EXHIBIT 3
STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 5, 1995
BETWEEN
TJ INTERNATIONAL, INC.
AND
ANDERSEN CORPORATION
TABLE OF CONTENTS
PAGE
1. PURCHASE OF STOCK. . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Shares to be Purchased. . . . . . . . . . . . . . . . . . . . 1
(b) Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Final Determination, Payments and Allocation of Fixed
Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Contingent Purchase Price and Payment . . . . . . . . . . . . 7
(f) Expenses and Refusal to Continue . . . . . . . . . . . . 8
2. REPRESENTATIONS AND WARRANTIES OF TJI. . . . . . . . . . . . . . . 9
(a) Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . 9
(b) Corporate Organization, Minute Books and Records. . . . . . . 9
(c) Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Authorization . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 11
(f) Consents and Approvals. . . . . . . . . . . . . . . . . . . . 11
(g) Financial Statements. . . . . . . . . . . . . . . . . . . . . 12
(h) Loss Contingencies; Other Liabilities . . . . . . . . . . . . 12
(i) Absence of Certain Changes. . . . . . . . . . . . . . . . . . 12
(j) Real Properties . . . . . . . . . . . . . . . . . . . . . . . 13
(k) Machinery, Equipment, Vehicles and Personal Property. . . . . 14
(l) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 14
(m) Receivables and Payables. . . . . . . . . . . . . . . . . . . 14
(n) Intellectual Property . . . . . . . . . . . . . . . . . . . . 15
(o) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Tax and Government Returns. . . . . . . . . . . . . . . . . . 16
(q) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) Pension and Retirement Plans. . . . . . . . . . . . . . . . . 17
(s) Bank Accounts; Powers of Attorney . . . . . . . . . . . . . . 19
(t) Contracts and Commitments; No Default . . . . . . . . . . . . 20
(u) Orders, Commitments and Returns . . . . . . . . . . . . . . . 21
(v) Employment Matters. . . . . . . . . . . . . . . . . . . . . . 21
(w) Dealers and Suppliers . . . . . . . . . . . . . . . . . . . . 24
(x) Permits and Other Operating Rights. . . . . . . . . . . . . . 24
(y) Compliance with Law . . . . . . . . . . . . . . . . . . . . . 24
(z) Assets of Business. . . . . . . . . . . . . . . . . . . . . . 24
(aa) Business Generally. . . . . . . . . . . . . . . . . . . . . . 24
(ab) Environmental and Occupational Health and Safety
Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ac) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(ad) Outlook Representations . . . . . . . . . . . . . . . . . . . 26
(ae) Accuracy of Information . . . . . . . . . . . . . . . . . . . 26
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . . 26
(a) Corporate Organization. . . . . . . . . . . . . . . . . . . . 26
(b) Authorization . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 26
(d) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Consents and Approvals. . . . . . . . . . . . . . . . . . . . 27
(f) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Agreements as to Specified Matters. . . . . . . . . . . . . . 27
(b) Conduct of Business . . . . . . . . . . . . . . . . . . . . . 29
(c) No Solicitation of Alternate Transaction. . . . . . . . . . . 29
(d) Full Access to Purchaser. . . . . . . . . . . . . . . . . . . 29
(e) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Filings; Consents; Removal of Objections. . . . . . . . . . . 30
(g) Further Assurances; Cooperation; Notification . . . . . . . . 30
(h) Supplements to Disclosure Schedule. . . . . . . . . . . . . . 31
(i) Public Announcements. . . . . . . . . . . . . . . . . . . . . 31
5. CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . 31
(a) Representations and Warranties True . . . . . . . . . . . . . 31
(b) Performance . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Required Approvals and Consents . . . . . . . . . . . . . . . 32
(d) Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . 32
(e) No Proceeding or Litigation . . . . . . . . . . . . . . . . . 32
(f) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 32
(g) Legislation . . . . . . . . . . . . . . . . . . . . . . . . . 32
(h) Acceptance by Counsel to Purchaser. . . . . . . . . . . . . . 32
(i) Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 32
(j) Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . 33
(k) Collective Bargaining Agreement . . . . . . . . . . . . . . . 33
(l) Management Employees. . . . . . . . . . . . . . . . . . . . . 33
(m) Tax Refunds . . . . . . . . . . . . . . . . . . . . . . . . . 33
(n) Release. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6. CONDITIONS TO TJI'S OBLIGATIONS. . . . . . . . . . . . . . . . . . 33
(a) Representations and Warranties True . . . . . . . . . . . . . 33
(b) Performance . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) No Proceeding or Litigation . . . . . . . . . . . . . . . . . 34
(e) Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 34
(f) Opinion of Purchaser's Counsel. . . . . . . . . . . . . . . . 34
(g) Acceptance by Counsel . . . . . . . . . . . . . . . . . . . . 34
(h) Management Employees. . . . . . . . . . . . . . . . . . . . . 34
7. TERMINATION AND ABANDONMENT. . . . . . . . . . . . . . . . . . . . 34
(a) Methods of Termination. . . . . . . . . . . . . . . . . . . . 34
(b) Procedure Upon Termination. . . . . . . . . . . . . . . . . . 34
8. SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 35
(a) Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Indemnification by Purchaser -- Untrue Representations
or Breach of Warranties or Covenants. . . . . . . . . . . . . 35
(c) Indemnification by TJI -- Untrue Representation or
Breach of Warranty. . . . . . . . . . . . . . . . . . . . . . 35
(d) Indemnification by and Covenants of TJI -- Employment
Termination . . . . . . . . . . . . . . . . . . . . . . . . . 36
(e) Indemnification - Indemnities Relating to
Environmental Matters Described in Exhibit 8(e). . . . . . . 36
(f) Indemnification - Indemnities Regarding Litigation
Described in the Disclosure Schedule. . . . . . . . . . . . . 37
(g) Indemnification by TJI -- Other . . . . . . . . . . . . . . . 37
(h) Limitation on and Method for Making Claims for
Indemnification . . . . . . . . . . . . . . . . . . . . . . . 37
(i) Special Procedures Regarding Environmental Matters. . . . . . 38
9. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . 39
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Amendment and Modification. . . . . . . . . . . . . . . . . . 39
(c) Waiver of Compliance; Consents. . . . . . . . . . . . . . . . 39
(d) No Third Party Beneficiaries. . . . . . . . . . . . . . . . . 39
(e) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(f) Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 40
(g) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 41
(h) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 41
(i) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(j) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 41
(k) Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . 41
(l) Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 42
(m) Non-Competition . . . . . . . . . . . . . . . . . . . . . . . 42
LIST OF EXHIBITS
NAME OF EXHIBIT NUMBER OF EXHIBIT
--------------- -----------------
Dashwood and Laflamme Pro Forma Balance Sheet. . . . . . Exhibit 1(a)
Disclosure Schedule. . . . . . . . . . . . . . . . . . . Exhibit 2
Purchaser Approvals. . . . . . . . . . . . . . . . . . . Exhibit 3(e)
Certain Environmental Matters. . . . . . . . . . . . . . Exhibit 8(e)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of January 5, 1995, is by and
between ANDERSEN CORPORATION, a corporation organized under the laws of the
State of Minnesota ("Purchaser") and TJ INTERNATIONAL, INC., a corporation
organized under the laws of the State of Delaware ("TJI").
A. TJI recently transferred to OUTLOOK WINDOW PARTNERSHIP, a partnership
organized under the laws of Delaware ("Outlook") record ownership of all of the
shares of the outstanding capital stock, common and preferred (collectively the
"Stock") of Dashwood Industries Limited, a company organized under the laws of
Ontario, Canada (the "Company"), but retained beneficial ownership thereof,
including a right to require Outlook to divest itself of such record ownership
and take other related action in favor of Purchaser;
B. Purchaser wishes to acquire and TJI wishes Outlook to sell to Purchaser
the Stock on the terms and conditions set forth herein.
C. The parties hereto wish to make certain representations, warranties,
covenants and agreements in connection with such acquisition and sale and
prescribe various conditions to such transaction.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
ARTICLE 1
1. PURCHASE OF STOCK.
(a) SHARES TO BE PURCHASED. Subject to the terms hereof and upon
satisfaction of all conditions to the obligations of the parties contained
herein (other than such conditions as shall have been waived in accordance with
the terms hereof), TJI agrees to sell, transfer, assign and deliver its
beneficial ownership of, and to cause Outlook to sell, transfer, assign and
deliver its record ownership of, the Stock to Purchaser, and Purchaser agrees to
acquire the same at the Closing (as hereinafter defined), such acquisition to be
effective for financial accounting as of midnight between December 31, 1994 and
January 1, 1995 (the "Effective Time"), but effective for tax purposes at the
start of the day of the Closing (the "Tax Effective Date"), it being agreed that
TJI and Purchaser shall each take all reasonable steps to ensure that the 1994
tax years of Dashwood and R. Laflamme & Frere Inc., a corporation organized
under the laws of Quebec and a wholly-owned subsidiary of the Company
("Laflamme") is extended so as to end on the day preceding the day of Closing.
(b) PURCHASE PRICE. Purchaser will, in full payment for both record and
beneficial ownership of the Stock, pay a purchase price equal to the sum of the
Dashwood Price plus the Laflamme Price plus
Three Hundred Thousand United States Dollars (U.S. $300,000) (this sum the
"Fixed Purchase Price"), plus the amount, if any, of the Contingent Purchase
Price as defined in Section 1(e) hereof (collectively the "Purchase Price").
The Dashwood Price shall be equal to the sum of Adjusted Net Worth of the
Company plus the Fourth Quarter Loss Adjustment plus the Risk Asset Obligation.
Adjusted Net Worth of the Company shall mean the amount of the
shareholders' equity of the Company as of the Effective Time, adjusted as
provided herein and determined under generally accepted accounting principles as
applied in the United States ("GAAP") applied on a basis consistent with the
application thereof in the preparation of the financial statements of the
Company as of September 30, 1994 ("DW 94 GAAP"), all as reflected in the pro
forma balance sheet of the Company as of September 30, 1994 attached hereto as
Exhibit 1(a) (the "Dashwood Pro Forma Balance Sheet"), but in any event applying
materiality standards determined assuming the Company is a stand-alone business;
provided that (I) the warranty reserve shall be determined by reference to
objective criteria such as historic experience, (II) there shall be an
appropriate accrual under GAAP reflecting the tax position of the Company on a
stand-alone basis (without regard to the NOLs or the Tax Receivable as
hereinafter defined) as of the Tax Effective Date and (III) there shall in any
event be excluded from the computation of Adjusted Net Worth of Dashwood any
amounts attributable to:
(i) so much of the deferred tax provision of the Company as reflects
only an inter-company allocation of consolidated tax obligations of TJI and
its subsidiaries, referred to in the balance sheet of the Company as of
September 30, 1994, which is included in the first column of Exhibit
1(a)(the "DW 9/94 Balance Sheet") as the "tax cushion";
(ii) any accrual with respect to the right to receive a refund with
respect to income taxes, whether designated as an asset or a contra-account
liability, including all or any part of the One Million Eight Hundred Two
Thousand Canadian Dollars (Can. $1,802,000.00) claimed immediately prior to
the Tax Effective Time by the Company from the province of Ontario as a
refund of taxes and interest previously paid (such amount so claimed the
"Tax Receivable");
(iii) net operating (non-capital) losses of the Company incurred
prior to the Tax Effective Time and available as a deduction against future
taxable income for Canadian federal and provincial income tax purposes (the
"Dashwood NOLs") or any benefit therefrom (including any "book benefit" of
the type described in the DW 9/94 Balance Sheet);
(iv) other selected assets of the Company which are neither current
assets or fixed operating assets of the Company and which the parties
mutually agree shall be
2
transferred to TJI or its affiliates in kind effective as of the Effective
Time;
(v) any inter-company obligations of the Company to TJI, Outlook or
any other of their respective affiliates (including Laflamme), except any
trade payable for value received incurred in the ordinary course of
business; and
(vi) the Company's equity holdings in Laflamme, and to the extent
included in the computation of Adjusted Net Worth of Laflamme, any debt of
the Company to any bank or financial institution, including any debt
associated with the acquisition of Laflamme.
The Fourth Quarter Loss Adjustment shall mean an amount equal to the lesser
of U.S. $300,000 or one third of the net operating losses incurred by the
Company during the fourth quarter of its 1994 fiscal year and which are
available as a deduction against future taxable income for Canadian federal and
provincial income tax purposes.
