-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PKfbta9Z0zADUnifdUHxGIzUQoodF1YSYFhVi1dMBZY/0YrPNXQV1IUDj/1H1gK7 YaF/RmYf2pxw6UbA8qrq+A== 0000950123-03-002273.txt : 20030228 0000950123-03-002273.hdr.sgml : 20030228 20030228175243 ACCESSION NUMBER: 0000950123-03-002273 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 20030228 GROUP MEMBERS: BLACKFRIARS CORP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EMCO LTD CENTRAL INDEX KEY: 0000920982 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: 1934 Act SEC FILE NUMBER: 005-47688 FILM NUMBER: 03587792 BUSINESS ADDRESS: STREET 1: 620 RICHMOND ST CITY: LONDON ONTARIO CANAD STATE: A6 ZIP: 00000 BUSINESS PHONE: 5196453900 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: 2022841 ONTARIO INC CENTRAL INDEX KEY: 0001219405 IRS NUMBER: 00000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: 199 BAY ST STE 5300 CITY: TORONTO ONTARIO CANADA STATE: A6 ZIP: MRL189 BUSINESS PHONE: 4168695500 MAIL ADDRESS: STREET 1: 199 BAY ST STE 5300 CITY: TORONTO ONTARIO CANADA STATE: A6 ZIP: M5L189 SC TO-T 1 t09071sctovt.txt EMCO LIMITED/2022841 ONTARIO INC. ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE TO (RULE 14D-100) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934. EMCO LIMITED (Name of Subject Company (Issuer)) 2022841 ONTARIO INC., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BLACKFRIARS CORP. (Names of Filing Persons (Offerors)) ---------------- COMMON SHARES (Title of Class of Securities) ---------------- 290839109 (CUSIP Number of Class of Securities) David Bradford Secretary Blackfriars Corp. 555 Skokie Blvd. Suite #555 Northbrook, Illinois 60062 Telephone: (818) 597-3750 (Name, address and telephone number of person authorized to receive notices and communications on behalf of filing persons) Copies to: Stephen M Banker, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036-6522 Telephone: 212-735-3000 CALCULATION OF FILING FEE ================================================================================ Transaction Valuation* Amount of Filing Fee** $194,134,547 $15,706 ================================================================================ * Estimated for purposes of calculating amount of filing fee only. This amount assumes the purchase of all outstanding shares of common stock of Emco Limited ("Emco"), based upon the product obtained by multiplying (a) 17,488,482 (the maximum number of common shares ("Common Shares") of Emco to be acquired in the tender offer) and (b) the quotient of (x) the offer price of CDN $16.60 per Common Share divided by (y) 1.4954 (the February 27, 2003, noon buying rate in New York City for cable transfers payable in Canadian dollars for US $1.00, as released by the Federal Reserved Bank of New York). ** The amount of the filing fee calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals the product of .0000809 and the transaction valuation. [_] CHECK THE BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(a)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING. Amount Previously Paid: N/A Form or Registration No.: N/A Filing party: N/A Date Filed: N/A [_] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER. CHECK THE APPROPRIATE BOXES BELOW TO DESIGNATE ANY TRANSACTIONS TO WHICH THE STATEMENT RELATES: [X] THIRD-PARTY TENDER OFFER SUBJECT TO RULE 14d-1. [_] ISSUER TENDER OFFER SUBJECT TO RULE 13e-4. [_] GOING-PRIVATE TRANSACTION SUBJECT TO RULE 13e-3. [_] AMENDMENT TO SCHEDULE 13d UNDER RULE 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [_] ================================================================================ THIS TENDER OFFER STATEMENT ON SCHEDULE TO RELATES TO THE OFFER BY 2022841 ONTARIO INC. (THE "OFFEROR"), AN ONTARIO CORPORATION AND AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BLACKFRIARS CORP., A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE ("BLACKFRIARS"), TO PURCHASE ALL OUTSTANDING COMMON SHARES (THE "COMMON SHARES") OF EMCO LTD. (THE "COMPANY"), AT CDN $16.60 PER SHARE, NET TO THE SELLER IN CASH, WITHOUT INTEREST THEREON, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE OFFER TO PURCHASE (THE "OFFER TO PURCHASE", WHICH INCLUDES THE OFFER DOCUMENT ("OFFER DOCUMENT") AND THE ACCOMPANIED CIRCULAR (THE "CIRCULAR") CONTAINED THEREIN) AND IN THE RELATED LETTER OF TRANSMITTAL, COPIES OF WHICH ARE ATTACHED HERETO AS EXHIBITS (A)(1) AND (A)(2), RESPECTIVELY (WHICH ARE HEREIN COLLECTIVELY REFERRED TO AS THE "OFFER"). ALL OF THE INFORMATION IN THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL, AND ANY AMENDMENTS OR SUPPLEMENTS THERETO RELATED TO THE OFFER HEREAFTER FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE OFFEROR AND BLACKFRIARS, HEREBY IS INCORPORATED BY REFERENCE (WHERE APPROPRIATE) IN ANSWER TO ITEMS 1 THROUGH 12 OF THIS SCHEDULE TO (WHETHER OR NOT IDENTIFIED WITH SPECIFICITY). ITEM 1. SUMMARY TERM SHEET. The information set forth in the section of the Offer entitled "Selected Questions and Answers About the Offer" is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) The name of the subject company is Emco Limited, an Ontario Corporation, and the address of its principal executive offices is 620 Richmond Street, London, Ontario N6A 5J9. Its telephone number is (519)-645-3900. (b) The title of the subject class of securities being sought is the Common Shares. The information concerning the securities outstanding set forth under "Information About Common Shares" in the Circular is incorporated herein by reference. (c) The information concerning the principal market in which the Common Shares are traded and certain high and low sales prices for the Common Shares in such principal market is set forth in "Information About Common Shares" in the Circular and is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF THE FILING PERSON. (a)-(c) The information set forth in "The Offeror" and "Blackfriars Corp." in the Circular and in Schedule I thereto is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) The information set forth under "The Offer," "Time for Acceptance," "Manner of Acceptance," "Conditions of the Offer," "Extension, Variation or Change in the Offer; Subsequent Offer Period," "Take Up Of and Payment For Deposited Common Shares," "Right to Withdraw Deposited Common Shares," "Mail Service Interruption," "Notice and Delivery," "Acquisition of Common Shares Not Deposited Under the Offer" and "Other Terms of the Offer" in the Offer Document and "Acquisition of Common Shares Not Deposited Under the Offer" and "Certain Income Tax Considerations." in the Circular is incorporated herein by reference. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (a)-(b) The information set forth in "The Offeror," "Blackfriars Corp.", "Background of the Offer," "Purpose of the Offer," "Plans for Emco," "Ownership of and Trading in Securities of Emco," "Commitments to Acquire Securities of Emco" and "Arrangements, Agreements or Understandings" in the Circular is incorporated herein by reference. ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS. (a),(c) The information set forth in "Purpose of the Offer," "Plans for Emco," "Arrangements, Agreements or Understandings" and "Certain Effects of the Offer" in the Circular and "Dividends and Distributions" in the Offer is incorporated herein by reference. ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a),(b) The information set forth in "Source of Funds" in the Circular is incorporated herein by reference. (d) Not Applicable. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in "Ownership of and Trading in Securities of Emco," "The Offeror" and "Blackfriars Corp." in the Circular and in Schedule I thereof is incorporated herein by reference. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. (a) The information set forth in "Other Matters Relating to the Offer" in the Circular is incorporated herein by reference. ITEM 10. FINANCIAL STATEMENTS. (a)-(b) Not Applicable. ITEM 11. ADDITIONAL INFORMATION. (a)-(b) The information set forth in "The Offeror," "Blackfriars Corp.", "Regulatory Matters" and "Certain Effects of the Offer" in the Circular and in Schedule I thereof is incorporated herein by reference. ITEM 12. EXHIBITS. (a)(1) Offer to Purchase, dated February 28, 2003. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Two Press Releases issued by 2022841 Ontario Inc. on February 20, 2003 (incorporated herein by reference to the Schedule TO filed by Blackfriars Corp. on February 20, 2003). (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Summary Advertisement as published in the New York Times National Edition on February 28, 2003. (a)(9) Letter to Holders of Options under Emco Limited's Stock Option Plan. (a)(10) Notice of Acceptance by Holders of Options under Emco Limited's Stock Option Plan. 3 (a)(11) Letter to Participants in the Employee Stock Purchase Plan of Emco Limited. (a)(12) Letter of Transmittal and Direction for the Use of Participants in the Employee Stock Purchase Plan of Emco Limited. (d)(1) Support Agreement, dated as of February 19, 2003, among Blackfriars Corp., 2022841 Ontario Inc. and the Emco Limited. (d)(2) Letter, dated as of February 19, 2003, from Blackfriars Corp. to Emco Limited. (d)(3) Lock-up Agreement, dated as of February 19, 2003, between Blackfriars Corp. and Masco Corporation. (d)(4) Confidentiality Agreement, dated September 25, 2002, between Hajoca Corporation, an affiliate of Blackfriars Corp. [The remainder of this page is intentionally left blank] 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. 2022841 ONTARIO INC. By: /s/ Christopher Pappo ----------------------------------- Name: Christopher Pappo Title: Chief Financial Officer BLACKFRIARS CORP. By: /s/ Thomas A. Lullo ----------------------------------- Name: Thomas A. Lullo Title: Treasurer and Assistant Secretary Dated: February 28, 2003 5 EXHIBIT INDEX
Exhibit No. Exhibit Name Page Number - ----------- ------------ ----------- (a)(1) Offer to Purchase, dated February 28, 2003. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Two Press Releases issued by 2022841 Ontario Inc. on February 20, 2003 (incorporated herein by reference to the Schedule TO filed by Blackfriars Corp. on February 20, 2003). (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Summary Advertisement as published in the New York Times National Edition on February 28, 2003. (a)(9) Letter to Holders of Options under Emco Limited's Stock Option Plan. (a)(10) Notice of Acceptance by Holders of Options under Emco Limited's Stock Option Plan. (a)(11) Letter to Participants in the Employee Stock Purchase Plan of Emco Limited. (a)(12) Letter of Transmittal and Direction for the Use of Participants in the Employee Stock Purchase Plan of Emco Limited. (d)(1) Support Agreement, dated as of February 19, 2003, among Blackfriars Corp., 2022841 Ontario Inc. and Emco Limited. (d)(2) Letter, dated as of February 19, 2003, from Blackfriars Corp. to Emco Limited. (d)(3) Lock-up Agreement, dated as of February 19, 2003, between Blackfriars Corp. and Masco Corporation. (d)(4) Confidentiality Agreement, dated September 25, 2002, between Hajoca Corporation, an affiliate of Blackfriars Corp., and Emco Limited.
6 EX-99.A.1 3 t09071exv99waw1.txt OFFER TO PURCHASE EXHIBIT (a)(1) This document is important and requires your immediate attention. If you are in any doubt as to how to deal with it, you should consult your investment dealer, stockbroker, bank manager, accountant, lawyer or other professional advisor. FEBRUARY 28, 2003 2022841 ONTARIO INC. OFFER TO PURCHASE ALL OF THE OUTSTANDING COMMON SHARES OF EMCO LIMITED AT A PRICE OF CDN$16.60 CASH PER COMMON SHARE This offer (the "OFFER") by 2022841 Ontario Inc. (the "OFFEROR") to purchase all of the outstanding common shares ("COMMON SHARES") of Emco Limited ("EMCO") will be open for acceptance until 8:00 p.m. (EST) on April 7, 2003, unless withdrawn or extended. The Offer is subject to certain conditions which are described under "CONDITIONS OF THE OFFER" in Section 4 of the Offer including, without limitation, there being validly deposited under the Offer and not withdrawn prior to the expiration of the Offer, that number of Common Shares which represents, at the time the Offer expires, at least 66 2/3% of the Common Shares (calculated on a fully-diluted basis, excluding Common Shares issuable on the conversion of the outstanding 6.5% convertible unsecured subordinated debentures of Emco due July 4, 2007 (the "DEBENTURES")), but including Common Shares held at the time the Offer expires by or on behalf of the Offeror, its associates or affiliates. THE EMCO BOARD OF DIRECTORS, FOLLOWING CONSULTATION WITH ITS FINANCIAL AND LEGAL ADVISORS, HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS IN THE BEST INTERESTS OF THE HOLDERS OF COMMON SHARES (THE "SHAREHOLDERS") AND, ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES TO THE OFFER. Pursuant to a support agreement (the "SUPPORT AGREEMENT") dated as of February 19, 2003, among Emco, the Offeror and Blackfriars Corp. ("BLACKFRIARS"), a Delaware corporation and the parent company of the Offeror, among other things, Blackfriars agreed to cause the Offeror to make the Offer and Emco agreed to support the Offer, subject to the terms and conditions set forth in the Support Agreement. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the accompanying circular forming part of the Offer (the "CIRCULAR") and the directors' circular of the Emco Board of Directors accompanying this document. The Offeror and Blackfriars have also entered into an agreement dated as of February 19, 2003 (the "LOCK-UP AGREEMENT") with Masco Corporation (the "SELLING SHAREHOLDER") pursuant to which the Selling Shareholder has agreed to deposit irrevocably to the Offer, and not to withdraw, Common Shares representing in the aggregate approximately 42% of the outstanding Common Shares. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- LOCK-UP AGREEMENT" in Section 11 of the Circular. The Common Shares are listed for trading on the Toronto Stock Exchange (the "TSX") under the stock symbol "EML" and are listed on the Nasdaq National Market ("NASDAQ") under the symbol "EMLTF". On February 19, 2003, which was the last trading day prior to the announcement of the Offer, the closing price of the Common Shares was Cdn$14.75 on the TSX and US$9.71 on Nasdaq. Selected Questions and Answers about the Offer are contained on pages (i) to (iv). You should read the entire Offer and Circular carefully prior to making your decision whether to tender your Common Shares to the Offer. THE OFFER REPRESENTS A PREMIUM OF 12.5% OVER THE CLOSING PRICE OF THE COMMON SHARES ON THE TSX ON FEBRUARY 19, 2003, THE LAST TRADING DAY PRIOR TO THE ANNOUNCEMENT OF THE OFFER, AND A PREMIUM OF 58% OVER THE CLOSING PRICE OF THE COMMON SHARES ON THE TSX ON JULY 23, 2002, THE LAST TRADING DAY PRIOR TO THE ANNOUNCEMENT BY EMCO OF ITS PROCESS TO CONSIDER STRATEGIC ALTERNATIVES IN ORDER TO ATTEMPT TO MAXIMIZE VALUE FOR SHAREHOLDERS. Shareholders who wish to accept the Offer must properly complete and execute the accompanying letter of transmittal (the "LETTER OF TRANSMITTAL") (printed on blue paper) or a manually executed facsimile and deposit it, together with certificates representing their Common Shares, in accordance with the instructions in the Letter of Transmittal. Alternatively, Shareholders may follow the procedure for book-entry transfer of Common Shares described under "MANNER OF ACCEPTANCE -- BOOK ENTRY TRANSFER" or the procedure for guaranteed delivery described under "MANNER OF ACCEPTANCE -- PROCEDURE FOR GUARANTEED DELIVERY" in Section 3 of the Offer. Shareholders whose Common Shares are registered in the name of an investment dealer, stockbroker, bank, trust company or other nominee should contact that nominee for assistance if they wish to accept the Offer. The Offer is made only for Common Shares and is not made for the Debentures or options or rights to acquire Common Shares. Any holder of the Debentures or such options or rights who wishes to accept the Offer should exercise their conversion rights pursuant to the terms of the Debentures or exercise such options or rights, in order to obtain certificates representing Common Shares and deposit them in accordance with the Offer. Emco will also permit holders of Options to transfer their Options to Emco in exchange for a cash payment of the "in-the-money" value of such Options, conditional upon the Offeror taking up and paying for Common Shares under the Offer. Questions and requests for assistance may be directed to Scotia Capital Inc. and Scotia Capital (USA) Inc. as Dealer Managers, MacKenzie Partners, Inc., as Information Agent for the Offer, or Computershare Trust Company of Canada as the Depositary for the Offer. Additional copies of the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained without charge on request from the Depositary or the Information Agent at its office shown on the last page of this Offer and Circular. None of the Offeror or its affiliates will bid for or make purchases of Common Shares during the pendancy of the Offer. This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offeror or its agents may, in the Offeror's sole discretion, take such action as the Offeror may deem necessary to extend the Offer to Shareholders in such jurisdiction. ---------------------------------------------- The Dealer Managers for the Offer are: In Canada: In the United States: SCOTIA CAPITAL INC. SCOTIA CAPITAL (USA) INC.
NOTICE TO SHAREHOLDERS IN THE UNITED STATES SHAREHOLDERS WHO ARE NOT RESIDENTS OF CANADA SHOULD BE AWARE THAT THE DISPOSITION OF COMMON SHARES PURSUANT TO THE OFFER MAY HAVE TAX CONSEQUENCES BOTH IN CANADA AND IN THE UNITED STATES WHICH MAY NOT BE DESCRIBED FULLY HEREIN. SEE "CERTAIN INCOME TAX CONSIDERATIONS -- CANADIAN FEDERAL INCOME TAX CONSIDERATIONS -- NON-RESIDENTS OF CANADA" AND "CERTAIN INCOME TAX CONSIDERATIONS -- U.S. FEDERAL INCOME TAX CONSIDERATIONS" IN SECTION 16 OF THE CIRCULAR. THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE U.S. FEDERAL SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT THE OFFEROR AND EMCO ARE INCORPORATED AND ORGANIZED UNDER THE LAWS OF THE PROVINCE OF ONTARIO, CANADA, THAT SOME OF THEIR OFFICERS AND DIRECTORS ARE RESIDENTS OF CANADA, THAT SOME OR ALL OF THE EXPERTS NAMED IN THE OFFER OR CIRCULAR MAY BE RESIDENTS OF A FOREIGN COUNTRY, AND THAT ALL OR A SUBSTANTIAL PORTION OF THE ASSETS OF THE OFFEROR AND EMCO AND OF THE ABOVE-MENTIONED PERSONS MAY BE LOCATED OUTSIDE OF THE UNITED STATES. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY ANY SECURITIES REGULATORY AUTHORITY NOR HAS ANY SECURITIES REGULATORY AUTHORITY PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. AS AT FEBRUARY 27, 2003, THE BANK OF CANADA QUOTED NOON SPOT EXCHANGE RATE FOR CANADIAN DOLLARS PER US$1.00 WAS CDN$1.495. THE OFFER PRICE IS CDN$16.60 PER COMMON SHARE. THEREFORE, IF YOU WERE PAID CDN$16.60 ON FEBRUARY 27, 2003, PER COMMON SHARE AND EXCHANGED THAT AMOUNT FOR UNITED STATES DOLLARS AT THAT EXCHANGE RATE, YOU WOULD RECEIVE US$11.10 PER COMMON SHARE (EXCLUDING ANY CURRENCY EXCHANGE FEES OR COMMISSIONS). ALTHOUGH THE OFFER PRICE PER COMMON SHARE OF CDN$16.60 WILL NOT VARY, THE U.S. DOLLAR EQUIVALENT THEREOF WILL VARY WITH THE CANADIAN DOLLAR TO U.S. DOLLAR EXCHANGE RATE. SELECTED QUESTIONS AND ANSWERS ABOUT THE OFFER 2022841 ONTARIO INC. IS OFFERING TO PURCHASE ALL OF THE OUTSTANDING COMMON SHARES OF EMCO LIMITED FOR CDN$16.60 PER SHARE IN CASH. THE FOLLOWING ARE SOME OF THE QUESTIONS YOU, AS A SHAREHOLDER OF EMCO, MAY HAVE AND ANSWERS TO THOSE QUESTIONS. WE URGE YOU TO READ THE REMAINDER OF THE OFFER AND CIRCULAR AND THE ENCLOSED LETTER OF TRANSMITTAL CAREFULLY BECAUSE THE INFORMATION CONTAINED BELOW IS NOT COMPLETE. ADDITIONAL IMPORTANT INFORMATION IS CONTAINED IN THE REMAINDER OF THE OFFER, THE CIRCULAR AND THE LETTER OF TRANSMITTAL. AS USED IN THESE QUESTIONS AND ANSWERS, "WE" OR "US" OR "OUR" REFERS TO 2022841 ONTARIO INC., THE ENTITY MAKING THE TENDER OFFER FOR THE COMMON SHARES. WHO IS OFFERING TO BUY MY EMCO COMMON SHARES? We are 2022841 Ontario Inc., a newly formed Ontario corporation and an indirect wholly owned subsidiary of Blackfriars Corp., a Delaware corporation. We have been formed for the purpose of making a tender offer for, and purchasing, all of the Emco common shares and have carried on no activities other than in connection with the support agreement among Blackfriars, Emco and us and the lock-up agreement among Blackfriars, Masco Corporation (a shareholder of Emco holding approximately 42% of the outstanding Emco common shares) and us. See Sections 1 to 3 of the attached Circular for more details regarding Blackfriars, Emco and us. WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE TENDER OFFER? We are seeking to purchase all of the issued and outstanding Emco common shares. See Section 1 of the Offer. HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO PAY ANY FEES OR COMMISSIONS? We are offering to pay Cdn$16.60 per Emco common share, net to you in cash, without interest. On February 27, 2003, the Bank of Canada quoted noon spot exchange rate for Canadian dollars per US$1.00 was Cdn$1.495. Therefore, if you were paid Cdn$16.60 per Emco common share on February 27, 2003 and exchanged that amount for United States dollars at that exchange rate, you would receive US$11.10 per Emco common share (excluding any currency exchange fees or commissions). Although the offer price of Cdn$16.60 per Emco common share is fixed, the amount you would receive in United States dollars per Emco common share will vary with the Canadian dollar to U.S. dollar exchange rate, which may be higher or lower than Cdn$1.495 per US$1.00 at the time of exchange. If you are the record owner of your shares and you tender your Emco common shares to us in the tender offer, you will not have to pay brokerage fees or similar expenses. If you own your Emco common shares through a broker or other nominee, and your broker or nominee tenders your Emco common shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See Section 3 of the Offer. DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT? Blackfriars, our parent company, has made available sufficient funds to purchase all Emco common shares that are validly tendered and not withdrawn in the tender offer and to provide funding for the compulsory share acquisition or the subsequent acquisition transaction that is expected to follow the successful completion of the tender offer. Blackfriars' source of funds will be its cash and short term investments on hand. See "SOURCE OF FUNDS" in Section 8 of the Circular for additional information. Our obligation to purchase the Emco common shares in the tender offer is not subject to any financing condition. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER? We do not think our financial condition is relevant to your decision whether to tender to the tender offer because the form of consideration consists solely of cash and our tender offer is not contingent upon our receipt of financing. See Section 8 of the Circular for additional information. HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR EMCO COMMON SHARES? Concurrently with entering into the support agreement, we entered into a lock-up agreement with a principal shareholder of Emco that owns 6,621,334 Emco common shares, constituting approximately 42% of the outstanding (i) Emco common shares. Under the lock-up agreement, the shareholder has agreed, among other things, to deposit its Emco common shares to the tender offer. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER? You will have until 8:00 p.m. (EST), on April 7, 2003, to tender your shares in the tender offer, unless the tender offer is extended. If you cannot deliver everything that is required in order to make a valid tender by that time, you may be able to use a guaranteed delivery procedure, which is described in Section 3 of the Offer. CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES? We expressly reserve the right, subject to the terms of the support agreement and applicable law, to extend the period of time during which the tender offer remains open, provided that the support agreement and the tender offer may be terminated by Emco if we do not purchase the Emco common shares tendered in the tender offer by May 15, 2003. See Section 5 of the Offer. If we purchase the shares tendered in the offer, we have the right, at our option, to extend the tender offer to provide a "SUBSEQUENT OFFERING PERIOD" during which shareholders may tender their Emco common shares and promptly receive the offer price of Cdn$16.60 per Emco common share. Notwithstanding the provisions of United States federal securities laws relating to subsequent offering periods, there will be withdrawal rights during any subsequent offering period, if there is one. In addition, if we elect to provide a subsequent offering period, the subsequent offering period will be at least 10 days but no more than 20 business days. See Section 2 of the Offer. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED? If we extend the tender offer, we will inform Computershare Trust Company of Canada, the depositary for the tender offer, of that fact and will make a public announcement of the extension not later than 9:00 a.m. (EST), on the next business day after the day on which the tender offer was scheduled to expire. See Section 5 of the Offer. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE TENDER OFFER? We are not obligated to purchase any Emco common shares that are validly tendered unless the number of Emco common shares validly tendered (other than tenders by guaranteed delivery where actual delivery has not occurred) and not withdrawn before the expiration of the tender offer represents at least 66 2/3% of the outstanding Emco common shares on a fully diluted basis. A fully diluted basis means we assume all options and other rights to acquire Emco common shares (other than rights to convert the outstanding Emco 6.5% convertible unsecured subordinated debentures into Emco common shares) outstanding at that time had been exercised, whether or not they were exercised. See Section 4 of the Offer. We are not obligated to purchase Emco common shares that are validly tendered if we have not received any required approvals or rulings, including, without limitation, under the Competition Act (Canada) and the Investment Canada Act, or if the applicable waiting period under the Hart-Scott-Rodino Act has not expired or been terminated. See Section 14 of the Circular. We are not obligated to purchase Emco common shares that are validly tendered if Emco's board of directors withdraws its recommendation of the tender offer, or changes its recommendation in a manner that has substantially the same effect. See Section 11 of the Circular. We are not obligated to purchase Emco common shares that are validly tendered if Emco breaches or fails to perform in any material respect its obligations under the support agreement or breaches its representations and warranties under the support agreement in any material respect and the breach or failure to perform is not cured within five days of receipt of written notice of the breach or failure to comply or of becoming aware of the breach of a representation or warranty. See Section 11 of the Circular. The tender offer also is subject to a number of other conditions. We can waive the conditions to the tender offer without Emco's consent. See Sections 4 of the Offer. Our obligation to purchase Emco common shares under the tender offer is not conditioned on any financing arrangements or subject to any financing condition. See Section 8 of the Circular for information about our financing arrangements. (ii) HOW DO I TENDER MY EMCO COMMON SHARES? To tender your Emco common shares: - You must deliver the share certificates (or arrange for the book-entry delivery of your shares), together with a completed letter of transmittal (or an "Agent's Message" in the case of book-entry transfer) and any other documents required by the letter of transmittal, to the depositary not later than the time the tender offer expires. See Section 3 of the Offer. - If your Emco common shares are held in "street name," your Emco common shares can only be tendered by your broker or nominee through the depositary. - If you are unable to deliver any required document or instrument to the depositary by the expiration of the tender offer, you may gain some extra time by having a broker, a bank or other fiduciary that is an eligible institution guarantee that the missing items will be received by the depositary within three Toronto Stock Exchange trading days. For the tender to be valid, however, the depositary must receive the missing items within that three trading day period. See Section 3 of the Offer. UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED EMCO COMMON SHARES? You may withdraw Emco common shares at any time before the scheduled or any extended expiration of the tender offer, unless they are accepted for purchase upon the scheduled expiration of the tender offer. You may also withdraw any Emco common shares that are tendered during the subsequent offering period, if there is one, before such common shares are purchased by us. According to applicable securities laws, we must promptly pay for all common shares we purchase during any subsequent offering period. You may also have additional time to withdraw your Emco common shares if certain changes are made in the tender offer. See Section 7 of the Offer. HOW DO I WITHDRAW PREVIOUSLY TENDERED EMCO COMMON SHARES? To withdraw Emco common shares that have been tendered, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the depositary for the tender offer while you still have the right to withdraw the Emco common shares. See Section 7 of the Offer. WHAT DOES EMCO'S BOARD OF DIRECTORS RECOMMEND REGARDING THE TENDER OFFER? We are making the tender offer pursuant to the support agreement, which has been approved unanimously by Emco's board of directors. EMCO'S BOARD OF DIRECTORS, FOLLOWING CONSULTATION WITH ITS FINANCIAL AND LEGAL ADVISORS, HAS UNANIMOUSLY DETERMINED THAT THE TENDER OFFER IS IN THE BEST INTERESTS OF THE SHAREHOLDERS AND, ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS ACCEPT THE TENDER OFFER AND TENDER THEIR EMCO COMMON SHARES TO THE TENDER OFFER. IF THE EMCO COMMON SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL EMCO CONTINUE AS A PUBLIC COMPANY? In all likelihood, no. Following the purchase of Emco common shares in the tender offer, if over 90% of the outstanding Emco common shares are purchased, we expect to consummate a compulsory share acquisition transaction as provided under applicable Ontario law. If less than 90% of the outstanding Emco common shares are tendered and purchased in the tender offer or if for some other reason we cannot complete a compulsory share acquisition under applicable law, we intend to complete a subsequent acquisition transaction to acquire the remaining publicly held Emco common shares. See Section 11 of the Offer and Section 15 of the Circular. Even if for some reason a compulsory share acquisition or subsequent acquisition transaction does not take place, if we purchase all of the tendered Emco common shares, then there may be so few remaining shareholders and publicly held Emco common shares that the Emco common shares will no longer be eligible to be traded on the Toronto Stock Exchange or the Nasdaq, there may not be a public trading market for the Emco common shares, and Emco may cease to make filings with the Canadian securities regulatory authorities, the Securities and Exchange Commission or otherwise no longer be required to comply with their rules relating to publicly held companies. See Section 7 of the Circular. (iii) IF ALL OF THE EMCO COMMON SHARES ARE NOT TENDERED IN THE OFFER, WILL THE REMAINING PUBLICLY HELD EMCO COMMON SHARES BE PURCHASED? We expect yes. Following the purchase of Emco common shares in the tender offer, if over 90% of the outstanding Emco common shares are purchased, we will consummate a compulsory share acquisition transaction as provided under applicable Ontario law. If less than 90% of the outstanding Emco common shares are tendered and purchased in the tender offer or if for some other reason we cannot complete a compulsory share acquisition under applicable law, we intend to complete a subsequent acquisition transaction to acquire the remaining publicly held Emco common shares. See Section 11 of the Offer and Section 15 of the Circular. In either such case, Blackfriars will indirectly own all of the Emco common shares, and all remaining public shareholders of Emco (other than shareholders properly exercising appraisal rights under applicable Ontario law, if applicable) will receive Cdn$16.60 per share in cash, without interest. WHAT IS THE MARKET VALUE OF MY EMCO COMMON SHARES AS OF A RECENT DATE? On February 19, 2003, the last trading day before the announcement of the tender offer, the closing price of the Emco common shares was Cdn$14.75 on the Toronto Stock Exchange and US$9.71 on Nasdaq. The tender offer represents a premium of 12.5% over the closing price of the Emco common shares on the Toronto Stock Exchange on the last trading day before the announcement of the tender offer and a premium of 58% over the closing price of the Emco common shares on the Toronto Stock Exchange on July 23, 2002, the last trading day before the announcement by Emco of its process to attempt to maximize value for shareholders. We encourage you to obtain a recent quotation for Emco common shares in deciding whether to tender your Emco common shares. See Section 13 of the Circular. GENERALLY, WHAT ARE THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF TENDERING EMCO COMMON SHARES? A shareholder who is resident in Canada, who holds Emco common shares as capital property and who sells such Emco common shares to us under the tender offer, will realize a capital gain (or capital loss) equal to the amount by which the cash received, net of any reasonable costs of disposition, exceeds (or is less than) the adjusted cost base to the shareholder of its Emco common shares. In general, shareholders who are non-residents of Canada for the purposes of the Income Tax Act (Canada) will not be subject to Canadian income tax on any gain realized on a disposition of Emco common shares to us under the tender offer unless those Emco common shares constitute "taxable Canadian property" within the meaning of the Income Tax Act (Canada) and that gain is not otherwise exempt from tax under the Income Tax Act (Canada) pursuant to an exemption contained in an applicable income tax treaty or convention. We encourage you to seek independent tax advice regarding the tax consequences of tendering your Emco common shares. See Section 16 of the Circular. GENERALLY, WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING EMCO COMMON SHARES? The sale of Emco common shares by certain U.S. shareholders pursuant to the tender offer will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. shareholder who sells Emco common shares pursuant to the tender offer will recognize a gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received (in U.S. dollar equivalents determined at the spot rate on the date of the consummation of the tender offer) and the shareholder's adjusted tax basis in the Emco common shares sold pursuant to the tender offer (as determined in U.S. dollars). We encourage you to seek independent tax advice regarding the tax consequences of tendering your Emco common shares. See Section 16 of the Circular. TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER? Questions and requests for assistance may be directed to Scotia Capital Inc. and Scotia Capital (USA) Inc. as dealer managers, MacKenzie Partners, Inc. as information agent for the tender offer, or Computershare Trust Company of Canada as the depositary for the tender offer. Additional copies of the Offer, the Circular, the Letter of Transmittal and the related tender offer documents may be obtained without charge on request from a dealer manager, the information agent or the depositary at their respective offices shown on the last page of the Offer and Circular. (iv) TABLE OF CONTENTS
PAGE ---- SELECTED QUESTIONS AND ANSWERS ABOUT THE OFFER.............. (i) DEFINITIONS................................................. 2 SUMMARY..................................................... 5 OFFER....................................................... 10 1. THE OFFER............................................. 10 2. TIME FOR ACCEPTANCE................................... 11 3. MANNER OF ACCEPTANCE.................................. 12 4. CONDITIONS OF THE OFFER............................... 15 5. EXTENSION, VARIATION OR CHANGE IN THE OFFER; SUBSEQUENT OFFERING PERIOD........................... 17 6. TAKE UP OF AND PAYMENT FOR DEPOSITED COMMON SHARES.... 18 7. RIGHT TO WITHDRAW DEPOSITED COMMON SHARES............. 19 8. MAIL SERVICE INTERRUPTION............................. 20 9. DIVIDENDS AND DISTRIBUTIONS........................... 20 10. NOTICE AND DELIVERY................................... 21 11. ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER................................................ 21 12. MARKET PURCHASES...................................... 22 13. OTHER TERMS OF THE OFFER.............................. 22 14. MISCELLANEOUS......................................... 22 CIRCULAR.................................................... 24 1. THE OFFEROR........................................... 24 2. BLACKFRIARS CORP...................................... 24 3. EMCO LIMITED.......................................... 25 4. BACKGROUND TO THE OFFER............................... 25 5. PURPOSE OF THE OFFER.................................. 26 6. PLANS FOR EMCO........................................ 27 7. CERTAIN EFFECTS OF THE OFFER.......................... 27 8. SOURCE OF FUNDS....................................... 28 9. OWNERSHIP OF AND TRADING IN SECURITIES OF EMCO........ 28 10. COMMITMENTS TO ACQUIRE SECURITIES OF EMCO............. 29 11. ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS............ 29 12. MATERIAL CHANGES AND OTHER INFORMATION CONCERNING EMCO................................................. 33 13. INFORMATION ABOUT COMMON SHARES....................... 33 14. REGULATORY MATTERS.................................... 35 15. ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER................................................ 37 16. CERTAIN INCOME TAX CONSIDERATIONS..................... 39 17. OTHER MATTERS RELATING TO THE OFFER................... 45 18. OFFEREES' STATUTORY RIGHTS............................ 46 SCHEDULE I -- INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR AND BLACKFRIARS AND THE TRUSTS AND TRUSTEES CONTROLLING SUCH CORPORATIONS.................... 47 APPROVAL AND CERTIFICATE OF THE OFFEROR..................... 49
1 DEFINITIONS In the accompanying Summary, Offer and Circular, unless the context otherwise requires or unless defined elsewhere herein, the following terms have the meanings indicated: "AFFILIATE" has the meaning specified in the OBCA; "ASSOCIATE" has the meaning specified in the OBCA; "BLACKFRIARS" means Blackfriars Corp., a corporation incorporated under the laws of the State of Delaware; "BUSINESS DAY" means any day other than a Saturday or a Sunday, on which banks are open for business in Toronto, Ontario and New York, New York; "BOOK-ENTRY TRANSFER FACILITY" means The Depository Trust Company; "CIRCULAR" means the take-over bid circular accompanying the Offer and forming a part of it; "CLOSE OF BUSINESS" on any given date means the time on such date (or, if such date is not a Business Day, on the next following Business Day) at which the office of the transfer agent for the Common Shares in Toronto, Ontario becomes closed to the public; "CODE" means the United States Internal Revenue Code of 1986, as amended; "COMMON SHARES" means the issued and outstanding common shares of Emco; "COMPETITION ACT" means the Competition Act (Canada), as amended; "COMPETITION COMMISSIONER" means the Commissioner of Competition appointed under the Competition Act; "COMPULSORY ACQUISITION" has the meaning specified under "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" in Section 15 of the Circular; "CVMQ" means the Commission des valeurs mobilieres du Quebec; "DEALER MANAGERS" means Scotia Capital Inc. in Canada and Scotia Capital (USA) Inc. in the United States; "DEBENTURES" means the 6.5% convertible unsecured subordinated debentures of Emco due July 4, 2007; "DEPOSIT MINIMUM CONDITION" has the meaning specified in Section 4 of the Offer; "DEPOSITARY" means Computershare Trust Company of Canada at its offices specified in the Letter of Transmittal; "DIRECTORS' CIRCULAR" means the circular of the Emco Board of Directors in respect of the Offer; "EFFECTIVE TIME" has the meaning specified under "MANNER OF ACCEPTANCE -- POWER OF ATTORNEY" in Section 3 of the Offer; "ELIGIBLE INSTITUTION" means a Canadian Schedule I chartered bank, a major trust company in Canada, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP). Members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Dealers Association of Canada, members of the National Association of Securities Dealers or banks and trust companies in the United States; "EMCO" means Emco Limited, a corporation constituted under the OBCA; "EMCO BOARD OF DIRECTORS" means the board of directors of Emco; "EST" means Eastern Standard Time; "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended; "EXPIRY DATE" means April 7, 2003, or such later date or dates as may be fixed by the Offeror from time to time pursuant to Section 5 of the Offer, "EXTENSION, VARIATION OR CHANGE IN THE OFFER; SUBSEQUENT OFFERING PERIOD"; "EXPIRY TIME" means 8:00 p.m. (EST) on the Expiry Date, or such later time and date as may be fixed by the Offeror from time to time as provided under "EXTENSION, VARIATION OR CHANGE IN THE OFFER; SUBSEQUENT OFFERING PERIOD" in Section 5 of the Offer, unless the Offer is withdrawn by the Offeror; 2 "FULLY-DILUTED BASIS" means, with respect to the number of outstanding Common Shares at any time, the number of Common Shares that would be outstanding assuming all options and other rights to acquire Common Shares (other than rights to convert the outstanding Debentures into Common Shares) outstanding at that time had been exercised; "GOVERNMENT ENTITY" means any domestic (federal, state, provincial or territorial), foreign or supranational court, commission, governmental body, quasi-governmental entity, body or authority of any kind whatsoever, regulatory agency, authority, stock exchange or tribunal; "HSR ACT" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; "INFORMATION AGENT" means MacKenzie Partners, Inc.; "INVESTMENT CANADA ACT" means the Investment Canada Act, as amended; "LETTER OF TRANSMITTAL" means the Letter of Transmittal (printed on blue paper) in the form accompanying the Offer and Circular, or a facsimile thereof; "LOCK-UP AGREEMENT" means the agreement between the Offeror, Blackfriars and the Selling Shareholder dated as of February 19, 2003, as described in "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- LOCK-UP AGREEMENT" in Section 11 of the Circular; "LOCKED-UP SHARES" means the 6,621,334 Common Shares that the Selling Shareholder has agreed to deposit irrevocably to the Offer pursuant to the Lock-up Agreement described in "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- LOCKUP AGREEMENT" in Section 11 of the Circular; "MATERIAL ADVERSE CHANGE" means when used with respect to Emco, Blackfriars or the Offeror, as the case may be, any change or effect that is or could reasonably be expected to be materially adverse to the business, operations, assets, liabilities, employee relationships, customer or supplier relationships, earnings or results of operations, business conditions or prospects (financial or otherwise), of Emco and its subsidiaries, or Blackfriars and its subsidiaries, taken as a whole, as the case may be; "MINORITY APPROVAL", with respect to a Subsequent Acquisition Transaction, has the meaning specified in OSC Rule 61-501 and Policy Q-27; "NASDAQ" means the Nasdaq National Market; "NOTICE OF GUARANTEED DELIVERY" means the Notice of Guaranteed Delivery for Deposit of Common Shares (printed on green paper) in the form accompanying the Offer and Circular, or a facsimile thereof; "OBCA" means the Business Corporations Act (Ontario), as amended; "OFFER" means the offer to purchase all of the outstanding Common Shares made hereby to Shareholders, subject to the terms set forth in the Offer Documents; "OFFER DOCUMENTS" means, collectively, the Offer, Circular, Letter of Transmittal and Notice of Guaranteed Delivery; "OFFER PERIOD" means the period commencing on the date of the Offer and ending at the Expiry Time; "OFFER PRICE" means Cdn$16.60 per Common Share; "OFFEROR" means 2022841 Ontario Inc., an indirect wholly-owned subsidiary of Blackfriars, incorporated under the OBCA; "OPTIONS" means the options to acquire Common Shares issued and outstanding under the Stock Option Plan; "OSA" means the Securities Act (Ontario), as amended; "OSC RULE 61-501" means Rule 61-501 -- Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions of the OSC; "OSC" means the Ontario Securities Commission; "POLICY Q-27" means Policy Statement No. Q-27 of the CVMQ; "PURCHASED COMMON SHARES" means the Common Shares deposited pursuant to the Offer and purchased by the Offeror; "SCHEDULE TO" means the Schedule TO filed by the Offeror and Blackfriars with the SEC in connection with the Offer; 3 "SEC" means the United States Securities and Exchange Commission; "SELLING SHAREHOLDER" means Masco Corporation, a corporation incorporated under the laws of the State of Delaware; "SHAREHOLDERS" means the holders of Common Shares, and "SHAREHOLDER" means any one of them; "SHARE CERTIFICATES" means the certificates in respect of Common Shares; "SOLICITING DEALER GROUP" means the soliciting dealer group (comprised of members of the Investment Dealers Association of Canada and members of Canadian stock exchanges) formed to solicit acceptances of the Offer; "STOCK OPTION PLAN" means the Stock Option Plan being Part II of the 1991 Long Term Incentive Program for management and key personnel of Emco, as amended; "SUBSEQUENT ACQUISITION TRANSACTION" has the meaning specified under "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER -- SUBSEQUENT ACQUISITION TRANSACTION" in Section 15 of the Circular; "SUPPORT AGREEMENT" means the support agreement among the Offeror, Blackfriars and Emco dated as of February 19, 2003, as described in "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular; "SUPERIOR PROPOSAL" has the meaning specified under "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular; "TAKE-OVER PROPOSAL" has the meaning specified under "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular; "TAX ACT" means the Income Tax Act (Canada), including all regulations made thereunder, as amended; "TD SECURITIES" means TD Securities, Inc.; "TSX" means the Toronto Stock Exchange; and "UNITED STATES" means the United States of America, its territories and possessions, any State of the United States and the District of Columbia. "U.S. HOLDERS" has the meaning specified under "CERTAIN INCOME TAX CONSIDERATIONS -- UNITED STATES FEDERAL TAX CONSIDERATIONS" in Section 16 of the Circular. 4 SUMMARY The following is a summary only and is qualified by the detailed provisions contained elsewhere in the Offer and Circular. Shareholders are urged to read the Offer and Circular in their entirety. Capitalized terms used in this summary, that are not otherwise defined herein, are defined in the Definitions. The information concerning Emco contained herein and in the Offer and Circular has been provided to the Offeror by Emco or has been taken from or is based upon publicly available documents or records of Emco on file with Canadian securities regulatory authorities and other public sources at the time of the Offer, unless otherwise indicated, and has not been independently verified by the Offeror. All currency amounts expressed herein, unless otherwise indicated, are expressed in Canadian dollars. THE OFFER The Offeror, 2022841 Ontario Inc., is offering, upon the terms and subject to the conditions of the Offer, to purchase all of the outstanding Common Shares, including Common Shares which may become outstanding on the conversion of Debentures or the exercise of Options, at a price in cash of Cdn$16.60 per Common Share. See "THE OFFER" in Section 1 of the Offer. THE EMCO BOARD OF DIRECTORS, FOLLOWING CONSULTATION WITH ITS FINANCIAL AND LEGAL ADVISORS, HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS IN THE BEST INTERESTS OF SHAREHOLDERS AND, ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDED THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES TO THE OFFER. SEE THE ACCOMPANYING DIRECTORS' CIRCULAR. The obligation of the Offeror to take up and pay for Common Shares pursuant to the Offer is subject to certain conditions. See "CONDITIONS OF THE OFFER" in Section 4 of the Offer. THE OFFEROR The Offeror was incorporated on February 19, 2003 under the OBCA and is an indirect wholly-owned subsidiary of Blackfriars. The Offeror has not carried on any business prior to the date hereof other than in connection with the Support Agreement and the Lock-up Agreement, and was incorporated to make, and to purchase Common Shares tendered to, the Offer. The Offeror's head office and principal place of business is located at 199 Bay Street, Toronto, Ontario, M5L 1B9. See "THE OFFEROR" in Section 1 of the Circular. BLACKFRIARS CORP. Blackfriars is a closely held corporation incorporated under the laws of Delaware. Blackfriars' corporate headquarters is located at 555 Skokie Blvd, Suite 555, Northbrook, Illinois 60062. Blackfriars is a diversified holding company and conducts no operations of its own, other than as a holding company. Blackfriars holds investments in various businesses, including principally a wholesale electrical distribution business. Other than 10,700 Common Shares held by a director and officer of Blackfriars, as of the date hereof, the Offeror and Blackfriars do not beneficially own, directly or indirectly, any of the outstanding Common Shares or any securities convertible into or exchangeable for Common Shares. However, the Offeror and Blackfriars have entered into the Lock-up Agreement with Masco Corporation pursuant to which Masco Corporation has agreed to tender 6,621,334 Common Shares, or approximately 42% of the outstanding Common Shares, to the Offer. See "BLACKFRIARS CORP." in Section 2 of the Circular and "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDING -- LOCK-UP AGREEMENT" in Section 11 of the Circular. EMCO LIMITED Emco Limited is the corporation continuing from the amalgamation of Emco Limited and BPCO Inc. on January 1, 1993 under the laws of Ontario. The predecessor of Emco Limited, the Empire Manufacturing Company Limited, was incorporated under the laws of Ontario by Letters Patent dated May 28, 1906. Emco's head office and principal place of business is located at 620 Richmond Street, London, Ontario N6A 5J9. The Common Shares are listed and posted for trading on the TSX under the symbol "EML" and on the Nasdaq under the symbol "EMLTF". Based on representations made in the Support Agreement, the Offeror believes that as of the date hereof, there are approximately 17,488,482 Common Shares outstanding on a Fully-diluted Basis. See "EMCO LIMITED" in Section 3 of the Circular. 5 SOURCE OF FUNDS Blackfriars has made available to the Offeror sufficient funds to purchase all Common Shares that are validly tendered and not withdrawn in the Offer and to provide funding for the Compulsory Acquisition or the Subsequent Acquisition Transaction that is expected to follow the successful completion of the Offer. Blackfriars' source of funds will be its cash and short term investments on hand. See "SOURCE OF FUNDS" in Section 8 of the Circular for additional information. The Offeror's obligation to purchase the Common Shares tendered in the Offer is not subject to any financing condition. PURPOSE OF THE OFFER The purpose of the Offer is to enable the Offeror to acquire all of the outstanding Common Shares. If, within 120 days after February 28, 2003, the Offer is accepted by holders of at least 90% of the outstanding Common Shares, the Offeror now intends, and in the Support Agreement has agreed to use its reasonable best efforts, to exercise its statutory right to acquire, to the extent permitted by applicable law, all the Common Shares not deposited under the Offer. If such statutory right of acquisition is not available, the Offeror now intends to cause a meeting of Shareholders to be called to consider a statutory arrangement, amalgamation, consolidation, corporate reorganization or other transaction that may constitute a going private transaction for the purpose of enabling the Offeror or an affiliate or associate of the Offeror to acquire all the Common Shares not deposited under the Offer. See "PURPOSE OF THE OFFER" in Section 5 of the Circular and "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" in Section 11 of the Offer and Section 15 of the Circular. It is expected that the Offeror would redeem the Debentures in accordance with their terms immediately prior to the completion of a Compulsory Acquisition or Subsequent Acquisition Transaction. SUPPORT AGREEMENT The Emco Board of Directors, after consultation with its financial and legal advisors, has unanimously determined that the Offer is in the best interests of Shareholders and has unanimously recommended that Shareholders accept the Offer and tender their Common Shares to the Offer. Pursuant to a Support Agreement among Emco, the Offeror and Blackfriars dated as of February 19, 2003, the Emco Board of Directors agreed to support the Offer. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular. LOCK-UP AGREEMENT On February 20, 2003, the Offeror, Blackfriars and the Selling Shareholder entered into the Lock-up Agreement pursuant to which the Selling Shareholder agreed to deposit irrevocably pursuant to the Offer and not to withdraw 6,621,334 Common Shares (or approximately 42% of the outstanding Common Shares). See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- LOCK-UP AGREEMENT" in Section 11 of the Circular. TIME FOR ACCEPTANCE The Offer is open for acceptance until the Expiry Time unless the Offer is withdrawn by the Offeror. See "TIME FOR ACCEPTANCE" in Section 2 of the Offer. MANNER OF ACCEPTANCE Shareholders wishing to accept the Offer must deposit before the Expiry Time at the office of the Depositary specified in the Letter of Transmittal, their Share Certificate(s), or arrange to have their Common Shares delivered by book-entry transfer into the account of the Depositary established for such purposes, together with a Letter of Transmittal (or a facsimile), properly completed and signed. Instructions are contained in the Letter of Transmittal. If a Shareholder wishes to deposit Common Shares pursuant to the Offer and the Share Certificate(s) are not immediately available or if the Share Certificate(s) and all other required documents cannot be provided to the Depositary at or prior to the Expiry Time, those Common Shares may nevertheless be deposited in compliance with the procedure for guaranteed delivery. See "MANNER OF ACCEPTANCE -- PROCEDURE FOR GUARANTEED DELIVERY" in Section 3 of the Offer. Shareholders whose Common Shares are registered in the name of an investment dealer, stockbroker, bank, trust company or other nominee should contact that nominee for assistance if they wish to accept the Offer and to determine whether any fees or charges will apply. 