purchaser and
the Purchaser agrees to purchase from the Vendors on the Closing Date, all (but
not less than all) of the issued and outstanding shares in the capital of each
of the Corporations (collectively, and as more particularly described in
Schedule Y hereto, the “Purchased Shares”).
Section 2.2 Purchase Price.
The purchase price (the “Purchase
Price”) payable by the Purchaser to the Vendors for the Purchased
Shares and the Non-Competition Agreement covenants shall be THIRTEEN MILLION,
FIVE HUNDRED THOUSAND DOLLARS ($13,500,000), subject to adjustment in
accordance with Section 2.5.
Section 2.3 Deposit.
(1) The Vendors acknowledge that, contemporaneously with the execution
of the Letter of Intent, a deposit (the “Deposit”) of $100,000 was made by the
Purchaser to its solicitors. The
Parties agree that the Deposit shall continue to be invested pending Closing in
an interest-bearing account, certificate of deposit or other similar
instruments or accounts of any Canadian Schedule A bank.
(2) Upon satisfaction or waiver of the conditions precedent to the
Closing in Article 6, the Deposit, together with all accrued interest
thereon, will be applied on Closing in satisfaction of an equivalent amount of
the Purchase Price. If the Closing does
not occur for any reason, other than a default by the
9
Purchaser in
the performance of its obligations under this Agreement, the Parties agree that
the full amount of the Deposit, together with all accrued interest thereon,
shall be returned to the Purchaser.
(3) If the Closing does not occur because of a default by the Purchaser
in the performance of its obligations under this Agreement, the Parties agree
that the full amount of the Deposit, together with all accrued interest
thereon, shall be paid over to the Vendors as liquidated damages (and not as a
penalty) to compensate them for the expenses incurred and opportunities
foregone as a result of such default.
At the Closing, the Purchaser shall pay the
Purchase Price, before any adjustments, as follows:
(a) as to the amount of the Deposit (plus all accrued interest thereon)
by application of the Deposit (plus accrued interest thereon);
(b) as to $2,450,000 by certified cheque, bank draft or wire transfer
payable to or to the order of the Vendors’ solicitors, in trust to be held by
the escrow agent designated in Schedule I hereto and pursuant to the terms and
conditions set forth in the said Schedule I; and
(c) as to the balance by Purchaser’s cheque or by bank draft of
immediately available funds to the order of the Vendors (or as they may
otherwise direct) or by wire transfer to the Vendors (or as they may otherwise
direct) pursuant to wire transfer instructions provided in writing by the
Vendors to the Purchaser at least five Business Days prior to Closing.
It is understood and agreed that the
Purchase Price, and any related adjustments in accordance with Section 2.5
or otherwise, shall be allocated and paid to the Vendors as outlined in
Schedule X hereto.
(1) Within 60 Business Days following the Closing Date (or such other
date as is mutually agreed to by the Vendors and the Purchaser in writing), the
Purchaser will cause its accountants, to prepare and deliver to the Vendors a
draft combined closing balance sheet (the “Draft Closing Balance Sheet”) of the
Corporations prepared as of the close of business on the Closing Date. The Draft Closing Balance Sheet is to be
prepared in accordance with GAAP applied on a basis consistent with the
preparation of the MGA Group Financial Statements, except as otherwise provided
in Schedule J hereto.
10
(2) Within 20 Business Days following receipt of the Draft Closing
Balance Sheet, the Vendors shall cause their accountants to review the Draft
Closing Balance Sheet and shall notify the Purchaser in writing if they have
any objections to the Draft Closing Balance Sheet. The notice of objection must contain a statement of the basis of
each of the Vendors’ objections and each amount in dispute. The Purchaser shall provide access, upon
every reasonable request, to the Vendors and their accountants to all work
papers of the Purchaser’s accountants, accounting books and records and the
appropriate personnel to verify the accuracy, presentation and other matters
relating to the preparation of the Draft Closing Balance Sheet. The Vendors shall be deemed to have accepted
the Draft Closing Balance Sheet if they do not notify the Purchaser of their
objection within the said period of 20 Business Days.
(3) If the Vendors dispute the Draft Closing Balance Sheet, the Parties
will work expeditiously and in good faith in an attempt to resolve such dispute
within a further period of 10 Business Days after the date of notification by
the Vendors to the Purchaser of such dispute, failing which the dispute shall
be submitted for determination to an independent national firm of chartered
accountants mutually agreed to by the Purchaser and the Vendors (and failing
such agreement within a further period of 5 Business days, such independent
national firm of chartered accountants shall be KPMG). The determination of such firm of chartered
accountants shall be final and binding upon the Parties and shall not be
subject to appeal, absent manifest error.
Such firm of chartered accountants shall be deemed to be acting as
experts and not as arbitrators.
(4) The Vendors and the Purchaser shall each bear the fees and expenses
of their respective accountants in preparing or reviewing, as the case may be,
the Draft Closing Balance Sheet. In the
case of a dispute and the retention of a national firm of chartered accountants
to determine such dispute, the costs and expenses of such third firm of chartered
accountants shall be borne as to one-half by the Vendors and as to one-half by
the Purchaser. However, the Vendors and
the Purchaser shall each bear their own costs in presenting their respective
cases to the third firm of chartered accountants.
(5) Immediately following the 20
Business Day period referred to in Section 2.5(2), or the resolution of
any dispute in accordance with the foregoing, as the case may be, the Purchaser
shall deliver to the Vendors the final closing balance sheet (the “Closing
Balance Sheet”). Such
Closing Balance Sheet shall be final and binding upon the Parties and shall not
be subject to appeal, absent manifest error.
(6) Within 3 Business Days after receipt of the Closing Balance Sheet,
either the Purchaser shall pay to the Vendors in the manner described in
Section 2.4(c),
11
the amount by
which the Working Capital as determined from the Closing Balance Sheet exceeds
$1,296,000, or the Vendors shall pay to the Purchaser by certified
cheque, bank draft or wire transfer in immediately available funds, the amount
by which $1,296,000 exceeds the Working Capital as determined from the Closing
Balance Sheet, as the case may be. The
determination and adjustment of the Purchase Price in accordance with the
provisions of this Section 2.5 shall not limit or affect any other rights
or causes of action either the Purchaser or the Vendors may have with respect
to the representations, warranties, covenants and indemnities in its or their
favour in this Agreement; provided that, it is understood and agreed that any
claim regarding a representation, warranty, covenant or indemnity will be
reduced by any adjustment reflected on the Closing Balance Sheet that has been
made directly relating to the said representation, warranty, covenant or
indemnity claim.
(7) For purposes of this Section 2.5, “Working Capital” as
determined from any balance sheet, means the amount by which the aggregate book
value of all the current assets of the Corporations as shown on such balance
sheet (excluding accounts receivable that have been outstanding more than 90
days, other than accounts
receivables for which there is insurance or specific payment terms negotiated
with the debtor) exceeds all of the liabilities (except for deferred taxes) of
the Corporations as shown on such balance sheet.
(8) Each of (i) the Vendors and (ii) the Purchaser represent and warrant
to the other that KPMG is an independent auditor in relation to it, and that
KPMG has not provided any services to it during the three-year period ending on
the Closing Date.
Section 3.1 Representations and Warranties of the Vendors.
The Vendors, on a joint and several basis
(save for the representations and warranties in Sections 3.2 (a-1), 3.2(a-2),
3.2(a-3), 3.2(f) and 3.2(g), which are several) represent and warrant as
follows to the Purchaser and acknowledge and confirm that the Purchaser is
relying upon the representations and warranties in connection with the purchase
by the Purchaser of the Purchased Shares:
(a) Incorporation
and Qualification.
Each of the Corporations is a corporation duly incorporated, organized
and existing and in good standing under the laws of Canada, and has the
corporate power to own and operate its property, carry on its business and
enter into and
12
perform its
obligations under each of the Ancillary Agreements to which it is a party. Each Corporation is duly qualified, licensed
or registered to carry on business in the jurisdictions listed in Schedule K
hereto. The jurisdictions listed in the
said Schedule K include all jurisdictions in which the nature of the Assets or
the Business makes such qualification necessary or where either of the
Corporations owns or leases any material Assets or conducts any material
business.
(a-1) Incorporation and Qualification. MPCo is a corporation duly incorporated,
organized and existing and in good standing under the laws of Canada, and has
the corporate power to own and operate its property, carry on its business and
enter into and perform its obligations under the Agreement and each of the
Ancillary Agreements to which it is a party.
(a-2) Incorporation and Qualification. GSCo is a corporation duly
incorporated, organized and existing and in good standing under the laws of
Canada, and has the corporate power to own and operate its property, carry on
its business and enter into and perform its obligations under the Agreement and
each of the Ancillary Agreements to which it is a party.
(a-3) Incorporation and Qualification. AJCo is a corporation duly
incorporated, organized and existing and in good standing under the laws of
Canada, and has the corporate power to own and operate its property, carry on
its business and enter into and perform its obligations under the Agreement and
each of the Ancillary Agreements to which it is a party.
(b) Validity of Agreement. Except as disclosed in
Schedule L hereto, the execution, delivery and performance by the Vendors of
this Agreement and each of the Ancillary Agreements to which any of them is a
party:
(i) have been duly authorized by all necessary action on the part of the
Vendors;
(ii) do not (or would not with the giving of notice, the lapse of time or
the happening of any other event or condition) result in a breach or a
violation of, or conflict with, or allow any other Person to exercise any
rights under, any of the terms or provisions of the constating documents or
by-laws of either of the Corporations or any Contracts or other instruments to
which any of the Vendors or either of the Corporations is a
13
party, or
pursuant to which any of its assets or property may be affected;
(iii) will not result in a breach of, or cause the termination or
revocation of, any Authorization held by any of the Vendors or either of the
Corporations, or necessary to the ownership of the Purchased Shares or the operation
of the Business; and
(iv) will not result in the violation of any Law.
(c) Required
Filings, etc.
There is no requirement to make any filing with, give any notice to, or
obtain any authorization of, any Governmental Entity as a condition to the lawful
completion of the transactions contemplated by this Agreement, except for the
filings, notifications and authorizations described in Schedule M hereto, or
that relate solely to the identity of the Purchaser or the nature of the
business carried on by the Purchaser.
(d) Execution
and Binding Obligation. This Agreement and each of the Ancillary Agreements to which any
of the Vendors is a party have been duly executed and delivered by the Vendors,
and constitute legal, valid and binding obligations of the Vendors, enforceable
against the Vendors in accordance with their respective terms, subject only to
any limitation under applicable laws relating to (i) bankruptcy,
winding-up, insolvency, arrangement and other laws of general application affecting
the enforcement of creditors’ rights, and (ii) the discretion that a court
may exercise in the granting of equitable remedies such as specific performance
and injunction.