The Risk Asset Obligation shall mean fifty percent (50%) of the Tax
Receivable, plus an amount equal to the sum of any income taxes together with
interest and penalties thereon assessed against the Company after the Effective
Time but prior to the date that the Fixed Purchase Price is finally determined
in accordance with Section 1(d) hereof, provided that such sum shall be accrued
for and reduce the Fixed Purchase Price as so determined (such sum the "Interim
Assessments"), plus fifty percent (50%) of the tax benefit of the difference
between the Dashwood NOLs less the amount, if any, of any indebtedness forgiven
for Canadian income tax purposes from or in connection with the transactions
contemplated hereby (including those described in Section 1(d) hereof) and not
otherwise taken into account in computing the Dashwood NOLs, the tax benefit of
such difference being forty percent (40%) thereof, net of tax cost associated
with the receipt thereof, minus One Hundred Sixty-Seven Thousand Canadian
Dollars (Can. $167,000).
The Laflamme Price shall be equal to the sum of the Adjusted Net Worth of
Laflamme plus the Applied NOL, in each case computed as of the Effective Time.
Adjusted Net Worth of Laflamme shall mean the amount of the shareholders'
equity of Laflamme as of the Effective Time, adjusted as provided herein and
determined under GAAP applied on a basis consistent with the application thereof
in preparation of the balance sheet of Laflamme as of December 3, 1994 (such
GAAP the "LF 94 GAAP" and such balance sheet the "LF 12/94 Balance Sheet"), but
in any event applying materiality standards determined assuming Laflamme is a
stand-alone business; provided that (1) there shall be an appropriate accrual
under GAAP reflecting the tax position of Laflamme on a stand alone basis
without regard to items described (x) and (y) of this Section as of the Tax
Effective Date, (2) the warranty reserve shall be determined by reference to
objective criteria such as historic experience, and (3) there shall in any
3
event be excluded from the computation of Adjusted Net Worth of Laflamme any
amounts attributable to:
(w) other selected assets of Laflamme which are not current assets or fixed
operational assets of Laflamme and which the parties mutually agree shall be
transferred to TJI or its affiliates in kind effective as of the Effective Time;
(x) any tax asset, including any right to a refund or other repayment of
income taxes, whether designated as an asset or a contra-liability account;
(y) net operating (non-capital) losses of Laflamme incurred prior to the
Tax Effective Time and available as a deduction against future taxable income
for Canadian federal and provincial income tax purposes (the "LF NOLs") or any
benefit therefrom (including any "book benefit" thereof); and
(z) any inter-company obligations of Laflamme to TJI, Outlook or any of
their respective affiliates (including Dashwood), except for any trade payables
for value received incurred in the ordinary course of business.
The Applied NOL shall mean an amount equal to the financial accounting balance
sheet "book benefit" of its net operating losses which Laflamme is able to
accrue in accordance with LF 94 GAAP as an offset against its deferred taxes
payable as of the Effective Time.
(c) CLOSING. Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned pursuant to Section 7
hereof, a closing of the transactions contemplated hereby (the "Closing") will
be held at the offices of Oppenheimer Wolff & Donnelly in St. Paul, Minnesota on
January 5, 1995, or at such other time or place as the parties may agree
provided, however, that if any of the conditions provided for in Sections 5
and 6 hereof shall not have been satisfied or waived by such date, then the
party to this Agreement in whose favor such condition runs shall be entitled to
postpone the Closing to a date not later than the Termination Date, by notice to
the other parties until such condition or conditions shall have been satisfied
or waived unless the parties hereto shall agree in writing to extend the date of
such Closing (the date on which the Closing is to occur in accordance with the
foregoing is herein referred to as the "Closing Date").
At the Closing, TJI shall, and shall cause Outlook to, take all actions
reasonably required by Purchaser to effect the transactions contemplated hereby.
Without limiting the foregoing or the other requirements of this Agreement, the
following shall occur, in a manner in form and substance satisfactory to
Purchaser, in the order set forth below:
(i) TJI shall cause Outlook at the Closing to deliver to Purchaser
certificates representing 100% of the Stock, duly
4
endorsed for transfer to Purchaser or as Purchaser shall direct, in
exchange for delivery to TJI at the Closing of a non-interest bearing
promissory note of Purchaser in a principal amount equal to Can.
$3,736,000, the terms and payment schedule of which note shall be
satisfactory to each of TJI and Purchaser (the "Closing Note") and
(ii) Purchaser shall within two business days of the Closing Date loan
money to the Company and/or acquire from the Company Class E, Series A
Preference Shares ("New Preferred") with the effect of infusing into the
Company an aggregate amount of at least U.S. $ 11,800,000.00 and
(iii) Purchaser shall cause the Company to repay within two business
days of the Closing Date then outstanding inter-company indebtedness of the
Company to TJI and/or its affiliates in an amount equal to U.S.
$11,800,000.00 (the initial principal amount of the Closing Note, for such
purpose being deemed to be U.S. $2,680,000, plus the U.S. $11,800,000.00 of
inter-company indebtedness so repaid collectively the "Closing Payment").
The delivery of the Closing Note to TJI by Purchaser shall conclusively be
deemed to satisfy the obligation of Purchaser to pay an amount of the Purchase
Price equal to the original principal amount of the Closing Note.
At the Closing, TJI shall, or shall cause Outlook to, further
(y) deliver or cause Company to deliver to the Purchaser all the
documents and records relating to Company's and Laflamme's businesses
and not in their possession, including all minute books, corporate
records and documents, corporate seals, books of account, accounting
records, past financial statements, tax returns, share certificate
books and share records, title documents and surveys, all contracts,
agreements, licenses, permits, patents, trade marks or other
instruments to which the Company or Laflamme is a party or by which it
is bound, lists of suppliers and customers of the Company or Laflamme
and all other documents, files, records and other data financial or
otherwise of the Company or Laflamme which may be in the possession of
the Company, Laflamme, TJI or Outlook, and
(z) cause such directors of Company and Laflamme as the Purchaser may
specify to resign in favour of nominees of the Purchaser, such
resignations to be effective at the Closing unless otherwise specified
by the Purchaser,
(d) FINAL DETERMINATION, PAYMENTS AND ALLOCATION OF FIXED PURCHASE PRICE.
The Purchaser shall cause the Company and Laflamme to each prepare its draft
financial statements in Canadian dollars as of the Effective Time in the former
case in accordance with DW 94 GAAP and in the latter case in accordance with LF
94 GAAP. The
5
amount of Adjusted Net Worth of the Company, the Adjusted Net Worth of Laflamme,
the Fourth Quarter Loss Adjustment, and the Applied NOL shall each be determined
based on a full audit, including appropriate footnotes, of each of the Company's
and Laflamme's balance sheets as included in such draft financial statements
applying such standards, and in the case of the Fourth Quarter Loss Adjustment
and the Applied NOL based on the proper application of federal and provincial
tax law (and to the extent not inconsistent therewith the prior practice of the
relevant corporation, including prior practices with respect to taking
discretionary depreciation deductions). The Risk Asset Obligation shall be
determined based on the proper application of federal and provincial tax law
(and to the extent not inconsistent therewith the prior practices of the
relevant corporation). Such determinations shall be conducted and made by
Arthur Andersen & Co., TJI's auditors ("AA"), who shall issue its opinions with
respect to each such balance sheet and who shall be required by the parties to
provide reasonable confirmation of its tax determinations, and be reviewed by
Ernst & Young LLP ("EY"), Purchaser's auditors (such audit and such Fourth
Quarter Loss Adjustment, Risk Asset Obligation and Applied NOL determinations
collectively the "Audit"). EY shall have full access to the working papers of
AA. The Audit shall be completed within 90 days of the Effective Time and
submitted to Purchaser and TJI.
In the event that the Purchaser and TJI shall not have agreed in writing
within ninety (90) days of the Effective Time that the amount of the Adjusted
Net Worth of each of the Company and Laflamme, of the Fourth Quarter Loss
Adjustment, the Risk Asset Obligation and the Applied NOL have been properly
determined through the Audit, and TJI and Purchaser are unable to resolve any
such disagreement to their mutual satisfaction within thirty (30) days
thereafter, such disagreement shall be submitted to KPMG Peat Marwick or such
other firm of certified public accountants as the parties shall jointly
designate in writing (the "Independent Firm"). The Independent Firm shall be
requested to determine as quickly as is reasonably possible the proper
resolution of the subject of disagreement applying the terms of this Agreement
and acting as experts and not as arbitrators. The determination of the
Independent Firm shall be final and binding on the parties absent manifest
error. The cost of the Independent Firm shall be shared by the Purchaser and
TJI equally.
In the event the Fixed Purchase Price as finally determined exceeds the
Closing Payment (the "Shortfall"), Purchaser, within ten (10) days of such
determination, (i) shall first issue to TJI a note (the "Reconciliation Note")
which shall be on the same terms as the Closing Note except that the principal
amount thereof shall be equal to the excess, if any, of (i) the Risk Asset
Obligation over (ii) Three Million Three Hundred Eighteen Thousand Canadian
Dollars (Can. $3,318,000) and except that no principal on the Reconciliation
Note shall be payable unless and until the aggregate Tax Benefits (as defined in
the Closing Note) which have been Realized (as such term is also defined in the
Closing Note) equals Three Million Four Hundred Eighty-Five Thousand Canadian
Dollars
6
(Can. $3,485,000) and (ii) shall next cause the Company to repay, if a positive
number, the lesser of an amount equal to the difference between the Shortfall
minus the original principal amount of the Reconciliation Note or an amount
equal to any indebtedness owed by the Company to TJI and its affiliates as set
forth in the balance sheet prepared as a part of the Audit which has not been
repaid by making of the Closing Payment (the "Inter-Co Debt") and (iii) shall
finally if the Shortfall exceeds the original principal amount of the
Reconciliation Note plus the aggregate amount of the Inter-Co Debt repaid in
accordance with clause (ii), pay the excess directly to TJI. The delivery of
the Reconciliation Note to TJI by Purchaser shall conclusively be deemed to
satisfy the obligation of Purchaser to pay an amount of the Purchase Price equal
to the original principal amount of the Reconciliation Note.
In the event that the Closing Payment shall exceed the Fixed Purchase Price
as so determined (such excess the "Excess Payment") (i) the first U.S.$300,000
of the Excess Payment shall be applied to eliminate the first U.S. $300,000.00
installment of principal under the Closing Note, and the balance, if any, of the
Excess Payment shall be paid by TJI to Andersen in cash within such ten (10) day
period.
In the event that after making the payments required to be made by this
section 1(d) there shall be any unpaid indebtedness owed by the Company or
Laflamme to TJI, Outlook, any of their respective affiliates or any person
claiming by or through any of them, TJI hereby agrees to forgive, and cause
Outlook and such affiliates and persons to forgive, such indebtedness.
Notwithstanding anything else contained in this Agreement, Purchaser shall
have no obligation to pay to TJI in any form the amount of any Shortfall unless
and until TJI shall have delivered to Purchaser a certificate issued pursuant to
Section 116 of the INCOME TAX ACT (CANADA) in respect of the sale of the Stock
containing a certificate limit at least equal to the amount of the Fixed
Purchase Price allocated to the Stock in accordance with the foregoing.
(e) CONTINGENT PURCHASE PRICE AND PAYMENT. Contingent Purchase Price shall
be equal to fifty percent (50%) of the difference between (i) the sum of the
amount if any finally recovered from the province of Ontario with respect to the
Tax Receivable together with any interest thereon paid to the Company in
connection with the recovery thereof, plus the amount if any finally recovered
with respect to any Interim Assessments together with any interest thereon paid
to the Company in connection with the recovery thereof, plus the amount if any
of corporate income taxes, federal or provincial actually saved by reason of the
application of Dashwood NOLs (such savings the "NOL Savings") together with any
interest thereon paid to the Company in connection with the recovery of taxes
paid because the Company was improperly denied the right to apply such net
operating (non-capital) losses less (ii) the sum of the Risk Asset Obligation
plus
7
Can. $167,000 plus any tax cost incurred by the Company in connection with
recovering any Risk Asset Obligation (for example, because of income taxes
imposed on interest paid by any taxing authority and included in such or by
reason of any increase in the Large Corporations Tax for the year due to the
reduction in the amount of the two percent (2%) federal surtax on account of the
application of the Dashwood NOLs).
