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 of earliest event reported) November 21, 2000
(November 6, 2000)
Alamo Group Inc.
(Exact name of registrant as specified in its charter)
State of Delaware 0-21220 74-1621248
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1502 E. Walnut Seguin, Texas
78155
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(Address of Principal executive offices)
Registrant's telephone number, including area code (830)379-1480
Alamo Group Inc.
Form 8-K
Item 2. Acquisition of Assets.
On November 6, 2000, Registrant through wholly owned indirect subsidiaries,
acquired all of the outstanding stock of Schulte Industries, Ltd., Schulte
Sales, Ltd., and Schulte Sales (International) Inc., all of which are
Saskatchewan, Canada corporations, each with their headquarters in Englefeld,
Saskatchewan, Canada. Also on November 6, 2000, registrant's wholly owned
subsidiary Alamo Group (USA) Inc., a Delaware corporation, acquired all of
the outstanding stock of Schulte (USA) Inc., a Florida corporation with
headquarters in Lake Wales, Florida.
The Schulte family of companies was founded by John Schulte in 1923 and is
managed jointly by Earl Schulte and Jim Carnago. Schulte manufactures mechanical
rotary mowers, snow blowers and rock removal equipment for sale in Canada, the
United States and abroad. Schulte employs approximately 90 persons. Schulte's
sales for the fiscal year ending July 31, 2000, were approximately $12 million.
The purchase price for the outstanding stock of Schulte is approximately $9.03
million in cash paid at closing. The purchase price was financed by borrowing
$9.03 million from Bank of America, N.A. under an existing revolving-credit
facility. The final purchase price will be determined based on Schulte's
adjusted net worth as reflected on its financial statements as of November 6,
2000.
The acquisition will be accounted for as a purchase. As a result of the
purchase, Registrant acquired assets with a projected value of approximately
$6.9 million and assumed liabilities of approximately $2.9 million. The purchase
price includes a premium over the net asset value of approximately $5.0 million
and Registrant expects to allocate the excess purchase price to goodwill which
will be amortized on a straight-line basis over a period of fifteen years.
Alamo Group Inc.
Form 8-K
Item 7. Financial Statements and Exhibits.
No Financial Statements are required by this Item.
Alamo Group Inc.
Form 8-K
Item 10. Exhibits.
Share Purchase Agreement dated as of November 6, 2000, among Alamo Group
(SASK) Inc. and Alamo Group (USA) Inc. as Purchasers and Valda Schulte, Lisa
Muller, Dean Carnago, Jim Carnago, Lani Carnago, Earl Schulte, Jeanne
Schulte, Hal Carnago, Carnago Holdings Ltd., Val-Lis Holdings Inc., Schulte
Family Trust, Carnago Family Trust, Schulte Industries Ltd., Schulte Sales
Ltd., Schulte Sales (INTERNATIONAL) Inc., Schulte (USA) Inc., JC Capital
Ltd., LC Capital Ltd., ES Capital Ltd. and JS Capital Ltd. as Sellers.
Alamo Group Inc.
Form 8-K
SIGNATURES
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 hereunto duly authorized.
Date: November 21, 2000
By:-------------------------
Robert H. George
Vice President
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is dated as of
November 6, 2000, by and among Alamo Group (Sask) Inc. ("Alamo Sask"), a
Saskatchewan corporation, Alamo Group (USA) Inc. ("Alamo USA"), a Delaware
corporation (Alamo Sask and Alamo USA being hereafter collectively referred
to as the "Purchaser"), Valda Schulte, Lisa Muller, Dean Carnago, Jim
Carnago, Lani Carnago, Earl Schulte, Jeanne Schulte, Hal Carnago, Carnago
Holdings Ltd., Val - Lis Holdings Inc., Schulte Family Trust and Carnago
Family Trust (the "Shareholders"); and Schulte Industries Ltd., Schulte
Sales Ltd., Schulte Sales (International) Inc., and Schulte (USA) Inc.,
(collectively, "Schulte"), and JC Capital Ltd., LC Capital Ltd., ES Capital
Ltd., and JS Capital Ltd. (collectively, the "Capital Companies") (the
"Capital Companies" and "Schulte" are referred to herein, collectively, as
the "Companies," and, individually, as the "Company").
WHEREAS, Dean Carnago, Hal Carnago, Lisa Muller and Valda Schulte are
collectively the legal and beneficial owners of an aggregate of 4 fully paid and
non-assessable Class A shares (the "International Stock") of Schulte Sales
(International) Inc., a Saskatchewan corporation ("International"), such shares
constituting 100% of the issued and outstanding capital stock of International
as of the Closing Date; and
WHEREAS, Dean Carnago, Hal Carnago, Lisa Muller and Valda Schulte are
collectively the legal and beneficial owners of an aggregate of 100 fully paid
shares of common stock, par value $1.00 (USD) per share (the "USA Stock"), of
Schulte USA Inc., a Florida corporation ("USA"), such shares constituting 100%
of the issued and outstanding stock of USA as of the Closing Date; and
WHEREAS, Schulte Family Trust and Carnago Family Trust are collectively
the legal owners of an aggregate of 50 fully paid and non-assessable Class F
shares (the "Industries Stock") of Schulte Industries Ltd., a Saskatchewan
corporation ("Industries"), such shares, together with the 20,000 fully paid and
non-assessable Class B shares, the 3,198,837 fully paid and non-assessable Class
E shares, and the 25 fully paid and non-assessable Class F shares of Industries
held by each of LC Capital Ltd. and ES Capital Ltd., constitute 100% of the
issued and outstanding stock of Industries as of the Closing Date; and
WHEREAS, Schulte Family Trust and Carnago Family Trust are collectively
the legal owners of an aggregate of 50 fully paid and non-assessable Class D
shares (the "Sales Stock") of Schulte Sales Ltd., a Saskatchewan corporation
("Sales"), such shares, together with the 60,000 fully paid and non-assessable
Class B shares of Sales held by JC Capital Ltd. and the 861,010 fully paid and
non-assessable Class C shares, and the 25 fully paid and non-assessable Class D
shares of Sales held by each of JC Capital Ltd. and JS Capital Ltd., constitute
100% of the issued and outstanding stock of Sales as of the Closing Date; and
WHEREAS, James Carnago is the legal and beneficial owner of 496,000 fully
paid and non-assessable Class C shares and Carnago Holdings Ltd. is the legal
and beneficial owner of 100 fully paid and non-assessable Class A shares
(collectively the "JC Stock") of JC Capital Ltd., a Saskatchewan corporation
("JC Capital"), such shares constituting 100% of the issued and outstanding
stock of JC Capital as of the Closing Date; and
WHEREAS, Lani Carnago is the legal and beneficial owner of 542,600 fully
paid and non-assessable Class C shares and Carnago Holdings Ltd. is the legal
and beneficial owner of 100 fully paid and non-assessable Class A shares
(collectively, the "LC Stock") of LC Capital Ltd., a Saskatchewan corporation
("LC Capital"), such shares constituting 100% of the issued and outstanding
stock of LC Capital as of the Closing Date; and
WHEREAS, Earl Schulte is the legal and beneficial owner of 546,600 fully
paid and non-assessable Class C shares and Val-Lis Holdings Inc. is the legal
and beneficial owner of 100 fully paid and non-assessable Class A shares
(collectively the "ES Stock") of ES Capital, Ltd., a Saskatchewan corporation
("ES Capital"), such shares constituting 100% of the issued and outstanding
stock of ES Capital as of the Closing Date; and
WHEREAS, Jeanne Schulte is the legal and beneficial owner of 500,000 fully
paid and non-assessable Class C shares and Val-Lis Holdings Inc. is the legal
and beneficial owner of 100 fully paid and non-assessable Class A shares
(collectively the "JS Stock") of JS Capital Ltd., a Saskatchewan corporation
("JS Capital"), such shares constituting 100% of the issued and outstanding
stock of JS Capital as of the Closing Date; and
WHEREAS, Alamo Sask desires to purchase from the Shareholders the
International Stock, the Industries Stock, the JC Stock, the LC Stock, the ES
Stock, the JS Stock and the Sales Stock in order that Alamo Sask will, on the
Closing Date, directly own all of the issued and outstanding shares of each of
the Capital Companies and, directly and indirectly (via the Capital Companies)
own all of the issued and outstanding shares of Sales, International and
Industries; and
WHEREAS, Alamo USA desires to purchase from Hal Carnago, Dean Carnago,
Valda Schulte and Lisa Muller the USA Stock in order that Alamo USA will, on the
Closing Date, directly own all of the issued and outstanding shares of USA; and
WHEREAS, the International Stock, the Industries Stock, the JC Stock, the
LC Stock, the ES Stock, the JS Stock and the Sales Stock are referred to herein
collectively as the "Canadian Stock"; and
WHEREAS, the Canadian Stock and the USA Stock are referred to herein
collectively as the "Stock;" and
WHEREAS, the Shareholders, jointly and severally, are making certain
representations, warranties, covenants and indemnities herein as an inducement
to each of Alamo Sask and Alamo USA (collectively, the "Purchaser") to enter
into this Agreement; and
WHEREAS, capitalized terms not otherwise defined shall have the meaning
set forth in Section 11.14;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SALE OF STOCK; CLOSING
Purchase of Stock
Subject to the terms and conditions of this Agreement: (a) the Shareholders
shall sell, transfer and deliver to Alamo Sask, and Alamo Sask shall purchase,
the Canadian Stock on the Closing Date; and (b) Hal Carnago, Dean Carnago, Valda
Schulte and Lisa Muller shall sell, transfer and deliver to Alamo USA, and Alamo
USA shall purchase, the USA Stock on the Closing Date.
Purchase Price
(a) In consideration for the Stock, the Purchaser shall pay to the
Shareholders the estimated purchase price as follows (the "Purchase
Price"), which Purchase Price shall be subject to adjustment as set forth
in Section 1.3. The portion of the Purchase Price payable for the USA
Stock shall be $30,000.00 (CAD). The portion of the Purchase Price payable
for the Canadian Stock, in aggregate, shall be $13,720,000.00 (CAD),
allocated as follows:
(i) to directly acquire the International Stock: $1,930,000.00 (CAD);
(ii) to directly and indirectly acquire all of the issued and
outstanding shares of Industries (via the purchase of,
collectively, the Industries Stock, the LC Stock and the ES
Stock): $9,900,000.00 (CAD); and
(iii) to directly and indirectly acquire all of the issued and
outstanding shares of Sales (via the purchase of, collectively,
the Sales Stock, the JC Stock and the JS Stock): $1,890,000.00
(CAD).
(b) The amount of the Purchase Price payable to the Shareholders as of the
Closing Date shall be reduced by:
the amount of the Holdback (as hereafter defined) which shall be
paid into escrow in accordance herewith; and
by the amount of all net negative cash balances and interest bearing
debt of Schulte (including notes, capital leases or loans, and lines
of credit) save and except to the extent that any of the interest
bearing debt is to be paid out of the Purchase Price by the
Shareholders' Solicitors on or after the Closing Date in accordance
with Section 1.3 hereof.
(c) The Purchase Price shall be, subject to applicable adjustments herein, paid
as follows:
(i) $12,375,000 (CAD) via solicitor's trust cheque at Closing; and (ii)
$1,375,000 (CAD) to be held in an escrow account (the "Holdback")
which shall be held, invested and ultimately disbursed in the manner
set forth in that one certain escrow agreement attached hereto as
Exhibit "A" (the "Escrow Agreement") (which the parties hereby agree
to execute and deliver at Closing). The Holdback shall be released
(less adjustments in accordance with this Agreement and subject to
any continuing holdback in accordance with the Escrow Agreement) on
the expiration of twelve (12) months from the Closing Date. Interest
on the Holdback shall accrue for the benefit of the party receiving
the Holdback pursuant to the terms of the Escrow Agreement.
(d) Subject to applicable adjustments as herein provided, each Shareholder
shall be paid his, her or its proportion of the Purchase Price in
accordance with the percentage opposite his, her or its name as set forth
on Exhibit "D" attached hereto.
(e) For greater certainty, any payment by the Purchaser pursuant to this
Section shall be good and sufficiently made if made to the Shareholders'
Solicitors, in trust, and any such payment to the Shareholders' Solicitors
shall be a full and sufficient discharge of the Purchaser's payment
obligations without the need to ensure the distribution of any such
payment or portion thereof to any particular Shareholder or any other
person or entity whatsoever.
(f) Each of the Shareholders hereby jointly and severally agrees to
indemnify and save the Purchaser harmless from and against any and all claims,
demands, actions, causes of action, damages, losses, deficiencies, costs,
liabilities, expenses (including, without limitation, all legal and other
professional fees (on a solicitor and his own client basis) and disbursements,
interest and penalties) suffered or incurred by the Purchaser as a result of, or
arising directly or indirectly out of, or in connection with: (i) the allocation
of the Purchase Price as among or between the Shareholders (as set forth in
Exhibit "D" hereto or otherwise); or
(ii) arising out of any payment of the Purchase Price or portion
thereof to the Shareholders' Solicitors; or
(iii) any subsequent disbursement or payment by the Shareholders'
Solicitors of all or any portion of the Purchase Price to any
particular Shareholder, Person or entity.
(g) The Shareholders hereby acknowledge that they have each participated in
determining the respective allocations and the manner of payment of the
Purchase Price and that they are in full agreement therewith.
Adjustments to Purchase Price
Based on Schulte's unaudited combined financial statements for the period ending
January 31, 2000 (the "January Financials"), a copy of which is attached hereto
as Exhibit "B", the parties hereto agree and acknowledge that, as of the date of
the January Financials, the net worth of Schulte is $5,349,000 (CAD) (the
"Estimated Net Worth"). Schulte has prepared and delivered to the Purchaser a
projected restated balance sheet of Schulte as of the Closing prepared in
accordance with GAAP and on the same basis as the January Financials. Within
thirty (30) days after the Closing, the Purchaser shall prepare and deliver to
the Representative (as hereinafter defined) an actual balance sheet of Schulte
as of the Closing prepared in accordance with GAAP and on the same basis as the
January Financials (the "Final Financial Statements") which shall, for greater
certainty, continue to evidence as a liability thereon the full amount of all
net negative cash balances and interest bearing debt of the Companies as of the
Closing Date, notwithstanding any subsequent payment thereof by the
Shareholders' Solicitors on or after the Closing Date. The Purchaser shall have
the right at its own expense to review, or cause to be reviewed, the January
Financials or any part thereof, for compliance, accuracy and/or completeness.
