<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date earliest event reported): June 30, 1998
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Registrant, State of Incorporation, I.R.S. Employer
Commission File Number Address and Telephone Number Identification No.
0-8410 WYANT CORPORATION 11-2236837
(a New York corporation)
100 Readington Road
Somerville, New Jersey 08876
Telephone (908) 707-1800
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1998, Wood Wyant Inc. ("Buyer"), a wholly owned Canadian
subsidiary of Wyant Corporation (Nasdaq: WYNT) ("Wyant"), completed the
acquisition of the following four related businesses:
1. Pursuant to a Share Purchase Agreement dated as of June 30, 1998
between Buyer and John Kazakoff and Loretta Kazakoff (collectively, the
"Kazakoffs"), Buyer purchased all of the issued and outstanding shares of the
capital stock of Purnel Distributors Inc. ("Purnel") beneficially owned by the
Kazakoffs. The operating assets of Purnel principally include inventory,
accounts receivable, property, plant and equipment and all other assets,
tangible or intangible, that are required to operate the acquired business. The
business is engaged in the distribution of sanitation products and Buyer intends
to continue to use such property, plant and equipment consistent with prior
practice. The consideration paid by Buyer to the Kazakoffs consisted of: (A)
Cdn$413,000 (US$281,373) financed by Buyer pursuant to a credit facility with
the Bank of Nova Scotia and (B) 12,000 shares of Class F Preferred Stock of
Buyer (the "Class F Preferred Stock") that, among other things, (i) on or prior
to June 30, 2000, (x) have a liquidation preference per share of one share of
Wyant common stock, par value US$.01 per share ("Wyant Common Stock"), subject
to the priority of Buyer's other classes of preferred stock, (y) are
exchangeable for Wyant Common Stock on a share for share basis and (z) are
entitled to dividends equivalent, on a per share basis, to any dividends paid by
Wyant on Wyant Common Stock, subject to the priority of Buyer's other classes of
preferred stock and (ii) on or after July 1, 2000 (x) are redeemable in five
equal annual tranches, at the option of the holders thereof exercisable between
July 1, 2000 and July 31, 2000, at the Liquidation Price (defined below), (y)
have a liquidation preference of Cdn$11.250028 per share plus any accrued and
unpaid dividends to the applicable date (the "Liquidation Price"), if the option
to redeem is exercised, subject to the priority of Buyer's other classes of
preferred stock and (z) are entitled to dividends at an annual rate of 3.5% of
the Liquidation Price if the option to redeem is exercised, subject to the
priority of Buyer's other classes of preferred stock (collectively, the "Class F
Preferred Stock Terms").
2. Pursuant to a Share Purchase Agreement dated as of June 30, 1998
between Buyer and Terrance Smith, Carolyn Smith and Lynda Smith (collectively,
the "Smiths"), Buyer purchased all of the issued and outstanding shares of the
capital stock of Fraser Valley Industrial Chemicals Inc. ("FVIC") beneficially
owned by the Smiths. The operating assets of FVIC principally include inventory,
accounts receivable, property, plant and equipment and all other assets,
tangible or intangible, that are required to operate the acquired business. The
business is engaged in the production of janitorial chemicals and Buyer intends
to continue to use such property, plant and equipment consistent with prior
practice. The consideration paid by Buyer to the Smiths consisted of: (A)
Cdn$588,250 (US$400,770) financed by Buyer pursuant to a credit facility with
the Bank of Nova Scotia and (B) 36,600 shares of Class F Preferred Stock subject
to the Class F Preferred Stock Terms.
3. Pursuant to a Share Purchase Agreement dated as of June 30, 1998
between Buyer and Stewart Smith and The Smith Family Trust (collectively,
"Stewart Smith and the Trust"), Buyer purchased all of the issued and
outstanding shares of the capital stock of Midway Supply Ltd. ("Midway")
beneficially owned by Stewart Smith and the Trust. The operating assets of
Midway principally include inventory, accounts receivable, property, plant and
equipment and all other assets, tangible or intangible, that are required to
operate the acquired business. The business is engaged in the distribution of
sanitation products and Buyer intends to continue to use such property, plant
and equipment consistent with prior practice. The consideration paid by Buyer to
the Smiths consisted of: (A) Cdn$1,411,750 (US$961,814) financed by Buyer
pursuant to a credit facility with the Bank of Nova Scotia and (B) 87,845 shares
of Class F Preferred Stock subject to the Class F Preferred Stock Terms.
4. Pursuant to a Share Purchase Agreement dated as of June 30, 1998
between Buyer and Stewart Smith and John Kazakoff (collectively, "Smith and
Kazakoff"), Buyer purchased all of the issued and outstanding shares of the
capital stock of Midway Purnel Sanitary Supply Ltd. ("Midway Purnel")
beneficially owned by Smith and Kazakoff. The operating assets of Midway Purnel
principally include inventory, accounts receivable, property, plant and
equipment and all other assets, tangible or intangible, that are required to
operate the acquired business. The business is engaged in the distribution of
sanitation products and Buyer intends to continue to use such property, plant
and equipment consistent with prior practice.
2
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The consideration paid by Buyer to Smith and Kazakoff consisted of Cdn$1
(US$1).
All conversions from Canadian to United States dollars set forth above are
based on an exchange rate of US$1.00 to Cdn$1.4678.
3
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
As permitted by Item 7(a)(4) of Form 8-K, the required financial
statements are not included herewith and will be filed under cover of
an amendment to this Report on Form 8-K as soon as practicable, but
not later than 60 days after this Report on Form 8-K must be filed.
(b) Pro Forma Financial Information
As permitted by Item 7(b)(2) of Form 8-K, the required pro forma
financial information is not included herewith and will be filed
under cover of an amendment to this Report on Form 8-K as soon as
practicable, but not later than 60 days after this Report on Form 8-K
must be filed.
(c) Exhibits
2.1 Share Purchase Agreement dated as of June 30, 1998
among Buyer and the Kazakoffs.
2.2 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and the Smiths.
2.3 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and Stewart Smith and the Trust.
2.4 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and Smith and Kazakoff.
4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WYANT CORPORATION
By: /s/ Marc D'Amour
------------------
Name: Marc D'Amour
Title: Vice President, Chief Financial
Officer and Treasurer
Dated: July 14, 1998
5
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EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
2.1 Share Purchase Agreement dated as of June 30, 1998
among Buyer and the Kazakoffs.
2.2 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and the Smiths.
2.3 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and Stewart Smith and the Trust.
2.4 Share Purchase Agreement dated as of June 30, 1998 among
Buyer and Smith and Kazakoff.
<PAGE> 1
SHARE PURCHASE AGREEMENT
BETWEEN
WOOD WYANT INC., AS PURCHASER
AND
JOHN KAZAKOFF AND LORETTA KAZAKOFF,
AS VENDORS
RELATING TO THE PURCHASE OF
PURNEL DISTRIBUTORS LTD.
MADE AS OF
JUNE 30, 1998
<PAGE> 2
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
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ARTICLE 1 - INTERPRETATION 2
1.1 DEFINITIONS 2
1.2 HEADINGS 6
1.3 EXTENDED MEANINGS 6
1.4 ACCOUNTING PRINCIPLES 6
1.5 INCLUSIVE LANGUAGE 6
1.6 CURRENCY 6
1.7 SCHEDULES 7
ARTICLE 2 - PURCHASE AND SALE 8
2.1 PURCHASE AND SALE AND PURCHASE PRICE 8
2.2 ADJUSTMENT OF THE PURCHASE PRICE 9
2.3 CLOSING 10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES 10
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS 10
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS 22
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 22
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 24
ARTICLE 4 - COVENANTS 24
4.1 TAXES 24
4.2 COVENANTS OF THE VENDORS 24
4.3 COVENANTS OF THE PURCHASER 26
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS 26
ARTICLE 5 - THIRD PARTY CLAIMS 27
ARTICLE 6 - RIGHTS OF SET-OFF 28
ARTICLE 7 - CONDITIONS 29
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER 29
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS 31
ARTICLE 8 - GENERAL 33
8.1 FURTHER ASSURANCES 33
8.2 TIME OF THE ESSENCE 33
8.3 COMMISSIONS 33
8.4 LEGAL FEES 33
8.5 PUBLIC ANNOUNCEMENTS 34
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8.6 BENEFIT OF THE AGREEMENT 35
8.7 ENTIRE AGREEMENT 35
8.8 AMENDMENTS AND WAIVER 35
8.9 ASSIGNMENT 35
8.10 NOTICES 36
8.11 GOVERNING LAW 38
8.12 ATTORNMENT 38
8.13 INDEPENDENT LEGAL ADVICE 38
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of June 30, 1998;
BETWEEN: WOOD WYANT INC., a corporation incorporated under the laws
of Canada;
(hereinafter referred to as the "Purchaser")
AND: JOHN KAZAKOFF, a business executive residing in the
Province of British Columbia;
(hereinafter referred to as "John")
AND: LORETTA KAZAKOFF, a business executive residing in the
Province of British Columbia;
(hereinafter referred to as "Loretta")
(John and Loretta are hereinafter sometimes collectively
referred to as the "Vendors")
WHEREAS the Corporation is engaged in the Business (as defined herein) in
the Province of British Columbia;
WHEREAS the Vendors are the beneficial and registered owners of all of the
issued and outstanding shares in the capital stock of the Corporation
(collectively the "Shares");
AND WHEREAS the Vendors desire to sell and the Purchaser desires to
purchase the Shares, upon and subject to the terms and conditions hereinafter
set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the parties hereto
agree as follows:
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ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
1.1.1 "Agreement" means this agreement and all amendments made hereto by
written agreement between the Vendors and the Purchaser;
1.1.2 "Ancillary Agreements" means the Employment Agreement, the Escrow
Agreement and the Non-Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheet of the Corporation as at the
Balance Sheet Date;
1.1.4 "Balance Sheet Date" means February 28, 1998;
1.1.5 "Business" means the business of the Corporation consisting in the
sale and distribution of industrial and institutional sanitation and
janitorial products and services, including sanitary paper products,
janitorial and cleaning chemicals and equipment and general
sanitation supplies in British Columbia;
1.1.6 "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in Vancouver, British Columbia;
1.1.7 "Class D Shares" has the meaning set out in Section 2.2.1;
1.1.8 "Class F Shares" has the meaning set out in Section 2.1.2;
1.1.9 "Closing Balance Sheet" means the balance sheet of the Corporation as
at the Closing Date and an accompanying review engagement report
prepared by the accountants of the Corporation at the cost of the
Vendors in accordance with GAAP applied on a basis consistent with
prior periods;
1.1.10 "Closing Date" means June 30, 1998;
1.1.11 "Contaminant" means any substance or material which does not occur
naturally in the environment or which falls within the definition of
"pollutants", "waste", "special waste", "hazardous chemicals",
"hazardous
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waste", "dangerous goods", "toxic substances", or any
variation of such terms or any terms of similar import in any
Environmental Law including, without limitation, urea
formaldehyde, asbestos, PCB transformers and poly-chlorinated
biphenyls.
1.1.12 "Control" (including the terms "Controlling" and "Controlled")
means the power to elect the majority of the board of directors or
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise;
1.1.13 "Consents" means the consents, approvals and authorizations
required to be obtained pursuant to Schedule 3.1.7;
1.1.14 "Corporation" means Purnel Distributors Ltd.;
1.1.15 "Covenant Agreement" has the meaning set out in Section 7.2.1.6;
1.1.16 "Employment Agreement" has the meaning set out in Section 7.1.1.8;
1.1.17 "Environment" means all components of the Earth, including air,
all layers of the atmosphere, land, soil, water, organic and
inorganic matter, living species and organisms, any combination of
the above components, interacting natural systems that include the
above components and the ambient milieu with which living species
have dynamic relations;
1.1.18 "Environmental Laws" means all Laws relating in whole or in part
to the Environment or its protection, as the same would be applied
as of the date hereof, including any Laws relating to (i) the
natural or accidental release, emission, discharge, deposit,
issuance, spraying, injection, inoculation, abandonment, burial,
spilling, incineration, disposal, leaking, seeping, pouring,
emptying, throwing, dumping, placing or exhausting of any
Contaminant into the Environment and (ii) the storage, disposal,
destruction, incineration, burial, recycling, handling,
transportation or use of a Contaminant;
1.1.19 "Environmental Permits" has the meaning set out in Section 3.1.46.2;
1.1.20 "Escrow Agreement" has the meaning set out in Section 7.1.1.9;
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1.1.21 "Financial Statements" has the meaning set out in Section 3.1.8;
1.1.22 "GAAP" has the meaning specified in Section 1.4;
1.1.23 "Governmental Authority" means any federal, provincial, regional,
municipal or local or other governmental authority, domestic or
foreign, having jurisdiction over the Corporation or the Business
and includes any agency, department, commission, board, bureau,
instrumentality, court, tribunal or other Person exercising
executive, legislative, judicial, regulatory or administrative
functions constituted or appointed by any such authority;
1.1.24 "Interim Financial Statements" has the meaning specified in
Section 3.1.9;
1.1.25 "Law" means any law, statute, by-law, regulation or any legally
binding rule, directive, guideline, policy, notice, order or
ordinance of any Governmental Authority, including Environmental
Laws;
1.1.26 "Leased Premises" has the meaning set out in Section 3.1.14;
1.1.27 "Lien" in relation to any property or asset, means any encumbrance
or title defect of whatever kind or nature, regardless of form,
whether or not recorded or registered or consensual or statutory or
arising by law, including any lien, charge, mortgage, hypothecation,
pledge, security interest, assignment, lease, option, easement,
servitude, right of way, encroachment, restrictive covenant, right
of use or any other claim or right of any kind or nature whatsoever
which affects ownership or possession of, or title to, or any
interest in, or the right to use or occupy such property or asset;
1.1.28 "Material Contract" has the meaning set out in Section 3.1.24;
1.1.29 "Net Assets" means shareholders' equity as shown on the Combined
Closing Balance Sheet;
1.1.30 "Non-Canadian" has the meaning set out in Section 3.3.4;
1.1.31 "Non-Competition Agreements" has the meaning set out in Section
7.1.1.7;
1.1.32 "Parent Common Shares" means the common shares of Wyant
Corporation issuable to a holder of Class F Shares in accordance
with the exercise of the
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retraction rights relating to the Class F Shares as set out
in Section 8 of the Class F Share Conditions (as defined in the
Covenant Agreement);
1.1.33 "Permits" means all permits, licenses, certificates, approvals,
authorizations, consents, registrations, qualifications and the like
issued by any Governmental Authority which are held by the
Corporation in connection with the operation of the Business;
1.1.34 "Person" means an individual, corporation, joint venture,
partnership, trust, trustee, unincorporated organization, or any
other entity;
1.1.35 "Personal Property Leases" has the meaning set out in Section 3.1.15;
1.1.36 "Premises Leases" has the meaning set out in Section 3.1.14;
1.1.37 "Purchase Price" has the meaning set out in Section 2.1.1;
1.1.38 "Purchased Shares" has the meaning set out in Section 2.1.1;
1.1.39 "Related Person" means:
(a) with respect to any Person who is an individual, a child,
stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law of that
person, including adoptive relationships; and
(b) with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with that person;
1.1.40 "Shares" has the meaning set forth in the preamble hereto;
1.1.41 "Taxes" means all federal, provincial, local, foreign and other
taxes, including income taxes, sales taxes, goods and services
taxes, use taxes, occupancy taxes, excise taxes, property taxes,
franchise taxes and employment and payroll related taxes;
1.1.42 "Time of Closing" means 10 a.m. (Vancouver Time) on the Closing
Date; and
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1.1.43 "Wyant" means Wyant Corporation.
1.2 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof
and include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 EXTENDED MEANINGS
In this Agreement words importing the singular number only shall include
the plural and vice versa, words importing the masculine gender shall include
the feminine and neuter genders and vice versa and words importing persons
shall include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations.
1.4 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be made
in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is
made or required to be made in accordance with generally accepted accounting
principles ("GAAP").
1.5 INCLUSIVE LANGUAGE
As used herein, the word "or" is not exclusive and the word "including" is
not limiting (whether or not non-limiting language such as "without limitation"
or "but not limited to" or words of similar import is used with reference
thereof).
1.6 CURRENCY
All references to currency herein are to lawful money of Canada.
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1.7 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
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Schedule 2.1.1: Shareholders of the Corporation; Allocation of Purchase Price
Schedule 2.1.2: Class F Share Conditions
Schedule 2.1.3: Promissory Note
Schedule 3.1.3: Share Conditions of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Interim Financial Statements
Schedule 3.1.12: Liens
Schedule 3.1.14: Leased Premises and Premises Leases
Schedule 3.1.15: Personal Property Leases
Schedule 3.1.19: Capital Expenditures
Schedule 3.1.17: Inventory
Schedule 3.1.20: Dividends
Schedule 3.1.22: Tax Accounts
Schedule 3.1.23: Liabilities
Schedule 3.1.24: Material Contracts
Schedule 3.1.30: Employment Contracts
Schedule 3.1.31: Employee Benefit Plans
Schedule 3.1.35: Related Person Indebtedness
Schedule 3.1.37: Intellectual Property
Schedule 3.1.40: Insurance Policies
Schedule 3.1.42: Amounts payable to Related Persons
Schedule 3.1.43: Litigation
Schedule 3.1.46: Environmental Matters
Schedule 3.1.51: Bank Accounts
Schedule 3.3.7: Financial Statements of the Purchaser
Schedule 3.3.8: Memorandum on Rule 144 Resale of Restricted Securities
Schedule 7.1.1.7: Non-Competition Agreements
Schedule 7.1.1.8: Employment Agreement
Schedule 7.1.1.9: Escrow Agreement
Schedule 7.1.1.10:Lease
Schedule 7.1.1.11:Opinion of the Vendors' Counsel
Schedule 7.2.1.6: Covenant Agreement
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ARTICLE 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE AND PURCHASE PRICE
2.1.1 Subject to the terms and conditions hereof, on the Closing Date, each
of the Vendors shall sell to the Purchaser the number of Shares set
opposite the name of each Vendor on Schedule 2.1.1 hereto (the
aggregate number of such Shares is herein collectively called the
"Purchased Shares") and the Purchaser shall purchase the Purchased
Shares from the Vendors, free and clear of all Liens, for a total
purchase price of $548,000 (hereinafter referred to as the "Purchase
Price"), subject to adjustment in accordance with Section 2.2, to be
allocated amongst the Vendors in accordance with Schedule 2.1.1.
2.1.2 The Purchase Price shall be paid against delivery to the Purchaser of
share certificates evidencing the Purchased Shares duly endorsed for
transfer to the Purchaser and satisfied (i) as to an aggregate amount
of $388,000 payable to the Vendors in accordance with their
respective shareholdings set forth in Schedule 2.1.1 by certified
cheque or bank draft to the order of each of the Vendors, and
delivered by the Purchaser at the Time of Closing, (ii) as to
$25,000 payable by cheque to the order of McCarthy Tetrault, as
escrow agent, and delivered by Bruce Ferrand at the Time of Closing,
such amount having been deposited "in trust" with Bruce Ferrand by
the Purchaser such amount and interest thereon to be held in escrow
pursuant to the Escrow Agreement in order to secure the payment of
any amounts due by the Vendors to the Purchaser pursuant to this
Agreement. The escrowed funds will be dealt with on the terms and
conditions set forth in the Escrow Agreement, and (iii) as to an
aggregate amount of $135,000, by the delivery to the Vendors as set
forth in Schedule 2.1.1 at the Time of Closing of a total of 12,000
class F exchangeable shares of the capital stock of the Purchaser
("Class F Shares"), to be issued from treasury and having the
attributes set out in Schedule 2.1.2.
2.1.3 The Purchaser shall also purchase all of John's right title and
interest in the promissory note attached hereto as Schedule 2.1.3,
for a total purchase price of $58,345, payable at the Time of Closing
by certified cheque or bank draft.
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2.2 ADJUSTMENT OF THE PURCHASE PRICE
2.2.1 The amount of the Purchase Price allocable to the Common Shares is
based on the assumption that the net asset value ("Net Assets") of
the Corporation on the Closing Balance Sheet shall be not less than
$300,000. In the event that Net Assets as shown on the Closing
Balance Sheet are greater or less than $300,000 on the Closing Date,
then the Vendors of the class D redeemable preferred shares of the
Corporation ("Class D Shares") will pay the Purchaser the amount of
the shortfall (in accordance with the percentages of their Class D
Shares set out on Schedule 2.1.1) or the Purchaser will pay the
Vendors of the Class D Shares the amount of the excess (in accordance
with the percentages of their Class D set out on Schedule 2.1.1), as
the case may be, together with interest on such amount at the rate of
6% per annum calculated from the Closing Date to the date of payment.
2.2.2 On or before August 31, 1998, the Vendors shall deliver the Closing
Balance Sheet to the Purchaser.
2.2.3 The Closing Balance Sheet shall be final, conclusive and binding
unless the Purchaser gives written notice of its disagreement with
any item or items thereon within 30 days following the receipt of the
Closing Balance Sheet, specifying in reasonable detail the nature and
extent of such disagreement.
2.2.4 If within 5 days following the receipt by the Vendors of a notice of
the type referred to in Section 2.2.3, the Vendors and the Purchaser
are unable to resolve any disagreement with respect to the Closing
Balance Sheet and the determination of Net Assets, the disagreement
shall be submitted to Price Waterhouse for arbitration. Price
Waterhouse shall act as an arbitrator to determine and resolve only
those issues in dispute. Price Waterhouse shall deliver a decision
within 30 days of the submission of the dispute, and such decision
shall be consistent with this Agreement, shall be set forth in a
written statement delivered to the Purchaser and the Vendors and
shall be final, conclusive and binding on the Purchaser and the
Vendors. The adjusting payments, if any, required by Section 2.2.1
shall be made forthwith after receipt of the final determination of
Net Assets by Price Waterhouse, together with all interest thereon at
the rate of 6% per annum from the Closing Date to the date of
payment. The fees and expenses of Price Waterhouse in connection with
any such determination shall be paid one half by the Vendors and one
half by the Purchaser. Otherwise, the Purchaser and the Vendors
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shall each pay their own costs incurred, including the fees
and expenses of their respective accountants or attorneys, if
any.
2.3 CLOSING
The sale and purchase of the Purchased Shares and the execution and
delivery of the Ancillary Agreements shall be completed at the Time of Closing
at the offices of McCarthy Tetrault, Pacific Centre 777 Dunsmuir Street,
Vancouver, British Columbia.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly and severally represent and warrant to the Purchaser
the following, and acknowledge that the Purchaser is entitled to rely on such
representations and warranties notwithstanding any due diligence investigation
done by the Purchaser prior to the closing:
3.1.1 the Corporation is a corporation duly incorporated, organized and
subsisting under the laws of British Columbia as a private issuer as
that term is defined in the Securities Act (British Columbia) with
the corporate power to own its assets and to carry on the Business
and has made all necessary filings under all applicable corporate,
securities and taxation Laws or any other Laws to which the
Corporation is subject and is qualified to own its properties and
assets and to carry on the Business as presently carried on by it;
3.1.2 Schedule 2.1.1 sets out (i) the authorized capital of the Corporation
and (ii) the number of Shares of the Corporation which are issued and
outstanding, which shares have been validly issued as fully paid and
non-assessable and registered in the names of the Vendors as set
forth on Schedule 2.1.1;
3.1.3 the rights, privileges, restrictions and conditions attached to the
Shares are as set out in Schedule 3.1.3 attached hereto;
3.1.4 the Purchased Shares constitute all of the issued and outstanding
Shares in the capital stock of the Corporation;
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3.1.5 each of the Vendors is the beneficial and registered owner of the
number of Purchased Shares set opposite the name of such Vendor on
Schedule 2.1.1, free and clear of all Liens, options and any other
rights of others;
3.1.6 there is no contract, option or any other right of another binding
upon or which at any time in the future may become binding upon:
(i) any of the Vendors to sell, transfer, assign, or grant any
Lien on or affecting, or in any other way dispose of or
encumber any of the Purchased Shares other than pursuant to
the provisions of this Agreement or any of its assets other
than in the ordinary course of business, or
(ii) the Corporation to allot or issue any of the unissued shares
or securities of the Corporation or to create any additional
class of shares or securities;
3.1.7 except as disclosed on Schedule 3.1.7, neither the entering into nor
the delivery of this Agreement and the Ancillary Agreements nor the
completion of the transactions contemplated hereby by each of the
Vendors will result in the violation of or require the Consent of any
third party pursuant to:
(i) any of the provisions of the Memorandum or Articles, as
amended, of the Corporation;
(ii) any agreement or other instrument to which the Corporation or
any of the Vendors is a party or by which the Corporation or
any of the Vendors is bound, or
(iii) any applicable Law;
3.1.8 the financial statements of the Corporation, consisting of the
Balance Sheet and statements of income, retained earnings and changes
in financial position for the period ended on the Balance Sheet Date,
together with the review engagement report of Yule & Associates,
chartered accountants, thereon and the notes thereto (hereinafter
collectively referred to as the "Financial Statements"), a copy of
which is attached hereto as Schedule 3.1.8:
(i) are in accordance with the books and accounts of the
Corporation as at the Balance Sheet Date,
<PAGE> 15
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(ii) are true and correct and present fairly the financial
position of the Corporation as at the Balance Sheet Date,
(iii) have been prepared in accordance with GAAP consistently
applied, and
(iv) present fairly all of the assets and liabilities of the
Corporation as at the Balance Sheet Date including, without
limiting the generality of the foregoing, all contingent
liabilities of the Corporation as at the Balance Sheet Date;
3.1.9 the interim financial statements of the Corporation, consisting of a
balance sheet and statement of income, for the period ended on June
25, 1998 (hereinafter collectively referred to as the "Interim
Financial Statements"), a copy of which is attached hereto as
Schedule 3.1.9:
(i) are in accordance with the books and accounts of the
Corporation as at June 25, 1998,
(ii) are true and correct and present fairly the financial
position of the Corporation as at June 25, 1998, subject only
to usual and proper adjustments, which will not exceed, in
aggregate, $15,000 and without provision for income or
capital taxes, the disposition of a loan receivable from
Midway Purnel Sanitary Supply (PG) Ltd. in the amount of
$20,000,
(iii) present fairly all of the assets and liabilities of the
Corporation as at June 25, 1998, and
(iv) have been prepared in accordance with GAAP consistent with
the principles of GAAP used in the preparation of the Balance
Sheet;
3.1.10 since the Balance Sheet Date, the Business of the Corporation has
been carried on in its usual and ordinary course and in a manner
consistent with prior practices and, the Corporation has not, since
the Balance Sheet Date, entered into any transaction out of the usual
and ordinary course of business;
3.1.11 since the Balance Sheet Date, there has been no material change in
the affairs, business, prospects, operations or condition of the
Corporation, financial or otherwise, whether arising as a result of
any legislative or regulatory change, revocation of any Permit or
right to do business, fire, explosion, accident,
<PAGE> 16
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casualty, labour dispute, flood, drought, riot, storm,
expropriation, condemnation, act of God, public force or
otherwise, except changes occurring in the usual and ordinary
course of business which have not adversely affected the affairs,
business, prospects, operations or condition of the Corporation,
financial or otherwise;
3.1.12 the Corporation is the owner with a good and marketable title,
free and clear of all Liens, options and any other rights of others,
except for the Liens described on Schedule 3.1.12 of all assets
shown or reflected on the Balance Sheet, except only such of the
assets of the Corporation as have been disposed of in the usual and
ordinary course of business since the Balance Sheet Date, and of all
assets acquired by the Corporation since the Balance Sheet Date;
3.1.13 all machinery, equipment and automotive equipment owned or used by
the Corporation has been properly maintained and is in good working
order for the purposes of ongoing operation, subject to ordinary
wear and tear for machinery and equipment of comparable age;
3.1.14 Schedule 3.1.14 sets forth a true and complete list of all
premises leased by the Corporation ("Leased Premises") and any lease
in respect thereof to which the Corporation is a party ("Premises
Leases") and: (i) each Premises Lease is in full force and effect,
unamended by oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of such Premises Lease in
accordance with the terms thereof, (ii) each Premises Lease is in
good standing, all rental and other payments payable by the
Corporation under the leases have been duly paid, (iii) there is
currently no outstanding default by the Corporation under the
Premises Leases nor is there currently any outstanding default by
any landlord thereunder or dispute between the Corporation and any
landlord under any of the Premises Leases; (iv) the Corporation has
not sublet, assigned or transferred any of its interests in such
Premises Lease and (v) the Leased Premises are the only premises
used by the Corporation;
3.1.15 Schedule 3.1.15 sets forth a true and complete list of all lease
agreements concerning personal property leased by the Corporation
("Personal Property Leases") and: (i) each Personal Property Lease
is in full force and effect, unamended by oral or written agreement,
and the Corporation is entitled to the full benefit and advantage of
each Personal Property Lease in accordance with the terms thereof,
(ii) each Personal Property Lease is in good standing, all rental
and other payments payable by the Corporation under the Personal
<PAGE> 17
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Property Leases have been duly paid, (iii) there is currently no
outstanding default by the Corporation thereunder nor of the other
parties thereunder nor dispute between the Corporation and any other
party thereunder, and (iv) the Corporation has treated all Personal
Property Leases as operating leases for Canadian income tax purposes;
3.1.16 except for the Premises Leases, the Corporation holds no ownership
or other interest in or right affecting any real estate or real
property;
3.1.17 the inventory of the Corporation consist of items saleable in the
ordinary course of business reasonably fit for their usual purpose,
except for obsolete and slow-moving items and materials below
standard quality which have been written down on the books of
account of the Business to net realizable value, or adequate
reserves having been provided therefor, all in accordance with GAAP.
