<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 30, 1999
COLD METAL PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
New York 1-12870 16-1144965
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
8526 South Avenue, Youngtown, Ohio 44514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 758-1194
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective March 30, 1999, the Registrant, acting through its wholly
owned Canadian subsidiary, Cold Metal Products, Limited, disposed of the assets
and certain liabilities of its steel service centers located in Hamilton and
Concord, Ontario, Canada pursuant to an agreement entered into on that date with
Maksteel Inc., an independent automotive steel service center company
headquartered in Mississauga, Ontario, Canada. The service centers employ
approximately 100 people and slit steel for the automotive and industrial goods
markets. The Registrant received consideration of $14.6 million in cash and a
subordinated promissory note due in one year for approximately $1.0 million. The
buyer also assumed $7.1 million of accounts payable. The consideration was
determined pursuant to arm's length negotiations and was based on final net book
value of the assets of the service centers as of March 25, 1999.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information (Unaudited)
Pro Forma Consolidated Condensed Balance Sheet
----------------------------------------------
The Registrant's unaudited pro forma balance sheet gives
effect to the disposition of the service center assets and liabilities as if the
transaction had occurred, for balance sheet purposes, on December 31, 1998. Pro
forma adjustments were made to eliminate the affected assets and liabilities of
the sale, with proceeds received reflected as a reduction of bank debt.
Estimated closing costs were accrued, deferred tax effects were recorded, and a
portion of the foreign currency translation amount was recognized as an
adjustment to equity.
<TABLE>
<CAPTION>
Fiscal Period Ended
December 31, 1998
Condensed Pro Forma Pro Forma
Historical Adjustments Amount
(in thousands)
<S> <C> <C> <C>
Assets:
Current Assets $ 72,004 $ (13,861) $ 58,143
Property, plant and equipment 45,442 (5,619) 39,823
Other non-current assets 11,508 (841) 10,667
----------------------------------
Total assets $ 128,954 $ (20,321) $ 108,633
==================================
Liabilities and shareholders' equity:
Current liabilities $ 31,415 $ (6,167) $ 25,248
Long-term debt 56,710 (13,722) 42,988
Other liabilities 16,055 0 16,055
Shareholders' equity 24,774 (432) 24,342
----------------------------------
Total liabilities and shareholders' equity $ 128,954 $ (20,321) $ 108,633
==================================
</TABLE>
<PAGE> 3
Pro Forma Consolidated Income Statement
---------------------------------------
The following unaudited pro forma statements of operations
have been derived from the Registrant's statements of operations for fiscal
1998 and for the nine month period ended December 31, 1998, and adjust such
information to give effect to the disposition of the service centers as if the
disposition had occurred on April 1, 1997. In preparing the pro forma results
of operations for fiscal 1998 and the nine month period ended December 31,
1998, adjustments have been made for certain corporate allocations which would
remain as costs of the Registrant. Proceeds from the disposition were used to
reduce debt and interest expense is adjusted accordingly. The pro forma
statements of operations are presented for informational purposes only and do
not purport to be indicative of the results of operation that actually would
have resulted if the sale had been consummated on April 1, 1997, nor which may
result from future operations.
<TABLE>
<CAPTION>
Nine Months Ended
December 31, 1998
Actual Pro Forma Pro Forma
Adjustments Amount
(dollars in thousands except per share amounts)
<S> <C> <C> <C>
Net sales $ 186,901 $ (42,673) $ 144,228
Cost of sales 178,525 (45,671) 132,854
------------------------------------------
Gross profit 8,376 2,998 11,374
Selling, general and administrative 11,923 (1,060) 10,863
expenses
Impairment of long-lived assets 3,065 (3,065) 0
Interest expense 3,384 (665) 2,719
------------------------------------------
Income (loss) before income taxes (9,996) 7,788 (2,208)
Income taxes (2,953) (2,092) (861)
------------------------------------------
Net income (loss) $ (7,043) $ 5,696 $ (1,347)
==========================================
Net income (loss) per share $ (1.00) $ .81 $ (.19)
==========================================
Weighted average shares
outstanding 7,054,350 7,054,350 7,054,350
==========================================
</TABLE>
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<TABLE>
<CAPTION>
Fiscal Year Ended
March 31, 1998
Actual Pro Forma Pro Forma
Adjustments Amount
(dollars in thousands except per share amounts)
<S> <C> <C> <C>
Net sales $ 289,213 $ (75,812) $ 213,401
Cost of sales 264,799 (73,180) 191,619
----------------------------------------
Gross profit 24,414 (2,632) 21,782
Selling, general and administrative expenses 16,019 (2,390) 13,629
Interest expense 4,624 (920) 3,704
----------------------------------------
Income before income taxes 3,771 678 4,449
Income taxes 1,438 224 1,662
Net income $ 2,333 $ 454 $ 2,787
========================================
Net income per share $ 0.33 $ 0.06 $ 0.39
========================================
Weighted average shares outstanding 7,142,026 7,142,026 7,142,026
========================================
</TABLE>
(c) Exhibits
2(b) Asset Purchase Agreement between Cold Metal Products, Limited
and Maksteel Inc. dated March 30, 1999 not including schedules setting forth
detailed information regarding the assets and liabilities transferred and
assumed, pension plans, and other employee matters. Copies of schedules to the
Agreement which are not included herewith may be obtained by submitting a
written request to the Company.
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.
COLD METAL PRODUCTS, INC.
BY /s/ Raymond P. Torok
---------------------
Raymond P. Torok
President and Chief Executive Officer
April 14, 1999
<PAGE> 1
Exhibit 99c
COLD METAL PRODUCTS, LIMITED
-and-
MAKSTEEL, INC.
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
March 30, 1999
- --------------------------------------------------------------------------------
Osler, Hoskin & Harcourt
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions.................................................................................... 1
1.2 Certain Rules of Interpretation............................................................... 13
1.3 Knowledge..................................................................................... 14
1.4 Entire Agreement.............................................................................. 14
1.5 Applicable Law................................................................................ 14
1.6 Accounting Principles......................................................................... 14
1.7 Schedules..................................................................................... 14
ARTICLE 2
PURCHASE AND SALE
2.1 Action by Vendor and Purchaser................................................................ 15
2.2 Place of Closing.............................................................................. 16
2.3 Tender........................................................................................ 16
2.4 No Assumption of Liabilities.................................................................. 16
2.5 Assignment of Contracts....................................................................... 17
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price................................................................................ 18
3.2 Satisfaction of Purchase Price................................................................ 18
3.3 Schedule Corrections ......................................................................... 19
3.4 Interest...................................................................................... 20
3.5 Allocation of Purchase Price.................................................................. 20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
4.1 Incorporation and Registration................................................................ 20
4.2 Residence of the Vendor....................................................................... 21
4.3 No Shares..................................................................................... 21
4.4 Title to the Assets........................................................................... 21
4.5 Due Authorization............................................................................. 21
4.6 Enforceability of Obligations................................................................. 21
4.7 Absence of Conflicting Agreements............................................................. 21
4.8 Regulatory Approvals.......................................................................... 22
4.9 Financial Statements.......................................................................... 22
4.10 Absence of Undisclosed Liabilities............................................................ 22
4.11 Absence of Changes and Unusual Transactions................................................... 22
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
4.12 No Joint Venture Interests.................................................................... 24
4.13 Major Suppliers and Customers................................................................. 24
4.14 Condition of Assets........................................................................... 24
4.15 Inventories................................................................................... 24
4.16 Accrued Liabilities........................................................................... 24
4.17 Government Grants............................................................................. 25
4.18 Business in Compliance with Law............................................................... 25
4.19 Governmental Authorizations................................................................... 25
4.20 Restrictive Covenants......................................................................... 25
4.21 Intellectual Property......................................................................... 25
4.22 Equipment Contracts........................................................................... 25
4.23 Real Property................................................................................. 26
4.24 Leased Real Property.......................................................................... 26
4.25 Real Property Generally....................................................................... 26
4.26 Environmental Matters......................................................................... 29
4.27 Employment Matters............................................................................ 30
4.28 Collective Agreement.......................................................................... 32
4.29 Pension Plans and Benefit Plans............................................................... 33
4.30 Material Contracts............................................................................ 35
4.31 Copies of Agreements, etc..................................................................... 36
4.32 Litigation.................................................................................... 36
4.33 Tax Matters................................................................................... 36
4.34 Books and Records............................................................................. 37
4.35 Trade Allowances.............................................................................. 37
4.36 Third Party Consents.......................................................................... 37
4.37 Location of the Assets........................................................................ 37
4.38 No Broker..................................................................................... 37
4.39 Year 2000 Compliance.......................................................................... 37
4.40 Full Disclosure............................................................................... 38
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Incorporation and Residence................................................................... 38
5.2 Due Authorization............................................................................. 38
5.3 Enforceability of Obligations................................................................. 38
5.4 Absence of Conflicting Agreements............................................................. 39
5.5 Litigation.................................................................................... 39
5.6 Goods and Services Tax and Harmonized Sales Tax Registration.................................. 39
5.7 No Broker..................................................................................... 39
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 Non-Waiver.................................................................................... 40
6.2 Nature and Survival........................................................................... 40
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
7.1 Truth and Accuracy of Representations of Vendor at the Closing Time........................... 41
7.2 Performance of Obligations.................................................................... 41
7.3 Receipt of Closing Documentation.............................................................. 41
7.4 Opinion of Vendor's Counsel................................................................... 41
7.5 Consents to Assignment........................................................................ 42
7.6 Consents, Authorizations and Registrations.................................................... 42
7.7 No Proceedings................................................................................ 42
7.8 Encumbrances.................................................................................. 42
7.9 Real Estate Title Work........................................................................ 42
7.10 Non-Competition............................................................................... 42
7.11 Actual Possession............................................................................. 42
7.12 Releases...................................................................................... 43
7.13 Support Services Agreement ................................................................... 43
7.14 Remediation Agreement......................................................................... 43
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT
8.1 Truth and Accuracy of Representations of the Purchaser at Closing Time........................ 43
8.2 Performance of Obligations.................................................................... 43
8.3 Opinion of Purchaser's Counsel................................................................ 44
8.4 Competition Act Approval...................................................................... 44
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 Conduct of Business Prior to Closing.......................................................... 44
9.2 Access for Investigation...................................................................... 45
9.3 Confidentiality............................................................................... 46
9.4 Actions to Satisfy Closing Conditions......................................................... 47
9.5 Employees..................................................................................... 47
9.6 Pension and Other Benefit Plans............................................................... 48
9.7 Sales and Transfer Taxes...................................................................... 53
...................................................................................................... 53
9.8 Goods and Services Tax and Harmonized Sales Tax............................................... 53
9.9 Accounts Receivable Election.................................................................. 53
9.10 Preservation of Records....................................................................... 53
9.11 Risk of Loss.................................................................................. 54
9.12 Accounts Receivable Buy-Back.................................................................. 54
9.13 Surveys....................................................................................... 55
9.14 Payment of Trade Payables .................................................................... 55
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnifications for Breaches of Covenants and Warranty, etc........................... 55
10.2 Environmental Indemnity....................................................................... 56
10.3 Product Liability and Warranties.............................................................. 57
10.4 Indemnification Procedures for Third Party Claims............................................. 57
10.5 Bulk Sales Act Indemnity...................................................................... 58
ARTICLE 11
GENERAL
11.1 Public Notices................................................................................ 59
11.2 Expenses...................................................................................... 59
11.3 Notices....................................................................................... 59
11.4 Assignment.................................................................................... 61
11.5 Planning Act (Ontario)........................................................................ 61
11.7 Further Assurances ........................................................................... 62
11.8 Counterparts.................................................................................. 62
</TABLE>
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<PAGE> 6
THIS ASSET PURCHASE AGREEMENT is made this 30th of March, 1999
BETWEEN:
COLD METAL PRODUCTS, LIMITED, a corporation governed
by the laws of Ontario
(the "Vendor")
- and -
MAKSTEEL INC., a corporation governed by the laws of Ontario
(the "Purchaser")
RECITALS:
A. The Vendor carries on a flat rolled steel service centre business
through two such centres (the "Business").
B. The Vendor has agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendor the "Purchased Assets" (as
hereinafter defined) and the Purchaser has agreed to assume the
"Assumed Liabilities" (as hereinafter defined), on the terms and
conditions of this Agreement.