(e) Authorized
and Issued Capital. The authorized capital of MGA Construction consists of an
unlimited number of Class A special shares and an unlimited amount of Class A
common shares of which 300,000 Class A special shares and 3,000 Class A common
shares (and no more) have been duly issued and are outstanding as fully paid
and non-assessable. The authorized
capital of MGA Connectors consists of an unlimited number of Class A common
shares and an unlimited number of Class B common shares, of which only 300
Class A common shares (and no more) have been duly issued and are outstanding
as fully paid and non-assessable. All
of the Purchased Shares have been issued in compliance with all applicable
Laws, including applicable securities laws.
(f) No
Other Agreements to Purchase. Except for the Purchaser’s right under this
Agreement, no Person has any written or oral agreement, option or warrant or
any right or privilege (whether by Law,
14
pre-emptive or
contractual) capable of becoming such for (i) the purchase or acquisition
from any of the Vendors of any of the Purchased Shares, or (ii) the
purchase, subscription, allotment or issuance of any of the unissued shares or
other securities of either of the Corporations.
(g) Title
to Purchased Shares. Subject only to this Agreement, the Purchased Shares are owned by
the Vendors as the registered and beneficial owner with a good title, free
and clear of all Liens, other than those restrictions on transfer, if any, in
the articles of the Corporations. Upon completion of the transaction
contemplated by this Agreement, the Purchaser will have good and valid title,
of record and beneficial, to the Purchased Shares, free and clear of all Liens;
other than (i) those restrictions on transfer, if any, in the articles of
the Corporations, and (ii) Liens granted by the Purchaser.
(h) Dividends
and Distributions.
Since December 31, 2002, neither of the Corporations has, directly or
indirectly, declared or paid any dividends or declared or made any other
distribution on any of its shares of any class (other than those specifically
disclosed to the Purchaser in a Memo from Cummings, Cooper, Schusheim and
Berliner dated April 15, 2003 and those distributions set forth in Section
5.11) and neither of the Corporations has, directly or indirectly, redeemed,
purchased or otherwise acquired any of its shares of any class or agreed to do
so.
(i) Corporate
Records.
The Corporate Records are complete and accurate and all corporate
proceedings and actions reflected in the Corporate Records have been conducted
or taken in compliance with all Laws and with the articles and by-laws of
either of the Corporations, as the case may be. Without limiting the generality of the foregoing (i) the
minute books contain complete and accurate minutes of all meetings of the
directors and shareholders held since incorporation and all such meetings were
properly called and held, (ii) the minute books contain all resolutions
passed by the directors and shareholders (and committees, if any) and all such
resolutions were properly passed, (iii) the share certificate books,
register of shareholders and register of transfers are complete and accurate,
all transfers have been properly completed and approved and any tax payable in
connection with the transfer of any securities has been paid, and (iv) the
registers of directors and officers are complete and accurate and all former
and present directors and officers were properly elected or appointed, as the
case may be. Neither of the
Corporations has been subject to, or affected by, any unanimous shareholders
agreement;
15
(j) Residence
of the Vendors.
None of the Vendors is not a non-resident of Canada within the meaning
of the Income
Tax Act (Canada).
(k) Conduct
of Business in Ordinary Course. Except as disclosed in Schedule N hereto,
since December 31, 2002, the Business has been carried on in the Ordinary
Course. Without limiting the generality
of the foregoing, neither of the Corporations has:
(i) sold, transferred or otherwise disposed of any Assets, except for
(i) Assets which are obsolete and which individually or in the aggregate
do not exceed $50,000, or (ii) Inventory sold in the Ordinary Course;
(ii) made any capital expenditure or commitment therefor which
individually or in the aggregate exceeded $50,000;
(iii) discharged any secured or unsecured obligation or liability (whether
accrued, absolute, contingent or otherwise) which individually or in the
aggregate exceeded $50,000;
(iv) increased its indebtedness for borrowed money or made any loan or
advance, or assumed, guaranteed or otherwise became liable with respect to the
liabilities or obligation of any Person;
(v) made any bonus or profit sharing distribution or similar payment of
any kind, except (i) as may be required by the terms of a Material Contract,
(ii) as provided for in the MGA Group Financial Statements;
(vi) granted any increase in the rate of wages, salaries, bonuses or
other remuneration of any employee of either of the Corporations, except as may
be required by the terms of a Material Contract;
(vii) terminated any officer or other senior employee;
(viii) written off as uncollectible any Accounts Receivable which,
individually or in the aggregate, are material to either of the Corporations or
is in excess of $50,000;
(ix) suffered any extraordinary loss, whether or not covered by
insurance;
(x) suffered any material shortage or any cessation or interruption of
Inventory shipments, supplies or ordinary services;
16
(xi) cancelled or waived any material claims or rights;
(xii) compromised or settled any litigation, proceeding or other
governmental action relating to the Assets, the Business or either of the
Corporations;
(xiii) cancelled or reduced any insurance coverage; or
(xiv) authorized, agreed or otherwise committed, whether or not in
writing, to do any of the foregoing.
In addition,
neither of the Corporations has (i) made or agreed to make, any change in
any method of accounting or auditing practice, or (ii) amended or approved
any amendment to its constating documents, by-laws or capital structure.
(l) No
Material Adverse Change. Since December 31, 2002, there has not been any material adverse
change in the affairs, prospects, operations or condition of either of the
Corporations, the Assets or the Business and, to
the best knowledge of the Vendors, no event has occurred or circumstance
exists which may result in such a material adverse change (other than changes
affecting businesses generally or general economic conditions affecting
industry generally).
(m) Compliance
with Laws.
Each of the Corporations is conducting and has always conducted the
Business, and any past business, in compliance with all Laws.
(n) Authorizations. Each of the Corporations
owns, holds, possesses or lawfully uses in the operation of the Business, all
Authorizations which are, in any manner, necessary for it to conduct the
Business as presently or previously conducted or for the ownership and use of
the Assets in compliance with all Laws.
All Authorizations material to each of the Corporations or the Business
are listed in Schedule O hereto (the “Material Authorizations”). Each Authorization is valid, subsisting and
in good standing, neither of the Corporations is in default or breach of any
Authorization and no proceeding is pending or, to the best knowledge of the
Vendors, threatened to revoke or limit any Authorization. All Authorizations are renewable by their
terms or in the ordinary course of business without the need for either of the
Corporations to comply with any special rules or procedures, agree to any
materially different terms or conditions or pay any amounts other than routine
filing fees. None of the Vendors, nor any
person related to any of the Vendors, owns or has any proprietary, financial or
other interest (direct or indirect) in any Authorization which either of the
17
Corporations
owns, possesses or uses in the operation of the Business, as now or previously
conducted.
(o) Sufficiency
of Assets.
The Business is the only business operation carried on by the
Corporations and the Assets include all rights and property necessary to the
conduct of the Business after the Closing substantially in the same manner as
it was conducted prior to the Closing.
With the exception of Inventory in transit, all of the Assets are
situate at the Leased Properties.
(p) Title
to the Assets.
The Corporations own (with good title) all of the properties and assets
(whether real, personal or mixed and whether tangible or intangible) that they
purport to own, including all the properties and assets reflected as being
owned by the Corporations in their financial Books and Records. The Corporations have legal and beneficial ownership
of the Assets free and clear of all Liens, except for Permitted Liens.
(q) No
Options, etc.
No Person has any written or oral agreement, option, understanding or
commitment, or any right or privilege capable of becoming such for the purchase
or other acquisition from either of the Corporations of any of the Assets,
other than pursuant to purchase orders for Inventory sold in the Ordinary
Course.
(r) Condition
of Tangible Assets. The buildings, plants, structures, equipment and other tangible property
owned or leased by either of the Corporations are structurally sound, in good
operating condition and repair having regard to their use and age and are
adequate and suitable for the uses to which they are being put. None of such buildings, plants, structures,
equipment or other property are in need of maintenance or repairs, except for
ordinary routine maintenance and repairs that are not material in nature or
cost, and except for machinery and equipment safety changes set out in the
Workers Compensation Board report Number 2001128680233.
(s) Leased
Property.
Neither of the Corporations is the lessee of, or subject to any
agreement or option to own or lease, any real property or any interest in any
real property, other than the Leased Properties. All of the buildings and fixtures on the Leased Properties were
constructed in accordance with all Laws and the Corporations have adequate
rights of ingress and egress into the Leased Properties for the operation of
the Business in the Ordinary Course. None
of the Leased Properties or the buildings and fixtures thereon, nor their use,
operation or maintenance for the purpose of carrying on the Business,
18
violates any
restrictive covenant or any provision of any Law or encroaches on any property
owned by any other Person. No
condemnation or expropriation proceeding is pending or, to the best knowledge of the Vendors, threatened which would
preclude or impair the use of any of the Leased Properties for the purposes for
which they are currently used. There
are no outstanding work orders from or required by any municipality, police
department, fire department, sanitation, health or safety authorities or from
any other Person and there are no matters under discussion with or by the
Corporations relating to work orders.
Each of the Leased Properties is adequate and suitable for the purposes
for which it is presently being used.
(t) Leases. Neither of the
Corporations is a party to, or under any agreement to become a party to, any
lease with respect to real property (whether written or oral), other than the
Leases. True, correct and complete
copies of all written Leases and a full written description of all oral Leases
have been provided to the Purchaser. Each
Lease is in good standing, creates a good and valid leasehold estate in the
Leased Properties thereby demised and is in full force and effect without
amendment, except as disclosed in Schedule B (Part 3) hereto. With respect to each Lease (i) all rents
and additional rents have been paid, (ii) no waiver, indulgence or
postponement of the lessee’s obligations has been granted by the lessor,
(iii) there exists no event of default or event, occurrence, condition or
act (including the purchase of the Purchased Shares) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a default under the Lease, and (iv) to the best knowledge of the Vendors, all of the covenants to be
performed by any party under the Lease have been fully performed.
(u) Key
Contracts.
Except for the Contracts described in Schedule P hereto (collectively,
the “Material
Contracts”), the Leases, the Employee Plans and the insurance
policies set out in Schedule Q (Part I) hereto, neither of the
Corporations is a party to or bound by:
(i) any distributor, sales, advertising, agency or manufacturer’s
representative Contract;
(ii) any continuing Contract for the purchase of materials, supplies,
equipment or services involving in the case of any such Contract more than $50,000 over the life of the Contract;
19
(iii) any Contract that expires or may be renewed at the option of any
Person other than the Corporations so as to expire more than one year after the
date of this Agreement;
(iv) any trust indenture, mortgage, promissory note, loan agreement or
other Contract for the borrowing of money, any currency exchange, commodities
or other hedging arrangement or any leasing transaction of the type required to
be capitalized in accordance with GAAP;
(v) any Contracts for capital expenditures in excess of $50,000, in the aggregate;
(vi) any confidentiality, secrecy or non-disclosure Contract or any
Contract limiting the freedom of either of the Corporations to engage in any
line of business, compete with any other Person, operate the Assets at maximum
production capacity or otherwise conduct the Business;
(vii) any Contract pursuant to which either of the Corporations is a
lessor of any machinery, equipment, motor vehicles, office furniture, fixtures
or other personal property;
(viii) any Contract with any Person with whom either of the Corporations or
any of the Vendors does not deal at arm’s length within the meaning of the Income Tax
Act (Canada);
(ix) any agreement of guarantee, support, indemnification, assumption or
endorsement of, or any similar commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or otherwise) or
indebtedness of any other Person; or
(x) any Contract made out of the Ordinary Course.