Except as disclosed in Schedule 3.1.17, there is no recurring or
ongoing high incidence of product failure or warranty claims against
the Corporation related to the Business;
3.1.18 there are no outstanding orders, notices or similar requirements
relating to the Corporation issued by any Governmental Authority,
including building, environmental, fire, health, labour or police
authorities, and there are no matters under discussion with any such
Governmental Authority relating to orders, notices or similar
requirements;
3.1.19 except as disclosed on Schedule 3.1.19, no single capital
expenditure in excess of $25,000 or capital expenditures in the
aggregate in excess of $50,000 have been made or authorized by the
Corporation since the Balance Sheet Date;
3.1.20 except (i) as disclosed on Schedule 3.1.20 and (ii) a dividend in
the amount of $30,500 paid to Loretta on the date hereof, no
dividends have been declared or paid on or in respect of the Shares
and no other distribution on any of its securities or shares has
been made by the Corporation since the Balance Sheet Date and all
dividends which to the date hereof have been declared or paid by the
Corporation have been duly and validly declared and are fully paid;
3.1.21 the Corporation does not have any liability, obligation or
commitment for the payment of Taxes of whatever nature or kind, or
interest or penalties with respect thereto, except such as are
disclosed in the Financial Statements or
<PAGE> 18
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such Taxes not yet due as have arisen since the Balance Sheet Date in
the usual and ordinary course of business and for which adequate
provision in the accounts of the Corporation has been made, and the
Corporation is not in arrears with respect to any required
withholdings or instalment payments or other payments of any Tax or
duty of any kind or any penalty or interest thereon and has not filed
any waiver for a taxation year of the Corporation under the Income
Tax Act (Canada) or any other legislation imposing Tax on the
Corporation; all obligations of the Corporation with respect to its
employees for withholding Taxes, Canada Pension Plan contributions,
unemployment insurance contributions and workers compensation
remittances or contributions of any kind which are due as of the
Closing Date will have been paid by the Corporation prior to the
Closing Date; there are no outstanding disputes with or assessments
from the Workmen's Compensation Board of British Columbia or the
Employment Standards Branch;
3.1.22 the tax accounts of the Corporation as disclosed in Schedule 3.1.22
attached hereto are true and complete in all material respects;
3.1.23 except as disclosed on Schedule 3.1.23, there are no outstanding
liabilities (whether absolute or contingent) against the Corporation
except trade debts incurred in the usual and ordinary course of
business;
3.1.24 set forth on Schedule 3.1.24 is a true and complete list of all
contracts or agreements (except for the Premises Leases, the Personal
Property Leases and the employment agreement with the Vendors listed
on Schedule 3.1.31) to which the Corporation is a party or is
otherwise bound which are (i) outside the ordinary course of
business, (ii) involve a financial commitment by the Corporation of
at least $25,000, (iii) have a term in excess of 60 days or (iv) to
which any Related Person of the Corporation is a party (collectively,
the "Material Contracts" and individually, a "Material Contract").
Subject only to the requirement to obtain the Consents, the
Corporation has not received notice of any default, and the
Corporation is not in default, under any Material Contract, nor has
there occurred any event which, with a lapse of time or giving of
notice, or both, would constitute such a default. Subject only to
the requirement to obtain the Consents, each Material Contract is in
full force and effect, unamended by written or oral agreement and the
Corporation is (i) entitled to the full benefit and advantage of each
Material Contract in accordance with the terms thereof, (ii) each
Material Contract is in good standing, and (iii) there is no
currently outstanding default by the
<PAGE> 19
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Corporation nor by any other party thereunder nor is there a
dispute between the Corporation and any party thereunder;
3.1.25 the Corporation is not in default or breach of any contract or
commitment to which it is a party and there exists no condition,
event or act which, with the giving of notice or lapse of time or
both would constitute such a default or breach and all such
contracts and commitments are in good standing and in full force and
effect without amendment thereto and the Corporation is entitled to
all benefits thereunder;
3.1.26 the Corporation is not a party to or bound by any guarantee,
indemnification, surety or similar obligation;
3.1.27 the Corporation does not have any subsidiaries or agreements,
options or commitments to acquire any shares or securities of any
corporation or interests of or in any other entity or to acquire or
lease any business operations, real property or assets;
3.1.28 there is no agreement, option, understanding or commitment, or any
right or privilege capable of becoming an agreement, for the
purchase from the Corporation of the Business or any of its assets
other than in the usual and ordinary course of business;
3.1.29 the Corporation is not a party to or bound by any contract or
commitment to pay any royalty, licence fee or management fee or
which contains restrictive covenants or covenants not to compete in
any line of business with any other Person;
3.1.30 the Corporation does not have any employment contract, whether
written or oral, with any person whomsoever except contracts with
the employees as are listed in Schedule 3.1.30 attached hereto,
whether or not such contracts are in writing; Schedule 3.1.30 truly
and correctly sets out for each employee of the Corporation, the
annual salary, job function, the length of employment of each of the
employees with the Corporation and other remuneration (including any
bonus, deferred compensation, incentive profit sharing,
remuneration, medical insurance, pension, retirement, vacation and
such leave arrangements) as well as all accrued and unpaid vacation
pay and sick pay payable to each employee; no labour relations or
labour standards, discrimination in employment or employment
practices, harassment, occupational health and safety standards or
workers compensation issue or
<PAGE> 20
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matter is pending or, to Vendors' knowledge, threatened with
respect to any employee of the Corporation; except as disclosed
in Schedule 3.1.30, to the best of the knowledge of the Vendors,
no employee has made or has any basis for making any claim
(whether under Law, any employment contract, or otherwise) on
account of or for (i) overtime pay, other than overtime for the
current payroll period, (ii) wages or salary for any period other
than the current payroll period, (iii) vacation time off, sick
time or pay in lieu of any of the foregoing, other than that
earned in respect of the current payroll period or (iv) any
violation of any Law;
3.1.31 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without limiting the generality
of the foregoing, any pension plan maintained by or on behalf
of the Corporation for any of its employees,
except such agreements and plans as are listed in Schedule 3.1.31
attached hereto;
3.1.32 all benefit plans listed in Schedule 3.1.31 attached hereto have
been duly registered where required by, and are in good standing
under, all applicable Laws including, without limiting the
generality of the foregoing, the Income Tax Act (Canada) and the
Pension Benefits Standards Act (British Columbia) and all required
employer contributions under any such plans have been made and the
applicable funds have been funded in accordance with the terms
thereof of the plans and no past service funding liabilities exist
thereunder;
3.1.33 no trade union, council of trade unions, employee bargaining agency
or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of the
Corporation's employees by way of certification, interim
certification, voluntary recognition, designation or
successor rights,
(ii) has applied to be certified as the bargaining agent of any of
the Corporation's employees;
<PAGE> 21
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3.1.34 except for (i) remuneration paid to employees in the usual and
ordinary course of business and made at current rates of
remuneration, and (ii) dividends described in Section 3.1.20 no
payments have been made or authorized since the Balance Sheet Date by
the Corporation to officers, directors or employees of the
Corporation;
3.1.35 except as disclosed on Schedule 3.1.35, no Vendor, director, former
director, officer, shareholder or employee of the Corporation or any
Person who is a Related Person with any such Person is indebted to
the Corporation;
3.1.36 the Corporation is not conducting its business in any jurisdiction
other than the Province of British Columbia;
3.1.37 attached hereto as Schedule 3.1.37 is a list of all registered trade
marks, trade names, patents and copyrights, of all unregistered trade
marks, trade names and copyrights and of all patent applications,
trade mark registration applications and copyright registration
applications, both domestic and foreign, owned or made by the
Corporation;
3.1.38 all trade marks, trade names, patents and copyrights, both domestic
and foreign, used in or required for the proper carrying on of the
Corporation's Business are validly and beneficially owned by the
Corporation with the sole and exclusive right to use the same and are
in good standing and duly registered in all appropriate offices to
preserve the right thereof and thereto;
3.1.39 the conduct of the Business by the Corporation does not infringe upon
the trade marks, trade names, patents or copyrights, domestic or
foreign, of any other Person;
3.1.40 attached hereto as Schedule 3.1.40 is a true and complete list of all
insurance policies maintained by the Corporation that also specifies
the insurer, the amount of the coverage, the type of insurance, the
policy number and any pending claims thereunder and any previous
insurance claims that have been made by the Corporation; the
Corporation maintain third party liability and property damage
automobile insurance in an amount of not less than $1,000,000 per
occurrence for all vehicles owned or leased by the Corporation; all
such insurance policies are in full force and effect and the premiums
have been fully paid to date;
<PAGE> 22
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3.1.41 none of the Vendors is a non-resident person within the meaning of
Section 116 of the Income Tax Act (Canada); and
3.1.42 the Corporation is not indebted to any Related Person, except for
salary and other similar compensation accrued to the Closing Date
and payable to the Vendors, or except as set out in Schedule 3.1.42;
3.1.43 except as disclosed on Schedule 3.1.43 hereto, there is no action,
suit, proceeding, claim, grievance or investigation in any court or
before any arbitrator or before of by any Governmental Authority
existing, pending or threatened, related to the Business or the
transactions contemplated by this Agreement; and there is no factual
or legal basis which could give rise in the future to the pendency
or threat of any such action, suit, proceeding, claim or
investigation which could, if determined adversely, have a material
adverse effect on the Corporation or the ability of the Corporation
to carry on the Business following Closing;
3.1.44 the Corporation and the Leased Premises (being all premises from
which it conducts the operations of the Business) are in compliance
with all applicable Laws of all Governmental Authorities having
jurisdiction, are not in breach of any such Laws and there is no
requirement to conduct a corrective or remedial action with respect
to such premises in order to carry on the Business as presently
conducted, and the Corporation is duly licensed, registered or
qualified, and duly possesses and is in compliance with all Permits
and quotas, in the Province of British Columbia and all
municipalities thereof in which the Corporation carries on its
business to enable the Business to be carried on as now conducted
and its assets to be owned, leased and operated, and all such
Permits are valid and subsisting and in good standing and none of
the same contains or is subject to any term, provision, condition or
limitation which has or may have an adverse effect on the operation
of the Business or which may adversely change or terminate such
Permit by virtue of the completion of the transactions contemplated
hereby;
3.1.45 the operation of the Corporation on the Leased Premises is not
subject to any restriction or limitation and is not in contravention
of any Law or of any decree or order of any Governmental Authority
having jurisdiction;
3.1.46 except as specifically disclosed in Schedule 3.1.46 and without
limiting the scope of any other representation and warranty herein:
<PAGE> 23
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3.1.46.1 The Business, the Leased Premises and the Corporation
have been and are in compliance with applicable Laws,
including, without limitation, Environmental Laws;
3.1.46.2 The Corporation holds all Permits required under
applicable Environmental Laws for the operation of the
Business (the "Environmental Permits"); each Environmental
Permit is valid and in force and the operations of the
Corporation are in compliance with the conditions set out in
the Environmental Permits; there are no grounds for
revocation, expiry or annulment of any Environmental
Permits;
3.1.46.3 The Vendors, the Corporation, its employees, agents,
shareholders, directors and officers have never been
declared guilty of committing an offence for a violation of
Environmental Laws and have never had a fine imposed against
them and have never otherwise settled such a prosecution in
relation to the Business or the premises used in the
Business;
3.1.46.4 There are no Contaminants, waste or pollutants of any
kind whatsoever in, on or under the Leased Premises or in,
on or under the assets of the Business or the Corporation,
the presence of which constitutes a violation of applicable
Environmental Laws;
3.1.46.5 The waste, effluents and air emissions generated by the
operation of the Business by the Corporation have been and
are treated, transported and eliminated in accordance with
applicable Environmental Laws;
3.1.46.6 The Corporation has not received any written or verbal
notice or request for information in the context of any
environmental federal, provincial, regional or municipal
investigation or inspection;
3.1.46.7 The Corporation does not own or use any underground or
aboveground storage tank in connection with the Business;
<PAGE> 24
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3.1.46.8 There are no PCBs, asbestos, urea formaldehyde or
radioactive substances in, on or under the premises used by
the Corporation in connection with the Business; and
3.1.46.9 there is no present requirement of any applicable
Environmental Law which is due to be imposed which will
materially increase the Corporation's cost of complying with
the Environmental Laws.
3.1.47 the Closing Balance Sheet and statements of income, retained
earnings and changes in financial position for the period ended on
the Closing Date, together with the review engagement report of Yule
& Associates, chartered accountants, thereon and the notes thereto:
(i) will be in accordance with the books and
accounts of the Corporation as at the Closing Date;
(ii) will be true and correct and present fairly
the financial position of the Corporation as at the Closing
Date;
(iii) will have been prepared in accordance with
GAAP consistent with the principles of GAAP used in the
preparation of the Financial Statements; and
(iv) will present fairly all of the assets and
liabilities of the Corporation as at the Closing Date
including, without limiting the generality of the foregoing,
all contingent liabilities of the Corporation as at the
Closing Date;
3.1.48 the accounts receivable of the Corporation which will be shown on
the Closing Balance Sheet will be collectible in the ordinary and
usual course of business and the Closing Balance Sheet will include
an appropriate allowance for uncollectible accounts;
3.1.49 the Closing Balance Sheet will include an appropriate allowance
for earned but unused vacation;
3.1.50 the minute books of the Corporation contain a complete record of
all material decisions taken by the directors and of the
shareholders of the Corporation;
<PAGE> 25
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the Corporation's financial and other books and records
accurately reflect the financial transactions and the operations
related to the Business; and
3.1.51 Schedule 3.1.51 hereto sets forth a complete list of all bank
accounts and similar accounts held or operated by the Corporation,
stating the name of the financial institution, the account number
and the persons having authority to sign in respect of each such
account.
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.2.1 The representations and warranties of the Vendors set forth
in Section 3.1 shall survive the completion of the sale and purchase
of the Purchased Shares herein provided for and, notwithstanding
such completion, the representations and warranties set forth in
Section 3.1 shall continue in full force and effect for the benefit
of the Purchaser for a period of three years from the Closing Date,
except for the representations and warranties of the Vendors set
forth in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.1.6, 3.1.7
and 3.1.12 and any representation and warranty fraudulently made,
all of which shall survive in perpetuity and the representations and
warranties in relation to Taxes, all of which shall survive until
the expiry of the longest limitation period under applicable Law
relating thereto.
3.2.2 The covenants of the Vendors set forth in this Agreement
shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall
continue in full force and effect for the benefit of the Purchaser
in accordance with the terms thereof.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.3.1 the Purchaser is a corporation duly incorporated, organized
and subsisting under the laws of Canada;
3.3.2 the Purchaser has good and sufficient power, authority and
right to enter into and deliver this Agreement and the Ancillary
Agreements and to complete the transactions to be completed by the
Purchaser contemplated hereby;
3.3.3 the Class F Shares will, at closing, be validly issued to
the Vendors in accordance with Schedule 2.1.1 as fully paid and
non-assessable;
<PAGE> 26
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3.3.4 Purchaser is not a "non-Canadian" for the purposes of and
within the meaning of the Investment Canada Act, R.S.C. 1985, c. 28
(1st Supp.);
3.3.5 Purchaser is not a non-resident of Canada for the purposes
of the Income Tax Act, S.C. 1970-72-72 c. 63 (Canada);
3.3.6 Purchaser is a taxable Canadian corporation as defined in
subsection 89(1) of the Income Tax Act (Canada);
3.3.7 the audited financial statements of the Purchaser for the
period ended December 31, 1997, together with the report thereon of
Ernst & Young, dated February 13, 1998 annexed hereto as Schedule
3.3.7:
(i) are in accordance with the books and accounts
of the Purchaser as at December 31, 1997,
(ii) are true and correct and present fairly the
financial position of the Purchaser as at December 31, 1997,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities of the
Purchaser as at December 31, 1997 including, without limiting
the generality of the foregoing, all contingent liabilities
of the Purchaser as at December 31, 1997; and
3.3.8 based on advice received from Winthrop, Stimson, Putnam &
Roberts, Purchaser's U.S. securities law counsel, as set forth in
the memorandum attached as Schedule 3.3.8, and subject to the
qualifications set forth in the memorandum, the Class F Shares and
the Parent Common Shares
(i) under Rule 144 of the United States Securities Act of 1933,
as amended, ("Rule 144"), are not tradeable by the Vendors
within the first twelve months following the Closing Date,
(ii) under Rule 144, are tradeable by the Vendors
in the second twelve month period following the Closing
Date, subject to the volume of sale and manner of sale
restrictions set out in the memorandum, and
<PAGE> 27
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(iii) under Rule 144, are tradeable by the Vendors
without restrictions other than the manner of sale
restrictions referred to in the memorandum commencing the
third year following the Closing Date.
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.4.1 The representations and warranties of the Purchaser set
forth in Section 3.3 shall survive the completion of the sale and
purchase of the Shares herein provided for and, notwithstanding such
completion, the representations and warranties set forth in Section
3.3 shall continue in full force and effect for the benefit of the
Vendors for a period of three years from the Closing Date, except
for the representations and warranties of the Purchaser set forth in
Sections 3.3.1, 3.3.2 and 3.3.3 any representation and warranty
fraudulently made, all of which shall survive in perpetuity and the
representations and warranties in relation to Taxes, all of which
shall survive until the expiry of the longest limitation period
under applicable Law relating thereto.
3.4.2 The covenants of the Purchaser set forth in this Agreement
shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall
continue in full force and effect for the benefit of the Vendors in
accordance with the terms thereof.
ARTICLE 4 - COVENANTS
4.1 TAXES
The Purchaser does not assume and shall not be liable for any taxes under
the Income Tax Act (Canada) or any other taxes whatsoever which may be or
become payable by the Vendors including, without limiting the generality of the
foregoing, any taxes resulting from or arising as a consequence of the sale by
the Vendors to the Purchaser of the Purchased Shares herein contemplated, and
the Vendors shall indemnify and save harmless the Purchaser from and against
all such taxes.
4.2 COVENANTS OF THE VENDORS
4.2.1 Each of the Vendors shall jointly and severally indemnify
and save harmless the Purchaser and the officers and directors of
the Purchaser from and against all claims, actions, demands, suits,
proceedings, losses, damages, fines, liabilities (whether accrued,
actual, contingent or otherwise), costs and
<PAGE> 28
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expenses, including reasonable environmental characterization and
remediation costs, reasonable lawyers fees and other reasonable
consultants fees, directly or indirectly suffered by the Purchaser
and the officers and directors of the Purchaser from any breach of
any covenant of the Vendors contained in this Agreement or from
any inaccuracy or misrepresentation in any representation or
warranty set forth in Section 3.1 notwithstanding any information
obtained by the Purchaser at or before the Closing Date as to such
inaccuracy or misrepresentation.
4.2.2 The Vendors shall ensure that the representations and
warranties of the Vendors set out in Section 3.1 are true and
correct at the Time of Closing and that the conditions of closing
for the benefit of the Purchaser set out in Section 7.1.1 over which
the Vendors have reasonable control have been performed or complied
with by the Time of Closing.
4.2.3 The Vendors shall permit the Purchaser, through its agents
and representatives, to make such reasonable investigation prior to
and at the Time of Closing of the assets of the Corporation and of
its financial and legal condition as the Purchaser considers
necessary or advisable to familiarize itself with such assets and
other matters and the Vendors shall supply any and all documents and
records of the Corporation to the Purchaser and its agents and
representatives as they may reasonably require. The Vendors shall
also permit the inspection of the assets of the Corporation by the
Purchaser prior to and at the Time of Closing by such federal,
provincial or municipal authorities as the Purchaser may require.
Such investigations and inspections shall not, however, affect or
mitigate the Vendors' covenants, representations and warranties
hereunder which shall continue in full force and effect.
4.2.4 The Vendors shall use their best efforts as employees of the
Corporation to ensure that the Corporation's relationships with
suppliers continue on substantially the same terms and conditions
following the Closing Date.
4.2.5 Each of the Vendors shall indemnify and save harmless the
Purchaser and the officers and directors of the Purchaser from and
against all liabilities (whether actual, contingent, accrued or
otherwise), claims and demands of or in connection with any matter
relating to any contracts between the Corporation and any Related
Person entered into prior to the date of this Agreement and which
are not disclosed in the Schedules hereto.
<PAGE> 29
- 26 -
4.3 COVENANTS OF THE PURCHASER
4.3.1 The Purchaser shall ensure that the representations and
warranties of the Purchaser set out in Section 3.3 are true and
correct at the Time of Closing and that the conditions of closing
for the benefit of the Vendors set out in Section 7.2.1 over which
the Purchaser has reasonable control have been performed or complied
with by the Time of Closing.
4.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against all losses, damages or expenses directly or
indirectly suffered by the Vendors resulting from any breach of any
covenant of the Purchaser contained in this Agreement or from any
inaccuracy or misrepresentation in any representation or warranty
set forth in Section 3.3.
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS
The Vendors acknowledge and agree that:
4.4.1 the Class F Shares have not been, and the Parent Common
Shares will not be, registered under the United States Securities
Act of 1933, as amended (the "Securities Act"), or any other
securities laws of the United States or Canada (the "Securities
Laws") because Purchaser is issuing the Class F Shares, and Wyant
Corporation will be issuing the Parent Common Shares, in reliance
upon exemptions from the registration and prospectus requirements of
the Securities Laws which they believe are available in connection
with the transactions contemplated by this Agreement;
4.4.2 Purchaser has relied upon the fact that the Class F Shares
and the Parent Common Shares are to be held by the Vendors for
investment; and
4.4.3 exemption from registration under the Securities Laws would
not be available if the Class F Shares and the Parent Common Shares
were acquired by the Vendors with a view to distribution.
Accordingly, the Vendors hereby confirm to Purchaser and Wyant Corporation
that the Vendors are acquiring the Class F Shares, and will acquire the Parent
Common Shares, for the account of the Vendors, for investment and not with a
view to the resale or distribution thereof under the Securities Laws. The
Vendors agree not to transfer, sell or offer for sale all or any portion of the
Class F Shares and the Parent Common Shares, unless there is an effective
registration or other qualification or exemption relating thereto
<PAGE> 30
- 27 -
under the Securities Laws. The Vendors understand that neither Purchaser nor
Wyant Corporation is under any obligation to register the Class F Shares and
the Parent Common Shares or to assist the Vendors in complying with any
exemption from registration under the Securities Laws. Prior to acquiring the
Class F Shares and, upon exchange, the Parent Common Shares, the Vendors have
made such investigation of Purchaser and Wyant Corporation and their respective
businesses as the Vendors have deemed advisable and has had made available to
the Vendors all information with respect thereto that the Vendors have
requested to make an informed decision to acquire the Class F Shares and the
Parent Common Shares. The Vendors consider themselves to be persons possessing
experience and sophistication as an investor that is adequate for the
evaluation of the merits and risk of the Vendors' investment in the Class F
Shares and, upon exchange, the Parent Common Shares. The Vendors acknowledge
that each certificate for the Class F Shares and the Parent Common Shares will
be imprinted with a legend in substantially the following form: "The
securities represented by this certificate were originally issued on June 30,
1998, and have not been registered under the Securities Act of 1933, as
amended, or any other securities laws of the United States or Canada. The
transfer of the securities represented by this certificate is subject to the
conditions specified in Section 4.4 of the Share Purchase Agreement dated as of
June 30, 1998 among the parties thereto, and The Purchaser reserves the right
to refuse the transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such conditions will be
furnished by the Purchaser to the holder hereof upon written request and
without charge."
ARTICLE 5 - THIRD PARTY CLAIMS
In the event of a third party claim against Purchaser or the Corporation
for which the Vendors are or may be liable hereunder:
5.1 Purchaser shall tender in writing defence of the claim to the
Vendors, within 15 working days after the Purchaser knows of the
claim. The Vendors shall have the right, by notice to the Purchaser
within 30 days following the receipt of the notice by the Purchaser
of the third party claim, to assume the defence of such third party
claim, with counsel reasonably satisfactory to the Purchaser and at
no cost to the Purchaser. If the Purchaser so chooses, the
Purchaser may participate in the defence of such third party claim
at its sole cost and expense; provided, however, that such
participation may not in any way interfere with or contradict the
defence of such claim. The Vendors shall cooperate fully to make
available to the Purchaser, at the Purchaser's expense, all
pertinent information and witnesses under the Vendors' control,
<PAGE> 31
- 28 -
make such assignments and take such other steps as may be
reasonably requested by counsel for the Purchaser to conduct such
defence.
5.2 In the event that the Vendors assume the defence of such
third party claim, the Vendors, at their expense, shall diligently
proceed with the defence of said third party claim and, in
connection therewith, the Purchaser, at the Vendors' expense, shall
cooperate fully to make available to the Vendors, all pertinent
information and witnesses under the Purchaser's control, make such
assignments and take such other steps as may be reasonably requested
by counsel for the Vendors to conduct such defence.
5.3 The Vendors shall not make any settlement or compromise of
any third party claim without the written consent of the Purchaser,
which consent shall not be unreasonably withheld or delayed.
5.4 Subject to the provisions of Section 5.3, the final
resolution or determination of any such third party claim, including
all related costs and expenses, will be binding and conclusive upon
the parties hereto.
5.5 Should the Vendors fail to assume the defence of any third
party claim or fail to diligently and reasonably defend such third
party claim, the Vendors' right to defend the claim shall terminate
and the Purchaser shall be solely entitled to defend, settle and
compromise such third party claim as in its reasonable discretion
may appear advisable, and the resolution or final determination of
such defence, settlement or compromise, including all related costs
and expenses, will be binding and conclusive upon the Vendors, and
the Vendors shall indemnify the Purchaser in respect to such
resolution or final determination and all such costs and expenses.
5.6 The provisions of this Article 5 shall apply mutatis mutandis
for the benefit of the Vendors in the event of any third party claim
against the Vendors for which the Purchaser is or may be liable
hereunder.
ARTICLE 6 - RIGHTS OF SET-OFF
6.1 The Vendors agree that the Purchaser shall have rights to set-off or
compensate any claim the Purchaser may have against the Vendors under this
Agreement or any Ancillary Agreements entered into by the Vendors in connection
with the transaction contemplated hereby or under the terms and conditions of
the Class F Shares against the payments due by
<PAGE> 32
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the Purchaser hereunder or under the Ancillary Agreements or under the terms
and conditions of the Class F Shares; provided that Purchaser will have no
right of set-off against amounts payable to any Vendor under his or her
Employment Agreement.
6.2 If the Purchaser exercises the right of set-off, the Purchaser shall give a
prior written notice to the Vendors, that the Purchaser has elected to exercise
such right of set-off.
6.3 The Purchaser and the Vendors agree that nothing in this Article 6 shall
derogate from any of the provisions of this Agreement or the Ancillary
Agreements in favour of the Purchaser or any rights of Purchaser under the law
in respect of any claim of the Purchaser.
ARTICLE 7 - CONDITIONS
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER
7.1.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which
are for the exclusive benefit of the Purchaser to be performed or
complied with at or prior to the Time of Closing:
7.1.1.1 the representations and warranties of the Vendors set
forth in Section 3.1 shall be true and correct at the Time
of Closing with the same force and effect as if made at and
as of such time;
7.1.1.2 the Vendors shall have performed or complied with all of
the terms, covenants and conditions of this Agreement to be
performed or complied with by the Vendors at or prior to the
Time of Closing;
7.1.1.3 the Purchaser shall be furnished with such certificates,
affidavits or statutory declarations of the Corporation and
of the Vendors or of officers of the Corporation and of the
Vendor as the Purchaser or the Purchaser's counsel may
reasonably think necessary in order to establish that the
terms, covenants and conditions contained in this Agreement
to have been performed or complied with by the Vendors or by
the Corporation, as the case may be, at or prior to the Time
of Closing have been performed and complied with and that
the representations and warranties of the Vendors herein
given are true and correct at the Time of Closing;
<PAGE> 33
- 30 -
7.1.1.4 no material damage by fire or other hazard to the assets
of the Corporation shall have occurred from the date hereof
to the Time of Closing;
7.1.1.5 all directors and officers of the Corporation specified
by the Purchaser shall resign;
7.1.1.6 the Vendors and all directors and officers of the
Corporation shall release the Corporation from any and all
possible claims against the Corporation arising from any
act, matter or thing arising at or prior to the Time of
Closing; for greater certainty, such release will not affect
the obligations of the Corporation under any of the
Ancillary Agreements;
7.1.1.7 there shall be a non-competition agreement entered into
between the Purchaser, the Corporation and each of the
Vendors substantially in the form attached hereto as
Schedule 7.1.1.7 (the "Non-Competition Agreements");
7.1.1.8 there shall be an employment agreement entered into
between the Corporation and John Kazakoff substantially in
the form attached hereto as Schedule 7.1.1.8 (the
"Employment Agreement");
7.1.1.9 there shall be an escrow agreement entered, into between
the Purchaser, the Vendors and McCarthy Tetrault, as escrow
agent, in substantially the form attached hereto as Schedule
7.1.1.9 (the "Escrow Agreement");
7.1.1.10 the Purchaser and John Kazakoff shall have executed a
lease in respect of the premises located at 4400 Minto Road
in substantially the form attached hereto as Schedule
7.1.1.10;
7.1.1.11 the Vendors shall have delivered to the Purchaser a
favourable opinion of the Vendors' counsel substantially in
the form attached hereto as Schedule 7.1.1.11;
7.1.1.12 the form and legality of all matters incidental to the
sale by the Vendors and the purchase by the Purchaser of the
Shares shall be subject to the approval of the
Purchaser's counsel, acting reasonably.
<PAGE> 34
- 31 -
7.1.2 In case any term or covenant of the Vendors or condition to
be performed or complied with for the benefit of the Purchaser at or
prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Purchaser may,
without limiting any other right that the Purchaser may have, at its
sole option, either:
7.1.2.1 rescind this Agreement by notice to the Vendors, and in
such event the Purchaser shall be released from all
obligations hereunder; or
7.1.2.2 waive compliance with any such term, covenant or
condition in whole or in part on such terms as may be agreed
upon without prejudice to any of its rights of rescission in
the event of non-performance of any other term, covenant or
condition in whole or in part;
and, if the Purchaser rescinds this Agreement pursuant to Section 7.1.2
and the term, covenant or condition for which the Purchaser has rescinded
this Agreement was one that the Vendors had covenanted, pursuant to
Section 4.2.2, to ensure had been performed or complied with, the Vendors
shall be liable to the Purchaser for any losses, damages or expenses
incurred by the Purchaser as a result of such breach.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
7.2.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which
are for the exclusive benefit of the Vendors to be performed or
complied with at or prior to the Time of Closing:
7.2.1.1 the representations and warranties of the Purchaser set
forth in Section 3.3 shall be true and correct at the Time
of Closing with the same force and effect as if made at and
as of such time;
7.2.1.2 the Purchaser shall have performed or complied with all
of the terms, covenants and conditions of this Agreement to
be performed or complied with by the Purchaser at or prior
to the Time of Closing;
7.2.1.3 the Vendors shall be furnished with such certificates,
affidavits or statutory declarations of the Purchaser or of
officers of the
<PAGE> 35
- 32 -
Purchaser as the Vendors or the Vendors' counsel
may reasonably think necessary in order to establish
that the terms, covenants and conditions contained in
this Agreement to have been performed or complied with
by the Purchaser at or prior to the Time of Closing have
been performed and complied with and that the
representations and warranties of the Purchaser herein
given are true and correct at the Time of Closing;
7.2.1.4 the Purchaser and John Kazakoff shall have executed a
lease in respect of the premises located at 4400 Minto Road
in substantially the form attached hereto as Schedule
7.1.1.10;
7.2.1.5 the Corporation shall have executed the Employment
Agreement; and
7.2.1.6 Wyant Corporation shall have executed a Covenant
Agreement in favour of the Vendors substantially in the form
of Schedule 7.2.1.6 (the "Covenant Agreement).
7.2.2 In case any term or covenant of the Purchaser or condition
to be performed or complied with for the benefit of the Vendors at
or prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Vendors may,
without limiting any other right that the Vendors may have, at its
sole option, either:
7.2.2.1 rescind this Agreement by notice to the Purchaser, and in
such event the Vendors shall be released from all
obligations hereunder; or
7.2.2.2 waive compliance with any such term, covenant or
condition in whole or in part on such terms as may be agreed
upon without prejudice to any of its rights of rescission in
the event of non-performance of any other term, covenant or
condition in whole or in part;
and, if the Vendors rescind this Agreement pursuant to Section 7.2.2.1
and the term, covenant or condition for which the Vendors have rescinded
this Agreement was one that the Purchaser had covenanted, pursuant to
Section 4.3.1, to ensure had been performed or complied with, the
Purchaser shall be liable to the Vendors for any losses, damages or
expenses incurred by the Vendors as a result of such breach.
