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EXHIBIT 2.1
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SHARE PURCHASE AGREEMENT
AMONG
ALL OF THE SHAREHOLDERS OF
NIKA ENTERPRISES LTD.
AND
EVI OIL TOOLS CANADA LTD.
DATED AS OF
JANUARY 30, 1998
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TABLE OF CONTENTS
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ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Organizational Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Approvals, Licenses and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Share Ownership; Title to and Condition of Properties . . . . . . . . . . . . . . . . . . 6
2.5 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.9 No Adverse Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Warranties and Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.14 Sales into the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Approvals, Licenses and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Negotiation with Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Covenant Not to Compete With the Business . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Special Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 Special Environmental Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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BUYER'S CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Instruments of Transfer and Share Certificates . . . . . . . . . . . . . . . . . . . . . . 20
5.4 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 No Adverse Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 Other Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Licenses, Consents and Approvals by the Shareholders . . . . . . . . . . . . . . . . . . . 21
5.8 Consents of Third Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Employment and Consulting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.11 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.12 Shareholder Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.13 Competition Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.14 Special Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SHAREHOLDERS' CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Licenses, Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Other Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Indemnification by the Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Indemnification Basket and Cap; Effect of Materiality Qualifiers . . . . . . . . . . . . . 25
7.5 Waiver of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.7 Failure to Pay Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8 Adjustment of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS,WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Best Efforts to Satisfy Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Liability Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4 Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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DEFINITIONS OF CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Assignment and Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.12 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of January, 1998, by and among the shareholders of Nika
Enterprises Ltd., an Alberta corporation (the "Company"), listed on the
signature pages hereto (the "Shareholders"), and EVI Oil Tools Canada Ltd., an
Alberta corporation (the "Buyer").
W I T N E S S E T H :
WHEREAS, the Shareholders desire to transfer, sell and assign to Buyer
all of the shares in the capital of the Company (the "Shares") upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and agreements, all as more fully set forth below;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Sale of Shares. On the Closing Date, upon the terms and
subject to the conditions contained herein, each Shareholder shall transfer,
assign and convey to Buyer, and Buyer shall purchase from such Shareholder, the
number of Shares held by such Shareholder after the Repurchase as set forth on
Section 1.1 of the Disclosure Schedule, free and clear of all Liens (other than
those liens created or suffered by Buyer and restrictions on sales of Shares
under applicable securities laws).
1.2 Closing. Subject to the conditions set forth in this
Agreement, the Closing shall take place at the offices of Milner Fenerty,
located at 2900, 10180 - 101 Street, Manulife Place, Edmonton, Alberta, Canada,
at 9:00 a.m. on the date that is five Business Days after the earlier to occur
of the events in Section 5.13(a) and Section 5.13(b), or at such other time,
date and place as the parties hereto shall mutually agree upon in writing (the
"Closing Date"). Failure to consummate the transactions contemplated hereby on
such date shall not result in a termination of this Agreement or relieve any
party hereto of any obligation hereunder. Title to, ownership of and control
over the Shares shall pass to Buyer at the Closing.
1.3 Purchase Price. In consideration of the transfer to Buyer of
the Shares, Buyer shall pay to the Shareholders the Purchase Price, with the
Purchase Price to be allocated among the Shareholders in the same proportion as
each Shareholder owns the Shares after the Repurchase as set forth on Section
1.1 of the Disclosure Schedule. On the Closing Date, Buyer shall pay an amount
equal to the Estimated Purchase Price to
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Cleall Pahl, counsel to the Shareholders, in trust for the Shareholders. Such
payments shall be made to the Shareholders by Canadian bank draft of same day
funds.
1.4 Purchase Price Adjustment.
(a) Within 60 calendar days after the Closing Date, Buyer
shall prepare and deliver to the Shareholders a statement reflecting the
Purchase Price and the calculation thereof (the "Final Statement"). Buyer
shall provide the Shareholders with access to copies of all work papers and
other relevant documents to verify the entries contained in the Final
Statement. The Shareholders shall have a period of 15 calendar days after
delivery to them of the Final Statement to review it and make any objections
the Shareholders may have in writing to Buyer. If written objections to the
Final Statement are delivered to Buyer within such 15-day period, then Buyer
and the Shareholders shall attempt to resolve the matter or matters in dispute.
If no written objections are made within the time period provided above, Buyer
shall pay to Cleall Pahl, counsel to the Shareholders, in trust for the
Shareholders, the amount, if any, by which the Purchase Price exceeds the
Estimated Purchase Price and the Shareholders, in the same proportions as the
Shareholders received the Estimated Purchase Price, shall reimburse Buyer the
absolute amount, if any, by which the Estimated Purchase Price exceeds the
Purchase Price (whether positive or negative), in each case within five
calendar days after the end of such 15-day period.
(b) If disputes with respect to the Final Statement
cannot be resolved by Buyer and the Shareholders within 15 calendar days after
the delivery of the objections to the Final Statement, then either party may
submit the specific matters in dispute to KPMG in Edmonton, Alberta, Canada or
such other nationally recognized independent accounting firm in Canada as may
be approved by Buyer and the Shareholders, which firm shall render its opinion
as to such matters. Based on such opinion, such independent accounting firm
will then send to Buyer and the Shareholders its determination on the specific
matters in dispute, which determination shall be final and binding on the
parties hereto. Within five calendar days after delivery of such opinion to
Buyer and the Shareholders, Buyer shall pay to Cleall Pahl, counsel to the
Shareholders, in trust for the Shareholders, the amount, if any, by which the
Purchase Price exceeds the Estimated Purchase Price and the Shareholders, in
the same proportions as the Shareholders received the Estimated Purchase Price,
shall reimburse Buyer the absolute amount, if any, by which the Estimated
Purchase Price exceeds the Purchase Price (whether positive or negative). The
fees and other costs charged by each party's own independent accounting firm
shall be borne by such party and the fees and other costs charged by the
independent accounting firm shall be borne by Buyer, on the one hand, and the
Shareholders, on the other hand, equally.
(c) The calculation of the Purchase Price for purposes of
the Final Statement shall be based on a consolidated balance sheet of the
Company as of the Closing Date and shall be prepared as of the time prior to
the funding to the Company by the Buyer of the amounts of the Special
Distribution and Special Shareholder Loans (the "Closing Balance Sheet"). The
Closing Balance Sheet shall be prepared in a manner consistent with the
consolidated balance sheet of the Company at October 31, 1997 included in the
Financial Statements. For purposes of preparing the Closing
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Balance Sheet (i) all indebtedness owed to any of the Shareholders or any
affiliates of any Shareholders (other than the Special Distribution and the
Special Shareholder Loans) shall be eliminated, (ii) all intercompany
transactions shall be eliminated and no accounts receivable or other amount
owed to the Company from any Subsidiary, any Shareholder or any Affiliate of
any Shareholder (other than accounts receivable from Ampscot Overseas Petroleum
Equipment Company LLC) shall be included as an asset, (iii) all accrued and
unpaid fees of any investment bankers, legal advisors, accountants or other
consultants or Persons providing services to the Company or its Subsidiaries
shall be fully accrued as a liability of the Company as of the Closing Date
notwithstanding that such obligations may not be required to be paid or accrued
under GAAP until the Closing or after the Closing, (iv) there shall be no
increases in the carrying value of any assets of the Company or its
Subsidiaries by virtue of any adjustments made after October 31, 1997, (v)
there shall not be any increases in assets due to the recognition of any
non-cash income after October 31, 1997, other than in connection with sales of
products and services in the ordinary course of business, (vi) any increase in
assets as a result of unrealized gains (other than in connection with sales of
product and services in the ordinary course of business), translation
adjustments, reversals of accruals for contingent liabilities or changes of
accounting shall not be considered and (vii) any withholding or similar
obligation with respect to the Special Shareholder Loans and the Special
Distribution shall be fully accrued as a liability of the Company as of the
Closing Date.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SHAREHOLDERS
Except as otherwise set forth in the correspondingly numbered section
of the Disclosure Schedule delivered to and approved by Buyer at the signing of
this Agreement, each Shareholder, jointly and severally with the other
Shareholders, hereby represents and warrants to Buyer and covenants and agrees
as follows:
2.1 Organizational Matters.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the province of Alberta,
Canada, and is duly authorized, qualified and licensed and has all requisite
power and authority under all applicable laws, ordinances and orders of public
authorities to own, operate and lease its properties and assets and to carry on
its business in the places and in the manner currently conducted.
(b) Each of the Company and its Subsidiaries is qualified
to transact business as an extra-provincial or foreign corporation and is in
good standing in the jurisdictions, if any, specified in Section 2.1(b) of the
Disclosure Schedule, and there is no other jurisdiction in which the nature and
extent of its businesses or the character of its assets makes such qualification
necessary.
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(c) All of the Subsidiaries of the Company and its
ownership interests are set forth on Section 2.1(c) of the Disclosure Schedule.
Each such Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization set forth on Section 2.1(c) of the Disclosure Schedule, and is
duly authorized, qualified and licensed and has all requisite power and
authority under all applicable laws, ordinances and orders of public
authorities to own, operate and lease its properties and assets and to carry on
its business in the places and in the manner currently conducted. All of the
outstanding shares in the capital of such Subsidiaries have been duly
authorized and validly issued and are fully paid, non-assessable, were not
issued in violation of any preemptive rights or other preferential rights of
subscription or purchase of any Person and, except as set forth in Section
2.1(c) of the Disclosure Schedule, are owned of record and beneficially by the
Company or its Subsidiaries identified on such schedule as owning such interest
free and clear of all Liens (other than restrictions on sales of shares under
applicable securities laws). There are no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive rights,
agreements, arrangements or understandings of any character obligating the
Company or any Subsidiary (i) to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares in the capital of any Subsidiary or any
securities or obligations convertible into or exchangeable for such shares or
(ii) to grant, extend or enter into any such option, warrant, convertible
security, call, right, commitment, preemptive right, agreement, arrangement or
understanding. Neither Company nor its Subsidiaries own (directly or
indirectly) any equity interest or other interest or investment in any
corporation, partnership, joint venture, association or other entity or
organization, other than the Subsidiaries set forth in Section 2.1(c) of the
Disclosure Schedule.