Any such review shall be made in accordance with GAAP. Any such review may
include, but is not limited to, a review of the adequacy of all reserves,
including that for bad debts, receivables, warranty and product liability,
inventory obsolescence practices and policy, revenue recognition, asset
valuation, and cost of goods sold. The Representative shall have fifteen (15)
days after the date the Final Financial Statements are sent to the
Representative to notify the Purchaser if the Representative objects to any item
on the Final Financial Statements. Any such notice shall specify the item or
items in dispute ("Disputed Item(s)"). If (a) the Representative does not
deliver to the Purchaser any objections in writing to the Final Financial
Statements within fifteen (15) after the date such statements are sent to the
Representative pursuant to Section 11.6 hereof, or (b) the Representative
acknowledges in writing that the Final Financial Statements are accurate, the
Final Financial Statements shall be final, binding and conclusive on the parties
for purposes of making any adjustments to the Purchase Price pursuant to this
Section 1.3. In the event of a dispute, the parties agree to co-operate with
each other to try to resolve the dispute prior to submission of the dispute for
determination by the accounting firm as hereinafter provided, which co-operation
shall include, but not be limited to, responding to reasonable inquiries made by
a party for information or explanation. In the event the parties fail to resolve
any Disputed Item(s) within thirty (30) days after notice from the
Representative that a dispute exists, then the matter shall be submitted to
PriceWaterhouseCoopers, or such other accounting firm as is jointly selected by
the Purchaser and Representative and whose decision with respect thereto shall
be final and binding on the parties in all respects. Fees and expenses incurred
by such accounting firm with respect to Disputed Items shall be borne equally by
the Purchaser on the one hand and the Shareholders on the other hand. The Actual
Net Worth of Schulte shall be determined based on the Final Financial Statements
(the "Actual Net Worth"). On the tenth (10th) business day following the
determination of the Final Financial Statements, including resolution of any
Disputed Item(s), the Purchase Price shall be adjusted, upward or downward, as
the case may be, by the amount that the Actual Net Worth is greater or lesser
than the Estimated Net Worth.
If the Estimated Net Worth exceeds the Actual Net Worth, then the Shareholders
shall pay the Purchaser the difference within ten (10) business days after the
Final Financial Statements are delivered to the Representative. If the Estimated
Net Worth is less than the Actual Net Worth, then the Purchaser shall pay the
Representative the difference within ten (10) business days after the Final
Financial Statements are sent to the Representative. The Representative shall
distribute such difference among the Shareholders in such amounts and in such
proportions as deemed appropriate in light of the circumstances giving rise to
the adjustment to Actual Net Worth. Any adjustment to the Purchase Price
pursuant to this Section 1.3 shall not reduce the amount being held pursuant to
the Escrow Agreement.
Notwithstanding the foregoing, but for greater certainty, the portion of the
Purchase Price payable to the Shareholders at Closing shall be delivered to the
Shareholders' Solicitors in trust, on the trust condition that, as soon as
reasonably possible after the Closing Date, the Shareholders' Solicitors shall,
by use of such portion of the Purchase Price as is necessary, ensure that: (i)
all interest bearing debt of any of the Companies (including, without
limitation, notes, capital leases, loans and lines of credit) existing as at the
Closing Date (including all amounts owing to the Royal Bank of Canada as of the
Closing Date) is repaid in full from the portion of the Purchase Price delivered
to the Shareholders' Solicitors in trust hereunder, forthwith following the
Closing Date and (ii) all registered Encumbrances affecting the Stock, or any of
the real and/or personal property of the Companies (save and except for any
registered Encumbrances against Schulte in favour of the Royal Bank of Canada,
or which has otherwise been specifically identified herein and specifically
accepted and assumed by the Purchaser) are completely discharged and released
forthwith following the Closing Date.
Closing
The Closing shall take place at the offices of MacPherson Leslie & Tyerman
("MLT"), 1500 - 410 - 22nd Street East, Saskatoon, Saskatchewan, Canada S7K 5T6,
at 9:00 a.m. local time, on November 6, 2000, or at such time and on such date
as the parties shall mutually agree (the "Closing"). Subject to the provisions
of Article 7 hereof, failure to consummate the Closing provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 1.4 shall not result in the termination of this Agreement and shall not
relieve any parties to this Agreement of any obligation hereunder. For purposes
of this Agreement, the date on which the Closing actually occurs is the "Closing
Date".
Closing Deliveries
(a) At the Closing, the Shareholders, jointly and severally, shall:
(i) assign or cause to be assigned, as the case may be, by instruments
satisfactory to the Purchaser and in the manner contemplated herein,
good and valid title to the Canadian Stock to Alamo Sask, and good
and valid title to the USA Stock to Alamo USA, in each case, free
and clear of all Encumbrances of any nature whatsoever; and
(ii) deliver to the Purchaser such other documents including, without
limitation, officers' certificates and opinions of counsel, as may
be required by this Agreement.
(b) At the Closing, the Purchaser shall:
(i) cause to be transferred to the Shareholders' Solicitors, via
solicitors trust cheque, the Purchase Price determined in accordance
with Section 1.2;
(ii) deliver the Holdback, via solicitors trust cheque payable to the
"Escrow Agent" pursuant to the Escrow Agreement; and
(iii) deliver to the Shareholders such other documents including, without
limitation, officers' certificates, as may be required by this
Agreement.
Non-Competition and Confidentiality Agreements
On the Closing Date, each of the Shareholders shall execute and deliver to the
Purchaser a Non-Competition and Confidentiality Agreement in the form attached
hereto as Exhibit "C" (the "Non-Competition Agreement"). The parties hereto
agree that the Non-Competition Agreement has been separately negotiated and is a
material condition to Closing.
Employment and Non-Competition Agreement
Effective as of the Closing Date, Sales shall employ Jim Carnago, and Industries
shall employ Earl Schulte pursuant to the terms and conditions of the Employment
and Non-Competition Agreements in the form attached hereto as Exhibit "E" (the
"Employment Agreement").
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders hereby, jointly and severally, make the representations and
warranties set forth in this Article 2 to the Purchaser and the Companies. The
Shareholders have delivered to the Purchaser the Schedules to this Agreement
referred to in this Article 2 on the date hereof.
Organization and Qualification
The Companies are corporations organized, validly existing and in good standing
under the laws of the state, province and country of their formation, and have
all requisite corporate power and authority to carry on their business as now
being conducted, and to own, lease and operate their properties and assets as
now owned, leased and operated. The Companies are duly qualified to do business
and are in good standing in each jurisdiction in which the properties owned,
leased or operated by them or the nature of the business conducted by them makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not have, or could not reasonably be anticipated to have,
individually or in the aggregate, a Material Adverse Effect. True, accurate and
complete copies of the Companies' Certificates of Incorporation and Articles,
Bylaws, and in each case as in effect on the date hereof, including all
amendments thereto, have heretofore been delivered to Purchaser. Except as
specifically disclosed in this Agreement, the Companies have no Subsidiaries and
do not own, directly or indirectly, any ownership interest in any entity.
Capitalization
As of the date hereof, (i) the authorized capital stock of International
consists of an unlimited number of Class A (voting) shares, an unlimited
number of Class B (non-voting) shares, an unlimited number of Class C
(voting preferred) shares, and an unlimited number of Class D (non-voting
preferred) shares, only 4 Class A (voting) shares of which are issued and
outstanding; (ii) the authorized capital stock of USA consists of 1,000
shares of common stock, par value $1.00 per share, only 100 shares of
which are issued and outstanding; (iii) the authorized capital stock of
Industries consists of an unlimited number of Class A (common, voting)
shares, an unlimited number of Class B (redeemable, preferred, non-voting)
shares, an unlimited number of Class C (convertible, non-voting) shares,
an unlimited number of Class D (redeemable, preferred, non-voting) shares,
an unlimited number of Class E (preferred, voting) shares, and an
unlimited number of Class F (non-voting) shares, only 40,000 Class B
(redeemable, preferred, non-voting) shares, 6,397,674 Class E (preferred,
voting) shares, and 100 Class F (non-voting) shares of which are issued
and outstanding; (iv) the authorized capital stock of Sales consists of an
unlimited number of Class A (common, voting) shares, an unlimited number
of Class B (non-voting, preferred) shares, an unlimited number of Class C
(voting) shares, and an unlimited number of Class D (non-voting) shares,
only 60,000 Class B (non-voting, preferred) shares, 1,722,020 Class C
(voting) shares, and 100 Class D (non-voting) shares of which are issued
and outstanding; (v) the authorized capital stock of JC Capital consists
of an unlimited number of Class A (voting) shares, an unlimited number of
Class B (non-voting) shares, and an unlimited number of Class C
(preferred, redeemable, retractible shares), only 100 Class A (voting)
shares and 496,000 Class C (preferred, redeemable, retractible) shares of
which are issued and outstanding; (vi) the authorized capital stock of LC
Capital consists of an unlimited number of Class A (voting) shares, an
unlimited number of Class B (non-voting) shares, and an unlimited number
of Class C (preferred, redeemable, retractible shares), only 100 Class A
(voting) shares and 542,600 Class C (preferred, redeemable, retractible)
shares of which are issued and outstanding; (vii) the authorized capital
stock of JS Capital consists of an unlimited number of Class A (voting)
shares, an unlimited number of Class B (non-voting) shares, and an
unlimited number of Class C (preferred, redeemable, retractible shares),
only 100 Class A (voting) shares and 500,000 Class C (preferred,
redeemable, retractible) shares of which are issued and outstanding; and
(viii) the authorized capital stock of ES Capital consists of an unlimited
number of Class A (voting) shares, an unlimited number of Class B
(non-voting) shares, and an unlimited number of Class C (preferred,
redeemable, retractible shares), only 100 Class A (voting) shares, and
546,600 Class C (preferred, redeemable, retractible) shares of which are
issued and outstanding. No shares of the Stock are held in treasury.
Schedule 2.2(a) accurately describes the ownership of each of the
Companies' capital stock as of the date hereof. The Shareholders other
than the Carnago Family Trust and the Schulte Family Trust, are and will
be on the Closing Date the legal and beneficial owners and shareholders
of, and have, and on the Closing Date will have, good, valid and
indefeasible record and beneficial title to, the capital stock indicated
on Schedule 2.2(a) to be owned by them, free and clear of any adverse
claim of any other Person, including without limitation, any Encumbrance
of any nature. The Carnago Family Trust and the Schulte Family Trust are
and will be on the Closing Date the legal owners and shareholders of, and
have, and on the Closing Date will have, good, valid and indefeasible
record and legal title to, the capital stock indicated on Schedule 2.2(a)
to be owned by them, free and clear of any adverse claim of any other
person, including, without limitation, any Encumbrance of any nature. At
the Closing, the Shareholders will transfer to the Purchaser good, valid
and indefeasible title to the Stock, free and clear of all Encumbrances,
and other agreements, covenants, restrictions, reservations and other
burdens of any type whatsoever. Purchaser shall not be required to pay any
transfer Taxes or other Taxes or fees with respect to the transfer of the
Stock as provided herein.
There are no outstanding subscriptions, options, convertible securities,
rights, warrants, calls, or other agreements or commitments of any kind
issued or granted by, or binding upon, the Companies to purchase or
otherwise acquire any security of or equity interest in the Companies.
There are no outstanding subscriptions, options, convertible securities,
rights, warrants, calls, or other agreements or commitments of any kind
obligating the Companies to issue or sell any shares of capital stock of
the Companies, or irrevocable proxies or any agreements restricting the
transfer of or otherwise relating to shares of capital stock of any class.
All of the issued and outstanding shares of capital stock of the Companies
have been duly authorized, validly issued and are fully paid and
nonassessable. Except for the Accrued Bonuses and Dividends, all dividends
and other distributions declared prior to the date hereof with respect to
the issued and outstanding shares of capital stock of the Companies have
been paid or distributed.
Authority
Each of the Shareholders has the absolute and unrestricted right, power,
authority and capacity to execute and deliver this Agreement, to perform his,
her or its obligations hereunder and to consummate the transactions contemplated
hereby free of claims of any Person. This Agreement has been duly and validly
executed and delivered by the Shareholders, and this Agreement constitutes the
legal, valid and binding agreement of the Shareholders, enforceable jointly and
severally against the Shareholders in accordance with its terms. All
beneficiaries of the Schulte Family Trust and the Carnago Family Trust have
consented to the sale of the Stock owned by the Schulte Family Trust and the
Carnago Family Trust as contemplated in this Agreement.
No Violation
No prior consent, approval or authorization of, or declaration, filing or
registration with any party, domestic or foreign, is necessary in connection
with the execution and delivery of this Agreement by the Shareholders, the
performance of the obligations hereunder, or the consummation of the
transactions contemplated hereby. Neither the execution, delivery nor
performance of this Agreement in its entirety, nor the consummation of all of
the transactions contemplated hereby will (i) violate (with or without the
giving of notice or the passage of time), any law, order, writ, judgment,
injunction, award, decree, rule, statute, ordinance or regulation applicable to
the Companies or the Shareholders, (ii) be in conflict with, result in a breach
or termination of any provision of, cause the acceleration of the maturity of
any debt or obligation pursuant to, constitute a default (or give rise to any
right of termination, cancellation or acceleration, with or without the giving
of notice or the passage of time) under, or result in the creation of any
Encumbrance upon any property or assets of the Companies or the Shareholders
pursuant to any terms, conditions or provisions of any contract, note, license,
instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which the
Companies or any Holder is a party or by which any of their assets or properties
are subject or bound, (iii) give rise to any lien, charge or other encumbrance
on any of the assets of the Companies, or (iv) conflict with or violate any
provision of the Articles or the Bylaws of the Companies. There are no
proceedings pending or threatened against the Companies or the Shareholders, at
law or in equity or before or by any foreign, federal, provincial, territorial,
state, municipal or other governmental court, department, commission, board,
bureau, agency, instrumentality or other Person, which may result in liability
to the Purchaser upon the consummation of the transactions contemplated hereby
or which would prevent or delay such consummation. The corporate existence,
business organization and assets including, but not limited to, the licenses,
permits, authorizations and contracts of the Companies, will not be terminated
or impaired by reason of the execution, delivery or performance of this
Agreement or consummation of the transactions contemplated hereby.
Financial Statements
Each of the Companies has provided the Purchaser with (i) true and complete
copies of its audited balance sheets as of July 31, 2000, 1999, 1998 and 1997,
and the related statements of income, Shareholders' equity, and changes in cash
flows for the years then ended, and (ii) its unaudited balance sheets as of
Interim Balance Sheet Date and the related statements of income, Shareholders'
equity, and changes in cash flows for the period then ended. All of the
foregoing balance sheets and the related statements of income, Shareholders'
equity and changes in cash flows of the Companies are collectively referred to
as "Schulte's Financial Statements." Schulte's Financial Statements (including
the related notes thereto) are true and accurate and present fairly the
financial position of the Companies as of the dates thereof and the results of
operations and changes in financial position of the Companies for the periods
then ended, each in conformity with GAAP (subject, in the case of the interim
financial statements, to normal year-end adjustments, the effect of which,
individually or in the aggregate, will not be materially adverse, and the fact
that they do not contain all of the footnote disclosures required by GAAP). The
accounting records underlying Schulte's Financial Statements accurately and
fairly reflect, in all material respects, the transactions of the Companies.