<PAGE> 36
- 33 -
ARTICLE 8 - GENERAL
8.1 FURTHER ASSURANCES
Each of the Vendors and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and things
as the other party may, either before or after the Closing Date, reasonably
require to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 COMMISSIONS
8.3.1 The Vendors shall jointly and severally indemnify and save
harmless the Purchaser from and against any claims whatsoever for
any commission or other remuneration payable or alleged to be
payable to any person in respect of the sale and purchase of the
Purchased Shares, to the extent such person purports to act or have
acted for the Vendors in connection with the sale of the Purchased
Shares.
8.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against any claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any person in
respect of the sale and purchase of the Purchased Shares, to the
extent such person purports to act or have acted for the Purchaser
in connection with the sale of the Purchased Shares.
8.4 LEGAL FEES
Each of the parties hereto shall pay their respective legal and accounting
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
hereto and any other costs and expenses whatsoever and howsoever incurred.
<PAGE> 37
- 34 -
8.5 PUBLIC ANNOUNCEMENTS
Prior to closing, no public announcement or press release concerning the
sale and purchase of the Shares shall be made by the Vendors or the Purchaser
without the prior consent and joint approval of the Vendors and the Purchaser,
save as may be required by applicable Law.
8.6 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted assigns
of the parties hereto.
8.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
8.8 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by both of the parties
hereto and no waiver of any breach of any term or provision of this Agreement
shall be effective or binding unless made in writing and signed by the party
purporting to give the same and, unless otherwise provided, shall be limited to
the specific breach waived.
8.9 ASSIGNMENT
This Agreement may not be assigned by any party hereto without the written
consent of the other parties, but the rights and obligations of the Purchaser
hereunder may be assigned by the Purchaser without the consent of the other
parties hereto to an affiliate of the Purchaser, as determined by the
provisions of the Canada Business Corporations Act, provided that such
affiliate enters into a written agreement with the Vendors to be bound by the
provisions of this Agreement in all respects and to the same extent as the
Purchaser is bound and provided that the Purchaser shall continue to be bound
by all the obligations hereunder as if such assignment had not occurred and
perform such obligations to the extent that such affiliate fails to do so.
<PAGE> 38
- 35 -
8.10 NOTICES
Any demand, notice or other communication to be given in connection with
this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication addressed
to the recipient as follows:
To the Vendors:
JOHN KAZAKOFF
c/o Yule & Associates
4 - 615 Columbia Avenue
Castlegar, British Columbia
V1N 1G9
Attention: Geoff Yule
Telecopier:(250) 365-8027
With copy to:
Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
LORETTA KAZAKOFF
c/o Yule & Associates
4 - 615 Columbia Avenue
Castlegar, British Columbia
V1N 1G9
Attention: Geoff Yule
Telecopier:(250) 365-8027
<PAGE> 39
- 36 -
With copy to:
Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
To the Purchaser:
WOOD WYANT INC.
1475 - 32nd Avenue
Lachine, Quebec
H8T 3J1
Fax No.:(514) 636-1148
Attention: Mr. Donald C. MacMartin
With a copy to:
McCarthy Tetrault
1170 Peel Street
Montreal, Quebec
H3B 4S8
Fax No.:(514) 397-4170
Attention: Mr. Thomas R.M. Davis
or to such other address, individual or electronic communication number as may
be designated by notice given by either party to the other. Any demand, notice
or other communication given by personal delivery shall be conclusively deemed
to have been given on the day of actual delivery thereof and, if given by
registered mail, on the third Business Day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving
<PAGE> 40
- 37 -
any demand, notice or other communication knows or ought reasonably to know of
any difficulties with the postal system which might affect the delivery of
mail, any such demand, notice or other communication shall not be mailed but
shall be given by personal delivery or by electronic communication.
8.11 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein.
8.12 ATTORNMENT
For the purpose of all legal proceedings, this Agreement shall be deemed
to have been performed in the Province of British Columbia and the courts of
the Province of British Columbia shall have jurisdiction to entertain any
action arising under this Agreement. Each of the parties to this Agreement
accepts the jurisdiction of such courts and irrevocably express to be bound by
any judgment rendered thereby in connection with this Agreement.
8.13 INDEPENDENT LEGAL ADVICE
Each of the Vendors acknowledges, represents and agrees that: (i) he has
had the opportunity to consult with independent legal counsel with respect to
the provisions of this Agreement; (ii) the nature, scope and effect of the
provisions of this Agreement have been adequately explained to him; and (iii)
he understands and accepts the provisions of this Agreement.
<PAGE> 41
- 38 -
IN WITNESS WHEREOF the parties have executed this Agreement.
WOOD WYANT INC.
Per:
-----------------------------
---------------------------------
JOHN KAZAKOFF
---------------------------------
LORETTA KAZAKOFF
<PAGE> 1
SHARE PURCHASE AGREEMENT
BETWEEN
WOOD WYANT INC., AS PURCHASER
AND
CAROLYNN SMITH, TERRANCE SMITH
AND LYNDA SMITH, AS VENDORS
RELATING TO THE PURCHASE OF
FRASER VALLEY INDUSTRIAL CHEMICALS INC.
MADE AS OF
JUNE 30, 1998
<PAGE> 2
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
<TABLE>
<S> <C> <C> <C>
ARTICLE 1 - INTERPRETATION........................................................................................2
1.1 DEFINITIONS............................................................................2
1.2 HEADINGS...............................................................................6
1.3 EXTENDED MEANINGS......................................................................7
1.4 ACCOUNTING PRINCIPLES..................................................................7
1.5 INCLUSIVE LANGUAGE.....................................................................7
1.6 CURRENCY...............................................................................7
1.7 SCHEDULES..............................................................................7
ARTICLE 2 - PURCHASE AND SALE.....................................................................................8
2.1 PURCHASE AND SALE AND PURCHASE PRICE...................................................8
2.2 ADJUSTMENT OF THE PURCHASE PRICE.......................................................9
2.3 CLOSING...............................................................................10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.......................................................................10
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS.........................................11
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES
AND COVENANTS.........................................................................23
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................................24
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES
AND COVENANTS.........................................................................25
ARTICLE 4 - COVENANTS............................................................................................26
4.1 TAXES.................................................................................26
4.2 COVENANTS OF THE VENDORS..............................................................26
4.3 COVENANTS OF THE PURCHASER............................................................28
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS...........................................28
ARTICLE 5 - THIRD PARTY CLAIMS...................................................................................29
ARTICLE 6 - RIGHTS OF SET-OFF....................................................................................30
ARTICLE 7 - CONDITIONS...........................................................................................31
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER...........................................31
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS.............................................33
ARTICLE 8 - GENERAL..............................................................................................35
8.1 FURTHER ASSURANCES....................................................................35
8.2 TIME OF THE ESSENCE...................................................................35
8.3 COMMISSIONS...........................................................................35
8.4 LEGAL FEES............................................................................36
8.5 PUBLIC ANNOUNCEMENTS..................................................................36
</TABLE>
<PAGE> 3
- ii -
<TABLE>
<S> <C> <C> <C>
8.6 BENEFIT OF THE AGREEMENT..............................................................36
8.7 ENTIRE AGREEMENT......................................................................36
8.8 AMENDMENTS AND WAIVER.................................................................36
8.9 ASSIGNMENT............................................................................36
8.10 NOTICES...............................................................................37
8.11 GOVERNING LAW.........................................................................39
8.12 ATTORNMENT............................................................................39
8.13 INDEPENDENT LEGAL ADVICE..............................................................39
</TABLE>
<PAGE> 4
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of June 30, 1998;
BETWEEN: WOOD WYANT INC., a corporation incorporated under
the laws of Canada;
(hereinafter referred to as the "Purchaser")
AND: CAROLYNN SMITH, a business executive residing in
the Province of British Columbia;
(hereinafter referred to as "Carolynn")
AND: TERRANCE SMITH, a business executive residing in
the Province of British Columbia;
(hereinafter referred to as "Terrance")
AND: LYNDA SMITH, a business executive residing in the
Province of British Columbia;
(hereinafter referred to as "Lynda")
(Carolynn, Terrance and Lynda are
hereinafter sometimes collectively referred
to as the "Vendors")
WHEREAS the Corporation is engaged in the Business (as
defined herein) in the Province of British Columbia;
WHEREAS the Vendors are the beneficial and registered
owners of all of the issued and outstanding shares in the
capital stock of the Corporation (collectively the "Shares");
AND WHEREAS the Vendors desire to sell and the
Purchaser desires to purchase the Shares, upon and subject to
the terms and conditions hereinafter set forth;
<PAGE> 5
- 2 -
NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the premises and the covenants and agreements
herein contained the parties hereto agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 Definitions
In this Agreement, unless something in the subject
matter or context is inconsistent therewith:
1.1.1 "Agreement" means this agreement and all amendments
made hereto by written agreement between the Vendors
and the Purchaser;
1.1.2 "Ancillary Agreements" means the Employment
Agreement, the Escrow Agreement and the Non-
Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheets of each of
Fraser Valley Industrial Chemicals Inc. and 430639
B.C. Ltd. as at the Balance Sheet Date;
1.1.4 "Balance Sheet Date" means September 30, 1997;
1.1.5 "Business" means the business of the Corporation
consisting in the manufacture of janitorial chemical
products and the sale and distribution of industrial
and institutional sanitation and janitorial products
and services, including sanitary paper products,
janitorial and cleaning chemicals and equipment and
general sanitation supplies in British Columbia;
1.1.6 "Business Day" means a day other than a Saturday,
Sunday or statutory holiday in Vancouver, British
Columbia;
1.1.7 "Class F Shares" has the meaning set out in Section
2.1.2;
1.1.8 "Closing Balance Sheet" means the balance sheet of
the Corporation as at the Closing Date and an
accompanying audit report prepared by the auditors of
the Corporation at the cost of the Vendors in
accordance with GAAP applied on a basis consistent
with prior periods;
<PAGE> 6
- 3 -
1.1.9 "Closing Date" means June 30, 1998;
1.1.10 "Combined Closing Balance Sheet" means the
balance sheet of the Corporation and Midway
Supply, on a combined basis, as at the Closing
Date and an accompanying review engagement report
prepared by the accountants of the Corporation at
the cost of the Vendors in accordance with GAAP
applied on a basis consistent with prior periods;
1.1.11 "Contaminant" means any substance or material
which does not occur naturally in the environment
or which falls within the definition of
"pollutants", "waste", "special waste",
"hazardous chemicals", "hazardous waste",
"dangerous goods", "toxic substances", or any
variation of such terms or any terms of similar
import in any Environmental Law including,
without limitation, urea formaldehyde, asbestos,
PCB transformers and poly-chlorinated biphenyls.
1.1.12 "Control" (including the terms "Controlling" and
"Controlled") means the power to elect the
majority of the board of directors or the
possession, direct or indirect, of the power to
direct or cause the direction of the management
and policies of a person, whether through the
ownership of voting securities, by contract, or
otherwise;
1.1.13 "Consents" means the consents, approvals and
authorizations required to be obtained pursuant
to Schedule 3.1.7;
1.1.14 "Corporate Reorganization" means the amalgamation
on June 30, 1998 of Fraser Valley Industrial
Chemicals Inc. and 430639 B.C. Ltd. under the
terms of an amalgamation agreement dated June 30,
1998, a copy of which is attached as
Schedule 3.1.9, in accordance with the provisions
of the Companies Act (British Columbia);
1.1.15 "Corporation" means Fraser Valley Industrial
Chemicals Inc., the corporation resulting from
the amalgamation of Fraser Valley Industrial
Chemicals Inc. and 430369 B.C. Ltd. pursuant to
the Corporate Reorganization;
1.1.16 "Covenant Agreement" has the meaning set out in
Section 7.2.1.6;
1.1.17 "Employment Agreement" has the meaning set out in
Section 7.1.1.8;
<PAGE> 7
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1.1.18 "Environment" means all components of the Earth,
including air, all layers of the atmosphere,
land, soil, water, organic and inorganic matter,
living species and organisms, any combination of
the above components, interacting natural systems
that include the above components and the ambient
milieu with which living species have dynamic
relations;
1.1.19 "Environmental Laws" means all Laws relating in
whole or in part to the Environment or its
protection, as the same would be applied as of
the date hereof, including any Laws relating to
(i) the natural or accidental release, emission,
discharge, deposit, issuance, spraying,
injection, inoculation, abandonment, burial,
spilling, incineration, disposal, leaking,
seeping, pouring, emptying, throwing, dumping,
placing or exhausting of any Contaminant into the
Environment and (ii) the storage, disposal,
destruction, incineration, burial, recycling,
handling, transportation or use of a Contaminant;
1.1.20 "Environmental Permits" has the meaning set out
in Section 3.1.45.2
1.1.21 "Escrow Agreement" has the meaning set out in
Section 7.1.1.9;
1.1.22 "Financial Statements" has the meaning set out in
Section 3.1.8;
1.1.23 "GAAP" has the meaning specified in Section 1.4;
1.1.24 "Governmental Authority" means any federal,
provincial, regional, municipal or local or other
governmental authority, domestic or foreign,
having jurisdiction over the Corporation or the
Business and includes any agency, department,
commission, board, bureau, instrumentality,
court, tribunal or other Person exercising
executive, legislative, judicial, regulatory or
administrative functions constituted or appointed
by any such authority;
1.1.25 "Law" means any law, statute, by-law, regulation
or any legally binding rule, directive,
guideline, policy, notice, order or ordinance of
any Governmental Authority, including Environmental
Laws;
1.1.26 "Leased Premises" has the meaning set out in
Section 3.1.13;
1.1.27 "Lien" in relation to any property or asset,
means any encumbrance or title defect of whatever
kind or nature, regardless of form, whether or
not recorded or registered or consensual or
statutory or arising by law, including
<PAGE> 8
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any lien, charge, mortgage, hypothecation, pledge,
security interest, assignment, lease, option,
easement, servitude, right of way, encroachment,
restrictive covenant, right of use or any other
claim or right of any kind or nature whatsoever
which affects ownership or possession of, or
title to, or any interest in, or the right to use
or occupy such property or asset;
1.1.28 "Material Contract" has the meaning set out in
Section 3.1.23;
1.1.29 "Midway Supply" means Midway Supply Ltd., a
corporation incorporated under the Companies Act
(British Columbia);
1.1.30 "Midway Supply Share Purchase Agreement" means
the share purchase agreement dated as of June 30,
1998 among Wood Wyant Inc., Stewart L. Smith and
The Smith Family Trust relating to the purchase
and sale of all of the issued and outstanding
shares of Midway Supply;
1.1.31 "Net Assets" means shareholders' equity as shown
on the Combined Closing Balance Sheet;
1.1.32 "Non-Canadian" has the meaning set out in
Section 3.3.4;
1.1.33 "Non-Competition Agreements" has the meaning set
out in Section 7.1.1.7;
1.1.34 "Parent Common Shares" means the common shares of
Wyant Corporation issuable to a holder of Class F
Shares in accordance with the exercise of the
retraction rights relating to the Class F Shares
as set out in Section 8 of the Class F Share
Conditions (as defined in the Covenant
Agreement);
1.1.35 "Permits" means all permits, licenses,
certificates, approvals, authorizations,
consents, registrations, qualifications and the
like issued by any Governmental Authority which
are held by the Corporation in connection with
the operation of the Business;
1.1.36 "Person" means an individual, corporation, joint
venture, partnership, trust, trustee,
unincorporated organization, or any other entity;
1.1.37 "Personal Property Leases" has the meaning set
out in Section 3.1.14;
1.1.38 "Premises Leases" has the meaning set out in
Section 3.1.13;
<PAGE> 9
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1.1.39 "Purchase Price" has the meaning set out in
Section 2.1.1;
1.1.40 "Purchased Shares" has the meaning set out in
Section 2.1.1;
1.1.41 "Related Person" means:
(a) with respect to any Person who is an individual,
a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law
of that person, including adoptive relationships;
and
(b) with respect to any Person, a Person that
directly, or indirectly through one or more
intermediaries, Controls, is Controlled by or is
under common Control with that person;
1.1.42 "Shares" has the meaning set forth in the
preamble hereto;
1.1.43 "Taxes" means all federal, provincial, local,
foreign and other taxes, including income taxes,
sales taxes, goods and services taxes, use taxes,
occupancy taxes, excise taxes, property taxes,
franchise taxes and employment and payroll
related taxes;
1.1.44 "Time of Closing" means 10 a.m. (Vancouver Time)
on the Closing Date; and
1.1.45 "Wyant" means Wyant Corporation.
1.2 Headings
The division of this Agreement into Articles and
Sections and the insertion of headings are for convenience of
reference only and shall not affect the construction or
interpretation of this Agreement. The terms "this Agreement",
"hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other
portion hereof and include any agreement supplemental hereto.
Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
<PAGE> 10
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1.3 Extended Meanings
In this Agreement words importing the singular number only
shall include the plural and vice versa, words importing the masculine gender
shall include the feminine and neutergenders and vice versa and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.
1.4 Accounting Principles
Wherever in this Agreement reference is made to a
calculation to be made in accordance with generally accepted
accounting principles, such reference shall be deemed to be to
the generally accepted accounting principles from time to time
approved by the Canadian Institute of Chartered Accountants, or
any successor institute, applicable as at the date on which such
calculation is made or required to be made in accordance with
generally accepted accounting principles ("GAAP").
1.5 Inclusive Language
As used herein, the word "or" is not exclusive and
the word "including" is not limiting (whether or not non-
limiting language such as "without limitation" or "but not
limited to" or words of similar import is used with reference
thereof).
1.6 Currency
All references to currency herein are to lawful money
of Canada.
1.7 Schedules
The following are the Schedules annexed hereto and
incorporated by reference and deemed to be part hereof:
<TABLE>
<S> <C> <C>
Schedule 2.1.1: Shareholders of the Corporation; Allocation of Purchase Price
Schedule 2.1.2: Class F Share Conditions
Schedule 3.1.3: Memorandum and Articles of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Corporate Reorganization Transactions
Schedule 3.1.11: Liens
Schedule 3.1.13: Leased Premises and Premises Leases
Schedule 3.1.14: Personal Property Leases
</TABLE>
<PAGE> 11
- 8 -
<TABLE>
<S> <C> <C>
Schedule 3.1.16: Inventory
Schedule 3.1.18: Capital Expenditures
Schedule 3.1.19: Dividends
Schedule 3.1.21: Tax Accounts
Schedule 3.1.22 Liabilities
Schedule 3.1.23: Material Contracts
Schedule 3.1.29: Employment Contracts
Schedule 3.1.30: Employee Benefit Plans
Schedule 3.1.34: Related Person Indebtedness
Schedule 3.1.36: Intellectual Property
Schedule 3.1.39: Insurance Policies
Schedule 3.1.41: Amounts payable to Related Persons
Schedule 3.1.42: Litigation
Schedule 3.1.45: Environmental Matters
Schedule 3.1.51 Bank Accounts
Schedule 3.3.7: Financial Statements of the Purchaser
Schedule 3.3.8: Memorandum on Rule 144 Resale of Restricted Securities
Schedule 7.1.1.7: Non-Competition Agreements
Schedule 7.1.1.8: Employment Agreement
Schedule 7.1.1.9: Escrow Agreement
Schedule 7.1.1.10: Opinion of the Vendors' Counsel
Schedule 7.2.1.6: Covenant Agreement
</TABLE>
ARTICLE 2 - PURCHASE AND SALE
2.1 Purchase and Sale and Purchase Price
2.1.1 Subject to the terms and conditions hereof, on
the Closing Date, each of the Vendors shall sell
to the Purchaser the number of Shares set
opposite the name of each Vendor on
Schedule 2.1.1 hereto (the aggregate number of
such Shares is herein collectively called the
"Purchased Shares") and the Purchaser shall
purchase the Purchased Shares from the Vendors,
free and clear of all Liens, for a total purchase
price of $1,000,000 (hereinafter referred to as
the "Purchase Price"), subject to adjustment in
accordance with Section 2.2, to be allocated
amongst the Vendors in accordance with Schedule
2.1.1.
2.1.2 The Purchase Price shall be paid against delivery
to the Purchaser of share certificates evidencing
the Purchased Shares duly endorsed for
<PAGE> 12
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transfer to the Purchaser and satisfied (i) as to an
aggregate amount of $558,840 payable pro rata to the
Vendors in accordance with their respective
shareholdings set forth in Schedule 2.1.1 by
certified cheque or bank draft to the order of
each of the Vendors, and delivered by the
Purchaser at the Time of Closing, (ii) as to
$14,705 payable by cheque to the order of
McCarthy Tetrault, as escrow agent, and delivered
by Bruce Ferrand at the Time of Closing, such
amount having been deposited "in trust" with
Bruce Ferrand by the Purchaser, (iii) as to
$14,705, by the delivery to McCarthy Tetrault, as
escrow agent, of a certified cheque or bank
draft, such amounts in (ii) and (iii) and
interest thereon to be held in escrow pursuant to
the Escrow Agreement in order to secure the
payment of any amounts due by the Vendors to the
Purchaser pursuant to this Agreement. The
escrowed funds will be dealt with on the terms
and conditions set forth in the Escrow Agreement,
and (iv) as to an aggregate amount of $411,750,
by the delivery pro rata to the Vendors in
accordance with their respective shareholdings
set forth in Schedule 2.1.1 at the Time of
Closing of a total of 36,600 class F exchangeable
shares of the capital stock of the Purchaser
("Class F Shares"), to be issued from treasury
and having the attributes set out in
Schedule 2.1.2.
2.2 Adjustment of the Purchase Price
2.2.1 The amount of the Purchase Price allocable to the
Common Shares is based on the assumption that the
net asset value ("Net Assets") of the Corporation
and Midway Supply, on a combined basis, on the
Combined Closing Balance Sheet shall be not less
than $1,600,000. In the event that Net Assets as
shown on the Combined Closing Balance Sheet are
greater or less than $1,600,000 on the Closing
Date, then the Vendors of the Common Shares of
Midway Supply will pay the Purchaser the amount
of the shortfall (in accordance with the
percentages of their Common Shares set out on
Schedule 2.1.1 to the Midway Supply Share
Purchase Agreement) or the Purchaser will pay the
Vendors of the Common Shares of Midway Supply the
amount of the excess (in accordance with the
percentages of their Common Shares set out on
Schedule 2.1.1 to the Midway Supply Share
Purchase Agreement), as the case may be, together
with interest on such amount at the rate of 6%
per annum calculated from the Closing Date to the
date of payment.
<PAGE> 13
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2.2.2 On or before August 31, 1998, the Vendors shall
deliver the Closing Balance Sheet and the
Combined Closing Balance Sheet to the Purchaser.
2.2.3 The Closing Balance Sheet and the Combined
Closing Balance Sheet shall be final, conclusive
and binding unless the Purchaser gives written
notice of its disagreement with any item or items
thereon within 30 days following the receipt of
the Closing Balance Sheet, specifying in
reasonable detail the nature and extent of such
disagreement.
2.2.4 If within 5 days following the receipt by the Vendors
of a notice of the type referred to in Section 2.2.3,
the Vendors and the Purchaser are unable to resolve
any disagreement with respect to the Closing Balance
Sheet, Combined Closing Balance Sheet and the
determination of Net Assets, the disagreement shall
be submitted to Price Waterhouse for arbitration.
Price Waterhouse shall act as an arbitrator to
determine and resolve only those issues in dispute.
Price Waterhouse shall deliver a decision within 30
days of the submission of the dispute, and such
decision shall be consistent with this Agreement,
shall be set forth in a written statement delivered
to the Purchaser and the Vendors and shall be final,
conclusive and binding on the Purchaser and the
Vendors. The adjusting payments, if any, required by
Section 2.2.1 shall be made forthwith after receipt
of the final determination of Net Assets by Price
Waterhouse, together with all interest thereon at the
rate of 6% per annum from the Closing Date to the
date of payment. The fees and expenses of Price
Waterhouse in connection with any such determination
shall be paid one half by the Vendors and one half by
the Purchaser. Otherwise, the Purchaser and the
Vendors shall each pay their own costs incurred,
including the fees and expenses of their respective
accountants or attorneys, if any.
2.3 Closing
The sale and purchase of the Purchased Shares and the
execution and delivery of the Ancillary Agreements shall be
completed at the Time of Closing at the offices of McCarthy
Tetrault, Pacific Centre 777 Dunsmuir Street, Vancouver, British
Columbia.
<PAGE> 14
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Vendors
The Vendors jointly and severally represent and warrant
to the Purchaser the following, and acknowledge that the
Purchaser is entitled to rely on such representations and
warranties notwithstanding any due diligence investigation done
by the Purchaser prior to the closing:
3.1.1 the Corporation is the corporation continuing as
a result of the amalgamation of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.
pursuant to the Corporate Reorganization; the
Corporation has been duly organized and validly
subsists under the laws of British Columbia as a
private issuer as that term is defined in the
Securities Act (British Columbia) with the
corporate power to own its assets and to carry on
the Business and has made all necessary filings
under all applicable corporate, securities and
taxation Laws or any other Laws to which the
Corporation is subject and is qualified to own
its properties and assets and to carry on the
Business as presently carried on by it;
3.1.2 Schedule 2.1.1 sets out (i) the authorized
capital of the Corporation and (ii) the number of
Shares of the Corporation which are issued and
outstanding, which shares have been validly
issued as fully paid and non-assessable and
registered in the names of the Vendors as set
forth on Schedule 2.1.1;
3.1.3 a true and complete copy of the Memorandum and
Articles of the Corporation, including the
rights, privileges, restrictions and conditions
attached to the Shares is attached hereto as
Schedule 3.1.3 attached hereto;
3.1.4 the Purchased Shares constitute all of the issued
and outstanding Shares in the capital stock of
the Corporation;
3.1.5 each of the Vendors is the beneficial and
registered owner of the number of Purchased
Shares set opposite the name of such Vendor on
Schedule 2.1.1, free and clear of all Liens,
options and any other rights of others;
<PAGE> 15
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3.1.6 there is no contract, option or any other right
of another binding upon or which at any time in
the future may become binding upon:
(i) any of the Vendors to sell, transfer, assign, or
grant any Lien on or affecting, or in any other
way dispose of or encumber any of the Purchased
Shares other than pursuant to the provisions of
this Agreement or any of its assets other than in
the ordinary course of business, or
(ii) the Corporation to allot or issue any of the
unissued shares or securities of the Corporation
or to create any additional class of shares or
securities;
3.1.7 except as disclosed on Schedule 3.1.7, neither
the entering into nor the delivery of this
Agreement and the Ancillary Agreements nor the
completion of the transactions contemplated
hereby by each of the Vendors will result in the
violation of or require the Consent of any third
party pursuant to:
(i) any of the provisions of the Memorandum or
Articles of Amalgamation of the Corporation;
(ii) any agreement or other instrument to which the
Corporation or any of the Vendors is a party or
by which the Corporation or any of the Vendors is
bound, or
(iii) any applicable Law;
3.1.8 the financial statements of each of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.,
consisting of the Balance Sheet and statements of
income and retained earnings for the period ended
on the Balance Sheet Date, together with a notice
to reader from Cinnamon Jang Willoughby &
Company, chartered accountants, thereon and the
notes thereto (hereinafter collectively referred
to as the "Financial Statements"), a copy of
which is attached hereto as Schedule 3.1.8:
(i) are in accordance with the books and accounts of
each of Fraser Valley Industrial Chemicals Inc.
and 430639 B.C. Ltd. as at the Balance Sheet
Date,
<PAGE> 16
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(ii) are true and correct and present fairly the
financial position of each of Fraser Valley
Industrial Chemicals Inc. and 430639 B.C. Ltd.
as at the Balance Sheet Date,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities
of each of Fraser Valley Industrial Chemicals
Inc. and 430639 B.C. Ltd. as at the Balance
Sheet Date including, without limiting the
generality of the foregoing, all contingent
liabilities of each of Fraser Valley Industrial
Chemicals Inc. and 430639 B.C. Ltd. as at the
Balance Sheet Date;
3.1.9 since the Balance Sheet Date, the Business of
each of Fraser Valley Industrial Chemicals Inc.
and 430639 B.C. Ltd. and of the Corporation has
been carried on in its usual and ordinary course
and in a manner consistent with prior practices
and each of Fraser Valley Industrial Chemicals
Inc. and 430639 B.C. Ltd. and the Corporation has
not, since the Balance Sheet Date, entered into
any transaction out of the usual and ordinary
course of business other than the Corporate
Reorganization;
3.1.10 since the Balance Sheet Date, there has been no
material change in the affairs, business,
prospects, operations or condition of each of
Fraser Valley Industrial Chemicals Inc. and
430639 B.C. Ltd. and the Corporation, financial
or otherwise, whether arising as a result of any
legislative or regulatory change, revocation of
any Permit or right to do business, fire,
explosion, accident, casualty, labour dispute,
flood, drought, riot, storm, expropriation,
condemnation, act of God, public force or
otherwise, except changes occurring in the usual
and ordinary course of business which have not
adversely affected the affairs, business,
prospects, operations or condition of each of
Fraser Valley Industrial Chemicals Inc., 430639
B.C. Ltd. and the Corporation, financial or
otherwise;
3.1.11 the Corporation is the owner with a good and
marketable title, free and clear of all Liens,
options and any other rights of others, except
for the Liens described on Schedule 3.1.11 of all
assets shown or reflected on the Balance Sheet,
except only such of the assets of each of Fraser
Valley Industrial Chemicals Inc., 430639 B.C.