(d) Set forth in Section 2.1(d) of the Disclosure
Schedule is a true, correct and complete copy of the organizational documents
and bylaws of the Company and each of its Subsidiaries, in each case as in full
force and effect on the date hereof.
(e) The business is only conducted by the Company or its
Subsidiaries under the name "Ampscot".
(f) The authorized shares in the capital of the Company
consist of (i) an unlimited number of Class A Preferred Shares issuable in
series, with 1,000 authorized Class A Preferred Series I shares, none of which
are issued and outstanding; (ii) an unlimited number of Class B Common Shares,
58 of which are issued and outstanding; and (iii) an unlimited number of Class
C Common Shares, 97 of which are issued and outstanding. After the Repurchase,
the Company will have 1 Class B Common Share issued and outstanding and 56
Class C Common Shares issued and outstanding. All of the shares of capital
stock of the Company that are issued and outstanding are fully paid and
non-assessable and were not issued in violation of any preemptive rights of any
Person. There are no outstanding options, warrants, convertible securities,
calls, rights, commitments, preemptive rights, agreements, arrangements or
understandings of any character obligating the Company (i) to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares in the
capital of the Company or any securities or obligations convertible into or
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exchangeable for such shares or (ii) to grant, extend or enter into any such
option, warrant, convertible security, call, right, commitment, preemptive
right, agreement, arrangement or understanding.
2.2 Effect of Agreement. (a) Each Shareholder has full power and
authority to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by such Shareholder has been duly authorized
by all requisite action on the part of such Shareholder. When this Agreement
has been duly executed and delivered by such Shareholder, it will be a valid
and binding obligation of such Shareholder enforceable against it in accordance
with its terms. Except as set forth in Section 2.2(a) of the Disclosure
Schedule, the execution, delivery and performance of this Agreement by the
Shareholders and the consummation of the transactions contemplated hereby (i)
do not violate any provision of the organizational documents or bylaws of the
Company or any Subsidiaries, and (ii) do not conflict with, or result in any
breach of, or default or loss of any right under (or an event or circumstance
that, with notice or the lapse of time, or both, may result in a default), or
the creation of a Lien pursuant to, or cause or permit the acceleration prior
to maturity of any amounts owing under, any indenture, mortgage, deed of trust,
lease, or other agreement to which the Company or any Subsidiaries are a party
or to which any of their respective assets are subject.
(b) Except as set forth in Section 2.2(b) of the Disclosure
Schedule, the execution, delivery and performance of this Agreement by such
Shareholder will not result in the loss of any license, franchise or permit
possessed by the Company or any Subsidiaries or give a right of acceleration or
termination to any party to any agreement or other instrument to which the
Company or any Subsidiaries are a party or by which any of their respective
assets are bound, or the loss of any right or benefit under such agreement or
instrument.
2.3 Approvals, Licenses and Authorizations.
(a) All material licenses, permits, concessions,
warrants, franchises and other governmental authorizations and approvals of all
Governmental Entities required or necessary for the Company and its
Subsidiaries to carry on their respective businesses in the places and in the
manner currently conducted have been duly obtained, are in full force and
effect and are set forth truly, correctly and completely in Section 2.3 of the
Disclosure Schedule. No violations are in existence or have been recorded with
respect to such licenses, permits or other authorizations and no proceeding is
pending or, to the knowledge of the Shareholders, threatened with respect to
the revocation or limitation of any of such licenses, permits or other
authorizations. The Company and its Subsidiaries have complied with all laws,
rules, regulations and orders applicable to them, and all rules, regulations
and orders respecting the provision of services by the Company and its
Subsidiaries, except for violations that would not have a Material Adverse
Effect.
(b) No order, license, consent, waiver, authorization or
approval of, or exemption by, or the giving of notice to, or the registration
with, or the taking of
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10
any other action in respect of, any Person not a party to this Agreement,
including any Governmental Entity, and no, filing, recording, publication or
registration in any public office or any other place is now, or in the future
under existing law will be, necessary on behalf of the Shareholders to
authorize its execution, delivery and performance of this Agreement or any
other agreement contemplated hereby to be executed and delivered by the
Shareholders and the consummation by the Shareholders of the transactions
contemplated hereby or thereby, or to effect the legality, validity, binding
effect or enforceability thereof.
2.4 Share Ownership; Title to and Condition of Properties.
(a) Each Shareholder owns beneficially and of record the
shares of the Company set forth in Section 1.1 of the Disclosure Schedule next
to such Shareholder's name prior to the Repurchase, free and clear of all
Liens. Following the Repurchase, upon the purchase of the Shares set forth in
Section 1.1 of the Disclosure Schedule as contemplated by this Agreement, Buyer
will obtain good and valid title to such Shares free and clear of all Liens
(other than those Liens created or suffered by Buyer and restrictions on sales
of Shares under applicable securities laws).
(b) The Company and each of its Subsidiaries have good
title to, or valid and subsisting leasehold interests in, all personal property
owned or leased by it free and clear of all Liens, except as set forth in
Section 2.4 of the Disclosure Schedule.
(c) Each parcel of real estate owned or leased by the
Company or any of its Subsidiaries (i) is free and clear of any Liens, other
than Permitted Liens, and (ii) to the best of the Shareholders' knowledge, is
not (A) subject to any governmental decree, (B) to be sold or (C) is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed.
(d) Other than the trade name "Ampscot", neither the
Company nor any of its Subsidiaries owns, or is licensed or otherwise has the
right to use, any patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights or
other proprietary intellectual property rights or computer programs
(collectively, "Intellectual Property"). No claims are pending or, to the
knowledge of such Shareholder, threatened that the Company or any of its
Subsidiaries are infringing or otherwise adversely affecting the rights of any
Person with regard to any Intellectual Property.
2.5 Contracts and Commitments.
(a) Except as set forth in Section 2.5(a) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to
or are bound by:
(i) any agreement, contract or commitment (other
than purchase orders in the ordinary course of business for
raw materials necessary to complete then existing contracts
or purchase orders);
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11
(ii) any agreement, contract or commitment
requiring (A) the customer's payment for goods or services
(whether or not such goods or services are actually provided)
or (B) the provision of goods or services, in either case at
a price less than the cost of producing such goods or
providing such services;
(iii) any loan or advance to, or investment in, any
Person or any agreement, contract, commitment or
understanding relating to the making of any such loan,
advance or investment;
(iv) any agreement or obligation with any
director, officer, shareholder or Affiliate of the Company
(other than bonuses not to exceed C$5,000,000.00 accruing
from November 1, 1997 through the Closing Date);
(v) any Debt Obligations;
(vi) any management service, employment,
consulting, collective bargaining or other similar type
contract or agreement;
(vii) any agreement, contract or commitment that
would limit the freedom of Buyer or any Affiliate thereof
following the Closing Date to engage in any line of business,
to own, operate, sell, transfer, pledge or otherwise dispose
of or encumber any of the assets of the Company or any of its
Subsidiaries or to compete with any Person or to engage in
any business or activity in any geographic area;
(viii) any agreement, lease, contract or commitment
or series of related agreements, leases, contracts or
commitments not entered into in the ordinary course of
business or, except for agreements to purchase or sell goods
and services entered into in the ordinary course of business,
not cancelable by the Company or one of its Subsidiaries
without penalty within 90 calendar days;
(ix) any agreement or contract obligating the
Company or any of its Subsidiaries to provide for
indemnification or contribution with respect to any matter;
(x) any manufacturing, supply, sales,
distributorship or similar agreement relating to the products
manufactured or sold or services provided by the Company or
any of its Subsidiaries;
(xi) any license, royalty or similar agreement; or
(xii) any other agreement, contract or commitment
that might reasonably be expected to have a Material Adverse
Effect.
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12
(b) Neither the Company nor any of its Subsidiaries is in
breach of any provision of, or are in default (and such Shareholder does not
know of any event or circumstance that with notice, or lapse of time or both,
would constitute an event of default) under the terms of any of the contracts
or agreements listed on Section 2.5(a) of the Disclosure Schedule. All of the
contracts and agreements listed on Section 2.5(a) of the Disclosure Schedule
are in full force and effect. Such Shareholder is not aware of any pending or
threatened disputes with respect to any of the contracts or agreements listed
on Section 2.5(a) of the Disclosure Schedule.
(c) Except as set forth in Section 2.5(c) of the
Disclosure Schedule, the enforceability of the contracts and agreements set
forth on Section 2.5(a) of the Disclosure Schedule will not be affected in any
manner by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
2.6 Financial Statements. Attached as Section 2.6 of the
Disclosure Schedule are true, correct and complete copies of (a) the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of October
31, 1997, and (b) the unaudited balance sheets, statements of income and
statements of cash flow of (i) Ampscot Equipment Ltd. as of October 31, 1994,
1995 and 1996, and for the years ended October 31, 1995, 1996 and 1997 and (ii)
the Company as of December 31, 1995, 1996 and 1997, and for the years ended
December 31, 1995, 1996 and 1997 (collectively, the "Financial Statements").
The Financial Statements:
(x) fairly present the financial position of the Company
and its Subsidiaries on a consolidated basis as of their respective
dates and the results of operations of the Company and its
Subsidiaries on a consolidated basis for the periods indicated
therein;
(y) have been prepared in accordance with GAAP and have
been reviewed by the Company's Chartered Accountants; and
(z) have not been rendered untrue, incomplete or unfair
as representations of the financial condition of the Company and its
Subsidiaries on a consolidated basis by events subsequent to the date
of the respective Financial Statements.
Except as set forth in Section 2.6 of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any material liability of any kind or
matter, either direct, accrued, absolute or otherwise, that is not reflected or
disclosed in the Financial Statements. The Net Assets of the Company as of
October 31, 1997 equal C$6,938,542.00.