6 Shareholders will not be required to pay any fee or commission if they accept the Offer by transmitting their Common Shares directly to the Depositary or by using the facilities of the Soliciting Dealer Group. WITHDRAWAL OF THE DEPOSITED COMMON SHARES Any Common Shares deposited in acceptance of the Offer may be withdrawn by or on behalf of the depositing Shareholder at any time until they have been accepted for payment by the Offeror. Additional withdrawal rights may be available under other circumstances as required by applicable law. See "RIGHT TO WITHDRAW DEPOSITED COMMON SHARES" in Section 7 of the Offer. Except as so indicated or as otherwise required by applicable law, deposits of Common Shares are irrevocable. PAYMENT Upon the terms and subject to the conditions of the Offer (as the same may be amended or waived), the Offeror will pay for Common Shares taken up under the Offer as soon as reasonably possible thereafter and in any event not later than three Business Days following the time at which it becomes entitled to take up Common Shares pursuant to applicable law, or as may be required or permitted by law to make such payment. See "TAKE UP OF AND PAYMENT FOR DEPOSITED COMMON SHARES" in Section 6 of the Offer. STOCK EXCHANGE LISTINGS AND MARKET PRICES OF COMMON SHARES The Common Shares are listed for trading on the TSX and on Nasdaq. On February 19, 2003, which was the last trading day prior to the announcement of the Offer, the closing price of the Common Shares was Cdn$14.75 on the TSX and US$9.71 on Nasdaq. CONDITIONS OF THE OFFER The Offeror will have the right to withdraw the Offer, and will not be required to take up or pay for any Common Shares deposited under the Offer, if any of the conditions described under "CONDITIONS OF THE OFFER" in Section 4 of the Offer have not been satisfied or waived at or prior to the Expiry Time. The Offer is conditional upon, among other things, there being validly deposited under the Offer and not withdrawn such number of Common Shares as represents not less than 66 2/3% of the Common Shares outstanding (on a Fully-diluted Basis). See Section 4 of the Offer, "CONDITIONS OF THE OFFER". EXTENSIONS The Offeror expressly reserves the right, subject to the terms of the Support Agreement and applicable law, to extend the period of time during which the Offer remains open, provided that the Support Agreement and the Offer may be terminated by Emco if the Offeror does not purchase the Common Shares tendered to the Offer by May 15, 2003. If the Offeror extends the Offer, it will inform Computershare Trust Company of Canada, the Depositary for the Offer, of that fact and will make a public announcement of the extension not later than 9:00 a.m. (EST), on the next Business Day after the day on which the Offer was scheduled to expire. See Section 5 of the Offer. SUBSEQUENT OFFERING PERIOD If the Offeror purchases Common Shares tendered in the Offer, the Offeror will have the right, at its option, to extend the Offer to provide a "SUBSEQUENT OFFERING PERIOD" during which Shareholders may tender their Common Shares and promptly receive the Offer Price. Notwithstanding the provisions of United States federal securities laws relating to subsequent offering periods, there will be withdrawal rights during any subsequent offering period, if there is one. Common Shares tendered during any subsequent offering period may be withdrawn at any time prior to such Common Shares being purchased by the Offeror. In accordance with applicable securities laws, any Common Shares purchased during such Subsequent Offering Period must be promptly paid for. In addition, in the event the Offeror elects to provide a subsequent offering period, the subsequent offering period will be at least 10 days but no more than 20 Business Days. See Section 2 of the Offer. SUBSEQUENT TRANSACTIONS If, within 120 days after February 28, 2003, the Offer is accepted by the holders of not less than 90% of the Common Shares, other than those held on the date of the Offer by or on behalf of the Offeror or an affiliate or associate of the Offeror, the Offeror now intends to, and in the Support Agreement has agreed to use its reasonable best efforts to, acquire, to the extent permitted by applicable law, the remaining Common Shares pursuant to the compulsory 7 acquisition provisions of the OBCA. If the Offeror takes up and pays for Common Shares under the Offer representing at least 66 2/3% of the Common Shares (on a Fully-Diluted Basis) and acquires less than 90% of the Common Shares, or the compulsory acquisition provisions of the OBCA are otherwise unavailable, the Offeror now intends to implement other means of acquiring, directly or indirectly, all of the Common Shares in accordance with applicable law, including by way of a Subsequent Acquisition Transaction. See "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" in Section 11 of the Offer and Section 15 of the Circular. CERTAIN EFFECTS OF THE OFFER As described above, following the purchase of Common Shares under the Offer, the Offeror expects to acquire the remaining shares through a Compulsory Acquisition or a Subsequent Acquisition Transaction. In such case, Emco will no longer be publicly owned. Even if for some reason a Compulsory Acquisition or a Subsequent Acquisition Transaction does not take place, if the Offeror purchases all of the Common Shares tendered in the Offer, then there may be so few remaining shareholders and publicly held shares that the Common Shares will no longer be eligible to be traded on the TSX or Nasdaq, there may not be a public trading market for Common Shares, and Emco may apply to cease to be a reporting issuer in Canada and cease to make filings with Canadian securities regulatory authorities or the Securities and Exchange Commission or otherwise no longer be required to comply with the Securities and Exchange Commission rules relating to publicly held companies. See "CERTAIN EFFECTS OF THE OFFER" in Section 7 of the Circular. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS A Shareholder who is resident in Canada, who holds Common Shares as capital property and who sells such Common Shares to the Offeror under the Offer, will realize a capital gain (or capital loss) equal to the amount by which the cash received, net of any reasonable costs of disposition, exceeds (or is less than) the adjusted cost base to the Shareholder of such Common Shares. In general, Shareholders who are non-residents of Canada for the purposes of the Tax Act will not be subject to Canadian income tax on any gain realized on a disposition of Common Shares to the Offeror under the Offer unless those Common Shares constitute "taxable Canadian property" within the meaning of the Tax Act and that gain is not otherwise exempt from tax under the Tax Act pursuant to an exemption contained in an applicable income tax treaty or convention. THE FOREGOING IS A BRIEF SUMMARY OF CANADIAN FEDERAL INCOME TAX CONSEQUENCES ONLY. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF A SALE OF COMMON SHARES PURSUANT TO THE OFFER OR A COMPULSORY ACQUISITION OR A DISPOSITION OF COMMON SHARES PURSUANT TO ANY SUBSEQUENT ACQUISITION TRANSACTION. See "CERTAIN INCOME TAX CONSIDERATIONS -- CANADIAN FEDERAL INCOME TAX CONSIDERATIONS" in Section 16 of the Circular. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS In general, the sale of Common Shares by U.S. Holders pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. Holder who sells Common Shares pursuant to the Offer will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received (in U.S. dollar equivalents determined at the spot rate on the date of the consummation of the Offer) and such Shareholder's adjusted tax basis in the Common Shares sold pursuant to the Offer (as determined in U.S. dollars). The U.S. federal income tax summary set forth above is for general information only. U.S. Holders are urged to consult their tax advisors to determine the particular tax consequences to them of the Offer, including the applicability and effect of state, local, foreign and other tax laws. See "CERTAIN INCOME TAX CONSIDERATIONS -- UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" in Section 16 of the Circular. DEPOSITARY Computershare Trust Company of Canada is acting as Depositary under the Offer. The Depositary will receive deposits of Share Certificates and accompanying Letters of Transmittal at the office specified in the Letter of Transmittal. The Depositary will also receive Notices of Guaranteed Delivery at the office specified in the Notice of 8 Guaranteed Delivery. The Depositary will also be responsible for giving notices, if required, and for making payment for all Common Shares purchased by the Offeror under the Offer. The Depositary will also receive book-entry transfers of Common Shares. See "MANNER OF ACCEPTANCE" in Section 3 of the Offer. DEALER MANAGERS AND SOLICITING DEALER GROUP Scotia Capital Inc. has been retained as the Canadian Dealer Manager for the Offer and to form the Soliciting Dealer Group comprising members of the Investment Dealers Association of Canada and members of the TSX. The Offeror has retained the services of Scotia Capital (USA) Inc. to act as U.S. Dealer Manager and to solicit institutional acceptances of the Offer in the United States. The Offeror will pay the Dealer Managers and the soliciting dealers certain fees, as described under "OTHER MATTERS RELATING TO THE OFFER -- DEALER MANAGERS AND SOLICITING DEALER GROUP" in Section 17 of the Circular. INFORMATION AGENT MacKenzie Partners, Inc. has been retained as the Information Agent for the Offer. If you should need any additional information or copies of the offer documents, you may call Scotia Capital Inc. or Scotia Capital (USA) Inc., the Dealer Managers for the Offer, MacKenzie Partners, Inc., at 1-800-322-2885, or Computershare Trust Company of Canada, the Depositary for the Offer, at 1-800-564-6253. See the back cover of this Offer and Circular. 9 OFFER The accompanying Circular, which is incorporated into and forms part of the Offer, contains important information that should be read carefully before making a decision with respect to the Offer. February 28, 2003 TO THE SHAREHOLDERS OF EMCO LIMITED: 1. THE OFFER The Offeror hereby offers to purchase, on and subject to the following terms and conditions, and the terms and conditions of the Letter of Transmittal, all of the outstanding Common Shares, including Common Shares which become outstanding on the conversion of outstanding Debentures or the exercise of Options, at a price of Cdn$16.60 net to the Shareholder in cash per Common Share, without interest thereon. The Offer is made only for Common Shares and is not made for Options or Debentures. Any holder of Options or Debentures who wishes to accept the Offer should exercise their Options or convert their Debentures in order to obtain Share Certificates and deposit them in accordance with the Offer. Any such exercise or conversion must be sufficiently in advance of the Expiry Time to assure that the holders of Options or Debentures will have Share Certificates available for deposit before the Expiry Time, or in sufficient time to comply with the procedures referred to under "MANNER OF ACCEPTANCE -- PROCEDURE FOR GUARANTEED DELIVERY" in Section 3 of the Offer. THE EMCO BOARD OF DIRECTORS, FOLLOWING CONSULTATION WITH ITS FINANCIAL AND LEGAL ADVISORS, HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS IN THE BEST INTERESTS OF SHAREHOLDERS AND, ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDED THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES TO THE OFFER. Emco has entered into a Support Agreement, dated as of February 19, 2003, with the Offeror and Blackfriars with respect to the Offer. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular. Based upon representations made in the Support Agreement, the Offeror believes that as of the date hereof, there are approximately 17,497,099 Common Shares outstanding on a Fully-diluted Basis. Tendering Shareholders who are owners of record of Common Shares and who tender directly to the Depositary will not be required to pay brokerage fees or commissions or, except as otherwise provided in Instruction 8 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Common Shares by the Offeror pursuant to the Offer. Shareholders who hold their Common Shares through a broker or bank should consult such institution as to whether it will charge any service fees to tender Common Shares in the Offer. Blackfriars or the Offeror will pay all charges and expenses of the Dealer Managers, the Information Agent and the Depositary incurred in connection with the Offer. See Section 1 of the Circular. TD Securities, the financial advisor to the Independent Committee of the Emco Board of Directors, has delivered a written opinion, dated February 19, 2003, to the effect that, as of the date of the opinion, based on the assumptions, limitations and qualifications set forth in the opinion, the consideration to be received by Shareholders is fair, from a financial point of view, to such Shareholders. The full text of TD Securities' written opinion is included in Schedule A to the Directors' Circular which is being mailed to Shareholders concurrently with this Offer. Shareholders are urged to read the text of such opinion carefully in its entirety. The Offer is conditioned upon, among other things, there being validly tendered in accordance with the terms of the Offer, and not withdrawn prior to the Expiry Time of the Offer, that number of Shares that represents at least a 66 2/3% of the outstanding Common Shares on a Fully-diluted Basis. The Offer also is subject to certain other conditions that are described in Section 4 of the Offer. Please read Section 4 of the Offer, which sets forth in full the conditions to the Offer, and Section 14 of the Circular, which sets forth additional information about the Competition Act, Investment Canada Act, the HSR Act, and other required regulatory approvals. The Offeror's obligation to purchase Common Shares under the Offer is not subject to any financing condition. Subject to the provisions of the Support Agreement, the Offeror may waive any or all of the conditions to its obligation to purchase Common Shares pursuant to the Offer. If by the Expiry Time of the Offer or any extension thereof, any of the conditions to the Offer have not been satisfied or waived, subject to the provisions of the Support Agreement, the Offeror may elect to (i) terminate the Offer and return all tendered Common Shares to tendering Shareholders, (ii) waive all of the unsatisfied conditions and purchase all Common Shares validly tendered by the Expiry Time and not properly withdrawn or (iii) extend the Offer 10 and, subject to the right of Shareholders to withdraw Common Shares until the new Expiry Time of the Offer, retain the Common Shares that have been tendered until the Expiry Time of the Offer as extended. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Offeror will accept for payment and pay for all Common Shares validly tendered on or prior to the Expiry Time and not properly withdrawn as permitted under Section 7 of the Offer. The Offer is currently set to expire 8:00 p.m. (EST), on April 7, 2003, unless the Offeror, in accordance with the Support Agreement, extends the period during which the Offer is open. The rights reserved by the Offeror with respect to extending, delaying and terminating the Offer are in addition to the Offeror's rights pursuant to Sections 4 and 5 of the Offer. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by a public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 a.m. (EST), on the next Business Day after the previously scheduled Expiry Time, in accordance with the Canadian and U.S. securities laws. Subject to applicable law, and without limiting the manner in which the Offeror may choose to make any public announcement, the Offeror shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to Dow Jones News Service and Canada NewsWire. If the Offeror extends the Offer or if the Offeror is delayed in its acceptance for payment of or payment for Common Shares or it is unable to pay for Common Shares pursuant to the Offer for any reason, then without prejudice to the Offeror's rights under the Offer, the Depositary may retain tendered Common Shares on behalf of the Offeror, and such Common Shares may not be withdrawn except to the extent tendering Shareholders are entitled to withdrawal rights as described under Section 7 of the Offer. However, the ability of the Offeror to delay the payment for Common Shares that the Offeror has accepted for payment is limited by (i) Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of shareholders promptly after the termination or withdrawal of such bidder's offer, unless such bidder elects to offer a Subsequent Offering Period as described in Section 2 of the Offer, "TIME FOR ACCEPTANCE" and pays for the Common Shares tendered during the Subsequent Offering Period in accordance with Rule 14d-11 under the Exchange Act, and (ii) the terms of the Support Agreement, which provide that, subject to the terms and conditions of the Offer, Offeror will pay for Shares that are tendered pursuant to the Offer in accordance with the Offer and applicable securities laws. Emco has provided the Offeror with a list of registered Shareholders and a list of participants in book-based nominee registrants who hold Common Shares, together with their address and respective holdings of Common Shares, and will provide to the Offeror such additional information (including updated lists of shareholders, mailing labels and lists of securities positions) and such other assistance as the Offeror may reasonably request in order to communicate the Offer to Shareholders. This Offer and Circular, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Common Shares whose names appear on Emco's shareholder list and will be furnished, for subsequent transmittal to beneficial owners of Common Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing. 2. TIME FOR ACCEPTANCE The Offer is open for acceptance until 8:00 p.m. (EST) on the Expiry Date, or until such later time and date or times and dates to which it may be extended, unless the Offer is withdrawn by the Offeror. The Offeror may provide a subsequent offering period following the expiration of the Offer (a "SUBSEQUENT OFFERING PERIOD") of an additional period of 10 days to 20 Business Days, beginning immediately after the Offeror purchases the Common Shares tendered in the Offer, during which Shareholders may tender their Common Shares and receive the Offer Price. The Offeror may determine to provide a Subsequent Offering Period in the event that the Common Shares tendered and not withdrawn pursuant to the Offer constitute less than 90% of the outstanding Common Shares (above which percentage the remaining publicly held Common Shares could be acquired in a Compulsory Acquisition; see Section 11 of the Offer and Section 15 of the Circular) as of the expiration of the Offer. During a Subsequent Offering Period, the Offeror promptly will purchase and pay the same price paid in the Offer for all Common Shares tendered. Notwithstanding the provisions of United States federal securities laws relating to subsequent offering periods, the Offeror will permit withdrawal of tendered Common Shares during any Subsequent Offering Period, if there is one, at any time prior to such Common Shares being purchased by the Offeror. In 11 accordance with applicable securities laws, any Common Shares purchased during such Subsequent Offering Period must be promptly paid for. 3. MANNER OF ACCEPTANCE VALID TENDERS In order for a Shareholder to validly tender Common Shares to the Offer: (a) a Letter of Transmittal (printed on blue paper) (or a facsimile thereof), properly completed as required by the rules and instructions set out in the Letter of Transmittal and duly executed (or, in the case of a book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter of Transmittal) and any other documents specified in the instructions set out in the Letter of Transmittal must be received by the Depositary, at any of the offices of the Depositary listed in the Letter of Transmittal, together with either: (i) the Share Certificate(s) in respect of which the Offer is being accepted, or (ii) confirmation (a "BOOK-ENTRY CONFIRMATION") of a book-entry transfer of such Common Shares into the Depositary's account at The Depository Trust Company (the "BOOK-ENTRY TRANSFER FACILITY") pursuant to the procedures set forth below, in each case so as to be received on or prior to the Expiry Time; or (b) the tendering Shareholder must comply with the guaranteed delivery procedures described below. The Offer will be deemed to be accepted only if the Depositary has actually received these documents before the Expiry Time. Except as otherwise provided in the instructions to the Letter of Transmittal, the signature on the Letter of Transmittal must be guaranteed by an Eligible Institution. If a Letter of Transmittal is executed by a person other than the registered holder of the Share Certificate(s) to which the Letter of Transmittal relates, the Share Certificate(s) must be endorsed or be accompanied by an appropriate share transfer power of attorney duly and properly completed by the registered holder, with the signature on the endorsement panel or share transfer power guaranteed by an Eligible Institution. The term "AGENT'S MESSAGE" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Common Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Offeror may enforce such agreement against such participant. BOOK-ENTRY TRANSFER The Depositary will establish an account with respect to the Common Shares at the Book-Entry Transfer Facility for purposes of the Offer within two Business Days after the date of this Offer. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make a book-entry delivery of Common Shares by causing the Book-Entry Transfer Facility to transfer such Common Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Common Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, either the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary, at one of its addresses set forth on the back cover of this Offer, prior to the Expiry Time, or the tendering Shareholder must comply with the guaranteed delivery procedure described below. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. SIGNATURE GUARANTEES No signature guarantee is required on the Letter of Transmittal if: (a) the Letter of Transmittal is signed by the registered holder of the Common Shares tendered therewith, unless such holder has completed either the box entitled "SPECIAL DELIVERY INSTRUCTIONS" or the box entitled "SPECIAL PAYMENT INSTRUCTIONS" on the Letter of Transmittal; or 12 (b) the Common Shares are tendered for the account of a firm that is an Eligible Institution. In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued in the name of, a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate duly executed stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 3 and 4 of the Letter of Transmittal. PROCEDURE FOR GUARANTEED DELIVERY If a Shareholder wishes to deposit Common Shares under the Offer and either the Share Certificate(s) are not immediately available or the Shareholder is not able to deliver the Share Certificate(s) and all other required documents to the Depositary before the Expiry Time, those Common Shares may nevertheless be deposited under the Offer, provided that all of the following conditions are met: (a) such deposit is made by or through an Eligible Institution; and (b) a properly completed and duly executed Notice of Guaranteed Delivery (printed on green paper) in the form accompanying this Offer (or a manually signed facsimile thereof), together with a guarantee to deliver by an Eligible Institution in the form set out in the Notice of Guaranteed Delivery, is received by the Depositary before the Expiry Time at its office in Toronto, Ontario, Canada as set forth in the accompanying Notice of Guaranteed Delivery; and (c) the Share Certificate(s), in proper form for transfer, together with a Letter of Transmittal (or a facsimile, properly completed and signed) and all other documents required by the Letter of Transmittal, are received by the Depositary at its office in Toronto, Ontario, Canada set forth in the Letter of Transmittal before 5:00 p.m. (EST) on the third trading day on the TSX after the Expiry Date. THE NOTICE OF GUARANTEED DELIVERY MUST BE DELIVERED BY HAND OR COURIER OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AT ITS OFFICE IN TORONTO, ONTARIO, CANADA AS SET FORTH IN THE NOTICE OF GUARANTEED DELIVERY AND MUST INCLUDE A GUARANTEE BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN THE NOTICE OF GUARANTEED DELIVERY. POWER OF ATTORNEY The execution of a Letter of Transmittal, or an Agent's Message in connection with a book-entry transfer of Common Shares irrevocably appoints the Offeror, and any other person designated by the Offeror in writing, as the true and lawful agents, attorneys and attorneys-in-fact of the Shareholder delivering the Letter of Transmittal, or on whose behalf an Agent's Message is sent, with respect to the Common Shares registered in the name of the holder on the securities registers maintained by Emco and deposited pursuant to the Offer and purchased by the Offeror (the "PURCHASED COMMON SHARES"), and with respect to any and all dividends, distributions, payments, securities, rights, warrants or other interests accrued, declared, issued, transferred, made or distributed on or in respect of the Purchased Common Shares on or after February 20, 2003 (the date of the announcement of the Offer), effective from and after the time that the Offeror takes up and pays for the Purchased Common Shares (the "EFFECTIVE TIME"), with full power of substitution (such powers of attorney, being coupled with an interest, being irrevocable), to: (a) register or record the transfer or cancellation of Purchased Common Shares on the appropriate registers; (b) vote, execute and deliver any instruments of proxy, authorizations or consents in form and on terms satisfactory to the Offeror in respect of any Purchased Common Shares, revoke any such instrument, authorization or consent given prior to or after the Effective Time, and/or designate in any such instruments of proxy any person(s) as the proxy or the proxy nominee(s) of the Shareholder in respect of such Purchased Common Shares for all purposes; (c) execute, endorse and negotiate any cheques or other instruments representing any distribution payable to the Shareholder in respect of the Purchased Common Shares; and 13 (d) exercise any other rights of a holder of Purchased Common Shares. A Shareholder who executes a Letter of Transmittal, or on whose behalf an Agent's Message is sent, also agrees, from and after the Effective Time: (a) not to vote any of the Purchased Common Shares at any meeting of holders of Common Shares; (b) not to exercise any other rights or privileges attached to any of the Purchased Common Shares; and (c) to deliver to the Offeror any and all instruments of proxy, authorizations or consents received in respect of the Purchased Common Shares. At the date on which the Offeror purchases the Purchased Common Shares, all prior proxies given by the holder of those Purchased Common Shares with respect to those shares shall be revoked and no subsequent proxies may be given by such holder with respect to those shares. DEPOSITING SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES The deposit of Common Shares pursuant to the procedures herein will constitute a binding agreement between the depositing Shareholder and the Offeror upon the terms and subject to the conditions of the Offer, including the depositing Shareholder's representations and warranties that: (i) such Shareholder has full power and authority to deposit, sell, assign and transfer the Common Shares being deposited; (ii) such Shareholder owns the Common Shares which are being deposited free and clear of all liens, restrictions, charges, encumbrances, claims, equities and rights of others; (iii) the deposit of such Common Shares complies with applicable securities laws; and (iv) when such Common Shares are taken up and paid for by the Offeror, the Offeror will acquire good title to such Common Shares free and clear of all liens, restrictions, charges, encumbrances, claims, equities, and rights of others. The acceptance of the Offer pursuant to the procedures set forth above shall constitute an agreement between the depositing Shareholder and the Offeror in accordance with the terms and conditions of the Offer. The Offeror reserves the right to permit the Offer to be accepted in a manner other than that set forth in this Section 3. BACKUP WITHHOLDING Under the "backup withholding" provisions of U.S. federal income tax law, the Depositary may be required to withhold from the amount of any payments made pursuant to the Offer. In order to prevent backup withholding with respect to payments to certain Shareholders of the Offer Price for Common Shares purchased pursuant to the Offer, each Shareholder (other than a corporation) who is a U.S. resident (a "U.S. SHAREHOLDER") must provide the Depositary with such U.S. Shareholder's correct taxpayer identification number ("TIN") and certify that they are not subject to backup withholding by completing the Substitute Form W-9 in the Letter of Transmittal. If a U.S. Shareholder does not provide its correct TIN or fails to provide the certification described above, the Internal Revenue Service may impose a penalty on such U.S. Shareholder and payment of cash to such U.S. Shareholder pursuant to the Offer may be subject to backup withholding. Shareholders who are residents of Canada and certain other Shareholders (including, among others, all corporations and certain non-U.S. individuals and non-U.S. entities) are not subject to backup withholding. All U.S. Shareholders depositing Common Shares pursuant to the Offer should complete and sign the Substitute Form W-9 included in the Letter of Transmittal to provide the information necessary to avoid backup withholding. Non-U.S. Shareholders, including residents of Canada, should complete and sign the Form W-8BEN -- Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding included in the Letter of Transmittal in order to avoid backup withholding. See Instruction 11 of the Letter of Transmittal. Backup withholding is not an additional tax. The amount of any backup withholding will be refunded (or allowed as a credit against the U.S. federal income tax liability of the Shareholder) provided that the required information is furnished to the Internal Revenue Service. GENERAL The Offer will be deemed to be accepted only if the Depositary actually has received the requisite documents at or before the Expiry Time. In all cases, payment for the Common Shares deposited and taken up by the Offeror pursuant to the Offer will be made only after timely receipt by the Depositary of Share Certificates or book-entry transfer of Common Shares into the appropriate account, a Letter of Transmittal (or a facsimile) properly completed and signed covering the Common Shares with the signatures guaranteed in accordance with the instructions and rules set out 14 therein, or an Agent's Message in connection with a book-entry transfer of Common Shares, and any other required documents. THE METHOD OF DELIVERY OF THE SHARE CERTIFICATE(S), THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE PERSON DEPOSITING THOSE DOCUMENTS. THE OFFEROR RECOMMENDS THAT THOSE DOCUMENTS BE DELIVERED BY HAND TO THE DEPOSITARY AND THAT A RECEIPT BE OBTAINED OR, IF MAILED, THAT REGISTERED MAIL, PROPERLY INSURED, BE USED WITH AN ACKNOWLEDGEMENT OF RECEIPT REQUESTED. SHAREHOLDERS WHOSE COMMON SHARES ARE REGISTERED IN THE NAME OF A STOCKBROKER, INVESTMENT DEALER, BANK, TRUST COMPANY OR OTHER NOMINEE SHOULD CONTACT THAT PERSON FOR ASSISTANCE IN DEPOSITING THEIR COMMON SHARES. All questions as to the validity, form, eligibility (including timely receipt) and acceptance of Common Shares deposited pursuant to the Offer will be determined by the Offeror in its sole discretion. Depositing Shareholders agree that such determination shall be final and binding. The Offeror reserves the absolute right to reject any and all deposits which it determines not to be in proper form or which may be unlawful to accept under the laws of any jurisdiction. The Offeror reserves the absolute right to waive any defects or irregularities in the deposit of any Common Shares. There shall be no duty or obligation on Emco, the Offeror, Blackfriars, the Dealer Managers, the Information Agent, the Depositary or any other person to give notice of any defects or irregularities in any deposit and no liability shall be incurred by any of them for failure to give any such notice. The Offeror's interpretation of the terms and conditions of the Offer, the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery will be final and binding. Shareholders will not be required to pay any fee or commission if they accept the Offer by transmitting their Share Certificates directly to the Depositary, or by using the facilities of the Soliciting Dealer Group. Shareholders should contact their investment dealer, stock broker, bank manager, investment professional or other nominee to determine if such person will require a fee to tender Common Shares to the Offer. 4. CONDITIONS OF THE OFFER Subject to the provisions of the Support Agreement, the Offeror will have the right to withdraw the Offer and not take up, purchase or pay for, and will have the right to extend the period of time during which the Offer is open and postpone taking up and paying for, any Common Shares deposited under the Offer, unless all of the following conditions are satisfied or waived by the Offeror at or prior to the Expiry Time: (a) there shall have been deposited under the Offer and not withdrawn at least 66 2/3% of the Common Shares on a Fully-diluted Basis (the "DEPOSIT MINIMUM CONDITION"); (b) the Offeror and Emco shall each have filed all notices and information required to be filed under Part IX of the Competition Act, except if such requirement shall have been waived pursuant to paragraph 113(c) of the Competition Act, and any information the Offeror elects to file with the Competition Commissioner in its sole discretion under the Competition Act, including, without limiting the foregoing, a competitive impact statement and (i) the Offeror shall have received an advance ruling certificate in accordance with section 102 of the Competition Act from the Competition Commissioner in connection with the transactions contemplated by the Support Agreement, or (ii) the Competition Commissioner shall have confirmed, in writing, that he has no intention to file an application under Part VIII of the Competition Act in connection with the transactions contemplated by the Support Agreement; (c) the Offeror shall have received evidence satisfactory to the Offeror that any requisite approvals to the completion of the transactions contemplated by the Support Agreement shall have been granted or deemed to have been granted under the Investment Canada Act on terms satisfactory to the Offeror in its commercially reasonable discretion; (d) all other authorizations, consents, orders, declarations or approvals of, or filings with, or terminations or expirations of waiting periods imposed by a Governmental Entity (including any stock exchange or other securities regulatory authority and including under the HSR Act) that are necessary to make the Offer or to effect any of the transactions contemplated hereby shall have been obtained, shall have been made or shall have occurred, each on terms satisfactory to the Offeror and Blackfriars, acting reasonably; (e) no court or other Governmental Entity having jurisdiction over Emco, the Offeror or Blackfriars, or any of their respective subsidiaries, shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) 15 which is then in effect and has the effect of making the Offer or any of the transactions contemplated by the Support Agreement (including taking up and paying for any Common Shares deposited under the Offer and completing any Compulsory Acquisition or Subsequent Acquisition Transaction) illegal; (f) Emco shall have performed each of its agreements contained in the Support Agreement required to be performed on or prior to the Expiry Time (including, for certainty, its obligations under Section 3.1 of the Support Agreement, which obligations relate to certain covenants concerning the conduct of Emco prior to the Effective Time) in all material respects, each of the representations and warranties of Emco contained in the Support Agreement shall be true and correct in all material respects on and as of the Expiry Time as if made on and as of such time (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date) and Blackfriars shall have received a certificate signed on behalf of Emco by its Chief Executive Officer and its Chief Financial Officer to such effect; (g) the Selling Shareholder shall have performed each of its agreements contained in the Lock-up Agreement required to be performed on or prior to the Expiry Time; (h) since the date of the Support Agreement, there shall have been no Material Adverse Change with respect to Emco; (i) the Offeror shall not have become aware of any material misstatement, untrue statement of a material fact, or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made and at the date it was made (after giving effect to all subsequent filings in relation to all maters covered in earlier filings) in any document filed by or on behalf of Emco with any securities regulatory authority; (j) the Emco Board of Directors shall not have withdrawn its recommendation that holders of Common Shares accept the Offer or changed such recommendation in a manner that has substantially the same effect; and (k) (A) no act, action, suit or proceeding shall have been taken before or by any domestic or foreign court or other Governmental Entity or by any elected or appointed public official or private person (including, without limitation, any individual, corporation, firm, group or other entity) in Canada or elsewhere, whether or not having the force of law, and (B) no law, regulation or policy shall have been proposed, enacted, promulgated or applied, in either case: (i) to cease trade, enjoin, prohibit or impose material limitations or conditions on the purchase by or the sale to the Offeror of the Common Shares or the right of the Offeror to own or exercise full rights of ownership of the Common Shares; or (ii) which, if the Offer were consummated, could, in the Offeror's judgment, acting reasonably, materially adversely affect the Offeror's ability to effect a Subsequent Acquisition Transaction or have a Material Adverse Change with respect to Emco. The foregoing conditions are for the exclusive benefit of the Offeror and the Offeror may, subject to applicable law, waive any of the foregoing conditions in whole or in part at any time and from time to time without prejudice to any other rights which the Offeror may have. The failure by the Offeror at any time to exercise any of the foregoing rights will not be deemed to be a waiver of any such right and each such right shall be deemed to be an ongoing right which may be asserted at any time and from time to time. Any waiver of a condition or the withdrawal of the Offer shall be effective upon written notice (or other communication confirmed in writing) being given by the Offeror to that effect to the Depositary at its principal office in Toronto, Ontario, Canada. The Offeror, forthwith after giving any such notice, will make a public announcement of such waiver or withdrawal and, to the extent required by applicable law, cause the Depositary as soon as is practicable thereafter to notify the Shareholders in the manner set forth under "NOTICE AND DELIVERY" in Section 10 of the Offer. If the Offer is withdrawn, the Offeror shall not be obligated to take up, accept for payment or pay for any Common Shares deposited under the Offer, and the Depositary will promptly return all Share Certificates for deposited Common Shares and Letters of Transmittal, Notices of Guaranteed Delivery and related documents in its possession to the parties by whom they were deposited. 16 5. EXTENSION, VARIATION OR CHANGE IN THE OFFER; SUBSEQUENT OFFERING PERIOD EXTENSION, VARIATION OR CHANGE IN THE OFFER The Offer is open for acceptance until the Expiry Time, unless the Offer is withdrawn or the Offer Period is extended. Subject as hereinafter described, the Offeror may, in its sole discretion, at any time and from time to time, extend the Expiry Time or vary the Offer by giving written notice (or other communication confirmed in writing) of such extension or variation to the Depositary at its principal office in Toronto, Ontario, Canada. Upon the giving of such notice or other communication extending the Expiry Time, the Expiry Time shall be, and be deemed to be, so extended. The Offeror, as soon as practicable thereafter, will cause the Depositary to provide a copy of any notice of extension or variation, in the manner set forth under "NOTICE AND DELIVERY" in Section 10 of the Offer, to all registered holders of Common Shares whose Common Shares have not been taken up at the date of the extension or variation; provided that the Offeror will not, without the prior consent of Emco, amend the terms of the Offer other than to (i) increase the consideration per Common Share payable under the Offer, (ii) extend the expiry of the Offer, or (iii) waive any conditions of the Offer. The Offeror shall, as soon as practicable after giving notice of an extension or variation to the Depositary, make a public announcement of the extension or variation to the extent and in the manner required by applicable law. Any notice of extension or variation will be deemed to have been given and to be effective on the day on which it is delivered or otherwise communicated to the Depositary at its principal office in Toronto, Ontario, Canada. Notwithstanding the foregoing but subject to applicable law, the Offer may not be extended by the Offeror if all of the terms and conditions of the Offer (other than those waived by the Offeror) have been fulfilled or complied with, unless the Offeror first takes up (and, in the Province of Quebec, pays for) all Common Shares then deposited under the Offer and not withdrawn. Where the terms of the Offer are varied (except a variation consisting solely of the waiver of a condition), the Offer Period will not expire before ten days after the notice of variation has been given to Shareholders, unless otherwise permitted by applicable law and subject to abridgement or elimination of that period pursuant to such orders as may be granted by Canadian courts and/or securities regulatory authorities. Notwithstanding the foregoing, if the Offeror makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Offeror will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an Offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or changes to a dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the SEC's view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to shareholders and, if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of ten business days may be required to allow for adequate dissemination to shareholders. Accordingly, if prior to the Expiry Time the Offeror decreases the number of Common Shares being sought or increases or decreases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the tenth business day from the date that notice of such increase or decrease is first published, sent or given to Shareholders, the Offer will be extended at least until the expiration of such tenth business day. The Offeror may not decrease the consideration offered pursuant to the Offer without the prior consent of Emco. If, before the Expiry Time, or after the Expiry Time but before the expiry of all rights of withdrawal with respect to the Offer, a change occurs in the information contained in the Offer or the Circular, as amended from time to time, that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Offer (other than a change that is not within the control of the Offeror or its affiliates), the Offeror will give written notice of such change to the Depositary at its principal office in Toronto, Ontario, Canada and will cause the Depositary to provide as soon as practicable thereafter a copy of such notice in the manner set forth under "NOTICE AND DELIVERY" in Section 10 of the Offer, to all Shareholders whose Common Shares have not been taken up under the Offer at the date of the occurrence of the change, if required by applicable law. As soon as possible after giving notice of a change in information to the Depositary, the Offeror will make a public announcement of the change in information. Any notice of change in information will be deemed to have been given and to be effective on the day on which it is delivered or otherwise communicated to the Depositary at its principal office in Toronto, Ontario, Canada. 17 During any such extension, or in the event of any variation or change in information, all Common Shares previously deposited and not taken up or withdrawn will remain subject to the Offer and, subject to applicable law, may be accepted for purchase by the Offeror in accordance with the terms of the Offer, subject to the provisions set out under "RIGHT TO WITHDRAW DEPOSITED COMMON SHARES" in Section 7 of the Offer. An extension of the Expiry Time, a variation of the Offer or a change in information contained in the Offer or the Circular does not, unless otherwise expressly stated, constitute a waiver by the Offeror of any of its rights set out under "CONDITIONS OF THE OFFER" in Section 4 of the Offer. If the consideration being offered for the Common Shares under the Offer is increased, the increased consideration will be paid to all depositing Shareholders whose Common Shares are taken up under the Offer, whether or not such Common Shares were deposited before the increase. No Common Shares will be purchased by the Offeror or its affiliates during the currency of the Offer other than pursuant to the Offer. SUBSEQUENT OFFERING PERIOD If the Offeror purchases the Common Shares tendered in the Offer, the Offeror will have the right, at its option, to extend the Offer to provide a "subsequent offering period" during which Shareholders may tender their Common Shares and promptly receive the Offer Price. Notwithstanding the provisions of United States federal securities laws relating to subsequent offering periods, there will be withdrawal rights during any subsequent offering period, if there is one. See Section 7 of the Offer. In addition, in the event the Offeror elects to provide a subsequent offering period, the subsequent offering period will be at least 10 days but no more than 20 Business Days. See Section 2 of the Offer. 6. TAKE UP OF AND PAYMENT FOR DEPOSITED COMMON SHARES Upon the terms and subject to the conditions of the Offer, the Offeror will take up Common Shares duly and validly deposited pursuant to the Offer in accordance with the terms hereof promptly and in any event not later than three Business Days following the time at which it becomes entitled to take up Common Shares under applicable law. Any Common Shares taken up will be paid for promptly, and in any event not later than three Business Days following the time at which it becomes entitled to take up Common Shares under the Offer pursuant to applicable law. Any Common Shares deposited pursuant to the Offer in any subsequent offering period will be taken up and paid for promptly. For the purposes of the Offer, the Offeror will be deemed to have taken up and accepted for payment Common Shares validly deposited under the Offer and not withdrawn if, as and when the Offeror gives written notice to the Depositary, at its principal office in Toronto, Ontario, Canada to that effect and as required by applicable law. The Offeror reserves the right, in its sole discretion, to delay taking up or paying for any Common Shares or to terminate the Offer and not take up or pay for any Common Shares if any condition specified under "CONDITIONS OF THE OFFER" in Section 4 of the Offer is not satisfied or waived by the Offeror. Subject to compliance with Rule 14e-1(c) under the Exchange Act, the Offeror expressly reserves the right to delay payment for Common Shares in order to comply in whole or in part with any applicable law. See Section 4 of the Offer and Section 14 of the Circular. The Offeror will not, however, take up and pay for any Common Shares deposited under the Offer unless it simultaneously takes up and pays for all Common Shares then validly deposited under the Offer. If, for any reason whatsoever, acceptance for payment of any Common Shares tendered pursuant to the Offer is delayed, or the Offeror is unable to accept for payment Common Shares tendered pursuant to the Offer, then, without prejudice to the Offeror's rights under the Offer, the Depositary may, nevertheless, on behalf of the Offeror, retain the tendered Common Shares, except to the extent that the tendering Shareholders exercise withdrawal rights as described in Section 7 of the Offer. The Offeror will pay for Common Shares validly deposited under the Offer and not withdrawn by providing the Depositary with sufficient funds (by bank transfer or other means satisfactory to the Depositary). The Depositary will act as the agent of persons who have deposited Common Shares in acceptance of the Offer for the purposes of receiving payment from the Offeror and transmitting such payment to such persons. Receipt of payment by the Depositary will be deemed to constitute receipt of payment by persons depositing Common Shares. UNDER NO CIRCUMSTANCES WILL INTEREST ACCRUE OR BE PAID BY THE OFFEROR OR THE DEPOSITARY ON THE PURCHASE PRICE OF THE COMMON SHARES PURCHASED BY THE OFFEROR, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. SETTLEMENT WITH EACH SHAREHOLDER WHO HAS VALIDLY DEPOSITED AND NOT WITHDRAWN COMMON SHARES UNDER THE OFFER WILL BE EFFECTED BY THE DEPOSITARY BY FORWARDING A CHEQUE, PAYABLE IN CANADIAN FUNDS, REPRESENTING THE CASH PAYMENT FOR SUCH SECURITIES TO WHICH SUCH SHAREHOLDER IS ENTITLED. Unless otherwise directed in the Letter of 18 Transmittal, any such cheque will be issued in the name of the registered holder of Common Shares so deposited. Unless the person who deposits Common Shares instructs the Depositary to hold such cheque for pick-up by checking the appropriate box in the Letter of Transmittal, such cheque will be forwarded by first class mail to such person at the address specified in the Letter of Transmittal. If no address is specified therein, such cheque will be forwarded to the address of the holder as shown on the share register maintained by Emco or Emco's transfer agent. Cheques mailed in accordance with this paragraph will be deemed to have been delivered upon the date of mailing. The Offeror reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Common Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Offeror of its obligations under the Offer and will in no way prejudice the rights of tendering Shareholders to receive payment for Common Shares validly tendered and accepted for payment pursuant to the Offer. Depositing Shareholders will not be obliged to pay brokerage fees or commissions if they accept the Offer by depositing their Common Shares directly with the Depositary or if they use the services of the Dealer Managers or the Soliciting Dealer Group to accept the Offer. If any deposited Common Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if Share Certificates are submitted for more Common Shares than are deposited, Share Certificates for unpurchased Common Shares will be returned to the depositing Shareholder as soon as is practicable following the termination of the Offer by either sending new Share Certificates for Common Shares not purchased or by returning the deposited Share Certificates (and other relevant documents). Share Certificates (and other relevant documents) will be forwarded by first-class mail in the name of and to the address specified by the Shareholder in the Letter of Transmittal or, if such name or address is not so specified, in such name and to such address as shown on the share register maintained by Emco or Emco's transfer agent, as soon as practicable after the termination of the Offer. Common Shares acquired pursuant to the Offer shall be transferred by the Shareholder and acquired by the Offeror free and clear of all liens, charges, encumbrances, claims, equities and rights of others and together with all rights and benefits arising therefrom. 7. RIGHT TO WITHDRAW DEPOSITED COMMON SHARES Except as otherwise provided in this Section 7, all deposits of Common Shares pursuant to the Offer are irrevocable. Unless otherwise required or permitted by applicable law, any Common Shares deposited in acceptance of the Offer may be withdrawn at the place of deposit by or on behalf of the depositing Shareholder: (a) at any time when the Common Shares have not been accepted and taken up by the Offeror; (b) if the Common Shares have not been paid for by the Offeror within three Business Days after having been taken up; or (c) at any time before the expiration of ten days from the date upon which either: (i) a notice of change relating to a change which has occurred in the information contained in the Offer or the Circular, as amended from time to time, that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Offer (other than a change that is not within the control of the Offeror or an affiliate of the Offeror), in the event that such change occurs before the Expiry Time or after the Expiry Time but before the expiry of all rights of withdrawal in respect of the Offer; or (ii) a notice of variation concerning a variation in the terms of the Offer (other than a variation consisting solely of an increase in the consideration offered for the Common Shares where the Expiry Time is not extended for more than ten days), is mailed, delivered or otherwise properly communicated (subject to abridgement of that period pursuant to such order or orders as may be granted by applicable courts or securities regulatory authorities) and only if such deposited Common Shares have not been taken up by the Offeror at the date of the notice. Notwithstanding the provisions of United States federal securities laws relating to subsequent offering periods, Common Shares tendered during a subsequent offering period, if there is one, may also be withdrawn at any time prior to such Common Shares being purchased by the Offeror. In accordance with applicable securities laws, any Common Shares purchased during such subsequent offering period must be promptly paid for. 19 Withdrawals of Common Shares deposited pursuant to the Offer must be effected by notice of withdrawal made by or on behalf of the depositing Shareholder and must be actually received by the Depositary at the place of deposit before such Common Shares are accepted for purchase and taken up. Notices of withdrawal: (i) must be made by a method, including facsimile transmission, that provides the Depositary with a written or printed copy; (ii) must be signed by or on behalf of the person who signed the Letter of Transmittal (or Notice of Guaranteed Delivery) accompanying the Common Shares which are to be withdrawn; (iii) must specify such person's name, the number of Common Shares to be withdrawn, the name of the registered holder and the certificate number shown on each certificate representing the Common Shares to be withdrawn; and (iv) must be actually received by the Depositary at the place of deposit of the applicable Common Shares (or Notice of Guaranteed Delivery in respect thereof). Any signature in a notice of withdrawal must be guaranteed by an Eligible Institution in the same manner as in a Letter of Transmittal (as described in the instructions and rules set out therein), except in the case of Common Shares deposited for the account of an Eligible Institution. The withdrawal will take effect upon actual physical receipt by the Depositary of the properly completed and signed written notice of withdrawal. All questions as to the validity (including timely receipt) and form of notices of withdrawal will be determined by the Offeror in its sole discretion, and such determination will be final and binding. There will be no obligation on Emco, the Offeror, Blackfriars, the Dealer Managers, the Information Agent, the Depositary or any other person to give any notice of any defects or irregularities in any withdrawal and no liability will be incurred by any of them for failure to give any such notice. If the Offer is extended or if the Offeror is delayed in taking up or paying for Common Shares or is unable to take up and pay for Common Shares, then, without prejudice to the Offeror's other rights, Common Shares deposited under the Offer may be retained by the Depositary on behalf of the Offeror except to the extent that depositing Shareholders exercise withdrawal rights as set forth in this Section 7 or pursuant to applicable law. However, the ability of the Offeror to delay the payment for Common Shares that the Offeror has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of shareholders promptly after the termination or withdrawal of such bidder's offer, unless such bidder elects to offer a subsequent offering period and pays for the shares tendered during the subsequent offering period in accordance with Rule 14d-11 under the Exchange Act. Any Common Shares withdrawn will be deemed to be not validly deposited for the purposes of the Offer, but may be redeposited subsequently at or prior to the Expiry Time by following the procedures described under "MANNER OF ACCEPTANCE" in Section 3 of the Offer. In addition to the foregoing rights of withdrawal, Shareholders in certain provinces of Canada are entitled to statutory rights of rescission in certain circumstances. See "OFFEREES' STATUTORY RIGHTS" in Section 18 of the Circular. 8. MAIL SERVICE INTERRUPTION Notwithstanding the provisions of the Offer, the Circular, the Letter of Transmittal or the Notice of Guaranteed Delivery, cheques and any other relevant documents will not be mailed if the Offeror determines that delivery thereof by mail may be delayed as a result of a mail strike or lock-out. Persons entitled to cheques and any other relevant documents that are not mailed for the foregoing reason may take delivery thereof at the office of the Depositary to which the Common Shares were deposited until such time as the Offeror has determined that delivery by mail will no longer be delayed. Notwithstanding the provisions set out under "TAKE UP OF AND PAYMENT FOR DEPOSITED COMMON SHARES" in Section 6 of the Offer, cheques and any other relevant documents not mailed for the foregoing reason will be conclusively deemed to have been delivered upon being made available for delivery to the depositing Shareholder at the appropriate office of the Depositary. Notice of any determination regarding mail service delay or interruption made by the Offeror will be given in accordance with the provisions set out under "NOTICE AND DELIVERY" in Section 10 of the Offer. 9. DIVIDENDS AND DISTRIBUTIONS If, on or after the date of the Offer, Emco should divide, combine or otherwise change any of the Common Shares or its capitalization, or disclose that it has taken or intends to take any such action, the Offeror, in its sole discretion, may make such adjustments as it considers appropriate to the purchase price and the other terms of the Offer (including, without limitation, the type of securities offered to be purchased and the amounts payable therefor) to reflect that division, combination or other change. 20 If, on or after February 20, 2003, Emco should declare, set aside, or pay any dividend or other distribution or declare, make or pay any other distribution or payment on, or declare, allot, reserve or issue, any securities, rights or other interests with respect to any Common Share that is payable or distributable to Shareholders on a record date that is prior to the date of transfer into the name of the Offeror or its nominee or transferee on the register of Shareholders maintained by Emco or its agent of such Common Share following acceptance thereof for purchase pursuant to the Offer, then (i) in the case of any such cash dividend, distribution or payment, the amount of the dividends, distributions or payments shall be received and held by the depositing Shareholder for the account of the Offeror until the Offeror pays for such Common Shares, and to the extent that such dividends, distributions or payments do not exceed the Offer Price, the Offer Price will be reduced by the amount of any such dividends, distributions or payments, and (ii) in the case of any such cash dividend, distribution or payment that exceeds the Offer Price, or in the case of any non-cash dividend, distribution, payment, right or interest, the whole of any such dividend, distribution, payment, right or other interest, will be received and held by the depositing Shareholder for the account of the Offeror and shall be required to be promptly remitted and transferred by the depositing Shareholder to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer. Pending such remittance, the Offeror will be entitled to all rights and privileges as the owner of any such dividend, distribution, payment, right or other interest and may withhold the Offer Price or deduct from the Offer Price the amount or value thereof, as determined by the Offeror in its sole discretion. In addition, the Offeror and Blackfriars may terminate the Support Agreement should the events described in this paragraph occur. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" in Section 11 of the Circular and Section 5 of the Offer, "EXTENSION, VARIATION OR CHANGE IN THE OFFER; SUBSEQUENT OFFERING PERIOD". 10. NOTICE AND DELIVERY Without limiting any other lawful means of giving notice, any notice that the Offeror or the Depositary may give or cause to be given under the Offer will be deemed to have been properly given if it is mailed by first class mail, postage prepaid to the registered holders of Common Shares at their respective addresses appearing in the securities registers maintained by Emco or its agent and, unless otherwise specified by applicable law, will be deemed to have been received on the first Business Day following mailing. These provisions apply notwithstanding any accidental omission to give notice to any one or more Shareholders and notwithstanding any interruption of mail services in Canada or the United States following mailing. If mail service is interrupted following mailing, the Offeror intends to make reasonable efforts to disseminate the notice by other means, such as publication. Subject to applicable law, if post offices in Canada are not open for the deposit of mail, for instance as a result of a mail strike or lock-out, any notice which the Offeror or the Depositary may give or cause to be given under the Offer will be deemed to have been properly given and to have been received by Shareholders if it is published once in the National Edition of The Globe and Mail or The National Post or is given to Canada NewsWire by press release and is given to the Dow Jones News Service by press release. The Offer will be mailed to registered holders of Common Shares by first class mail, postage prepaid or made in such other manner as is permitted by applicable regulatory authorities and will be furnished by the Offeror to brokers, investment advisors, banks and similar persons whose names, or the names of whose nominees, appear in the register maintained by the Depositary on behalf of Emco in respect of the Common Shares or, if security position listings are available, who are listed as participants in a clearing agency's security position listings, for subsequent transmittal to the beneficial owners of Common Shares where such listings are received. WHEREVER THE OFFER CALLS FOR DOCUMENTS TO BE DELIVERED TO THE DEPOSITARY, THOSE DOCUMENTS WILL NOT BE CONSIDERED DELIVERED UNLESS AND UNTIL THEY HAVE BEEN PHYSICALLY RECEIVED AT THE ADDRESS LISTED FOR THE DEPOSITARY IN THE LETTER OF TRANSMITTAL OR NOTICE OF GUARANTEED DELIVERY, AS APPLICABLE. WHEREVER THE OFFER CALLS FOR DOCUMENTS TO BE DELIVERED TO A PARTICULAR OFFICE OF THE DEPOSITARY, THOSE DOCUMENTS WILL NOT BE CONSIDERED DELIVERED UNLESS AND UNTIL THEY HAVE BEEN PHYSICALLY RECEIVED AT THE PARTICULAR OFFICE AT THE ADDRESS LISTED IN THE LETTER OF TRANSMITTAL OR NOTICE OF GUARANTEED DELIVERY, AS APPLICABLE. 11. ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER If, within 120 days after the date of the Offer, the Offer has been accepted by the holders of not less than 90% of the Common Shares (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), the Offeror now intends, and in the Support Agreement has agreed to use its reasonable 21 best efforts, to avail itself to the extent possible, of the compulsory acquisition provisions of section 188 of the OBCA so as to acquire the remaining Common Shares from those Shareholders who have not accepted the Offer. If less than 90% of the Common Shares are acquired by the Offeror pursuant to the Offer (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), or the compulsory acquisition provisions of the OBCA are otherwise unavailable, the Offeror now intends to implement other means of acquiring all of the Common Shares in accordance with Canadian law, including by way of a capital reorganization, an arrangement, amalgamation, merger, share consolidation, or other transaction that constitutes a Subsequent Acquisition Transaction. If the Deposit Minimum Condition is satisfied, the Offeror will own sufficient Common Shares to effect unilaterally a Subsequent Acquisition Transaction. See "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" in Section 15 of the Circular. 12. MARKET PURCHASES None of the Offeror or its affiliates will bid for or make purchases of Common Shares during the currency of the Offer other than Common Shares tendered to the Offer. Although the Offeror has no present intention to sell Common Shares taken up under the Offer, it reserves the right to make or to enter into an arrangement, commitment or understanding at or prior to the Expiry Time to sell any of such Common Shares after the Expiry Time. 13. OTHER TERMS OF THE OFFER The Offer and the accompanying Circular constitute (i) the take-over bid circular required under Canadian provincial securities legislation with respect to the Offer and (ii) the Offer to Purchase to be incorporated by reference into the Tender Offer Statement on Schedule TO to be filed by the Offeror and Blackfriars with the SEC. The Offer and all contracts resulting from the acceptance hereof shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. Each party to a contract resulting from an acceptance of the Offer unconditionally and irrevocably attorns to the jurisdiction of the courts of the Province of Ontario. In any jurisdiction in which the Offer is required to be made by a licensed broker or dealer, this Offer shall be made on behalf of the Offeror by brokers or dealers licensed under the laws of such jurisdiction. The provisions of the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery accompanying the Offer, including the instructions contained therein, as applicable, form part of the terms and conditions of the Offer. The Offeror, in its sole discretion, will be entitled to make a final and binding determination of all questions relating to the interpretation of the Offer (including the satisfaction of the conditions of the Offer), the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery, the validity of any acceptance of the Offer, the validity of any elections and the validity of any withdrawals of Common Shares. The Offeror reserves the right to transfer to one or more affiliated companies the right to purchase all or any portion of the Common Shares deposited pursuant to the Offer but any such transfer will not relieve the Offeror of its obligations under the Offer and in no way will prejudice the rights of persons depositing Common Shares to receive payment for Common Shares validly deposited and accepted for payment pursuant to the Offer. 14. MISCELLANEOUS The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Common Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Offeror may, in its discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Common Shares in such jurisdiction. NO PERSON (INCLUDING THE DEALER MANAGERS, ANY MEMBER OF THE SOLICITING DEALER GROUP, THE INFORMATION AGENT, OR THE DEPOSITARY) HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE OFFEROR OR BLACKFRIARS NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. The Offeror and Blackfriars have filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain 22 additional information with respect to the Offer, and may file amendments thereto. In addition, Emco has filed with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the recommendation of the Emco Board of Directors with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. A copy of such documents, and any amendments thereto, may be examined at, and copies may be obtained from, the SEC (but not the regional offices of the SEC) in the manner set forth under Section 3 of the Circular. Dated: February 28, 2003. 2022841 ONTARIO INC. (signed) Christopher Pappo Director 23 CIRCULAR This Circular is furnished in connection with the accompanying Offer dated February 28, 2003 by the Offeror to purchase all the issued and outstanding Common Shares, including Common Shares that become outstanding on the exercise or conversion of the outstanding Options and Debentures. Shareholders should refer to the Offer for details of its terms and conditions, including details as to payment and withdrawal rights. The information concerning Emco contained in the Offer and this Circular has been provided to the Offeror by Emco or has been taken from or is based upon publicly available documents and records of Emco on file with Canadian securities regulatory authorities and other public sources at the time of the Offer, unless otherwise indicated, and has not been independently verified by the Offeror. Although the Offeror has no knowledge that would indicate that any of the statements contained herein and taken from or based on such information are untrue or incomplete, it does not assume any responsibility for the accuracy or completeness of such information, or for any failure by Emco to disclose publicly events or acts that may have occurred or that may affect the significance or accuracy of any such information and that are unknown to the Offeror. Unless otherwise indicated, information concerning Emco is given as at February 25, 2003. 1. THE OFFEROR The Offeror was incorporated on February 19, 2003 under the OBCA. The Offeror is an indirect wholly-owned subsidiary of Blackfriars. The Offeror has not carried on any business prior to the date hereof other than in connection with the Support Agreement and the Lock-up Agreement, and was incorporated to make, and to purchase Common Shares tendered to, the Offer. The Offeror's head office and principal place of business is located at 199 Bay Street, Toronto, Ontario, M5L 1B9. The telephone number for the Offeror is 416-814-7995. 2. BLACKFRIARS CORP. Blackfriars is a closely held corporation incorporated under the laws of Delaware. Blackfriars' corporate headquarters and principal place of business are located at 555 Skokie Blvd, Suite 555, Northbrook, Illinois 60062. The telephone number for Blackfriars is 1-818-597-3749. Blackfriars is a holding company and conducts no operations of its own, other than as a holding company. Blackfriars holds investments in various businesses, including principally a whole-sale electrical distribution business. Other than 10,700 Common Shares held by a director and officer of Blackfriars, as of the date hereof, the Offeror and Blackfriars do not beneficially own, directly or indirectly, any of the outstanding Common Shares or any securities convertible or exchangeable for Common Shares. However, the Offeror and Blackfriars have entered into the Lock-up Agreement with the Selling Shareholder. See "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- LOCK-UP AGREEMENT" in Section 11 of the Circular. The name, citizenship, principal business address, business phone number, principal occupation or employment and five-year employment history for each of the directors and executive officers of the Offeror and Blackfriars and of the controlling persons of Blackfriars, and certain other information is set forth on Schedule I hereto. None of the persons listed in Schedule I has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours). None of the persons listed in Schedule I has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal, provincial or state securities laws, or a finding of any violation of federal, provincial or state securities laws. Except as described in this Circular or in the accompanying Offer, none of the Offeror, Blackfriars, or, to the best knowledge of the Offeror and Blackfriars, any of the persons listed in Schedule I or any associate or majority-owned subsidiary of the Offeror, Blackfriars or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Common Shares. Furthermore, none of the Offeror, Blackfriars or, to the best knowledge of the Offeror and Blackfriars, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Common Shares during the past 60 days. Except as provided in the Support Agreement and the Lock-up Agreement, none of the Offeror, Blackfriars or, to the best knowledge of the Offeror and Blackfriars, any of the persons listed in Schedule I, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of Emco, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such 24 securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies. Except as set forth above, none of Blackfriars, the Offeror or, to the best knowledge of the Offeror and Blackfriars, any of the persons listed in Schedule I, has had any business relationship or transaction with Emco or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Circular or in the accompanying Offer, there have been no material contacts, negotiations or transactions between the Offeror and Blackfriars or, to the best knowledge of the Offeror, Blackfriars, or any of the persons listed in Schedule I, on the one hand, and Emco or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. 3. EMCO LIMITED Emco Limited is the corporation continuing from the amalgamation of Emco Limited and BPCO Inc. on January 1, 1993, under the laws of Ontario. The original predecessor of Emco Limited, the Empire Manufacturing Company Limited, was incorporated under the laws of Ontario by Letters Patent dated May 28, 1906. Emco is one of Canada's leading distributors and manufacturers of building products for the residential, commercial and industrial construction markets. Emco, together with its subsidiaries, operates two distinct segments: Distribution and Manufacturing. Within the Distribution segment, Emco is a leading Canadian wholesale distributor of plumbing, waterworks and industrial products such as pipes, valves and fittings. The Manufacturing segment consists of Emco Building Products Ltd. ("BUILDING PRODUCTS") and Metcraft Inc. ("METCRAFT"). Building Products is a major manufacturer and distributor of building and home improvement products across Canada and in the northern United States. Metcraft is a manufacturer of stainless steel products for the institutional and food services industries. Emco is a "reporting issuer" or equivalent in all provinces and territories of Canada and files its continuous disclosure documents and other documents with the Canadian securities regulatory authorities. Such documents are available through the website maintained by the Canadian Depositary for Securities Limited at "www.sedar.com". The Common Shares are also registered under the Exchange Act. Accordingly, Emco is subject to the informational reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports and other information with the SEC relating to its business, financial condition and other matters. Such reports and other information can be inspected and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-732-0330. Emco's SEC filings since November 2002 are also available to the public on the SEC's Internet site (http://www.sec.gov). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. As of the date hereof, and based on representations made in the Support Agreement, there are approximately 17,497,099 Common Shares outstanding on a Fully-diluted Basis. The Common Shares are listed and posted for trading on the TSX under the symbol "EML" and are listed on Nasdaq under the symbol "EMLTF". The authorized share capital of Emco consists of an unlimited number of common shares and an unlimited number of preference shares. Emco's head office and principal place of business is located at 620 Richmond Street, London, Ontario N6A 5J9. The telephone number for Emco is (519) 645-3900. Pursuant to the securities laws of various provinces of Canada, the directors of Emco must send the Directors' Circular to all Shareholders to whom the Offer is made. The Directors' Circular has been sent to Shareholders together with the Offer and this Circular. The Directors' Circular must disclose, together with other information, any material changes in the affairs of Emco subsequent to the date of the most recently published financial statements of Emco. See the Directors' Circular which accompanies the Offer and this Circular. 4. BACKGROUND TO THE OFFER In July 2002, the Emco Board of Directors initiated a review to consider strategic alternatives in order to maximize shareholder value. In August 2002, the Independent Committee of the Emco Board of Directors established a 25 process for the review of strategic alternatives and retained TD Securities as its financial advisor, and McCarthy Tetrault LLP as its legal advisor. On September 25, 2002, an affiliate of Blackfriars and Emco entered into a confidentiality agreement containing customary confidentiality and standstill provisions. After entering into the confidentiality agreement, the affiliate of Blackfriars and its advisors were given access to certain non-public information relating to Emco for the purposes of considering an offer to acquire all of the Common Shares. The affiliate of Blackfriars provided an initial non-binding expression of interest to Emco on November 15, 2002. The affiliate and certain others who had also provided initial non-binding expressions of interest, were selected to proceed with detailed due diligence reviews. During the period from mid-December 2002 to the beginning of February 2003, representatives and advisors of the affiliate of Blackfriars were provided access to further detailed financial information, material legal agreements and other information of Emco, Emco's facilities, and members of Emco's senior management team. On February 7, 2003, the affiliate of Blackfriars submitted a proposal to TD Securities for the purchase of all of the Common Shares, subject to the negotiation of a support agreement and other customary terms and conditions. Between February 14, 2003, and February 20, 2003 the management and advisors of the affiliate of Blackfriars and Emco negotiated and settled the terms of the Support Agreement, which included an Offer price of Cdn$16.60 per Common Share, the conditions of the Offer, and the circumstances which would give rise to the payment of a termination fee. The Lock-up Agreement with Masco Corporation was also negotiated and settled. The Independent Committee of the Emco Board of Directors, and the Emco Board of Directors, held meetings on February 19, 2002 to consider the Support Agreement. Following consultation with its financial and legal advisors, the Emco Board of Directors unanimously determined that the Offer was in the best interests of the Shareholders. On February 20, 2003, Masco Corporation agreed to execute the Lock-up Agreement and Emco issued a press a release announcing the entering into of the Support Agreement and the Lock-up Agreement and the Offeror issued a press release indicating its intention to make the Offer and that the Lockup Agreement had been signed. 5. PURPOSE OF THE OFFER The purpose of the Offer is to enable the Offeror to acquire control of Emco and ultimately to own all of the Common Shares, including Common Shares which may become outstanding upon the exercise of Options or the conversion of Debentures. If the Offer is successful, the Offeror now intends, subject to applicable law, to consummate a Compulsory Acquisition or Subsequent Acquisition Transaction. In the Support Agreement, the Offeror has committed to use its reasonable best efforts to consummate a Compulsory Acquisition if the Deposit Minimum Condition is satisfied and the Offer is completed. The exact timing and details of a Compulsory Acquisition or Subsequent Acquisition Transaction will necessarily depend upon a variety of factors, including the number of Common Shares acquired pursuant to the Offer. See also "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" in Section 15 of this Circular. Subject to completion of the Compulsory Acquisition or the Subsequent Acquisition Transaction that is expected to follow the successful completion of the Offer, the Offeror intends to redeem the Debentures in accordance with their terms. Although the Offeror now intends to propose a Compulsory Acquisition or a Subsequent Acquisition Transaction generally on the same terms as the Offer, it is possible that, as a result of delays in the Offeror's ability to effect such a transaction, information hereafter obtained by the Offeror, changes in general economic, industry, regulatory or market conditions or in the business of Emco, or other currently unforeseen circumstances, such a transaction may not be so proposed, may be delayed or abandoned or may be proposed on different terms. If the Offeror is unable to complete a Compulsory Acquisition or a Subsequent Acquisition Transaction, or proposes a Subsequent Acquisition Transaction but cannot obtain any required approvals promptly, the Offeror will evaluate its other alternatives. Such alternatives could include, to the extent permitted by applicable law, purchasing additional Common Shares in the open market, in privately negotiated transactions, in another take-over bid or exchange offer, or otherwise. Subject to applicable law, any additional purchases of Common Shares could be at a price greater than, equal to, or less than the price to be paid for Common Shares under the Offer and could be for cash, securities and/or other consideration. Alternatively, the Offeror may take no action to acquire additional Common 26 Shares, or may even sell or otherwise dispose of any or all Common Shares acquired pursuant to the Offer, on terms and at prices then determined by the Offeror, which may vary from the price paid for Common Shares under the Offer. 6. PLANS FOR EMCO If the Offer is successful and the Offeror acquires more than 50% but less than 66 2/3% of the Common Shares, the Offeror will be entitled, pursuant to the Support Agreement, to designate such number of directors of the Emco Board of Directors and any committees thereof, as is proportionate to the percentage of Common Shares owned by the Offer. In addition, if the Offeror takes up and pays for in excess of 66 2/3% of the Common Shares in the Offer, the Offeror will be entitled, pursuant to the Support Agreement, to designate all of the directors of the Emco Board of Directors and any committees thereof. If the Offer is successful, the Offeror intends to conduct a detailed review of Emco and its assets, liabilities, corporate structure, capitalization, operations, properties, and policies with a view to integrating the business carried on by Emco with those carried on by affiliates of the Offeror. Except as described in the Offer or in this Circular, the Offeror has no current plans or proposals which would relate to or result in any material changes in the affairs of Emco, including any proposal to liquidate Emco, to sell, lease or exchange all or a substantial part of its assets, to engage in any extraordinary corporate transaction involving Emco or any of its subsidiaries, or to make any material change in Emco's capitalization or dividend policy, to amalgamate it with any other business organization or to make any material change in its business or corporate structure, other than potentially to liquidate Emco into, or amalgamate Emco with, the Offeror or one or more subsidiaries or affiliates of the Offeror. If permitted by applicable law, subject to completion of the Offer, the Offeror intends that if all of the issued and outstanding Common Shares are acquired as a result of the Offer, a Compulsory Acquisition, or a Subsequent Acquisition Transaction, if any, the Common Shares would be delisted from the TSX and Nasdaq and, subject to applicable securities laws in provinces where Emco is a reporting issuer and United States securities laws, Emco would cease to be a reporting issuer in such provinces and under the Exchange Act. It is expected that the Offeror would redeem the Debentures in accordance with their terms immediately prior to the completion of a Compulsory Acquisition or Subsequent Acquisition Transaction. 7. CERTAIN EFFECTS OF THE OFFER MARKET FOR COMMON SHARES The purchase of Common Shares in the Offer will reduce the number of holders of Common Shares and the number of Common Shares that might otherwise trade publicly and is likely to adversely affect the liquidity and market value of the remaining Common Shares held by the public. STOCK QUOTATION Depending upon the number of Common Shares purchased pursuant to the Offer, the Common Shares may no longer meet the standards for continued listing on the TSX or Nasdaq. According to its published guidelines, the TSX and Nasdaq would give consideration to delisting Common Shares if, among other things, the Common Shares did not substantially meet its standards for continued listing. The TSX may suspend the trading of, or delist the Common Shares, if (i) the market value of Emco's issued securities falls below Cdn$3 million over any period of 30 consecutive trading days, (ii) the market value of Emco's freely tradable, publicly held securities falls below Cdn$2 million over any period of 30 consecutive days, (iii) the number of freely tradable, publicly held Emco securities falls below 500,000 or (iv) the number of public security holders, each holding board lot or more, falls below 150. Under the first standard for continued listing, Nasdaq would give consideration to delisting the Common Shares if (i) the number of publicly held Common Shares falls below 750,000, (ii) the number of holders of round lots of Common Shares falls below 400, (iii) Emco's market value of publicly held Common Shares falls below US$5 million, (iv) the minimum bid price per Common Share falls below US$1, (v) Emco's shareholders' equity falls below US$10 million, and (vi) there fails to be at least two market makers in the Common Shares. Under the second standard, Nasdaq would give consideration to delisting the Common Shares if (i) the number of publicly held Common Shares falls below 1,100,000, (ii) the number of holders of round lots of Common Shares falls below 400, (iii) Emco's market value of publicly held Common Shares falls below US$15 million, (iv) the minimum bid price per Common Share falls below US$3 and (v) either (a) Emco's market capitalization falls below US$50 million or (b) Emco's total assets and 27 total revenue fall below US$50 million for each of the two most recently completed fiscal years or two of the last three most recently completed fiscal years, and (vi) there fails to be at least four market makers in the Common Shares. Common Shares held by directors or officers of Emco, or their immediate families, or by any beneficial owner of more than ten percent or more of the Common Shares ordinarily will not be considered as being publicly held for this purpose. If the TSX and/or Nasdaq were to delist the Common Shares, it is possible that the Common Shares would continue to trade on other securities exchanges or in the over-the-counter market and that price quotations would be reported by such exchanges or other sources. However, the extent of the public market for the Common Shares and the availability of such quotations would depend upon such factors as the number of shareholders and/or the aggregate market value of the Common Shares remaining at such time, the interest in maintaining a market in the Common Shares on the part of securities firms, the possible application by Emco to cease to be a reporting issuer in Canada and possible termination of registration under the Exchange Act and other factors. MARGIN REGULATIONS The Common Shares are currently "margin securities" under the Regulations of the Board of Governors of the United States Federal Reserve System (the "FEDERAL RESERVE BOARD"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Common Shares. Depending upon factors similar to those described above regarding the market for the Common Shares and stock quotations, it is possible that, following the Offer, the Common Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. EXCHANGE ACT REGISTRATION The Common Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of Emco to the SEC if the Common Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Common Shares under the Exchange Act would substantially reduce the information required to be furnished by Emco to its shareholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to Emco, such as the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of Emco and persons holding "restricted securities" of Emco to dispose of such securities pursuant to Rule 144 promulgated under the United States Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the Common Shares under the Exchange Act were terminated, the Common Shares would no longer be "margin securities" or be eligible for trading on Nasdaq. 8. SOURCE OF FUNDS The Offeror estimates that if it acquires all of the Common Shares (on a Fully-diluted Basis) pursuant to the Offer, the total amount of cash required for the purchase of such Common Shares and to pay related fees and expenses (collectively, the "OFFER COSTS") will be approximately Cdn$290 million. Blackfriars will provide all funding required by the Offeror in connection with the Offer. Blackfriars will finance such commitment from cash and short term investments on hand. The Offer is not conditioned on any financing arrangements or financing contingencies. The Offeror and Blackfriars believe that the financial condition of Blackfriars and its affiliates is not material to a decision by a holder of Common Shares whether to tender such shares in the Offer because (i) cash is the only consideration that will be paid to the holders of Common Shares in connection with the Offer, (ii) the Offeror is offering to purchase all of the outstanding Common Shares in the Offer, (iii) the Offer is not subject to any financing arrangements or financing contingencies, and (iv) Blackfriars has sufficient cash on hand and short term investments as indicated in the letter dated February 19, 2003 from Blackfriars to Emco's Board of Directors which has been filed as an exhibit to the Offeror's Tender Offer Statement on Schedule TO, to provide the Offeror, with the amount of cash consideration payable to holders of Common Shares in the Offer. 9. OWNERSHIP OF AND TRADING IN SECURITIES OF EMCO Other than 10,700 Common Shares held by a director and officer of Blackfriars, none of the Offeror, Blackfriars or, to the knowledge of the Offeror or Blackfriars, any of the persons set forth on Schedule I, or, to the knowledge the Offeror or Blackfriars, or any directors or senior officers of the Offeror or Blackfriars, after reasonable enquiry, (i) any 28 of their respective associates, or (ii) any person or company acting jointly or in concert with the Offeror or Blackfriars, or (iii) any person or company holding more than 10% of any class of equity securities of the Offeror or Blackfriars, beneficially owns, directly or indirectly, or controls or exercises direction over, or has the right to acquire, any securities of Emco. During the six month period preceding the date of the Offer, no securities of Emco have been traded by the Offeror, Blackfriars, or, to the knowledge of the Offeror or Blackfriars, any of the persons set forth on Schedule I, or, to the knowledge the Offeror or Blackfriars, or any directors or senior officers of the Offeror or Blackfriars, after reasonable enquiry, (i) by any of their respective associates, (ii) by any person or company acting jointly or in concert with the Offeror or Blackfriars, or (iii) by any person or company who beneficially owns, directly or indirectly, more than 10% of any class of equity securities of the Offeror or Blackfriars. 10. COMMITMENTS TO ACQUIRE SECURITIES OF EMCO Other than pursuant to the Offer, there are no commitments to acquire equity securities of Emco by the Offeror, Blackfriars, or, to the knowledge of the Offeror or Blackfriars or any of the persons set forth on Schedule I, or, to the knowledge the Offeror or Blackfriars, or any directors or senior officers of the Offeror or Blackfriars, after reasonable enquiry, (i) by any of the persons set forth on Schedule I, or (ii) by any of their respective associates, or (iii) by any person or company acting jointly or in concert with the Offeror, or (iv) by any person or company who beneficially owns, directly or indirectly, more than 10% of any class of the Offeror's equity securities. 11. ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS SUPPORT AGREEMENT On February 20, 2003, Emco, Blackfriars and the Offeror entered into the Support Agreement whereby Blackfriars agreed to cause the Offeror to make, and Emco agreed to support, the Offer. Blackfriars has guaranteed the obligations of the Offeror under the Support Agreement. The material terms and provisions of the Support Agreement are summarized below. This summary is qualified in its entirety by the terms of the Support Agreement, which has been filed as an exhibit to the Schedule TO filed by the Offeror and Blackfriars with the SEC and is incorporated herein by reference. The Offeror agreed to make the Offer on the terms and subject to the conditions set forth in the Support Agreement and to mail the Offer as soon as reasonably practicable but in any event by 11:59 p.m. (EST) on March 14, 2003, subject to extension in certain circumstances specified in the Support Agreement, including by reason of there being an injunction or other order of a court or regulatory authority prohibiting the mailing of the Offer. Emco represented to the Offeror and Blackfriars that the Emco Board of Directors, following consultation with its financial and legal advisors, unanimously determined that the Offer was in the best interests of the Shareholders to enter into the Support Agreement and for the Offer to be made, and unanimously approved recommending that the Shareholders accept the Offer. Emco also represented to the Offeror and Blackfriars that, after reasonable inquiry, the Emco Board of Directors has been advised and believes that each of the directors of Emco intends to tender to the Offer all Common Shares of which he or she is the beneficial owner. Emco also agreed to prepare and approve in final form for distribution with this Circular and the Directors' Circular, each containing the unanimous recommendation of the Emco Board of Directors that the Shareholders accept the Offer and a copy of the opinion from TD Securities, the financial advisor to the Independent Committee of the Emco Board of Directors. Emco agreed and represented that the Emco Board of Directors unanimously determined to use their reasonable efforts to enable the Offeror to elect or appoint all of the directors of Emco as soon as possible after the Offeror takes up and pays for in excess of 66 2/3% of the Common Shares (on a Fully-diluted Basis) pursuant to the Offer. If the Offeror takes up and pays for at least a majority of the outstanding Common Shares (on a Fully-diluted Basis) but less than 66 2/3% (on a Fully-diluted Basis), Emco acknowledged that the Offeror will be entitled to designate such number of members of the Emco Board of Directors, and any committees thereof, as is proportionate to the percentage of the Common Shares owned by the Offeror, and Emco will co-operate with the Offeror, subject to applicable law, to enable the Offeror's designees to be elected or appointed to the Emco Board of Directors and to constitute a majority of the Emco Board of Directors. 29 Emco agreed that during the period from the date of the Support Agreement to the earlier of the time ("SUPPORT AGREEMENT EFFECTIVE TIME") of the appointment or election to the Emco Board of Directors of persons designated by the Offeror who represent a majority of the directors of Emco, and the termination of the Support Agreement, except as expressly contemplated or permitted by the Support Agreement, it and its subsidiaries, in all material respects, would carry on their businesses in the ordinary course as currently conducted and, to the extent consistent therewith, use reasonable commercial efforts to preserve intact their current business organizations, keep available the services of their current employees, and preserve their current relationships with customers, suppliers and others having business dealings with them to the end that their goodwill and ongoing businesses will be unimpaired at the Support Agreement Effective Time. Emco specifically agreed that, without the prior written consent of Blackfriars, neither it nor any of its subsidiaries would do certain things, including the following (i) split, combine or reclassify any of their shares or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for their shares or purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any of their shares or any of their other securities or any rights, warrants or options to acquire any such shares or other securities, in each case, other than intercompany transactions involving Emco and its subsidiaries and other than purchases of Common Shares pursuant to Emco's Employee Stock Purchase Plan; (ii) issue or sell any securities other than pursuant to the exercise of Options or conversion of the Debentures; (iii) amend their constating documents; (iv) alter the corporate structure or ownership of Emco or its subsidiaries; or (v) directly or indirectly reorganize, merge, amalgamate or consolidate Emco or any of its subsidiaries with any person. Emco made certain representations and warranties to Blackfriars with respect to, among other matters: (i) its organization and qualification; (ii) corporate authority and execution of the Support Agreement; (iii) its capitalization; (iv) pension and termination benefits; (v) the preparation and correctness of its financial statements and compliance with generally accepted accounting principles; (vi) absence of certain changes in its business since its last financial year-end; (vii) tax matters; (viii) litigation; (ix) severance and employment agreements; (x) insurance and (xi) compliance with applicable laws. Emco agreed that, without the prior written consent of the Offeror and Blackfriars, it will not, nor will it permit any of its subsidiaries to, nor will it authorize or permit any officer, director or employee of or any financial advisor, attorney or other advisor or representative or agent of, Emco or any of its subsidiaries to, (i) solicit, initiate or encourage inquiries or the submission of any Take-over Proposal, (ii) enter into any agreement with respect to or approve or recommend any Take-over Proposal, or (iii) participate in any negotiations regarding, or furnish to any person any information with respect to Emco or any of its subsidiaries in connection with the making of any proposal that constitutes, or may reasonably be expected to lead to, any Take-over Proposal; provided that if the Emco Board of Directors reasonably determines (after consultation with its financial advisors) that an unsolicited bona fide written Take-over Proposal constitutes a Superior Proposal, then, to the extent required by the fiduciary obligations of the Emco Board of Directors, as determined in good faith by a majority of the directors after receiving a written opinion or the advice of its outside counsel that is reflected in the minutes of the meeting of the Emco Board of Directors, to such effect, Emco may, in response to an unsolicited request therefor, (i) furnish information with respect to Emco and its subsidiaries to any person pursuant to a customary confidentiality agreement and, (ii) negotiate with the third party and enter into an agreement with respect to a Superior Proposal. "TAKE-OVER PROPOSAL" means any proposal or offer from any other person, or other business organization whatsoever (including any of Emco's officers or directors) relating to any recapitalization, merger, amalgamation, acquisition, arrangement or other business combination involving Emco or any of its subsidiaries or any proposal or offer from any such person to acquire in any manner, directly or indirectly, an equity interest in, any voting securities of, or a substantial portion of the assets of Emco or any of its subsidiaries, other than the transactions contemplated by the Support Agreement. "SUPERIOR PROPOSAL" means a Take-over Proposal on terms which a majority of the Emco Board of Directors determines in its reasonable good faith judgment to be more favourable to the Shareholders than the Offer (after consultation with Emco's financial, legal and other advisors) and for which financing, to the extent required, is then committed or which, in the reasonable good faith judgment of a majority of the Emco Board of Directors (after consultation with Emco's financial, legal and other advisors), is reasonably capable of being obtained by such third party. Emco agreed that it will provide notice orally and in writing to Blackfriars of (i) any Take-over Proposal or any inquiry with respect to or which could lead to any Take-over Proposal received by any officer or director of Emco or, to the knowledge of Emco, any financial advisor, attorney or other advisor or representative or agent of Emco; (ii) the 30 material terms of such Take-over Proposal (including a copy of any written proposal); and (iii) the identity of the person making any such Take-over Proposal or inquiry no later than 24 hours following receipt of such Take-over Proposal or inquiry. If Emco intends to furnish any person with any information with respect to any Take-over Proposal, it will advise Blackfriars orally and in writing of such intention and will provide Blackfriars with a copy of all such information not less than one business day in advance of providing any such information to such person and will keep Blackfriars fully informed of the status and details of any such Take-over Proposal or inquiry. Emco agreed that it will not enter into any agreement (a "PROPOSED AGREEMENT"), except a confidentiality agreement, with any third party providing for or to facilitate any Take-over Proposal that the Emco Board of Directors considers to be a Superior Proposal unless it has provided the Offeror and Blackfriars with a copy of the Proposed Agreement, together with a written notice from the Emco Board of Directors regarding the value in financial terms that the Board, in consultation with financial advisors, has determined should be ascribed to any non-cash consideration, not less than three business days (the "MATCH PERIOD") prior to the execution by Emco of the Proposed Agreement. Emco agreed that during the Match Period, the Offeror will have the right, but not the obligation, to offer to amend the terms of the Support Agreement in order to provide for financial terms at least equivalent to those in the Proposed Agreement. The Emco Board of Directors will review any offer by the Offeror and Blackfriars to amend the terms of the Support Agreement in order to determine, in good faith and in accordance with its fiduciary duties, whether the Offeror's amended offer would be at least as favourable to Shareholders as the Take-over Proposal set out in the Proposed Agreement. If the Emco Board of Directors so determines, Emco will enter into an amended agreement with the Offeror and Blackfriars reflecting the Offeror's amended offer. If the Emco Board of Directors continues to believe, acting in good faith and properly discharging its fiduciary duties and, after consultation with its financial legal and advisors, that the Take-over Proposal remains a Superior Proposal and therefore rejects the amended offer, Emco may enter into the Proposed Agreement after Emco pays the Cdn$6 million termination fee (described below) to Blackfriars. Emco agreed that, except with the prior written consent of Blackfriars, it will immediately terminate any existing discussions or negotiations with any parties (other than the Offeror and Blackfriars) with respect to any potential Take-over Proposal. Emco agreed not to terminate, amend or waive any provision of any confidentiality or standstill agreement to which Emco or any of its subsidiaries is a party (other than any involving Blackfriars or a Superior Proposal). Emco agreed that it will immediately demand the return or destruction of all confidential information provided to any third party in connection with any potential Take-over Proposal and will use all reasonable efforts to ensure that such information is returned. The Support Agreement may be terminated by notice in writing in the following circumstances: (a) by mutual written consent of Blackfriars and Emco; (b) by either Blackfriars or Emco if the other party (in the case of Blackfriars, including the Offeror) will have failed to comply with any of its covenants or agreements contained in the Support Agreement required to be complied with prior to the date of such termination, which failure to comply has not been cured within five business days following receipt by such other party of written notice of such failure to comply; (c) by either Blackfriars or Emco if there has been a breach by the other party (in the case of Blackfriars, including any breach by the Offeror) of any representation or warranty which has the effect of making such representation or warranty not true and correct in all material respects and which breach has not been cured within five business days following the breaching party becoming aware of such breach or the receipt by the breaching party of written notice of the breach from the other party; (d) by Emco if the Circular has not been mailed as set out above; provided, however, that the right to terminate is not available if Emco has failed to fulfill any of its obligations in the Support Agreement, or has been a cause of the failure of the Circular to have been mailed; (e) by either Emco or Blackfriars if the Offeror has not become legally obligated to accept and take-up any Common Shares pursuant to the Offer by May 15, 2003; (f) by either Blackfriars or Emco if any court or other Governmental Entity having jurisdiction will have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Support Agreement and such order, decree, ruling or other action will have become final and nonappealable; (g) by Blackfriars if any condition of making the Offer has not been satisfied or waived prior to the date the Circular is to be mailed or if any condition of the Offer has not been satisfied or waived prior to the expiry of the Offer; (h) by Blackfriars if the Emco Board of Directors (A) qualifies, modifies or withdraws its recommendation in favour of the Offer, (B) recommends to the Shareholders any Take-over Proposal other than the Offer, or (C) resolves to do either of the above; (i) by Emco if it proposes to enter into a merger, acquisition or other agreement to effect a Superior Proposal; but only if the Offeror and Blackfriars have not exercised their right to match the Superior Proposal; 31 or (j) by Blackfriars if any person or group of persons acting jointly or in concert acquires 50% or more of the outstanding Common Shares. Emco has agreed to pay Blackfriars a termination fee of Cdn$6 million in the event that Emco proposes to terminate the Support Agreement on the basis of the grounds described in (i) in the above paragraph or in the event that Blackfriars proposes to terminate the Support Agreement on the basis of the grounds described in (h) or (j) in the above paragraph. The termination fee will be paid concurrently with the termination if the termination is by Emco, or no later than the second business day following the termination if the termination is by Blackfriars. Emco agreed (i) that the Emco Board of Directors would pass a resolution accelerating the vesting of all Options, (ii) that Emco would promptly notify the holders of Options of such resolution, and (iii) that Emco would permit holders of Options to transfer their Options to Emco in exchange for a cash payment of the in-the-money value of the Option, conditional upon the Offeror taking up and paying for Common Shares under the Offer. Subject to existing contractual and legal restrictions, Emco agreed to provide the counsel, accountants, financial advisors and other representatives of Blackfriars with reasonable access to, and permit them to make such inspections as they may reasonably require of the properties, books, contracts, commitments and records of Emco and its subsidiaries and to, (i) furnish promptly to Blackfriars a copy of each report, schedule, registration statement and other document filed by Emco or its subsidiaries pursuant to the requirements of federal, provincial or other securities laws, (ii) furnish promptly to Blackfriars all other information concerning their businesses, properties and personnel as Blackfriars may reasonably request, and (iii) promptly make available to Blackfriars all personnel of Emco and its subsidiaries knowledgeable about matters relevant to such inspections. If the Offeror takes up and pays for not less than 66 2/3% of the Common Shares, Emco will, in connection with any Subsequent Acquisition Transaction, assist the Offeror in acquiring the remaining Common Shares, provided that the consideration offered in connection with the Subsequent Acquisition Transaction is at least equivalent in value to the consideration under the Offer. If, within 120 days of the date of the Offer, the Offer has been accepted by holders of not less than 90% of the Common Shares, the Offeror will use its reasonable best efforts, to the extent permitted by applicable law, to acquire the remainder of the Common Shares through a statutory right of acquisition available under the OBCA. Under the Support Agreement, Blackfriars agreed to cause Emco or any successor to Emco to indemnify all past and present officers and directors of Emco or its subsidiaries to the same extent they are indemnified as of February 19, 2002 pursuant to the constating documents of Emco and its subsidiaries and any existing indemnification agreements for acts or omissions occurring prior to the Support Agreement Effective Time. Emco intends to purchase run-off insurance, for such term as may be considered reasonable by it (but which in any event will not exceed six years from the Support Agreement Effective Time), for its past and present directors and officers in respect of all matters relating to the period when they were directors and/or officers. In the absence of run-off insurance, Blackfriars will cause Emco or any successor to Emco to provide, for an aggregate period of not less than six years from the Support Agreement Effective Time, Emco's current and former directors and officers an insurance and indemnification policy that provides coverage for events occurring prior to the Support Agreement Effective Time that is substantially similar to Emco's existing policy if such a policy is available at a reasonable cost. LOCK-UP AGREEMENT On February 20, 2003, the Offeror, Blackfriars and the Selling Shareholder entered into the Lock-up Agreement. The Selling Shareholder has represented to Blackfriars that it owns and controls 6,621,334 Common Shares, being approximately 42% of all Common Shares. The material terms and provisions of the Lock-up Agreement are summarized below. This summary is qualified in its entirety by the terms of the Lock-up Agreement, which has been filed as an exhibit to the Schedule TO filed by the Offeror and Blackfriars with the SEC and is incorporated herein by reference. Under the terms of the Lock-up Agreement, the Selling Shareholder agreed to deposit or cause to be deposited all of the Locked-up Shares by not later than the fifth business day following the mailing of the Offer. The Selling Shareholder also agreed not to withdraw the Locked-up Shares from the Offer unless the Lock-up Agreement is terminated in accordance with its terms prior to the Offeror taking-up and paying for the Locked-up Shares. The Selling Shareholder has agreed that it will cooperate with the Offeror in order to assist the Offeror to successfully complete the acquisition of all of the Common Shares by: 32 (a) exercising the voting rights attached to its Common Shares to oppose any proposed action (i) which might reasonably be regarded as being directed towards, or preventing or delaying the successful completion of the Offer, or (ii) which could materially change the business, assets, operations, capital, affairs, financial conditions, licences, permits, rights or privileges of the Emco and its subsidiaries; and (b) not taking any action of any kind which may reduce the likelihood of success of or delay the completion of the Offer and, promptly upon request, assisting the Offeror by providing any information reasonably required for the Offeror to secure regulatory approvals in respect of the completion of the Offer. The Lock-up Agreement may be terminated by notice in writing: (a) by the Selling Shareholder, without prejudice to any other rights, if the Offer is not mailed by March 14, 2003 or the Offeror has not taken up and paid for the Locked-up Shares pursuant to the Offer by May 15, 2003; and (b) by the Offeror, without prejudice to any other rights, if there is a material breach of the Lock-up Agreement by the Selling Shareholder. If, during the term of the Lock-up Agreement a Superior Proposal is made, the Offeror and Blackfriars have agreed to (i) notify the Selling Shareholder in writing prior to the expiry of the Superior Proposal that it will waive any unsatisfied conditions in its transaction and irrevocably commit to purchase the Locked-up Shares on the terms of the Offer, or (ii) release the Selling Shareholder from the Lock-up Agreement and return the Locked-up Shares to the Selling Shareholder so as to permit the Selling Shareholder to tender those Locked-up Shares into the Superior Proposal 48 hours prior to its expiry. 12. MATERIAL CHANGES AND OTHER INFORMATION CONCERNING EMCO The Offeror has no information that indicates any material change in the affairs of Emco since the date of the last published financial statements of Emco other than as has been publicly disclosed by Emco or as otherwise described herein. The Offeror has no knowledge of any material fact concerning securities of Emco that has not been generally disclosed by Emco or any other matter that has not previously been generally disclosed but which would reasonably be expected to affect the decision of Shareholders to accept or reject the Offer except as described herein. 13. INFORMATION ABOUT COMMON SHARES PRICE RANGE AND TRADING VOLUMES The Common Shares are listed and posted for trading on the TSX and Nasdaq. Based upon representations made in the Support Agreement, the Offeror believes that as the date hereof there are approximately 17,497,099 Common 33 Shares outstanding on a Fully-diluted Basis. The following tables sets forth the high and low sales price and volume of sales of the Common Shares traded on the TSX and Nasdaq for the periods indicated:
TSX NASDAQ --------------------------------- ----------------------------- HIGH LOW VOLUME HIGH LOW VOLUME --------- --------- --------- -------- -------- ------- 2003 -- MONTHLY February 3 to February 26...... Cdn$16.90 Cdn$13.25 1,652,300 US$11.08 US$ 8.88 283,800 January........................ Cdn$14.23 Cdn$12.16 219,570 US$ 9.23 US$ 8.00 51,400 2002 -- MONTHLY December....................... Cdn$12.79 Cdn$11.60 129,960 US$ 8.09 US$ 6.01 50,900 November....................... Cdn$12.00 Cdn$10.65 146,910 US$ 7.50 US$ 6.85 3,300 October........................ Cdn$12.10 Cdn$10.26 316,750 US$ 7.80 US$ 6.50 20,500 September...................... Cdn$12.00 Cdn$10.05 346,470 US$ 7.50 US$ 6.46 13,000 August......................... Cdn$12.00 Cdn$10.60 119,690 US$ 7.64 US$ 6.77 26,400 July........................... Cdn$12.70 Cdn$ 8.81 356,710 US$ 8.39 US$ 5.89 102,400 June........................... Cdn$12.77 Cdn$11.25 181,690 US$ 8.40 US$ 7.05 72,300 May............................ Cdn$12.42 Cdn$10.45 720,080 US$ 8.09 US$ 6.60 236,600 April.......................... Cdn$12.09 Cdn$ 8.40 281,680 US$ 7.65 US$ 5.23 169,300 March.......................... Cdn$ 9.55 Cdn$ 8.05 503,160 US$ 6.03 US$ 5.18 131,900 February....................... Cdn$ 9.55 Cdn$ 6.70 384,550 US$ 5.95 US$ 4.17 109,000 January........................ Cdn$ 7.00 Cdn$ 6.30 392,390 US$ 4.41 US$ 3.91 45,200 2002 -- QUARTERLY October -- December............ Cdn$12.79 Cdn$10.26 593,620 US$ 8.09 US$ 6.01 74,700 July -- September.............. Cdn$12.70 Cdn$ 8.81 822,870 US$ 8.39 US$ 5.89 141,800 April -- June.................. Cdn$12.77 Cdn$ 8.40 1,183,450 US$ 8.40 US$ 5.23 478,200 January -- March............... Cdn$ 9.55 Cdn$ 6.30 1,280,100 US$ 6.03 US$ 3.91 286,100 2001 -- QUARTERLY October -- December............ Cdn$ 6.60 Cdn$ 3.85 382,030 US$ 4.32 US$ 2.42 139,200 July -- September.............. Cdn$ 7.25 Cdn$ 3.71 415,310 US$ 5.60 US$ 2.25 384,300 April -- June.................. Cdn$ 7.50 Cdn$ 3.35 856,500 US$ 4.76 US$ 2.19 107,500 January -- March............... Cdn$ 5.40 Cdn$ 3.55 331,890 US$ 3.56 US$ 2.37 83,500