(v) No
Breach of Material Contracts. Each of the Corporations has performed all
of the obligations required to be performed by it and is entitled to all
benefits under, and is not alleged to be in default of any Material
Contract. Each of the Material
Contracts is in full force and effect, unamended, and there exists no default
or event of default or event, occurrence, condition or act (including the purchase
of the Purchased Shares) which, with the giving of notice, the lapse of time or
the happening of any other event or condition, would become a default or event
of default under any Material Contract.
True, correct and complete copies of all Material Contracts have been
delivered to the Purchaser.
20
(w) No
Breach of Other Contracts. Except for certain acts of default or breach
which, in the aggregate, are not material, neither of the Corporations has
violated or breached, in any material respect, any of the terms or conditions
of any Contract (other than the Material Contracts), and, to the best knowledge
of the Vendors, except for certain failures to perform which, in the aggregate,
are not material, all the covenants to be performed by any other party to such
Contract have been fully performed, in all material respects;
(x) Accounts
Receivable.
All Accounts Receivable are bona fide, and, subject to an allowance for
doubtful accounts that has been reflected on the books of the Corporations in
accordance with GAAP and consistent with past practice, collectible without
set-off or counterclaim.
(y) Intellectual
Property Rights.
All registered Intellectual Property and all material non-registered
Intellectual Property used as a whole or in part in, or required for the
carrying on of, the Business in the manner heretofore carried on are listed in
Schedule F (Part 1) hereto and are owned by, or validly licensed to, one or
both of the Corporations. Except as
otherwise disclosed in the Schedule F (Part 2) hereto, the Corporations
(i) have the exclusive right to use the Intellectual Property, (ii)
own of record the Intellectual Property, (iii) have not commenced or
threatened to commence any suit, action or proceeding against any Person in
connection with the use of the Intellectual Property, and (iv) have not
conveyed, assigned or encumbered any of the Intellectual Property. All registrations and filings necessary to
preserve the rights of the Corporations in the Intellectual Property have been
made and are in good standing. To the best knowledge of the Vendors, the
conduct of the Business does not infringe upon the intellectual property of any
other Person. The purchase and sale
herein contemplated will not violate or breach the terms of any material
Intellectual Property license to which the Corporations are a party, nor cause
such licenses to be terminated or modified.
The Corporations are not obliged to pay royalties or any other
compensation to any person or entity in respect of its ownership, use or
license of any Intellectual Property owned by, used in, or necessary to conduct
the Business. The Corporations have
taken all commercially reasonable steps (including measures to protect secrecy
and confidentiality) to protect the right, title and interest of the
Corporations in and to all the Intellectual Property used in whole or in part
in, or required for the carrying on of, the Business. All employees, agents, consultants and other representatives of
the Corporations who have access to confidential or proprietary information of
the
21
Corporations
have a legal obligation of confidentiality to the Corporations with respect to
such information. There has been no
public disclosure of know-how, trade secrets or any other type of proprietary
information forming a part of the Intellectual Property owned by the
Corporations that would adversely affect the ability of the Corporations to
sustain valid rights to such Intellectual Property. There has been no public disclosure, sale or offer for sale of
any invention, forming a part of the Intellectual Property, nor has there been
any disclosure, directly or indirectly, derived from the inventor(s) (such as a
non-confidential publication or presentation by an inventor, employee, officer,
director or other representative of each of the Corporations) that may affect
the ability of the Corporations to obtain or sustain valid patent rights to
such invention. To the best of the
knowledge of the Vendors, there is no publication, such as a patent, published
or laid-open patent application, journal article, catalogue, promotion or
specification, of another Person which may prevent the Corporations from
obtaining or sustaining valid patent rights to any otherwise patentable
Intellectual Property. In relation to
each patent application (in preparation or filed), or patent, for an invention
within the Intellectual Property, neither the Corporations nor the Vendors are
aware of any professional opinion, such as the opinion of a patent agency or
patent attorney, whether preliminary in nature or in any other manner
qualified, which advises that the chances of obtaining or sustaining valid
patent rights to the invention are in any manner doubtful.
(z) Inventories. The Inventories of each of
the Corporations do not include any material items, which are below standard
quality or of a quality or quantity not usable or saleable in the Ordinary
Course or which are held in quantities exceeding the quantities sold and delivered
in the preceding twelve months other than Accubrace Inventory owned by MGA
Construction. The Inventory levels
of each of the Corporations are sufficient for the continuation of the Business
in the Ordinary Course. All Inventories
of each of the Corporations have been determined and valued in accordance with
the policies, practices and procedures set forth on Schedule R hereto.
(aa) Subsidiaries. Neither of the
Corporations has any subsidiaries or holds any shares or other ownership,
equity or proprietary interests in any other Person.
(bb) Books
and Records.
All accounting and financial Books and Records have been fully, properly
and accurately kept and completed in all material respects. The Books and Records and other data and
22
information
are not recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which are not available to
the Corporations in the Ordinary Course.
(cc) Financial
Statements.
The MGA Group Financial Statements have been prepared in accordance with
GAAP applied on a basis consistent with those of previous fiscal years and
present fairly: (i) the assets,
liabilities (whether accrued, absolute, contingent or otherwise) and financial
position of the Corporations as December 31, 2002 on a combined basis; and
(ii) the sales and earnings of the Corporations, on a combined basis,
during the period ended December 31, 2002.
(dd) Working
Capital.
The amount of working capital of each of the Corporations is consistent
with amounts held in accordance with its past practices and is sufficient for
the purposes of operating the 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 either of the Corporations.
(ee) No
Liabilities.
Except as specifically and plainly disclosed in this Agreement or
reflected or reserved against in the balance sheet forming part of the Audited
Financial Statements, neither of the Corporations has any liabilities or
obligations of any nature (whether known or unknown, absolute, accrued,
contingent or otherwise), except for current liabilities incurred in the
Ordinary Course since December 31, 2002.
(ff) Bank
Accounts and Powers of Attorney. Schedule S hereto sets forth a correct and
complete list showing (i) the name of each bank in which either of the
Corporations has an account or safe deposit box, the account number of each
such account and the names of all Persons authorized to draw on the account or
to have access to the safety deposit box, and (ii) the names of all
Persons holding powers of attorney from either of the Corporations. True and complete copies of the powers of
attorney have been provided to the Purchaser.
(gg) Environmental
Matters.
Except as set forth in Schedule T (Part 1) hereto:
(i) none of the real properties currently or, to the best knowledge of the Vendors, formerly owned, leased or
used by either of the Corporations or over which either of the Corporations has
or
23
had charge,
management or control (such property, the “Indemnification Properties”) (i) has
ever been used by any Person as a waste disposal site or as a licensed
landfill, or (ii) has ever had asbestos, asbestos-containing materials,
PCBs, radioactive substances or aboveground or underground storage systems,
active or abandoned, located on, at or under them;
(ii) to the best knowledge of the Vendors, no properties adjacent to any of the Leased Properties are
contaminated where such contamination could, if it migrated to a Leased
Property, have a material adverse effect on the Leased Property;
(iii) to the best knowledge of the Vendors, neither of the Corporations has transported, removed
or disposed of any waste to a location outside of Canada;
(iv) to the best knowledge of the Vendors, there are no contaminants located in the ground or in groundwater
under any of the Leased Properties;
(v) neither of the Corporations has been required by any Governmental
Entity to (I) alter any of the Leased Properties in a material way to comply
with Environmental Laws, or (II) perform any environmental closure,
decommissioning, rehabilitation, restoration or post-remedial investigations,
on, about, or in connection with any real property;
(vi) the Assets are capable of, and are not restricted by any
Authorization or Contract from, being operated at maximum daily and annual
production capacity while remaining in compliance with Environmental Laws; and
(vii) each of the Corporations has in place environmental management
policies which include a corporate environmental policy, an employee training
program and a spill response plan and each of the Corporations is complying
with all such policies.
Schedule T
(Part 2) hereto lists all reports and documents relating to the environmental
matters affecting either of the Corporations or any of the Leased Properties
which are in the possession or under the control of the Vendors. Copies of all such reports and documents
have been provided to the Purchaser. To
the best knowledge of the Vendors, there are no other reports or documents
relating to environmental matters affecting either of the Corporations or any
of
24
the Leased
Properties which have not been made available to the Purchaser whether by
reason of confidentiality restrictions or otherwise.
(hh) Employees. Except as set forth in
Schedule U (Part 2) hereto:
(i) each of the Corporations is in compliance with all Laws respecting
employment and employment practices, terms and conditions of employment, pay
equity and wages and hours of work;
(ii) neither of the Corporations has or is engaged in any unfair labour
practice and no unfair labour practice complaint, grievance or arbitration
proceeding is pending or, to the best knowledge
of the Vendors, threatened against either of the Corporations;
(iii) no collective bargaining agreement is currently in place or is being
negotiated by either of the Corporations with respect to any employees of the
Corporations. No union representation
question exists respecting the employees of either of the Corporations. There is no labour strike, dispute, work
slowdown or work stoppage pending or involving or, to the best knowledge of the Vendors, threatened against either of
the Corporations. No trade union has
applied to have either of the Corporations declared a related employer pursuant
to the Labour
Relations Act (Ontario) or any similar legislation in any
jurisdiction in which the Corporations carry on business; and
(iv) all amounts due or accrued due for all salary, wages, bonuses,
commissions, vacation with pay, pension benefits or other employee benefits are
reflected in the Books and Records.
Schedule U
(Part 1) hereto contains a correct and complete list of all directors,
officers, employees, independent contractors, consultants and agents of each of
the Corporations, whether actively at work or not, their addresses, salaries,
wage rates, commissions and consulting fees, bonus arrangements, benefits,
positions, ages, status as full-time or part-time employees and length of
service. No employee of either of the
Corporations has any agreement as to length of notice or severance payment
required to terminate his or her employment, other than such as results by Law.
25
(ii) Employee
Plans.
(i) Schedule D hereto lists and describes all Employee Plans. The Vendors have furnished to the Purchaser
true, correct and complete copies of all the Employee Plans, as amended as of
the date hereof, together with all related documentation, including funding and
investment management agreements, summary plan descriptions, the most recent
actuarial reports, financial statements and asset statements, all material
opinions and memoranda (whether externally or internally prepared) and all
material correspondence with all regulatory authorities or other relevant
Persons. No changes have occurred or
are expected to occur which would materially affect the information contained
in the actuarial reports, financial statements or asset statements required to
be provided to the Purchaser pursuant to this provision.