2.7 Taxes. Except as set forth in Section 2.7 of the Disclosure
Schedule:
(a) all Tax Returns of or relating to any Tax that are
required to be filed on or before the Closing Date for, by, on behalf of or
with respect to the Company or any of its Subsidiaries, including, but not
limited to, those relating to the income, business, operations, payroll or
property of the Company or any of its
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13
Subsidiaries and those which include or should include the Company or any of
its Subsidiaries (whether on a separate, consolidated, affiliated, combined,
unitary or any other basis), have been or will be timely filed with the
appropriate foreign, federal, provincial, state and local authorities on or
before the Closing Date, and all Taxes shown to be due and payable on such Tax
Returns or related to such Tax Returns have been or will be paid in full on or
before the Closing Date;
(b) all such Tax Returns and the information and data
contained therein have been or will be properly and accurately compiled and
completed, fairly present or will fairly present the information purported to
be shown therein, and reflect or will reflect all liabilities for Taxes for the
periods covered by such Tax Returns;
(c) to the best knowledge of the Shareholders, none of
such Tax Returns are under audit or examination by any foreign, federal,
provincial, state or local authority and there are no agreements, waivers or
other arrangements providing for an extension of time with respect to the
assessment or collection of any Tax or deficiency of any nature against the
Company or any of its Subsidiaries or with respect to any such Tax Return, or
any suits or other actions, proceedings, investigations or claims now pending
or threatened against the Company or any of its Subsidiaries with respect to
any Tax, or any matters under discussion with any foreign, federal, provincial,
state or local authority relating to any Tax, or any claims for any additional
Tax asserted by any such authority;
(d) all Taxes assessed and due and owing from or against
the Company or any of its Subsidiaries on or before the Closing Date
(including, but not limited to, value added Taxes or ad valorem Taxes relating
to any property of the Company or any of its Subsidiaries) have been or will be
timely paid in full on or before the Closing Date;
(e) all withholding Tax and Tax deposit requirements
imposed on the Company or any of its Subsidiaries for any and all periods
ending on or before the Closing Date, or through and including the Closing Date
for periods that have not ended on or before the Closing Date, have been or
will be timely satisfied in full on or before the Closing Date;
(f) the Financial Statements reflect and include adequate
charges, accruals, reserves and provisions for the payment in full of any and
all Taxes payable with respect to any and all periods ending on or before the
respective dates thereof;
(g) there is no basis known to such Shareholder for any
reassessment of Tax and there have been no special assessments on any assets of
the Company or any of its Subsidiaries;
(h) all Tax Returns filed with respect to the Tax years
of the Companies and their Subsidiaries through the Tax year ended October 31,
1994, have been examined and closed or are Tax Returns with respect to which
the applicable
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14
period for assessment under applicable law, after giving effect to extensions
or waivers, has expired;
(i) neither Company nor any of its Subsidiaries is a
party to any Tax allocation or Tax sharing agreement; and
(j) neither Company nor any of its Subsidiaries is or has
been a member of any affiliated, consolidated, combined, unitary or similar
group for Tax purposes.
2.8 No Litigation. Except as set forth in Section 2.8 of the
Disclosure Schedule, there is no action, suit, claim, investigation or legal,
administrative, arbitration or other proceeding, or governmental investigation
or examination, or any change in any zoning or building ordinance pending or,
to the knowledge of the Shareholder, threatened against or affecting the
Company or any of its Subsidiaries or their respective properties or assets, at
law or in equity, before or by any Governmental Entity and, to the knowledge of
such Shareholder, no basis exists for any such action, suit, claim,
investigation or proceeding. The matters set forth on Section 2.8 of the
Disclosure Schedule will not prevent the Shareholders from selling the Shares
to Buyer or prevent the Company or any of its Subsidiaries from carrying on
their business in the ordinary course.
2.9 No Adverse Changes or Events. Since October 31, 1997, the
Company and its Subsidiaries have been consistently operated only in the
ordinary course, and, except as set forth in Section 2.9 of the Disclosure
Schedule, there has not been:
(a) any adverse change in the financial condition,
assets, liabilities (contingent or otherwise), results of operations, business
or prospects of the Company and its Subsidiaries on a combined consolidated
basis except for such changes that in the aggregate have not had a Material
Adverse Effect, or any occurrence, circumstance or combination thereof that
might reasonably be expected to have a Material Adverse Effect before or after
the Closing;
(b) any damage, destruction or loss, whether or not
covered by insurance, adversely affecting the Company or any of its
Subsidiaries;
(c) any increase in the compensation or rate of
compensation or commissions or bonuses payable or to become payable by the
Company or any of its Subsidiaries to any officer or Shareholder employee, any
payment or accrual of, or commitment with respect to, any bonus plan or
severance arrangement that is not consistent with past practice or any change
or modification to any severance arrangement;
(d) any sale, assignment, transfer or other disposition
or lapse of any proprietary rights of the Company or any of its Subsidiaries or
disclosure to any Person (other than employees of the Company or any of its
Subsidiaries in the scope of their employment) of any such proprietary rights
material to the Company or any of its Subsidiaries;
-10-
15
(e) any cancellation or compromise of any material
claims, or any waiver of any other material rights relating to the Company or
any of its Subsidiaries, or any sale, transfer or other disposition of any
properties or assets, real, personal or mixed, tangible or intangible, material
to the Company or any of its Subsidiaries (other than sales of inventory of the
Company and its Subsidiaries in the ordinary course of business);
(f) any change in the Company's or its Subsidiaries'
method of accounting for financial, Tax or other purposes; or
(g) any action taken or omitted to be taken that would
have been prohibited under Section 4.2 had such action been taken or omitted to
be taken after the date hereof.
2.10 Environmental Matters. Except as set forth in Section 2.10
of the Disclosure Schedule:
(a) none of the Company, any of its Subsidiaries or, to
the knowledge of such Shareholder, any prior owner or operator of the business
conducted by the Company or any of its Subsidiaries have caused or allowed the
generation, use, treatment, storage, or disposal of Hazardous Materials at any
site or facility owned, leased or operated by the Company or any of its
Subsidiaries except in accordance with all applicable Environmental Laws or
except to the extent the same would not have a Material Adverse Effect and
would not result in any liability, contingent or otherwise, to Buyer or its
Affiliates or the Company and its Subsidiaries;
(b) neither the Company nor any of its Subsidiaries own
or lease or previously owned or leased any real property, improvements or
related assets that have been subject to the release of any Hazardous Materials
except to the extent that the same would not have a Material Adverse Effect;
(c) the Company and each of its Subsidiaries have secured
all Environmental Permits necessary to the conduct the business of the Company
and the Subsidiaries, except to the extent that the failure to have an
Environmental Permit would not have a Material Adverse Effect, and, to the
knowledge of the Shareholders, all such Environmental Permits are subsisting
and in good standing and the Company and each of its Subsidiaries are in
compliance with such permits;
(d) neither the Company nor any of its Subsidiaries have
received any notice, nor are the Shareholders aware, of any proposal to amend,
revoke or replace any Environmental Permit, or requiring the issuance of any
additional Environmental Permit;
(e) to the knowledge of the Shareholders, neither the
Company nor any of its Subsidiaries have received inquiry or notice nor does
such Shareholder have any reason to suspect or believe that the Company or its
Subsidiaries will receive inquiry or notice of any actual or potential
proceedings, claims, lawsuits or losses
-11-
16
related to or arising under any Environmental Law and relating to the Company
or its Subsidiaries;
(f) to the knowledge of the Shareholders, neither the
Company nor any of its Subsidiaries are currently operating or required to be
operating under any compliance order, schedule, decree or agreement, any
consent decree, order or agreement, or corrective action decree, order or
agreement issued or entered into under any federal, state, provincial or local
statute, regulation or ordinance regarding the environment or health or safety
in the work place; and
(g) the Company and each of its Subsidiaries is in
compliance in all material respects with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
established under Environmental Laws.
2.11 Warranties and Product Liability. Neither the Company nor
any of its Subsidiaries have provided any warranties with respect to goods or
services provided by them which cover consequential, punitive or exemplary
damages. Except as disclosed in Section 2.11 of the Disclosure Schedule, such
Shareholder is not aware of any state of facts or the occurrence of any event
forming the basis of any present claim against the Company or its Subsidiaries
with respect to warranties relating to products manufactured, sold or
distributed by it, or services performed by or on behalf of it on or prior to
the Closing. The Company and the Subsidiaries have provided to Buyer all
information relating to any known or alleged design or other defect with
respect to the products manufactured or sold by the Company or Subsidiaries.
2.12 Employee Matters.
(a) There are no collective bargaining or other labor
union agreements to which the Company or any of its Subsidiaries is a party or
by which they are bound. To the knowledge of such Shareholder, neither the
Company nor any of its Subsidiaries have encountered any labor union organizing
activity or had any actual or threatened employee strikes, work stoppages,
slowdowns or walkouts. There have been no allegations made by any employees of
the Company or any of its Subsidiaries regarding unfair labor practices and
there have been no union grievances filed.
(b) Section 2.12 of the Disclosure Schedule contains a
list and brief description of all employee pension plans (sometimes referred to
herein as "Pension Plans"), employee welfare benefit plans and all other
Benefit Plans maintained, or contributed to, by the Company, its Subsidiaries
or any of its Affiliates for the benefit of any present or former officers or
employees of the Company or its Subsidiaries. The Company and its Subsidiaries
have made available to Buyer prior to Closing true, complete and correct copies
of all filings for the past three years relating to the foregoing Benefit
Plans.