NOW THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement the following words and terms
shall have the meanings set out below:
<PAGE> 7
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"ACCOUNTS PAYABLE" means the amounts in connection with the Business
due and owing to traders, suppliers and other persons in the ordinary
course of business as of the Time of Closing (other than amounts due
and owing to persons who are not dealing at Arm's Length with the
Vendor) as listed on Schedule 1.1(a);
"ACCOUNTS RECEIVABLE" means the accounts receivable, bills receivable,
trade accounts, book debts and insurance claims recorded as receivable
in the Books and Records and other amounts due to the Vendor in
connection with the Business including any refunds and rebates
receivable in connection with the Business or the Purchased Assets as
listed in Schedule 1.1(b), and the benefit of all security (including
cash deposits), guarantees and other collateral held by the Vendor in
connection with the Business;
"ACCRUED LIABILITIES" means the accrued liabilities of the Business
incurred in the ordinary course of business, including accruals for
vacation pay, customer rebates and allowances for product returns,
shown on Schedule 1.1(a);
"AFFILIATE" shall have the meaning given in the Business Corporations
Act (Ontario), as amended from time to time;
"AGREEMENT" means this Asset Purchase Agreement, including all
schedules, and all instruments supplementing or amending or confirming
this Agreement and references to "Article" or "Section" mean and refer
to the specified Article or Section of this Agreement;
"ASSUMED LIABILITIES" means (i) the Accounts Payable plus (ii) the
Accrued Liabilities plus (iii) the liabilities and obligations of the
Vendor relating to the Business accrued due on, or accruing due
subsequent to, the Effective Date under the Contracts, the Governmental
Authorizations and the Permitted Encumbrances, plus (iv) the
liabilities and obligations of the Vendor accrued due on, or accruing
due subsequent to, the Closing Date in connection with the Transferred
Employees plus (v) any other obligations or liabilities specifically
provided for under this Agreement;
"BALANCE SHEET" means the balance sheet of the Business as at January
31, 1999 forming part of the Financial Statements;
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies, practices, or understandings, whether oral or written, formal
or informal, funded or unfunded,
<PAGE> 8
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registered or unregistered to which the Vendor is a party to or bound
by or under which the Vendor has, or will have, any liability or
contingent liability, relating to:
(a) incentives;
(b) performance compensation;
(c) bonuses;
(d) profit sharing;
(e) deferred compensation;
(f) share purchase, share option, stock appreciation, phantom
stock;
(g) hospitalization, health, medical, dental treatment or
expenses;
(h) disability or wage continuation benefits;
(i) supplementary employment benefit, life insurance, death or
survivor's benefits, arrangements or understandings;
(j) employee loans;
(k) accrued sick pay or vacation pay;
(l) severance or termination pay, or separation from services
benefits; or
(m) other benefits of any other type offered through any
arrangement that could be characterized as providing for additional
compensation or fringe benefits,
with respect to any of its Employees or former employees, (or any
dependents or beneficiaries of any such Employees or former employees)
individuals working on contract with it or other individuals providing
services to it of a kind normally provided by employees or eligible
dependents of such persons, but shall not include the Pension Plan(s);
<PAGE> 9
-4-
"BOOKS AND RECORDS" means all books, records, books of account, sales
and purchase records (including copies of sales and purchase invoices),
lists of suppliers and customers, lists of Inventory, lists of Accounts
Receivable, lists of Accounts Payable, credit information, research
materials, research and development files, formulae, business reports,
plans and projections and all other documents, surveys, plans, files,
records, correspondence, and other data and information, financial or
otherwise of the Vendor, relating to the Business or the Purchased
Assets, including all data and information stored on computer-related
or other electronic media;
"BUSINESS" shall have the meaning given to it in the first recital of
this Agreement;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
the principal commercial banks in the City of Toronto are open for
business during normal banking hours;
"CLAIMS" means any claim, demand, action, cause of action, damage,
loss, cost, liability or expense, including reasonable professional
fees and all costs incurred in investigating or pursuing any of the
foregoing or any proceeding relating to any of the foregoing;
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of the Purchased Assets under this Agreement;
"CLOSING DATE" means March 30, 1999 or such other date as the Parties
may agree in writing as the date upon which the Closing shall take
place;
"CLOSING TIME" means 9 O'clock a.m. Toronto time, on the Closing Date
or such other time on such date as the Parties may agree in writing as
the time at which the Closing shall take place;
"COLLECTIVE AGREEMENT" means the collective agreements and all related
documents including all benefit agreements, letters of understanding,
letters of intent and other written communications with bargaining
agents relating to the Employees or the Business by which the Vendor is
bound or which impose any obligations upon the Vendor or set out the
understanding of the parties thereto with respect to the meaning of any
provisions of such collective agreements;
<PAGE> 10
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"COMPETITION ACT APPROVAL" means (a) the issuance of an advance ruling
certificate pursuant to Section 102 of the Competition Act (Canada) by
the Director of Investigation and Research appointed under the
Competition Act (Canada) to the effect that he is satisfied that he
would not have sufficient grounds upon which to apply to the
Competition Tribunal for an order under Section 92 of such Act with
respect to the transactions contemplated by this Agreement; or (b) that
the waiting period under Section 123 of the Competition Act (Canada)
shall have expired;
"CONTRACTS" means all contracts, licences, leases, agreements,
commitments, entitlements and engagements of the Vendor relating to the
Business or the Purchased Assets and including all quotations, orders
or tenders for contracts which remain open for acceptance and any
manufacturers' or suppliers' warranty, guarantee or commitment (express
or implied);
"CONTROL" shall have the meaning given in the Business Corporations Act
(Ontario);
"DISABLED EMPLOYEE" means a Non- Unionized Employee who was not
available for work at the Business on the Closing Date due to illness,
injury, accident or any other disabling condition;
"EFFECTIVE DATE" means March 24, 1999 or such other date as the Parties
may agree in writing;
"EMPLOYEES" means only those persons employed or retained by the Vendor
in connection with the Business listed on Schedule 4.27;
"ENCUMBRANCES" means any pledge, lien, charge, security interest,
lease, title retention agreement, mortgage, restriction, development or
similar agreement, easement, right-of-way, title defect, option or
adverse claim or encumbrance of any kind or character whatsoever;
"ENVIRONMENT" means the environment or natural environment as defined
in any Environmental Law and includes air, surface, water, ground
water, land surface, soil and subsurface strata;
"ENVIRONMENTAL APPROVALS" means all permits, certificates, licences and
authorizations; all consents, instructions or directions having the
force of law; and all registrations or
<PAGE> 11
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approvals issued or required by Governmental Authorities pursuant to
Environmental Laws with respect to the operation of the Business or
pertaining to the Purchased Assets and includes any sewer surcharge
agreement;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to the
protection of the Environment, and public health and safety, and
includes those relating to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, Release and disposal of Hazardous
Substances;
"EQUIPMENT CONTRACTS" means the motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
agreements listed in Schedule 4.22;
"EXCLUDED ASSETS" means:
(a) all cash, bank balances, moneys in possession of banks and
other depositories, term or time deposits and similar cash
items of, owned or held by or for the account of the Vendor;
(b) all shares, notes, bonds, debentures or other securities of or
issued by corporations or other persons and all certificates
or other evidences of ownership thereof owned or held by or
for the account of the Vendor;
(c) the corporate, financial, taxation and other records of the
Vendor not pertaining exclusively or primarily to the
Business;
(d) all extra-provincial, sales, excise or other licences or
registrations issued to or held by the Vendor, whether in
respect of the Business or otherwise;
(e) the benefit of any litigation
(f) any refunds in respect of reassessments for Taxes paid and
pertaining to the Business or Purchased Assets prior to
Closing;
(g) refundable Taxes and duty drawbacks;
<PAGE> 12
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(h) all amounts owing from any director, officer, former director
or officer, shareholder, employee or any Affiliate;
(i) all insurance policies and the right to receive insurance
recoveries under such policies;
(j) Prepaid Expenses and Deposits;
(k) Intellectual Property;
(l) Goodwill;
(m) Leased Real Property and Real Property Leases, if any.
(n) scrap metal removed by the Vendor from the Real Property prior
to Closing;
(o) the Vendor's storage facility municipality known as Building
18, 65 Imperial Street, Hamilton, Ontario; and
(p) the mainframe computer at Youngstown, Ohio and the Stelplan
software.
"FINANCIAL STATEMENTS" means the unaudited pro forma financial
statements of the Business for the fiscal year ended March 31, 1998,
together with interim financial statements of the Business for the
period April 1, 1998 to January 31, 1999, inclusive, consisting of a
balance sheet and a statement of earnings, a copy of which are annexed
as Schedule 4.9;
"FIXED ASSETS" means the fixed assets, machinery, equipment, fixtures,
furniture, furnishings, vehicles, material handling equipment,
implements, parts, spare parts, tools, jigs, discs, molds, patterns and
tooling listed in Schedule 4.14;
"GOODWILL" means the goodwill of the Business and all rights in respect
of the name "Cold Metal Products" and any variations of such name, but
does not include Books and Records, information and documents relevant
thereto and the exclusive right of the Purchaser to represent itself as
carrying on the Business in succession to the Vendor;
<PAGE> 13
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"GOVERNMENTAL AUTHORITIES" means any government, regulatory authority,
governmental department, bureau, agency, commission, board, tribunal,
or court or other law, rule or regulation-making entity having or
purporting to have jurisdiction on behalf of any nation, or province or
state or other subdivision thereof or any municipality, district or
other subdivision thereof;
"GOVERNMENTAL AUTHORIZATION" means all authorizations, approvals,
including Environmental Approvals, orders, consents, directives,
notices, licences, permits variances, registrations or similar rights
issued to or required by the Vendor in connection with the Business or
any of the Purchased Assets by any Governmental Authorities;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance, dangerous substance or dangerous good as defined,
judicially interpreted or identified in any Environmental Law,
including any asbestos or asbestos containing materials;
"INTELLECTUAL PROPERTY" means all patents, copyrights, registered and
unregistered trademarks, trade-names, logos, commercial symbols,
industrial designs, circuit topographies (including applications for
all of the foregoing and renewals, divisions, extensions and reissues,
where applicable, relating thereto), inventions, licences, trade
secrets, patterns, drawings, computer software, formulae, technical
information, research data, concepts, methods, procedures, designs,
know-how, and all other intellectual property relating to the Business
or the Purchased Assets;
"INTERIM PERIOD" means the period between the Effective Date and
Closing;
"INVENTORIES" means the inventories of raw materials, work-in-progress,
finished goods and by-products, operating supplies and packaging
materials and other inventories listed in Schedule 4.15;
"LAWS" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, tax treaties, policies,
notices, directions and judgements or other requirements of any
Governmental Authority;
"LEASED REAL PROPERTY" means all premises which are leased, subleased,
licensed or otherwise occupied by the Vendor as tenant or licensee and
the interest of the Vendor in all
<PAGE> 14
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plants, buildings, structures, fixtures, erections, improvements,
easements, rights-of-way, spur tracks and other appurtenances situate
on or forming part of such premises;
"MATERIAL CONTRACT" means any Contract (i) involving aggregate payments
to or by the Vendor in excess of $100,000, (ii) involving rights or
obligations that may reasonably extend beyond three (3) months, (iii)
which is outside the ordinary course of business, or (iv) which does
not terminate or cannot be terminated without penalty on less than one
(1) month's notice;
"NON-UNIONIZED EMPLOYEE" has the meaning given in subsection 9.5(b);
"NOTICE" shall have the meaning given in Section 11.3;
"OCCUPATIONAL HEALTH AND SAFETY LAWS" means all Laws relating in full
or in part to the protection of employee health and safety and safety
in the workplace;
"PARTIES" means the Vendor and the Purchaser collectively, and "Party"
means any one of them;
"PENSION PLAN(S)" means each plan, arrangement, agreement, program,
policy or practice to which the Vendor is a party to or bound by or
under which the Vendor has any liability or obligation with respect to
its Employees or former employees (or their eligible beneficiaries and
dependants) that is a "registered pension plan" as that term is defined
in subsection 249(1) of the Income Tax Act (Canada) or other pension
plan or retirement arrangement, including any group registered
retirement savings plan or supplemental pension or retirement plans;
"PERMITTED ENCUMBRANCES" means the Encumbrances listed in Schedule 4.4;
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and a
natural person in such person's capacity as trustee, executor,
administrator or other legal representative;
"PREPAID EXPENSES AND DEPOSITS" means all amounts prepaid in connection
with the Business or the Purchased Assets including taxes, business
taxes, rents, telephone and
<PAGE> 15
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insurance premiums (but excluding income or other taxes which are
personal to the Vendor and any amounts paid in respect of the Pension
Plans or Benefit Plans) and all deposits with any public utility or any
Governmental Authority;
"PRIME RATE" means the prime rate of interest per annum quoted by Bank
of Montreal from time to time as its reference rate of interest for
Canadian dollar loans made to its commercial customers in Canada and
which it refers to as its "prime rate", as such rate may be changed
from time to time, and for greater certainty, the Prime Rate is not
necessarily the lowest rate of interest charged by Bank of Montreal to
its customers;
"PURCHASE PRICE" shall have the meaning given in Section 3.1;
"PURCHASED ASSETS" means all of the Vendor's right, title and interest
in, to and under the assets, property and undertaking, other than the
Excluded Assets, owned or used or held by Vendor for use in, or in
respect of the operation of, the Business, including the following
properties, assets and rights:
(a) the Real Property;
(b) the Contracts, including the Material Contracts and the
Equipment Contracts;
(c) the Inventories;
(d) the Fixed Assets;
(e) the Accounts Receivable;
(f) the Books and Records;
(g) the Government Authorizations; and
(h) all other rights, properties and assets (other than any
Excluded Assets) of the Vendor used primarily in the Business,
of whatsoever nature or kind and wherever situated;
"PURCHASER'S BENEFIT PLANS" has the meaning given in subsection 9.6(m);
<PAGE> 16
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"PURCHASER'S COUNSEL" means the firm of Osler, Hoskin & Harcourt;
"PURCHASER'S NON-UNION PENSION PLAN" has the meaning given in
subsection 9.6(b);
"PURCHASER'S UNION PENSION PLAN" has the meaning given in Section
9.6(f);
"REAL PROPERTY" means the real properties municipally known as 215
Doughton Road, Concord, Ontario and 475 Kenora Avenue, Hamilton,
Ontario, as more particularly described in Schedule 4.23;
"REAL PROPERTY LEASES" means those agreements to lease, leases,
subleases or licences or other occupancy rights pursuant to which the
Vendor uses or occupies any part of the Leased Real Property as tenant
or licensee;
"RELEASE" has the meaning prescribed in any Environmental Law and
includes any release, spill, leak, pumping, pouring, emission,
emptying, discharge, injection, escape, leaching, disposal, dumping,
deposit, spraying, burial, abandonment, incineration, seepage, or
placement;
"REMEDIAL ORDER" means any administrative complaint, direction, order
or sanction issued, filed or imposed by any Governmental Authority
pursuant to any Environmental Laws and includes any order requiring any
remediation or clean-up of any Hazardous Substance, or requiring that
any Release or any other activity be reduced, modified or eliminated;
"TAX RETURNS" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"TAXES" includes all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by any
Governmental Authority, together with all interest, penalties, fines,
additions to tax or other additional amounts imposed in respect
thereof, including those levied on, or measured by, or referred to as
income, gross receipts, profits, capital, transfer, land transfer,
sales, goods and services, harmonized sales, use, value-added, excise,
stamp, withholding, business, franchising, property, payroll,
employment, health, employer health, social services, education and
social security taxes, all surtaxes, all customs duties and import and
export taxes, all license, franchise and
<PAGE> 17
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registration fees and all unemployment or employment insurance, health
insurance and Canada, Quebec and other government pension plan premiums
and contributions;
"TRANSFERRED EMPLOYEES" means Employees who become employed by the
Purchaser after Closing either because their employment is governed by
the terms of the Collective Agreement or because they are Non-Unionized
Employees (other than Disabled Employees) who have accepted an offer of
employment from the Purchaser as of the Closing Date or are Disabled
Employees who have accepted an offer of employment from the Purchaser
in accordance with section 9.5(b);
"VENDOR'S BENEFIT PLANS" means the Benefit Plans listed in Schedule
4.29;
"VENDOR'S COUNSEL" means the firm of Blake, Cassels & Graydon;
"VENDOR'S NON-UNION PENSION PLAN" means The Pension Plan for Salaried
Employees of Cold Metal Products, Limited;
"VENDOR'S UNION PENSION PLAN" means The Pension Plan for Hourly
Employees of Cold Metal Products, Limited;
"YEAR 2000 COMPLIANT" means the status of whether:
(a) all dates receivable by software and hardware used in the
Business or Purchased Assets (input data) have a century
indicator, all dates produced by software and hardware used in
the Business or Purchased Assets (output or results) have a
century indicator;
(b) date calculations involving either a single century or
multiple centuries neither cause an abnormal ending nor
generate incorrect results;
(c) when sorting by date, all records are sorted by accurate
sequence; and when the date is used as a key, records are read
and written in accurate sequence; and
(d) leap years are determined by the following standard:
<PAGE> 18
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(i) if the year is evenly divisible by 4, it is a leap
year, except for years ending in 00; and
(ii) a year ending in 00 is a leap year if it is evenly
divisible by 400.