(ii) All of the Employee Plans are and have been established, registered,
qualified, invested and administered, in all respects, in accordance with their
terms and all Laws, including all tax laws where same is required for
preferential tax treatment. No fact or
circumstance exists that could adversely affect the preferential tax treatment
ordinarily accorded to any such Employee Plan.
(iii) The Corporations may unilaterally amend or terminate, as a whole or
in part, each Employee Plan and take contribution holidays under or withdraw
surplus from each Employee Plan, subject only to approvals required by
Laws. To
the best knowledge of the Vendors, no such Employee Plan is subject to
any pending investigation, examination or other proceeding, action or claim
initiated by any regulatory authority, or by any other party (other than
routine claims for benefits), and there exists no state of facts which could
reasonably be expected to give rise to any such investigation, examination or
other proceeding, action or claim or to affect the registration of any such
Employee Plan required to be registered.
(iv) All contributions or premiums required to be paid by either of the
Corporations under the terms of each Employee Plan or by Laws have been made in
a timely fashion in accordance with Laws and the terms of such Employee
Plans. Neither of the Corporations has
any liability (other than liabilities accruing after the Closing Date) with
respect to any such Employee Plans.
Contributions or premiums for the period up to the Closing Date will be
paid by the Corporations prior to the
26
Closing Date
even though not otherwise required to be paid until a later date.
(v) No commitments to improve or otherwise amend any Employee Plan have
been made, except as required by Laws.
(vi) There have been no improper withdrawals, applications or transfers of
assets of any Employee Plan, and neither of the Corporations, nor any of their
agents or delegates, has breached any fiduciary obligation with respect to the
administration or investment of any such Employee Plan.
(vii) Each Employee Plan, which is a funded plan, will be fully funded as
of the Closing Date on both a going concern and a solvency basis pursuant to
the actuarial assumptions and methodology utilized in the most recent actuarial
valuation therefor.
(viii) None of the Employee Plans enjoys any special tax status under any
Laws, nor has any advance tax ruling been sought or received in respect of any
Employee Plan.
(ix) All employee data necessary to administer each Employee Plan has
been provided by the Vendors to the Purchaser and are true and correct as of
the date of this Agreement and the Vendors will notify the Purchaser of any
changes thereto.
(x) No insurance policy or any other agreement affecting any Employee
Plan requires or permits a retroactive increase in contributions, premiums or
other payments due thereunder. The
level of insurance reserves under each such insured Employee Plan is reasonable
and sufficient to provide for all incurred but unreported claims.
(xi) None of the Employee Plans (other than pension plans) provides benefits
to retired employees or to the beneficiaries or dependants of retired
employees.
(jj) Insurance. The Assets are insured
against loss or damage by all insurable hazards or risks, on a basis set out in
such policies. Schedule Q (Part 1)
hereto contains a list of insurance policies which are maintained by the
Corporations setting out, in respect of each policy, a description of the type
of policy, the name of insurer, the coverage allowance, the expiration date,
the annual premium and any pending claims. Neither of the Corporations is in
default with respect to any of
27
the provisions
in the insurance policies, including the payment of any premiums thereunder,
and has not failed to give any notice or to present any claim under any
insurance policy in a due and timely fashion.
There has not been any material adverse change in the relationship of
either of the Corporations with its insurers, the availability of coverage, or
in the premiums payable pursuant to the policies. Schedule Q (Part 2) hereto 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 the Corporations over the past 5
calendar years. Copies of all insurance
policies of the Corporations and the most recent inspection reports received
from insurance underwriters have been delivered to the Purchaser.
(kk) Litigation. Except as described in
Schedule V hereto, there are no actions, suits or proceedings, at law or in
equity, by any Person (including the Corporations) nor any arbitration,
administrative or other proceeding by or before (or, to the best knowledge of the Vendors, any investigation by) any
Governmental Entity pending, or, to the best
knowledge of the Vendors, threatened against or affecting the
Corporations, the Business or any of the Assets, and none of the Vendors knows
of any valid basis for any such action, suit, proceeding, arbitration or
investigation by or against either of the Corporations. Neither of the Corporations is subject to
any judgment, order or decree entered in any lawsuit or proceeding nor has
either of the Corporations settled any claim prior to being prosecuted in respect
of it. Except as disclosed in the said
Schedule V, neither of the Corporations is the plaintiff or complainant in any
action, suit or proceeding.
(ll) Customers
and Suppliers.
Schedule W hereto, is a true and correct list setting forth the twenty
largest customers and the twenty largest suppliers of each of the Corporations
by dollar amount as at December 31, 2002.
None of the Vendors has reason to believe that the benefits of any
relationship with any of the major customers or suppliers of the Corporations
will not continue after the Closing Date in substantially the same manner as
prior to the date of this Agreement, except to the extent caused by decisions
or actions of the Purchaser;
(mm) Taxes. Each of the Corporations
has filed or caused to be filed, within the times and in the manner prescribed
by Law, all federal, provincial, local and foreign tax returns and tax reports
which are required to be filed by or with respect to the Corporations. The information in such returns and reports is correct and complete in all
material respects and such returns and reports reflect accurately all liability
for taxes of each
28
of the
Corporations for the periods covered thereby.
All federal, provincial, local and foreign income, profits, franchise,
sales, use, occupancy, excise and other taxes and assessments (including
interest and penalties) that are or may become payable by or due from either of
the Corporations have been fully paid or fully disclosed and fully provided for
in the Books and Records and the Financial Statements. The federal income tax
liability of MGA Construction has been assessed for all fiscal years through
its fiscal year ended on December 31,
2001 and for MGA Connectors for all fiscal year through its fiscal year
ended on December 31, 2001. There are no outstanding agreements or
waivers extending the statutory period providing for an extension of time with
respect to the assessment or re-assessment of tax or the filing of any tax
return by, or any payment of any tax by either of the Corporations, no notice
of assessment or reassessment has been received and, to the best knowledge of the Vendors, no examination of any tax
return of either of the Corporations is currently in progress. There are no claims, actions, suits or
proceedings (or, to the best knowledge of the
Vendors, any investigation) pending, or to
the best knowledge of the Vendors, threatened against either of the
Corporations relating to taxes and none of the Vendors knows of any valid basis
for any such claim, action, suit, proceeding, investigation or discussion. Each of the Corporations 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. Tax instalments for the period up to the Closing Date will be
paid by each of the Corporations prior to such Closing Date even though not
otherwise required to be paid until a later date.
(nn) Transportation Services. Neither of the Corporations
provides any trucking or transportation services to third parties.
(oo) Accubrace Inc. Accubrace Inc. is a Canadian federal
corporation incorporated on July 21, 1999.
Since incorporation it has not carried on any business, currently has no
assets or liabilities and is inactive.
All rights to the Accubrace products and tooling, and the Accubrace name
and trade mark belong to MGA Construction and not Accubrace Inc.
(pp) Full
Disclosure.
Neither this Agreement nor any Ancillary Agreement to which any of the
Vendors or either of the Corporations is a party (i) contains any untrue
statement of a material fact in respect of any of the Vendors, the affairs,
prospects, operations or condition of either of the Corporations, the Assets or
the Business, or (ii) omits any statement of a material fact necessary in
order to make the statements
29
in respect of
the Vendors, the affairs, prospects, operations or condition of either of the
Corporations, the Assets or the Business herein or therein not misleading.
The Purchaser represents and warrants as
follows to the Vendors and acknowledges and confirms that the Vendors are
relying on such representations and warranties in connection with the sale by
the Vendors of the Purchased Shares:
(a) Incorporation
and Corporate Power. The Purchaser is a corporation duly incorporated and existing and
in good standing under the laws of Canada and has the corporate power and
authority to enter into and perform its obligations under this Agreement and
each of the Ancillary Agreements to which it is a party.
(b) Validity
of Agreement.
The execution, delivery and performance by the Purchaser of this
Agreement and each of the Ancillary Agreements to which it is a party:
(i) have been duly authorized by all necessary corporate action on the part
of the Purchaser; (ii) do not (or would not with the giving of notice, the
lapse of time or the happening of any other event or condition) result in a
breach or a violation of, or conflict with, any of the terms or provisions of
its constating documents or by-laws or any contracts or instruments to which it
is a party or pursuant to which any of its assets or property may be affected;
and (iii) will not result in the violation of any Law.
(c) Execution
and Binding Obligation. This Agreement and each of the Ancillary Agreements to which the
Purchaser is a party have been duly executed and delivered by the Purchaser and
constitute legal, valid and binding obligations of the Purchaser, enforceable
against it in accordance with their respective terms subject only to any limitation
under applicable laws relating to (i) bankruptcy, insolvency, arrangement
or other similar laws of general application affecting creditors’ rights, and
(ii) the discretion that a court may exercise in the granting of equitable
remedies.
(d) Litigation. There are no actions,
suits, proceedings or investigations pending before any court or Governmental
Entity or before any arbitrator of any kind, or any order, injunction or decree
outstanding, or, to the knowledge of the Purchaser, threatened, against the
30
Purchaser, or
against or relating to its property, assets or business, that would materially
and adversely affect the right, power or capacity of the Purchaser to enter
into and perform its obligations under this Agreement or any of the Ancillary
Agreements to which it is a party.
(1) During the Interim Period, the Vendors will cause each of the Corporations
to conduct the Business in the Ordinary Course.
(2) Without limiting the generality of Section 5.1(1), the Vendors
will cause each of the Corporations to:
(a) use its Best Efforts to preserve intact its current business
organization, keep available the
services of its present employees and agents and maintain good relations
with, and the goodwill of, its suppliers, customers, landlords, creditors,
distributors and all other Persons having business relationships with it;
(b) confer with the Purchaser concerning operational matters of a
material nature;
(c) use reasonable efforts, consistent with past practice, to retain
possession and control of the Assets and preserve the confidentiality of any
confidential or proprietary information of the Business;
(d) conduct the Business in such a manner that, on the Closing Date, the
representations and warranties of the Vendors in this Agreement shall be true,
correct and complete as if such representations and warranties were made on and
as of the Closing Date;
(e) maintain in force the insurance policies that they now maintain,
except to the extent that they may be replaced with equivalent policies
appropriate to insure adequately the Business and Assets at the same rates or
at rates approved by the Purchaser; and
(f) otherwise periodically report to the Purchaser concerning the state
of the Business.
(1) The Vendors shall, and shall cause the Corporations to,
(i) permit the Purchaser and its employees, agents, counsel, accountants
or other
31
representatives,
between this date and the Closing, without undue interference to the ordinary
conduct of the Business, to have reasonable access during normal business hours
and upon reasonable notice to (w) the premises of each of the Corporations, (x)
the Assets and, in particular to any information, including all Books and
Records whether retained by the Vendors, either of the Corporations or
otherwise, (y) all Contracts, and (z) the senior personnel of each of the
Corporations, and (ii) furnish to the Purchaser or its employees, agents,
counsel, accountants or other representatives, such financial and operating
data and other information with respect to the Assets and the Corporations as
the Purchaser shall from time to time reasonably request.