(c) Except as set forth in Section 2.12 of the Disclosure
Schedule, each Benefit Plan that has been or is sponsored, participated in or
contributed to by the Company, its Subsidiaries or any of its Affiliates, (i)
is in compliance in all material respects with all registration, reporting and
disclosure requirements of all applicable
-12-
17
laws, (ii) has had all appropriate filings filed timely for each year of its
existence, if required, (iii) has at all times complied with any bonding
requirements, (iv) is in good standing, (v) has been properly funded and (vi)
has no controversy pending with any Governmental Entity, nor any controversy
resolved adversely to the Company, Subsidiaries or any of its Affiliates, which
may subject Buyer or the Company or its Subsidiaries to the payment of any
penalty, interest, tax or other obligation.
(d) Except as set forth in Section 2.12 of the Disclosure
Schedule, the execution of this Agreement or the consummation of the
transactions contemplated by this Agreement will not give rise to any, or
trigger any, change of control, severance or other similar provision in any
Benefit Plan.
(e) Neither the Company or any of its Subsidiaries or
Affiliates provides employee post-retirement medical or health coverage for any
employee or contributes to or maintains any employee welfare benefit plan which
provides for health benefit coverage following termination of employment of any
employee, except as described in Section 2.12 of the Disclosure Schedule, nor
has it made any representations, agreements, covenants or commitments to
provide that coverage.
(f) Except as set forth in Section 2.12 of the Disclosure
Schedule, neither the Company or any of its Subsidiaries or Affiliates or any
officer or director of any of the foregoing or any of the Benefit Plans,
including the Pension Plans, or any trusts created thereunder, or any trustee
or administrator thereof, have engaged in any prohibited transaction or act or
any other breach of fiduciary responsibility that could subject Buyer or the
Company or its Subsidiaries to any Tax or penalty or to any liability under any
applicable law or regulation.
(g) With respect to any Benefit Plan that is an employee
welfare benefit plan, such Benefit Plan (i) complies in all material respects
with the applicable requirements of law for such plan and (ii) may be amended
or terminated without liability to Buyer on or at any time after the Closing.
2.13 Finder's Fees. Such Shareholder has not, and neither the
Company nor any of its Subsidiaries or Affiliates has, employed or retained any
investment banker, broker, agent, finder or other party, or incurred any
obligation for brokerage fees, finder's fees or commissions, with respect to
the sale of the Shares or with respect to the transactions contemplated by this
Agreement, or otherwise dealt with anyone purporting to act in the capacity of
a finder or broker with respect thereto whereby any party hereto may be
obligated to pay such a fee or commission. Each of the Shareholders, jointly
and severally with the other Shareholders, agrees to indemnify and hold Buyer
and its Affiliates harmless from and against any and all claims, liabilities or
obligations with respect to all fees, commissions or expenses asserted by any
Person against the Company or any of its Subsidiaries or Buyer on the basis of
any act, statement, agreement or commitment alleged to have been made by the
Company or any of its Subsidiaries with respect to any such fee, commission or
expense. Each Shareholder also agrees to severally indemnify Buyer from and
against any and all claims, liabilities and obligations with respect to fees,
commission and expenses asserted by any Person against the Company, any
Subsidiary of the
-13-
18
Company or Buyer on the basis of any act, statement, agreement, or commitment
alleged to have been made by such Shareholder with respect to any such fee,
commission or expense.
2.14 Sales into the United States. Revenues from sales of goods
and services attributable to the Company and the Subsidiaries in or into and
for use in the United States have, for each of the three years preceding the
date hereof, been less than an aggregate total of US$25,000,000. The Company
and the Subsidiaries do not, in the aggregate, have assets in the United States
having a book value of US$15,000,000 or more.
2.15 Insurance. Section 2.15 of the Disclosure Schedule sets
forth all existing insurance policies held by the Company and its Subsidiaries
relating to the business, assets, employees or agents of the Company and its
Subsidiaries. Each such policy is in full force and effect and is with
responsible insurance carriers. There is no dispute with respect to such
policies and all claims arising from events or circumstances occurring prior to
the date hereof have been paid in full or adequate reserves therefor are
recorded in the Financial Statements. All retroactive premium adjustments for
any period ended on or before December 31, 1996 under any worker's compensation
policy or any other insurance policies of the Company or any of its
Subsidiaries have been recorded in accordance with GAAP and are reflected in
the Financial Statements. Other than as set forth in Section 2.15 of the
Disclosure Schedule, none of such policies will terminate as a result of the
transactions contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Shareholders as follows:
3.1 Corporate Matters. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the province of
Alberta. Buyer has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by Buyer and is a
legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect that affect creditors' rights generally and by legal and equitable
limitations on the availability of specific remedies. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by Buyer will not violate any provision of, or constitute a
default under, any contract or other agreement to which Buyer is a party or by
which it is bound, or conflict with its organizational documents or Bylaws,
other than violations, defaults or conflicts that would not materially and
adversely affect the ability of Buyer to consummate the transactions provided
for in this Agreement.
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19
3.2 Approvals, Licenses and Authorizations. No order, license,
consent, waiver, authorization or approval of, or exemption by, or the giving
of notice to, or the registration with, or the taking of any other action in
respect of, any Person not a party to this Agreement, including any
Governmental Entity, and no filing, recording, publication or registration in
any public office or any other place is now, or under existing law in the
future will be, necessary on behalf of Buyer to authorize its execution,
delivery and performance of this Agreement or any other agreement contemplated
hereby to be executed and delivered by Buyer and the consummation by Buyer of
the transactions contemplated hereby or thereby, or to effect the legality,
validity, binding effect or enforceability thereof.
3.3 Finder's Fees. Neither Buyer nor any Affiliate of Buyer has
employed or retained any investment banker, broker, agent, finder or other
party, or incurred any obligation for brokerage fees, finder's fees or
commissions, with respect to the transactions contemplated by this Agreement,
or otherwise dealt with anyone purporting to act in the capacity of a finder or
broker with respect thereto whereby any party hereto may be obligated to pay
such a fee or a commission. Buyer agrees to indemnify and hold the
Shareholders and their Affiliates harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Buyer or any Affiliate of Buyer with
respect to any such fee, commission or expense.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Access to Information.
(a) Until the Closing, the Shareholders shall cause the
Company in which they are shareholders to furnish Buyer and its employees,
officers, accountants, attorneys, agents, investment bankers and other
authorized representatives with all financial, operating and other data and
information concerning the Company and its Subsidiaries as Buyer shall from
time to time reasonably request and will afford Buyer and its employees,
officers, accountants, attorneys, agents, investment bankers and other
authorized representatives access to the Company's and its Subsidiaries'
offices, properties, books, records, contracts and documents and will be given
the opportunity to ask questions of, and receive answers from, representatives
of the Company and the Subsidiaries. No investigations by Buyer or its
employees, representatives or agents shall reduce or otherwise affect the
obligation or liability of the Shareholders with respect to any
representations, warranties, covenants or agreements made herein or in any
Exhibit, Schedule or other certificate, instrument, agreement or document,
including the Disclosure Schedule, executed and delivered in connection with
this Agreement. The Shareholders will cooperate with Buyer and its employees,
officers, accountants, attorneys, agents and other authorized representatives
in the preparation of any documents or other materials that may be required by
any Governmental Entity.
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20
(b) The Shareholders agree to cooperate with Buyer, and
cause the Company's outside accountants to assist Buyer, in the preparation of
any financial statements relating to the Company and the Subsidiaries that may
be reasonably requested by Buyer for filing with the United States Securities
and Exchange Commission in connection with any filings that may be made by EVI,
Inc., Buyer's parent corporation, under the United States Securities Act of
1933 or the United States Securities Exchange Act of 1934. Such financial
statements shall, if requested by Buyer, consist of (i) such audited balance
sheets and audited statements of operations, cash flows and changes in equity
together with the notes thereon and (ii) such unaudited interim balance sheets
and unaudited interim statements of operations, cash flows and changes in
equity, if any, in each case as Buyer or EVI, Inc. shall reasonably deem to be
required. All costs with respect to the preparation of the foregoing financial
statements shall be borne by Buyer.
4.2 Covenants. Until the Closing, except as described on Section
4.2 of the Disclosure Schedule, each Shareholder shall and shall cause Company
to comply with the provisions set forth below (unless otherwise consented to in
writing by Buyer):
(a) Company and its Subsidiaries shall conduct their
business in the ordinary and usual course;
(b) Company and its Subsidiaries will not (i) grant or
agree to grant any bonuses to any employee, (ii) grant any general
increase in the rates of salaries or compensation of its or their
employees or any specific increase to any employee, including
executive officers of the Company or its Subsidiaries, (iii) provide
for any new pension, retirement or other employment benefits to any of
its or their employees or any increase in any existing benefits or
(iv) terminate or amend in any respect or provide for any material
increase in benefits under any Benefit Plan;
(c) Company and its Subsidiaries will not amend their
charters or by-laws or enter into any merger or consolidation
agreement;
(d) Company and its Subsidiaries shall not authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of any class or any other securities or equity
equivalents or amend any of the terms of any such securities or
agreements;
(e) Company and its Subsidiaries shall not sell, assign
or dispose of any of their assets or properties, tangible or
intangible, or incur or assume any liabilities or enter into any
sale/leaseback or similar transaction, except for sales and
dispositions of inventory made in the ordinary course of business
consistent with past practices;
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(f) Company shall not, and the Shareholders shall not
consent to, a sale of stock of the Company to any Person other than
Buyer or an Affiliate of Buyer;
(g) none of the Company or any of its Subsidiaries shall
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other Person;
(h) none of the Company or any of its Subsidiaries shall
implement or adopt (i) any change in their accounting methods or
principles or the application thereof (including depreciation lives)
or (ii) any material change in its Tax methods or principles or the
application thereof (including depreciation lives); and
(i) Company shall not (i) declare or pay any dividend on
or make any other distribution in respect of any of their capital
stock or other ownership interests, (ii) split, combine or reclassify
any of their capital stock or other ownership interests or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of, their capital stock or other
ownership interests, (iii) purchase, redeem or otherwise acquire any
shares of their capital stock or other ownership interests, (iv)
advance or otherwise loan any funds to any Shareholder or any
Affiliate of the Company or any Shareholder other than the Company and
its Subsidiaries or (v) take any preliminary action with respect to
the foregoing; provided that the Company shall be permitted (A) to
declare the Special Distribution with a payment date on or after the
Closing Date in an amount not to exceed C$68,900,082.00 in the
aggregate, (B) to repurchase up to 57 of its Class B Common Shares and
up to 41 of its Class C Common Shares at a purchase price not to
exceed C$4,312,000.00 in the aggregate and (C) to incur the Special
Shareholder Loans in consideration for such repurchase.