The amount of any Contingent Purchase Price attributable to recovery of the
Tax Receivable or any Interim Assessments shall be paid to TJI by the Purchaser
within thirty (30) days following the date the Tax Receivable or such Interim
Assessment, as the case maybe, shall be paid to the Company by the province of
Ontario, or if later following the day after which any right which the province
of Ontario may have to seek to overturn or to otherwise challenge the right of
Dashwood to the Tax Receivable or such Interim Assessment, as the case maybe,
whether by administrative challenge, appeal or otherwise, shall have lapsed.
The amount of any Contingent Purchase Price attributable to NOL Savings shall be
paid to TJI by the Purchaser after the tax return in which the relevant Pre-95
NOLs are so applied is filed (the date of such filing which reflects particular
NOL Savings the "Filing Date") within thirty (30) days following the day on
which any right of the province of Ontario or the Canadian government to seek to
disallow or otherwise challenge such application or otherwise seek to reduce or
eliminate such NOL Savings, whether by administrative challenge, appeal or
otherwise, shall have lapsed (the "Lapse Date"). Contingent Purchase Price
attributable to interest paid to and received by the Company shall be payable at
the same time as the amount of the associated recovery of all or any portion of
the Tax Receivable, Interim Assessments or NOL Savings are payable to TJI in
accordance with the foregoing.
Interest shall be payable on portions of the Contingent Purchase Price
which may be payable to TJI in accordance with the foregoing only as follows:
from and after the Filing Date with respect to an amount of NOL Savings until
the earlier of: (A) the date such NOL Savings shall be lost to the Company by
reason of an assessment, administrative challenge, appeal of a proceeding in
progress or otherwise, and (B) the Lapse Date with respect to such NOL Savings.
Interest shall be payable on such amount on the last business day of each
calendar quarter at BMo LIBOR as in effect from time to time. BMo LIBOR with
respect to interest accruing during a calendar year shall be determined annually
as of the first business day of such year and shall be the interest rate at
which the Bank of Montreal offered or would have offered on such date to place
with first-class banks in the London interbank market deposits in Canadian
dollars in amounts comparable to such NOL Savings for a period of twelve months.
(f) EXPENSES AND REFUSAL TO CONTINUE. The parties agree that TJI shall
reimburse the Purchaser and the Company for fifty percent (50%) of all out-of-
pocket costs and expenses, including attorneys and accountants fees, incurred by
it in any attempt by it to recover all or any portion of the Tax Receivable or
any Interim Assessments or to establish the validity, availability and
8
applicability of all or any portion the NOL Savings (whether or not resulting in
the payment of any monies to TJI because such attempt fails, by reason of the
application of clause (ii) of Section 1(e) hereof or otherwise). TJI shall have
right to approve the Company's selection of counsel and accountants to represent
it with respect to such attempted recovery, which approval will not be
unreasonably withheld or delayed. Such reimbursement shall be made by TJI
within thirty (30) days of written demand by Purchaser. In the event that
either party (the "Refusing Party") wishes to cease to seek to recover the Tax
Receivable or any identifiable component of any Interim Assessments or the NOL
Savings, it shall so notify the other party. From and after the delivery of
such notice, such other party may at its option also discontinue seeking such
recovery, or continue to seek such recovery at its sole expense, such expenses
to include payment to the Refusing Party of its cost in providing support
reasonably requested by such other party in continuing to seek such recovery.
In such event if such other party is not already entitled, by virtue of the
Closing Note, the Reconciliation Note or otherwise, to 100% of the recovery of
the tax benefit which the Refusing Party does not wish to seek to recover, such
other party shall thereafter be so entitled.
(g) CONVERSIONS. All payment obligations (including amounts of Inter-Co
Debt) will be initially determined in Canadian dollars but shall be paid in U.S.
dollars at a conversion rate equal to the average of the median of the buyers'
and sellers' rates as of the close of business on the last business day of each
of the four (4) weeks preceding the week during which the payment is made, all
as quoted by the Bank of Canada; provided, however, that the principal amount of
the Closing Note and the Reconciliation Note and interest thereon shall be
denominated and paid in Canadian dollars, and the amount of the Risk Asset
Obligation shall be determined and remain in Canadian dollars.
ARTICLE 2
2. REPRESENTATIONS AND WARRANTIES OF TJI.
TJI hereby represents and warrants to Purchaser as of the date hereof as
follows:
(a) DISCLOSURE SCHEDULE. The disclosure schedule marked as Exhibit 2
hereto (the "Disclosure Schedule") is divided into sections which correspond to
the sections of this Section 2. The Disclosure Schedule comprises an accurate
and complete list of all exceptions to the truth and accuracy of, and of all
disclosures or descriptions required by, the representations and warranties set
forth below and a disclosure or description made in any section thereof shall
constitute a disclosure for purposes of any other section of this Agreement.
(b) CORPORATE ORGANIZATION, MINUTE BOOKS AND RECORDS. Each of the
Company, Laflamme and TJI is a corporation duly organized and validly existing
under the laws of the jurisdiction in which it is incorporated, has full
corporate power and authority to carry on
9
its business as it is now being conducted and to own, lease and operate its
properties and assets. Each of the Company and Laflamme is duly qualified or
licensed to do business in every other jurisdiction in which the character or
location of the properties and assets owned, leased or operated by it or the
conduct of its business requires such qualification or licensing and is in good
standing in each such jurisdiction, except in such jurisdictions in which the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a material adverse effect on it or its current activities; and
has heretofore delivered to Purchaser complete and correct copies of its
certificate and articles of incorporation and bylaws, as amended and presently
in effect. The Disclosure Schedule contains a list for each of the Company and
Laflamme of all jurisdictions in which it is qualified or licensed to do
business. Neither the Company nor Laflamme owns (and has not at any time on or
after March 30, 1992 owned) of record or beneficially more than five percent
(5%) of the outstanding voting securities of any corporation or partnership or
other legal entity, except that during such period the Company has owned
beneficially and of record all of the shares of the outstanding capital stock of
Laflamme, common and preferred.
The corporate records and minute books of each of the Company and Laflamme
contain complete and accurate minutes of all its meetings of and copies of all
its by-laws and resolutions passed by its directors and shareholders since its
incorporation; all such meetings were duly called and held, all such by-laws and
resolutions were duly passed and the share certificate books, registers of
shareholders, registers of transfers, registers of directors, register of debt
holders and other corporate registers of Company and Laflamme are each complete
and accurate in all material respects. There is in existence no shareholders'
agreement nor a unanimous shareholders' agreement governing the affairs of
Company or Laflamme. The Disclosure Schedule sets out the names of the current
officers and directors of each of the Company and Laflamme.
(c) CAPITALIZATION. The authorized capital stock of each of the Company
and Laflamme, is set forth on the Disclosure Schedule. With respect to each of
the Company and Laflamme (i) the number of shares of its capital stock
outstanding as of the date of this Agreement are set forth on the Disclosure
Schedule, (ii) all the issued and outstanding shares of its capital stock are
duly authorized, validly issued, fully paid, nonassessable and are without, and
were not issued in violation of, preemptive rights, (iii) there are no other
shares of its capital stock or other equity securities outstanding or any
securities convertible into or exchangeable for such shares, securities or
rights, (iv) there are no outstanding options, warrants, conversion privileges
or other rights to purchase or acquire any of its capital stock or other equity
securities or any securities convertible into or exchangeable for such shares,
securities or rights, (v) there are no contracts, commitments, understandings,
arrangements or restrictions by which it is bound to issue or acquire any
additional shares of its capital stock or other equity securities or any
10
options, warrants, conversion privileges or other rights to purchase or acquire
any of its capital stock or other equity securities or any securities
convertible into or exchangeable for such shares, securities or rights.
(d) AUTHORIZATION. TJI has the legal capacity to enter into this
Agreement and each of TJI and Outlook has the legal capacity to carry out the
transactions contemplated hereby, including without limitation the legal
capacity to execute, deliver and perform the instruments, agreements or
contracts, if any, required by Section 5 to be executed and delivered by either
of them as a condition to Closing. This Agreement has been duly authorized and
has been duly and validly executed by TJI and constitutes its valid and binding
legal obligation, enforceable against it in accordance with its terms.
(e) NON-CONTRAVENTION. Neither the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated herein
will: (i) violate or be in conflict with any provision of the articles,
certificate or certificate and articles of incorporation or bylaws of the
Company. Laflamme or TJI; or (ii) be in conflict with, or constitute a default,
however defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or permit the
acceleration of the maturity of, or give rise to any right of termination,
cancellation, imposition of fees or penalties under, any debt, note, bond,
lease, mortgage, indenture, license, obligation, contract, commitment,
franchise, permit, instrument or other agreement or obligation to which the
Company, Laflamme, Outlook or TJI is a party or by which any of them or their
respective properties or assets is or may be bound (unless with respect to which
defaults or other rights, requisite waivers or consents shall have been obtained
at or prior to the Closing) or (iii) result in the creation or imposition of any
mortgage, hypothec, pledge, lien, security interest, encumbrance, restriction,
prior claim, adverse claim, easement, servitude, right-of-way, tenancy, lease,
encroachment or charge of any kind, whether or not of record (herein a "Lien")
upon any property or assets of the Company or Laflamme, under any debt,
obligation, contract, agreement or commitment to which any of them is party or
by which any of them or their respective assets or properties is or may be
bound; or (iv) violate or cause a violation of any statute, treaty, law,
judgment, writ, injunction, decision, decree, order, regulation, ordinance or
other similar authoritative matters (sometimes hereinafter separately referred
to as a "Law" and sometimes collectively as "Laws") of any foreign, federal,
provincial, state or local governmental or quasi-governmental, administrative,
regulatory or judicial court, department, commission, agency, board, bureau,
instrumentality or other authority (hereinafter sometimes separately referred to
as an "Authority" and sometimes collectively as "Authorities").
(f) CONSENTS AND APPROVALS. With respect to Company, Laflamme, Outlook
and TJI, no consent, approval, order or authorization of or from, or
registration, notification,
11
declaration or filing with (hereinafter sometimes separately referred to as a
"Consent" and sometimes collectively as "Consents") any individual or entity,
including without limitation any Authority, is required in connection with the
execution, delivery or performance of this Agreement by TJI or the consummation
by any of them of the transactions contemplated herein.
(g) FINANCIAL STATEMENTS. TJI has furnished to Purchaser with respect to
each of the Company and Laflamme its balance sheets and statements of operations
described on the Disclosure Schedule, which financial statements in any event
includes the DW 9/94 Balance Sheet and the LF 12/94 Balance Sheet. The most
recent balance sheet so described with respect to each of the Company and
Laflamme will be referred to herein as its "Latest Balance Sheet" or other words
indicating which corporations balance sheet is being described. All such
financial statements of each of the Company and Laflamme (i) are in accordance
with its books and records and have been, prepared in conformity with GAAP
consistently applied, and (ii) fairly present its financial position as of the
respective dates thereof and the results of operations for the periods then
ended, all in accordance with GAAP consistently applied for all periods.
(h) LOSS CONTINGENCIES; OTHER LIABILITIES. Except as reflected in its
Latest Balance Sheet or the footnotes thereto, and except for other liabilities
and obligations arising in the ordinary course since the date of its Latest
Balance Sheet which are consistent in type and amount with those reflected in
its Latest Balance Sheet, neither the Company nor Laflamme has (i) any loss
contingencies which for any reason are not required by GAAP to be accrued;
(ii) any other categories of liabilities or obligations, known or unknown, fixed
or contingent, liquidated or unliquidated which are not required by GAAP to be
accrued. For purposes of this Agreement, "Loss Contingency" shall have the
meaning accorded to it by GAAP.
(i) ABSENCE OF CERTAIN CHANGES. Since the date of its Latest Balance
Sheet, the Company and Laflamme have each owned and operated its assets,
properties and businesses in the ordinary course of business consistent with
past practice. Without limiting the generality of the foregoing, neither the
Company nor Laflamme has:
(i) suffered any adverse change in its condition (financial or
otherwise), assets, business and properties or experienced any event or
failed to take any action which reasonably could be expected to result in
such an adverse change;
(ii) suffered any loss, damage, destruction or other casualty
(whether or not covered by insurance) or suffered any loss of officers,
employees, dealers, distributors, independent contractors, customers, or
suppliers or other favorable business relationships;
12
(iii) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock; or purchased or redeemed any
shares of its capital stock;
(iv) agreed to lend any money or incurred any indebtedness for
borrowed money, or lent any money which is outstanding on the date hereof;
(v) subjected to any Lien, any of its properties or assets, tangible
or intangible;
(vi) acquired or disposed of any assets or properties except in the
ordinary course of business consistent with past practice;
(vii) forgiven or cancelled any debts or claims, or waived any rights
except in the ordinary course of business consistent with past practice;
(viii) entered into any transaction except in the ordinary course of
business consistent with past practice;
(ix) granted to any officer or salaried employee or any other
employee any increase in compensation in any form or paid any severance or
termination pay;
(x) entered into any commitment for capital expenditures for
additions to plant, property or equipment in excess of Can.$ 25,000; or
(xi) agreed, whether in writing or otherwise, to take any action
described in this section.