1.2 CERTAIN RULES OF INTERPRETATION - In this Agreement and the Schedules:
(a) TIME - time is of the essence in the performance of the
Parties' respective obligations;
(b) CURRENCY - unless otherwise specified, all references to money
amounts are to Canadian currency;
(c) HEADINGS - descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles or
Sections;
(d) SINGULAR, ETC. - use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude the
application of any provision of this Agreement to such person or
persons or circumstances as the context otherwise permits;
(e) CONSENT - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification of
such approval or consent is not delivered within the applicable time
limited, then, unless otherwise specified, the Party whose consent or
approval is required shall be conclusively deemed to have withheld its
approval or consent;
(f) CALCULATION OF TIME - unless otherwise specified, time periods
within or following which any payment is to be made or act is to be
done shall be calculated by excluding the day on which the period
commences and including the day on which the period ends and by
extending the period to the next Business Day following if the last day
of the period is not a Business Day;
(g) BUSINESS DAY - whenever any payment is to be made or action
to be taken under this Agreement is required to be made or taken on a
day other than a Business Day, such payment shall be made or action
taken on the next Business Day following such day;
<PAGE> 19
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(h) INCLUSION - where the words "including" or "includes" appear
in this Agreement, they mean "including (or includes) without
limitation".
1.3 KNOWLEDGE - Any reference to the knowledge of any Party shall mean to
the best of the knowledge, information and belief of such Party after reviewing
all relevant records and making due inquiries regarding the relevant matter of
all relevant officers and directors of such Party.
1.4 ENTIRE AGREEMENT - This Agreement together with the agreements and
other documents to be delivered pursuant to this Agreement, constitute the
entire agreement between the Parties pertaining to the subject matter of this
Agreement and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties including the letter of
intent between the Parties dated March 1, 1999 and the confidentiality agreement
between Cold Metal Products, Inc., the Vendor and the Purchaser dated February
4, 1999, and there are no warranties, representations or other agreements
between the Parties in connection with the subject matter of this Agreement
except as specifically set forth in this Agreement and any document delivered
pursuant to this Agreement. No supplement, modification or waiver or termination
of this Agreement shall be binding unless executed in writing by the Party to be
bound thereby.
1.5 APPLICABLE LAW - This Agreement shall be construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein
and shall be treated, in all respects, as an Ontario contract.
1.6 ACCOUNTING PRINCIPLES - All reference to generally accepted accounting
principles means to principles recommended, from time to time, in the Handbook
of the Canadian Institute of Chartered Accountants and all accounting terms not
otherwise defined in this Agreement have the meanings assigned to them in
accordance with Canadian generally accepted accounting principles.
1.7 SCHEDULES - The schedules to this Agreement, as listed below, are an
integral part of this Agreement:
Schedule Description
-------- -----------
Schedule 1.1(a) Accounts Payable and Accrued Liabilities
Schedule 1.1(b) Accounts Receivable
Schedule 3.2 Form of Promissory Note
<PAGE> 20
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Schedule 3.7 Allocation of Purchase Price
Schedule 4.4 Permitted Encumbrances
Schedule 4.9 Financial Statements
Schedule 4.11 Undisclosed Liabilities
Schedule 4.14 Fixed Assets
Schedule 4.15 Inventories
Schedule 4.19 Licences
Schedule 4.18 Compliance with Law
Schedule 4.21 Intellectual Property
Schedule 4.22 Equipment Contracts
Schedule 4.23 Real Property
Schedule 4.25 Real Property Surveys
Schedule 4.26 Environmental Matters
Schedule 4.27 Employment Matters
Schedule 4.28 Collective Agreement
Schedule 4.29 Pension Plans and Benefit Plans
Schedule 4.30 Material Contracts
Schedule 4.35 Trade Allowances
Schedule 4.36 Third Party Consents and Notifications
Schedule 4.37 Location of the Assets
Schedule 7.4 Opinion of Vendor's Counsel
Schedule 7.10 Non-Competition Agreement
Schedule 7.13 Support Services Agreement
Schedule 7.14 Environmental Indemnification and Remediation Agreement
Schedule 8.3 Opinion of Purchaser's Counsel
Schedule 9.6 Actuarial Methods and Assumptions
ARTICLE 2
PURCHASE AND SALE
2.1 ACTION BY VENDOR AND PURCHASER - At the Closing Time but with effect
as of and from the Effective Date:
<PAGE> 21
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(a) PURCHASE AND SALE OF PURCHASED ASSETS - the Vendor shall sell
and the Purchaser shall purchase the Purchased Assets for the Purchase
Price payable as provided in this Agreement;
(b) ASSUMPTION OF ASSUMED LIABILITIES - the Purchaser shall assume
the Assumed Liabilities;
(c) PAYMENT OF PURCHASE PRICE - the Purchaser shall deliver to the
Vendor the Purchase Price as provided in Section 3.2; and
(d) TRANSFER AND DELIVERY OF PURCHASED ASSETS - the Vendor shall
execute and deliver to the Purchaser all such bills of sale,
assignments, instruments of transfer, deeds, assurances, consents and
other documents as shall be necessary to effectively transfer to the
Purchaser all the Vendor's right, title and interest in, to and under,
or in respect of, the Purchased Assets; shall deliver up to the
Purchaser possession of the Purchased Assets, free and clear of all
Encumbrances (other than Permitted Encumbrances). In connection with
the transfer of ownership to the Purchaser of the Purchased Assets, the
Vendor shall effect the registrations, recordings and filings with
public authorities required to discharge any Encumbrances (other than
Permitted Encumbrances) on the Purchased Assets or which may be
required to be made or filed by it and the Purchaser shall effect the
other registrations, recordings and filings with public authorities.
2.2 PLACE OF CLOSING - The Closing shall take place at the Closing Time at
the offices of the Purchaser's Solicitors located at Toronto, or at such other
place as may be agreed upon by the Vendor and the Purchaser.
2.3 TENDER - Any tender of documents or money under this Agreement may be
made upon the Parties or their respective counsel and money may be tendered by
official bank draft drawn upon a Canadian chartered bank or by negotiable cheque
payable in Canadian funds and certified by a Canadian chartered bank or trust
company or, with the consent of the Party entitled to payment, by wire transfer
of immediately available funds to the account specified by that Party.
Notwithstanding the foregoing, the payment contemplated by subsection 3.2(c)
shall be made by wire transfer to BNY Financial Corp. ("BNY") against the
release of all BNY's Encumbrances on the Purchased Assets.
2.4 NO ASSUMPTION OF LIABILITIES - For greater certainty, the Purchaser is
not assuming and shall not be responsible for any of the liabilities, debts or
obligations of the Vendor, whether present or
<PAGE> 22
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future, absolute or contingent and whether or not relating to the Business,
other than the Assumed Liabilities.
2.5 ASSIGNMENT OF CONTRACTS - Nothing in this Agreement shall be construed
as an assignment of, or an attempt to assign to the Purchaser, any Contract or
Governmental Authorization which, as a matter of law or by its terms, is (i) not
assignable, or (ii) not assignable without the approval or consent of the issuer
thereof or the other party or parties thereto, without first obtaining such
approval or consent (collectively "Non-Assignable Rights"). In connection with
such Non-Assignable Rights, and without prejudice to the rights of the Purchaser
under Section 7.5, the Vendor shall, at the request of the Purchaser:
(a) apply for and use all reasonable efforts to obtain all
consents or approvals contemplated by the Contracts or Governmental
Authorization, in a form satisfactory to the Purchaser acting
reasonably;
(b) co-operate with the Purchaser in any reasonable and lawful
arrangements designed to provide the benefits of such Non-Assignable
Rights to the Purchaser, including holding any such Non-Assignable
Rights in trust for the Purchaser or acting as agent for the Purchaser;
(c) enforce any rights of the Vendor arising from such
Non-Assignable Rights against the issuer thereof or the other party or
parties thereto;
(d) take all such actions and do, or cause to be done, all such
things at the request of the Purchaser as shall reasonably be necessary
and proper in order that the value of any NonAssignable Rights shall be
preserved and shall enure to the benefit of the Purchaser; and
(e) pay over to the Purchaser, all monies collected by or paid to
the Vendor in respect of such Non-Assignable Rights.
The Purchaser shall indemnify and save the Vendor harmless from any Claims in
respect of any NonAssignable Rights in connection with or arising as a result of
any action of the Vendor taken in accordance with the foregoing. If the Vendor
is unable to lawfully provide the benefit of any Governmental Authorization to
the Purchaser, it shall not, at any time, use such Governmental Authorization
for its own purposes or assign or provide the benefit of such Governmental
Authorization to any other party.
<PAGE> 23
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2.6 ECONOMIC EFFECT OF TRANSFER - It is the intention of the parties that
the economic effect of the purchase and sale of the Purchased Assets pursuant to
this Agreement shall be as of the Effective Date. Accordingly, subject to
compliance with the terms of this Agreement and from and after the Effective
Date to the Closing Date, the Purchased Assets and the Business shall be and
shall have been held by the Vendor in trust for and on behalf of the Purchaser
and all operations of the Business shall be and shall have been conducted by the
Vendor for and on behalf of, and for the economic benefit of the Purchaser and
any income or loss of the Business from and after the Effective Date shall be
for the account of the Purchaser. Accordingly, all assets acquired or
liabilities incurred by the Business in accordance with the terms of this
Agreement from and after the Effective Date shall be assets and liabilities of
the Purchaser and the Vendor shall account to the Purchaser for the income and
loss of the Business and any changes in the assets and liabilities of the
Business from the Effective Date in accordance with the terms of this Agreement.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE - The amount payable by the Purchaser for the Purchased
Assets, subject to any adjustments required by Section 3.3 and subsection 9.6(j)
and exclusive of all applicable sales and transfer taxes, shall be $35,522,000
(the "Purchase Price").
3.2 SATISFACTION OF PURCHASE PRICE - The Purchaser shall pay and satisfy
the Purchase Price as follows:
(a) as to the amount equal to the book value as at the Effective
Date of the Assumed Liabilities, by the assumption by the Purchaser of
the Assumed Liabilities;
(b) as to $1.5 million, by the delivery of the promissory note in
the form attached as Schedule 3.2; and
(c) as to the balance, by payment at the Closing Time in
accordance with Section 2.3.
<PAGE> 24
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3.3 SCHEDULE CORRECTIONS -
(a) DELIVERY OF OBJECTION NOTICE - In the event that the Purchaser
determines in good faith that Schedules 1.1(a), 1.1(b), 4.14 and 4.15
are incorrect in any way, the Purchaser shall so advise the Vendor by
delivery to the Vendor of a written notice (the "Objection Notice")
within forty-five (45) days after the date of this Agreement. The
Objection Notice shall set out the reasons for the Purchaser's
objection as well as the amount under dispute and reasonable details of
the calculation of such amount.
(b) AGREEMENT OF PARTIES - In the event that the Parties agree on
a resolution of the dispute set out in the Objection Notice, the
Parties shall confirm this resolution in writing and shall thereafter
be bound by such resolution.
(c) ARBITRATION - In the event that the Parties are unable to
settle any dispute set out in the Objection Notice within thirty (30)
days after the delivery by the Purchaser to the Vendor of the Objection
Notice, the dispute shall forthwith, and in any event within sixty (60)
days after the delivery by the Purchaser to the Vendor of the Objection
Notice, be referred to arbitration by a partner of Ernst & Young LLP
Chartered Accountants or, if such firm is unable or unwilling to act,
KPMG LLP, Chartered Accountants or its successor as a single
arbitrator, if the Parties can agree upon one arbitrator, or otherwise
by three arbitrators, of whom one shall be appointed by the Purchaser
and one shall be appointed by the Vendor and the third shall be chosen
by the first two named arbitrators. The arbitration and the appointment
of the arbitrator shall, except to the extent provided for in this
Section, be conducted in Toronto in accordance with the Arbitrations
Act (Ontario). The Purchaser and the Vendor shall cooperate in
completing any arbitration as expeditiously as possible and the
arbitrators may hire such experts as may appear to be appropriate. If a
single arbitrator is used, all of the costs and expenses of the
arbitration shall be borne equally by the Parties or in such other
manner as the arbitrator may determine to be appropriate. If three
arbitrators are used the costs and expenses of the third arbitrator and
of any experts engaged by such arbitrator shall be borne equally by the
Parties and each Party shall pay the costs and expenses of the
arbitrator appointed by it. Arbitration under this Section shall be in
substitution for and precludes the bringing of any action in any court
in connection with any objection made by the Purchaser pursuant to this
Section.
(d) DETERMINATION OF ARBITRATOR - The determination of the
arbitrator shall be made within thirty (30) days after the date on
which the dispute was referred to it and the
<PAGE> 25
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determination of the arbitrator shall be final and binding on all
Parties. The Purchase Price shall be increased to the extent the
arbitrator determines that items included in Schedule 1.1(a) ought not
to have been included or items which ought to have been included in
Schedules 1.1(b), 4.14 or 4.15 were omitted and shall be decreased to
the extent that the arbitrator determines that items which ought to
have been included in Schedule 1.1(a) were omitted or items included in
Schedules 1.1(b), 4.14 or 4.15 ought not to have been included.
(e) PAYMENT IN ACCORDANCE WITH DETERMINATION - Within five (5)
days after resolution, by agreement of the Parties, of the dispute
which was the subject of the Objection Notice or, failing such
resolution, within five (5) days after the final determination of the
arbitrator, the Vendor or the Purchaser, as the case may be, shall pay
to the other the amount by which the Purchase Price is to be adjusted
as a result of such resolution or final determination.
3.4 INTEREST - All amounts paid as adjustments to the Purchase Price under
Section 3.3 shall be paid together with interest thereon calculated monthly from
the Closing Date to the date of payment, at the Prime Rate quoted by the Bank of
Montreal on the Closing Date.
3.5 ALLOCATION OF PURCHASE PRICE - The Purchase Price shall be allocated in
accordance with the provisions of Schedule 3.7 provided that if the Purchase
Price shall be adjusted pursuant to Section 3.3 and subsection 9.6(j), the
amount of adjustment required shall, if such amount cannot be reasonably
allocated to a particular asset, be allocated on a pro rata basis among the
various categories of assets listed in Schedule 3.7. The Vendor and the
Purchaser agree to report the purchase and sale of the Purchased Assets in any
returns required to be filed under the Income Tax Act (Canada) and other
taxation statutes in accordance with the provisions of Schedule 3.7, as
adjusted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor hereby represents and warrants to the Purchaser, the matters set out
below.
4.1 INCORPORATION AND REGISTRATION - The Vendor is a corporation duly
incorporated and validly existing under the laws of Ontario and has all
necessary corporate power, authority and capacity to own the Purchased Assets
and to carry on the Business as presently conducted. Neither the nature of the
Business nor the location or character of the Purchased Assets requires it to be
registered,
<PAGE> 26
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licensed or otherwise qualified as an extra-provincial or foreign corporation in
any jurisdiction where it is not duly registered, licensed or otherwise
qualified for such purpose, other than jurisdictions where the failure to be so
registered, licensed or otherwise qualified would not have a material adverse
effect on the Business.
4.2 RESIDENCE OF THE VENDOR - The Vendor is not a non-resident of Canada
for the purposes of the Income Tax Act (Canada).
4.3 NO SHARES - The Purchased Assets do not include any interest in any
shares of any corporation.