4.3 Negotiation with Others. The Shareholders agree that from
the date hereof until the Closing Date or the termination of this Agreement
pursuant to Article 9 none of the Shareholders nor any Affiliate of the
Shareholders will, directly or indirectly, negotiate with any Person not a
party hereto or not affiliated with a party hereto with respect to a sale or
disposition of the Company or Subsidiaries or authorize or encourage any other
Person to do the same. During such period, the Shareholders will return
without discussion all offers or proposals for the acquisition of the Shares or
any of the operating assets of the Company or its Subsidiaries.
4.4 Information. During the period from the date of this
Agreement to the Closing Date, Buyer and the Shareholders will promptly inform
each other in writing of (a) any claim, action or any proceeding commenced
against such party with respect to the transactions contemplated by this
Agreement or any assets or property of the Company or its Subsidiaries and (b)
any event or circumstance which renders untrue or inaccurate any representation
or warranty.
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4.5 Further Assurances. Each Shareholder shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered to
Buyer such bills of sale, assignments and other instruments of transfer,
assignment and conveyance, in form and substance satisfactory to counsel for
Buyer acting reasonably, as shall be necessary to vest in Buyer all the right,
title and interest in and to the Shares held by such Shareholder free and clear
of all Liens (including the release of all Liens of record other than Permitted
Liens) and shall use its best efforts to cause to be taken such other action,
including Tax filings and filings in the Alberta personal property registry, as
Buyer reasonably may require to more effectively implement and carry into
effect the transactions contemplated by this Agreement.
4.6 Covenant Not to Compete With the Business. Each of the
Shareholders agrees that, effective as of the Closing Date and for a period of
five years thereafter, neither such Shareholder nor such Shareholder's
Affiliates shall, without the consent of Buyer, directly or indirectly, design,
develop, market, produce, manufacture or provide any product, good or service
that competes with the business conducted by the Company or its Subsidiaries in
any geographic location in the world in which the Company conducts its business
as of the date hereof except for the account of Buyer and its Affiliates. Each
Shareholder acknowledges that a remedy at law for any breach or attempted
breach of this Section 4.6 will be inadequate and further agree that any breach
of this Section 4.6 will result in irreparable harm to the Company and the
Subsidiaries, and, accordingly, Buyer and the Company and their Subsidiaries
shall, in addition to any other remedy that may be available to any of them, be
entitled to specific performance and injunctive and other equitable relief in
case of any such breach or attempted breach. Each Shareholder acknowledges
that this covenant not to compete is being provided as an inducement to Buyer
to acquire the Shares from such Shareholder and that this Section 4.6 contains
reasonable limitations as to time, geographical area and scope of activity to
be restrained that do not impose a greater restraint than is necessary to
protect the goodwill or other business interest of Buyer and the Company and
its Subsidiaries. Whenever possible, each provision of this Section 4.6 shall
be interpreted in such a manner as to be effective and valid under applicable
law but if any provision of this Section 4.6 shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of
this Section 4.6. If any provision of this Section 4.6 shall, for any reason,
be judged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Section 4.6 but shall be confined in its operation to the
provision of this Section 4.6 directly involved in the controversy in which
such judgment shall have been rendered. In the event that the provisions of
this Section 4.6 should ever be deemed to exceed the time or geographic
limitations permitted by applicable laws, then such provision shall be reformed
to the maximum time or geographic limitations permitted by applicable law.
4.7 Release.
(a) AS OF THE CLOSING, EACH OF THE SHAREHOLDERS DOES
HEREBY FOR ITSELF AND FOR HIMSELF OR HIS HEIRS, EXECUTORS, ADMINISTRATORS AND
LEGAL REPRESENTATIVES REMISE, RELEASE, ACQUIT AND FOREVER DISCHARGE THE COMPANY
AND ITS RESPECTIVE AFFILIATES,
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PARTNERS, SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES, OF AND FROM ANY AND
ALL CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION
AND OBLIGATIONS OF EVERY NATURE WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN
OR UNKNOWN, MATURED OR UNMATURED, FIXED OR CONTINGENT, WHICH EACH OF SUCH
SHAREHOLDERS NOW HAS, OWNS OR HOLDS OR HAS AT ANY TIME PREVIOUSLY HAD, OWNED OR
HELD AGAINST THE COMPANY OR SUCH PERSON, INCLUDING WITHOUT LIMITATION ALL
LIABILITIES CREATED AS A RESULT OF THE NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL
ACTS OF THE COMPANY, ANY OF ITS SUBSIDIARIES AND ITS EMPLOYEES AND AGENTS,
EXISTING AS OF THE CLOSING OR RELATING TO ANY MATTER THAT OCCURRED ON OR PRIOR
TO THE CLOSING; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES, DEBTS OR
CAUSES OF ACTION THAT MAY ARISE IN THE CONNECTION WITH THE FAILURE OF ANY OF
THE PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS (I) HEREUNDER OR UNDER
ANY OTHER AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR (II)
FROM ANY BREACHES BY ANY OF THEM OF THIS AGREEMENT OR ANY OTHER AGREEMENT SHALL
NOT BE RELEASED OR DISCHARGED PURSUANT TO THIS AGREEMENT; AND PROVIDED FURTHER
ANY LIABILITIES UNDER BENEFIT PLANS LISTED ON THE SCHEDULES HERETO SHALL NOT BE
RELEASED.
(b) EACH OF THE SHAREHOLDERS REPRESENTS AND WARRANTS THAT
SUCH SHAREHOLDER HAS NOT PREVIOUSLY ASSIGNED OR TRANSFERRED, OR PURPORTED TO
ASSIGN OR TRANSFER, TO ANY PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE
CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR
OBLIGATIONS RELEASED HEREIN. EACH OF THE SHAREHOLDERS COVENANTS AND AGREES
THAT SUCH SHAREHOLDER WILL NOT ASSIGN OR TRANSFER TO ANY PERSON OR ENTITY
WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS TO BE RELEASED
HEREIN. EACH OF THE SHAREHOLDERS REPRESENTS AND WARRANTS THAT SUCH SHAREHOLDER
HAS READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS SECTION 4.7 AND THAT
SUCH SHAREHOLDER HAS BEEN REPRESENTED BY LEGAL COUNSEL OF SUCH SHAREHOLDER'S
OWN CHOOSING IN CONNECTION WITH THE NEGOTIATION, EXECUTION AND DELIVERY OF THIS
AGREEMENT.
4.8 Special Transactions. Following the date hereof and prior to
the Closing, the board of directors of the Company may declare a dividend (the
"Special Distribution") to its shareholders of up to C$68,900,082.00 in the
aggregate, to be payable on or after the Closing Date. Following the date
hereof and prior to the Closing, the Company may repurchase (the "Repurchase")
up to 57 shares of its Class B Common Stock and up to 41 shares of its Class C
Common Stock at a purchase price of up to C$4,312,000.00 in the aggregate,
payable through the issuance by the Company of promissory notes (the "Special
Shareholder Loans") to be issued to each Shareholder from whom stock is being
repurchased. The Shareholders waive the requirement that the Company shall
give notice of the Repurchase in accordance with section 32(3) of the Business
Corporation Act (Alberta). Any Special Shareholder Loans would have a maturity
date on or after the Closing Date and would bear no interest. Immediately
after the Closing, the Buyer agrees to cause the Company (i) to pay the Special
Distribution in accordance with the resolutions of the Board of Directors of
the Company declaring such Special Distribution and (ii) to pay the Special
Shareholder Loans in accordance with the terms of the promissory notes related
thereto issued by the Company. The Company shall obtain all necessary
approvals from the Bank of Montreal regarding the Repurchase.
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4.9 Special Environmental Procedures. In addition to the
indemnification provided in Section 7.1 hereof, the Shareholders agree, at
their sole expense and without regard to the limitations of Section 7.4, to
remediate the matters described in the Phase I Environmental Site Assessment
attached as Exhibit 4.9 hereto and performed by Conor Pacific Environmental
Technologies Inc. at the Company's Nisku, Alberta, Canada facility (the
"Remediation"), and to diligently pursue the Remediation until it is completed.
The Remediation shall be effected in compliance with all applicable federal,
provincial and local safety and health laws and applicable Environmental Laws.
ARTICLE 5
BUYER'S CONDITIONS
The obligation of Buyer to purchase the Shares as contemplated hereby
is, at the option of Buyer, subject to the satisfaction on or before the
Closing Date of the conditions set forth below, any of which may be waived by
Buyer in writing; provided, however, Buyer's election to proceed with the
Closing shall not be deemed a waiver of any breach of any representation,
warranty or covenant herein and such action shall not prejudice Buyer's right
to recover damages for any such breach.
5.1 Representations, Warranties and Covenants. The
representations and warranties of the Shareholders contained in this Agreement
shall be true, correct and complete in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made or given on and as of such date; each and all of the
agreements and covenants of the Shareholders to be performed or complied with
by it on or before the Closing Date pursuant to this Agreement shall have been
performed or complied with in all material respects; and the Shareholders shall
have delivered to Buyer a certificate dated the Closing Date regarding the
matters set forth in this Section 5.1.
5.2 Good Standing. The Shareholders shall have delivered to
Buyer certificates of status issued by appropriate Governmental Entities
evidencing the status of the Company and its Subsidiaries, as of a date not
more than five calendar days prior to the Closing Date, in the province of
Alberta, Canada and in each other jurisdiction in which the Company and its
Subsidiaries conduct their respective businesses.