(j) REAL PROPERTIES. Each of the Company and Laflamme has good and
marketable title in fee simple in and to, or a leasehold interest in and to, all
of real property and fixtures thereon owned or occupied by it or otherwise
reflected in its Latest Balance Sheet (except for real property assets and
fixtures sold in the ordinary course of business since the date of its Latest
Balance Sheet), all of which property, and the respective interest of the
Company and Laflamme therein, is described in the Disclosure Schedule. Such
leasehold interests are valid and in full force and effect and enforceable in
accordance with their terms and there does not exist any violation, breach or
default thereof or thereunder. None of the real property assets or fixtures
owned by Company or Laflamme is subject to any Lien, except the following
(herein called "Permitted Liens"): (i) Liens securing specified liabilities or
obligations shown on the Latest Balance Sheet of the debtor corporation with
respect to which no breach, violation or default exists; (ii) minor
imperfections of title which do not impair the value, existing use or
transferability of such real property assets or fixtures; and (iii) Liens for
current taxes not yet due and payable or being contested in good faith by
appropriate
13
proceedings. With respect to each of the Company and Laflamme, all real
properties owned by and leased to it are free from structural defects, in good
operating condition and repair (ordinary wear and tear excepted), with no
material maintenance, repair or replacement having been deferred or neglected,
and suitable for the intended use and free from other material defects. Each
such real property and its present use conform in all respects to all
occupational, safety or health, zoning, planning, subdivision, platting and
similar Laws, and there is, to the knowledge of TJI, the Company or Laflamme, no
such Law contemplated that would affect adversely the ownership or lease and
operation and use such real properties. Except as set forth in the Disclosure
Schedule, all public utilities necessary for the use and operation of any
facilities on the aforesaid real properties are available for use or access at
such properties and there is no legal or physical impairment to free ingress or
egress from any of such facilities or real properties.
(k) MACHINERY, EQUIPMENT, VEHICLES AND PERSONAL PROPERTY. With respect to
each of the Company and Laflamme, it has good and marketable right, title and
interest in and to, or a leasehold interest in and to, all machinery, equipment,
vehicles and other personal property, tangible or intangible (including
inventories and receivables) owned or primarily utilized by it or otherwise
reflected in its Latest Balance Sheet (except for such items sold or otherwise
disposed of in the ordinary course of business since the date of its Latest
Balance Sheet), any such personal property under lease being separately
described in the Disclosure Schedule. All of such leasehold interests relating
to machinery, equipment, vehicles and other personal property are valid and in
full force and effect and enforceable in accordance with their terms and there
does not exist any violation, breach or default thereof or thereunder. None of
such machinery, equipment, vehicles or other personal property owned by Company
is subject to any Lien except Permitted Liens of the type described in
clause(j)(i). The machinery, equipment, vehicles and other personal property of
Company which are necessary to the conduct of its business are in good operating
condition and repair, ordinary wear and tear excepted, and fit for the intended
purposes thereof and no material maintenance, replacement or repair has been
deferred or neglected.
(l) INVENTORIES. All inventory of the Company or Laflamme the value of
which is included in the determination of its Adjusted Net Worth, consists of a
quality and quantity usable and salable in the ordinary course of business, and
the respective present quantities of all inventory of Company and Laflamme are
reasonable in the present circumstances of the businesses as currently conducted
or as proposed to be conducted.
(m) RECEIVABLES AND PAYABLES.
(i) With respect to each of the Company and Laflamme, it has good
right, title and interest in and to all its accounts and notes receivable
and trade notes and trade accounts reflected in its Latest Balance Sheet
and those acquired and
14
generated since the date of its Latest Balance Sheet (except for those paid
since the date of its Latest Balance Sheet). None of such accounts and
notes receivable and trade notes and trade accounts is subject to any Lien.
Except to the extent of applicable reserves shown in its Latest Balance
Sheet, all of the accounts and notes receivable, trade notes and trade
accounts owing to Company constitute valid and enforceable claims arising
from bona fide transactions in the ordinary course of business, and there
are no claims, refusals to pay or other rights of set-off against any
thereof. No account or note debtor whose account or note balance exceeds
the amount set forth in the Disclosure Schedule at the date set forth
therein was delinquent in payment by more than ninety days. The aging
schedule of the accounts and notes receivable and trade notes and trade
accounts of Company previously furnished to Purchaser is complete and
accurate. All account or note receivable or trade note or trade account
are collectible in accordance with their terms, other than for such
accounts and notes which are not in excess of the reserves established
therefor in the Latest Balance Sheet in which it is reflected.
(ii) With respect to each of the Company and Laflamme, all accounts
payable and notes payable by it arose in bona fide transactions in the
ordinary course of business and no such account payable or note payable is
delinquent.
(n) INTELLECTUAL PROPERTY. The Company and Laflamme each owns or has
valid rights to use exclusively and perpetually, free of any Lien and without
the obligation to pay royalties or other compensation to any third party with
respect thereto, all Canadian, United States and other foreign patents,
trademarks, trade names, industrial designs or registrations therefor, utility
models or similar petty patents, servicemarks, copyrights, and any applications
therefor, schematics, technology, know-how, trade secrets, software code,
computer software programs or applications and tangible or intangible
proprietary information or material that are used or currently proposed to be
used in its business as heretofore conducted; provided that rights to any
software code, programs of applications which are generally commercially
available, and the copyrights associated therewith need not be exclusive or
perpetual (collectively the "Intellectual Property Rights"). The Disclosure
Schedule sets forth a full, complete and true list of all Canadian, United
States and other patents, trademarks, registered copyrights, tradenames,
industrial designs and registrations therefor and servicemarks, and any
applications therefor included in the Intellectual Property Rights, and
specifies the jurisdictions in which each such Intellectual Property Right has
been issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. All patents,
trademarks, copyrights, service marks, trade names, industrial design and
registrations held by the Company or Laflamme are valid and subsisting. The
Company and Laflamme each owns or has valid rights
15
to use exclusively and perpetually, free of any Lien and without obligation to
pay royalties or other compensation to any third party with respect thereto, all
advertising and promotional materials used by it, including any name or likeness
of any person or entity used or any words or symbols which may have acquired
secondary meaning to those exposed to such materials ("Promotional Materials").
No claims with respect to the Intellectual Property Rights or Promotional
Materials have been asserted or, to the knowledge of the TJI, the Company or
Laflamme, are threatened by any person, against the Company or Laflamme, nor do
any of them know of any valid grounds for any bona fide claims. There is no
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Rights by any third party. The conduct by each of the Company and
Laflamme of its business does not infringe upon the patents, industrial designs,
topographies, trade-marks, trade names, brand names, service marks, logos or
copyrights, whether or not registered and whether domestic or foreign, or the
trade secrets, know-how or confidential or proprietary information of any other
person.
(o) LITIGATION. There is no legal, administrative, arbitration, or other
proceeding, suit, claim or action of any nature or investigation, review or
audit of any kind (including without limitation a proceeding, suit, claim or
action, or an investigation, review or audit, involving any environmental Law or
matter), judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled or, to the knowledge of TJI, the Company or Laflamme, threatened or
contemplated by or against or involving (i) the Company or Laflamme, or their
respective assets, properties or businesses (including the Intellectual Property
Rights or Promotional Materials) or their respective directors, officers, agents
or employees (but only in their capacity as such), whether at law or in equity,
before or by any person or entity or Authority, or (ii) TJI, Outlook, the
Company or Laflamme which questions or challenges the validity of this Agreement
or any action taken or to be taken by the parties hereto pursuant to this
Agreement or in connection with the transactions contemplated herein.
(p) TAX AND GOVERNMENT RETURNS. With respect to each of the Company and
Laflamme: (i) it has duly filed in a timely manner all tax returns required to
be filed by it (including any and all tax elections available to it in relation
to such tax returns) and all information returns as to which the non-filing or
late filing could result in interest or penalties, has made complete and
accurate disclosure in such returns and has paid all taxes shown on such returns
as being due and payable and has also paid all assessments and reassessments and
all other taxes, governmental charges, penalties, interest and fines due and
payable by it up to the date hereof and (ii) no federal or provincial taxes or
interest or penalties thereon are or will become due with respect to any period
which period includes any date prior to the Tax Effective Date
16
except those which have been previously paid by it or for which an adequate
provision has been made in its Latest Balance Sheet . With respect to Laflamme
only, all non-capital losses which are claimed to have been incurred prior to
the Tax Effective Date, including any taken into account in computing Applied
NOL, are valid and available for application against the future income of
Laflamme or against deferred tax charges of LaFlamme as and when the tax accrued
for becomes payable. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment or
reassessment of income tax or the filing of any tax return by, or payment of any
tax by, or levying of any governmental charge against, the Company or Laflamme.
There are no actions, audits, assessments, reassessments, suits, proceedings,
investigations or claims now threatened or pending against the Company or
Laflamme in respect of taxes or governmental charges or any matters under
discussion with any governmental authority relating to taxes or governmental
charges asserted by any such authority. Both the Company and Laflamme have
withheld from each payment made by it the amount of all taxes and other
deductions required to be withheld therefrom and has paid the same to the proper
taxing or other authority within the time prescribed under any applicable
legislation or regulation. The relevant federal and provincial limitation
periods for reassessment of taxes have expired in respect of the Company and
Laflamme for the years respectively set out in the Disclosure Schedule. The paid
up capital of the Stock for purposes of the INCOME TAX ACT (CANADA) is in excess
of 24,000,000 Canadian dollars (Can.$24,000,000). TJI's adjusted cost base in
the Stock is in excess of Can.$10,000,000.
(q) INSURANCE. The Disclosure Schedule contains an accurate and complete
list of all policies of fire and other casualty, general liability, theft, life,
workers' compensation, health, directors and officers, business interruption and
other forms of insurance owned or held by Company or Laflamme, specifying the
insured, the insurer, the policy number, the term of the coverage and, in the
case of any "claims made" coverage, the same information as to predecessor
policies for the previous five years. All present policies are in full force
and effect, will remain in full force and effect following Closing and all
premiums with respect thereto have been paid. During the preceding five (5)
years, neither the Company nor Laflamme have been denied any form of insurance
and no policy of insurance has been revoked or rescinded during the past two
years.
(r) PENSION AND RETIREMENT PLANS.
(i) Company is not party to, or bound by, any oral or written
retirement or pension plan or other similar arrangements other than
the Group Registered Retirement Savings Plan for Hourly Employees of
Dashwood Industries Limited (the "Group RRSP") and the Registered
Pension Plan for Employees of Dashwood Industries Limited (the
"Registered Pension Plan"). Laflamme is not party to nor
17
bound by any oral or written retirement or pension plan or other
similar arrangements.
(ii) The text of the Group RRSP, the agreement with the issuer of
the Group RRSP, the employee application form or forms relating to the
Group RRSP and all relevant employee communications with respect to
the Group RRSP have been delivered to the Purchaser. Such documents
contain all terms of the Group RRSP and are enforceable in accordance
with applicable laws.
(iii) Company has properly administered the Group RRSP, and the
Group RRSP is in good standing, in accordance with its terms, the
terms of the agreement with the issuer of the Group RRSP, and
applicable laws. In particular, without limiting the generality of
the foregoing, Company has made all withholdings and remittances with
respect to the Group RRSP required by its terms and applicable laws.
(iv) To the best of the knowledge of Company, the issuer of the
Group RRSP has complied with all of its obligations to Company and to
employees of Company under applicable law and terms of the Group RRSP.
(v) The Registered Pension Plan is a money-purchase plan funded
pursuant to a Group Annuity Policy issued by The Mutual Life Assurance
Company of Canada. Policy GA 7554-2-RPP, dated July 1, 1992 contains
all terms of the Registered Pension Plan and is enforceable in
accordance with its terms and applicable laws and regulatory policies.