Books and Records
The books of account and other records of the Companies, all of which have been
made available to the Purchaser prior to Closing, are complete and correct in
all material respects and have been maintained in accordance with sound business
practices, including, but not limited to, the maintenance of an adequate system
of internal controls. The minute books of each of the Companies contain accurate
and complete records of all meetings held of, and corporate action taken by, the
Shareholders and board of directors of such Companies and no meeting of such
Shareholders or any of such board of directors has been held for which minutes
have not been prepared and are not contained in such minute books.
Absence of Certain Changes
Except for the Accrued Bonuses and Dividends or as required in order to give
effect to the Approved Corporate Reorganization, since the Interim Balance Sheet
Date no Company has:
made any amendment to its Articles, Bylaws, or changed the character of
its business in any manner;
suffered any Material Adverse Effect or any event, condition or contingency
that will result in a Material Adverse Effect;
entered into any agreement, commitment or transaction except in the Ordinary
Course of Business;
except in the Ordinary Course of Business, incurred, assumed or become subject
to, whether directly or by way of any guarantee or otherwise, any obligations or
Liabilities;
permitted or allowed any of its Properties or assets to be subject to any
Encumbrance of any kind (other than statutory liens not yet delinquent);
except in the Ordinary Course of Business, cancelled any debts, waived any
claims or rights, or sold, transferred, or otherwise disposed of any of its
Properties or assets;
disposed of or permitted to lapse any rights to the use of any Intellectual
Property, or disposed of or disclosed to any Person other than its employees or
agents, any trade secret not theretofore a matter of public knowledge;
granted any increase in compensation or paid or agreed to pay or accrue any
bonus, severance payment or like benefit to or for the credit of any director,
officer, employee or other Person, other than reasonable increases that fall due
on employee's anniversaries of service, or entered into any employment,
consulting or severance contract or other agreement with any director, officer,
employee or other Person, or adopted, amended or terminated any Benefit Plan
maintained by the Company for the directors, officers, employees or former
employees of the Company;
directly or indirectly declared, set aside or paid any dividend or made any
distribution with respect to its capital stock, or redeemed, purchased or
otherwise acquired, or arranged for the redemption, purchase or acquisition of,
any shares of its capital stock or other of its securities;
organized or acquired any capital stock, or other equity securities or
acquired any equity or ownership interest in any Person;
issued, reserved for issuance, granted, sold or authorized the issuance of any
shares, or subscriptions, options, warrants, calls, rights or commitments of any
kind relating to the issuance or sale of or conversion into shares of their
capital stock or authorized a stock split of the Company or otherwise changed
its capitalization in any manner;
made any or acquiesced with any change in any accounting methods, principles
or practices;
experienced any material adverse change in relations with any Material
Customer or Material Supplier;
entered into any transaction, or entered into, modified or amended any Contract
or commitment, other than in the Ordinary Course of Business;
agreed, whether in writing or otherwise, to take any action the performance of
which would change the representations contained in this Section 2.7 in the
future so that any such representation would not be true in all material
respects as of the Closing; or
agreed to, entered into, or implemented a corporate reorganization, except for
the Approved Corporate Reorganization.
Absence of Undisclosed Liabilities
Except as and to the extent (i) fully reflected or reserved against on Schulte's
Financial Statements, including the notes thereto (ii) of Liabilities or
obligations incurred since the Interim Balance Sheet Date in the Ordinary Course
of Business consistent with past practice (both in nature and amount), none of
the Companies has Liabilities or obligations of any nature including, without
limitation, any Liabilities resulting from failure to comply with any Legal
Requirement applicable to the Company or any Tax Liabilities due or to become
due and whether incurred as a direct or indirect result of the Approved
Corporate Reorganization or in respect of or measured by the income or sales of
any of the Companies for any period. There is no basis for any assertion against
Schulte of any Liabilities of any nature or in any amount not fully reflected or
reserved against on Schulte's Financial Statements as of such date or
specifically referred to in the notes thereto.
Receivables
All trade accounts and trade notes receivable of each Company as at the date set
forth in Schedule 2.9 are listed on Schedule 2.9 and represent or will represent
valid obligations arising from sales actually made in the Ordinary Course of
Business, and are or will be current and collectible net of any reserve shown on
Schulte's Financial Statements. Within 20 days following the Closing Date, the
Shareholders shall deliver to the Purchaser an accurate listing of all trade
accounts and trade receivables of each Company as of the Closing Date, all of
which receivables shall be valid obligations arising from sales actually made in
the Ordinary Course of Business and will be current and collectible, net of any
reasonable reserves. Schedule 2.9 sets forth a list of all liens held by each of
the Companies on a customer's assets to secure payment of an account or trade
note receivable to each of the Companies.
Inventories
Except as disclosed on Schedule 2.10, the inventory of the Companies consists
of: (i) manufactured and purchased parts and finished goods, all of which are
merchantable and fit for the purpose for which they were procured or
manufactured, and for which each of the Companies has an absolute inventory
reserve which is adequate based on historical or expected experience, and (ii)
raw materials and supplies and goods in process which are fit for the purpose
procured.
Distributors, Dealers, Customers, Suppliers
Prior to the Closing Date the Shareholders caused to be delivered to MLT, on
behalf of the Purchaser, a complete and accurate list of all of the distributors
and dealers for each Company's products and all of the related contractual
arrangements (whether written or oral, and whether or not legally binding or
enforceable) are in good standing with each such distributor or dealer. Schedule
2.11 lists (i) the ten largest customers (by dollar volume) of each of the
Companies during the 12 month period ending on the Interim Balance Sheet Date
and the existing contractual arrangements with each such customer are in good
standing and have continued in the Ordinary Course of Business up to and
including the Closing Date (each a "Material Customer"), (ii) all suppliers of
significant materials or services to each Company and the contractual
arrangements for continued supply from such Person are in good standing and have
continued in the Ordinary Course of Business up to and including the Closing
Date (each a "Material Supplier"), and (iii) consignment sales or sales with
right of return. True, correct and complete copies and/or descriptions of all
existing dealer agreements for the Companies' products, whether oral or written,
including any amendments or exceptions to such dealer agreements, have been
delivered to the Purchaser. Neither the Companies nor the Shareholders have any
Knowledge that (and no Knowledge of any facts which would form the basis for a
belief that) (a) any distributor, dealer, or customer representing more than one
percent (1%) of any of the Companies' sales during the 12 month period ending on
the Interim Balance Sheet Date; or (b) any vendor representing more than one
percent (1%) of any of the Companies' purchases during the 12 month period
ending on the Interim Balance Sheet Date, has notified any of the Companies or
the Shareholders, orally or in writing, that after the Closing such distributor,
dealer, vendor, or customer will not do business with the Purchaser or that it
will do business on terms and conditions which are materially less favourable
than those upon which such distributor, dealer or customer did business with the
Companies prior to the Closing.
Companies' Indebtedness
The Shareholders have delivered to the Purchaser true and complete copies of all
loan documents (the "Loan Documents") related to any indebtedness of the
Companies and documents relating to any third party debt or obligations,
including capital leases and amounts owing to or from the Shareholders (the
"Indebtedness"), and have made available to the Purchaser all correspondence
concerning the status of the loans described in the Loan Documents and the
Indebtedness.
Litigation
Except as set forth on Schedule 2.13, there are no actions, suits, claims,
investigations, reviews or other proceedings pending or, to the best Knowledge
of any of the Companies or the Shareholders, threatened against any of the
Companies or involving any of their properties or assets, at law or in equity or
before or by any foreign, federal, provincial, territorial, state, municipal, or
other governmental court, department, commission, board, bureau, agency,
Governmental Authority, or other instrumentality or Person or any board of
arbitration or similar entity (a "Proceeding"). The Shareholders will notify the
Purchaser immediately in writing of any Proceeding initiated against any of the
Companies or any of the Shareholders involving or related to the properties,
assets and/or business of the Companies.
Tax Matters
Except as reflected or reserved against in Schulte's Financial Statements:
each of the Companies has duly filed on a timely basis and in the manner
prescribed by Law all Tax Returns required to be filed by it and has paid
all Taxes which are due and payable, and all reassessments, penalties,
interest and fines due and payable by or assessed against it. All such Tax
Returns are true, complete and correct, comply fully with the provisions
of the Income Tax Act, the Code, and all other relevant Tax Laws, fully
disclose the Taxes due for the reporting periods to which such returns
relate and properly report and reflect all transactions of the Companies
as may be required by and in accordance with the Income Tax Act, the Code,
and all other relevant Tax Laws;
without limiting the generality of the foregoing, all T-5's and Section 55(5)(f)
Income Tax Act designations required, arising out of or related to the Approved
Corporate Reorganization will be filed on or before the Closing Date or
forthwith thereafter and copies of the same shall be provided by the
Shareholders to the Purchaser and its accounting advisors;
each of the Companies has been reviewed, determined and assessed for federal and
provincial income tax for all years to and including the fiscal year of each of
the Companies ended July 31, 1999;
each of the Companies has made adequate reserves, accruals and provision in its
financial records for Taxes payable by it for the current period that are not
yet due and any previous period for which Tax returns are not yet required to be
filed;
there are no Proceedings, pending or, to the best of the Shareholders'
Knowledge, threatened, against any of the Companies in respect of Taxes,
computation of taxable income, government charges or assessments nor are any
material matters under discussion between any of the Companies and any
Government Authority relating to Taxes asserted by any such authority;
none of the Companies has incurred any Tax Liabilities after January 31, 2000,
other than in the Ordinary Course of Business;
none of the Companies has incurred any Tax Liabilities as a result of the
Approved Corporate Reorganization or any of the transactions contemplated by
this Agreement;
there is no agreement, waiver or other arrangement providing any of the
Companies with an extension of the period fixed to file any Tax return, to pay
or remit any Taxes or of the period during which any Government Authority may
assess or re-assess any of the Companies in respect of Taxes;
each of the Companies has withheld from each payment made to any of its past or
present directors, officers and employees, and to any non-resident of Canada,
the amount of all Taxes and other deductions required to be withheld therefrom
and has paid the same to the proper Tax or other receiving officers within the
time required under any applicable Laws;
each of the Companies has remitted to the proper Tax or other receiving officers
where required by Law to do so, all amounts collected by it on account of GST;
copies of the federal, state and provincial Tax returns for each of the
Companies for each of their financial years ending July 31, 1996, July 31, 1997,
July 31, 1998, and July 31, 1999 have been provided to the Purchaser and copies
of all elections pursuant to the Income Tax Act, the Code, or any other fiscal
Laws made by or affecting any of the Companies have been provided to the
Purchaser, and all such returns and elections are correct in all material
respects and fully disclose the Taxes, expenses, deductions and credits due for
such periods to the extent required by Law;
each of International, Sales and Industries is a registrant for purposes of the
GST and their registration numbers are BN 8973 05074, BN 10474 6896, and BN
10474 6862, respectively;
none of the Companies has been a limited sales real property holding corporation
within the meaning of Section 897(e)(2) of the Code during the applicable
periods specified in Section 897(c)(l)(A)(ii) of the Code;
none of the Companies has been a member of an affiliated group filing a
consolidated Tax Return;
none of the Companies has Liability for the Taxes of any Person (other than
the Companies themselves) as a transferee or successor, by contract or
otherwise;
none of the Companies has made any payments, are not obligated to make any
payments, and are not a party to any agreement that under circumstances could
obligate them to make any payments that will not be deductible under Section
280G of the Code; and
none of the Companies will be liable for any Tax under Section 1374 of the
Code.
Employment Matters and Employee Benefit Plans
Employees: Prior to the Closing Date, the Shareholders caused to be
delivered to MLT, on behalf of the Purchaser, a complete and correct list
of all employees of the Companies, including their rates of pay, length of
service, age and title and all of such information was and remains correct
and accurate as at the Closing Date. None of the Companies has received
any notice of termination of employment, claim for wrongful dismissal or
claim that any of the Companies has violated the rights of any current or
former employee under applicable human rights or similar Laws in any of
the jurisdictions in which any of the Companies currently carry on, or
previously carried on, business. There are no outstanding orders or
charges against any of the Companies under any applicable health and
safety Laws in any jurisdiction in which any of the Companies currently
carry on, or previously carried on, business. All levies, assessments and
penalties made against any of the Companies pursuant to any applicable
workers' compensation Laws in any jurisdiction in which any of the
Companies currently carry on, or previously carried on, business have been
paid by the Companies.
Employee Accruals: All accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, Canada Pension Plan premiums, ERISA
premiums, accrued wages, salaries and commissions and Employee Plan payments by
the Companies have been reflected in Schulte's Financial Statements.
Employee Plans: Schedule 2.15 annexed hereto contains a complete and correct
list of all Employee Plans. Each Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all Laws that are
applicable to such Employee Plan and:
(i) all contributions to, and payments from, each Employee Plan that may
have been required to be made in accordance with any such Employee
Plan, the recommendation of the actuary of such Employee Plan, or
the Laws of the jurisdictions that govern such Employee Plan, have
been made in a timely manner;
(ii) all material reports, returns and similar documents (including
applications for approval of contributions) with respect to any
Employee Plan required to be filed with any Governmental Authority
or distributed to any Employee Plan participant have been duly filed
or distributed on a timely basis;
(iii) there are, to the best of the Shareholders' Knowledge, no pending
Proceedings by any Governmental Authority or Employee Plan
participant involving or relating to any Employee Plan, no
threatened or pending Proceedings (except for claims for benefits
payable in the normal operation of the Employee Plans) against any
Employee Plan or asserting any right or claim to benefits under any
Employee Plan that could give rise to a liability to any of the
Companies nor are there any facts, to the Knowledge of the
Shareholders, that could give rise to any liability to the
Companies, in the event of such Proceeding; and
(iv) no notice has been received by any of the Companies of any
complaints or any other proceedings of any kind involving any of the
Companies or any Employee Plan participant before any pension board
or committee relating to any Employee Plan;
(d) Employee's Contracts: Except as set out in Schedule 2.15 annexed
hereto, none of the Companies is a party to, bound by or subject to any:
(i) agreement, whether written or oral, for the employment of any
director, employee, officer or contractor: (A) other than agreements
for indefinite hire terminable by the employer without cause on
reasonable notice in accordance with applicable Law; or (B) which
provides for severance payments in excess of that required under
applicable Law;
(ii) contracts or collective bargaining agreements with, or commitments
to, any Labour Representatives and none of the Companies has
conducted negotiations with respect to any such future contracts or
commitments;
(iii) Employee Plans, except as set out in Schedule 2.15 annexed hereto;
and no Labour Representatives hold bargaining rights with respect to any
employees of the Companies, and there are no current or, to the best of
the Shareholders' Knowledge, threatened attempts to establish any trade
union or employee association with respect to any of the Companies;
(e) Golden Parachutes: Neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated
hereby or thereby will:
(i) result in any payment (including, without limitation, severance,
unemployment compensation, termination, "golden parachute", bonus or
otherwise) becoming due to any director, officer, employee or
independent contractor of any of the Companies under any plan,
agreement or otherwise;
(ii) materially increase or result in the acceleration of the time of
payments for any salary or benefits otherwise payable by any of the
Companies to any of their respective directors, officers, employees
or contractors; or
(iii) result in the forgiveness of any loans by any of the Companies to
any of its directors, officers, employees or contractors.