4.4 TITLE TO THE ASSETS - The Vendor is the absolute beneficial owner of
the personal property forming part of the Purchased Assets with good and valid
title, free and clear of all Encumbrances other than Permitted Encumbrances and
those Encumbrances set out on Schedule 4.4 which are to be discharged prior to
Closing and is exclusively entitled to possess and dispose of same (subject
only, in the case of Contracts or Governmental Authorizations, to the necessity
for obtaining consents to their assignment). There has been no assignment,
subletting or granting of any licence (of occupation or otherwise) of or in
respect of any of the Purchased Assets or any granting of any agreement or right
capable of becoming an agreement or option for the purchase of the Purchased
Assets other than pursuant to the provisions of, or as disclosed in, this
Agreement or pursuant to purchase orders accepted by the Vendor in the ordinary
course.
4.5 DUE AUTHORIZATION - The Vendor has all necessary corporate power,
authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of the
Vendor.
4.6 ENFORCEABILITY OF OBLIGATIONS - This Agreement constitutes a valid and
binding obligation of the Vendor enforceable against it in accordance with its
terms, subject to limitations with respect to enforcement imposed by law in
connection with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought.
4.7 ABSENCE OF CONFLICTING AGREEMENTS - Except for those Contracts and
Governmental Authorizations which require consent to their assignment or
transfer and the requirement for Competition Act Approval, the Vendor is not a
party to, bound or affected by or subject to any
<PAGE> 27
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indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree, licence, permit or law
which would be violated, contravened, breached by, or under which default would
occur or an Encumbrance would be created as a result of the execution and
delivery of this Agreement or any other agreement to be entered into under the
terms of this Agreement, or the performance by the Vendor of any of its
obligations provided for under this Agreement or any other agreement
contemplated under this Agreement.
4.8 REGULATORY APPROVALS - No approval, order, consent of or filing with
any Governmental Authority is required other than Competition Act Approval on
the part of the Vendor, in connection with the execution, delivery and
performance of this Agreement or any other documents and agreements to be
delivered under this Agreement or the performance of the Vendor's obligations
under this Agreement or any other documents and agreements to be delivered under
this Agreement.
4.9 FINANCIAL STATEMENTS - The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding period and present fairly:
(a) all of the assets, liabilities and financial position of the
Vendor related to the Business as at March 31, 1998; and
(b) the sales, earnings and results of operation of the Business
for the period ended January 31, 1999 except that they will be
presented in a form which facilitates internal reporting and the income
taxes shall have been calculated on a divisional rather than a legal
entity basis.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES - Since the date of the Balance
Sheet, the Vendor has not incurred any material liabilities or obligations
(whether accrued, absolute, contingent or otherwise) relating to the Business,
which continue to be outstanding, except as disclosed on Schedule 4.10 or
incurred in the ordinary course of business.
4.11 ABSENCE OF CHANGES AND UNUSUAL TRANSACTIONS - Except as set forth in
Schedule 4.11, since the date of the Balance Sheet:
(a) there has not been any material change in the financial
condition or operations of the Business or the Purchased Assets other
than changes in the ordinary and usual course of business, none of
which has been materially adverse;
<PAGE> 28
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(b) there has not been any damage, destruction, loss, unfair
labour practice complaint, organizing drive, application for
certification or other event, development or condition of any character
(whether or not covered by insurance) materially and adversely
affecting the business, assets or properties of the Business;
(c) there has not been any material change in the nature, level
and condition of the Inventories.
(d) the Vendor has not transferred, assigned, sold or otherwise
disposed of any of the assets shown or reflected in the Balance Sheet
or cancelled any debts or entitlements except, in each case, in the
ordinary and usual course of business;
(e) the Vendor has not incurred or assumed any obligation or
liability (fixed or contingent) relating to or affecting the Business,
except unsecured current obligations and liabilities incurred in the
ordinary and usual course of business;
(f) the Vendor has not discharged or satisfied any lien or
encumbrance, or paid any obligation or liability (fixed or contingent),
in each case relating to the Business, other than liabilities included
in the Balance Sheet and liabilities incurred since the date of the
Balance Sheet in the ordinary and usual course of business;
(g) the Vendor has not suffered any extraordinary loss, waived or
omitted to take any action in respect of any rights of substantial
value, or entered into any commitment or transaction not in the
ordinary and usual course of business in connection with the Business
where such loss, rights, commitment or transaction is or would be
material in relation to the Purchased Assets or the Business;
(h) the Vendor has not granted any bonuses, whether monetary or
otherwise, or made any general wage or salary increases in respect of
personnel which it employs in the Business, other than as provided for
in the Collective Agreement or changed the terms of employment for any
Employee except in the usual course of business and consistent with
past practice or agreed to a change in interpretation or application of
any provision of the Collective Agreement;
<PAGE> 29
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(i) except as disclosed by the Vendor to the Purchaser in writing,
the Vendor has not hired or dismissed any senior employees or hired or
dismissed more than (20) employees, in each case who are or were
dedicated primarily to the Business;
(j) the Vendor has not, except as disclosed in the Schedule of
Permitted Encumbrances, mortgaged, pledged, subjected to lien, granted
a security interest in or otherwise encumbered any of its assets or
property used in the Business, whether tangible or intangible; or
(k) the Vendor has not authorized, agreed or otherwise become
committed to do any of the foregoing.
4.12 NO JOINT VENTURE INTERESTS - The Vendor, in connection with the
Business, is not a party, beneficiary, trustee, co-tenant, joint-venturer or
otherwise a participant in any partnership, trust, joint venture, co-tenancy or
similar joint owned business undertaking and the Vendor has no significant
investment interests in any business owned or controlled by any third party.
4.13 MAJOR SUPPLIERS AND CUSTOMERS - The Vendor has provided to the
Purchaser a comprehensive listing of each supplier of goods and services to, and
each customer of, the Business to whom the Vendor paid or billed in excess of
$5,000 in the aggregate during the period commencing April 1, 1998, together
with, in each case, the amount so billed or paid. To the knowledge of the
Vendor, no Major Supplier or Customer intends to change its relationship or the
terms upon which it conducts business with the Purchaser following completion of
the transactions contemplated in this Agreement. A Major Supplier or Customer is
one from whom or to whom sales in the last twelve months was at least $500,000.
4.14 CONDITION OF ASSETS - The Fixed Assets are being delivered to the
Purchaser in their "as is" condition as inspected by and demonstrated to the
Purchaser on March 4, 1999.
4.15 INVENTORIES - All Inventories are valued on the books of the Vendor at
the lower of cost or net realizable value.
4.16 ACCRUED LIABILITIES - The amounts of the Accrued Liabilities have been
determined in accordance with generally accepted accounting principles applied
on a basis consistent with the Financial Statements.
<PAGE> 30
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4.17 GOVERNMENT GRANTS - The Vendor has not received any grants or other
forms of assistance including loans with interest at below market rates,
received by the Vendor in connection with the Business from any government,
governmental department, agency, commission, board, bureau or instrumentality,
domestic or foreign.
4.18 BUSINESS IN COMPLIANCE WITH LAW - Except as set out in Schedule 4.18,
all material respects, the operations of the Business have been conducted in
compliance with all Laws of each jurisdiction in which the Business has been and
is carried on and the Vendor has not received any notice of any alleged
violation of any such Laws.
4.19 GOVERNMENTAL AUTHORIZATIONS - Schedule 4.19 sets forth a complete list
of the Governmental Authorizations. The Governmental Authorizations listed in
Schedule 4.19 are all the authorizations required by the Vendor to enable it to
carry on the Business in compliance with all Laws. The Governmental
Authorizations are in full force and effect in accordance with their terms, in
all material respects and there have been no violations thereof and no
proceedings are pending or, to the knowledge of the Vendor, threatened, which
could result in their revocation or limitation.
4.20 RESTRICTIVE COVENANTS - The Vendor is not a party to or bound or
affected by any commitment, agreement or document containing any covenant which
(i) expressly limits the freedom of the Vendor and (ii) may after the Closing
limit the freedom of the Purchaser, to compete in any line of business, transfer
or move any of its assets or operations or which materially or adversely affects
the business practices, operations or conditions of the Business or the
continued operation of the Business after the Closing.
4.21 INTELLECTUAL PROPERTY - Except as disclosed in Schedule 4.21, the
Vendor has no knowledge that the Business, any activity in which the Vendor is
engaged in connection with the Business or any product which the Vendor
manufactures, uses or sells in connection with the Business, or any process,
method, packaging, advertising, or material that the Vendor employs in the
manufacture, marketing or sale of any such product, or the use of any
intellectual property used in connection with the Business breaches, violates,
infringes or interferes with any intellectual property rights of any third party
or requires payment for the use of any patent, trade-name, trade secret,
trade-mark, copyright or other intellectual property right or technology of
another.
4.22 EQUIPMENT CONTRACTS - Schedule 4.22 sets forth a complete list of all
Equipment Contracts together with a description of the equipment and vehicles to
which the Equipment Contracts relate. The Equipment Contracts listed in Schedule
4.22 are all those used to earn the revenue shown on the
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Financial Statements. All of the Equipment Contracts are in full force and
effect and no material default exists and no event has occurred which with the
giving of notice or the lapse of time would become a material default on the
part of the Vendor, or, to the knowledge of the Vendor, on the part of any of
the other parties thereto. The entire interest of the Vendor under each of the
Equipment Contracts is held by it free and clear of any Encumbrances other than
Permitted Encumbrances and all payments due under the Equipment Contracts have
been duly and punctually paid.
4.23 REAL PROPERTY -
(a) Schedule 4.23 sets forth a complete list of:
(i) the Real Property in each case by reference to the owner,
municipal address and legal description which is used or is
reasonably required for the Business; and
(ii) the matters described in Section 4.25 (f) and (q) as
applicable.
(b) The Vendor is the legal and beneficial owner of the Real
Property in fee simple, with good and marketable title thereto, free
and clear of all Encumbrances other than Permitted Encumbrances.
(c) There are no agreements, undertakings or other documents which
affect or relate to the title to, or ownership of such Real Property
except for the Permitted Encumbrances.
4.24 LEASED REAL PROPERTY - The Vendor is not a party to any Real Property
Leases.
4.25 REAL PROPERTY GENERALLY -
(a) The plant, buildings, structures, erections, improvements and
fixtures situate on the Real Property are being delivered to the
Purchaser in their "as is" condition as inspected by and demonstrated
to the Purchaser on March 4, 1999.
(b) The Vendor has such rights of entry and exit to and from the
Real Property as are reasonably necessary to carry on the Business upon
the Real Property.
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(c) No person has any right to purchase any of the Real Property,
and no person other than the Vendor is using or has any right to use,
as tenant, or is in possession or occupancy of, any part of such Real
Property other than rights which are Permitted Encumbrances.
(d) The Vendor has not granted any option, right of first refusal
or other contractual rights with respect to any of the Real Property
other than to the Purchaser pursuant to this Agreement or as set out in
Schedule 4.4 respecting Permitted Encumbrances.
(e) The Vendor has not entered into any agreement to sell,
transfer, encumber, or otherwise dispose of or impair the right, title
and interest of the Vendor in and to the Real Property or the air,
density and easement rights relating to the Real Property except as set
out in Schedule 4.4 respecting Permitted Encumbrances.
(f) Schedule 4.25 provides details on the most up-to-date surveys,
prepared by licensed land surveyors, relating to the Real Property
which are available, and such surveys have been delivered or made
available to the Purchaser.
(g) The Vendor has not received any notification of and has no
knowledge of, any outstanding or incomplete work orders in respect of
any of the buildings, improvements or other structures constructed on
the Real Property or of any current non-compliance (other than
non-compliances which are legal non-conforming under relevant zoning
by-laws) with applicable statutes and regulations or building and
zoning by-laws and regulations.
(h) To the knowledge of the Vendor, the current uses of the Real
Property are permitted under current zoning regulations.
(i) The Vendor has not made application for a rezoning of any of
the Real Property and has no knowledge of any proposed or pending
change to any zoning affecting the Real Property.
(j) To the knowledge of the Vendor, no part of the Real Property
is subject to any building or use restriction that would restrict or
prevent the use and operation of the Real Property for the Business by
the Purchaser.
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(k) Except as may be shown on the surveys for the Real Property
delivered to the Purchaser, to the knowledge of the Vendor no
improvements constituting a part of the Real Property encroaches on
real property not forming part of the Real Property.
(l) The Vendor has no knowledge of any expropriation or
condemnation or similar proceeding pending or threatened against the
Real Property or any part of the Real Property.
(m) All accounts for work and services performed or materials
placed or furnished upon or in respect of the construction and
completion of any of the buildings, improvements or other structures
constructed on the Real Property have been fully paid and no one is
entitled to claim a lien under the Construction Lien Act (Ontario) or
other similar legislation for such work performed by or on behalf of
the Vendor.
(n) The Real Property is fully serviced to permit the operations
of the Business by the Purchaser as at the Closing Date. All municipal
levies, local improvements, imposts and permit fees due and payable
prior to the Closing Date have been or will as at the Closing Date be
paid by the Vendor, subject to pro rating for the number of days
elapsed prior to Closing.
(o) To the knowledge of the Vendor, all Permitted Encumbrances
which are easements, agreements, rights-of-way, restrictive covenants
or restrictions are in good standing and the Vendor has performed in
all material respects all obligations required to be performed by it
thereunder and there is no material breach or default in any respect
thereunder nor has there occurred any event nor does there exist any
condition which, in either case, with the giving of notice or the lapse
of time, would constitute such a material breach or default.
(p) To the knowledge of the Vendor, the easements, rights-of-way
and other similar appurtenant interests which benefit the Real Property
or to which the Real Property is subject and which are necessary for
the continued use and operation of the Real Property for the Business
are listed in Schedule 4.25. None of such easements, rights-of-way or
other interests requires the consent of any other party to the
transactions contemplated by this Agreement.
(q) There are no matters affecting the right, title and interest
of the Vendor in and to the Real Property which, in the aggregate,
would materially and adversely affect the ability of
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the Purchaser as of the Closing Date, to carry on the Business upon
the Real Property as it has been carried on in the ordinary course in
the past.
4.26 ENVIRONMENTAL MATTERS - Except as referred to in the documents listed
in Schedule 4.26:
(a) Except as disclosed in Schedule 4.26, there are no
Environmental Approvals.
(b) All operations of the Vendor pertaining to the Business or the
Purchased Assets or conducted on the Real Property and the Real
Property itself while occupied by the Vendor, and, to the knowledge of
the Vendor, while occupied by the Vendor's predecessors in title, have
been and are now, in compliance with all Environmental Laws. Any
Release by the Vendor and, to the knowledge of the Vendor, by the
Vendor's predecessors in title of any Hazardous Substance from the
Business or the Purchased Assets into the Environment complied and
complies with all Environmental Laws.
(c) The Environmental Approvals have been obtained, are valid and
in full force and effect, have been and are being complied with, and
there have been and are no proceedings commenced or threatened to
revoke or amend any Environmental Approvals.