(vi) The Registered Pension Plan is duly registered and in good
standing under all applicable legislation including without limitation
the PENSION BENEFITS ACT (Ontario) and the INCOME TAX ACT (Canada),
and no events have occurred which could jeopardize such status.
(vii) All material reports and disclosures relating to the
Registered Pension Plan required by applicable laws and regulatory
policies have been filed, distributed or made.
(viii) All material obligations (including without limitation
fiduciary and funding obligations and payment of any taxes, penalties
or fees payable under applicable legislation) required to be performed
in connection with the Registered Pension Plan pursuant to its terms,
applicable laws and regulatory policies have been performed. Without
limiting the foregoing, there are no outstanding liabilities under the
Registered Pension Plan for taxes, penalties or fees under any
applicable legislation including without limitation the
18
PENSION BENEFITS ACT (Ontario) and the INCOME TAX ACT (Canada).
(ix) No withdrawals of assets, including cash, have been made
from the assets from time to time held in connection with the
Registered Pension Plan or any prior registered pension plan offered
by Company, except for the purpose of paying or arranging for the
payment of benefits or proper expenses of the Registered Pension Plan
in accordance with its terms and applicable laws.
(x) The Registered Pension Plan is fully funded on both a going
concern and solvency basis.
(xi) The Registered Pension Plan was established effective
July 1, 1988. Prior to that date Company offered a defined benefit
registered pension plan to eligible employees. Company has complied
with the terms of such prior registered pension plan, all applicable
laws and all applicable regulatory policies with respect to the prior
administration, including the conversion or termination, of such prior
registered pension plan.
(xii) The data with respect to the Registered Pension Plan
provided to the Purchaser is complete and accurate in all material
respects.
(xiii) No representations have been made to employees or
former employees or Company who may become eligible to receive
benefits from the Registered Pension Plan to the effect that the
Registered Pension Plan will be amended, except as required by
applicable law or by the appropriate regulatory authorities to
preserve the registered status of the Registered Pension Plan
therewith.
(xiv) No actions, suits or claims are pending or threatened
in respect of the Group RRSP and the Registered Pension Plan other
than routine uncontested claims for benefits.
(s) BANK ACCOUNTS; POWERS OF ATTORNEY. The Disclosure Schedule sets forth
with respect to each of the Company and Laflamme: (i) the names and locations
of all financial institutions, investment banking and brokerage houses, and
other similar institutions at which it maintains accounts, deposits, safe
deposit boxes of any nature, and the names of all persons authorized to draw
thereon or make withdrawals therefrom; (ii) the terms and conditions thereof and
any limitations or restrictions as to use, withdrawal or otherwise; and
(iii) the names of all persons or entities holding general or special powers of
attorney from it and a summary of the terms thereof.
19
(t) CONTRACTS AND COMMITMENTS; NO DEFAULT.
(i) The Disclosure Schedule sets forth with respect to each of the
Company and Laflamme:
A. all its contracts, commitments, agreements or arrangements
with any person which (1) requires payments individually in excess of
$5,000 annually or in excess of $25,000 over its term (including
without limitation periods covered by any option to extend or renew by
either party) and (2) is not terminable on thirty (30) days' or less
notice without cost or other liability;
B. all its obligations to pay any person or entity cash
remuneration at the annual rate (including without limitation
guaranteed bonuses) of more than $50,000 for services rendered;
C. any agreement which restricts it from carrying on its
businesses or any part thereof anywhere in the world or from competing
in any line of business with any person or entity;
D. any obligation or requirement to which it is subject to
provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any person or entity;
E. any agreement, contract, commitment or loan (i) between it
and any director, officer or consultant of TJI, Outlook, the Company
or Laflamme, or (ii) under which any Intellectual Property Rights or
Promotional Materials are licensed to the Company or Laflamme;
F. any of its outstanding sales or purchase contracts,
commitments or proposals which may result in any loss upon completion
or performance thereof;
G. any purchase or sale contract or agreement to which it is
party that calls for aggregate purchases or sales in excess over the
course of such contract or agreement of $25,000 or which continues for
a period of more than twelve months (including without limitation
periods covered by any option to renew or extend by either party)
which is not terminable on sixty (60) days' or less notice without
cost or other liability at or any time after the Closing;
H. all distributorship, dealer, manufacturer's representative,
franchise or similar sales contracts to which it is party.
20
(ii) True and complete copies (or summaries, in the case of oral
items) of all items disclosed pursuant to subsection 2(t)(i) have been made
available to Purchaser for review. All such items are valid and
enforceable by and against Company or Laflamme, which ever is party
thereto, in accordance with their respective terms; neither the Company nor
Laflamme is in breach, violation or default, however defined, in the
performance of any of its obligations thereunder, and no facts and
circumstances exist which, whether with the giving of due notice, lapse of
time, or both, would constitute such a breach, violation or default
thereunder or thereof; and, to the knowledge of TJI, the Company and
Laflamme, no other parties thereto are in a breach, violation or default,
however defined, thereunder or thereof, and no facts or circumstances exist
which, whether with the giving of due notice, lapse of time, or both, would
constitute such a breach, violation or default thereunder or thereof.
(u) ORDERS, COMMITMENTS AND RETURNS. With respect to each of the Company
and Laflamme (i) all accepted and unfulfilled orders for the sale of products
and the performance of services entered into by it and all outstanding contracts
or commitments for the purchase of supplies, materials and services were made in
bona fide transactions in the ordinary course of business, (ii) there are no
claims, or facts which might give rise to a claim, against it to return products
by reason of alleged over-shipments, defective products or otherwise, or of
products in the hands of customers, retailers or distributors under an
understanding that such products would be returnable, (iii) it is not required
to provide any bonding or other financial security arrangements in connection
with transactions with any of its customers or suppliers in the ordinary course
of its business or otherwise.
(v) EMPLOYMENT MATTERS.
(i) except for unwritten and normal contracts of employment for
indefinite hire, all written or oral employment, service, union or other
similar agreement to which the Company or Laflamme is party are described
in the Disclosure Schedule; the Company and Laflamme are each in compliance
with all such agreements to which it is a party and is not in arrears in
the payment of any obligations required to be made under any such
agreements, contingent or otherwise; and none of such agreements contain
any specific agreement as to notice of termination or severance pay in lieu
thereof;
(ii) neither the Company nor Laflamme has made any agreements with any
labour union or employee association or made commitments to or conducted
negotiations with any labour union or employee association with respect to
any future agreements except as set forth and described in the Disclosure
Schedule and except with respect to those which have expired in accordance
with their terms and are not being renegotiated, and each is in compliance
with the terms of all such
21
agreements to which it is a party set forth in the Disclosure Schedule;
there are no grievances currently outstanding or anticipated against either
the Company or Laflamme with respect to any labour union or employee
association, there are no letters of agreement between either of them and
any labour union or employee association and there are no minutes of
settlement which contain outstanding obligations of either of them, except
as set forth and described in the Disclosure Schedule; neither the Company
nor Laflamme is aware of any current attempts to organize or establish any
other labour union or employee association with respect to it;
(iii) the Company employs a total of 248 full-time persons, 88 of who
are on layoff subject to recall, and 3 part-time persons and Laflamme
employs a total of 239 full-time persons, 130 of who are on layoff subject
to recall, and 2 part-time persons; the names of such individuals, their
positions, their years of service and their present salaries and benefits
are set out in Disclosure Schedule; TJI has no reason to believe that any
employee of the Company or Laflamme would terminate his employment due to
the transactions contemplated by this Agreement; and general relations
between the Company and Laflamme and their respective employees are good
and there is no labour strike, dispute, slowdown or stoppage pending or
threatened;
(iv) neither the Company nor Laflamme is liable for any damages to any
employee or former employee resulting from the violation of any applicable
employment law or employment agreement;
(v) there have been no claims of wrongful dismissal, no human rights
complaints or inquiries made and no EMPLOYMENT STANDARDS ACT (ONTARIO) OR
LABOUR STANDARDS ACT (QUEBEC) complaints, inquiries or claims made against
the Company during the six (6) years preceding the Closing Date or against
Laflamme during the two (2) years preceding the Closing Date;
(vi) there are no outstanding inspection orders against the Company or
Laflamme under the OCCUPATIONAL HEALTH AND SAFETY ACT (ONTARIO) or
regulations thereto or the ACT RESPECTING OCCUPATIONAL HEALTH AND SAFETY
(QUEBEC) or regulations thereto (collectively "OHSA"). There are no
outstanding prosecution orders against the Company or Laflamme under the
PROVINCIAL OFFENCES ACT (ONTARIO) or the LABOUR CODE (QUEBEC) or the CODE
OF PENAL PROCEDURE (QUEBEC) for violations of OHSA nor are TJI, the Company
or Laflamme aware of any threatened prosecutions or grounds upon which any
prosecution may be commenced. The Company and Laflamme have each fully
complied with applicable provisions of OHSA and the regulations thereunder,
and there have been no serious accidents or incidents affecting worker
health or safety;
22
(vii) all assessments against the Company and Laflamme pursuant to
the WORKERS COMPENSATION ACT (ONTARIO) (the "WCA") and the ACT RESPECTING
INDUSTRIAL ACCIDENTS AND OCCUPATIONAL DISEASES (QUEBEC) (the "IAOD") have
been paid and any deficiencies in payments have been properly accrued and
are recorded on their respective books. There are no existing or potential
claims of which TJI, the Company or Laflamme have knowledge or notice for
compensation or pensions under the WCA or the IAOD. There have not been
any nor are there any penalty assessments or warnings in respect of penalty
assessments nor any workwell audit outstanding or scheduled against the
Company or Laflamme;
(viii) the Company and Laflamme have each complied with applicable
requirements of the PAY EQUITY ACT (ONTARIO), and the Company and Laflamme
have each complied with applicable requirements of the ACT RESPECTING THE
PROTECTION OF PERSONAL INFORMATION IN THE PRIVATE SECTOR (QUEBEC);
(ix) neither the Company nor Laflamme is an 'employer' under the
EMPLOYMENT EQUITY ACT (CANADA) and there has been no requirement under such
Act to file a report;
(x) all vacation pay, bonuses, commissions and other employee benefit
payments payable to employees of the Company or Laflamme through the date
thereof are reflected and have been accrued in its Latest Balance Sheet;
(xi) neither the Company nor Laflamme has made any representations or
commitments to its employees with respect to future increases in wage or
other compensation; and
(xii) the only profit sharing plans, deferred compensation or
incentive plans, health, dental, welfare and employee benefit plans, bonus
plans, stock option plans, stock purchase plans, unemployment compensation
plans, insurance plans, severance plans, sick leave, vacation plans or
similar benefit plans that are maintained by the Company or Laflamme with
respect to their respective employees are those described in the Disclosure
Schedule (which are collectively referred to as the "Benefit Plans"). Each
Benefit Plan has been duly registered where required by, and is in good
standing under, all applicable legislation, rules or orders including,
without limitation, the INCOME TAX ACT (CANADA) and parallel provincial
law, and all required employer contributions under each Benefit Plan have
been made and the applicable funds have been funded in accordance with the
terms of the Benefit Plans and any applicable legislation, rule or order
and no past service funding liabilities exist thereunder. All required
employee's and employer's contributions payable under applicable federal
and provincial legislation, regulations, rules, decrees or orders have been
made and there have not been any, nor are there notices of any, assessments
or penalty
23
assessments, letters of demand or warnings against the Company or Laflamme.
(w) DEALERS AND SUPPLIERS. There has not been in the twelve month period
prior to the date hereof any adverse change in the business relationship of the
Company or Laflamme and any of their respective dealers or suppliers.
(x) PERMITS AND OTHER OPERATING RIGHTS. Neither the Company nor Laflamme
requires, in connection with the ownership or possession of its assets or
properties or the conduct of its business as previously, presently or as
presently anticipated to be conducted, the Consent of any Authority, except
those Consents previously obtained. All such required Consents are in full force
and effect and listed in the Disclosure Schedule, and neither TJI, the Company
nor Laflamme have received any notice of termination or cancellation of, nor
know of any facts permitting the termination od cancellation of, any such
Consents.
(y) COMPLIANCE WITH LAW. The assets, properties, businesses and
operations of both the Company and Laflamme are and have been conducted in
compliance with all Laws applicable to the ownership and conduct of their
assets, properties, businesses and operations. There are no outstanding and
unsatisfied deficiency reports, plans of correction, notices of noncompliance or
work orders relating to any such Authorities, and no such discussions with any
such Authorities are scheduled, pending or anticipated.