Leases, Contracts and Agreements
Schedule 2.16 sets forth (i) an accurate and complete description of all leases,
subleases, purchase orders, licenses, commitments, contracts, term sheets and
agreements (whether written or oral, and whether or not legally binding or
enforceable) (a) involving performance of services or delivery of goods or
materials by any of the Companies of an amount or value in excess of $10,000
(CAD) over its term, (b) involving performance of services or delivery of goods
or materials to any of the Companies of an amount or value in excess of $25,000
(CAD) over its term or (c) that is terminable by any of the Companies or the
other party upon less than thirty (30) days notice, and (ii) a description of
all current business arrangements with Material Customers or Material Suppliers
for which no written contract or other agreement exists (collectively, the
"Contracts"). Schedule 2.16 provides reasonably complete details concerning such
Contracts, identifying among other things, the parties to the Contract, the
nature of the Contract, and the amount of the remaining commitment of the
Companies thereunder. The Shareholders have delivered to the Purchaser true and
correct copies or, in the case of oral contracts or business arrangements,
descriptions of all Contracts. Each of the Contracts are legal, valid and
binding obligations of the Companies and, to the Knowledge of any of the
Shareholders or the Companies, the other parties to such Contracts, enforceable
by the Companies in accordance with their terms and are in full force and
effect. Except as described in Schedule 2.16, all rent and other payments by
each of the Companies under the Contracts are current, there are no existing
defaults by any Company under the Contracts, and no termination, condition or
other event has occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a default or a
basis for force majeure or other claim of excusable delay or non-performance
thereunder by any of the Companies or, to the Knowledge of any of the
Shareholders or the Companies, the other parties to such Contracts. There are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate, any amounts paid or payable to any of the Companies under current
or completed Contracts with any Person having the contractual or statutory right
to demand or require such renegotiation, and no such Person has made written
demand for such renegotiation. Each of the Companies has good and marketable
leasehold interest in each parcel of real property leased by it free and clear
of all mortgages, pledges, liens, encumbrances and security interests.
Related Party Transactions
There are no agreements, instruments, commitments, extensions of credit, Tax
sharing or allocation agreements or other contractual agreements of any kind
between or among any of the Companies, whether on its own behalf or in its
capacity as trustee or custodian for the funds of any employee benefit plan and
any Shareholders of the Company.
Compliance with Laws
(a) None of the Companies is in default with respect to nor in violation
(and has not been in violation of during the five-year period prior to
the date hereof) of any Legal Requirement or Governmental
Authorization, except those which would not reasonably be expected to
have a Material Adverse Effect. The consummation of the transactions
contemplated by this Agreement will not constitute a default or
violation under any Legal Requirement or Governmental Authorization
applicable to any of the Companies, except which would not reasonably
be expected to have a Material Adverse Effect.
(b) None of the Companies has received any notice or other communication
(whether oral or written) from any Governmental Authority or from any
other Person regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement or
Governmental Authorization or (ii) any actual, alleged, possible or
potential obligation on the part of the Company to undertake or to bear
all or any portion of the cost of, any remedial action of any nature,
except (in the case of (i) and (ii) above) for notices or
communications with respect to violations or obligations which would
not reasonably be expected to have a Material Adverse Effect.
(c) Set forth in Schedule 2.18(c) are all the Governmental Authorizations
-----------------
held by each of the Companies on the date hereof, which constitute all
of the Governmental Authorizations necessary to permit each of the
Companies to own, operate, use, and maintain its assets in the manner
in which it is now operated and maintained and to conduct its
businesses as now being conducted. All required filings with respect
to such Governmental Authorizations have been timely made and all
required applications for renewal thereof have been timely filed.
Following the consummation of the transactions contemplated by this
Agreement, each of the Companies will have the same rights as it had
prior to the Closing in each such Governmental Authorization, without
impairment or change in any material respect.
Insurance
(a) Schedule 2.19(a) contains an accurate and complete description of all
policies of property, fire and casualty, product liability, workers'
compensation, liability and other forms of insurance owned or held by
each of the Companies and, except as set forth on Schedule 2.19(a),
each of the Companies have had similar insurance in force for at least
the last five years. Such description provides reasonably complete
details concerning such policies, identifying among other things, (i)
the issuer of each such policy, (ii) the amount of coverage still
available and outstanding under each such policy, (iii) whether each
such policy is a "claims made" or an "occurrences" policy, and (iv) any
retrospective premium adjustments of which any of the Companies has
Knowledge. True and complete copies of such policies have been
delivered to the Purchaser.
(b) All policies described in paragraph (a) hereof (i) are issued by
financially sound and reputable insurance companies, (ii) are
sufficient for compliance with all Legal Requirements and all Contracts
or applicable agreements to which any of the Companies are parties or
by which they are bound, (iii) are valid, outstanding, and enforceable
policies, (iv) provide adequate insurance coverage for the assets and
the operations of each of the Companies for all risks normally insured
against by an entity carrying on the same business or businesses as the
Companies, and (iv) will not in any way be affected by, terminate, or
lapse by reason of, the transactions contemplated by this Agreement.
(c) None of the Companies nor any Shareholder of any of the Companies has
received (i) any notice of cancellation of any policy described in
paragraph (a) hereof or refusal of coverage thereunder, (ii) any notice
that any issuer of such policy has filed for protection under
applicable bankruptcy or other insolvency laws or is otherwise in the
process of liquidating or has been liquidated, (iii) any other
indication that such policies are no longer in full force or effect or
that the issuer of any such policy is no longer willing or able to
perform its obligations thereunder; or (iv) notice that a claim is
being handled under a "reservation of rights" provision by any
insurance carrier.
(d) None of the Companies has currently, nor in the past five years had,
any fidelity bonds.
Intellectual Property
(a) Schedule 2.20(a) sets forth a correct and complete list and summary
description of (i) all federal, state, provincial and foreign grants,
registrations and applications existing or outstanding with respect to
Intellectual Property owned by each of the Companies, (ii) all license
agreements relating to Intellectual Property to which each of the
Companies is a party (excluding licenses with respect to off-the-shelf
software, each with a cost of less than $1,000 (CAD)), (iii) all
trademarks, trade names, service names, service marks, and any
applications for any of the foregoing, which constitute Intellectual
Property, and (iv) all other material items of Intellectual Property
not otherwise included in the foregoing clauses (i)-(iii). Each of the
Companies have provided the Purchaser with true, correct and complete
copies and/or descriptions of all of the items listed on Schedule
2.20(a).
(b) Each of the Companies owns or has the right to use pursuant to license,
sublicense, agreement or other permission all Intellectual Property
(collectively the "Intellectual Property Right"). The consummation of
the transactions contemplated by this Agreement will not adversely
effect the Intellectual Property Rights owned or used by each of the
Companies. None of the Companies has copied software in violation of
any agreement, license, sublicense, or other permission, or in
violation of a Legal Requirement.
(c) The intellectual properties in the Intellectual Property are valid and
subsisting and not unenforceable in whole or part, and each of the
Companies has sole and full title to all owned Intellectual Property,
free and clear of all Encumbrances and licenses (either as licensee or
licensor), including claims or rights of employees, agents, consultants
or other parties involved in the development or creation of such
Intellectual Properties, and no other Person has or shall have any
claim of ownership with respect to the Intellectual Properties
whatsoever. None of the Intellectual Property is dependent upon any
other intellectual property in order to freely operate or be utilized
in the manner heretofore utilized by any of the Companies in its
businesses.
(d) None of the Companies nor any of their officers, Shareholders or directors
is currently in receipt of any notice of any violation of, and none of the
Companies is violating or infringing upon and has not for the last six
years violated or infringed, the rights of any other Person with respect
to any Intellectual Property, or has conducted any acts of unfair
competition.
(e) To the Knowledge of each of the Companies and each of the Shareholders, no
other Person is infringing any intellectual property rights of each of the
Companies with respect to the Intellectual Property.
(f) The Shareholders shall keep confidential and not disclose to any third
party any trade secrets among the Intellectual Property, except such of
said trade secrets as now are or hereinafter become published or otherwise
generally available to the public other than through the direct or
indirect actions of the Shareholders.
Environmental Matters
Without in any manner limiting any other representations and warranties set
forth in this Agreement and except as set forth in Schedule 2.21:
none of the Companies nor its Business Facilities, is in violation of, or has
violated, or has been or is in non-compliance with, any Environmental
Laws;without in any manner limiting the generality of subparagraph (a) above:
except in compliance with Environmental Laws (including, without limitation, by
obtaining necessary Environmental Permits, no Materials of Environmental Concern
have been used, generated, extracted, mined, beneficiated, manufactured, stored,
treated, or disposed of, or in any other way released (and no release is
threatened) by any of the Companies, on, under or about any Business Facility or
transferred or transported to or from any Business Facility, and no Materials of
Environmental Concern have been generated, manufactured, stored or treated or
disposed of, or in any other way released (and no release is threatened), on,
under, about or from any property adjacent to any Business Facility; none of the
Companies is now, and will not be in the future, as a result of the
operation or condition of the business of the Companies on or prior to the
Closing Date, subject to any: (a) contingent liability in connection with any
release or threatened release of any Materials of Environmental Concern into the
environment whether on or off any Business Facility; (b) reclamation,
decontamination or Remediation requirements under Environmental Laws, or any
reporting requirements related thereto; or (c) consent order, compliance order
or administrative order relating to or issued under any Environmental Law;
there are no Environmental Claims pending or, to the Knowledge of any of the
Companies or any of the Shareholders, threatened against any of the Companies,
or any of their Business Facilities, and, to the Knowledge of any of the
Companies or any of the Shareholders, there is no basis for any such
Environmental Claims;
each of the Companies and all of its Business Facilities have all permits,
licenses, registrations, identification numbers, applications, consents,
variances, notices of intent, and other authorizations (collectively,
"Environmental Permits") necessary to comply with Requirements of Environmental
Laws governing the Companies and/or the business of the Companies; the Companies
have all environmental and pollution control equipment necessary for compliance
with all Environmental Laws (including, without limitation, for compliance with
all applicable Environmental Permits) and operation of the business of each of
the Companies as presently conducted; and each of the Companies and their
Business Facilities are in compliance with all terms and conditions of such
required Environmental Permits and will be in such compliance after the
consummation of the transactions herein contemplated;
there are no, nor have there ever been any, storage tanks or solid waste
management units located on or under any Business Facility of any of the
Companies, and there are no Materials of Environmental Concern on any Business
Facility of the Companies in an amount exceeding background levels for such
geographic area or which would require reporting to any Governmental Authority
or Remediation to comply with Requirements of Environmental Laws; none of the
off-site locations where Materials of Environmental Concern generated from any
Business Facility of any of the Companies (or for which any Company has arranged
for their disposal) has been stored, treated, recycled, disposed of or released
has been nominated or identified as a facility which is subject to an existing
or potential claim or Encumbrance under Environmental Laws; none of the
Companies has been named as a potentially responsible party under, and no
Business Facility of any of the Companies has been nominated or identified as a
facility which is subject to an existing or potential claim under Environmental
Laws, and no Business Facility of the Companies is subject to any lien or
Encumbrance arising under Environmental Laws; none of the Companies has received
any notice of any release or threatened release of Materials of Environmental
Concern, or of any violation of, non-compliance with, or remedial obligation
under, Environmental Laws or Environmental Permits, relating to the ownership,
use, maintenance, or operation of any Business Facility of the Companies, nor is
there any basis for any of the foregoing, nor have any of the Companies
voluntarily undertaken Remediation or other decontamination or cleanup of any
facility or site or entered into any agreement for the payment of costs
associated with such activity; there is no Requirement of Environmental Laws
that will require future compliance costs on the part of any of the Companies,
whether alone or in the aggregate, in excess of Ten Thousand Dollars ($10,000)
(CAD) above costs currently expended in the Ordinary Course of Business; there
are no present or past events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance by any of the Companies with Requirements of Environmental Laws or
which may give rise to any common law or statutory liability under Environmental
Laws or form the basis of an Environmental Claim against any of the Companies;
there are no obligations, undertakings or liabilities arising out of or relating
to Environmental Laws which any of the Companies have agreed to, assumed or
retained, by contract (whether written or oral, and whether enforceable or
unenforceable) or otherwise; each of the Companies have filed all notices,
notifications, financial security, waste management plans, or applications which
are required to be obtained or filed by each of the Companies for the operation
of its businesses or the use or operation of any Business Facility of any of the
Companies; each of the Companies and each of their Business Facilities are in
compliance with all other applicable limitations, restrictions, conditions,
schedules and timetables contained in Environmental Laws or contained in any
plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; and no current Business Facility (or
equipment thereon) of the Companies contains any asbestos-containing materials
or polychlorinated biphenyls in any form, nor do they use prohibited or
restricted refrigerants, nor are there any wetland areas or other land subject
to restricted development under Environmental Laws. Regulatory Actions
There are no actions or Proceedings pending or threatened against any of the
Companies or any of their Business Facilities by or before any Governmental
Authority. None of the Companies is subject to any formal or informal agreement,
memorandum of understanding, enforcement action with or any type of financial
assistance by any regulatory authority having jurisdiction over it.
Title to Properties, Encumbrances
Schedule 2.23 sets forth a true and complete description of (i) all real
property, leaseholds or other interests in real property and (ii) all machinery,
equipment, furniture, fixtures, vehicles and other fixed assets owned by any of
the Companies with an original capital cost in excess of $10,000 (CAD) or which
is otherwise necessary for the conduct of its business as currently conducted.
Except as set forth on Schedule 2.23, each of the Companies has unencumbered,
good, legal, and indefeasible title to all of its assets, real and personal,
including, without limitation, all the properties and assets reflected in
Schulte's Financial Statements, free and clear of any Encumbrances, except for
those properties and assets disposed of for fair market value in the Ordinary
Course of Business since the Interim Balance Sheet Date and otherwise in
accordance with this Agreement. For greater certainty, all such Encumbrances
(save and except for any Encumbrances registered against Schulte by the Royal
Bank of Canada) shall be discharged at or before Closing, failing which the
portion of the Purchase Price payable at Closing shall be paid in trust to the
Shareholders' Solicitors (as herein set forth) in order to arrange for the
discharge thereof. Each of the Companies has made available to the Purchaser all
of the files and information in the possession of the Companies concerning such
properties, including any title exceptions which might affect marketable title
or value of such property. Each of the Companies holds good and legal title or
good and valid leasehold rights to all assets that are necessary for it to
conduct its business as it is currently being conducted. Except as set forth on
Schedule 2.23, each of the Companies owns or leases all furniture, equipment,
and other property used to transact business presently located on its premises.