The Support Agreement was announced on February 20, 2003. The closing price of the Common Shares on the TSX and Nasdaq on February 19, 2003, the last full trading day immediately prior to this announcement, was Cdn$14.75 and US$9.71, respectively. The Offer represents a premium of approximately 12.5% to the closing price of the Common Shares on the TSX on February 19, 2003, and approximately 58% over the closing price of Common Shares on the TSX on July 23, 2002, the trading day immediately prior to the announcement by Emco of its process to attempt to maximize value for Shareholders. The purchase of Common Shares by the Offeror pursuant to the Offer will reduce the number of Common Shares which might otherwise trade publicly, as well as the number of Shareholders, and, depending on the number of Shareholders depositing and the number of Common Shares purchased under the Offer, is likely to adversely affect the liquidity and market value of the remaining Common Shares held by the public. After the purchase of Common Shares under the Offer, it is the Offeror's intention to take steps toward the elimination of any public reporting requirements of Emco under applicable securities legislation in any jurisdiction if it has an insignificant number of security holders in such jurisdiction. The rules and regulations of the TSX and Nasdaq establish certain criteria which, if not met, could lead to the delisting of the Common Shares from the TSX and Nasdaq. Among such criteria are the number of Shareholders, the number of Common Shares publicly held and the aggregate market value of the Common Shares publicly held. See Section 7 of this Circular. Depending on the number of Common Shares purchased pursuant to the Offer, it is possible that the Common Shares would fail to meet the criteria for continued listing on the TSX and Nasdaq. See Section 7 of this Circular. If this were to happen, the Common Shares could be delisted and this delisting could, in turn, adversely affect the market or result in a lack of an established market for the Common Shares. It is the intention of the Offeror to apply to delist the Common Shares from the TSX and Nasdaq as soon as is practicable after completion of the Offer, if 34 all of the issued and outstanding Common Shares are deposited, or after a Compulsory Acquisition or a Subsequent Acquisition Transaction, if any. See "CERTAIN EFFECTS OF THE OFFER" in Section 7 of this Circular. PREVIOUS DISTRIBUTIONS OF COMMON SHARES Based upon information provided to the Offeror by Emco, the Offeror believes that Emco has not issued any Common Shares in the last five years, other than any distribution of Common Shares pursuant to the Stock Option Plan and the Employee Stock Purchase Plan of Emco. DIVIDEND POLICY Based upon information provided to the Offeror by Emco, the Offeror believes that Emco has not paid dividends on the Common Shares in the last 5 years. 14. REGULATORY MATTERS Other than in connection with or in compliance with the provisions of the Investment Canada Act, the Competition Act and HSR Act, no authorization, consent or approval of, or filing with, any public body, court or authority is necessary on the part of the Offeror or Blackfriars for the consummation of the transactions contemplated by the Support Agreement, except for such authorizations, consents, approvals and filings as to which the failure to obtain or make would not, individually or in the aggregate, prevent or materially delay consummation of the transactions contemplated by that agreement. In the event that either Blackfriars or the Offeror becomes aware of other requirements, each will take reasonable commercial efforts to obtain such approval prior to the Expiry Time, as such time may be extended. INVESTMENT CANADA ACT Under the Investment Canada Act, certain transactions involving the acquisition of control of a Canadian business by a non-Canadian are subject to review and cannot be implemented unless the Minister responsible for the Investment Canada Act (the "MINISTER") is satisfied that the transaction is likely to be of net benefit to Canada. If a transaction is subject to the review requirement (a "REVIEWABLE TRANSACTION"), an application for review must be filed with the Investment Review Division of Industry Canada prior to the implementation of the Reviewable Transaction. The Minister is then required to determine whether the Reviewable Transaction is likely to be of net benefit to Canada taking into account, among other things, certain factors specified in the Investment Canada Act and any written undertakings that may have been given by the applicant. The Investment Canada Act contemplates an initial review period of 45 days after filing; however, if the Minister has not completed the review by that date, the Minister may unilaterally extend the review period by up to 30 days (or such longer period as may be agreed to by the applicant) to permit completion of the review. The prescribed factors of assessment to be considered by the Minister include, among other things, the effect of the investment on the level and nature of economic activity in Canada (including the effect on employment, resource processing, utilization of Canadian products and services and exports), the degree and significance of participation by Canadians in the acquired business, the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada, the effect of the investment on competition within any industry in Canada, the compatibility of the investment with national industrial, economic and cultural policies (taking into consideration corresponding provincial policies) and the contribution of the investment to Canada's ability to compete in world markets. If the Minister determines that he is not satisfied that a Reviewable Transaction is likely to be of net benefit to Canada, the Reviewable Transaction may not be implemented. As the acquisition of control of Emco contemplated by the Offer is a Reviewable Transaction, the Offeror will need to file an application for review under the Investment Canada Act. COMPETITION ACT The Competition Act requires a pre-merger notification to the Competition Commissioner for transactions that exceed certain financial thresholds and, in the case of share acquisitions, that exceed an additional voting interest threshold. If a transaction is subject to pre-merger notification, a pre-merger filing must be submitted to the Competition Commissioner and a waiting period must expire or be waived by the Competition Commissioner before the proposed transaction may be completed. Either a short form notification (with a 14 day waiting period) or a long form notification (with a 42 day waiting period) may be filed, but, if a short form is filed, the Competition 35 Commissioner may, within 14 days, require a long form, in which case the proposed transaction generally may not be completed until 42 days after a long form filing is made. The Competition Commissioner's review of a transaction subject to a pre-merger notification may take longer than the statutory waiting period, in which case the parties may be asked to delay completion of the transaction until the review is completed and the Competition Commissioner has determined his position. Whether or not a pre-merger filing is required, the Competition Commissioner may apply to the Competition Tribunal, a specialized tribunal empowered to deal with certain matters under the Competition Act, with respect to a "merger" (as defined in the Competition Act) and, if the Competition Tribunal finds that the merger is likely to prevent or lessen competition substantially, it may order that the merger not proceed or, in the event that the merger has been completed, order its dissolution or the disposition of some of the assets or shares involved. The Competition Tribunal also may issue an interim order under the Competition Act prohibiting the completion of the merger for a period of up to 30 days where (a) the Competition Commissioner has certified that an inquiry is being made under paragraph 10(1)(b) of the Competition Act in connection with the merger and that in his opinion more time is required to complete the inquiry, and (b) the Competition Tribunal finds that, in the absence of an interim order, a party to the merger or any other person is likely to take an action that would substantially impair the ability of the Competition Tribunal to remedy the effect of the merger on competition under section 92 of the Competition Act because that action would be difficult to reverse. The duration of such interim orders may be extended for an additional period of up to 30 days where the Competition Tribunal finds that the Competition Commissioner is unable to complete his inquiry because of circumstances beyond his control. If the Competition Commissioner challenges the merger under section 92 of the Competition Act, he may also apply to the Competition Tribunal for an injunctive order. The Competition Commissioner may upon request issue an advance ruling certificate ("ARC"), where he is satisfied that he would not have sufficient grounds on which to apply to the Competition Tribunal under the merger provisions of the Competition Act. If the Competition Commissioner issues an ARC in respect of a proposed transaction, that transaction is exempt from the pre-merger notification provisions. Alternatively, the Competition Commissioner may issue a "no action" letter following a notification or an application for an ARC, indicating that he is of the view that grounds do not then exist to initiate proceedings before the Competition Tribunal under the merger provisions of the Competition Act with respect to the proposed transaction, while preserving during the three years following completion of the proposed transaction his ability to so initiate proceedings should circumstances change. The purchase of Common Shares pursuant to the Offer requires pre-merger notification to the Competition Commissioner and the Offeror's acquisition of control of Emco would be a "merger" for the purposes of the merger provisions of the Competition Act. The Offeror will request an ARC in respect of the Offer and the Offeror and Emco will make a short-form pre-merger notification filing in respect of the Offer. LITIGATION AND PERMITS The Offeror is not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 14, based on its examination of publicly available information filed by Emco with the SEC and other publicly available information concerning Emco, the Offeror is not aware of any governmental license or regulatory permit that appears to be material to Emco's business that might be adversely affected by the Offeror's acquisition of Common Shares as contemplated herein or of any approval or other action by any governmental, regulatory or administrative authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Common Shares by the Offeror or Blackfriars as contemplated herein. Should any such approval or other action be required, the Offeror currently contemplates that such approval or other action will be sought. While the Offeror does not currently intend to delay acceptance for payment of Common Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken, adverse consequences might not result to Emco's business, or certain parts of Emco's business might not have to be disposed of, any of which could cause the Offeror to elect to terminate the Offer without the purchase of Common Shares under the Offer. UNITED STATES ANTITRUST COMPLIANCE. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION") and the FTC and certain waiting period 36 requirements have been satisfied. The purchase of Common Shares pursuant to the Offer is subject to such requirements. Pursuant to the requirements of the HSR Act, the Offeror intends to file a Notification and Report Form with respect to the Offer with the Antitrust Division and the FTC as soon as practicable. The waiting period applicable to the purchase of Shares pursuant to the Offer will expire at 11:59 p.m., Eastern time, on the fifteenth calendar day from the day after such filing is made by the Offeror. However, prior to such time, the Antitrust Division or the FTC may extend the waiting period by requesting additional information or documentary material relevant to the Offer from the Offeror. If such a request is made, the waiting period will be extended until 11:59 p.m., Eastern time, on the tenth day after substantial compliance by the Offeror with such request. Thereafter, such waiting period can be extended only by court order. The Antitrust Division and the FTC scrutinize the legality under the antitrust laws of transactions such as the acquisition of Common Shares by the Offeror pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws of the United States as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Common Shares pursuant to the Offer or seeking divestiture of the Common Shares so acquired or divestiture of substantial assets of Blackfriars or Emco. Private parties (including individual States) may also bring legal actions under the antitrust laws of the United States. The Offeror does not believe that the consummation of the Offer will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See Section 4 of the Offer, including conditions with respect to litigation and certain governmental actions and Section 11 of the Circular, "ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS -- SUPPORT AGREEMENT" for certain termination rights. U.S. STATE TAKEOVER STATUTES. A number of states have adopted laws that purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or that have substantial assets, shareholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. Emco, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. If any government official or third party should seek to apply any state takeover law to the Offer or other business combination between the Offeror or any of its affiliates and Emco, the Offeror will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Offeror might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Common Shares, and the Offeror might be unable to accept for payment or pay for Common Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Offeror may not be obligated to accept for payment or pay for any tendered Common Shares. 15. ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER COMPULSORY ACQUISITION Section 188 of the OBCA permits an offeror to acquire the shares not tendered to an offer for shares of a particular class of shares of a corporation if, within 120 days after the date of the offer, the offer is accepted by the holders of not less than 90% of any class of securities to which the offer relates, other than securities held at the date of the offer by or on behalf of the offeror or its Affiliates or Associates. If, within 120 days after the date thereof, the Offer has been accepted by holders of not less than 90% of the Common Shares, other than Common Shares held on the date of the Offer by or on behalf of the Offeror or its Affiliates or Associates, and the Offeror purchases such deposited Common Shares, the Offeror will use its reasonable best efforts, to the extent permitted by applicable law, to acquire the remainder of the Common Shares on the same terms as such Common Shares were acquired under the Offer, pursuant to the provisions of Section 188 of the OBCA (a "COMPULSORY ACQUISITION"). To exercise such statutory right, the Offeror must give notice (the "OFFEROR'S NOTICE") to each holder of Common Shares who did not accept the Offer (and to each person who subsequently acquires any such Common 37 Shares) (in each case a "DISSENTING OFFEREE") and to the Director under the OBCA of such proposed acquisition on or before the earlier of 60 days from the termination of the Offer and 180 days from the date of the Offer. Within 20 days of giving the Offeror's Notice, the Offeror must pay or transfer to Emco the consideration the Offeror would have had to pay to the Dissenting Offerees if they had elected to accept the Offer, to be held in trust for the Dissenting Offerees. In accordance with Section 188 of the OBCA, within 20 days after receipt of the Offeror's Notice, each Dissenting Offeree must send the Share Certificates(s) held by such Dissenting Offeree to Emco, and may elect either to transfer such Common Shares to the Offeror on the terms of the Offer or to demand payment of the fair value of such Common Shares held by such holder by so notifying the Offeror. If a Dissenting Offeree has elected to demand payment of the fair value of such Common Shares, the Offeror may apply to a court having jurisdiction to hear an application to fix the fair value of such Common Shares of the Dissenting Offeree. If the Offeror fails to apply to such court within 20 days after it made the payment or transferred the consideration to Emco referred to above, the Dissenting Offeree may then apply to the court within a further period of 20 days to have the court fix the fair value. If there is no such application by the Dissenting Offeree within such period, the Dissenting Offeree will be deemed to have elected to transfer such Common Shares to the Offeror on the terms of the Offer. Any judicial determination of the fair value of the Common Shares could be more or less than the amount paid pursuant to the Offer. The foregoing is a summary only. See Section 188 of the OBCA for the full text of the relevant statutory provisions. Section 188 of the OBCA is complex and may require strict adherence to notice and timing provisions, failing which such rights may be lost or altered. Shareholders who wish to be better informed about those provisions of the OBCA should consult with their legal advisors. SUBSEQUENT ACQUISITION TRANSACTION If the Offeror takes up and pays for Common Shares pursuant to the Offer, and if the foregoing statutory right of Compulsory Acquisition is not available, the Offeror currently intends to acquire the balance of the Common Shares as soon as practicable by way of a Subsequent Acquisition Transaction. In order to effect a Subsequent Acquisition Transaction, the Offeror will seek to cause a special meeting of the Shareholders to be called to consider a capital reorganization, amalgamation, statutory plan of arrangement, reorganization, consolidation, recapitalization, or other transaction involving the Offeror and/or an affiliate of the Offeror and Emco and/or the Shareholders for the purposes of Emco becoming, directly or indirectly, a wholly-owned subsidiary of the Offeror or effecting an amalgamation or merger of Emco and the Offeror and/or an affiliate of the Offeror, carried out for a cash consideration per Common Share not less than the price paid pursuant to the Offer (referred to in the Offer Documents as a "SUBSEQUENT ACQUISITION TRANSACTION"). Depending upon the nature and terms of the Subsequent Acquisition Transaction, the approval of at least two-thirds of the votes cast by holders of the Common Shares and the approval of a majority of the votes cast by "minority" holders of Common Shares (including Common Shares tendered into the Offer by "minority" holders of Common Shares) will be required at a meeting duly called and held for the purpose of approving the Subsequent Acquisition Transaction. The Offeror will cause Common Shares acquired under the Offer to be voted in favour of such a transaction. In certain types of Subsequent Acquisition Transactions, the registered holders of Common Shares may have the right to dissent under the OBCA and to be paid fair value for their Common Shares, with such fair value to be determined by a court of competent jurisdiction. The fair value of Common Shares so determined could be more or less than the amount paid pursuant to the Offer or the Subsequent Acquisition Transaction. Any such judicial determination of the fair value of the Common Shares could be based upon considerations other than, or in addition to, the market price, if any, of the Common Shares. The methods of acquiring the remaining Common Shares described above, other than the statutory right of compulsory acquisition under Section 188 of the OBCA, may constitute a "going private transaction" within the meaning of OSC Rule 61-501 and Policy Q-27 if such method would result in the interest of a holder of Common Shares (the "AFFECTED SECURITIES") being terminated without the consent of the Shareholder. OSC Rule 61-501 and Policy Q-27 provide that, unless exempted, a corporation proposing to carry out a going private transaction is required to engage an independent valuator to prepare a valuation of the affected securities (and any non-cash consideration being offered therefor) and provide to the holders of the affected securities a summary of such valuation. The Offeror intends to rely on any exemptions available or seek waivers pursuant to OSC Rule 61-501 and Policy Q-27 exempting the Offeror or Emco, as appropriate, from the requirement to prepare a valuation in connection with any Subsequent Acquisition Transaction proposed by the Offeror. An exemption is available for 38 certain going private transactions completed within 120 days after the expiry of a formal take-over bid for consideration at least equal to and of the same type as that paid in the take-over bid, provided certain tax disclosure is given in the take-over bid disclosure documents. The Offeror expects that this exemption would be available. OSC Rule 61-501 and Policy Q-27 also require that, unless exempted, in addition to any other required shareholder approval, in order to complete a going private transaction or a related party transaction, the approval of a majority of the votes cast by "minority" holders of the affected securities be obtained. In relation to the Offer and any subsequent going private transaction, the "minority" holders will be, unless an exemption is available or discretionary relief is granted by the OSC and the CVMQ, as required, all holders of Common Shares, other than, among others, the following: (i) the Offeror (other than in respect of Common Shares acquired pursuant to the Offer, as described below); (ii) any "related parties" of the Offeror (as defined, for the purposes of OSC Rule 61-501 and Policy Q-27) who would not be equally treated; and (iii) any person or company acting jointly or in concert with the foregoing. OSC Rule 61-501 and Policy Q-27 also provide that the Offeror may treat Common Shares acquired pursuant to the Offer as "minority" shares and vote them, or consider them voted, in favour of such going private transaction if the consideration per security in the going private transaction is at least equal in value to and of the same type as the consideration paid under the Offer. The Offeror currently intends that the consideration offered under any Subsequent Acquisition Transaction proposed by it would be identical to the Offer price. If, following the Offer, the Offeror and its affiliates are the registered holders of 90% or more of the Common Shares at the time the going private transaction is initiated, the requirement for minority approval under OSC Rule 61-501 and Policy Q-27 will not apply to the transaction if a statutory dissent and appraisal remedy is available, or if a substantially equivalent enforceable right is made available, to the minority shareholders. If the Offeror is unable to effect a Compulsory Acquisition or propose a Subsequent Acquisition Transaction involving Emco, or proposes a Subsequent Acquisition Transaction but cannot promptly obtain any required approval, the Offeror will evaluate other available alternatives. Such alternatives could include, to the extent permitted by applicable law, purchasing additional Common Shares in the open market or in privately negotiated transactions or otherwise, or taking no further action to acquire additional Common Shares. Alternatively, the Offeror may sell or otherwise dispose of any or all Common Shares acquired pursuant to the Offer. Such transactions may be effected on terms and at prices then determined by the Offeror, which may vary from the Offer Price. See "CERTAIN INCOME TAX CONSIDERATIONS" in Section 16 of this Circular for a discussion of the income tax consequences to Shareholders of a Subsequent Acquisition Transaction. JUDICIAL DEVELOPMENTS Prior to the pronouncement of OSC Rule 61-501 and Policy Q-27, Canadian courts had, in a few instances, granted preliminary injunctions to prohibit transactions which constituted "going private transactions" within the meaning of OSC Rule 61-501 and Policy Q-27. The Offeror has been advised that more recent notices and judicial decisions indicate a willingness to permit "going private transactions" to proceed subject to compliance with requirements intended to ensure procedural and substantive fairness to the minority shareholders. Shareholders should consult their legal advisors for a determination of their legal rights with respect to any transaction which may constitute a going private transaction. 16. CERTAIN INCOME TAX CONSIDERATIONS CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal Canadian federal income tax considerations under the Tax Act, as of the date hereof, generally applicable to a Shareholder in respect of the sale of Common Shares pursuant to the Offer or otherwise pursuant to certain transactions described under Section 15 of the Circular, "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER". The summary is based on the provisions of the Tax Act in force on the date hereof and counsel's understanding of the current published administrative practices of the Canada Customs and Revenue Agency (the "CCRA"). This summary takes into account all specific proposals to amend the Tax Act which have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "PROPOSED AMENDMENTS") and assumes that all such Proposed Amendments will be enacted in their present form. No assurances can be given that the Proposed Amendments will be enacted in the form proposed, if at all; however, the Canadian federal income tax considerations generally applicable to a Shareholder described below will not be different in a material adverse way if the Proposed 39 Amendments are not enacted. The summary does not otherwise take into account or anticipate any changes in law, whether by judicial, governmental or legislative decision or action or changes in administrative practices of the CCRA, nor does it take into account provincial, territorial or foreign income tax legislation or considerations. The provisions of provincial income tax legislation vary from province to province in Canada and in some cases differ from federal income tax legislation. THE SUMMARY IS NOT APPLICABLE TO A SHAREHOLDER THAT IS A "FINANCIAL INSTITUTION" AS DEFINED IN SECTION 142.2 OF THE TAX ACT. IN ADDITION, THE SUMMARY IS NOT APPLICABLE TO A SHAREHOLDER THAT ACQUIRED COMMON SHARES ON THE EXERCISE OF AN EMPLOYEE STOCK OPTION. ANY SUCH SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS. The summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations and is not intended to be, nor should it be construed to be, legal, business or tax advice or representations to any particular Shareholder. Accordingly, Shareholders should consult their own tax advisors with respect to their particular circumstances, including the application and effect of the income and other tax laws of any country, province, state or local tax authority. RESIDENTS OF CANADA The following portion of the summary is generally applicable to a Shareholder who, at all relevant times, for the purposes of the Tax Act and any applicable income tax treaty or convention, is, or is deemed to be, resident in Canada, and, for purposes of the Tax Act, deals at arm's length with Emco and the Offeror, is not affiliated with Emco or the Offeror and holds Common Shares as capital property. Common Shares generally will be considered capital property to a Shareholder unless the Shareholder holds such Common Shares in the course of carrying on a business, or the Shareholder has acquired them in a transaction or transactions considered to be an adventure in the nature of trade. Certain Shareholders whose Common Shares might not otherwise qualify as capital property may be eligible to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have the Common Shares and every other "CANADIAN SECURITY" (as defined in the Tax Act) owned by such holder deemed to be capital property in the taxation year of the election and all subsequent taxation years. CAPITAL GAINS AND CAPITAL LOSSES A Shareholder who disposes of Common Shares to the Offeror under the Offer will realize a capital gain (or capital loss) equal to the amount by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the Common Shares to the Shareholder. A Shareholder who disposes of Common Shares pursuant to the Offer will be required to include one-half of the amount of any capital gain (a "TAXABLE CAPITAL GAIN") in income, and one-half of the amount of any capital loss (an "ALLOWABLE CAPITAL LOSS") will be required to be deducted against taxable capital gains realized in the year of disposition. Allowable capital losses not deducted in the taxation year in which they are realized may ordinarily be carried back and deducted in any of the three preceding years or carried forward and deducted in any following year against taxable capital gains realized in such years, to the extent and under the circumstances specified in the Tax Act. Capital gains realized by an individual or trust, other than certain specified trusts, may give rise to alternative minimum tax under the Tax Act. In general, a capital loss otherwise arising upon the disposition of a Common Share by a corporation may be reduced by dividends previously received or deemed to have been received thereon to the extent and under the circumstances prescribed in the Tax Act. Similar rules may apply where the corporation is a member of a partnership or a beneficiary of a trust that owns Common Shares or where a partnership or trust of which a corporation is a member or a beneficiary is a member of a partnership or a beneficiary of a trust that owns Common Shares. Shareholders to whom these rules may be relevant should consult their own tax advisors. A Shareholder that is, throughout the relevant taxation year, a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate investment income" for the year, which is defined to include an amount in respect of taxable capital gains. 40 COMPULSORY ACQUISITION As described under Section 15 of the Circular "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER", the Offeror may, in certain circumstances, acquire Common Shares pursuant to Section 188 of the OBCA. A Shareholder who disposes of his or her Common Shares in such circumstances generally will realize a capital gain (or a capital loss) calculated in the manner and subject to the treatment, described above under "CAPITAL GAINS AND CAPITAL LOSSES", but Shareholders whose Common Shares may be so acquired should consult their own tax advisors in this regard. SUBSEQUENT ACQUISITION TRANSACTION If a Compulsory Acquisition provisions are not utilized, the Offeror may propose other means of acquiring the remaining issued and outstanding Common Shares as described under Section 15 of the Circular "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER". Such means include a capital reorganization, arrangement, reclassification, consolidation or an amalgamation. The tax treatment of a Subsequent Acquisition Transaction to a Shareholder will depend upon the exact manner in which the Subsequent Acquisition Transaction is carried out. Shareholders should consult their own tax advisors for advice with respect to the income tax consequences to them of having their Common Shares acquired pursuant to a Subsequent Acquisition Transaction. A Subsequent Acquisition Transaction could be implemented by means of an amalgamation of Emco with the Offeror or one of its affiliates pursuant to which Shareholders who have not tendered their Common Shares under the Offer would have their Common Shares exchanged on the amalgamation for redeemable preference shares ("REDEEMABLE SHARES") which would then be immediately redeemed for cash. Such a Shareholder would not realize a capital gain or capital loss as a result of such exchange, and the cost of the Redeemable Shares received would be equal to the aggregate of the adjusted cost base of the Common Shares to the Shareholder immediately before the amalgamation. Upon the redemption of Redeemable Shares, the holder thereof would be deemed to have received a dividend (subject to the potential application of subsection 55(2) of the Tax Act to holders of such shares that are corporations as discussed below) equal to the amount by which the redemption price of the Redeemable Shares (equal to the amount of any cash received) exceeds their paid-up capital for the purposes of the Tax Act. Emco advises that the paid-up capital per Common Share as at the date hereof is Cdn$4.58. The difference between the redemption price and the amount of the deemed dividend would be treated as proceeds of disposition of such shares for the purposes of computing any capital gain or capital loss arising on the disposition of such shares. A capital loss arising upon the redemption of a Redeemable Share may be reduced by dividends previously received or deemed to have been received thereon or on Common Shares for which they were exchanged as described above under "CAPITAL GAINS AND CAPITAL LOSSES". Subsection 55(2) of the Tax Act provides that where a corporate Shareholder is deemed to receive a dividend under the circumstances described above, all or part of the deemed dividend may be treated as proceeds of disposition of the Redeemable Shares for the purpose of computing the Shareholder's capital gain on the disposition of such shares. Accordingly, corporate Shareholders should consult their tax advisors for specific advice with respect to the potential application of this provision. Subject to the potential application of this provision, dividends deemed to be received by a corporation as a result of the redemption of the Redeemable Shares will be included in computing its income, but normally will also be deductible in computing its taxable income unless the corporation is a "specified financial institution" (as defined in the Tax Act). Dividends deemed to be received on the Redeemable Shares by a specified financial institution may not be deductible in computing its taxable income if the term preferred share rules in the Tax Act are applicable. Corporations which may be affected by such rules should consult their own tax advisors. A Shareholder that is a "private corporation" or a "subject corporation" (as such terms are defined in the Tax Act) may be liable to pay the 33 1/3% refundable tax under Part IV of the Tax Act on dividends deemed to be received on the Redeemable Shares to the extent that such dividends are deductible in computing the corporation's taxable income. In the case of a Shareholder who is an individual (including a trust), dividends deemed to be received as a result of the redemption of the Redeemable Shares will be included in computing the recipient's income, and will be subject to the gross-up and dividend tax credit rules normally applicable to taxable dividends received from a taxable Canadian corporation. Under the current administrative practice of the CCRA, Shareholders who exercise their statutory right of dissent in respect of an amalgamation should be considered to have disposed of their Common Shares for proceeds of 41 disposition equal to the amount paid by the amalgamated corporation to the dissenting Shareholder therefor, other than interest awarded by the court. However, because of uncertainties under the relevant legislation as to whether such amounts paid to a dissenting Shareholder will be treated entirely as proceeds of disposition, or in part as the payment of a deemed dividend, dissenting Shareholders should consult their own tax advisors in this regard. A Subsequent Acquisition Transaction could also be implemented by means of a capital reorganization of Emco pursuant to which Shareholders who have not tendered their Common Shares under the Offer would have their Common Shares exchanged for special shares ("SPECIAL SHARES") which would then be immediately sold to the Offeror for cash. Such a Shareholder would not realize a capital gain or capital loss as a result of such exchange, and the cost of the Special Shares received would be equal to the aggregate of the adjusted cost base of the Common Shares to the Shareholder immediately before the exchange. Upon the sale of the Special Shares, the Shareholder will realize a capital gain (or a capital loss) calculated in the manner and subject to the treatment described above under "CAPITAL GAINS AND CAPITAL LOSSES", but Shareholders whose Special Shares may be so acquired should consult their own tax advisors in this regard. Shareholders who exercise their statutory right of dissent in respect of a capital reorganization and are paid the fair value of their shares by Emco will be deemed to have received a dividend to the extent that the amount received (less the amount of any interest ordered by the court) exceeds the paid-up capital of the Common Shares for purposes of the Tax Act. The difference between the amount received (less the amount of any interest ordered by the court) and the amount of the deemed dividend would be treated as proceeds of disposition of the Common Shares for the purpose of computing any capital gain or capital loss arising on the disposition of such shares. A capital loss arising in such circumstances may be reduced by dividends previously received or deemed to have been received on Common Shares as described above under "CAPITAL GAINS AND CAPITAL LOSSES". The tax treatment of any dividend deemed to have been received in such circumstances will be the same as the tax treatment of dividends deemed to have been received on the redemption of Redeemable Shares as described above. A Subsequent Acquisition Transaction could also be implemented by means of a share consolidation of Emco pursuant to which Shareholders who have not tendered their Common Shares under the Offer would have their Common Shares exchanged for a fraction of a Common Share in respect of which such Shareholders will receive cash. A Shareholder whose Common Shares are consolidated and who receives a cash payment from Emco will be deemed to have received a taxable dividend (subject to the potential application of subsection 55(2) of the Tax Act to Shareholders that are corporations, as discussed above) equal to the amount by which such payment exceeds the paid-up capital for purposes of the Tax Act of the Common Shares that are exchanged. Emco advises that the paid-up capital per Common Share as of the date hereof is Cdn$4.58. The difference between the cash received and the amount of the deemed dividend will be treated as proceeds of disposition of the Common Shares for the purpose of computing any capital gain or capital loss arising on the disposition of such Shares. A capital loss arising in such circumstances may be reduced by dividends previously received or deemed to have been received on Common Shares as described above under "CAPITAL GAINS AND CAPITAL LOSSES". The tax treatment of any dividend deemed to have been received in such circumstances will be the same as the tax treatment of dividends deemed to have been received on the redemption of Redeemable Shares as described above. Shareholders who exercise their statutory right of dissent in respect of a consolidation and are paid the fair value of their shares by Emco will be deemed to have received a dividend to the extent that the amount received (less the amount of any interest ordered by the Court) exceeds the paid-up capital of the Common Shares for purposes of the Tax Act. The difference between the amount received (less the amount of any interest ordered by the Court) and the amount of the deemed dividend will be treated as proceeds of disposition of the Common Shares for the purpose of computing any capital gain or capital loss arising on the disposition of such Shares. A capital loss arising in such circumstances may be reduced by dividends previously received or deemed to have been received on Common Shares as described above under "CAPITAL GAINS AND CAPITAL LOSSES". The tax treatment of any dividend deemed to have been received in such circumstances will be the same as the tax treatment of dividends deemed to have been received on the redemption of Redeemable Shares, as described above. NON-RESIDENTS OF CANADA The following portion of the summary is generally applicable to a Shareholder who at all relevant times, for the purposes of the Tax Act and any applicable income tax treaty or convention, is not resident, nor deemed to be resident, in Canada, deals at arm's length with Emco and the Offeror, is not affiliated for the purposes of the Tax Act with Emco 42 or the Offeror, holds Common Shares as capital property and does not use or hold, and is not deemed to use or hold, Common Shares in connection with carrying on a business in Canada (a "NON-RESIDENT HOLDER"). Special rules which are not discussed in this summary may apply to a non-resident that is an insurer carrying on business in Canada and elsewhere. This portion of the summary assumes that the Common Shares will be listed on the TSX at the time such shares are disposed of pursuant to the offer. A non-resident holder of Common Shares that are not taxable Canadian property to such holder will not be subject to tax under the Tax Act on any capital gain realized on the disposition of such shares under the Offer. A Common Share will generally not be taxable Canadian property to a non-resident holder unless, at any time during the 60-month period that ends at the time of the disposition, the non-resident holder, persons with whom the non-resident holder did not deal at arm's length, or any combination thereof, owned 25% or more of the shares of any class or series of Emco. The Common Shares may also be taxable Canadian property in certain other circumstances. Even if the Common Shares are taxable Canadian property to a non-resident holder, any capital gain realized upon the disposition or deemed disposition thereof may not be subject to tax under the Tax Act if such gain is exempt from tax pursuant to the provisions of an applicable income tax treaty or convention to which Canada is a party. In the event that the Common Shares constitute taxable Canadian property and the capital gain otherwise to be realized upon a disposition of such shares to the Offeror is not exempt from Canadian tax by virtue of an applicable income tax treaty or convention, then in such circumstances, the tax consequences as described above under "RESIDENTS OF CANADA -- CAPITAL GAINS AND CAPITAL LOSSES" will generally apply. Such non-resident holders whose Common Shares are taxable Canadian property should consult their own tax advisors in this regard. If the Offeror does not acquire all the Common Shares pursuant to the Offer it may propose other means to acquire the remaining Common Shares as described under the heading "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER" under Section 15 of the Circular. The tax treatment of such a transaction to a non-resident holder will depend on the exact manner in which the transaction is carried out and may be substantially the same as or materially different than described above. A non-resident holder may realize a capital gain or a capital loss which would be taxed in the manner described above and/or a deemed dividend. Dividends paid or deemed to be paid to a non-resident holder will be subject to Canadian withholding tax at a rate of 25%. Such rate may be reduced under the provisions of an applicable income tax convention to which Canada is a party. In addition, in the event of a capital reorganization or share consolidation, if the Emco Special Shares or fractions of a Common Share, as the case may be, are not listed on a prescribed stock exchange at the time of disposition, the notification and withholding requirements provided for in section 116 of the Tax Act may apply to non-resident holders. Non-resident holders should consult their own tax advisors for advice with respect to the potential income tax consequences to them of having their Common Shares acquired pursuant to such a transaction. U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of certain U.S. federal income tax consequences of the Offer to U.S. Holders (as defined below) of Common Shares whose Common Shares are tendered and accepted for payment pursuant to the Offer or otherwise pursuant to certain transactions described in Section 15 of the Circular, "ACQUISITION OF COMMON SHARES NOT DEPOSITED UNDER THE OFFER". The discussion is for general information only and does not purport to consider all aspects of U.S. federal income taxation that might be relevant to holders of Common Shares. The discussion is based on current provisions of the Code, existing, proposed and temporary U.S. Treasury Regulations promulgated thereunder, and administrative and judicial interpretations thereof, all of which are subject to change, possibly with retroactive effect. This summary applies only to U.S. Holders of Common Shares who hold their Common Shares as capital assets within the meaning of section 1221 of the Code. This discussion does not apply to Common Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to certain types of U.S. Holders who may be subject to special rules (including, without limitation, entities that are treated as partnerships for U.S. federal income tax purposes; insurance companies; regulated investment companies; common trust funds; tax-exempt organizations; banks or other financial institutions; broker-dealers; U.S. Holders who have acquired the Common Shares as part of a straddle, hedge, conversion transaction or other integrated investment; or persons who own or owned, directly or indirectly, 10% or more of the total combined voting power of all classes of the stock of Emco entitled to vote). This summary does not consider the effect of any foreign, state or local tax laws nor does it discuss the U.S. federal income tax consequences to any holder of Common Shares who, for U.S. federal income tax purposes, is 43 not a "U.S. HOLDER" (as defined below). As used in this discussion, the term "U.S. HOLDER" means a beneficial owner of Common Shares that for U.S. federal income tax purposes is: - an individual who is a citizen or resident of the United States; - a corporation, or other entity treated as a corporation, created or organized under the laws of the United States or any State or any political subdivision thereof; - an estate the income of which is subject to U.S. federal income taxation regardless of its source; or - a trust, if a U.S. court is able to exercise primary supervision over the trust's administration and one or more U.S. persons have the authority to control all of the trust's substantial decisions. SALE OF COMMON SHARES FOR CASH PURSUANT TO THE OFFER The sale of Common Shares for cash pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes. Subject to the passive foreign investment company rules below, a U.S. Holder who sells Common Shares pursuant to the Offer will generally recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received (in the U.S. dollar equivalents determined at the spot rate on the date of the consummation of the Offer) and the holder's adjusted tax basis in the Common Shares sold pursuant to the Offer (as determined in U.S. dollars). Gain or loss will be determined separately for each block of Common Shares (i.e., Common Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer. Such gain or loss will be long-term capital gain or loss provided that a holder's holding period for such Common Shares is more than one year at the time of the consummation of the Offer. Long-term capital gains recognized by an individual upon a disposition of Common Shares are eligible for reduced rates of taxation. Certain limitations apply to the use of a holder's capital losses. In the event that the sale of a U.S. Holder's Common Shares for cash pursuant to the Offer gives rise to a gain for Canadian federal income tax purposes (see "CANADIAN FEDERAL INCOME TAX CONSIDERATIONS -- NON-RESIDENTS OF CANADA" above), such gain, if taxable, may qualify for exemption from Canadian tax under the income tax treaty in effect between the United States and Canada if such U.S. Holder is entitled to the benefits of such treaty. In the event that the income tax treaty in effect between the United States and Canada does not exempt the gain from Canadian federal income tax, the U.S. Holder generally may be entitled to claim a foreign tax credit with respect to such tax for U.S. federal income tax purposes. Such U.S. Holders should consult their own tax advisors regarding their eligibility for benefits under the income tax treaty in effect between the United States and Canada and the possible availability of a foreign tax credit. PASSIVE FOREIGN INVESTMENT COMPANY The above summary assumes that Emco is not a passive foreign investment company ("PFIC") with respect to any U.S. Holder of Common Shares. Generally, Emco would be a PFIC with respect to a U.S. Holder if, during any year during such holder's holding period, 75% or more of Emco's annual gross income consisted of certain "passive" income or 50% or more of the average quarterly value of Emco's assets in any such year consisted of assets that produced, or were held for the production of, passive income. Based on information provided in Emco's Annual Report, we do not believe that Emco is a PFIC for the current year, and we assume that Emco was not a PFIC with respect to any previous year. If Emco were a PFIC with respect to any U.S. Holder, such holder generally would be required to pay an interest charge together with tax calculated at the maximum ordinary income tax rate with respect to all or a portion of its gain from the sale of Common Shares for cash pursuant to the Offer. This special PFIC rule generally would not apply to the sale of Common Shares for cash pursuant to the Offer, however, if, in the first year of such holder's ownership of Common Shares that Emco was a PFIC ("Initial Year"), the holder either (x) made an election to treat Emco as a qualified electing fund to include in income on a current basis such holder's pro rata share of the income or gain of Emco ("QEF Election") or (y) made an election ("Mark-to-Market Election") to recognize on a current basis increases or decreases in the value of the holder's Common Shares. If the U.S. Holder did not make a QEF Election in the Initial Year but did make a QEF Election in a subsequent year, the special PFIC rule also generally would not apply if such holder had made an additional election ("PURGING ELECTION") to include certain amounts in income with respect to its Common Shares in the year the Purging Election was made. 44 Any U.S. Holder who believes that Emco is or may be a PFIC with respect such holder is urged to consult its tax advisors. COMPULSORY ACQUISITION The Offeror, in certain circumstances, may acquire Common Shares from a U.S. Holder in a Compulsory Acquisition (see "ACQUISITION OF EMCO SHARES NOT DEPOSITED UNDER THE OFFER" above). A U.S. Holder that sells his or her Emco Shares to the Offeror in the Compulsory Acquisition generally will realize gain or loss calculated in the manner and subject to the treatment described above in "SALE OF EMCO SHARES FOR CASH PURSUANT TO THE OFFER." U.S. Holders should consult their own tax advisors to determine the specific tax consequences of the Compulsory Acquisition to them, including the application and effect of the alternative minimum tax and any state, local, and foreign tax laws. SUBSEQUENT ACQUISITION TRANSACTION If the Compulsory Acquisition is not available, the Offeror may acquire Common shares from a U.S. Holder in a Subsequent Acquisition Transaction (see "ACQUISITION OF EMCO SHARES NOT DEPOSITED UNDER THE OFFER" above). A Subsequent Acquisition may be implemented by means of an amalgamation, a merger, an arrangement, a capital reorganization, or a consolidation. The U.S. federal income tax treatment to a U.S. Holder will depend on the manner in which the Subsequent Acquisition Transaction is effected. Generally, a U.S. Holder's sale of its Common Shares pursuant to a Subsequent Acquisition Transaction will be a taxable transaction for U.S. federal income tax purposes. U.S. Holders should consult their own tax advisors to determine the specific tax consequences of the Subsequent Acquisition Transaction to them, including the application of the alternative minimum tax and any state, local, and foreign tax laws. A U.S. Holder that recognizes its right of dissent in respect of certain types of Subsequent Acquisition Transactions and receives cash in consideration for the Common Shares generally will recognize, subject to the discussion below, capital gain or loss in an aggregate amount equal to the difference between the amount of cash received (in the U.S. dollar equivalents determined at the spot rate on the date that the cash is received) and the U.S. Holder's tax basis in the dissenting Common Shares (as determined in U.S. dollars). However, there is no authority directly on point, and it is possible that a U.S. Holder will be required to recognize gain or loss at the effective time of the Subsequent Acquisition Transaction, and in advance of the receipt of any cash payment, in an amount generally equal to the trading price of Common Shares at the effective time of the Subsequent Acquisition Transaction (in U.S. dollar equivalents determined at the spot rate on the effective date of the Subsequent Acquisition Transaction). In this event, capital gain or loss also would be recognized by the U.S. Holder at the time the appraised fair value is received, to the extent that such payment exceeds or is less than the amount realized at the effective time of the Subsequent Acquisition Transaction, and a portion of such payment may be characterized as interest income. INFORMATION REPORTING AND BACKUP WITHHOLDING A U.S. Holder whose Common Shares are sold pursuant to the Offer may be subject to information reporting. In addition, a U.S. Holder of Common Shares may be subject to backup withholding on the proceeds from the sale of Common Shares pursuant to the Offer unless such holder is an exempt recipient (such as a corporation) or provides to the paying agent such holder's correct taxpayer identification number and certifies that such holder is exempt from or otherwise is not subject to backup withholding. Backup withholding is not an additional tax. The amount of any backup withholding will be refunded (or allowed as a credit against the U.S. federal income tax liability of the U.S. Holder) provided that the required information is furnished to the Internal Revenue Service. AS INDIVIDUAL CIRCUMSTANCES MAY DIFFER, U.S. HOLDERS OF COMMON SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED ABOVE AND THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS AND OF CHANGES IN SUCH LAWS. 17. OTHER MATTERS RELATING TO THE OFFER DEPOSITARY The Offeror has engaged the Depositary for the receipt of Share Certificates and related Letters of Transmittal. In addition, the Depositary will receive Notices of Guaranteed Delivery deposited under the Offer at its office in Toronto, 45 Ontario, Canada. The duties of the Depositary also include assisting in making payment to Shareholders for Common Shares purchased by the Offeror pursuant to the Offer. The Depositary will receive reasonable and customary compensation from the Offeror for its services in connection with the Offer, will be reimbursed for certain out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith. DEALER MANAGERS AND SOLICITING DEALER GROUP The Offeror has engaged the services of Scotia Capital Inc. to act as Canadian Dealer Manager and to assist the Offeror in connection with the Offer and to solicit acceptances of the Offer. The Canadian Dealer Manager will be paid a fee for services rendered by it in its capacity as dealer manager and it will be reimbursed by the Offeror for its reasonable out-of-pocket expenses, including fees of legal counsel. The Offeror has retained the services of Scotia Capital (USA) Inc. to act as U.S. Dealer Manager and to solicit institutional acceptances of the Offer in the United States. The Dealer Managers have also undertaken to form a Soliciting Dealer Group comprising members of the Investment Dealers Association of Canada and members of the TSX to solicit acceptances of the Offer. Each member of the Soliciting Dealer Group, including the Dealer Managers, is referred to herein as a "Soliciting Dealer". The Offeror has agreed to pay the Dealer Managers a work fee of Cdn$100,000, and a success fee of Cdn$100,000 if more than 80% of the Common Shares are tendered to the Offer and purchased by the Offeror. In addition, the Offeror has agreed to pay each Soliciting Dealer whose name appears in the appropriate space of a properly completed and executed Letter of Transmittal, a fee of Cdn$0.05 for each Common Share deposited and taken up by the Offeror under the Offer. A minimum fee of Cdn$85 and a maximum fee of Cdn$1,500 will be paid in respect of any one beneficial owner, provided that the minimum fee of Cdn$85 will only be paid in respect of Common Shares deposited by a single beneficial holder where the number of Common Shares so deposited is greater than or equal to 500 shares. No solicitation fee will be payable with respect to Common Shares beneficially owned and tendered by the Selling Shareholder or by Emco, Blackfriars, their affiliates and associates and each of their respective directors and officers. The Offeror may require the Soliciting Dealers to furnish evidence of beneficial ownership satisfactory to the Offeror at the time of deposit. The Dealer Managers and the Soliciting Dealer Group will be indemnified against certain liabilities, including liabilities under securities laws, in connection with the Offer. No fee or commission will be payable by any Shareholder who transmits such Shareholder's Common Shares directly to the Depositary or who makes use of the facilities of a Soliciting Dealer to accept the Offer. Neither the Offeror nor Blackfriars will pay any fees or commissions to any broker or dealer or to any other person (other than to the Soliciting Dealers (including the Dealer Managers), the Information Agent and the Depositary) in connection with the solicitation of tenders of Common Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Offeror for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. INFORMATION AGENT The Offeror has retained Mackenzie Partners, Inc. to be the Information Agent in connection with the Offer. The Information Agent may contact holders of Common Shares by mail, telephone, telecopy, telegraph and personal interview and may request banks, brokers, dealers and other nominees to forward materials relating to the Offer to beneficial owners of Common Shares. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services in connection with the Offer, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under federal securities laws. The Offeror has agreed to pay the Information Agent a customary fee plus reasonable out-of-pocket expenses. 18. OFFEREES' STATUTORY RIGHTS Securities legislation in certain of the provinces and territories of Canada provides Shareholders with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or a notice that is required to be delivered to Shareholders. However, such rights must be exercised within prescribed time limits. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer. 46 SCHEDULE I INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR AND BLACKFRIARS AND THE TRUSTS AND TRUSTEES CONTROLLING SUCH CORPORATIONS I. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years for each member of the Offeror's Board of Directors and each executive officer of the Offeror. Unless indicated otherwise, each person is a citizen of the United States of America.
PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL POSITIONS NAME TITLE HELD DURING THE PAST FIVE YEARS - ---- ------------------------ --------------------------------------------------------- M. Yontef (citizen of Canada)........ Director and President Partner, law firm of Stikeman Elliot LLP of Offeror 5300 Commerce Court West, 199 Bay Street, Toronto, Canada M5L 1B9 K. Jackson (citizen of Canada)....... Director and Secretary Partner, law firm of Stikeman Elliot LLP of Offeror 5300 Commerce Court West, 199 Bay Street, Toronto, Canada M5L 1B9 C. Pappo............................. Director and Chief Vice President, Finance and Administration Financial Officer of of Hajoca Corporation, an affiliate of Blackfriars. Offeror 127 Coulter Avenue, Ardmore, PA 19003
II. DIRECTORS AND EXECUTIVE OFFICERS OF BLACKFRIARS The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years for each member of the Blackfriars' Board of Directors and each executive officer of Blackfriars. Unless indicated otherwise, each person is a citizen of the United States of America.
PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL POSITIONS NAME TITLE HELD DURING THE PAST FIVE YEARS - ---- ------------------------ --------------------------------------------------------- T. Lullo............................. Treasurer and Assistant Vice President and Chief Financial Secretary of Blackfriars Officer, Consolidated Electrical Distributors, Inc. 31356 Via Colinas, Westlake Village, CA 91362 K. Colburn........................... Director and President Director of Hajoca Corporation of Blackfriars 127 Coulter Avenue, Ardmore, PA 19003. Private Investor C. C. Hogel.......................... Director of Blackfriars Director of Hajoca Corporation 127 Coulter Avenue, Ardmore, PA 19003. Private Investor
47
PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL POSITIONS NAME TITLE HELD DURING THE PAST FIVE YEARS - ---- ------------------------ --------------------------------------------------------- D. Bradford.......................... Secretary of Blackfriars Vice President and General Counsel of Consolidated Electrical Distributors, Inc. (since 12/4/01). 31356 Via Colinas, Westlake Village, CA 91362. Partner with law firm of Manatt, Phelps & Phillips (November 1998 to May 2000). Nashville, Tennessee (Office closed now). R. Colburn........................... Director, Vice President Director of Hajoca Corporation. and Assistant Secretary 127 Coulter Avenue, of Blackfriars Ardmore, PA 19003. Private Investor.
III. TRUSTEES OF TRUSTS The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years for each of the trustees of the Declaration of Trust of K. Colburn dated February 16, 1978, the Declaration of Trust of R. Colburn dated July 13, 1978 and the C. C. Hogel Trust dated May 31, 1978 all formed under the laws of the State of Illinois (collectively, the "TRUSTS"), which collectively own approximately 97% of the stock of Blackfriars. Unless indicated otherwise, each person is a citizen of the United States of America. The principal business of the Trusts is to hold the personal assets of the respective grantors. The principal business address for the Trusts is 555 Skokie Blvd, Suite 555, Northbrook, Illinois 60062 and the telephone number for the Trusts is (847) 313 6458.
PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL POSITIONS NAME TITLE HELD DURING THE PAST FIVE YEARS - ---- ------------------------ --------------------------------------------------------- K. Colburn........................... Trustee under the Director of Hajoca Corporation. Declaration of Trust of 127 Coulter Avenue, K. Colburn dated Ardmore, PA 19003. February 16, 1978. Private Investor. Trustee under the C. C. Hogel Trust dated May 31, 1978. R. Colburn........................... Trustee under the Director of Hajoca Corporation. Declaration of Trust of 127 Coulter Avenue, R. Colburn dated July Ardmore, PA 19003. 13, 1978. Trustee under Private Investor. the C. C. Hogel Trust dated May 31, 1978.
48 APPROVAL AND CERTIFICATE OF THE OFFEROR The contents of the Offer and Circular have been approved and the sending, communication or delivery thereof to the Shareholders has been authorized, by the board of directors of the Offeror. The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it is made. In addition, the foregoing does not contain any misrepresentation likely to affect the value or market price of the Common Shares subject to the Offer. DATED: February 28, 2003 (Signed) MARVIN YONTEF (Signed) CHRISTOPHER PAPPO President Chief Financial Officer On behalf of the Board of Directors (Signed) CHRISTOPHER PAPPO (Signed) KAREN JACKSON Director Director
49 THE DEPOSITARY FOR THE OFFER IS: COMPUTERSHARE TRUST COMPANY OF CANADA BY MAIL P.O. Box 7021 31 Adelaide St. East Toronto, Ontario M5C 3H2 Attention: Corporate Actions BY HAND OR BY COURIER 100 University Avenue 9th Floor Toronto, Ontario M5J 2Y1 Attention: Corporate Actions Toll Free: 1-800-564-6253 E-mail: caregistryinfo@computershare.com THE DEALER MANAGERS FOR THE OFFER ARE: IN CANADA: IN THE UNITED STATES: SCOTIA CAPITAL INC. SCOTIA CAPITAL (USA) INC. Scotia Plaza, 64th Floor 1 Liberty Plaza 40 King Street West New York, NY 10006 Box 4085, Station "A" Toronto, Ontario M5W 2X6 Telephone: (416) 945-4599
THE INFORMATION AGENT FOR THE OFFER IS: MACKENZIE PARTNERS, INC. 105 Madison Avenue New York, New York 10016 (212) 929-5500 or CALL TOLL-FREE (800) 322-2885 Email: proxy@mackenziepartners.com ANY QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED BY HOLDERS OF COMMON SHARES TO THE DEALER MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY AT THEIR RESPECTIVE TELEPHONE NUMBERS AND LOCATIONS SET OUT ABOVE. ADDITIONAL COPIES OF THIS OFFER, THE CIRCULAR, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND RELATED MATERIALS MAY BE OBTAINED FROM THE DEALER MANAGERS OR THE INFORMATION AGENT AT THEIR RESPECTIVE LOCATIONS SET OUT ABOVE AND WILL BE FURNISHED PROMPTLY AT THE OFFEROR'S EXPENSE. SHAREHOLDERS MAY ALSO CONTACT THEIR INVESTMENT DEALER, STOCK BROKER, BANK MANAGER, ACCOUNTANT, LAWYER OR PROFESSIONAL ADVISOR FOR ASSISTANCE CONCERNING THE OFFER. EX-99.A.2 4 t09071exv99waw2.txt LETTER OF TRANSMITTAL EXHIBIT (a)(2) The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. The Dealer Manager, the Information Agent, the Depositary (see the back page of this document for addresses and telephone numbers) or your broker or other financial advisor can assist you in completing this Letter of Transmittal. 2022841 ONTARIO INC. LETTER OF TRANSMITTAL TO TENDER COMMON SHARES OF EMCO LIMITED TO BE DEPOSITED PURSUANT TO THE OFFER DATED FEBRUARY 28, 2003 THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 PM (EST), ON MONDAY, APRIL 7, 2003, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN. The Depositary for the Offer is: Computershare Trust Company of Canada By Mail: By Hand, Overnight Courier, Certified or Express Mail Delivery: Computershare Trust Company of Canada Computershare Trust Company of Canada P.O. Box 7021 100 University Avenue 31 Adelaide St. East 9th Floor Toronto, Ontario M5C 3H2 Toronto, Ontario M5J 2Y1 Attention: Corporate Actions Attention: Corporate Actions
E-mail: caregistryinfo@computershare.com Call Toll Free: 1-800-564-6253 Facsimile Transmission for Eligible Institutions: (416) 981-9663 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE FORM W-9 OR W-8BEN, AS APPLICABLE, SET FORTH BELOW. PLEASE CAREFULLY READ THE INSTRUCTIONS SET OUT BELOW BEFORE COMPLETING THIS LETTER OF TRANSMITTAL. DESCRIPTION OF SHARES TENDERED - --------------------------------------------------------------------------------------------------------------------------- Number of Common Shares Tendered (see item 6 of the Number of Common Shares instructions Name(s) in which Registered Certificate Number(s) (1) Represented by Certificate (1) for partial tenders) (2) - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Total - --------------------------------------------------------------------------------------------------------------------------- (1) Need not be completed by shareholders delivering Common Shares by book-entry transfer (book-entry shareholders). (2) Unless otherwise indicated, all Common Shares represented by certificates delivered to the Depositary will be deemed to have been tendered. IF CERTIFICATES HAVE BEEN LOST OR MUTILATED, SEE INSTRUCTION 10. - ---------------------------------------------------------------------------------------------------------------------------
(If this space is insufficient, please attach a list in the above form) (see items 1 and 9 of the instructions) NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY TO: 2022841 ONTARIO INC. -and- TO: COMPUTERSHARE TRUST COMPANY OF CANADA (the "DEPOSITARY") at its offices set out herein. This Letter of Transmittal, properly completed and duly executed, or a manually executed facsimile hereof, together with all other required documents, must accompany certificates ("SHARE CERTIFICATES") representing common shares (the "COMMON SHARES") of Emco Limited ("EMCO") deposited pursuant to the Offer, dated February 28, 2003 (the "OFFER DOCUMENT"), made by 2022841 Ontario Inc. (the "OFFEROR"), a wholly-owned subsidiary of Blackfriars Corp., to purchase all of the outstanding Common Shares at a purchase price of CDN $16.60 per Common Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth herein and in the Offer to Purchase (as defined below). The Offer Document and the take-over bid Circular dated February 28, 2003 (the "CIRCULAR"), accompanying the Offer Document, are referred to herein as the "OFFER TO PURCHASE", and the Offer to Purchase, together with this Letter of Transmittal, as each may be amended or supplemented, together constitute the "OFFER". Capitalized terms used, but not defined, in this Letter of Transmittal and which are defined in the Offer to Purchase shall have the same meanings herein as given to them in the Offer to Purchase. The terms and conditions of the Offer to Purchase are incorporated by reference in this Letter of Transmittal. The Offer will be open for acceptance until 8:00 p.m. (EST) on Monday, April 7, 2003 unless the Offer Period (as defined in the Offer) is extended or the Offer is withdrawn. This Letter of Transmittal is to be used if Shares Certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Common Shares is to be made by book-entry transfer to an account maintained by the Depositary at the Book-Entry Transfer Facility (pursuant to the procedures set forth in Section 3 of the Offer Document). Holders of Common Shares who wish to tender such Common Shares but whose Share Certificates are not immediately available, who cannot complete the procedure for book-entry transfer on a timely basis, or who cannot deliver all other required documents to the Depositary prior to the Expiry Time (as defined in the Offer Document), must tender their Common Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer Document. See Instruction 2 herein. TENDER OF SHARES [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution: ----------------------------------------------------------------------------- Account Number: ----------------------------------------------------------------------------- Transaction Code Number: ----------------------------------------------------------------------------- The undersigned: (a) acknowledges receipt of the Offer Document and Circular; (b) tenders the above-described Common Shares (the "DEPOSITED SHARES") pursuant to the Offer, upon the terms and subject to the conditions set forth in the Offer to Purchase and in this Letter of Transmittal, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for and in respect of the Deposited Shares and (unless tender is to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer Document) delivers to you the enclosed Share Certificate(s) representing the Deposited Shares and, on and subject to the terms and conditions of the Offer, deposits and sells, assigns and transfers to the Offeror all right, title and interest in and to the Deposited Shares, including any and all dividends, distributions, payments, securities, rights, warrants or other interests accrued, declared, issued, transferred, made or distributed on or in respect of the Deposited Shares on or after February 20, 2003 (collectively, the "OTHER PROPERTY"). If, notwithstanding such assignment, any distributions or Other Property are received by or made payable to or to the order of the undersigned, then: (i) in the case of any such cash dividend, distribution or payment, the amount of the dividends, distributions or payments shall be received and held by the undersigned depositing Shareholder for the account of the Offeror until the Offeror pays for such Common Shares, and to the extent that such dividends, distributions or payments do not exceed the purchase price per Common Share payable in cash by the Offeror pursuant to the Offer, the purchase price per Common Share payable by the Offeror pursuant to the Offer in cash will be reduced by the amount of any such dividend, distribution or payment; and (ii) in the case of any such cash dividend, distribution or payment that exceeds the purchase price per Common Share payable in cash by the Offeror pursuant to the Offer, or in the case of any non-cash dividend, distribution, payment, right or interest, the whole of any such dividend, distribution, payment, right or other interest, will be received and held by the undersigned depositing Shareholder for the account of the Offeror and shall be required to be promptly remitted and transferred by the depositing Shareholder to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer. Pending such remittance, the Offeror will be entitled to all rights and privileges as the owner of any such dividend, distribution, payment, right or other interest and may withhold the entire purchase price payable by the Offeror pursuant to the Offer or deduct from the consideration payable by the Offeror pursuant to the Offer the amount or value thereof, as determined by the Offeror in its sole discretion; (c) acknowledges and agrees that the execution of this Letter of Transmittal irrevocably appoints the Offeror, and any other person designated by the Offeror in writing, as the true and lawful agent, attorney and attorney-in-fact of the Shareholder delivering this Letter of Transmittal with respect to the Deposited Shares and Other Property; (d) acknowledges and agrees that this power of attorney is granted irrevocably upon execution of this Letter of Transmittal and shall in all cases be effective on and after the time that the Offeror accepts for payment, takes up and pays for the Deposited Shares (the "EFFECTIVE TIME"), with full power of substitution, in the name of and on behalf of such holder (such power of attorney being deemed to be an irrevocable power coupled with an interest) (i) to transfer ownership of the Common Shares on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidence of transfer and authenticity, to, or upon the order of, the Offeror, (ii) to register or record the transfer or cancellation of Deposited Shares and Other Property on the appropriate registers, (iii) to vote, execute and deliver any instruments of proxy, authorizations or consents in form and on terms satisfactory to the Offeror in respect of any Deposited Shares and Other Property, revoke any such instrument, authorization or consent given prior to or after the Effective Time, and/or designate in any such instruments of proxy any person(s) as the proxy or the proxy nominee(s) of the Shareholder in respect of such Deposited Shares and Other Property for all purposes, (iv) to execute, endorse and negotiate any cheques or other instruments respecting any distribution payable to the Shareholder in respect of such Deposited Shares and Other Property, and (v) to exercise any other rights of the undersigned with respect to such Deposited Shares and Other Property; (e) agrees upon the execution of this Letter of Transmittal, effective from and after the Effective Time (i) not to vote any of the Deposited Shares or Other Property at any meeting of holders of those securities, (ii) not to exercise any other rights or privileges attached to the Deposited Shares or Other Property, and (iii) to deliver to the Offeror any and all instruments of proxy, authorizations or consents received in respect of the Deposited Shares or Other Property; (f) acknowledges that upon such appointment, all prior proxies given by the holder of such Deposited Shares or Other Property with respect thereto shall be revoked and no subsequent proxies may be given by such holder with respect thereto; (g) agrees to execute, upon request, any additional documents, transfers and other assurances as may be necessary or desirable to complete the sale, assignment and transfer of the Deposited Shares and Other Property to the Offeror and acknowledges that all authority herein conferred or agreed to be conferred shall, to the extent permitted by law, survive the death or incapacity, bankruptcy or insolvency of the holder of such Deposited Shares or Other Property and all obligations of the holder herein or therein shall be binding upon the heirs, personal representatives, successors and assigns of the holder, as the case may be; (h) agrees that all questions as to validity, form, eligibility (including timely receipt) and acceptance of any Common Shares deposited pursuant to the Offer and of any notice of withdrawal shall be determined by the Offeror in its sole discretion and that such determination shall be final and binding and acknowledges that there is no duty or obligation upon the Offeror, the Depositary or any other person to give notice of any defect or irregularity in any deposit or notice of withdrawal and no liability will be incurred by any of them for failure to give any such notice; (i) represents and warrants that (i) the undersigned has full power and authority to deposit, sell, assign and transfer the Deposited Shares being deposited (and any Other Property), (ii) the undersigned or the person on whose behalf the Deposited Shares (and Other Property) are being deposited owns (including, without limitation, within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Deposited Shares which are being deposited (and any Other Property) free and clear of all liens, restrictions, charges, encumbrances, claims, equities and rights of others, (iii) the deposit of such Deposited Shares complies with applicable securities laws (including with Rule 14e-4 under the Exchange Act) and (iv) when such Deposited Shares are taken up and paid for by the Offeror, the Offeror will acquire good, marketable and unencumbered title thereto (and to any Other Property) free and clear of all liens, restrictions, charges, encumbrances, claims, equities, and rights of others. The acceptance of the Offer pursuant to the procedures set forth above shall constitute an agreement between the depositing Shareholder and the Offeror in accordance with the terms and conditions of the Offer; and (j) directs the Offeror and the Depositary, upon the Offeror accepting for purchase and taking up the Deposited Shares, to (i) issue or cause to be issued a cheque or cheques in the full amount to which the undersigned is entitled in respect of the Deposited Shares pursuant to the Offer, in the name indicated below, and to send such cheque or cheques as the case may be to the address, or hold the same for pickup, as indicated below and (ii) return any certificates for Deposited Shares not purchased to the address indicated below (and if no name, address or delivery instructions are indicated to the undersigned at the address of the undersigned as it appears on the applicable securities register of Emco). By reason of the use of the undersigned of an English language form of Letter of Transmittal, the undersigned, the Offeror, and the Depositary shall be deemed to have required that any contract evidenced by the Offer as accepted through this Letter of Transmittal, as well as all documents related thereto, be drawn exclusively in the English language. En raison de l'usage d'une lettre d'envoi en langue anglaise par le soussignee, le soussignee et les destinataires sont presumees avoir requis que tout contrat attestee par l'offre et son acceptation par cette lettre d'envoi, de meme que tous les documents qui s'y rapportent, soient redigees exclusivement en langue anglaise. Signature guaranteed by: (if required under item 4 of the instructions): ------------------------------------------------------ Authorized Signature of Guarantor ------------------------------------------------------ Name of Guarantor (please print or type) ------------------------------------------------------ Address of Guarantor (please print or type) ------------------------------------------------------ Telephone Number of Guarantor (please print or type) DATED: , 2003. ------------------------------------------------------ Signature of Shareholder or Authorized Representative (see items 3 and 5 of the instructions) ------------------------------------------------------ Telephone Number of Shareholder (please print or type) ------------------------------------------------------ Facsimile Number of Shareholder (please print or type) ------------------------------------------------------ Social Insurance Number (or Taxpayer Identification Number or Social Security Number of U.S. residents) (please print or type) ------------------------------------------------------ Name of Shareholder (please print or type) ------------------------------------------------------ Name of Authorized Representative, if applicable (please print or type) - -------------------------------------------------------- -------------------------------------------------------- BLOCK A BLOCK B (see items 3 and 4 of the instructions) (see item 4 of the instructions) ISSUE CHEQUE(S) IN THE NAME OF: SEND CHEQUE(S) (UNLESS BOX C IS CHECKED) TO: (please print or type) (please print or type) [ ] Same address as Block A or to: - -------------------------------------------------------- -------------------------------------------------------- (Name) (Name) - -------------------------------------------------------- -------------------------------------------------------- (Street Address and Number) - -------------------------------------------------------- -------------------------------------------------------- (City and Province or State) (Street Address and Number) - -------------------------------------------------------- -------------------------------------------------------- (Country and Postal or Zip Code) - -------------------------------------------------------- -------------------------------------------------------- (Telephone -- Business Hours) (City and Province or State) - -------------------------------------------------------- -------------------------------------------------------- (Social Insurance, Taxpayer Identification, (Country and Postal or Zip Code) or Social Security No.) -------------------------------------------------------- - --------------------------------------------------------
- -------------------------------------------------------------------------------- BLOCK C [ ] HOLD CHEQUE(S) FOR PICK-UP AGAINST COUNTER RECEIPT AT THE TORONTO OFFICE OF THE DEPOSITARY. - -------------------------------------------------------------------------------- BLOCK D DEPOSITS PURSUANT TO NOTICE OF GUARANTEED DELIVERY (see item 2 of the instructions) [ ] CHECK HERE IF COMMON SHARES ARE BEING DEPOSITED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: (please print or type) Name(s) of Registered Holder(s): - ------------------------------------------------------------------------------- Window Ticket Number (if any): - ------------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: Name of Institution which Guaranteed Delivery: - ---------------------------------------------------------------- INVESTMENT DEALER OR BROKER SOLICITING ACCEPTANCE OF THE OFFER: (see item 7 of the instructions) (please print or type) - ----------------------------------------------------- ----------------------------------------------------- (Firm) (Telephone Number) (Fax Number) - ----------------------------------------------------- ----------------------------------------------------- (Registered Representative) (Address)
[ ] CHECK HERE IF LIST OF BENEFICIAL HOLDERS IS ATTACHED. [ ] CHECK HERE IF DISKETTE TO FOLLOW.
- ------------------------------------------------------------------------------------------------------------- BLOCK E PAYER'S NAME: COMPUTERSHARE TRUST COMPANY OF CANADA - ------------------------------------------------------------------------------------------------------------- PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Name: ------------------------------------ BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number or DATING BELOW. Employer Identification Number: -------------- Awaiting TIN [ ] -------------------------------------------------------------------------------------- SUBSTITUTE PART 2 -- CERTIFICATION -- Under the penalties of perjury, I certify that: FORM W-9 (1) The number shown on this form is my correct Taxpayer Identification Number (or I DEPARTMENT OF THE am waiting for a number to be issued to me), TREASURY INTERNAL (2) I am not subject to backup withholding because (a) I am exempt from backup REVENUE SERVICE withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (including a U.S. resident alien). -------------------------------------------------------------------------------------- Payer's Request for CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been Taxpayer notified by the IRS that you are currently subject to backup withholding because of Identification under-reporting interest or dividends on your tax return. However, if after being Number (TIN) notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do (UNITED STATES not cross out such item (2). SHAREHOLDERS ONLY) -------------------------------------------------------------------------------------- The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. Sign Here SIGNATURE -------------------------------------------------------------------------- DATE--------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 30% of all reportable payments made to me will be withheld. Signature ----------------------- Date --------------------, 2003 BLOCK F - -------------------------------------------------------------------------------- TO BE COMPLETED ONLY BY EMCO SHAREHOLDERS THAT ARE NON-U.S. HOLDERS. NOTE: PLEASE REVIEW CAREFULLY INSTRUCTION 9 BELOW BEFORE COMPLETING THE FOLLOWING INFORMATION. - --------------------------------------------------------------------------------
SUBSTITUTE CERTIFICATE OF FOREIGN STATUS OF BENEFICIAL OWNER FOR UNITED STATES TAX WITHHOLDING FORM W8BEN - --------------------------------------------------------------------------------------
PART I IDENTIFICATION OF BENEFICIAL OWNER (See instructions) - -------------------------------------------------------------------------------- 1 Name of individual or organization that is the beneficial 2 Country of incorporation or organization owner - -------------------------------------------------------------------------------------------------------------------
3 Type of beneficial owner: [ ] Individual [ ] Corporation [ ] Disregarded [ ] Partnership entity [ ] Grantor trust [ ] Complex trust [ ] Estate [ ] Government [ ] International organization [ ] Central bank of issue [ ] Tax-exempt [ ] Private organization foundation 3 [ ] Simple trust
- ------------------------------------------------------------------------------------------------------------------- 4 Permanent residence address (street, apt. or suite no., or rural route). DO NOT USE A P.O. BOX OR IN-CARE-OF ADDRESS. (See Instructions) - ------------------------------------------------------------------------------------------------------------------- City or town, state or province. Include postal code where Country (do not abbreviate) appropriate. - ------------------------------------------------------------------------------------------------------------------- 5 Mailing address (if different from above) - ------------------------------------------------------------------------------------------------------------------- City or town, state or province. Include postal code where Country (do not abbreviate) appropriate. - ------------------------------------------------------------------------------------------------------------------- 6 U.S. taxpayer identification number (optional -- See Instructions) [ ] SSN or ITIN [ ] EIN - -------------------------------------------------------------------------------------------------------------------
PART II CLAIM OF TAX TREATY BENEFITS (IF APPLICABLE) - -------------------------------------------------------------------------------- 7 I certify that (check all that apply): a [ ] The beneficial owner is a resident of ------ within the meaning of the income tax treaty between the United States and that country. b [ ] If required, the U.S. taxpayer identification number is stated on line 6 (see instructions). c [ ] The beneficial owner is not an individual, derives the item (or items) of income for which the treaty benefits are claimed, and, if applicable, meets the requirements of the treaty provision dealing with limitation on benefits (see instructions). d [ ] The beneficial owner is not an individual, is claiming treaty benefits for dividends received from a foreign corporation or interest from a U.S. trade or business of a foreign corporation, and meets qualified resident status (see instructions).
- -------------------------------------------------------------------------------- PART III CERTIFICATION - -------------------------------------------------------------------------------- Under penalties of perjury, I declare that I have examined the information on this form and to the best of my knowledge and belief it is true, correct, and complete. I further certify under penalties of perjury that: -- I am the beneficial owner (or am authorized to sign for the beneficial owner) of all the income to which this form relates, -- The beneficial owner is not a U.S. person, -- The income to which this form relates is not effectively connected with the conduct of a trade or business in the United States or is effectively connected but is not subject to tax under an income tax treaty, and -- For broker transactions or barter exchanges, the beneficial owner is an exempt foreign person. Furthermore, I authorize this form to be provided to any withholding agent that has control, receipt, or custody of the income of which I am the beneficial owner or any withholding agent that can disburse or make payments of the income of which I am the beneficial owner. The Internal Revenue Service does not require your consent to any provisions of this document other than the certifications required to establish your status as a non-U.S. person and, if applicable, obtain a reduced rate of withholding. ---------------------------------------------------------------- --------------- SIGN HERE Signature of beneficial owner (or individual authorized to sign for beneficial owner) Date (MM-DD-YYYY) ------------------- SIGN HERE Capacity in which acting
INSTRUCTIONS AND RULES FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. USE OF LETTER OF TRANSMITTAL (a) This Letter of Transmittal (or a manually signed facsimile thereof) properly completed and signed, together with accompanying Share Certificates representing the Deposited Shares (or, if tender is made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer Document, a timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of the Deposited Shares into the Depositary's account at the Book-Entry Transfer Facility) and all other documents required by the terms of the Offer to Purchase and this Letter of Transmittal must be received by the Depositary at any of the offices of the Depositary specified on the front page of this document at or prior to 8:00 p.m. (EST) on Monday, April 7, 2003 unless the Offer is extended or withdrawn or unless the procedures for guaranteed delivery set out in paragraph 2 below are employed. (b) The method used to deliver this Letter of Transmittal and any accompanying certificates representing Common Shares and all other required documents is at the option and risk of the person depositing same, and delivery will be deemed effective only when such documents are actually received. THE OFFEROR RECOMMENDS THAT THE NECESSARY DOCUMENTATION BE HAND DELIVERED TO THE DEPOSITARY AT ANY OF THEIR OFFICES SPECIFIED ON THE FRONT PAGE OF THIS DOCUMENT, AND A RECEIPT OBTAINED; OTHERWISE, THE USE OF REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. SHAREHOLDERS WHOSE COMMON SHARES ARE REGISTERED IN THE NAME OF A BROKER, INVESTMENT DEALER, BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT THEIR NOMINEE HOLDER TO ARRANGE FOR THE DEPOSIT OF THOSE COMMON SHARES. 2. PROCEDURES FOR GUARANTEED DELIVERY If a Shareholder wishes to deposit Common Shares pursuant to the Offer and (i) the holder's Share Certificate(s) are not immediately available, (ii) the Shareholder cannot deliver the Share Certificate(s) and all other required documents to the Depositary, or (iii) the Shareholder cannot complete the procedure for delivery by book-entry transfer, in each case, at or prior to the Expiry Time, such Common Shares may nevertheless be deposited pursuant to the Offer provided that all of the following conditions are met: (a) such a deposit is made by or through an Eligible Institution (as defined below); (b) a properly completed and duly executed Notice of Guaranteed Delivery (printed on green paper) in the form accompanying the Letter of Transmittal or a manually signed facsimile thereof, is received by the Depositary at its Toronto, Ontario, Canada office as set forth in the Notice of Guaranteed Delivery (by hand, courier, facsimile transmission or mail) together with a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery, before the Expiry Time; and (c) the certificate(s) representing the Deposited Shares in proper form for transfer (or a Book-Entry Confirmation), in each case together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof (or an Agent's Message, in the case of book-entry transfer), and all other documents required by this Letter of Transmittal, are received by the Depositary at its Toronto, Ontario, Canada office as set forth in the Letter of Transmittal before 8:00 p.m. (EST) on the third trading day on the Toronto Stock Exchange after the Expiry Date. THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR COURIER, TRANSMITTED BY FACSIMILE TRANSMISSION OR DELIVERED BY MAIL TO THE DEPOSITARY AT ITS OFFICE IN TORONTO SPECIFIED IN THE NOTICE OF GUARANTEED DELIVERY NOT LATER THAN THE EXPIRY TIME (AS DEFINED IN THE OFFER DOCUMENT) AND MUST INCLUDE A GUARANTEE TO DELIVER BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN THE NOTICE OF GUARANTEED DELIVERY. Delivery to any office or transmission other than to the specified office or facsimile number does not constitute delivery for this purpose. An "ELIGIBLE INSTITUTION" means a Canadian Schedule I chartered bank, a major trust company in Canada, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP), or any other "eligible guarantor institution", as such term is defined in Rule 17Ad-15 of the Exchange Act (each, an "Eligible Institution" and collectively the "Eligible Institutions"). Members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Dealers Association of Canada, members of the National Association of Securities Dealers or banks and trust companies in the United States. 3. SIGNATURES This Letter of Transmittal must be completed and signed by the register holder of Common Shares (including any participant in the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of Common Shares) accepting the Offer or by such holder's duly authorized representative (in accordance with item 5 below). (a) If this Letter of Transmittal is signed by the registered owner(s) of the accompanying Share Certificate(s), such signature(s) on this Letter of Transmittal must correspond with the name(s) as registered or as written on the face of such Share Certificate(s) without any change whatsoever, and the certificate(s) need not be endorsed. If such transmitted Share Certificate(s) are owned of record by two or more joint owners, both or all such owners must sign the Letter of Transmittal; (b) If this Letter of Transmittal is signed by a person other than the registered owner(s) of the accompanying Share Certificate(s), or if a cheque is to be issued to a person other than the registered owner(s): (i) such deposited Share Certificate(s) must be endorsed or be accompanied by an appropriate share transfer power(s) of attorney, duly and properly completed by the registered owner(s); and (ii) the signature(s) on such endorsement or share transfer power(s) of attorney must correspond exactly to the name(s) of the registered owner(s) as registered or as appearing on the Share Certificate(s) and must be guaranteed as noted in item 4 below. 4. GUARANTEE OF SIGNATURES If this Letter of Transmittal is signed by a person other than the registered owner(s) (which term, for purposes of these Instructions, includes any participant in the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Common Shares) of the Deposited Shares or if Deposited Shares not purchased are to be returned to a person other than such registered owner(s) or sent to an address other than the address of the registered owner(s) as shown on the registers of Emco or if the payment is to be issued in the name of a person other than the registered owner(s) of the Deposited Shares as shown on the registers of Emco, such signature must be guaranteed by an Eligible Institution, or in some other manner satisfactory to the Depositary (except that no guarantee is required if the signature is that of an Eligible Institution). 5. FIDUCIARIES, REPRESENTATIONS AND AUTHORIZATIONS Where this Letter of Transmittal is executed by a person on behalf of an executor, administrator, trustee, guardian, corporation, partnership or association or is executed by any other person acting in a representative capacity, this Letter of Transmittal must be accompanied by satisfactory evidence of the authority to act. Either of the Offeror or the Depositary, at its discretion, may require additional evidence of authority or additional documentation. 6. PARTIAL TENDERS (Not applicable to stockholders who tender by book-entry transfer.) Unless tenders are to be made pursuant to the procedure for tender by book-entry transfer, if less than the total number of Common Shares evidenced by any Share Certificate submitted is to be deposited, fill in the number of Common Shares to be deposited in the appropriate space on the front page of this Letter of Transmittal. In such case, new Share Certificate(s) for the number of Common Shares not deposited will be sent to the registered holder as soon as practicable after the Expiry Time (and provided such deposited Common Shares are accepted for purchase, taken-up and paid for by the Offeror). The total number of Common Shares evidenced by all Share Certificates delivered will be deemed to have been deposited unless otherwise indicated on the front page of this Letter of Transmittal. 7. SOLICITATION Identify the investment dealer or broker, if any, who solicited acceptance of the Offer by completing the appropriate box on the Letter of Acceptance and Transmittal. If this deposit represents more than one beneficial holder, all beneficial holder information must be provided on a list that must accompany the deposit or on a diskette that must be forwarded to the place of deposit. 8. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 8, the Offeror will pay all stock transfer taxes with respect to the transfer and sale of any Common Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if Share Certificate(s) for Common Shares not tendered or not accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered Share Certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person) payable on account of the transfer to such other person will be deducted from the purchase price of such Common Shares purchased unless evidence satisfactory to the Offeror of the payment of such taxes, or exemption therefrom, is submitted. 9. MISCELLANEOUS (a) If the space on this Letter of Transmittal is insufficient to list all Share Certificates for Deposited Shares, additional certificate numbers and the number of Deposited Shares may be included on a separate signed list affixed to this Letter of Transmittal. (b) If Deposited Shares are registered in different forms of the same name (e.g. "John Doe" and "J. Doe"), a separate Letter of Transmittal should be signed for each different registration. (c) THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. (d) No alternative, conditional or contingent deposits will be accepted. All depositing Shareholders waive any right to receive any notice of acceptance of Deposited Shares for payment by execution of this Letter of Transmittal (or a facsimile thereof). (e) The Offer and any agreement resulting from the acceptance of the Offer will be construed in accordance with and governed by the laws of the Province of Ontario and the laws of Canada applicable therein and the holder of the Common Shares covered by this Letter of Transmittal hereby unconditionally and irrevocably attorns to the non-exclusive jurisdiction of the courts of the Province of Ontario and the courts of appeal therefrom. (f) Additional copies of the Offer Document, the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained on request and without charge from the Depositary at any of its offices at the addresses listed on the front page of this document. 10. LOST CERTIFICATES If a Share Certificate has been lost or destroyed, this Letter of Transmittal should be completed as fully as possible and forwarded, together with a letter describing the loss, to the Depositary. The Depositary will respond with the replacement requirements which must be properly completed and submitted in good order to the Depositary on or prior to the Expiry Time. 11. SUBSTITUTE FORM W-9 Each United States Shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9, which is provided in Block E, and to certify whether such Shareholder is subject to backup withholding of United States federal income tax. If a United States Shareholder has been notified by the Internal Revenue Service that such Shareholder is subject to backup withholding, such Shareholder must cross out item 2 of the Substitute Form W-9, unless such Shareholder has since been notified by the Internal Revenue Service that such Shareholder is no longer subject to backup withholding. Failure to provide the information and certifications on the Substitute Form W-9 may subject a United States Shareholder to a US$50.00 penalty imposed by the Internal Revenue Service and 30% United States federal income tax withholding on the payment of the purchase price of all Common Shares purchased from such Shareholder. If a United States Shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such Shareholder should check the box in Part 1 of the Substitute Form W-9 and complete the attached Certificate of Awaiting Taxpayer Identification Number. In such case, the Depositary will withhold 30% of all payments of the purchase price to such Shareholder made prior to the time a properly certified TIN is provided to the Depositary and, if the Depositary is not provided with a TIN within 60 days, such amounts will be paid over to the Internal Revenue Service. A United States Shareholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Common Shares. If the Common Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. IN ORDER FOR A NON-UNITED STATES SHAREHOLDER TO PREVENT BACKUP WITHHOLDING, SUCH PERSON MUST COMPLETE THE FORM W-8BEN ("CERTIFICATE OF FOREIGN STATUS") SET FORTH ABOVE IN BLOCK F, TO BE SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO SUCH PERSON'S EXEMPT STATUS. MANUALLY SIGNED FACSIMILE COPIES OF THIS LETTER OF TRANSMITTAL WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH EMCO SHAREHOLDER OR SUCH SHAREHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE COVER PAGE OF THIS LETTER OF TRANSMITTAL. Questions or requests for assistance may be directed to the Information Agent at the address and telephone numbers set forth below. Requests for copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and all other tender offer materials may be directed to the Information Agent as set forth below and will be furnished promptly at the Offeror's expense. The Offeror will not pay fees or commissions to any broker or dealer or any other person for soliciting tenders of Common Shares pursuant to the Offer except as otherwise set forth in the Offer to Purchase. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. THE DEALER MANAGER FOR THE OFFER IS: In Canada: SCOTIA CAPITAL INC. Scotia Plaza, 64th Floor 40 King Street West Box 4085, Station "A" Toronto, Ontario M5W 2X6 Telephone: (416) 945-4599 THE INFORMATION AGENT FOR THE OFFER IS: (MacKenzie Partners, Inc. LOGO) 105 Madison Avenue New York, New York 10016 (212) 929-5500 (Call Collect) or Call Toll-Free (800) 322-2885 Email: proxy@mackenziepartners.com EX-99.A.3 5 t09071exv99waw3.txt NOTICE OF GUARANTEED DELIVERY EXHIBIT (a)(3) The Dealer Manager, the Depositary, the Information Agent (see the Circular or below for address and telephone number) or your broker or other financial advisor can assist you in completing this Notice of Guaranteed Delivery. THIS IS NOT A LETTER OF TRANSMITTAL 2022841 ONTARIO INC. NOTICE OF GUARANTEED DELIVERY FOR DEPOSIT OF COMMON SHARES OF EMCO LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M. (EST), ON MONDAY, APRIL 7, 2003, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN. This Notice of Guaranteed Delivery, or a manually signed facsimile hereof, must be used to accept the Offer (the "OFFER DOCUMENT"), dated February 28, 2003, made by 2022841 Ontario Inc. (the "OFFEROR") for common shares (the "COMMON SHARES") of Emco Limited ("EMCO") if (i) certificates representing the Common Shares are not immediately available, (ii) the procedure for book entry transfer set forth in Section 3 of the Offer Document cannot be completed on a timely basis or (iii) the shareholder cannot deliver the certificates representing such Common Shares and all other required documents to the Depositary at or prior to the Expiry Time under the Offer (as defined hereinafter). The terms and conditions of the Offer are incorporated by reference in this Notice of Guaranteed Delivery. Capitalized terms used, but not defined, in this Notice of Guaranteed Delivery and which are defined in the Offer Document shall have the same meanings herein as given to them in the Offer Document and the take-over bid circular accompanying the Offer (the "CIRCULAR", and, together with the Offer Document, the "OFFER TO PURCHASE"). The Offer to Purchase, together with the related Letter of Transmittal, and any supplements or amendments thereto, collectively constitute the "OFFER". To: the Depositary, COMPUTERSHARE TRUST COMPANY OF CANADA: BY MAIL: BY HAND OR BY COURIER: P.O. Box 7021 100 University Avenue 31 Adelaide St. E 9th Floor Toronto, Ontario M5C 3H2 Toronto, Ontario M5J 2Y1 Attention: Corporate Actions Attention: Corporate Actions
BY FACSIMILE TRANSMISSION: Fax: (416) 981-9663 In order to utilize the procedures contemplated by this Notice of Guaranteed Delivery, the following conditions must be met: (a) The deposit must be made by or through an Eligible Institution (as defined in the Offer); (b) A properly completed and duly executed copy of this Notice of Guaranteed Delivery (or a manually signed facsimile hereof) must be received by the Depositary at its Toronto, Ontario, Canada office set forth above (by hand, courier, facsimile transmission or mail) together with a guarantee to deliver by an Eligible Institution in the form set forth below before the Expiry Time; and (c) The certificate(s) representing deposited Common Shares in proper form for transfer (or a book-entry transfer thereof), together with a properly completed and duly executed Letter of Transmittal, or a signed facsimile thereof relating to such Common Shares (or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer) and all other documents required by the Letter of Transmittal must be received by the Depositary at its Toronto, Canada office before 5:00 p.m. (EST) on the third trading day on the Toronto Stock Exchange after the Expiry Date. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THIS NOTICE OF GUARANTEED DELIVERY TO THE DEPOSITARY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. TO: 2022841 ONTARIO INC. -AND- TO: COMPUTERSHARE TRUST COMPANY OF CANADA The undersigned hereby deposits to 2022841 Ontario Inc. (the "OFFEROR"), on and subject to the terms and conditions of the Offer, dated February 28, 2003 (the "OFFER DOCUMENT"), the take-over bid Circular accompanying and forming part of the Offer Document and the Letter of Transmittal, receipt of which is hereby acknowledged, the common shares (the "COMMON SHARES") listed below of Emco Limited ("EMCO"), pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer, "Manner and Time of Acceptance -- Procedure for Guaranteed Delivery". - -------------------------------------------------------------------------------------------------------------------------- Name(s) and address(es) of Shareholder(s) Certificate Number(s), if Number(s) (please print) available of Common Shares - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- TOTAL SHARES: ----------------------------------------