Ltd. and the Corporation as have been disposed of
in the usual and ordinary course of business
since the Balance Sheet Date, and of all assets
acquired by each of Fraser
<PAGE> 17
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Valley Industrial Chemicals Inc., 430639 B.C. Ltd.
and the Corporation since the Balance Sheet Date;
3.1.12 all machinery, equipment and automotive equipment
owned or used by the Corporation has been
properly maintained and is in good working order
for the purposes of ongoing operation, subject to
ordinary wear and tear for machinery and
equipment of comparable age;
3.1.13 Schedule 3.1.13 sets forth a true and complete
list of all premises leased by the Corporation
("Leased Premises") and any lease in respect
thereof to which the Corporation is a party
("Premises Leases") and: (i) each Premises Lease
is in full force and effect, unamended by oral or
written agreement, and the Corporation is
entitled to the full benefit and advantage of
such Premises Lease in accordance with the terms
thereof, (ii) each Premises Lease is in good
standing, all rental and other payments payable
by the Corporation under the leases have been
duly paid, (iii) there is currently no
outstanding default by the Corporation under the
Premises Leases nor is there currently any
outstanding default by any landlord thereunder or
dispute between the Corporation and any landlord
under any of the Premises Leases; (iv) the
Corporation has not sublet, assigned or
transferred any of its interests in such Premises
Lease and (v) the Leased Premises are the only
premises used by the Corporation;
3.1.14 Schedule 3.1.14 sets forth a true and complete
list of all lease agreements concerning personal
property leased by the Corporation ("Personal
Property Leases") and: (i) each Personal Property
Lease is in full force and effect, unamended by
oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of
each Personal Property Lease in accordance with
the terms thereof, (ii) each Personal Property
Lease is in good standing, all rental and other
payments payable by the Corporation under the
Personal Property Leases have been duly paid,
(iii) there is currently no outstanding default
by the Corporation thereunder nor of the other
parties thereunder nor dispute between the
Corporation and any other party thereunder, and
(iv) the Corporation has treated all Personal
Property Leases as operating leases for Canadian
income tax purposes;
3.1.15 except for the Premises Leases, the Corporation
holds no ownership or other interest in or right
affecting any real estate or real property;
<PAGE> 18
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3.1.16 the inventory of the Corporation consist of items
saleable in the ordinary course of business
reasonably fit for their usual purpose, except
for obsolete and slow-moving items and materials
below standard quality which have been written
down on the books of account of the Business to
net realizable value, or adequate reserves having
been provided therefor, all in accordance with
GAAP. Except as disclosed in Schedule 3.1.16,
there is no recurring or ongoing high incidence
of product failure or warranty claims against the
Corporation related to the Business;
3.1.17 there are no outstanding orders, notices or
similar requirements relating to the Corporation
issued by any Governmental Authority, including
building, environmental, fire, health, labour or
police authorities, and there are no matters
under discussion with any such Governmental
Authority relating to orders, notices or similar
requirements;
3.1.18 except as disclosed on Schedule 3.1.18, since the
Balance Sheet Date, no single capital expenditure
in excess of $25,000 or capital expenditures in
the aggregate in excess of $50,000 have been made
or authorized by Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. or the
Corporation;
3.1.19 except as disclosed on Schedule 3.1.19, since the
Balance Sheet Date, no dividends have been
declared or paid on or in respect of the Shares
and no other distribution on any of its
securities or shares has been made by Fraser
Valley Industrial Chemicals Inc., 430639 B.C.
Ltd. or the Corporation and all dividends which
to the date hereof have been declared or paid by
Fraser Valley Industrial Chemicals Inc., 430639
B.C. Ltd. or the Corporation have been duly and
validly declared and are fully paid;
3.1.20 the Corporation does not have any liability,
obligation or commitment for the payment of Taxes
of whatever nature or kind, or interest or
penalties with respect thereto, except such as
are disclosed in the Financial Statements or such
Taxes not yet due as have arisen since the
Balance Sheet Date in the usual and ordinary
course of business and for which adequate
provision in the accounts of the Corporation has
been made, and the Corporation is not in arrears
with respect to any required withholdings or
instalment payments or other payments of any Tax
or duty of any kind or any penalty or interest
thereon and has not filed any waiver for a
taxation year of Fraser Valley Industrial
Chemicals Inc.,
<PAGE> 19
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430639 B.C. Ltd. or the Corporation under the Income
Tax Act (Canada) or any other legislation imposing
Tax on the Corporation; all obligations of the
Corporation with respect to its employees for
withholding Taxes, Canada Pension Plan contributions,
unemployment insurance contributions and workers
compensation remittances or contributions of any kind
which are due as of the Closing Date will have been
paid by the Corporation prior to the Closing Date;
there are no outstanding disputes with or assessments
from the Workmen's Compensation Board of British
Columbia or the Employment Standards Branch;
3.1.21 the tax accounts of the Corporation as disclosed
in Schedule 3.1.21 attached hereto are true and
complete in all material respects;
3.1.22 except as disclosed on Schedule 3.1.22, there are
no outstanding liabilities (whether absolute or
contingent) against the Corporation except trade
debts incurred in the usual and ordinary course
of business;
3.1.23 set forth on Schedule 3.1.23 is a true and
complete list of all contracts or agreements
(except for the Premises Leases, the Personal
Property Leases and the employment agreement with
the Vendors listed on Schedule 3.1.29) to which
the Corporation is a party or is otherwise bound
which are (i) outside the ordinary course of
business, (ii) involve a financial commitment by
the Corporation of at least $25,000, (iii) have a
term in excess of 60 days or (iv) to which any
Related Person of the Corporation is a party
(collectively, the "Material Contracts" and
individually, a "Material Contract"). Subject
only to the requirement to obtain the Consents,
the Corporation has not received notice of any
default, and the Corporation is not in default,
under any Material Contract, nor has there
occurred any event which, with a lapse of time or
giving of notice, or both, would constitute such
a default. Subject only to the requirement to
obtain the Consents, each Material Contract is in
full force and effect, unamended by written or
oral agreement and the Corporation is (i)
entitled to the full benefit and advantage of
each Material Contract in accordance with the
terms thereof, (ii) each Material Contract is in
good standing, and (iii) there is no currently
outstanding default by the Corporation nor by any
other party thereunder nor is there a dispute
between the Corporation and any party thereunder;
3.1.24 the Corporation is not in default or breach of
any contract or commitment to which it is a party
and there exists no condition, event or
<PAGE> 20
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act which, with the giving of notice or lapse of
time or both would constitute such a default or
breach and all such contracts and commitments are in
good standing and in full force and effect
without amendment thereto and the Corporation is
entitled to all benefits thereunder;
3.1.25 the Corporation is not a party to or bound by any
guarantee, indemnification, surety or similar
obligation;
3.1.26 the Corporation does not have any subsidiaries or
agreements, options or commitments to acquire any
shares or securities of any corporation or
interests of or in any other entity or to acquire
or lease any business operations, real property
or assets;
3.1.27 there is no agreement, option, understanding or
commitment, or any right or privilege capable of
becoming an agreement, for the purchase from the
Corporation of the Business or any of its assets
other than in the usual and ordinary course of
business;
3.1.28 the Corporation is not a party to or bound by any
contract or commitment to pay any royalty,
licence fee or management fee or which contains
restrictive covenants or covenants not to compete
in any line of business with any other Person;
3.1.29 the Corporation does not have any employment
contract, whether written or oral, with any
person whomsoever except contracts with the
employees as are listed in Schedule 3.1.29
attached hereto, whether or not such contracts
are in writing; Schedule 3.1.29 truly and
correctly sets out for each employee of the
Corporation, the annual salary, job function, the
length of employment of each of the employees
with the Corporation and other remuneration
(including any bonus, deferred compensation,
incentive profit sharing, remuneration, medical
insurance, pension, retirement, vacation and such
leave arrangements) as well as all accrued and
unpaid vacation pay and sick pay payable to each
employee; no labour relations or labour
standards, discrimination in employment or
employment practices, harassment, occupational
health and safety standards or workers
compensation issue or matter is pending or, to
Vendors' knowledge, threatened with respect to
any employee of the Corporation; except as
disclosed in Schedule 3.1.29, to the best of the
knowledge of the Vendors, no employee has made or
has any basis for
<PAGE> 21
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making any claim (whether under Law, any employment
contract, or otherwise) on account of or for
(i) overtime pay, other than overtime for the current
payroll period, (ii) wages or salary for any period
other than the current payroll period, (iii) vacation
time off, sick time or pay in lieu of any of the
foregoing, other than that earned in respect of the
current payroll period or (iv) any violation of any
Law;
3.1.30 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without limiting the
generality of the foregoing, any pension plan
maintained by or on behalf of the Corporation for
any of its employees,
except such agreements and plans as are listed in
Schedule 3.1.30 attached hereto;
3.1.31 all benefit plans listed in Schedule 3.1.30
attached hereto have been duly registered where
required by, and are in good standing under, all
applicable Laws including, without limiting the
generality of the foregoing, the Income Tax Act
(Canada) and the Pension Benefits Standards Act
(British Columbia) and all required employer
contributions under any such plans have been made
and the applicable funds have been funded in
accordance with the terms thereof of the plans
and no past service funding liabilities exist
thereunder;
3.1.32 no trade union, council of trade unions, employee
bargaining agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of
the Corporation's employees by way of
certification, interim certification, voluntary
recognition, designation or successor rights,
(ii) has applied to be certified as the bargaining
agent of any of the Corporation's employees;
3.1.33 except for (i) remuneration paid to employees in
the usual and ordinary course of business and
made at current rates of remuneration,
(ii) dividends disclosed on Schedule 3.1.19, and
(iii) a bonus in the amount of $5,000 payable to
Gordon Mitchell since the Balance Sheet
<PAGE> 22
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Date, no payments have been made or authorized by
each of Fraser Valley Industrial Chemicals Inc.,
430369 B.C. Ltd. and the Corporation to officers,
directors or employees of each of Fraser Valley
Industrial Chemical Inc., 430639 B.C. Ltd. and the
Corporation;
3.1.34 except as disclosed on Schedule 3.1.34, no
Vendor, director, former director, officer,
shareholder or employee of the Corporation or any
Person who is a Related Person with any such
Person is indebted to the Corporation;
3.1.35 the Corporation is not conducting its business in
any jurisdiction other than the Province of
British Columbia;
3.1.36 attached hereto as Schedule 3.1.36 is a list of
all registered trade marks, trade names, patents
and copyrights, of all unregistered trade marks,
trade names and copyrights and of all patent
applications, trade mark registration
applications and copyright registration
applications, both domestic and foreign, owned or
made by the Corporation;
3.1.37 all trade marks, trade names, patents and
copyrights, both domestic and foreign, used in or
required for the proper carrying on of the
Corporation's Business are validly and
beneficially owned by the Corporation with the
sole and exclusive right to use the same and are
in good standing and duly registered in all
appropriate offices to preserve the right thereof
and thereto;
3.1.38 the conduct of the Business by the Corporation
does not infringe upon the trade marks, trade
names, patents or copyrights, domestic or
foreign, of any other Person;
3.1.39 attached hereto as Schedule 3.1.39 is a true and
complete list of all insurance policies
maintained by the Corporation that also specifies
the insurer, the amount of the coverage, the type
of insurance, the policy number and any pending
claims thereunder and any previous insurance
claims that have been made by the Corporation;
the Corporation maintains third party liability
and property damage automobile insurance in an
amount of not less than $1,000,000 per occurance
for all vehicles owned or leased by the
Corporation; all such insurance policies are in
full force and effect and the premiums have been
fully paid to date;
<PAGE> 23
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3.1.40 none of the Vendors is a non-resident person within
the meaning of Section#116 of the Income Tax Act
(Canada); and
3.1.41 the Corporation is not indebted to any Related
Person, except for salary and other similar
compensation accrued to the Closing Date and payable
to the Vendors, or except as set out in Schedule
3.1.41;
3.1.42 except as disclosed on Schedule 3.1.42 hereto, there
is no action, suit, proceeding, claim, grievance or
investigation in any court or before any arbitrator
or before of by any Governmental Authority existing,
pending or threatened, related to the Business or the
transactions contemplated by this Agreement; and
there is no factual or legal basis which could give
rise in the future to the pendency or threat of any
such action, suit, proceeding, claim or investigation
which could, if determined adversely, have a material
adverse effect on the Corporation or the ability of
the Corporation to carry on the Business following
Closing;
3.1.43 the Corporation and the Leased Premises (being all
premises from which it conducts the operations of the
Business) are in compliance with all applicable Laws
of all Governmental Authorities having jurisdiction,
are not in breach of any such Laws and there is no
requirement to conduct a corrective or remedial
action with respect to such premises in order to
carry on the Business as presently conducted, and the
Corporation is duly licensed, registered or
qualified, and duly possesses and is in compliance
with all Permits and quotas, in the Province of
British Columbia and all municipalities thereof in
which the Corporation carries on its business to
enable the Business to be carried on as now conducted
and its assets to be owned, leased and operated, and
all such Permits are valid and subsisting and in good
standing and none of the same contains or is subject
to any term, provision, condition or limitation which
has or may have an adverse effect on the operation of
the Business or which may adversely change or
terminate such Permit by virtue of the completion of
the transactions contemplated hereby;
3.1.44 the operation of the Corporation on the Leased
Premises is not subject to any restriction or
limitation and is not in contravention of any Law or
of any decree or order of any Governmental Authority
having jurisdiction;
<PAGE> 24
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3.1.45 except as specifically disclosed in
Schedule#3.1.45 and without limiting the
scope of any other representation and
warranty herein:
3.1.45.1 the Business, the Leased Premises and the
Corporation have been and are in compliance
with applicable Laws, including, without
limitation, Environmental Laws;
3.1.45.2 the Corporation holds all Permits required
under applicable Environmental Laws for the
operation of the Business (the
"Environmental Permits"); each Environmental
Permit is valid and in force and the
operations of the Corporation are in
compliance with the conditions set out in
the Environmental Permits; there are no
grounds for revocation, expiry or annulment
of any Environmental Permits;
3.1.45.3 the Vendors, each of Fraser Valley
Industrial Chemicals Inc., 430639 B.C. Ltd.
and the Corporation, and their respective
employees, agents, shareholders, directors
and officers have never been declared guilty
of committing an offence for a violation of
Environmental Laws and have never had a fine
imposed against them and have never
otherwise settled such a prosecution in
relation to the Business or the premises
used in the Business;
3.1.45.4 there are no Contaminants, waste or
pollutants of any kind whatsoever in, on or
under the Leased Premises or in, on or under
the assets of the Business or the
Corporation, the presence of which
constitutes a violation of applicable
Environmental Laws;
3.1.45.5 the waste, effluents and air emissions
generated by the operation of the Business
by the Corporation have been and are
treated, transported and eliminated in
accordance with applicable Environmental
Laws;
3.1.45.6 the Corporation has not received any written
or verbal notice or request for information
in the context of any environmental federal,
provincial, regional or municipal
investigation or inspection;
3.1.45.7 the Corporation does not own or use any
underground or aboveground storage tank in
connection with the Business;
<PAGE> 25
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3.1.45.8 there are no PCBs, asbestos, urea formaldehyde or
radioactive substances in, on or under the premises
used by the Corporation in connection with the
Business; and
3.1.45.9 there is no present requirement of any applicable
Environmental Law which is due to be imposed which
will materially increase the Corporation's cost of
complying with the Environmental Laws.
3.1.46 the Closing Balance Sheet and statements of income,
retained earnings and changes in financial position
for the period ended on the Closing Date, together
with the audit report of Cinnamon Jang Willoughby &
Company, chartered accountants, thereon and the notes
thereto:
(i) will be in accordance with the books and accounts
of the Corporation as at the Closing Date;
(ii) will be true and correct and present fairly the
financial position of the Corporation as at the
Closing Date;
(iii) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in
the preparation of the Financial Statements; and
(iv) will present fairly all of the assets and
liabilities of the Corporation as at the Closing
Date including, without limiting the generality
of the foregoing, all contingent liabilities of
the Corporation as at the Closing Date;
3.1.47 the Combined Closing Balance Sheet as at the Closing
Date, together with the review engagement report of
Cinnamon Jang Willoughby & Company, chartered
accountants, thereon and the notes thereto:
(i) will be in accordance with the books and accounts
of the Corporation and Midway Supply as at the
Closing Date;
(ii) will be true and correct and present fairly the
combined financial position of the Corporation
and Midway Supply as at the Closing Date;
(iii) will reflect the elimination of all intercompany
profits included in ending inventory of either
the Corporation or Midway Supply;
<PAGE> 26
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(iv) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in
the preparation of the Balance Sheet; and
(v) will present fairly all of the assets and
liabilities of the Corporation and Midway Supply
as at the Closing Date including, without
limiting the generality of the foregoing, all
contingent liabilities of the Corporation and
Midway Supply as at the Closing Date;
3.1.48 the accounts receivable of the Corporation which
will be shown on the Closing Balance Sheet will
be collectible in the ordinary and usual course
of business and the Closing Balance Sheet will
include an appropriate allowance for
uncollectible accounts;
3.1.49 the Closing Balance Sheet will include an
appropriate allowance for earned but unused
vacation;
3.1.50 the minute books of Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. and the
Corporation contain a complete record of all
material decisions taken by the directors and of
the shareholders of Fraser Valley Industrial
Chemicals Inc., 430639 B.C. Ltd. and the
Corporation; Fraser Valley Industrial Chemicals
Inc.'s, 430639 B.C. Ltd.'s and the Corporation's
financial and other books and records accurately
reflect the financial transactions and the
operations related to the Business;
3.1.51 Schedule 3.1.51 hereto sets forth a complete list
of all bank accounts and similar accounts held or
operated by the Corporation, stating the name of
the financial institution, the account number and
the persons having authority to sign in respect
of each such account.
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.2.1 The representations and warranties of the Vendors
set forth in Section#3.1 shall survive the
completion of the sale and purchase of the
Purchased Shares herein provided for and,
notwithstanding such completion, the
representations and warranties set forth in
Section 3.1 shall continue in full force and
effect for the benefit of the Purchaser for a
period of three years from the Closing Date,
except for the representations and warranties of
the Vendors set forth in Sections 3.1.1, 3.1.2,
3.1.3, 3.1.4, 3.1.5, 3.1.6, 3.1.7 and 3.1.11 and
any representation and warranty fraudulently
made, all of which shall survive
<PAGE> 27
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in perpetuity and the representations and warranties
in relation to Taxes, all of which shall survive
until the expiry of the longest limitation period
under applicable Law relating thereto.
3.2.2 The covenants of the Vendors set forth in this
Agreement shall survive the completion of the
sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall
continue in full force and effect for the benefit
of the Purchaser in accordance with the terms
thereof.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.3.1 the Purchaser is a corporation duly incorporated,
organized and subsisting under the laws of
Canada;
3.3.2 the Purchaser has good and sufficient power,
authority and right to enter into and deliver
this Agreement and the Ancillary Agreements and
to complete the transactions to be completed by
the Purchaser contemplated hereby;
3.3.3 the Class F Shares will, at closing, be validly
issued to the Vendors in accordance with
Schedule 2.1.1 as fully paid and non-assessable;
3.3.4 Purchaser is not a "non-Canadian" for the
purposes of and within the meaning of the
Investment Canada Act, R.S.C. 1985, c. 28 (1st
Supp.);
3.3.5 Purchaser is not a non-resident of Canada for the
purposes of the Income Tax Act, S.C. 1970-72-72
c. 63 (Canada);
3.3.6 Purchaser is a taxable Canadian corporation as
defined in subsection 89(1) of the Income Tax Act
(Canada);
3.3.7 the audited financial statements of the Purchaser
for the period ended December 31, 1997, together
with the report thereon of Ernst & Young, dated
February 13, 1998 annexed hereto as
Schedule 3.3.7:
(i) are in accordance with the books and accounts of
the Purchaser as at December 31, 1997,
<PAGE> 28
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(ii) are true and correct and present fairly the
financial position of the Purchaser as at
December 31, 1997,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities
of the Purchaser as at December 31, 1997
including, without limiting the generality of the
foregoing, all contingent liabilities of the
Purchaser as at December 31, 1997; and
3.3.8 based on advice received from Winthrop, Stimson,
Putnam & Roberts, Purchaser's U.S. securities law
counsel, as set forth in the memorandum attached
as Schedule 3.3.8, and subject to the
qualifications set forth in the memorandum, the
Class F Shares and the Parent Common Shares
(i) under Rule 144 of the United States Securities
Act of 1933, as amended, ("Rule 144"), are not
tradeable by the Vendors within the first twelve
months following the Closing Date,
(ii) under Rule 144, are tradeable by the Vendors in
the second twelve month period following the
Closing Date, subject to the volume of sale and
manner of sale restrictions set out in the
memorandum, and
(iii) under Rule 144, are tradeable by the Vendors
without restrictions other than the manner of
sale restrictions referred to in the memorandum
commencing the third year following the Closing
Date.
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.4.1 The representations and warranties of the
Purchaser set forth in Section 3.3 shall survive
the completion of the sale and purchase of the
Shares herein provided for and, notwithstanding
such completion, the representations and
warranties set forth in Section 3.3 shall
continue in full force and effect for the benefit
of the Vendors for a period of three years from
the Closing Date, except for the representations
and warranties of the Purchaser set forth in
Sections 3.3.1, 3.3.2 and 3.3.3 any
representation and warranty fraudulently made,
all of which shall survive in perpetuity and the
representations and warranties in relation to
Taxes, all of which shall survive until the
expiry of the longest limitation period under
applicable Law relating thereto.
<PAGE> 29
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3.4.2 The covenants of the Purchaser set forth in this
Agreement shall survive the completion of the
sale and purchase of the Shares herein provided
for and, notwithstanding such completion, shall
continue in full force and effect for the benefit
of the Vendors in accordance with the terms
thereof.
ARTICLE 4 - COVENANTS
4.1 TAXES
The Purchaser does not assume and shall not be liable for any
taxes under the Income Tax Act (Canada) or any other taxes whatsoever which may
be or become payable by the Vendors including, without limiting the generality
of the foregoing, any taxes resulting from or arising as a consequence of the
sale by the Vendors to the Purchaser of the Purchased Shares herein
contemplated, and the Vendors shall indemnify and save harmless the Purchaser
from and against all such taxes.
4.2 COVENANTS OF THE VENDORS
4.2.1 Each of the Vendors shall jointly and severally
indemnify and save harmless the Purchaser and the
officers and directors of the Purchaser from and
against all claims, actions, demands, suits,
proceedings, losses, damages, fines, liabilities
(whether accrued, actual, contingent or
otherwise), costs and expenses, including
reasonable environmental characterization and
remediation costs, reasonable lawyers fees and
other reasonable consultants fees, directly or
indirectly suffered by the Purchaser and the
officers and directors of the Purchaser from any
breach of any covenant of the Vendors contained
in this Agreement or from any inaccuracy or
misrepresentation in any representation or
warranty set forth in Section 3.1 notwithstanding
any information obtained by the Purchaser at or
before the Closing Date as to such inaccuracy or
misrepresentation.
4.2.2 The Vendors shall ensure that the representations
and warranties of the Vendors set out in Section
3.1 are true and correct at the Time of Closing
and that the conditions of closing for the
benefit of the Purchaser set out in Section 7.1.1
over which the Vendors have reasonable control
have been performed or complied with by the Time
of Closing.
<PAGE> 30
- 27 -
4.2.3 The Vendors shall permit the Purchaser, through
its agents and representatives, to make such
reasonable investigation prior to and at the Time
of Closing of the assets of the Corporation and
of its financial and legal condition as the
Purchaser considers necessary or advisable to
familiarize itself with such assets and other
matters and the Vendors shall supply any and all
documents and records of the Corporation to the
Purchaser and its agents and representatives as
they may reasonably require. The Vendors shall
also permit the inspection of the assets of the
Corporation by the Purchaser prior to and at the
Time of Closing by such federal, provincial or
municipal authorities as the Purchaser may
require. Such investigations and inspections
shall not, however, affect or mitigate the
Vendors' covenants, representations and
warranties hereunder which shall continue in full
force and effect.
4.2.4 The Vendors shall use their best efforts as
employees of the Corporation to ensure that the
Corporation's relationships with suppliers
continue on substantially the same terms and
conditions following the Closing Date.
4.2.5 Each of the Vendors shall indemnify and save
harmless the Purchaser and the officers and
directors of the Purchaser from and against all
liabilities (whether actual, contingent, accrued
or otherwise), claims and demands of or in
connection with any matter relating to any
contracts between the Corporation and any Related
Person entered into prior to the date of this
Agreement and which are not disclosed in the
Schedules hereto.
4.3 COVENANTS OF THE PURCHASER
4.3.1 The Purchaser shall ensure that the
representations and warranties of the Purchaser
set out in Section 3.3 are true and correct at
the Time of Closing and that the conditions of
closing for the benefit of the Vendors set out in
Section 7.2.1 over which the Purchaser has
reasonable control have been performed or
complied with by the Time of Closing.
4.3.2 The Purchaser shall indemnify and save harmless
the Vendors from and against all losses, damages
or expenses directly or indirectly suffered by
the Vendors resulting from any breach of any
covenant of the Purchaser contained in this
Agreement or from any inaccuracy or
misrepresentation in any representation or
warranty set forth in Section 3.3.
<PAGE> 31
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4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS
The Vendors acknowledge and agree that:
4.4.1 the Class F Shares have not been, and the Parent
Common Shares will not be, registered under the
United States Securities Act of 1933, as amended (the
"Securities Act"), or any other securities laws of
the United States or Canada (the "Securities Laws")
because Purchaser is issuing the Class F Shares, and
Wyant Corporation will be issuing the Parent Common
Shares, in reliance upon exemptions from the
registration and prospectus requirements of the
Securities Laws which they believe are available in
connection with the transactions contemplated by this
Agreement;
4.4.2 Purchaser has relied upon the fact that the Class F
Shares and the Parent Common Shares are to be held by
the Vendors for investment; and
4.4.3 exemption from registration under the Securities Laws
would not be available if the Class F Shares and the
Parent Common Shares were acquired by the Vendors
with a view to distribution.
Accordingly, the Vendors hereby confirm to Purchaser and Wyant
Corporation that the Vendors are acquiring the Class F Shares, and will acquire
the Parent Common Shares, for the account of the Vendors, for investment and not
with a view to the resale or distribution thereof under the Securities Laws. The
Vendors agree not to transfer, sell or offer for sale all or any portion of the
Class F Shares and the Parent Common Shares, unless there is an effective
registration or other qualification or exemption relating thereto under the
Securities Laws. The Vendors understand that neither Purchaser nor Wyant
Corporation is under any obligation to register the Class F Shares and the
Parent Common Shares or to assist the Vendors in complying with any exemption
from registration under the Securities Laws. Prior to acquiring the Class F
Shares and, upon exchange, the Parent Common Shares, the Vendors have made such
investigation of Purchaser and Wyant Corporation and their respective businesses
as the Vendors have deemed advisable and has had made available to the Vendors
all information with respect thereto that the Vendors have requested to make an
informed decision to acquire the Class F Shares and the Parent Common Shares.
The Vendors consider themselves to be persons possessing experience and
sophistication as an investor that is adequate for the evaluation of the merits
and risk of the Vendors' investment in the Class F Shares and, upon exchange,
the Parent Common Shares. The Vendors acknowledge that each certificate for the
Class F Shares and the Parent Common Shares will be imprinted with a legend in
substantially the following form: "The securities represented by this
certificate were originally issued on June 30, 1998,
<PAGE> 32
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and have not been registered under the Securities Act of 1933, as amended, or
any other securities laws of the United States or Canada. The transfer of the
securities represented by this certificate is subject to the conditions
specified in Section 4.4 of the Share Purchase Agreement dated as of June 30,
1998 among the parties thereto, and The Purchaser reserves the right to refuse
the transfer of such securities until such conditions have been fulfilled with
respect to such transfer. A copy of such conditions will be furnished by the
Purchaser to the holder hereof upon written request and without charge."
ARTICLE 5 - THIRD PARTY CLAIMS
In the event of a third party claim against Purchaser or the
Corporation for which the Vendors are or may be liable hereunder:
5.1 Purchaser shall tender in writing defence of the claim to the
Vendors, within 15 working days after the Purchaser knows of the
claim. The Vendors shall have the right, by notice to the
Purchaser within 30 days following the receipt of the notice by
the Purchaser of the third party claim, to assume the defence of
such third party claim, with counsel reasonably satisfactory to
the Purchaser and at no cost to the Purchaser. If the Purchaser
so chooses, the Purchaser may participate in the defence of such
third party claim at its sole cost and expense; provided,
however, that such participation may not in any way interfere
with or contradict the defence of such claim. The Vendors shall
cooperate fully to make available to the Purchaser, at the
Purchaser's expense, all pertinent information and witnesses
under the Vendors' control, make such assignments and take such
other steps as may be reasonably requested by counsel for the
Purchaser to conduct such defence.
5.2 In the event that the Vendors assume the defence of such third
party claim, the Vendors, at their expense, shall diligently
proceed with the defence of said third party claim and, in
connection therewith, the Purchaser, at the Vendors' expense,
shall cooperate fully to make available to the Vendors, all
pertinent information and witnesses under the Purchaser's
control, make such assignments and take such other steps as may
be reasonably requested by counsel for the Vendors to conduct
such defence.
5.3 The Vendors shall not make any settlement or compromise of any
third party claim without the written consent of the Purchaser,
which consent shall not be unreasonably withheld or delayed.
<PAGE> 33
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5.4 Subject to the provisions of Section 5.3, the final resolution
or determination of any such third party claim, including all
related costs and expenses, will be binding and conclusive upon
the parties hereto.
5.5 Should the Vendors fail to assume the defence of any third party
claim or fail to diligently and reasonably defend such third
party claim, the Vendors' right to defend the claim shall
terminate and the Purchaser shall be solely entitled to defend,
settle and compromise such third party claim as in its
reasonable discretion may appear advisable, and the resolution
or final determination of such defence, settlement or
compromise, including all related costs and expenses, will be
binding and conclusive upon the Vendors, and the Vendors shall
indemnify the Purchaser in respect to such resolution or final
determination and all such costs and expenses.
5.6 The provisions of this Article 5 shall apply mutatis mutandis
for the benefit of the Vendors in the event of any third party
claim against the Vendors for which the Purchaser is or may be
liable hereunder.
ARTICLE 6 - RIGHTS OF SET-OFF
6.1 The Vendors agree that the Purchaser shall have rights to set-off or
compensate any claim the Purchaser may have against the Vendors under this
Agreement or any Ancillary Agreements entered into by the Vendors in connection
with the transaction contemplated hereby or under the terms and conditions of
the Class F Shares against the payments due by the Purchaser hereunder or under
the Ancillary Agreements or under the terms and conditions of the Class F
Shares; provided that Purchaser will have no right of set-off against amounts
payable to any Vendor under his or her Employment Agreement.
6.2 If the Purchaser exercises the right of set-off, the Purchaser shall
give a prior written notice to the Vendors, that the Purchaser has elected to
exercise such right of set-off.
6.3 The Purchaser and the Vendors agree that nothing in this Article 6
shall derogate from any of the provisions of this Agreement or the Ancillary
Agreements in favour of the Purchaser or any rights of Purchaser under the law
in respect of any claim of the Purchaser.