(d) Neither the Business nor any of the Purchased Assets has been
or is now the subject of any Remedial Order, nor does the Vendor have
any knowledge of any investigation or evaluation commenced as to
whether any such Remedial Order is necessary nor, to the knowledge of
the Vendor, has any threat of any such Remedial Order been made nor, to
the knowledge of the Vendor, or any circumstance arisen which could
likely result in the issuance of any such Remedial Order with respect
to the Business or the Purchased Assets.
(e) With respect to the Business and the Purchased Assets, the
Vendor has never been prosecuted for or convicted of any offence under
Environmental Laws, nor has the Vendor been found liable in any
proceeding to pay any fine, penalty or judgment to any person as a
result of any Release or threatened Release of any Hazardous Substance
into the Environment or the breach of any Environmental Law and, to the
knowledge of the Vendor, there is no basis for any such proceeding.
(f) No part of the Real Property or any other Purchased Assets has
ever been used by the Vendor, as a landfill or for the disposal of
waste and, to the knowledge of the Vendor, no part
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of the Real Property has been used by any other person as a landfill or
for the disposal of waste.
(g) To the knowledge of the Vendors, no asbestos or asbestos
containing materials are used, stored or otherwise present in or on the
Real Property or any other Purchased Asset.
(h) No equipment, waste or other material containing
polychlorinated biphenyls (PCBs) are used, stored or otherwise present
in or on the Real Property or other Purchased Assets.
(i) All material environmental data and studies (including the
results of any environmental audit possessed by or within the control
of the Vendor) with respect to the Business or the Purchased Assets
have been delivered or made available to the Purchaser.
(j) There has been no Release by the Vendor or, to the knowledge
of the Vendor by any other party, of any Hazardous Substance which is
now present in, on or under any of the Real Property or any other
Purchased Assets (including underlying soils and substrata, surface
water and groundwater) at levels which exceed decommissioning or
remediation standards under any Environmental Laws or standards
published or administered by those Governmental Authorities responsible
for establishing or applying such standards.
(k) To the knowledge of the Vendor, no underground storage tanks
have been or are on the Real Property.
(l) The Vendor has no knowledge of any Hazardous Substance
originating from any neighbouring or adjoining properties which has
migrated onto, or is migrating towards any of the Real Property or any
other Purchased Assets.
4.27 EMPLOYMENT MATTERS -
(a) Schedule 4.27 sets forth a complete list of all Employees,
together with the titles, service dates and material terms of
employment, including current wages, salaries or hourly rate of pay of,
and bonus (whether monetary or otherwise) paid and/or payable since the
beginning of the most recently completed fiscal year or payable in the
current fiscal year to each such Employee, the date upon which such
wage, salary, rate or bonus became effective and the date upon which
each such Employee was first hired by the Vendor. Except as
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disclosed, no Employee is on long-term disability leave, extended
absence or receiving benefits pursuant to the Workplace Safety and
Insurance Act (Ontario).
(b) Except for those written employment contracts with salaried
Employees identified in Schedule 4.27, there are no written contracts
of employment entered into with any Employees or any oral contracts of
employment which are not terminable on the giving of reasonable notice
in accordance with applicable law.
(c) Except as set out in Schedule 4.27 there are no employment
policies or plans, including policies or plans regarding incentive
compensation, stock options, severance pay or other terms or conditions
of employment or terms or conditions upon which Employees may be
terminated, which are binding upon the Vendor.
(d) The Business has been and is being operated in compliance in
all material respects with all Laws relating to employees, including
employment standards, Occupational Health and Safety Laws, human
rights, labour relations, workplace safety and insurance and pay
equity. The Vendor has complied with and posted plans as required under
the Ontario Pay Equity Act. There have been no claims or complaints,
nor to the knowledge of the Vendor are there any threatened claims or
complaints, against the Vendor pursuant to any such Laws. To the
knowledge of the Vendor nothing has occurred which might lead to a
claim or complaint against the Vendor under any such Laws. There are no
issued or, to the knowledge of the Vendor, pending decisions or
settlements which place any obligation upon the Vendor to do or refrain
from doing any act.
(e) All current assessments under the Workplace Safety and
Insurance Act (Ontario) in relation to the Business have been paid or
accrued by the Vendor and the Business has not been and is not subject
to any special or penalty assessment or surcharge under such
legislation which has not been paid.
(f) The Vendor has made available to the Purchaser for review, all
inspection reports under the Occupational Health and Safety Act
(Ontario) relating to the Business. There are no outstanding inspection
orders made under the Occupational Health and Safety Act (Ontario)
relating to the Business. Except as set forth in Schedule 4.27, the
Vendors are operating in compliance with all Occupational Health and
Safety Laws in all material respects, including but not limited to the
Workplace Hazardous Materials Information System (WHMIS), in connection
with the Business. To the knowledge of the Vendor, there
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are no pending or threatened charges against the Business under
Occupational Health and Safety Laws relating to the Business. Except as
set out in Schedule 4.27, there have been no fatal or critical
accidents which have occurred in the course of the operation of the
Business which might lead to charges under Occupational Health and
Safety Laws. To the knowledge of the Vendor, there are no materials
present in the Business, exposure to which may result in an
occupational disease as defined in the Workplace Safety and Insurance
Act (Ontario). If such materials, including asbestos, are required to
be removed to comply with Occupational Health and Safety Laws, the
Vendor agrees to indemnify the Purchaser for any and all reasonable
costs arising from such removal. The Vendor has complied in all
respects with any Remedial Orders issued under Occupational Health and
Safety Laws. To the knowledge of the Vendor, there are no appeals of
any Remedial Orders under Occupational Health and Safety Laws relating
to the Business which are currently outstanding.
4.28 COLLECTIVE AGREEMENT -
(a) Schedule 4.28 describes any Collective Agreement, either
directly or by operation of law, with any trade union or association
which may qualify as a trade union in respect of the Business.
(b) There are no outstanding or, to the knowledge of the Vendor,
threatened labour board proceedings of any kind, including any
proceedings which could result in certification of a trade union as
bargaining agent for Employees or dependent contractors of the Vendor
not already covered by the Collective Agreement, and there have not
been any such proceedings within the last three (3) years.
(c) To the knowledge of the Vendor, there are no threatened or
apparent union organizing activities involving Employees or dependent
contractors of the Vendor in respect of the Business, not already
covered by the Collective Agreement and no trade union has bargaining
rights for such Employees or dependant contractors.
(d) To the knowledge of the Vendor, the Vendor is not in breach
of or default under any Collective Agreement.
(e) There is no strike or lock out occurring or to the knowledge
of the Vendor threatened affecting the Business.
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(f) The Vendor does not have any unresolved grievances or pending
arbitration cases outstanding relating to the Business. To the
knowledge of the Vendor, the Vendor does not have any labour problems
that might materially affect the value or operation of the Business.
(g) None of the Collective Agreements contain provisions relating
to the establishment or maintenance of any Pension Plan or Benefit Plan
or contributions thereto except as set out in Schedule 4.28.
4.29 PENSION PLANS AND BENEFIT PLANS -
(a) Schedule 4.29 sets forth a complete list of the Pension Plans
and the Benefit Plans.
(b) Current and complete copies of all written Pension Plans and
Benefit Plans or, where oral, written summaries of the material terms
thereof, have been provided or made available to the Purchaser together
with current and complete copies of all documents relating to the
Pension Plans and Benefit Plans, including, as applicable,
(i) all documents establishing, creating or amending any
of the Pension Plans or Benefit Plans as in effect on the date
of this Agreement;
(ii) all trust agreements and funding agreements as in
effect on the date of this Agreement;
(iii) all insurance contracts, subscription agreements and
participation agreements as in effect on the date of this
Agreement;
(iv) the most recent financial statements required to be
filed under Laws, and the most recent actuarial report for the
Vendor's Union Pension Plan;
(v) the most recent material reports, statements, annual
information returns or other returns, filings and material
correspondence with any regulatory authority;
(vi) all material legal opinions, consultants' reports and
correspondence relating to the administration or funding of
any Pension Plan or the use of funds held under such plans
which impacts on the portion of the Pension Plans to be
transferred to the Purchaser pursuant to this Agreement; and
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(vii) all booklets, summaries, manuals and written
communications of a general nature distributed or available to
any Employees concerning any Pension Plan or Benefit Plan
whether or not such communications have been or are required
to be filed with any Governmental Authorities as in effect on
the date of this Agreement.
(c) Except as disclosed in Schedule 4.29 each Pension Plan and
Benefit Plan, and any amendment to any Pension Plan or Benefit Plan,
is, and has been, established, registered (where required), qualified,
administered and invested, in compliance with (i) the terms thereof,
(ii) all Laws and (iii) the Collective Agreement.
(d) All obligations under the Pension Plans and Benefit Plans
(whether pursuant to the terms thereof, any Collective Agreements, or
any Laws) have been satisfied, and there are no outstanding defaults or
violations thereunder by the Vendor nor does the Vendor have any
knowledge of any default or violation by any other party to any Pension
Plan or Benefit Plan.
(e) Except as disclosed in Schedule 4.29, there have been no
improvements, increases or changes to or promised improvements,
increases or changes to the benefits provided under the Pension Plans
or Benefit Plans. None of the Pension Plans or Benefit Plans provide
for benefit increases or the acceleration of funding obligations that
are contingent upon or will be triggered by the entering into of this
Agreement or the completion of the transactions contemplated herein.
(f) All employer or employee payments, contributions and premiums
required to be remitted, paid to or in respect of each Pension Plan and
each Benefit Plan have been paid or remitted in a timely fashion in
accordance with the terms thereof and all Laws, and no Taxes, penalties
or fees are owing or exigible under any Pension Plan or Benefit Plan.
(g) There is no proceeding, action, investigation by Governmental
Authorities, suit or claim (other than routine claims for payment of
benefits) pending or threatened involving any Pension Plan or Benefit
Plan or their assets, and to the knowledge of the Vendor no facts exist
which could reasonably be expected to give rise to any such proceeding,
action, investigation, suit or Claim (other than routine claims for
payment of benefits).
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(h) Schedule 4.29 discloses the amount of any going concern
unfunded actuarial liabilities, past service unfunded liabilities or
solvency deficiencies respecting any of the Pension Plans.
(i) No material changes have occurred in respect of any Pension
Plan since the date of the most recent financial, accounting, actuarial
or other report, as applicable, issued in connection with any Pension
Plan, which could reasonably be expected to adversely affect the
relevant report (including rendering it misleading in any material
respect).
(j) The Vendor has not received, or applied for, any payment of
surplus out of any Pension Plans and the Vendor has not taken any
contribution or premium holidays under any Pension Plans.
(k) None of the Pension Plans or Benefit Plans is a multi-employer
pension plan as defined under Laws.
(l) All employee data necessary to administer each Pension Plan
and Benefit Plan for the Transferred Employees is in the possession of
the Vendor and is complete, correct and in a form which is sufficient
for the proper administration of each Pension Plan or Benefit Plan in
accordance with the terms thereof and all Laws.
(m) None of the Benefit Plans, other than Pension Plans and any
Benefit Plans specifically identified as such in Schedule 4.29, provide
benefits beyond retirement or other termination of service to Employees
or former employees or to the beneficiaries or dependents of such
employees.
(n) Except as disclosed in Schedule 4.29, none of the insured
Benefit Plans require or permit a retroactive increase in premiums or
payments and the level of insurance reserves, if any, under each
insured Benefit Plan is reasonable and sufficient to provide for all
incurred but unreported claims.
4.30 MATERIAL CONTRACTS - Schedule 4.30 sets forth a complete list of the
Material Contracts. The Material Contracts are all in full force and effect
unamended and no default exists under such Material Contracts on the part of the
Vendor or, to the knowledge of the Vendor, on the part of any other party to
such Contracts. To its knowledge, the Vendor, through the Business and the
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Purchased Assets, has the capacity, including the necessary personnel, equipment
and supplies, to perform all its obligations under the Material Contracts listed
in Schedule 4.30.
4.31 COPIES OF AGREEMENTS, ETC. - Current and complete copies of the
Material Contracts have been delivered to the Purchaser and there are no current
or pending negotiations with respect to the renewal, repudiation or amendment of
any such agreement, plan or policy.
4.32 LITIGATION - There is no suit, action, litigation, investigation,
claim, complaint, grievance or proceeding, including appeals and applications
for review, in progress, or, to the knowledge of the Vendor, pending or
threatened against or relating to the Vendor before any Governmental Authority
or arbitration panel which, if determined adversely to the Vendor, would,
(a) materially and adversely affect the properties, business,
future prospects or financial condition of the Business or the
Purchased Assets,
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Assets as contemplated by this Agreement, or
(c) prevent the Vendor from fulfilling all of its obligations
set out in this Agreement or arising from this Agreement,
and the Vendor has no knowledge of any existing ground on which any such action,
suit, litigation or proceeding might be commenced with any reasonable likelihood
of success. There is not presently outstanding against the Vendor any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator.
4.33 TAX MATTERS -
(a) No failure, if any, of the Vendor to duly and timely pay all
Taxes, including instalments on account of Taxes for the current year,
that are due and payable by it, will result in an Encumbrance on the
Purchased Assets.
(b) There are no actions, suits, proceedings, investigations,
audits or claims now pending or, to the knowledge of the Vendor,
threatened against the Vendor in respect of any Taxes and there are no
matters under discussion, audit or appeal with any Governmental
Authority relating to Taxes, which will result in an Encumbrance on the
Purchased Assets.
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(c) The Vendor has timely withheld from any amount paid or
credited by it to of for the account or benefit of any person,
including any of its employees, officers or directors and any
non-resident person, the amount of all Taxes and other deductions
required by any Laws to be withheld from any amount and has duly and
timely remitted the same to the appropriate Governmental Authority.
4.34 BOOKS AND RECORDS - The Vendor has made available to the Purchaser all
Books and Records. The Books and Records fairly and correctly set out and
disclose in all material respects the financial position of the Business and all
material financial transactions relating to the Business have been accurately
recorded in the Books and Records.
4.35 TRADE ALLOWANCES - Schedule 4.35 sets out any agreements or
understandings (whether written or oral) with, or concessions granted to, any
customer of the Business which will continue to be binding on the Business on or
after the Closing Date to receive discounts, allowances, volume rebates or
similar reductions in price or other trade terms.
4.36 THIRD PARTY CONSENTS - Except as set out in Schedule 4.36, no
notification, approval or consent is required to be obtained by the Vendor in
connection with the execution, delivery and performance of this Agreement or any
other documents and agreements to be delivered under this Agreement.
4.37 LOCATION OF THE ASSETS - Except as disclosed on Schedule 4.37, all of
the Purchased Assets are located on the Real Property or are in transit to or
from the Real Property.
4.38 NO BROKER - The Vendor has carried on all negotiations relating to this
Agreement and the transactions contemplated in this Agreement directly and
without intervention on its behalf of any other party in such manner as to give
rise to any valid claim for a brokerage commission, finder's fee or other like
payment against the Purchaser or the Purchased Assets.