5.3 Instruments of Transfer and Share Certificates. The
Shareholders shall have executed, acknowledged and delivered to Buyer stock
powers accompanying each share certificate evidencing the Shares, and other
instruments of transfer, assignment and conveyance as shall be reasonably
requested by Buyer to vest in Buyer all the right, title and interest in and to
the Shares.
5.4 No Litigation. No preliminary or permanent injunction or
other order of any court or other Governmental Entity shall be in effect or
threatened nor shall there be in effect any statute, rule, regulation or
executive order promulgated or
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enacted by any Governmental Entity that, in any such case, prevents the
consummation of the transactions contemplated by this Agreement. No suit,
action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced or threatened by any Person (other than Buyer or its
Affiliates) seeking to prevent the sale of the Shares or asserting that the
sale of all or a portion of the Shares would be unlawful.
5.5 No Adverse Event. Neither the Company nor its Subsidiaries
shall be affected or threatened to be affected by any loss or damage to any of
their respective assets, whether or not covered by insurance, except to the
extent that the same would not have a Material Adverse Effect.
5.6 Other Legal Matters. All Exhibits, Schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required
by this Agreement.
5.7 Licenses, Consents and Approvals by the Shareholders. The
Shareholders shall have delivered to Buyer a copy of each of the licenses,
consents, approvals and other authorizations from Governmental Entities
necessary or appropriate for the Shareholders to consummate the transactions
contemplated by this Agreement.
5.8 Consents of Third Persons. All material consents from third
Persons, including those consents necessary for the consummation of the
transactions contemplated by this Agreement and those consents listed in
Section 2.2 of the Disclosure Schedule, shall have been obtained on terms
satisfactory to Buyer and delivered to Buyer.
5.9 Employment and Consulting Agreements. Neal Allen and Daryl
Allen shall have entered into three-year employment agreements with Buyer in
the form set forth in Exhibit 5.9.
5.10 Legal Opinion. Buyer shall have received from Cleall Pahl,
counsel to the Company and the Shareholders, a legal opinion in substantially
the form set forth in Exhibit 5.10.
5.11 Resignations. Buyer shall have received written resignations
from all of the directors and officers of the Company.
5.12 Shareholder Debt. All indebtedness owed between the Company
or its Subsidiaries and any Shareholder, other than the Special Distribution
and the Special Shareholder Loans, shall have been paid in full or released.
5.13 Competition Act. On or before the Closing Date, either:
(a) the Director of Investigation and Research (the
"Director") under the Competition Act (Canada) (the "Act") shall have issued an
advance ruling
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certificate, in a form satisfactory to the Buyer, ruling in favor of the
purchase of the Shares by the Buyer in accordance with this Agreement (the
"Transaction"); or
(b) the applicable waiting period under section 123 of
the Act shall have expired without the Director having given notice that the
Director intends to make an application to the Competition Tribunal for an
order under section 92 of the Act in respect of the Transaction and no
proceedings shall have been taken or threatened by the Director under the
merger provisions of the Act in respect of the Transaction.
Nothing contained in this Agreement shall be construed so as to require the
Buyer or any of its subsidiaries or affiliates to sell, license, dispose of or
hold separate, or to operate in any specified manner, any of their respective
assets or businesses.
5.14 Special Transactions. The Shareholders shall have delivered
to the Buyer (a) a copy of the resolutions of the Company authorizing the
declaration and payment of the Special Distribution, certified by the President
of the Company, and (b) a copy of the promissory notes evidencing the Special
Shareholder Loans.
ARTICLE 6
SHAREHOLDERS' CONDITIONS
The obligation of the Shareholders to transfer the Shares as
contemplated hereby is, at the option of the Shareholders, subject to the
satisfaction on or before the Closing Date of the conditions set forth below,
any of which may be waived by the Shareholders in writing; provided, however,
the Shareholders' election to proceed with the closing of the transactions
contemplated hereby shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein and such action shall not prejudice
the Shareholders' rights to recover damages for any breach.
6.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true, correct and
complete in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made or
given on and as of such date; each and all of the agreements and covenants of
Buyer to be performed or complied with by it on or before the Closing Date
pursuant to this Agreement shall have been performed or complied with in all
material respects; and Buyer shall have delivered to the Shareholders a
certificate signed by one of its duly authorized officers, dated the Closing
Date, regarding the matters set forth in this Section 6.1.
6.2 Licenses, Consents and Approvals. Buyer shall have delivered
to Shareholders a copy of each of the licenses, consents, approvals and other
authorizations from Governmental Entities necessary or appropriate for Buyer to
consummate the transactions contemplated by this Agreement.
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6.3 Other Legal Matters. All Exhibits, Schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required
by this Agreement.
6.4 No Litigation. No preliminary or permanent injunction or
other order of any Governmental Entity shall be in effect or threatened nor
shall there be any statute, rule, regulation or executive order promulgated or
enacted by any Governmental Entity that, in any such case, prevents the
consummation of the transactions contemplated by this Agreement.
6.5 Legal Opinion. The Shareholders shall have received from
Milner Fenerty, counsel to Buyer, a legal opinion in substantially the form set
forth in Exhibit 6.5.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by the Shareholders. Except as otherwise
limited by this Article 7, Article 8 and Article 9 hereof, each Shareholder,
jointly and severally with the other Shareholders, agrees to indemnify, defend
and hold Buyer and its successors and assigns harmless from and against and in
respect of Damages actually suffered, incurred or realized by such party,
arising out of or resulting from or relating to:
(a) any breach of representation or warranty made in
Article 2 of this Agreement, including those portions of the Disclosure
Schedule referenced in Article 2, or any breach of covenant or agreement of
such Shareholder contained in the Agreement; and
(b) all Environmental Liabilities relating to the
business and assets of the Company or its Subsidiaries, whenever incurred,
based upon, arising from or related to any conditions, events, circumstances,
facts, activities, practices, incidents, actions or omissions occurring or
existing on or prior to the Closing Date regardless of whether such
Environmental Liabilities are known, unknown, disclosed, undisclosed, fixed or
contingent, or whether such Environmental Liabilities relate to on-site or
off-site Environmental Conditions, including without limitation any such
Environmental Liabilities arising from the use, storage, handling, treatment,
disposal, generation, transportation or release of any Hazardous Materials on
or prior to the Closing Date but specifically excluding the matters referred to
in Section 4.9 hereof.
(c) Any liability or claim for liability (whether in
contract, in tort or otherwise, and whether or not successful) related to the
operations and business of the Company or any of its Subsidiaries prior to the
Closing except to the extent such liability has been fully accrued on the
Closing Balance Sheet.
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(d) Any and all Taxes pertaining or attributable to the
Company or any of its Subsidiaries with respect to any and all taxable periods
or portions thereof ending on or prior to the Closing Date to the extent not
fully accrued on the Closing Balance Sheet, including without limitation Taxes
pertaining or attributable to the Repurchase, the Special Shareholder Loans or
the Special Distribution.
7.2 Indemnification by Buyer. Except as otherwise limited by
this Article 7, Article 8 and Article 9 hereof, Buyer agrees to indemnify,
defend and hold the Shareholders and their successors and assigns harmless from
and against and in respect of Damages actually suffered, incurred or realized
by such party, arising out of or resulting from any misrepresentation, breach
of warranty or breach of any covenant or agreement made or undertaken by Buyer
in this Agreement or any misrepresentation in or omission from any other
agreement, certificate, Exhibit or writing delivered to the Shareholders
pursuant to this Agreement.
7.3 Procedure. All claims for indemnification under this Article
7 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor
notice of any matter which an Indemnitee has determined has given or could give
rise to a right of indemnification under this Agreement, stating the amount of
Damages, if known, and method of computation thereof, all with reasonable
particularity, and stating with particularity the nature of such matter.
Failure to provide such notice shall not affect the right of the Indemnitee to
indemnification except to the extent such failure shall have resulted in
liability to the Indemnitor that could have been actually avoided had such
notice been provided within such required time period.
(b) The obligations and liabilities of an Indemnitor
under this Article 7 with respect to Damages arising from claims of any third
party that are subject to the indemnification provided for in this Article 7
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the Indemnitor prompt notice of
such Third Party Claim and the Indemnitor may, at its option, assume and
control the defense of such Third Party Claim at the Indemnitor's expense and
through counsel of the Indemnitor's choice reasonably acceptable to Indemnitee.
In the event the Indemnitor assumes the defense against any such Third Party
Claim as provided above, the Indemnitee shall have the right to participate at
its own expense in the defense of such asserted liability, shall cooperate with
the Indemnitor in such defense and will attempt to make available on a
reasonable basis to the Indemnitor all witnesses, pertinent records, materials
and information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. In the event the Indemnitor does not
elect to conduct the defense against any such Third Party Claim, the Indemnitor
shall pay all reasonable costs and expenses of such defense as incurred and
shall cooperate with the Indemnitee (and be entitled to participate) in such
defense and attempt to make available to it on a reasonable basis all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. Except
for the settlement of a Third Party Claim that
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involves the payment of money only and for which the Indemnitee is totally
indemnified by the Indemnitor, or which does not affect any right of the
Indemnitee or impose any obligations on the Indemnitee, no Third Party Claim
may be settled without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld.
7.4 Indemnification Basket and Cap; Effect of Materiality
Qualifiers.
(a) Except as provided in this Section 7.4, there shall
be no indemnification by the Shareholders for Damages for a
misrepresentation or breach of representation or warranty (except the
representations and warranties in Sections 2.1, 2.2, 2.4, 2.7, 2.10,
2.13 and 2.14, which shall not be subject to the Basket Amount)
recoverable against a party obligated to provide indemnification
therefor under this Article 7 until the Damages for all
misrepresentations and breaches of representations and warranties by
the Shareholders as a group exceed C$250,000 in the aggregate (the
"Basket Amount"), and once all such Damages exceeds the Basket Amount,
the Shareholders shall only be obligated to the other party for such
Damages in excess of the Basket Amount.