<PAGE> 34
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ARTICLE 7 - CONDITIONS
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER
7.1.1 The sale by the Vendors and the purchase by the
Purchaser of the Purchased Shares is subject to
the following conditions which are for the
exclusive benefit of the Purchaser to be
performed or complied with at or prior to the
Time of Closing:
7.1.1.1 the representations and warranties of the
Vendors set forth in Section 3.1 shall be
true and correct at the Time of Closing with
the same force and effect as if made at and
as of such time;
7.1.1.2 the Vendors shall have performed or complied
with all of the terms, covenants and
conditions of this Agreement to be performed
or complied with by the Vendors at or prior
to the Time of Closing;
7.1.1.3 the Purchaser shall be furnished with such
certificates, affidavits or statutory
declarations of the Corporation and of the
Vendors or of officers of the Corporation
and of the Vendor as the Purchaser or the
Purchaser's counsel may reasonably think
necessary in order to establish that the
terms, covenants and conditions contained in
this Agreement to have been performed or
complied with by the Vendors or by the
Corporation, as the case may be, at or prior
to the Time of Closing have been performed
and complied with and that the
representations and warranties of the
Vendors herein given are true and correct at
the Time of Closing;
7.1.1.4 no material damage by fire or other hazard
to the assets of the Corporation shall have
occurred from the date hereof to the Time of
Closing;
7.1.1.5 all directors and officers of the
Corporation specified by the Purchaser shall
resign;
7.1.1.6 the Vendors and all directors and officers
of the Corporation shall release the
Corporation from any and all possible claims
against the Corporation arising from any
act, matter or thing arising at or prior to
the Time of Closing; for greater certainty,
such release will not
<PAGE> 35
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affect the obligations of the Corporation under
any of the Ancillary Agreements;
7.1.1.7 there shall be a non-competition agreement
entered into between the Purchaser, the
Corporation and each of the Vendors
substantially in the form attached hereto as
Schedule 7.1.1.7 (the "Non-Competition
Agreements");
7.1.1.8 there shall be an employment agreement entered
into between the Corporation and Terrance
Smith, substantially in the form attached
hereto as Schedule 7.1.1.8 (the "Employment
Agreement");
7.1.1.9 there shall be an escrow agreement entered into
between the Purchaser, the Vendors and McCarthy
Tetrault, as escrow agent, in substantially the
form attached hereto as Schedule 7.1.1.9 (the
"Escrow Agreement");
7.1.1.10 the Vendors shall have delivered to the
Purchaser a favourable opinion of the Vendors'
counsel substantially in the form attached
hereto as Schedule 7.1.1.10;
7.1.1.11 the execution of a Share Purchase Agreement
among the Purchaser, Stewart L. Smith and The
Smith Family Trust dated the date hereof with
respect to the sale of all the shares of Midway
Supply and the closing of the transactions
contemplated thereby; and
7.1.1.12 the form and legality of all matters incidental
to the sale by the Vendors and the purchase by
the Purchaser of the Shares shall be subject to
the approval of the Purchaser's counsel, acting
reasonably.
7.1.2 In case any term or covenant of the Vendors or condition to
be performed or complied with for the benefit of the
Purchaser at or prior to the Time of Closing shall not have
been performed or complied with at or prior to the Time of
Closing, the Purchaser may, without limiting any other right
that the Purchaser may have, at its sole option, either:
7.1.2.1 rescind this Agreement by notice to the
Vendors, and in such event the Purchaser shall
be released from all obligations hereunder; or
<PAGE> 36
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7.1.2.2 waive compliance with any such term, covenant
or condition in whole or in part on such terms
as may be agreed upon without prejudice to any
of its rights of rescission in the event of
non-performance of any other term, covenant or
condition in whole or in part;
and, if the Purchaser rescinds this Agreement pursuant to Section 7.1.2
and the term, covenant or condition for which the Purchaser has
rescinded this Agreement was one that the Vendors had covenanted,
pursuant to Section 4.2.2, to ensure had been performed or complied
with, the Vendors shall be liable to the Purchaser for any losses,
damages or expenses incurred by the Purchaser as a result of such
breach.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
7.2.1 The sale by the Vendors and the purchase by the
Purchaser of the Purchased Shares is subject to the
following conditions which are for the exclusive
benefit of the Vendors to be performed or complied
with at or prior to the Time of Closing:
7.2.1.1 the representations and warranties of the
Purchaser set forth in Section 3.3 shall be
true and correct at the Time of Closing with
the same force and effect as if made at and as
of such time;
7.2.1.2 the Purchaser shall have performed or
complied with all of the terms, covenants
and conditions of this Agreement to be
performed or complied with by the Purchaser
at or prior to the Time of Closing;
7.2.1.3 the Vendors shall be furnished with such
certificates, affidavits or statutory
declarations of the Purchaser or of officers
of the Purchaser as the Vendors or the
Vendors' counsel may reasonably think
necessary in order to establish that the
terms, covenants and conditions contained in
this Agreement to have been performed or
complied with by the Purchaser at or prior
to the Time of Closing have been performed
and complied with and that the
representations and warranties of the
Purchaser herein given are true and correct
at the Time of Closing;
7.2.1.4 the execution of a Share Purchase Agreement
among the Purchaser, Stewart L. Smith and
The Smith Family Trust dated the date hereof
<PAGE> 37
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with respect to the sale of all the shares
of Midway Supply and the closing of the
transactions contemplated thereby;
7.2.1.5 the Corporation shall have executed the
Employment Agreement; and
7.2.1.6 Wyant Corporation shall have executed a
Covenant Agreement in favour of the Vendors
substantially in the form of
Schedule 7.2.1.6 (the "Covenant Agreement").
7.2.2 In case any term or covenant of the Purchaser or
condition to be performed or complied with for the
benefit of the Vendors at or prior to the Time of
Closing shall not have been performed or complied
with at or prior to the Time of Closing, the Vendors
may, without limiting any other right that the
Vendors may have, at its sole option, either:
7.2.2.1 rescind this Agreement by notice to the
Purchaser, and in such event the Vendors
shall be released from all obligations
hereunder; or
7.2.2.2 waive compliance with any such term,
covenant or condition in whole or in part on
such terms as may be agreed upon without
prejudice to any of its rights of rescission
in the event of non-performance of any other
term, covenant or condition in whole or in
part;
and, if the Vendors rescind this Agreement pursuant to Section 7.2.2.1
and the term, covenant or condition for which the Vendors have
rescinded this Agreement was one that the Purchaser had covenanted,
pursuant to Section 4.3.1, to ensure had been performed or complied
with, the Purchaser shall be liable to the Vendors for any losses,
damages or expenses incurred by the Vendors as a result of such breach.
ARTICLE 8 - GENERAL
8.1 FURTHER ASSURANCES
Each of the Vendors and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and things as
the other party
<PAGE> 38
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may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full
intent and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 COMMISSIONS
8.3.1 The Vendors shall jointly and severally indemnify and
save harmless the Purchaser from and against any
claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any
person in respect of the sale and purchase of the
Purchased Shares, to the extent such person purports
to act or have acted for the Vendors in connection
with the sale of the Purchased Shares.
8.3.2 The Purchaser shall indemnify and save harmless the
Vendors from and against any claims whatsoever for
any commission or other remuneration payable or
alleged to be payable to any person in respect of the
sale and purchase of the Purchased Shares, to the
extent such person purports to act or have acted for
the Purchaser in connection with the sale of the
Purchased Shares.
8.4 LEGAL FEES
Each of the parties hereto shall pay their respective legal
and accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto and any other costs and expenses whatsoever and
howsoever incurred.
8.5 PUBLIC ANNOUNCEMENTS
Prior to closing, no public announcement or press release
concerning the sale and purchase of the Shares shall be made by the Vendors or
the Purchaser without the prior consent and joint approval of the Vendors and
the Purchaser, save as may be required by applicable Law.
<PAGE> 39
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8.6 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding
upon the respective heirs, executors, administrators, successors and permitted
assigns of the parties hereto.
8.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between the parties hereto
with respect thereto. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement.
8.8 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be
valid or binding unless set forth in writing and duly executed by both of the
parties hereto and no waiver of any breach of any term or provision of this
Agreement shall be effective or binding unless made in writing and signed by the
party purporting to give the same and, unless otherwise provided, shall be
limited to the specific breach waived.
8.9 ASSIGNMENT
This Agreement may not be assigned by any party hereto
without the written consent of the other parties, but the rights and obligations
of the Purchaser hereunder may be assigned by the Purchaser without the consent
of the other parties hereto to an affiliate of the Purchaser, as determined by
the provisions of the Canada Business Corporations Act, provided that such
affiliate enters into a written agreement with the Vendors to be bound by the
provisions of this Agreement in all respects and to the same extent as the
Purchaser is bound and provided that the Purchaser shall continue to be bound by
all the obligations hereunder as if such assignment had not occurred and perform
such obligations to the extent that such affiliate fails to do so.
8.10 NOTICES
Any demand, notice or other communication to be given in
connection with this Agreement shall be given in writing and shall be given by
personal delivery, by registered mail or by electronic means of communication
addressed to the recipient as follows:
<PAGE> 40
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To the Vendors:
CAROLYNN SMITH
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
TERRANCE SMITH
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
LYNDA SMITH
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
<PAGE> 41
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To the Purchaser:
WOOD WYANT INC.
1475 - 32nd Avenue
Lachine, Quebec
H8T 3J1
Fax No.: (514) 636-1148
Attention: Mr. Donald C. MacMartin
With a copy to:
McCarthy Tetrault
1170 Peel Street
Montreal, Quebec
H3B 4S8
Fax No.: (514) 397-4170
Attention: Mr. Thomas R.M. Davis
or to such other address, individual or electronic communication number as may
be designated by notice given by either party to the other. Any demand, notice
or other communication given by personal delivery shall be conclusively deemed
to have been given on the day of actual delivery thereof and, if given by
registered mail, on the third Business Day following the deposit thereof in the
mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. If the party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties with the
postal system which might affect the delivery of mail, any such demand, notice
or other communication shall not be mailed but shall be given by personal
delivery or by electronic communication.
8.11 GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein.
<PAGE> 42
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8.12 ATTORNMENT
For the purpose of all legal proceedings, this Agreement
shall be deemed to have been performed in the Province of British
Columbia and the courts of the Province of British Columbia shall
have jurisdiction to entertain any action arising under this
Agreement. Each of the parties to this Agreement accepts the
jurisdiction of such courts and irrevocably express to be bound by
any judgment rendered thereby in connection with this Agreement.
8.13 INDEPENDENT LEGAL ADVICE
Each of the Vendors acknowledges, represents and agrees
that: (i) he has had the opportunity to consult with independent
legal counsel with respect to the provisions of this Agreement;
(ii) the nature, scope and effect of the provisions of this
Agreement have been adequately explained to him; and (iii) he
understands and accepts the provisions of this Agreement.
<PAGE> 43
- 40 -
IN WITNESS WHEREOF the parties have executed this
Agreement.
Wood Wyant Inc.
Per:
---------------------
-------------------------
Terrance Smith
-------------------------
Carolynn Smith
-------------------------
Lynda Smith
<PAGE> 1
SHARE PURCHASE AGREEMENT
BETWEEN
WOOD WYANT INC.
AND
STEWART L. SMITH
THE SMITH FAMILY TRUST
RELATING TO THE PURCHASE OF
MIDWAY SUPPLY LTD.
MADE AS OF
JUNE 30, 1998
<PAGE> 2
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
<TABLE>
<S> <C> <C>
ARTICLE 1 - INTERPRETATION 2
1.1 DEFINITIONS 2
1.2 HEADINGS 6
1.3 EXTENDED MEANINGS 6
1.4 ACCOUNTING PRINCIPLES 6
1.5 INCLUSIVE LANGUAGE 7
1.6 CURRENCY 7
1.7 SCHEDULES 7
ARTICLE 2 - PURCHASE AND SALE 8
2.1 PURCHASE AND SALE AND PURCHASE PRICE 8
2.2 ADJUSTMENT OF THE PURCHASE PRICE 9
2.3 CLOSING 10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES 10
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS 10
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS,
WARRANTIES AND COVENANTS 23
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 24
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 25
ARTICLE 4 - COVENANTS 26
4.1 TAXES 26
4.2 COVENANTS OF THE VENDORS 26
4.3 COVENANTS OF THE PURCHASER 27
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS 28
ARTICLE 5 - THIRD PARTY CLAIMS 29
ARTICLE 6 - RIGHTS OF SET-OFF 30
ARTICLE 7 - CONDITIONS 31
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER 31
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS 33
ARTICLE 8 - GENERAL 35
8.1 FURTHER ASSURANCES 35
8.2 TIME OF THE ESSENCE 35
8.3 COMMISSIONS 35
8.4 LEGAL FEES 35
8.5 PUBLIC ANNOUNCEMENTS 35
</TABLE>
<PAGE> 3
- ii -
<TABLE>
<S> <C> <C>
8.6 BENEFIT OF THE AGREEMENT 36
8.7 ENTIRE AGREEMENT 36
8.8 AMENDMENTS AND WAIVER 36
8.9 ASSIGNMENT 36
8.10 NOTICES 37
8.11 GOVERNING LAW 39
8.12 ATTORNMENT 39
8.13 INDEPENDENT LEGAL ADVICE 39
</TABLE>
<PAGE> 4
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of June 30, 1998;
BETWEEN: WOOD WYANT INC., a corporation incorporated under
the laws of Canada;
(hereinafter referred to as the "Purchaser")
AND: STEWART L. SMITH, a business executive residing in the
Province of British Columbia;
(hereinafter referred to as "Stewart")
AND: STEWART L. SMITH and CAROLYNN SMITH, in their
capacity as trustees for and on behalf of THE SMITH
FAMILY TRUST, a trust under the laws of British
Columbia;
(hereinafter referred to as the "Trust")
(Stewart and the Trust are hereinafter
sometimes collectively referred to as the
"Vendors")
WHEREAS the Corporation is engaged in the Business (as defined herein) in
the Province of British Columbia;
WHEREAS the Vendors are the beneficial and registered owners of all of the
issued and outstanding shares in the capital stock of the Corporation
(collectively the "Shares");
AND WHEREAS the Vendors desire to sell and the Purchaser desires to
purchase the Shares, upon and subject to the terms and conditions hereinafter
set forth;
<PAGE> 5
- 2 -
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the parties hereto
agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
1.1.1 "Agreement" means this agreement and all amendments made
hereto by written agreement between the Vendors and the Purchaser;
1.1.2 "Ancillary Agreements" means the Acknowledgment, Release and
Indemnity Agreements, the Employment Agreement, the Escrow Agreement
and the Non-Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheet of the Corporation
as at the Balance Sheet Date;
1.1.4 "Balance Sheet Date" means May 31, 1997;
1.1.5 "Business" means the business of the Corporation consisting
in the sale and distribution of industrial and institutional
sanitation and janitorial products and services, including sanitary
paper products, janitorial and cleaning chemicals and equipment and
general sanitation supplies in British Columbia;
1.1.6 "Business Day" means a day other than a Saturday, Sunday or
statutory holiday in Vancouver, British Columbia;
1.1.7 "Class F Shares" has the meaning set out in Section 2.1.2;
1.1.8 "Closing Balance Sheet" means the balance sheet of the
Corporation as at the Closing Date and an accompanying review
engagement report prepared by the accountants of the Corporation at
the cost of the Vendors in accordance with GAAP applied on a basis
consistent with prior periods;
1.1.9 "Closing Date" means June 30, 1998;
<PAGE> 6
- 3 -
1.1.10 "Combined Closing Balance Sheet" means the balance sheet of the
Corporation and Fraser Valley, on a combined basis, as at the
Closing Date and an accompanying review engagement report prepared
by the accountants of the Corporation at the cost of the Vendors in
accordance with GAAP applied on a basis consistent with prior
periods;
1.1.11 "Contaminant" means any substance or material which does not occur
naturally in the environment or which falls within the definition
of "pollutants", "waste", "special waste", "hazardous chemicals",
"hazardous waste", "dangerous goods", "toxic substances", or any
variation of such terms or any terms of similar import in any
Environmental Law including, without limitation, urea formaldehyde,
asbestos, PCB transformers and poly-chlorinated biphenyls.
1.1.12 "Control" (including the terms "Controlling" and "Controlled")
means the power to elect the majority of the board of directors or
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise;
1.1.13 "Consents" means the consents, approvals and authorizations
required to be obtained pursuant to Schedule 3.1.7;
1.1.14 "Corporation" means Midway Supply Ltd.;
1.1.15 "Covenant Agreement" has the meaning set out in Section 7.2.1.6;
1.1.16 "Employment Agreement" has the meaning set out in Section 7.1.1.8;
1.1.17 "Environment" means all components of the Earth, including air,
all layers of the atmosphere, land, soil, water, organic and
inorganic matter, living species and organisms, any combination of
the above components, interacting natural systems that include the
above components and the ambient milieu with which living species
have dynamic relations;
1.1.18 "Environmental Laws" means all Laws relating in whole or in part
to the Environment or its protection, as the same would be applied
as of the date hereof, including any Laws relating to (i) the
natural or accidental release, emission, discharge, deposit,
issuance, spraying, injection, inoculation, abandonment, burial,
spilling, incineration, disposal, leaking, seeping,
<PAGE> 7
- 4 -
pouring, emptying, throwing, dumping, placing or exhausting
of any Contaminant into the Environment and (ii) the storage,
disposal, destruction, incineration, burial, recycling, handling,
transportation or use of a Contaminant;
1.1.19 "Environmental Permits" has the meaning set out in Section
3.1.46.2;
1.1.20 "Escrow Agreement" has the meaning set out in Section 7.1.1.9;
1.1.21 "Financial Statements" has the meaning set out in Section 3.1.8;
1.1.22 "Fraser Valley" means Fraser Valley Industrial Chemicals Inc.;
1.1.23 "GAAP" has the meaning specified in Section 1.4;
1.1.24 "Governmental Authority" means any federal, provincial, regional,
municipal or local or other governmental authority, domestic or
foreign, having jurisdiction over the Corporation or the Business
and includes any agency, department, commission, board, bureau,
instrumentality, court, tribunal or other Person exercising
executive, legislative, judicial, regulatory or administrative
functions constituted or appointed by any such authority;
1.1.25 "Interim Financial Statements" has the meaning specified in
Section 3.1.9;
1.1.26 "Law" means any law, statute, by-law, regulation or any legally
binding rule, directive, guideline, policy, notice, order or
ordinance of any Governmental Authority, including Environmental
Laws;
1.1.27 "Leased Premises" has the meaning set out in Section 3.1.14;
1.1.28 "Lien" in relation to any property or asset, means any encumbrance
or title defect of whatever kind or nature, regardless of form,
whether or not recorded or registered or consensual or statutory or
arising by law, including any lien, charge, mortgage,
hypothecation, pledge, security interest, assignment, lease,
option, easement, servitude, right of way, encroachment,
restrictive covenant, right of use or any other claim or right of
any kind or nature whatsoever which affects ownership or possession
of, or title to, or any interest in, or the right to use or occupy
such property or asset;
1.1.29 "Material Contract" has the meaning set out in Section 3.1.24;
<PAGE> 8
- 5 -
1.1.30 "Net Assets" means shareholders' equity as shown on the Combined
Closing Balance Sheet;
1.1.31 "Non-Canadian" has the meaning set out in Section 3.3.4;
1.1.32 "Non-Competition Agreements" has the meaning set out in Section
7.1.1.7;
1.1.33 "Parent Common Shares" means the common shares of Wyant
Corporation issuable to a holder of Class F Shares in accordance
with the exercise of the retraction rights relating to the Class F
Shares as set out in Section 8 of the Class F Share Conditions (as
defined in the Covenant Agreement);
1.1.34 "Permits" means all permits, licenses, certificates, approvals,
authorizations, consents, registrations, qualifications and the
like issued by any Governmental Authority which are held by the
Corporation in connection with the operation of the Business;
1.1.35 "Person" means an individual, corporation, joint venture,
partnership, trust, trustee, unincorporated organization, or any
other entity;
1.1.36 "Personal Property Leases" has the meaning set out in Section
3.1.15;
1.1.37 "Premises Leases" has the meaning set out in Section 3.1.14;
1.1.38 "Purchase Price" has the meaning set out in Section 2.1.1;
1.1.39 "Purchased Shares" has the meaning set out in Section 2.1.1;
1.1.40 "Related Person" means:
(a) with respect to any Person who is an
individual, a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law
or sister-in-law of that person, including adoptive
relationships; and
(b) with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with
that person;
<PAGE> 9
- 6 -
1.1.41 "Shares" has the meaning set forth in the preamble hereto;
1.1.42 "Taxes" means all federal, provincial, local, foreign and other
taxes, including income taxes, sales taxes, goods and services
taxes, use taxes, occupancy taxes, excise taxes, property taxes,
franchise taxes and employment and payroll related taxes;
1.1.43 "Time of Closing" means 10 a.m. (Vancouver Time) on the Closing
Date; and
1.1.44 "Wyant" means Wyant Corporation.
1.2 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof
and include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 EXTENDED MEANINGS
In this Agreement words importing the singular number only shall include
the plural and vice versa, words importing the masculine gender shall include
the feminine and neuter genders and vice versa and words importing persons
shall include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations.
1.4 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be made
in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is
made or required to be made in accordance with generally accepted accounting
principles ("GAAP").
<PAGE> 10
- 7 -
1.5 INCLUSIVE LANGUAGE
As used herein, the word "or" is not exclusive and the word "including" is
not limiting (whether or not non-limiting language such as "without limitation"
or "but not limited to" or words of similar import is used with reference
thereof).
1.6 CURRENCY
All references to currency herein are to lawful money of Canada.
1.7 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
<TABLE>
<S> <C>
Schedule 2.1.1: Shareholders of the Corporation; Allocation of Purchase Price
Schedule 2.1.2: Class F Share Conditions
Schedule 3.1.3: Memorandum and Articles of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Interim Financial Statements
Schedule 3.1.10: Corporate Reorganization Transactions
Schedule 3.1.12: Liens
Schedule 3.1.14: Leased Premises and Premises Leases
Schedule 3.1.15: Personal Property Leases
Schedule 3.1.17: Inventory
Schedule 3.1.19: Capital Expenditures
Schedule 3.1.20: Dividends
Schedule 3.1.22: Tax Accounts
Schedule 3.1.23: Outstanding Liabilities
Schedule 3.1.24: Material Contracts
Schedule 3.1.29: Royalty, Licence Fee or Management Fee
Schedule 3.1.30: Employment Contracts
Schedule 3.1.31: Employee Benefit Plans
Schedule 3.1.35: Related Person Indebtedness
Schedule 3.1.37: Intellectual Property
Schedule 3.1.40: Insurance Policies
Schedule 3.1.42: Amounts payable to Related Persons
Schedule 3.1.43: Litigation
Schedule 3.1.46: Environmental Matters
</TABLE>
<PAGE> 11
- 8 -
<TABLE>
<S> <C>
Schedule 3.1.52: Bank Accounts
Schedule 3.3.7: Financial Statements of the Purchaser
Schedule 3.3.8: Memorandum on Rule 144 Resale of Restricted Securities
Schedule 7.1.1.7: Non-Competition Agreements
Schedule 7.1.1.8: Employment Agreement
Schedule 7.1.1.9: Escrow Agreement
Schedule 7.1.1.10: Opinion of the Vendors' Counsel
Schedule 7.2.1.6: Covenant Agreement
</TABLE>
ARTICLE 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE AND PURCHASE PRICE
2.1.1 Subject to the terms and conditions hereof, on the Closing
Date, each of the Vendors shall sell to the Purchaser the number of
Shares set opposite the name of each Vendor on Schedule 2.1.1 hereto
(the aggregate number of such Shares is herein collectively called
the "Purchased Shares") and the Purchaser shall purchase the
Purchased Shares from the Vendors, free and clear of all Liens, for
a total purchase price of $2,400,000 (hereinafter referred to as the
"Purchase Price"), subject to adjustment in accordance with Section
2.2, to be allocated amongst the Vendors in accordance with Schedule
2.1.1.
2.1.2 The Purchase Price shall be paid against delivery to the
Purchaser of share certificates evidencing the Purchased Shares duly
endorsed for transfer to the Purchaser and satisfied (i) as to an
aggregate amount of $1,341,160 payable pro rata to the Vendors in
accordance with their respective shareholdings set forth in Schedule
2.1.1 by certified cheque or bank draft to the order of each of the
Vendors, and delivered by the Purchaser at the Time of Closing, (ii)
as to $35,295 payable by cheque to the order of McCarthy Tetrault,
as escrow agent, and delivered by Bruce Ferrand at the Time of
Closing, such amount having been deposited "in trust" with Bruce
Ferrand by the Purchaser, (iii) as to $35,295, by the delivery to
McCarthy Tetrault, as escrow agent, of a certified cheque or bank
draft, such amounts in (ii) and (iii) and interest thereon to be
held in escrow pursuant to the Escrow Agreement in order to secure
the payment of any amounts due by the Vendors to the Purchaser
pursuant to this Agreement. The escrowed funds will be dealt with on
the terms and conditions set forth in the Escrow Agreement, and (iv)
as to an aggregate
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amount of $988,250, by the delivery pro rata to the Vendors in
accordance with their respective shareholdings set forth in Schedule
2.1.1 at the Time of Closing of a total of 87,845 class F
exchangeable shares of the capital stock of the Purchaser ("Class F
Shares"), to be issued from treasury and having the attributes set
out in Schedule 2.1.2.
2.2 ADJUSTMENT OF THE PURCHASE PRICE
2.2.1 The amount of the Purchase Price allocable to the Common
Shares is based on the assumption that the net asset value ("Net
Assets") of the Corporation and Fraser Valley, on a combined basis,
on the Combined Closing Balance Sheet shall be not less than
$1,600,000. In the event that Net Assets as shown on the Combined
Closing Balance Sheet are greater or less than $1,600,000 on the
Closing Date, then the Vendors of the Common Shares will pay the
Purchaser the amount of the shortfall (in accordance with the
percentages of their Common Shares set out on Schedule 2.1.1) or the
Purchaser will pay the Vendors of the Common Shares the amount of
the excess (in accordance with the percentages of their Common
Shares set out on Schedule 2.1.1), as the case may be, together with
interest on such amount at the rate of 6% per annum calculated from
the Closing Date to the date of payment.
2.2.2 On or before August 31, 1998, the Vendors shall deliver the
Closing Balance Sheet and the Combined Closing Balance Sheet to the
Purchaser.
2.2.3 The Closing Balance Sheet and the Combined Closing Balance
Sheet shall be final, conclusive and binding unless the Purchaser
gives written notice of its disagreement with any item or items
thereon within 30 days following the receipt of the Closing Balance
Sheet, specifying in reasonable detail the nature and extent of such
disagreement.
2.2.4 If within 5 days following the receipt by the Vendors of a
notice of the type referred to in Section 2.2.3, the Vendors and the
Purchaser are unable to resolve any disagreement with respect to the
Closing Balance Sheet, Combined Closing Balance Sheet and the
determination of Net Assets, the disagreement shall be submitted to
Price Waterhouse for arbitration. Price Waterhouse shall act as an
arbitrator to determine and resolve only those issues in dispute.
Price Waterhouse shall deliver a decision within 30 days of the
submission of the dispute, and such decision shall be consistent
with this Agreement, shall be set forth in a
<PAGE> 13
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written statement delivered to the Purchaser and the Vendors and
shall be final, conclusive and binding on the Purchaser and the
Vendors. The adjusting payments, if any, required by Section 2.2.1
shall be made forthwith after receipt of the final determination of
Net Assets by Price Waterhouse, together with all interest thereon at
the rate of 6% per annum from the Closing Date to the date of
payment. The fees and expenses of Price Waterhouse in connection with
any such determination shall be paid one half by the Vendors and one
half by the Purchaser. Otherwise, the Purchaser and the Vendors
shall each pay their own costs incurred, including the fees and
expenses of their respective accountants or attorneys, if any.
2.3 CLOSING
The sale and purchase of the Purchased Shares and the execution and
delivery of the Ancillary Agreements shall be completed at the Time of Closing
at the offices of McCarthy Tetrault, Pacific Centre 777 Dunsmuir Street,
Vancouver, British Columbia.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly and severally represent and warrant to the Purchaser
the following, and acknowledge that the Purchaser is entitled to rely on such
representations and warranties notwithstanding any due diligence investigation
done by the Purchaser prior to the closing:
3.1.1 the Corporation is a corporation duly incorporated,
organized and subsisting under the laws of British Columbia as a
private issuer as that term is defined in the Securities Act
(British Columbia) with the corporate power to own its assets and to
carry on the Business and has made all necessary filings under all
applicable corporate, securities and taxation Laws or any other Laws
to which the Corporation is subject and is qualified to own its
properties and assets and to carry on the Business as presently
carried on by it;
3.1.2 Schedule 2.1.1 sets out (i) the authorized capital of the
Corporation and (ii) the number of Shares of the Corporation which
are issued and outstanding, which shares have been validly issued as
fully paid and
<PAGE> 14
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non-assessable and registered in the names of the Vendors as set
forth on Schedule 2.1.1;
3.1.3 a true and complete copy of the Memorandum and Articles of
the Corporation, including the rights, privileges, restrictions and
conditions attached to the Shares are attached hereto as Schedule
3.1.3;
3.1.4 the Purchased Shares constitute all of the issued and
outstanding Shares in the capital stock of the Corporation;
3.1.5 each of the Vendors is the beneficial and registered owner
of the number of Purchased Shares set opposite the name of such
Vendor on Schedule 2.1.1, free and clear of all Liens, options and
any other rights of others;
3.1.6 there is no contract, option or any other right of another
binding upon or which at any time in the future may become binding
upon:
(i) any of the Vendors to sell, transfer,
assign, or grant any Lien on or affecting, or in any
other way dispose of or encumber any of the Purchased
Shares other than pursuant to the provisions of this
Agreement or any of its assets other than in the ordinary
course of business, or
(ii) the Corporation to allot or issue any
of the unissued shares or securities of the Corporation
or to create any additional class of shares or
securities;
3.1.7 except as disclosed on Schedule 3.1.7, neither the entering
into nor the delivery of this Agreement and the Ancillary Agreements
nor the completion of the transactions contemplated hereby by each
of the Vendors will result in the violation of or require the
Consent of any third party pursuant to:
(i) any of the provisions of the Memorandum
or Articles, as amended, of the Corporation;
(ii) any agreement or other instrument to
which the Corporation or any of the Vendors is a party or
by which the Corporation or any of the Vendors is bound,
or
<PAGE> 15
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(iii) any applicable Law;
3.1.8 the financial statements of the Corporation, consisting of
the Balance Sheet and statements of income, retained earnings and
changes in financial position for the period ended on the Balance
Sheet Date, together with the review engagement report of Cinnamon
Jang Willoughby & Company, chartered accountants, thereon and the
notes thereto (hereinafter collectively referred to as the
"Financial Statements"), a copy of which is attached hereto as
Schedule 3.1.8:
(i) are in accordance with the books and
accounts of the Corporation as at the Balance Sheet Date,
(ii) are true and correct and present fairly
the financial position of the Corporation as at the
Balance Sheet Date,
(iii) have been prepared in accordance with
GAAP consistently applied, and
(iv) present fairly all of the assets and
liabilities of the Corporation as at the Balance Sheet
Date including, without limiting the generality of the
foregoing, all contingent liabilities of the Corporation
as at the Balance Sheet Date;
3.1.9 the interim financial statements of the Corporation,
consisting of a balance sheet and statement of income, for the
period ended on May 31, 1998 (hereinafter collectively referred to
as the "Interim Financial Statements"), a copy of which is attached
hereto as Schedule 3.1.9:
(i) are in accordance with the books and
accounts of the Corporation as at May 31, 1998,
(ii) are true and correct and present fairly
the financial position of the Corporation as at May 31,
1998, subject only to usual and proper adjustments, which
will not exceed, in aggregate, $30,000 and without
provision for income or capital taxes, the disposition of
a loan receivable from Midway Purnel Sanitary Supply (PG)
Ltd. in the amount of $136,965 and the disposal or
cancellation of life insurance policies and the
associated cash surrender values;
<PAGE> 16
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(iii) present fairly all of the assets and
liabilities of the Corporation as at May 31, 1998; and
(iv) have been prepared in accordance with
accounting principles consistent with the principles of
GAAP used in the preparation of the Balance Sheet;
3.1.10 since the Balance Sheet Date, the Business of the Corporation has
been carried on in its usual and ordinary course and in a manner
consistent with prior practices and, the Corporation has not, since
the Balance Sheet Date, entered into any transaction out of the
usual and ordinary course of business;
3.1.11 since the Balance Sheet Date, there has been no material change in
the affairs, business, prospects, operations or condition of the
Corporation, financial or otherwise, whether arising as a result of
any legislative or regulatory change, revocation of any Permit or
right to do business, fire, explosion, accident, casualty, labour
dispute, flood, drought, riot, storm, expropriation, condemnation,
act of God, public force or otherwise, except changes occurring in
the usual and ordinary course of business which have not adversely
affected the affairs, business, prospects, operations or condition
of the Corporation, financial or otherwise;
3.1.12 the Corporation is the owner with a good and marketable title,
free and clear of all Liens, options and any other rights of others,
except for the Liens described on Schedule 3.1.12 of all assets
shown or reflected on the Balance Sheet, except only such of the
assets of the Corporation as have been disposed of in the usual and
ordinary course of business since the Balance Sheet Date, and of all
assets acquired by the Corporation since the Balance Sheet Date;
3.1.13 all machinery, equipment and automotive equipment owned or used by
the Corporation has been properly maintained and is in good working
order for the purposes of ongoing operation, subject to ordinary
wear and tear for machinery and equipment of comparable age;
3.1.14 Schedule 3.1.14 sets forth a true and complete list of all
premises leased by the Corporation ("Leased Premises") and any lease
in respect thereof to which the Corporation is a party ("Premises
Leases") and: (i) each Premises Lease is in full force and effect,
unamended by oral or written
<PAGE> 17
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agreement, and the Corporation is entitled to the full benefit and
advantage of such Premises Lease in accordance with the terms
thereof, (ii) each Premises Lease is in good standing, all rental and
other payments payable by the Corporation under the leases have been
duly paid, (iii) there is currently no outstanding default by the
Corporation under the Premises Leases nor is there currently any
outstanding default by any landlord thereunder or dispute between the
Corporation and any landlord under any of the Premises Leases; (iv)
the Corporation has not sublet, assigned or transferred any of its
interests in such Premises Lease and (v) the Leased Premises are the
only premises used by the Corporation;
3.1.15 Schedule 3.1.15 sets forth a true and complete list of all lease
agreements concerning personal property leased by the Corporation
("Personal Property Leases") and: (i) each Personal Property Lease
is in full force and effect, unamended by oral or written agreement,
and the Corporation is entitled to the full benefit and advantage of
each Personal Property Lease in accordance with the terms thereof,
(ii) each Personal Property Lease is in good standing, all rental
and other payments payable by the Corporation under the Personal
Property Leases have been duly paid, (iii) there is currently no
outstanding default by the Corporation thereunder nor of the other
parties thereunder nor dispute between the Corporation and any other
party thereunder, and (iv) the Corporation has treated all Personal
Property Leases as operating leases for Canadian income tax
purposes;
3.1.16 except for the Premises Leases, the Corporation holds no ownership
or other interest in or right affecting any real estate or real
property;
3.1.17 the inventory of the Corporation consist of items saleable in the
ordinary course of business reasonably fit for their usual purpose,
except for obsolete and slow-moving items and materials below
standard quality which have been written down on the books of
account of the Business to net realizable value, or adequate
reserves having been provided therefor, all in accordance with GAAP.