All leases under which any of the Companies lease any real property have been
delivered to the Purchaser and are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any such leases,
any existing default or event which with notice or lapse of time or both would
become a default by or on behalf of any of the Companies, or to the Knowledge of
any of the Companies or on behalf of any third parties.
Condition and Sufficiency of Assets
The buildings, plants, structures and equipment leased or owned by each of the
Companies are structurally sound with no known defects, are in good operating
condition and repair and are adequate for the uses to which they are being put,
and none of such buildings, plants, structures or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost.
Product Warranties, Defects, Liability
Each product manufactured, sold, leased, or delivered by any of the Companies
has been in material conformity with all applicable federal, state, provincial,
local or foreign laws and regulations, contractual commitments and all express
and implied warranties, and none of the Companies has Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any Liability)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Interim Balance Sheet (rather than in any notes thereto). Except as
disclosed on Schedule 2.25, no product manufactured, sold, leased, or delivered
by any of the Companies is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease. Schedule
2.25 includes copies of the standard terms and conditions of sale or lease for
each of the Companies (containing applicable guaranty, warranty, and indemnity
provisions). None of the Companies has Liability (and, to the Knowledge of the
Companies and the Shareholders, there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased, or delivered by the Companies and
there has been no inquiry or investigation made in respect thereof by any Person
including any governmental or administrative agency other than such Liability
for which the Companies have obtained insurance coverage (after taking into
effect deductibles under applicable insurance policies).
No Broker's or Finder's Fee
Other than an arrangement between the Shareholders and KPMG Corporate Finance,
Inc. ("Broker") (which is the sole responsibility of the Shareholders), no
agent, broker, investment banker, person or firm has acted directly or
indirectly on behalf of any of the Companies or any of the Shareholders in
connection with this Agreement or the transaction contemplated herein, and no
such person or entity is or will be entitled to any broker's or finder's fee or
any other commission or similar fee or expense, directly or indirectly, in
connection with this Agreement or the transaction contemplated herein.
Government Assistance
There are no agreements, loans other funding arrangements or assistance programs
(collectively called "Government Assistance Programs") with, or which are
outstanding in favour of any of the Companies from, any federal, provincial,
state, municipal other government or governmental agency, board, commission or
authority, domestic or foreign.
Shareholders Residency
Each of the Shareholders is resident in Canada within the meaning of the Income
Tax Act. The Shareholders are each residents of the Province of Saskatchewan.
Approved Corporate Reorganization
The approved Corporate Reorganization shall not affect the value of the Stock or
the condition of any of the Companies or give rise to any Tax Liability of any
of the Companies in any manner whatsoever.
Representations Not Misleading
No representation or warranty by the Shareholders in this Agreement, nor any
statement, summary, exhibit or schedule furnished to the Purchaser by any of the
Companies or any of the Shareholders under and pursuant to, or in anticipation
of this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. There is no fact known to
any of the Shareholders which materially or adversely affects the businesses of
any of the Companies, prospects or condition of any of the Companies or their
businesses, or which might reasonably be expected to deter the Purchaser from
completing the transaction of purchase and sale herein contemplated which has
not been set forth in this Agreement or in certificates or statements in writing
furnished in connection with the transactions contemplated by this Agreement.
Banking Arrangements
Schedule 2.31 accurately lists, as of the Closing Date:
(a) the name of each bank or institution where each of the Companies has
accounts or safe deposit boxes;
(b) the name(s) in which such accounts or boxes are held; and
(c) the name(s) of each Person authorized to draw thereon or have access
thereto.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the representations and warranties set forth in this
Article 3 to the Shareholders.
Organization and Authority
Alamo Sask is a corporation duly organized, validly existing, and in good
standing under the laws of the Province of Saskatchewan, Canada, and has all
requisite corporate power and authority to enter into and carry out its
obligations under this Agreement. Alamo USA is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to enter into and carry out
its obligations under this Agreement.
Authority
No proceedings on the part of the Purchaser are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and is a valid, legally binding and enforceable
obligation of the Purchaser. There are no proceedings pending or, to the
Knowledge of the Purchaser, threatened, against it, at law or in equity or
before any foreign, federal, state, municipal or other governmental court,
department, commission, board, bureau, agency, instrumentality or other Person
which seek to prevent or delay the consummation of the transactions contemplated
hereby.
Consents and Approvals
No prior consent, approval or authorization of, or declaration, filing or
registration with, any Person is required of or by the Purchaser in connection
with the execution, delivery and performance by the Purchaser of this Agreement.
POST CLOSING PAYMENT OF ACCRUED BONUSES AND DIVIDENDS
Permitted Liability at Closing
The parties acknowledge that, on the Closing Date, the Accrued Bonuses and
Dividends shall be and remain permitted liabilities of the Companies provided
that, for greater certainty, in the event that the Actual Net Worth, as
determined in accordance with Section 1.3 hereof, exceeds or is less than the
Estimated Net North, the provisions of Section 1.3 (and all adjustments between
the parties contemplated therein) shall continue to apply.
Post Closing Covenant to Pay
The Purchaser agrees that it shall cause the Companies to pay to those
Shareholders entitled to receive payment thereof:
the full amount of the July 31 Accrued Bonuses after December 31, 2000 but in
any event prior to January 29, 2001;
(b) the full amount of the Pre-Closing Dividends on or before June
30, 2001; and
(c) the full amount of the Pre-Closing Bonus after December 31, 2000 but
in any event on or before March 31, 2001.
ADDITIONAL AGREEMENTS
Access To, and Information Concerning, Properties and Records The Shareholders,
jointly and severally, agree that they have, and have caused each of the
Companies to, give the Purchaser, its legal counsel, accountants and other
representatives full access (and have otherwise fully co-operated, including by
making available copies of all of the following which are susceptible to
photostatic reproduction), during normal business hours, throughout the period
prior to the Closing, to all of the books, Contracts, Properties, premises,
permits, Environmental Permits, licenses, Governmental Authorizations,
commitments of any nature (whether oral or written) and records of each of the
Companies, and have permitted the Purchaser and such representatives to make
such inspections (including without limitation, with regard to such Properties,
physical inspection of the surface and subsurface thereof and any structure
thereon) and to have discussions with material suppliers and customers of any of
the Companies as the Purchaser and such representatives required and furnished
to the Purchaser and such representatives during such period all such
information concerning each of the Companies and their affairs as they
requested.
Environmental Investigation
(a) The Purchaser and its consultants, agents and representatives, have at the
Purchaser's sole expense conducted certain inspections of the Property,
including, without limitation, certain environmental assessments and
investigation ("Environmental Inspections").
(b) The Purchaser shall not have any liability or responsibility of any
nature whatsoever for the results, conclusions or other findings
related to any Environmental Inspection, or other environmental survey
performed by or on behalf of the Purchaser nor shall the Purchaser be
responsible for any claims associated with the exposure or release of
Materials of Environmental Concern in, on or under the Property. If
this Agreement is terminated, then except as otherwise required by law,
the Purchaser shall have no obligation to make any reports to any
Governmental Authority of the results of any Environmental Inspection,
secondary investigation or other environmental survey, but such
reporting shall remain the responsibility of and within the discretion
of the Companies. The Purchaser shall not have any liability to the
Companies or any Shareholder, or any other Person for any report of
such results to any Governmental Authority.
(c) The Companies and the Shareholders have made available to the Purchaser
and its consultants, agents and representatives all documents and other
material relating to environmental conditions of the Property or
compliance with, or liability under Environmental Laws, including,
without limitation, the results of other environmental inspections and
surveys. The Companies and the Shareholders shall permit all engineers
and consultants who prepared or furnished such reports to discuss such
reports and information with the Purchaser and shall be entitled to
certify the same in favour of the Purchaser and its consultants, agents
and representatives and make all other data available to the Purchaser
and its consultants, agents and representatives.
Miscellaneous Agreements and Consents
Subject to the terms and conditions of this Agreement, the Purchaser and the
Shareholders agree to use commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper, or advisable under applicable Laws to consummate and make effective, as
soon as practicable after the date hereof, the transactions contemplated by this
Agreement.
Best Good Faith Efforts
All parties hereto agree that the parties will use their best good faith efforts
to secure all third-party or regulatory approvals necessary to consummate the
transactions provided for herein and to satisfy the other conditions to Closing
contained herein.
Public Announcement
Except to the extent public disclosure is required by Law, the timing and
content of any announcements, press releases or other public statements
concerning the proposal contained herein will occur upon, and be determined by,
the mutual consent of the Representative and the Purchaser.
Confidentiality
Without the express written consent of all of the parties hereto, each of the
parties hereto agrees to maintain in confidence and not disclose to any other
Person the terms of the transactions contemplated herein or the information
delivered in connection with the proposed due diligence investigation, other
than disclosures required to obtain the approvals for the transactions
contemplated hereby, disclosures to those professionals and advisors who have a
need to know, disclosures of information already available to the public or any
other disclosures required by applicable law. In the event that the Purchaser,
any of the Companies or any of the Shareholders is at any time requested or
required (by oral questions, interrogatories, request for information or
documents, subpoena or other similar process) to disclose any information
supplied to it in connection with this transaction, such party agrees to provide
the other parties hereto prompt notice of such request so that an appropriate
protective order may be sought and/or such other party may waive the first
party's compliance with the terms of this Section 5.6.
CONDITIONS TO CLOSING
Conditions to Each Party's Obligation to Close
The respective obligations of each party to close the transactions contemplated
hereby are subject to the satisfaction or waiver of the following conditions
prior to the Closing:
the receipt of approval required pursuant to any applicable regulatory
approvals and the expiration of any applicable waiting period with respect
thereto; and
the Closing will not violate any injunction, order or decree of any court or
Governmental Authority having competent jurisdiction.
Conditions to the Obligations of the Purchaser to Close The obligations of the
Purchaser to close the transactions contemplated hereby are subject to the
satisfaction or waiver of the following conditions prior to the Closing:
all representations and warranties of the Shareholders shall be true and
correct in all material respects as of the date hereof with the same force
and effect as though made on and as of the Closing;
the Shareholders shall have performed all obligations and agreements and shall
have complied with all covenants and conditions contained in this Agreement to
be performed or complied with by them prior to the Closing Date;
all actions necessary to authorize the execution, delivery and performance of
this Agreement by the Shareholders and the consummation by the Shareholders of
the transactions contemplated herein shall have been duly and validly taken;
the Purchaser shall have received certificates dated the Closing executed by the
Shareholders, certifying in such reasonable detail as the Purchaser may
reasonably request, to the effect described in Sections 6.2(a), (b), and (c);
the form and substance of all actions, proceedings, instruments and documents
required to consummate the transactions contemplated by this Agreement shall
have been satisfactory in all reasonable respects to the Purchaser and its
counsel;
there shall not have occurred any change in the business of any of the
Companies which would constitute a Material Adverse Effect;
the Purchaser shall have received the opinions of counsel to the Shareholders
acceptable to the Purchaser and its counsel as to the matters set forth on, and
in the form of, Exhibit "F" attached hereto;
the Shareholders shall have obtained all third party consents required to
consummate the transactions hereunder, copies of which shall have been furnished
to the Purchaser;
the Purchaser shall have completed and be satisfied, in its sole discretion,
with the results of its due diligence investigation of the Company including,
but not limited to, the Environmental Inspections;
the Shareholders shall have duly transferred all of the Canadian Stock to Alamo
Sask, and all of the USA Stock to Alamo USA, in each case, free and clear of all
Encumbrances, with all transfer Taxes, if any, paid by the Shareholders. No
claim shall have been filed, made or threatened by any Person asserting that
such Person is entitled to any part of the Purchase Price paid for the Stock;
the Purchaser shall have received evidence that all retirement benefits, health
funds or other obligations to employees of the Companies are fully funded;
all third party debt, including, but not limited to, capital leases and loan
amounts owing to or from any of the Shareholders (save and except for the
Accrued Bonuses and Dividends), shall have been paid or repaid as applicable, or
such amounts shall be reduced from the Purchase Price or arrangements
satisfactory to the Purchaser shall have been made for payment thereof by the
Shareholders' Solicitors as contemplated in Section 1.3;
the Non-Competition Agreement shall be entered into by the parties thereto;
the Employment Agreements shall be entered into by each of Jim Carnago and
Schulte Sales Ltd., and Earl Schulte and Schulte Industries, Ltd.;
each of the Shareholders shall have executed a Release in the form attached
hereto as Exhibit "G"; and
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each of the Shareholders shall have resigned all officer and director
positions of the Companies.
Conditions to the Obligations of the Shareholders to Close The obligations of
the Shareholders to close the transactions contemplated herein are subject to
the satisfaction or waiver of the following conditions prior to the Closing:
(a) all representations and warranties of the Purchaser contained herein shall
be true and correct in all material respects as of the date hereof with
the same force and effect as though made on and as of the Closing;
(b) the Purchaser shall have performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement to
be performed or complied with by it prior to the Closing Date; and
(c) the Representative shall have received certificates dated the Closing,
executed by an appropriate officer of the Purchaser certifying, in such
detail as the Representative may reasonably request, to the effect
described in Sections 6.3(a) and (b).
TERMINATION; AMENDMENT; WAIVER
Termination
This Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date:
(a) by mutual written consent duly authorized by the board of directors of
the Purchaser and the Representative;
(b) by the Purchaser (i) if any of the representations and warranties
contained in Article 2 were incorrect in any material respect when made or
at any time thereafter, or (ii) if any of the conditions to Closing
contained in Section 6.1 or 6.2 shall not have been complied with or
performed at the time required for such compliance or performance and such
non-compliance or non-performance shall not have been waived in writing by
the Purchaser;
(c) by the Representative if the conditions to Closing contained in Section
6.1 or 6.3 shall not have been complied with or performed at the time
required for such compliance or performance and such non-compliance or
non-performance shall not have been waived in writing by the
Representative;
(d) by the Purchaser or the Representative if the Closing Date shall not have
occurred on or before December 15, 2000, or such later date agreed to in
writing by the Purchaser and the Representative; and
(e) by the Purchaser or the Representative if any court of competent
jurisdiction in the United States of America, Canada, or other
(federal, state or provincial) governmental body, including the
governmental bodies responsible for enforcement of the HSR Act, the
Competition Act and/or the Investment Canada Act shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions herein
contemplated, and such order, decree, ruling or other action shall have
been final and nonappealable.
Effect of Termination
In the event of the termination and abandonment of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party or its directors,
officers or Shareholders, other than the provisions of Section 5.1, Section 5.6,
and this Section 7.2. Nothing contained in this Section 7.2 shall relieve any
party from liability for any breach of this Agreement.
Amendment
This Agreement may not be amended except by an instrument in writing signed by
the Representative and the Purchaser.