(z) ASSETS OF BUSINESS. With respect to each of the company and Laflamme,
the assets owned or leased by it constitute all of the assets held for use or
used primarily in connection with its businesses and are adequate to carry on
such businesses as presently conducted and as contemplated by it to be
conducted.
(aa) BUSINESS GENERALLY. There has been no event, transaction or
information which has come to the attention of TJI, the Company or Laflamme
which, as it relates directly to the businesses of the Company or Laflamme,
could, individually or in the aggregate, reasonably be expected to have a
material adverse effect on either of their respective businesses.
(ab) ENVIRONMENTAL AND OCCUPATIONAL HEALTH AND SAFETY MATTERS. Except as
set forth in the Disclosure Schedule:
(i) the real property owned, leased or occupied by the Company
or Laflamme and its existing and prior uses comply and have at all
times complied with, and neither the Company nor Laflamme is in
violation of, nor has it violated, in connection with the ownership,
use, maintenance or operation of its assets including such real
property or the conduct of its business, any applicable federal,
provincial, municipal or local laws, regulations, orders or approvals
of any governmental
24
authorities relating to environmental and occupational health and
safety matters;
(ii) without limiting the generality of this Section 2(ab), the
Company and Laflamme have each operated all real property owned,
leased or occupied or otherwise used by it in its business and has at
all times received, handled, used, stored, treated, shipped and
disposed of all environmental contaminants in the conduct of its
business in compliance with all applicable environmental, health or
safety laws, regulations, orders or approvals;
(iii) there are no orders or directions relating to
environmental or occupational health and safety matters requiring any
work, repairs, construction or capital expenditures with respect to
the assets of the Company or Laflamme or the conduct of their
respective businesses, nor has TJI, the Company or Laflamme received
any notice of any of the same;
(iv) except to the extent in compliance with all applicable
federal, provincial, municipal or local laws, regulations, orders or
approvals of any governmental authorities related to environmental and
occupational health and safety matters (A) no hazardous or toxic
materials, substances, pollutants, contaminants or wastes have been
released into the environment, or deposited, discharged, placed,
stored or disposed of at, on or near real property owned, leased or
occupied by the Company or Laflamme, (B) no such real property been
used at any time by any person as a landfill or waste disposal site,
and (C) no aboveground or underground treatment and storage tanks,
sumps, water, gas or oil wells, or related piping, conduits or other
structures are or have been located on or under such real property;
and
(v) no notice of any violation of any of the matters referred to
in Section (ab)(i) through (iv) relating to the business or the assets
of the Company or Laflamme or their use have been received by TJI, the
Company or Laflamme, and there are no writs, injunctions, orders or
judgments outstanding, no lawsuits, claims, proceedings or
investigations pending or threatened, relating to the ownership, use,
maintenance or operation of the assets of the Company or Laflamme or
their respective businesses nor is there any basis for such lawsuits,
claims, proceedings or investigations being instituted or filed and
the Company or Laflamme possess as of Closing all required
certificates, licenses, permits or consents from any Authority with
respect to matters relating to the environment or occupational health
and safety, including any regulatory restrictions on the use of phenyl
mercury oleate ("PMO") or the export
25
to the United States of windows or components thereof coated with PMO;
(ac) BROKERS. Neither TJI, Outlook, the Company or Laflamme nor any of
their respective directors, officers or employees have employed any broker,
finder, or financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee, in connection with the
transactions contemplated hereby, nor is there any basis known to TJI, the
Company or Laflamme for any such fee or commission to be claimed by any person
or entity.
(ad) OUTLOOK REPRESENTATIONS. Outlook has the full legal right, power and
authority to sell, transfer, assign and deliver record ownership to the Stock to
Purchaser at Closing and delivery of the Stock at Closing will transfer to
Purchaser valid legal and beneficial ownership thereto free and clear of all
Liens.
(ae) ACCURACY OF INFORMATION. No representation or warranty by TJI in this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading as of the date of the representation or warranty.
ARTICLE 3
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to TJI as of the date hereof as follows:
(a) CORPORATE ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the law of the State of Minnesota.
(b) AUTHORIZATION. Purchaser has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated herein.
The Board of Directors of Purchaser has taken all action required by law, its
articles of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement is the valid and binding legal
obligation of Purchaser enforceable against it in accordance with its terms.
(c) NON-CONTRAVENTION. Neither the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated herein will
violate any provision of the articles of incorporation or bylaws of Purchaser or
any subsidiary of Purchaser.
26
(d) DISCLOSURE. No representation or warranty by Purchaser in this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which made,
not misleading as of the date of the representation or warranty.
(e) CONSENTS AND APPROVALS. Except for the Consents identified on
Exhibit 3(e) hereto, no Consent is required by any person or entity, including
without limitation any Authority, in connection with the execution, delivery and
performance by Purchaser of this Agreement, or the consummation of the
transactions contemplated herein, other than any Consent which, if not made or
obtained, will not, individually or in the aggregate, have a material adverse
effect on the business of Purchaser and its subsidiaries taken as a whole.
(f) BROKERS. Neither Purchaser nor any of its directors, officers or key
employees have employed any broker, finder or financial advisor, or incurred any
liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated hereby, nor is
there any basis known to Purchaser for any such fee or commission to be claimed
by any person or entity.
ARTICLE 4
4. COVENANTS.
(a) AGREEMENTS AS TO SPECIFIED MATTERS. Except as consented to in advance
by Purchaser, from the date hereof until the Closing, TJI shall not permit the
Company or Laflamme to:
(i) Except as required by Section 4(j), hereof, amend its certificate
and articles of incorporation or bylaws;
(ii) Borrow or agree to borrow, or lend or agree to lend, any funds;
(iii) Incur, assume, suffer or become subject to, whether directly or
by way of guarantee or otherwise, any claims, obligations, liabilities or
loss contingencies except those which are not material in amount and were
incurred in the ordinary course of business consistent with past practices;
(iv) Pay, discharge or satisfy any claims, liabilities or obligations
prior to maturity;
(v) Permit or allow any of its properties or assets material to the
operation of its businesses to be subjected to any Lien except (i) as set
forth in the Disclosure Schedule and (ii) for Permitted Liens;
27
(vi) Cancel or amend any debts, waive any claims or rights or sell,
transfer or otherwise dispose of any properties or assets, other than for
such debts, claims, rights, properties or assets which, individually or in
the aggregate, are not material to the conduct of its businesses;
(vii) License, sell, transfer, pledge, modify, disclose, dispose of
or permit to lapse any right to the use of any intellectual property rights
other than for such intellectual property rights which, individually or in
the aggregate, are not material to the conduct of its businesses;
(viii) (A) Terminate, enter into, adopt, institute or otherwise
become subject to or amend in any material respect any collective
bargaining agreement or employment or similar agreement or arrangement with
any of its directors, officers or employees; (B) terminate, enter into,
adopt, institute or otherwise become subject to or amend in any material
respect any employee compensation plan; (C) contribute, set aside for
contribution or authorize the contribution of any amounts for any such
employee compensation plan except as required (and not discretionary) by
the terms of such employee compensation plan; or (D) grant or become
obligated to grant any general increase in the compensation of any
directors, officers or employees (including without limitation any such
increase pursuant to any employee compensation plan);
(ix) Make or enter into any commitment for capital expenditures for
additions to property, plant or equipment individually in excess of
$25,000.00;
(x) (A) Declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock or other securities (including
without limitation distributions in redemption or liquidation) or redeem,
purchase or otherwise acquire any shares of its capital stock or other
securities; (B) issue, grant or sell any shares of its capital stock or
equity securities of any class, or any options, warrants, conversion or
other rights to purchase or acquire any such shares or equity securities or
any securities convertible into or exchangeable for such shares or equity
securities, except issuance of Company Common Stock pursuant to the
exercise of stock options outstanding on the date hereof; (C) become a
party to any merger, exchange, reorganization, recapitalization,
liquidation, dissolution or other similar corporate transaction; or
(D) organize any new subsidiary, acquire any capital stock or other equity
securities or other ownership interest in, or assets of, any person or
entity or otherwise make any investment by purchase of stock or securities,
contributions to capital, property transfer or purchase of any properties
or assets of any person or entity;
(xi) Pay, lend or advance any amounts to, or sell, transfer or lease
any properties or assets to, or enter into
28
any agreement or arrangement with TJI, Outlook any affiliate of either such
person or any of its or their respective directors, officers, or employees;
(xii) Terminate, enter into or amend in any material respect any item
identified in Section 2(t) of the Disclosure Schedule, or take any action
or omit to take any action which will cause a breach, violation or default
(however defined) under any such item; or
(xiii) Agree, whether in writing or otherwise, to take any action
described in this section.
(b) CONDUCT OF BUSINESS. TJI shall cause each of the Company and Laflamme
to maintain its assets and properties and carry on its businesses and operations
only in the ordinary course in substantially the same manner as previously
operated and to use its best efforts to preserve intact its business
organizations, existing business relationships (including without limitation its
relationships with officers, employees, dealers, distributors, independent
contractors, customers and suppliers), good will and going concern value.
(c) NO SOLICITATION OF ALTERNATE TRANSACTION. TJI shall not, nor shall it
permit Outlook, the Company or Laflamme or any of their respective directors,
officers, representative, agents and employees to, directly or indirectly,
participate in discussions regarding or conclude or become bound by any
arrangement involving the issuance, purchase or sale of the capital stock of, or
merger, consolidation, sale of substantial assets or of a significant amount of
assets with or by the Company or Laflamme, or any liquidation, dissolution or
similar transactions involving the Company or Laflamme.
(d) FULL ACCESS TO PURCHASER. TJI shall cause Company and Laflamme to
afford to Purchaser and its directors, officers, employees, counsel, accountants
and other representatives free and full access during normal business hours to
their respective facilities, properties, books and records in order that
Purchaser may have full opportunity to make such investigations as it shall
desire to make of their respective affairs; PROVIDED, HOWEVER, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with their respective business operations; and TJI shall cause the
Company and Laflamme to furnish such additional financial and operating data and
other information as Purchaser shall, from time to time, reasonably request,
including without limitation access to the working papers of their independent
certified public accountants; and, PROVIDED, FURTHER, that any such
investigation shall not affect or otherwise diminish or obviate in any respect
any of the representations and warranties of TJI herein.
(e) CONFIDENTIALITY. Each of the parties hereto agrees that it will not
use, or permit the use of, any of the information
29
relating to any other party hereto furnished to it in connection with the
transactions contemplated herein ("Information") in a manner or for a purpose
detrimental to such other party or otherwise than in connection with the
transaction, and that they will use, and cause their respective directors,
officers, employees, accountants, counsel and other representatives, all
commercially reasonable efforts to maintain the confidentiality of all of the
Information except as may be required by judicial or administrative process or,
in the opinion of such party's regular counsel, by other requirements of Law;
PROVIDED, HOWEVER, that prior to any disclosure of any Information permitted
hereunder, the disclosing party shall first obtain the recipients' undertaking
to comply with the provisions of this section with respect to such information.
The term "Information" as used herein shall not include any information relating
to a party which the party disclosing such information can show: (i) to have
been in its possession prior to its receipt from another party hereto; (ii) to
be now or to later become generally available to the public through no fault of
the disclosing party; (iii) to have been available to the public at the time of
its receipt by the disclosing party; (iv) to have been received separately by
the disclosing party in an unrestricted manner from a person entitled to
disclose such information; or (v) to have been developed independently by the
disclosing party without regard to any information received in connection with
this transaction. Each party hereto also agrees to promptly return to the party
from whom originally received all original and duplicate copies of written
materials containing Information should the transactions contemplated herein not
occur.
(f) FILINGS; CONSENTS; REMOVAL OF OBJECTIONS. Subject to the terms and
conditions herein provided, the parties hereto shall, and TJI shall cause
Outlook, the Company and Laflamme to, use their best efforts to take or cause to
be taken all actions and do or cause to be done all things necessary, proper or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated hereby, including without
limitation obtaining all Consents of any person or entity, whether private or
governmental, required in connection with the consummation of the transactions
contemplated herein.
(g) FURTHER ASSURANCES; COOPERATION; NOTIFICATION.
(i) Each party hereto shall, before, at and after Closing, execute
and deliver such instruments and take such other actions as the other party
or parties, as the case may be, may reasonably require in order to carry
out the intent of this Agreement.