4.39 YEAR 2000 COMPLIANCE - Most of the Vendor's critical information
technology systems in the Business have been modified, tested, and/or certified
from vendors as being Year 2000 Compliant. Other non-information technology
systems have been inventoried, tested or certified in accordance with a
compliance plan. The Vendor has initiated a formal inquiry process with its
suppliers and vendors with which the Vendor has significant relationships to
evaluate the extent to which the Business is vulnerable to third party failure
to remedy Year 2000 problems. The Vendor
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continues to evaluate replies as it receives them and is working with the third
parties to correct those problems or monitoring their efforts to achieve
compliance. The Vendor has received replies from many of its significant
suppliers and vendors. The Vendor estimates that the total cost of becoming Year
2000 Compliant for its internal systems and equipment for the Business is less
than $150,000.00, of which only a nominal amount remains to be spent. Most of
the cost to date has been funded by allocation of existing resources rather than
incurring incremental costs. Any remaining costs may be funded by allocation of
existing resources. Based on an assessment of its major information technology
and noninformation technology systems in the Business, the Vendor believes that
all necessary modifications and testing will be completed in a timely manner to
ensure that the Business achieves Year 2000 Compliance December 31, 1999.
4.40 FULL DISCLOSURE - The Vendor has made available to the Purchaser, all
information, including the financial, marketing, sales and operational
information on a historical basis in respect of the Business which would be
material to a purchaser of the Business. All information, which has been
provided to the Purchaser relating to the Business is true and correct in all
material respects and the Vendor has not knowingly omitted any material fact or
facts therefrom which would make such information misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendor the matters set out
below.
5.1 INCORPORATION AND RESIDENCE - The Purchaser is a corporation duly
incorporated and validly existing under the laws of Ontario. The Purchaser is
not a non resident of Canada for purposes of the Income Tax Act (Canada). The
Purchaser is a "WTO Investor" for the purposes of the Investment Canada Act.
5.2 DUE AUTHORIZATION - The Purchaser has all necessary corporate power,
authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transaction contemplated under this Agreement have
been duly authorized by all necessary corporate action of the Purchaser.
5.3 ENFORCEABILITY OF OBLIGATIONS - This Agreement constitutes a valid and
binding obligation of the Vendor enforceable against it in accordance with its
terms, subject to limitations with respect
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to enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which they
are sought.
5.4 ABSENCE OF CONFLICTING AGREEMENTS - Except for Competition Act
Approval, the Purchaser is not a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, obligation, instrument, charter or
by-law provision, statute, regulation, order, judgment, decree, license, permit
or law which would be violated, contravened or breached by, or under which any
default would occur or a lien, claim, restriction or encumbrance would be
created as a result of the execution and delivery by it of this Agreement or the
performance by it of any of the terms of this Agreement.
5.5 LITIGATION - There is no suit, action, litigation, investigation,
claim, complaint or proceeding before any Governmental Authority or arbitration
panel in progress or, to the knowledge of the Purchaser, pending or threatened
against or relating to the Purchaser, which, if determined adversely to the
Purchaser, would,
(a) prevent the Purchaser from paying the Purchase Price to the
Vendor;
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Assets as contemplated by this Agreement; or
(c) prevent the Purchaser from fulfilling all of its obligations
set out in this Agreement or arising from this Agreement,
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
5.6 GOODS AND SERVICES TAX AND HARMONIZED SALES TAX REGISTRATION - The
Purchaser is duly registered under Subdivision (d) of Division V of Part IX of
the Excise Tax Act (Canada) with respect to the goods and services tax and
harmonized sales tax and its registration number is R103467965RT0001.
5.7 NO BROKER - The Purchaser has carried on all negotiations relating to
this Agreement and the transactions contemplated in this Agreement directly and
without the intervention on its behalf of
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any other party in such manner as to give rise to any valid claim for a
brokerage commission, finder's fee or other like payment against the Vendor or
the Purchase Price.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 NON-WAIVER - No investigations made by or on behalf of the Purchaser
at any time shall have the effect of waiving, diminishing the scope or otherwise
affecting any representation or warranty made by the Vendor in or pursuant to
this Agreement. No waiver of any condition or other provisions, in whole or in
part, shall constitute a waiver of any other condition or provision (whether or
not similar) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
6.2 NATURE AND SURVIVAL -
(a) Subject to subsection (b), all representations, warranties and
covenants contained in this Agreement on the part of each of the
Parties shall survive the Closing, the execution and delivery under
this Agreement of any bills of sale, instruments of conveyance,
assignments or other instruments of transfer of title to any of the
Purchased Assets and the payment of the consideration for the Purchased
Assets.
(b) Representations and warranties concerning tax matters, set
out in Section 4.33, shall survive for a period of ninety days after
the relevant authorities shall no longer be entitled to assess
liability for tax against the Vendor or Purchaser for any particular
taxation year ended on or prior to the Closing Date, having regard,
without limitation, to any waivers given by the Vendor in respect of
any such taxation year. All other representations and warranties shall
only survive for a period of two (2) years from the Closing Date. If no
claim shall have been made under this Agreement against a Party for any
incorrectness in or breach of any representation or warranty made in
this Agreement prior to the expiry of these survival periods, such
Party shall have no further liability under this Agreement with respect
to such representation or warranty.
(c) Notwithstanding the limitations set out in subsection (b) any
Claim which is based on title to the Purchased Assets, intentional
misrepresentation or fraud may be brought at any time.
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ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased Assets
under this Agreement shall be subject to the satisfaction of, or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part):
7.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING TIME -
The representations and warranties of the Vendor contained in Sections 4.1, 4.4,
4.5 and 4.6 of this Agreement and any representations and warranties of the
Vendor made in or pursuant to this Agreement containing a materiality
qualification shall be true and correct, and any representations and warranties
of the Vendor made in or pursuant to this Agreement without a materiality
qualification (other than the representations and warranties contained in
Sections 4.1, 4.4, 4.5 and 4.6) shall be true and correct in all material
respects, in each case as at the Closing Time and with the same effect as if
made at and as of the Closing Time (except as such representations and
warranties may be affected by the occurrence of events or transactions expressly
contemplated and permitted by this Agreement).
7.2 PERFORMANCE OF OBLIGATIONS - The Vendor shall have performed or
complied with, in all respects, all its obligations, covenants and agreements
under this Agreement.
7.3 RECEIPT OF CLOSING DOCUMENTATION - All instruments of conveyance and
other documentation relating to the sale and purchase of the Purchased Assets
including assignments of Contracts (and consents to such assignments, where
required), deeds of Real Property in registrable form, surveys, bills of sale
and trade-mark assignments, documentation relating to the due authorization and
completion of such sale and purchase and all actions and proceedings taken on or
prior to the Closing in connection with the performance by the Vendor of its
obligations under this Agreement shall be satisfactory to the Purchaser, acting
reasonably, and the Purchaser shall have received copies of all such
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection with such transactions
in compliance with these conditions, in form (as to certification and otherwise)
and substance satisfactory to the Purchaser.
7.4 OPINION OF VENDOR'S COUNSEL - The Purchaser shall have received an
opinion dated the Closing Date from the Vendor's Counsel, substantially in the
form of Schedule 7.4.
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7.5 CONSENTS TO ASSIGNMENT - All consents or approvals from or
notifications to any landlord, lessor or other person required under the terms
of any of the Contracts with respect to the assignment of such Contracts to the
Purchaser, shall have been duly obtained or given, as the case may be, on or
before the Closing Time, other than any such consents or approvals where the
failure to obtain such consents or approvals does not and will not have, either
individually or in the aggregate, a material adverse effect on the Business.
7.6 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS - All consents, approvals,
orders and authorizations of any person (or registrations, declarations, filings
or recordings with any such authorities), required in connection with the
completion of any of the transactions contemplated by this Agreement (other than
with respect to the Pension Plans(s) or Benefit Plan(s)), the execution of this
Agreement, the Closing or the performance of any of the terms and conditions of
this Agreement, including Competition Act Approval, all clearance certificates
required pursuant to any applicable retail sales tax legislation and a Purchase
Certificate from the Workplace Safety and Insurance Board (Ontario) shall have
been obtained at or before the Closing Time.
7.7 NO PROCEEDINGS - There shall be no injunction or restraining order
issued preventing, and no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation against any Party by
any person, for the purpose of enjoining or preventing the consummation of the
transactions contemplated in this Agreement or otherwise claiming that this
Agreement or the consummation thereof is improper or would give rise to
proceedings under any statute or rule of law.
7.8 ENCUMBRANCES - The Purchaser shall have received evidence satisfactory
to it that all Encumbrances other than Permitted Encumbrances have been
discharged and that the Purchased Assets are free and clear of all Encumbrances
other than Permitted Encumbrances.
7.9 REAL ESTATE TITLE WORK - The Purchaser shall have received from its
counsel, title opinions relating to the Real Property in form and substance
satisfactory to it.
7.10 NON-COMPETITION - The Vendor shall have executed and delivered a
non-competition agreement substantially in the form attached as Schedule 7.10.
7.11 ACTUAL POSSESSION - The Vendor shall have delivered actual possession
of the Purchased Assets to the Purchaser.
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7.12 RELEASES - The Vendor shall have released any employees of the
Business to be employed by the Purchaser from and after the Closing from any
confidentiality agreements with the Vendor except to the extent that these have
been assigned to the Purchaser.
7.13 SUPPORT SERVICES AGREEMENT - The Parties shall have entered into a
support services agreement in the form set out in Schedule 7.13.
7.14 REMEDIATION AGREEMENT - The Parties shall have entered into an
environmental indemnification and remediation agreement in the form set out in
Schedule 7.14.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Vendor, in which event the Purchaser is released from all obligations under this
Agreement, and unless the Purchaser can show that the condition relied upon
could reasonably have been performed by the Vendor, the Vendor is also released
from all obligations under this Agreement. However, the Purchaser may waive
compliance with any condition in whole or in part if it sees fit to do so,
without prejudice to its rights of termination in the event of non-fulfilment of
any other condition, in whole or in part, or to its rights to recover damages
for the breach of any representation, warranty, covenant or condition contained
in this Agreement.
ARTICLE 8
VENDOR'S CONDITIONS PRECEDENT
The obligations of the Vendor to complete the sale of the Purchased Assets under
this Agreement shall be subject to the satisfaction of or compliance with, at or
before the Closing Time, each of the following conditions precedent (each of
which is acknowledged to be inserted for the exclusive benefit of the Vendor and
may be waived by it in whole or in part):
8.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT CLOSING TIME
- - All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct as at the Closing Time and with the
same effect as if made at and as of the Closing Time.
8.2 PERFORMANCE OF OBLIGATIONS - The Purchaser shall have performed or
complied with, in all respects, all its obligations, covenants and agreements
under this Agreement.
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8.3 OPINION OF PURCHASER'S COUNSEL - The Vendor shall have received an
opinion dated the Closing Date, from the Purchaser's Counsel, substantially in
the form attached as Schedule 8.3.
8.4 COMPETITION ACT APPROVAL - Competition Act Approval shall have been
received.
8.5 SERVICES AGREEMENT - The Purchaser and the Vendor shall have entered
into an agreement in the form set out in Schedule 7.13.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Vendor may terminate this Agreement by notice in writing to the
Purchaser, in which event the Vendor is released from all obligations under this
Agreement, and unless the Vendor can show that the condition relied upon could
reasonably have been performed by the Purchaser, the Purchaser is also released
from all obligations under this Agreement. However, the Vendor may waive
compliance with any condition in whole or in part if it sees fit to do so,
without prejudice to its rights of termination in the event of non-fulfilment of
any other condition in whole or in part or to its rights to recover damages for
the breach of any representation, warranty, covenant or condition contained in
this Agreement.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date
of this Agreement to the Closing Time:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE - Except as otherwise
contemplated or permitted by this Agreement, the Vendor shall conduct
the Business in the ordinary and normal course, consistent with past
practice and regular customer service and business policies and not,
without the prior written consent of the Purchaser, enter into any
transaction which, if effected before the date of this Agreement, would
constitute a breach of the representations, warranties or agreements of
the Vendor contained in this Agreement.
(b) MAINTAIN GOOD RELATIONS - The Vendor shall use all reasonable
efforts to maintain good relations with the Employees, its customers
and suppliers.
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(c) CONTINUE INSURANCE - The Vendor shall continue in force all
policies of insurance maintained by the Vendor in respect of the
Business and give all notices and present claims under all insurance
policies in a timely fashion.
(d) PERFORM OBLIGATIONS - The Vendor shall comply with all Laws
affecting the operation of the Business.
(e) PREVENT CERTAIN CHANGES - The Vendor shall not, without the
prior written consent of the Purchaser, take any of the actions, do any
of the things or perform any of the acts described in Section 4.11.
(f) APPROVALS - The Vendor shall co-operate with the Purchaser and
the Parties will use all reasonable efforts and diligently pursue
obtaining Competition Act Approval. The Purchaser will be responsible
for the $25,000.00 filing fee in respect of the application to obtain
Competition Act Approval but the Parties shall otherwise bear their own
costs in connection with such filing.
9.2 ACCESS FOR INVESTIGATION -
(a) The Vendor shall permit the Purchaser and its representatives,
between the date of this Agreement and the Closing Time, without
interference to the ordinary conduct of the Business, to have free and
unrestricted access during normal business hours to (i) the Real
Property, (ii) all other locations where Books and Records or other
material relevant to the Business is stored; (iii) to all the Books and
Records and (iv) the properties and assets used in the Business. The
Vendor shall furnish to the Purchaser copies of Books and Records
(subject to any confidentiality agreements or covenants relating to any
such Books and Records) as the Purchaser shall from time to time
reasonably request to enable confirmation of the matters warranted in
Article 4. Without limiting the generality of the foregoing, it is
agreed that the accounting representatives of the Purchaser shall be
afforded ample opportunity to make a full investigation of all aspects
of the financial affairs of the Business.
(b) Notwithstanding subsection (a), the Vendor shall not be
required to disclose any information, records, files or other data to
the Purchaser where prohibited by any law. If any consent of any person
or Governmental Authority is required to permit the Vendor to release
any information to the Purchaser, the Vendor shall make all reasonable
effort to obtain such consent.
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(c) The Vendor shall forthwith, upon request by the Purchaser or
Purchaser's Counsel, execute and deliver to the Purchaser all necessary
consents to permit the Purchaser to have inspections made and have
existing records released to the Purchaser by the municipal building
and zoning department, fire department, public works, environmental
agencies, the elevator inspections branch of the provincial department
of labour and other appropriate authorities as the Purchaser may
consider advisable, acting reasonably, between the date of this
Agreement and Closing. Such consents will authorize and direct the
release of information to the Purchaser.
9.3 CONFIDENTIALITY -
(a) Prior to the Closing, the Purchaser shall keep confidential
all information disclosed to it by the Vendor or its agents relating to
the Vendor or the Business, except information which:
(i) is or becomes generally available to the public other
than through the fault of the Purchaser;
(ii) the Purchaser received from an independent third
party, who had obtained the information lawfully and was under
no obligation of secrecy, or
(iii) the Purchaser can show was lawfully in its possession
before receipt of such information from the Vendor.