Except as disclosed in Schedule 3.1.17, there is no recurring or
ongoing high incidence of product failure or warranty claims against
the Corporation related to the Business;
3.1.18 there are no outstanding orders, notices or similar requirements
relating to the Corporation issued by any Governmental Authority,
including building, environmental, fire, health, labour or police
authorities, and
<PAGE> 18
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there are no matters under discussion with any such Governmental
Authority relating to orders, notices or similar requirements;
3.1.19 except as disclosed on Schedule 3.1.19, no single capital
expenditure in excess of $25,000 or capital expenditures in the
aggregate in excess of $50,000 have been made or authorized by the
Corporation since the Balance Sheet Date;
3.1.20 except as disclosed on Schedule 3.1.20, no dividends have been
declared or paid on or in respect of the Shares and no other
distribution on any of its securities or shares has been made by the
Corporation since the Balance Sheet Date and all dividends which to
the date hereof have been declared or paid by the Corporation have
been duly and validly declared and are fully paid;
3.1.21 the Corporation does not have any liability, obligation or
commitment for the payment of Taxes of whatever nature or kind, or
interest or penalties with respect thereto, except such as are
disclosed in the Financial Statements or such Taxes not yet due as
have arisen since the Balance Sheet Date in the usual and ordinary
course of business and for which adequate provision in the accounts
of the Corporation has been made, and the Corporation is not in
arrears with respect to any required withholdings or instalment
payments or other payments of any Tax or duty of any kind or any
penalty or interest thereon and has not filed any waiver for a
taxation year of the Corporation under the Income Tax Act (Canada)
or any other legislation imposing Tax on the Corporation; all
obligations of the Corporation with respect to its employees for
withholding Taxes, Canada Pension Plan contributions, unemployment
insurance contributions and workers compensation remittances or
contributions of any kind which are due as of the Closing Date will
have been paid by the Corporation prior to the Closing Date; there
are no outstanding disputes with or assessments from the Workmen's
Compensation Board of British Columbia or the Employment Standards
Branch;
3.1.22 the tax accounts of the Corporation as disclosed in Schedule
3.1.22 attached hereto are true and complete in all material
respects;
3.1.23 except as disclosed on Schedule 3.1.23, there are no outstanding
liabilities (whether absolute or contingent) against the Corporation
except trade debts incurred in the usual and ordinary course of
business;
<PAGE> 19
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3.1.24 set forth on Schedule 3.1.24 is a true and complete list of all
contracts or agreements (except for the Premises Leases, the
Personal Property Leases and the employment agreement with the
Vendors listed on Schedule 3.1.31) to which the Corporation is a
party or is otherwise bound which are (i) outside the ordinary
course of business, (ii) involve a financial commitment by the
Corporation of at least $25,000, (iii) have a term in excess of 60
days or (iv) to which any Related Person of the Corporation is a
party (collectively, the "Material Contracts" and individually, a
"Material Contract"). Subject only to the requirement to obtain the
Consents, the Corporation has not received notice of any default,
and the Corporation is not in default, under any Material Contract,
nor has there occurred any event which, with a lapse of time or
giving of notice, or both, would constitute such a default. Subject
only to the requirement to obtain the Consents, each Material
Contract is in full force and effect, unamended by written or oral
agreement and the Corporation is (i) entitled to the full benefit
and advantage of each Material Contract in accordance with the terms
thereof, (ii) each Material Contract is in good standing, and (iii)
there is no currently outstanding default by the Corporation nor by
any other party thereunder nor is there a dispute between the
Corporation and any party thereunder;
3.1.25 the Corporation is not in default or breach of any contract or
commitment to which it is a party and there exists no condition,
event or act which, with the giving of notice or lapse of time or
both would constitute such a default or breach and all such
contracts and commitments are in good standing and in full force and
effect without amendment thereto and the Corporation is entitled to
all benefits thereunder;
3.1.26 the Corporation is not a party to or bound by any guarantee,
indemnification, surety or similar obligation;
3.1.27 the Corporation does not have any subsidiaries or agreements,
options or commitments to acquire any shares or securities of any
corporation or interests of or in any other entity or to acquire or
lease any business operations, real property or assets;
3.1.28 there is no agreement, option, understanding or commitment, or any
right or privilege capable of becoming an agreement, for the
purchase from the Corporation of the Business or any of its assets
other than in the usual and ordinary course of business;
<PAGE> 20
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3.1.29 except as disclosed on Schedule 3.1.29, the Corporation is not a
party to or bound by any contract or commitment to pay any royalty,
licence fee or management fee or which contains restrictive
covenants or covenants not to compete in any line of business with
any other Person;
3.1.30 the Corporation does not have any employment contract, whether
written or oral, with any person whomsoever except contracts with
the employees as are listed in Schedule 3.1.30 attached hereto,
whether or not such contracts are in writing; Schedule 3.1.30 truly
and correctly sets out for each employee of the Corporation, the
annual salary, the length of employment of each of the employees
with the Corporation and other remuneration (including any bonus,
deferred compensation, incentive profit sharing, remuneration,
medical insurance, pension, retirement, vacation and such leave
arrangements) as well as all accrued and unpaid vacation pay and
sick pay payable to each employee; no labour relations or labour
standards, discrimination in employment or employment practices,
harassment, occupational health and safety standards or workers
compensation issue or matter is pending or, to Vendors' knowledge,
threatened with respect to any employee of the Corporation; except
as disclosed in Schedule 3.1.30, to the best of the knowledge of the
Vendors, no employee has made or has any basis for making any claim
(whether under Law, any employment contract, or otherwise) on
account of or for (i) overtime pay, other than overtime for the
current payroll period, (ii) wages or salary for any period other
than the current payroll period, (iii) vacation time off, sick time
or pay in lieu of any of the foregoing, other than that earned in
respect of the current payroll period or (iv) any violation of any
Law;
3.1.31 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without
limiting the generality of the foregoing, any pension
plan maintained by or on behalf of the Corporation for
any of its employees,
except such agreements and plans as are listed in Schedule 3.1.31
attached hereto;
<PAGE> 21
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3.1.32 all benefit plans listed in Schedule 3.1.31 attached hereto have
been duly registered where required by, and are in good standing
under, all applicable Laws including, without limiting the
generality of the foregoing, the Income Tax Act (Canada) and the
Pension Benefits Standards Act (British Columbia) and all required
employer contributions under any such plans have been made and the
applicable funds have been funded in accordance with the terms
thereof of the plans and no past service funding liabilities exist
thereunder;
3.1.33 no trade union, council of trade unions, employee bargaining
agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to
any of the Corporation's employees by way of
certification, interim certification, voluntary
recognition, designation or successor rights,
(ii) has applied to be certified as the
bargaining agent of any of the Corporation's employees;
3.1.34 except for (i) remuneration paid to employees in the usual and
ordinary course of business and made at current rates of
remuneration, and (ii) dividends in the aggregate amount of $130,000
described in Schedule 3.1.20 and (iii) bonuses to employees in the
aggregate amount of $98,000 paid as of May 31, 1998, no payments
have been made or authorized since the Balance Sheet Date by the
Corporation to officers, directors or employees of the Corporation;
3.1.35 except as disclosed on Schedule 3.1.35, no Vendor, director,
former director, officer, shareholder or employee of the Corporation
or any Person who is a Related Person with any such Person is
indebted to the Corporation;
3.1.36 the Corporation is not conducting its business in any jurisdiction
other than the Province of British Columbia;
3.1.37 attached hereto as Schedule 3.1.37 is a list of all registered
trade marks, trade names, patents and copyrights, of all
unregistered trade marks, trade names and copyrights and of all
patent applications, trade mark registration applications and
copyright registration applications, both domestic and foreign,
owned or made by the Corporation;
<PAGE> 22
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3.1.38 all trade marks, trade names, patents and copyrights, both
domestic and foreign, used in or required for the proper carrying on
of the Corporation's Business are validly and beneficially owned by
the Corporation with the sole and exclusive right to use the same
and are in good standing and duly registered in all appropriate
offices to preserve the right thereof and thereto;
3.1.39 the conduct of the Business by the Corporation does not infringe
upon the trade marks, trade names, patents or copyrights, domestic
or foreign, of any other Person;
3.1.40 attached hereto as Schedule 3.1.40 is a true and complete list of
all insurance policies maintained by the Corporation that also
specifies the insurer, the amount of the coverage, the type of
insurance, the policy number and any pending claims thereunder and
any previous insurance claims that have been made by the
Corporation; the Corporation maintains third party liability and
property damage automobile insurance in an amount of not less than
$1,000,000 per occurrence for all vehicles owned or leased by the
Corporation; all such insurance policies are in full force and
effect and the premiums have been fully paid to date;
3.1.41 none of the Vendors is a non-resident person within the meaning of
Section 116 of the Income Tax Act (Canada); and
3.1.42 the Corporation is not indebted to any Related Person, except for
salary and other similar compensation accrued to the Closing Date
and payable to the Vendors, or except as set out in Schedule 3.1.42;
3.1.43 except as disclosed on Schedule 3.1.43 hereto, there is no action,
suit, proceeding, claim, grievance or investigation in any court or
before any arbitrator or before of by any Governmental Authority
existing, pending or threatened, related to the Business or the
transactions contemplated by this Agreement; and there is no factual
or legal basis which could give rise in the future to the pendency
or threat of any such action, suit, proceeding, claim or
investigation which could, if determined adversely, have a material
adverse effect on the Corporation or the ability of the Corporation
to carry on the Business following Closing;
3.1.44 the Corporation and the Leased Premises (being all premises from
which it conducts the operations of the Business) are in compliance
with all
<PAGE> 23
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applicable Laws of all Governmental Authorities having
jurisdiction, are not in breach of any such Laws and there is
no requirement to conduct a corrective or remedial action with
respect to such premises in order to carry on the Business as
presently conducted, and the Corporation is duly licensed,
registered or qualified, and duly possesses and is in
compliance with all Permits and quotas, in the Province of
British Columbia and all municipalities thereof in which the
Corporation carries on its business to enable the Business to
be carried on as now conducted and its assets to be owned,
leased and operated, and all such Permits are valid and
subsisting and in good standing and none of the same contains
or is subject to any term, provision, condition or limitation
which has or may have an adverse effect on the operation of
the Business or which may adversely change or terminate such
Permit by virtue of the completion of the transactions
contemplated hereby;
3.1.45 the operation of the Corporation on the Leased Premises is not
subject to any restriction or limitation and is not in contravention
of any Law or of any decree or order of any Governmental Authority
having jurisdiction;
3.1.46 except as specifically disclosed in Schedule 3.1.46 and without
limiting the scope of any other representation and warranty herein:
3.1.46.1 The Business, the Leased Premises and the Corporation
have been and are in compliance with applicable Laws,
including, without limitation, Environmental Laws;
3.1.46.2 The Corporation holds all Permits required under
applicable Environmental Laws for the operation of the
Business (the "Environmental Permits"); each
Environmental Permit is valid and in force and the
operations of the Corporation are in compliance with the
conditions set out in the Environmental Permits; there
are no grounds for revocation, expiry or annulment of any
Environmental Permits;
3.1.46.3 The Vendors, the Corporation, its employees, agents,
shareholders, directors and officers have never been
declared guilty of committing an offence for a violation
of Environmental Laws and have never had a fine imposed
against them and have never otherwise settled such a
prosecution in relation to the Business or the premises
used in the Business;
<PAGE> 24
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3.1.46.4 There are no Contaminants, waste or pollutants of any
kind whatsoever in, on or under the Leased Premises or
in, on or under the assets of the Business or the
Corporation, the presence of which constitutes a
violation of applicable Environmental Laws;
3.1.46.5 The waste, effluents and air emissions generated by
the operation of the Business by the Corporation have
been and are treated, transported and eliminated in
accordance with applicable Environmental Laws;
3.1.46.6 The Corporation has not received any written or
verbal notice or request for information in the context
of any environmental federal, provincial, regional or
municipal investigation or inspection;
3.1.46.7 The Corporation does not own or use any underground
or aboveground storage tank in connection with the
Business;
3.1.46.8 There are no PCBs, asbestos, urea formaldehyde or
radioactive substances in, on or under the premises used
by the Corporation in connection with the Business; and
3.1.46.9 there is no present requirement of any applicable
Environmental Law which is due to be imposed which will
materially increase the Corporation's cost of complying
with the Environmental Laws.
3.1.47 the Closing Balance Sheet and statements of income, retained
earnings and changes in financial position for the period ended on
the Closing Date, together with the review engagement report of
Cinnamon Jang Willoughby & Company, chartered accountants, thereon
and the notes thereto:
(i) will be in accordance with the books and accounts of the
Corporation as at the Closing Date;
(ii) will be true and correct and present fairly the financial
position of the Corporation as at the Closing Date;
<PAGE> 25
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(iii) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in the
preparation of the Financial Statements; and
(iv) will present fairly all of the assets and liabilities of
the Corporation as at the Closing Date including, without
limiting the generality of the foregoing, all contingent
liabilities of the Corporation as at the Closing Date;
3.1.48 the Combined Closing Balance Sheet as at the Closing Date,
together with the review engagement report of Cinnamon Jang
Willoughby & Company, chartered accountants, thereon and the notes
thereto:
(i) will be in accordance with the books and accounts of the
Corporation and Fraser Valley as at the Closing Date;
(ii) will be true and correct and present fairly the combined
financial position of the Corporation and Fraser Valley
as at the Closing Date;
(iii) will reflect the elimination of all intercompany profits
included in ending inventory of either the Corporation or
Fraser Valley;
(iv) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in the
preparation of the Balance Sheet; and
(v) will present fairly all of the assets and liabilities of
the Corporation and Fraser Valley as at the Closing Date
including, without limiting the generality of the
foregoing, all contingent liabilities of the Corporation
and Fraser Valley as at the Closing Date;
3.1.49 the accounts receivable of the Corporation which will be shown on
the Closing Balance Sheet will be collectible in the ordinary and
usual course of business and the Closing Balance Sheet will include
an appropriate allowance for uncollectible accounts;
3.1.50 the Closing Balance Sheet will include an appropriate allowance
for earned but unused vacation;
<PAGE> 26
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3.1.51 the minute books of the Corporation contain a complete record of
all material decisions taken by the directors and of the
shareholders of the Corporation; the Corporation's financial and
other books and records accurately reflect the financial
transactions and the operations related to the Business;
3.1.52 Schedule 3.1.52 hereto sets forth a complete list of all bank
accounts and similar accounts held or operated by the Corporation,
stating the name of the financial institution, the account number
and the persons having authority to sign in respect of each such
account;
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.2.1 The representations and warranties of the Vendors set forth
in Section 3.1 shall survive the completion of the sale and purchase
of the Purchased Shares herein provided for and, notwithstanding
such completion, the representations and warranties set forth in
Section 3.1 shall continue in full force and effect for the benefit
of the Purchaser for a period of three years from the Closing Date,
except for the representations and warranties of the Vendors set
forth in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.1.6, 3.1.7
and 3.1.12 and any representation and warranty fraudulently made,
all of which shall survive in perpetuity and the representations and
warranties in relation to Taxes, all of which shall survive until
the expiry of the longest limitation period under applicable Law
relating thereto.
3.2.2 The covenants of the Vendors set forth in this Agreement
shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall
continue in full force and effect for the benefit of the Purchaser
in accordance with the terms thereof.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.3.1 the Purchaser is a corporation duly incorporated, organized
and subsisting under the laws of Canada;
<PAGE> 27
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3.3.2 the Purchaser has good and sufficient power, authority and
right to enter into and deliver this Agreement and the Ancillary
Agreements and to complete the transactions to be completed by the
Purchaser contemplated hereby;
3.3.3 the Class F Shares will, at closing, be validly issued to
the Vendors in accordance with Schedule 2.1.1 as fully paid and
non-assessable;
3.3.4 Purchaser is not a "non-Canadian" for the purposes of and
within the meaning of the Investment Canada Act, R.S.C. 1985, c. 28
(1st Supp.);
3.3.5 Purchaser is not a non-resident of Canada for the purposes
of the Income Tax Act, S.C. 1970-72-72 c. 63 (Canada);
3.3.6 Purchaser is a taxable Canadian corporation as defined in
subsection 89(1) of the Income Tax Act (Canada);
3.3.7 the audited financial statements of the Purchaser for the
period ended December 31, 1997, together with the report thereon of
Ernst & Young, dated February 13, 1998 annexed hereto as Schedule
3.3.7:
(i) are in accordance with the books and accounts of the
Purchaser as at December 31, 1997,
(ii) are true and correct and present fairly the financial
position of the Purchaser as at December 31, 1997,
(iii) have been prepared in accordance with GAAP consistently
applied, and
(iv) present fairly all of the assets and liabilities of the
Purchaser as at December 31, 1997 including, without
limiting the generality of the foregoing, all contingent
liabilities of the Purchaser as at December 31, 1997; and
3.3.8 based on advice received from Winthrop, Stimson, Putnam & Roberts,
Purchaser's U.S. securities law counsel, as set forth in the
memorandum attached as Schedule 3.3.8, and subject to the
qualifications set forth in the memorandum, the Class F Shares and
the Parent Common Shares
<PAGE> 28
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(i) under Rule 144 of the United States Securities Act of
1933, as amended, ("Rule 144"), are not tradeable by the
Vendors within the first twelve months following the
Closing Date,
(ii) under Rule 144, are tradeable by the Vendors in the
second twelve month period following the Closing Date,
subject to the volume of sale and manner of sale
restrictions set out in the memorandum, and
(iii) under Rule 144, are tradeable by the Vendors without
restrictions other than the manner of sale restrictions
referred to in the memorandum commencing the third year
following the Closing Date.
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.4.1 The representations and warranties of the Purchaser set
forth in Section 3.3 shall survive the completion of the sale and
purchase of the Shares herein provided for and, notwithstanding such
completion, the representations and warranties set forth in Section
3.3 shall continue in full force and effect for the benefit of the
Vendors for a period of three years from the Closing Date, except
for the representations and warranties of the Purchaser set forth in
Sections 3.3.1, 3.3.2 and 3.3.3 any representation and warranty
fraudulently made, all of which shall survive in perpetuity and the
representations and warranties in relation to Taxes, all of which
shall survive until the expiry of the longest limitation period
under applicable Law relating thereto.
3.4.2 The covenants of the Purchaser set forth in this Agreement
shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall
continue in full force and effect for the benefit of the Vendors in
accordance with the terms thereof.
ARTICLE 4 - COVENANTS
4.1 TAXES
The Purchaser does not assume and shall not be liable for any taxes under
the Income Tax Act (Canada) or any other taxes whatsoever which may be or
become payable
<PAGE> 29
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by the Vendors including, without limiting the generality of the foregoing, any
taxes resulting from or arising as a consequence of the sale by the Vendors to
the Purchaser of the Purchased Shares herein contemplated, and the Vendors
shall indemnify and save harmless the Purchaser from and against all such
taxes.
4.2 COVENANTS OF THE VENDORS
4.2.1 Each of the Vendors shall jointly and severally indemnify
and save harmless the Purchaser and the officers and directors of
the Purchaser from and against all claims, actions, demands, suits,
proceedings, losses, damages, fines, liabilities (whether accrued,
actual, contingent or otherwise), costs and expenses, including
reasonable environmental characterization and remediation costs,
reasonable lawyers fees and other reasonable consultants fees,
directly or indirectly suffered by the Purchaser and the officers
and directors of the Purchaser from any breach of any covenant of
the Vendors contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in
Section 3.1 notwithstanding any information obtained by the
Purchaser at or before the Closing Date as to such inaccuracy or
misrepresentation.
4.2.2 The Vendors shall ensure that the representations and
warranties of the Vendors set out in Section 3.1 are true and
correct at the Time of Closing and that the conditions of closing
for the benefit of the Purchaser set out in Section 7.1.1 over which
the Vendors have reasonable control have been performed or complied
with by the Time of Closing.
4.2.3 The Vendors shall permit the Purchaser, through its agents
and representatives, to make such reasonable investigation prior to
and at the Time of Closing of the assets of the Corporation and of
its financial and legal condition as the Purchaser considers
necessary or advisable to familiarize itself with such assets and
other matters and the Vendors shall supply any and all documents and
records of the Corporation to the Purchaser and its agents and
representatives as they may reasonably require. The Vendors shall
also permit the inspection of the assets of the Corporation by the
Purchaser prior to and at the Time of Closing by such federal,
provincial or municipal authorities as the Purchaser may require.
Such investigations and inspections shall not, however, affect or
mitigate the Vendors' covenants, representations and warranties
hereunder which shall continue in full force and effect.
<PAGE> 30
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4.2.4 The Vendors shall use their best efforts as employees of the
Corporation to ensure that the Corporation's relationships with
suppliers continue on substantially the same terms and conditions
following the Closing Date.
4.2.5 Each of the Vendors shall indemnify and save harmless the
Purchaser and the officers and directors of the Purchaser from and
against all liabilities (whether actual, contingent, accrued or
otherwise), claims and demands of or in connection with any matter
relating to any contracts between the Corporation and any Related
Person entered into prior to the date of this Agreement and not
disclosed in the Schedules hereto.
4.3 COVENANTS OF THE PURCHASER
4.3.1 The Purchaser shall ensure that the representations and
warranties of the Purchaser set out in Section 3.3 are true and
correct at the Time of Closing and that the conditions of closing
for the benefit of the Vendors set out in Section 7.2.1 over which
the Purchaser has reasonable control have been performed or complied
with by the Time of Closing.
4.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against all losses, damages or expenses directly or
indirectly suffered by the Vendors resulting from any breach of any
covenant of the Purchaser contained in this Agreement or from any
inaccuracy or misrepresentation in any representation or warranty
set forth in Section 3.3.
4.4 ACKNOWLEDGMENT AND COVENANTS OF THE VENDORS
The Vendors acknowledge and agree that:
4.4.1 the Class F Shares have not been, and the Parent Common
Shares will not be, registered under the United States Securities
Act of 1933, as amended (the "Securities Act"), or any other
securities laws of the United States or Canada (the "Securities
Laws") because Purchaser is issuing the Class F Shares, and Wyant
Corporation will be issuing the Parent Common Shares, in reliance
upon exemptions from the registration and prospectus requirements of
the Securities Laws which they believe are available in connection
with the transactions contemplated by this Agreement;
4.4.2 Purchaser has relied upon the fact that the Class F Shares
and the Parent Common Shares are to be held by the Vendors for
investment; and
<PAGE> 31
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4.4.3 exemption from registration under the Securities Laws would
not be available if the Class F Shares and the Parent Common Shares
were acquired by the Vendors with a view to distribution.
Accordingly, the Vendors hereby confirm to Purchaser and Wyant Corporation
that the Vendors are acquiring the Class F Shares, and will acquire the Parent
Common Shares, for the account of the Vendors, for investment and not with a
view to the resale or distribution thereof under the Securities Laws. The
Vendors agree not to transfer, sell or offer for sale all or any portion of the
Class F Shares and the Parent Common Shares, unless there is an effective
registration or other qualification or exemption relating thereto under the
Securities Laws. The Vendors understand that neither Purchaser nor Wyant
Corporation is under any obligation to register the Class F Shares and the
Parent Common Shares or to assist the Vendors in complying with any exemption
from registration under the Securities Laws. Prior to acquiring the Class F
Shares and, upon exchange, the Parent Common Shares, the Vendors have made such
investigation of Purchaser and Wyant Corporation and their respective
businesses as the Vendors have deemed advisable and has had made available to
the Vendors all information with respect thereto that the Vendors have
requested to make an informed decision to acquire the Class F Shares and the
Parent Common Shares. The Vendors consider themselves to be persons possessing
experience and sophistication as an investor that is adequate for the
evaluation of the merits and risk of the Vendors' investment in the Class F
Shares and, upon exchange, the Parent Common Shares. The Vendors acknowledge
that each certificate for the Class F Shares and the Parent Common Shares will
be imprinted with a legend in substantially the following form: "The
securities represented by this certificate were originally issued on June 30,
1998, and have not been registered under the Securities Act of 1933, as
amended, or any other securities laws of the United States or Canada. The
transfer of the securities represented by this certificate is subject to the
conditions specified in Section 4.4 of the Share Purchase Agreement dated as of
June 30, 1998 among the parties thereto, and The Purchaser reserves the right
to refuse the transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such conditions will be
furnished by the Purchaser to the holder hereof upon written request and
without charge."
ARTICLE 5 - THIRD PARTY CLAIMS
In the event of a third party claim against Purchaser or the Corporation
for which the Vendors are or may be liable hereunder:
5.1 Purchaser shall tender in writing defence of the claim to the
Vendors, within 15 working days after the Purchaser knows of the
claim. The
<PAGE> 32
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Vendors shall have the right, by notice to the Purchaser
within 30 days following the receipt of the notice by the
Purchaser of the third party claim, to assume the defence of
such third party claim, with counsel reasonably satisfactory
to the Purchaser and at no cost to the Purchaser. If the
Purchaser so chooses, the Purchaser may participate in the
defence of such third party claim at its sole cost and
expense; provided, however, that such participation may not in
any way interfere with or contradict the defence of such
claim. The Vendors shall cooperate fully to make available to
the Purchaser, at the Purchaser's expense, all pertinent
information and witnesses under the Vendors' control, make
such assignments and take such other steps as may be
reasonably requested by counsel for the Purchaser to conduct
such defence.
5.2 In the event that the Vendors assume the defence of such
third party claim, the Vendors, at their expense, shall diligently
proceed with the defence of said third party claim and, in
connection therewith, the Purchaser, at the Vendors' expense, shall
cooperate fully to make available to the Vendors, all pertinent
information and witnesses under the Purchaser's control, make such
assignments and take such other steps as may be reasonably requested
by counsel for the Vendors to conduct such defence.
5.3 The Vendors shall not make any settlement or compromise of
any third party claim without the written consent of the Purchaser,
which consent shall not unreasonably be withheld or delayed.
5.4 Subject to the provisions of Section 5.3, the final
resolution or determination of any such third party claim, including
all related costs and expenses, will be binding and conclusive upon
the parties hereto.
5.5 Should the Vendors fail to assume the defence of any third
party claim or fail to diligently and reasonably defend such third
party claim, the Vendors' right to defend the claim shall terminate
and the Purchaser shall be solely entitled to defend, settle and
compromise such third party claim as in its reasonable discretion
may appear advisable, and the resolution or final determination of
such defence, settlement or compromise, including all related costs
and expenses, will be binding and conclusive upon the Vendors, and
the Vendors shall indemnify the Purchaser in respect to such
resolution or final determination and all such costs and expenses.
<PAGE> 33
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5.6 The provisions of this Article 5 shall apply mutatis mutandis
for the benefit of the Vendors in the event of any third party claim
against the Vendors for which the Purchaser is or may be liable
hereunder.
ARTICLE 6 - RIGHTS OF SET-OFF
6.1 The Vendors agree that the Purchaser shall have rights to set-off or
compensate any claim the Purchaser may have against the Vendors under this
Agreement or any Ancillary Agreements entered into by the Vendors in connection
with the transaction contemplated hereby or under the terms and conditions of
the Class F Shares against the payments due by the Purchaser hereunder or under
the Ancillary Agreements or under the terms and conditions of the Class F
Shares; provided that Purchaser will have no right of set-off against amounts
payable to any Vendor under his or her Employment Agreement.
6.2 If the Purchaser exercises the right of set-off, the Purchaser shall give
a prior written notice to the Vendors, that the Purchaser has elected to
exercise such right of set-off.
6.3 The Purchaser and the Vendors agree that nothing in this Article 6 shall
derogate from any of the provisions of this Agreement or the Ancillary
Agreements in favour of the Purchaser or any rights of Purchaser under the law
in respect of any claim of the Purchaser.