(ii) TJI shall cause the Company and Laflamme to cooperate with
Purchaser to promptly develop plans for the management of the businesses
after the Closing, including without limitation plans relating to
productivity, marketing, operations and improvements, and to further
cooperate with Purchaser to provide for the implementation of such plans as
30
soon as practicable after the Closing. Subject to applicable Law, TJI
shall cause the Company and Laflamme to confer on a regular and reasonable
basis with one or more representatives of Purchaser to report on material
operational matters and the general status of ongoing operations.
(iii) At all times from the date hereof until the Closing, each party
shall promptly notify the other in writing of the occurrence of any event
which it reasonably believes will or may result in a failure by such party
to satisfy the conditions specified in Article 5 and Article 6 hereof.
(h) SUPPLEMENTS TO DISCLOSURE SCHEDULE. Prior to the Closing, TJI will
supplement or amend the Disclosure Schedule with respect to any event or
development which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in the
Disclosure Schedule or which is necessary to correct any information in the
Disclosure Schedule or in any representation and warranty of TJI which has been
rendered inaccurate by reason of such event or development. For purposes of
determining the accuracy as of the date hereof of the representations and
warranties of TJI contained in Section 2 hereof in order to determine the
fulfillment of the conditions set forth in section 5(a), the Disclosure Schedule
shall be deemed to exclude any information contained in any supplement or
amendment hereto delivered after the delivery of the Disclosure Schedule.
(i) PUBLIC ANNOUNCEMENTS. Neither of the parties hereto shall make any
public announcement with respect to the transactions contemplated herein without
the prior written consent of the other parties, which consent shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that either of the parties
hereto may at any time make any announcements which are required by applicable
Law so long as the party so required to make an announcement promptly upon
learning of such requirement notifies the other parties of such requirement and
discusses with the other parties in good faith the exact proposed wording of any
such announcement.
ARTICLE 5
5. CONDITIONS TO OBLIGATIONS OF PURCHASER.
Notwithstanding any other provision of this Agreement to the contrary, the
obligation of Purchaser to effect the transactions contemplated herein shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of TJI contained in this Agreement, including without limitation in
the Disclosure Schedule initially delivered to Purchaser as Exhibit 2 (and not
including any changes or additions delivered to Purchaser pursuant to
section 4(h)), shall be true, complete and accurate in all material respects as
of the
31
date when made and at and as of the Closing as though such representations and
warranties were made at and as of such time.
(b) PERFORMANCE. TJI shall have performed and complied in all material
respects with all agreements, covenants, and obligations required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(c) REQUIRED APPROVALS AND CONSENTS.
(i) All action required by law and otherwise to be taken by the TJI,
the Company and Laflamme to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(ii) All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, and all Consents of from
all other persons and entities, shall have been delivered, made or
obtained, and Purchaser shall have received copies thereof.
(d) ADVERSE CHANGES. No material adverse changes shall have occurred in
the assets, business, properties or condition (financial or otherwise) of the
Company or Laflamme.
(e) NO PROCEEDING OR LITIGATION. No suit, action, investigation, inquiry
or other proceeding by any Authority or other person or entity shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby or which, if successfully asserted, would
individually or in the aggregate, otherwise have a material adverse effect on
the assets, business, properties or condition (financial or otherwise) of the
Company or Laflamme.
(f) OPINION OF COUNSEL. Purchaser shall have received an opinion of TJI's
American and Canadian counsel, dated the Closing Date, in form and substance
satisfactory to Purchaser.
(g) LEGISLATION. No Law shall have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby or
any of the conditions to the consummation of such transaction.
(h) ACCEPTANCE BY COUNSEL TO PURCHASER. The form and substance of all
legal matters contemplated hereby and of all papers delivered hereunder shall be
reasonably acceptable to Oppenheimer Wolff & Donnelly, counsel to Purchaser.
(i) CERTIFICATES. Purchaser shall have received such certificates of TJI,
in a form and substance reasonably satisfactory to Purchaser, dated the Closing
Date, to evidence compliance with the conditions set forth in this Section 5 and
such other matters as may be reasonably requested by Purchaser.
32
(j) DUE DILIGENCE. Purchaser shall have received and been satisfied with
all information requested by it pursuant to section 4(d).
(k) COLLECTIVE BARGAINING AGREEMENT. There shall be in force a collective
bargaining agreement between the Company and its unionized employees
satisfactory to Purchaser as of the Closing.
(l) MANAGEMENT EMPLOYEES. A Canadian affiliate of TJI (the "TJI
Affiliate") and each of the Company and Laflamme shall have executed and
delivered concurrently with Closing a letter (an "Offer Letter") in form
satisfactory to Purchaser offering to each employee of the Company or Laflamme
who immediately prior to Closing held any unvested options to acquire shares of
the common stock of TJI (such employees "Management Employees" and such options
whether or not vested "Options") a second job with the TJI Affiliate for the
purpose of permitting them to continue to enjoy the benefit of such Options for
a further two year period, and Purchaser shall have no reason to believe that
any Management Employee intends to initiate litigation with the Company or TJI
in connection therewith.
(m) TAX REFUNDS. The Company shall have no basis upon which to reflect on
its financial statements any right to receive a refund or other repayment of
income taxes other than the Tax Receivable.
(n) RELEASE. TJI shall have delivered to Purchaser a release in form
satisfactory to Purchaser of the Company and Laflamme from TJI, Outlook and all
of their respective affiliates.
ARTICLE 6
6. CONDITIONS TO TJI'S OBLIGATIONS.
Notwithstanding anything in this Agreement to the contrary, the obligation
of TJI to effect the transactions contemplated herein shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained in this Agreement shall be true, complete and
accurate in all material respects as of the date when made and at and as of the
Closing, as though such representations and warranties were made at and as of
such time.
(b) PERFORMANCE. Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Purchaser at or
prior to the Closing.
(c) APPROVALS. All Consents listed on Exhibit 3(e) hereto shall have
been delivered, made or obtained. All action required to be taken by Purchaser
to authorize the execution, delivery and
33
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) NO PROCEEDING OR LITIGATION. No suit, action, investigation, inquiry
or other proceeding by any Authority or other person or entity shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby.
(e) CERTIFICATES. Purchaser shall have furnished TJI with such
certificates of Purchaser's officers, in a form and substance reasonably
acceptable to TJI, dated the Closing Date, to evidence compliance with the
conditions set forth in this Section 6 and such other matters as may be
reasonably requested by TJI.
(f) OPINION OF PURCHASER'S COUNSEL. Purchaser shall have delivered to TJI
an opinion from Oppenheimer Wolff & Donnelly, counsel to Purchaser, dated the
Closing Date, in form and substance satisfactory to TJI.
(g) ACCEPTANCE BY COUNSEL. The form and substance of all legal matters
contemplated hereby and of all papers delivered hereunder shall be reasonably
acceptable to Tory Tory DesLauriers & Binnington, counsel to TJI.
(h) MANAGEMENT EMPLOYEES. The condition precedent of Purchaser set forth
in section 5(l) shall have been satisfied.
ARTICLE 7
7. TERMINATION AND ABANDONMENT.
(a) METHODS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time, but not later
than the Closing:
(i) By mutual written consent of Purchaser and TJI; or
(ii) By Purchaser or TJI if the Closing shall not have occurred on or
before March 31, 1995 or such later date as shall be agreed to by them (the
"Termination Date"); or
(iii) By TJI on or after the Termination Date, if any of the
conditions provided for in Section 6 of this Agreement shall not have been
satisfied or waived in writing by TJI prior to such date; or
(iv) By the Purchaser on or after the Termination Date, if any of the
conditions provided for in Section 5 of this Agreement shall not have been
satisfied or waived in writing by Purchaser prior to such date.
(b) PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to section 7(a), written notice thereof
34
shall forthwith be given to the other party or parties, and the provisions of
this Agreement (except to the extent provided in section 9(a)) shall terminate,
and the transactions contemplated herein shall be abandoned, without further
action by any party hereto. If this Agreement is terminated as provided herein:
(i) each party will, upon request, redeliver all documents, work papers and
other material of any other party (and all copies thereof) relating to the
transactions contemplated herein, whether so obtained before or after the
execution hereof, to the party furnishing the same; and (ii) the confidentiality
obligations of section 4(e) shall continue to be applicable but no such
termination shall have the effect of releasing any party hereto from liability
for damages arising from breach of any representation, warranty, agreement,
covenant or other provision of this Agreement occurring prior to such
termination.
ARTICLE 8
8. SURVIVAL AND INDEMNIFICATION.
(a) SURVIVAL AND LIMITATIONS. The representations and warranties of each
of the parties hereto shall survive the Closing. Except as any of the following
Sections of this Article 8 may contain specific limitations, any claims for
indemnity pursuant to any Section of this Article may be made indefinitely and
for any amount.
(b) INDEMNIFICATION BY PURCHASER -- UNTRUE REPRESENTATIONS OR BREACH OF
WARRANTIES OR COVENANTS. Purchaser agrees to indemnify TJI from and against any
and all claims, loss, liability, damage, cost and expense (collectively "Loss")
suffered or incurred by it by reason of or in relation to (i) the inaccuracy or
other breach of any representation and/or warranty by Purchaser in any part of
this Agreement, PROVIDED, HOWEVER, that no claim for indemnity may be made
pursuant to this section after the third anniversary of the Closing Date; and
(ii) any nonfulfillment of any covenant, agreement or undertaking of Purchaser
in any part of this Agreement.
(c) INDEMNIFICATION BY TJI -- UNTRUE REPRESENTATION OR BREACH OF WARRANTY.
TJI agrees to indemnify Purchaser from and against any and all Loss suffered or
incurred by Purchaser, the Company or Laflamme by reason of or in relation to
the inaccuracy or other breach of any representation and/or warranty by it in
this Agreement, PROVIDED, HOWEVER, that (i) no claim for indemnity may be made
pursuant to this Section in connection with the representations and warranties
contained in Sections 2(g) to 2(i) inclusive, Sections 2(k) to 2(o) inclusive,
Section 2(q), Sections 2(s) to 2(aa) inclusive and Sections 2(ac) to 2(ae)
inclusive more than three (3) years following the Closing, and (ii) Purchaser
shall not be entitled to receive any indemnity with respect to any single
inaccuracy or other breach if the Loss arising therefrom is less than Can.$
5,000.
35
(d) INDEMNIFICATION BY AND COVENANTS OF TJI -- EMPLOYMENT TERMINATION.
TJI agrees to indemnify Purchaser from and against any and all Loss suffered or
incurred by Purchaser, the Company or Laflamme, by reason of (A) any claims of
termination, constructive or otherwise, and any rights to notice, pay in lieu of
notice, severance or damages associated therewith, made by any Management
Employee (i) based on the loss by any Management Employee for any reason of the
right to fully exercise any Option granted to such Employee on or prior to
December 31, 1994 with respect to the shares subject thereto the rights to which
were vested on or before such date or which were scheduled to vest anytime on or
before the end of the two year employment period contemplated by the Offer
Letter, except to the extent such loss arises from such Employee voluntarily
leaving the employ of the TJI Affiliate after having accepted such employment,
or on any alteration of the terms of such employment from those set forth in the
Offer Letter unless such alteration was taken with the written consent of
Purchaser, (ii) based on the fact that the Company and Laflamme will cease as of
the Closing to honor old or grant any new Options, (B) any claim to the extent
it relates to the value of the rights under the Option Plan or any part thereof
and which is made by a Management Employee who accepts employment offered to it
by a TJI Affiliate in respect of such employment, whether at the end of a fixed
term of employment or otherwise; provided that no such indemnity obligation
shall arise with respect to any action taken by the TJI Affiliate with respect
to such employee at the written direction of Purchaser.
(e) INDEMNIFICATION - INDEMNITIES RELATING TO ENVIRONMENTAL MATTERS
DESCRIBED IN EXHIBIT 8(E). TJI agrees, to indemnify and hold the Purchaser
harmless from and against all Loss suffered or incurred by the Purchaser, the
Company or Laflamme in any manner relating to or arising from (i) any of the
events, circumstances or conditions described in any of the points in Exhibit
8(e) other than those points specifically addressed in clause (ii) of this
Section 8(e); provided that Purchaser shall not be entitled to receive any
indemnity with respect to the matters described in any single such point in the
Disclosure Schedule unless, and then only to the extent that, the Loss arising
therefrom exceeds Can.$50,000 or (ii) any of the events, circumstances or
conditions described in Clause 12 of Exhibit 8(e) with respect to the Company
and its "sump" or in Clauses 8 and 9 of Exhibit 8(e) with respect to the St.