Extension, Waiver
At any time prior to the Closing Date, the Representative or the Purchaser may
(i) extend the time for the performance of any of the obligations or other acts
of the non-waiving party, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document, certificate or writing delivered
pursuant hereto by the non-waiving party, or (iii) waive compliance with any of
the agreements or conditions contained herein by the non-waiving party. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Survival of Representations and Warranties
Except as otherwise provided herein, all representations, warranties, covenants
and agreements made in this Agreement, or in any Exhibit or Schedule delivered
in connection herewith, shall survive the Closing for a period of three (3)
years, regardless of any investigations or inquiries made by the Purchaser,
Shareholders or any of their respective representatives. The representations and
warranties made by the Shareholders in Sections 2.1, 2.2 and 2.3 hereof shall
survive the Closing indefinitely. Further, all representations, warranties,
covenants and agreements made regarding Tax matters and environmental matters
(and all indemnification obligations of Shareholders relating thereto as set
forth in Article 9 hereof) shall survive the Closing indefinitely. All claims
based upon the representations, warranties, covenants or agreements in this
Agreement, or in any Exhibit or Schedule delivered in connection herewith, must
be made prior to the relevant termination date as set forth in this Section 8.1.
All representations, warranties, covenants and agreements shall survive to the
extent a claim based on a representation, warranty, covenant or agreement in
this Agreement, or in any Exhibit or Schedule delivered in connection herewith,
is made on or prior to the relevant termination date set forth in this Section
8.1, until such claim is finally resolved.
INDEMNIFICATION
Indemnification by the Shareholders
Each of the Shareholders, jointly and severally, unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless, the
Purchaser, and each of the Purchaser's Subsidiaries, stockholders, Affiliates,
each of the Companies' and their respective officers, directors, employees,
counsel, agents, successors, assigns, heirs and legal and personal
representatives (the Purchaser and all such other Persons are collectively
referred to as the "Purchaser's Indemnified Persons") from and against, and
shall reimburse the Purchaser's Indemnified Persons for, each and every Loss,
INCLUDING WITHOUT LIMITATION THOSE LOSSES ARISING OUT OF THE STRICT LIABILITY OR
THE NEGLIGENCE OF ANY PARTY, INCLUDING THE PURCHASER'S INDEMNIFIED PERSONS,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE, paid,
imposed on or incurred by the Purchaser's Indemnified Persons, directly or
indirectly, relating to, resulting from or arising out of, or any allegation by
any Person of:
(a) any inaccuracy in any representation or warranty of the Shareholders
under this Agreement, or the Schedules thereto or any agreement,
certificate or other document delivered or to be delivered by the
Shareholders pursuant hereto in any respect, whether or not the
Purchaser's Indemnified Persons relied thereon or had knowledge
thereof, or any breach or nonfulfillment of any covenant, agreement or
other obligation of the Shareholders under this Agreement or any
agreement or document delivered pursuant hereto, all without regard to
materiality;
(b) any Environmental Claim or the violation of any Requirements of
Environmental Law to the extent such Environmental Claim or such violation
relates, directly or indirectly, to events, conditions, operations, facts
or circumstances which occurred, existed or commenced on or prior to the
Closing Date; or
(c) any claim by any Person, including the Broker, for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with the
Shareholders (or any Person acting on their behalf) or any of the
Companies in connection with any of the transactions contemplated by this
Agreement.
With respect to matters not involving Proceedings commenced or threatened by
third parties, within ten (10) days after notification from the Purchaser's
Indemnified Persons supported by reasonable documentation setting forth the
nature of the circumstances entitling the Purchaser's Indemnified Persons to
indemnity hereunder, the Representative at no cost or expense to the Purchaser's
Indemnified Persons, shall diligently commence resolution of such matters in a
manner reasonably acceptable to the Purchaser's Indemnified Persons and shall
diligently and timely prosecute such resolution to completion; provided,
however, with respect to those claims that may be satisfied by payment of a
liquidated sum of money, the Shareholders shall promptly pay the amount so
claimed to the extent supported by reasonable documentation. If litigation or
any other Proceeding is commenced or threatened, the provisions of Section 9.3
shall control.
Indemnification by the Purchaser
The Purchaser unconditionally, absolutely and irrevocably agrees to and shall
defend, indemnify and hold harmless the Shareholders and the Shareholders'
successors, assigns, heirs and legal and personal representatives (the
Shareholders and such other Persons are collectively referred to as the
"Shareholders' Indemnified Persons") from and against, and shall reimburse the
Shareholders' Indemnified Persons for, each and every Loss paid, imposed on or
incurred by the Shareholders' Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of, or any allegation by any third
party of any inaccuracy in any representation or warranty of the Purchaser under
this Agreement or any agreement, certificate or other document delivered or to
be delivered by the Purchaser pursuant hereto in any respect, whether or not the
Shareholders' Indemnified Persons relied thereon or had Knowledge thereof, or
any breach or nonfulfillment of any covenant, agreement or other obligation of
the Purchaser under this Agreement or any agreement or document delivered
pursuant hereto.
Notice and Defense of Third Party Claims
If any Proceeding shall be brought or asserted under this Article 9 against an
indemnified party or any successor thereto (the "Indemnified Person") in respect
of which indemnity may be sought under this Article 9 from an indemnifying
Person or any successor thereto (the "Indemnifying Person"), the Indemnified
Person shall give prompt written notice of such Proceeding to the Indemnifying
Person who shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
expenses; provided, that any delay or failure so to notify the Indemnifying
Person shall relieve the Indemnifying Person of its obligations hereunder only
to the extent, if at all, that it is prejudiced by reason of such delay or
failure. In no event shall any Indemnified Person be required to make any
expenditure or bring any cause of action to enforce the Indemnifying Person's
obligations and liability under and pursuant to the indemnifications set forth
in this Article 9. In addition, actual or threatened action by a Governmental
Authority or other entity is not a condition or prerequisite to the Indemnifying
Person's obligations under this Article. The Indemnified Person shall have the
right to employ separate counsel in any of the foregoing Proceedings and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless the Indemnified Person
shall in good faith determine that there exist actual or potential conflicts of
interest which make representation by the same counsel inappropriate. The
Indemnified Person's right to participate in the defense or response to any
Proceeding should not be deemed to limit or otherwise modify its obligations
under this Article 9. In the event that the Indemnifying Person, within five
days after notice of any such Proceeding, fails to assume the defense thereof,
the Indemnified Person shall have the right to undertake the defense, compromise
or settlement of such Proceeding for the account of the Indemnifying Person,
subject to the right of the Indemnifying Person to assume the defense of such
Proceeding with counsel reasonably satisfactory to the Indemnified Person at any
time prior to the settlement, compromise or final determination thereof.
Anything in this Article to the contrary notwithstanding, the Indemnifying
Person shall not, without the Indemnified Person's prior written consent, settle
or compromise any Proceeding or consent to the entry of any judgment with
respect to any Proceeding; provided, however, that the Indemnifying Person may,
without the Indemnified Person's prior written consent, settle or compromise any
such Proceeding or consent to entry of any judgment with respect to any such
Proceeding that requires solely the payment of money damages by the Indemnifying
Person and that includes as an unconditional term thereof the release by the
claimant or the plaintiff of the Indemnified Person from all liability in
respect of such Proceeding.
Other Remedies
In addition to the rights and remedies of the parties specifically provided for
by this Article 9, each party hereto shall have such other remedies as shall be
available under applicable law or in equity for the other party's breach of the
representations and warranties contained herein, or the failure to perform any
of its covenants, agreements or obligations under or contained in this Agreement
or in any document furnished or delivered pursuant hereto.
Inconsistent Provisions
The provisions of this Article shall govern and control over any inconsistent
provisions of this Agreement.
Subrogation to Indemnity Rights
If any of the Shareholders fail to perform his, her or its obligations under
this Article 9, the Purchaser shall be surrogate to any rights the Shareholders
may have under any rights of contribution or indemnity from any former
Shareholders of any of the Companies, any present or former owners, tenants or
other occupants or users of the Business Facilities, or any other Person
relating to the matters covered by this Article 9.
THE REPRESENTATIVE
The Representative
(a) The Shareholders hereby appoint Jim Carnago and Earl Schulte, jointly,
as their agent and representative (the "Representative") and authorize
and direct the Representative to take such action, and to exercise such
rights, power and authority as are authorized, delegated and granted to
the Representative hereunder in connection with the transactions
contemplated hereby, and to exercise such rights, power and authority
as are incidental thereto including, but not limited to, the power to
act for the Shareholders with respect to all indemnification matters
referred to in this Agreement, which includes the right to compromise
or settle any such claims on behalf of the Shareholders, and the power
to receive and distribute or pay to the Purchaser, as applicable, the
difference between Estimated Net Worth and Actual Net Worth as
described in Section 1.3 hereof. Execution of this Agreement by the
Shareholders shall constitute an irrevocable agreement by the
Shareholders to be bound by the actions of the Representative taken
hereunder or any successor Representative as appointed pursuant to
Section 10.1(b).
(b) Subject to the provisions of this Section 10.1(b), the Representative
shall serve as the Representative from the date hereof until the
earlier of his removal or the completion of his obligations hereunder.
The parties hereto acknowledge and agree that, as to all matters
arising under this Agreement, the Representative shall act for and on
behalf of the Shareholders. When this Agreement provides that a
determination or any other action or event is conclusive and binding
upon the Shareholders, such determination, action or event shall be
conclusive and binding upon the Representative. In addition, the
Representative shall have all such incidental powers as may be
necessary or desirable to carry into effect the provisions of this
Section 10.1. In the event that the Person who is acting as the
Representative is terminated by the Shareholders or is unable or
unwilling to continue to serve as the Representative, or otherwise
ceases to be the Representative, his successor shall be appointed in
accordance with this Section 10.1; provided, that (i) Purchaser shall
not have withheld its approval of the appointment of such successor as
the Representative, which approval shall not be unreasonable withheld,
and (ii) the Representative shall not voluntarily resign without the
Shareholders first selecting a successor Representative reasonably
satisfactory to Purchaser in accordance with this Section 10.1. Upon
the termination or resignation of any Representative, a successor
Representative (and, if necessary, further successor Representative),
reasonably satisfactory to Purchaser, shall be appointed by the
Shareholders who held a majority of the Schulte Stock on the Closing
Date. Any successor to a Representative shall for purposes of this
Agreement be deemed to be, from the time of the appointment thereof, a
Representative. No appointment of a successor shall be effective
unless such successor agrees in writing to be bound by the terms of
this Agreement.
(c) The Shareholders agree that the provisions set forth in this Section
10.1 shall in no way impose any obligations on the Purchaser other than
those explicitly set forth in this Agreement. In particular,
notwithstanding any notice received by Purchaser to the contrary,
Purchaser shall be fully protected in relying upon and shall be
entitled (i) to rely upon actions, decisions and determinations of the
Representative, and (ii) to assume that all actions, decisions and
determinations of the Representative are fully authorized and binding
upon the Representative and the Shareholders.
(d) The Representative shall not be liable to the Shareholders for the
performance of any act or the failure to act so long as he acted or failed
to act in good faith and such action or inaction did not constitute
willful misconduct or gross negligence.
MISCELLANEOUS
Expenses
The Purchaser will pay its own expenses in connection with the transactions
contemplated hereby. The Shareholders will pay the expenses of the Companies and
the Shareholders in connection with the transactions contemplated hereby.
Entire Agreement, Assignment
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof, including the Letter of Intent between the
parties hereto dated August 17, 2000. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests and obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties; provided, however, that the Purchaser may assign its rights, interests
and obligations under this Agreement (i) after the Closing, to any direct or
indirect Subsidiary or Affiliate of the Purchaser; and/or (ii) after the
Closing, in connection with a transfer of all or substantially all of the assets
or stock of the Purchaser or a merger or consolidation of the Purchaser with and
into another corporation or other entity, but no such assignment shall release
the Purchaser from its obligations hereunder.
Further Assurances
From time to time as and when requested by the Purchaser, or its successors or
assigns, the Shareholders shall execute and deliver and shall cause each of the
Companies and the officers and directors of each of the Companies to execute and
deliver such further agreements, documents, deeds, certificates and other
instruments of conveyance and transfer and to take or cause to be taken such
other actions as the Purchaser may reasonably require and as shall be reasonably
necessary or advisable to carry out the purposes of and effect the transactions
contemplated by this Agreement.
Enforcement of the Agreement
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they are entitled
pursuant to the terms hereof or otherwise, at law or in equity.
Severability
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws in any jurisdiction, that provision
shall be ineffective to the extent of such illegality, invalidity or
unenforceability in that jurisdiction and such holding shall not, consistent
with applicable law, invalidate or render unenforceable such provision in any
other jurisdiction, and the legality, validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby, and shall
remain in full force and effect in all jurisdictions.
Notices
All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by cable, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
if to the Purchaser:
Alamo Group (Sask) Inc.
c/o 1502 E. Walnut
P.O. Drawer 549
Seguin, Texas
USA
78156-0549
Attention: Ronald A. Robinson
Facsimile: (210) 372-9683
with required copy to:
J. David Oppenheimer
Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, Sixth Floor
San Antonio, Texas
USA
78205
Facsimile: (210) 224-7540
and to:
James S. Kerby
MacPherson Leslie & Tyerman
1500 - 410 - 22nd Street E.
Saskatoon, Saskatchewan
Canada
S7K 5T6
Facsimile: (306) 975-7145
if to the Shareholders or the Representative:
James Carnago
Box 195
Englefeld, Saskatchewan
S0K 1N0
Facsimile: (306) 287-3355
and
Earl Schulte
Box 195
Englefeld, Saskatchewan
S0K 1N0
Facsimile: (306) 287-3355
With required copy to:
Behiel, Munkler & Will
Barristers and Solicitors
602 - 9th Street
Humboldt, Saskatchewan
Canada
S0K 2A0
Facsimile: (306) 682-5165
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Government Law and Jurisdiction
(a) Governing Law: This Agreement will be governed by and construed in
accordance with the laws of the Province of Saskatchewan and the laws
of Canada applicable therein.
(b) Jurisdiction: To the fullest extent permitted by Law, the parties
hereby irrevocably:
(i) attorn to the jurisdiction of the courts of Saskatchewan and hereby
waive objection to the laying of the venue of any suit, legal action
or proceeding in any such court and any claim that any such suit,
action or proceeding has been brought in an inconvenient forum;
(ii) agree to bring any suit, legal action or proceeding with respect to
this Agreement only before a competent court in Saskatchewan; and
(iii) agree that a final judgment in any suit, legal action or proceeding
brought in the courts of Saskatchewan will be conclusive and binding
upon each of the parties and may be enforced in any court in any
jurisdiction in which any party or any of the assets of any party is
or may be found or located by a suit upon such judgment, a certified
copy of which will be conclusive evidence of the fact and of the
amount of such judgment.
Gender, "Including" is Not Limiting, Descriptive Headings
The masculine and neuter genders used in this Agreement each includes the
masculine, feminine and neuter genders, and the singular number includes the
plural, each where appropriate, and vice versa. Wherever the term "including" or
a similar term is used in this Agreement, it shall be read as if it were written
"including by way of example only and without in any way limiting the generality
of the clause or concept referred to." The descriptive headings are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
Parties in Interest
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Counterparts
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the same
agreement.