ARTICLE 7 - CONDITIONS
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER
7.1.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which
are for the exclusive benefit of the Purchaser to be performed or
complied with at or prior to the Time of Closing:
7.1.1.1 the representations and warranties of the Vendors set
forth in Section 3.1 shall be true and correct at the Time
of Closing with the same force and effect as if made at and
as of such time;
7.1.1.2 the Vendors shall have performed or complied with all of
the terms, covenants and conditions of this Agreement to be
performed or complied with by the Vendors at or prior to the
Time of Closing;
<PAGE> 34
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7.1.1.3 the Purchaser shall be furnished with such certificates,
affidavits or statutory declarations of the Corporation and
of the Vendors or of officers of the Corporation and of the
Vendor as the Purchaser or the Purchaser's counsel may
reasonably think necessary in order to establish that the
terms, covenants and conditions contained in this Agreement
to have been performed or complied with by the Vendors or by
the Corporation, as the case may be, at or prior to the Time
of Closing have been performed and complied with and that
the representations and warranties of the Vendors herein
given are true and correct at the Time of Closing;
7.1.1.4 no material damage by fire or other hazard to the assets
of the Corporation shall have occurred from the date hereof
to the Time of Closing;
7.1.1.5 all directors and officers of the Corporation specified
by the Purchaser shall resign;
7.1.1.6 the Vendors and all directors and officers of the
Corporation shall release the Corporation from any and all
possible claims against the Corporation arising from any
act, matter or thing arising at or prior to the Time of
Closing; for greater certainty, such release will not affect
the obligations of the Corporation under any of the
Ancillary Agreements;
7.1.1.7 there shall be a non-competition agreement entered into
between the Purchaser, the Corporation and each of the
Vendors substantially in the form attached hereto as
Schedule 7.1.1.7 (the "Non-Competition Agreements");
7.1.1.8 there shall be an employment agreement entered into
between the Corporation and each of Stewart, Lynda Smith,
Jerry Smith and Clayton Smith substantially in the form
attached hereto as Schedule 7.1.1.8 (the "Employment
Agreement");
7.1.1.9 there shall be an escrow agreement entered into between
the Purchaser, the Vendors and McCarthy Tetrault, as escrow
agent, in substantially the form attached hereto as Schedule
7.1.1.9 (the "Escrow Agreement");
<PAGE> 35
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7.1.1.10 the Vendors shall have delivered to the Purchaser a
favourable opinion of the Vendors' counsel substantially in
the form attached hereto as Schedule 7.1.1.10;
7.1.1.11 the execution of a Share Purchase Agreement among the
Purchaser, Terrance Smith, Carolynn Smith and Lynda Smith
dated the date hereof with respect to the sale of all the
shares of Fraser Valley; and
7.1.1.12 the form and legality of all matters incidental to the
sale by the Vendors and the purchase by the Purchaser of the
Shares shall be subject to the approval of the Purchaser's
counsel, acting reasonably.
7.1.2 In case any term or covenant of the Vendors or condition to
be performed or complied with for the benefit of the Purchaser at or
prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Purchaser may,
without limiting any other right that the Purchaser may have, at its
sole option, either:
7.1.2.1 rescind this Agreement by notice to the Vendors, and in
such event the Purchaser shall be released from all
obligations hereunder; or
7.1.2.2 waive compliance with any such term, covenant or
condition in whole or in part on such terms as may be agreed
upon without prejudice to any of its rights of rescission in
the event of non-performance of any other term, covenant or
condition in whole or in part;
and, if the Purchaser rescinds this Agreement pursuant to Section 7.1.2
and the term, covenant or condition for which the Purchaser has rescinded
this Agreement was one that the Vendors had covenanted, pursuant to
Section 4.2.2, to ensure had been performed or complied with, the Vendors
shall be liable to the Purchaser for any losses, damages or expenses
incurred by the Purchaser as a result of such breach.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
7.2.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which
are for the exclusive
<PAGE> 36
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benefit of the Vendors to be performed or complied with at
or prior to the Time of Closing:
7.2.1.1 the representations and warranties of the Purchaser set
forth in Section 3.3 shall be true and correct at the Time
of Closing with the same force and effect as if made at and
as of such time;
7.2.1.2 the Purchaser shall have performed or complied with all
of the terms, covenants and conditions of this Agreement to
be performed or complied with by the Purchaser at or prior
to the Time of Closing;
7.2.1.3 the Vendors shall be furnished with such certificates,
affidavits or statutory declarations of the Purchaser or of
officers of the Purchaser as the Vendors or the Vendors'
counsel may reasonably think necessary in order to establish
that the terms, covenants and conditions contained in this
Agreement to have been performed or complied with by the
Purchaser at or prior to the Time of Closing have been
performed and complied with and that the representations and
warranties of the Purchaser herein given are true and
correct at the Time of Closing;
7.2.1.4 the execution of a Share Purchase Agreement among the
Purchaser, Terrance Smith, Carolynn Smith and Lynda Smith
dated the date hereof with respect to the sale of all the
shares of Fraser Valley;
7.2.1.5 the Corporation shall have executed Employment
Agreement[S]; and
7.2.1.6 Wyant Corporation shall have executed a Covenant
Agreement in favour of the Vendors substantially in the form
of Schedule 7.2.1.6 (the "Covenant Agreement).
7.2.2 In case any term or covenant of the Purchaser or condition
to be performed or complied with for the benefit of the Vendors at
or prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Vendors may,
without limiting any other right that the Vendors may have, at its
sole option, either:
<PAGE> 37
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7.2.2.1 rescind this Agreement by notice to the Purchaser, and in
such event the Vendors shall be released from all
obligations hereunder; or
7.2.2.2 waive compliance with any such term, covenant or
condition in whole or in part on such terms as may be agreed
upon without prejudice to any of its rights of rescission in
the event of non-performance of any other term, covenant or
condition in whole or in part;
and, if the Vendors rescind this Agreement pursuant to Section 7.2.2.1
and the term, covenant or condition for which the Vendors have rescinded
this Agreement was one that the Purchaser had covenanted, pursuant to
Section 4.3.2, to ensure had been performed or complied with, the
Purchaser shall be liable to the Vendors for any losses, damages or
expenses incurred by the Vendors as a result of such breach.
ARTICLE 8 - GENERAL
8.1 FURTHER ASSURANCES
Each of the Vendors and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and things
as the other party may, either before or after the Closing Date, reasonably
require to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 COMMISSIONS
8.3.1 The Vendors shall solidarily (jointly and severally)
indemnify and save harmless the Purchaser from and against any
claims whatsoever for any commission or other remuneration payable
or alleged to be payable to any person in respect of the sale and
purchase of the Purchased Shares, to the extent such person purports
to act or have acted for the Vendors in connection with the sale of
the Purchased Shares.
<PAGE> 38
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8.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against any claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any person in
respect of the sale and purchase of the Purchased Shares, to the
extent such person purports to act or have acted for the Purchaser
in connection with the sale of the Purchased Shares.
8.4 LEGAL FEES
Each of the parties hereto shall pay their respective legal and accounting
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
hereto and any other costs and expenses whatsoever and howsoever incurred.
8.5 PUBLIC ANNOUNCEMENTS
Prior to closing, no public announcement or press release concerning the
sale and purchase of the Shares shall be made by the Vendors or the Purchaser
without the prior consent and joint approval of the Vendors and the Purchaser,
save as may be required by applicable Law.
8.6 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted assigns
of the parties hereto.
8.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
8.8 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by both of the parties
hereto and no waiver of any breach of any term or provision of this Agreement
shall be effective or binding unless made
<PAGE> 39
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in writing and signed by the party purporting to give the same and, unless
otherwise provided, shall be limited to the specific breach waived.
8.9 ASSIGNMENT
This Agreement may not be assigned by any party hereto without the written
consent of the other parties, but the rights and obligations of the Purchaser
hereunder may be assigned by the Purchaser without the consent of the other
parties hereto to an affiliate of the Purchaser, as determined by the
provisions of the Canada Business Corporations Act, provided that such
affiliate enters into a written agreement with the Vendors to be bound by the
provisions of this Agreement in all respects and to the same extent as the
Purchaser is bound and provided that the Purchaser shall continue to be bound
by all the obligations hereunder as if such assignment had not occurred and
perform such obligations to the extent that such affiliate fails to do so.
8.10 NOTICES
Any demand, notice or other communication to be given in connection with
this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication addressed
to the recipient as follows:
To the Vendors:
STEWART L. SMITH
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
<PAGE> 40
- 37 -
THE SMITH FAMILY TRUST
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
To the Purchaser:
WOOD WYANT INC.
1475 - 32nd Avenue
Lachine, Quebec
H8T 3J1
Fax No.:(514) 636-1148
Attention:Mr. Donald C. MacMartin
With a copy to:
McCarthy Tetrault
1170 Peel Street
Montreal, Quebec
H3B 4S8
Fax No.:(514) 397-4170
Attention: Mr. Thomas R.M. Davis
or to such other address, individual or electronic communication number as
may be designated by notice given by either party to the other. Any
demand, notice or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery
thereof and, if given by registered mail, on the third Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
If the party giving any demand, notice or other communication knows or
ought reasonably to know of any difficulties with the postal system which
might affect the delivery of mail, any such demand, notice or other
communication shall not be mailed but shall be given by personal delivery
or by electronic communication.
<PAGE> 41
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8.11 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada
applicable therein.
8.12 ATTORNMENT
For the purpose of all legal proceedings, this Agreement shall be
deemed to have been performed in the Province of British Columbia and the
courts of the Province of British Columbia shall have jurisdiction to
entertain any action arising under this Agreement. Each of the parties to
this Agreement accepts the jurisdiction of such courts and irrevocably
express to be bound by any judgment rendered thereby in connection with
this Agreement.
8.13 INDEPENDENT LEGAL ADVICE
Each of the Vendors acknowledges, represents and agrees that: (i) he has
had the opportunity to consult with independent legal counsel with respect to
the provisions of this Agreement; (ii) the nature, scope and effect of the
provisions of this Agreement have been adequately explained to him; and (iii)
he understands and accepts the provisions of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
WOOD WYANT INC.
Per:_____________________
_________________________
STEWART L. SMITH
THE SMITH FAMILY TRUST
Per:_____________________
Per:_____________________
<PAGE> 1
SHARE PURCHASE AGREEMENT
BETWEEN
WOOD WYANT INC., AS PURCHASER
AND
STEWART L. SMITH AND JOHN P. KAZAKOFF,
AS VENDORS
RELATING TO THE PURCHASE OF
MIDWAY PURNEL SANITARY SUPPLY LTD.
MADE AS OF
JUNE 30, 1998
<PAGE> 2
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT
<TABLE>
<S> <C> <C>
ARTICLE 1 - INTERPRETATION 2
1.1 DEFINITIONS 2
1.2 HEADINGS 5
1.3 EXTENDED MEANINGS 5
1.4 ACCOUNTING PRINCIPLES 6
1.5 INCLUSIVE LANGUAGE 6
1.6 CURRENCY 6
1.7 SCHEDULES 6
ARTICLE 2 - PURCHASE AND SALE 7
2.1 PURCHASE AND SALE AND PURCHASE PRICE 7
2.2 CLOSING 7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES 8
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS 8
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 19
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 20
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 20
ARTICLE 4 - COVENANTS 21
4.1 TAXES 21
4.2 COVENANTS OF THE VENDORS 21
4.3 COVENANTS OF THE PURCHASER 22
ARTICLE 5 - THIRD PARTY CLAIMS 23
ARTICLE 6 - RIGHTS OF SET-OFF 24
ARTICLE 7 - CONDITIONS 24
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER 24
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS 27
ARTICLE 8 - GENERAL 29
8.1 FURTHER ASSURANCES 29
8.2 TIME OF THE ESSENCE 29
8.3 COMMISSIONS 29
8.4 LEGAL FEES 29
</TABLE>
<PAGE> 3
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<TABLE>
<S> <C> <C>
8.5 PUBLIC ANNOUNCEMENTS 30
8.6 BENEFIT OF THE AGREEMENT 30
8.7 ENTIRE AGREEMENT 30
8.8 AMENDMENTS AND WAIVER 30
8.9 ASSIGNMENT 30
8.10 NOTICES 31
8.11 GOVERNING LAW 33
8.12 ATTORNMENT 33
8.13 INDEPENDENT LEGAL ADVICE 33
</TABLE>
<PAGE> 4
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of June 30, 1998;
BETWEEN: WOOD WYANT INC., a corporation incorporated under the laws of Canada;
(hereinafter referred to as the "Purchaser")
AND: STEWART L. SMITH, a business executive residing in the Province of
British Columbia;
(hereinafter referred to as "Stewart")
AND: JOHN P. KAZAKOFF, a business executive residing in the Province of
British Columbia;
(hereinafter referred to as "John")
(Stewart and John are hereinafter sometimes
collectively referred to as the "Vendors")
WHEREAS the Corporation is engaged in the Business (as defined herein) in
the Province of British Columbia;
WHEREAS the Vendors are the beneficial and registered owners of all of the
issued and outstanding shares in the capital stock of the Corporation
(collectively the "Shares");
AND WHEREAS the Vendors desire to sell and the Purchaser desires to
purchase the Shares, upon and subject to the terms and conditions hereinafter
set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein contained the parties hereto
agree as follows:
<PAGE> 5
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ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
1.1.1 "Agreement" means this agreement and all amendments made hereto by
written agreement between the Vendors and the Purchaser;
1.1.2 "Ancillary Agreements" means the Non-Competition Agreements;
1.1.3 "Balance Sheet" means the balance sheet of the Corporation as at
the Balance Sheet Date;
1.1.4 "Balance Sheet Date" means March 31, 1998;
1.1.5 "Business" means the business of the Corporation consisting in the
sale and distribution of industrial and institutional sanitation and
janitorial products and services, including sanitary paper products,
janitorial and cleaning chemicals and equipment and general
sanitation supplies in British Columbia;
1.1.6 "Business Day" means a day other than a Saturday, Sunday or
statutory holiday in Vancouver, British Columbia;
1.1.7 "Closing Balance Sheet" means the balance sheet of the Corporation
as at the Closing Date and an accompanying review engagement report
prepared by the accountants of the Corporation at the cost of the
Vendors in accordance with GAAP applied on a basis consistent with
prior periods;
1.1.8 "Closing Date" means June 30, 1998;
1.1.9 "Contaminant" means any substance or material which does not occur
naturally in the environment or which falls within the definition of
"pollutants", "waste", "special waste", "hazardous chemicals",
"hazardous waste", "dangerous goods", "toxic substances", or any
variation of such terms or any terms of similar import in any
Environmental Law including, without limitation, urea formaldehyde,
asbestos, PCB transformers and poly-chlorinated biphenyls.
<PAGE> 6
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1.1.10 "Control" (including the terms "Controlling" and "Controlled")
means the power to elect the majority of the board of directors or
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise;
1.1.11 "Consents" means the consents, approvals and authorizations
required to be obtained pursuant to Schedule 3.1.7;
1.1.12 "Corporation" means Midway Purnel Sanitary Supply Ltd.;
1.1.13 "Environment" means all components of the Earth, including air, all
layers of the atmosphere, land, soil, water, organic and inorganic
matter, living species and organisms, any combination of the above
components, interacting natural systems that include the above
components and the ambient milieu with which living species have
dynamic relations;
1.1.14 "Environmental Laws" means all Laws relating in whole or in part to
the Environment or its protection, as the same would be applied as
of the date hereof, including any Laws relating to (i) the natural
or accidental release, emission, discharge, deposit, issuance,
spraying, injection, inoculation, abandonment, burial, spilling,
incineration, disposal, leaking, seeping, pouring, emptying,
throwing, dumping, placing or exhausting of any Contaminant into
the Environment and (ii) the storage, disposal, destruction,
incineration, burial, recycling, handling, transportation or use
of a Contaminant;
1.1.15 "Environmental Permits" has the meaning set out in Section 3.1.46.2;
1.1.16 "Financial Statements" has the meaning set out in Section 3.1.8 ;
1.1.17 "GAAP" has the meaning specified in Section 1.4;
1.1.18 "Governmental Authority" means any federal, provincial, regional,
municipal or local or other governmental authority, domestic or
foreign, having jurisdiction over the Corporation or the Business
and includes any agency, department, commission, board, bureau,
instrumentality, court, tribunal or other Person exercising
executive, legislative, judicial, regulatory or administrative
functions constituted or appointed by any such authority;
<PAGE> 7
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1.1.19 "Interim Financial Statements" has the meaning specified in Section
3.1.9;
1.1.20 "Law" means any law, statute, by-law, regulation or any legally
binding rule, directive, guideline, policy, notice, order or
ordinance of any Governmental Authority, including Environmental
Laws;
1.1.21 "Leased Premises" has the meaning set out in Section 3.1.14;
1.1.22 "Lien" in relation to any property or asset, means any encumbrance
or title defect of whatever kind or nature, regardless of form,
whether or not recorded or registered or consensual or statutory or
arising by law, including any lien, charge, mortgage, hypothecation,
pledge, security interest, assignment, lease, option, easement,
servitude, right of way, encroachment, restrictive covenant, right
of use or any other claim or right of any kind or nature whatsoever
which affects ownership or possession of, or title to, or any
interest in, or the right to use or occupy such property or asset;
1.1.23 "Material Contract" has the meaning set out in Section 3.1.24;
1.1.24 "Net Assets" means shareholders' equity as shown on the Combined
Closing Balance Sheet;
1.1.25 "Non-Canadian" has the meaning set out in Section 3.3.3;
1.1.26 "Non-Competition Agreements" has the meaning set out in Section
7.1.1.7;
1.1.27 "Permits" means all permits, licenses, certificates, approvals,
authorizations, consents, registrations, qualifications and the like
issued by any Governmental Authority which are held by the
Corporation in connection with the operation of the Business;
1.1.28 "Person" means an individual, corporation, joint venture,
partnership, trust, trustee, unincorporated organization, or any
other entity;
1.1.29 "Personal Property Leases" has the meaning set out in Section
3.1.15;
1.1.30 "Premises Leases" has the meaning set out in Section 3.1.14;
1.1.31 "Purchase Price" has the meaning set out in Section 2.1.1;
<PAGE> 8
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1.1.32 "Purchased Shares" has the meaning set out in Section 2.1.1;
1.1.33 "Related Person" means:
(a) with respect to any Person who is an individual,
a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law
of that person, including adoptive relationships; and
(b) with respect to any Person, a Person that directly,
or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with that person;
1.1.34 "Shares" has the meaning set forth in the preamble hereto;
1.1.35 "Taxes" means all federal, provincial, local, foreign and other
taxes, including income taxes, sales taxes, goods and services taxes,
use taxes, occupancy taxes, excise taxes, property taxes, franchise
taxes and employment and payroll related taxes; and
1.1.36 "Time of Closing" means 10 a.m. (Vancouver Time) on the Closing Date.
1.2 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The
terms "this Agreement", "hereof", "hereunder" and similar expressions
refer to this Agreement and not to any particular Article, Section or
other portion hereof and include any agreement supplemental hereto.
Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to Articles
and Sections of this Agreement.
1.3 EXTENDED MEANINGS
In this Agreement words importing the singular number only shall include
the plural and vice versa, words importing the masculine gender shall
include the feminine and neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations.
<PAGE> 9
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1.4 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be made
in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which such calculation is
made or required to be made in accordance with generally accepted accounting
principles ("GAAP").
1.5 INCLUSIVE LANGUAGE
As used herein, the word "or" is not exclusive and the word "including" is
not limiting (whether or not non-limiting language such as "without limitation"
or "but not limited to" or words of similar import is used with reference
thereof).
1.6 CURRENCY
All references to currency herein are to lawful money of Canada.
1.7 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule 2.1.1: Shareholders of the Corporation; Allocation of Purchase Price
Schedule 3.1.3: Share Conditions of the Corporation
Schedule 3.1.7: Third Party Consents
Schedule 3.1.8: Financial Statements
Schedule 3.1.9: Interim Financial Statements
Schedule 3.1.12: Liens
Schedule 3.1.14: Leased Premises and Premises Leases
Schedule 3.1.15: Personal Property Leases
Schedule 3.1.17: Inventory
Schedule 3.1.19: Capital Expenditures
Schedule 3.1.20: Dividends
Schedule 3.1.22: Tax Accounts
Schedule 3.1.23 Liabilities
Schedule 3.1.24: Material Contracts
Schedule 3.1.30: Employment Contracts
Schedule 3.1.31: Employee Benefit Plans
<PAGE> 10
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Schedule 3.1.35: Related Person Indebtedness
Schedule 3.1.37: Intellectual Property
Schedule 3.1.40: Insurance Policies
Schedule 3.1.42: Amounts payable to Related Persons
Schedule 3.1.43: Litigation
Schedule 3.1.46: Environmental Matters
Schedule 3.1.51 Bank Accounts
Schedule 7.1.1.7: Non-Competition Agreements
Schedule 7.1.1.8: Opinion of the Vendors' Counsel
ARTICLE 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE AND PURCHASE PRICE
2.1.1 Subject to the terms and conditions hereof, on the Closing
Date, each of the Vendors shall sell to the Purchaser the number of
Shares set opposite the name of each Vendor on Schedule 2.1.1 hereto
(the aggregate number of such Shares is herein collectively called
the "Purchased Shares") and the Purchaser shall purchase the
Purchased Shares from the Vendors, free and clear of all Liens, for a
total purchase price of $1.00 (hereinafter referred to as the
"Purchase Price"), to be allocated amongst the Vendors in accordance
with Schedule 2.1.1.
2.1.2 The Purchase Price shall be paid against delivery to the
Purchaser of share certificates evidencing the Purchased Shares duly
endorsed for transfer to the Purchaser and satisfied as to an
aggregate amount of $1.00 payable pro rata to the Vendors in
accordance with their respective shareholdings set forth in Schedule
2.1.1 by cash, certified cheque or bank draft to the order of each of
the Vendors, and delivered by the Purchaser at the Time of Closing.
2.2 CLOSING
The sale and purchase of the Purchased Shares and the execution and
delivery of the Ancillary Agreements shall be completed at the Time of Closing
at the offices of McCarthy Tetrault, Pacific Centre 777 Dunsmuir Street,
Vancouver, British Columbia.
<PAGE> 11
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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly and severally represent and warrant to the Purchaser
the following, and acknowledge that the Purchaser is entitled to rely on such
representations and warranties notwithstanding any due diligence investigation
done by the Purchaser prior to the closing:
3.1.1 the Corporation is a corporation duly incorporated, organized
and subsisting under the laws of British Columbia as a private issuer
as that term is defined in the Securities Act (British Columbia) with
the corporate power to own its assets and to carry on the Business
and has made all necessary filings under all applicable corporate,
securities and taxation Laws or any other Laws to which the
Corporation is subject and is qualified to own its properties and
assets and to carry on the Business as presently carried on by it;
3.1.2 Schedule 2.1.1 sets out (i) the authorized capital of the
Corporation and (ii) the number of Shares of the Corporation which
are issued and outstanding, which shares have been validly issued as
fully paid and non-assessable and registered in the names of the
Vendors as set forth on Schedule 2.1.1;
3.1.3 the rights, privileges, restrictions and conditions attached
to the Shares are as set out in Schedule 3.1.3 attached hereto;
3.1.4 the Purchased Shares constitute all of the issued and
outstanding Shares in the capital stock of the Corporation;
3.1.5 each of the Vendors is the beneficial and registered owner of
the number of Purchased Shares set opposite the name of such Vendor
on Schedule 2.1.1, free and clear of all Liens, options and any other
rights of others;
3.1.6 there is no contract, option or any other right of another
binding upon or which at any time in the future may become binding
upon:
(i) any of the Vendors to sell, transfer, assign, or
grant any Lien on or affecting, or in any other way dispose of
or encumber any of the Purchased Shares other than pursuant to
the provisions of this
<PAGE> 12
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Agreement or any of its assets other than in the ordinary
course of business, or
(ii) the Corporation to allot or issue any of the
unissued shares or securities of the Corporation or to create
any additional class of shares or securities;
3.1.7 except as disclosed on Schedule 3.1.7, neither the entering
into nor the delivery of this Agreement and the Ancillary Agreements
nor the completion of the transactions contemplated hereby by each of
the Vendors will result in the violation of or require the Consent of
any third party pursuant to:
(i) any of the provisions of the Memorandum or
Articles, as amended, of the Corporation;
(ii) any agreement or other instrument to which the
Corporation or any of the Vendors is a party or by which the
Corporation or any of the Vendors is bound, or
(iii) any applicable Law;
3.1.8 the financial statements of the Corporation, consisting of the
Balance Sheet and statements of income, retained earnings and changes
in financial position for the period ended on the Balance Sheet Date,
together with the review engagement report of Cinnamon Jang
Willoughby & Company, chartered accountants, thereon and the notes
thereto (hereinafter collectively referred to as the "Financial
Statements"), a copy of which is attached hereto as Schedule 3.1.8:
(i) are in accordance with the books and accounts of
the Corporation as at the Balance Sheet Date,
(ii) are true and correct and present fairly the
financial position of the Corporation as at the Balance Sheet
Date,
(iii) have been prepared in accordance with GAAP
consistently applied, and
(iv) present fairly all of the assets and liabilities of
the Corporation as at the Balance Sheet Date including, without
limiting the generality of the
<PAGE> 13
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foregoing, all contingent liabilities of the Corporation as at
the Balance Sheet Date;
3.1.9 the interim financial statements of the Corporation,
consisting of a balance sheet and statement of income, for the period
ended on April 30, 1998 (hereinafter collectively referred to as the
"Interim Financial Statements"), a copy of which is attached hereto
as Schedule 3.1.9:
(i) are in accordance with the books and accounts of
the Corporation as at April 30, 1998,
(ii) are true and correct and present fairly the
financial position of the Corporation as at April 30, 1998,
subject only to usual and proper adjustments, which will not
exceed, in aggregate, $15,000 and without provision for income
or capital taxes;
(iii) present fairly all of the assets and liabilities
of the Corporation as at April 30, 1998, and
(iv) have been prepared in accordance with accounting
principles consistent with the principles of GAAP used in the
preparation of the Balance Sheet;
3.1.10 since the Balance Sheet Date, the Business of the Corporation has
been carried on in its usual and ordinary course and in a manner
consistent with prior practices and, the Corporation has not, since
the Balance Sheet Date, entered into any transaction out of the usual
and ordinary course of business;
3.1.11 since the Balance Sheet Date, there has been no material change in
the affairs, business, prospects, operations or condition of the
Corporation, financial or otherwise, whether arising as a result of
any legislative or regulatory change, revocation of any Permit or
right to do business, fire, explosion, accident, casualty, labour
dispute, flood, drought, riot, storm, expropriation, condemnation,
act of God, public force or otherwise, except changes occurring in
the usual and ordinary course of business which have not adversely
affected the affairs, business, prospects, operations or condition of
the Corporation, financial or otherwise;
3.1.12 the Corporation is the owner with a good and marketable title, free
and clear of all Liens, options and any other rights of others,
except for the Liens
<PAGE> 14
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described on Schedule 3.1.12 of all assets shown or reflected on the
Balance Sheet, except only such of the assets of the Corporation as
have been disposed of in the usual and ordinary course of business
since the Balance Sheet Date, and of all assets acquired by the
Corporation since the Balance Sheet Date;
3.1.13 all machinery, equipment and automotive equipment owned or used by
the Corporation has been properly maintained and is in good working
order for the purposes of ongoing operation, subject to ordinary wear
and tear for machinery and equipment of comparable age;
3.1.14 Schedule 3.1.14 sets forth a true and complete list of all premises
leased by the Corporation ("Leased Premises") and any lease in
respect thereof to which the Corporation is a party ("Premises
Leases") and: (i) each Premises Lease is in full force and effect,
unamended by oral or written agreement, and the Corporation is
entitled to the full benefit and advantage of such Premises Lease in
accordance with the terms thereof, (ii) each Premises Lease is in
good standing, all rental and other payments payable by the
Corporation under the leases have been duly paid, (iii) there is
currently no outstanding default by the Corporation under the
Premises Leases nor is there currently any outstanding default by any
landlord thereunder or dispute between the Corporation and any
landlord under any of the Premises Leases; (iv) the Corporation has
not sublet, assigned or transferred any of its interests in such
Premises Lease and (v) the Leased Premises are the only premises used
by the Corporation;
3.1.15 Schedule 3.1.15 sets forth a true and complete list of all lease
agreements concerning personal property leased by the Corporation
("Personal Property Leases") and: (i) each Personal Property Lease is
in full force and effect, unamended by oral or written agreement, and
the Corporation is entitled to the full benefit and advantage of each
Personal Property Lease in accordance with the terms thereof, (ii)
each Personal Property Lease is in good standing, all rental and
other payments payable by the Corporation under the Personal Property
Leases have been duly paid, (iii) there is currently no outstanding
default by the Corporation thereunder nor of the other parties
thereunder nor dispute between the Corporation and any other party
thereunder, and (iv) the Corporation has treated all Personal
Property Leases as operating leases for Canadian income tax purposes;
3.1.16 except for the Premises Leases, the Corporation holds no ownership
or other interest in or right affecting any real estate or real
property;
<PAGE> 15
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3.1.17 the inventory of the Corporation consist of items saleable in the
ordinary course of business reasonably fit for their usual purpose,
except for obsolete and slow-moving items and materials below
standard quality which have been written down on the books of account
of the Business to net realizable value, or adequate reserves having
been provided therefor, all in accordance with GAAP. Except as
disclosed in Schedule 3.1.17, there is no recurring or ongoing high
incidence of product failure or warranty claims against the
Corporation related to the Business;
3.1.18 there are no outstanding orders, notices or similar requirements
relating to the Corporation issued by any Governmental Authority,
including building, environmental, fire, health, labour or police
authorities, and there are no matters under discussion with any such
Governmental Authority relating to orders, notices or similar
requirements;
3.1.19 except as disclosed on Schedule 3.1.19, no single capital
expenditure in excess of $25,000 or capital expenditures in the
aggregate in excess of $50,000 have been made or authorized by the
Corporation since the Balance Sheet Date;
3.1.20 except as disclosed on Schedule 3.1.20, no dividends have been
declared or paid on or in respect of the Shares and no other
distribution on any of its securities or shares has been made by the
Corporation since the Balance Sheet Date and all dividends which to
the date hereof have been declared or paid by the Corporation have
been duly and validly declared and are fully paid;
3.1.21 the Corporation does not have any liability, obligation or
commitment for the payment of Taxes of whatever nature or kind, or
interest or penalties with respect thereto, except such as are
disclosed in the Financial Statements or such Taxes not yet due as
have arisen since the Balance Sheet Date in the usual and ordinary
course of business and for which adequate provision in the accounts
of the Corporation has been made, and the Corporation is not in
arrears with respect to any required withholdings or instalment
payments or other payments of any Tax or duty of any kind or any
penalty or interest thereon and has not filed any waiver for a
taxation year of the Corporation under the Income Tax Act (Canada) or
any other legislation imposing Tax on the Corporation; all
obligations of the Corporation with respect to its employees for
withholding Taxes, Canada Pension Plan contributions, unemployment
insurance contributions and workers compensation remittances or
contributions of any kind which are due as of the Closing Date will
have
<PAGE> 16
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been paid by the Corporation prior to the Closing Date; there are no
outstanding disputes with or assessments from the Workmen's
Compensation Board of British Columbia or the Employment Standards
Branch;
3.1.22 the tax accounts of the Corporation as disclosed in Schedule 3.1.22
attached hereto are true and complete in all material respects;
3.1.23 except as disclosed on Schedule 3.1.23, there are no outstanding
liabilities (whether absolute or contingent) against the Corporation
except trade debts incurred in the usual and ordinary course of
business;
3.1.24 set forth on Schedule 3.1.24 is a true and complete list of all
contracts or agreements (except for the Premises Leases, the Personal
Property Leases and the employment agreement with the Vendors listed
on Schedule 3.1.31) to which the Corporation is a party or is
otherwise bound which are (i) outside the ordinary course of
business, (ii) involve a financial commitment by the Corporation of
at least $25,000, (iii) have a term in excess of 60 days or (iv) to
which any Related Person of the Corporation is a party (collectively,
the "Material Contracts" and individually, a "Material Contract").