(2) No investigations made by or on behalf of the Purchaser, whether
under this Section 5.2 or any other provision of this Agreement or any
Ancillary Agreement, shall have the effect of waiving, diminishing the scope
of, or otherwise affecting any representation or warranty made in this
Agreement or any Ancillary Agreement.
(3) The Vendors and the Purchaser acknowledge the execution and delivery
of the Confidentiality Agreement, and each Party agrees to comply with such
agreement in accordance with its terms.
(1) Each of the Vendors shall take all such actions as are within its or
his power to control and each will use its or his Best Efforts to cause other
actions to be taken which are not within its or his power to control, so as to
ensure compliance with all of the conditions set forth in Section 6.1,
including ensuring that during the Interim Period and at Closing, there is no breach
of any of his representations and warranties.
(2) The Purchaser shall take all such actions as are within its power to
control and to use its Best Efforts to cause other actions to be taken which
are not within its power to control, so as to ensure compliance with all of the
conditions set forth in Section 6.2, including ensuring that during the
Interim Period and at Closing, there is no breach of any of its representations
and warranties.
Each of the Vendors shall take all
necessary steps and corporate proceedings to permit good title to the Purchased
Shares to be duly and validly transferred and assigned to the Purchaser at the
Closing, free of all Liens other than the restrictions on transfer, if any, in
the articles of the Corporations.
32
Each of the Vendors will use its or his
Best Efforts to obtain, prior to Closing, all Consents, including all Required
Consents. Such Consents shall be upon
such terms as are acceptable to the Purchaser, acting reasonably. The Purchaser will co-operate in obtaining
such Consents.
Each of the Vendors and the Purchaser, as
promptly as practicable after the execution of this Agreement, will
(i) make, or cause to be made, all such filings and submissions under all
Laws, as may be required to consummate the purchase and sale of the Purchased
Shares in accordance with the terms of this Agreement; (ii) to use its or his
Best Efforts to obtain, or cause to be obtained, all Authorizations necessary
or advisable to consummate such transfer, including, if applicable, the receipt
of an advanced ruling certificate or no action letter as contemplated in Section
6.3(5), and (iii) use its or his Best Efforts to take, or cause to be
taken, all other actions necessary, proper or advisable in order for him or it
to fulfil his or its obligations under this Agreement. The Vendors and the Purchaser will coordinate
and cooperate with one another in exchanging such information and supplying
such assistance as may be reasonably requested by each in connection with the
foregoing, including providing each other with all notices and information
supplied or filed with any Governmental Entity (except for notices and
information which the Vendors or the Purchaser, in each case acting reasonably,
considers highly confidential and sensitive which may be filed on a
confidential basis), and all notices and correspondence received from any
Governmental Entity.
Each of the Vendors shall promptly notify
the Purchaser, and the Purchaser shall promptly notify the Vendors, upon any
representation or warranty made by it or him in this Agreement or any Ancillary
Agreement becoming untrue or incorrect during the Interim Period and, for the
purposes of this Section 5.7, each representation and warranty shall be
deemed to be given at and as of all times during the Interim Period. Any such notification shall set out
particulars of the untrue or incorrect representation or warranty and details
of any actions being taken by the Vendors or the Purchaser, as the case may be,
to rectify that state of affairs.
If at any time prior to Closing, the
Canadian Competition Bureau has made an inquiry or commenced an investigation
relating the purchase and sale transaction contemplated herein which in the
Purchaser’s view, acting reasonably, might reasonably be expected to lead to a
challenge of the transaction by the Canadian Competition Bureau as being
anti-competition, then the Purchaser may so notify the Vendors as contemplated
by Section 6.3(b).
33
During the Interim Period, none of the
Vendors shall, directly or indirectly, solicit, initiate, or encourage any
inquiries or proposals from, discuss or negotiate with, provide any information
to, or consider the merits of any inquiries or proposals from, any Person
(other than the Purchaser) relating to any transaction involving the sale of
any shares of the Corporations or the sale of the Business or any of the Assets
(other than as permitted by this Agreement).
The Vendors may cause the Corporations to
distribute or transfer the short-term investments shown on the MGA Group
Financial Statements to the Vendors, or their nominees, prior to the Closing
Date. The Vendors may cause the Corporations to pay out the management fees
accrued to December 31, 2002 on the MGA Group Financial Statements to
management personnel prior to the Closing Date. The Vendors may cause the Corporations to pay out a reasonable
amount of net income (such amount to be agreed to in writing by the Purchaser)
by way of management fees to management personnel prior to the Closing
Date. The Vendors shall cause the MGA
Construction receivables of $409,102 to be paid to MGA Construction prior to the
Closing Date. The Vendors shall cause
the GMSA Developments Inc. mortgage owed to MGA Construction to be paid to MGA
Construction before the Closing Date.
The purchase and sale of the Purchased
Shares is subject to the following conditions to be fulfilled or performed
prior to Closing, which conditions are for the exclusive benefit of the
Purchaser and may be waived, as a whole or in part, by the Purchaser in its
sole discretion:
(a) Truth
of Representations and Warranties. The representations and warranties of the
Vendors in this Agreement or in any Ancillary Agreement shall have been true
and correct as of the date of this Agreement and shall be true and correct as
of the Closing Date with the same force and effect as if such representations
and warranties had been made on and as of the Closing Date, and each of the
Vendors shall have executed and delivered a certificate to that effect. The receipt of such certificate and the
Closing shall not constitute a waiver by the Purchaser of any of the
representations and warranties of the Vendors, this Agreement or in any
Ancillary Agreement.
34
(b) Performance
of Covenants. Each of the Vendors shall have
fulfilled or complied with all covenants in this Agreement and in any Ancillary
Agreement to be fulfilled or complied with by it or him at or prior to the
Closing, and the Vendors shall have executed and delivered a certificate to
that effect. The receipt of such
certificate and the Closing shall not constitute a waiver by the Purchaser of
any of the covenants of the Vendors in this Agreement or any Ancillary
Agreement.
(c) Consents. All Required Consents
shall have been obtained on terms acceptable to the Purchaser, acting
reasonably.
(d) Due
Diligence.
The Purchaser shall have completed its investigation into the
Corporations, the Business, the Vendors’ title to the Purchased Shares, the
Assets (including the Leased Properties) and all other matters it deems
relevant and such investigation shall not have disclosed any matter which the
Purchaser, considers to be materially adverse to either of the Corporations,
the Business or the Assets, or materially adverse to its decision to acquire
the Purchased Shares.
(e) [Intentionally
Blank]
(f) Deliveries. The Vendors shall have
delivered or caused to be delivered to the Purchaser the following in form and
substance satisfactory to the Purchaser, acting reasonably:
(i) share certificates representing the Purchased Shares duly endorsed
in blank for transfer, or accompanied by irrevocable security transfer powers
of attorney duly executed in blank, in either case by the holders of record,
together with evidence satisfactory to the Purchaser that the Purchaser or its
nominee(s) have been entered upon the books of the Corporations as the holder
of the Purchased Shares;
(ii) certified copies of (i) all resolutions of the shareholders or
the board of directors of each of MPCo, GSCo and AJCo approving the entering
into and completion of the transactions contemplated by this Agreement and
Ancillary Agreements to which they are a party, and (ii) a list of each of
MPCo’s, GSCo’s and AJCo’s officers and directors authorized to sign agreements,
together with their specimen signatures;
(iii) a certificate of status, compliance, good standing or like
certificate with respect to the each of the corporate Vendors and the
Corporations issued by appropriate government officials of their respective
jurisdictions of incorporation and of each
35
jurisdiction
in which either of the Corporations carries on its business as listed in
Schedule K hereto;
(iv) the certificates referred to in Section 6.1(a) and
Section 6.1(b);
(v) a non-competition agreement duly executed by each of the Vendors,
substantially in the form of the agreement in Schedule BB hereto;
(vi) a consulting agreement duly executed by each of MPCo, GSCo, AJCo and
MWCo, substantially in the form of the agreement in Schedule FF;
(vii) evidence that all employment/consulting arrangements in place prior
to closing between either of the Corporations and any of the Vendors or their
Affiliates have been terminated and replaced with the consulting agreements
referred to in Section 6.1(f)(vi);
(viii) evidence that the employment agreement with Kelly Graham listed on
Schedule U (Part 1) has been terminated and replaced with arrangements
reasonably satisfactory to the Purchaser;
(ix) Accubrace Inc. has changed its name to a name that does not include
“Accubrace” (or a similar designation), and the owners of that Corporation have
provided assurances satisfactory to the Purchaser of its status and operations
(x) an opinion of counsel for the Vendors and the Corporations,
substantially in the form set forth in Schedule CC (part 1) hereto;
(xi) a lease duly executed by each of the individual Vendors and the
Purchaser, substantially in the form of Schedule AA hereto;
(xii) evidence that the lease, dated January 1, 2001, among each of the
individual Vendors and MGA Construction listed in Schedule B (Part 1) has been
terminated and replaced with the lease referred to in Section 6.1(f)(xi);
(xiii) a non-disturbance agreement from the mortgagees of the Kingston Road
leased premises, substantially in the form of the document in Schedule DD
hereto;
36
(xiv) evidence that all necessary steps and proceedings as approved by
counsel for the Purchaser to permit all of the Purchased Shares to be
transferred to the Purchaser or its nominee(s) have been taken;
(xv) an acknowledgement from Shear Force Systems Inc. relating to the
prefabrication shearwall designs, in a form reasonably satisfactory to the Purchaser;
(xvi) clarification agreements from Alpine Engineered Products, Inc.,
Alpine Systems Corp. and Abcot Holdings Inc. relating to agreements with MGA
Construction, in a form reasonably satisfactory to the Purchaser;
(xvii) an update of various Intellectual Property matters as outlined in
Schedule F (Part 3) hereto;
(xviii) a duly executed resignation, effective as of the Closing, of each
director or officer of each of the Corporations, as the Purchaser may specify
in writing at least 3 Business Days prior to Closing;
(xix) a release in favour of each of the Corporations, substantially in
the form of the release in Schedule EE (Part 1) hereto, from each of the
Persons listed in Schedule EE (Part 2) hereto; and
(xx) a duly executed resignation of the auditors of each of the
Corporations effective as of the Closing.
(g) Proceedings. All proceedings to be
taken in connection with the transactions contemplated by this Agreement and
any Ancillary Agreement shall be reasonably satisfactory in form and substance
to the Purchaser, acting reasonably, and the Purchaser shall have received
copies of all instruments and other evidence as it may reasonably request in
order to establish, evidence or perfect the consummation of such transactions
and the taking of all necessary proceedings in connection therewith;
(h) Change
in Law.
Since this date, no Law, proposed Law, any change in any Law, or the
interpretation or enforcement of any Law shall have been introduced, enacted or
announced (including the introduction, enactment or announcement of any Law
respecting taxes or environmental matters), the effect of which will be to
prevent or to increase the cost to the Purchaser of the completion of the
transaction contemplated in this Agreement, or to prevent or to increase the
cost to
37
either of the
Corporations of operating the Business after Closing on substantially the same
basis as currently operated; and
(i) Board
Approval. The
Board of Directors of the Purchaser shall have authorized and approved this
Agreement and the transactions contemplated hereby.