If this Agreement is terminated without completion of the transactions
contemplated herein, the Purchaser shall promptly return all documents,
work papers and other written material (including all copies) obtained
from the Vendor in connection with this Agreement, and not previously
made public and shall continue to maintain the confidence of all such
information.
(b) After the Closing, the Vendor shall keep confidential all
information relating to the Business, except information which:
(i) is or becomes generally available to the public, or
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(ii) the Vendor received after Closing from an independent
third party, who had obtained the information lawfully and was
under no obligation of secrecy, or
(iii) the Vendor is required by law to disclose provided
that the Vendor shall give prompt notice to the Purchaser of
such requirement and, unless the Purchaser waives any
objection to compliance with the requirement, the Vendor will
cooperate with the Purchaser on a reasonable basis in the
Purchaser's efforts to obtain a protective order or other
remedy to avoid disclosure or obtain assurance that the
information will be accorded confidential treatment.
9.4 ACTIONS TO SATISFY CLOSING CONDITIONS - Each of the Parties agrees to
take all such actions as are within its power to control, and to use its best
efforts to cause other actions to be taken which are not within its power to
control, so as to ensure compliance with each of the conditions and covenants
set forth in Articles 7, 8 or 9 which are for the benefit of any other Party.
9.5 EMPLOYEES -
(a) The Purchaser shall become the successor employer under the
Collective Agreement and shall be bound by and comply with the terms of
such Collective Agreement effective from the Closing Date. For greater
certainty, the Purchaser will not assume any liability for any former
employees of the Vendor who have resigned, retired or ceased to be
employed by the Vendor for any reason before the Closing Date.
(b) The Purchaser shall offer employment, effective from the
Closing Date, to the Employees listed on Schedule 9.5 ("Non-Unionized
Employees") (other than the Disabled Employees). The Purchaser shall
also offer employment to the Disabled Employees who by June 30, 1999
have ceased to be disabled or injured and who have notified the
Purchaser that they are ready, willing and able to return to work, each
offer to be effective upon the date such Disabled Employee ceases to be
disabled or injured and is ready, willing and able to return to work.
Such offers shall be on terms and conditions of employment including
salary, incentive compensation and benefits which are substantially
equivalent in the aggregate to those presently paid to the
Non-Unionized Employees. Prior to its presentation to any NonUnionized
Employee, the Purchaser shall provide the Vendor with a copy of its
offer of employment to the Non-Unionized Employees and the form of
offer of employment shall be settled by the Parties, acting reasonably.
The Vendor and the Purchaser shall
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exercise reasonable efforts to persuade the Non-Unionized Employees to
accept such offers of employment.
(c) The Vendor shall be responsible for all notices of
termination, pay in lieu of reasonable notice of termination, severance
and other obligations to the Non-Unionized Employees who are not
offered employment by the Purchaser or who do not accept employment
with the Purchaser and to Disabled Employees respecting whom the
Purchaser is not required pursuant to subsection (b) to make an offer
of employment and the Vendor shall indemnify and save the Purchaser
harmless in respect of all such obligations.
(d) The Purchaser shall recognize the service of the Transferred
Employees with the Vendor and, to the extent such service was
recognized by the Vendor, with the Vendor's predecessors for the
Business up to the Closing Date for all purposes as if such service had
occurred with the Purchaser.
9.6 PENSION AND OTHER BENEFIT PLANS -
(a) Effective as of the Closing Date, the Transferred Employees
who participate in the Vendor's Non-Union Pension Plan shall cease to
participate in such plan.
(b) Effective as of the Closing Date, the Purchaser shall provide
at its own expense a pension plan registered with the appropriate
federal and provincial regulatory authorities for the Transferred
Employees who are Non-Unionized Employees who were participating, or
who would be eligible to participate, in the Vendor's Non-Union Pension
Plan had their employment with the Vendor continued after the Closing
Date (the "Purchaser's Non-Union Pension Plan").
(c) The Purchaser's Non-Union Pension Plan shall recognize service
prior to the Closing Date and membership in the Vendor's Non-Union
Pension Plan to the extent required under Laws for purposes of the
Purchaser's Non-Union Pension Plan.
(d) The Vendor shall cause the funding agent of the Vendor's
Non-Union Pension Plan to effect a transfer of assets from the Vendor's
Non-Union Pension Plan to the funding agent of the Purchaser's
Non-Union Pension Plan equal to the assets held in the defined
contribution accounts (the "Accounts") for the Transferred Employees
who are NonUnionized Employees in the Vendor's Non-Union Pension Plan
at the Closing Date, plus (or
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minus) investment returns earned (or losses suffered) by such Accounts
from the Closing Date to the time of transfer. Such Accounts shall be
transferred within 60 days after the establishment of the Purchaser's
Non-Union Pension Plan, or if later, within 60 days after receipt of
written approval for the transfer of such Accounts from the applicable
regulatory authorities. For greater certainty, until such transfer, the
Accounts will continue to be invested and managed in accordance with
the terms of the Vendor's Non-Union Pension Plan and such Accounts will
continue to bear their proportionate share of management and custodial
fees charged to such plan. The Parties shall use reasonable efforts to
avoid any adverse investment costs or losses to the Accounts as a
result of the transfer of assets from the Vendor's Non-Union Pension
Plan to the Purchaser's Non-Union Pension Plan contemplated in this
subsection 9.6(d).
(e) Effective as of the Closing Date, the unionized Transferred
Employees whose employment is governed by the Collective Agreement and
who participate in the Vendor's Union Pension Plan shall cease to
participate in and accrue benefits under the Vendor's Union Pension
Plan.
(f) Effective as of the Closing Date, the Purchaser shall provide
at its own expense, a pension plan, registered with the appropriate
federal and provincial regulatory authorities, for the Transferred
Employees whose employment is governed by the Collective Agreement (the
"Purchaser's Union Pension Plan"). The Purchaser's Union Pension Plan
shall provide benefits to such Transferred Employees in respect of
their service prior to Closing and after the Closing Date to the expiry
of the Collective Agreement on the same basis as provided under the
Vendor's Union Pension Plan as constituted at the Closing Date. The
Purchaser's Union Pension Plan shall recognize Transferred Employees'
period of service and membership in the Vendor's Union Pension Plan for
equivalent purposes of the Purchaser's Union Pension Plan.
(g) Within 60 days after the Closing Date, the Vendor shall cause
its actuary to perform actuarial valuations, effective as at the
Closing Date, in accordance with the methods and assumptions described
in Schedule 9.6 hereto in order to determine (i) the going concern and
solvency liabilities for all benefits under the Vendor's Union Pension
Plan and (ii) the going concern and solvency liabilities for all
benefits for the Transferred Employees whose employment is governed by
the Collective Agreement under the Vendor's Union Pension Plan, and
(iii) the market value of the assets of the Vendor's Union Pension
Plan, and shall cause the amounts thereof to be reported to the
Purchaser and to the Purchaser's actuary and
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shall furnish to each of them such other information and data as may be
reasonably requested to permit a review and verification of such
determinations by the Purchaser and its actuary. Any data errors or
inaccuracies identified by either Party will be corrected and will be
reflected in the calculation of the amounts referred to in this
subsection 9.6(g). If the Purchaser does not agree in writing to the
determinations within 30 days after receiving such information, the
determinations shall be referred to and settled with full and final
effect by a qualified independent actuary (jointly selected by the
Parties) within 30 days thereafter and the reasonable costs and
expenses of such independent actuary shall be borne equally by the
Vendor and the Purchaser. For greater certainty, the determination of
going concern and solvency liabilities under subsection 9.6(g) shall be
in accordance with any and all applicable standards, guidelines or
policies issued by the Canadian Institute of Actuaries and in
accordance with Laws.
(h) Within 14 days following the determination of the liabilities
and assets referred to in subsection 9.6(g), the Vendor shall promptly
apply for such regulatory approvals as may be required to transfer from
the Vendor's Union Pension Plan to the Purchaser's Union Pension Plan
such maximum amount (determined as at the Closing Date) as may be
permitted by the applicable regulatory authorities to be transferred
from the Vendor's Union Pension Plan to the Purchaser's Union Pension
Plan in respect of the Transferred Employees whose employment is
governed by the terms of the Collective Agreement (the "Transfer
Amount"). The Vendor shall deliver a true and complete copy of the
Vendor's application to the Purchaser at the time the Vendor makes such
application and shall promptly provide to the Purchaser copies of all
correspondence with the applicable regulators relating thereto.
(i) Promptly after the determination of the Transfer Amount and
subject to receipt by the Vendor of such regulatory approvals as may be
required, and subject to the adjustments referred to in subsections
9.6(j) and (k), the Vendor shall cause the funding agent of the
Vendor's Union Pension Plan to transfer the Transfer Amount, in cash,
(together with interest thereon at the rate prescribed in Schedule 9.6)
to the funding agent of the Purchaser's Union Pension Plan. The date on
which such amount is transferred from the Vendor's Union Pension Plan
to the Purchaser's Union Pension Plan pursuant to this subsection
9.6(i) shall be referred to as the "Transfer Date". Written
confirmation and copies of any and all such regulatory approvals shall
be forwarded by each party to the other promptly upon receipt.
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(j) As soon as practicable after the Closing Date, but in any
event no later than the Transfer Date, the Vendor shall make a payment
to the Purchaser (which shall be deemed to be an adjustment to the
Purchase Price) of an amount equal to the sum of:
(i) the amount, if any, by which the going concern
liability determined as at the Closing Date for
Transferred Employees whose employment is governed by
the terms of the Collective Agreement (determined in
accordance with subsection 9.6(g)) exceeds the
Transfer Amount as at the Closing Date, and
(ii) the amount, if any, by which the Solvency Deficiency
(defined below) exceeds $250,000,
together with interest adjustments thereon from the Closing
Date to the date of payment at the rate prescribed therefor in
Schedule 9.6. For purposes of Section 9.6, the "Solvency
Deficiency" shall be the amount, if any, by the which the
solvency liability determined as at the Closing Date for
Transferred Employees whose employment is governed by the
terms of the Collective Agreement (determined in accordance
with subsection 9.6(g)) exceeds the greater of (A) the
Transfer Amount as of the Closing Date, and (B) the going
concern liability determined as at the Closing Date for
Transferred Employees whose employment is governed by the
terms of the Collective Agreement (determined in accordance
with subsection 9.6(g)).
(k) From the Closing Date to the Transfer Date, the Vendor shall
cause the funding agent of the Vendor's Union Pension Plan to pay from
the Vendor's Union Pension Plan and record as required, all pension and
ancillary benefit payments relating to the unionized Transferred
Employees as directed by the Purchaser and the Purchaser's direction in
respect thereof shall be in accordance with the Purchaser's Union
Pension Plan and Laws. The amount of the aforesaid payment together
with interest thereon from the date of payment to the Transfer Date (as
adjusted in accordance with Schedule 9.6) shall be deducted from the
Transfer Amount.
(l) The Vendor and Purchaser each shall file such information
returns and reports, obtain such regulatory approvals and take all
other actions in connection with the implementation of this Section 9.6
as may be necessary and reasonable to give effect to the Pension Plan
transactions contemplated in this Section 9.6.
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(m) Promptly after the Closing Date, the Purchaser shall establish
or cause to be established with effect as of the Closing Date, benefit
plans ("Purchaser's Benefit Plans") to provide non-pension life,
health, dental and disability benefits for the Transferred Employees in
connection with any and all claims of Transferred Employees incurred on
and after the Closing Date.
(n) The Purchaser's Benefit Plans shall comply with the
requirements of applicable Collective Agreements. Transferred Employees
who participate in the Vendor's Benefit Plans according to the terms of
the Vendor's Benefit Plans shall, with effect as of the Closing Date,
cease to participate in and accrue benefits under the Vendor's Benefit
Plans and shall commence participation in and accrue benefits under the
Purchaser's Benefit Plans in accordance with, and subject to, the
membership, eligibility and coverage requirements of the Purchaser's
Benefit Plans, except that with respect to such Transferred Employees,
the Purchaser's Benefit Plans shall waive any pre-existing condition
limitations, shall accept any pre-approvals and shall honour any
deductibles and out-of-pocket expenses incurred by such Transferred
Employees during (calendar) 1999. Transferred Employees who are not
participants in the Vendor's Benefit Plans as at the Closing Date shall
become participants in and accrue benefits under the Purchaser's
Benefit Plans on and after the Closing Date in accordance with, and
subject to, the membership, eligibility and coverage requirements
thereof. The Vendor shall retain responsibility under the Vendor's
Benefit Plans for all amounts payable by reason of or in connection
with any and all claims incurred by the Transferred Employees (or their
eligible beneficiaries and dependants) before the Closing Date and for
any claims incurred by any person who is not a Transferred Employee.
For the purposes of this subsection (n), a claim shall be deemed to
have been incurred on the date of occurrence of an injury, the later of
diagnosis of an illness and absence from work because of that illness,
or any other event giving rise to such claim or series of related
claims.
(o) Notwithstanding anything to the contrary herein, each Disabled
Employee and each Transferred Employee covered under the Collective
Agreement who is in receipt of long term disability benefits under the
Vendor's Benefit Plans on the Closing Date shall remain the
responsibility of the Vendor and the Vendor's Benefit Plans until such
employee commences active employment with the Purchaser.
(p) The Vendor shall provide to the Purchaser, no later than 45
days after the Closing Date, such data, records, documentation and
information relating to Transferred Employees
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and their participation in any Pension Plan or Benefit Plan as
Purchaser may reasonably request.
9.7 SALES AND TRANSFER TAXES - The Purchaser shall pay direct to the
appropriate taxing authorities all sales and transfer taxes, registration
charges and transfer fees other than the goods and services tax/harmonized sales
tax imposed under Part IX of the Excise Tax Act (Canada) payable by it,
applicable in respect of the purchase and sale of the Purchased Assets under
this Agreement and, upon the reasonable request of the Vendor, the Purchaser
shall furnish proof of such payment.
9.8 GOODS AND SERVICES TAX AND HARMONIZED SALES TAX - The Vendor and the
Purchaser shall jointly elect under subsection 167(1) of Part IX of the Excise
Tax Act (Canada) and any provincial legislation imposing a similar value added
or multi-staged tax that no such tax be payable with respect to the sale and
purchase of the Purchased Assets pursuant to this Agreement. The Vendor and the
Purchaser shall make such election in the prescribed form containing prescribed
information pursuant to the Excise Tax Act (Canada) and any provincial
legislation imposing a similar value added or multi-staged tax and the Purchaser
shall file the joint election in compliance with the requirements of the Excise
Tax Act (Canada) and any provincial legislation imposing a similar value added
or multi-staged tax. The Purchaser shall indemnify and save harmless the Vendor
from and against any such tax imposed on the Vendor as a result of any failure
by any Governmental Authority to accept any such election.