Apollinaire facility of LaFlamme and its dump site and a dip tank respectively.
All actions and decision taken by Purchaser, the Company or Laflamme in respect
of such a indemnifiable matter shall be commercially reasonable. Purchaser
shall cause TJI to be kept fully informed of Purchaser's, the Company's or
Laflamme's actions in respect thereto, including reasonable advance written
notice of any material pending meeting, deadline or the like. TJI shall be
entitled to participate in material meetings, phone calls and the like regarding
such a matter, and Purchaser, the Company and Laflamme shall not take any
material action with respect to such a matter, including any selection of
counsel, any compromise or settlement of such Claim or agreement with respect
thereto or the
36
initiation of any litigation or other proceeding with respect thereto, without
the prior consent of the TJI, such consent not to be unreasonably withheld or
delayed.
(f) INDEMNIFICATION - INDEMNITIES REGARDING LITIGATION DESCRIBED IN THE
DISCLOSURE SCHEDULE. TJI agrees, notwithstanding any description, disclosure or
exception set forth in the Disclosure Schedule or in a supplement or amendment
thereto pursuant to Section 4(h) or the actual or deemed knowledge otherwise
derived of the Purchaser, the Company or Laflamme that an indemnity is or might
be payable hereunder (collectively "Prior Knowledge"), to indemnify and hold the
Purchaser harmless from and against all Loss suffered or incurred by the
Purchaser, the Company or Laflamme arising from any of the matters described in
Section 2(o) in the Disclosure Schedule (or in a supplement or amendment thereto
pursuant to Section 4(h)).
(g) INDEMNIFICATION BY TJI -- OTHER. TJI agrees to indemnify Purchaser
from and against: (i) any and all loss, liability or damage suffered or
incurred by it by reason of any nonfulfillment of any covenant, agreement or
undertaking of TJI in this Agreement; and (ii) any and all costs and expenses,
including without limitation legal fees and expenses, in connection with
enforcing the indemnification rights of Purchaser pursuant to Sections 8(c),
8(d), 8(e), 8(f) and 8(g).
(h) LIMITATION ON AND METHOD FOR MAKING CLAIMS FOR INDEMNIFICATION.
Notwithstanding any other provision of this Agreement, TJI shall not be liable
for any claim made under this Section 8 unless and until the aggregate of such
claims exceeds Can. $250,000, whereupon TJI shall be liable for the full amount
of such claims. The parties further agree that they intend that all
indemnification claims hereunder be made as promptly as is reasonably
practicable by the party seeking indemnification (the "Indemnified Party").
Whenever any claim shall arise for indemnification hereunder, the Indemnified
Party shall promptly following the time its senior management become aware of
the same notify the party from whom indemnification is sought (the "Indemnifying
Party") of the claim and, when known, the facts constituting the basis for such
claim. In the case of any such claim for indemnification hereunder resulting
from or in connection with any claim or legal proceedings of a third party, the
notice to the Indemnifying Party shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. In cases not
governed by Sections 8(e) or 8(i), the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, which shall not be unreasonably withheld. If the Indemnifying Party is
of the opinion that the Indemnified Party is not entitled to indemnification, or
is not entitled to indemnification in the amount claimed in such notice, it
shall deliver, within thirty (30) days after the receipt of such notice, a
written objection to such claim and written specifications in reasonable detail
of the aspects or details
37
objected to, and the grounds for such objection. If the Indemnifying Party
shall file timely written notice of objection to any claim for indemnification,
the validity and amount of such claim shall be determined by arbitration
pursuant to section 9(l) hereof. If timely notice of objection is not delivered
or if a claim by an Indemnified Party is admitted in writing by an Indemnifying
Party or if an arbitration award is made in favor of an Indemnified Party, the
Indemnified Party, as a non-exclusive remedy, shall have the right to set-off
the amount of such claim or award against any amount yet owed, whether due or to
become due, by the Indemnified Party or any subsidiary thereof to any
Indemnifying Party by reason of this Agreement or any agreement or arrangement
or contract to be entered into at the Closing.
(i) SPECIAL PROCEDURES REGARDING ENVIRONMENTAL MATTERS. TJI shall be
entitled to be reimbursed if TJI has already paid an indemnity under Sections
8(c) in respect of an inaccuracy or breach of the representation contained in
Section 2(ab) or under 8(e) in respect of Loss arising from an environmental or
occupational health and safety matter (such a matter giving rise to a Loss
herein an "Environmental Claim"), or a credit to the extent it has not effected
payment with respect to an Environmental Claim, in the event and to the extent
that Laflamme and/or Dashwood shall have actually received compensation with
respect to such Environmental Claim pursuant to a policy of insurance naming
Laflamme as the insured or renewals thereof, the premiums on which are paid by
prior owners of Laflamme and which provides coverage against any Environmental
Claims, or pursuant to the Share Subscription and Purchase Agreement made
between Les Placemats Armand Laflamme Inc., Gestion Rosaire Laflamme Inc.,
Lucien Laflamme, Richard Laflamme and Armand Laflamme, Rosaire Laflamme and
Dashwood Industries Limited dated February 7, 1992 (the right to such
compensation under such insurance an "Insurance Claim" and under such Agreement
a "LF Claim").
For purposes of this Section 8(i), the sum of Can.$70,000 shall be deemed to
have been paid by TJI with respect to an Environmental Claim concerning emission
from the boiler at St. Apollinaire of Laflamme.
TJI shall have the right to assume control of the prosecution, compromise or
settlement of any Insurance Claim or LF Claim provided that:
(i) such assumption shall, by its terms, be without cost to the
Purchaser, Dashwood or Laflamme;
(ii) all actions and decision taken by TJI in respect of such a Claim
shall be commercially reasonable;
(iii) TJI shall keep Purchaser fully informed of its actions in
respect thereto, including reasonable advance written notice of any
material pending meeting, deadline or the like. Purchaser shall be entitled
to participate in
38
meetings, phone calls and the like regarding such a Claim, and TJI shall
not take any material action with respect to such a Claim, including any
selection of counsel, any compromise or settlement of such Claim or
agreement with respect thereto or the initiation of any litigation or other
proceeding with respect to such Claim, without the prior consent of the
Purchaser, such consent not to be unreasonably withheld or delayed; and
(iv) in the event TJI desires to initiate any litigation or other
proceeding with respect to such a Claim, Purchaser shall first be given a
reasonable opportunity to cause the assignment or other transfer of such
Claim to TJI for initiation and prosecution to the maximum extent such an
assignment or transfer may be lawfully consummated.
ARTICLE 9
9. MISCELLANEOUS PROVISIONS.
(a) EXPENSES. Each of the parties hereto shall bear its own costs, fees
and expenses in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including professional fees, whether or not
the transactions contemplated herein is consummated.
(b) AMENDMENT AND MODIFICATION. Subject to applicable Law, this Agreement
may be amended or modified by the parties hereto at any time prior to the
Closing with respect to any of the terms contained herein; PROVIDED, HOWEVER,
that all such amendments and modifications must be in writing duly executed by
all of the parties hereto; and PROVIDED, FURTHER, that after any approval of the
transactions contemplated herein by the sellers of Company, no such amendment or
modification without the further approval of such sellers shall reduce the
amount or form of the consideration or in any way materially adversely affect
the rights of Company sellers with respect hereto.
(c) WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be expressly waived
only in writing by the party entitled hereby to such compliance, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. No single or partial exercise of a
right or remedy shall preclude any other or further exercise thereof or of any
other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent shall be given in writing
in the same manner as for waivers of compliance.
(d) NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall entitle
any person or entity (other than a party hereto and
39
his, her or its respective successors and assigns permitted hereby) to any
claim, cause of action, remedy or right of any kind.
(e) NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be made in writing and shall be deemed to
have been duly given and effective: (i) on the date of delivery, if delivered
personally; (ii) on the earlier of the fourth (4th) day after mailing or the
date of the return receipt acknowledgement, if mailed, postage prepaid, by
certified or registered mail, return receipt requested; or (iii) on the date of
transmission, if sent by facsimile, telecopy, telegraph, telex or other similar
telegraphic communications equipment:
If to Purchaser:
To: Andersen Corporation
100 4th Avenue No.
Bayport, MN 55003-1096
Attn: Michael Johnson
Fax: (612) 430-5107
With a copy to:
Oppenheimer Wolff & Donnelly
1700 First National Bank Building
St. Paul, MN 55101
Attn: Dennis P. Whelpley
Fax: (612) 223-2596
or to such other person or address as Purchaser shall furnish to the other
parties hereto in writing in accordance with this section.
40
If to TJI:
To: TJ International
380 E. ParkCenter Blvd.
Suite 300
P. O. Box 65
Boise, ID 83707
Attn: Jody Olson
Fax: (208) 345-3431
With a copy to:
Gabor G. S. Takach
Tory Tory DesLauriers & Binnington
Suite 3000 Aetna Tower
Toronto Dominion Centre
Toronto, Ontario, Canada M5K 1N2
Fax: (416) 865-7380
(f) ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned (whether
voluntarily, involuntarily, by operation of law or otherwise) by any of the
parties hereto without the prior written consent of the other parties, PROVIDED,
HOWEVER, that Purchaser may assign this Agreement, in whole or in any part, and
from time to time, to a wholly-owned, direct or indirect, subsidiary of
Purchaser, if Purchaser remains bound hereby).
(g) GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
internal substantive laws of the State of Minnesota (without regard to the laws
of conflict that might otherwise apply) as to all matters, including without
limitation matters of validity, construction, effect, performance and remedies.
(h) COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) HEADINGS. The table of contents and the headings of the sections and
sections of this Agreement are inserted for convenience only and shall not
constitute a part hereof.
(j) ENTIRE AGREEMENT. The Disclosure Schedule and the exhibits and other
writings referred to in this Agreement or in the Disclosure Schedule or any such
exhibit or other writing are part of this Agreement, together they embody the
entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement and together they are referred to
41
as "this Agreement" or the "Agreement". There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement (including without
limitation the letter of intent dated October 26,1994, between Purchaser and TJI
and all amendments and extensions thereof. Provisions of this Agreement shall
be interpreted to be valid and enforceable under applicable Law to the extent
that such interpretation does not materially alter this Agreement; PROVIDED,
HOWEVER, that if any such provision shall become invalid or unenforceable under
applicable Law such provision shall be stricken to the extent necessary and the
remainder of such provisions and the remainder of this Agreement shall continue
in full force and effect.
(k) INJUNCTIVE RELIEF. It is expressly agreed among the parties hereto
that monetary damages would be inadequate to compensate a party hereto for any
breach by any other party of its covenants and agreements in sections 4(c), 4(e)
and 9(m) hereof. Accordingly, the parties agree and acknowledge that any such
violation or threatened violation will cause irreparable injury to the other and
that, in addition to any other remedies which may be available, such party shall
be entitled to injunctive relief against the threatened breach of sections 4(c)
and 4(e) hereof or the continuation of any such breach without the necessity or
proving actual damages and may seek to specifically enforce the terms thereof.
(l) ARBITRATION. With the sole exception of the injunctive relief
contemplated by section 9(k), any controversy or claim arising out of or
relating to this Agreement, or the making, performance or interpretation
thereof, including without limitation alleged fraudulent inducement thereof,
shall be settled by binding arbitration in St. Paul, Minnesota by a panel of
three arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon any arbitration award may be
entered in any court having jurisdiction thereof and the parties consent to the
jurisdiction of the courts of the State of Minnesota for this purpose.
(m) NON-COMPETITION. For a period of three years following the Closing
Date, TJI shall not, nor shall it permit any affiliate (including Outlook) to,
be engaged, concerned or interested in any capacity (whether as a partner or
shareholder, agent, consultant or otherwise), or permit its name or any part
thereof is used or employed in connection with, or otherwise be involved in any
capacity with, any business which manufactures, markets or sells doors or
windows in Canada, or any similar business in Canada.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TJ INTERNATIONAL, INC. ANDERSEN CORPORATION
By: /S/ Jody B. Olson By: /s/ J.W. Wulf
--------------------- ---------------------------
Its Vice President, Its President and Chief
--------------------- --------------------------
Corporate Development Executive Officer
--------------------- --------------------------
Z9747\ANDERSEN\TJ-INTL\ACQ.321\3-21-95\DPW:cad
43