The purchase and sale of the Purchased
Shares is subject to the following conditions to be fulfilled or performed
prior to the Closing, which conditions are for the exclusive benefit of the
Vendors and may be waived, as a whole or in part, by the Vendors in their
exclusive discretion:
(a) Truth
of Representations and Warranties. The representations and warranties of the
Purchaser in this Agreement and in any Ancillary Agreement shall be true and
correct as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date and
the Purchaser shall have executed and delivered a certificate of a senior
officer to that effect. The receipt of
such certificate and the Closing shall not constitute a waiver of the
representations and warranties of the Purchaser in this Agreement or any
Ancillary Agreement.
(b) Performance
of Covenants.
The Purchaser shall have fulfilled or complied with all covenants in
this Agreement and in any Ancillary Agreement to be fulfilled or complied with
by it at or prior to the Closing and the Purchaser shall have executed and
delivered a certificate of a senior officer to that effect. The receipt of such certificate and the
Closing shall not constitute a waiver by the Vendors of the covenants of the
Purchaser in this Agreement or any Ancillary Agreement.
(c) Consulting
Arrangements.
The Purchaser shall have irrevocably agreed to cause one of the
Corporations, forthwith after Closing, to engage MPCo, GSCo, AJCo and MWCo as
consultants, on the terms and conditions set forth in Schedule FF hereto.
(d) Deliveries. The Purchaser shall have
delivered or caused to be delivered to the Vendors the following in form and
substance satisfactory to the Vendors acting reasonably:
(i) certified copies of (i) all resolutions of the shareholders or
the board of directors of the Purchaser approving the entering into and
completion of the transactions contemplated by this
38
Agreement and
the Ancillary Agreements, to which it is a party, and (ii) a list of its
officers and directors authorized to sign agreements, together with their
specimen signatures;
(ii) a certificate of status, compliance, good standing or like
certificate with respect to the Purchaser issued by appropriate government
official of the jurisdiction of its incorporation;
(iii) the certificates referred to in Section 6.2(a) and
Section 6.2(b); and
(iv) an opinion of counsel for the Purchaser, substantially in the form
set forth in Schedule CC (Part 2) hereto.
(e) Proceedings. All corporate proceedings
to be taken in connection with the transactions contemplated by this Agreement
and any Ancillary Agreement shall be reasonably satisfactory in form and
substance to the Vendors, acting reasonably, and the Vendors shall have
received copies of all the instruments and other evidence as they may
reasonably request in order to establish, evidence or perfect the consummation
of such transactions and the taking of all corporate proceedings in connection
therewith.
The purchase and sale of the Purchased
Shares is subject to the following conditions precedent to be fulfilled prior
to the Closing:
(a) No
Legal Action.
No action or proceeding shall be pending or threatened by any Person
(other than any of the Vendors, the Purchaser or either of the Corporations) in
any jurisdiction, to enjoin, restrict or prohibit any of the transactions
contemplated by this Agreement or the right of either of the Corporations to
conduct the Business after Closing on substantially the same basis as heretofore
operated.
(b) Competition
Act. Provided
the Purchaser has given notice to the Vendors as contemplated in
Section 5.8 (and such notice has not been withdrawn), the Vendors and the
Purchaser shall each have filed all information and shall have satisfied any
request for additional information so that, under the Competition Act (Canada),
the Parties shall have received either (i) an advance ruling certificate
pursuant to section 102 of the Competition Act (Canada), or (ii) written
confirmation from the Commissioner of Competition (a “no action letter”) that said
Commissioner has no intention to file an application under Section 92
39
of the Competition
Act (Canada) in connection with the transaction contemplated by the
Agreement.
Section 7.1 Date, Time and Place of
Closing.
The completion of the transaction of
purchase and sale contemplated by this Agreement shall take place at the
offices of Stikeman Elliott LLP, Suite 1700, Park Place, 666 Burrard Street,
Vancouver, British Columbia, at 10:00 a.m. (Vancouver time) on the Closing Date
or at such other place, on such other date and at such other time as may be
agreed upon in writing between the Vendors and the Purchaser.
Subject to satisfaction or waiver by the
relevant Party of the conditions of closing, at the Closing, the Vendors shall
deliver actual possession of the Purchased Shares to the Purchaser and upon
such delivery the Purchaser shall pay or satisfy the Purchase Price in
accordance with Section 2.3.
If, prior to the Closing, all or any
material part of the Assets are destroyed or damaged by fire or any other
casualty or is appropriated, expropriated or seized by any Governmental Entity,
the Purchaser shall have the option, exercisable in the Purchaser’s absolute
discretion by notice in writing given within 4 Business Days of the Purchaser
receiving notice in writing from the Vendors of such destruction, damage,
expropriation or seizure:
(a) to complete the transaction contemplated in this Agreement without
reduction of the Purchase Price, in which event all proceeds of any insurance
or compensation for expropriation or seizure shall be retained by the
Corporations; or
(b) terminate this Agreement and not complete the transaction
contemplated in this Agreement, in which case all obligations of the Purchaser
and the Vendors (save and except for their respective obligations under
Section 5.2(3), Section 12.3, Section 12.4 and Section 12.7
which shall survive) shall terminate immediately upon the Purchaser giving
notice as required herein.
40
If any of the conditions in
Section 6.1 is not fulfilled or waived at or prior to Closing or any
obligation or covenant of the Vendors to be performed at or prior to Closing is
not observed or performed by such time, the Purchaser may terminate this
Agreement by notice in writing to the Vendors, and in such event the Purchaser
shall be released from all obligations hereunder save and except for its
obligations under, Section 5.2(3), Section 12.3, Section 12.4
and Section 12.7, which shall survive. If the Purchaser waives compliance
with any of the conditions, obligations or covenants in this Agreement, the
waiver will be without prejudice to any of its rights of termination in the
event of non-fulfilment, non-observance or non-performance of any other
condition, obligation or covenant, as a whole or in part.
If any of the conditions in
Section 6.2 is not fulfilled or waived at or prior to Closing or any
obligation or covenant of the Purchaser to be performed at or prior to Closing
is not observed or performed by such time, the Vendors may terminate this
Agreement by notice in writing to the Purchaser, and in such event the Vendors
shall be released from all obligations hereunder, save and except for their
obligations under Section 5.2(3), Section 12.3, Section 12.4 and
Section 12.7, which shall survive.
If the Vendors waive compliance with any of the conditions, obligations
or covenants in this Agreement, the waiver will be without prejudice to any of
their rights of termination in the event of non-fulfilment, non-observance or
non-performance of any other condition, obligation or covenant, as a whole or
in part.
(1) This Agreement may, by notice in writing given prior to or on the
Closing Date, be terminated: (a) by mutual consent of the Vendors and the
Purchaser; or (b) if any of the conditions precedent in Section 6.3 is not
fulfilled or waived at or prior to Closing; and, in such event, each Party
shall be released from all obligations under this Agreement, save and except
for his or its obligations under Section 5.2(3), Section 12.3,
Section 12.4 and Section 12.7, which shall survive.
(2) This Agreement may also be terminated in the circumstances and upon
the terms set out in Section 7.3.
41
Subject to Section 9.3,
Section 9.5, and Section 9.6, the Vendors, on a joint and several
basis, shall indemnify and save harmless each of the Purchaser and the
Corporations, and their respective shareholders, directors, officers,
employees, agents and representatives, other than the Vendors (collectively,
the “Purchaser’s
Indemnified Persons”) against and from any loss, liability, claim,
damage (including incidental and consequential damage), taxes or expense
(whether or not involving a third-party claim), including legal expenses
(collectively, “Damages”) suffered by, imposed upon or asserted against any
of the Purchaser’s Indemnified Persons as a result of, in respect of, connected
with, or arising out of, under, or pursuant to:
(a) any failure of any of the Vendors to perform or fulfil any covenant
of the Vendors in this Agreement or any Ancillary Agreement;
(b) any breach or inaccuracy of any representation or warranty by the
Vendors in this Agreement or in any Ancillary Agreement;
(c) except as otherwise specifically provided in Sections 9.1(d),
9.1(e), 9.1(f), 9.1(g), 9.1(h) and 9.1(i), any facts, circumstances, events,
conditions or occurrences in existence on or prior to the Closing Date,
relating directly or indirectly to either of the Corporations, the Business or
the Assets, even though such Damages may be suffered after the Closing Date,
except to the extent that the liability in respect thereof (i) is
reflected on the MGA Group Financial Statements, (ii) has been incurred by
the Corporations in the Ordinary Course since December 31, 2002, or
(iii) is specifically and expressly disclosed (x) in this Agreement, (y)
in any of the Material Contracts, or (z) in any other Contracts which, by the
terms of this Agreement, are not required to be disclosed;
(d) any Damages resulting to the Purchaser or either of the Corporations
arising in any way (i) from adding
MPCo, GSCo and AJCo as Vendors hereto or the related steps by certain of the
individual Vendors to transfer certain of the Purchased Shares owned by them to
the corporate Vendors (ii) the steps related to any corporate reorganization of
MGA Connectors, or (iii) the steps related to the increase in paid up capital
of certain of the Purchased Shares;
42
(e) any Damages resulting to the Purchaser or either of the Corporations
arising in any way from the steps contemplated to be taken pursuant to
Section 5.10;
(f) any Damages resulting to the Purchaser or either of the Corporations
arising from warranty or similar products liability claims relating to any
period up to and including the Closing Date or relating to any product manufactured
or sold by either of the Corporations on or prior to the Closing Date;
(g) any Damages resulting to either of the Corporations resulting from
the settlement and finalization of the action, suits and proceedings disclosed
in Schedule V hereto;
(h) the transportation, removal or disposal by either of the
Corporations on or prior to the Closing Date of waste to a location outside
Canada; or
(i) any leaching, migration or seepage onto, across or into the property
or premises of any other Person at any time of any contaminants that were
present on, at or under any of the Indemnification Properties, except where it
is shown by the Vendors that such contaminants were not so present on or prior
to the Closing Date, or notwithstanding any other provision of this Agreement,
including Section 3.2(gg), the presence on or prior to the Closing Date of
contaminants on, at or under any of the Indemnification Properties.
The Purchaser shall indemnify and save the
Vendors harmless against and from any Damages suffered by, imposed upon or
asserted against any of the Vendors as a result of, in respect of, connected
with, or arising out of, under or pursuant to:
(a) any failure of the Purchaser to perform or fulfil any covenant of
the Purchaser in this Agreement or any Ancillary Agreement; and
(b) any breach or inaccuracy of any representation or warranty by the
Purchaser in this Agreement or in any Ancillary Agreement.