Number of Shares Tendered: - --------------------------- Certificate No(s) (if available): - --------------------------------------------------------- - --------------------------------------------------------- [ ] Check if securities will be tendered by book-entry transfer. - --------------------------------------------------------- Name of Tendering Institution: Account No.: - ------------------------------------------- Dated: - ------------------------------------------ , 2003 Name(s) of Record Holder(s) - --------------------------------------------------------- - --------------------------------------------------------- (please print) Address(es): - --------------------------------------------------------- - --------------------------------------------------------- (Zip Code) Area Code and Telephone No(s): - --------------------------------------------------------- Signature(s): - --------------------------------------------------------- - --------------------------------------------------------- DO NOT SEND CERTIFICATES FOR COMMON SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR THE COMMON SHARES MUST BE SENT WITH YOUR LETTER OF TRANSMITTAL. GUARANTEE (Not to be used for signature guarantee) The undersigned, an Eligible Institution (as defined in the Offer) GUARANTEES THE DELIVERY, to the office of the Depositary in Toronto, Ontario, Canada set forth above, of the certificates representing the Common Shares tendered hereby, in proper form for transfer, with delivery of a properly completed and duly executed Letter of Transmittal or a manually signed facsimile thereof (or an Agent's Message, in the case of delivery of the Common Shares by book-entry transfer) and all other documents required by the Letter of Transmittal, before 5:00 p.m. (EST) on the third trading day on the Toronto Stock Exchange after the Expiry Date. Dated: - ------------------------------------ --------------------------------------- Firm --------------------------------------- Authorized Signature --------------------------------------- Name (please print) --------------------------------------- Title --------------------------------------- Address --------------------------------------- Area Code and Telephone Number EX-99.A.4 6 t09071exv99waw4.txt LETTER TO BROKERS, ETC. EXHIBIT (a)(4) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING COMMON SHARES OF EMCO LIMITED AT CDN $16.60 NET PER SHARE BY 2022841 ONTARIO INC., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BLACKFRIARS CORP. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M., EASTERN TIME, ON MONDAY, APRIL 7, 2003, UNLESS THE OFFER IS EXTENDED. February 28, 2003 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: 2022841 Ontario Inc., an Ontario corporation (the "Offeror") and an indirect wholly owned subsidiary of Blackfriars Corp., a corporation organized under the laws of the state of Delaware ("Blackfriars"), has made an offer to purchase all outstanding common shares (the "Common Shares") of Emco Limited, an Ontario corporation (the "Company"), at a purchase price of CDN $16.60 per share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer (the "Offer Document") and the accompanied Circular (the "Circular", and together with the Offer Document, the "Offer to Purchase"), dated February 28, 2003, and a related Letter of Transmittal (the "Letter of Transmittal" which, together with the Offer to Purchase and any amendments or supplements thereto, collectively constitute the "Offer") enclosed herewith. Holders of Common Shares whose certificates for such Common Shares (the "Share Certificates") are not immediately available, who cannot complete the procedures for book-entry transfer on a timely basis, or who cannot deliver all other required documents to Computershare Trust Company of Canada (the "Depositary") prior to the Expiry Time (as defined under "Definitions" in the Offer to Purchase) must tender their Common Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer Document. The Offer is conditioned upon, among other things, (1) there being validly tendered (other than by guaranteed delivery where actual delivery has not occurred) and not properly withdrawn prior to the expiration of the Offer a number of Common Shares that represents at least 66 2/3% of the Common Shares outstanding on a fully diluted basis, excluding Common Shares issuable on the conversion of the outstanding 6.5% convertible unsecured subordinated debentures of The Company, due July 4, 2007 (the "Deposit Minimum Condition"), (2) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and regulations required thereunder having expired or been terminated, and (3) the Offeror shall have received all required regulatory approvals or rulings, including, without limitation, under the Competition Act (Canada) and under the Investment Canada Act. The Offer is subject to certain other conditions described under "Conditions of the Offer" in Section 4 of the Offer Document. Please read Section 4 of the Offer Document, which sets forth in full the conditions to the Offer. Please furnish copies of the following enclosed materials to those of your clients for whose accounts you hold Common Shares registered in your name or in the name of your nominee: 1. Offer to Purchase, dated February 28, 2003; 2. Letter of Transmittal for your use in accepting the Offer and tendering Common Shares and for the information of your clients (manually signed facsimile copies of the Letter of Transmittal may be used to tender Common Shares); 3. Notice of Guaranteed Delivery to be used to accept the Offer if Share Certificates are not immediately available or if such certificates and all other required documents cannot be delivered to the Depositary or if the procedures for book-entry transfer cannot be completed on a timely basis; 4. A printed form of letter that may be sent to your clients for whose accounts you hold Common Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. The Directors' Circular of the Company's board of directors, which is included in the Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company, and which includes the recommendation of the Company's board of directors that shareholders accept the Offer and tender their Common Shares to the Offeror pursuant to the Offer; and 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. The Company's board of directors, at a special meeting held on February 19, 2003, unanimously (1) determined that the Offer is in the best interests of the Company's shareholders, (2) approved and adopted the Support Agreement among the Company, the Offeror and Blackfriars, dated as of February 19, 2003 (the "Support Agreement") and the transactions contemplated thereby, including the Offer, and (3) recommended that the Company's shareholders accept the Offer. Accordingly, the Company's board of directors has recommended that you accept the Offer and tender all of your Common Shares pursuant to the Offer. The Offer is being made pursuant to the Support Agreement; see "Arrangements, Agreements or Understandings" in Section 11 of the Circular. The Support Agreement provides, among other things, that if, within 120 days after the date of the Offer, the Offer has been accepted by the holders of not less than 90% of the Common Shares (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), the Offeror will use its reasonable best efforts to avail itself to the extent possible, of the compulsory acquisition provisions of section 188 of the Business Corporation Act (Ontario) (the "OBCA") so as to acquire the remaining Common Shares from those shareholders who have not accepted the Offer at the same price per Common Share paid in the Offer. If less than 90% of the Common Shares are acquired by the Offeror pursuant to the Offer (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), or the compulsory acquisition provisions of the OBCA are otherwise unavailable, the Offeror may, and currently intends to, implement other means of acquiring all of the Common Shares in accordance with Canadian law, including by way of a capital reorganization, an arrangement, amalgamation, merger, share consolidation, or other transaction (a "Subsequent Acquisition Transaction"), provided that the consideration offered in connection with the Subsequent Acquisition Transaction is at least equivalent in value to the consideration offered under the Offer. If the Deposit Minimum Condition is satisfied, the Offeror will own sufficient Common Shares to effect a Subsequent Acquisition Transaction without the affirmative vote of any of the other shareholders of the Company. See "Acquisition of Common Shares Not Deposited under the Offer" in Section 11 of the Offer Document and Section 15 of the Circular. Concurrently with entering into the Support Agreement, Offeror and Blackfriars entered into a lock-up agreement (the "Lock-up Agreement") with Masco Corporation ("Masco") which owns 6,621,334 Common Shares, constituting approximately 42% of the Common Shares outstanding. Under the Lock-up Agreement, Masco has agreed, among other things, to tender its Common Shares in the Offer. See "Arrangements, Agreements or Understandings" in Section 11 of the Circular. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in Section 3 of the Offer Document) in connection with a book-entry delivery of Common Shares, and any other required documents should be sent to the Depositary, and (ii) Share Certificates representing the tendered Common Shares should be delivered to the Depositary, or such Common Shares should be tendered by book-entry delivery into the Depositary's account maintained at The Depositary Trust Company, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Common Shares wish to tender, but it is impracticable for them to forward their Share Certificates or other required documents prior to the Expiry Time or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer Document. The Offeror will not pay any fees or commissions to any broker or dealer or other person (other than the Information Agent, the Soliciting Dealer Group, the Dealer Managers and the Depositary (each, as defined in the Offer Document)) for soliciting tenders of Common Shares pursuant to the Offer. The Offeror, however, upon request, will reimburse you for customary mailing and handling costs incurred by you in forwarding the enclosed materials to your customers. The Offeror will pay or cause to be paid all stock transfer taxes applicable to its purchase of Common Shares pursuant to the Offer, except as otherwise provided in Instruction 8 of the Letter of Transmittal. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M., EASTERN TIME, ON MONDAY, APRIL 7, 2003, UNLESS THE OFFER IS EXTENDED. Any inquiries you may have with respect to the Offer should be addressed to the Information Agent at the address and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent. Very truly yours, MACKENZIE PARTNERS, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF BLACKFRIARS, THE OFFEROR, THE COMPANY, THE DEALER MANAGERS, ANY MEMBER OF THE SOLICITING DEALER GROUP, THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.A.5 7 t09071exv99waw5.txt LETTER TO CLIENTS EXHIBIT (a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING COMMON SHARES OF EMCO LIMITED AT CDN $16.60 NET PER SHARE BY 2022841 ONTARIO INC., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BLACKFRIARS CORP. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M., EASTERN TIME, ON MONDAY, APRIL 7, 2003, UNLESS THE OFFER IS EXTENDED. February 28, 2003 To Our Clients: Enclosed for your consideration is the Offer (the "Offer Document") and the accompanied Circular (the "Circular", and together with the Offer Document, the "Offer to Purchase"), dated February 28, 2003, a related Letter of Transmittal (the "Letter of Transmittal" which, together with the Offer to Purchase and any amendments or supplements thereto, collectively constitute the "Offer"), and the Directors' Circular of the Board of Directors of Emco Limited, an Ontario corporation (the "Company"), which is included in the Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company, in connection with the offer by 2022841 Ontario Inc., an Ontario corporation (the "Offeror") and an indirect wholly owned subsidiary of Blackfriars Corp., a corporation organized under the laws of the state of Delaware ("Blackfriars"), to purchase all outstanding common shares (the "Common Shares") of the Company, at a purchase price of CDN $16.60 per share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. We are the holder of record of Common Shares for your account. A tender of such Common Shares can be made only by us as the holder of record and pursuant to your instructions. The enclosed Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Common Shares held by us for your account. We request instructions as to whether you wish us to tender any or all of the Common Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. Your attention is invited to the following: 1. The offered price is CDN $16.60 per Share, net to you in cash, without interest thereon. On February 27, 2003, the Federal Reserve Bank of New York quoted noon spot exchange rate for Canadian dollars per U.S. $1.00 was CDN $1.4954. Therefore, if you received payment in Canadian dollars and exchanged it for U.S. dollars on such date, you would have received U.S. $11.10 per Common Share. You should get a current quote of the exchange rate before deciding whether to tender your Common Shares. 2. The Offer is being made for all outstanding Common Shares. 3. The Offer is being made pursuant to a Support Agreement, dated as of February 19, 2003 (the "Support Agreement"), among Blackfriars, the Offeror and the Company. See "Arrangements, Agreements or Understandings" in Section 11 of the Circular. The Support Agreement provides, among other things, that if, within 120 days after the date of the Offer, the Offer has been accepted by the holders of not less than 90% of the Common Shares (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), the Offeror will use its reasonable best efforts to avail itself, to the extent possible, of the compulsory acquisition provisions of section 188 of the Business Corporation Act (Ontario) (the "OBCA") so as to acquire the remaining Common Shares from those shareholders who have not accepted the Offer at the same price per Common Share paid in the Offer. If less than 90% of the Common Shares are acquired by the Offeror pursuant to the Offer (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), or the compulsory acquisition provisions of the OBCA are otherwise unavailable, the Offeror may, and currently intends to, implement other means of acquiring all of the Common Shares in accordance with Canadian law, including by way of a capital reorganization, an arrangement, amalgamation, merger, share consolidation, or other transaction (a "Subsequent Acquisition Transaction"), provided that the consideration offered in connection with the Subsequent Acquisition Transaction is at least equivalent in value to the consideration offered under the Offer. If the Deposit Minimum Condition (as defined below) is satisfied, the Offeror will own sufficient Common Shares to effect a Subsequent Acquisition Transaction without the affirmative vote of any of other shareholder of the Company. See "Acquisition of Common Shares Not Deposited under the Offer" in Section 11 of the Offer Document and in Section 15 of the Circular. 4. The Company's board of directors, at a special meeting held on February 19, 2003, unanimously (1) determined that the Offer is in the best interests of the Company's shareholders, (2) approved and adopted the Support Agreement and the transactions contemplated thereby, including the Offer, and (3) recommended that the Company's shareholders accept the Offer. Accordingly, the Company's board of directors has recommended that you accept the Offer and tender all of your Common Shares pursuant to the Offer. 5. Concurrently with entering into the Support Agreement, the Offeror and Blackfriars entered into a lock-up agreement (the "Lock-up Agreement") with Masco Corporation ("Masco") which owns 6,621,334 Common Shares, constituting approximately 42% of the Common Shares outstanding. Under the Lock-up Agreement, Masco has agreed, among other things, to tender its Common Shares in the Offer. See "Arrangements, Agreements or Understanding -- Lock-up Agreement" in Section 11 of the Circular. 6. The Offer and withdrawal rights will expire at 8:00 P.M., Eastern Time, on Monday, April 7, 2003 (the "Expiry Time"), unless the Offer is extended. 7. Any stock transfer taxes applicable to the sale of Common Shares to the Offeror pursuant to the Offer will be paid by the Offeror, except as otherwise provided in Instruction 8 of the Letter of Transmittal. The Offer is conditioned upon, among other things, (1) there being validly tendered (other than by guaranteed delivery where actual delivery has not occurred) and not properly withdrawn prior to the expiration of the Offer a number of Common Shares that represents at least 66 2/3% of the Common Shares outstanding on a Fully-diluted Basis (as defined in the Offer to Purchase), excluding Common Shares issuable on the conversion of the outstanding 6.5% convertible unsecured subordinated debentures of The Company, due July 4, 2007 (the "Deposit Minimum Condition"), (2) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder having expired or been terminated, and (3) the Offeror shall have received all required regulatory approvals or rulings, including, without limitation, under the Competition Act (Canada) and under the Investment Canada Act. The Offer is subject to certain other conditions described under "Conditions of the Offer" in Section 4 of the Offer Document. Please read Section 4 of the Offer Document, which set forth in full the conditions to the Offer. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is not being made to (nor will tenders be accepted from or on behalf of) holders of Common Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer to will be deemed to be made on behalf of the Offeror by one or more registered brokers or dealers licensed under the laws of such jurisdiction. If you wish to have us tender any or all of your Common Shares, please so instruct us by completing, executing and returning to us the instruction form set forth on the reverse side of this letter. An envelope to return your instructions to us also is enclosed. If you authorize the tender of your Common Shares, all such Common Shares will be tendered unless otherwise specified on the reverse side of this letter. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiry Time. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING COMMON SHARES OF EMCO LIMITED AT CDN $16.60 NET PER SHARE BY 2022841 ONTARIO INC., AN INDIRECT WHOLLY OWNED SUBSIDIARY BLACKFRIARS CORP. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer and the accompanied Circular (together, the "Offer to Purchase") dated February 28, 2003, and the related Letter of Transmittal, in connection with the offer by 2022841 Ontario Inc., an Ontario corporation (the "Offeror") and an indirect wholly owned subsidiary of Blackfriars Corp., a corporation organized under the laws of the state of Delaware ("Blackfriars"), to purchase all outstanding common shares (the "Common Shares"), of Emco Limited, an Ontario corporation (the "Company"), at a purchase price of CDN $16.60 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. This will instruct you to tender to the Offeror the number of Common Shares indicated below (or, if no number is indicated below, all Common Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Number of Common Shares to Be Tendered:* ------------------------------------- Account No.: ------------------------------- Dated: _________________, 2003 SIGN HERE - -------------------------------------------- - -------------------------------------------- Signature(s) - -------------------------------------------- - -------------------------------------------- - -------------------------------------------- - -------------------------------------------- Print Name(s)and Address(es) - -------------------------------------------- - -------------------------------------------- - -------------------------------------------- Area Code and Telephone Number(s) - -------------------------------------------- Taxpayer Identification or Social Security Number(s)
* Unless otherwise indicated, it will be assumed that all Common Shares held by us for your account are to be tendered. EX-99.A.7 8 t09071exv99waw7.txt GUIDELINES FOR CERTIFICATION EXHIBIT (a)(7) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU) TO GIVE THE PAYER: Social security numbers have nine digits separated by two hyphens (i.e., 000-00-0000). Employee identification numbers have nine digits separated by only one hyphen (i.e., 00-0000000). The table below will help determine the number to give the payer. "Section" refer to the Internal Revenue Code of 1986, as amended and "IRS" refers to the Internal Revenue Service.
- --------------------------------------------------------- PROVIDE THE FOLLOWING FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER - --------------------------------------------------------- 1. Individual The individual 2. Two or more individuals The actual owner of (joint account) the account or, if combined fund, the first individual on the account(1) 3. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 4. a. The usual revocable The grantor-trustee(1) savings trust account (grantor is also trustee) b. So-called trust that is not a legal or valid trust under state 5. Sole proprietorship The owner(3) 6. Sole proprietorship The owner(3) 7. A valid trust, estate, or The legal entity(4) pension trust - ---------------------------------------------------------
- --------------------------------------------------------- PROVIDE THE FOLLOWING FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER - --------------------------------------------------------- 8. Corporate The corporation 9. Association, club, The organization religious, charitable, educational, or other tax-exempt organization account 10. Partnership The partnership 11. A broker or registered The broker or nominee nominee 12. Account with the Department The public entity of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ---------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or your employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 OBTAINING A NUMBER - If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Card, at the local Social Administration office, or Form SS-4, Application for Employer Identification Number,) by calling 1 (800) TAX-FORM, and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from withholding include: - An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2). - The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or wholly-owned agency or instrumentality of any one or more of the foregoing. - An international organization or any agency or instrumentality thereof. - A foreign government and any political subdivision, agency or instrumentality thereof. Payees that may be exempt from backup withholding include: - A Corporation. - A financial institution. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under Section 584(a). - An entity registered at all times during the tax year under the Investment Company Act of 1940. - A middleman known in the investment community as a nominee or custodian. - A futures commission merchant registered with the Commodity Futures Trading Commission. - A foreign central bank of issue. Payments of dividends and patronage dividends generally exempt from backup withholding include:) - Payments to nonresident aliens subject to withholding under Section 1441. - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Section 404(k) payments made by an ESOP. Payments of interest generally exempt from backup withholding include: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under Section 852). - Payments described in Section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under Section 1451. - Payments made by certain foreign organizations. - Mortgage interest paid to you. - Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see the regulations under sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N. - Exempt payees described above must file Form W-9 or a substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT) A TO THE PAYER. PRIVACY ACT NOTICE. -- Section 6109 requires you to provide) your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 30% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX ADVISOR OR THE INTERNAL REVENUE SERVICE. EX-99.A.8 9 t09071exv99waw8.txt SUMMARY ADVERTISEMENT EXHIBIT (a)(8) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Common Shares (as defined below). The Offer (as defined below) is made only by the Offer To Purchase (as defined below), and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Common Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Common Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Offeror (as defined below) may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Common Shares in such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Offeror by one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING COMMON SHARES OF EMCO LIMITED AT CDN $16.60 NET PER SHARE BY 2022841 ONTARIO INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BLACKFRIARS CORP. 2022841 Ontario Inc., an Ontario corporation (the "Offeror") and an indirect wholly owned subsidiary of Blackfriars Corp., a corporation organized under the laws of the state of Delaware ("Blackfriars"), is offering to purchase all outstanding common shares (the "Common Shares") of Emco Limited, an Ontario corporation (the "Company"), at a purchase price of CDN $16.60 per share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer (the "Offer Document") and the accompanied Circular (the "Circular", and together with the Offer Document, the "Offer to Purchase"), dated February 28, 2003, and the related Letter of Transmittal (the "Letter of Transmittal" which, together with the Offer to Purchase and any amendments or supplements thereto, collectively constitute the "Offer"). Tendering shareholders who have Common Shares registered in their names and who tender directly to Computershare Trust Company of Canada (the "Depositary") will not be charged brokerage fees or commissions or, subject to Instruction 8 of the Letter of Transmittal, transfer taxes on the purchase of Common Shares pursuant to the Offer. Shareholders who hold their Common Shares through a broker or bank should consult such institution as to whether it will charge any service fees to tender Common Shares. The Offeror will pay all charges and expenses of the Depositary and Mackenzie Partners, Inc., which is acting as the information agent for the Offer (the "Information Agent"), the Soliciting Dealer Group and the Dealer Managers (each, as defined in the Offer to Purchase), incurred in connection with the Offer. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M., EASTERN TIME, ON MONDAY, APRIL 7, 2003 (THE "EXPIRY TIME"), UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (1) there being validly tendered (other than by guaranteed delivery where actual delivery has not occurred) and not properly withdrawn prior to the expiration of the Offer a number of Common Shares that represents at least 66 2/3% of the Common Shares outstanding on a fully diluted basis, excluding Common Shares issuable on the conversion of the outstanding 6.5% convertible unsecured subordinated debentures of Emco, due July 4, 2007 (the "Deposit Minimum Condition"), (2) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder having expired or been terminated and (3) receipt of any required approvals or rulings under the Competition Act (Canada) and the Investment Canada Act. The Offer is subject to certain other conditions described under "Conditions of the Offer" in Section 4 of the Offer Document. Please read Section 4 of the Offer Document, which sets forth in full the conditions to the Offer. The Offeror's obligation to purchase the Common Shares is not conditioned on any financing arrangements or subject to any financing condition. See Section 8 of the Circular for a description of Blackfriars' and the Offeror's financing arrangements. The Offer is being made pursuant to a Support Agreement, dated as of February 19, 2003 (the "Support Agreement"), among Blackfriars, the Offeror and the Company. The purpose of the Offer is to permit Blackfriars, through the Offeror, to acquire at least that number of Common Shares which would satisfy the Deposit Minimum Condition. The Support Agreement provides that, among other things, the Offeror will commence the Offer and that if, within 120 days after the date of the Offer, the Offer has been accepted by the holders of not less than 90% of the Common Shares (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), the Offeror will use its reasonable best efforts to avail itself, to the extent possible, of the compulsory acquisition provisions of section 188 of the Business Corporation Act (Ontario) (the "OBCA") so as to acquire the remaining Common Shares from those shareholders who have not accepted the Offer at the same price per Common Share paid under the Offer (a "Compulsory Acquisition"). If less than 90% of the Common Shares are acquired by the Offeror pursuant to the Offer (other than Common Shares held on the date hereof by or on behalf of the Offeror or any affiliate or associate of the Offeror), or the compulsory acquisition provisions of the OBCA are otherwise unavailable, the Offeror may, and currently intends to, implement other means of acquiring all of the Common Shares in accordance with Canadian law, including by way of a capital reorganization, an arrangement, amalgamation, merger, share consolidation, or other transaction (a "Subsequent Acquisition Transaction"), provided that the consideration offered in connection with the Subsequent Acquisition Transaction is at least equivalent in value to the consideration offered under the Offer. If the Deposit Minimum Condition is satisfied, the Offeror will own sufficient Common Shares to effect a Subsequent Acquisition Transaction without the affirmative vote of any other shareholder. See "Acquisition of Common Shares Not Deposited under the Offer" in Section 15 of the Circular. Without limiting the foregoing, effective upon the acceptance for payment of Common Shares pursuant to the Offer, the holders of such Common Shares will sell and assign to Offeror all right, title and interest in and to all of the Common Shares tendered (including, but not limited to, such holder's right to any and all dividends and distributions). The Company's board of directors, at a special meeting held on February 19, 2003, unanimously (1) determined that the Support Agreement and the transactions contemplated thereby, including the Offer, are fair to the Company's shareholders and in the best interests of the Company and its shareholders, (2) approved and adopted the Support Agreement and the transactions contemplated thereby, including the Offer, and (3) recommended that the Company's shareholders accept the Offer. Accordingly, the Company's board of directors has recommended that you accept the Offer and tender all of your Common Shares pursuant to the Offer. Concurrently with entering into the Support Agreement, the Offeror and Blackfriars entered into a lock-up agreement (the "Lock-up Agreement") with Masco Corporation ("Masco") which owns 6,621,334 Common Shares, constituting approximately 42% of the Common Shares outstanding. Under the Lock-up Agreement, Masco has agreed, among other things, to tender its Common Shares in the Offer. For purposes of the Offer, the Offeror will be deemed to have accepted for payment, and thereby purchased, the Common Shares validly tendered (other than by guaranteed delivery where actual delivery has not taken place) and not properly withdrawn as, if and when Offeror gives oral or written notice to the Depositary of Offeror's acceptance of such Common Shares for payment pursuant to the Offer. In all cases, on the terms and subject to the conditions of the Offer, payment for Common Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Offeror and transmitting such payment to tendering shareholders. Under no circumstances will the Offeror pay interest on the purchase price of Common Shares because of any delay in making any payment. Payment for Common Shares tendered and accepted for payment pursuant to the Offer will be made only after the timely receipt by the Depositary of (i) certificates for such Common Shares or timely confirmation of a book-entry transfer of such Common Shares into the Depositary's account at The Depositary Trust Company pursuant to the procedures set forth in the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with all required signature guarantees or, in the case of book-entry transfer, or an Agent's Message (as defined in the Offer to Purchase), and (iii) any other documents required by the Letter of Transmittal. Subject to the terms of the Support Agreement, the Offeror may, in its sole discretion, at any time and from time to time, extend the Expiry Time or vary the Offer by giving written notice (or other communication confirmed in writing) of such extension or variation to the Depositary at its principal office in Toronto, Ontario, Canada. Any extension of the period during which the Offer is open will be followed, as promptly as practicable, by public announcement thereof made by the Offeror, such announcement to be issued not later than 9:00 a.m., Eastern time, on the next business day of the previously scheduled Expiry Time. During any such extension, all Common Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Common Shares. Notwithstanding the foregoing but subject to applicable law, the Offer may not be extended by the Offeror if all of the terms and conditions of the Offer (other than those waived by the Offeror) have been fulfilled or complied with, unless the Offeror first takes up (and, in the Province of Quebec, pays for) all Common Shares then deposited under the Offer and not withdrawn. The Offeror has the right to include a "subsequent offering period" in the event the tendered Common Shares are purchased pursuant to the Offer. During a subsequent offering period, shareholders may tender their Common Shares and promptly receive the Offer consideration. Pursuant to applicable U.S. and Canadian securities laws, the Offeror may not extend the Offer during the subsequent offering period for less than 3 business days or more than 20 business days (for all such extensions). Notwithstanding the provisions of Rule 14d-7(a)(2) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to the ability of a purchaser in a tender offer to preclude withdrawals during a subsequent offering period, the Offeror will permit withdrawal of tendered Common Shares during any subsequent offering period, if there is one. However, in order to comply with Exchange Act Rule 14d-11(c), which requires the Offeror promptly purchase and pay for all Common Shares tendered during a subsequent offering period, notice of any such withdrawal must be received by the Depositary before such shares have been paid for. If the consideration being offered for the Common Shares under the Offer is increased, the increased consideration will be paid to all depositing shareholders whose Common Shares are taken up under the Offer. Except as otherwise provided in Section 7 of the Offer Document, all deposits of Common Shares pursuant to the Offer are irrevocable. Unless otherwise required or permitted by applicable law, any Common Shares deposited in acceptance of the Offer may be withdrawn at the place of deposit by or on behalf of the depositing shareholder: (a) at any time when the Common Shares have not been accepted for purchase and taken up by the Offeror; (b) if the Common Shares have not been paid for by the Offeror within three (3) business days after having been taken up; or (c) at any time before the expiration of ten (10) days from the date upon which either: (i) a notice of change relating to a change which has occurred in the information contained in the Offer Document or the Circular, as amended from time to time, that would reasonably be expected to affect the decision of a shareholder to accept or reject the Offer (other than a change that is not within the control of the Offeror or an affiliate of the Offeror), in the event that such change occurs before the Expiry Time or after the Expiry Time but before the expiry of all rights of withdrawal in respect of the Offer; or (ii) a notice of variation concerning a variation in the terms of the Offer (other than a variation consisting solely of an increase in the consideration offered for the Common Shares where the Expiry Time is not extended for more than 10 days), is mailed, delivered or otherwise properly communicated (subject to abridgement of that period pursuant to such order or orders as may be granted by applicable courts or securities regulatory authorities) and only if such deposited Common Shares have not been accepted for purchase and taken up by the Offeror at the date of the notice. Withdrawals of Common Shares deposited pursuant to the Offer must be effected by notice of withdrawal made by or on behalf of the depositing shareholder and must be actually received by the Depositary at the place of deposit before Common Shares are accepted for purchase in the Offer. Notices of withdrawal: (i) must be made by a method, including facsimile transmission, that provides the Depositary with a written or printed copy; (ii) must be signed by or on behalf of the person who signed the Letter of Transmittal (or Notice of Guaranteed Delivery, (as defined in the Offer Document)) accompanying the Common Shares which are to be withdrawn; (iii) must specify such person's name, the number of Common Shares to be withdrawn, the name of the registered holder and, if a certificate has been tendered, the certificate number shown on each certificate representing the applicable Common Shares to be withdrawn; and (iv) must be actually received by the Depositary at the place of deposit of the applicable Common Shares (or Notice of Guaranteed Delivery in respect thereof). If Common Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3 of the Offer Document, such notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility (as defined in the Offer Document) to be credited with the withdrawn Common Shares. Any signature in a notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer Document), except in the case of Common Shares deposited for the account of an Eligible Institution. The withdrawal will take effect upon timely actual physical receipt by the Depositary of the properly completed and signed written notice of withdrawal. Common Shares shall be deemed paid for at the time sufficient funds are made available by the Offeror to the Depositary for payment to tendering holders of Common Shares. All questions as to the validity (including timely receipt) and form of notices of withdrawal will be determined by the Offeror in its sole discretion, and such determination will be final and binding. There will be no obligation on the Offeror, the Dealer Managers (as defined in the Offer Document), the Information Agent, the Depositary or any other person to give any notice of any defects or irregularities in any withdrawal and no liability will be incurred by any of them for failure to give any such notice. If the Offeror is delayed in taking up or paying for Common Shares or is unable to take up and pay for Common Shares, then, without prejudice to the Offeror's other rights, Common Shares deposited under the Offer may be retained by the Depositary on behalf of the Offeror and such Common Shares may not be withdrawn except to the extent that depositing shareholders are entitled to withdrawal rights as set forth in Section 7 of the Offer Document or pursuant to applicable law. Any Common Shares withdrawn will be deemed to be not validly deposited for the purposes of the Offer, but may be redeposited subsequently at or prior to the Expiry Time by following the procedures described under "Manner of Acceptance" in Section 3 of the Offer Document. With respect to certain U.S. shareholders, the sale of Common Shares for cash pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes and other state, local and foreign income tax purposes as well. In general, U.S. shareholders who sell Common Shares pursuant to the Offer will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received (in the U.S. dollar equivalents determined at the spot rate on the date of the consummation of the Offer) and the shareholder's adjusted tax basis in the Common Shares sold pursuant to the Offer (as determined in U.S. dollars). Provided that such Common Shares constitute capital assets in the hands of the shareholder, such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the shareholder has held the Common Shares for more than one year at the time of the consummation of the Offer. Long term capital gains recognized by an individual generally will be eligible for reduced rates of taxation, and the deductibility of capital losses is subject to limitations. The foregoing assumes that the Company is not a passive foreign investment company with respect to a particular U.S. shareholder in which case special tax rules could apply. All shareholders should consult with their own tax advisors as to the particular tax consequences of the Offer, including the applicability and effect of the alternative minimum tax and any state, local or foreign income and other tax laws and of changes in such tax laws. For a more complete description of certain U.S. federal income and Canadian federal income tax consequences of the Offer, including with respect to a Compulsory Acquisition or Subsequent Acquisition Transaction, see Section 16 of the Circular. The information required to be disclosed by Paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Offeror with its list of shareholder and security position listings for the purpose of disseminating the Offer to holders of Common Shares. The Offer to Purchase, the Letter of Transmittal and other related materials are being mailed to record holders of Common Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Common Shares. The Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer. Questions and requests for assistance and copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be directed to the Information Agent at the address and telephone numbers set forth below and will be furnished promptly at Offeror's expense. Offeror will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Common Shares pursuant to the Offer. The Information Agent for the Offer is: MACKENZIE PARTNERS LOGO 105 Madison Avenue New York, New York 10016 (212) 929-5500 (Call Collect) or Call Toll-Free (800) 322-2885 E-mail: proxy@mackenziepartners.com February 28, 2003 EX-99.A.9 10 t09071exv99waw9.txt LETTER TO HOLDERS OF OPTIONS EXHIBIT (a)(9) [LETTERHEAD OF EMCO LIMITED] February 28, 2003 [NAME AND ADDRESS OF OPTION HOLDER] Dear -: RE: OFFER BY 2022841 ONTARIO INC., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF BLACKFRIARS CORP., TO ACQUIRE ALL OUTSTANDING COMMON SHARES OF EMCO LIMITED ("EMCO") We are writing to you as a holder of options ("OPTIONS") under Emco's Stock Option Plan, being Part II of Emco's 1991 Long Term Incentive Program. As you know, 2022841 Ontario Inc. (the "OFFEROR"), an indirect wholly-owned subsidiary of Blackfriars Corp., has made an offer (the "OFFER") to acquire all of the outstanding Common Shares of Emco at a cash price of Cdn. $16.60 per share (the "OFFER PRICE"). The Offer is open for acceptance until 8:00 p.m. (EST) on the Expiry Date (as defined in the Offer) (currently Monday, April 7, 2003, but subject to extension at the discretion of the Offeror). The Offer extends to the Common Shares of Emco issuable upon the exercise of your Options (the "OPTIONED SHARES"). A copy of the Offer accompanies this letter. According to Emco's records, you hold Options to purchase the number of Optioned Shares specified in the attached Schedule "A". The Board of Directors of Emco has passed a resolution which (i) vests all outstanding Options immediately, and (ii) PROVIDES THAT ALL OPTIONS MUST BE EXERCISED ON OR BEFORE THE EXPIRY DATE, FAILING WHICH THEY WILL LAPSE AND BE CANCELLED, all conditional upon the Offeror taking up and paying for the Common Shares of Emco pursuant to the Offer. Emco has agreed to put into place certain arrangements which will facilitate your participation in the Offer in respect of any or all of your Optioned Shares, without any requirement for you to fund the option exercise price of your Options. If you wish to participate in these arrangements, you should complete and sign the Notice of Acceptance accompanying this letter and deliver it to Emco at 620 Richmond Street, London, Ontario, N6A 5J9, Fax No.: (519) 645-2870, Attention: Wayne Lawrence, by personal delivery, courier or fax, by no later than the Expiry Date. -2- By signing the Notice of Acceptance in respect of any or all of your Options, you elect, in lieu of exercising such Options in accordance with their terms, to transfer such Options to Emco in exchange for Emco paying you the "in-the-money" value of such Options in cash (net of any applicable withholding taxes), conditional upon the Offeror taking up and paying for the Common Shares of Emco pursuant to the Offer. In other words, you will receive payment of an amount equal to the difference between the Offer Price and the option exercise price of such Options (net of any applicable withholding taxes). If the Offeror does not acquire any Emco Common Shares under the Offer, the above election will have no effect and your Options will remain valid and outstanding, exercisable in accordance with their original terms. You may use the Notice of Acceptance to elect to participate in these arrangements in respect of all or any part of your Optioned Shares. You also have the choice of dealing with your Options in accordance with their terms. The Board of Directors of Emco recommends that you accept the Offer, both in respect of your "in-the-money" Optioned Shares and in respect of any other Common Shares of Emco you may own. However, the decision to accept the Offer is your own. If you do not wish to accept the Offer, do not complete the Notice of Acceptance accompanying this letter. As noted above, however, the Options will lapse and be cancelled if they have not been exercised on or before the Expiry Date, provided the Offeror takes up and pays for Emco Common Shares pursuant to the Offer. You may also have received another somewhat similar package of documents from Computershare Trust Company of Canada in respect of the Offer. Please note that the Notice of Acceptance enclosed with this letter (and NOT the documents received from Computershare Trust Company of Canada) should be used by you for your Optioned Shares if you wish to be paid their "in-the-money" value as described in this letter. TAX CONSEQUENCES CANADIAN FEDERAL INCOME TAX CONSEQUENCES Under the Income Tax Act (Canada) and the regulations thereto, upon the transfer of your Options to Emco and the payment by Emco to you of the "in-the-money" value of such Options as described in this letter, you will be deemed to receive a taxable benefit that will be included in your income from employment. This benefit will be equal to the difference between the Cdn. $16.60 Offer Price and the option exercise price of your Options. You will be allowed to deduct 50% of the benefit in computing your taxable income. Effectively, only 50% of the benefit will be taxed. Any payment made to you will be subject to any applicable withholding taxes required by law. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES If you are a citizen or a resident of the United States, under the Internal Revenue Code, upon the transfer of your Options to Emco and the payment by Emco to you of the "in-the-money" value of such Options as described in this letter, you will be treated as receiving income in connection with the performance of services equal to the excess of the Offer Price over the option exercise price of your Options. Such amount will be included in your gross -3- income as ordinary income for United States federal income tax purposes and also may be subject to state and local taxes. Any payment made to you may be subject to the withholding of federal, state and local income and employment taxes. SERVICES PERFORMED IN ANOTHER COUNTRY If you are a resident of Canada who has received Options in connection with the performance of services in the United States or a resident of the United States who has received Options in connection with the performance of services in Canada, you may be subject to taxation in both Canada and the United States. You should consult your tax adviser concerning such taxation and the possible application of foreign tax credits and benefits available under the United States - Canada Income Tax Treaty. These summaries are of a general nature only and are not intended to constitute, nor should they be construed to constitute, legal or tax advice to any particular holder of Options of the consequences of the Offer. If you have any questions, please contact the writer at (519) 645-3924. Yours truly, EMCO LIMITED By: /s/ Wayne Lawrence Wayne Lawrence Assistant Treasurer SCHEDULE "A" OPTIONS HELD NAME OF OPTION HOLDER: - NUMBER OF OPTIONED SHARES OPTION EXERCISE PRICE(s) - - EX-99.A.10 11 t09071exv99waw10.txt NOTICE OF ACCEPTANCE EXHIBIT (a)(10) NOTICE OF ACCEPTANCE IF YOU WISH TO PARTICIPATE IN THE OFFER (AS DEFINED BELOW) IN RESPECT OF ANY OR ALL OF YOUR OPTIONED SHARES (AS DEFINED BELOW), WITHOUT ANY REQUIREMENT FOR YOU TO FUND THE EXERCISE PRICE OF YOUR OPTIONS (AS DEFINED BELOW), AS DESCRIBED IN THE ACCOMPANYING LETTER, CAREFULLY COMPLETE PARAGRAPH 2 BELOW, SIGN THIS NOTICE OF ACCEPTANCE AND RETURN IT TO EMCO LIMITED AT 620 RICHMOND STREET, LONDON, ONTARIO, N6A 5J9, ATTENTION: WAYNE LAWRENCE, ON OR BEFORE THE EXPIRY DATE (AS DEFINED IN THE OFFER) (CURRENTLY MONDAY, APRIL 7, 2003, BUT SUBJECT TO EXTENSION AT THE DISCRETION OF THE OFFEROR (AS DEFINED BELOW)). THE ACCOMPANYING RETURN ENVELOPE MAY BE USED FOR THIS PURPOSE OR YOU MAY FAX THE COMPLETED NOTICE OF ACCEPTANCE TO (519) 645-2870. ALL OPTIONS MUST BE EXERCISED ON OR BEFORE THE EXPIRY DATE, FAILING WHICH THEY WILL LAPSE AND BE CANCELLED. TO: EMCO LIMITED ("EMCO") 1. I hold options (the "OPTIONS") to purchase Emco Common Shares (the "OPTIONED SHARES") under Emco's Stock Option Plan, being Part II of Emco's 1991 Long Term Incentive Program. I have received and have read (i) the Letter to Employee Stock Option Holders from Wayne Lawrence of Emco dated February 28, 2003, and (ii) the offer (the "OFFER") of 2022841 Ontario Inc. (the "OFFEROR") dated February 28, 2003 to purchase all outstanding Common Shares of Emco for Cdn. $16.60 per share (the "OFFER PRICE"). 2. The election specified in Paragraph 3 below will apply in respect of the following Options held by me (the "ELECTED OPTIONS"):
NUMBER OF OPTIONED SHARES EXERCISE PRICE(s) --------------------------------------------- ------------------------------------------------ --------------------------------------------- ------------------------------------------------ --------------------------------------------- ------------------------------------------------ --------------------------------------------- ------------------------------------------------ --------------------------------------------- ------------------------------------------------
I ACKNOWLEDGE THAT IF THIS PARAGRAPH 2 IS NOT COMPLETED BY ME, I WILL BE DEEMED TO HAVE SPECIFIED ALL "IN-THE-MONEY" OPTIONS HELD BY ME. 3. On and subject to the conditions set out in Paragraphs 4 and 5 below, in lieu of exercising the Elected Options in accordance with their terms, I irrevocably elect to transfer the Elected Options to Emco in exchange for Emco paying me the "in-the-money" value of the Elected Options in cash (net of any applicable withholding taxes), such value being determined based on the Offer Price. -2- 4. I retain the right to withdraw this Notice of Acceptance, at any time during which a holder of Common Shares of Emco has the right to withdraw such shares from the Offer under the rights of withdrawal set out in the Offer, by providing written notice to such effect to Emco at 620 Richmond Street, London, Ontario, N6A 5J9, Attention: Wayne Lawrence by personal delivery, courier or fax (fax no. (519) 645-2870). 5. I understand that, if the Offeror does not take up and pay for the Emco Common Shares deposited under the Offer, this Notice of Acceptance will cease to be of any force or effect and my Elected Options will remain valid and outstanding, exercisable in accordance with their original terms. DATED this ______ day of _________________, 2003. - ----------------------------- --------------------------------- WITNESS SIGNATURE OF OPTION HOLDER --------------------------------- NAME OF OPTION HOLDER - PLEASE PRINT EX-99.A.11 12 t09071exv99waw11.txt LETTER TP PARTICIPANTS EXHIBIT (a)(11) [LETTERHEAD OF EMCO LIMITED] February 28, 2003 TO: PARTICIPANTS IN THE EMCO EMPLOYEE STOCK PURCHASE PLAN Enclosed is the formal documentation of an offer by 2022841 Ontario Inc. to purchase all of the shares of Emco Limited. As you are an Emco shareholder through the Employee Stock Purchase Plan, this offer is important to you and you should review the enclosed materials. You must decide whether to accept the offer for your shares. The purpose of this letter is to provide you with a summary of certain highlights of the offer and to let you know what steps you must take if you wish to accept the offer. THE OFFER - The bidder (2022841 Ontario Inc.) is offering to pay $16.60 Canadian in cash for each share of Emco that you own, on the terms and conditions described in the enclosed documents. One of the more important conditions is that shareholders owning at least 2/3 of the outstanding shares accept the offer by its expiry date, which is anticipated to be Monday, April 7, 2003. - After considering a number of alternatives to increase shareholder value, the board of directors of Emco has recommended that shareholders accept this offer. - If the offer is successful, all of your shares in the Employee Stock Purchase Plan will vest and you will be able to tender all shares in your account to this offer. - You will shortly receive a statement showing the total number of shares you have in the Employee Stock Purchase Plan. - This letter contains only summary information about the offer. You are urged to read the accompanying circular of 2022841 Ontario Inc. with respect to the offer in detail before you decide whether or not to sell your shares. YOUR CHOICES - If you do not wish to accept the offer, do nothing. - If you wish to accept the offer for all of your shares, complete BLOCK A on page 3 of the attached Letter of Transmittal and Direction, complete BLOCK B on page 4 (if you are a U.S. employee), date and sign the letter on page 4, and send it by mail or courier in the enclosed addressed envelope to Clarica Trust Company at the address set out in the Letter of Transmittal and Direction. Clarica, as the registered holder of the Emco shares held in the Employee Stock Purchase Plan, will then tender your shares into the offer on your behalf. Note that your letter must be received by Clarica by the offer expiry date for your acceptance to be effective. -2- - If you wish to accept the offer for only some of your shares, write that number in the blank in Item 1 on page 1 of the attached Letter of Transmittal and Direction, complete BLOCK A on page 3, complete BLOCK B on page 4 (if you are a U.S. employee), date and sign the letter on page 4, and send it by mail or courier in the enclosed addressed envelope to Clarica Trust Company at the address set out in the Letter of Transmittal and Direction. Clarica, as the registered holder of the Emco shares held in the Employee Stock Purchase Plan, will then tender your shares into the offer on your behalf. Note that your letter must be received by Clarica by the offer expiry date for your acceptance to be effective. - Note that if you accept the offer and then change your mind, you may under certain circumstances have a right to withdraw your shares from the offer. In order to exercise any such right, you must provide written notice that you wish to withdraw to Clarica Trust Company at the address set out in the Letter of Transmittal and Direction, by personal delivery, courier or fax. Clarica, as the registered holder of the Emco shares held in the Employee Stock Purchase Plan, will then withdraw your shares from the offer on your behalf. We would emphasize that if you choose to accept the offer for some or all of your shares in the Employee Stock Purchase Plan, you must arrange for the delivery of your completed and signed Letter of Transmittal and Direction to Clarica by the offer expiry date in order to be effective. You may also have received another somewhat similar package of documents from Computershare Trust Company in respect of the offer. Please note that the Letter of Transmittal and Direction enclosed with this letter (and NOT the documents received from Computershare Trust Company) should be used by you for the shares held by you in the Emco Employee Stock Purchase Plan. (You should use the documents received from Computershare Trust Company for any other Emco shares owned by you.) Note also that the completed and signed Letter of Transmittal and Direction must be delivered to Clarica Trust Company at the address set out in the Letter of Transmittal and Direction (and NOT to Computershare Trust Company). If you need assistance in completing the enclosed Letter of Transmittal and Direction, please contact one of the persons listed at the end of that document. Yours truly, EMCO LIMITED By: /s/ Wayne Lawrence Wayne Lawrence Assistant Treasurer EX-99.A.12 13 t09071exv99waw12.txt LETTER OF TRANSMITTAL AND DIRECTION EXHIBIT (a)(12) LETTER OF TRANSMITTAL AND DIRECTION FOR USE BY PARTICIPANTS IN THE EMCO LIMITED EMPLOYEE STOCK PURCHASE PLAN This Letter of Transmittal and Direction (this "LETTER OF TRANSMITTAL") is for use by participants in the Employee Stock Purchase Plan (the "PLAN") of Emco Limited ("EMCO") in connection with the offer (the "OFFER") dated February 28, 2003 made by 2022841 Ontario Inc. (the "OFFEROR"), an indirect wholly-owned subsidiary of Blackfriars Corp., to purchase all of the outstanding Common Shares of Emco (the "EMCO SHARES"). In order to accept the Offer, participants in the Plan must properly complete and sign this Letter of Transmittal and deliver it to the sole trustee for the Plan, Clarica Trust Company (the "TRUSTEE") prior to 8:00 p.m. (EST) on the Expiry Date (as defined in the Offer) (currently Monday, April 7, 2003, but subject to extension at the discretion of the Offeror). See Instruction 1 below for delivery instructions. Participants in the Plan are referred to the offer to purchase and take-over bid circular of the Offeror dated February 28, 2003 (the "OFFEROR'S CIRCULAR") that accompanies this Letter of Transmittal. Capitalized terms used but not otherwise defined in this Letter of Transmittal have respective meanings set out in the Offeror's Circular. The terms and conditions of the Offer are incorporated by reference in this Letter of Transmittal. PLEASE CAREFULLY READ THE INSTRUCTIONS SET OUT BELOW BEFORE COMPLETING THIS LETTER OF TRANSMITTAL. ************************* TO: 2022841 ONTARIO INC. AND TO: COMPUTERSHARE TRUST COMPANY OF CANADA AND TO: CLARICA TRUST COMPANY The undersigned: 1. irrevocably authorizes and directs the Trustee to tender into the Offer ALL (unless a lesser number or percentage is specified hereafter: _____________, in which case such lesser number or percentage) of the Emco Shares held on behalf of the undersigned by the Trustee pursuant to the Plan, together with any and all dividends, stock dividends, securities, rights, warrants, payments, assets or other interests and distributions declared, paid, issued, distributed, made or transferred on or in respect of such Emco Shares on and after February 20, 2003 (the date of the announcement of the Offer) (collectively, the "PURCHASED SHARES"), and for doing so, this shall be the Trustee's good and sufficient authority; 2. subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for and in respect of the Purchased Shares and, on and subject to the terms and conditions of the Offer, sells, assigns and transfers to the Offeror all of the undersigned's -2- right, title and interest in and to the Purchased Shares, effective on and after the date on which the Offeror takes up and pays for the Purchased Shares (the "EFFECTIVE DATE"); 3. acknowledges that, in order for the undersigned to exercise any right of withdrawal the undersigned may have under the provisions of the Offer, the undersigned must provide written notice to such effect to the Trustee, Clarica Trust Company, at 227 King Street South, Waterloo, Ontario, N2J 4C5, Attention: Kim Dreher, by personal delivery, courier or fax (fax no. (519) 888-3143); 4. acknowledges receipt of the Offeror's Circular; 5. represents and warrants that: (a) the undersigned is a "Participant" in the Plan (as such term is defined therein); (b) the undersigned has full power and authority to instruct the Trustee to tender the Purchased Shares into the Offer and to sell, assign and transfer the Purchased Shares to the Offeror as contemplated herein; (c) the undersigned beneficially owns the Purchased Shares free and clear of all liens, restrictions, charges, encumbrances, claims and equities whatsoever; (d) the undersigned has not sold, assigned or transferred, or agreed to sell, assign or transfer, any of the Purchased Shares to any other person; and (e) when the Purchased Shares are taken up and paid for by the Offeror, the Offeror will acquire good title thereto free and clear of all liens, restrictions, charges, encumbrances, claims and equities whatsoever; 6. irrevocably constitutes and appoints any officer of the Offeror as the true and lawful agent, attorney and proxy of the undersigned with respect to the Purchased Shares, effective on and after the Effective Date, with full power of substitution, in the name and on behalf of the undersigned (such power of attorney being deemed to be an irrevocable power coupled with an interest): (a) to register, record, transfer and enter the transfer of Purchased Shares on the appropriate register of shareholders maintained by Emco; and (b) to exercise any and all of the rights of the holder of the Purchased Shares; 7. agrees, effective on and after the Effective Date, not to vote any of the Purchased Shares at any meeting of holders of Emco Shares or to exercise any other rights or privileges attached to the Purchased Shares; 8. covenants to execute, upon request, any additional documents, transfers or other assurances necessary or desirable to complete the sale, assignment and transfer of the Purchased Shares to the Offeror contemplated herein; -3- 9. acknowledges that all authority herein conferred by the undersigned shall survive the death, incapacity, bankruptcy or insolvency of the undersigned and that all obligations of the undersigned herein shall be binding upon the heirs, executors, personal representatives, successors and assigns of the undersigned; and 10. by virtue of the execution of this Letter of Transmittal, shall be deemed to have agreed that all questions as to validity, form, eligibility (including timely receipt) and acceptance of any Purchased Shares deposited pursuant to the Offer will be determined by the Offeror, in its reasonable discretion, and that such determination shall be final and binding and acknowledges that there shall be no duty or obligation on the Offeror, Computershare Trust Company of Canada (the "DEPOSITARY") or any other person to give notice of any defect or irregularity in any deposit and no liability shall be incurred by any of them for failure to give any such notice. The undersigned instructs the Trustee, the Offeror and the Depositary, upon the Offeror taking up and paying for the Purchased Shares, to mail the resulting cheque by first class mail, postage prepaid, in accordance with the instructions given below in Block A. Should the Purchased Shares not be purchased in accordance with the terms of the Offer, this Letter of Transmittal shall be returned to the undersigned in accordance with the instructions in the preceding sentence and the Purchased Shares shall be returned to the Trustee. FOR QUEBEC PLAN PARTICIPANTS ONLY: By reason of the use by the undersigned of an English language form of Letter of Transmittal, the undersigned shall be deemed to have required that any contract evidenced by the Offer, as accepted through this Letter of Transmittal, as well as all documents related thereto, be drawn exclusively in the English language. En raison de l'usage d'une lettre d'envoi en langue anglaise par le soussigne, le soussigne et les destinataires sont reputes avoir demande que tout contrat atteste par l'offre et son acceptation par cette lettre d'envoi, de meme que tous les documents qui s'y rapportent, soient rediges exclusivement en langue anglaise. BLOCK A - ------------------------------------------------------------------- ISSUE CHEQUE IN THE NAME OF AND SEND CHEQUE TO: (please print) - --------------------------------------------------- (Name) - --------------------------------------------------- (Street Address and Number) - --------------------------------------------------- (City and Province/State) - --------------------------------------------------- (Country and Postal Code/Zip Code) - --------------------------------------------------- (Telephone - Business Hours) - --------------------------------------------------- (Social Insurance or Tax Identification Number) -4- Dated: , 2003 -------------------------------------- - --------------------------------------------------- Signature of Plan Participant or Authorized Representative (see Instruction 3) - --------------------------------------------------- Name of Plan Participant (please print or type) - --------------------------------------------------- Name of Authorized Representative (please print or type) (if applicable) BLOCK B SUBSTITUTE FORM W-9 TO BE COMPLETED BY U.S. PLAN PARTICIPANTS ONLY (See Instruction 5) Under penalty of perjury, I certify that: 1. The social security or other taxpayer identification number stated above is my correct taxpayer identification number (or I am waiting for a number to be issued to me); 2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the United States Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and 3. I am a U.S. person (including a U.S. resident alien). Certification Instructions: You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. - ----------------------------------- Tax Identification Number - ----------------------------------- ---------------------------- Signature of Plan Participant Date -i- INSTRUCTIONS 1. DELIVERY OF LETTER OF TRANSMITTAL (a) This Letter of Transmittal, properly completed and signed, must be received by the Trustee, Clarica Trust Company, at its office specified below at or prior to 8:00 p.m. (EST) on the Expiry Date (as defined in the Offer) (currently Monday, April 7, 2003, but subject to extension at the discretion of the Offeror). (b) The method used to deliver this Letter of Transmittal is at the option and risk of the Plan participant, and delivery will be deemed effective only when this Letter of Transmittal is actually received as indicated above. The Offeror recommends that this Letter of Transmittal be hand delivered or couriered to the Trustee, Clarica Trust Company, at its office specified below and that a receipt therefor be obtained; otherwise, the use of registered mail with return receipt requested, properly insured, is recommended. 2. SIGNATURES This Letter of Transmittal must be completed and signed by the Plan participant accepting the Offer or by such Plan participant's duly authorized representative (in accordance with Instruction 3 below). 3. FIDUCIARIES, REPRESENTATIVES AND AUTHORIZATIONS Where this Letter of Transmittal is executed by a person acting as an executor, administrator, trustee, guardian, attorney-in-fact, agent or any other representative or fiduciary capacity, this Letter of Transmittal must be accompanied by satisfactory evidence/proof of his or her appointment and authority to act. Any of the Offeror, the Trustee or the Depositary, at its sole discretion, may require additional evidence of appointment and authority to act. 4. PARTIAL TENDERS If less than all of the Emco Shares held by the Trustee on behalf of the Plan participant pursuant to the Plan are to be deposited into the Offer, fill in the number or percentage of Emco Shares to be deposited in the appropriate space in Section 1 of this Letter of Transmittal. In such case, the Emco Shares not deposited will continue to be held in the Plan. The total number of Emco Shares held by the Trustee on behalf of the Plan participant will be deemed to have been deposited unless otherwise indicated. 5. SUBSTITUTE FORM W-9 Each U.S. Plan participant is required to provide the Trustee and the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided in Block B, and to certify whether such Plan participant is subject to backup withholding of United States federal income tax. If a U.S. Plan participant has been notified by the Internal Revenue Service that such Plan participant is subject to backup withholding, such Plan participant must cross out item 2 of the Substitute Form W-9, unless such Plan participant has since been notified by the Internal Revenue Service that such Plan participant is no longer -ii- subject to backup withholding. Failure to provide the information in the Substitute Form W-9 may subject a U.S. Plan participant to 30% United States federal income tax withholding on the payment of the purchase price of all Emco Shares purchased from such Plan participant. If a U.S. Plan participant has not been issued a TIN and has applied for one or intends to apply for one in the near future, such Plan participant should write "Applied For" in the space provided for in the TIN in the Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in the Substitute Form W-9 and the Trustee and the Depositary are not provided with a TIN within 60 days, the Trustee and the Depositary will withhold 30% of all payments of the purchase price to such Plan participant until a TIN is provided to the Trustee and the Depositary. 6. MISCELLANEOUS (a) No alternative, conditional or contingent deposits of Emco Shares held pursuant to the Plan will be accepted. All depositing Plan participants by execution of this Letter of Transmittal waive any right to receive any notice of acceptance of the Purchased Shares for payment. (b) The Offer and any agreement resulting from the acceptance of the Offer will be construed in accordance with and governed by the laws of the Province of Ontario and the laws of Canada applicable therein. The Plan participant signing this Letter of Transmittal hereby unconditionally and irrevocably attorns to the jurisdiction of the courts of the Province of Ontario. ************************* CLARICA TRUST COMPANY 227 King Street South Waterloo, Ontario N2J 4C5 Attention: Kim Dreher email: kim.dreher@clarica.com telephone: 1-519-888-3900 ext. 5298 fax: 1-519-888-3143 ANY QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED BY PLAN PARTICIPANTS TO EMCO AT THE TELEPHONE NUMBER AND LOCATION SET OUT BELOW: Emco Limited 1108 Dundas Street East London, Ontario N5W 3A7 Attention: Martha Lawson or Frances Smeets email: mlawson@emcoltd.com or fsmeets@emcoltd.com telephone: 1-519-453-9600 fax: 1-519-453-4659 EX-99.D.1 14 t09071exv99wdw1.txt SUPPORT AGREEMENT EXHIBIT (d)(1) SUPPORT AGREEMENT BETWEEN BLACKFRIARS CORP. AND 2022841 ONTARIO INC. AND EMCO LIMITED DATED AS OF FEBRUARY 19, 2003 TABLE OF CONTENTS TABLE OF CONTENTS ARTICLE 1 - THE OFFER.................................................... 1 1.1 Interpretation...................................................... 1 1.2 The Offer........................................................... 3 1.3 Mailing the Offer................................................... 3 1.4 SEC Filings......................................................... 3 1.5 Expiry of the Offer................................................. 4 1.6 Modification of the Offer........................................... 4 1.7 Approval of the Offer............................................... 4 1.8 Directors' Circular................................................. 4 1.9 Shareholder Lists................................................... 5 1.10 Directors........................................................... 5 1.11 Subsequent Acquisition Transaction.................................. 5 1.12 OSC Rule 61-501 Order............................................... 6 1.13 Guarantee........................................................... 6 ARTICLE 2 - Representations and warranties............................... 6 2.1 Representations and Warranties....................................... 6 ARTICLE 3 - COVENANTS RELATING TO CONDUCT OF BUSINESS ................... 6 3.1 Conduct of Business by the Company.................................. 6 3.2 No Solicitation..................................................... 9 3.3 Existing Take-over Proposals; Third Party Standstill Agreements ....11 ARTICLE 4 - ADDITIONAL AGREEMENTS........................................11 4.1 Access to Information...............................................11 4.2 Indemnification; Directors and Officers Insurance...................12 4.3 Notification of Certain Matters.....................................12 4.4 Fees................................................................13 4.5 Company Stock Options...............................................13 4.6 Reasonable Commercial Efforts.......................................13 4.7 Public Announcements................................................14 4.8 Take Up and Payment.................................................14 4.9 Employment Contracts and Benefit Plans..............................14 4.10 Transfer Agent......................................................14 ARTICLE 5 - CONDITIONS PRECEDENT TO THE OFFER ...........................15 5.1 Conditions to Bidco's Obligation to Make the Offer..................15 5.2 Conditions to Bidco's Obligation to Complete the Offer..............15 ARTICLE 6 - TERMINATION, AMENDMENT AND WAIVER............................18 6.1 Termination.........................................................18 6.2 Effect of Termination...............................................19 6.3 Amendment...........................................................19 6.4 Waiver..............................................................19 ARTICLE 7 - GENERAL PROVISIONS ..........................................19 7.1 Notices.............................................................20 7.2 Counterparts........................................................20 7.3 Currency............................................................21 7.4 Time of the Essence.................................................21 7.5 Entire Agreement; No Third-Party Beneficiaries......................21 7.6 Governing Law.......................................................21 7.7 Assignment..........................................................21 7.8 Severability........................................................21 7.9 Enforcement of this Agreement.......................................21 SCHEDULE "A"............................................................. 1 Part 1 - Representations and Warranties of Parent and Bidco ............. 1 1.1 Organization.................................................. 1 1.2 Authority..................................................... 1 1.3 No Violation.................................................. 1 1.4 Financing the Offer........................................... 2 1.5 Litigation, etc .............................................. 2 Part 2 - Representations and Warranties of the Company .................. 2 2.1 Organization.................................................. 2 2.2 Capitalization................................................ 2 2.3 Authority .................................................... 3 2.4 No Violation.................................................. 3 2.5 Absence of Changes............................................ 4 2.6 No Material Misrepresentation................................. 4 2.7 Financial Statements.......................................... 4 2.8 Litigation, etc............................................... 4 2.9 Tax Matters................................................... 5 2.10 Pension and Termination Benefits.............................. 6 2.11 Fairness Opinion.............................................. 6 2.12 Severance and Employment Agreements........................... 6 2.13 Compliance with Laws.......................................... 6 2.14 Insurance..................................................... 7 2.15 Directors and Officers Insurance.............................. 7 2.17 TD Fee........................................................ 7 2.18 Foreign Private Issuer........................................ 7 SUPPORT AGREEMENT ----------------- THIS AGREEMENT is made as of February 19, 2003 BETWEEN: BLACKFRIARS CORP., a corporation existing under the laws of Delaware ("PARENT"), -and- 2022841 ONTARIO INC., a corporation existing under the laws of Ontario, a wholly owned subsidiary of Parent ("BIDCO"), -and- EMCO LIMITED, a company existing under the laws of Ontario (the "Company"), WHEREAS Parent, through Bidco, proposes to make an offer (the "OFFER") to purchase all of the common shares of the Company (the "COMMON SHARES") at a price of $16.60 per Common Share in cash; AND WHEREAS the Offer is the result of a comprehensive process of reviewing strategic alternatives conducted by an independent committee of the Company's board of directors, with the assistance of professional financial and legal advisors; AND WHEREAS the Board of Directors of the Company has determined, after receiving legal, financial and other advice, that it would be in the best interests of the Company to support the Offer and to recommend acceptance of the Offer to the Shareholders; AND WHEREAS in order to induce Parent and Bidco to enter into this Agreement, concurrently herewith Masco Corporation has agreed to enter into a Lock-up Agreement dated as of the date hereof (the "LOCK-UP AGREEMENT") in the form of the attached Schedule "B" pursuant to which Masco Corporation has agreed, subject to the terms and conditions of such agreement, to deposit 6,621,334 Common Shares in acceptance of the Offer; NOW, THEREFORE, in consideration of the covenants, representations and warranties herein contained, the parties agree as follows: ARTICLE 1 - THE OFFER --------------------- 1.1 INTERPRETATION -------------- (1) When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "INCLUDE," "INCLUDES" or "INCLUDING" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." (2) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (3) "SUBSIDIARY" means any corporation, partnership, limited liability company, joint venture or other legal entity of which Parent or the Company, as the case may be (either alone or through or together with any other Subsidiary), owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, limited liability company, joint venture or other legal entity. (4) "KNOWLEDGE OF THE COMPANY" means the actual knowledge of the directors and officers of the Company after having made reasonable enquiry. (5) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when used with respect to the Company, Parent or Bidco, as the case may be, any change or effect that is or could reasonably be expected to be materially adverse to the business, operations, assets, liabilities, employee relationships, customer or supplier relationships, earnings or results of operations, business conditions or prospects (financial or otherwise), of the Company and its Subsidiaries, or Parent and its Subsidiaries, taken as a whole, as the case may be. (6) "PERSON" means an individual, partnership, association, body corporate, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative. (7) "OPTIONS" means all currently outstanding options to purchase Common Shares under the Company's 1991 Long-Term Incentive Plan, or other compensation arrangements. (8) "SEC" means the United States Securities and Exchange Commission. (9) "SHAREHOLDERS" means, collectively, all holders of Common Shares. (10) A calculation made on a "FULLY-DILUTED BASIS" means a calculation made on a fully-diluted basis after excluding therefrom all impact of converting the Company's 6-1/2% convertible unsecured subordinated debentures. (11) "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated as of September 25, 2002 between an affiliate of Parent and the Company. (12) "DISCLOSURE LETTER" means the disclosure letter dated the date of this Agreement from the Company to Parent and Bidco. (13) "$" means the lawful currency of Canada. 1.2 THE OFFER --------- Subject to the terms and conditions set forth below, Parent shall cause Bidco to make the Offer to purchase all of the issued and outstanding Common Shares, including all Common Shares issued on the exercise of outstanding Options, at a price of $16.60 per Common Share in cash in accordance with all applicable securities legislation, including the Exchange Act. The term "OFFER" shall include any amendments to the Offer made in accordance with the terms of this Agreement, including removing or waiving any condition or extending the period during which Common Shares may be deposited. The Offer shall be subject to there being validly deposited under the Offer and not withdrawn at the expiry thereof such number of Common Shares which constitutes at least 66-2/3% of the Common Shares outstanding (on a Fully-Diluted Basis) (the "MINIMUM TENDER CONDITION") and shall be subject to the other conditions set forth in Article 5. If the Company has declared, set aside or paid any dividend on, or made any other actual, constructive or deemed distribution in respect of, any of its Common Shares, or otherwise made any payments to its shareholders in their capacity as such, Bidco may reduce the amount of the Offer price per Common Share by any amount they determine in their sole discretion, provided that such amount shall not exceed the amount of such dividend or distribution received per Common Share. 1.3 MAILING THE OFFER ----------------- Subject to Section 5.1, Bidco shall mail the Offer and accompanying take-over bid circular (collectively, the "TAKE-OVER BID CIRCULAR") in accordance with applicable law to all registered Shareholders as soon as reasonably practicable and, in any event, not later than 11:59 p.m. (Toronto time) on March 14, 2003 (such time on such date being referred to herein as the "LATEST MAILING TIME"); provided, however, that if the mailing of the Offer is delayed by reason of an injunction or order made by a court or regulatory authority of competent jurisdiction, then, provided that such injunction or order is being contested or appealed, then the Latest Mailing Time shall be extended to the earlier of 11:59 p.m. (Toronto time) on April 7, 2003 and 11:59 p.m. (Toronto time) on the fifth business day following the date on which such injunction or order ceases to be in effect. The Company and its counsel shall be given an opportunity to review and comment upon the Take-over Bid Circular prior to mailing, recognizing that whether or not such comments are appropriate will be determined by Bidco, acting reasonably. 1.4 SEC FILINGS ----------- As soon as practicable on the date of commencement of the Offer, Parent and Bidco shall file or cause to be filed with the SEC a Tender Offer Statement on Schedule TO (together with any supplements or amendments thereto, the "SCHEDULE TO") with respect to the Offer which shall contain (as an exhibit) or shall incorporate by reference the Take-over Bid Circular and related letter of transmittal, as well as other ancillary Offer documents and instruments. 1.5 EXPIRY OF THE OFFER ------------------- The Offer shall expire not earlier than 5:00 p.m. (Toronto time) on the 36th day after the date that the Offer is first commenced within the meaning of the Securities Act (Ontario), subject to the right of Bidco to extend the period during which Common Shares may be deposited under the Offer (the "EXPIRY TIME"). 1.6 MODIFICATION OF THE OFFER ------------------------- It is understood and agreed that Bidco shall not, without the prior consent of the Company, amend the terms of the Offer other than to increase the consideration per Common Share payable under the Offer, to extend the expiry of the Offer or to waive any conditions of the Offer. 1.7 APPROVAL OF THE OFFER --------------------- The Company represents and warrants to and in favour of Bidco and Parent and acknowledges that Bidco and Parent are relying upon such representations and warranties in entering into this Agreement, that, as of the date hereof, the Board of Directors of the Company, following consultation with its financial and legal advisors, has determined unanimously that the Offer is fair to the Shareholders and that it is in the best interests of the Company and the Shareholders for this Agreement to be entered into, the Offer to be made and the Board of Directors of the Company to support the making of the Offer and, accordingly, has approved the entering into of this Agreement and the making of a recommendation that Shareholders accept the Offer. After reasonable enquiry, the Board of Directors has been advised and believes that each of the directors of the Company intends to tender under the Offer all Common Shares of which he is the beneficial owner. 1.8 DIRECTORS' CIRCULAR ------------------- (1) The Company covenants to cooperate with Bidco and Parent and to take all reasonable action to support the Offer and to provide to Bidco and Parent on a confidential basis, a draft copy of any directors' circular (each, a "DIRECTORS' CIRCULAR") to be issued in respect of the Offer, prior to the mailing thereof, and to provide Bidco and Parent with a reasonable opportunity to review and provide comments thereon, recognizing that whether or not such comments are appropriate will be determined by the Company, acting reasonably. The Directors' Circular will reflect the determinations referred to in Section 1.7 and the Company will mail the Directors' Circular concurrently with the mailing by Bidco of the Take-over Bid Circular to the Shareholders. (2) The Company shall file with the SEC, contemporaneously with the filing by Parent and Bidco of the Schedule TO, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any supplements or amendments thereto, the "SCHEDULE 14D-9") containing the recommendation of the Board of Directors of the Company in favour of the Offer and the approval of this Agreement. 1.9 SHAREHOLDER LISTS ----------------- (1) The Company shall cause its transfer agent to provide Bidco, within three business days of the execution and delivery of this Agreement, with a list of the registered holders of Common Shares and a list of participants in book-based nominee registrants such as CDS & Co. and CEDE & Co. who hold Common Shares, together with their addresses and respective holdings of Common Shares. The Company shall concurrently provide Bidco with the names, addresses and holdings of all persons having rights to acquire Common Shares and the details of such rights. The Company shall from time to time furnish Bidco with such additional information, including updated or additional lists of Shareholders, mailing labels and lists of securities positions and other assistance as Bidco may reasonably request in order to be able to communicate the Offer to the Shareholders and to such other persons as are entitled to receive the Offer under applicable law. (2) The Company will make such enquiries as counsel shall advise are necessary to determine to the extent feasible the number of Shareholders in the United States in order to confirm the availability of exemptions for the Offer from U.S. laws respecting tender offers. 1.10 DIRECTORS --------- The Company agrees and represents that its Board of Directors has determined unanimously to use its and their respective reasonable efforts to enable Bidco to elect or appoint all of the directors of the Company as soon as possible after Bidco takes up and pays for in excess of 66-2/3% of the Common Shares (on a Fully-Diluted Basis) pursuant to the Offer. If Bidco takes up and pays for such number of Common Shares as represents at least a majority of the outstanding Common Shares (on a Fully-Diluted Basis) but less than 66-2/3% (on a Fully-Diluted Basis), the Company acknowledges that Bidco shall be entitled to designate such number of members of the Board of Directors, and any committees thereof, as is proportionate to the percentage of the outstanding Common Shares owned by Bidco and the Company shall cooperate with Bidco, subject to applicable law, to enable Bidco's designees to be elected or appointed to the Board of Directors and to constitute a majority of the Board of Directors, including at the request of Bidco, by its reasonable efforts to expand the Board of Directors and/or secure the resignations of such number of directors as is necessary to enable Bidco's designees to be elected or appointed to the Board of Directors. 1.11 SUBSEQUENT ACQUISITION TRANSACTION ---------------------------------- If, within 120 days after the date of the Offer, the Offer has been accepted by holders of not less than 90% of the outstanding Common Shares, Bidco shall use its reasonable best efforts, to the extent permitted by applicable law, to acquire the remainder of the Common Shares from those Shareholders who have not accepted the Offer pursuant to Section 188 of the Business Corporations Act (Ontario) (the "OBCA") at the same price as in the Offer. If that statutory right of acquisition is not available, Bidco may pursue other means of acquiring the remaining Common Shares not tendered to the Offer. In the event Bidco takes up and pays for Common Shares under the Offer representing at least 66-2/3% of the Common Shares (on a Fully-Diluted Basis), the Company agrees to cooperate with Bidco and to use its reasonable best efforts to enable Bidco to acquire the remaining Common Shares by way of amalgamation,statutory arrangement, capital reorganization or other transaction involving the Company and Bidco or an Affiliate (as defined in the Securities Act (Ontario)) of Bidco (a "Subsequent Acquisition Transaction"), provided that the consideration offered in connection with the Subsequent Acquisition Transaction is at least equivalent in value to the consideration offered under the Offer. 1.12 OSC RULE 61-501 ORDER --------------------- The Company acknowledges that Parent and/or its affiliates may, if determined necessary or desirable in their sole discretion, apply for an order under section 4.8(1)1 or section 9.1 of Rule 61-501 of the Ontario Securities Commission (and equivalent provisions in other jurisdictions) to confirm that, as contemplated in section 2.3(2) of Policy 61-501CP of the Ontario Securities Commission, Masco Corporation is not, by virtue of entering into the Lock-up Agreement, acting jointly or in concert with Parent or its affiliates and thus will be able to be counted as part of the minority for the purposes of any second step going private transaction, and for greater certainty, the Company will support such efforts in such application or before the Court and elsewhere in the event that it is challenged. 1.13 GUARANTEE --------- Parent hereby irrevocably and unconditionally guarantees the timely performance by Bidco of all its obligations under this Agreement, including the making of the Offer and the taking up and paying for of the Common Shares properly deposited thereunder, subject to the terms and conditions of this Agreement. ARTICLE 2 - REPRESENTATIONS AND WARRANTIES ------------------------------------------ 2.1 REPRESENTATIONS AND WARRANTIES ------------------------------ Certain representations and warranties from Parent and Bidco to the Company and from the Company to Parent and Bidco are set out in Schedule "A". The representations and warranties in this Agreement (including those set out in Schedule "A") shall terminate at the Effective Time. ARTICLE 3 - COVENANTS RELATING TO CONDUCT OF BUSINESS ----------------------------------------------------- 3.1 CONDUCT OF BUSINESS BY THE COMPANY ---------------------------------- Except as expressly permitted by clauses (a) through (s) of this Section 3.1, during the period from the date of this Agreement to the earlier of the time (the "EFFECTIVE TIME") of the appointment or election to the Board of Directors of the Company of persons designated by Bidco who represent a majority of the directors of the Company and the termination of this Agreement in accordance with its terms, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its and their businesses in the ordinary course of its and their businesses as currently conducted and, to the extent consistent therewith, use reasonable commercial efforts to preserve intact its and their current business organizations, keep available the services of its and their current officers and employees and preserve its and their relationships with customers, suppliers and others having business dealings with it and them to the end that its and their goodwill and ongoing businesses shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or in the Disclosure Letter, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent: (a) (A) split, combine or reclassify any of its or their shares or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its or their shares or (B) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of the Company or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, in each case, other than intercompany transactions involving the Company and its Subsidiaries and other than purchases of Common Shares pursuant to the Company's Employee Stock Purchase Plan; (b) issue, deliver, sell, pledge, dispose of, or otherwise encumber, any of its or their shares, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire any such shares, voting securities, equity equivalent or convertible securities, other than the issuance of Common Shares upon the exercise of Options outstanding on the date of this Agreement or upon the conversion of 6-1/2% convertible unsecured subordinated debentures; (c) amend its or their certificate of incorporation, articles, by-laws or other charter documents; (d) acquire or agree to acquire by merging, amalgamating or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any person or other business organization or division thereof or otherwise acquire or agree to acquire any assets, other than acquisitions of inventory or fixed assets in the ordinary course of business consistent with past practice, including capital expenditures previously authorized in the Company's most recent budget as disclosed in the Company's data room; (e) pledge, encumber, sell, lease or otherwise dispose of, or agree to pledge, encumber, sell, lease or otherwise dispose of, any of its or their assets, other than in the ordinary course of business consistent with past practice; (f) incur any indebtedness for borrowed money, guarantee any such indebtedness or make any loans, advances or capital contributions to, or other investments in, any other person, other than indebtedness, guarantees, loans, advances, capital contributions and investments (i) between the Company and any of its wholly-owned Subsidiaries in the ordinary course of business consistent with past practice and (ii) other than borrowings under the Company's existing revolving credit facilities or master lease arrangements in the ordinary course of business consistent with past practice; (g) alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any of its Subsidiaries; (h) enter into or amend any material written employment, consulting or severance agreement with any management level employee or any consultant or the equivalent or any compensation agreement, benefit plan, retention plan, severance plan or bonus plan or grant any bonuses, salary increases, pension benefits, retirement allowances, retention, severance or termination pay to any management level employee or any consultant other than pursuant to and in accordance with written agreements in effect on the date hereof; (i) violate or fail to perform any material obligation or duty imposed upon it or any of its Subsidiaries by any applicable law; (j) make any change to accounting policies or procedures (other than changes required to be made by Canadian generally accepted accounting principles); (k) prepare or file any Returns inconsistent with past practice or, on any such Returns, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Returns in prior periods; (l) make or rescind any express or deemed Tax election related to Taxes or change any of its or their methods of reporting income or deductions for Tax purposes or make a request for a Tax ruling or enter into any agreement with any taxing authority; (m) commence any litigation or proceeding or settle or compromise any litigation except in the ordinary course of business consistent with past practice and except for any settlement or compromise having an aggregate cost to the Company of not more than $500,000; (n) enter into or amend any agreement or contract material to the Company and its Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice (and other than as contemplated by this Agreement) or purchase any real property; (o) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the December 31, 2002 audited financial statements (or the notes thereto) of the Company and its Subsidiaries or incurred in the ordinary course of business consistent with past practice or arising under applicable law; (p) directly or indirectly (i) reduce the stated capital of the Company or any of its Subsidiaries, or (ii) reorganize, merge, amalgamate or consolidate the Company or any of its Subsidiaries with any person; (q) allow its current insurance (or re-insurance) policies to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such cancellation, termination or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; (r) in the case of employees who are not management level employees, take any action other than in the ordinary course of business consistent with past practice, with respect to entering into or amending any employment, severance, collective bargaining, benefit or similar agreements, policies or arrangements or with respect to the grant of any bonuses, salary increases, pension benefits, retirement allowances, deferred compensation, retention, severance or termination pay or any other form of compensation or profit sharing or with respect to any increase of benefits otherwise payable; or (s) authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing. 3.2 NO SOLICITATION --------------- (1) Except with the prior written consent of Parent, the Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any officer, director or employee of or any financial advisor, attorney or other advisor or representative or agent of, the Company or any of its Subsidiaries to, (i) solicit, initiate or encourage inquiries or the submission of any Take-over Proposal (as hereafter defined), (ii) enter into any agreement with respect to or approve or recommend any Take-over Proposal or (iii) participate in any negotiations regarding, or furnish to any person any information with respect to the Company or any of its Subsidiaries in connection with the making of any proposal that constitutes, or may reasonably be expected to lead to, any Take-over Proposal; provided, however, that nothing contained in this Section 3.2 shall prohibit the Company, its directors or its professional advisors from referring a third party to this Section 3.2 or making a copy of this Section 3.2 available to any third party; and, provided, further, that if the Board of Directors of the Company reasonably determines (after consultation with its financial advisors) that an unsolicited bona fide written Take-over Proposal constitutes a Superior Proposal (as defined below), then, to the extent required by the fiduciary obligations of the Board of Directors of the Company, as determined in good faith by a majority thereof after receiving a written opinion of its outside counsel, or advice of its outside counsel that is reflected in the minutes of the meeting of the Board of Directors of the Company, to such effect, the Company may, in response to an unsolicited request therefor, (i) furnish information with respect to the Company and its Subsidiaries to any person pursuant to a customary confidentiality agreement (as determined by the Company's counsel) and, (ii) negotiate with the third party and enter into an agreement with respect to a Superior Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any officer or director of the Company or any of its Subsidiaries or any financial advisor, attorney or other advisor or representative of the Company or any of its Subsidiaries, whether or not such person is purporting to act on behalf of the Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach of this Section 3.2(1) by the Company. (2) For purposes of this Agreement, "TAKE-OVER PROPOSAL" means any proposal or offer from any other person, or other business organization whatsoever (including any of the Company's officers or directors) relating to any recapitalization, merger, amalgamation, acquisition, arrangement or other business combination involving the Company or any of its Subsidiaries or any proposal or offer from any such person to acquire in any manner, directly or indirectly, an equity interest in, any voting securities of, or a substantial portion of the assets of the Company or any of its Subsidiaries, other than the transactions contemplated by this Agreement, and "SUPERIOR PROPOSAL" means a Take-over Proposal on terms which a majority of the members of the Board of Directors of the Company determines, at a duly constituted meeting of the Board of Directors or by unanimous written consent, in its reasonable good faith judgment to be more favourable to the Shareholders than the Offer (after consultation with the Company's financial, legal and other advisors) and for which financing, to the extent required, is then committed or which, in the reasonable good faith judgment of a majority of such members, as expressed in a resolution adopted at a duly constituted meeting of such members (after consultation with the Company's financial, legal and other advisors), is reasonably capable of being obtained by such third party. (3) The Company shall advise Parent orally and in writing of (i) any Take-over Proposal or any inquiry with respect to or which could lead to any Take-over Proposal received by any officer or director of the Company or, to the Knowledge of the Company, any financial advisor, attorney or other advisor or representative or agent of the Company on or after the date hereof, (ii) the material terms of such Take-over Proposal (including a copy of any written proposal), and (iii) the identity of the person making any such Take-over Proposal or inquiry no later than 24 hours following receipt of such Take-over Proposal or inquiry. If the Company intends to furnish any person with any information with respect to any Take-over Proposal in accordance with Section 3.2(1), the Company shall advise Parent orally and in writing of such intention and shall provide the Parent with a copy of all such information not less than one business day in advance of providing any such information to such person. The Company will not, except in the usual and ordinary course of business and pursuant to Section 3.2(1) in the case of a Superior Proposal, provide any information about the Company or its Subsidiaries to any third party, including any party making a Take-over Proposal. The Company will keep Parent fully informed of the status and details of any such Take-over Proposal or inquiry. (4) The Company covenants and agrees that it will not enter into any agreement (a "PROPOSED AGREEMENT"), other than a confidentiality agreement as contemplated by Section 3.2(1), with any third party providing for or to facilitate any Take-over Proposal that, pursuant to Section 3.2(1), the Board of Directors reasonably determines constitutes a Superior Proposal unless the Company shall have provided Parent and Bidco with a copy of any Proposed Agreement not less than three business days prior to its proposed execution by the Company, together with a written notice from the Board of Directors of the Company regarding the value in financial terms that the Board has in consultation with its financial advisors determined should be ascribed to any non-cash consideration offered under the Proposed Agreement. During such three business day period, the Company acknowledges and agrees that the Parent and Bidco shall have the opportunity but not the obligation, to offer to amend the terms of this Agreement in order to provide for financial terms at least equivalent to those in the Proposed Agreement. The Board of Directors of the Company shall review any offer by Parent and Bidco to amend the terms of this Agreement to determine, acting in good faith and in accordance with its fiduciary duties, whether Bidco's amended Offer would be at least as favourable to the Shareholders as the Take-over Proposal provided for in the Proposed Agreement. If the Board of Directors of the Company so determines, the Company will enter into an amended agreement with Parent and Bidco reflecting the amended Offer. If the Board of Directors of the Company continues to believe, acting in good faith and in the proper discharge of its fiduciary duties and after consultation with its financial, legal and other advisors, that the Take-over Proposal provided for in the Proposed Agreement continues to be a Superior Proposal with respect to the amended Offer, and therefore rejects the amended Offer, the Company shall be entitled to enter into the Proposed Agreement following payment to the Parent of all amounts payable pursuant to Section 4.4. The Company acknowledges and agrees that each successive modification of any Take-over Proposal shall constitute a new Take-over Proposal for purposes of the requirement of this Section 3.2(4) and will initiate an additional three business day notice period. 3.3 EXISTING TAKE-OVER PROPOSALS; THIRD PARTY STANDSTILL AGREEMENTS --------------------------------------------------------------- (1) Except with the prior written consent of Parent, the Company shall immediately cease and cause to be terminated any existing discussions or negotiations with any parties (other than Parent and Bidco) with respect to any potential Take-over Proposal. The Company will immediately demand the return or destruction of all confidential information provided at the date hereof to any third parties in connection with any potential Take-over Proposal and will use all reasonable efforts to ensure that such information is returned. During the period from the date of this Agreement through the Effective Time, the Company shall not terminate, amend, modify or waive any provision of any confidentiality or standstill agreement to which the Company or any of its Subsidiaries is a party (other than any involving Parent or a Superior Proposal). During such period, the Company agrees to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof. (2) The Company will ensure that the officers and directors of the Company and its Subsidiaries and any investment bankers or other advisors or representatives or agents retained by the Company are aware of the provisions of these Sections 3.1, 3.2 and 3.3, and the Company will be responsible for any breach of such sections by such bankers, advisors or representatives. ARTICLE 4 - ADDITIONAL AGREEMENTS --------------------------------- 4.1 ACCESS TO INFORMATION --------------------- Subject to currently existing contractual and legal restrictions applicable to the Company or any of its Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to, afford to the accountants, counsel, financial advisors and other representatives of Parent reasonable access to, and permit them to make such inspections as they may reasonably require of, during the period from the date of this Agreement through the Effective Time, all of their respective properties, books, contracts, commitments and records (including tax returns and the work papers of independent accountants, if available and subject to the consent of such independent accountants, which the Company shall use reasonable commercial efforts to obtain) and, during such period, the Company shall, and shall cause each of its Subsidiaries to, (i) furnish promptly to Parent a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal, provincial or other securities laws, (ii) furnish promptly to Parent all other information concerning its business, properties and personnel as Parent may reasonably request and (iii) promptly make available to Parent all personnel of the Company and its Subsidiaries knowledgeable about matters relevant to such inspections. No investigation pursuant to this Section 4.1 shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto. All information obtained by Parent or Bidco pursuant to this Section 4.1 shall be kept confidential in accordance with the Confidentiality Agreement as if Parent was a party thereto, and, for this purpose, Bidco shall be deemed to be bound by all obligations of Parent under such Confidentiality Agreement as if it was a party thereto in the place and in the stead of Parent. 4.2 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE ------------------------------------------------- (1) From and after the Effective Time, Parent shall cause the Company or any successor to the Company to indemnify and hold harmless all past and present officers and directors of the Company and of its Subsidiaries to the same extent and in the same manner such persons are indemnified as of the date of this Agreement by the Company and its Subsidiaries pursuant to their respective governing laws and the articles, by-laws or other constating documents of the Company and its Subsidiaries and existing indemnity agreements for acts or omissions occurring at or prior to the Effective Time. (2) Notwithstanding Section 3.1, the Company intends to purchase run-off insurance, for such term as may be considered reasonable by it (but which in any event shall not exceed six years from the Effective Time), for its past and present directors and officers in respect of all matters relating to the period when they were directors and/or officers. (3) In the absence of the run-off insurance described in Section 4.2(2), Parent shall cause the Company or any successor to the Company to provide, for an aggregate period of not less than six years from the Effective Time, the Company's current and former directors and officers an insurance and indemnification policy that provides coverage for events occurring prior to the Effective Time that is substantially similar to the Company's existing policy if such a policy is available at a reasonable cost. 4.3 NOTIFICATION OF CERTAIN MATTERS ------------------------------- Parent and Bidco shall use their reasonable best efforts to give prompt notice to the Company, and the Company shall use its reasonable best efforts to give prompt notice to Parent and Bidco, of: (i) the occurrence, or non-occurrence, of any event which would be reasonably likely to cause (x) any representation or warranty contained in this Agreement and made by it to be untrue or inaccurate or (y) any covenant, condition or agreement contained in this Agreement and made by it not to be complied with or satisfied, (ii) any failure of Parent, Bidco or the Company, as the case may be, to comply in a timely manner with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder or (iii) any change or event which would be reasonably likely to have a Material Adverse Effect on Parent, Bidco or the Company, as the case may be; provided, however, that the delivery of any notice pursuant to this Section 4.3 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. 4.4 FEES ---- Notwithstanding any provision in this Agreement to the contrary, if this Agreement is terminated by the Company pursuant to Section 6.1(i) or, by Parent pursuant to Section 6.1 (h) or (j), then the Company shall (without prejudice to any other rights of Parent against the Company) pay to Parent $6 million in cash (the "TERMINATION FEE"), such payment to be made by the Company concurrently with such termination if the termination is by the Company, or no later than the second business day following such termination if the termination is by Parent. 4.5 COMPANY STOCK OPTIONS --------------------- On the date of this Agreement, the Board of Directors of the Company shall pass a resolution accelerating the vesting of all Options. The Company shall promptly notify the holders of Options of such resolution and shall permit holders of Options to either (i) make a "cashless" exercise whereby they will receive shares of the Company with a value equal to any in-the-money amount, or (ii) be paid any in-the-money value of the Option in cash, in each case, conditional upon Bidco taking up and paying for Common Shares under the Offer. 4.6 REASONABLE COMMERCIAL EFFORTS ----------------------------- (1) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use its reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to make, in the most expeditious manner practicable, the Offer and to consummate the other transactions contemplated by the Offer and this Agreement, including: (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from any domestic (federal, state, provincial or territorial), foreign or supranational court, commission, governmental body, quasi-governmental entity, body or authority of any kind whatsoever, regulatory agency, authority, stock exchange or tribunal ("GOVERNMENTAL ENTITY") and the making of all necessary registrations and filings (including filings with Governmental Entities) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity (including those in connection with the Competition Act (Canada)), (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement. No party to this Agreement shall consent to any voluntary delay of the making of the Offer or the taking up and paying for the Common Shares deposited under the Offer at the behest of any Governmental Entity without the consent of the other parties to this Agreement, which consent shall not be unreasonably withheld. (2) Each party shall use all reasonable commercial efforts not to take any action, or enter into any transaction, which would cause any of its representations or warranties contained in this Agreement to be untrue or result in a breach of any covenant made by it in this Agreement. 4.7 PUBLIC ANNOUNCEMENTS -------------------- None of the parties will issue any press release with respect to the transactions contemplated by this Agreement or otherwise issue any written public statements with respect to such transactions without prior consultation with the other parties, except as may be required by applicable law or by obligations pursuant to any listing agreement with the Toronto Stock Exchange or NASDAQ. Moreover, in any event, each party agrees to give prior notice to the others of any public announcement relating to the Offer or the Lock-up Agreement and agrees to consult with each other prior to issuing each such public announcement. The Company agrees that, promptly after the entering into of this Agreement, it shall issue a press release in the form attached as Schedule "B". Nothwithstanding the foregoing, the Company agrees not to issue any press release or other public disclosure with a description of Parent or Bidco without the consent of Parent. 4.8 TAKE UP AND PAYMENT ------------------- Subject to the terms and conditions hereof and of the Offer, Bidco agrees to take up the Common Shares deposited under the Offer and pay for such Common Shares in accordance with the Offer and applicable securities laws. Bidco covenants that, in the event Bidco increases the consideration per Common Share offered under the Offer, Bidco will pay such increased consideration to each Shareholder in respect of all Common Shares tendered, notwithstanding that such shares have previously been taken up and paid for by Bidco. 4.9 EMPLOYMENT CONTRACTS AND BENEFIT PLANS -------------------------------------- Bidco and Parent shall permit the Company to honour and comply with the terms of all existing employment and change of control contracts entered into by the Company or any of its Subsidiaries and with the terms of all pension and benefit plans to which the Company or any of its Subsidiaries is a party or by which it is bound (other than stock option or similar plans). 4.10 TRANSFER AGENT -------------- The Company consents to its transfer agent mailing the Take-over Bid Circular to the Shareholders and to acting as depositary under the Offer. ARTICLE 5 - CONDITIONS PRECEDENT TO THE OFFER --------------------------------------------- 5.1 CONDITIONS TO BIDCO'S OBLIGATION TO MAKE THE OFFER -------------------------------------------------- The obligation of Bidco to make the Offer and mail the Take-over Bid Circular is conditional upon the satisfaction of the following conditions at or prior to the Latest Mailing Time, all of which conditions are included for the sole benefit of Bidco and any or all of which may be waived by Bidco in whole or in part in its sole discretion without prejudice to any other rights it may have under this Agreement. (a) No Termination. The obligations of Bidco and Parent hereunder shall not have been terminated under Article 6. (b) No Impossibility. No circumstance shall exist that would render it unlikely, in the reasonable opinion of Bidco and Parent, for any one or more of the conditions set out in Section 5.2 to be satisfied. (c) Lock-up Agreement. Masco Corporation shall have entered into the Lock-up Agreement in a form satisfactory to Parent. (d) Board of Directors Recommendation. The Board of Directors of the Company shall have unanimously recommended that Shareholders accept the Offer and shall not have withdrawn such recommendation or changed such recommendation in a manner that has substantially the same effect as the withdrawal thereof. (e) No Prohibition. No cease trade order, injunction or other prohibition at law shall exist against Bidco making the Offer or taking up or paying for Common Shares deposited under the Offer. (f) Directors' Circular. The Board of Directors of the Company shall have prepared and approved in final form, for mailing by the Company on the date the Takeover Bid Circular is mailed, the Directors' Circular, which circular shall contain the recommendation that Shareholders accept the Offer and a copy of the opinion from the Company's financial advisor, TD Securities Inc., that, as of the date hereof, the Offer is fair, from a financial point of view, to Shareholders. 5.2 CONDITIONS TO BIDCO'S OBLIGATION TO COMPLETE THE OFFER ------------------------------------------------------ Notwithstanding any other provisions of the Agreement, Bidco shall have the right to withdraw or terminate the Offer and not take up and pay for any Common Shares deposited under the Offer, unless all of the following conditions are satisfied or waived by Bidco at or prior to the Expiry Time: (a) Minimum Tender Condition. The Minimum Tender Condition shall have been satisfied. (b) Competition Act. Bidco and the Company shall each have filed all notices and information required to be filed under Part IX of the Competition Act, except if such requirement shall have been waived pursuant to paragraph 113(c) of the Competition Act, and any information Bidco elects to file with the Competition Commissioner in its sole discretion under the Competition Act, including, without limiting the foregoing, a competitive impact statement and (i) Bidco shall have received an advance ruling certificate in accordance with section 102 of the Competition Act from the Competition Commissioner in connection with the transactions contemplated by this Agreement, or (ii) the Competition Commissioner shall have confirmed, in writing, that he has no intention to file an application under Part VIII of the Competition Act in connection with the transactions contemplated by this Agreement. (c) Investment Canada Act. Bidco shall have received evidence satisfactory to it that any requisite approvals to the completion of the transactions contemplated by this Agreement shall have been granted or deemed to have been granted under the Investment Canada Act on terms satisfactory to Bidco in its commercially reasonable discretion. (d) Approvals. All other authorizations, consents, orders, declarations or approvals of, or filings with, or terminations or expirations of waiting periods imposed by a Governmental Entity (including any stock exchange or other securities regulatory authority and including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976) that are necessary to make the Offer or to effect any of the transactions contemplated hereby shall have been obtained, shall have been made or shall have occurred, each on terms satisfactory to Bidco and Parent, acting reasonably. (e) No Order. No court or other Governmental Entity having jurisdiction over the Company or Parent, or any of their respective Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the Offer or any of the transactions contemplated hereby (including taking up and paying for any Common Shares deposited under the Offer and completing any compulsory acquisition or subsequent acquisition transaction) illegal. (f) Performance of Obligations, Representations and Warranties. The Company shall have performed each of its agreements contained in this Agreement required to be performed on or prior to the Expiry Time (including, for certainty, its obligations under Section 3.1) in all material respects, each of the representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects on and as of the Expiry Time as if made on and as of such time (other than representations and warranties which address matters only as of a certain date which shall be true and correct as of such certain date) and Parent shall have received a certificate signed on behalf of the Company by its Chief Executive Officer and its Chief Financial Officer to such effect. (g) Performance of Obligations by Masco Corporation. Masco Corporation shall have performed each of its agreements contained in the Lock-up Agreement required to be performed on or prior to the Expiry Time. (h) Material Adverse Change. Since the date of this Agreement, there shall have been no Material Adverse Change with respect to the Company. (i) No Untrue Statement. Bidco shall not have become aware of any material misstatement, untrue statement of a material fact, or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made and at the date it was made (after giving effect to all subsequent filings in relation to all maters covered in earlier filings) in any document filed by or on behalf of the Company with any securities regulatory authority. (j) No Withdrawal of Recommendation. The Board of Directors of the Company shall not have withdrawn its recommendation that holders of Common Shares accept the Offer or changed such recommendation in a manner that has substantially the same effect. (k) No Action. (A) No act, action, suit or proceeding shall have been taken before or by any domestic or foreign court or other Governmental Entity or by any elected or appointed public official or private person (including, without limitation, any individual, corporation, firm, group or other entity) in Canada or elsewhere, whether or not having the force of law, and (B) no law, regulation or policy shall have been proposed, enacted, promulgated or applied, in either case: (i) to cease trade, enjoin, prohibit or impose material limitations or conditions on the purchase by or the sale to Bidco of the Common Shares or the right of Bidco to own or exercise full rights of ownership of the Common Shares; or (ii)which, if the Offer were consummated, could, in Bidco's judgment, acting reasonably, materially adversely affect Bidco's ability to effect a Subsequent Acquisition Transaction or have a Material Adverse Change with respect to the Company. The foregoing conditions are for the exclusive benefit of Bidco and Bidco may waive any of the foregoing conditions in whole or in part at any time and from time to time without prejudice to any other rights which Bidco may have. The failure by Bidco at any time to exercise any of the foregoing rights will not be deemed to be a waiver of any such right and each such right shall be deemed to be an ongoing right which may be asserted at any time and from time to time. ARTICLE 6 - TERMINATION, AMENDMENT AND WAIVER --------------------------------------------- 6.1 TERMINATION ----------- This Agreement may be terminated at any time prior to the Expiry Time: (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company if the other party (in the case of Parent, including Bidco) shall have failed to comply with any of its covenants or agreements contained in this Agreement required to be complied with prior to the date of such termination, which failure to comply has not been cured within five business days following receipt by such other party of written notice of such failure to comply; (c) by either Parent or the Company if there has been a breach by the other party (in the case of Parent, including any breach by Bidco) of any representation or warranty which has the effect of making such representation or warranty not true and correct in all material respects and which breach has not been cured within five business days following the breaching party becoming aware of such breach or the receipt by the breaching party of written notice of the breach from the other party; (d) by the Company if the Take-over Bid Circular has not been mailed by the Latest Mailing Time; provided, however, that the right to terminate this Agreement pursuant to this Section 6.1 (d) shall not be available if the Company has failed to fulfill any of its obligations contained in this Agreement, or has been a cause of the failure of the Take-over Bid Circular to have been mailed or the Offer to have been completed on or prior to the aforesaid time and date, respectively; (e) by either Company or the Parent if Bidco has not become legally obligated to accept and take-up any Common Shares pursuant to the Offer by May 15, 2003; (f) by either Parent or the Company if any court or other Governmental Entity having jurisdiction over a party hereto shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; (g) by Parent if any condition of making the Offer set out in Section 5.1 has not been satisfied or waived prior to the Latest Mailing Time or if any condition of the Offer set out in Section 5.2 has not been satisfied or waived prior to the Expiry Time; (h) by Parent if (i) the Board of Directors of the Company qualifies, modifies or withdraws its recommendation in favour of the Offer, (ii) the Board of Directors of the Company recommends to the Shareholders any Take-over Proposal other than the Offer or (iii) the Board of Directors of the Company resolves to do anything referred to in (i) or (ii) of this paragraph; (i) by the Company if it proposes to enter into a merger, acquisition or other agreement to effect a Superior Proposal; but only if Parent and Bidco have not exercised their right to match the Superior Proposal as set out in Section 3.2(4); or (j) by Parent if any person or group of persons acting jointly or in concert acquires 50% or more of the outstanding Common Shares. The right of any party hereto to terminate this Agreement pursuant to this Section 6.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any person controlling any such party or any of their respective officers or directors, whether prior to or after the execution of this Agreement. 6.2 EFFECT OF TERMINATION --------------------- (1) In the event of any termination of this Agreement by either Parent or the Company in accordance with the provisions of Section 6.1, Bidco may terminate or withdraw the Offer without any liability or obligation on its or Parent's part under this Agreement; provided, however, that nothing contained in this Section 6.2 shall relieve any party hereto from any liability for any wilful breach of a representation or warranty contained in this Agreement or the breach of any covenant contained in this Agreement (2) Any termination of this Agreement pursuant to the sections referred to in Section 4.4 shall not affect the obligation of the Company, if any, to pay the Termination Fee set out in Section 4.4. 6.3 AMENDMENT --------- This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 6.4 WAIVER ------ At any time prior to the Expiry Time, the parties hereto may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained herein which may legally be waived. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. ARTICLE 7 - GENERAL PROVISIONS ------------------------------ 7.1 Notices ------- All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally, one day after being delivered to an overnight courier or when telecopied (with a confirmatory copy sent by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to Parent or Bidco, to: Blackfriars Corp. 555 Skokie Blvd., Suite 555 Northbrook, IL 60065 Attention: Tom Lullo, Treasurer and Assistant Secretary Facsimile No.: (818) 597-3176 and to: Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9 Attention: Marvin Yontef Facsimile No.: (416) 947-0866 If to the Company, to: Emco Limited 620 Richmond Street London, Ontario N6A 5J9 Attention: Mark Whitley Vice President, General Counsel and Secretary Facsimile: 519-645-2465 with a copy to: McCarthy Tetrault LLP Suite 4700, Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, Ontario M5K 1E6 Attention: Graham P.C. Gow Facsimile: 416-868-0673 7.2 COUNTERPARTS ------------ This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 7.3 CURRENCY -------- All references to currency herein are to lawful money of Canada. 7.4 TIME OF THE ESSENCE ------------------- Time is of the essence in this Agreement. 7.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES ---------------------------------------------- This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement, except for the provisions of Sections 4.2 and 4.9, is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 7.6 GOVERNING LAW ------------- This Agreement shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. 7.7 ASSIGNMENT ---------- Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. 7.8 SEVERABILITY ------------ If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement may be consummated as originally contemplated to the fullest extent possible. 7.9 ENFORCEMENT OF THIS AGREEMENT ----------------------------- The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific wording or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof (but any such proceeding shall be brought exclusively in the Superior Court of Ontario), such remedy being in addition to any other remedy to which any party is entitled at law or in equity. Each party hereto waives any right to a trial by jury in connection with any such action, suit or proceeding and waives any objection based on forum non conveniens or any other objection to venue thereof. IN WITNESS WHEREOF, Parent, Bidco and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized all as of the date first written above. BLACKFRIARS CORP. By: /s/ Thomas A. Lullo -------------------------- Name: Thomas A. Lullo Title: Treasurer and Assistant Secretary 2022841 ONTARIO INC. By: /s/ Christopher Pappo -------------------------- Name: Christopher Pappo Title: Director EMCO LIMITED By: /s/ Frank M. Hennessey -------------------------- Name: Frank M. Hennessey Title: Chairman of the Board By: /s/ D. Brian Harrison -------------------------- Name: D. Brian Harrison Title: Chairman of the Independent Committee of the Board SCHEDULE "A" PART 1 - REPRESENTATIONS AND WARRANTIES OF PARENT AND BIDCO Parent and Bidco hereby jointly and severally represent and warrant to the Company as follows: 1.1 ORGANIZATION ------------ Each of Parent and Bidco has been duly incorporated or formed under applicable law, is validly existing and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. 1.2 AUTHORITY --------- Parent and Bidco have the requisite corporate power and authority to enter into this Agreement and to perform their respective obligations hereunder. The execution and delivery of this Agreement by Parent and Bidco and the consummation by Parent and Bidco of the transactions contemplated by this Agreement have been duly authorized by the board of directors of Parent and Bidco and no other corporate proceedings on the part of Parent or Bidco are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and Bidco and constitutes a valid and binding obligation of Parent and Bidco, enforceable against Parent and Bidco in accordance with its terms subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other laws relating to or affecting creditors' rights generally and to general principles of equity. 1.3 NO VIOLATION ------------ Except as disclosed in writing to the Company prior to the date hereof, the execution and delivery by Parent and Bidco of this Agreement and performance by it of its obligations hereunder and (subject to satisfying the conditions to the completion of the Offer specified in Section 5.2(b) of this Agreement with respect to subparagraph (a)(ii) below) the completion of the Offer and the transactions contemplated thereby, will not: (a) result in a violation or breach of, require any consent to be obtained under or give rise to any termination rights under any provision of: (i) its certificate of incorporation, articles, by-laws or other charter documents; (ii) any law, regulation, order, judgment or decree; or (iii) any material contract, agreement, license, franchise or permit to which Parent or Bidco is bound or is subject or is the beneficiary; (b) give rise to any right of termination or acceleration of indebtedness, or cause any indebtedness to come due before its stated maturity or cause any available credit to cease to be available; or (c) result in the imposition of any encumbrance, charge or lien upon any of its material assets, or restrict, hinder, impair or limit the ability of Parent or Bidco to carry on the business of Parent or Bidco as and where it is now being carried on or as and where it may be carried on in the future. 1.4 FINANCING THE OFFER ------------------- As at the time the Offer is first commenced within the meaning of the Securities Act (Ontario), Bidco shall have made all necessary arrangements to ensure that the required funds are available to effect payments in full for all of the Common Shares that Bidco shall have offered to acquire under the Offer. 1.5 LITIGATION, ETC. ---------------- Except as disclosed in writing to the Company prior to the date hereof, there is no claim, action, proceeding or investigation pending or, to the knowledge of Parent or Bidco, threatened against or relating to Parent or Bidco that, if adversely determined, is likely to prevent or materially delay consummation of the transactions contemplated by this Agreement or the Offer, and Parent and Bidco are not aware of any basis for any such claim, action, proceeding or investigation. Neither Parent or Bidco is subject to any outstanding order, writ, injunction or decree that is likely to prevent or materially delay consummation of the transactions contemplated by this Agreement or the Offer. PART 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Bidco as follows: 2.1 ORGANIZATION ------------ Each of the Company and each of its Subsidiaries has been duly incorporated or formed under applicable law, is validly existing and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. All of the outstanding shares and other ownership interests of the Subsidiaries are validly issued, fully paid and non-assessable and, except as disclosed in the Disclosure Letter, all such shares and other ownership interests are owned directly or indirectly by the Company free and clear of all liens, claims or encumbrances, other than for a security interest in favour of the Company's lenders. Except as disclosed in the Disclosure Letter, there are no outstanding options, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to acquire any shares or other ownership interests in any of the Subsidiaries from the Company or any of its Subsidiaries. The Disclosure Letter contains a list of all subsidiaries of the Company and their respective jurisdictions of incorporation. 2.2 CAPITALIZATION -------------- The authorized capital of the Company consists of an unlimited number of Common Shares and an unlimited number of preference shares, and 15,874,822 Common Shares and no preference shares have been validly issued and are outstanding as fully paid and nonassessable. There is no contract, option or any other right of another binding upon or which at any time in the future may become binding upon the Company or any Subsidiary to allot or issue any of its unissued shares or to create any additional class of shares, other than 1,613,660 Common Shares issuable upon exercise of the Options, Common Shares issuable pursuant to the Company's Employee Share Purchase Plan and 3,498,734 Common Shares issuable upon the conversion, at a conversion price of $19.75, of the Company's outstanding $69.1 million principal amount of 6 1/2% convertible unsecured subordinated debentures. 2.3 AUTHORITY --------- The Company has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly authorized by the Board of Directors of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other laws relating to or affecting creditors' rights generally and to general principles of equity. 2.4 NO VIOLATION ------------ Except as disclosed in the Disclosure Letter, the execution and delivery by the Company of this Agreement and performance by it of its obligations hereunder and (subject to satisfying the conditions to the completion of the Offer specified in Section 5.2(b) of this Agreement with respect to subparagraph (a)(ii) below) the completion of the Offer and the transactions contemplated thereby, will not: (a) result in a violation or breach of, require any consent to be obtained under or give rise to any termination rights, rights of first refusal or rights of first offer under any provision of: (i) its or any Subsidiary's certificate of incorporation, articles, by-laws or other charter documents, including any unanimous shareholder agreement or any other agreement or understanding with any party holding an ownership interest in any Subsidiary; (ii) any law, regulation, order, judgment or decree; or (iii) any material contract, agreement, license, franchise or permit to which the Company or any Subsidiary is bound or is subject or is the beneficiary; (b) give rise to any right of termination or acceleration of indebtedness, or cause any indebtedness to come due before its stated maturity or cause any available credit to cease to be available, other than the outstanding 6.5% redeemable convertible debentures which may go into default if the Company Shares cease to be listed on an exchange; or (c) result in the imposition of any encumbrance, charge or lien upon any of its material assets or the material assets of any Subsidiary, or restrict, hinder, impair or limit the ability of the Company or any Subsidiary to carry on the business of the Company or any Subsidiary as and where it is now being carried on or as and where it may be carried on in the future. 2.5 ABSENCE OF CHANGES. ------------------ Since December 31, 2002, and except as has been publicly disclosed (i) the Company and the Subsidiaries have conducted their respective businesses only in the ordinary course, (ii) no material liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) material to the Company or any Subsidiary has been incurred, other than in the ordinary course of business, and (iii) there has not been any Material Adverse Change in the Company. 2.6 NO MATERIAL MISREPRESENTATION. ------------------------------ The Company has filed all documents required to be filed by it under the Securities Act (Ontario) or other applicable securities laws, including the Exchange Act, and no such filings have been made on a confidential basis. As at their respective dates, all documents filed by the Company under the Securities Act (Ontario) or other applicable securities laws were in compliance in all material respects with such applicable securities laws and did not contain any material misstatement or any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 2.7 FINANCIAL STATEMENTS. --------------------- The audited consolidated financial statements for the Company as at and for each of the fiscal years ended on December 31, 2002, December 31, 2001 and December 31, 2000, including the notes thereto and the report by the Company's auditors thereon, have been, and all financial statements of the Company which are publicly disseminated by the Company in respect of any subsequent periods will be, prepared in accordance with Canadian generally accepted accounting principles applied on a basis consistent with prior periods (other than to the extent the result of changes in such generally accepted accounting principles disclosed in such financial statements) and present fairly (or will present fairly), in all material respects, the consolidated financial position and results of operations of the Company and its Subsidiaries, taken as a whole, as of the respective dates thereof and for the respective periods covered thereby. 2.8 LITIGATION, ETC. ---------------- Except as disclosed in the Disclosure Letter, there is no claim, action, proceeding or investigation pending or, to the Knowledge of the Company, threatened against or relating to the Company or any Subsidiary or affecting any of their properties or assets before any court or governmental or regulatory authority or body that, if adversely determined, is likely to have a Material Adverse Change with respect to the Company, or prevent or materially delay consummation of the transactions contemplated by this Agreement or the Offer, and the Company is not aware of any basis for any such claim, action, proceeding or investigation. Neither the Company nor any Subsidiary is subject to any outstanding order, writ, injunction or decree that has had or may have a Material Adverse Change with respect to the Company or prevent or materially delay consummation of the transactions contemplated by this Agreement or the Offer. 2.9 TAX MATTERS. ------------ (a) DEFINITIONS. For purposes of this Agreement, the following definitions shall apply: (i) The term "TAXES" shall mean all taxes, however denominated, including any interest, penalties or other additions that may become payable in respect thereof, imposed by any federal, territorial, state, local or foreign government or any agency or political subdivision of any such government, which taxes shall include all income or profits taxes (including federal income taxes and provincial income taxes), payroll and employee withholding taxes, unemployment insurance, social insurance taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which the Company or any of its Subsidiaries is required to pay, withhold or collect. (ii) The term "RETURNS" shall mean all reports, estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed in connection with, any Taxes. (b) RETURNS FILED AND TAXES PAID. All Returns required to be filed by or on behalf of the Company or any Subsidiaries have been duly filed on a timely basis and such Returns are true, complete and correct in all material respects. All Taxes shown to be payable on the Returns or on subsequent assessments with respect thereto have been paid in full on a timely basis, and no other Taxes are payable by the Company or any material Subsidiaries with respect to items or periods covered by such Returns. (c) TAX RESERVES. The Company has paid or provided adequate accruals in its financial statements for the year ended dated December 31, 2002 for Taxes, including income taxes and related deferred taxes, owing in respect of the period ending on such date, in conformity with generally accepted accounting principles applicable in Canada. (d) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. Except as disclosed in the Disclosure Letter, no deficiencies exist, or have been asserted and remain outstanding, with respect to Taxes of the Company or any Subsidiary. Neither the Company nor any Subsidiary is a party to any action or proceeding for assessment or collection of Taxes, nor has any such action or proceeding been asserted or, to the Knowledge of the Company, threatened against the Company or any Subsidiary or any of their respective assets which remains outstanding. No waiver or extension of any statute of limitations is in effect with respect to Taxes or Returns of the Company or any Subsidiary. Except as has been disclosed in the Disclosure Letter, no audit of the Returns of the Company or any Subsidiary by a government or taxing authority is in process, pending or, to the Knowledge of the Company, threatened. 2.10 PENSION AND TERMINATION BENEFITS. --------------------------------- Other than as disclosed in the Disclosure Letter, the Company has provided accruals adequate under Canadian generally accepted accounting principles in its financial statements for the year ended December 31, 2002 (or such amounts are fully funded) for all pension or other employee benefit obligations of the Company to such date arising under or relating to each of the pension or retirement income plans or other employee benefit plans or agreements or policies maintained by or binding on the Company or any of its Subsidiaries as well as for any other payment required to be made by the Company to such date in connection with the termination of employment or retirement of any employee of the Company or any Subsidiary. Except as set out in the Disclosure Letter, all contributions or premiums required to be made by the Company under the terms of the pension or retirement income plans or other employee benefit plans or by applicable law have been made and the Company does not have any contribution, premium, reimbursement or funding liabilities in respect of such plans. 2.11 FAIRNESS OPINION. ----------------- The Company has received an opinion from its financial advisors, TD Securities Inc., that, as of the date hereof, the consideration received pursuant to the Offer is fair, from a financial point of view, to Shareholders. 2.12 SEVERANCE AND EMPLOYMENT AGREEMENTS. ------------------------------------ Except as disclosed in the Disclosure Letter, neither the Company nor any of its Subsidiaries has entered into any written agreement relating to employment, compensation, severance, retention, change of control, termination or the provision of other benefits, with any directors or senior management. 2.13 COMPLIANCE WITH LAWS. --------------------- The Company and each of its Subsidiaries have conducted their respective businesses in compliance, in all material respects, with all applicable laws and regulations and the terms and conditions of all of their respective licenses and the Company and each of its Subsidiaries is currently in compliance, in all material respects, with all such laws, regulations and licenses. 2.14 INSURANCE. ---------- Policies of insurance in force as of the date hereof naming the Company or any of its Subsidiaries as an insured adequately cover all risks reasonably and prudently foreseeable in the operation of the businesses of the Company and its Subsidiaries. 2.15 DIRECTORS AND OFFICERS INSURANCE. --------------------------------- There have been no claims within the past two years made by the Company or any of its Subsidiaries or any of their respective officers or directors under any directors or officers insurance policies obtained by the Company or any of its Subsidiaries and the Company is not aware of any basis for any such claims. 2.16 TD FEE. ------- The fees and disbursements owing to TD Securities in connection with its engagement to review strategic alternatives relating to Emco shall not exceed $2 million. 2.17 FOREIGN PRIVATE ISSUER. ------------------------ The Company is a "foreign private issuer" within the meaning of Rule 3b-4(c) under the Exchange Act. EX-99.D.2 15 t09071exv99wdw2.txt LETTER DATED AS OF FEBRUARY 19, 2003 EXHIBIT (d)(2) BLACKFRIARS CORP. 555 Skokie Blvd, Suite 555 Northbrook, Illinois 60062 (818) 991-9000 February 19, 2003 Board of Directors Emco Limited 620 Richmond Street London, Ontario N6A 5J9 Canada Dear Sirs: This letter is provided to the Board of Directors (the "Board") of Emco Limited ("Emco"), in conjunction with the proposed transaction reflected in the Support Agreement currently being negotiated between Blackfriars Corp. ("Blackfriars") and 2022841 Ontario Inc. and Emco ("Agreement"). To encourage the Board to approve the Agreement, and in response to concerns raised by the Board, Blackfriars agrees to keep a balance of U.S. funds equivalent to a minimum of $300 million (Canadian Dollars) in our accounts with Bank of America until the earlier of the taking up and payment for Emco stock as contemplated by the Agreement or any termination of the Agreement in accordance with its terms. IT is understood and agreed that such funds may be used to take up and pay for such Emco stock. In addition, Blackfriars will endeavor to have the Bank of America confirm in writing to the Board's financial advisor, TD Securities, the oral advice that it gave earlier today in respect to the financial capabilities of Blackfriars. Sincerely, /s/ Thomas A. Lullo Thomas A. Lullo Treasurer and Assistant Secretary EX-99.D.3 16 t09071exv99wdw3.txt LOCK-UP AGREEMENT EXHIBIT (d)(3) BLACKFRIARS CORP. 555 Skokie Blvd, Suite 555 Northbrook, Illinois 60062 (818) 991-9000 February 19,2003 CONFIDENTIAL Masco Corporation 21001 Van Born Road Taylor, Michigan USA 48180 Attention: Mr. John Leekley Dear Sirs: This Agreement sets out the terms and conditions of the agreement by Masco Corporation (the "SELLER") to deposit 6,621,334 common shares (the "COMMON SHARES") of Emco Limited (the "COMPANY") under the offer (the "OFFER") to be made by a wholly-owned subsidiary (the "OFFEROR") of Blackfriars Corp. ("PARENT") pursuant to a support agreement (the "SUPPORT AGREEMENT") of even date herewith between Parent, the Offeror and the Company. ARTICLE 1 - THE OFFER AND ACCEPTANCE 1.1 Price and Terms. The Offeror agrees to make the Offer on the terms and conditions provided in the Support Agreement. 1.2 Deposit of Common Shares. Subject to the terms and conditions hereof, Seller agrees to deposit its Common Shares, together with a completed and executed letter of transmittal, under the Offer as soon as practicable after the mailing thereof and, in any event, within five business days of such mailing. 1.3 Non-Withdrawal. Seller irrevocably agrees not to withdraw or take any action to withdraw any of its Common Shares deposited under the Offer, notwithstanding any withdrawal rights it may have under the terms of the Offer or otherwise, unless this Agreement is terminated in accordance with its terms prior to the Offeror taking up and paying for Seller's Common Shares under the Offer. 1.4 Parent Guarantee. Parent guarantees that the Offeror will fulfill all of its obligations under this Agreement in a timely manner. 1.5 Minority Approval Counting. Seller hereby confirms that it is not acting jointly or in concert with Parent and its affiliates in respect of the Offer, and that the entry into this Agreement was a condition imposed by Parent to proceeding with the Offer. Seller consents to being treated, and confirms that it will support its treatment, as part of the minority for the purposes of the minority approval requirement under Rule 61-501 of the Ontario Securities Commission (or equivalent provisions in other jurisdictions) in any regulatory or court proceedings. ARTICLE 2 - REPRESENTATIONS AND WARRANTIES 2.1 Representation and Warranties of Seller. Seller hereby represents and warrants that: (a) it is a corporation duly incorporated and validly existing under the laws of Delaware and has the requisite corporate power to enter into this Agreement and to sell its Common Shares to the Offeror pursuant to the Offer; (b) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Seller; (c) Seller has duly executed and delivered this Agreement and it constitutes a valid and binding obligation of Seller enforceable against Seller in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors' rights generally and to general principles of equity; (d) it is, and upon the deposit of its 6,621,334 Common Shares under the Offer will be, the sole legal and beneficial owner of such Common Shares free and clear of all mortgages, liens, pledges, security interests, charges, encumbrances and any other rights of others, and it has and will have the exclusive right to dispose of its Common Shares as provided in this Agreement; and (e) the 6,621,334 Common Shares to be acquired by the Offeror from Seller pursuant to the Offer will be acquired with good and marketable title, free and clear of all mortgages, liens, pledges, security interests, charges, encumbrances and adverse claims and are all of the Common Shares owned by the Seller. 2.2 Representations and Warranties of the Parent and Offeror. The Parent and Offeror hereby represent and warrant, jointly and severally, that: (a) the Offeror is a corporation duly incorporated and validly existing under the laws of Ontario and has the requisite corporate power to enter into this Agreement and to carry out its obligations hereunder; (b) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by both Parent and the Offeror; (c) Parent and the Offeror have duly executed and delivered this Agreement and it constitutes a valid and binding obligation of both of them enforceable against them in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors' rights generally and to general principles of equity; and (d) the Offeror has sufficient funds, or has made adequate and binding arrangements to ensure that such funds are available, to make payment in full for all Common Shares offered to be acquired pursuant to the Offer. 2.3 Survival of Representations and Warranties. The representations and warranties made by Seller and the Offeror herein shall survive for a period of two years fiom the date hereof except the representations and warranties made by the Seller in Sections 2.l(d) and (e) which shall survive indefinitely. ARTICLE 3 - TERMINATION 3.1 Termination by Seller. Seller may, without prejudice to any other rights, terminate its obligations under this Agreement by notice to the Offeror if the Offer is not mailed by March 14, 2003 or the Offeror has not taken up and paid for the Seller's Common Shares pursuant to the Offer by May 15, 2003. 3.2 Termination by the Offeror. The Offeror may, without prejudice to any other rights, terminate its obligations under this Agreement by notice to Seller if there is a material breach of this Agreement by Seller or if the Offeror is entitled to terminate the Support Agreement in accordance with its terms. 3.3 Superior Proposal. If, during the term of this Agreement, a Superior Proposal (as defined in the Support Agreement) is made, Parent and Offeror will (i) notify Seller in writing prior to the expiry of the Superior Proposal that it will waive any unsatisfied conditions in its transaction and irrevocably commit to purchase Seller's Common Shares on the terms of the Offer or (ii) will release Seller from this Agreement and return Seller's Common Shares to Seller so as to permit Seller to tender those Common Shares into the Superior Proposal 48 hours prior to its expiry. ARTICLE 4 - GENERAL 4.1 Disclosure. Unless required by applicable laws, rules or regulations (including stock exchange rules and regulations), neither party shall make any public announcement or statement with respect to this Agreement without prior consultation with the other. Seller shall not issue any press release or other public disclosure that describes Parent or Offeror without the consent of Parent. 4.2 Expenses. Each of the Offeror and Seller will pay its own legal, financial advisor and other costs and expenses incurred in connection with this Agreement and the Offer. 4.3 Assignment. This Agreement shall not be assignable by either party without the prior written consent of the other party, which consent will be within its sole discretion. 4.4 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements and understandings with respect thereto. 4.5 Time. Time shall be of the essence of ths Agreement. 4.6 Notices. All notices or other communications which are required or permitted hereunder shall be communicated confidentially and in writing to the addresses set out below or if sent by confidential facsimile to: Blackfriars Corp., Attn: Tom Lullo at (818) 597-3176, and to Stikeman Elliott LLP, Attn: Marvin Yontef at (416) 947-0866, in respect of the Offeror; and to (313) 792-4451, Attn: Mr. John Leekley, in respect of the Seller. 4.7 Counterparts. This Agreement may be executed in one or more counterparts which together shall be deemed to constitute one valid and binding agreement. 4.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 4.9 Cooperation. Seller agrees to cooperate with the Offeror in the following respects in order to assist the Offeror to successfully complete the acquisition of all of the outstanding Common Shares: (a) to consent to the disclosure of the substance of this Agreement in the Take-over Bid Circular (as defined in the Support Agreement) and the filing of this Agreement as may be required pursuant to applicable securities laws; (b) to exercise its voting rights attached to its Common Shares to oppose any proposed action (i) which might reasonably be regarded as being directed towards reducing the likelihood of, or preventing or delaying the successful completion of the Offer, or (ii) which could materially change the business, assets, operations, capital, affairs, financial conditions, licences, permits, rights or privileges of the Company and its subsidiaries; (c) not to take any action of any kind which may reduce the likelihood of success of or delay the completion of the Offer and, promptly upon request, to assist the Offeror by providing any information reasonably required for the Offeror to secure regulatory approvals in respect of the completion of the Offer; and (d) to ensure that its representations and warranties in section 2.1 are true and correct at all times during the period from the date of this Agreement until the earlier of (i) the date the Offeror acquires the Seller's Common Shares and (ii) the date this Agreement is terminated in accordance with its terms. Please confirm that the foregoing accurately reflects the agreement between Seller and the Offeror by signing and returning the enclosed copy of this letter to the undersigned. 2022841 ONTARIO INC. By: /s/ Christopher Pappo ---------------------- Name: Christopher Pappo ---------------------- Title: Director ---------------------- Yours truly, BLACKFRIARS CORP. By: /s/ Thomas A. Lullo ----------------------------------- Name: Thomas A. Lullo --------------------------------- Title: Treasurer & Assistant Secretary --------------------------------- Agreed and confirmed this 19th day of February, 2003. MASCO CORPORATION By: /s/ John R. Leekley ----------------------------------------------- Name: John R. Leekley ---------------------------------------------- Title: Senior Vice President and General Counsel ---------------------------------------------- EX-99.D.4 17 t09071exv99wdw4.txt CONFIDENTIALITY AGREEMENT EXHIBIT (d)(4) September 25, 2002 PRIVATE AND CONFIDENTIAL - ------------------------ Hajoca Corporation 127 Coulter Avenue Ardmore, PA 19003 Attention: Mr. Richard Klau President Dear Mr. Klau: Re: Confidential Information - --------------------------------- You have requested that Emco Limited ("Emco" or the "Company") provide you with financial, operating and other information concerning the Company, which may include proprietary information and/or confidential information which has not been generally disclosed to the public, for use in connection with a possible acquisition of the Company or one or more of the Company's business units or any other possible transaction between you and the company and/or its shareholders (collectively a "Transaction"). It is acknowledged that it would be in the best interests of the Company that, if a Transaction is to proceed, Information (as defined below) be made available to you for purposes of evaluating and/or implementing a Transaction (the "Permitted Purpose"). Therefore, subject to the terms and conditions hereof, and to the extent which the Company in its sole discretion considers advisable in the circumstances, the Company agrees to provide certain Information to you solely for the Permitted Purpose. As a condition to furnishing the Information, and the agreement and consent of the Company herein contained, you covenant and agree with the Company as follows: 1. "Information" means collectively all information, whether orally, in writing and/or in electronic form, belonging to, relating to or otherwise concerning the Company and/or its affiliates now, before or hereinafter furnished to you by the Company, its affiliates or their respective representatives, and all analyses, compilations, data, structures or other documents prepared by the Company or its affiliates, by you or by their or your respective representatives, containing or based upon, in whole or in part, any such information or reflecting reviews of the Company or its affiliates, regardless of whether specifically identified as "confidential". 2. For the purposes of this Agreement, the term representatives shall include, without limitation, all directors, officers, employees, agents, lawyers, accountants, consultants, financial advisors or other representatives. 3. The term "person" as used in this Agreement shall be broadly interpreted to include, without limitation, any individual, corporation, company, group, partnership or other entity. 4. Except with the prior written authorization of the Company or as may be permitted pursuant to Sections 5, 6 or 12 of this Agreement, you will not, and will direct your representatives not to, disclose to any other person the fact that the Information has been made available to you, that discussions or negotiations are taking place concerning a Transaction or any of the terms, conditions or other facts with respect to any such Transaction, including the status of this Agreement. 5. You will keep the Information strictly confidential and treat the Information as proprietary to Emco and will not, without the prior written consent of the Company, disclose or allow access to, the Information in any manner whatsoever, in whole or in part. In addition, you will not use, directly or indirectly, the Information for any purpose other than the Permitted Purpose or in any way which is or may be detrimental to Emco or in any manner which is in competition with any of Emco's businesses. You agree to transmit the Information only to those of your employees ("Employees') and lawyers and accountants ("Advisors"), but excluding your financial advisors except as set out in section 6 below, in all cases who need to know the Information for the Permitted Purpose, who shall be informed by you of the confidential nature of the Information and who agree to be bound by the terms of this Agreement. On request, you shall notify the Company of the identity of each Advisor to whom any Information has been delivered or disclosed. You shall be responsible for any breach of this Agreement by any of your Employees and Advisors. You shall make all reasonable, necessary or appropriate efforts to safeguard the Information from disclosure to anyone other than as permitted hereby. You agree to comply with all applicable laws in respect of the Information. 6. Notwithstanding any other provision of this Agreement you may, with the prior written consent of the Company, discuss a Transaction with, and disclose Information to, specified persons acceptable to the Company who have signed an agreement with the Company in substantially the form of this Agreement (as to which you may rely upon a written acknowledgement from an officer of the Company referred to in section 8 below). For greater certainty, you may not discuss any Transaction with, or disclose Information to, any financial advisor unless that financial advisor is acceptable to the Company and has signed a confidentiality agreement with the Company substantially in the form of this Agreement. If at any time you consider that a Transaction would require the involvement or participation directly or indirectly of a third party, you agree that such third party will not be contacted without the prior written consent of Emco, and that such third party shall sign a confidentiality agreement with the Company substantially in the form of this Agreement prior to disclosure to such party of any Information. 7. All requests for Information made by you shall be to David Duncan and/or such other persons at TD Securities Inc. whose names are set out in the Company's September 2002 Confidential Information Memorandum, TD Tower, 66 Wellington Street West, 8th Floor, Toronto, Ontario M5K 1A2, telephone (416) 307-8992, fax (416) 308-0182 who, subject to this Agreement, will arrange for the provision of such Information. 8. You will not, and will direct your representatives not to, contact any representative of the Company or its affiliates other than Brian Harrison, Chairman, Independent Committee of the Board of Directors, Douglas Speers, President and Chief Executive Officer, Gordon Currie, Executive Vice President and Chief Financial Officer, or Mark Whitley, General Counsel and Secretary, with respect to any Transaction, Information or any other matter contemplated in this Agreement. 9. If you determine that you do not wish to be involved in a Transaction, you will promptly advise the Company of that fact. If the Company requests for any reason whatsoever, you will promptly re-deliver to the Company all Information without retaining copies thereof and shall destroy all analyses, compilations, forecasts, studies or other documents prepared by you or your representatives. In such event, you shall forthwith confirm such re-delivery and destruction to the Company by delivering to the Company a certificate in writing signed by two senior officers of your organization certifying such re-delivery and destruction. Any oral Information will continue to be subject to the terms of this Agreement. 10. The obligations imposed on you hereunder shall not apply to any Information (i) which is or becomes generally available to the public other than as a result of a disclosure by you or your representatives; (ii) which becomes available to you on a non-confidential basis from a source other than the Company or its affiliates or their respective representatives, provided that you do not believe, after a good faith enquiry, that such source is bound by a confidentiality agreement with the Company or its affiliates or their respective representatives or is otherwise prohibited from transmitting the Information to you by a contractual, legal or fiduciary obligation; or (iii) which was known to you on a non-confidential basis prior to disclosure to you by the Company or its affiliates or by their respective representatives, provided that such information is not known by you to be subject to another confidentially agreement with or other obligation of secrecy of the Company or another party. 11. Although you understand that the Company will endeavour to include in the Information those materials which are believed to be reliable and relevant for the Permitted Purpose, you acknowledge that neither the Company (including its affiliates) nor any of its representatives makes any representation or warranty as to the accuracy or completeness of the Information except as otherwise may be provided in a definitive agreement with the Company (other than this Agreement) entered into in connection with a Transaction which provides specific representations or warranties and only to the extent of such specific representations or warranties. You agree that neither the Company (including its affiliates) nor any of its representatives shall have any liability to you or to any of your representatives as a result of the use of the information by you or your representatives except as otherwise may be provided in a definitive agreement with the Company (other than this Agreement) entered into in connection with a Transaction which provides specific representations or warranties and only to the extent of such specific representations or warranties. 12. In the event that you or any of your representatives becomes legally compelled (by oral questions, interrogations, requests for information or documents, subpoena, civil investigative demand, or similar process) to disclose any of the Information, you will provide the Company with prompt notice so that the Company may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Agreement and you shall not oppose any action by Emco to seek such a protective order or other remedy. You will cooperate with the Company on a reasonable basis in its efforts to obtain a protective order or other remedy. In the event that such protective order or other remedy is not obtained, or the Company waives compliance with the provisions of this Agreement, you or your representatives will furnish only that portion of the Information which is legally required and each such party shall exercise reasonable commercial efforts to obtain reliable assurances that confidential treatment will be accorded the Information. 13. You acknowledge and agree that the Information shall at all times remain the property of the Company and, without limiting the generality of the foregoing, the Company shall not be restricted in any manner whatsoever by this Agreement from disclosing the Information to other third parties. In particular, you acknowledge that the Company may, from time to time, disclose the Information to other third parties in connection with other possible transactions involving the Company. 14. You acknowledge that you are aware, and you will advise your representatives, that securities laws prohibit any person who has received from an issuer material non-public information concerning matters such as those which are the subject of this Agreement from purchasing or selling securities of such issuer or from communicating such information to any other person. 15. During the period of one year from the date hereof, you and your affiliates (including any person or entity, directly or indirectly, through one or more intermediaries, controlled by or under common control with you) shall not, without the prior written authorization of the Independent Committee of the Board of Directors of the Company: (i) acquire or agree to acquire or make any offer or proposal to acquire, in any manner, any securities or property of the Company or its affiliates, except that, subject to Section 14 of this Agreement, shares may be purchased not to exceed 5% of the total number of shares then outstanding; (ii) assist, advise, encourage, agree with, discuss or negotiate with any other persons to acquire or agree to acquire, in any manner, any securities or property of the Company or its affiliates; (iii) solicit, or in any way participate in any solicitation of, proxies of the Company's shareholders or form, join or in any way participate in a proxy group; (iv) make any proposal for or offer of an extraordinary transaction involving Emco or its shares or assets (including, without limitation, an amalgamation, merger or other business combination); (v) seek any modification to or waiver of your agreements and obligations under this Agreement; or (vi) make any public announcement with respect to the foregoing, except as may be required by applicable law or regulatory authorities. 16. Without the prior written consent of the Company, you agree that you shall not, for a period of two years from the date hereof, (i) directly or indirectly solicit for employment or solicit for hire or contract for the services of, any person employed by the Company, other than in publications of a general nature and not specifically directed at the employees of the Company, or (ii) employ, hire or contract for the services of any person employed by the Company who is identified by you, made known to you or introduced to you as a result of your consideration of a Transaction. 17. You acknowledge and agree that the Company would not have an adequate remedy at law and would suffer losses which could not be adequately compensated for by damages in the event that any of the provisions of this Agreement are not performed by you in accordance with their specific terms or are otherwise breached by you. Accordingly, you agree that the Company shall be entitled to injunctive relief or specific performance to prevent breaches of this Agreement and to specifically enforce the terms and provisions hereof in addition to any other remedy to which the Company may be entitled at law or in equity, without proof of actual damages to Emco and/or its affiliates and notwithstanding that damages may be readily quantifiable and you agree not to plead sufficiency of damages as a defense in the proceeding for such injunctive relief or specific performance brought by Emco and/or its affiliates. The prevailing party in any such litigation will be entitled to payment of its legal fees and disbursements, court costs and other expenses of enforcing, defending or otherwise protecting its interest hereunder. You further agree to indemnify and save harmless the Company and its representatives from any losses, costs, damages or expenses arising out of a breach by you of any of the terms and conditions of this Agreement. 18. It is further understood and agreed that no failure or delay by the Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or future exercise of any right, power or privilege hereunder. 19. Except as specifically set forth in this Agreement, neither you nor the Company will be under any legal obligation with respect to any Transaction unless and until a definitive agreement between us is executed and delivered. You further acknowledge and agree that the Company reserves the right, in its sole discretion, to reject any and all proposals made by you or on your behalf with regard to a Transaction, and to terminate discussions and negotiations with you at any time. 20. This Agreement shall terminate five (5) years from the date hereof. 21. Any demand, notice or other communication authorized or required to be given by or in connection with this Agreement shall be given in writing and shall be given by personal delivery, courier or by facsimile addressed to the recipient as follows: To the Company: Emco Limited 620 Richmond Street London, Ontario N6A 5J9 Attention: Mark F. Whitley, General Counsel and Secretary Fax: 519-645-2465 To you: Hajoca Corporation 127 Coulter Avenue Ardmore, PA 19003 Attention: Richard Klau President Fax: 610-896-7538 or to such other address, facsimile number or individual as may be designated by notice given by either party to the other. Any communication given by personal or courier delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, and if given by facsimile, on the day of transmittal thereof if given during the normal business hours of the recipient, and on the day during which such normal business hours next occur if not given during such hours on a business day of the recipient. 22. This Agreement shall be governed and construed in accordance with the laws of the Province of Ontario and of Canada applicable therein and both parties hereby irrevocably attorn to the exclusive jurisdiction of the courts of the Province of Ontario. 23. This Agreement is not intended to create, and shall not be construed as creating, a joint venture, partnership or other form of business association between the parties, nor as establishing a license or grant of any kind from one party to another. No right or license whatsoever, either expressed or implied, is granted to you, your affiliates or your representatives pursuant to this Agreement under any patent, patent application, trademark, or other proprietary right, now or hereafter owned or controlled by the Company or its affiliates. 24. If any provision or any part of this Agreement is or is held to be unenforceable, invalid or illegal, then it shall be severable and deemed to be deleted, and the remaining provisions of this Agreement shall remain valid and binding to the full extent permitted by law. 25. Facsimiles of this executed document will be treated as original documents and are valid and binding on the parties. 26. The obligations of confidentiality and other agreements contained in this Agreement are in addition to, and not in limitation of, any other applicable legal restrictions upon the use and disclosure of the Information. 27. This Agreement is being written on behalf of Emco by its agent TD Securities Inc. and your obligations hereunder will be directly to Emco. If you are in agreement with the foregoing, please so indicate by signing and returning one copy of this letter whereupon this letter will constitute our agreement with respect to the subject matter hereof. Yours truly, /s/ EMCO LIMITED By TD Securities Inc., As Agent ACCEPTED AND AGREED TO AS OF THE DATE SET FORTH ABOVE HAJOCA CORPORATION By: /s/ Christopher Pappo ------------------------------------------ Name Christopher Pappo ------------------------------------------ Title: Vice President Finance and Administration ------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----