Subject only to the requirement to obtain the Consents, the
Corporation has not received notice of any default, and the
Corporation is not in default, under any Material Contract, nor has
there occurred any event which, with a lapse of time or giving of
notice, or both, would constitute such a default. Subject only to
the requirement to obtain the Consents, each Material Contract is in
full force and effect, unamended by written or oral agreement and the
Corporation is (i) entitled to the full benefit and advantage of each
Material Contract in accordance with the terms thereof, (ii) each
Material Contract is in good standing, and (iii) there is no
currently outstanding default by the Corporation nor by any other
party thereunder nor is there a dispute between the Corporation and
any party thereunder;
3.1.25 the Corporation is not in default or breach of any contract or
commitment to which it is a party and there exists no condition,
event or act which, with the giving of notice or lapse of time or
both would constitute such a default or breach and all such contracts
and commitments are in good standing and in full force and effect
without amendment thereto and the Corporation is entitled to all
benefits thereunder;
3.1.26 the Corporation is not a party to or bound by any guarantee,
indemnification, surety or similar obligation;
<PAGE> 17
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3.1.27 the Corporation does not have any subsidiaries or agreements,
options or commitments to acquire any shares or securities of any
corporation or interests of or in any other entity or to acquire or
lease any business operations, real property or assets;
3.1.28 there is no agreement, option, understanding or commitment, or any
right or privilege capable of becoming an agreement, for the purchase
from the Corporation of the Business or any of its assets other than
in the usual and ordinary course of business;
3.1.29 the Corporation is not a party to or bound by any contract or
commitment to pay any royalty, licence fee or management fee or which
contains restrictive covenants or covenants not to compete in any
line of business with any other Person;
3.1.30 the Corporation does not have any employment contract, whether
written or oral, with any person whomsoever except contracts with the
employees as are listed in Schedule 3.1.30 attached hereto, whether
or not such contracts are in writing; Schedule 3.1.30 truly and
correctly sets out for each employee of the Corporation, the annual
salary, job function, the length of employment of each of the
employees with the Corporation and other remuneration (including any
bonus, deferred compensation, incentive profit sharing, remuneration,
medical insurance, pension, retirement, vacation and such leave
arrangements) as well as all accrued and unpaid vacation pay and sick
pay payable to each employee; no labour relations or labour
standards, discrimination in employment or employment practices,
harassment, occupational health and safety standards or workers
compensation issue or matter is pending or, to Vendors' knowledge,
threatened with respect to any employee of the Corporation; except as
disclosed in Schedule 3.1.30, to the best of the knowledge of the
Vendors, no employee has made or has any basis for making any claim
(whether under Law, any employment contract, or otherwise) on account
of or for (i) overtime pay, other than overtime for the current
payroll period, (ii) wages or salary for any period other than the
current payroll period, (iii) vacation time off, sick time or pay in
lieu of any of the foregoing, other than that earned in respect of
the current payroll period or (iv) any violation of any Law;
3.1.31 the Corporation is not bound by or a party to:
(i) any collective bargaining agreement, or
<PAGE> 18
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(ii) any benefit plan including, without limiting the
generality of the foregoing, any pension plan maintained by or
on behalf of the Corporation for any of its employees,
except such agreements and plans as are listed in Schedule 3.1.31
attached hereto;
3.1.32 all benefit plans listed in Schedule 3.1.31 attached hereto have
been duly registered where required by, and are in good standing
under, all applicable Laws including, without limiting the generality
of the foregoing, the Income Tax Act (Canada) and the Pension
Benefits Standards Act (British Columbia) and all required employer
contributions under any such plans have been made and the applicable
funds have been funded in accordance with the terms thereof of the
plans and no past service funding liabilities exist thereunder;
3.1.33 no trade union, council of trade unions, employee bargaining agency
or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of the
Corporation's employees by way of certification, interim
certification, voluntary recognition, designation or successor
rights,
(ii) has applied to be certified as the bargaining agent
of any of the Corporation's employees;
3.1.34 except for remuneration paid to employees in the usual and ordinary
course of business and made at current rates of remuneration, no
payments have been made or authorized since the Balance Sheet Date by
the Corporation to officers, directors or employees of the
Corporation;
3.1.35 except as disclosed on Schedule 3.1.35, no Vendor, director, former
director, officer, shareholder or employee of the Corporation or any
Person who is a Related Person with any such Person is indebted to
the Corporation;
3.1.36 the Corporation is not conducting its business in any jurisdiction
other than the Province of British Columbia;
3.1.37 attached hereto as Schedule 3.1.37 is a list of all registered
trade marks, trade names, patents and copyrights, of all unregistered
trade marks, trade names and copyrights and of all patent
applications, trade mark registration
<PAGE> 19
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applications and copyright registration applications, both domestic
and foreign, owned or made by the Corporation;
3.1.38 all trade marks, trade names, patents and copyrights, both domestic
and foreign, used in or required for the proper carrying on of the
Corporation's Business are validly and beneficially owned by the
Corporation with the sole and exclusive right to use the same and are
in good standing and duly registered in all appropriate offices to
preserve the right thereof and thereto;
3.1.39 the conduct of the Business by the Corporation does not infringe
upon the trade marks, trade names, patents or copyrights, domestic or
foreign, of any other Person;
3.1.40 attached hereto as Schedule 3.1.40 is a true and complete list of
all insurance policies maintained by the Corporation that also
specifies the insurer, the amount of the coverage, the type of
insurance, the policy number and any pending claims thereunder and
any previous insurance claims that have been made by the Corporation;
the Corporation maintaining third party liability and property damage
automobile insurance in an amount of not less than $1,000,000 per
occurrence for all vehicles owned or leased by the corporation; all
such insurance policies are in full force and effect and the premiums
have been fully paid to date;
3.1.41 none of the Vendors is a non-resident person within the meaning of
Section 116 of the Income Tax Act (Canada); and
3.1.42 the Corporation is not indebted to any Related Person, except for
salary and other similar compensation accrued to the Closing Date and
payable to the Vendors, or except as set out in Schedule 3.1.42;
3.1.43 except as disclosed on Schedule 3.1.43 hereto, there is no action,
suit, proceeding, claim, grievance or investigation in any court or
before any arbitrator or before of by any Governmental Authority
existing, pending or threatened, related to the Business or the
transactions contemplated by this Agreement; and there is no factual
or legal basis which could give rise in the future to the pendency or
threat of any such action, suit, proceeding, claim or investigation
which could, if determined adversely, have a material adverse effect
on the Corporation or the ability of the Corporation to carry on the
Business following Closing;
<PAGE> 20
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3.1.44 the Corporation and the Leased Premises (being all premises from
which it conducts the operations of the Business) are in compliance
with all applicable Laws of all Governmental Authorities having
jurisdiction, are not in breach of any such Laws and there is no
requirement to conduct a corrective or remedial action with respect
to such premises in order to carry on the Business as presently
conducted, and the Corporation is duly licensed, registered or
qualified, and duly possesses and is in compliance with all Permits
and quotas, in the Province of British Columbia and all
municipalities thereof in which the Corporation carries on its
business to enable the Business to be carried on as now conducted and
its assets to be owned, leased and operated, and all such Permits are
valid and subsisting and in good standing and none of the same
contains or is subject to any term, provision, condition or
limitation which has or may have an adverse effect on the operation
of the Business or which may adversely change or terminate such
Permit by virtue of the completion of the transactions contemplated
hereby;
3.1.45 the operation of the Corporation on the Leased Premises is not
subject to any restriction or limitation and is not in contravention
of any Law or of any decree or order of any Governmental Authority
having jurisdiction;
3.1.46 except as specifically disclosed in Schedule 3.1.46 and without
limiting the scope of any other representation and warranty herein:
3.1.46.1 The Business, the Leased Premises and the Corporation have
been and are in compliance with applicable Laws, including,
without limitation, Environmental Laws;
3.1.46.2 The Corporation holds all Permits required under applicable
Environmental Laws for the operation of the Business (the
"Environmental Permits"); each Environmental Permit is valid
and in force and the operations of the Corporation are in
compliance with the conditions set out in the Environmental
Permits; there are no grounds for revocation, expiry or
annulment of any Environmental Permits;
3.1.46.3 The Vendors, the Corporation, its employees, agents,
shareholders, directors and officers have never been declared
guilty of committing an offence for a violation of
Environmental Laws and have never had a fine imposed against
them and have
<PAGE> 21
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never otherwise settled such a prosecution in relation to
the Business or the premises used in the Business;
3.1.46.4 There are no Contaminants, waste or pollutants of any kind
whatsoever in, on or under the Leased Premises or in, on or
under the assets of the Business or the Corporation, the
presence of which constitutes a violation of applicable
Environmental Laws;
3.1.46.5 The waste, effluents and air emissions generated by the
operation of the Business by the Corporation have been and
are treated, transported and eliminated in accordance with
applicable Environmental Laws;
3.1.46.6 The Corporation has not received any written or verbal
notice or request for information in the context of any
environmental federal, provincial, regional or municipal
investigation or inspection;
3.1.46.7 The Corporation does not own or use any underground or
aboveground storage tank in connection with the Business;
3.1.46.8 There are no PCBs, asbestos, urea formaldehyde or
radioactive substances in, on or under the premises used
by the Corporation in connection with the Business; and
3.1.46.9 there is no present requirement of any applicable
Environmental Law which is due to be imposed which will
materially increase the Corporation's cost of complying with
the Environmental Laws.
3.1.47 the Closing Balance Sheet and statements of income, retained
earnings and changes in financial position for the period ended on
the Closing Date, together with the review engagement report of
Cinnamon Jang Willoughby & Company, chartered accountants, thereon
and the notes thereto:
(i) will be in accordance with the books and accounts
of the Corporation as at the Closing Date;
<PAGE> 22
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(ii) will be true and correct and present fairly the
financial position of the Corporation as at the Closing Date;
(iii) will have been prepared in accordance with GAAP
consistent with the principles of GAAP used in the preparation
of the Financial Statements; and
(iv) will present fairly all of the assets and
liabilities of the Corporation as at the Closing Date
including, without limiting the generality of the foregoing,
all contingent liabilities of the Corporation as at the Closing
Date;
3.1.48 the accounts receivable of the Corporation which will be shown on
the Closing Balance Sheet will be collectible in the ordinary and
usual course of business and the Closing Balance Sheet will include
an appropriate allowance for uncollectible accounts;
3.1.49 the Closing Balance Sheet will include an appropriate allowance for
earned but unused vacation;
3.1.50 the minute books of the Corporation contain a complete record of
all material decisions taken by the directors and of the shareholders
of the Corporation; the Corporation's financial and other books and
records accurately reflect the financial transactions and the
operations related to the Business;
3.1.51 Schedule 3.1.51 hereto sets forth a complete list of all bank
accounts and similar accounts held or operated by the Corporation,
stating the name of the financial institution, the account number and
the persons having authority to sign in respect of each such account.
3.2 SURVIVAL OF VENDOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.2.1 The representations and warranties of the Vendors set forth in
Section 3.1 shall survive the completion of the sale and purchase of
the Purchased Shares herein provided for and, notwithstanding such
completion, the representations and warranties set forth in Section
3.1 shall continue in full force and effect for the benefit of the
Purchaser for a period of three years from the Closing Date, except
for the representations and warranties of the Vendors set forth in
Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.1.6, 3.1.7 and 3.1.12
and any representation and warranty fraudulently made, all of which
shall survive in
<PAGE> 23
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perpetuity and the representations and warranties in relation to
Taxes, all of which shall survive until the expiry of the
longest limitation period under applicable Law relating
thereto.
3.2.2 The covenants of the Vendors set forth in this Agreement shall
survive the completion of the sale and purchase of the Shares herein
provided for and, notwithstanding such completion, shall continue in
full force and effect for the benefit of the Purchaser in accordance
with the terms thereof.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.3.1 the Purchaser is a corporation duly incorporated, organized
and subsisting under the laws of Canada;
3.3.2 the Purchaser has good and sufficient power, authority and
right to enter into and deliver this Agreement and the Ancillary
Agreements and to complete the transactions to be completed by the
Purchaser contemplated hereby;
3.3.3 Purchaser is not a "non-Canadian" for the purposes of and
within the meaning of the Investment Canada Act, R.S.C. 1985, c. 28
(1st Supp.);
3.3.4 Purchaser is not a non-resident of Canada for the purposes of
the Income Tax Act, S.C. 1970-72-72 c. 63 (Canada);
3.3.5 Purchaser is a taxable Canadian corporation as defined in
subsection 89(1) of the Income Tax Act (Canada);
3.4 SURVIVAL OF PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
3.4.1 The representations and warranties of the Purchaser set forth
in Section 3.3 shall survive the completion of the sale and purchase
of the Shares herein provided for and, notwithstanding such
completion, the representations and warranties set forth in Section
3.3 shall continue in full force and effect for the benefit of the
Vendors for a period of three years from the Closing Date, except for
the representations and warranties of the Purchaser set forth in
Sections 3.3.1 and 3.3.2 any representation and warranty fraudulently
made, all of which shall survive in perpetuity and the
representations and warranties
<PAGE> 24
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in relation to Taxes, all of which shall survive until
the expiry of the longest limitation period under applicable
Law relating thereto.
3.4.2 The covenants of the Purchaser set forth in this Agreement
shall survive the completion of the sale and purchase of the Shares
herein provided for and, notwithstanding such completion, shall
continue in full force and effect for the benefit of the Vendors in
accordance with the terms thereof.
ARTICLE 4 - COVENANTS
4.1 TAXES
The Purchaser does not assume and shall not be liable for any taxes under
the Income Tax Act (Canada) or any other taxes whatsoever which may be or
become payable by the Vendors including, without limiting the generality of the
foregoing, any taxes resulting from or arising as a consequence of the sale by
the Vendors to the Purchaser of the Purchased Shares herein contemplated, and
the Vendors shall indemnify and save harmless the Purchaser from and against
all such taxes.
4.2 COVENANTS OF THE VENDORS
4.2.1 Each of the Vendors shall jointly and severally indemnify and
save harmless the Purchaser and the officers and directors of the
Purchaser from and against all claims, actions, demands, suits,
proceedings, losses, damages, fines, liabilities (whether accrued,
actual, contingent or otherwise), costs and expenses, including
reasonable environmental characterization and remediation costs,
reasonable lawyers fees and other reasonable consultants fees,
directly or indirectly suffered by the Purchaser and the officers and
directors of the Purchaser from any breach of any covenant of the
Vendors contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in
Section 3.1 notwithstanding any information obtained by the Purchaser
at or before the Closing Date as to such inaccuracy or
misrepresentation.
4.2.2 The Vendors shall ensure that the representations and
warranties of the Vendors set out in Section 3.1 are true and correct
at the Time of Closing and that the conditions of closing for the
benefit of the Purchaser set out in Section 7.1.1 over which the
Vendors have reasonable control have been performed or complied with
by the Time of Closing.
<PAGE> 25
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4.2.3 The Vendors shall permit the Purchaser, through its agents and
representatives, to make such reasonable investigation prior to and
at the Time of Closing of the assets of the Corporation and of its
financial and legal condition as the Purchaser considers necessary or
advisable to familiarize itself with such assets and other matters
and the Vendors shall supply any and all documents and records of the
Corporation to the Purchaser and its agents and representatives as
they may reasonably require. The Vendors shall also permit the
inspection of the assets of the Corporation by the Purchaser prior to
and at the Time of Closing by such federal, provincial or municipal
authorities as the Purchaser may require. Such investigations and
inspections shall not, however, affect or mitigate the Vendors'
covenants, representations and warranties hereunder which shall
continue in full force and effect.
4.2.4 The Vendors shall use their best efforts as employees of the
Corporation to ensure that the Corporation's relationships with
suppliers continue on substantially the same terms and conditions
following the Closing Date.
4.2.5 Each of the Vendors shall indemnify and save harmless the
Purchaser and the officers and directors of the Purchaser from and
against all liabilities (whether actual, contingent, accrued or
otherwise), claims and demands of or in connection with any matter
relating to any contracts between the Corporation and any Related
Person entered into prior to the date of this Agreement and which are
not disclosed in the Schedules hereto.
4.3 COVENANTS OF THE PURCHASER
4.3.1 The Purchaser shall ensure that the representations and
warranties of the Purchaser set out in Section 3.3 are true and
correct at the Time of Closing and that the conditions of closing for
the benefit of the Vendors set out in Section 7.2.1 over which the
Purchaser has reasonable control have been performed or complied with
by the Time of Closing.
4.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against all losses, damages or expenses directly or
indirectly suffered by the Vendors resulting from any breach of any
covenant of the Purchaser contained in this Agreement or from any
inaccuracy or misrepresentation in any representation or warranty set
forth in Section 3.3.
<PAGE> 26
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ARTICLE 5 - THIRD PARTY CLAIMS
In the event of a third party claim against Purchaser or the Corporation
for which the Vendors are or may be liable hereunder:
5.1 Purchaser shall tender in writing defence of the claim to the
Vendors, within 15 working days after the Purchaser knows of the
claim. The Vendors shall have the right, by notice to the Purchaser
within 30 days following the receipt of the notice by the Purchaser
of the third party claim, to assume the defence of such third party
claim, with counsel reasonably satisfactory to the Purchaser and at
no cost to the Purchaser. If the Purchaser so chooses, the Purchaser
may participate in the defence of such third party claim at its sole
cost and expense; provided, however, that such participation may not
in any way interfere with or contradict the defence of such claim.
The Vendors shall cooperate fully to make available to the Purchaser,
at the Purchaser's expense, all pertinent information and witnesses
under the Vendors' control, make such assignments and take such other
steps as may be reasonably requested by counsel for the Purchaser to
conduct such defence.
5.2 In the event that the Vendors assume the defence of such third
party claim, the Vendors, at their expense, shall diligently proceed
with the defence of said third party claim and, in connection
therewith, the Purchaser, at the Vendors' expense, shall cooperate
fully to make available to the Vendors, all pertinent information and
witnesses under the Purchaser's control, make such assignments and
take such other steps as may be reasonably requested by counsel for
the Vendors to conduct such defence.
5.3 The Vendors shall not make any settlement or compromise of any
third party claim without the written consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
5.4 Subject to the provisions of Section 5.3, the final resolution
or determination of any such third party claim, including all related
costs and expenses, will be binding and conclusive upon the parties
hereto.
5.5 Should the Vendors fail to assume the defence of any third
party claim or fail to diligently and reasonably defend such third
party claim, the Vendors' right to defend the claim shall terminate
and the Purchaser shall be solely entitled to defend, settle and
compromise such third party claim as in its reasonable discretion may
appear advisable, and the resolution or final determination of
<PAGE> 27
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such defence, settlement or compromise, including all
related costs and expenses, will be binding and conclusive upon
the Vendors, and the Vendors shall indemnify the Purchaser in
respect to such resolution or final determination and all such
costs and expenses.
5.6 The provisions of this Article 5 shall apply mutatis mutandis
for the benefit of the Vendors in the event of any third party claim
against the Vendors for which the Purchaser is or may be liable
hereunder.
ARTICLE 6 - RIGHTS OF SET-OFF
6.1 The Vendors agree that the Purchaser shall have rights to set-off or
compensate any claim the Purchaser may have against the Vendors under this
Agreement or any Ancillary Agreements entered into by the Vendors in connection
with the transaction contemplated hereby or against either of them under each
of the share purchase agreements dated the date hereof with respect to the
purchase by the Purchaser of all of the outstanding shares of Midway Supply
Ltd. and Purnel Distributors Ltd. against amounts payable to the Vendors or the
Vendor under such agreements or under Class F Shares issued thereunder;
provided that Purchaser will have no right of set-off against amounts payable
to any Vendor under his or her Employment Agreement.
6.2 If the Purchaser exercises the right of set-off, the Purchaser shall give a
prior written notice to the Vendors, that the Purchaser has elected to exercise
such right of set-off.
6.3 The Purchaser and the Vendors agree that nothing in this Article 6 shall
derogate from any of the provisions of this Agreement or the Ancillary
Agreements in favour of the Purchaser or any rights of Purchaser under the law
in respect of any claim of the Purchaser.
ARTICLE 7 - CONDITIONS
7.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER
7.1.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which are
for the exclusive benefit of the Purchaser to be performed or
complied with at or prior to the Time of Closing:
<PAGE> 28
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7.1.1.1 the representations and warranties of the Vendors set forth
in Section 3.1 shall be true and correct at the Time of Closing
with the same force and effect as if made at and as of such
time;
7.1.1.2 the Vendors shall have performed or complied with all of the
terms, covenants and conditions of this Agreement to be
performed or complied with by the Vendors at or prior to the
Time of Closing;
7.1.1.3 the Purchaser shall be furnished with such certificates,
affidavits or statutory declarations of the Corporation and of
the Vendors or of officers of the Corporation and of the Vendor
as the Purchaser or the Purchaser's counsel may reasonably
think necessary in order to establish that the terms, covenants
and conditions contained in this Agreement to have been
performed or complied with by the Vendors or by the
Corporation, as the case may be, at or prior to the Time of
Closing have been performed and complied with and that the
representations and warranties of the Vendors herein given are
true and correct at the Time of Closing;
7.1.1.4 no material damage by fire or other hazard to the assets of
the Corporation shall have occurred from the date hereof to the
Time of Closing;
7.1.1.5 all directors and officers of the Corporation specified by
the Purchaser shall resign;
7.1.1.6 the Vendors and all directors and officers of the
Corporation shall release the Corporation from any and all
possible claims against the Corporation arising from any act,
matter or thing arising at or prior to the Time of Closing; for
greater certainty, such release will not affect the obligations
of the Corporation under any of the Ancillary Agreements;
7.1.1.7 there shall be a non-competition agreement entered into
between the Purchaser, the Corporation and each of the Vendors
substantially in the form attached hereto as Schedule 7.1.1.7
(the "Non-Competition Agreements");
<PAGE> 29
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7.1.1.8 the Vendors shall have delivered to the Purchaser a
favourable opinion of the Vendors' counsel substantially in the
form attached hereto as Schedule 7.1.1.8;
7.1.1.9 the form and legality of all matters incidental to the sale
by the Vendors and the purchase by the Purchaser of the Shares
shall be subject to the approval of the Purchaser's counsel,
acting reasonably.
7.1.2 In case any term or covenant of the Vendors or condition to be
performed or complied with for the benefit of the Purchaser at or
prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Purchaser may,
without limiting any other right that the Purchaser may have, at its
sole option, either:
7.1.2.1 rescind this Agreement by notice to the Vendors, and in such
event the Purchaser shall be released from all obligations
hereunder; or
7.1.2.2 waive compliance with any such term, covenant or condition
in whole or in part on such terms as may be agreed upon without
prejudice to any of its rights of rescission in the event of
non-performance of any other term, covenant or condition in
whole or in part;
and, if the Purchaser rescinds this Agreement pursuant to Section 7.1.2
and the term, covenant or condition for which the Purchaser has rescinded
this Agreement was one that the Vendors had covenanted, pursuant to
Section 4.2.2, to ensure had been performed or complied with, the Vendors
shall be liable to the Purchaser for any losses, damages or expenses
incurred by the Purchaser as a result of such breach.
7.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
7.2.1 The sale by the Vendors and the purchase by the Purchaser of
the Purchased Shares is subject to the following conditions which are
for the exclusive benefit of the Vendors to be performed or complied
with at or prior to the Time of Closing:
<PAGE> 30
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7.2.1.1 the representations and warranties of the Purchaser set
forth in Section 3.3 shall be true and correct at the Time of
Closing with the same force and effect as if made at and as of
such time;
7.2.1.2 the Purchaser shall have performed or complied with all of
the terms, covenants and conditions of this Agreement to be
performed or complied with by the Purchaser at or prior to the
Time of Closing; and
7.2.1.3 the Vendors shall be furnished with such certificates,
affidavits or statutory declarations of the Purchaser or of
officers of the Purchaser as the Vendors or the Vendors'
counsel may reasonably think necessary in order to establish
that the terms, covenants and conditions contained in this
Agreement to have been performed or complied with by the
Purchaser at or prior to the Time of Closing have been
performed and complied with and that the representations and
warranties of the Purchaser herein given are true and correct
at the Time of Closing.
7.2.2 In case any term or covenant of the Purchaser or condition to
be performed or complied with for the benefit of the Vendors at or
prior to the Time of Closing shall not have been performed or
complied with at or prior to the Time of Closing, the Vendors may,
without limiting any other right that the Vendors may have, at its
sole option, either:
7.2.2.1 rescind this Agreement by notice to the Purchaser, and in
such event the Vendors shall be released from all obligations
hereunder; or
7.2.2.2 waive compliance with any such term, covenant or condition
in whole or in part on such terms as may be agreed upon without
prejudice to any of its rights of rescission in the event of
non-performance of any other term, covenant or condition in
whole or in part;
and, if the Vendors rescind this Agreement pursuant to Section 7.2.2.1 and
the term, covenant or condition for which the Vendors have rescinded this
Agreement was one that the Purchaser had covenanted, pursuant to Section
4.3.1, to ensure had been performed or complied with, the Purchaser shall
be liable to the Vendors for any losses, damages or expenses incurred by
the Vendors as a result of such breach.
<PAGE> 31
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ARTICLE 8 - GENERAL
8.1 FURTHER ASSURANCES
Each of the Vendors and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and things
as the other party may, either before or after the Closing Date, reasonably
require to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 COMMISSIONS
8.3.1 The Vendors shall jointly and severally indemnify and save
harmless the Purchaser from and against any claims whatsoever for any
commission or other remuneration payable or alleged to be payable to
any person in respect of the sale and purchase of the Purchased
Shares, to the extent such person purports to act or have acted for
the Vendors in connection with the sale of the Purchased Shares.
8.3.2 The Purchaser shall indemnify and save harmless the Vendors
from and against any claims whatsoever for any commission or other
remuneration payable or alleged to be payable to any person in
respect of the sale and purchase of the Purchased Shares, to the
extent such person purports to act or have acted for the Purchaser in
connection with the sale of the Purchased Shares.
8.4 LEGAL FEES
Each of the parties hereto shall pay their respective legal and accounting
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
hereto and any other costs and expenses whatsoever and howsoever incurred.
<PAGE> 32
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8.5 PUBLIC ANNOUNCEMENTS
Prior to closing, no public announcement or press release concerning the
sale and purchase of the Shares shall be made by the Vendors or the Purchaser
without the prior consent and joint approval of the Vendors and the Purchaser,
save as may be required by applicable Law.
8.6 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted assigns
of the parties hereto.
8.7 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
8.8 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by both of the parties
hereto and no waiver of any breach of any term or provision of this Agreement
shall be effective or binding unless made in writing and signed by the party
purporting to give the same and, unless otherwise provided, shall be limited to
the specific breach waived.
8.9 ASSIGNMENT
This Agreement may not be assigned by any party hereto without the written
consent of the other parties, but the rights and obligations of the Purchaser
hereunder may be assigned by the Purchaser without the consent of the other
parties hereto to an affiliate of the Purchaser, as determined by the
provisions of the Canada Business Corporations Act, provided that such
affiliate enters into a written agreement with the Vendors to be bound by the
provisions of this Agreement in all respects and to the same extent as the
Purchaser is bound and provided that the Purchaser shall continue to be bound
by all the obligations hereunder as if such assignment had not occurred and
perform such obligations to the extent that such affiliate fails to do so.
<PAGE> 33
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8.10 NOTICES
Any demand, notice or other communication to be given in connection with
this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication addressed
to the recipient as follows:
To the Vendors:
STEWART L. SMITH
c/o Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier: (604) 454-6295
Telephone: (604) 454-6216
JOHN P. KAZAKOFF
c/o Yule & Associates
4 - 615 Columbia Avenue
Castlegar, British Columbia
V1N 1G9
Attention: Geoff Yule
Telecopier:(250) 365-8027
Telephone:
With copy to:
Cinnamon Jang Willoughby & Company
900 - 4720 Kingsway
Burnaby, British Columbia
V5H 4N2
Attention: Don Willoughby
Telecopier:(604) 454-6295
Telephone:(604) 454-6216
<PAGE> 34
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To the Purchaser:
WOOD WYANT INC.
1475 - 32nd Avenue
Lachine, Quebec
H8T 3J1
Fax No.:(514) 636-1148
Attention: Mr. Donald C. MacMartin
With a copy to:
McCarthy Tetrault
1170 Peel Street
Montreal, Quebec
H3B 4S8
Fax No.:(514) 397-4170
Attention: Mr. Thomas R.M. Davis
or to such other address, individual or electronic communication number as
may be designated by notice given by either party to the other. Any demand,
notice or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the third Business Day following the
deposit thereof in the mail and, if given by electronic communication, on
the day of transmittal thereof if given during the normal business hours of
the recipient and on the Business Day during which such normal business
hours next occur if not given during such hours on any day. If the party
giving any demand, notice or other communication knows or ought reasonably
to know of any difficulties with the postal system which might affect the
delivery of mail, any such demand, notice or other communication shall not
be mailed but shall be given by personal delivery or by electronic
communication.
8.11 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada
applicable therein.
<PAGE> 35
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8.12 ATTORNMENT
For the purpose of all legal proceedings, this Agreement shall be deemed
to have been performed in the Province of British Columbia and the courts of
the Province of British Columbia shall have jurisdiction to entertain any
action arising under this Agreement. Each of the parties to this Agreement
accepts the jurisdiction of such courts and irrevocably express to be bound by
any judgment rendered thereby in connection with this Agreement.
8.13 INDEPENDENT LEGAL ADVICE
Each of the Vendors acknowledges, represents and agrees that: (i) he has
had the opportunity to consult with independent legal counsel with respect to
the provisions of this Agreement; (ii) the nature, scope and effect of the
provisions of this Agreement have been adequately explained to him; and (iii)
he understands and accepts the provisions of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
WOOD WYANT INC.
Per: __________________________________
_______________________________________
STEWART L. SMITH
_______________________________________
JOHN P. KAZAKOFF