(b) In no case shall the Shareholders' aggregate
liability under Section 7.1(a) exceed for all claims the Purchase
Price plus the amounts of the Special Distribution and the Special
Shareholder Loans.
(c) For purposes of determining the right of a party to
make a claim for indemnification for a breach of representation or
warranty under Sections 7.1 and 7.2, all representations and
warranties that have been made subject to a materiality or dollar
qualification (including any Material Adverse Effect) shall be deemed
to have been made without that qualification, it being understood and
agreed that the thresholds provided for under Section 7.4(a) are
intended to be the only materiality qualification for such matters for
purposes of indemnification.
7.5 Waiver of Contribution. Each of the Shareholders hereby
expressly acknowledges and agrees that the indemnity obligations under Section
7.1 shall apply notwithstanding the matter subject to indemnification involves
an act or omission by a Company or one of its Subsidiaries and that such
Shareholder shall not seek or receive indemnification or contribution from a
Company or its Subsidiaries with respect to such claim for indemnification.
7.6 Payment. Payment of any amounts due pursuant to this Article
7 shall be made within thirty days after notice is sent by the Indemnitee.
7.7 Failure to Pay Indemnification. If and to the extent the
Indemnitee shall make written demand upon the Indemnitor for indemnification
pursuant to this Article 7 and the Indemnitor shall refuse or fail to pay in
full within thirty days of such written demand the amounts demanded pursuant
hereto and in accordance herewith, then the Indemnitee may utilize any legal or
equitable remedy to collect
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from the Indemnitor the amount of its Losses. Nothing contained herein is
intended to limit or constrain the Indemnitee's rights against the Indemnitor
for indemnity, the remedies herein being cumulative and in addition to all
other rights and remedies of the Indemnitee.
7.8 Adjustment of Liability. The amount which an Indemnitee
shall be entitled to receive from an Indemnitor with respect to any
indemnifiable Loss under this Article 7 shall be net of any insurance recovery
by the Indemnitee on account of such Loss.
ARTICLE 8
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS,WARRANTIES AND AGREEMENTS
All statements of fact contained in any written statement (including
financial statements), certificate, instrument or document delivered by or on
behalf of the Shareholders pursuant to this Agreement shall be deemed
representations and warranties of the Shareholders. The several
representations and warranties of the parties to this Agreement shall survive
the Closing Date and shall remain in full force and effect for a period of two
years following the Closing Date (except that (a) the representations and
warranties set forth in Sections 2.1, 2.2, 2.4, 2.10, 2.13, 2.14, 3.1 and 3.3
shall survive the Closing Date without limitation and (b) the representations
and warranties set forth in Section 2.7 shall survive until the expiration of
the time during which the Minister of National Revenue or any other
governmental authority may assess Taxes for the taxation year in question) (the
period during which the representations and warranties shall survive being
referred to herein with respect to such representations and warranties as the
"Survival Period"), and shall be effective with respect to any inaccuracy
therein or breach thereof (and a claim for indemnification under Article 7
hereof may be made thereon) if a written notice asserting the claim shall have
been duly given in accordance with Article 7 hereof within the Survival Period
with respect to such matter. Any claim for indemnification made during the
Survival Period shall be valid and the representations and warranties relating
thereto shall remain in effect for purposes of such indemnification
notwithstanding such claim may not be resolved within the Survival Period. The
agreements and covenants set forth herein shall survive without limitation.
All representations, warranties and covenants and agreements made by the
parties shall not be affected by any investigation heretofore or hereafter made
by and on behalf of any of them and shall not be deemed merged into any
instruments or agreements delivered in connection with this Agreement or
otherwise in connection with the transactions contemplated hereby.
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ARTICLE 9
TERMINATION
9.1 Best Efforts to Satisfy Conditions. Subject to the
provisions of this Agreement, Buyer and the Shareholders agree to use all
reasonable efforts to bring about the satisfaction of the conditions specified
in Article 5 and Article 6 hereof.
9.2 Termination. The obligation to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of Buyer and the Shareholders;
(b) Buyer, if a material default shall be made in the
observance or in the due and timely performance by the Shareholders of any
agreements and covenants of the Shareholders herein contained, or if there
shall have been a breach by the Shareholders of any of the warranties and
representations of the Shareholders herein contained, and such default or
breach has not been cured or has not been waived;
(c) the Shareholders, if a material default shall be made
by Buyer in the observance or in the due and timely performance by Buyer of any
agreements and covenants of Buyer herein contained, or if there shall have been
a breach by Buyer of any of the warranties and representations of Buyer herein
contained, and such default or breach has not been cured or has not been
waived; and
(d) Buyer or the Shareholders (provided the terminating
party has not materially breached any of its agreements, covenants or
representations and warranties) if the Closing shall not have occurred on or
before February 28, 1998.
9.3 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 9.2, then this Agreement shall, except as provided in this
Section 9.3, forthwith become void and there shall not be any liability or
obligation with respect to the terminated provisions of this Agreement on the
part of the Shareholders or Buyer except and to the extent such termination
results from the willful breach by a party of any of its representations,
warranties or agreements hereunder. The termination of this Agreement shall
not relieve any party of its obligations under this Section 9.3.
9.4 Notice of Termination. The parties hereto may exercise their
respective rights of termination under this Article 9 only by delivering
written notice to that effect to the other party or parties, and such notice is
received on or before the Closing Date.
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ARTICLE 10
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein, unless the
context otherwise indicates, both for purposes of this Agreement and all
Exhibits hereto and the Disclosure Schedule:
10.1 "Affiliate" with respect to any Person, means any Person
that directly or indirectly controls, is controlled by or is under common
control with such Person.
10.2 "Agreement" shall mean this Share Purchase Agreement among
the Shareholders and Buyer, as amended from time to time by the parties hereto.
10.3 "Benefit Plan" means any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, share ownership, share purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical dependent care, cafeteria, employee assistance, scholarship program or
other plan, arrangement or understanding (whether or not legally binding)
providing benefits to any current or former employee, officer or director of
the Company or any Subsidiary or Affiliate thereof.
10.4 "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Houston, Texas or Calgary,
Alberta are authorized by law to close.
10.5 "Buyer" shall mean EVI Oil Tools Canada Ltd., an Alberta
corporation, or one or more of its designees.
10.6 "C$" shall mean Canadian dollars.
10.7 "Closing" shall mean the transfer by the Shareholders to
Buyer of the Shares and the transfer by Buyer to the Shareholders of the
consideration for the Shares set forth herein.
10.8 "Closing Balance Sheet" shall have the meaning given such
term in Section 1.4(c) hereof.
10.9 "Closing Date" shall have the meaning given such term in
Section 1.2 hereof.
10.10 "Company" shall have the meaning set forth in the opening
paragraph hereof.
10.11 "Damages" shall mean any and all liabilities, losses,
damages, demands, assessments, claims, costs and expenses (including interest,
awards, judgments,
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penalties, settlements, fines, costs of remediation, diminutions in value,
costs and expenses incurred in connection with investigating and defending any
claims or causes of action (including, without limitation, attorneys' fees and
expenses calculated on a solicitor and client basis and all fees and expenses
of consultants and other professionals)).
10.12 "Debt Obligations" shall mean any contract, agreement,
indenture, note or other instrument relating to the borrowing of money or any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any Person (other than the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business).
10.13 "Disclosure Schedule" shall mean the disclosure schedule of
even date delivered to Buyer by the Shareholders.
10.14 "Documents and Other Papers" shall mean and include any
document, agreement, instrument, certificate, writing, notice, consent,
affidavit, letter, telegram, telex, statement, file, computer disk, microfiche
or other document in electronic format, schedule, exhibit or any other paper or
record whatsoever.
10.15 "Environmental Condition" means any pollution, contamination,
degradation, damage or injury caused by, related to or arising from the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, release or emission of any Hazardous Materials.
10.16 "Environmental Laws" shall mean all federal, state,
provincial or municipal laws, rules, regulations, statutes, ordinances, or
orders of any Governmental Entity relating to (a) the control of any potential
pollutant or protection of the air, water, or land, (b) solid, gaseous or
liquid waste generation, handling, treatment, storage, disposal or
transportation and (c) exposure to hazardous, toxic or other substances alleged
to be harmful. The term "Environmental Laws" shall also include all state,
provincial, local and municipal laws, rules, regulations, statutes, ordinances
and orders dealing with the same subject matter or promulgated by any
governmental or quasi-governmental agency thereunder or to carry out the
purposes of any federal, state, provincial, local and municipal law.
10.17 "Environmental Liabilities" shall mean any and all Damages
(including remediation, removal, response, abatement, clean-up, investigative
and/or monitoring costs and any other related costs and expenses) incurred or
imposed (a) pursuant to any agreement, order, notice, requirement,
responsibility or directive (including directives embodied in Environmental
Laws), injunction, judgment or similar documents (including settlements)
arising out of, in connection with or under Environmental Laws, or (b) pursuant
to any claim by a Governmental Entity or other third Person or entity for
personal injury, property damage, damage to natural resources, remediation or
similar costs or expenses incurred or asserted by such entity or person
pursuant to common law or statute and arising out of or in connection with a
release, as such term is defined in Environmental Laws, of Hazardous Materials.
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10.18 "Environmental Permit" shall mean any permit, license,
approval, registration, identification number or other authorization with
respect to the Company or any of its Subsidiaries under any applicable law,
regulation or other requirement of the United States, Canada or any other
country or of any state, province, municipality or other subdivision thereof
relating to the control of any pollutant or protection of health or the
environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air,
surface water, groundwater or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
10.19 "Estimated Purchase Price" shall mean C$2,508,000.00.
10.20 "Final Statement" shall have the meaning given such term in
Section 1.4(a) hereof.
10.21 "Financial Statements" shall have the meaning given such term
in Section 2.6 hereof.