(1) The representations and warranties of the Vendors in this Agreement
and in any Ancillary Agreement shall survive the Closing and, notwithstanding
the Closing or any investigation made by or on behalf of the Purchaser, shall
43
continue for a
period of 3 years after the Closing Date and any claim in respect thereof shall
be made in writing during such time period, except that:
(a) the representations and warranties in Section 3.2(a), Section
3.2(a-1), Section 3.2(a-2), Section 3.2(a-3), Section 3.2(b),
Section 3.2(c), Section 3.2(d), Section 3.2(e) and
Section 3.2(f) (and the corresponding representations and warranties set
out in the certificate to be delivered pursuant to Section 6.1(a)) shall
survive and continue in full force and effect without limitation of time;
(b) the representations and warranties in Section 3.2(mm) (and the
corresponding representations and warranties in the Certificate to be delivered
pursuant to Section 6.1(a)) shall survive and continue in full force and
effect until, but not beyond, the expiration of the period, if any, during
which an assessment, reassessment or other form of recognized document
assessing liability for tax, interest or penalties under applicable tax
legislation in respect of any taxation year to which such representations and
warranties extend could be issued under such tax legislation to either of the
Corporations, provided neither of the Corporations shall have filed any waiver
or other document extending such period; and
(c) a claim for any breach by any of the Vendors of any of the
representations and warranties in this Agreement or in any Ancillary Agreement
involving fraud or fraudulent misrepresentation may be made at any time subject
only to applicable limitation periods imposed by Law.
(2) The representations and warranties of the Purchaser in this
Agreement and in any Ancillary Agreement shall survive the Closing and,
notwithstanding the Closing or any investigation made by or on behalf of the
Vendors, shall continue for a period of 3 years after the Closing Date, and any
claim in respect thereof shall be made in writing during such time period,
except that:
(a) the representations and warranties in Section 4.1(a),
Section 4.1(b) and Section 4.1(c) (and the corresponding
representations and warranties set out in the certificate to be delivered
pursuant to Section 6.1(b)) shall survive and continue in full force and
effect without limitation of time; and
(b) a claim for any breach by the Purchaser of any of the
representations and warranties in this Agreement or in any Ancillary Agreement
involving fraud or fraudulent misrepresentation may be made at any time subject
only to applicable limitation periods imposed by Law.
44
(1) The Vendors will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 9.1(a),
Section 9.1(b) or Section 9.1(c) until the total of all Damages with
respect to such matters exceeds $40,000, but then for the full amount of such
Damages, including such $40,000. This
Section 9.4(1) will not apply, however, to any breach of Section 3.2(mm),
and the Vendors will be liable for all Damages with respect to any such breach,
without qualification.
(2) The Purchaser will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 9.2 until the
total of all Damages with respect to such matters exceeds $40,000, but then for
the full amount of such damages, including such $40,000.
(1) Promptly after receipt by an indemnified party (an “Indemnified
Party”) under Section 9.1 or Section 9.2 of a notice of
the commencement of any proceeding against the Indemnified Party, the
Indemnified Party will, if a claim is to be made against an indemnifying party
under such Section 9.1 or Section 9.2 (an “Indemnifying Party”), give notice to the
Indemnifying Party of the commencement of such claim. The failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that the Indemnifying Party may have to any
Indemnified Party, except to the extent that the Indemnifying Party
demonstrates that the defense of such action is prejudiced by the Indemnified
Party’s failure to give such notice.
(2) If any proceeding referred to in Section 9.5(1) (a “Proceeding”)
is brought against an Indemnified Party and such Indemnified Party gives notice
to the Indemnifying Party of the commencement of the Proceeding, the
Indemnifying Party will, unless the claim involves taxes, be entitled to
participate in the Proceeding. Subject
to the next following sentence, to the extent that the Indemnifying Party
wishes to assume the defense of the Proceeding with counsel satisfactory to the
Indemnified Party, it may do so provided the Indemnifying Party reimburses the
Indemnified Party for all of the Indemnified Party’s out-of-pocket expenses
arising prior to or in connection with such assumption. The Indemnifying Party may not assume the
defence of the Proceeding if (i) the Indemnifying Party is also a party to
the Proceeding and the Indemnified Party determines in good faith that joint
representation would be inappropriate, or (ii) the Indemnifying Party
fails to provide reasonable assurance to the Indemnified Party of the
Indemnifying Party’s financial capacity to defend the Proceeding and provide
indemnification with respect to the Proceeding. After notice from the Indemnifying Party to the Indemnified Party
of the Indemnifying Party’s
45
election to
assume the defense of the Proceeding, the Indemnifying Party will not, as long
as the Indemnifying Party diligently conducts such defense, be liable to the
Indemnified Party under this Section 9.5 for any fees of other counsel or
any other expenses with respect to the defense of the Proceeding, in each case
subsequently incurred by the Indemnified Party in connection with the defense
of the Proceeding, other than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a Proceeding (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of,
and subject to, indemnification, (ii) no compromise or settlement of such
claims may be made by the Indemnifying
Party without the Indemnified Party’s consent unless (y) there is no
finding or admission of any violation of Laws or any violation of the rights of
any Person and no effect on any other claims that may be made against the
Indemnified Party, and (z) the sole relief provided is monetary damages
that are paid in full by the Indemnifying Party, and (iii) the Indemnified
Party will have no liability with respect to any compromise or settlement of
such claims effected without the Indemnified Party’s consent. If notice is given to the Indemnifying Party
of the commencement of any Proceeding and the Indemnifying Party does not,
within ten days after receipt of such notice, give notice to the Indemnified
Party of the Indemnifying Party’s election to assume the defense of the
Proceeding, the Indemnifying Party will be bound by any determination made in
the Proceeding or any compromise or settlement effected by the Indemnified
Party.
(3) Notwithstanding the foregoing, if an Indemnified Party determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect the Indemnified Party or the Indemnified Party’s Affiliates,
other than as a result of monetary damages for which the Indemnified Party
would be entitled to indemnification under this Agreement, the Indemnified
Party may, by notice to the Indemnifying Party, assume the exclusive right to
defend, compromise, or settle the Proceeding.
In such case, the Indemnifying Party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without the Indemnifying Party’s consent (which may not be
unreasonably withheld).
(4) Where the defence of a Proceeding is being undertaken and controlled
by the Indemnifying Party, the Indemnified Party will use all reasonable
efforts to make available to the Indemnifying Party those employees whose
assistance, testimony or presence is necessary to assist the Indemnifying Party
in evaluating and defending any such claims.
However, the Indemnifying Party shall be responsible for the expense
associated with any employees made available by the Indemnified Party to the
Indemnifying Party pursuant to this Section 9.5(4), which expense shall be
equal to an amount to be mutually
46
agreed upon
per person per hour or per day for each day or portion thereof that the
employees are assisting the Indemnifying Party and which expenses shall not
exceed the actual cost to the Indemnified Party associated with the employees.
(5) With respect to any Proceeding, the Indemnified Party shall make
available to the Indemnifying Party or the Indemnifying Party’s representatives
on a timely basis all documents, records and other materials in the possession
of the Indemnified Party, at the expense of the Indemnifying Party, reasonably
required by the Indemnifying Party for the Indemnifying Party’s use in defending
any such claim and shall otherwise cooperate on a timely basis with the
Indemnifying Party in the defence of such claim.
(6) With respect to any re-assessment for income, corporate, sales,
excise, or other tax or other liability enforceable by Lien against the
property of the Indemnified Party, the Indemnifying Party’s right so to contest
shall only apply after payment of the re-assessment or the provision of such
security as is necessary to avoid a Lien being placed on the property of the
Indemnified Party.
A claim for indemnification for any matter
not involving a third-party claim may be asserted by notice to the Party from
whom indemnification is sought.
No Party shall have the right to bring any
proceeding against any other Party for a breach of any representation,
warranty, covenant or agreement in this Agreement, except for a proceeding
brought in accordance with this Article 9.
This provision is not intended to preclude any proceeding by any Party
against any other Party based on fraud or on a cause of action or right,
including any statutory right, other than a cause of action in contract for
breach of a representation, warranty, covenant or agreement in this Agreement.
After the Closing, each of the Vendors will
keep confidential all information in his possession or under his control
relating to either of the Corporations and the Business, unless such
information is or becomes generally available to the public other than as a
result of a disclosure by any of the Vendors in violation of this Agreement.
47
From time to time after the Closing Date,
each Party shall, at the request of any other Party, execute and deliver such
additional conveyances, transfers and other assurances as may be reasonably
required effectively to transfer the Purchased Shares to the Purchaser and
carry out the intent of this Agreement and any Ancillary Agreement.
The Vendors represent and warrant that, in
the Ordinary Course of Business of the Corporation, they have guaranteed the
obligations of the Corporations to certain suppliers by written personal
guarantees relating to the supply of goods of the Corporations. The Purchaser will use reasonable efforts to
cause the Corporations to remove any such personal guarantees given by any of the
Vendors in the Ordinary Course to suppliers of the Corporations (it being
understood that, in the aggregate, such personal guarantees do not exceed
Cdn$500,000, and such removal will only be possible once the Vendors have
identified the specific personal guarantees involved).
With full consultation with the Purchaser
and the Corporations, and acting reasonably, the Vendors will have the right to
finalize and settle the actions, suits and proceedings set forth in Schedule V
hereto. In finalizing and settling any
such action, suit or proceedings, the terms and conditions set forth in Section
9.5(2) which, in that Section, apply to an Indemnifying Party in a Proceeding
shall apply to the Vendors, mutatis mutandis in finalizing such action, suit or
proceeding.
If any controversy, dispute, claim,
question or difference (a “Dispute”) arises with respect to this
Agreement or its performance, enforcement, breach, termination or validity, the
Parties shall use all reasonable efforts to settle the Dispute. To this end, they shall consult and
negotiate with each other, in good faith and understanding of their mutual interests,
to reach a just and equitable solution satisfactory to all Parties.
Section 11.2 Arbitration.
Except as is expressly provided in this
Agreement, if the Parties do not reach a solution pursuant to Section 11.1
within a period of 15 Business Days following the first notice of the Dispute by
one Party to the other, then upon written notice by any
48
Party to the other, the Dispute shall be finally
settled by arbitration in accordance with the provisions of the Arbitration
Act, 1991 (Ontario), based upon the following:
(a) The arbitration tribunal shall consist of one arbitrator appointed
by mutual agreement of the Parties, or in the event of failure to agree within
10 Business Days following delivery of the written notice to arbitrate, any Party
may apply to a judge of the Ontario Superior Court of Justice to appoint an
arbitrator. The arbitrator shall be
qualified by education and training to pass upon the particular matter to be
decided;
(b) The arbitrator shall be instructed that time is of the essence in
the arbitration proceeding and, in any event, the arbitration award must be
made within 45 days of the submission of the Dispute to arbitration;
(c) After written notice is given to refer any Dispute to arbitration,
the Parties will meet within 10 Business Days of delivery of the notice and
will negotiate in good faith any changes in these arbitration provisions or the
rules of arbitration which are herein adopted, in an effort to expedite the
process and otherwise ensure that the process is appropriate given the nature
of the Dispute and the values at risk;
(d) The arbitration shall take place in Toronto, Ontario;
(e) The arbitration award shall be given in writing and shall be final
and binding on the Parties, not subject to any appeal, and shall deal with the
question of costs of arbitration and all related matters;
(f) Judgment upon any award may be entered in any Court having
jurisdiction or application may be made to the Court for a judicial recognition
of the award or an order of enforcement, as the case may be;
(g) All Disputes referred to arbitration (including the scope of the
agreement to arbitrate, any statute of limitations, set-off claims, conflict of
laws rules, tort claims and interest claims) shall be governed by the substantive
law of the Province of Ontario; and
(h) The Parties agree that the arbitration shall be kept confidential
and that the existence of the proceeding and any element of it (including any
pleadings, briefs or other documents submitted or exchanged, any testimony or
other oral submissions and any awards) shall not be disclosed beyond the
arbitrator, the Parties, their counsel and any Person necessary to the conduct
of the proceeding, except as may
49
lawfully be
required in judicial proceedings relating to the arbitration or otherwise
required by Law.