Incorporation by Reference
Any and all schedules, exhibits, annexes, statements, reports, certificates or
other documents or instruments referred to herein or attached hereto are
incorporated herein by reference hereto as though fully set forth at the point
referred to in the Agreement. The schedules attached hereto contain descriptive
headings and summaries of the representations and warranties set forth in full
in this Agreement. Such descriptive headings and summaries are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of the Agreement.
Arbitration
(a) Basis for Arbitration: The parties hereto agree that the subject matter of
this Agreement and any agreement that may be entered in connection
herewith both involve and affect interstate commerce within the meaning of
the commerce clause of the United States Constitution. This Agreement
shall be irrevocable and is binding upon the parties and is subject to
being specifically enforced.
(b) Mandatory Arbitration of Disputes: Except for actions for injunctive
relief instituted by any party, any action, dispute, claim,
counterclaim or controversy ("Dispute" or "Disputes"), between or among
the parties including, without limitation, any claim based on, or
arising from, an alleged tort or contract shall be resolved by
arbitration as set forth below. As used herein, Disputes shall include
all actions, disputes, claims, counterclaims or controversies arising
in connection with any extension of or commitment set forth in this
Agreement or in any other agreement entered by the parties in
connection with this Agreement, any action taken (or any omission to
take any action) in connection with any of the foregoing, any past,
present and future agreements between or among the parties, including,
without limitation, this binding arbitration in accordance with Title 9
of the U.S. Code and the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). Defenses based on statutes of
limitation, estoppel, waiver, applicable in any such arbitration
proceeding, and the commencement of an arbitration proceeding with
respect to this Agreement shall be deemed the commencement of an action
for such purposes. In furtherance and not in limitation of the
foregoing, the parties agree that if any Dispute arises after the date
hereof that is based on an alleged act or omission of the Shareholders,
occurring prior to the date hereof and on an alleged act or omission of
the Purchaser occurring after the date hereof, then the liability or
obligation of the Shareholders and the Purchaser with respect to such
Dispute, including any indemnification obligations of such parties
under this Agreement shall be resolved among the Shareholders and the
Purchaser by apportioning liability based on their own acts or
omissions in accordance with the provisions of this Section 11.12,
unless otherwise mutually agreed by the Shareholders and the
Purchaser.
(c) Arbitrators:
(i) The arbitration shall be conducted before a board of three neutral
arbitrators (the "Board"), at least one of whom shall be a licensed
attorney.
(ii) The Representative and the Purchaser shall select one arbitrator.
The third arbitrator shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon
appointment of the third arbitrator within thirty (30) days
following receipt by one party of the other party's notice of
arbitration, the third arbitrator shall be selected from a list or
lists of proposed arbitrators submitted by AAA. The selection
process shall be that which is set forth in the AAA commercial
arbitration rules then prevailing. Initially, however, promptly
following its receipt of a request to submit a list of proposed
arbitrators, AAA shall convene the parties in person or by telephone
and attempt to facilitate their selection of the third arbitrator by
agreement. If an arbitrator should die, withdraw or otherwise become
incapable of serving, a replacement shall be selected and
appointment in the same manner in which such arbitrator was
initially selected.
(iii) The arbitrators shall select a Chairman by majority vote. Upon
consultation with the other arbitrators and the parties, the
Chairman shall, at the earliest possible date, set dates for a
hearing and establish any pre-hearing conferences or procedural
schedules that the Board deems to be necessary and appropriate.
(iv) The Chairman shall preside at all meetings and executive sessions of
the Board. The Chairman may authorize depositions and issue
subpoenas. All other decisions of the Board shall be by a majority
of the arbitrators, unless the parties agree otherwise.
(d) Place of Arbitration: Whenever an arbitration is required under subsection
(b), such arbitration shall be conducted in Saskatoon, Saskatchewan,
Canada.
(e) Miscellaneous: Any arbitration questions arising under this Agreement
shall be governed in accordance with Title 9 of the U.S. Code. This
section constitutes the entire agreement of the parties with respect to
its subject matter and supersedes all prior discussions, arrangements,
negotiations and other communications on dispute resolutions. The
provisions of this section shall survive any termination, amendment or
expiration of the Agreement in which this section is contained, unless
the parties otherwise expressly agree in writing. In the event of any
Dispute governed by this section, the Shareholders, on the one hand,
and the Purchaser, on the other hand, shall pay all of their own
expenses, and subject to the award of the arbitrator, shall pay an
equal share of the arbitrators' fees. This section may be amended,
changed or modified only by the express provisions of a writing which
specifically refers to this section and which is signed by all the
parties hereto.
Jurisdiction and Venue
Any process against the Purchaser, any of the Companies or the Shareholders in,
or in connection with, any suit, action or proceeding arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement may
be served personally or by certified mail at the address set forth in Section
11.6 with the same effect as though served on it or him personally. Each of the
parties submits to the jurisdiction of any court sitting in the Province of
Saskatchewan, Canada, in any action or proceeding arising out of or relating to
this Agreement and hereby waives any and all objections to jurisdiction and
review or venue that it or they may have under the laws of Saskatchewan or
Canada.
Certain Definitions
(a) "Accrued Bonuses and Dividends" means, collectively, the July 31
Accrued Bonuses, the Pre-Closing Dividends and the Pre-Closing Bonus;
(b) "Affiliate" as used in this Agreement means, with respect to any
Person, (i) any Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such Person in
question, (ii) any officer, director, stockholders or shareholders of
such Person in question, or member of the family (any parent, spouse,
sibling, son or daughter) of such officer, director, stockholders or
shareholders, and (iii) any Person that, directly or indirectly,
controls, is controlled by, or is under common control with, any
officer, director, stockholders or shareholders of such Person in
question or member of the extended family of such officer, director,
stockholders or shareholders. For the purposes of the definition of
Affiliate, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect
to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
(c) "Approved Corporate Reorganization" means the corporate reorganization in
relation to the Companies as described in Schedule 11.14(c), which
corporate reorganization:
(i) is to be effective and completed on or before the Closing Date;
and
(ii) shall not, in the opinion of the Purchaser and its legal and
accounting advisers, acting reasonably, adversely affect the value
of the Stock or the condition of any of the Companies or give rise
to any Tax Liability of any of the Companies in any manner
whatsoever.
(d) "Business Facility" includes any property (whether real or personal) which
any of the Companies currently leases, operates, or owns or manages in any
manner or which any of the Companies formerly leased, operated, owned or
managed in any manner.
(e) "Canada Pension Plan" means the statutory Canada Pension Plan
established pursuant to Canada Pension Plan, R.S.C. 1985, c.C-8, as
amended.
(f) "Code" means the United States Internal Revenue Code of 1986, as amended
or any successor statute.
(g) "Companies" has the meaning set forth in the recitals.
(h) "Employee Plans" means any plans, policies or agreements respecting
pension, retirement and/or deferred compensation arrangements, stock
purchase, profit sharing, stock option, loans, insurance, medical,
hospital, dental, vision, drug or home care, sick leave, disability,
salary continuation, legal, unemployment, welfare, vacation or other
similar employee benefits (excluding severance arrangements) that are
maintained, sponsored or otherwise contributed to, or required to be
contributed to, by any of the Companies for the benefit of and generally
available to their respective employees, former employees and Persons
claiming through any of them, such as spouses and other beneficiaries.
(i) "Encumbrance" means and includes, whether or not registered or
recorded, any and all:
(i) mortgages, assignments of rent, liens, licenses, leases, charges,
security interests, hypothecations and pledges, whether fixed or
floating, against property (whether real, personal, mixed, tangible
or intangible), or conditional sales contracts, title retention
agreements, equipment trusts or financing leases relating thereto,
or any subordination to any right or claim of others in respect
thereof;
(ii) adverse claims existing, pending or threatened, against property
(whether real, personal, mixed, tangible or intangible);
(iii) rights, interests and estates against or in property (whether real,
personal, mixed, tangible or intangible), including easements,
rights-of-way, encroachments, restrictive or statutory covenants,
profit a prendre, or other similar rights, granted to or reserved or
taken by any Person or Governmental Authority;
(iv) options, warrants, rights, calls, commitments, conversion rights,
rights of exchange or other agreements or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
options, warrants, rights, calls, commitments, conversion rights,
rights of exchange or other agreements for the purchase or transfer
of, or the purchase or transfer of any interest in, any property
(whether real, personal, mixed, tangible or intangible); and
(v) without limiting the generality of the foregoing, any other
Liability, encumbrance or title defect against or in property
(whether real, personal, mixed, tangible or intangible) of
whatsoever nature and kind or any other right of any Person of any
kind or nature whatsoever which may constitute or become by
operation of Law or otherwise an encumbrance or title defect against
or in property.
(j) "Environmental Claim" means any Proceeding; claim; litigation; demand;
action; cause of action; suit; loss; cost (including, but not limited
to, all legal fees (on a solicitor and his own client basis) or other
attorneys' fees), diminution in value, expert's fees; damage; punitive
damage; fine, penalty, expense, Liability, criminal liability,
judgment; governmental or private investigation and testing;
notification of status of being potentially responsible for clean-up of
any facility or for being in violation or in potential violation of any
Requirement of Environmental Law; proceeding; lien; personal injury or
death of any Person; or property damage, whether threatened, sought,
brought or imposed, that is related to or that seeks to recover Losses
related to, or seeks to impose liability regarding any of the Companies
or operations conducted by any of them for: (i) improper use or
treatment of wetlands, pinelands or other protected land or wildlife;
(ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials ["NORM"]); (iv) explosives; (v) pollution,
contamination, preservation, protection, decontamination, remediation
or clean-up of the air, surface water, groundwater, soil or protected
lands; (vi) solid, gaseous or liquid waste generation, handling,
discharge, release, threatened release, treatment, storage, disposal or
transportation; (vii) exposure of Persons or property to Materials of
Environmental Concern and the effects thereof; (viii) the release,
threatened release, generation, extraction, mining, beneficiating,
manufacture, processing, distribution in commerce, use, transfer,
transportation, treatment, storage, disposal or Remediation of
Materials of Environmental Concern; (ix) injury to, death of or threat
to the health or safety of any Person or Persons caused directly or
indirectly by Materials of Environmental Concern; (x) destruction
caused directly or indirectly by Materials of Environmental Concern or
the release or threatened release of any Materials of Environmental
Concern on any property (whether real or personal); (xi) the
implementation of spill prevention and/or disaster plans relating to
Materials of Environmental Concern; (xii) community right-to-know and
other disclosure laws; or (xiii) maintaining, disclosing or reporting
information to Governmental Authorities under any Environmental Law.
The term, "Environmental Claim" also includes, without limitation, any
Losses incurred in testing for the need for Remediation or for breach
or violation of any Requirements of Environmental Laws; monitoring or
responding to efforts to require Remediation and any claim based upon
any asserted or actual breach or violation of any Requirements of
Environmental Law.
(k) "Environmental Laws" mean any federal, state, provincial, local or
foreign Law, regulation, ordinance, bylaw, code or legal requirement
relating to pollution, or protection or cleanup of the environment
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, Environmental Management and
Protection Act, S.S. 1983-84, c.E-10.2 (the "EMPA") and the Canadian
Environmental Protection Act, R.S.C. 1985, c. 16 (4th Supp.) (the
"CEPA"), and any other Law or legal requirement, as now or hereinafter
in effect, relating to: (a) the release, containment, removal,
remediation, response, cleanup or abatement of any sort of any
Materials of Environmental Concern; (b) the manufacture, generation,
formulation, processing, labeling, distribution, introduction into
commerce, use, treatment, handling, storage, recycling, disposal or
transportation of any Materials of Environmental Concern; (c) exposure
of persons, including employees, to any Materials of Environmental
Concern; or, (d) the physical structure, use or condition of a
building, facility, fixture or other structure, including, without
limitation, those relating to the management, use, storage, disposal,
cleanup or removal of asbestos, asbestos-containing materials,
polychlorinated biphenyls or any other Materials of Environmental
Concern.
(l) "ERISA" means Employee Retirement Income Security Act of 1974, as amended,
or any successor statute.
(m) "GAAP" means, with respect to all of the Companies except Schulte USA
Inc., Canadian generally accepted accounting principles, consistently
applied, and with respect to Schulte USA Inc., United States generally
accepted accounting principles, consistently applied. Whenever
reference is made in this Agreement to a calculation to be made or
financial statements or documents to be prepared in accordance with
"generally accepted accounting principles" or "GAAP", such reference
will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian institute with respect to
all of the Companies except Schulte USA Inc., and the United States
institute with respect to Schulte USA Inc., or any successor institute,
applicable as at the date on which such calculation is made or required
to be made or such financial statements or documents are prepared or
required to be prepared in accordance with generally accepted
accounting principles.
(n) "Governmental Authority" means any domestic or foreign, national,
federal, provincial, state, regional, municipal, county or other local
government or quasi-governmental or private body exercising any
statutory, regulatory, expropriation or Taxing authority under the
authority of any of the foregoing governments or any Laws, and includes
any ministry, department, commission, bureau, board, administrative or
other agency or regulatory body or instrumentality thereof, and any
domestic, foreign, international, judicial, quasi-judicial, arbitration
or administrative court, tribunal, commission, board or panel acting
under the authority of any of the foregoing persons or any Laws.
(o) "GST" means the Goods and Services Tax as contained in Part IV of the
Excise Tax Act, R.S.C. 1985, c.E-15, as amended.
(p) "Income Tax Act" means for the purposes of this Agreement, the Income
Tax Act, R.S.C. 1985 (5th Supp.), c.1, as amended, and where the
context so permits, any reference to the Income Tax Act includes a
reference to any analogous provincial legislation, any reference to any
provision of the Income Tax Act includes a reference to the
corresponding provision of any such analogous provincial legislation
and any reference to any filing or similar requirement imposed under
the Income Tax Act includes a reference to any corresponding filing or
similar requirement imposed under any such analogous provincial
legislation.
(q) "Intellectual Property" means all patents, patent applications,
inventions, processes, trademarks (whether registered or unregistered),
trademark applications, trade names, service names, brand names, brand
marks, service marks, mask works, copyrights, software, trade secrets or
any other indicia of know-how used by any of the Companies in their
business or operations.
(r) "Interim Balance Sheet Date" means January 31, 2000.
(s) "July 31 Accrued Bonuses" means, collectively, accrued but unpaid
bonuses totalling $737,000 as at the Closing Date, owing by Industries (in
the amount of $212,000), Sales (in the amount of $212,000) and
International (in the amount of $313,000), as set forth in the July 31,
2000 audited financial statements of the Companies.
(t) "Knowledge" means with respect to any Person, the actual knowledge of
such Person after a good faith and commercially reasonable inquiry or,
if such Person is not a natural person the directors, officers,
managers or other employees exercising supervisory responsibility
functions, arising after the conduct by such Persons of a good faith
and commercially reasonable investigation with respect to the facts or
matters specified. For the avoidance of doubt, a Person will be deemed
to have actual knowledge of any matter which a good faith and
commercially reasonable inquiry would have revealed notwithstanding
that the Person has not actually undertaken such inquiry.