10.22 "GAAP" shall mean generally accepted accounting principles in
Canada as consistently applied by the Company.
10.23 "Governmental Entity" shall mean Canada, the United States of
America, any arbitrator, court, administrative or regulatory agency,
commission, department, board or bureau or body or other government or
authority or instrumentality or any entity or Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
10.24 "Hazardous Materials" shall mean (a) any petroleum or
petroleum products, (b) radioactive materials, urea formaldehyde, asbestos and
PCBs and (c) any other chemical, substance or waste that is regulated by any
Governmental Entity under any Environmental Law.
10.25 "Indemnitee" shall mean the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 7.1 and Section 7.2 hereof, as the case may be.
10.26 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 7.1 or Section
7.2 hereof, as the case may be.
10.27 "Lien" shall mean any lien, pledge, claim, charge, security
interest or other encumbrance, option, defect or other rights of any third
Person of any nature whatsoever (including, without limitation, lessor
ownership rights).
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10.28 "Material Adverse Effect" shall mean a single event,
occurrence or fact that (together with all other events, occurrences and facts
that could reasonably be expected to result in a loss to the Company and its
Subsidiaries, taken as a whole) would have, or might reasonably be expected to
have, a material adverse effect on the assets, business, operations, prospects
or financial condition of the Company and its Subsidiaries, taken as a whole,
or that would constitute a criminal violation of law involving a felony or
indictable offense.
10.29 "Net Assets" shall mean, in accordance with GAAP and with
reference to a balance sheet of the Company (including the Closing Balance
Sheet), the difference between total assets and total liabilities on a
consolidated basis (including deferred income tax liabilities and capital lease
obligations but excluding the amounts of the Special Distribution and the
Special Shareholder Loans), subject to the adjustments provided for in Section
1.4(c) hereof.
10.30 "Pension Plans" shall have the meaning given such term in
Section 2.12(b) hereof.
10.31 "Permitted Liens" shall mean (a) Liens for current taxes and
assessments not yet due, (b) inchoate mechanic and materialmen Liens for
construction in progress, (c) inchoate workmen, repairmen, warehousemen and
carriers Liens arising in the ordinary course of business and (d) Liens created
by Buyer; provided, however, at the Closing, the term "Permitted Liens" shall
not include any Liens for tax assessments filed of record against the Company
or any of its Subsidiaries or assets.
10.32 "Person" shall mean a corporation, an association, a
partnership, an organization, a business, an individual or a Governmental
Entity.
10.33 "Purchase Price" shall mean C$2,508,000.00 (a) plus the
amount, if any, by which Net Assets on the Closing Date exceeds C$6,938,542.00,
(b) minus the amount, if any, by which C$6,938,542.00 exceeds Net Assets on the
Closing Date and (c) plus the amount of depreciation of fixed assets from
November 1, 1997, through the Closing Date.
10.34 "Repurchase" shall have the meaning given such term in
Section 4.8 hereof.
10.35 "Shares" shall mean all of the issued and outstanding shares
in the capital of the Company after the Repurchase set forth in Section 1.1 of
the Disclosure Schedule.
10.36 "Special Distribution" shall have the meaning given such term
in Section 4.8 hereof.
10.37 "Special Shareholder Loans" shall have the meaning given such
term in Section 4.8 hereof.
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10.38 "Subsidiaries" shall mean any and all Persons in which the
Company, directly or indirectly, own any equity or other similar ownership
interests.
10.39 "Survival Period" shall have the meaning given such term in
Article 8 hereof.
10.40 "Tax" or "Taxes" shall mean all federal, state, provincial,
local, foreign and other taxes, charges, fees, duties, levies, imposts, customs
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, goods and services, transfer,
franchise, profits, profit share, license, lease, service, service use, value
added, withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, premium, property, windfall profits, or other taxes, fees,
assessments, customs, duties, levies, imposts, or charges of any kind
whatsoever, together with any interests, penalties, additions to tax, fines or
other additional amounts imposed thereon or related thereto.
10.41 "Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes.
10.42 "Third Party Claims" shall have the meaning given such term
in Section 7.3(b) hereof.
10.43 "US$" shall mean United States dollars.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses. Except as otherwise set forth herein, and
whether or not the transactions contemplated by this Agreement shall be
consummated, each party agrees to pay, without right of reimbursement from any
other party, the costs incurred by such party incident to the preparation and
execution of this Agreement and performance of its obligations hereunder,
including without limitation the fees and disbursements of legal counsel,
accountants and consultants employed by such party in connection with the
transactions contemplated by this Agreement.
11.2 Notices. All notices, requests, consents, directions and
other instruments and communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified first-class mail, return receipt
requested, addressed to the respective party at the address set forth below, or
if sent by facsimile or other similar form of communication (with receipt
confirmed) to the respective party at the facsimile number set forth below:
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If to the Shareholders, to:
Nika Enterprises Ltd.
1607 Eighth Street
Nisku, Alberta, Canada T9E 7S7
Attention: Neal Allen
Facsimile: (403) 955-2632
Confirm: (403) 955-2646
Copies to:
Cleall Pahl
2500 Commerce Place
10155 - 102 Street
Edmonton, Alberta, Canada T5J 4G8
Attention: James K. Wheatley
Facsimile: (403) 425-1222
Confirm: (403) 425-2500
If to Buyer, to:
EVI Oil Tools Canada Ltd.
c/o EVI, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attention: James G. Kiley
Facsimile: (713) 297-8488
Confirm: (713) 297-8400
Copies to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Curtis W. Huff
Facsimile: (713) 651-5246
Confirm: (713) 651-5151
or to such other address or facsimile number and to the attention of such other
Person as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
11.3 Bulk Transfer Laws. The Shareholders agree with Buyer that
the provisions of any statute of any state, province or jurisdiction regulating
bulk sales or transfers do not apply to this Agreement.
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11.4 Assignment and Successors. Except as specifically
contemplated by this Agreement, prior to the Closing no party hereto shall
assign this Agreement or any part hereof without the prior written consent of
the other party; provided, however, Buyer may, prior to the Closing, assign its
rights and obligations in this Agreement to an Affiliate of Buyer. This
Agreement shall enure to the benefit of, be binding upon and be enforceable by
the parties hereto and their respective successors and assigns.
11.5 Entire Agreement. This Agreement and the Exhibits hereto and
the Disclosure Schedule constitute the entire agreement and understanding
between the parties relating to the subject matter hereof and thereof and
supersedes all prior representations, endorsements, premises, agreements,
memoranda communications, negotiations, discussions, understandings and
arrangements, whether oral, written or inferred, between the parties relating
to the subject matter hereof. This Agreement may not be modified, amended,
rescinded, canceled, altered or supplemented, in whole or in part, except upon
the execution and delivery of a written instrument executed by a duly
authorized representative of each of the parties hereto.
11.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the province of Alberta,
Canada without giving effect to choice of law principles.
11.7 Waiver. The waiver of any breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any other breach
of the same or any other term or condition.
11.8 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.9 No Third Party Beneficiaries. Any agreement contained,
expressed or implied in this Agreement shall be only for the benefit of the
parties hereto and their respective legal representatives, successors and
assigns, and such agreements shall not inure to the benefit of the obligees of
any indebtedness of any party hereto, it being the intention of the parties
hereto that no Person shall be deemed a third party beneficiary of this
Agreement, except to the extent a third party is expressly given rights herein.
11.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 Headings. Each statement set forth in the Disclosure
Schedule with respect to a particular section herein shall be deemed made
solely with respect to such section and not with respect to any other section
hereof unless specifically set forth in the Disclosure Schedule as also being
made with respect to such other section. The headings of the Articles and
Sections of this Agreement have been inserted for
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convenience of reference only and shall in no way restrict or otherwise modify
any of the terms or provisions hereof or affect in any way the meaning or
interpretation of this Agreement.
11.12 Time of the Essence. Time shall be of the essence under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SHAREHOLDERS
/s/ Neal Allen
-------------------------------------
Neal Allen
/s/ Daryl Allen
-------------------------------------
Daryl Allen
/s/ Rae Allen
-------------------------------------
Rae Allen
/s/ Carol Allen
-------------------------------------
Carol Allen
/s/ Lea Sanderson
-------------------------------------
Lea Sanderson
BUYER:
EVI OIL TOOLS CANADA LTD.
By: /s/ James Kiley
----------------------------------
Name: James Kiley
--------------------------------
Title: Vice President
-------------------------------
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As permitted by Item 601(b)(2) of Regulation S-K, the Company has not
filed any schedules and exhibits with this Exhibit No. 2.1. Listed below is a
brief description of the omitted schedules and exhibits. The Company agrees to
furnish supplementally a copy of any such omitted schedules and exhibits to the
Commission upon request.
DISCLOSURE SCHEDULES
Section 1.1 Shareholder List and Ownership
Section 2.1(b) Jurisdictional Qualification
Section 2.1(c) Subsidiaries of the Company
Section 2.1(d) Organizational Documents of the Company and the
Subsidiaries
Section 2.2(a) List of Violated Organizational Documents and Agreements
Section 2.2(b) List of Violated Licenses, Franchises and Permits
Section 2.3 Material Licenses and Approvals
Section 2.4 Incumbered Property
Section 2.5(a) List of Contracts and Agreements
Section 2.5(c) Affected Contracts and Agreements
Section 2.6 Financial Statements
Section 2.7 Outstanding Taxes
Section 2.8 Litigation
Section 2.9 Adverse Changes and Events
Section 2.10 Environmental Matters
Section 2.11 Warranties and Product Liability
Section 2.12 Employee Benefit Plans
Section 2.15 Insurance Policies
Section 4.2 Covenants
Section 5.9 Employment and Consulting Agreements
EXHIBITS
Exhibit 4.9 Phase I Environmental Site Assessment
Exhibit 5.9 Form of Employment Agreement
Exhibit 5.10 Opinion of Cleall Pahl
Exhibit 6.5 Opinion of Milner Fenerty
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