Any notice, direction or other
communication given under this Agreement or any Ancillary Agreement shall be in
writing and given by delivering it or sending it by facsimile or other similar
form of recorded communication addressed:
(a)
|
to the Purchaser at:
|
|
|
|
|
5 Kenview Boulevard
Brampton, ON L6T 5G5
|
|
|
|
|
|
Attention:
|
General Manager
|
|
Facsimile:
|
(905) 458-7274
|
|
|
|
with a copy to:
|
|
|
|
|
Simpson Strong-Tie Company Inc.
4120 Dublin Boulevard
Suite 400
Dublin, CA
94568 USA
|
|
|
|
|
|
Attention:
|
Chief Financial Officer
|
|
|
Facsimile:
|
(952) 833-1496
|
|
|
|
|
Purchaser’s Solicitors:
|
|
|
|
|
Stikeman Elliott LLP
5300 Commerce Court West
Toronto, ON M5L 1B9
|
|
|
|
|
|
Attention:
|
Wayne E. Shaw
|
|
|
Facsimile:
|
(416) 947-0866
|
|
|
|
(b)
|
to each of the Vendors at:
|
50
|
|
4110 Yonge Street, Suite
510
Toronto, ON M2P 2P7
|
|
|
|
|
|
Attention:
|
Howard G. Cooper
|
|
Facsimile:
|
(416) 512-9501
|
|
|
|
with a copy to:
|
|
|
|
|
Vendor’s solicitors
|
|
|
|
|
|
Cummings, Cooper, Schusheim & Berliner LLP
4110 Yonge Street, Suite 510
Toronto, ON M2P 2P7
|
|
|
|
|
|
Attention:
|
Howard G. Cooper
|
|
|
Facsimile:
|
(416) 512-9501
|
Any such
communication shall be deemed to have been validly and effectively given
(i) if personally delivered or transmitted by facsimile, on the date of
such delivery or transmission if such date is a Business Day and such delivery
was made prior to 4:00 p.m. (Toronto time), and otherwise on the next Business
Day, or (ii) if sent for next-day delivery through an internationally
recognized overnight delivery service, on the Business Day following the date
sent. Any Party may change his or its
address for service from time to time by notice given in accordance with the
foregoing and any subsequent notice shall be sent to such Party at his or its
changed address.
Time shall be of the essence of this
Agreement.
The Vendors, on a joint and several basis,
shall indemnify and save harmless the Purchaser and each of the Corporations
from and against any and all claims, losses and costs whatsoever for any
commission or other remuneration payable or alleged to be payable to any
broker, agent or other intermediary who purports to act or have acted for any
of the Vendors or either of the Corporations, including Klein Valuation
Services Inc. The Purchaser shall
indemnify and save harmless the Vendors from and against any and all claims,
losses and costs whatsoever for any commission or other remuneration payable or
alleged to be payable to any broker, agent or other intermediary who purports
to act or have acted for the Purchaser.
At all times prior to Closing, any press
release or public statement or announcement (a “Public Statement”) with respect to the transaction
contemplated
51
in this Agreement shall be made only with the prior written
consent and joint approval of the Vendors and the Purchaser, unless such Public
Statement is required by Law or by any stock exchange, in which case the Party
required to make the Public Statement shall use his or its best efforts to
obtain the approval of the other Parties as to the form, nature and extent of
the disclosure. The Parties acknowledge
and confirm a press release relating to the proposed transaction was issued at
the time of the Letter of Intent. After
the Closing, any Public Statement by the Vendors shall be made only with the
prior written consent and approval of the Purchaser.
Except as otherwise provided in
Section 9.1, the Vendors and the Purchaser intend that this Agreement
shall not benefit or create any right or cause of action in, or on behalf of,
any Person other than the Parties to this Agreement and no Person, other than
the Parties and the Indemnified Parties, shall be entitled to rely on any of
the provisions of this Agreement in any action, suit, proceeding, hearing or
other forum.
If the Closing does not occur for any
reason whatsoever, and notwithstanding any other provision of this Agreement,
the Vendors agree that each of the Corporations shall be jointly and severally
liable with the Vendors, as a principal and not as a surety, with respect to
all of the representations, warranties, covenants, indemnities and agreements
of the Vendors.
Except as otherwise expressly provided in
this Agreement, all costs and expenses (including the fees and disbursements of
legal counsel, investment advisers and accountants) incurred in connection with
this Agreement, the Ancillary Agreements and the transactions contemplated herein
and therein shall be paid by the Party incurring such expenses. No such costs and expenses of the Vendors
shall be paid by either of the Corporations, including any costs related to the
transfer of certain of the Purchased Shares from the individual Vendors to the
corporate Vendors, any steps related to any corporate reorganization of MGA
Connectors and any steps related to increasing the paid up capital of certain
of the Purchased Shares.
This Agreement may only be amended, supplemented
or otherwise modified by written agreement signed by each of the Vendors and
the Purchaser.
Section 12.9 Waiver.
No waiver of any of the provisions of this
Agreement or any Ancillary Agreement shall be deemed to constitute a waiver of
any other provision (whether or not similar) nor shall such waiver be binding
unless executed in writing by the
52
Party to be bound by the waiver. No failure on the part of the Vendors or the
Purchaser to exercise, and no delay in exercising any right under this
Agreement shall operate as a waiver of such right nor shall any single or
partial exercise of any such right preclude any other or further exercise of
such right or the exercise of any other right.
Except as otherwise expressly provided in
this Agreement, the covenants, representations and warranties shall not merge
on and shall survive the Closing and, notwithstanding such Closing or any
investigation made by or on behalf of any Party, shall continue in full force
and effect. Closing shall not prejudice any right of one Party against any
other Party in respect of anything done or omitted under this Agreement or in
respect of any right to damages or other remedies.
This Agreement together with the Ancillary
Agreements constitutes the entire agreement between the Parties and supersedes
all prior agreements, understandings, negotiations and discussions, whether
oral or written, of the Parties, including the Letter of Intent, save and
except the Confidentiality Agreement.
There are no representations, warranties, covenants, conditions or other
agreements, express or implied, collateral, statutory or otherwise, between the
Parties in connection with the subject matter of this Agreement, except as
specifically set forth herein or in the Confidentiality Agreement and neither
the Purchaser nor any of the Vendors has relied or is relying on any other
information, discussion or understanding in entering into and completing the
transactions contemplated in this Agreement.
If there is any conflict or inconsistency between the provisions of this
Agreement and the provisions of any Ancillary Agreement, the provisions of this
Agreement shall govern.
(1) This Agreement shall become effective when executed by each of the
Vendors and the Purchaser, and after that time shall be binding upon and enure
to the benefit of the Vendors, the Purchaser and their respective heirs, executors,
administrators, successors and permitted assigns.
(2) Except as provided in this Section 12.12, neither this
Agreement nor any of the rights or obligations under this Agreement shall be
assignable or transferable by any Party without the prior written consent of
the other Party. The Purchaser shall be
entitled, upon giving notice to the Vendors at any time on or prior to the
Closing Date, to assign this Agreement or any of the Purchaser’s rights and
obligations under this Agreement to any Affiliate of the Purchaser, subject to
the following conditions: (i) the
assignee shall become jointly and severally liable with the Purchaser, as a
principal and not
53
as a surety,
with respect to all of the representations, warranties, covenants, indemnities
and agreements of the Purchaser; and (ii) the assignee shall execute an
agreement confirming the assignment and the assumption by the assignee of all
obligations of the Purchaser under this Agreement. Any attempted or purported assignment that does not comply with
this Section 12.12(2) shall be void and of no effect whatsoever.
If any provision of this Agreement shall be
determined by an arbitrator or any court of competent jurisdiction to be
illegal, invalid or unenforceable, that provision shall be severed from this
Agreement and the remaining provisions shall continue in full force and effect.
This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein. Each of the Parties irrevocably attorns and submits to the
non-exclusive jurisdiction of the Ontario Superior Court of Justice. Each of the Vendors appoints Howard G.
Cooper, their solicitor, as agent for the service of any process with respect
to any matter arising under or related to the Agreement or any Ancillary
Agreement.
This Agreement may be executed in any
number of counterparts and all such
54
counterparts
taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF
the Parties have executed this Share Purchase Agreement as of the date first
above written.
55
|
SIGNED,
SEALED & DELIVERED
|
)
|
|
|
in the
presence of
|
)
|
|
|
|
)
|
/s/ Michael
Petrovic
|
|
|
)
|
Michael
Petrovic
|
|
|
)
|
|
|
|
)
|
/s/ George
Shahnazarian
|
|
|
)
|
George
Shahnazarian
|
|
|
)
|
|
|
|
)
|
/s/ Armen
Jeknavorian
|
|
|
)
|
Armen
Jeknavorian
|
|
|
)
|
|
|
|
|
/s/ Marvin
Wight
|
|
|
|
Marvin Wight
|
|
|
|
|
|
|
|
|
|
|
|
MPCO HOLDINGS INC.
|
|
|
|
|
|
|
|
Per:
|
/s/ Michael
Petrovic
|
|
|
|
|
Michael
Petrovic, President
|
|
|
|
|
|
|
|
|
|
|
|
|
GSHAH INC.
|
|
|
|
|
|
|
|
Per:
|
/s/ George
Shahnazarian
|
|
|
|
|
George Shahnazarian,
President
|
|
|
|
|
|
|
|
|
|
|
|
|
JORJEK HOLDINGS INC.
|
|
|
|
|
|
|
|
Per:
|
/s/ Armen
Jeknavorian
|
|
|
|
|
Armen
Jeknavorian, President
|
|
|
|
|
|
|
|
|
|
|
|
|
SIMPSON STRONG-TIE CANADA,
LIMITED
|
|
|
|
|
|
|
|
Per:
|
/s/ Michael
J. Herbert
|
|
|
|
|
Michael J.
Herbert, C.F.O.
|
56