(u) "Labour Representatives" means any trade union, employee association,
bargaining agent or affiliated bargaining agent.
(v) "Laws" means all legally binding federal, provincial, state, municipal and
local constitutions, treaties, laws, statutes, codes, ordinances, decrees,
rules, regulations, by-laws, judicial or arbitral or administrative
judgments, orders, decisions, rulings or awards, policies, voluntary
restraints, guidelines, permits and lawful requirements and any provisions
of such Laws, including general principles of civil and common law.
(w) "Legal Requirement" means any law, statute, ordinance, decree,
requirement, Order, treaty, proclamation, convention, rule or regulation
(or interpretation of any of the foregoing) of, and the terms of any,
Governmental Authorization issued by, any Governmental Authority.
(x) "Liability" means any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate,
implied, vicarious, joint, STRICT, several or secondary liability),
regardless of whether such debt, obligation, duty or liability would be
required to be disclosed on a balance sheet prepared in accordance with
GAAP.
(y) "Loss" means any loss, damage, injury, harm, detriment, decline or
diminution in value, lost opportunity, Liability, exposure, claim,
demand, Proceeding, settlement, judgment, award, punitive damage, fine,
penalty, Tax, fee, charge, obligation, cost or expense (including,
without limitation, costs of attempting to avoid or in opposing the
imposition thereof, interest, penalties, reasonable costs of
preparation and investigation, and the fees, disbursements and expenses
of attorneys, solicitors (on a solicitor and his own client basis),
accountants, Escrow Agent and other professional advisors), as well as
with respect to compliance with the Requirements of Environmental Law,
expenses of Remediation and any other remedial, removal, beneficiating,
response, abatement, cleanup, investigative, monitoring, or record
keeping costs and expenses.
(z) "Material Adverse Effect" shall mean any material adverse change in the
financial condition, assets, Liabilities (absolute, accrued, contingent or
otherwise), reserves, business, prospects or results of operations of any
of the Companies.
(aa) "Material Customer" has the meaning set forth in Section 2.11.
(bb) "Material Supplier" has the meaning set forth in Section 2.11.
(cc) "Materials of Environmental Concern" means: (i) those substances
included within the statutory and/or regulatory definitions of "hazardous
substance," "hazardous waste," "extremely hazardous substance," "regulated
substance," "hazardous materials," or "toxic substances," under any
Environmental Law; (ii) any material, waste or substance which is or
contains: (A) petroleum, oil or a fraction thereof, (B) explosives, (C)
radioactive materials (including NORM), or (D) solid wastes that pose
imminent and substantial endangerment to health or the environment; and
(iii) such other substances, materials, or wastes that are or become
classified or regulated as hazardous or toxic under any applicable
federal, state, provincial or local law or regulation. To the extent that
the laws or regulations of any applicable state, province or local
jurisdiction establish a meaning for any term defined herein through
reference to federal Environmental Laws which is broader than the meaning
under such federal Environmental Laws, such broader meaning shall apply.
(dd) "Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Authority or by any
arbitrator.
(ee) "Ordinary Course of Business" means an action taken by a Person or one of
the Companies or by a Company and will be deemed to have been taken in the
Ordinary Course of Business only if:
(A) such action is consistent with the past practices of such Person or
Company and is taken in the ordinary course of the normal day-to-day
operations of such Person or Company; and
(B) such action is similar in nature and magnitude to actions
customarily taken by Persons or companies, without any authorization
by the board of directors (or by any Person or group of Persons
exercising similar authority), shareholders or any Governmental
Authority, in the ordinary course of the routine and normal
day-to-day operations of companies that are in the same line of
business and of comparable size with the Companies.
(ff) "Person" means any individual, joint venture, association, body,
corporation, partnership, trust, or entity whatsoever, and includes any
Governmental Authority.
(gg) "Pre-Closing Bonus" means accrued but unpaid bonuses (currently estimated
to be $800,000) owing by the Companies, collectively, to certain
Shareholders, as of the Closing Date accrued in order to reduce the
combined net equity of Schulte on the Closing Date to an amount equal to
the Estimated Net Worth.
(hh) "Pre-Closing Dividends" means, collectively, the declared but unpaid
portion of dividends owing by Sales and Industries as of the Closing Date
and more particularly described as follows:
Sales:
Due to Carnago Holdings Ltd. $ 673.00
Industries:
Due to Val-Lis Holdings Inc. $345,140.00
Due to Carnago Holdings Ltd. $436,574.00
-----------
Total Pre-Closing Dividends: $782,387.00
===========
(ii) "Proceeding" means any action, suit or proceeding, including appeals or
applications for review, before or by any Governmental Authority,
arbitrator or arbitration board or any investigation or inquiry by any
Governmental Authority.
(jj) "Property" or "Properties" includes any property (whether real or personal)
which the Company currently or in the past has leased, operated or owned or
managed in any manner.
(kk) "Remediation" means any action necessary to: (i) comply with and ensure
compliance with the Requirements of Environmental Laws and (ii) the taking of
all reasonably necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened release of Materials
of Environmental Concern at, on, in, about, under, within or near the air,
soil, surface water, groundwater or soil vapour at any Business Facility or
of any public domain affected by the business of any of the Companies.
(ll) "Requirement(s) of Environmental Law(s)" means all requirements,
conditions, restrictions or stipulations of Environmental Laws imposed upon
or related to any of the Companies or the assets and/or the business of any
of the Companies.
(mm) "Shareholders' Solicitors" means Behiel, Munkler & Will, Barristers and
Solicitors.
(nn) "Stock" has the meaning set forth in the recitals.
(oo) "Subsidiary" shall mean, when used with reference to a particular Person:
any corporation, a majority of the outstanding voting securities of which is
owned or controlled directly or indirectly by such Person, or if less than a
majority of such voting securities are so owned or controlled, any
corporation in regard to which such Person possesses, directly or indirectly,
the power to direct or cause the direction of management and policies of such
corporation. Any partnership, joint venture or other enterprise shall be a
Subsidiary of a particular Person, if that Person has, directly or
indirectly, a 20% or greater equity interest or in regard to which such
Person possesses, directly or indirectly, the power to direct or cause the
direction of management and policies of such entity.
(pp) "Tax Return" means any return (including any information return), report,
statement, declaration, schedule, notice, notification, form, certificate or
other document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Authority in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with
any Legal Requirement relating to any Tax.
(qq) "Taxes" means all taxes of any kind (including income, corporation,
capital, value added, goods and services, sales, withholding, franchise,
customs duties, profits, gross receipts, excise, property, stamp, transfer,
water, business or payroll taxes, including without limitation ERISA, Canada
Pension Plan, provincial and state pension plans, workers' compensation,
employment insurance, employer health taxes) and other imposts, duties,
levies, deductions, withholdings, charges, assessments, reassessments or fees
of any nature (including interest, fines, penalties and additions) that are
imposed under any Laws, by any relevant taxing authorities or by any
Governmental Authorities, and "Tax" means any one of them.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the day and year first above written.
PURCHASER:
ALAMO GROUP (SASK) INC.
By:____________________
Ronald A. Robinson, its
President
ALAMO GROUP (USA) INC.
By: _____________________
Ronald A. Robinson, its
President
SHAREHOLDERS:
Valda Schulte, Individually
Lisa Muller, Individually
Dean Carnago, Individually
Jim Carnago, Individually
Lani Carnago, Individually
Earl Schulte, Individually
Jeanne Schulte, Individually
Hal Carnago, Individually
SCHULTE FAMILY TRUST
By:
its duly authorized Trustee(s)
CARNAGO FAMILY TRUST
By:
its duly authorized Trustee(s)
CARNAGO HOLDINGS LTD.
By:
VAL-LIS HOLDINGS INC.
By:
SCHULTE:
SCHULTE INDUSTRIES LTD.
By:
SCHULTE SALES LTD.
By:
SCHULTE SALES (INTERNATIONAL) INC.
By:
SCHULTE (USA) INC.
By:
CAPITAL COMPANIES:
JC CAPITAL LTD.
By:
LC CAPITAL LTD.
By:
JS CAPITAL LTD.
By:
ES CAPITAL LTD.
By:
SHARE PURCHASE AGREEMENT
by and between
ALAMO GROUP (SASK) INC.
("Alamo Sask")
and
ALAMO GROUP (USA) INC.
("Alamo USA")
("Alamo Sask" and "Alamo USA" being, collectively, the "Purchaser")
and
VALDA SCHULTE
LISA MULLER
DEAN CARNAGO
JIM CARNAGO
LANI CARNAGO
EARL SCHULTE
JEANNE SCHULTE
HAL CARNAGO
CARNAGO HOLDINGS LTD.
VAL - LIS HOLDINGS INC.
SCHULTE FAMILY TRUST
CARNAGO FAMILY TRUST
(Collectively, the "Shareholders")
and
SCHULTE INDUSTRIES LTD.
SCHULTE SALES LTD.
SCHULTE SALES (INTERNATIONAL) INC.
SCHULTE (USA) INC.
(Collectively, "Schulte")
and
JC CAPITAL LTD.
LC CAPITAL LTD.
ES CAPITAL LTD.
JS CAPITAL LTD.
(Collectively, the "Capital Companies")
(Collectively, "Schulte" and the "Capital Companies" are hereinafter
referred to as the "Companies," or individually, as the "Company")
Dated as of November 6, 2000
TABLE OF CONTENTS
ARTICLE 1 SALE OF STOCK;CLOSING..........................................3
1.1 Purchase of Stock..................................................3
1.2 Purchase Price.....................................................3
1.3 Adjustments to Purchase Price......................................5
1.4 Closing........................................................... 6
1.5 Closing Deliveries.................................................6
1.6 Non-Competition and Confidentiality Agreements.....................7
1.7 Employment and Non-Competition Agreement...........................7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.............7
2.1 Organization and Qualification.....................................7
2.2 Capitalization.....................................................8
2.3 Authority......................................................... 9
2.4 No Violation.......................................................9
2.5 Financial Statements...............................................10
2.6 Books and Records..................................................11
2.7 Absence of Certain Changes.........................................11
2.8 Absence of Undisclosed Liabilities.................................12
2.9 Receivables........................................................13
2.10 Inventories........................................................13
2.11 Distributors, Dealers, Customers, Suppliers........................13
2.12 Companies' Indebtedness............................................14
2.13 Litigation.........................................................14
2.14 Tax Matters........................................................14
2.15 Employment Matters and Employee Benefit Plans......................16
2.16 Leases, Contracts and Agreements...................................18
2.17 Related Party Transactions.........................................18
2.18 Compliance with Laws...............................................19
2.19 Insurance 19
2.20 Intellectual Property..............................................20
2.21 Environmental Matters..............................................21
2.22 Regulatory Actions.................................................23
2.23 Title to Properties, Encumbrances..................................23
2.24 Condition and Sufficiency of Assets................................24
2.25 Product Warranties, Defects, Liability.............................24
2.26 No Broker's or Finder's Fee........................................25
2.27 Government Assistance..............................................25
2.28 Shareholders Residency.............................................25
2.29 Approved Corporate Reorganization..................................25
2.30 Representations Not Misleading.....................................25
2.31 Banking Arrangements...............................................26
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................26
3.1 Organization and Authority.........................................26
3.2 Authority......................................................... 26
3.3 Consents and Approvals.............................................26
ARTICLE 4 POST CLOSING PAYMENT OF ACCRUED BONUSES .......................27
4.1 Permitted Liability at Closing.....................................27
4.2 Post Closing Covenant to Pay.......................................27
ARTICLE 5 ADDITIONAL AGREEMENTS..........................................27
5.1 Access To, and Information Concerning, Properties and Records......27
5.2 Environmental Investigation........................................28
5.3 Miscellaneous Agreements and Consents..............................28
5.4 Best Good Faith Efforts............................................28
5.5 Public Announcement................................................29
5.6 Confidentiality....................................................29
ARTICLE 6 CONDITIONS TO CLOSING..........................................29
6.1 Conditions to Each Party's Obligation to Close.....................29
6.2 Conditions to the Obligations of the Purchaser to Close............29
6.3 Conditions to the Obligations of the Shareholders to Close.........31
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER.................................31
7.1 Termination........................................................31
7.2 Effect of Termination..............................................32
7.3 Amendment......................................................... 32
7.4 Extension, Waiver..................................................32
ARTICLE 8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................32
8.1 Survival of Representations and Warranties.........................32
ARTICLE 9 INDEMNIFICATION................................................33
9.1 Indemnification by the Shareholders................................33
9.2 Indemnification by the Purchaser...................................34
9.3 Notice and Defense of Third Party Claims...........................34
9.4 Other Remedies.....................................................35
9.5 Inconsistent Provisions............................................35
9.6 Subrogation to Indemnity Rights....................................35
ARTICLE 10 THE REPRESENTATIVE............................................36
10.1 The Representative.................................................36
ARTICLE 11 MISCELLANEOUS.................................................37
11.1 Expenses...........................................................37
11.2 Entire Agreement, Assignment.......................................37
11.3 Further Assurances.................................................37
11.4 Enforcement of the Agreement.......................................38
11.5 Severability.......................................................38
11.6 Notices............................................................38
11.7 Government Law and Jurisdiction....................................39
11.8 Gender, "Including" is Not Limiting, Descriptive Headings..........40
11.9 Parties in Interest................................................40
11.10 Counterparts.......................................................40
11.11 Incorporation by Reference.........................................40
11.12 Arbitration........................................................41
11.13 Jurisdiction and Venue.............................................42
11.14 Certain ...Definitions.............................................43
EXHIBITS
Exhibit A -.....Escrow Agreement
Exhibit B -.....January Financials
Exhibit C -.....Non-Competition and Confidentiality Agreement
---------
Exhibit D -.....Purchase Price Allocation
---------
Exhibit E -.....Employment Agreement
---------
Exhibit F -.....Opinion of Counsel for the Shareholders
---------
Exhibit G -.....Release of Shareholders
---------
LIST OF SCHEDULES
Schedule 2.2(a)...- Company's Capitalization
---------------
Schedule 2.9...... - Receivables
------------
Schedule 2.10..... - Inventories
-------------
Schedule 2.11..... - Suppliers and Customers
-------------
Schedule 2.13 ....- - Litigation
-------------
Schedule 2.15..... - Employee Benefit Matters
-------------
Schedule 2.16..... - Leases, Contracts and Agreements
-------------
Schedule 2.18(c)..- Governmental Authorizations
----------------
Schedule 2.19(a)..- Description of Insurance
----------------
Schedule 2.20(a)..- Patents, Trademarks and Copyrights
----------------
Schedule 2.21..... - Environmental Matters
-------------
Schedule 2.23..... - Title to Properties
-------------
Schedule 2.25..... - Product Warranties
-------------
Schedule 2.31..... - List of Accounts and Safe Deposit Boxes
------------------
Schedule 11.14(c).- Approved Corporate Reorganization
-----------------