9.9 ACCOUNTS RECEIVABLE ELECTION - The Purchaser and the Vendor shall with
respect to the accounts receivable jointly execute and file an election under
Section 22 of the Income Tax Act (Canada), and any equivalent provision under
applicable provincial tax legislation, and shall designate therein the portion
of the Purchase Price allocated thereto under Section 3.2 of this Agreement as
the consideration paid by the Purchaser to the Vendor.
9.10 PRESERVATION OF RECORDS - The Purchaser shall take all reasonable
steps to preserve and keep the records of the Vendor and the Business delivered
to it in connection with the completion of the transactions contemplated by this
Agreement for a period of six (6) years from the Closing Date, or for any longer
period as and when may be required by any Law or Governmental Authority, and
shall make such records available to the Vendor as may be reasonably required by
it. The Vendor acknowledges that the Purchaser shall not be liable to the Vendor
in the event of any accidental destruction of such records, unless such
destruction was wilfully caused by the Purchaser.
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9.11 RISK OF LOSS- The Purchased Assets shall be and remain until Closing
at the risk of the Vendor. Pending Closing, the Vendor shall hold all insurance
policies and the proceeds thereof notwithstanding that such insurance policies
and proceeds of insurance may be an Excluded Asset in trust for the Parties as
their interests may appear.
9.12 ACCOUNTS RECEIVABLE BUY-BACK -
(a) The Vendor shall repurchase from the Purchaser, any of the
Accounts Receivable which remain uncollected as of the close of
business on August 1, 1999 (the "Repurchase Date") (including any
uncollected Accounts Receivable which are subject to any defense,
counterclaim or set off) in excess of the agreed to aggregate reserves
on Schedule 1.1(b) at a price equal to the aggregate face value
thereof, payable by certified cheque, bank draft or wire transfer
within two Business Days of delivery by the Purchaser to the Vendor of
a statement setting out any such uncollected Accounts Receivable as of
the Repurchase Date. The Purchaser shall deliver to the Vendor the
contracts, invoices and other documentation furnished by the Vendor in
connection with this transaction relating to such repurchased Accounts
Receivable. The Purchaser shall communicate with the Vendor respecting
any customer claims or refusals or failures to pay Accounts Receivable
on not less than a weekly basis until August 1, 1999 and, in accordance
with the Non-Competition Agreement, shall permit the Vendor to rework
orders in order to attempt to collect any such repurchased Accounts
Receivable. The Purchaser shall at the request of the Vendor provide
evidence satisfactory to the Vendor, acting reasonably, of the release
by its lenders of any security interest in such repurchased Accounts
Receivable and the Vendor shall not be obliged to repurchase without
such evidence.
(b) Any payment made by an account debtor to the Purchaser in
respect of the Accounts Receivable shall be deemed to have been paid
with respect to and shall be applied against the oldest portion of any
indebtedness owed by the trade debtor to the Purchaser, unless at the
time of payment, such trade debtor directs, in writing, that the
payment be applied to the payment of a particular account receivable,
in which case, such payment shall be applied as directed.
(c) Prior to the Repurchase Date of the Accounts Receivable, the
Purchaser shall use all reasonable efforts to collect the Accounts
Receivable in the ordinary course of business.
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9.13 SURVEYS - The Vendor has delivered to the Purchaser (i) three (3)
original copies of a survey and real property report for each Real Property
prepared by a duly licenced surveyor.
9.14 PAYMENT OF TRADE PAYABLES - Within 75 days from the date of this
Agreement, Purchaser shall deliver a certificate to the Vendor confirming that
substantially all trade payables included in the Accounts Payable have been paid
or satisfied.
ARTICLE 10
INDEMNIFICATION
10.1 MUTUAL INDEMNIFICATIONS FOR BREACHES OF COVENANTS AND WARRANTY, ETC. -
The Vendor covenants and agrees with the Purchaser, and the Purchaser covenants
and agrees with the Vendor (the Party or Parties so covenanting and agreeing to
indemnify another Party being referred to in this Section as the "Indemnifying
Party" and the Party so to be indemnified being called the "Indemnified Party")
to indemnify and save harmless, on an after-Tax basis, the Indemnified Party,
effective as and from the Closing Time, from and against all Claims which may be
made or brought against the Indemnified Party or which it may suffer or incur,
directly or indirectly as a result of or in connection with any non-fulfilment
of any covenant or agreement on the part of the Indemnifying Party under this
Agreement or any incorrectness in or breach of any representation or warranty of
the Indemnifying Party contained in this Agreement or in any certificate or
other document furnished by the Indemnifying Party pursuant to this Agreement.
The foregoing obligation of indemnification in respect of such Claims shall be
subject to:
(a) the limitation contained in Section 6.2 respecting the
survival of the representations and warranties of the Parties;
(b) the requirement that the Indemnifying Party shall, in respect
of any Claim made by any third person, be afforded an opportunity at
its sole expense to resist, defend and compromise such Claim in
accordance with Section 10.4; and
(c) the limitation that the Indemnifying Party shall not be
required to pay any such amount until the aggregate of such claims by
the Indemnified Party exceeds $25,000 and, upon the aggregate of such
claims exceeding $25,000, the Indemnifying Party shall be required to
pay the amount owing in respect of all of such claims including the
$25,000. Solely for purposes of calculating the foregoing amounts (but,
for greater certainty, not for
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purposes of determining whether any representation or warranty is
incorrect or has been breached), any representation or warranty which
contains the words "material" or "materially" shall be read and
construed as though such words were not contained therein.
10.2 ENVIRONMENTAL INDEMNITY - The Vendor covenants and agrees to indemnify
and save harmless, on an after-Tax basis, the Purchaser and each of its
officers, directors, employees and agents (collectively referred to in this
Section as the "Indemnified Parties") for a period of two (2) years from the
Closing Date from and against all Claims which may be made or brought against
the Indemnified Parties or which they may suffer or incur, directly or
indirectly as a result of or in connection with:
(a) the presence of any Hazardous Substances which are not in
compliance with applicable Environmental Laws upon or within the Real
Property prior to the Closing Date (including underlying soils and
substrata, surface water, groundwater and vegetation);
(b) the presence of any Hazardous Substances which are not in
compliance with applicable Environmental Laws on, upon or within
properties adjoining or approximate to any of the Real Property
relating to any act or omission of the Vendor, each case prior to the
Closing Date or in any way to the carrying on of the Business by the
Vendor;
(c) any Remedial Order imposed in connection with the Business or
the Real Property (including underlying soils and substrata, surface
water, groundwater and vegetation) relating to any condition, event or
circumstance existing or occurring prior to Closing;
(d) any Remedial Order imposed in connection with the Business in
connection with properties adjoining or approximate to the Real
Property (including underlying soils and substrata, surface water,
groundwater and vegetation), in each case relating to any act or
omission of the Vendor prior to the Closing Date or in any way to the
carrying on of the Business by the Vendor;
(e) any other Claims brought or imposed at any time by third
parties in connection with environmental matters relating to the Real
Property relating to any period prior to the Closing Date.
The benefit of this indemnity may be assigned by the Purchaser to any successor
or assign of the Purchaser and the Vendor hereby consents to any such
assignment.
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10.3 PRODUCT LIABILITY AND WARRANTIES -
(a) All liability to third persons and warranty obligations
respecting products manufactured or sold or services provided by the
Business prior to the Closing Date shall remain the sole responsibility
of the Vendor and the Vendor covenants and agrees to indemnify the
Purchaser in respect of such liability and warranty obligations.
(b) All liability to third persons and warranty obligations
respecting products manufactured and sold or services provided by the
Business from and after the Closing Date shall be the sole
responsibility of the Purchaser and the Purchaser covenants and agrees
to indemnify the Vendor in respect of such liability and warranty
obligations.
10.4 INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS -
(a) In the case of Claims made by a third party with respect to
which indemnification is sought, the Party seeking indemnification
shall give prompt written notice, and in any event within 20 days, to
the other Party of any such Claims made upon it. In the event of a
failure to give such notice, such failure shall not preclude the Party
seeking indemnification to obtain such indemnification but its right to
indemnification may be reduced to the extent that such delay prejudiced
the defense of the Claim or increased the amount of liability or cost
of defense and provided that, notwithstanding anything else herein
contained, no claim for indemnity in respect of the breach of any
representation or warranty contained herein may be made unless notice
of such claim has been given prior to the expiry of the survival period
applicable to such representation and warranty pursuant to Section 6.2.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 60 days after receipt of the
notice described in subsection (a) to assume the control of the
defense, compromise or settlement of the Claim, provided that such
assumption shall, by its terms, be without cost to the Indemnified
Party and provided the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party in accordance with the
terms contained in this Section in respect of that Claim.
(c) Upon the assumption of control of any Claim by the
Indemnifying Party as set out in subsection (b), the Indemnifying Party
shall diligently proceed with the defence, compromise or settlement of
the Claim at its sole expense, including, if necessary, employment of
counsel reasonably satisfactory to the Indemnified Party and, in
connection
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therewith, the Indemnified Party shall cooperate fully, but at the
expense of the Indemnifying Party with respect to any out-of-pocket
expenses incurred, to make available to the Indemnifying Party all
pertinent information and witnesses under the Indemnified Party's
control, make such assignments, provide access to any Real Property or
Purchased Assets for the purpose of carrying out investigations or
remedial actions and take such other steps as in the opinion of counsel
for the Indemnifying Party are reasonably necessary to enable the
Indemnifying Party to conduct such defence. The Indemnified Party shall
also have the right to participate reasonably in the negotiation,
settlement or defence of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the Parties as to the validity or invalidity, as the
case may be of such Claim against the Indemnifying Party.
(e) If the Indemnifying Party does not assume control of a Claim
as permitted in subsection (b), the Indemnified Party shall not be
entitled to any indemnity from the Indemnifying Party in respect of
such Claim if the Indemnified Party settles such Claim without the
consent of the Indemnifying Party.
10.5 BULK SALES ACT INDEMNITY - It is agreed that the Purchaser shall not
require the Vendor to comply, or to assist the Purchaser to comply, with the
requirements of the Bulk Sales Act (Ontario), section 6 of the Retail Sales Tax
Act (Ontario) and any other comparable bulk sales or retail sales tax
legislation as may be applicable in respect of the purchase and sale of the
Purchased Assets pursuant to this Agreement. Notwithstanding the foregoing, the
Vendor agrees to indemnify and save harmless the Purchaser on an after Tax basis
from and against any Claims which may be made or brought against the Purchaser
or which the Purchaser may suffer or incur as a result of, in respect of, or
arising out of such non-compliance. The Purchaser shall indemnify and save
harmless the Vendor on an after Tax basis from and against any Claim which may
be made or brought against the Vendor or which the Vendor may suffer or incur as
a result of a failure by the Purchaser to discharge the Assumed Liabilities in
accordance with their terms.
<PAGE> 64
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ARTICLE 11
GENERAL
11.1 PUBLIC NOTICES - All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by the Vendor and the Purchaser and no Party
shall act unilaterally in this regard without the prior approval of the other
Party, such approval not to be unreasonably withheld, except:
(a) in the case of the Vendor for communications made in
confidence to the Vendor's employees affected by such transactions; or
(b) where required to do so by law or by the applicable
regulations or policies of any provincial or Canadian, U.S. or other
regulatory agency of competent jurisdiction or any stock exchange
whether or not in Canada in circumstances where prior consultation with
the other Party is not practicable.
11.2 EXPENSES - Each of the Parties shall pay their respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Assets and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred. Each Party shall be responsible for any fees and expenses of any
broker or investment advisor retained by it in connection with the sale of the
Purchased Assets.
11.3 NOTICES - Any notice or other writing required or permitted to be given
under this Agreement or for the purposes of this Agreement (in this Section
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered, or if sent by prepaid registered mail or if transmitted by
facsimile or other form of recorded communication tested prior to transmission
to such Party:
(a) in the case of a Notice to the Vendor at:
Cold Metal Products, Limited
65 Imperial Street
Hamilton, ON L8E 5A9
Attention: Martin Whitlock
Fax: (905) 544-2320
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with a copy to the Vendor's Counsel at:
Blake, Cassels & Graydon
Commerce Court West
P. O. Box 25, Commerce Court
TORONTO, ON M5L 1A9
Attention: Alan F. Brown
Fax: (416) 863-2653
with a copy to:
Cohen Swados Wright Hanifin Bradford & Brett, LLP
70 Niagara Street
BUFFALO, NY 14202-3467
USA
Attention: Jane Clemens
Fax: (716) 856-5228
(b) in the case of a Notice to the Purchaser at:
Maksteel Inc.
7615 Torbram Road
MISSISSAUGA, ON L4T 4A8
Attention: Robert E. Rollwagen
Fax: (905) 678-6755
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with a copy to Purchaser's Counsel:
Osler, Hoskin & Harcourt
PO Box 50
1 First Canadian Place, Suite 6600
TORONTO, ON M5X 1B8
Attention: Adrian P. Hartog
Fax: (416) 862-6666
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
11.4 ASSIGNMENT - Neither this Agreement nor any benefits or burdens under
this Agreement shall be assignable by any Party without the prior written
consent of each of the other Parties, which consent shall not be unreasonably
withheld or delayed. Subject to the foregoing, this Agreement shall enure to the
benefit of and be binding upon the Parties and their respective successors
(including any successor by reason of amalgamation of any Party) and permitted
assigns.
11.5 PLANNING ACT (ONTARIO) - This Agreement shall only be effective to
create an interest in the Real Property if the subdivision control provisions of
the Planning Act, (Ontario), as amended, are complied with by the Vendor on or
before the Closing and the Vendor covenants to proceed diligently at its expense
to obtain any necessary consent on or before Closing. The Vendor has no
knowledge that completion of the transactions provided for in this Agreement
will require any consent under the Planning Act (Ontario) and if any consent is
required the Vendor will obtain such consent prior to the Closing, at its sole
cost and expense.
11.6 SET-OFF - In the event that the Purchaser is entitled to receive
amounts from the Vendor under this Agreement (other than pursuant to Section
9.12), such amounts shall be set-off against the then outstanding principal
amount and any accrued and unpaid interest of the promissory note referred
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to in Section 3.2(b) and the principal amount of such promissory note shall be
reduced from time to time on the dates amounts are set-off against it pursuant
to this Section. To the extent the aggregate of the amounts which the Purchaser
is entitled to receive from the Vendor hereunder (other than pursuant to Section
9.12) exceeds the principal amount of such promissory note plus any accrued and
unpaid interest thereon, such excess may be claimed by the Purchaser from the
Vendor.
11.7 FURTHER ASSURANCES - The Parties shall, with reasonable diligence, do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Agreement, and each Party shall
provide such further documents or instruments required by any other Party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
11.8 COUNTERPARTS - This Agreement may be executed by the Parties in
separate counterparts each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
COLD METAL PRODUCTS, LIMITED
Per:_______________________________
Name:
Title:
Per:_______________________________
Name:
Title:
MAKSTEEL INC.
Per:_______________________________
Name:
Title:
Per:_______________________________
Name:
Title:
