<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996
COMMISSION FILE NUMBER 1-9149
THE INTERLAKE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3428543
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
550 WARRENVILLE ROAD, LISLE, ILLINOIS 60532-4387
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
(630) 852-8800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
As of October 15, 1996, 23,112,999 shares of the Registrant's common stock
were outstanding.
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<PAGE>
THE INTERLAKE CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements as of and for the periods
ended September 29, 1996 and October 1, 1995 are unaudited, but include all
adjustments which the Registrant considers necessary for a fair presentation
of results of operations and financial position for the applicable periods.
Except as noted, all adjustments are of a normal recurring nature.
2
<PAGE>
THE INTERLAKE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED
SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
(IN THOUSANDS EXCEPT PER SHARE STATISTICS)
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
------------------ ------------------
1996 1995 1996 1995
(13 WKS) (13 WKS) (39 WKS) (40 WKS)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales of Continuing Operations.... $174,047 $175,870 $513,920 $516,952
Cost of Products Sold................. 134,360 136,848 397,040 397,100
Selling & Administrative Expense...... 25,258 25,725 75,521 77,659
-------- -------- -------- --------
Operating Profit...................... 14,429 13,297 41,359 42,193
Non-operating (Income) Expense........ (348) (247) (1,627) (871)
-------- -------- -------- --------
Earnings Before Interest & Taxes...... 14,777 13,544 42,986 43,064
Interest Expense...................... 11,828 12,061 35,491 35,586
Interest Income....................... (472) (481) (1,301) (1,232)
-------- -------- -------- --------
Income from Continuing Operations
Before Taxes, Minority Interest,
Extraordinary Item & Accounting
Change............................... 3,421 1,964 8,796 8,710
Provision for Income Taxes............ 2,236 1,321 5,826 5,857
-------- -------- -------- --------
Income from Continuing Operations
Before Minority Interest,
Extraordinary Item & Accounting
Change............................... 1,185 643 2,970 2,853
Minority Interest in Net Income of
Subsidiaries......................... 749 802 2,792 3,554
-------- -------- -------- --------
Income (Loss) from Continuing
Operations Before Extraordinary Item
& Accounting Change.................. 436 (159) 178 (701)
Income from Discontinued Operations,
Net of Income Taxes.................. 1,777 481 4,271 2,112
Extraordinary Item.................... -- -- -- (3,448)
Cumulative Effect of Accounting
Change............................... -- -- 1,610 --
-------- -------- -------- --------
Net Income (Loss)..................... $ 2,213 $ 322 $ 6,059 $ (2,037)
======== ======== ======== ========
Primary Net Income (Loss) Per Share:
Continuing Operations Before
Extraordinary Item & Accounting
Change............................. $ .02 $ (.01) $ .01 $ (.03)
Discontinued Operations............. .07 .02 .18 .09
Extraordinary Item.................. -- -- -- (.15)
Cumulative Effect of Accounting
Change............................. -- -- .07 --
-------- -------- -------- --------
Primary Net Income (Loss) Per Share... $ .09 $ .01 $ .26 $ (.09)
======== ======== ======== ========
Fully Diluted Net Income (Loss) Per
Share
Continuing Operations Before
Extraordinary Item & Accounting
Change............................. $ .01 $ (.01) $ .01 $ (.03)
Discontinued Operations............. .06 .02 .13 .07
Extraordinary Item.................. -- -- -- (.11)
Cumulative Effect of Accounting
Change............................. -- -- .05 --
-------- -------- -------- --------
Fully Diluted Net Income (Loss) Per
Share................................ $ .07 $ .01 $ .19 $ (.07)
======== ======== ======== ========
Weighted Average Shares Outstanding
Primary............................. 23,087 22,650 23,087 22,650
======== ======== ======== ========
Fully Diluted....................... 31,599 30,413 31,599 30,413
======== ======== ======== ========
</TABLE>
3
<PAGE>
THE INTERLAKE CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 29, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
ASSETS --------- ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................ $ 26,978 $ 41,562
Receivables, less allowances for doubtful accounts of
$2,200 at September 29, 1996 and $3,425 at December 31,
1995.................................................... 113,556 132,331
Inventories-- Raw materials and supplies................. 20,709 23,590
-- Semi-finished and finished products................... 40,771 55,140
Other current assets..................................... 14,328 15,100
--------- ---------
Total Current Assets................................... 216,342 267,723
--------- ---------
Investment in Discontinued Operations...................... 29,402 --
Other Assets............................................... 41,076 43,269
--------- ---------
70,478 43,269
--------- ---------
Property, Plant and Equipment, at cost..................... 380,233 402,125
Less--Depreciation and amortization........................ (238,845) (253,315)
--------- ---------
141,388 148,810
--------- ---------
Total Assets........................................... $ 428,208 $ 459,802
========= =========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<S> <C> <C>
Current Liabilities:
Accounts payable......................................... $ 63,398 $ 75,266
Accrued liabilities...................................... 35,253 47,464
Interest payable......................................... 7,525 11,150
Accrued salaries and wages............................... 16,654 15,648
Income taxes payable..................................... 12,909 14,665
Debt due within one year................................. 3,966 3,759
--------- ---------
Total Current Liabilities.............................. 139,705 167,952
--------- ---------
Long-Term Debt............................................. 445,299 439,856
--------- ---------
Other Long-Term Liabilities and Deferred Credits........... 87,760 104,516
--------- ---------
Preferred Stock--2,000,000 shares authorized Convertible
Exchangeable Preferred Stock--Redeemable, par value $1 per
share, issued 40,000 shares (liquidation value $58,329 at
September 29, 1996 and $54,602 at December 31, 1995)...... 39,155 39,155
Shareholders' Equity (Deficit):
Common stock, par value $1 per share, authorized
100,000,000 shares, issued 23,228,695 shares............ 23,229 23,229
Additional paid-in capital............................... 7,247 13,504
Cost of common stock held in treasury (115,696 shares at
September 29, 1996 and 412,500 shares at December 31,
1995)................................................... (2,700) (9,625)
Accumulated deficit...................................... (287,142) (293,201)
Unearned compensation.................................... (7,356) (8,950)
Accumulated foreign currency translation adjustments..... (16,989) (16,634)
--------- ---------
(283,711) (291,677)
--------- ---------
Total Liabilities and Shareholders' Equity (Deficit)... $ 428,208 $ 459,802
========= =========
</TABLE>
4
<PAGE>
THE INTERLAKE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
(39 WKS) (40 WKS)
-------- ---------
<S> <C> <C>
Cash flows from (for) operating activities:
Net income (loss)....................................... $ 6,059 $ (2,037)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization......................... 15,345 15,449
Extraordinary item.................................... -- 3,448
Cumulative effect of accounting change................ (1,876) --
Other operating adjustments........................... (11,870) 2,105
(Increase) decrease in working capital:
Accounts receivable................................. (3,855) (2,003)
Inventories......................................... (4,019) (5,771)
Other current assets................................ (3,813) (5,032)
Accounts payable.................................... 4,603 (2,629)
Other accrued liabilities........................... (8,244) (8,722)
Income taxes payable................................ 3,341 2,285
-------- ---------
Total working capital change...................... (11,987) (21,872)
-------- ---------
Net cash provided (used) by operating activities.......... (4,329) (2,907)
-------- ---------
Cash flows from (for) investing activities:
Capital expenditures.................................... (17,761) (12,704)
Proceeds from disposal of PP&E.......................... 183 173
Acquisitions............................................ (310) --
Other investment flows.................................. 350 759
-------- ---------
Net cash provided (used) by investing activities.......... (17,538) (11,772)
-------- ---------
Cash flows from (for) financing activities:
Proceeds from issuance of long-term debt................ 9,000 110,127
Retirements of long-term debt........................... (3,575) (107,387)
Debt issuance costs..................................... -- (5,513)
Other financing flows................................... 1,508 1,609
-------- ---------
Net cash provided (used) by financing activities.......... 6,933 (1,164)
-------- ---------
Effect of exchange rate changes........................... 350 31
-------- ---------
Increase (Decrease) in cash and cash equivalents.......... (14,584) (15,812)
Cash and cash equivalents, beginning of period............ 41,562 39,708
-------- ---------
Cash and cash equivalents, end of period.................. $ 26,978 $ 23,896
======== =========
</TABLE>
5
<PAGE>
THE INTERLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--FINANCIAL STATEMENTS
The information furnished in these financial statements is unaudited.
The Registrant and its subsidiaries are referred to herein on a consolidated
basis as the Company.
NOTE 2--SUBSEQUENT EVENT
On October 4, 1996, the Company sold its Packaging businesses ("Packaging")
to Samuel Manu-Tech Inc. ("SMT") of Etobicoke, Ontario, Canada, or entities
controlled by SMT, for an aggregate net cash purchase price, before taxes and
other expenses, of $104.4 million, subject to potential adjustments. The
transaction included the sale in the United States of substantially all of the
assets of Interlake Packaging Corporation ("Interlake Packaging") to Samuel
Strapping Systems (Tennessee), Inc. ("Samuel Tennessee"), and the assumption
by Samuel Tennessee of substantially all of the liabilities of Interlake
Packaging; the sale in Canada by Interlake Packaging and The Interlake
Companies, Inc. ("Interlake Companies") to SMT of all of the outstanding
shares of Acme Strapping Inc.; and the sale in England by Interlake Companies
of all of the outstanding shares of Precis (935) Limited to Samuel Strapping
Systems (U.K.) Limited. The gain of approximately $40.0 million on this sale
will be recorded in the fourth quarter of 1996. The Company anticipates using
the proceeds from the sale to reduce its long-term debt and to invest in its
other businesses.
NOTE 3--DISCONTINUED OPERATIONS
The consolidated financial statements of the Company have been restated to
report separately the net assets and operating results of Packaging as
discontinued operations. As of September 29, 1996, the investment in net
assets of discontinued operations consisted of:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Current assets............................................ $46,425
Current liabilities....................................... 25,716
-------
Net current assets........................................ 20,709
Net fixed assets.......................................... 10,514
Other assets.............................................. 2,999
Long-term liabilities..................................... (4,820)
-------
$29,402
=======
</TABLE>
Summary results of discontinued operations were as follows:
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
--------------- ------------------
1996
(13 1995 1996 1995
WKS) (13 WKS) (39 WKS) (40 WKS)
------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net Sales................................... $35,138 $34,371 $105,287 $106,727
======= ======= ======== ========
Earnings before interest and taxes.......... $ 4,462 $ 2,912 $ 12,087 $ 10,037
Net interest expense........................ 1,611 1,656 4,833 5,178
Provision for income taxes.................. 1,074 775 3,249 2,747
Cumulative effect of accounting change
related to discontinued operations......... -- -- 266 --
------- ------- -------- --------
Income from discontinued operations......... $ 1,777 $ 481 $ 4,271 $ 2,112
======= ======= ======== ========
</TABLE>
6
<PAGE>
THE INTERLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Interest expense was allocated to discontinued operations based on an
assumed $75.6 million reduction in long-term debt.
The liquidation of LIFO inventories benefited pre-tax income from
discontinued operations in the first nine months of 1995 by $.8 million.
NOTE 4--POSTRETIREMENT BENEFITS/ACCOUNTING CHANGE
In the third quarter of 1996, the Company eliminated postretirement medical
and life insurance benefits for which certain active domestic employees could
have become eligible. After a one-time cash payment of $.4 million, the
Company recorded a favorable expense adjustment to income from continuing
operations of $1.2 million, in accordance with the Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ("FAS 106").
Based on a review of postretirement life and medical claims cost experience
in the second quarter of 1996, the Company changed the assumptions used to
calculate the Accumulated Postretirement Benefit Obligation (APBO) required by
FAS 106. The annual rate of increase of per capita claims cost was changed
from 12% in 1996, decreasing by 1% per year to 6% in 2002, to 7% in 1996,
decreasing by 1/2% per year to 5% in 2000 and remaining at that level
thereafter. In addition, the method for determining expected future medical
claims was revised to reflect recent claims experience. The previously used
method applied a weighting factor to recent experience. These actuarial
assumption changes resulted in a favorable expense adjustment to income from
continuing operations of $1.3 million in the second quarter of 1996.
The Company changed its method of amortizing unrecognized actuarial gains
and losses with respect to its postretirement benefits to amortize them over a
five-year period. The method previously used was to amortize any unrecognized
gain or loss in excess of 10% of the APBO amount over 15 years. This change
has been accounted for as a change in accounting principle, the cumulative
effect of which was recorded as of the beginning of the year. As a result, net
income for the first nine months of 1996 was increased by $1.6 million in
respect of continuing operations and $.3 million in respect of discontinued
operations.
NOTE 5--COMPUTATION OF COMMON SHARE DATA
The weighted average number of common shares outstanding used to compute
primary net income per share was 23,087,000 for 1996 and 22,650,000 for 1995,
and for fully diluted net income per share was 31,599,000 for 1996 and
30,413,000 for 1995.
NOTE 6--INCOME TAXES
The effective tax rate on income from continuing operations was 66.2% and
67.2% for the 1996 and 1995 nine-month periods, respectively. Because most of
the Company's interest expense is borne in the United States at the parent
company level, the Company had substantial taxable income in foreign and state
jurisdictions. Taxes due to foreign authorities were not offset by U.S.
federal income tax benefits.
NOTE 7--ENVIRONMENTAL MATTERS
In connection with the reorganization of the old Interlake, Inc. (now Acme
Steel Company ("Acme")) in 1986, the Company, then newly-formed, indemnified
Acme against certain environmental liabilities relating to properties which
had been shut down or disposed of by Acme's iron and steel division prior to
the 1986 reorganization. As of September 29, 1996, the Company's reserves for
environmental liabilities totaled $3.5 million, most of which relates to the
Acme indemnification.
7
<PAGE>
THE INTERLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Based on its current estimate of its potential environmental liabilities,
including all contingent liabilities, individually and in the aggregate,
asserted and unasserted, the Company believes that, subject to the uncertainty
with respect to the Duluth Site discussed below, the costs of environmental
matters have been fully provided for or are unlikely to have a material
adverse effect on the Company's business, future results of operations,
liquidity or financial condition. In arriving at its current estimate of its
potential environmental liabilities, the Company has relied upon the estimates
and analysis of its environmental consultants and legal advisors, as well as
its own evaluation, and has considered: the probable scope and cost of
investigations and remediations for which the Company expects to have
liability; the likelihood of the Company being found liable for the claims
asserted or threatened against it; and the risk of other responsible parties
not being able to meet their obligations with respect to clean-ups. The
Company's estimate has not been discounted to reflect the time-value of money,
although a significant delay in implementation of certain of the remedies
thought to be probable could result in cost estimates increasing due to
inflation.
In estimating its potential environmental liabilities, the Company has not
taken into consideration any recoveries or potential recoveries from insurance
companies, although in May 1994, the Company instituted an action seeking a
declaratory judgment against and recoveries from insurers under policies
covering nearly 30 years. The parties are in discovery and trial is
tentatively set for April 1997. In the third quarter of 1996, the Company
entered into a settlement agreement with respect to one of the defendant
insurers, and is presently in settlement discussions with several others.
The Company's current estimates of its potential environmental liabilities
are subject to considerable uncertainty due to continuing uncertainty
surrounding one of the sites for which the Company is responsible pursuant to
its indemnity of Acme--namely, the Superfund site on the St. Louis River in
Duluth, Minnesota (the "Duluth Site"). These uncertainties relate to both the
clean-up of certain contaminated soils at the site, as well as the remediation
of certain underwater sediments. In the light of these uncertainties, the
Company's estimates could be subject to change in the future.
With respect to the contaminated soils, the Minnesota Pollution Control
Agency ("MPCA") on September 27, 1995, issued a Record of Decision selecting a
remedy consistent with the anticipated industrial development of the site. The
Company has contracted for, and commenced the implementation of, the portions
of the selected soils remedy for which it is responsible. Based on estimates
of consultants and work to date, the Company expects the cost of such
implementation to be between $3 million and $5 million, a portion of which has
been incurred. The Company expects the soils remediation to be substantially
completed by the end of 1996.
With respect to the underwater sediments, the MPCA has requested the Company
to undertake an investigation and to evaluate remedial alternatives. The
Company's consultants have substantially completed their initial
investigation. Based on this investigation, the Company is beginning to review
possible remedial alternatives for the underwater sediments with the MPCA and
other interested parties. The Company believes that, until this review is
completed, any estimate of remediating the underwater sediments will not be
meaningful. The Company also continues to believe that the range of reasonable
remedial alternatives for the underwater sediments includes that of taking no
action, thereby avoiding the disruption of the natural remediation of the
underwater sediments which has been underway for over 30 years. Thus, the
Company believes the minimum of the range of costs of remedial alternatives to
be zero, and to date has made provision for only the investigation, and not
for the clean-up, of underwater sediments. If ultimately a clean-up is
determined to be appropriate, the range of costs would likely be dependent in
part upon whether the remedy selected called for treating contamination in
place, which might cost several millions of dollars, or provided for removal
and treatment of contaminated sediments, which could cost tens of millions of
dollars.
In March 1996, the citizens' board of the MPCA named the successors to
certain coal tar processors at the Duluth Site (the "tar companies") as
additional responsible parties for a portion of the underwater sediments
8
<PAGE>
THE INTERLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
operable unit. The Company believes that the tar companies are the cause of a
significant portion of the underwater contamination of the site, while the tar
companies to date have maintained that their contributions were minimal.
The Company's current expectation is that cash outlays related to its
outstanding reserves for environmental matters largely will be made over the
period of 1996 and 1997. If the Company ultimately determines that additional
charges are necessary in connection with the Duluth Site, the Company believes
it is likely that cash outlays would occur near the end of the decade, or
later.
NOTE 8--COMMITMENTS AND CONTINGENCIES
The Company is engaged in certain routine litigation arising in the ordinary
course of business. Based upon its evaluation of available information,
management does not believe that any such matters are likely, individually or
in the aggregate, to have a material adverse effect upon the Company's business
future, results of operations, liquidity or consolidated financial condition.
On July 9, 1990, the City of Toledo, Ohio (the "City"), brought an action in
federal district court (the "Court") in Toledo against the Company, Acme Steel
Company ("Acme" or the "old Interlake" and, together with the Company, the
"Interlake defendants"), Beazer Materials and Services, Inc., succeeded by
Beazer East, Inc. ("Beazer") and Toledo Coke Corporation ("Toledo Coke") in
connection with the alleged contamination of a 1.7 acre parcel of land the City
had purchased from Toledo Coke for purposes of widening a road. Pursuant to a
memorandum of understanding dated September 30, 1996, among Beazer, the City,
and the Toledo-Lucas County Port Authority (the "Port Authority"), setting
forth certain obligations of Beazer, the City and the Port Authority for the
completion and funding of the road widening project and related environmental
work, the City, Beazer and the Interlake defendants entered into a settlement
agreement pursuant to which the City released the Interlake defendants and
Beazer from, and agreed to dismiss with prejudice, all claims in the Primary
Action. On October 10, 1996, the Court entered a consent order dismissing with
prejudice all claims in the Primary Action. The Court did not dismiss pending
cross-claims between Beazer and the Interlake defendants. In November 1995 the
Court granted the Interlake defendants' motion for summary judgement seeking
indemnification by Beazer for the liabilities alleged by the City and related
costs and expenses. Beazer has appealed the indemnification ruling. The appeal
has been fully briefed and oral argument took place before the United States
6th Circuit Court of Appeals on October 10, 1996.
On March 10, 1995, SC Holdings, Inc., a subsidiary of Waste Management
International Plc ("SC Holdings"), filed a complaint in federal district court
in Trenton, New Jersey, against Hoeganaes Corporation, an Interlake subsidiary,
and numerous other defendants, seeking to recover amounts expended or to be
expended in the remediation of the Cinnaminson Groundwater Contamination Site
in Burlington County, New Jersey. SC Holdings claims to have spent
approximately $10 million in investigation and remediation, and purportedly
estimates the total costs of investigation and remediation to be approximately
$60 million. The site is a broadly-defined Superfund site which encompasses a
landfill formerly operated by SC Holdings and may also include the groundwater
under Hoeganaes' Riverton, New Jersey, facility. Hoeganaes may have shipped
certain materials to the landfill. SC Holdings alleges that Hoeganaes has
liability as both an owner/operator and a generator. In November 1995, the
named defendants filed a complaint against numerous third-party defendants,
bringing the total number of defendants in the matter to approximately 100. The
parties to the litigation are presently engaged in a court-supervised non-
binding allocation process which is presently expected to last until mid-1997.
The Company believes it has meritorious defenses to both of the alleged bases
of liability.
NOTE 9--EXTRAORDINARY ITEM
During the second quarter of 1995, the Company issued $100.0 million of 12%
Senior Notes due in 2001, the proceeds of which were used to retire a portion
of the Company's bank debt. Debt issuance costs of $3.4 million associated with
the retired debt were written off and shown as an extraordinary item.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
(The following comments reflect the sale of the Company's packaging
businesses to Samuel Manu-Tech Inc. on October 4, 1996, subsequent to the end
of the third quarter, as described below and in Notes 2 and 3 of Notes to
Consolidated Financial Statements. Results of all periods presented have been
recast to reflect the packaging businesses as discontinued operations.)
RESULTS OF OPERATIONS
Third Quarter 1996 Compared with Third Quarter 1995
Net sales of continuing operations of $174.0 million in the quarter ended
September 29, 1996 compared with net sales of continuing operations of $175.9
million in the prior year period. Sales in the Engineered Materials segment
for the third quarter increased 6% to $64.1 million, due to higher sales at
both Special Materials and Aerospace Components. Sales in the Handling segment
for the third quarter declined 5% to $109.9 million, due mainly to lower sales
in North America. Operating profit from continuing operations increased 8% to
$14.4 million from $13.3 million in 1995. Operating profit in the 1996 quarter
benefited from the Company's action to eliminate postretirement medical and
life insurance benefits for certain active domestic employees, which resulted
in a one-time cash payment of $.4 million and a favorable expense adjustment
of $1.2 million.
Net income of $2.2 million, or $.07 per share, for the 1996 quarter compared
with net income of $.3 million, or $.01 per share, for the third quarter of
1995. These amounts include income from discontinued operations of $1.8
million, or $.06 per share, in the 1996 period, compared with income from
discontinued operations of $.5 million, or $.02 per share, in 1995. Results of
the discontinued operations for the third quarter included $.7 million from
the elimination of retiree life and medical benefits for certain active
domestic employees.
Segment Results
The Company's businesses are organized into two segments: Engineered
Materials and Handling. Businesses in Engineered Materials are Special
Materials (ferrous metal powders) and Aerospace Components (precision
aerospace component fabrication and aviation repair). As a result of the sale
of Packaging, the Handling/Packaging Systems segment has been renamed
Handling. Businesses in Handling are U.S. and international material handling
operations.
<TABLE>
<CAPTION>
THIRD QUARTER SEGMENT RESULTS
--------------------------------
NET SALES OPERATING PROFIT
------------- ------------------
1996 1995 1996 1995
------ ------ -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Engineered Materials
Special Materials..................... $ 43.7 $ 41.4
Aerospace Components.................. 20.4 19.2
------ ------
64.1 60.6 $ 9.1 $ 9.6
Handling................................ 109.9 115.3 5.5 4.2
------ ------
Corporate Items......................... (.2) (.5)
-------- --------
Consolidated Totals..................... $174.0 $175.9 $ 14.4 $ 13.3
====== ====== ======== ========
</TABLE>
Engineered Materials
Sales in the Engineered Materials segment for the third quarter increased 6%
to $64.1 million due to higher sales at both Special Materials and Aerospace
Components. Special Materials' metal powder sales increased 6%
10
<PAGE>
compared with the same period last year, reflecting higher volume. Profit
increased 1% for the quarter, as the benefit from additional sales was
partially offset by higher operating costs.
Aerospace Components' third quarter sales increased 6% compared with the
1995 period, due to increased shipments of fabricated components and improved
repair volume. Profit for the quarter declined 8%, due to higher maintenance
and repair expenses and a less favorable product mix in aviation repair.
Order backlogs in this segment were $158.0 million at the end of the
quarter, down from $160.9 million at the end of the third quarter of 1995.
Special Materials' backlog was down 28%, due to lower order rates and customer
inventory reduction efforts. Aerospace Components' backlog increased 8%,
reaching its highest level since 1989.
Handling
Sales in the Handling segment (at comparable exchange rates) declined 4%
compared with the 1995 period. Sales increased 12% in the Asia Pacific region
and were slightly higher in Europe, while North American sales were down 13%.
Handling's profit increased 28% (at comparable exchange rates) compared with
the third quarter of 1995, which included a one-time provision of $2.5 million
related to reducing fixed costs in Europe. Excluding this expense, profit for
the 1996 period declined 12%. North American profit declined 14%, as lower
steel and operating costs and the retired life and medical adjustment
partially offset the impact of lower sales. Excluding the 1995 provision
discussed above, Handling's European profit was level with the prior year, as
lower margins in the U.K. offset improvements in Germany and Belgium.
Order backlogs in this segment were $95.9 million at the end of the third
quarter, up from $81.2 million at the end of the third quarter of 1995 (at
comparable exchange rates), reflecting significantly stronger order intake at
the North American Handling operation.
Nine Months 1996 Compared with Nine Months 1995
For the first nine months of 1996, net sales of continuing operations
declined 1% to $513.9 million from $517.0 million. However, 1995 was a 40-week
period and 1996 was a 39-week period; also, changes in exchange rates
decreased sales by $3.6 million compared with 1995. Operating profit declined
2% to $41.4 million from $42.2 million a year earlier. Selling, general and
administrative expenses were 14.7% of sales for the first nine months of 1996,
compared with 15.0% of sales for the 1995 period.
The Company performed a review of postretirement medical and life claims
cost experience in the second quarter of 1996. Based on favorable claims
experience the Company changed the assumptions used in calculating the
liability for these benefits, resulting in a favorable expense adjustment to
income from continuing operations of $1.3 million in the second quarter. In
addition to the postretirement life and medical assumption changes, results
for the first nine months of 1996 included a $1.6 million benefit ($.05 per
share) from the cumulative effect of a change in accounting for postretirement
life and medical benefits calculated under FAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" in respect of continuing
operations.
Net income of $6.1 million, or $.19 per share, compared with a net loss for
the 1995 period of $2.0 million, or $.07 per share. These amounts include
income from discontinued operations of $4.3 million, or $.13 per share, in the
1996 period, compared with income from discontinued operations of $2.1
million, or $.07 per share, in 1995. Results for the discontinued operations
for the first nine months of 1996 included a $1.1 million benefit from the
elimination of retiree life and medical benefits for certain active domestic
employees and related assumption and accounting changes. Net income for the
first nine months of 1995 was reduced by a $3.4 million ($.11 per share)
extraordinary item which was recorded in the second quarter of 1995 to write
off deferred debt issuance costs related to the early retirement of a portion
of the Company's bank debt.
11
<PAGE>
<TABLE>
<CAPTION>
NINE MONTH SEGMENT
RESULTS
--------------------------
OPERATING
NET SALES PROFIT
------------- ------------
1996 1995 1996 1995
------ ------ ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Engineered Materials
Special Materials.......................... $130.8 $134.8
Aerospace Components....................... 62.5 53.1
------ ------
193.3 187.9 $28.9 $30.2
Handling..................................... 320.6 329.1 13.7 13.5
------ ------
Corporate Items.............................. (1.2) (1.5)
----- -----
Consolidated Totals.......................... $513.9 $517.0 $41.4 $42.2
====== ====== ===== =====
</TABLE>
Engineered Materials
For the first nine months of 1996, sales were up 3% from 1995, and profit
decreased 5%. Special Materials' sales declined 3% and profit declined 11%,
due to lower production volume and higher expenses. Aerospace Components'
sales increased 18% and profit increased 49% due to higher volumes and
improved manufacturing performance.
Handling
For the first nine months of 1996, Handling sales (at comparable exchange
rates) declined 1% compared with the 1995 period and profit was up 2%.
Excluding the 1995 provision, profit declined 10% due to lower prices in
Europe and North America, somewhat offset by selling and administrative
expense savings in Europe resulting from the cost reduction actions taken in
the third quarter of 1995.
FINANCIAL CONDITION
The Company's total debt at the end of the third quarter was $449.3 million,
up $5.7 million from year-end 1995. Cash totaled $27.0 million at the end of
the quarter, compared with $41.6 million at the end of 1995, reflecting
increased working capital requirements and capital expenditures. Capital
expenditures of $7.7 million during the quarter brought the year-to-date total
to $17.8 million, compared with $12.7 million for the first nine months of
1995.
Under its bank credit agreement, as of September 29, 1996, the Company had
available revolving facilities of up to an additional $29.2 million over its
then outstanding revolving indebtedness which, together with cash resources,
the Company believes provided it with adequate liquidity. The subsequent event
(see below) enhanced liquidity and reduced the Company's total debt.
SUBSEQUENT EVENT
On October 4, 1996, the Company sold its packaging businesses to Samuel
Manu-Tech Inc. of Etobicoke, Ontario, Canada. The gain of approximately $40.0
million on this sale will be recorded in the fourth quarter of 1996. The
Company anticipates using the proceeds from the sale to reduce its long-term
debt and to invest in its other businesses. The consolidated financial
statements of the Company have been restated to report separately the net
assets and operating results of the packaging businesses as discontinued
operations.
12
<PAGE>
PART II.--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The nature of the Company's business is such that it is regularly involved
in legal proceedings incidental to its business. None of these proceedings is
material within the meaning of regulations of the Securities and Exchange
Commission.
The Company is a party in certain litigation and a proceeding before a
governmental agency which relate to the contamination of the environment.
These matters are described in Note 7 and Note 8 of Notes to Consolidated
Financial Statements included herein. Reference is also made to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, Part
I, Item 3--Legal Proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<C> <S>
Exhibit 4.1 Tenth Amendment, dated as of September 25, 1996, to the Amended
and Restated Credit Agreement
Exhibit 10.1 U.S. Asset Purchase Agreement, dated October 1, 1996, between
Interlake Packaging Corporation and Samuel Strapping Systems
(Tennessee), Inc.
Exhibit 10.2 Canadian Stock Purchase Agreement, dated September 30, 1996,
between Interlake Packaging Corporation, The Interlake Companies,
Inc. and Samuel Manu-Tech Inc.
Exhibit 10.3 U.K. Stock Purchase Agreement, dated October 1, 1996, between The
Interlake Companies, Inc., Samuel Strapping Systems (U.K.)
Limited, The Interlake Corporation and Samuel Manu-Tech Inc.
Exhibit 27.1 Financial Data Schedules, for the year ended December 25, 1994
and the quarters ended April 2, 1995, July 2, 1995 and October 1,
1995
Exhibit 27.2 Financial Data Schedules, for the year ended December 31, 1995
and the quarters ended March 31, 1996, June 30, 1996 and
September 29, 1996
</TABLE>
(b) REPORTS ON FORM 8-K
Current Report on Form 8-K dated October 2, 1996, reporting that the Company
had signed a definitive agreement for the sale of its packaging businesses to
Samuel Manu-Tech Inc.
Current Report on Form 8-K dated October 4, 1996, reporting that the Company
had completed the sale of its packaging businesses
Current Report on Form 8-K, including Unaudited Pro Forma Condensed
Consolidated Statements of Income for the six months ended June 30, 1996 and
the year ended December 31, 1995, and Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of June 30, 1996, and notes thereto, dated
October 21, 1996
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Interlake Corporation
/s/ Stephen Gregory
-------------------------------------
Stephen Gregory
Vice President--Finance
and Chief Financial Officer
October 24, 1996
14
<PAGE>
EXHIBIT 4.1
TENTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
TENTH AMENDMENT (the "Amendment"), dated as of September 25, 1996
among THE INTERLAKE CORPORATION, a Delaware corporation (the "Company"), each
Subsidiary Borrower party to the Credit Agreement referred to below, The
Interlake Corporation Employee Stock Ownership Trust (the "ESOP Borrower"),
acting by and through the LaSalle National Trust, N.A. (successor to LaSalle
National Bank), not in its individual or corporate capacity, but solely in its
capacity as trustee of the ESOP Trust (the "ESOP Trustee" and together with the
Company and the Subsidiary Borrowers, the "Credit Parties"), THE CHASE MANHATTAN
BANK (as successor to CHEMICAL BANK), individually and as Administrative Agent
(the "Administrative Agent"), THE FIRST NATIONAL BANK OF CHICAGO, individually
and as Co-Agent (the "Co-Agent"), and the financial institutions party to the
Credit Agreement referred to below and listed on the signature pages hereto (the
"Banks"). All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided such terms in the Credit Agreement
referred to below.
W I T N E S S E T H :
-------------------
WHEREAS, each of the Credit Parties, the Banks, the Administrative
Agent and the Co-Agent are parties to that certain Amended and Restated Credit
Agreement dated as of September 27, 1989 and amended and restated as of May 28,
1992 and as further amended by the First Amendment dated as of August 14, 1992,
the Second Amendment and Waiver dated as of October 30, 1992, the Third
Amendment and Waiver dated as of August 20, 1993, the Fourth Amendment dated as
of December 22, 1993, the Fifth Amendment dated as of February 23, 1994,
<PAGE>
the Sixth Amendment dated as of August 16, 1994, the Seventh Amendment dated as
of January 24, 1995, the Eighth Amendment dated as of February 1, 1995 and the
Ninth Amendment dated as of June 1, 1995 (as so amended and restated and further
amended and as the same may hereafter be amended, modified or supplemented from
time to time, the "Credit Agreement"); and
WHEREAS, the Company, the Subsidiary Borrowers and the Banks wish to
amend the Credit Agreement as herein pro vided;
NOW THEREFORE, it is agreed:
1. On the Tenth Amendment Effective Date, Section 3.01 is hereby
amended by inserting the following new clause (i) to the end thereof:
"(i) On the date which is 150 days after the Interlake Packaging
Disposition is consummated, the Company shall pay to each Bank a fee based
on the amount of Net Cash Proceeds arising from the Interlake Packaging
Disposition used (x) to effectuate one or more Note Repurchases and/or (y)
to acquire the business and assets of (A) Real Time Solutions, Inc. and/or
(B) ARC Metals, Inc. (and not required to be applied to repay Loans
pursuant to Section 4.02(d)) as follows:
(a) to each Bank whose Exclusion Percentage is equal to or
greater than 50% but less than 75%, an amount equal to 1/8 of 1% of
its Fee Calculation Percentage multiplied by such Net Cash Proceeds
used;
(b) to each Bank whose Exclusion Percentage is equal to or
greater than 75% but less than 100%, an amount equal to 1/4 of 1% of
its Fee Calculation Percentage multiplied by such Net Cash Proceeds
used; and
<PAGE>
(c) to each Bank whose Exclusion Percentage is 100%, an amount
equal to 3/8 of 1% of its Fee Calculation Percentage multiplied by
such Net Cash Proceeds used."
2. On the Tenth Amendment Effective Date Section 4.02(d) of the
Credit Agreement is hereby amended by inserting the following sentence at the
end thereof:
"Notwithstanding the foregoing, with respect to the Interlake
Packaging Disposition, (a) 50% of the Net Cash Proceeds therefrom (the
"Total Mandatory Exclusion Amount") plus (b) the Total Voluntary Exclusion
Amount may, at the option of the Company, be excluded from the required
repayment set forth above, and be delivered to a blocked account with, and
on terms and conditions satisfactory to, the Administrative Agent, and may
be released therefrom, so long as no Default or Event of Default then
exists or would arise therefrom, (i) to effect Note Repurchases in
accordance with this Agreement and/or (ii) to acquire the business and
assets of (x) Real Time Solutions, Inc. and/or (y) ARC Metals, Inc.,
provided that on the earlier of (i) the date which is 150 days after the
date of the consummation of the Interlake Packaging Disposition and (ii)
the date of any exercise of remedies pursuant to the last paragraph of
Section 9, all amounts then held in such blocked account shall be applied
as otherwise required by the previous sentence of this Section 4.02(d).
3. On the Tenth Amendment Effective Date, Section 4.02(h) of the
Credit Agreement is hereby amended by inserting the following sentence at the
end thereof:
"Notwithstanding the foregoing, in connection with the application of
the Net Cash Proceeds of the Interlake Packaging Disposition on or after
the closing date thereof, all amounts to be applied in accordance with this
Section 4.02(h) shall be applied to reduce the
<PAGE>
Total Exposure (after giving effect to any forbearance of such reduction by
any Bank electing a Voluntary Exclusion Amount which is greater than zero),
and shall be applied: (a) first, to the repayments of Subsidiary Term Loans
outstanding to Acme Strapping, Inc. in the aggregate amount of $6,496,785,
(b) second, to the repayments of Subsidiary Revolving B Loans outstanding
to Acme Strapping, Inc. in the aggregate amount of $3,136,875, (c) third,
to repay Loans to Borrowers which are incorporated in the United States or
any State thereof in the following order: (i) first, to repay all Term
Loans and (ii) then to repay all Revolving B Loans; (d) fourth, to reduce
permanently the Total Revolving A Commitment, (e) fifth, to repay Loans to
Borrowers which are incorporated outside of the United States in the
following order: (i) first, to all Term Loans denominated in U.S. Dollars,
(ii) second, to all Revolving B Loans, (iii) third, to all Sterling Term
Loans and (iv) fourth, to all Sterling Revolving B Loans."
4. On the Tenth Amendment Effective Date, Section 8.02 of the Credit
Agreement is hereby amended by (a) deleting the word "and" at the end of clause
(xiii) and adding a comma in lieu thereof, (b) deleting the period at the end of
clause (xiv) and inserting " and" in lieu thereof and (c) inserting the
following new clause in lieu thereof:
"(xv) the Company or any of its Subsidiaries shall be permitted to
consummate the Interlake Packaging Disposition so long as the proceeds
thereof are applied as required by Sections 4.02(d) and (g).
5. On the Tenth Amendment Effective Date, Section 8.06 of the Credit
Agreement is hereby amended by (a) deleting the word "and" at the end of clause
(xvii) and adding a comma in lieu thereof, (b) deleting the period at the end of
clause (xviii) and inserting " and" in lieu
<PAGE>
thereof and (c) inserting the following new clauses in lieu thereof:
(xix) the Company or any of its Subsidiaries may purchase or otherwise
acquire all of the business and assets of Real Time Solutions, Inc.,
provided that such acquisition is based upon terms which are in form and
substance satisfactory to the Administrative Agent, and provided further
that such acquisition shall have been completed no later than the 150th day
following the consummation of the Interlake Packaging Disposition; and
(xx) the Company or any of its Subsidiaries may purchase or otherwise
acquire all of the business and assets of ARC Metals, Inc., provided that
such acquisition is based upon terms which are in form and substance
satisfactory to the Administrative Agent, and provided further that such
acquisition shall have been completed no later than the 150th day following
the consummation of the Interlake Packaging Disposition.
6. On the Tenth Amendment Effective Date, Section 8.12 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"8.12 Minimum Consolidated EBITDA. Consolidated EBITDA for any
four fiscal quarter period ending on the last day of any fiscal quarter set
forth below shall be greater than the amount set forth opposite such fiscal
quarter:"
<TABLE>
<CAPTION>
Fiscal Period Amount
------------- ------
<S> <C>
For the fourth quarter of 1995 $85,000,000
For the first quarter of 1996 $85,000,000
For the second quarter of 1996 $85,000,000
For the third quarter of 1996 $68,000,000
For the fourth quarter of 1996 $70,000,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
For the first quarter of 1997 $70,000,000
For the second quarter of 1997 $70,000,000
For the third quarter of 1997 $70,000,000
For the fourth quarter of 1997 $72,000,000
For the first quarter of 1998 $72,000,000
For the second quarter of 1998 $72,000,000
For the third quarter of 1998 $72,000,000
For the fourth quarter of 1998 $74,000,000
For the first quarter of 1999 $74,000,000
For the second quarter of 1999 $74,000,000
</TABLE>
Additionally, if the Company exceeds the required minimum Consolidated
EBITDA levels set forth above for the fiscal years ending December 31, 1995 or
December 31, 1996, then 50% of the excess in each of those two years, up to a
maximum of $5,000,000 in the aggregate, will be available to the Company as a
credit to add to the actual Consolidated EBITDA of the Company in any fiscal
quarter thereafter, to be included in the calculation for any period in which
such quarter is included. The credit created by such excess may be used in whole
or in part.
7. On the Tenth Amendment Effective Date, Section 8.13(i) of the
Credit Agreement is hereby amended by (i) inserting directly after the phrase
""any Indebtedness incurred pursuant to the Subordinated Debt Documents and the
Permanent Subordinated Debentures,":
"or any of the Senior Notes"
and (ii) inserting the following proviso at the end thereof:
, provided that the Company may acquire, repurchase, redeem or
otherwise prepay Senior Notes or Permanent Subordinated Debentures pursuant
to one or more Note Repurchases (i) in an amount not to exceed the amount
held in the blocked account described in and
<PAGE>
otherwise in compliance with the second sentence of Section 4.02(d) and
(ii) an additional amount equal to $10,000,000, and, in any event, each
such Note Repurchase shall be deemed to be a representation and warranty by
the Company that such Note Repurchase shall not violate or breach any
provision of the Credit Documents, the Subordinated Note Documents, the
Senior Notes or any other contractual obligation binding on the Company or
any of its Subsidiaries, and the Administrative Agent shall have received
an opinion of counsel satisfactory to it with respect to same.
8. On the Tenth Amendment Effective Date, Section 10 is hereby
amended by (x) inserting the following definitions in alphabetical order:
"Exclusion Percentage" shall mean, for each Bank, the sum of such
Bank's Mandatory Exclusion Percentage plus its Voluntary Exclusion
Percentage.
"Exposure" shall mean for each Bank at any time, (i) the aggregate
principal amount of Loans (other than ESOP Loans) of such Bank outstanding
at such time, plus (ii) the Revolving Percentage (if any) of such Bank
multiplied by the Letter of Credit Outstandings at such time, plus (iii)
such Bank's Unutilized Revolving A Commitment (if any) at such time, plus
(iv) the Delayed Draw Commitment (if any) of such Bank at such time.
"Fee Calculation Percentage" for each Bank shall mean a fraction
(expressed as a percentage) the numerator of which is the sum of such
Bank's Mandatory Exclusion Amount plus its Voluntary Exclusion Amount, and
the denominator of which is the Total Mandatory Exclusion Amount plus the
Total Voluntary Exclusion Amount.
"Interlake Packaging Business" shall mean the business which is (prior
to the disposition thereof)
<PAGE>
operated by the Interlake Packaging Corporation and certain other direct
and indirect Subsidiaries of the Company.
"Interlake Packaging Disposition" shall mean the sale or other
disposition of the capital stock and/or assets comprising the Interlake
Packaging Business; provided that consideration from such disposition will
be in the form of immediately available funds which, net of expected taxes
and related expenses, equals or exceeds $80,000,000, and that such
disposition is consummated upon terms and conditions satisfactory to the
Administrative Agent and the Required Banks.
"Mandatory Exclusion Amount" shall mean for each Bank, such Bank's Pro
Rata Share (calculated immediately prior to the consummation of the
Interlake Packaging Disposition) of the Total Mandatory Exclusion Amount.
"Mandatory Exclusion Percentage" for each Bank shall mean 50%
(representing the percentage of Net Cash Proceeds of the Interlake
Packaging Disposition such Bank would have received but for the operation
of clause (a) of the last sentence of Section 4.02(d)).
"Note Repurchase" shall mean any acquisition, repurchase, redemption
or other purchase of Permanent Subordinated Debentures or Senior Notes.
"Pro Rata Share" shall mean for each Bank, a fraction (expressed as a
percentage), the numerator of which is the Exposure of such Bank at such
time and the denominator of which is the Total Exposure at such time.
"Total Mandatory Exclusion Amount" shall have the meaning provided in
Section 4.02(d).
"Total Voluntary Exclusion Amount" shall mean aggregate Net Cash
Proceeds from the Interlake Packaging
<PAGE>
Disposition which are initially excluded from the repayment provisions of
Section 4.02(d) as a result of clause (b) of the second sentence thereof in
an amount equal to the aggregate of the Voluntary Exclusion Amount of each
of the Banks.
"Voluntary Exclusion Amount" shall mean, for each Bank, the amount of
Net Cash Proceeds of the Interlake Packaging Disposition initially
voluntarily excluded from the repayment provisions of Section 4.02(d) as a
result of clause (b) of the last sentence thereof, calculated on the basis
of such Bank's Voluntary Exclusion Percentage.
"Voluntary Exclusion Percentage" shall mean, (i) for each Bank which
executed the Tenth Amendment to this Agreement, the percentage (which
percentage may not exceed the Maximum Voluntary Exclusion Percentage listed
next to each Bank's name on Schedule A to this Tenth Amendment) filled in
by such Bank next to its signature thereto (representing the additional
percentage of Net Cash Proceeds of the Interlake Packaging Disposition it
would have received but for the election by such Bank not to have received
such percentage of Net Cash Proceeds as a result of the operation of clause
(b) of Section 4.02(d)) and (ii) for each Bank which fails to include any
percentage next to its signature and for each other Bank, a percentage
equal to zero.
; (y) by amending (A) the definition of Consolidated EBITDA by adding the
following sentence at the end thereof:
"For any calculation of Consolidated EBITDA on the date of the
Interlake Packaging Disposition or thereafter for any period of four fiscal
quarters inclusive of the date of the Interlake Packaging Disposition, all
calculations of Consolidated EBITDA shall give pro forma effect to the
Interlake Packaging
<PAGE>
Disposition as if it had taken place on the first day of the respective
four fiscal quarter period."
; (B) the definition of Excess Cash Flow by adding the following clause to the
text at the end of the parenthetical appearing in clause (i)(y) thereof:
"or to the extent used or available (A) to effect Note Repurchases
and/or (B) to acquire the business and assets of (I) Real Time
Solutions, Inc. and/or (II) ARC Metals, Inc."
; (C) the definition of Net Cash Proceeds by adding the following clause at the
end thereof:
"; provided that, Net Cash Proceeds shall not include any payments
made in respect of cash held by any entities being disposed of
pursuant to the Interlake Packaging Disposition."
; and (D) the definition of Total Exposure by deleting clause (iv) and inserting
the following in lieu thereof;
"(iv) the Total Delayed Draw Commitment then in effect."
and (z) by deleting the definition of "Permanent Subordinated Debentures" and
inserting the following definition in lieu thereof:
"Permanent Subordinated Debentures" shall mean those 12 1/8% Senior
Subordinated Debentures due 2002 issued by the Company pursuant to the
Indenture dated as of June 18, 1992, between the Company and Harris Trust
and Savings Bank as trustee, in the aggregate amount of $220,000,000.
<PAGE>
9. Section 13 of the Credit Agreement is hereby amended by adding the
following new Section 13.22 at the end thereof:
"Section 13.22 Interlake Packaging Disposition. Notwithstanding
anything to the contrary contained in this Agreement or any other Credit
Document, prior to the Interlake Packaging Disposition, the Company and its
Subsidiaries shall be permitted to effectuate all of the actions outlined
on Schedule XXI, which actions shall be effectuated on a basis satisfactory
to the Administrative Agent."
10. On the Tenth Amendment Effective Date, the Credit Agreement is
hereby amended by adding Schedule XXI thereto in the form of Exhibit A hereto.
11. In order to induce the Banks to enter into this Amendment, each
of the Credit Parties (other than the ESOP Trustee) hereby (a) certifies that no
Default or Event of Default exists and that each of the representations,
warranties and agreements contained in Section 6 of the Credit Agreement on the
Tenth Amendment Effective Date, both before and after giving effect to this
Amendment, is true and correct in all material respects, and (b) confirms that
it has and will continue to comply with all of its obligations contained in the
Credit Agreement and the other Credit Documents including with respect to each
of the Borrowers, but not limited to, all of its obligations contained in
Section 7.10(b) of the Credit Agreement.
12. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
13. This Amendment may be executed in any number of counterparts and
by the different parties hereto on sepa rate counterparts, each of which
counterparts when executed
<PAGE>
and delivered shall be an original, but all of which shall together constitute
one and the same instrument. A complete set of counterparts shall be lodged with
the Company and the Administrative Agent.
14. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
15. This Amendment shall become effective on the date (the "Tenth
Amendment Effective Date") when each of the following conditions shall have been
satisfied:
(a) On or prior to the Tenth Amendment Effective Date, the Company,
the Subsidiary Borrowers, the ESOP Trustee, the Administrative Agent, the
Co-Agents and the Required Banks shall have signed a copy hereof (whether
the same or different copies) and shall have delivered (including by way of
telecopier) such copies to the Administrative Agent;
(b) The Company shall simultaneously with the effectiveness hereof
consummate the Interlake Packaging Disposition;
(c) The Company shall have paid all fees and expenses (including
legal fees and expenses) then due and owing to the Administrative Agent;
(d) The Administrative Agent shall have received opinions of counsel
to the Company and its Subsidiaries (which counsel shall be satisfactory to
the Administrative Agent) covering the matters herein and such other
matters as the Administrative Agent shall have reasonably requested; and
(e) The Company shall have paid to the Administrative Agent for
distribution to the Banks a fee equal to 1/8 of 1% multiplied by its Fee
Calculation Percentage
<PAGE>
of the projected Net Cash Proceeds of the Interlake Packaging Disposition.
Notwithstanding the foregoing, paragraph 9 hereof shall become effective when
the condition in clause (a) of this paragraph 15 shall have been satisfied.
16. From and after the Tenth Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents or any other agreement
to the Credit Agreement shall be deemed to be references to such Credit Agree
ment as amended hereby.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
THE INTERLAKE CORPORATION
By /s/Stephen Gregory
--------------------------
Title: Vice President-
Finance and Chief
Financial Officer
SUBSIDIARY BORROWERS
--------------------
ACME STRAPPING INC.
By /s/Stephen Gregory
--------------------------
Title: Authorized Agent
DEXION (AUSTRALIA) PTY. LTD.
A.C.N. 000 083 956
By /s/Stephen R. Smith
--------------------------
Title: Authorized Agent
<PAGE>
S.A. DEXION-REDIRACK N.V.
By /s/Stephen R. Smith
--------------------------
Title: Authorized Agent
DEXION INTERNATIONAL LIMITED
By /s/Stephen R. Smith
--------------------------
Title: Authorized Agent
PRECIS (935) LTD.
By /s/Stephen R. Smith
--------------------------
Title: Authorized Agent
DEXION GmbH
By /s/Stephen Gregory
--------------------------
Title: Authorized Agent
TWICEBONUS LIMITED
By /s/Stephen Gregory
--------------------------
Title: Authorized Agent
<PAGE>
THE INTERLAKE CORPORATION EMPLOYEE STOCK OWNERSHIP
TRUST, acting by and through the LASALLE NATIONAL
TRUST, N.A. (successor to LaSalle National Bank),
not in its in dividual or corporate capacity
(except for the representations and warranties
contained in Section 6.01(b)(y) of the Credit
Agreement) but solely in its capacity as ESOP
Trustee
By /s/Jeffrey Schiedemeyer
------------------------
Title: Assistant Vice
President
<PAGE>
Voluntary
Exclusion
Percentage BANKS
- ---------- -----
___0____% THE CHASE MANHATTAN BANK
-
Individually, and as
Administrative Agent
By /s/
-------------------------------
Title: Managing Director
_____0____% THE FIRST NATIONAL BANK
OF CHICAGO
Individually, and as Co-Agent
By /s/
-------------------------------
Title:
__________% THE MITSUI TRUST AND BANKING
COMPANY LIMITED
By /s/Margaret Holloway
-------------------------------
Title:Vice President & Manager
40.4703% NATIONAL BANK OF CANADA
__________
<PAGE>
By /s/
-------------------------------
Title:Assistant Vice President
By /s/
-------------------------------
Title:
_____0____% NATIONAL WESTMINSTER BANK PLC
-
By /s/
-------------------------------
Title:Senior Vice President
_____0____% BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
-------------------------------
Title:Vice President
_____0____% BANK OF AMERICA, ILLINOIS
By /s/
-------------------------------
Title: Vice President
_____0____% THE FUJI BANK LIMITED
By /s/ Hidehlko Jdr
-------------------------------
Title:General Manager
<PAGE>
_____0____% THE NIPPON CREDIT BANK, LTD.
By /s/
--------------------------
Title: Senior Manager
<PAGE>
_____0____% THE BANK OF NOVA SCOTIA
By /s/F.C.H. Ashby
--------------------------
Title:Senior Manager Loan
Operations
_________% BANK OF YOKOHAMA
By__________________________
Title:
37.1068 % GIROCREDIT BANK AG
------- DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH
By /s/
--------------------------
Title:
By /s/
--------------------------
Title:
12.8007%
-------
SENIOR DEBT PORTFOLIO
By: Boston Management and
Research as Investment
Advisor
<PAGE>
By /s/
----------------------------
Title:Assistant Treasurer
36.3307____% LEHMAN COMMERCIAL PAPER INC.
By /s/
----------------------------
Title: Authorized Signatory
30.1751___% RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS, B.V.
By Chancellor Senior Secured
Management Inc. as Profile
Advisor
By /s/Christopher A. Bondy
----------------------------
Title: Vice President
50.000___% STICHTING RESTRUCTURED
OBLIGATIONS BACKED BY SENIOR
ASSETS 2, (ROSA 2)
By Chancellor Senior Secured
Management Inc. as Portfolio
Advisor
By /s/ Christopher A. Bondy
----------------------------
Title: Vice President
39.0578 % CERES FINANCE LTD.
------------
<PAGE>
By /s/
----------------------------
Title: Director
_________% MFS HIGH INCOME FUND
By /s/
----------------------------
Title:
<PAGE>
ACCEPTED AND CONSENTED TO:
INTERLAKE DRC LIMITED
By /s/Stephen Gregory
------------------------
Title: Authorized Agent
DEXION GROUP PLC
By /s/Stephen R. Smith
------------------------
Title: Authorized Agent
<PAGE>
EXHIBIT 10.1
================================================================================
U.S. ASSET PURCHASE AGREEMENT
-----------------------------
ASSET PURCHASE AGREEMENT
by and between
INTERLAKE PACKAGING CORPORATION
and
SAMUEL STRAPPING SYSTEMS (TENNESSEE), INC.
dated
October 1, 1996
-------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
ARTICLE 1
DEFINITIONS.......................................................... 2
1.1 Previously Defined Terms...................................... 2
1.2 Definitions................................................... 2
1.3 Interpretation................................................ 18
ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE,
ALLOCATION AND OTHER RELATED MATTERS................................. 18
2.1 Purchase and Sale............................................. 18
2.2 Consideration................................................. 18
2.3 Adjustment to the Purchase Price.............................. 22
2.4 Transfer Taxes................................................ 24
2.5 Allocation of Purchase Price.................................. 25
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES.................................. 25
3.1 Closing....................................................... 25
3.2 Closing Deliveries by Seller.................................. 26
3.3 Closing Deliveries by Purchaser............................... 28
3.4 Non-Assignable Contracts...................................... 29
3.5 Cooperation................................................... 30
ARTICLE 4
PRE-CLOSING FILINGS.................................................. 31
4.1 HSR Filing.................................................... 31
4.2 Other Government Filings...................................... 31
ARTICLE 5
PRE-CLOSING COVENANTS................................................ 31
5.1 Title Insurance and Surveys................................... 31
5.2 Conduct of Business Prior to Closing.......................... 33
5.3 Access to Information......................................... 34
5.4 Closing Deliveries; Conditions................................ 35
5.5 Conduct of Business after the Effective Date.................. 35
ARTICLE 6
FINANCIAL STATEMENTS; DISCLOSURE LETTER;
FINANCING COMMITMENT LETTER.......................................... 35
6.1 Pre-Signing Deliveries by Seller.............................. 35
6.2 Pre-Signing Deliveries by Purchaser........................... 35
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 7
WARRANTIES AND REPRESENTATIONS OF SELLER............................. 36
7.1 Incorporation and Qualification of Seller..................... 36
7.2 Authority..................................................... 36
7.3 No Conflict................................................... 37
7.4 Consents and Approvals........................................ 37
7.5 Brokers....................................................... 37
7.6 Required Assets; Title........................................ 38
7.7 Intellectual Property......................................... 38
7.8 Financial Statements.......................................... 39
7.9 Compliance with Laws.......................................... 39
7.10 Licenses and Permits.......................................... 40
7.11 Material Contracts............................................ 40
7.12 Real Properties............................................... 42
7.13 [Intentionally omitted]....................................... 42
7.14 Litigation.................................................... 42
7.15 Labor Matters................................................. 42
7.16 Employee Benefit Matters...................................... 43
7.17 Taxes......................................................... 48
7.18 Environmental Compliance...................................... 48
7.19 Inventory..................................................... 49
7.20 Receivables................................................... 50
7.21 Real Property Leases.......................................... 50
7.22 No Notice..................................................... 51
7.23 Customers..................................................... 51
7.24 Full Disclosure............................................... 51
7.25 DISCLAIMER OF WARRANTIES...................................... 51
ARTICLE 8
WARRANTIES AND REPRESENTATIONS OF PURCHASER.......................... 52
8.1 Incorporation and Qualification of Purchaser.................. 52
8.2 Authority..................................................... 52
8.3 No Conflict................................................... 53
8.4 Consents and Approvals........................................ 53
8.5 Litigation.................................................... 54
8.6 Brokers....................................................... 54
8.7 Financial Ability............................................. 54
ARTICLE 9
CONDITIONS TO CLOSING APPLICABLE TO PURCHASER........................ 54
9.1 No Termination................................................ 54
9.2 Bring-Down of Seller's Warranties............................. 55
9.3 Pending Actions............................................... 55
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
9.4 Consents and Approvals........................................ 55
9.5 All Necessary Documents....................................... 55
9.6 HSR Act....................................................... 56
9.7 Termination of Certain Liens, Claims and Encumbrances......... 56
9.8 Canadian and U.K. Transactions................................ 56
9.9 Title Policies................................................ 56
9.10 Conveyance of the Transferred Patents and Trademarks.......... 56
9.11 Additional Deliveries......................................... 57
9.12 Material Adverse Change....................................... 57
9.13 Consents under Senior Credit Agreement........................ 57
ARTICLE 10
CONDITIONS TO CLOSING APPLICABLE TO SELLER........................... 57
10.1 No Termination................................................ 57
10.2 Bring-Down of Purchaser Warranties............................ 57
10.3 Pending Actions............................................... 58
10.4 Consents and Approvals........................................ 58
10.5 All Necessary Documents....................................... 58
10.6 HSR Act....................................................... 58
10.7 Canadian and U.K. Transactions................................ 59
10.8 Letters of Credit............................................. 59
10.9 Consents under Senior Credit Agreement........................ 59
ARTICLE 11
TERMINATION.......................................................... 59
11.1 Termination................................................... 59
ARTICLE 12
INDEMNIFICATION...................................................... 60
12.1 Seller Indemnity.............................................. 60
12.2 Limitation.................................................... 61
12.3 Purchaser Indemnity........................................... 65
12.4 Notice of Claims.............................................. 66
12.5 Indemnification Proceeding.................................... 67
12.6 Satisfaction of Claims........................................ 68
12.7 Date of Notice of Claim....................................... 68
ARTICLE 13
CERTAIN OTHER UNDERSTANDINGS......................................... 68
13.1 Records....................................................... 68
13.2 Use of Interlake Name......................................... 70
13.3 Employee Matters.............................................. 70
13.4 Miscellaneous Employee Matters................................ 78
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
13.5 Waiver of Bulk Sales Law...................................... 78
13.6 Letters of Credit............................................. 78
13.7 Guarantee by Parents.......................................... 79
13.8 Additional Named Insured...................................... 80
13.9 Covenant Not to Compete....................................... 81
ARTICLE 14
MISCELLANEOUS........................................................ 84
14.1 Cost and Expenses............................................. 84
14.2 Entire Agreement.............................................. 84
14.3 Counterparts.................................................. 84
14.4 Assignment; Successors and Assigns............................ 85
14.5 Savings Clause................................................ 85
14.6 Headings...................................................... 85
14.7 Risk of Loss.................................................. 85
14.8 GOVERNING LAW................................................. 85
14.9 Public Announcements.......................................... 85
14.10 U.S. Dollars.................................................. 86
14.11 Survival...................................................... 86
14.12 Notices....................................................... 86
14.13 Disclosures................................................... 88
14.14 No Third-Party Beneficiaries.................................. 88
14.15 Arbitration................................................... 88
EXHIBITS
Exhibit 2.5 Allocation of Purchase Price
Exhibit 3.2(a) Form of Bill of Sale and Assignment
Exhibit 3.3(e) Form of Assumption Agreement
</TABLE>
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT, dated October 1, 1996 (as amended or
modified from time to time in accordance with the terms hereof, this
"Agreement"), is by and between Interlake Packaging Corporation, a Delaware
corporation ("Seller"), and Samuel Strapping Systems (Tennessee), Inc., a
Delaware corporation ("Purchaser").
R E C I T A L S:
- - - - - - - -
A. Seller is engaged in the business of developing, manufacturing,
distributing and selling plastic strapping, and selling the machinery and tools
to apply such strapping, primarily for the newspaper, textile, corrugated box,
graphics, can, bottle and distribution industries (the "Strapping Business").
B. Seller is also engaged in the business of manufacturing and
distributing wire stitching equipment, primarily for the graphic arts, fruit and
produce growing and corrugated box manufacturing industries (the "Stitching
Business"; together with the Strapping Business, the "Businesses").
C. Seller and The Interlake Companies, Inc., a Delaware corporation
("Interlake Companies") that is an Affiliate of Seller, own all of the issued
and outstanding capital stock of Acme Strapping Inc., a company organized under
the laws of Canada ("Acme-Canada").
D. Interlake Companies also owns directly or indirectly
substantially all of the issued and outstanding capital stock of Precis (935)
Limited, a company organized under the laws of the United Kingdom ("Precis").
E. Purchaser desires to acquire from Seller, and Seller desires to
sell to Purchaser, the Businesses and substantially all of the assets of Seller
and any Affiliate used in
<PAGE>
connection with the operation of the Businesses on the terms and subject to the
conditions hereinafter set forth.
F. Concurrently with Purchaser's purchase of the Businesses and such
assets hereunder (i) Purchaser's Parent desires to acquire from Seller and
Interlake Companies all of the issued and outstanding capital stock of Acme-
Canada, and (ii) an Affiliate of Purchaser's Parent desires to acquire from
Interlake Companies and the other shareholders of Precis all of the issued and
outstanding capital stock of Precis, pursuant to and in accordance with the
terms and conditions of the Canadian Stock Purchase Agreement (as hereinafter
defined) and the U.K. Stock Purchase Agreement (as hereinafter defined),
respectively.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 Previously Defined Terms. Each term defined in the first paragraph
and Recitals of this Agreement shall have the meaning set forth above whenever
used herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions. In addition to the terms defined in the first paragraph
and Recitals of this Agreement, whenever used herein, the following terms shall
have the meanings set forth below unless otherwise expressly provided or unless
the context clearly requires otherwise:
"Acme License Agreements" means (i) that certain License Agreement,
dated as of July 1, 1985, between Interlake, Inc. and Acme-Canada, as
heretofore amended, and (ii) that certain Services Agreement, dated January
1, 1964, between Acme Steel Company and Acme-Canada, as heretofore amended.
-2-
<PAGE>
"Acquired Businesses" means the Businesses and the businesses of Acme-
Canada and Precis and its subsidiaries, collectively.
"Affiliate" means, with respect to any Person, a Person that, directly
or indirectly, is controlled by, controls, or is under common control with
such Person. As used in the preceding sentence, "control" shall mean and
include, but not necessarily be limited to (i) the ownership of 50% or more
of the voting securities or other voting interests of any Person, or (ii)
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.
"Ancillary Agreements" means the Assumption Agreement, the Bill of
Sale and Assignment, the Pre-Signing Escrow Agreement, the Post-Signing
Escrow Agreement, the License Agreement (as defined in Section 3.2(a)(vi)
of this Agreement) and the Intellectual Property Assignments (as defined in
Section 3.2(a)(vii) of this Agreement).
"Assumed Liabilities" - See Section 2.2(d).
"Assumption Agreement" means the Assumption Agreement to be executed
by and between Purchaser and Seller on the Closing Date, substantially in
the form attached hereto as Exhibit 3.3(e).
"Balance Sheet Liabilities" - See Section 2.2(d).
"Bill of Sale and Assignment" means the Bill of Sale and Assignment to
be executed by and between Seller and Purchaser on the Closing Date,
substantially in the form attached hereto as Exhibit 3.2(a).
"Business Day" means any day of the year which is neither a Saturday
or Sunday nor a legal holiday on which banks are required or authorized to
be closed in Chicago, Illinois.
-3-
<PAGE>
"Businesses" has the meaning specified in the Recitals to this
Agreement.
"Business Plans" - See Section 7.16(a).
"Canadian Stock Purchase Agreement" means the Stock Purchase Agreement
dated as of the date hereof by and among Purchaser's Parent, Seller and
Interlake Companies, as amended or modified from time to time in accordance
with the terms thereof.
"Cass Strapping" means Cass Strapping Corporation, a Michigan
corporation.
"Closing" - See Section 3.1.
"Closing Date" - See Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Competition Act Opinion" means, as to any date, the unqualified legal
opinion of Smith Lyons, or such other Canadian legal counsel reasonably
acceptable to Seller, to the effect that, were Seller and Purchaser to have
consummated the transactions contemplated by the Purchase Agreements as of
such date, or at any time thereafter up to the date of such opinion, they
would have been in compliance with the merger provisions of the Competition
Act (Canada), including, without limitation, Section 123 regarding
prenotification and expiration of the twenty-one day waiting period.
"Consequential Damages" means any Loss (as defined in Section 12.1)
which is not the direct or proximate result of any events described in
Section 12.1(a) through (e) or Section 12.3(a) (i) through (vi) of this
Agreement.
"Contingent Liabilities" - See Section 2.2(d)(v).
"Contract Liabilities" - See Section 2.2(d)(ii).
"Contracts" - See clause (e) of the definition of "Purchased Assets"
herein.
-4-
<PAGE>
"Covered Employees" - See Section 13.3(h).
"Date of the Notice of Claim" - See Section 12.7.
"Disclosure Letter" means the letter dated as of the date of this
Agreement and delivered by Seller to Purchaser upon the execution and
delivery of this Agreement and accepted by Purchaser at such time, a copy
of which is set forth as Exhibit 1.2 hereto.
"DOJ" means the United States Department of Justice.
"Effective Date" means September 29, 1996 at 11:59 p.m., or such other
date and time agreed to in writing by Seller and Purchaser.
"Employees" - See Section 13.3(a).
"Environmental Laws" means any applicable federal, state or local law,
rules, regulations, codes, ordinances, orders, standards, permits,
licenses, actions, policies and requirements (including consent decrees,
judicial decisions and administrative orders) relating to protection,
preservation or conservation of the environment and public or worker health
and safety, all as amended, hereafter amended or reauthorized, including,
without limitation, those relating to: (a) releases or threatened releases
of Hazardous Substances; or (b) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances or materials
containing Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Facilities" means the facilities of Seller located on or forming a
part of the real property specified in clause (a) of the definition of
"Purchased Assets".
-5-
<PAGE>
"Final Closing Balance Sheet" means (i) the Seller Closing Balance
Sheet in the event the Purchaser does not deliver to Seller the Purchaser
Closing Balance Sheet (as defined in Section 2.3(c) hereof) in accordance
with the terms of Section 2.3 hereof, or (ii) the Purchaser Closing Balance
Sheet in the event (a) the Purchaser delivers to Seller the Purchaser
Closing Balance Sheet (as defined in Section 2.3(c) hereof) in accordance
with the terms of Section 2.3 and Seller does not deliver to Purchaser a
Seller's Notice (as defined in Section 2.3(d) of this Agreement) in
accordance with this Agreement, or (iii) in the event the Seller delivers a
Seller's Notice in accordance with Section 2.3(d) of this Agreement, the
Purchaser Closing Balance Sheet as modified by the resolution of any
objections thereto in accordance with Section 2.3(e) of this Agreement.
"Financial Statements" means the unaudited balance sheets, income
statements and cash flow statements at and for (i) the year ended December
31, 1994, (ii) the year ended December 31, 1995, and (iii) the two quarter
fiscal period ending on June 30, 1996, in each case for each of the
Strapping Business and the Stitching Business, a copy of each of which is
set forth in Section 6.1(a) of the Disclosure Letter.
"First Anniversary" means the one-year anniversary of the Effective
Date.
"FTC" means the United States Federal Trade Commission.
"Gerrard" means A.J. Gerrard & Company, an Illinois corporation.
"Gerrard Letter" means that certain letter of intent between Gerrard
and Seller's Parent dated April 12, 1996.
"Hazardous Substances" means (i) hazardous substances, as defined by
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. (S)9601 et seq.; (ii) hazardous wastes as defined by the Resource
Conservation and Recovery Act,
-6-
<PAGE>
42 U.S.C. (S)6901 et seq.; (iii) petroleum, including without limitation,
crude oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square
inch absolute); (iv) any radioactive material, including, without
limitation, any source, special nuclear, or by-product material as defined
in 42 U.S.C. (S)2011 et seq.; (v) asbestos in any form or condition; (vi)
regulated levels of polychlorinated biphenyls; and (vii) any other
material, substance or waste to which liability or standards of conduct are
imposed under any Environmental Laws.
"Hourly Union Employees" - See Section 13.3(a).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Improvements" - see Section 7.22.
"Indemnitee" - See Section 12.4.
"Indemnitor" - See Section 12.4.
"Information" - See Section 13.1.
"Initial Transfer Value" - See Section 13.3(h).
"Intercompany Service and Supply Arrangements" means those
arrangements pursuant to which the Seller or any of its affiliates provided
payroll, treasury, tax, insurance, insurance administration, telephone,
benefits, benefits administration, human resource, management or computer
services to the Businesses or any Persons operating the Businesses prior to
the Closing Date.
"Interlake Companies" has the meaning specified in the Recitals to
this Agreement.
"Interlake Master Trust" means The Interlake Corporation Retirement
and Pension Plans Master Trust Agreement, effective May 29, 1986, as
amended.
-7-
<PAGE>
"IRS" means the Internal Revenue Service.
"Leased Real Estate" - See definition of Purchased Assets.
"Letters of Credit - Seller" - See Section 13.6.
"Lien" means a mortgage, pledge, security interest, encumbrance, lien
(statutory or other), hypothecation, assignment, deposit arrangement or
preference, priority or other security agreement or preferential
arrangement of any kind.
"Losses" - See Section 12.1.
"Material Adverse Change" means, relating to any occurrence of
whatever nature, any material adverse change in, or effect on:
(a) the Purchased Assets or the present or projected business,
revenues, financial condition, operations or prospects of the Businesses,
each taken as a whole; or
(b) the ability of Seller or the Interlake Companies to timely and
fully perform any of its material obligations hereunder or under the
Canadian Stock Purchase Agreement or the U.K. Stock Purchase Agreement or
any document to be delivered in connection herewith or therewith;
provided, however, that Material Adverse Change shall not include (i) any
industry-wide changes in the industries in which the Businesses are
operating, (ii) any changes in the general economic conditions in the
United States, Canada or the United Kingdom, or (iii) any general changes
in the securities markets in the United States, Canada or the United
Kingdom.
"Multiemployer Plan" - See Section 7.16.
"Non-Transferred Intercompany Accounts" means all intercompany
accounts between Seller and any Affiliates of Seller, other than
Transferred Intercompany Accounts,
-8-
<PAGE>
a true and correct list of which, as of the date hereof, is set forth in
Section 1.2 of the Disclosure Letter.
"Non-Union Employees" - See Section 13.3(a).
"Notice of Claim" - See Section 12.4.
"Owned Real Estate" - See definition of Purchased Assets.
"Past Service" means service (a) as an employee of Seller, and (b) as
an employee of Seller's predecessor companies prior to the acquisition of the
Businesses by Seller, but only to the extent such service is continuous through
the Effective Date.
"Past Service Plan" - See Section 13.3(h).
"Permitted Exceptions" means, with respect to the real property
specified in clause (a) of the definition of "Purchased Assets" (i) all
easements, rights of way, covenants, conditions, restrictions of record and
other records noted in that certain commitment for title insurance prepared
by the Title Insurer with respect to the Fountain Inn property currently
dated August 16, 1996, a copy of which has been delivered to Purchaser, and
(ii) any Liens or exceptions which, alone or in the aggregate, do not
materially detract from, or materially interfere with, the ownership,
occupancy, or use of the properties subject thereto or affected thereby, or
otherwise materially impair the operations conducted thereon or affect in
any material respect the value of the properties subject thereto.
"Person" means any natural person, company, corporation, limited
liability company, partnership, joint venture, trust, association or other
entity of any kind.
"Plans" - See Section 7.16.
"Post-Effective Date Liabilities" - See Section 2.2(d)(iii).
-9-
<PAGE>
"Pre-Signing Escrow Agreement" means that certain Escrow Agreement
made and entered into as of July 29, 1996 among Harris Trust & Savings
Bank, as escrow agent, Seller's Parent and Purchaser's Parent, as
heretofore or hereafter amended.
"Post-Signing Escrow Agreement" means that certain Escrow Agreement
made and entered as of the day hereof by and among Harris Trust & Savings
Bank, as escrow agent, Purchaser and Seller, as heretofore or hereafter
amended.
"Pro Forma Balance Sheet" - See Section 2.3(a)
"Purchase Price" - See Section 2.2.
"Purchased Assets" means substantially all of the assets, properties,
rights and business of Seller and its Affiliates used in connection with
the operation of the Businesses, or of Seller used in connection with the
operation of the Acquired Businesses, of any type, description, kind and
nature, absolute, contingent or otherwise, real, personal and mixed,
tangible and intangible, wherever located and whether or not reflected on
the books and records of Seller or its Affiliates (other than the Retained
Assets), including, without limitation:
(a) all interests in real property used in connection with the
operation of a Business, including, without limitation (i) the owned real
estate described in Section 5.1 of the Disclosure Letter, together with all
buildings, facilities and other structures and improvements located on such
real property (the "Owned Real Estate"), and (ii) the leasehold interests
described in Section 5.1 of the Disclosure Letter (the "Leased Real
Estate");
(b) all machinery, equipment, furniture and tools, leasehold
improvements and all other tangible personal property used in connection
with the operation of a Business;
-10-
<PAGE>
(c) to the extent transferable, all licenses, permits, consents and
certificates of any regulatory, administrative and other governmental
agencies and bodies and used in connection with the operation of a
Business;
(d) all trade names, trademarks, trademark registrations, trademark
applications, service marks, service mark registrations, service mark
applications, patents, patent applications, copyrights, copyright
registrations, copyright applications and the licenses therefor, and all
trade secrets, know-how (including, without limitation, proprietary know-
how and use and application know-how), in each case used in connection with
the operation of a Business (other than to the extent relating to or using
the name "Interlake" or any derivative thereof), including, without
limitation, those described in Section 7.7 of the Disclosure Letter;
(e) all right, title and interest in and to the Acme License
Agreements and, to the extent transferable, all contracts, agreements,
license agreements, purchase and sale orders, foreign exchange contracts,
leases of machinery and equipment and motor vehicles (including, without
limitation, the vehicles listed in Schedule 7.13 of the Disclosure Letter
but exclusive of the vehicles used primarily by employees not being offered
employment by Purchaser in accordance with Section 13.3), and conditional
sales contracts and title retention agreements relating to machinery and
equipment, in each case, to which Seller is a party and which arose out of
or in connection with the operation of a Business, and all other
commitments and binding arrangements of Seller which arose out of or in
connection with the operation of a Business other than any such document
which constitutes or evidences a Retained Liability (the "Contracts"),
including, without limitation, the Contracts listed in
-11-
<PAGE>
Section 7.11 of the Disclosure Letter, together with such additions thereto
and deletions therefrom as shall have occurred in the ordinary course of
business prior to the Closing Date;
(f) all inventory, including, without limitation (i) raw materials,
work in process, finished goods, replacement and spare parts and supplies
located at a Facility or en route to a Facility, and (ii) finished goods
stored at locations other than a Facility, in each case used or to be used
in connection with the operation of a Business;
(g) all customer lists, vendor lists, distributor or agency
agreements, catalogs and advertising materials used or to be used in
connection with the operation of a Business;
(h) all general and financial records (other than certificates of
insurance obtained from third parties (including, without limitation,
contractors, suppliers and truckers)), correspondence and other files and
records used in connection with the operation of a Business, wherever
located, except for Seller's financial and accounting records unrelated to
the continued operation of a Business;
(i) all accounts receivable, notes receivable, contract receivables
and other receivables which arose out of or in connection with the
operation of a Business (the "Receivables") and all prepaid items and
deposits (or portions thereof) which arose out of or in connection with the
operation of a Business;
(j) to the extent transferable, all right, title and interest in, to
and under all letters of credit relating to either Business and with
respect to which Seller or any Affiliate is a named beneficiary, a list of
which as of the date hereof is set forth in Section 13.6 of the Disclosure
Letter;
(k) all goodwill in each Business;
(l) all research and development related to each Business;
-12-
<PAGE>
(m) all Seller's right, title and interest in and to any and all
vehicles used exclusively in the Businesses, if any;
(n) all claims against third persons in respect of unliquidated
rights under warranties, guarantees or similar obligations relating to
items included in the Purchased Assets;
(o) all rights of the sponsor or employer under the Racine Hourly
Pension Plan and as provided in Section 13.3 hereof;
(p) those assets, properties and rights reflected on the balance
sheet of a Business for the two fiscal quarter period ended June 30, 1996,
subject to any changes therein through the Closing Date which occur in the
ordinary course of business and in accordance with the terms hereof; and
(q) all other rights, assets and properties used in connection with
the operation of a Business.
"Purchaser's Parent " means Samuel Manu-Tech Inc., a corporation
incorporated under the laws of the province of Ontario.
"Purchaser's Trust" - See Section 13.3(g)(i).
"Purchaser Indemnified Persons" - See Section 12.1.
"Racine Hourly Pension Plan" - See Section 13.3(g).
"Real Property Leases" - See Section 7.21.
"Receivables" - See clause (i) of the definition of "Purchased
Assets".
"Replacement Letters of Credit" - See Section 13.6.
"Required Consents" means the consents from the other parties to those
certain Contracts set forth in Schedule 1.2 hereof.
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"Retained Assets" means any assets, properties, rights or interests of
Seller and its Affiliates not part of or included in the Purchased Assets,
including, without limitation, the following:
(a) as of the Effective Date, all cash (and cash equivalents) on
hand, in banks or in transit and all marketable securities;
(b) except to the extent provided in Section 13.3(g) and (h), any and
all rights and interests of Seller in the Interlake Master Trust;
(c) all Non-Transferred Intercompany Accounts;
(d) all contracts of insurance and any claims or rights of Seller
thereunder, including, but not limited to, any claims or rights of Seller
to reserves, unearned premiums or returns of premiums arising thereunder;
(e) Seller's corporate minute books and records, stock record books,
general ledgers and books of original entry, tax returns and other tax
records, reports, data, files, documents relating to the operations of the
Businesses which are not divisible or separable from Seller's records, and
documents which are unrelated to the operation of the Businesses;
(f) any rights, assets and properties not used in or related to the
operation of the Businesses;
(g) claims for refunds of Taxes paid by Seller to the extent such
refunds are not set forth on the Financial Statements as Receivables;
(h) subject to Section 13.2, any and all rights to the name
"Interlake" and any and all derivatives thereof, including, without
limitation, any and all trade names, trademarks, trademark registrations or
trademark applications that include any such names or derivatives thereof;
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(i) all rights of Seller under this Agreement, the Ancillary
Agreements and the other agreements, documents and instruments delivered to
Seller by Purchaser pursuant to this Agreement;
(j) all rights of Seller under the Gerrard Letter;
(k) all rights of Seller under leases for motor vehicles used
primarily by employees not being offered employment by Purchaser in
accordance with Section 13.3; and
(l) the furniture used by Robert Pederson in his office in Hodgkins,
Illinois (desk, round table, two cabinets, credenza, eight chairs, laptop
computer and printer).
"Retained Employee" means any employee who accepts an offer of
continued employment by Seller in accordance with Section 13.3(a).
"Retained Liabilities" - See Section 2.2(d).
"Returns" means all Tax returns and forms required to be filed or
furnished with respect to the Businesses.
"Seller Indemnified Persons" - See Section 12.3.
"Seller's knowledge" or "knowledge of Seller" means the actual
knowledge of the President, any vice president, any chief financial
officer, any chief environmental officer, or any of their equivalents, of
Seller, Seller's Parent, Interlake Companies, Acme-Canada, or any
subsidiary thereof, or any director of Precis or any subsidiary of Precis,
or knowledge which would have been acquired by any of such persons upon
reasonable inquiry.
"Seller's Parent" means The Interlake Corporation, a Delaware
corporation.
"Senior Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of September 27, 1989 and amended and restated as of
May 28, 1992, among Seller's Parent, certain of its subsidiaries, The
Interlake Corporation Employee Stock
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Ownership Trust, acting by and through The LaSalle National Bank, as
Trustee, various banks party thereto, Chemical Bank, as Administrative
Agent, and The First National Bank of Chicago, as Co-Agent, as amended,
modified or supplemented from time to time.
"Stitching Business" has the meaning specified in the Recitals to this
Agreement.
"Strapping Business" has the meaning specified in the Recitals to this
Agreement.
"Successor Plan" - See Section 13.3(h).
"Tangible Net Worth" means, as of the Effective Date, the value of the
Tangible Purchased Assets of the Acquired Businesses, minus the Balance
Sheet Liabilities of the Acquired Businesses, in each case as determined in
accordance with Section 2.3 as of the Effective Date.
"Tangible Purchased Assets" means, as of the Effective Date, all
tangible assets of the Acquired Businesses other than the Retained Assets,
including all prepaid assets the direct benefit of which will inure to
Purchaser after the Closing Date.
"Tax" or "Taxes" means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including liability for taxes of a predecessor entity.
"Third Anniversary" means the three-year anniversary of the Effective
Date.
"Title Insurer" means Chicago Title Insurance Company.
"Transfer Date" - See Section 13.3(h).
"Transferred Intercompany Account" means the accounts on the books and
records of Seller, on the one hand, and Acme Canada or Precis (or any
direct or indirect subsidiary
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of either thereof), on the other hand, that evidence amounts either payable
by Seller to or receivable by Seller from Acme-Canada or Precis (or any
direct or indirect subsidiary of either thereof), a true and correct list
of which as of the date hereof is set forth in Section 1.2 of the
Disclosure Letter.
"Transferred Patent and Trademarks" means those patents (or
applications therefor) and trademarks (and applications and registrations
therefor) to which title or license to use is held by Seller, Interlake
Companies or any Affiliate thereof and which are used in connection with
the operation of the Businesses, including the Transferred Patents and
Trademarks set forth in Section 7.7 of the Disclosure Letter.
"Transferring Employees" - See Section 13.3(c).
"U.K. Stock Purchase Agreement" means the Stock Purchase Agreement
dated as of the date hereof by and among an Affiliate of Purchaser's
Parent, Interlake Companies and all of the other shareholders of Precis, as
amended or modified from time to time in accordance with the terms thereof.
"Welfare Plan" means a welfare benefit plan as defined in Section 3(l)
of ERISA.
1.3 Interpretation. Unless the context of this Agreement otherwise
requires (a) words of any gender shall be deemed to include each other
gender, (b) words using the singular or plural number shall also include
the plural or singular number, respectively, (c) references to "hereof",
"herein", "hereby", "hereunder" and similar terms shall refer to this
entire Agreement, and (d) unless otherwise specified herein, each reference
to an "Article" or "Section" is to an Article or Section of this Agreement,
and each reference to an "Exhibit" is to an Exhibit attached to and made a
part of this Agreement.
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ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE,
ALLOCATION AND OTHER RELATED MATTERS
2.1 Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing on the Closing Date, Seller shall (or shall
cause one or more of its Affiliates to) sell, assign, convey, transfer and
deliver to Purchaser, and Purchaser shall acquire from Seller (or any such
Affiliate or Affiliates of Seller), the Businesses and the Purchased Assets.
2.2 Consideration.
(a) The purchase price (the "Purchase Price") payable by Purchaser
for the Businesses and the Purchased Assets shall be an amount equal to
FORTY FIVE MILLION DOLLARS ($45,000,000).
(b) At Closing, Purchaser shall pay to Seller for the Businesses and
the Purchased Assets an amount equal to (i) the Purchase Price, as adjusted
pursuant to 2.3(b), minus (ii) TWO MILLION DOLLARS ($2,000,000). Such
amount shall be paid by Purchaser to Seller by wire transfer of immediately
available federal funds at Closing to an account designated in writing by
Seller to Purchaser prior to the Closing Date. (c) A t Closing, TWO
MILLION DOLLARS ($2,000,000) shall be payable by
Purchaser to the Escrow Agent (as defined in the Post-Signing Escrow
Agreement) in accordance with the terms of the Post-Signing Escrow
Agreement, and shall be held and paid out in accordance with the terms of
the Post-Signing Escrow Agreement.
(d) Subject to, and notwithstanding, Purchaser's right to be
indemnified to the extent provided in Article 12 hereof, at Closing,
Purchaser shall, effective as of the Effective
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Date, assume, and be forever thereafter liable and responsible for, the
following (collectively, the "Assumed Liabilities"):
(i) those obligations and liabilities relating to the operation
of the Businesses to the extent set forth on the Seller Closing
Balance Sheet (as defined below) (the "Balance Sheet Liabilities");
(ii) obligations to perform under Contracts entered into in
connection with the operation of a Business prior to the Closing Date
(the "Contract Liabilities");
(iii) excluding any obligations described in clause (i) or (ii)
above, any obligations or liabilities arising or occurring as a result
of the Purchaser's operation of a Business or ownership or use of the
Purchased Assets (the "Post Effective Date Liabilities") after the
Effective Date including, without limitation, any liability or
obligation arising under any Environmental Law;
(iv) excluding any obligations described in clauses (i), (ii) or
(iii), any liabilities or obligations arising under the Racine Hourly
Pension Plan or which are the responsibility of Purchaser in
accordance with Section 13.3 hereof (the "Employer Liabilities"); and
(v) excluding any obligations described in clauses (ii), (iii) or
(iv) above, those obligations and liabilities relating to the
operation of the Businesses or ownership or use of the Purchased
Assets prior to the Effective Date to the extent not set forth on the
Final Closing Balance Sheet including, without limitation, any
liability or obligation arising under any Environmental Law, severance
arrangement, severance obligations arising as a result of the
transactions contemplated by this Agreement, or with respect to any
Taxes of Seller or any Affiliate, other than Taxes
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based on the net income of Seller and/or its Affiliates, Taxes shared
in connection with the transfer of the Purchased Assets hereunder or
any Taxes paid in connection with Seller's gain upon the sale of the
Purchased Assets (the "Contingent Liabilities").
Notwithstanding any provision hereof, Assumed Liabilities shall
not include the liabilities or obligations relating to (hereinafter
referred to as the "Retained Liabilities"):
(a) the Senior Credit Agreement or any other agreement for
borrowed money to which Seller is a party or by which
it is bound other than the Transferred Intercompany
Accounts;
(b) any Retained Assets;
(c) any Plan, other than as specifically provided in
Section 2.2(d);
(d) any Taxes computed on the basis of the income of Seller
or any of its subsidiaries;
(e) Seller's obligations with respect to any Non-
Transferred Intercompany Account, this Agreement or any
Ancillary Agreement;
(f) the Gerrard Letter; or
(g) the following litigation matters: Devalle v. Interlake
Conveyors, Inc. and Interlake Packaging Corp., Sup.
Ct., Orange County, New York (Goshen), No. 3651/93;
Goldsworthy v. Wheels, Inc. and InterPower Packaging
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Corp., Court of Common Pleas, Montgomery County,
Pennsylvania (Norristown), No. 93-05831; Sammut, et al.
v. Acme Strapping Inc., Redirack. The Interlake
Companies, Inc. and John Miller, Ontario Court (General
Division)(Toronto), No. 94-00-77914; and Bonifacio
Toledo v. N.J. Malin & Associates, Inc., Texas Conveyor
Controls, Inc., Numatics Incorporated, The Interlake
Companies, Inc., Interlake Conveyors, Inc., The
Interlake Corporation, Interlake, Inc., and Interlake
Packaging Corporation, Circuit Court of Cook County,
Illinois (Chicago), No. 94 L 4158.
Purchaser shall not assume, or in any way be liable for, any liabilities,
obligations or responsibilities which are Retained Liabilities.
2.3 Adjustment to the Purchase Price.
(a) One Business Day prior to the Closing Date, Seller shall deliver
to Purchaser an unaudited balance sheet (the "Seller Closing Balance
Sheet") for the Acquired Businesses dated as of the Effective Date setting
forth the Tangible Purchased Assets and the Balance Sheet Liabilities
relating to the Acquired Businesses (but not any Retained Liabilities, as
defined herein or in the Canadian Stock Purchase Agreement) as of such date
and computing the Tangible Net Worth as of such date, which balance sheet
shall be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with Seller's past practices and
in accordance with the judgments (but also subject to the adjustments)
reflected in the pro forma balance sheet dated as of June 30, 1996 (the
"Pro Forma Balance Sheet")
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attached hereto as Schedule 2.3 (the "Agreed Principles"). To the extent it
so chooses, Purchaser may have its representatives in attendance as
observers during the preparation of the Seller Closing Balance Sheet, and
Seller will give Purchaser adequate notice to allow it to do so.
(b) The Purchase Price shall be adjusted downward (the "Adjustment")
on the Closing Date on a dollar-for-dollar basis (the "Adjustment Amount"),
to the extent that the Tangible Net Worth as of the Effective Date as set
forth in the Seller Closing Balance Sheet is less than $30 million.
(c) Within sixty (60) days following the Closing Date, Purchaser shall
deliver (1) to Seller an unaudited balance sheet (the "Purchaser Closing
Balance Sheet") for the Acquired Businesses dated as of the Effective Date
setting forth the Tangible Purchased Assets and the Balance Sheet
Liabilities (but not any Retained Liabilities, as defined herein or in the
Canadian Stock Purchase Agreement) as of such date and computing the
Tangible Net Worth as of such date, which balance sheet shall be prepared
in accordance with the Agreed Principles, and (2) its determination of the
Adjustment Amount. To the extent it so chooses, Seller may have its
representatives in attendance as observers during the preparation of the
Purchaser Closing Balance Sheet, and Purchaser will give Seller adequate
notice to allow it to do so.
(d) Within thirty (30) days following the delivery by Purchaser of the
Purchaser Closing Balance Sheet in accordance with the terms hereof, Seller
shall notify Purchaser in writing ("Seller's Notice") of any objection
Seller has to the Purchaser Closing Balance Sheet or the Adjustment Amount
determined by the Purchaser in accordance with Section 2.3(c), which notice
shall set forth in reasonable detail those aspects of the Purchaser Closing
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Balance Sheet to which Seller objects. If Seller does not so notify
Purchaser within such period, the Purchaser Closing Balance Sheet and the
Adjustment Amount as determined by the Purchaser in accordance with Section
2.3(c) shall become final and binding on all parties at the end of such
period.
(e) If Seller does so notify Purchaser, Purchaser and Seller shall
attempt in good faith to resolve any such objections. If Purchaser and
Seller are unable to resolve any disputed item within twenty (20) days
after Purchaser's receipt of Seller's Notice in accordance with clause (d)
above, such disputed item(s) shall be submitted to one of the five largest
nationally recognized accounting firms or any of their successors (other
than Seller's or Purchaser's regular auditors or their successors) chosen
by lot which shall be instructed to arbitrate such disputed item(s) within
thirty (30) days after such accountants are chosen. The resolution of
disputes by the accounting firm so selected shall be set forth in writing
and shall be conclusive and binding upon and non-appealable by the parties.
The costs of any such resolution by such accounting firm shall be borne by
(i) Purchaser, if the net total dollar amount of the resolved disputed
items is closer to the net total dollar amount of such items submitted to
such accounting firm by Seller than to those submitted by Purchaser, (ii)
Seller, if the net total dollar amount of the resolved disputed items is
closer to the net total dollar amount of such items submitted to such
accounting firm by Purchaser than to those submitted by Seller, or (iii)
Purchaser and Seller equally, if the net total dollar amount of the
resolved disputed items is equal distance from the net total dollar amount
of such items submitted by each of Purchaser and Seller. Prior to the final
determination by such accounting firm of the net total of such items, the
costs of any such resolution by such accounting firm shall be borne equally
by Seller and Purchaser; provided, however, under
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no circumstances shall Purchaser or Seller have any obligation to pay the
other's legal fees or other related costs incurred by such Person in
connection with such resolution by such accounting firm.
(f) Upon the final resolution of any disputed item and the final
determination of the Adjustment Amount, if any, in accordance with this
Section 2.3, payments shall be made to Purchaser or Seller by the Escrow
Agent (as defined in the Post-Signing Escrow Agreement) pursuant to the
Post-Signing Escrow Agreement.
(g) Seller shall fully cooperate with Purchaser in its examination of
the Seller Closing Balance Sheet, and preparation of the Purchaser Closing
Balance Sheet, including, without limitation, by providing Purchaser with
access to Seller's books and records related thereto.
2.4 Transfer Taxes. Seller and Purchaser shall share equally the cost of
any and all transfer, filing, value added or similar taxes and fees which arise
out of the transactions contemplated by this Agreement, including, without
limitation, any transfer tax or filing fee relating to the transfer of real or
personal property, whether now in effect or hereafter adopted and regardless of
upon whom said tax or fee is imposed, but excluding any tax on or measured by
net or gross income or gain of Seller.
2.5 Allocation of Purchase Price. Seller and Purchaser agree that the
Purchase Price shall be allocated among the Purchased Assets as agreed by Seller
and Purchaser promptly upon the final determination of the Adjustment Amount,
and that such allocation shall be determined consistent with Exhibit 2.5 hereto.
Each party agrees to complete IRS Form 8594 in a manner consistent with such
allocation and to cooperate with the other party in the preparation of Form 8594
and to furnish the other party with a copy of such form prepared in draft form
within a reasonable
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period before the filing due date for such form. Neither Seller nor Purchaser
shall file any Return or take a position with a tax authority that is
inconsistent with such allocation.
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES
-----------------------------------
3.1 Closing. The term "Closing" as used herein shall refer to the
actual sale, assignment, conveyance, transfer and delivery of the Purchased
Assets to Purchaser in consideration for the payment to Seller of the Purchase
Price, and the assumption by Purchaser of the Assumed Liabilities, in accordance
with the terms hereof. Subject to Section 11.1 hereof, the Closing shall take
place at the offices of Katten Muchin & Zavis, 525 W. Monroe Avenue, Chicago,
Illinois 60661, or at such other place as is mutually agreed in writing by
Seller and Purchaser, at 10:00 a.m. Chicago time on the later of (A) October 4,
1996, and (B) fifth Business Day occurring after the later of (i) the expiration
or termination in accordance with the HSR Act of the waiting period applicable
to the consummation of the transactions contemplated hereunder required pursuant
to the provisions of the HSR Act, and (ii) the earliest date on which the
transactions contemplated by the Purchase Agreements can be consummated in
compliance with the merger provisions of the Competition Act (Canada), including
Section 123 of such act regarding pre-notification and expiration of the
applicable 21-day waiting period, or at such other time and/or date as is
mutually agreed in writing by Seller and Purchaser (the "Closing Date").
3.2 Closing Deliveries by Seller. At the Closing on the Closing Date,
Seller shall deliver to Purchaser:
(a) (i) the Bill of Sale and Assignment executed by Seller;
(ii) (A) special warranty deeds in form and substance
reasonably acceptable to Seller and Purchaser ("Special Warranty
Deeds") executed by Seller,
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and (B) in respect of each lease of each portion of the real property
which consists of a leasehold estate to be assigned pursuant to this
Agreement, an assignment of all right, title and interest as lessee
in, to and under the lease creating such leasehold estate, including
assignable purchase options and renewable rights, if any, pursuant to
an assignment and assumption agreement in form and substance
reasonably acceptable to Seller and Purchaser executed by Seller;
(iii) motor vehicle titles conveying Seller's title to each
vehicle to be transferred to Purchaser pursuant to this Agreement,
if any;
(iv) the Post-Signing Escrow Agreement executed by Seller;
(v) joint written instructions (the "Joint Instructions") to
the Escrow Agent (as defined in the Pre-Signing Escrow Agreement)
executed by Seller's Parent in accordance with Section 4(b) of the
Pre-Signing Escrow Agreement instructing the Escrow Agent to deliver
all amounts included in the Purchaser Fund and the Seller Fund (each
as defined in the Pre-Signing Escrow Agreement) as provided in the
Joint Instructions ;
(vi) a license agreement in form and substance reasonably
acceptable to Seller and Purchaser executed by Seller granting
Purchaser the right to use the name "Interlake" and derivatives
thereof in connection with the operation of the Business until October
4, 1997 (the "License Agreement"); and
(vii) (a) a trademark license agreement in form and substance
reasonably acceptable to Seller and Purchaser dated as of October 4,
1996 and executed by Seller, (b) a trademark assignment in form and
substance reasonably acceptable to Seller and Purchaser, dated as of
October 4, 1996 and executed by Seller, and (c) a
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patent assignment in form and substance reasonably acceptable to
Seller and Purchaser, dated as of October 4, 1996 and executed by
Seller (collectively, the "Intellectual Property Assignments"); and
(viii) such other instruments of assignment or conveyance as
Purchaser may reasonably request as necessary to vest in Purchaser
title to the Purchased Assets;
(b) certified copies of resolutions or unanimous written consents of
the Board of Directors of Seller and, if required, the stockholders of
Seller, approving the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement;
(c) a certificate, dated the Closing Date, executed by an appropriate
officer of Seller, as required by Section 9.2;
(d) (i) the opinion of Winston & Strawn, special counsel for Seller,
dated the Closing Date,in form and substance acceptable to Purchaser (ii)
the opinion of Stephen R. Smith, Esq., General Counsel of Seller, dated the
Closing Date, (iii) opinion letters in form and substances satisfactory to
Purchaser's Parent dated the Closing Date from legal counsel representing
(a) Interlake Companies regarding various legal issues relating to the U.K.
Stock Purchase Agreement, and (b) the Interlake Companies Seller regarding
various legal issues relating to the Canadian Stock Purchase Agreement;
(e) the Required Consents executed by the parties thereto;
(f) legible copies of all leases of real property, together with (i)
an estoppel certificate executed by the landlord on each Leased Real Estate
parcel in form and substance satisfactory to Purchaser to the extent such
certificate is a Required Consent, (ii) written consent from the landlord
of each Leased Real Estate parcel to the transactions contemplated
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herein to the extent such consent is a Required Consent, and (iii) any
other documents or deliveries required pursuant to the leases in effect
for the Leased Real Estate to the extent such documents or deliveries are
Required Consents;
(g) a standard title policy in conformance with the title insurance
commitment delivered in accordance with Section 5.1 hereof, subject only to
Permitted Exceptions and the preprinted exceptions, and certified surveys
as required pursuant to Section 5.1 hereof; and
(h) such other documents as Purchaser may reasonably request to carry
out the purposes of, and to close the transactions contemplated by, this
Agreement, including, but not limited to, the documents to be delivered
pursuant to Article 9.
3.3 Closing Deliveries by Purchaser. At the Closing on the Closing Date,
Purchaser shall deliver to Seller or to the Escrow Agent, as applicable:
(a) the payments to be delivered by Purchaser pursuant to Section 2.2;
(b) certified copies of resolutions or unanimous written consents of
the Board of Directors of Purchaser approving the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated under this Agreement;
(c) (i) the opinion of Katten Muchin & Zavis, special counsel for
Purchaser, dated the Closing Date, in form and substance acceptable to
Seller and Purchaser; and (ii) opinion letters in form and substance
satisfactory to Seller and the Interlake Companies dated the Closing Date
from legal counsel representing (a) Purchaser in connection with the
Canadian Stock Purchase Agreement, and (b) Purchaser in connection with
the U.K. Stock Purchase Agreement;
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(d) the certificate, dated the Closing Date, executed by the
appropriate officer of Purchaser, as required by Section 10.2;
(e) the Assumption Agreement executed by Purchaser;
(f) the Post-Signing Escrow Agreement executed by Purchaser;
(g) the Joint Instructions, executed by Purchaser;
(h) the License Agreement executed by Purchaser; and
(i) such other documents as Seller may reasonably request to carry
out the purposes of, and to close the transactions contemplated by, this
Agreement, including, but not limited to, the documents to be delivered
pursuant to Article 10.
3.4 Non-Assignable Contracts.
(a) Seller shall use its reasonable efforts to obtain and deliver to
Purchaser at or prior to the Closing such consents as are required to allow
the assignment by Seller to Purchaser of Seller's right, title and interest
in, to and under each Contract included in the Purchased Assets. To the
extent any such Contract is not capable of being assigned without the
consent or waiver of the other party thereto or any third party (including
a government or governmental unit), or if such assignment or attempted
assignment would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute an assignment or an attempted assignment of such Contract.
(b) Anything in this Agreement to the contrary notwithstanding, Seller
is not obligated to transfer to Purchaser any of its rights and obligations
in and to any Contract without first having obtained all necessary consents
and waivers to such transfer. For a reasonable period of time after the
Closing Date, Seller shall use its reasonable efforts, and
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Purchaser shall cooperate with Seller, to obtain the consents and waivers
referred to in Section 3.4(a) and to obtain any other consents and waivers
necessary to convey to Purchaser any Contract.
(c) To the extent that such consents and waivers are not obtained by
Seller (other than with respect to any Required Consent), or Purchaser
does not direct Seller to terminate any foreign exchange contract which
constitutes a Contract, a list of which is set forth in Section 3.4(c)
of the Disclosure Letter (the "Foreign Exchange Contracts"), Seller and
Purchaser shall use their reasonable efforts to establish arrangements
that are reasonable and lawful as to both Seller and Purchaser, and which
provide to Purchaser the benefits, and impose upon the Purchaser the risks
and burdens of, the relevant Contract for the remaining term of such
Contract, without incurring any financial obligation upon Seller or
Purchaser (except that, with respect to the Foreign Exchange Contracts,
Purchaser will make Seller whole with respect to any such Contracts which
Purchaser does not direct Seller to terminate). At Purchaser's direction,
Seller shall terminate any Foreign Exchange Contract. Purchaser shall
indemnify and hold Seller harmless from any Losses incurred by Seller in
connection with any termination of any such Foreign Exchange Contract
pursuant to the immediately preceding sentence.
(d) With respect to the Contracts, Purchaser acknowledges and agrees
that the Required Consents are the only consents the receipt of which
constitutes a condition precedent to Purchaser's obligation to consummate
the purchase and sale of the Purchased Assets contemplated hereby.
3.5 Cooperation. Seller and Purchaser shall, on request on and after the
date hereof, cooperate with one another by furnishing any and all additional
information, executing and
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delivering any and all additional documents and/or instruments and doing any and
all such other things as may be reasonably requested by the other party to
consummate or otherwise implement, or evidence, the transactions contemplated by
this Agreement.
ARTICLE 4
PRE-CLOSING FILINGS
-------------------
4.1 HSR Filing. Purchaser and Seller each have caused to be filed with
the DOJ and FTC the pre-merger notification and report form required pursuant to
the HSR Act with respect to the transactions contemplated hereby, together with
a request for early termination of the waiting period under the HSR Act, and
such early termination was previously granted. The parties hereto covenant and
agree with each other that with respect to such filing each shall: (a) after any
request by the FTC or DOJ, promptly file any information or documents requested
by the FTC or DOJ; and (b) furnish each other with any correspondence from or
to, and notify each other of any other communications with, the FTC or DOJ which
relates to the transactions contemplated hereunder, and to the extent
practicable, to permit the other to participate in any conferences with the FTC
or DOJ. Purchaser paid the entire amount of the filing fee required by the HSR
Act.
4.2 Other Government Filings. Seller and Purchaser covenant and agree
with each other to (a) promptly file, or cause to be promptly filed, with any
United States agency or any state or local governmental body or agency, all
other notices, applications or other documents as may be necessary to consummate
the transactions contemplated hereby, and (b) thereafter diligently pursue all
consents or approvals from any such governmental agencies or bodies as may be
necessary to consummate the transactions contemplated hereby.
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ARTICLE 5
PRE-CLOSING COVENANTS
---------------------
5.1 Title Insurance and Surveys. Prior to the Closing Date, Seller shall
obtain and deliver to Purchaser the following:
(a) with respect to each parcel of Owned Real Estate set forth in
Section 5.1 of the Disclosure Letter, and with respect to each parcel of
Leased Real Estate governed by a ground lease set forth in Section 5.1 of
the Disclosure Letter, if any, an owner's title insurance commitment
together with copies of all documents affecting or relating to title to
said parcels covering a date subsequent to the date hereof, issued by the
Title Insurer or such other title insurance company as is reasonably
acceptable to Purchaser.
(b) Surveys certified by a registered land surveyor licensed in the
jurisdiction in which the real estate is located as of a date subsequent
to the date hereof of the real estate covered by the title commitment
deliverable under Section 5.1(a) showing with respect to such real estate:
(i) the legal description; (ii) all buildings, structures and improvements
thereon and all "setback" lines, restrictions of record and other
restrictions that have been established by an applicable zoning or building
code or ordinance and all easements or rights of way; (iii) any
encroachments upon such parcel or upon adjoining parcels by buildings,
structures, improvements or easements; and (iv) access to such parcel.
(c) Legible and complete copies of all leases affecting the Leased
Real Estate. Any title encumbrances or exceptions which are set forth in
the title report or the survey and to which Purchaser does not object shall
be deemed to be Permitted Exceptions.
The costs and expenses of the title insurance commitments, policies and
surveys referred to in this Section 5.1 and in Section 9.9 shall be shared
equally by Seller and Purchaser, only if the
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transactions contemplated under this Agreement are consummated. In the event
that the transactions contemplated under this Agreement are not consummated for
any reason other than Purchaser's default, Seller shall pay the costs and
expenses of the title insurance reports, policies and surveys set forth in the
preceding sentence; in the event they are terminated due to Purchaser's default,
Purchaser shall pay such costs and expenses.
5.2 Conduct of Business Prior to Closing. During the period from the date
hereof to the Closing Date, Seller shall:
(a) use its reasonable efforts to preserve intact the business
organization of the Businesses, to keep available the services of the
present employees of the Businesses and to preserve the current material
relationships of Seller with the customers, suppliers and other Persons
having a business relationship with either Business;
(b) operate the Businesses in the ordinary course in substantially the
same manner as they are presently operated;
(c) except with the prior written consent of Purchaser, not: (i)
materially change its accounting methods, principles or practices; (ii)
establish or increase any bonus, insurance, severance, deferred
compensation, pension, profit sharing or other employee benefit plan or
otherwise increase the rates of compensation payable or to become payable
to any officer, employee, agent or consultant employed by Seller in
connection with either Business, except as set forth in Section 5.2(c) of
the Disclosure Letter; or (iii) sell, transfer, mortgage or otherwise
dispose of any Purchased Assets other than in the ordinary course of
business consistent with prior practice;
(d) not amend, terminate or waive any right under any Contract except
in the ordinary course of business consistent with past practices;
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(e) except as specifically set forth in Section 13.10, not, nor permit
its directors, officers, employees, representatives, investment bankers,
agents or Affiliates to, directly or indirectly (i) solicit or encourage
submission of any inquiries, proposals or offers by, (ii) participate in
any negotiations with, (iii) offer any access to the properties, books of
records of Seller or any affiliate, or (iv) otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with, any person,
entity or group (other than Purchaser) in connection with any proposal
relating to the possible acquisition of the Acquired Businesses or any of
the Purchased Assets, whether by way of merger, stock purchase, asset
purchase or otherwise (a "Seller Proposal"); and
(f) (i) maintain its property in as good repair, order and condition
as on the date hereof, normal wear and tear thereof accepted, (ii) maintain
and keep in full force existing insurance, (iii) maintain its records in
the usual, regular and ordinary manner on a basis consistent with past
practices, and (iv) perform and comply with all of its obligations under
Contracts.
Purchaser acknowledges that Seller intends, prior to or at the Closing, to
cancel all Intercompany Service and Supply Arrangements, and that such
cancellations will not be deemed a breach of this Agreement.
5.3 Access to Information. From the date hereof until the Closing, upon
reasonable notice, Seller shall, and shall cause each of its officers,
directors, employees, auditors and agents to: (a) afford the officers, employees
and authorized agents and representatives of Purchaser reasonable access, during
normal business hours, to the offices, properties, books and records relating to
the Businesses, and (b) furnish to the officers, employees and authorized agents
and representatives of Purchaser such additional financial and operating data
and other information regarding the assets,
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properties, goodwill and business of the Businesses and the Purchased Assets
and Assumed Liabilities as Purchaser may from time to time reasonably request;
provided, however, that such investigation shall not unreasonably interfere
with any of the businesses or operations of Seller or any of its Affiliates or
subsidiaries. Purchaser will be permitted to make copies of such books and
records as may be reasonably necessary. No investigation by Purchaser or its
agents shall affect or limit the scope of Seller's representations and
warranties or limit Seller's liability for any breach thereof.
5.4 Closing Deliveries; Conditions. Notwithstanding any provision herein,
each of Seller and Purchaser shall use its best efforts to obtain and deliver
its closing deliveries on the Closing Date as set forth herein and to satisfy
the conditions of Closing applicable to it on such date.
5.5 Conduct of Business after the Effective Date. Unless this Agreement
is terminated in accordance with Section 11.1, the Business shall be operated
from the Effective Date by Seller, until Closing, for the account of Purchaser
and in the ordinary course of business, and any amounts due Seller or Purchaser
as a result thereof shall be settled in accordance with Section 13.11.
ARTICLE 6
FINANCIAL STATEMENTS; DISCLOSURE LETTER;
FINANCING COMMITMENT LETTER
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6.1 Pre-Signing Deliveries by Seller. Seller has heretofore delivered to
Purchaser:
(a) the Financial Statements; and
(b) the Disclosure Letter, together with (or preceded by) a copy of
each Contract listed in Section 7.11 of the Disclosure Letter, and
containing all of the information required by the terms of this Agreement
to be contained therein.
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6.2 Pre-Signing Deliveries by Purchaser. Purchaser has heretofore
delivered to Seller a true and complete copy of the written binding commitment
of a reputable lending institution to provide the funds necessary for Purchaser
and Purchaser's Parent to purchase the Acquired Businesses.
ARTICLE 7
WARRANTIES AND REPRESENTATIONS OF SELLER
----------------------------------------
Seller warrants and represents to Purchaser (which warranties and
representations shall survive the Closing subject to the limitations of Article
12 of this Agreement) as follows:
7.1 Incorporation and Qualification of Seller. Seller is a corporation
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, operate and use the
Purchased Assets it now owns, operates or uses to engage in the operation of the
Businesses in which it is currently engaged, and to perform all of its
obligations under the contracts to which it is a party or by which it is bound.
7.2 Authority. Seller has all requisite corporate power and authority
to enter into this Agreement and the Ancillary Agreements and to carry out the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements by Seller, the performance by Seller
of its obligations hereunder and thereunder and the consummation by Seller of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of Seller. This Agreement has been
duly executed and delivered by Seller and (assuming the due authorization, valid
execution and delivery hereof and thereof by Purchaser) is, and as of the
Closing will be, and as of the Closing each Ancillary Agreement will be, duly
executed and delivered by Seller and (assuming the due authorization, valid
execution and delivery hereof and thereof by Purchaser, as appropriate), as of
the Closing, will be, a legal, valid
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and binding obligation of Seller, each enforceable against Seller in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
7.3 No Conflict. Except as described in Section 7.4, or as may result
from any facts relating solely to Purchaser, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by Seller do not and
will not: (a) conflict with or violate any provision of the Certificate of
Incorporation or By-Laws of Seller; (b) result in any breach of, or constitute
a default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Lien on any of the Purchased Assets pursuant to, any instrument, license,
agreement or commitment to which Seller is a party or by which any of the
Purchased Assets are bound; or (c) conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction or decree applicable to the
Purchased Assets or the Businesses.
7.4 Consents and Approvals. The execution and delivery by Seller of
this Agreement and the Ancillary Agreements do not or will not, and compliance
by Seller with the terms hereof and thereof and consummation by Seller of the
transactions contemplated hereby and thereby will not, require Seller to obtain
any consent, approval, authorization or other action of, or make any filing with
or give any notice to, any court, administrative agency or other governmental
authority, except (a) as disclosed in Section 7.4 of the Disclosure Letter, (b)
pursuant to the applicable requirements of the HSR Act, and (c) as may be
necessary as a result of any facts or circumstances relating solely to Purchaser
or Purchaser's Parent.
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7.5 Brokers. Neither this Agreement nor the sale of the Purchased
Assets or any other transaction contemplated by this Agreement was induced or
procured through any Person acting on behalf of or representing Seller or any of
its Affiliates as broker, finder, investment banker, financial advisor or in any
similar capacity.
7.6 Required Assets; Title. The Purchased Assets constitute substantially
all of the material rights and properties used in connection with conducting the
Businesses as presently conducted, except for the Retained Assets. Except as set
forth in Section 7.6 of the Disclosure Letter, Seller and its Affiliates own all
of the Purchased Assets, free and clear of any Liens whatsoever other than
Permitted Exceptions. Upon consummation of the transactions provided herein in
accordance with the terms hereof, Purchaser will be vested with title to the
Purchased Assets, free and clear of any Liens other than Permitted Exceptions.
7.7 Intellectual Property.
(a) To the knowledge of Seller, except as set forth in Section 7.7 or
7.14 of the Disclosure Letter, there is not now and has not been during the
past three (3) years any infringement, misuse or misappropriation in any
material respect by Seller of any valid patent, trademark, trade name,
service mark, copyright or trade secret in connection with the operation of
a Business and which is owned by any other Person, and there is not now any
existing or, to the knowledge of Seller, threatened claim asserted in
writing against Seller of any infringement, misuse or misappropriation in
any material respect by Seller of any patent, trademark, trade name,
service mark, copyright or trade secret which relates to either Business.
All material patents, trademarks, service marks, tradenames,
copyrights, and all applications and registrations thereof, used in
connection with the operation of the
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Businesses are set forth in Section 7.7 of the Disclosure Letter
("Proprietary Rights"). Except as set forth in Section 7.7 of the
Disclosure Letter, Seller and/or its Affiliates are the sole and exclusive
owners of, or have the sole and exclusive right to use, the Proprietary
Rights.
(b) Except as described in Section 7.7 or Section 7.14 of the
Disclosure Letter, there is no pending or threatened claim by Seller
against any other Person for infringement, misuse or misappropriation of
any patent, trademark, trade name, service mark, copyright or trade secret
owned by Seller and which is utilized in the conduct of either Business.
7.8 Financial Statements. Each of the Financial Statements is consistent
with the books and records of Seller and fairly presents in all material
respects the financial condition, assets and liabilities of the Businesses as
of its respective date and the results of operations for the periods related
thereto in accordance with generally accepted accounting principles consistently
applied among the periods which are the subject of the Financial Statements.
7.9 Compliance with Laws. Except as set forth in Section 7.9 of the
Disclosure Letter, Seller is currently in compliance in all material respects
with all laws, rules, ordinances, statutes, regulations, writs, injunctions,
judgments, decrees and orders ("Law") applicable to it in connection with the
ownership or use of the Purchased Assets or the operation of each Business, and
has not received any notice of any alleged claim or threatened claim, violation
of or liability or potential responsibility under any such Law in connection
with the ownership or use of the Purchased Assets or the operation of any
Business which has not been resolved; provided, however, that Purchaser
acknowledges and agrees that Seller's representations and warranties under this
Section 7.9 are not made with respect to any applicable Environmental Laws and
that Seller's representations and warranties to Purchaser with respect to
applicable Environmental Laws are made only in Section
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7.18. There are no writs, injunctions, judgments, decrees or orders applicable
to Seller which require the payment of money which have not been paid as of the
Effective Date.
7.10 Licenses and Permits. Except as set forth in Section 7.10 of the
Disclosure Letter, Seller has all material governmental licenses, franchises,
permits, approvals, authorizations, exemptions, certificates, registrations and
similar documents or instruments necessary to carry on the Businesses as each is
currently conducted, provided, however, that Purchaser acknowledges and agrees
that Seller's representations and warranties under this Section 7.10 are not
made with respect to any applicable Environmental Laws and that Seller's
representations and warranties to Purchaser with respect to applicable
Environmental Laws are made only in Section 7.18.
7.11 Material Contracts.
(a) Section 7.11 of the Disclosure Letter lists or describes (1) all
Contracts to be assigned to Purchaser and existing as of the date hereof
which involve an executory obligation of more than $100,000 in any one
calendar year, except Contracts which are terminable by Seller without
penalty on no more than thirty (30) days' notice, and (2) each and every
contract in effect described below which constitutes a Purchased Asset (the
"Material Contracts"):
(i) any existing or proposed collective bargaining or similar
arrangement with any labor union;
(ii) any contract for capital expenditures or the acquisition or
construction of fixed assets involving an executory obligation of more
than $100,000 per annum;
(iii) any contract for the purchase or the sale of materials,
supplies, merchandise or services except any contract made in the
ordinary course of business;
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(iv) any contract relating to environmental matters involving
an executory obligation of more than $100,000 per annum;
(v) any contract granting to any Person a first-refusal,
first-offer or similar preferential right to purchase any of the
Purchased Assets;
(vi) any contract with any manufacturer's representative or
other sales agent or distributor, or advertising or marketing entity, which
is not terminable by Seller without penalty on 180 calendar days' or less
notice;
(vii) any lease of real property to which Seller is a party;
(viii) any material non-governmental license or sublicense which
Seller has granted or received;
(ix) any contract providing for the indemnification by Seller
of any of its officers, directors, or employees or any other Person, the
obligation of which might reasonably be expected to exceed, in the
aggregate, $100,000;
(x) any contract prohibiting Seller from, or restricting it
in, conducting the Business anywhere in the world;
(xi) any joint venture or partnership contract;
(xii) any tax sharing agreements;
(xiii) any contract containing covenants by Seller not to
compete in either Business;
(xiv) any contract relating to the acquisition of any business
on or after the Effective Date;
(xv) any consulting contract requiring any payment or payments
of greater than, in the aggregate, $100,000; and
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(xvi) any employment contract having an express term of greater
than 1 year.
(b) Neither Seller nor, to the knowledge of Seller, any other Person, is in
material breach of, or material default under, any material Contract to be
conveyed to Purchaser under this Agreement, and no event or action has occurred,
is pending or, to the knowledge of Seller, is threatened, which after the giving
of notice, or the lapse of time, or both, could reasonably be expected to
constitute or result in a material breach by Seller or, to the knowledge of
Seller, any other Person, under any material Contract to be conveyed to
Purchaser under this Agreement.
7.12 Real Properties. Section 5.1 of the Disclosure Letter contains a
true and correct description of all of the Owned Real Estate and the Leased Real
Estate relating to the Businesses. Seller has fee simple title to the Owned Real
Estate and a valid leasehold interest in the Leased Real Estate, in each
instance, subject only to Permitted Exceptions and except as set forth in
Section 7.6 of the Disclosure Letter.
7.13 [Intentionally omitted].
7.14 Litigation. Except as set forth in Section 7.14 of the Disclosure
Letter, there are no actions, claims, proceedings or governmental investigations
pending or, to the knowledge of Seller, threatened against Seller, either
Business or any of the Purchased Assets at law or in equity, before or by any
federal, state or municipal court, agency or other governmental entity, or by
any other Person which are material and adverse to either Business or any of the
Purchased Assets.
7.15 Labor Matters. Section 7.15 of the Disclosure Letter contains a list
of the collective bargaining agreements to which Seller is a party relating to
employees employed by Seller in connection with the Businesses. Except as
disclosed in Section 7.15 of the Disclosure Letter (a) there are no labor
controversies pending or, to the knowledge of Seller, threatened against either
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Business or Seller relating to any Business; and (b) there are no grievances
outstanding, or unfair labor practice complaints pending, before the National
Labor Relations Board, against Seller in respect of employees employed by Seller
in connection with either Business under any such agreement or contract, in each
case which might be material and adverse to either Business or the Purchased
Assets.
7.16 Employee Benefit Matters.
(a) Except as is described in Section 7.16 of the Disclosure Letter or as
will not give rise to any liability to Purchaser, neither Seller nor any current
or former Plan Affiliate (as defined below) of Seller has at any time
maintained, sponsored, adopted, made contributions to, obligated itself or had
any liability with respect to any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA); any "employee welfare benefit plan" (as
such term is defined in Section 3(1) of ERISA); personnel policy (including
vacation time, holiday pay, service awards, bonus programs, moving expense,
reimbursement programs and sick leave) or material fringe benefit; any severance
agreement or plan or any medical, life or disability benefit; any excess benefit
plan, bonus or incentive plan (including stock options, restricted stock, stock
bonus or deferred bonus plans), top hat plan or deferred compensation plan,
salary reduction agreement, change of control agreement, employment agreement,
consulting agreement; or any other benefit plan, policy, program, arrangement,
agreement or contract, whether or not written or terminated or provided pursuant
to a collective bargaining agreement, with respect to any employee, former
employee, director, independent contractor, or any beneficiary or dependent
thereof. All such plans, policies, programs, arrangements, agreements and
contracts, including those that are set forth in Section 7.16 of the Disclosure
Letter and those which will not result in any liability to Purchaser, are
referred to in this Agreement as "Plans". Any Plan set forth on Section 7.16 of
the Disclosure Schedule as a
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"Scheduled Plan" is referred to herein as a "Scheduled Plan"; and any Plan,
other than a Scheduled Plan, in which Employees (or descendants or beneficiaries
thereof by virtue of such status) are currently participating or under which
such persons are currently covered, relating to the operation of the Business
but for which Purchaser will not have any liability (except in the case of those
Plans described in Section 7.11 of the Disclosure Schedule) shall be referred to
as a "Business Plan".
(b) Seller has delivered to Purchaser a complete and accurate copy of each
written Scheduled Plan, together with a copy of audited financial statements,
actuarial reports and Form 5500 Annual Reports (including required schedules) to
the extent required by ERISA or the Code, if any, for the three (3) most recent
plan years, the most recent IRS determination letter or IRS recognition of
exemption; each other material letter, ruling or notice issued by a governmental
authority with respect to each such plan, a copy of each trust agreement,
insurance contract or other funding vehicle, if any, with respect to each such
plan, the most recent PBGC Form 1 with respect to each such plan, if any, the
current summary plan description and summary of material modifications with
respect to each such plan, and a copy or description of each other general
explanation or written or oral communication and which describes a material term
of each such plan that has not previously been disclosed to Purchaser pursuant
to this Section. Seller has delivered to Purchaser a complete and accurate copy
of the current summary plan description and summary of material modifications to
the extent required by ERISA with respect to each Business Plan. Section 7.16 of
the Disclosure Letter contains a description of the material terms of each
Business Plan for which there is no summary plan description or summary of
material modifications and of each material term of each Business Plan which has
not previously been disclosed to Purchaser in a summary plan description or
summary of material modification.
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(c) Except as would not reasonably be expected to give rise to any
material liability to Purchaser, (1) each Scheduled Plan (i) has been and
currently complies in form and in operation in all respects with all
requirements of ERISA and the Code, to the extent they are applicable, and any
other applicable legal requirements; (ii) has been and is operated and
administered in compliance with its terms (except as otherwise required by law);
(iii) has been and is operated in compliance with applicable legal requirements
in such a manner as to qualify, where appropriate, for both Federal and state
purposes, for income tax exclusions to its participants, tax-exempt income for
its funding vehicle, and the allowance of deductions and credits with respect to
contributions thereto; and (iv) where appropriate, has received a favorable
determination letter or recognition of exemption from the IRS, (2) with respect
to each Scheduled Plan, there are no claims or other proceedings pending or, to
the knowledge of Seller, threatened with respect to the assets thereof (other
than routine claims for benefits), and there are no facts which could reasonably
give rise to any liability, claim or other proceeding against any Scheduled
Plan, any fiduciary or plan administrator or other person dealing with any
Scheduled Plan or the assets of any such plan (other than routine claims for
benefits), and (3) with respect to each Scheduled Plan, no Person: (i) has
entered into any nonexempt "prohibited transaction," as such term is defined
under ERISA or the Code; (ii) has breached a fiduciary obligation or violated
Sections 402, 403, 405, 503, 510 or 511 of ERISA; (iii) has any liability for
any failure to act or comply in connection with the administration or investment
of the assets of such plan; or (iv) engaged in any transaction or otherwise
acted with respect to such plan in such a manner which could subject Purchaser,
or any fiduciary or plan administrator or any other person dealing with any such
plan, to liability under Sections 409 or 502 (except for claims for benefits
made in the ordinary course) of ERISA or Sections 4972 or 4976 through 4980 of
the Code.
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(d) No Scheduled Plan is a "multi-employer plan" as defined in Section
4001 of ERISA, a "multi-employer plan" within the meaning of Section 3(37) of
ERISA, a "multiple employer plan" within the meaning of Section 413(c) of the
Code or a "multiple employer welfare arrangement" within the meaning of Section
3(40) of ERISA.
(e) Other than Scheduled Plans, the accruals for which are set forth in
the Financial Statements in accordance with SFAS 106, or as will not give rise
to any liability to Purchaser, neither Seller, nor any current or former Plan
Affiliate, has at any time maintained, contributed to or obligated itself or
otherwise had any liability with respect to any funded or unfunded employee
welfare plan, whether or not terminated, which provides medical, health, life
insurance or other welfare type benefits for current retirees or future retirees
or current former employees or future former employees, their spouses or
dependents or any other persons (except for limited continued medical benefit
coverage for former employees, their spouses and other dependents as required to
be provided under Section 4980B of the Code and Part 6 of Subtitle B of Title I
of ERISA and the accompanying proposed regulations or state continuation
coverage laws ("COBRA")).
(f) No Scheduled Plan which is subject to Title IV of ERISA has incurred
an "accumulated funding deficiency" as such term is defined in Section 302 of
ERISA or Section 412 of the Code, whether or not waived, or has posted or is
required to provide security under Code Section 401(a)(29) or Section 307 of
ERISA; no event has occurred which has or could result in the imposition of a
lien under Code Section 412 or Section 302 of ERISA with respect to a Scheduled
Plan that is subject to Title IV of ERISA, nor has any liability to the Pension
Benefit Guaranty Corporation (the "PBGC") (except for payment of premiums) been
incurred or reportable event within the meaning of Section 4043 of ERISA which
could reasonably be expected to give rise to
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any liability to Purchaser occurred with respect to any such plan; and the PBGC
has not threatened or taken steps to institute the termination of any such
Scheduled Plan.
(g) The requirements of COBRA have been satisfied with respect to each
Scheduled Plan to which they relate, other than technical requirements for which
no liability to Purchaser could reasonably be expected to arise.
(h) As of the Closing Date, with respect to the Racine Hourly Pension Plan
and the Past Service Plan, the estimated fair market value of the assets under
each such plan equals or exceeds the estimated present value of all vested and
non-vested accrued benefits under each such plan, determined using the actuarial
methods and assumptions disclosed in the most recent (January 1, 1995) actuarial
valuation report (specifically that [the set of assumptions included therein
using an interest rate of 9.0% per annum, compounded annually and the 1971 Group
Annuity Mortality Tables, without margins, with projection for mortality
improvement to 1976 by Scale E). All contributions, payments, premiums,
expenses, reimbursements or accruals required or due for all periods ending
prior to or as of the Closing Date (including periods from the first day of the
then current plan year to the Closing Date) for the Racine Hourly Pension Plan
and the Past Service Plan (as defined below) shall have been, as of the Closing
Date, made except to the extent accrued on the Final Closing Balance Sheet.
(i) As used in this Agreement, with respect to any Person ("First
Person"), the term "Plan Affiliate" shall mean each other Person with whom the
First Person constitutes or has constituted all or part of a controlled group,
or which would be treated or has been treated with the First Person as under
common control or whose employees would be treated or have been treated as
employed by the First Person, under Section 414 of the Code and any other legal
requirements.
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7.17 Taxes. Except as set forth in Section 7.17 of the Disclosure Letter,
Seller has duly and timely filed all state and local tax Returns required to be
filed by it in respect of the Businesses and paid all Taxes due thereunder.
Except as set forth in Section 7.17 of the Disclosure Letter, Seller has duly
withheld and, if payable, paid all Taxes which it is required to withhold from,
and pay relating to, compensation paid to employees of Seller employed by Seller
in connection with the Businesses.
7.18 Environmental Compliance.
(a) Compliance. To the knowledge of Seller, except as set forth in
Section 7.18 of the Disclosure Letter (i) Seller is in compliance with all
applicable Environmental Laws as in effect on the date hereof, (ii) Seller
possesses all required environmental permits, licenses, certifications and
approvals relating to the use, occupancy or operation of the Purchased Assets or
the Businesses, and (iii) Seller is in compliance with all requirements or
conditions imposed under its environmental permits, licenses, certifications and
approvals, and has filed all required notices and applications.
(b) No Hazardous Substances. To the knowledge of Seller, except as set
forth in Section 7.18 of the Disclosure Letter, Seller has never generated,
used, transported, treated, stored, disposed of or otherwise handled any
Hazardous Substances at any site, location or facility in connection with the
use, occupancy or operation of the Purchased Assets or the Businesses, other
than in compliance with Environmental Laws. To the knowledge of Seller, except
as set forth on in Section 7.18 of the Disclosure Letter, Seller has not owned
or operated any underground storage tanks ("USTs") in connection with the use,
occupancy or operation of the Purchased Assets or the Businesses, other than in
compliance with all applicable Environmental Laws. To the knowledge of Seller,
except as set forth in Section 7.18 of the Disclosure Letter, there has been no
release, spill or discharge of any Hazardous Substances in connection with the
use, occupancy or operation of the Purchased Assets
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or the Businesses in violation of or requiring reporting, removal or remediation
under any Environmental Laws as in effect at the time thereof, which has not
been reported, removed or remediated, as the case may be.
(c) No Actions or Proceedings. To the knowledge of Seller, except as set
forth in Section 7.18 of the Disclosure Letter, the Purchased Assets are not
subject to, nor are the subject of, any threatened private, administrative or
judicial inquiry, investigation, order or action resulting from or relating to
violations of or obligations under Environmental Laws, including without
limitation liabilities relating to the generation, transportation, treatment,
storage, disposal or other handling of Hazardous Substances in connection with
the use, occupancy or operation of the Purchased Assets or the Businesses.
(d) Other Conditions. To the knowledge of Seller, except as set forth in
Section 7.18 of the Disclosure Letter, no facts, events or conditions exist
which could reasonably be expected to interfere with or prevent continued
compliance with applicable Environmental Laws as in effect on the date hereof,
or result in any common law or statutory liability, or otherwise form the basis
of any claim, action, suit, proceeding, hearing or investigation, relating to
the release, discharge, generation, use, transportation, treatment, storage,
disposal or other handling of Hazardous Substances in connection with the use,
occupancy or operation of the Purchased Assets or the Businesses.
7.19 Inventory. All of the inventories which are reflected on the balance
sheet dated June 30, 1996 constituting a part of the Financial Statements were
purchased or acquired in the ordinary and regular course of the conduct of the
Businesses and in a manner consistent with the regular inventory practices
relating to the Businesses, and have been or will be used or sold in the
ordinary and regular course of the Businesses and in a manner consistent with
Seller's regular inventory practices; all of the inventories which are reflected
in the balance sheets constituting a part of the
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Financial Statements were priced at the lower of cost (on the last-in-first-out
basis, except for the portion of the Strapping Business which has been "bought-
in" as opposed to manufactured (e.g., purchased strapping, machines and parts),
which were priced on a first-in-first-out basis) or market, and were (as to
classes of items inventoried and methods of accounting and pricing) determined
in a manner consistent with prior years; and all inventories which have been
purchased or acquired by Seller for the Businesses since June 30, 1996 were
purchased or acquired in the ordinary and regular course of the Businesses and
in a manner consistent with Seller's regular inventory practices and have been
or will be used or sold in the ordinary and regular course of Seller's business
and in a manner consistent with Seller's regular inventory practices.
7.20 Receivables. All of the Receivables which are reflected in the
balance sheet dated June 30, 1996 constituting a part of the Financial
Statements represent, and all of the Receivables set forth on the Seller Closing
Balance Sheet as of the Closing Date will represent, valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the Closing Date, all of the Receivables will
be current and enforceable (but no representation is hereby made as to their
collectibility). There is no contest, claim or asserted right of set-off in any
agreement relating to the amount or validity of any Receivable except those
arising in the ordinary course of business. Seller has delivered or made
available to Purchaser a complete and accurate list of all Receivables as of
June 30, 1996, which list sets forth the aging of such Receivables.
7.21 Real Property Leases. Seller has provided Purchaser with a true and
complete copy of each of the leases pertaining to the Leased Real Estate (the
"Real Property Leases"). No payment required pursuant to the Real Property
Leases is past due. The Real Property Leases have not been amended, modified or
assigned except as otherwise disclosed in the Disclosure Letter and are in full
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force and effect. Except as disclosed in Section 7.21 of the Disclosure Letter,
neither Seller nor any lessor under the Real Property Leases is in default
thereunder.
7.22 No Notice. To Seller's knowledge, no notice, action, or proceeding
materially and adversely affecting the Owned or Leased Real Estate has been
served or commenced.
7.23 Customers. Section 7.23 of the Disclosure Letter is a complete list
of the 10 largest customers of each Business for the twelve month period ended
June 30, 1996. Except as noted in such section of the Disclosure Letter, since
June 30, 1996, no such customer has cancelled or otherwise terminated, or to
Seller's knowledge, threatened to cancel or otherwise terminate, its
relationship with a Business, or to Seller's knowledge, threatened to materially
reduce its business with any Business, other than due to normal fluctuations in
requirements and order levels in the ordinary cause of business.
7.24 Full Disclosure. The materials delivered by or on behalf of Seller in
connection with this Agreement, taken as a whole, fairly present the Businesses,
the Purchased Assets and the Assumed Liabilities.
7.25 DISCLAIMER OF WARRANTIES. EXCEPT WITH RESPECT TO THE WARRANTIES AND
REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER MAKES NO
WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, SUITABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE PURCHASED ASSETS, OR ANY PART
THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD BY PURCHASER THAT
THE PURCHASED ASSETS ARE TO BE CONVEYED HEREUNDER "AS IS" ON THE DATE HEREOF,
AND IN THEIR PRESENT CONDITION, SUBJECT TO REASONABLE USE,
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WEAR AND TEAR BETWEEN THE DATE HEREOF AND THE CLOSING DATE, AND PURCHASER SHALL
RELY UPON ITS OWN EXAMINATION THEREOF.
ARTICLE 8
WARRANTIES AND REPRESENTATIONS OF PURCHASER
-------------------------------------------
Purchaser warrants and represents to Seller (which warranties and
representations shall survive the Closing) as follows:
8.1 Incorporation and Qualification of Purchaser. Purchaser is a
corporation validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, operate and
lease the assets it now owns, operates or leases and to carry on its business as
currently conducted.
8.2 Authority. Purchaser has all requisite corporate power and authority
to enter into this Agreement and the Ancillary Agreements and to carry out the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements by Purchaser, the performance by
Purchaser of its obligations hereunder and thereunder and the consummation by
Purchaser of the transactions contemplated hereby and thereby have been, or
prior to Closing will be, duly authorized by all requisite corporate action on
the part of Purchaser. Each of this Agreement and the Ancillary Agreements has
been, or prior to Closing will be, duly executed and delivered by Purchaser and
(assuming the due authorization, valid execution and delivery hereof and thereof
by Seller) is, and as of the Closing will be, a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
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remedies generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
8.3 No Conflict. Except as may result from any facts or circumstances
relating solely to Seller, the execution, delivery and performance of this
Agreement and the Ancillary Agreements by Purchaser do not and will not: (a)
conflict with or violate any provision of the Certificate of Incorporation or
Bylaws of Purchaser; (b) except as would not have a material adverse effect on
Purchaser or its ability to consummate the transactions contemplated hereby or
by the Ancillary Agreements, as the case may be, result in any breach of, or
constitute a default (or event which, with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Lien on any of the assets or properties of Purchaser pursuant
to, any instrument, license, agreement or commitment to which Purchaser is a
party or by which any of its assets or properties are bound; or (c) except as
would not have a material adverse effect on Purchaser or its ability to
consummate the transactions contemplated hereby or by the Ancillary Agreements,
as the case may be, conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction or decree applicable to Purchaser or its assets or
properties.
8.4 Consents and Approvals. The execution, delivery and performance by
Purchaser of this Agreement and the Ancillary Agreements do not, and compliance
by Purchaser with the terms hereof and thereof and consummation by Purchaser of
the transactions contemplated hereby and thereby will not, require Purchaser to
obtain any consent, approval, authorization or other action of, or make any
filing with or give any notice to, any court, administrative agency or other
governmental authority, except (a) pursuant to the applicable requirements of
the HSR Act, (b) where failure to obtain such consents, approvals,
authorizations or actions, make such filings or give such notice
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would not prevent Purchaser from consummating the transactions contemplated
hereby and performing any of its material obligations under this Agreement or
the Ancillary Agreements, as the case may be, and (c) as may be necessary as a
result of any facts or circumstances relating solely to Seller.
8.5 Litigation. There are no actions, claims, proceedings or governmental
investigations pending against Purchaser or any of its assets or properties at
law or in equity, before or any federal, state or municipal court, agency or
other governmental entity, or by any other Person, which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Purchaser or its ability to consummate the transactions contemplated hereby or
by the Ancillary Agreements, as the case may be.
8.6 Brokers. Neither this Agreement nor the purchase of the Purchased
Assets or any other transaction contemplated by this Agreement was induced or
procured through any Person acting on behalf of or representing Purchaser or any
of its Affiliates as broker, finder, investment banker, financial advisor or in
any similar capacity .
8.7 Financial Ability. At the Closing on the Closing Date, Purchaser will
have the funds necessary to purchase the Purchased Assets and consummate the
transactions contemplated hereby.
ARTICLE 9
CONDITIONS TO CLOSING APPLICABLE TO PURCHASER
---------------------------------------------
The obligation of Purchaser to consummate the transactions herein
contemplated is subject to the following conditions precedent:
9.1 No Termination. Neither Purchaser nor Seller shall have terminated
this Agreement pursuant to Section 11.1.
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9.2 Bring-Down of Seller's Warranties. The warranties and representations
made by Seller herein to Purchaser shall be true and correct in all material
respects as of the date hereof and on and as of the Closing Date with the same
effect as if such warranties and representations had been made on and as of the
Closing Date, and Seller shall have performed and complied with all agreements,
covenants and conditions on its part required to be performed or complied with
on or prior to the Closing Date; and at the Closing, Purchaser shall have
received a certificate executed by the President or any Vice President of Seller
to the foregoing effect.
9.3 Pending Actions. No investigation, action, suit or proceeding by any
governmental or regulatory commission, agency, body or authority shall be
pending on the Closing Date which challenges, or is reasonably likely to result
in a challenge to, and no injunction issued by an order of any court shall be in
effect which prohibits, this Agreement or any transactions contemplated hereby.
9.4 Consents and Approvals. All consents, approvals or authorizations of
any governmental authority which are required to consummate the transactions
contemplated hereby, and the Required Consents, shall have been duly obtained
and shall be in full force and effect as of the Closing Date, and Seller shall
have complied with all applicable provisions of law requiring any notification,
declaration, filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation.
9.5 All Necessary Documents. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of such
documents as Purchaser may reasonably request in connection with said
transactions, including without limitation, those documents to be delivered
pursuant to Section 3.2.
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9.6 HSR Act. The waiting period applicable to the consummation of the
transactions contemplated hereunder required pursuant to the provisions of the
HSR Act shall have expired or been terminated in accordance with the HSR Act.
9.7 Termination of Certain Liens, Claims and Encumbrances. Purchaser
shall have received evidence, in form and substance reasonably satisfactory to
it, of the termination, cancellation and release of all liens, claims and
encumbrances which are not Permitted Exceptions.
9.8 Canadian and U.K. Transactions. The "Closing" contemplated under each
of the Canadian Stock Purchase Agreement and the U.K. Stock Purchase Agreement
shall be consummated concurrently with the Closing hereunder.
9.9 Title Policies. At the Closing, Seller shall have delivered to
Purchaser owner's title insurance policies dated the Closing Date, covering the
real estate covered by the commitments referred to in Section 5.1(a), issued by
the Title Insurer insuring the fee simple title of Purchaser in the real estate
in the amount to be set forth in Section 5.1 of the Disclosure Letter, subject
only to Permitted Exceptions and the preprinted exceptions.
9.10 Conveyance of the Transferred Patents and Trademarks. At the Closing,
Seller and its affiliates shall have delivered to Purchaser or, if requested by
Purchaser, to Cass Strapping, an assignment of the Transferred Patents and
Trademarks in form and substance reasonably satisfactory to Purchaser, duly
executed by Interlake Companies or its affiliates, as appropriate, pursuant to
which Interlake Companies and each appropriate Affiliate thereof shall assign to
Purchaser (or Cass Strapping, as the case may be) all of its rights, title and
interest in and to the Transferred Patents and Trademarks.
9.11 Additional Deliveries. Seller shall have delivered to Purchaser, at
Closing, all deeds, assignments, transfer tax declarations and such other
documents, instruments and agreements as may
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be necessary or desirable in order to convey to Purchaser title to the Owned
Real Estate and the leasehold estates created under the Real Property Leases,
free and clear of all liens, claims and encumbrances other than Permitted
Exceptions.
9.12 Material Adverse Change. Since June 30, 1996, there shall not have
been any Material Adverse Change. Purchaser shall have the right to waive any of
the foregoing conditions precedent, except for the condition set forth in
Section 9.6.
9.13 Consents under Senior Credit Agreement. All consents required under
the Senior Credit Agreement and the documents and instruments executed and
delivered in connection therewith to permit Seller to consummate the
transactions contemplated hereby shall have been delivered to Seller.
ARTICLE 10
CONDITIONS TO CLOSING APPLICABLE TO SELLER
------------------------------------------
The obligation of Seller to consummate the transactions herein contemplated
is subject to the following conditions precedent:
10.1 No Termination. Neither Purchaser nor Seller shall have terminated
this Agreement pursuant to Section 11.1.
10.2 Bring-Down of Purchaser Warranties. All warranties and
representations made by Purchaser herein to Seller shall be true and correct in
all material respects on and as of the Closing Date with the same effect as if
such warranties and representations had been made on and as of the Closing Date,
and Purchaser shall have performed and complied with all agreements, covenants
and conditions on its part required to be performed or complied with on or prior
to the Closing Date; and at the Closing, Seller shall have received a
certificate executed by the President or any Vice President of Purchaser to the
foregoing effect.
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10.3 Pending Actions. No investigation, action, suit or proceeding by any
governmental or regulatory commission, agency, body or authority shall be
pending on the Closing Date which challenges or is reasonably likely to result
in a challenge to, and no injunction issued by an order of any court shall be in
effect which prohibits, this Agreement or any transaction contemplated hereby.
10.4 Consents and Approvals. All consents, approvals or authorizations of
any governmental authority which are required to consummate the transactions
contemplated hereby, and the Required Consents, shall have been duly obtained
and shall be in full force and effect as of the Closing Date, and Purchaser
shall have complied with all applicable provisions of law requiring any
notification, declaration, filing, registration and/or qualification with any
governmental authority in connection with such performance and consummation.
10.5 All Necessary Documents. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement, and
all documents incident thereto, shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of such documents as
it may reasonably request in connection with said transactions, including
without limitation, those documents to be delivered pursuant to Section 3.3.
10.6 HSR Act. The waiting period applicable to the consummation of the
transactions contemplated hereunder required pursuant to the HSR Act shall have
expired or been terminated in accordance with the HSR Act.
10.7 Canadian and U.K. Transactions. The "Closing" contemplated under each
of the Canadian Stock Purchase Agreement and the U.K. Stock Purchase Agreement
shall be consummated concurrently with the Closing hereunder.
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10.8 Letters of Credit. At the Closing on the Closing Date, Purchaser
shall have caused the Replacement Letters of Credit to be in full force and
effect and shall have delivered a copy of each Replacement Letter of Credit to
Seller.
10.9 Consents under Senior Credit Agreement. All consents required under
the Senior Credit Agreement and the documents and instruments executed and
delivered in connection therewith to permit Seller to consummate the
transactions contemplated hereby shall have been delivered to Seller.
Seller shall have the right to waive any of the foregoing conditions
precedent, except for the condition set forth in Section 10.6.
ARTICLE 11
TERMINATION
-----------
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing only as follows, and in no other manner:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or by Seller if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or before
November 30, 1996, or such later date as may have been agreed upon in
writing by the parties hereto; provided, that the party seeking to
terminate is not, in any material respect, in breach of or default under
this Agreement;
(c) by Purchaser or by Seller if any representation or warranty made
herein for the benefit of Purchaser or Seller, respectively, or in any
certificate, schedule or documents furnished to Purchaser or Seller,
respectively, pursuant to this Agreement is untrue in any
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material respect, or if Seller or Purchaser, respectively, shall have
defaulted in any material respect in the performance of any material
obligation under this Agreement; or
(d) by Seller if the Closing of the transactions contemplated by this
Agreement shall not have occurred on or before October 10, 1996, and no
Competition Act Opinion, dated as of the date of Seller's notice of
termination, shall have been delivered to Seller by Purchaser within five
Business Days after the date of delivery of Seller's notice of termination
under this Section 11.1(d).
Any termination pursuant to this Article 11, other than pursuant to Section
11.1(d), shall not limit or restrict the rights or other remedies of any
party hereto. Upon termination of this Agreement pursuant to Section
11.1(d), neither Seller nor Purchaser shall have any further rights
hereunder.
ARTICLE 12
INDEMNIFICATION
---------------
12.1 Seller Indemnity. After the Closing Date, Seller agrees to indemnify,
defend and hold Purchaser, its Affiliates and their officers and directors
(collectively, the "Purchaser Indemnified Persons") harmless against any losses,
liabilities, costs, damages or expenses (including reasonable attorneys' fees),
other than Consequential Damages (collectively, the "Losses"), suffered as the
result of (a) any breach by Seller of any of its covenants or agreements
contained in this Agreement or any Ancillary Agreement; (b) any inaccuracy in or
breach of any of the representations or warranties made by Seller herein, in any
Ancillary Agreement or in the Disclosure Letter; (c) any inaccuracy or
misrepresentation in a certificate or affidavit delivered by Seller in
accordance with the provisions of this Agreement; (d) the assertion by a third
party of any Contingent Liabilities or the compliance
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by Purchaser with any applicable law, rule or order resulting in any Contingent
Liabilities; and (e) any Retained Liabilities.
12.2 Limitation. Purchaser's right to indemnification pursuant to Section
12.1(b), (c) and (d) is subject to the following specific limitations (other
than in the case of any obligation arising as a result of fraudulent activity on
the part of Seller, which instances are not subject to such limitations):
(a) (i) After the Third Anniversary, no Purchaser Indemnified Person
shall be entitled to assert any right of indemnification pursuant hereto
with respect to Section 7.18 for any Loss suffered by such Purchaser
Indemnified Person or with respect to Section 12.1(d) relating to any
Contingent Liability arising as a result of or in connection with Seller's
non-compliance with Environmental Laws, except that if, as of the Third
Anniversary, there shall then be pending any such claim under Section
12.1(b), (c) or (d) of which such Purchaser Indemnified Person shall have
notified Seller in writing on or prior to the Third Anniversary with
respect to such Section 7.18 or 12.1(d), such Purchaser Indemnified Person
shall continue to have the right to be indemnified with respect to such
claim.
(ii) After the expiration of the statute of limitations imposed by the
Code or any other applicable law with respect to the underlying Tax or
ERISA Plan liability of Seller that forms the basis for any Purchaser
Indemnified Person's claims, such Purchaser Indemnified Person shall not be
entitled to assert any right of indemnification under Section 12.1(b), (c)
or (d) with respect to any Loss suffered by such Purchaser Indemnified
Person with respect to the representations and warranties set forth in
Section 7.16 or Section 7.17 or with respect to Section 12.1(d) with
respect to any Contingent Liability arising as a result of or in
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connection with any Taxes of Seller other than Retained Liabilities or
transfer Taxes payable in accordance with the terms hereof, except that if,
as of the expiration of any such statute of limitations, there shall then
be pending any such claim under Section 12.1(b), (c) or (d) of which such
Purchaser Indemnified Person shall have notified Seller in writing on or
prior to such expiration date with respect to such Section 7.16, 7.17 or
12.1(d), such Purchaser Indemnified Person shall continue to have the right
to be indemnified with respect to such claim.
(iii) Except as otherwise set forth in clause (i) and (ii) above,
after the First Anniversary, no Purchaser Indemnified Person shall be
entitled to assert any other right of indemnification under Section
12.1(b), (c) or (d) (except with respect to Section 7.12) for any Loss
suffered by such Purchaser Indemnified Person, except that if, as of the
First Anniversary, there shall then be pending any such claim under Section
12.1(b), (c) or (d) of which such Purchaser Indemnified Person shall have
notified Seller in writing on or prior to the First Anniversary, such
Purchaser Indemnified Person shall continue to have the right to be
indemnified with respect to such claim.
(b) No Purchaser Indemnified Person shall be entitled to
indemnification hereunder for any indemnification claims under Section
12.1(b), (c) or (d) until the amount of the aggregate Losses required to be
indemnified by Seller pursuant to such sections, together with the amount
of the aggregate losses, damages and expenses required to be indemnified by
the "Sellers" under Sections 12.1 of each of the Canadian Stock Purchase
Agreement and the U.K. Stock Purchase Agreement, exceed, in the aggregate,
$750,000 (said amount is hereinafter sometimes referred to as the "Seller
Threshold"), whereupon the Purchaser Indemnified Persons shall be entitled
to indemnification under such sections from
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Seller only for the aggregate of indemnification claims in excess of the
Seller Threshold. For the purposes of this Section 12.2, in computing such
individual or aggregate amounts of claims, and the amount set forth in
clause (c) below, any concept of materiality contained in any warranty or
representation of Seller contained in this Agreement or in connection with
any obligation of Seller or any of its Affiliates shall be deemed not to
exist, and such representation, warranty or obligation shall be read
without such language relating to materiality and the amount of Loss shall
be calculated as if no such concept was present therein; provided, however,
the amount of each claim shall be deemed to be an amount (i) net of any tax
benefit realized by a Purchaser Indemnified Person by reason of
deductibility of such liability or damage (determined by multiplying such
deductible amount by the then applicable highest effective corporate income
tax rate), and any deferred tax benefit attributable to such liability or
damage (determined on the same basis but present-valued to the extent
obtained through depreciation or amortization deductions), and (ii) net of
any insurance proceeds and any indemnity, contribution or other similar
payment recovered by a Purchaser Indemnified Person from any third party
with respect thereto.
(c) The maximum liability of Seller under this Agreement and the
"Sellers" under the Canadian Stock Purchase Agreement and the U.K. Stock
Purchase Agreement to the Purchaser Indemnified Persons for indemnification
claims hereunder and thereunder, other than those arising in connection
with the Retained Liabilities or as a result of a breach by Seller of any
of its covenants or agreements hereunder, shall be $25,000,000 in
aggregate.
(d) As a condition to accepting the benefits of Section 12.1, each
Purchaser Indemnified Person acknowledges and agrees that its remedies with
respect to any and all
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claims relating to the subject matter of this Agreement shall be, except as
otherwise set forth herein, in accordance with the indemnification
provisions set forth in this Article 12.
(e) Anything herein to the contrary notwithstanding, no breach of any
representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of Purchaser, after the consummation of the
purchase and sale of the Businesses and the Purchased Assets contemplated
hereby, to rescind this Agreement or any of the transactions contemplated
hereby.
(f) Each Purchaser Indemnified Person shall take all reasonable steps
to mitigate all liabilities and damages for which a claim may be made
against Seller pursuant to Section 12.1 upon and after becoming aware of
any event which could reasonably be expected to give rise to such
liabilities or damages.
(g) Notwithstanding any provision hereof, after the Tangible Net Worth
is finally calculated in accordance with Section 2.3, no Purchaser
Indemnified Person shall have any right to indemnification for any Loss
suffered as a result of any breach of the warranty contained in Section 7.8
(to the extent such Loss arises out of matters which were finally
determined in accordance with Section 2.3), Section 7.19 or Section 7.20.
(h) In the event that Seller makes any payment to a Purchaser
Indemnified Person for indemnification for which such Purchaser Indemnified
Person could have collected on a claim against a third party, Seller shall
be entitled to pursue claims and conduct litigation on behalf of such
Purchaser Indemnified Person and any of such Person's successors, to pursue
and collect on any indemnification or other remedy available to such
Purchaser Indemnified Person with respect to such claim and generally to be
subrogated to the rights of such Purchaser Indemnified Person with respect
thereto.
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Only those limitations set forth in Section 12.2(d), (e), (f), (f) and (h) shall
have any effect relating to Seller's obligations to indemnify Purchaser
Indemnified Parties arising under Section 12.1(a) or (e).
12.3 Purchaser Indemnity. (a) After the Closing Date, Purchaser agrees to
indemnify, defend and hold Seller, its Affiliates and their officers and
directors (collectively, the "Seller Indemnified Persons") harmless against any
Loss suffered as the result of (i) any breach by Purchaser of any of its
covenants or agreements contained in this Agreement or any Ancillary Agreement,
(ii) any inaccuracy in or breach of any of the representations or warranties
made by Purchaser herein or in any Ancillary Agreement, (iii) any inaccuracy or
misrepresentation in a certificate or affidavit delivered by Purchaser at the
Closing in accordance with the provisions of this Agreement, (iv) any Balance
Sheet Liabilities, (v) any Contract Liabilities, (vi) any Post Effective Date
Liabilities, and (vii) except to the extent that Seller has an obligation to
indemnify any Purchaser Indemnified Person in accordance with this Section 12
therefor, any Contingent Liabilities.
(b) After the First Anniversary, no Seller Indemnified Person shall be
entitled to assert any right of indemnification under Section 12.3(a)(ii) or
(iii) for any Loss suffered by such Seller Indemnified Person, except that if,
as of the First Anniversary, there shall then be pending any such claim under
Section 12.3(a) in writing on or prior to the First Anniversary, such Seller
Indemnified Person shall continue to have the right to be indemnified with
respect to such claim.
(c) In the event that Purchaser makes any payment to a Seller Indemnified
Person for indemnification for which such Seller Indemnified Person could have
collected on a claim against a third party, Purchaser shall be entitled to
pursue claims and conduct litigation on behalf of such Seller Indemnified Person
and any of such Person's successors, to pursue and collect on any
indemnification or other remedy available to such Seller Indemnified Person with
respect to such
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claim and generally to be subrogated to the rights of such Seller Indemnified
Person with respect thereto.
(d) As a condition to accepting the benefits of Section 12.3(a), each
Seller Indemnified Person acknowledges and agrees that its remedies with respect
to any and all claims relating to the subject matter of this Agreement shall be
in accordance with the indemnification provisions set forth in this Article 12.
(e) Each Seller Indemnified Person shall take all reasonable steps to
mitigate all liabilities and damages for which a claim may be made against
Purchaser pursuant to Section 12.3(a) upon and after becoming aware of any event
which could reasonably be expected to give rise to such liabilities or damages.
12.4 Notice of Claims. Upon obtaining knowledge of any claim or demand
which has given rise to, or could reasonably be expected to give rise to, a
claim for indemnification hereunder, the party seeking indemnification
("Indemnitee") shall give written notice of such claim or demand ("Notice of
Claim") to the other party ("Indemnitor"). Indemnitee shall furnish to the
Indemnitor in reasonable detail such information as Indemnitee may have with
respect to such indemnification claim (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same). Subject to the limitations set forth in Section 12.2(a), no failure or
delay by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold Indemnitee
harmless, except to the extent that such failure or delay shall have adversely
effected Indemnitor's ability to defend against, settle or satisfy any
liability, damage, loss, claim or demand for which Indemnitee is entitled to
indemnification hereunder.
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12.5 Indemnification Proceeding. If the claim or demand set forth in the
Notice of Claim given by Indemnitee pursuant to Section 12.4 is a claim or
demand asserted by a third party, Indemnitor shall have fifteen (15) days after
the Date of the Notice of Claim to notify Indemnitee in writing of its election
to defend such third-party claim or demand on behalf of the Indemnitee. If
Indemnitor elects to defend such third-party claim or demand, Indemnitee shall
make available to Indemnitor and its agents and representatives all records and
other materials which are reasonably required in the defense of such third-party
claim or demand and shall otherwise cooperate with, and assist Indemnitor in the
defense of, such third-party claim or demand, and so long as the Indemnitor is
defending such third-party claim in good faith, Indemnitee shall not pay, settle
or compromise such third-party claim or demand. If Indemnitor elects to defend
such third-party claim or demand, Indemnitee shall have the right to participate
in the defense of such third-party claim or demand, at Indemnitee's own expense.
If Indemnitor does not elect to defend such third-party claim or demand or does
not defend such third-party claim or demand in good faith, Indemnitee shall have
the right, in addition to any other right or remedy it may have hereunder, at
Indemnitor's expense, to defend such third-party claim or demand; provided,
however, that (a) Indemnitee shall not have any obligation to participate in the
defense of, or defend, any such third-party claim or demand; and (b)
Indemnitee's defense of or its participation in the defense of any such third-
party claim or demand shall not in any way diminish or lessen the obligations of
Indemnitor under the agreements of indemnification set forth in this Article 12.
12.6 Satisfaction of Claims. Except for third-party claims being defended
in good faith, and subject to the resolution of any disputes hereunder in
accordance with Section 14.15, Indemnitor shall satisfy its obligations
hereunder within thirty (30) days after the Date of Notice of Claim.
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12.7 Date of Notice of Claim. The term "Date of the Notice of Claim" as
used in this Article 12 shall mean the date the Notice of Claim is effective
pursuant to Section 14.12.
ARTICLE 13
CERTAIN OTHER UNDERSTANDINGS
----------------------------
13.1 Records.
(a) After the Closing, each party agrees to provide the other with
access to all relevant documents and other information which may be needed
by such party for purposes of preparing tax returns or responding to an
audit by any governmental agency or for any other reasonable purpose. Such
access will be during normal business hours, upon reasonable prior notice
and not otherwise subject to time limitations.
(b) Purchaser further agrees that it shall preserve and keep all books
and records relating to the Businesses, including, without limitation, the
Purchased Assets, in Purchaser's possession for six years after the date
hereof. After such time, before Purchaser shall dispose of any of such
books and records, at least ninety (90) calendar days' prior written notice
to such effect shall be given by Purchaser to Seller, and Seller shall be
given an opportunity, at its cost and expense, to remove and retain all or
any part of such books and records as Seller may select. Duly authorized
representatives of Seller shall, upon reasonable notice, have access to
such books and records during normal business hours to examine, inspect,
retrieve and copy such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by Seller prior to or after the Closing, upon
reasonable notice, Purchaser shall, after the Closing: (i) afford the
officers, employees and authorized agents and representatives of
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Seller reasonable access, during normal business hours, to the offices,
properties, books and records of Purchaser with respect to the Businesses;
(ii) furnish to the officers, employees and authorized agents and
representatives of Seller such additional financial and other information
regarding the Businesses as Seller may from time to time reasonably
request; and (iii) make available to Seller, the employees of Purchaser
whose assistance, testimony or presence is necessary to assist Seller in
evaluating any such claims and in defending such claims, including the
presence of such persons as witnesses in hearings or trials for such
purposes; provided, however, that such investigation shall not unreasonably
interfere with the businesses or operations of Purchaser or any of its
Affiliates or subsidiaries.
(d) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary
that either party hereto or any successors be furnished with additional
information relating to the Businesses, including, without limitation, the
Purchased Assets, and such information is in the possession of the other
party hereto, such other party agrees to use its best efforts to furnish
such information to the party needing such information, at the cost and
expense of the party being furnished such information.
13.2 Use of Interlake Name. No later than twelve months following the
Closing Date, Purchaser shall forever cease (and shall cause all of its
Affiliates to forever cease) to use the name "Interlake" and all derivatives
thereof (including all logos incorporating either of such names or any
derivatives thereof) in connection with the Businesses or in any other way
whatsoever. Purchaser and Seller agree that money damages would not be a
sufficient remedy for any breach of the terms of this Section 13.2, and that in
addition to all other remedies, Seller shall be entitled to specific
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performance and injunctive or other equitable relief as a remedy for such
breach. Purchaser hereby waives any requirement for the securing or posting of
any bond in connection with any such remedy.
13.3 Employee Matters.
(a) Obligation to Hire Employees. On the Closing Date, Purchaser
agrees to hire each of Seller's salaried and non-union hourly personnel
(other than those individuals identified in Section 13.3(a) of the
Disclosure Letter) then employed by Seller (including, without limitation,
any employees who are on leave of absence due to disability or otherwise as
of the Closing Date, all such employees as of the date hereof being listed
in Section 13.3(a) of the Disclosure Letter) exclusively in connection with
the Businesses (collectively, the "Non-Union Employees") at a comparable
job and on comparable terms and with, in the aggregate, substantially
comparable benefits (specifically excluding Seller's employee stock
ownership plan, any right to invest in employer stock under any Seller
defined contribution plan and the Past Service Plan), and agrees to hire
all of Seller's unionized hourly personnel then employed by Seller
exclusively in connection with the Businesses (the "Hourly Union
Employees"; together with the Non-Union Employees, the "Employees") subject
to the terms and conditions of the collective bargaining agreement
applicable to such employees existing on or after the Closing Date.
(b) Seller's Reliance. Purchaser understands and acknowledges that
Seller is relying on Purchaser's agreement to hire all the Employees as of
the Closing Date. In that regard, Purchaser retains sole responsibility for
any obligations or liabilities to such Employees under the Worker
Adjustment and Retraining Notification Act (WARN), Pub.
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Law 100-379, 102 Stat. 890 (1988), as amended, and agrees to hold Seller
harmless from any Losses arising from such obligations or liabilities.
(c) Health Care. Seller shall be responsible for the health care
claims of any former employees of the Businesses and their families or
dependents who, at the time of the Closing, are receiving or are eligible
to receive continuation coverage required by COBRA. After the Closing Date,
Seller shall extend to Employees and other eligible Persons the option of
continuing health care coverage under Seller's Welfare Plans if, and to the
extent, required by COBRA. Purchaser shall be responsible for providing
health care continuation coverage as required by COBRA to any Employees who
are employed by Purchaser on or after the Closing Date ("Transferring
Employees"). Purchaser will reimburse Seller for the cost of providing
health care continuation coverage as required by COBRA to any Employee that
does not accept employment with Purchaser and to any Transferring Employee,
less the amount of premiums payable by Employee and subject to a maximum
limit equal to the lesser of $200,000 per Employee or the Seller's stop-
loss attachment point then in effect. Notwithstanding any other provision
of this Section 13.3(c), any obligation of Purchaser with respect to any
such reimbursement shall be treated as a Contingent Liability for purposes
of Section 12 hereof.
(d) Past Service and Vacations. Transferring Employees will receive
credit for Past Service in determining vacation entitlement under
Purchaser's applicable vacation policy. Except to the extent that
Transferring Employees receive payment from Seller for earned but unused
vacation and/or accrued vacation (determined as of the Closing Date),
Purchaser will give credit to Transferring Employees for such vacation.
Purchaser shall have no obligation to pay wages in lieu of earned, but
unused, or accrued vacation to any
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Employee. For purposes of this Section 14.3(d), "earned" vacation shall
mean vacation earned under Seller's vacation policy with respect to service
from July 1, 1995 through June 30, 1996, but to be taken in 1996, while
"accrued" vacation shall mean vacation accrued under Seller's vacation
policy with respect to service since July 1, 1996 but available only in
1997.
(e) Participation in Purchaser's Plans. Purchaser will give credit for
Past Service for purposes of determining eligibility for participation and
vesting in a plan maintained by Purchaser (and will waive or cause to be
waived any pre-existing illness exclusions) for which a Transferring
Employee is eligible under the terms thereof (but only to the extent such
service was granted under the corresponding Business Plan). Transferring
Employees will also receive credit toward any deductible for the current
plan year under Purchaser's medical plans for expenses incurred under
Seller's corresponding plans and shall similarly be charged against any
maximum limitations under Purchaser's medical plans (i.e., lifetime limits
or annual limits) for expenses incurred under Seller's corresponding plans.
(f) Medical Claims and Workers' Compensation. Purchaser is not
assuming Seller's medical and other Welfare Plans. Purchaser shall assume
all of the Employees' workers' compensation claims, both medical and
disability, that relate to occurrences on or after the Effective Date. With
respect to Employees' claims for medical, dental, health, accident or
disability benefits, Seller agrees that any claims incurred for services
rendered prior to the Effective Date or, in the case accident or disability
benefits, for the period prior to the Effective Date, shall remain the
responsibility of Seller and either be paid by Seller or a plan sponsored
by Seller and Purchaser agrees that any claims incurred for services
rendered on or after the Effective Date or, in the case of accident or
disability benefits for any
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period beginning on or after the Effective Date, shall be assumed by
Purchaser and either paid by Purchaser or a plan sponsored by Purchaser;
provided that, should either Seller or Purchaser (or a plan of Seller or
Purchaser) pay a claim that pursuant to this sentence is the responsibility
of the other, such other party agrees to make reimbursement for such
payment promptly following written notice thereof.
(g) Racine Hourly Pension Plan. Purchaser shall assume and become the
plan sponsor under the Interlake Packaging Corporation Racine Hourly
Employees Pension Plan (the "Racine Hourly Pension Plan") in accordance
with the following:
(i) Purchaser shall provide to Seller prior to the Closing Date a
certified copy of the trust agreement establishing the trust
designated by Purchaser to receive the assets of the Racine Hourly
Pension Plan (the "Purchaser's Trust") together with an opinion of
legal counsel reasonably acceptable to Seller to the effect that the
Purchaser's Trust satisfies the applicable requirements of Sections
401(a) and 501(a) of the Code.
(ii) Seller shall cause the trustee of the assets of the Racine
Hourly Pension Plan to transfer the assets of the Racine Hourly
Pension Trust to the Purchaser's Trust in cash (or other assets
reasonably acceptable to Purchaser), as follows:
(a) within 30 days of the Closing Date, Seller shall cause
90% of such assets, measured as of the Effective Date,
to be transferred to the Purchaser's Trust, and
(b) Seller shall cause the transfer of the remaining
balance of such assets, measured as of the Effective
Date and adjusted to
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reflect benefit payments, plan expenses and actual
earnings from the Effective Date to the date the
transfer described in (a) was made (the "Transfer
Date"), plus interest on the remaining balance from the
Transfer Date at the rate earned by the Bank of New
York Short Term Investment Fund in which short term
monies of the Racine Hourly Pension Plan are from time
to time invested, which second transfer shall be made
within 30 days of the Transfer Date.
(h) Past Service Plan. Effective as of the Closing Date, Purchaser
shall assume Seller's obligations as to the Employees and former employees
of the Businesses under the Consolidated Pension Plan -- Chem-tronics,
Interlake ARD and Past Service Plans (the "Past Service Plan") in
accordance with the following:
(i) Within 60 days after the Closing Date, but effective on the
Closing Date, Purchaser shall establish a defined benefit pension plan
(the "Successor Plan") for the benefit of the Employees and former
employees of the Business who are participating under the Past Service
Plan as of the Closing Date. The Successor Plan shall be in
substantially the same form as the Past Service Plan and shall provide
the Employees and former employees of the Businesses (the "Covered
Employees") their full accrued benefits under the Past Service Plan.
The Successor Plan shall also provide that each such Covered
Employee's credited service under the Past Service Plan as of the
Closing Date shall be given equivalent credit under the Successor Plan
with respect to eligibility, vesting and benefits. Within the same 60
day period, Purchaser shall furnish to Seller a certified copy of the
Successor Plan and related
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trust agreement and an opinion of counsel reasonably acceptable to
Seller to the effect that the Successor Plan will qualify under
Sections 401(a) and 501(a) of the Code.
(ii) No later than the Closing Date, Seller shall cause all
benefits provided to Covered Employees under the Past Service Plan to
be frozen so that the portion of the Past Service Plan including the
Covered Employees would not fail to comply with Section 401(a)(26) of
the Code as of the Closing Date assuming such portion were a stand-
alone plan established on such date, and such plan had less than 50
participants, and assuming reasonable actuarial assumptions were used.
Within 30 days after the Closing Date, Seller shall cause its
designated actuary to calculate the minimum amount of assets that is
required by Section 414(l) of the Code to be transferred from the Past
Service Plan to the Successor Plan, determined as of the Closing Date
(the "Past Service Plan Assets"). Seller shall forward to Purchaser
such calculation and all necessary supporting data, including a
statement of the actuarial assumptions and methods. Seller shall cause
the trustee of the Interlake Corporation Retirement and Pension Plans
Master Trust to transfer the Past Service Plan Assets to the Successor
Plan Trust in cash (or other assets reasonably acceptable to
Purchaser), as follows:
(a) within 60 days of the Closing Date, Seller shall cause
90% of the Past Service Plan Assets to be transferred
to the Successor Plan Trust, and
(b) Seller shall cause the transfer of the remaining
balance of such assets, measured as of the Effective
Date and adjusted to
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reflect benefit payments, plan expenses and actual
earnings from the Effective Date to the date the
transfer described in (a) was made (the "Transfer
Date"), plus interest on the remaining balance from the
Transfer Date at the rate earned by the Bank of New
York Short Term Investment Fund in which short term
monies of the Past Service Plan are from time to time
invested, which second transfer shall be made within 30
days of the Transfer Date.
(iii) On or before the Closing Date, the Past Service Plan shall
cease accruing benefits for the Covered Employees and all Covered
Employees shall cease to participate in the Past Service Plan (except
that benefits of the Covered Employees in pay status shall continue to
be paid from the Past Service Plan from the Closing Date to the
Transfer Date).
(i) Defined Contribution Plans. As of the Effective Date, Seller
shall cause each Transferring Employee to be 100% vested in his or her
accrued benefit, if any, under the Interlake Packaging Corporation Fountain
Inn Plant Profit Sharing Plan ("Fountain Inn Plan") and The Interlake
Corporation Amended and Restated Salaried Employees Retirement Savings Plan
("Retirement Savings Plan"). Seller shall cause to be contributed to the
Fountain Inn Plan and the Retirement Savings Plan all contributions that
are accrued for the employees of the Businesses as soon as practicable
after the Closing Date.
(j) Retiree Benefits. For each former employee of the Businesses (and
each Transferring Employee who has given notice that he or she is retiring
on or before December
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31, 1996, and is electing to receive the retiree benefits set forth below)
identified in Section 13.3(j) of the Disclosure Letter, Purchaser agrees
with Seller to provide at Purchaser's own cost and expense, from and after
the Effective Date, medical, dental, life insurance and health benefits and
arrangements substantially comparable to, and on substantially similar
terms and conditions as, the insurance, benefits and arrangements described
in Section 7.16 of the Disclosure Letter and being provided by Seller to
retirees immediately prior to the Closing. Notwithstanding this Section
13.3(j), Purchaser shall not assume any Plan of Seller under which such
benefits or coverage have been provided.
(k) Collective Bargaining Agreements. Purchaser recognizes that
Seller is a party to the collective bargaining agreement listed in Section
7.15 of the Disclosure Letter with respect to the Hourly Union Employees
(the "Collective Bargaining agreement"), which agreement, including the
obligation to provide benefits to the employees covered thereby, is a
Contract.
13.4 Miscellaneous Employee Matters.
(a) To the extent permitted by applicable law, Purchaser shall have
the right to assume the unemployment experience of Seller in the States of
South Carolina and Wisconsin, insofar as it relates to the operations of
the Businesses, effective as of the Effective Date. Purchaser and Seller
agree to adopt the standard procedure described in Section 4 of Revenue
Procedure 84-77 as promulgated by the IRS (and Purchaser agrees to comply
with the applicable provisions of said Section 5) to enable Purchaser to
constitute a successor employer solely for purposes of FICA and the
withholding of federal and state income taxes. Purchaser further agrees to
file and issue IRS Forms W-2 required to be filed and issue Forms 1099
required to be issued after the Closing Date.
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(b) This Agreement is being entered into solely for the benefit of the
parties hereto and, where expressly indicated, their respective Affiliates,
officers and directors, and the parties do not intend that any Employee or
any other Person shall be a third-party beneficiary of the covenants by
either Seller or Purchaser contained in this Agreement.
13.5 Waiver of Bulk Sales Law. The parties hereto acknowledge and agree
that no filings with respect to any bulk sales or similar laws have been made,
nor are they intended to be made, nor are such filings a condition precedent to
the Closing.
13.6 Letters of Credit.
(a) In connection with certain purchases of supplies, inventory and
equipment made by Seller from time to time from third parties and certain
services contracted for by Seller from time to time, in each case relating
to the Businesses, Seller has arranged for certain financial institutions
to issue letters of credit to the Persons providing such supplies,
inventory, equipment and services. Each of such letters of credit that is
in effect on the date hereof is described in Section 13.6 of the Disclosure
Letter (together with any other letters of credit issued on Seller's behalf
in the ordinary course of business between the date hereof and the Closing
Date, the "Letters of Credit - Seller").
(b) Purchaser hereby agrees that it will, at its own cost and expense,
cause to be issued, effective as of the Closing, letters of credit,
substantially in the form of the Letters of Credit - Seller (or with such
modifications as are acceptable to the named beneficiaries of the Letters
of Credit - Seller) (the "Replacement Letters of Credit"), to the extent
possible, in replacement of each of the Letters of Credit - Seller or, if
such replacement is not possible, then the Replacement Letters of Credit
shall be issued to Seller as beneficiary to secure the Letters of Credit -
Seller not replaced.
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(c) Purchaser agrees that Seller may, effective as of the Closing,
cause to be canceled any of the Letters of Credit - Seller which were
replaced with the third party beneficiary.
(d) Included in the Purchased Assets are any letters of credit issued
by customers of the Businesses to Seller as beneficiary. Seller agrees
that to the extent possible it will attempt to have Purchaser named as
beneficiary thereunder as of the Closing Date and if Purchaser is not named
as a beneficiary thereunder Seller will, upon the direction of Purchaser,
enforce its rights thereunder after the Closing Date and pay any proceeds
to Purchaser.
13.7 Guarantee by Parents. (a) Purchaser's Parent hereby irrevocably,
absolutely and unconditionally guarantees, as primary obligor and not merely as
surety, for the benefit of Seller and each other Seller Indemnified Person (i)
the due and punctual payment when due of all amounts that are or may become due
and payable by Purchaser under this Agreement, any Ancillary Agreement or any
other agreement, document or instrument executed and delivered by Purchaser in
connection with the transactions contemplated hereby and (ii) the due and
punctual performance when due of all covenants and agreements of Purchaser under
this Agreement, any Ancillary Agreement or any other agreement, document or
instrument executed and delivered by Purchaser in connection with the
transactions contemplated hereby, in each case strictly in accordance with the
terms hereof or thereof.
(b) Seller's Parent hereby irrevocably, absolutely and unconditionally
guarantees, as primary obligor and not merely as surety, for the benefit of
Purchaser and each other Purchaser Indemnified Person (i) the due and punctual
payment when due of all amounts that are or may become due and payable by Seller
under this Agreement, any Ancillary Agreement or any other
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agreement, document or instrument executed and delivered by Seller in connection
with the transactions contemplated hereby, and (ii) the due and punctual
performance when due of all covenants and agreements of Seller under this
Agreement, any Ancillary Agreement or any other agreement, document or
instrument executed and delivered by Purchaser in connection with the
transactions contemplated hereby, in each case strictly in accordance with the
terms hereof or thereof.
13.8 Additional Named Insured. Seller shall use all reasonable efforts to
cause each of its insurance carriers to name Purchaser as an additional insured
under each of the general liability insurance policies related to the
Businesses, the Purchased Assets or the Retained Liabilities for occurrences
prior to the Closing Date. Purchaser shall pay any costs payable to any such
insurance carrier relating to such carrier so naming Purchaser as an additional
insured. To the extent that Seller is not able to cause such insurance carriers
to so name Purchaser as an additional insured, Seller shall use its reasonable
efforts to obtain any benefits it has under any such insurance policies of such
carriers for the benefit of Purchaser and its affiliates. Seller makes no
representation or warranty as to the adequacy of such insurance, nor shall
Seller be deemed to be acting as an advisor to Purchaser with respect to
insurance matters.
13.9 Covenant Not to Compete.
(a) Seller hereby agrees that it shall not, and shall cause each of its
Affiliates not to, during the ten-year period commencing on the date hereof,
directly or indirectly, as agent, consultant, stockholder, director, co-partner
or in any other individual or representative capacity, own, operate, manage,
control, engage in, invest in or participate in any manner in, act as a
consultant or adviser to, render services for (alone or in association with any
Person) or otherwise assist, any Person that engages in or owns, invests in,
operates, manages or controls any venture or
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enterprise engaging or proposing to engage in the business engaged in by either
Business as of the Closing Date anywhere in the World; provided, that nothing
herein shall be deemed to prohibit Seller's Parent or any of its Affiliates
engaging in businesses other than the Businesses from engaging in commercial
relationships with any Person in any of the Businesses.
(b) If any court of competent jurisdiction shall at any time deem the term
of any covenant set forth in this Section 13.9 too lengthy or too extensive, the
other provisions of this Section 13.9 shall nevertheless stand, the restricted
period herein shall be deemed to be the longest period permissible by law under
the circumstances and the territory herein shall be deemed to comprise the
largest territory permissible by law under the circumstances. The court in each
case shall reduce the time period and/or territory to the maximum permissible
duration or size.
(c) Seller hereby acknowledges and agrees that such restrictions, rights
and remedies are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to the Purchaser, do not stifle the
inherent skill and experience of Seller, would not operate as a bar to Seller's
sole means of support, are fully required to protect the legitimate interests of
the Purchaser following the consummation of the transactions contemplated hereby
and do not confer a benefit upon the Purchaser disproportionate to the detriment
to Seller.
(d) Seller acknowledges and agrees that the covenants contained in this
Section 13.9 are reasonable and necessary for the protection of the Purchaser's
business interests, that irreparable injury will result to the Purchaser if
Seller breaches any of the terms of said covenants, and that in the event of
Seller's actual or threatened breach of any such covenants, the Purchaser will
have no adequate remedy at law. Seller accordingly agrees that in the event of
any actual or threatened breach by it of any of such covenants, Purchaser shall
be entitled to immediate temporary injunctive and other equitable relief,
without bond and without the necessity of showing actual monetary
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damages, subject to a hearing as soon thereafter as possible. Nothing contained
herein shall be construed as prohibiting Purchaser from pursuing any other
remedies available to it for such breach or threatened breach, including the
recovery of any damages which it is able to prove.
13.10 Seller Proposals. Nothing in Section 5.2(e) or elsewhere in this
Agreement shall prevent or be deemed to prevent Seller or any of its
representatives from at any time engaging in any of the activities set forth in
Section 5.2(e) with Gerrard and its representatives.
13.11 Further Actions.
(a) Seller and Purchaser agree that from and after the Closing Date,
if reasonably requested by the other, it will execute and deliver such
further instruments of conveyance and transfer and take such other
reasonable action as may be necessary or desirable (i) to convey and
transfer more effectively to Purchaser the Businesses and the Purchased
Assets, (ii) for Purchaser to more effectively assume the Assumed
Liabilities, (iii) to retain more effectively in Seller the Retained Assets
and the Retained Liabilities and (iv) to evidence the transactions
contemplated herein.
(b) If Purchaser shall, at any time after the Closing, receive any
Retained Asset or any payment with respect thereto, it shall promptly
deliver such Retained Asset or payment to Seller. If Seller shall, at any
time after the Closing, receive any Purchased Asset, any other asset of
Purchaser or any payment with respect thereto, Seller shall promptly
deliver such Purchased Asset, asset of Purchaser or payment to Purchaser.
(c) Notwithstanding the provisions of Section 13.11(b), Seller and
Purchaser acknowledge that, between the Effective Date and the Closing
Date, Seller will discharge certain Assumed Liabilities on Purchaser's
behalf, including, without limitation, payroll and the payment of certain
accounts payable. Seller and Purchaser also acknowledge that, from
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and after the Effective Date, Seller will likely receive payments from time
to time which constitute or represent the settlement of certain Purchased
Assets. Seller and Purchaser agree that, until the third Business Day after
the Closing Date, Seller need not remit to Purchaser any receipts
constituting or representing the settlement of Purchased Assets, and
Purchaser need not reimburse Seller for any payment made by Seller in
satisfaction of Assumed Liabilities. On the third Business Day following
the Closing Date, and each Business Day thereafter, Seller will make a
payment to Purchaser representing the excess of Purchased Assets (or
settlements with respect thereto) received by Seller over the payments made
by Seller in satisfaction of Assumed Liabilities, or Purchaser will make a
payment to Seller representing the excess of payments made by Seller in
satisfaction of Assumed Liabilities over the Purchased Assets (or
settlements with respect thereto) received by Seller, as the case may be.
Seller and Purchaser shall work together in good faith to settle the
account between them from time to time in accordance with Section 13.11(b).
ARTICLE 14
MISCELLANEOUS
-------------
14.1 Cost and Expenses. Except as otherwise provided in this Agreement,
each party hereto shall pay its own fees, costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation, preparation, execution
and delivery of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby.
14.2 Entire Agreement. The Disclosure Letter and the Exhibits referenced
in this Agreement are incorporated into this Agreement and together with this
Agreement and the Ancillary Agreements contain the entire agreement between the
parties hereto with respect to the transactions
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contemplated hereunder, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the date
hereof, including, without limitation, the letter dated May 3, 1996 from Mr.
Mark C. Samuel, President of Purchaser's Parent, to Mr. W. Robert Reum,
Chairman, President and Chief Executive Officer of Seller's Parent, regarding
the transaction contemplated hereby and the Mutual Confidentiality Agreement
dated as of April 26, 1996 between Seller's Parent and Purchaser's Parent. No
waiver, modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the party to be
bound thereby.
14.3 Counterparts. This Agreement may be executed in counterparts, each of
which when executed shall be deemed an original and all of which together shall
constitute one and the same instrument.
14.4 Assignment; Successors and Assigns. The respective rights and
obligations of the parties hereto shall not be assignable without the prior
written consent of the other party. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
14.5 Savings Clause. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, rule or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid
-84-
<PAGE>
and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
14.6 Headings. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
14.7 Risk of Loss. Risk of loss, damage or destruction of the Purchased
Assets shall be upon Seller until the Closing, and shall thereafter be upon
Purchaser.
14.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, EXCLUDING THE
"CONFLICT OF LAWS" RULES THEREOF.
14.9 Public Announcements. No press release or other public statement with
respect to this Agreement or the transactions contemplated hereby shall be
issued by either party without such party having consulted with and obtained the
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that no such consultation or consent is necessary
if a press release or other public statement is required to be made by
applicable law.
14.10 U.S. Dollars. All amounts expressed in this Agreement and all
payments required by this Agreement are in United States dollars.
14.11 Survival. All representations and warranties made by any party in
this Agreement shall be deemed made for the purpose of inducing the other party
to enter into this Agreement and, subject to Section 12.2(a), shall survive the
Closing.
14.12 Notices. (a) All notices, requests, demands and other
communications under this Agreement shall be in writing and delivered in person
or sent by overnight courier or certified mail, postage prepaid, or by facsimile
transmission, and properly addressed as follows:
-85-
<PAGE>
To Seller:
---------
Interlake Packaging Corporation
550 Warrenville Road
Lisle, Illinois 60532-4387
Fax: 630/719-7242
Attention: Stephen Gregory,
Vice President - Finance and
Chief Financial Officer
Stephen R. Smith,
Vice President, Secretary and
General Counsel
with a copy to:
--------------
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Fax: 312/558-5700
Attention: Joseph A. Walsh, Jr.
To Purchaser:
------------
Samuel Strapping Systems (Tennessee), Inc.
c/o Samuel Manu-Tech Inc.
191 The West Mall
Suite 418
Etobicoke, Ontario
Canada M9C 5K8
Fax: 416/626-5969
Attention: Mark C. Samuel,
President
Wallace Rayner
Executive Vice President and
Chief Financial Officer
-86-
<PAGE>
with a copy to:
--------------
Smith Lyons
Scotia Plaza
40 King Street West
Suite 5800
Toronto, Ontario
Canada M5H 3Z7
Fax: 416/369-7250
Attention: William Mutch
and
Katten Muchin & Zavis
Suite 1600
525 W. Monroe
Chicago, IL 60661
Fax: 312/902-1061
Attention: Stephen Neumer
(b) Any party may from time to time change its address for the purpose
of notices to that party by a similar notice specifying a new address, but
no such change shall be deemed to have been given until it is actually
received by the party sought to be charged with its contents.
(c) All notices and other communications required or permitted under
this Agreement which are addressed as provided in this Section 14.12 if
delivered personally, by overnight courier, or by facsimile transmission,
shall be effective upon delivery; and if delivered by mail, shall be
effective three (3) Business Days after deposit in the United States or
Canadian mail, postage prepaid.
14.13 Disclosures. All matters disclosed by Seller in any Section of the
Disclosure Letter shall be deemed a disclosure by Seller for purposes of all
relevant Sections of this Agreement.
14.14 No Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, nothing in this Agreement, expressed or implied, is
intended or shall be construed to
-87-
<PAGE>
confer upon or give to any Person, other than the parties hereto, any rights,
remedies or other benefits under or by reason of this Agreement.
14.15 Arbitration.
(a) Exclusive Procedure. Except as otherwise set forth herein, any
dispute arising out of or relating to this Agreement will be resolved in
accordance with the procedures specified in this Section 14.15, and this is
the sole and exclusive procedure for resolution of any such dispute. Each
party waives its right to court proceedings, in consideration of the
parties' agreement to negotiate and arbitrate.
(b) Negotiation between Executives. The parties will attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between the Chief Executive Officer of Seller's
Parent and the President of Purchaser's Parent (as of the date hereof, W.
Robert Reum and Mark C. Samuel), who may be accompanied by such other
persons as they choose. Any party may give the other party written notice
of any dispute not resolved in the normal course of business, and
specifically require a response by referring to this Section 14.15 of this
Agreement. Within 15 days after receipt of such notice, the receiving
party will submit to the other a written response. The notice and the
response will include a statement of each party's position and a summary of
arguments supporting that position and the names and titles of the persons
who will accompany such officer. Within 30 days after delivery of the
disputing party's notice, the executives of both parties will meet at a
mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All
reasonable requests for information made by one party to the other will be
honored.
-88-
<PAGE>
(c) Arbitration under the CPR Rules. Any dispute arising out of or
relating to this Agreement which has not been resolved within 60 days of
the initial written notice of the dispute under subsection (b) above will
be settled by arbitration. If, however, either party will not participate
in the negotiations required above, then the other party may initiate
arbitration before expiration of the period specified above. The following
rules will apply to the arbitration:
(i) the then current CPR Non-Administered Arbitration Rules
(adopted by the CPR Institute for Dispute Resolution) will govern, and
the United States Federal Arbitration Act, 9. U.S.C. (S) 1-16, will
also govern to the extent consistent;
(ii) there will be three independent and impartial arbitrators,
of whom each party will appoint one and the third will be appointed by
the other two;
(iii) the place of arbitration will be metropolitan Chicago;
(iv) the arbitrators shall not be empowered to award damages in
excess of compensatory damages, and each party hereby irrevocably
waives any right to recover any such damages;
(v) as a primary goal of this Section 14.15 is to conclude
disputes in a speedy manner at substantially less cost to the parties
than litigation, the arbitrators are therefore to conduct the
proceedings in a speedy and expeditious manner and to conclude and
issue an award as soon as possible after appointment of the third
arbitrator; and
(vi) the arbitrators' decision will be final and binding and
judgment upon the award rendered by the arbitrators may be entered by
any court having jurisdiction.
-89-
<PAGE>
(d) Statute of Limitations. The statute of limitations of the State
of Illinois applicable to the commencement of a lawsuit will apply to the
commencement of an arbitration, except that no defenses will be available
in arbitration based upon the passage of time during any negotiation called
for by this Section 14.15.
(e) Costs. Each party must bear its own costs of resolving any
dispute under this agreement and the parties each hereby severally agree to
pay 50% of the costs of any arbitrators engaged.
(f) Confidentiality. Any information or documents disclosed under
this Section 14.15 (i) will be treated as settlement negotiations under any
rules of evidence, (ii) must be kept confidential and (iii) may not be used
except to attempt to settle the dispute.
(g) Continued Performance. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of
any dispute arising out of or relating to this Agreement, unless to do so
would be impossible or impracticable under the circumstances.
(h) Effectiveness. This Agreement shall not become effective until
each of the Canadian Stock Purchase Agreement and the U.K. Stock Purchase
Agreement have been executed and delivered by all of the parties thereto.
[SIGNATURE PAGE FOLLOWS]
-90-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first written above.
INTERLAKE PACKAGING CORPORATION
By: /s/ Robert A. Pedersen
--------------------------------
Title: President
-----------------------------
SAMUEL STRAPPING SYSTEMS
(TENNESSEE), INC.
By: /s/ Mark Samuel
--------------------------------
Title: Director
-----------------------------
Agreed to, and Accepted this
1st day of October, 1996, as to
Section 13.7(a) only, by:
SAMUEL MANU-TECH, INC.
By: /s/ Mark Samuel
----------------------------
Title: Director
-------------------------
Agreed to, and Accepted this
1st day of October, 1996, as to
Section 13.7(b) only, by:
THE INTERLAKE CORPORATION
By: /s/ Stephen Gregory
----------------------------
Title: Vice President-Finance
-------------------------
-91-
<PAGE>
EXHIBIT 2.5
($000's)
--------
<TABLE>
<CAPTION>
===========================================================================================
Head
Plastics Stitching Office Licence Total
-------- --------- ------ ------- -----
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Leasehold Improvements -- 100 -- -- 100
- -------------------------------------------------------------------------------------------
Land 400 -- -- -- 400
- -------------------------------------------------------------------------------------------
Buildings 1,800 -- -- -- 1,800
- -------------------------------------------------------------------------------------------
Equipment 10,000 2,600 100 -- 12,700
- -------------------------------------------------------------------------------------------
Licence -- -- -- 15,000* 15,000
------
- -------------------------------------------------------------------------------------------
30,000
------
Add/Minus: Actual Working Capital,
other assets and Retirement liabilities ?
------
Add/Minus: Article 2.3(b), 2.3(c) and
(f) Adjustments to Goodwill/Intangibles ?
---
------
$ ?
---
======
</TABLE>
- -----------------------
* Allocation to Acme License Agreements
<PAGE>
EXHIBIT 3.2(a)
TO
ASSET PURCHASE AGREEMENT
------------------------
FORM OF
BILL OF SALE AND ASSIGNMENT AGREEMENT
-------------------------------------
THIS BILL OF SALE AND ASSIGNMENT AGREEMENT dated as of October 4, 1996 is
by and between Interlake Packaging Corporation, a Delaware corporation
("Seller"), and Samuel Strapping Systems (Tennessee), Inc., a Delaware
corporation ("Purchaser").
RECITALS:
--------
WHEREAS, Seller and Purchaser have entered into that certain Asset
Purchase Agreement dated as of October 4, 1996 (as amended from time to time in
accordance with the terms thereof, the "Purchase Agreement"), providing, subject
to the terms and conditions set forth therein, for the sale, assignment,
conveyance, transfer and delivery by Seller (or one or more of its Affiliates)
to Purchaser of the Purchased Assets (as such term is defined in Section 1.2 of
the Purchase Agreement);
WHEREAS, Seller and Purchaser have simultaneously herewith executed an
Assumption Agreement pursuant to which Purchaser has assumed certain obligations
relating to the Purchased Assets; and
WHEREAS, the parties hereto desire to execute and deliver this Bill of
Sale and Assignment Agreement for the purpose of effecting the sale, assignment,
conveyance, transfer and delivery of the Purchased Assets as contemplated
pursuant to Section 2.1 of the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in the Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, each capitalized
term used herein shall have the meaning assigned thereto in the Purchase
Agreement.
2. Sale and Assignment of the Purchased Assets.
(a) Seller by this instrument does hereby sell, assign , convey,
transfer and, deliver to Purchaser, its successors and permitted assigns, all of
Seller's right, title and interest in, to and under the Purchased Assets.
(b) Notwithstanding anything in this instrument to the contrary,
Seller is retaining title to, and possession of, and is not selling, assigning,
conveying, transferring or delivering to Purchaser hereunder or otherwise, any
rights, title or interest of Seller in, to or under, the Retained Assets.
<PAGE>
3. Further Action. At any time, or from time to time after the date
hereof, the Seller shall execute and deliver or cause to be executed and
delivered to Purchaser such other instruments as Purchaser may reasonably
request to carry out the intent and purpose of the Purchase Agreement and this
Bill of Sale and Assignment Agreement, and to more effectively vest title to the
Purchased Assets in Purchaser and, to the full extent permitted by law, to put
Purchaser in exclusive and absolute and total control of the Purchased Assets.
4. No Third-Party Beneficiaries. Nothing in this Bill of Sale and
Assignment Agreement, express or implied, is intended or shall be construed to
confer upon or give to any Person, other than the parties hereto, or their
respective successors or permitted assigns, any rights, remedies or other
benefits under or by reason of this Bill of Sale and Assignment Agreement.
5. Counterparts. This Bill of Sale and Assignment Agreement may be
executed in counterparts, each of which when executed shall be deemed an
original and all of which together shall constitute one and the same instrument.
6. GOVERNING LAW. THIS BILL OF SALE AND ASSIGNMENT AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS, EXCLUDING THE "CONFLICT OF LAWS" RULES THEREOF.
7. Successors and Assigns. The rights, title, benefits and
obligations of Seller and Purchaser under this Bill of Sale and Assignment
Agreement shall inure to the benefit of and be binding upon their respective
successors and permitted assigns.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Bill of Sale
and Assignment Agreement to be duly executed as of the date first written above.
INTERLAKE PACKAGING CORPORATION
By:
----------------------------------------------
Its:
SAMUEL STRAPPING SYSTEMS (TENNESSEE), INC.
By:
----------------------------------------------
Its:
<PAGE>
EXHIBIT 3.3(e)
TO
ASSET PURCHASE AGREEMENT
------------------------
FORM OF ASSUMPTION AGREEMENT
----------------------------
THIS ASSUMPTION AGREEMENT (the "Assumption Agreement") dated as of October
4, 1996 is by and between Samuel Strapping Systems (Tennessee), Inc., a Delaware
corporation ("Purchaser"), and Interlake Packaging Corporation, a Delaware
corporation ("Seller").
RECITALS:
--------
WHEREAS, Seller and Purchaser have entered into that certain Asset Purchase
Agreement dated as of October 4, 1996 (as amended from time to time in
accordance with the terms thereof, the "Purchase Agreement"), providing, subject
to the terms and conditions set forth therein, for the sale, assignment,
conveyance, transfer and delivery by Seller (or one or more of its Affiliates)
to Purchaser of the Purchased Assets (as such term is defined in Section 1.2 of
the Purchase Agreement);
WHEREAS, Seller and Purchaser have simultaneously herewith executed a Bill
of Sale and Assignment Agreement pursuant to which Purchaser has purchased the
Purchased Assets; and
WHEREAS, the parties hereto desire to execute and deliver this Assumption
Agreement for the purpose of effecting Purchaser's assumption of the Assumed
Liabilities as contemplated pursuant to Section 2.2(d) of the Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in the Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, each capitalized term
used herein shall have the meaning assigned thereto in the Purchase Agreement.
2. Assumption of Liabilities. Purchaser hereby assumes, agrees to perform
and in due course pay and discharge, and agrees to indemnify Seller against and
hold it harmless from, all Assumed Liabilities.
3. Liabilities Not Assumed. Purchaser does not assume, nor agree to pay,
perform or discharge or indemnify Seller against, or hold it harmless from, any
of the Retained Liabilities.
4. Contest. Nothing in the Purchase Agreement or this Assumption
Agreement shall preclude or prohibit Purchaser from contesting in good faith in
the legality, validity or enforceability of the Assumed Liabilities.
<PAGE>
5. No Third-Party Beneficiaries. Nothing in this Assumption Agreement,
express or implied, is intended or shall be construed to confer upon or give to
any Person, other than the parties hereto, or their respective successors or
permitted assigns, any rights, remedies or other benefits under or by reason of
this Assumption Agreement.
6. Interpretation. In the event of any conflict or inconsistency between
the terms, provisions and conditions of this Assumption Agreement and the
Purchase Agreement, the terms, provisions and conditions of the Purchase
Agreement shall govern.
7. Counterparts. This Assumption Agreement may be executed in
counterparts, each of which when executed shall be deemed an original and all of
which together shall constitute one and the same instrument.
8. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
EXCLUDING THE "CONFLICT OF LAWS" RULES THEREOF.
9. Successors and Assigns. The rights and obligations of Seller and
Purchaser under this Assumption Agreement shall inure to the benefit of and be
binding upon their respective successors and permitted assigns.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be duly executed as of the date first written above.
SAMUEL STRAPPING SYSTEMS (TENNESSEE),
INC.
By:
--------------------------------------
Its:
-------------------------------------
INTERLAKE PACKAGING CORPORATION
By:
--------------------------------------
Its:
-------------------------------------
<PAGE>
EXHIBIT 10.2
CANADIAN STOCK PURCHASE AGREEMENT
---------------------------------
STOCK PURCHASE AGREEMENT
by and between
INTERLAKE PACKAGING CORPORATION
and
THE INTERLAKE COMPANIES, INC. AS SELLERS
and
SAMUEL MANU-TECH INC., AS PURCHASER
dated
September 30, 1996
____________
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This STOCK PURCHASE AGREEMENT dated September 30, 1996 (as amended or
modified from time to time in accordance with the terms hereof, this "Agreement)
is by and between Interlake Packaging Corporation, a Delaware corporation
(together with its successors and permitted assigns, "Packaging"), and The
Interlake Companies, Inc., a Delaware corporation (together with its successors
and permitted assigns, "Interlake Companies"; together with Packaging,
"Sellers"), and Samuel Manu-Tech Inc., a corporation incorporated under the
laws of the Province of Ontario (together with its successors and permitted
assigns, "Purchaser").
R E C I T A L S:
A. Sellers own all of the issued and outstanding shares of the
capital stock of Acme Strapping Inc., a corporation incorporated under the
federal laws of Canada (the "Company").
B. The Company is in the businesses of manufacturing and supplying
steel and plastic strapping and edgeboard, and the machinery and tools to apply
such strapping, and of supplying product identification equipment, primarily to
the newspaper, lumber, metal, brick, textile, corrugated box, graphics, can,
bottle and distribution industries (collectively, the "Business").
C. Packaging is in the businesses of (i) supplying plastic strapping,
and the machinery and tools to apply such strapping, primarily to the newspaper,
textile, corrugated box, graphics, can, bottle and distribution industries and
(ii) manufacturing and distributing wire stitching equipment, primarily to the
graphic arts, fruit and produce growing and corrugated box manufacturing
industries (collectively, "Packaging's U.S. Businesses").
D. Interlake Companies owns directly or indirectly substantially all
of the issued and outstanding capital stock of Precis (935) Limited, a company
incorporated in England and Wales ("Precis").
E. Purchaser desires to acquire from Sellers, and Sellers desire to
sell to Purchaser, all of the issued and outstanding capital stock of the
Company on the terms and subject to the conditions hereinafter set forth.
F. Concurrently with Purchaser's purchase of all of the issued and
outstanding capital stock of the Company hereunder, Purchaser also desires to
acquire (or to cause Samuel Tennessee and Samuel U.K., respectively, to acquire)
(i) from Packaging, Packaging's U.S. Businesses and substantially all of the
assets of Packaging's U.S. Businesses and (ii) from Interlake Companies and the
other shareholders of Precis, all of the issued and outstanding capital stock of
Precis, pursuant to and in accordance with the terms and conditions of the U.S.
Asset
<PAGE>
2.
Purchase Agreement (as hereinafter defined) and the U.K. Stock Purchase
Agreement (as hereinafter defined), respectively.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 Previously Defined Terms. Each term defined in the first paragraph
and Recitals of this Agreement shall have the meaning set forth above whenever
used herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions. In addition to the terms defined in the first paragraph
and Recitals of this Agreement, whenever used herein, the following terms shall
have the meanings set forth below unless otherwise expressly provided or unless
the context clearly requires otherwise.
"Acme License Agreements" means (i) that certain License Agreement,
dated as of July 1, 1985, between Interlake, Inc. and the Company, as heretofore
amended, and (ii) that certain Services Agreement, dated January 1, 1964 between
Acme Steel Company and the Company as heretofore amended.
"Acquired Businesses" means the Business, Packaging's U.S. Businesses
and the businesses of Precis and its subsidiaries, collectively.
"Affiliate" means, with respect to any Person, a Person that, directly
or indirectly is controlled by, controls, or is under common control with such
Person. As used in the preceding sentence, "control" shall mean and include, but
not necessarily be limited to, (i) the ownership of 50% or more of the voting
securities or other voting interests of any Person, of (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Ancillary Agreements" means the Pre-Signing Escrow Agreement and the
Post-Signing Escrow Agreement.
"Balance Sheet" means the unaudited consolidated balance sheet dated
June 30, 1996, of the Company and the Subsidiary, which constitutes a part of
the Financial Statements.
"Balance Sheet Liabilities" means those obligations and liabilities
relating to the operation of the Business.
"Business" has the meaning specified in the Recitals to this
Agreement.
<PAGE>
3.
"Business Day" means any day of the year on which banks are not
required or authorized to be closed in Chicago, Illinois.
"Cass Strapping" means Cass Strapping Corporation, a Michigan
corporation.
"Closing" - See Section 3.1.
"Closing Date - See Section 3.1.
"Competition Act (Canada)" means the Competition Act, R.S.C. 1985,
c. C-34, as amended, and the regulations promulgated thereunder.
"Competition Act Opinion" means, as to any date, the unqualified legal
opinion of Smith Lyons, or such other Canadian legal counsel reasonably
acceptable to Sellers, to the effect that, were Sellers and Purchaser to have
consummated the transactions contemplated by this Agreement as of such date, or
at any time thereafter up to the date of such opinion, they would have been in
compliance with the merger provisions of the Competition Act (Canada),
including, without limitation, Section 123 regarding prenotification and
expiration of the twenty-one day waiting period.
"Consequential Damages" means any loss which is not the direct or
proximate result of any events described in Section 12.1 or Section 12.3 of
this Agreement.
"Contingent Liabilities" means those obligations (except for the
fulfilment of post-closing obligations under the Contracts) and liabilities
relating to the operation of the Business prior to the Effective Date and not
set forth on the Final Closing Balance Sheet (as defined in the U.S. Asset
Purchase Agreement) or under unfulfilled purchase orders or a Plan including,
without limitation, any such liability or obligation arising under any
Environmental Law, severance arrangement or with respect to any Taxes of the
Company or the Subsidiary.
"Contracts" means all contracts, agreements, license agreements,
purchase and sale orders, foreign exchange contracts, leases of machinery and
equipment, and conditional sales contracts and title retention agreements
relating to machinery and equipment, in each case, to which the Company or the
Subsidiary is a party and all other commitments and binding arrangements of the
Company or the Subsidiary, including, without limitation, the Contracts listed
in Section 7.11 of the Disclosure Letter.
"Date of the Notice of Claim" - See Section 12.7.
"Disclosure Letter" means the letter dated as of the date of this
Agreement and delivered by Sellers to Purchaser pursuant to Section 6.1(b)
simultaneously with the execution and delivery of this Agreement.
"Effective Date" means September 29, 1996 at 11:59 p.m. (Toronto time)
or such other date and time agreed to in writing by Seller and Purchaser.
<PAGE>
4.
"Environmental Laws" means any applicable foreign, federal, provincial
or local law relating to: (a) releases or threatened releases of Hazardous
Substances; (b) the manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances or materials containing Hazardous Substances;
or (c) the imminent and substantial endangerment of the environment or the
protection of human health or safety.
"Facilities" means the facilities of the Company located on or forming
a part of the real property described in Section 7.12 of the Disclosure Letter.
"Financial Statements" means the unaudited consolidated balance sheet
and income statement for the Company and the Subsidiary at and for the year
ended December 31, 1995, and for the six months ended June 30, 1996 a copy of
each of which is set forth in Section 6.1(a) of the Disclosure Letter.
"First Anniversary" means the one-year anniversary of the Effective
Date.
"GAAP" means United States generally accepted accounting principles.
"Hazardous Substances" means any waste, contaminant, pollutant,
hazardous substance, toxic substance, hazardous waste, special waste, hazardous
industrial substance or waste, petroleum or petroleum-derived substance or
waste, or any constituent of any such substance or waste, to the extent
regulated under or defined by any applicable Canadian Environmental Law.
"Indemnitee" - See Section 12.4.
"Indemnitor" - See Section 12.4.
"Information" - See Section 13.1.
"Interlake Companies" has the meaning specified in the introductory
paragraph of this Agreement.
"Interlake Corporation" means The Interlake Corporation, a Delaware
corporation.
"Lien" means a mortgage, pledge, security interest, encumbrance, lien
or other charge, claim, right or adverse interest of another Person.
"Material Adverse Effect" means, relating to any occurrence of
whatever nature, any material adverse change in, or effect on:
(a) the Business or the present or projected business, revenues, financial
condition, operations or prospects of the Acquired Businesses, each taken as a
whole; or
<PAGE>
5.
(b) the ability of Sellers to timely and fully perform any of their
material obligations hereunder or under the U.S. Asset Purchase Agreement or
the U.K. Stock Purchase Agreement or any document to be delivered in connection
herewith or therewith;
provided however, that Material Adverse Effect shall not include (i) any
industry-wide changes in the industries in which the Company is operating, (ii)
any changes in the general economic conditions in the United States, Canada or
the United Kingdom, or (iii) any general changes in the securities market in the
United States, Canada or the United Kingdom.
"Multiemployer Plan" - See Section 7.16.
"Notice of Claim" - See Section 12.4.
"Packaging" has the meaning specified in the introductory paragraph of
this Agreement.
"Packaging's U.S. Businesses" has the meaning specified in the
Recitals to this Agreement.
"Payables" means all accounts payable, notes payable, contract
payables and other payables which are obligations of the Company or the
Subsidiary.
"Permitted Exceptions" means, with respect to the real property
described in Section 7.12 of the Disclosure Letter, any Liens or exceptions
which, alone or in the aggregate, do not materially detract from, or materially
interfere with, the ownership, occupancy or use of the properties subject
thereto or affected thereby, or otherwise materially impair the operations
conducted thereon or affect in any material respect the value of the properties
subject thereto.
"Person" means any natural person, company, corporation, limited
liability company, partnership, joint venture, trust, association or
unincorporated entity of any kind.
"Plans" - See Section 7.16.
"Post-Signing Escrow Agreement" means that certain Escrow Agreement
made and entered as of the Closing Date by and among Harris Trust & Savings
Bank, as escrow agent, Purchase and Seller, as heretofore or hereafter amended.
"Pre-Signing Escrow Agreement" means that certain Escrow Agreement
made and entered into as of July 29, 1996 among Harris Trust & Savings Bank,
as escrow agent, The Interlake Corporation and Purchaser, as heretofore or
hereafter amended.
"Purchase Price" - See Section 2.2.
"Purchased Shares" means 4,000 common shares in the capital of the
Company.
<PAGE>
6.
"Purchaser Indemnified Persons" - See Section 12.1.
"Receivables" means all accounts receivable, notes receivable,
contract receivables and other receivables owned by the Company or the
Subsidiary.
"Retained Assets" means all of the Company's rights, title and
interest in and to the following:
(a) all of the assets, properties, rights and business of the Company
relating to its material handling business, which is known as "Redirack"; and
(b) all other assets, properties, rights and interests of Sellers
described in Section 1.2 of the Disclosure Letter as Retained Assets.
"Retained Liabilities" means all of the Company's liabilities or
obligations relating to the said Redirack business except any obligations or
liabilities of the Plans with respect to former employees of the Redirack
business and except any liabilities or obligations for federal, provincial or
local taxes to the extent accrued on the Final Closing Balance Sheet (as defined
in the U.S. Asset Purchase Agreement).
"Returns" means all Tax returns and forms required to be filed or
furnished with respect to the Business.
"Samuel Tennessee" means Samuel Strapping Systems (Tennessee), Inc.,
a Delaware corporation.
"Samuel U.K." means Samuel Strapping Systems (U.K.) Ltd., a company
organized under the laws of England.
"Seller Indemnified Persons" - See Section 12.3.
"Senior Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of September 27, 1989 and Amended and Restated as of May 28,
1992, among The Interlake Corporation, certain of its subsidiaries, The
Interlake Corporation Employee StockOwnership Trust, acting by and through The
LaSalle National Bank, as Trustee, various banks party thereto, Chemical Bank,
as Administrative Agent, and The First National Bank of Chicago, as Co-Agent,
as amended, modified or supplemented from time to time.
"Subsidiary" means Seal-less Strapping Industries Limited, a company
organized under the laws of Canada.
"Subsidiary Stock" means 5 common shares in the capital of the
Subsidiary.
"Tangible Assets" means, as of the Effective Date, all tangible assets
of the Business other than the Retained Assets including all prepaid assets.
<PAGE>
7.
"Tangible Net Worth" means, as of the Effective Date, the value of the
Tangible Assets of the Business, minus the Balance Sheet Liabilities, in each
case as determined in accordance with Section 2.3 as of the Effective Date.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, profits, property, excise or other taxes, fees, stamp
taxes and duties, assessments or charges of any kind whatsoever (whether payable
directly or by withholding), together with all interest and all penalties,
additions to tax or additional amounts imposed by any taxing or other authority
with respect thereto.
"Third Anniversary" means the three-year anniversary of the Effective
Date.
"Third Party Debt" - See Section 2.2.
"Transferred Intercompany Account" means any account on the books and
records of the Company or the Subsidiary that evidences amounts either payable
by the Company or the Subsidiary to, or receivable by the Company or the
Subsidiary from, Packaging (but only to the extent relating to Packaging's U.S.
Businesses) or Precis (or any direct or indirect subsidiary of Precis).
"U.K. Stock Purchase Agreement" means the Stock Purchase Agreement
dated as of the date hereof by and among Strapping U.K., Interlake Companies and
the other shareholders of Precis, as amended or modified from time to time in
accordance with the terms thereof.
"U.S. Asset Purchase Agreement" means the Asset Purchase Agreement
dated as of the date hereof by and between Samuel Tennessee and Packaging, as
amended or modified from time to time in accordance with the terms thereof.
1.3 Interpretation. Unless the context of this Agreement otherwise
requires, (a) words of any gender shall be deemed to include each other gender,
(b) words using the singular or plural number shall also include the plural or
singular number, respectively, (c) references to "hereof", "herein", "hereby",
"hereunder" and similar terms shall refer to this entire Agreement and (d)
unless otherwise specified herein, each reference to an "Article" or "Section"
is to an Article or Section of this Agreement, and each reference to an
"Exhibit" is to an Exhibit attached to and made a part of this Agreement.
1.4 Exchange Rate. If any amounts calculated pursuant to, or referred to
in, this agreement in Canadian dollars are required for the purposes of this
agreement to be converted at any time into US dollars, a conversion rate equal
to the mid-range spot rate as at the close of business on 27 September 1996, as
set out in the Wall Street Journal shall be applied.
<PAGE>
8.
ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE
AND OTHER RELATED MATTERS
-------------------------
2.1 Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing on the Closing Date, Sellers shall sell,
assign, convey, transfer and deliver to Purchaser, and Purchaser shall acquire
from Sellers, the Purchased Shares.
2.2 Consideration.
(a) The purchase price (the "Purchase Price") payable by Purchaser for
the Purchased Shares shall be an amount equal to (i) THIRTY MILLION DOLLARS
($30,000,000), plus (ii) the amount of all cash and cash equivalents of the
Company and the Subsidiary as of the Effective Date, plus (iii) the amount of
any and all Receivables of the Company and the Subsidiary as of the Effective
Date that are owed to the Company or the Subsidiary by either Seller or any
Affiliates of either Seller (other than any such Receivables that constitute
Transferred Intercompany Accounts), minus (iv) all indebtedness of the Company
or the Subsidiary for money borrowed from third party nonaffiliated lenders
("Third Party Debt") which is outstanding as of the Effective Date, minus (v)
the amount of any and all Payables of the Company and the Subsidiary as of the
Effective Date that are owed by the Company or the Subsidiary to either Seller
or any Affiliates of either Seller (other than any such Payables that constitute
Transferred Intercompany Accounts). The Purchase Price may also be adjusted as
provided for in Section 12.2(i). One day prior to the Closing Date, Sellers
shall provide to Purchaser a certification as to the amounts of each of the
items described in clauses (ii), (iii), (iv) and (v) of this Section 2.2(a).
(b) At the Closing on the Closing Date, Purchaser shall pay the
Purchase Price to Sellers, on a pro rata basis in accordance with the respective
percentage of Purchased Shares owned by Sellers as set forth in Section 7.21 of
the Disclosure Letter, less the sum of any amounts paid out to Sellers at or
prior to the Closing from the Purchaser Fund pursuant to the Pre-Signing Escrow
Agreement, by the wire transfer of immediately available federal funds to the
respective accounts designated in writing by Sellers to Purchaser prior to the
Closing Date.
2.3 Sales and Transfer Taxes. The Sellers shall pay one-half and the
Purchaser shall pay one-half of the cost of any and all stamp, transfer, goods
and services, sales, purchase, use, filing, value added, excise and similar
taxes and fees which arise out of the transactions contemplated by this
Agreement, the U.S. Asset Purchase Agreement and the U.K. Stock Purchase
Agreement including, without limitation, any stamp or transfer tax or filing fee
relating to the transfer of shares of capital stock, whether now in effect or
hereafter adopted and regardless of upon whom said tax or fee is imposed, but
excluding any tax on or measured by net or gross income or gain of either
Seller.
<PAGE>
9.
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES
-----------------------------------
3.1 Closing. The term "Closing" as used herein shall refer to the
actual sale, assignment, conveyance, transfer and delivery of the Purchased
Shares to Purchaser in consideration for the payment to Sellers of the Purchase
Price. Subject to Section 11.1 hereof, the Closing shall take place at the
offices of Smith Lyons, Suite 5800, Scotia Plaza, 40 King Street West, Toronto,
Ontario M5H 3Z7, or at such other place in Canada as is mutually agreed in
writing by Sellers and Purchaser, at 10:00 a.m. Toronto time on the later of (A)
October 4, 1996, and (B) fifth Business Day occurring after the earliest date on
which all of the conditions set forth in Articles 9 and 10 below have been or
are capable of being satisfied or at such other time and/or date as is mutually
agreed in writing by Seller and Purchaser (the "Closing Date").
3.2 Closing Deliveries by Sellers. At the Closing on the Closing Date,
Sellers shall deliver to Purchaser:
(a) certificates representing all of the Purchased Shares and the
Subsidiary Stock, with the certificates representing the Purchased Shares being
either duly endorsed or accompanied by stock powers duly executed;
(b) written resignations, effective on the Closing Date, of those
directors of the Company and the Subsidiary that Purchaser shall have requested
prior to the Closing together with written resignations of those officers of the
Company and the Subsidiary who are not employees thereof;
(c) releases in favour of the Company and the Subsidiary from those
persons referred to in Section 3.2(b);
(d) all corporate and other records of the Company and the Subsidiary
held by Sellers, including but not limited to, minute books, stock books and
registers, corporate seals, books of account, Contracts, financial records and
personnel records;
(e) Articles of Incorporation or Amalgamation of each of the Company
and the Subsidiary, each certified as of the date not earlier than ten (10) days
prior to the Closing Date by Industry Canada, Corporations Directorate;
(f) certificates dated as of a date not earlier than ten (10) days
prior to the Closing Date, of the appropriate governmental offices where the
Company and the Subsidiary are organized and each of the jurisdictions in which
the Company and the Subsidiary are qualified to transact business as a foreign
entity as to the qualification of the Company and the Subsidiary, as the case
may be, in such jurisdictions;
(g) By-laws of each of the Company and the Subsidiary certified, as of
the Closing Date, by its corporate secretary;
<PAGE>
10.
(h) certified copies of (i) minutes or unanimous written consents of
the Board of Directors of each Seller approving the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement and (ii) the consent of either the majority of
the directors of the Company or the majority of the shareholders of the Company
to the sale of the Purchased Shares pursuant to this Agreement;
(i) a certificate, dated the Closing Date, executed by an appropriate
officer of each Seller, as required by Section 9.2;
(j) a certificate pursuant to section 116 of the Income Tax Act
(Canada) with respect to the sale of the Purchased Shares;
[(k) Intentionally deleted;] and
(l) such other documents as Purchaser may reasonably request to carry
out the purposes of this Agreement, including, but not limited to, the documents
to be delivered pursuant to Article 9.
3.3 Closing Deliveries by Purchaser. At the Closing on the Closing Date,
Purchaser shall deliver to Sellers:
(a) the payment to be delivered by Purchaser pursuant to Section
2.2(b);
(b) certified copies of minutes or unanimous written consents of the
Board of Directors of Purchaser approving the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated under this Agreement;
(c) the opinion of Smith Lyons, Canadian counsel for Purchaser, dated
the Closing Date, covering the matters set forth in the form attached hereto as
Exhibit 3.3(c);
(d) the certificate, dated the Closing Date, executed by the
appropriate officer of Purchaser, as required by Section 10.2;
(e) releases of the officers and directors referred to in Section
3.2(b), in form reasonably satisfactory to the Sellers; and
(f) such other documents as Sellers may reasonably request to carry
out the purposes of this Agreement, including, but not limited to, the documents
to be delivered pursuant to Article 10.
3.4 Cooperation. Sellers and Purchaser shall, on request on and after the
Closing Date, cooperate with one another by furnishing any and all additional
information, executing and delivering any and all additional documents and/or
instruments and doing any and all such other things as may be reasonably
requested by the other party to consummate or otherwise implement the
transactions contemplated by this Agreement.
<PAGE>
11.
ARTICLE 4
PRE-CLOSING FILINGS
-------------------
4.1 Government Filings. Sellers and Purchaser covenant and agree with
each other to (a) promptly file, or cause to be promptly filed, with any
Canadian agency or any province or local governmental body or agency, all
notices, applications or other documents as may be necessary to consummate the
transactions contemplated hereby, including, without limitation, any and all
filings or notices required under the Competition Act (Canada) and (b)
thereafter diligently pursue all consents or approvals from any such
governmental agencies or bodies as may be necessary to consummate the
transactions contemplated hereby.
ARTICLE 5
PRE-CLOSING COVENANTS
---------------------
5.1 Conduct of Business Prior to Closing. (a) During the period from
the date hereof to the Closing Date, Sellers shall cause the Company to:
(i) use its reasonable efforts to preserve substantially intact the
business organization of the Business, to keep available the
services of the present employees of the Business and to
preserve the current relationships of the Company with the
customers, suppliers and other Persons having a material
business relationship with the Business; and
(ii) operate the Business in the ordinary course consistent with
prior practice, except as set forth in Section 5.1(a) of the
Disclosure Letter or as otherwise contemplated by this
Agreement.
(b) Each Seller covenants and agrees with Purchaser that during the
period from the date hereof to the Closing Date such Seller shall not, except
with the prior written consent of Purchaser, cause or permit the Company to: (i)
materially change its accounting methods, principles or practices; (ii)
establish or materially increase any bonus, insurance, severance, deferred
compensation, pension, profit sharing or other employee benefit plan or
otherwise increase the rates of compensation payable or to become payable to any
officer, employee, agent or consultant employed by the Company, except in the
ordinary course of business consistent with prior practice or in accordance with
existing compensation policies or the provisions of existing contracts entered
into prior to the date of this Agreement; (iii) sell, transfer, mortgage or
acquire any of the Company's assets other than in the ordinary course of
business consistent with prior practice or as disclosed to Purchaser prior to
the date hereof; (iv) merge or consolidate with any other Person; (v) declare,
pay or set aside for payment any dividend or other distribution in respect of
its capital stock, other than those payable in cash or Retained Assets; (vi)
directly or indirectly, redeem, purchase or otherwise acquire any shares of its
capital stock, other than for
<PAGE>
12.
cash or Retained Assets; (vii) issue, sell or otherwise dispose of any of its
shares of capital stock or grant any options, warrants or other rights to
acquire any of its shares of capital stock; or (viii) amend its charter
documents in any material respect; provided, however, that, prior to the
Closing, Sellers may cause the Company or the Subsidiary to pay to its employees
any or all bonuses accrued on or prior to the Closing Date.
(c) Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges and agrees that Sellers intend to cause the Company,
prior to or at the Closing, to cancel all intercompany service and supply
arrangements (other than the Acme License Agreements, which such agreements will
be assigned at the Closing under the U.S. Purchase Agreement by Packaging).
(d) Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges and agrees that, prior to the Closing, Sellers may cause
the Company to dividend, distribute or otherwise convey the Retained Assets to
Sellers or their designees, provided that the method of such conveyance has
received the prior written consent of the Purchaser, such consent not to be
unreasonably withheld.
(e) During the period from the Effective Date to the Closing Date,
Sellers will not cause and will not permit the Company or the Subsidiary to
dividend, distribute or otherwise convey any amount of cash or any other assets
to, or incur any new obligation to Seller or any of Seller's Affiliates other
than Precis or any of its direct or indirect subsidiaries or Packaging's U.S.
Buinesses; provided, that nothing in this Section 5.1(e) shall be deemed to
prohibit or prevent, during the period between the Effective Date and the
Closing, the settlement of intercompany accounts as contemplated by Section 9.10
and 10.10.
5.2 Access to Information. From the date hereof until the Closing, upon
reasonable notice, Sellers shall cause the Company, the Subsidiary and each of
their respective officers, directors, employees, auditors and agents to: (a)
afford the officers, employees and authorized agents and representatives of
Purchaser reasonable access, during normal business hours, to the offices,
properties, books and records of the Business, the Company and the Subsidiary
and (b) furnish to the officers, employees and authorized agents and
representatives of Purchaser such additional financial and operating data and
other information regarding the assets, properties, goodwill and business of the
Business, the Company and the Subsidiary as Purchaser may from time to time
reasonably request; provided, however, that such investigation shall not
unreasonably interfere with any of the businesses or operations of the Company
or any of its Affiliates or subsidiaries.
ARTICLE 6
FINANCIAL STATEMENTS; DISCLOSURE LETTER;
FINANCING COMMITMENT LETTER
---------------------------
6.1 Pre-Signing Deliveries by Sellers. Sellers have heretofore delivered
to Purchaser:
<PAGE>
13.
(a) the Financial Statements; and
(b) the Disclosure Letter, together with (or preceded by) a copy of
each Contract listed in Section 7.11 thereof and containing all of the
information required by the terms of this Agreement to be contained therein.
6.2 Pre-Signing Deliveries by Purchaser. Purchaser has heretofore
delivered to Sellers a true and complete copy of the written binding commitment
of a reputable lending institution to provide the funds necessary for Purchaser,
Samuel Tennessee and Samuel U.K. to purchase the Purchased Shares hereunder,
Packaging's U.S. Business under the U.S. Asset Purchase Agreement and all of the
outstanding shares of Precis under the U.K. Stock Purchase Agreement.
ARTICLE 7
WARRANTIES AND REPRESENTATIONS OF SELLERS
-----------------------------------------
Sellers, jointly and severally, warrant and represent to Purchaser
(which warranties and representations shall, subject to Section 12.2(a), survive
the Closing) as follows:
7.1 Incorporation and Qualification of the Company, the Subsidiary and
Sellers.
(a) The Company is a corporation validly existing under the laws of
Canada and has all requisite corporate power and authority to own, operate and
lease the assets it now owns, operates or leases and to carry on the Business as
it is currently conducted.
(b) Except as set forth in Section 7.1 of the Disclosure Letter, the
Company is duly licensed or qualified to do business in each jurisdiction in
which the properties owned or leased by it or the operation of the Business
makes such licensing or qualification necessary, except where the failure to be
so licensed or qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) The Subsidiary is a corporation validly existing under the laws of
Canada and has all requisite corporate power and authority to own, operate and
lease the assets it now owns, operates or leases and to carry on its business as
it is currently conducted.
(d) The Subsidiary is duly licensed or qualified to do business in
each jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(e) Each Seller is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, operate and lease the assets it now owns, operates or
leases and to carry on its business as it is currently conducted.
<PAGE>
14.
7.2 Authority. Each Seller has all requisite corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement by Sellers, the performance
by Sellers of their respective obligations hereunder and the consummation by
Sellers of the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of each Seller. This Agreement has been
duly executed and delivered by each Seller and (assuming the due authorization,
valid execution and delivery hereof by Purchaser) is a legal, valid and binding
obligation of each Seller, enforceable against each Seller in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
7.3 No Conflict. Assuming all consents, approvals, authorizations and
other actions described in Section 7.4 have been obtained and all filings and
notifications listed in Section 7.4 of the Disclosure Letter have been made or
given (except as may result from any facts or circumstances relating solely to
Purchaser), the execution, delivery and performance of this Agreement by Sellers
do not and will not: (a) except as set forth in Section 7.3 of the Disclosure
Letter, or as would not have a Material Adverse Effect, conflict with or violate
any provision of the organizational documents of the Company or either Seller;
(b) except as set forth in Section 7.3 of the Disclosure Letter or as would not
have a Material Adverse Effect, result in any breach of, or constitute a default
(or event with which the giving of notice or lapse of time, or both, would
become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Lien on any of the assets of the Company or the Purchased Shares pursuant to,
any Contract or any instrument, license, agreement or commitment to which either
Seller is a party or by which either Seller is bound; or (c) except as set forth
in Section 7.3 of the Disclosure Letter or as would not have a Material Adverse
Effect, conflict with or violate any law, rule, regulation, order, writ,
judgment, injunction or decree applicable to the Company, the Subsidiary, the
Purchased Shares, the Business or either Seller.
7.4 Consents and Approvals. The execution and delivery by Sellers of this
Agreement do not, and compliance by Sellers with the terms hereof and
consummation by Sellers of the transactions contemplated hereby will not,
require either Seller or the Company to obtain any consent, approval,
authorization or other action of, or make any filing with or give any notice to,
any court, administrative agency or other governmental authority, except (a) as
disclosed in Section 7.4 of the Disclosure Letter, (b) pursuant to the
applicable requirements of the Competition Act (Canada), (c) where failure to
obtain such consents, approvals, authorizations or actions, make such filings or
give such notices would not have a Material Adverse Effect and (d) as may be
necessary as a result of any facts or circumstances relating solely to
Purchaser.
7.5 Brokers. Neither this Agreement nor the sale of the Purchased Shares
nor any other transaction contemplated by this Agreement was induced or procured
through any Person acting on behalf of or representing either Seller or any of
their respective Affiliates as broker, finder, investment banker, financial
advisor or in any similar capacity.
<PAGE>
15.
7.6 No Subsidiaries. Except for the Subsidiary Stock, the Company does not
own any capital stock or other equity securities or any other direct or indirect
equity interest in any Person.
7.7 Intellectual Property.
(a) To the knowledge of Sellers, except as set forth in Section 7.7
or 7.14 of the Disclosure Letter, there is not now and has not been during the
past three (3) years any infringement, misuse or misappropriation in any
material respect by the Company or the Subsidiary of any valid patent,
trademark, trade name, service mark, copyright or trade secret which is owned by
any other Person, and there is not now any existing or, to the knowledge of
Sellers, any threatened claim asserted in writing against the Company or the
Subsidiary of any infringement, misuse or misappropriation in any material
respect by the Company or the Subsidiary of any patent, trademark, trade name,
service mark, copyright or trade secret. All material patents, trademarks,
service marks, tradenames, copyrights, and all applications and registrations
thereof, used in connection with the operation of the Business are set forth in
Section 7.7 of the Disclosure Letter ("Proprietary Rights"). Except as set forth
in Section 7.7 of the Disclosure Letter, Sellers and their Affiliates are the
sole and exclusive owners of, or have the sole and exclusive right to use, the
Proprietary Rights.
(b) Except as described in Section 7.14 of the Disclosure Letter,
there is no pending or threatened claim by the Company or the Subsidiary against
any other Person for infringement, misuse or misappropriation of any patent,
trademark, trade name, service mark, copyright or trade secret owned by the
Company or the Subsidiary.
7.8 Financial Statements. Each of the Financial Statements is consistent
with the books and records of the Company and the Subsidiary and fairly presents
the financial condition, assets and liabilities of the Business as of their
respective dates and the results of operations for the periods related thereto
in accordance with GAAP consistently applied among the periods which are the
subject of the Financial Statements.
7.9 Compliance with Laws. On the Closing Date, to the knowledge of
Sellers, neither the Company nor the Subsidiary will be in violation of any law,
rule or regulation, or any order, judgment or decree, in any case applicable to
the Company or the Subsidiary or by which any of their respective properties are
bound or affected, except (a) as set forth in Section 7.9 of the Disclosure
Letter and (b) for violations the existence of which could not reasonably be
expected to have a Material Adverse Effect; provided, however, that Purchaser
acknowledges and agrees that Sellers' representations under this Section 7.9 are
not made with respect to any Environmental Laws and that Sellers'
representations and warranties with respect to Environmental Laws are made only
in Section 7.18.
7.10 Licenses and Permits. Except as set forth in Section 7.10 of the
Disclosure Letter, to the knowledge of Sellers, each of the Company and the
Subsidiary has, or has applied for, all material governmental licenses,
franchises, permits, approvals, authorizations, exemptions, certificates,
registrations and similar documents or instruments necessary to carry on the
Business as it is currently conducted, except for such governmental licenses,
franchises, permits, approvals,
<PAGE>
16.
authorizations, exemptions, certificates, registrations and similar documents or
instruments the absence of which would not have a Material Adverse Effect;
provided, however, that Purchaser acknowledges and agrees that Sellers'
representations under this Section 7.10 are not made with respect to any
Environmental Laws and that Sellers' representations and warranties with respect
to Environmental Laws are made only in Section 7.18.
7.11 Material Contracts.
(a) Section 7.11 of the Disclosure Letter lists or describes all
currently existing Contracts which involve an executory obligation of more than
$100,000 in any one calendar year, except Contracts which are terminable by the
Company or the Subsidiary without penalty on no more than thirty (30) days'
notice. Complete and correct copies of all Contracts listed in Section 7.11 of
the Disclosure Letter have been delivered to or made available for inspection by
Purchaser.
(b) Neither the Company or the Subsidiary nor, to the knowledge of
either Seller, any other Person, is in material breach of, or material default
under, any Contract and no event or action has occurred, is pending or, to the
knowledge of either Seller, is threatened, which after the giving of notice, or
the lapse of time, or both, could reasonably be expected to constitute or result
in a material breach by the Company or the Subsidiary or, to the knowledge of
either Seller, any other Person, under any Contract.
7.12 Real Properties. Section 7.12 of the Disclosure Letter sets forth a
true and complete list and brief description of all real property owned, leased
or used by the Company or the Subsidiary, as landlord, tenant or otherwise. The
Company has good and marketable title to all real properties described in
Section 7.12 of the Disclosure Letter as being owned by it, except for Permitted
Exceptions and except as disclosed in the Disclosure Letter.
7.13 Tangible Personal Property. The Company has good title to all the
material assets consisting of tangible personal property purported to be owned
by it and valid and subsisting leases with respect to all of the material assets
consisting of tangible personal property purported to be leased by the Company.
All such owned tangible personal property is owned free and clear of all Liens,
except: (a) as set forth in Section 7.13 of the Disclosure Letter; (b) liens for
Taxes and assessments not yet payable; (c) liens for Taxes, assessments and
charges and other claims, the validity of which the Company is contesting in
good faith; and (d) imperfections of title and Liens the existence of which
could not be reasonably expected to have a Material Adverse Effect.
7.14 Litigation. Except as set forth in Section 7.14 of the Disclosure
Letter, (a) there are no actions, claims, proceedings or governmental
investigations pending or, to the knowledge of either Seller, threatened against
the Company, the Subsidiary, the Business or any of the assets of the Company or
the Subsidiary at law or in equity, before or by any federal, provincial or
municipal court, agency or other governmental entity, or by any other Person,
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and (b) neither the Business nor any of the assets of
the Company or the Subsidiary is subject to any
<PAGE>
17.
order, judgment or decree of any court or governmental agency having or which
could reasonably be expected to have a Material Adverse Effect.
7.15 Labour Matters. Section 7.15 of the Disclosure Letter contains a list
of the collective bargaining agreements to which the Company or the Subsidiary
is a party. Except as disclosed in Section 7.15 of the Disclosure Letter, (a)
there are no labour controversies pending or, to the knowledge of either Seller,
threatened against the Company or the Subsidiary which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
and (b) there are no grievances outstanding, or unfair labour practice
complaints pending before any applicable authorities, against the Company or the
Subsidiary under any such agreement or contract which could reasonably be
expected to have a Material Adverse Effect.
7.16 Employee Benefit Matters. Section 7.16 of the Disclosure Letter lists
all employee benefit plans contributed to or entered into by the Company or the
Subsidiary, or to which the Company or the Subsidiary is or has been obligated
to contribute, in either case within the last five (5) years (the "Plans").
Except as set forth in Section 7.16 of the Disclosure Letter, no Plan is a
multiemployer plan established pursuant to a trust agreement or a collective
bargaining agreement (a "Multiemployer Plan"). With respect to the Plans,
Sellers further represent and warrant to Purchaser that, to the best of their
knowledge and belief and except as set forth in Section 7.16 of the Disclosure
Letter or to the extent that the failure of any of the representations set forth
in this sentence could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect:
(a) Each Plan has been duly registered where required, and is in good
standing under, conforms in all material respects to, and its administration
complies with, all applicable legislation, regulatory requirements, orders or
governmental rules, including without limitation, the Pension Benefits Act
(Ontario), the Income Tax Act (Canada) and, where required, Revenue Canada
Customs, Excise and Taxation Information Circular 72-13R8 (collectively,
"Applicable Legislation").
(b) All of the Plans are in full force and effect as written, and the
Company has performed all material obligations required to be performed by it
under, and is not in material default under, or in material violation of any
Plan. Without limiting the generality of the foregoing, all premiums,
contributions and other payments required to be made by the Company and any
other party under the terms of any Plan maintained by the Company with respect
to the Business that is a pension plan as defined in Section 1 of the Pension
Benefits Act (Ontario) (a "Pension Plan") have been made for all such Pension
Plans, and no amounts are owed in respect of the period prior to the Effective
Date. All amounts properly accrued to the date hereof as liabilities of the
Company under or with respect to each Plan which have not been paid are set
forth in Section 7.16 of the Disclosure Letter. The Pension Plans are funded on
a proper actuarial basis (consistently applying the assumptions used in the
actuarial reports of September 29, 1995) having regard to the benefits to be
provided by such plans.
(c) All premiums, contributions and other payments required to be made
under all Applicable Legislation by the Company before the Closing Date with
respect to the Pension Plans
<PAGE>
18.
will have been made before the Closing Date to each of the funds established for
the Pension Plans in accordance with Applicable Legislation. From the date
hereof to the Closing Date, the Company shall not improve or promise to improve
any benefits provided or to be provided in accordance with the terms of the
Plans as of the date hereof, unless required by law or collectively negotiated
agreement.
Sellers may, however, cause the Company to pay prior to Closing any
bonuses to the extent accrued to such time.
(d) None of the Pension Plans has been wound-up in whole or in part or has
been subject to a revocation, an order or a declaration by the Pension
Commission of Ontario or the Superintendent of Pensions pursuant to the
provisions of the Pension Benefits Act (Ontario), or by other applicable pension
authorities pursuant to Applicable Legislation. No proceedings by the
Superintendent of Pensions to wind-up or revoke the registration status of any
of the Pension Plans pursuant to the provisions of the Pension Benefits Act
(Ontario) have been ordered, instituted or threatened by the Superintendent of
Pensions or any other individual, and no similar proceedings have been ordered,
instituted or threatened by any other applicable pension authority.
(e) There are no material actions, suits or claims pending, other than
routine claims for benefits, or, to the knowledge of the Company, threatened
against the Company in respect of employees who are members of any of the
Pension Plans, against any of the Pension Plans, or against the assets of any
Pension Plan.
(f) The Company does not maintain any Plan providing post-retirement
benefits other than pension benefits provided under the Pension Plans registered
in accordance with the Applicable Legislation. The financial obligation for
post-retirement benefits has been determined in accordance with generally
accepted actuarial practice and is reflected in the Financial Statements in
accordance with GAAP. The Company is not currently liable for post-retirement
benefits with respect to the Business under any Plan which has been wound up and
is not now maintained by the Company.
7.17 Taxes. Each of the Company and the Subsidiary has duly and timely
filed with the appropriate Canadian or foreign federal, provincial, state,
municipal and local authorities or Governmental Agencies all tax returns and
reports required to be filed by it; all such returns and reports were complete
and correct in all material respects; and, except to the extent reflected or
reserved against in the Final Closing Balance Sheet (as defined in the U.S.
Asset Purchase Agreement), each of the Company and the Subsidiary has paid all
taxes, levies, duties, assessments, deficiencies and imposts of any nature or
kind and any related penalties and interest (collectively, "Taxes") due to, or
claimed to be due from it by, any taxing authority. The Financial Statements
include adequate provision for all Taxes which relate to the business,
operations, properties or assets of the Company or the Subsidiary through the
periods indicated thereon which are not yet due and owing to the appropriate
taxing authority. All Taxes that the Company or the Subsidiary is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the appropriate taxing authority.
There are no Tax-related liens on the assets of the Company or the Subsidiary.
Neither
<PAGE>
19.
the Subsidiary nor the Company has executed or filed with any taxing authority
any agreement extending the period for assessment or collection of Taxes. The
Company is not a party to any pending action or proceeding, nor (to the best of
the knowledge of Sellers or the Company) is any such action or proceeding
threatened by any Governmental Agency, for the collection of Taxes. No claim for
assessment or collection of Taxes has been asserted against the Company or the
Subsidiary nor (to the knowledge of Sellers or the Company) is there any basis
for any such claim. No issue has been raised by any taxing authority in respect
of an audit or examination of any Tax return or report filed by the Company or
the Subsidiary which has not been settled or resolved, and no examination or
audit of any Tax return or report filed by the Company or the Subsidiary is
currently in progress or, to the best of the knowledge of Sellers or the
Company, threatened or contemplated by any Governmental Agency other than by the
Province of Ontario. The Company or the Subsidiary is not a party to any
agreement providing for the sharing or allocation of any Tax liability.
Notwithstanding any other provision of this Section 7.17, Sellers shall not be
deemed to be in breach of this Section 7.17 by virtue of any Taxes with respect
to any period including or ending prior to the Effective Date which results from
Purchaser causing the write-up of assets.
7.18 Environmental Compliance.
(a) Compliance. To the knowledge of Sellers, except as set forth in
Section 7.18 of the Disclosure Letter (i) the Company and the Subsidiary are in
compliance with all applicable Environmental Laws as presently in effect, (ii)
the Company possesses all required permits, licenses, certifications and
approvals under the Environmental Laws as presently in effect relating to the
use, occupancy or operation of the Business, and (iii) the Company and the
Subsidiary are in compliance with all requirements or conditions imposed under
their permits, licenses, certifications and approvals, and have filed all
required notices and applications.
(b) No Hazardous Substance. Except as set forth in Section 7.18 of the
Disclosure Letter, neither the Company nor the Subsidiary has ever generated,
used, transported, treated, stored, disposed of or otherwise handled any
Hazardous Substance at any site, location or facility in connection with the
use, occupancy or operation of the Business, other than in compliance in all
material respects with Environmental Laws in effect at the time in question.
Except as set forth in Section 7.18 of the Disclosure Letter, neither the
Company nor the Subsidiary has owned or operated any underground storage tanks
("USTs") in connection with the use or occupancy by the Company or the
Subsidiary of its real property or the operation of its Business, other than in
compliance in all material respects with all applicable Environmental Laws.
Except as set forth in Section 7.18 of the Disclosure Letter, to the knowledge
of Seller, there has been no release, spill or discharge of any Hazardous
Substance in connection with the use or occupancy of its real property or the
operation of its Business in material violation of or requiring reporting,
removal or remediation under any Environmental Laws in effect at the time in
question which has not been reported, removed or remediated, as the case may be.
(c) No Actions or Proceedings. Except as set forth in Section 7.18 of the
Disclosure Letter, neither the Company nor the Subsidiary is subject to, nor, to
Sellers' knowledge, is the subject of, any threatened private, administrative or
judicial inquiry, investigation, order or action
<PAGE>
20.
resulting from or relating to violations of or obligations under Environmental
Laws, including without limitation liabilities relating to the generation,
transportation, treatment, storage, disposal or other handling of Hazardous
Substance in connection with the use or occupancy of its real property or the
operation of its Business.
(d) Other Conditions. Except as set forth in Section 7.18 of the
Disclosure Letter, to the knowledge of the Sellers, no facts, events or
conditions exist which could reasonably be expected to interfere with or prevent
continued compliance with applicable Environmental Laws, as in effect on the
date hereof, or result in any common law or statutory liability, or otherwise
form the basis of any claim, action, suit, proceeding, hearing or investigation,
relating to the release, discharge, generation, use, transportation, treatment,
storage, disposal or other handling of Hazardous Substance in connection with
the use, occupancy or operation of the real estate or the Business.
7.19 Inventory. All of the inventories which are reflected in the balance
sheet dated June 30, 1996, constituting a part of the Financial Statements were
purchased or acquired in the ordinary and regular course of the conduct of the
Business and in a manner consistent with the regular inventory practices
relating to the Business, and have been or will be used or sold in the ordinary
and regular course of the Business and in a manner consistent with the Company's
or the Subsidiary's regular inventory practices; all of the inventories which
are reflected in the balance sheets constituting a part of the Financial
Statement were priced at the lower of cost (on the first-in-first-out basis), or
market, and were (as to classes of items inventories and methods of accounting
and pricing) determined in a manner consistent with prior years; and all
inventories which have been purchased or acquired by the Company or the
Subsidiary for the Business since June 30, 1996 were purchased or acquired in
the ordinary and regular course of the Business and in a manner consistent with
the Company's or the Subsidiary's regular inventory practices and have been or
will be used or sold in the ordinary and regular course of the Company's or
Subsidiary's business and in a manner consistent with the Company's or the
Subsidiary's regular inventory practices.
7.20 Receivables. All of the Receivables which are reflected in the balance
sheets constituting a part of the Financial Statements represent, and all of the
Receivables as of the Closing Date will represent, valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the Closing Date, all of the Receivables set
forth on the Seller Closing Balance Sheet delivered under the U.S. Asset
Purchase Agreement will be current and enforceable (but no representation is
hereby made as to their collectibility). There will be as of the Closing Date no
contest, claim or asserted right of set-off in any agreement relating to the
amount or validity of any Receivable set forth on the Seller Closing Balance
Sheet delivered under the U.S. Asset Purchase Agreement except those arising in
the ordinary course of business. The Seller has delivered or made available to
Purchaser a complete and accurate list of all Receivables as of June 30, 1996,
which list sets forth the aging of such Receivables.
7.21 Capitalization.
<PAGE>
21.
(a) The total number of shares of capital stock that the Company and
the Subsidiary are authorized to issue, the number of such shares that are
issued and outstanding and the respective holders of such shares are set forth
in Section 7.21 of the Disclosure Letter. The Purchased Shares constitute the
only shares of capital stock of the Company which are issued and outstanding;
and the Subsidiary Stock constitutes the only shares of capital stock of the
Subsidiary which are issued and outstanding.
(b) The Purchased Shares and the Subsidiary Stock are validly issued,
fully paid and nonassessable and are not subject to any preemptive rights, and,
except as disclosed in Section 7.21 of the Disclosure Letter, there are no
voting trust agreements or other contracts, agreements or arrangements
restricting voting or dividend rights or transferability with respect to either
the Purchased Shares or the Subsidiary Stock.
(c) Except as disclosed in Section 7.21 of the Disclosure Letter, (i)
Sellers own the Purchased Shares free and clear of all Liens, and (ii) the
Company owns the Subsidiary Stock free and clear of all Liens.
(d) Except as disclosed in Section 7.21 of the Disclosure Letter,
there are no outstanding options, warrants, rights, privileges or other
arrangements, preemptive, contractual or otherwise, to acquire any shares of
capital stock or other securities of the Company or the Subsidiary.
7.22 Undisclosed Liabilities. On June 30, 1996, neither the Company nor the
Subsidiary had any material debts, liabilities or obligations of a nature
required to be reflected on a balance sheet prepared in accordance with GAAP,
which were not fully disclosed, reflected or reserved against in the Balance
Sheet, except as disclosed in the Disclosure Letter. Except for current
liabilities or obligations which have been incurred since June 30, 1996 in the
ordinary course of business and except as disclosed in the Disclosure Letter or
as reflected on the Final Closing Balance Sheet (as defined in the U.S. Asset
Purchase Agreement), since June 30, 1996, neither the Company nor the Subsidiary
has incurred any material debt, liability or obligation of a nature required to
be reflected on a balance sheet prepared in accordance with GAAP.
7.23 Books and Records. The books and records maintained by the Company and
the Subsidiary are fully and accurately maintained in all material respects. The
minute books of the Company or the Subsidiary are complete and accurate in all
material respects and reflect all material actions taken and resolutions passed
by the directors and shareholders of the Company and the Subsidiary since their
respective dates of incorporation, and all such meetings were duly called and
held, and the share certificate books, register of shareholders, register of
transfer and registers of directors are complete and accurate in all material
respects.
7.24 Full Disclosure. The materials delivered by or on behalf of Seller in
connection with this Agreement, taken as a whole, fairly present the Business,
the Purchased Assets and the Assumed Liabilities.
<PAGE>
22.
7.25 DISCLAIMER OF WARRANTIES. EXCEPT WITH RESPECT TO THE WARRANTIES AND
REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLERS MAKE NO
WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, SUITABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE ASSETS OF THE COMPANY OR THE
SUBSIDIARY OR ANY PART THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF,
OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING
UNDERSTOOD BY PURCHASER THAT SUCH ASSETS ARE TO BE ACQUIRED BY IT BY VIRTUE OF
PURCHASER'S ACQUISITION OF THE COMPANY HEREUNDER "AS IS" ON THE DATE HEREOF, AND
IN THEIR PRESENT CONDITION, SUBJECT TO REASONABLE USE, WEAR AND TEAR BETWEEN THE
DATE HEREOF AND THE CLOSING DATE, AND PURCHASER SHALL RELY UPON ITS OWN
EXAMINATION THEREOF.
ARTICLE 8
WARRANTIES AND REPRESENTATIONS OF PURCHASER
Purchaser warrants and represents to Sellers (which warranties and
representations shall survive the Closing) as follows:
8.1 Incorporation and Qualification of Purchaser.
(a) Purchaser is a corporation validly existing and in good standing
under the laws of the Province of Ontario and has all requisite corporate power
and authority to own, operate and lease the assets it now owns, operates or
leases and to carry on its business as currently conducted.
8.2 Authority. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser and (assuming the due authorization,
valid execution and delivery hereof by Sellers) is a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
8.3 No Conflict. Except as may result from any facts or circumstances
relating solely to Sellers, the execution, delivery and performance of this
Agreement by Purchaser do not and will not: (a) conflict with or violate any
provision of the Articles of Amalgamation or by-laws of Purchaser; (b) except as
would not have a material adverse effect on Purchaser or its ability to
<PAGE>
23.
consummate the transactions contemplated hereby, result in any breach of, or
constitute a default (or event which, with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Lien on any of the assets or properties of Purchaser pursuant
to, any instrument, license, agreement or commitment to which Purchaser is a
party or by which any of its assets or properties are bound; or (c) except as
would not have a material adverse effect on Purchaser or its ability to
consummate the transactions contemplated hereby, conflict with or violate any
law, rule, regulation, order, writ, judgment, injunction or decree applicable to
Purchaser or its assets or properties.
8.4 Consents and Approvals. The execution, delivery and performance by
Purchaser of this Agreement do not, and compliance by Purchaser with the terms
hereof and consummation by Purchaser of the transactions contemplated hereby
will not, require Purchaser to obtain any consent, approval, authorization or
other action of, or make any filing with or give any notice to, any court,
administrative agency or other governmental authority, except (a) pursuant to
the applicable requirements of the Competition Act (Canada) , (b) where failure
to obtain such consents, approvals, authorizations or actions, make such filings
or give such notice would not prevent Purchaser from performing any of its
material obligations under this Agreement and (c) as may be necessary as a
result of any facts or circumstances relating solely to Sellers.
8.5 Litigation. There are no actions, claims, proceedings or governmental
investigations pending against Purchaser or any of its assets or properties at
law or in equity, before any federal, provincial or municipal court, agency or
other governmental entity, or by any other Person, which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Purchaser or its ability to consummate the transactions contemplated hereby.
8.6 Brokers. Neither this Agreement nor the purchase of the Purchased
Shares or any other transaction contemplated by this Agreement was induced or
procured through any Person acting on behalf of or representing Purchaser or any
of its Affiliates as broker, finder, investment banker, financial advisor or in
any similar capacity.
8.7 Financial Ability. At the Closing on the Closing Date, Purchaser will
have the funds necessary to purchase the Purchased Shares and consummate the
transactions contemplated hereby.
8.8 Investment Purpose. Purchaser confirms that it is acquiring the
Purchased Shares for investment for its own account and not with a view to the
sale or distribution of any part thereof, and that Purchaser has no present
intention of selling, granting, participating in, or otherwise distributing the
same.
8.9 Investment Canada Act. Purchaser is not a non-Canadian for the
purposes of the Investment Canada Act.
<PAGE>
24.
ARTICLE 9
CONDITIONS TO CLOSING APPLICABLE TO PURCHASER
The obligation of Purchaser to consummate the transactions herein
contemplated is subject to the following conditions precedent:
9.1 No Termination. Neither Purchaser nor either Seller shall have
terminated this Agreement pursuant to Section 11.1.
9.2 Bring-Down of Sellers' Warranties. The warranties and representations
made by Sellers herein to Purchaser shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date, and
each Seller shall have performed and complied with all agreements, covenants and
conditions on its part required to be performed or complied with on or prior to
the Closing Date; and at the Closing, Purchaser shall have received a
certificate executed by the President or any Vice President of each Seller to
the foregoing effect.
9.3 Pending Actions. No investigation, action, suit or proceeding by any
governmental or regulatory commission, agency, body or authority (except
pursuant to the Competition Act), shall be pending on the Closing Date which
challenges, or is reasonably likely to result in a challenge to, this Agreement
or any transactions contemplated hereby or any action is brought by any other
person which is reasonably likely to prevent the consummation of the
transactions contemplated hereby.
9.4 Consents and Approvals. All consents, approvals or authorizations of
any governmental authority required to consummate the transactions contemplated
hereby (except as contemplated under Section 9.6) shall have been duly obtained
and shall be in full force and effect as of the Closing Date, and Sellers shall
have complied with all applicable provisions of law requiring any notification,
declaration, filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation (except pursuant
to the Competition Act).
9.5 All Necessary Documents. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of such
documents as Purchaser may reasonably request in connection with said
transactions, including without limitation, those documents to be delivered
pursuant to Section 3.2.
9.6 Competition Act (Canada). Upon consummation of the transactions
contemplated hereby, the Parties shall be in compliance with the merger
provisions of the Competition Act (Canada) , including Section 123 regarding
pre-notification and expiration of the twenty-one day waiting period, in respect
of the transactions contemplated by this Agreement.
<PAGE>
25.
9.7 Termination of Certain Liens. Purchaser shall have received evidence,
in form and substance reasonably satisfactory to it, of the termination,
cancellation and release of the Liens set forth in Section 7.13 of the
Disclosure Letter, which are to be satisfied at or prior to Closing.
9.8 U.S. and U.K. Transactions. The "Closing" contemplated under each of
the U.S. Asset Purchase Agreement and the U.K. Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
9.9 Consents under Senior Credit Agreement and Release of Liens. All
consents required under the Senior Credit Agreement and the documents and
instruments executed and delivered in connection therewith to permit Sellers to
consummate the transactions contemplated hereby shall have been delivered to
Sellers and all Liens on the Purchased Shares and the assets of the Company and
the Subsidiary under the Senior Credit Agreement and the other documents and
instruments executed and delivered in connection therewith shall have been
released and terminated.
9.10 Certain Required Payments. (a) At or prior to Closing, Sellers shall
have paid (or caused to be paid) to the Company any and all amounts then owed by
either Seller or any Affiliate of the Sellers to the Company, and shall have
caused to be paid by the Company to Sellers or any Affiliate any and all amounts
then owed by the Company to such Seller or Affiliate, (in each case, other than
any amounts represented by a Transferred Intercompany Account), but in each case
only to the extent that such amount constituted an adjustment to the Purchase
Price pursuant to Section 2.2; and
(b) At or prior to Closing, the Sellers shall have caused the Company to
pay an amount sufficient to retire the Third Party Debt
and shall have provided evidence satisfactory to the Purchaser of such payments.
Purchaser shall have the right to waive any of the foregoing
conditions precedent.
ARTICLE 10
CONDITIONS TO CLOSING APPLICABLE TO SELLERS
The obligation of Sellers to consummate the transactions herein
contemplated is subject to the following conditions precedent:
10.1 No Termination. Neither Purchaser nor either Seller shall have
terminated this Agreement pursuant to Section 11.1.
10.2 Bring-Down of Purchaser Warranties. All warranties and representations
made by Purchaser herein to Sellers shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and
<PAGE>
26.
as of the Closing Date, and Purchaser shall have performed and complied with all
agreements, covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date; and at the Closing, Sellers shall
have received a certificate executed by the President or any Vice President of
Purchaser to the foregoing effect.
10.3 Pending Actions. No investigation, action, suit or proceeding by any
governmental or regulatory commission, agency, body or authority, shall be
pending on the Closing Date which challenges or is reasonably likely to result
in a challenge to this Agreement or any transaction contemplated hereby or any
action is brought by any other Person which is reasonably likely to prevent the
consummation of the transactions contemplated hereby.
10.4 Consents and Approvals. All consents, approvals or authorizations of
any governmental authority required to consummate the transactions contemplated
hereby shall have been duly obtained and shall be in full force and effect as of
the Closing Date, and Purchaser shall have complied with all applicable
provisions of law requiring any notification, declaration, filing, registration
and/or qualification with any governmental authority in connection with such
performance and consummation.
10.5 All Necessary Documents. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement, and
all documents incident thereto, shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of such documents
as they may reasonably request in connection with said transactions, including
without limitation, those documents to be delivered pursuant to Section 3.3.
10.6 Competition Act (Canada). Upon the consummation of the transactions
contemplated hereby, the Parties shall be in compliance with the merger
provisions of the Competition Act (Canada), including Section 123 regarding
prenotification and expiration of the twenty-one day waiting period, in respect
of the transactions contemplated by this Agreement.
10.7 Termination of Certain Liens. Sellers shall have received evidence, in
form and substance reasonably satisfactory to them, of the termination,
cancellation and release of the Liens set forth in Section 7.13 of the
Disclosure Letter, which are to be satisfied at or prior to Closing.
10.8 U.S. and U.K. Transactions. The "Closing" contemplated under each of
the U.S. Asset Purchase Agreement and the U.K. Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
10.9 Consents under Senior Credit Agreement and Release of Lien. All
consents required under the Senior Credit Agreement and the documents and
instruments executed and delivered in connection therewith to permit Sellers to
consummate the transactions contemplated hereby shall have been delivered to
Sellers and all Liens on the Purchased Shares and the assets of the Company and
the Subsidiary under the Senior Credit Agreement and the other documents and
instruments executed and delivered in connection therewith shall have been
released and terminated.
<PAGE>
27.
10.10 Certain Required Payments. (a) At or prior to Closing, Sellers shall
have paid (or caused to be paid) to the Company any and all amounts then owed by
either Seller or any Affiliate of the Sellers to the Company (other than any
amounts represented by a Transferred Intercompany Account), but only to the
extent that such amounts constituted an adjustment to the Purchase Price
pursuant to Section 2.2.; and
(b) At or prior to Closing, Sellers shall have caused to be paid by the
Company to Sellers or their Affiliates all amounts then owed by the Company to
Sellers or their Affiliates (other than any amounts represented by a Transferred
Intercompany Account), but only to the extent that such amounts constituted an
adjustment to the Purchase Price pursuant to Section 2.2;
(c) At or prior to Closing, the Sellers shall cause the Company to pay
an amount sufficient to retire the Third Party Debt.
10.11 Approval of Preferred Stockholders of The Interlake Corporation. The
preferred stockholders of The Interlake Corporation shall have authorized
Sellers' execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
Sellers shall have the right to waive any of the foregoing conditions
precedent.
ARTICLE 11
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to the
Closing only as follows, and in no other manner:
(a) by mutual consent of Purchaser and Sellers;
(b) by Purchaser or by either Seller if the Closing of the
transactions contemplated by this Agreement shall not have occurred on or before
November 30, 1996, or such later date as may have been agreed upon in writing by
the parties hereto; provided, that the party seeking to terminate is not, in any
material respect, in breach of or in default under this Agreement; or
(c) by Purchaser or by either Seller if any representation or warranty
made herein for the benefit of Purchaser or Sellers, respectively, or in any
certificate, schedule or documents furnished to Purchaser or Sellers,
respectively, pursuant to this Agreement is untrue in any material respect, or
if either Seller or Purchaser, respectively, shall have defaulted in any
material respect in the performance of any material obligation under this
Agreement; or
(d) by Sellers if the Closing of the transactions contemplated by this
Agreement shall not have occurred on or before October 10, 1996, and no
Competition Act Opinion as of the
<PAGE>
28.
date of Seller's notice of termination shall have been delivered to Sellers by
Purchaser within five business days after the date of Seller's notice of
termination under this Section 11.(d).
Any termination pursuant to this Article 11, other than pursuant to
Section 11.1(d), shall not limit or restrict the rights or other remedies of any
party hereto. Upon termination of this Agreement pursuant to Section 11.1(d),
neither Sellers nor Purchaser shall have any further rights hereunder.
ARTICLE 12
INDEMNIFICATION
12.1 Sellers' Indemnity. After the Closing Date, Sellers and Interlake
Corporation, (collectively, the "Covenantors") agree, jointly and severally, to
indemnify and hold Purchaser, its Affiliates (and, after the Closing, but only
in connection with a Tax Claim (as defined below) the Company and the
Subsidiary) and their officers and directors (collectively, the "Purchaser
Indemnified Persons") harmless against any loss, damage or expense (including
reasonable attorneys' fees) ("Loss") suffered as the result of (a) any breach by
either Seller of this Agreement, (b) any inaccuracy in or breach of any of the
representations, warranties, covenants or agreements made by either Seller
herein or in the Disclosure Letter (including, without limitation an inaccuracy
in or breach of Section 7.17 hereof (a "Tax Claim")), (c) any inaccuracy or
misrepresentation in a certificate or affidavit delivered by either Seller at
the Closing in accordance with the provisions of this Agreement, (d) the
assertion by a third party of any Contingent Liabilities or the compliance by
Purchaser with any applicable law, rule or order resulting in any Contingent
Liabilities and (e) any Retained Liabilities.
12.2 Limitation. Purchaser's right to indemnification pursuant to Section
12.1 is subject to the following specific limitations:
(a) (i) After the Third Anniversary, no Purchaser Indemnified
Person shall be entitled to assert any right of indemnification with respect to
Section 7.18 for any loss, damage or expense suffered by such Purchaser
Indemnified Person, except that if, as of the Third Anniversary, there shall
then be pending any such claim under Section 12.1 of which such Purchaser
Indemnified Person shall have notified the Covenantors in writing on or prior to
the Third Anniversary, such Purchaser Indemnified Person shall continue to have
the right to be indemnified with respect to such claim.
(ii) After the expiration of the statute of limitations imposed
by any applicable law with respect to the underlying tax liability that forms
vthe basis for any Purchaser Indemnified Person's claims, such Purchaser
Indemnified Person shall not be entitled to assert any right of indemnification
under Section 12.1 with respect to any loss, damage or expense suffered by such
Purchaser Indemnified Person as the result of a breach by Sellers of their
representations and warranties set forth in Section 7.17, except that if, as of
the expiration of any such statute of limitation, there shall then be pending
any such claim under Section 12.1 of which such Purchaser Indemnified Person
shall have notified the Covenantors in writing on or prior to such expiration
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29.
date, such Purchaser Indemnified Person shall continue to have the right to be
indemnified with respect to such claim.
(iii) Except as set forth above, after the First Anniversary, no
Purchaser Indemnified Person shall be entitled to assert any other right of
indemnification under Section 12.1 (except with respect to the second sentence
of Section 7.12 or the first sentence of Section 7.13) for any loss, damage or
expense suffered by such Purchaser Indemnified Person, except that if, as of the
First Anniversary, there shall then be pending any such claim under Section 12.1
of which such Purchaser Indemnified Person shall have notified the Covenantors
in writing on or prior to the First Anniversary, such Purchaser Indemnified
Person shall continue to have the right to be indemnified with respect to such
claim.
(iv) If a claim shall be made by any taxing authority, or if any
Purchaser Indemnified Person shall become aware that any taxing authority is
considering any issues which may give rise to such a claim, that in either
event, if successful, would result in the indemnification of a Purchaser
Indemnified Person under Section 12.1 (as limited by Section 12.2) for a Tax
Claim or would result in a loss, damage or expense in the nature of a Tax Claim
that would be counted towards the Threshold under Section 12.2(b), such
Purchaser Indemnified Person shall notify the Covenantors in writing of such
claim or other circumstances within ten days of receipt by any Purchaser
Indemnified Person from the taxing authority of notice of such claim, or any
such Purchaser Indemnified Person becoming aware of such other circumstances.
(b) No Purchaser Indemnified Person shall be entitled to
indemnification hereunder for any indemnification claim until the amount of the
aggregate losses, damages and expenses required to be indemnified by the
Covenantors pursuant to Section 12.1 (as limited by Section 12.2) together with
the amount of the aggregate losses, damages and expenses required to be
indemnified by the "Sellers" and/or "Covenantors" under Sections 12.1 of each of
the U.S. Asset Purchase Agreement and the U.K. Stock Purchase Agreement, exceed
$750,000 (said amount is hereinafter sometimes referred to as the "Threshold"),
whereupon the Purchaser Indemnified Persons shall be entitled to indemnification
hereunder from the Covenantors only for the aggregate of indemnification claims
in excess of the Threshold. For the purposes of Section 12.1 and this Section
12.2, in computing such individual or aggregate amounts of claims, and the
amount set forth in (c) below, the amount of each claim shall be deemed to be an
amount (i) net of any tax benefit realized by a Purchaser Indemnified Person or
the Company by reason of deductibility of such liability or damage (determined
by multiplying such deductible amount by the then applicable highest effective
corporate income tax rate for the Purchaser Indemnified Person), and any
deferred tax benefit attributable to such liability or damage (determined on the
same basis but present-valued to the extent obtained through depreciation or
amortization deductions), (ii) net of any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by a Purchaser Indemnified
Person or the Company or from any third party with respect thereto, and (iii)
without limiting the generality of the foregoing, in respect of any Tax Claim
the net amount thereof after adjusting for any corresponding or related
deductions, refunds, losses or other tax benefits of any nature whatsoever for
any earlier or later taxation period, and to the extent any such benefits are
deferred, they shall be present valued on the same basis as above.
<PAGE>
30.
(c) The maximum liability of the Covenantors under this Agreement and
the "Sellers" and/or "Covenantors" under the U.S. Asset Purchase Agreement and
the U.K. Stock Purchase Agreement to the Purchaser Indemnified Persons for
indemnification claims hereunder and thereunder shall be $25,000,000 in
aggregate.
(d) Prior to seeking indemnification under Section 12.1, a Purchaser
Indemnified Person shall deliver appropriate claims to any relevant insurer or
third party obligated to indemnify or reimburse such Purchaser Indemnified
Person with respect to the loss, damage or expense giving rise to such claim. To
the extent necessary, a Purchaser Indemnified Person shall permit the
Covenantors to assert any such claims and shall cooperate, at the Covenantors'
expense, with the Covenantors' prosecution of such claims. In the event that any
Covenantor makes any payment to a Purchaser Indemnified Person for
indemnification for which such Purchaser Indemnified Person could have collected
on a claim against a third party, such Covenantor shall be entitled to pursue
claims and conduct litigations on behalf of such Purchaser Indemnified Person
and any of its successors, to pursue and collect on any indemnification or other
remedy available to such Purchaser Indemnified Person with respect to such claim
and generally to be subrogated to the rights of such Purchaser Indemnified
Person with respect thereto.
(e) As a condition to accepting the benefits of Section 12.1, each
Purchaser Indemnified Person acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Article 12. In furtherance of the foregoing, each Purchaser Indemnified Person
waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it may have against the Covenantors and each
other Seller Indemnified Person arising under or based upon any foreign,
federal, provincial, state or local statute, law, ordinance, rule or regulation
(including, without limitation, any such rights, claims or causes of action
arising under or based upon common law, Environmental Laws or otherwise).
(f) Except as specifically set forth in this Agreement, no Seller is
making any representation, warranty, covenant or agreement with respect to the
matters contained herein including, without limitation, the assets, liabilities
and operations of the Company and the Subsidiary. Anything herein to the
contrary notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of
Purchaser, after the consummation of the purchase and sale of the Purchased
Shares contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.
(g) No Covenantor shall have any liability under any provision of this
Agreement for any liabilities or damages to the extent that such liabilities or
damages relate to actions taken or not taken by the Company, the Subsidiary,
Purchaser or any other Purchaser Indemnified Person after the Closing Date. In
no event shall any Covenantor be liable for Consequential Damages.
(h) Each Purchaser Indemnified Person shall take all reasonable steps
to mitigate all liabilities and damages for which a claim may be made against
Covenantors pursuant
<PAGE>
31.
to Section 12.1 upon and after becoming aware of any event which could
reasonably be expected to give rise to such liabilities or damages. Purchaser
shall cause the Company to refrain from issuing credit notes against the
Receivables unless Sellers have consented thereto.
(i) If at any time or from time to time either any Covenantor makes
any indemnification payment under Section 12.1 or Section 12.2, such payment
shall be deemed for all purposes hereto to constitute a reimbursement of a
portion of the Purchase Price equal to the amount so paid, and upon such
reimbursement, the Purchase Price shall be deemed to have been reduced
accordingly for all purposes hereof.
(j) (A) Upon notice from Purchaser to the Covenantors that a
Purchaser Indemnified Person is entitled to an indemnification payment for a
Loss arising from a Tax Claim, the Covenantors shall thereupon jointly and
severally, pay to the Purchaser Indemnified Person an amount that will indemnify
and hold the Purchaser Indemnified Person harmless from such loss, or if the
claim is being handled pursuant to sub-section (B) hereof, make such payment or
provide the security referred to in sub-section (B)(cc) hereof.
(B) The Covenantors shall have the right to control in all
respects the contest of any Tax Claim or any claim or possible claim by any
taxing authority that may give rise to any Tax Claim or any loss, damage or
expense in the nature of a Tax Claim that would be counted towards the Threshold
under Section 12.2(b) (collectively, a "claim"), whether in Covenantors' names
or in the name of any relevant Purchaser Indemnified Person, including, without
limitation, the right to negotiate with the relevant taxing authority with
respect thereto and, subject to the balance of this Section 12.2(j), to settle
any such claim, and each Purchaser Indemnified Person shall take all such action
in connection with contesting such claim, including, without limitation,
providing copies of any relevant documentation, as Sellers shall reasonably
request in writing from time to time, but only if
(aa) within 30 days (or such earlier date that any payment
of Taxes is due by the Purchaser Indemnified Person) after the notice described
above has been given to Sellers by the Purchaser Indemnified Person, the
Covenantors advise that they wish to exercise their rights under this Section
12.2(j)(B),
(bb) subject to the provisions of clause (dd) below on the
sharing of fees and expenses, the Covenantors shall have agreed to pay to the
Purchaser Indemnified Person, as provided in this Section 12.2(j), all costs and
expenses that the Purchaser Indemnified Person may reasonably incur in
connection with contesting such claim, including reasonable solicitors' and
accountants' fees and disbursements,
(cc) if the Purchaser Indemnified Person is requested to pay
the Tax claimed and sue for a refund, the Covenantors shall have either provided
security to the relevant taxing authority in form satisfactory to such taxing
authority for payment of such Tax, or paid the amount of such claimed Tax
directly to such taxing authority on behalf of the Purchaser Indemnified Person
(but only to the extent that the Covenantors would be required under Section
12.1 hereof (as limited by Section 12.2) to indemnify the Purchaser Indemnified
Person in respect
<PAGE>
32.
of such Tax so claimed) in which event such payment shall be deemed to
constitute the advance by the Covenantors to the Purchaser Indemnified Person,
on an interest-free basis, of the amount of such claim and to the extent that
the Covenantors are not so obligated to indemnify such Purchaser Indemnified
Person with respect to such Tax so claimed, such Purchaser Indemnified Person
shall promptly pay the Tax so claimed on its own, and any indemnity provided
hereunder shall not extend to any additional interest, costs or penalties
resulting from any failure by such Purchaser Indemnified Person to promptly pay
such Tax so claimed,
(dd) The Covenantors shall have selected tax counsel
reasonably satisfactory to the Purchaser Indemnified Person (provided it is
hereby agreed that Blake, Cassels & Graydon and Smith Lyons should each be
deemed to be satisfactory). In the case of any claim referred to in this Section
12.2 (j), the Purchaser Indemnified Person shall not make payment of such claim
for at least 30 days (or such shorter period as may be required by applicable
law) after the giving of the notice required by Subsection (a)(iv) above. The
Covenantors shall keep Purchaser informed as to the progress of any contest
pursuant to this Section 12.2, shall consult with Purchaser and Purchaser's
counsel in good faith with respect to such contest and shall make available to
Purchaser and Purchaser's counsel, a reasonable time prior to filing, any
materials to be filed with respect to such contest. In the case of any claim the
resolution of some portion of which is reasonably expected by Purchaser to have
an adverse effect on the Purchaser Indemnified Person as to which there will be
no indemnification by the Covenantors: (i) if the Covenantors wish to use
accountants other than KPMG Peat Marwick or Price Waterhouse, or counsel other
than Blake, Cassels & Graydon, or Smith Lyons, then Purchaser and the
Covenantors shall have agreed upon the accountants and the legal counsel to
represent them in contesting such claim; if Purchaser and the Covenantors cannot
or do not so agree within 15 days from the date on which the need for such
accountants and counsel first arises, then one of the national accounting firms
shall serve as the accountants and a firm selected by both Smith Lyons and
Blake, Cassels & Graydon shall serve as the legal counsel in such contest; and
(ii) the fees and expenses of any accountants and legal counsel shall be shared
by the Covenantors and the Purchaser in proportion to the amount at stake for
each. Notwithstanding anything to the contrary herein, neither party shall
settle any claim without the prior written consent of the other party, provided
that such consent is not unreasonably withheld or delayed, provided, however,
that if the Purchaser shall refuse to consent to any settlement of a claim which
the Covenantors wish to agree to, then without limiting the applicability of the
$750,000 Threshold or maximum liability of the Covenantors as provided for in
Sections 12.2(b) and (c) above, the liability of the Covenantors in connection
with such claim shall be limited to no more than the amount for which the
Covenantors would have settled, and
(ee) The Covenantors do not act unlawfully.
(C) If, after actual payment by the Covenantors of an amount
advanced pursuant to Subsection (j)(B)(cc) above, the extent of the liability of
the Purchaser Indemnified Person with respect to the indemnified matter shall be
established by the final judgment or decree of a court or a final or binding
settlement with a taxing authority having jurisdiction thereof (the "Final
Determination"), the Purchaser Indemnified Person shall promptly pay the
Covenantors any refund received by or credited to the Purchaser Indemnified
Person with respect to the
<PAGE>
33.
indemnified matter (together with any interest paid or credited thereon by the
taxing authority and any recovery of legal fees from such taxing authority) and
to the extent that the amount so paid by Sellers exceeds the amount for which
they are liable under Sections 12.1 and 12.2, the Purchaser Indemnified Person
shall promptly repay such excess to the Covenantors. Notwithstanding the
foregoing, the Purchaser Indemnified Person shall not be required to make any
payment under this clause (C) before such time as the Covenantors shall have
made all payments or indemnities then due with respect to Purchaser Indemnified
Person pursuant to Section 12.2.
(D) The Purchaser shall cause the Company to retain all books
and records that may become relevant to any Tax Claim that may arise hereunder
from time to time, until such time as the making of any such Tax Claim is
precluded pursuant to Section 12.2(a)(ii).
(k) Notwithstanding any provision hereof, after the Tangible Net
Worth is finally calculated in accordance with Section 2.3 of the U.S. Asset
Purchase Agreement, no Purchaser Indemnified Person shall have any right to
indemnification for any Loss suffered as a result of any inaccuracy in or breach
of the warranty contained in Section 7.8 or Section 7.22 (to the extent such
Loss arises out of matters which were finally determined in accordance with
Section 2.3 of the U.S. Asset Purchase Agreement), Section 7.19 or Section 7.20
12.3 Purchaser Indemnity. After the Closing Date, Purchaser agrees to
indemnify and hold each Seller, its Affiliates and their officers and directors
(collectively, the "Seller Indemnified Persons") harmless against any loss,
damage or expense (including reasonable attorneys' fees) suffered as the result
of (a) any breach by Purchaser of this Agreement, (b) any inaccuracy in or
breach of any of the representations, warranties, covenants or agreements made
by Purchaser herein, (c) any inaccuracy or misrepresentation in a certificate or
affidavit delivered by Purchaser at the Closing in accordance with the
provisions of this Agreement and (d) except to the extent Sellers have
indemnified Purchaser pursuant to this Section 12, the conduct of the Business
or the ownership or use of its assets by the Company or the Subsidiary before or
after the Closing, including without limitation under any Environmental Laws.
12.4 Notice of Claims. Upon obtaining knowledge of any claim or demand
which has given rise to, or could reasonably be expected to give rise to, a
claim for indemnification hereunder, the party seeking indemnification
("Indemnitee") shall give written notice of such claim or demand ("Notice of
Claim") to the other party ("Indemnitor"). Indemnitee shall furnish to the
Indemnitor in reasonable detail such information as Indemnitee may have with
respect to such indemnification claim (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same). Subject to the limitations set forth in Section 12.2(a), no failure or
delay by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold Indemnitee
harmless, except to the extent that such failure or delay shall have adversely
effected Indemnitor's ability to defend against, settle or satisfy any
liability, damage, loss, claim or demand for which Indemnitee is entitled to
indemnification hereunder.
<PAGE>
34.
12.5 Indemnification Proceeding. If the claim or demand set forth in
the Notice of Claim given by Indemnitee pursuant to Section 12.4 is a claim
or demand asserted by a third party, Indemnitor shall have fifteen (15) days
after the Date of the Notice of Claim to notify Indemnitee in writing of its
election to defend such third-party claim or demand on behalf of the Indemnitee.
If Indemnitor elects to defend such third-party claim or demand, Indemnitee
shall make available to Indemnitor and its agents and representatives all
records and other materials which are reasonably required in the defense of such
third-party claim or demand and shall otherwise cooperate with, and assist
Indemnitor in the defense of, such third-party claim or demand, and so long as
the Indemnitor is defending such third-party claim in good faith, Indemnitee
shall not pay, settle or compromise such third-party claim or demand. If
Indemnitor elects to defend such third-party claim or demand, Indemnitee shall
have the right to participate in the defense of such third-party claim or
demand, at Indemnitee's own expense. If Indemnitor does not elect to defend such
third-party claim or demand or does not defend such third-party claim or demand
in good faith, Indemnitee shall have the right, in addition to any other right
or remedy it may have hereunder, at Indemnitor's expense, to defend such third-
party claim or demand; provided, however, that (a) Indemnitee shall not have any
obligation to participate in the defense of, or defend, any such third-party
claim or demand; and (b) Indemnitee's defense of or its participation in the
defense of any such third-party claim or demand shall not in any way diminish or
lessen the obligations of Indemnitor under the agreements of indemnification set
forth in this Article 12.
12.6 Satisfaction of Claims. Except for third-party claims (including
Tax Claims) being defended in good faith, and subject to the resolution of any
disputes hereunder in accordance with Section 15.7, Indemnitor shall satisfy its
obligations under this Article 12 within thirty (30) days after the Date of
Notice of Claim.
12.7 Date of Notice of Claim. The term "Date of the Notice of Claim"
as used in this Article 12 shall mean the date the Notice of Claim is effective
pursuant to Section 15.12.
ARTICLE 13
CONFIDENTIALITY
---------------
13.1 Confidentiality. Purchaser agrees with respect to all technical,
commercial and other information relating to the Company, the Subsidiary, any
of their respective assets, the Facilities or the Business that is or has been
furnished or disclosed to Purchaser on, or after or before the date hereof,
including, but not limited to, information regarding the Company, the Subsidiary
and the organization, personnel, business activities, customers, policies,
assets, finances, costs, sales, revenues, rights, obligations, liabilities and
strategies of the Business (the "Information"), that, unless and until the
transactions contemplated by this Agreement shall have been consummated, (a)
such Information is confidential and/or proprietary to the Company and the
Business and entitled to and shall receive treatment as such by Purchaser; (b)
Purchaser will, and will require all of its employees, representatives, agents
and advisors who have access to such Information to, hold in confidence and not
disclose to any other Person nor use (except in respect
<PAGE>
35.
of the transactions contemplated by this Agreement or as required by law or in a
court, administrative or regulatory proceeding) any such Information; provided,
however, that Purchaser shall not have any restrictive obligation with respect
to any Information which (i) is contained in a printed publication available to
the general public, (ii) is or becomes publicly known through no wrongful act or
omission of, or violation of the terms hereof by, Purchaser, or (iii) becomes
known to Purchaser from a source which has no confidentiality obligation with
respect to such Information at the time of receipt of such Information; and (c)
all such Information, unless otherwise specified in writing, shall remain the
property of the Company or the Subsidiary, as the case may be, and, in the event
this Agreement is terminated, shall be returned to the Company or the
Subsidiary, as the case may be, together with any and all copies made thereof,
upon request for such return by either Seller (except for documents submitted
to a governmental agency with the consent of either Seller or upon subpoena and
which cannot be retrieved with reasonable effort). Purchaser shall provide
Information only to its employees, representatives, agents and advisors who have
a need to know such Information in connection with the transactions contemplated
by this Agreement.
13.2 Remedy. Purchaser acknowledges that the remedy at law for any
breach by Purchaser of its obligations under Section 13.1 is inadequate and that
Sellers shall be entitled to equitable remedies, including an injunction, in the
event of breach by Purchaser, in addition to any other available remedies at law
or otherwise.
ARTICLE 14
CERTAIN OTHER UNDERSTANDINGS
----------------------------
14.1 Records.
(a) After the Closing, each party agrees to provide the other with
access to all relevant documents and other information which may be needed by
such party for purposes of preparing tax returns or responding to an audit by
any governmental agency or for any other reasonable purpose. Such access will
be during normal business hours, upon reasonable prior notice and not otherwise
subject to time limitations.
(b) Purchaser agrees that it shall preserve and keep all books and
records relating to the Business, including, without limitation, the Company's
and the Subsidiary's assets, in Purchaser's possession until six months
following the expiration of the applicable statute of limitations (including
extensions thereof) applicable to the Returns of the Company or the Subsidiary
filed for each taxable period first ending after the Closing Date and each prior
taxable period to which such books or records are relevant. After such time,
before Purchaser shall dispose of any of such books and records, at least ninety
(90) calendar days' prior written notice to such effect shall be given by
Purchaser to Sellers, and Sellers shall be given an opportunity, at their own
cost and expense, to remove and retain all or any part of such books and records
as Sellers may select. Duly authorized representatives of Sellers shall, upon
reasonable notice, have
<PAGE>
36.
access to such books and records during normal business hours to examine,
inspect, retrieve and copy such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by Sellers prior to or after the Closing, upon reasonable
notice, Purchaser shall, after the Closing: (i) afford the officers, employees
and authorized agents and representatives of Sellers reasonable access, during
normal business hours, to the offices, properties, books and records of
Purchaser and the Company with respect to the Business; (ii) furnish to the
officers, employees and authorized agents and representatives of Sellers such
additional financial and other information regarding the Business as Sellers may
from time to time reasonably request; and (iii) make available to Sellers, the
employees of Purchaser and the Company whose assistance, testimony or presence
is necessary to assist Sellers in evaluating any such claims and in defending
such claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that such investigation shall not
unreasonably interfere with the businesses or operations of the Company.
(d) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary that
either party hereto or any successors be furnished with additional information
relating to the Business, including, without limitation, the Company's and the
Subsidiary's assets, and such information is in the possession of the other
party hereto, such other party agrees to use its best efforts to furnish such
information to the party needing such information, at the cost and expense of
the party being furnished such information; provided, that Purchaser will cause
the Company to provide the Sellers with information relevant to tax filings for
portions of 1996 prior to the Closing without charge.
14.2 Further Actions. Sellers agree that from and after the Closing
Date, if reasonably requested by Purchaser, they will execute and deliver such
further instruments of conveyance and transfer and take such other reasonable
action as may be necessary or desirable to convey and transfer more effectively
to Purchaser the Purchased Shares.
14.3 Change of Control. If (a) any Contract requires a consent to any
change in control of the Company and such consent has not been obtained by
the Closing Date or (b) a Contract relates solely to the Business but is in the
name of a Seller or an Affiliate of a Seller other than the Company, then this
Agreement, to the extent permitted by law, shall constitute an equitable
assignment by such Seller or such Affiliate to the Company of all rights,
benefits, title and interest, liabilities and obligations under any such
Contracts. Such Seller or Affiliate shall take all necessary steps and action
to provide the Company with the benefits of such Contracts. Purchaser and the
Company shall take all necessary steps to perform their obligations with respect
thereto and shall indemnify such Seller or such Affiliate for any losses
suffered by such Seller or such Affiliate relating to the Purchaser's or the
Company's performance of such obligations.
14.4 Taxes. Sellers shall be responsible for causing the Company to
prepare and file all Tax returns and reports of the Company due on or prior to
the Closing Date, which returns and reports shall be prepared and filed timely
and on a basis consistent with existing procedures for preparing such returns
and reports and in a manner consistent with prior practice with respect to
<PAGE>
37.
the treatment of specific items on the returns or reports. Purchaser shall be,
or shall cause the Company to be, responsible for preparing and filing all Tax
returns and reports of the Company due after the Closing Date (after taking into
account any applicable extensions of time to file), which returns and reports,
to the extent they relate to periods or portions of periods ending or prior to
the Closing Date, shall be prepared and filed timely and on a basis consistent
with existing procedures for preparing such returns and in a manner consistent
with prior practice with respect to the treatment of specific items on the
return. Purchaser will cause the Company to make available to the Sellers for
their review, at least 30 days prior to filing, any returns and reports
pertaining to the tax year ending on the Closing Date or any portion thereof,
and will respond to any reasonable requests of Seller with respect thereto.
ARTICLE 15
MISCELLANEOUS
-------------
15.1 Cost and Expenses. Except as otherwise provided in this Agreement,
each party hereto shall pay its own fees, costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation, preparation, execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
15.2 Entire Agreement. The Disclosure Letter and the Exhibits referenced
in this Agreement are incorporated into this Agreement and together with this
Agreement and the Ancillary Agreements contain the entire agreement between the
parties hereto with respect to the transactions contemplated hereunder, and
supersede all negotiations, representations, warranties, commitments, offers,
contracts and writings prior to the date hereof, including, without limitation,
the letter dated May 3, 1996 from Mr. Mark C. Samuel, President of Purchaser,
to Mr. W. Robert Reum, Chairman, President and Chief Executive Officer of The
Interlake Corporation, regarding the transaction contemplated hereby and the
Mutual Confidentiality Agreement dated as of April 26, 1996 between the
Interlake Corporation and Purchaser. No waiver, modification or amendment of
any provision of this Agreement shall be effective unless specifically made in
writing and duly signed by the party to be bound thereby.
15.3 Counterparts. This Agreement may be executed in counterparts, each of
which when executed shall be deemed an original and all of which together shall
constitute one and the same instrument.
15.4 Assignment, Successors and Assigns. The respective rights and
obligations of the parties hereto shall not be assignable without the prior
written consent of the other parties; provided, however, that Purchaser may
assign all or part of its rights under this Agreement and delegate all or part
of its obligations under this Agreement to a wholly-owned subsidiary of
Purchaser, in which event all the rights and powers of Purchaser and remedies
available to it under this Agreement shall extend to and be enforceable by such
subsidiary; provided further, however, that no such assignment and delegation
shall release Purchaser from its obligations under
<PAGE>
38.
this Agreement, and further, Purchaser hereby guarantees to Sellers the
performance by such subsidiary of its obligations under this Agreement and each
other document or instrument to be entered into by such subsidiary in connection
with the transactions contemplated hereby. In the event of any such assignment
and delegation the term "Purchaser" as used in this Agreement shall be deemed to
refer to such subsidiary of Purchaser where reference is made to actions to be
taken with respect to the acquisition of the Purchased Shares, and shall be
deemed to include both Purchaser and such subsidiary where appropriate. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
15.5 Savings Clause. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, rule or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
15.6 Headings. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
15.7 Arbitration.
(a) Exclusive Procedure. Any dispute arising out of or relating to
this Agreement will be resolved in accordance with the procedures specified in
this Section 15.7, and this is the sole and exclusive procedure for resolution
of any such dispute. Each party waives its right to court proceedings, in
consideration of the parties' agreement to negotiate and arbitrate.
(b) Negotiation between Executives. The parties will attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between the Presidents of The Interlake Corporation and
the Purchaser (as of the date hereof, W. Robert Reum and Mark C. Samuel,
respectively), who may be accompanied by such other persons as they choose. Any
party may give the other party written notice of any dispute not resolved in the
normal course of business, and specifically require a response by referring to
this section of this Agreement. Within 15 days after receipt of such notice, the
receiving party will submit to the other a written response. The notice and the
response will include a statement of each party's position and a summary of
arguments supporting that position and the names and titles of the persons who
will accompany the Chief Executive Officer. Within 30 days after delivery of the
disputing party's notice, the executives of both parties will meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests for
information made by one party to the other will be honoured.
<PAGE>
39.
(c) Arbitration under the CPR Rules. Any dispute arising out of or
relating to this Agreement which has not been resolved within 60 days of the
initial written notice of the dispute under subsection (b) above will be settled
by arbitration. If, however, either party will not participate in the
negotiations required above, then the other party may initiate arbitration
before expiration of the period specified above. The following rules will apply
to the arbitration:
(i) the then current CPR Non-Administered Arbitration Rules
(adopted by the CPR Institute for Dispute Resolution) will
govern, and the United States Federal Arbitration Act,
9.U.S.C. (S) 1-16, will also govern to the extent
consistent;
(ii) there will be three independent and impartial arbitrators,
of whom each party will appoint one and the third will be
appointed by the other two;
(iii) the place of arbitration will be metropolitan Chicago;
(iv) the arbitrators shall not be empowered to award damages in
excess of compensatory damages, and each party hereby
irrevocably waives any right to recover any such damages;
(v) as a primary goal of this section is to conclude disputes
in a speedy manner at substantially less cost to the
parties than litigation, the arbitrators are therefore to
conduct the proceedings in a speedy and expeditious manner
and to conclude and issue an award as soon as possible
after appointment of the third arbitrator; and
(vi) the arbitrators' decision will be final and binding and
judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction.
(d) Statute of Limitations. The statute of limitations of the State
of Illinois applicable to the commencement of a lawsuit will apply to the
commencement of an arbitration, except that no defenses will be available in
arbitration based upon the passage of time during any negotiation called for by
this Section.
(e) Costs. Each party must bear its own costs of resolving any
dispute under this Agreement and the parties each hereby severally agree to pay
50% of the costs of any arbitrators engaged.
(f) Confidentiality. Any information or documents disclosed under
this section (i) will be treated as settlement negotiations under any rules of
evidence, (ii) must be kept confidential and (iii) may not be used except to
attempt to settle the dispute.
<PAGE>
40.
(g) Continued Performance. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
impossible or impracticable under the circumstances.
15.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, EXCLUDING THE
"CONFLICT OF LAWS" RULES THEREOF.
15.9 Public Announcements. No press release or other public statement with
respect to this Agreement or the transactions contemplated hereby shall be
issued by any party without such party having consulted with and obtained the
written consent of the other parties, which consent shall not be unreasonably
withheld; provided, however, that no such consultation or consent is necessary
if a press release or other public statement is required to be made by
applicable law.
15.10 U.S. Dollars. All amounts expressed in this Agreement and all
payments required by this Agreement are in United States dollars.
15.11 Survival. All representations and warranties made by any party in
this Agreement shall be deemed made for the purpose of inducing the other
parties to enter into this Agreement and, subject to Section 12.2(a) shall
survive the Closing.
15.12 Notices.
(a) All notices, requests, demand and other communications under this
Agreement shall be in writing and delivered in person or sent by overnight
courier or certified mail, postage prepaid, or by facsimile transmission and
properly addressed as follows:
To Sellers or Interlake Companies or Interlake Corporation:
c/o Interlake Packaging Corporation
550 Warrenville Road
Lisle, Illinois 60532-4387
Fax: (630) 719-7242
Attention: Stephen Gregory,
Vice President - Finance and
Chief Financial Officer
Stephen R. Smith,
Vice President, Secretary and
General Counsel
<PAGE>
41.
To Purchaser:
Samuel Manu-Tech Inc.
191 The West Mall
Suite 418
Etobicoke, Ontario
Canada M9C 5K8
Fax: (416) 626-5969
Attention: Mark C. Samuel, President
Wallace H. Rayner, Executive Vice-President and
Chief Financial Officer
with a copy to:
Smith Lyons
40 King Street West
Suite 5800, Scotia Plaza
Toronto, Ontario
Canada M5H 3Z7
Fax: (416) 369-7250
Attention: D. William Mutch
(b) Any party may from time to time change its address for the purpose
of notices to that party by a similar notice specifying a new address, but no
such change shall be deemed to have been given until it is actually received by
the party sought to be charged with its contents.
(c) All notices and other communications required or permitted under
this Agreement which are addressed as provided in this Section 15.12 if
delivered personally or by overnight courier, or by facsimile transmission,
shall be effective upon delivery; and if delivered by mail, shall be effective
three (3) Business Days after deposit in the United States mail, postage
prepaid.
15.13 Disclosures. All matters disclosed by Sellers in any Section of the
Disclosure Letter shall be deemed a disclosure by Sellers for purposes of all
relevant Sections of this Agreement.
15.14 No Third-Party Beneficiaries. Except as otherwise expressly provided
in this Agreement, nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon or give to any Person, other than the
parties hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
42.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on September 30, 1996 in Toronto, Ontario. This Stock
Purchase Agreement will become effective once it and the U.S. Asset Purchase
Agreement and the U.K. Stock Purchase Agreement all have been executed and
delivered.
INTERLAKE PACKAGING CORPORATION
By:/s/ Stephen R. Smith
-----------------------------
Title: Vice President Secretary
and General Counsel
--------------------------
THE INTERLAKE COMPANIES, INC.
By:/s/ Stephen R. Smith
-----------------------------
Title: Vice President, Secretary
and General Counsel
--------------------------
SAMUEL MANU-TECH INC.
By:/s/ Mark Samuel
-----------------------------
Title: Director
--------------------------
Agreed to and accepted as of September 30, 1996 as
to Article 12 only.
THE INTERLAKE CORPORATION
By:/s/ Stephen Gregory
-----------------------------
Title: Vice President-Finance
--------------------------
<PAGE>
EXHIBIT 10.3
DATED 1 OCTOBER 1996
UK STOCK PURCHASE
AGREEMENT
relating to the issued share capital of Precis
(935) Limited
<TABLE>
<S> <C>
THE INTERLAKE COMPANIES INC AS SELLER (1)
SAMUEL STRAPPING SYSTEMS (U.K.) LIMITED, (2)
AS PURCHASER
THE INTERLAKE CORPORATION (3)
SAMUEL MANU-TECH INC (4)
</TABLE>
Execution Text
Ref: 342/S10078.1/CF:90776.9/jmr
<PAGE>
STOCK PURCHASE AGREEMENT
DATE
1 October 1996
PARTIES
This STOCK PURCHASE AGREEMENT (as amended or modified from time to
time in accordance with the terms hereof, this "Agreement) is by and
between The Interlake Companies, Inc., a Delaware corporation
(together with its successors and permitted assigns, "Interlake
Companies" or "Seller"), Samuel Strapping Systems (U.K.) Limited, a
company incorporated under the laws of England (together with its
successors and permitted assigns, "Purchaser"), The Interlake
Corporation, a Delaware corporation (together with its successors and
permitted assigns, "Interlake Corporation") and Samuel Manu-Tech Inc.,
a corporation incorporated under the laws of the Province of Ontario
(together with its successors and permitted assigns, "Samuel Manu-
Tech").
RECITALS
A Seller owns all of the issued and outstanding shares of Precis (935)
Limited, a company incorporated in England and Wales on 17 August 1989
under the Companies Act 1985 and registered under number 2414210 as a
private company limited by shares (the "Company"). The Company has at
the date of this agreement an authorised share capital of (Pounds)200
and $1,000 divided into 200 'B' ordinary shares of (Pounds)1 each and
1,000 'A' Ordinary Shares of $1 each all of which have been issued and
are fully paid or credited as fully paid. Seller is legal and
beneficial owner of all of the Purchased Shares.
B The Company through its Subsidiaries is in the business of
manufacturing and supplying steel and plastic strapping, and the
machinery and tools to apply such strapping, primarily to the
newspaper, lumber, metal, brick, textile, corrugated box, graphics,
can, bottle and distribution industries (collectively, the
"Business").
C Interlake Packaging Corporation (together with its successors and
permitted assigns, "Packaging") is a member of the same group of
companies as the Seller and is in the businesses of (i) supplying
plastic strapping, and the machinery and tools to apply such
strapping, primarily to the newspaper, textile, corrugated box,
graphics, can, bottle and distribution industries and (ii)
manufacturing and distributing wire stitching equipment, primarily to
the graphic arts, fruit and produce growing and corrugated box
manufacturing industries (collectively, "Packaging's U.S.
Businesses").
D Interlake Companies and Packaging own all of the issued and
outstanding capital stock of Acme Strapping Inc, a corporation
incorporated under the federal laws of Canada ("Acme").
E Purchaser desires to acquire from Seller, and Seller desires to sell
to Purchaser, the Purchased Shares on the terms and subject to the
conditions hereinafter set forth.
F Concurrently with Purchaser's purchase of all of the issued and
outstanding capital stock of the Company hereunder, (i) Samuel
Tennesse desires to acquire from Packaging, Packaging's U.S.
Businesses and substantially all of the assets of Packaging's U.S.
Businesses and (ii) Samuel Manu-Tech desires to acquire from
Interlake Companies and Packaging all of the issued and outstanding
capital stock of Acme, pursuant to and in accordance with the terms
and conditions of the U.S. Asset
<PAGE>
Purchase Agreement (as hereinafter defined) and the Canadian Stock
Purchase Agreement (as hereinafter defined), respectively.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:
DEFINITIONS
1.1 Previously Defined Terms
Each term defined in the introductory paragraph and Recitals of this
Agreement shall have the meaning set forth above whenever used herein,
unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions
In addition to the terms defined in the first paragraph and Recitals
of this Agreement, whenever used herein, the following terms shall
have the meanings set forth below unless otherwise expressly provided
or unless the context clearly requires otherwise.
"Acquired Businesses" means the Business, Packaging's U.S.
Businesses and the businesses of Acme and its
subsidiaries, collectively.
"Affiliate" means, with respect to any Person, a Person
that, directly or indirectly is controlled
by, controls, or is under common control with
such Person. As used in the preceding
sentence, "control" shall mean and include,
but not necessarily be limited to, (i) the
ownership of 50% or more of the voting
securities or other voting interests of any
Person, or (ii) the possession, directly or
indirectly, of the power to direct or cause
the direction of the management and policies
of such Person, whether through the ownership
of voting securities, by contract or
otherwise.
"Ancillary Agreements" means the pre-signing Escrow Agreement and
the post-signing Escrow Agreement.
"Balance Sheet" means the balance sheets of the Company and
each of the Subsidiaries dated as of 30 June
1996, which constitute a part of the
Financial Statements.
"Business" has the meaning specified in the Recitals to
this Agreement.
"Business Day" means any day of the year on which banks are
not required or authorised to be closed in
Chicago, Illinois.
<PAGE>
"Canadian Stock means the Stock Purchase Agreement dated as
Purchase Agreement" of the date hereof by and among Samuel Manu-
tech, Interlake Companies and Packaging, as
amended or modified from time to time in
accordance with the terms thereof.
"Closing" see Section 3.1.
"Closing Date" see Section 3.1.
"Consequential Damages" means any loss which is not the direct or
proximate result of any events described in
Section 12.1 or Section 12.3 of this
Agreement.
"Contingent Liabilities" means those obligations (except for
fulfilment of post-closing obligations under
the Contracts) and liabilities relating to
the operation of the Business prior to the
Effective Date and not set forth on the Final
Closing Balance Sheet or under unfulfilled
purchase orders or under a Plan including,
without limitation, any such liability or
obligation arising under any Environmental
Law, severance arrangement or with respect to
any Taxes of the Company or any of the
Subsidiaries.
"Contracts" means all contracts, agreements, license
agreements, purchase and sale orders, foreign
exchange contracts, leases of machinery and
equipment, and conditional sales contracts
and title retention agreements relating to
machinery and equipment, in each case, to
which the Company or any of the Subsidiaries
is a party and all other commitments and
binding arrangements of the Company or any of
the Subsidiaries, including, without
limitation, the Contracts listed in Section
7.11 of the Disclosure Letter.
"Covenantors" means together Seller and Interlake
Corporation, or either of them as the context
may require
"Date of the Notice of see Section 12.7.
Claim"
"Disclosure Letter" means the letter dated as of the date of this
Agreement and delivered by Seller to
Purchaser pursuant to Section 6.1(b)
simultaneously with the execution and
delivery of this Agreement.
"Effective Date" means 29 September, 1996, at 11.59 pm (London
time) or such other date and time agreed to
in writing by Seller and Purchaser.
"Environmental Laws" means any applicable national, EU,
international, foreign, federal or local law
(whether founded in legislation of whatever
nature or common law)
<PAGE>
including without limitation, regulatory
codes of practice, guidance notes, circulars,
directives, decisions, regulations, treaties
and conventions relating to: (a) releases or
threatened releases of Hazardous Substances;
(b) the manufacture, handling, transport,
use, treatment, accumulation, keeping,
storage or disposal of Hazardous Substances
or materials containing Hazardous Substances;
or (c) the protection or endangerment of the
environment or the protection or endangerment
of human health or safety in force or enacted
on the Closing Date.
"Facilities" means the facilities of the Company located
on or forming a part of the real property
described in Section 7.12 of the Disclosure
Letter.
"Final Closing Balance has the meaning given to it in the US Asset
Sheet" Purchase Agreement
"Financial Statements" means the audited balance sheet and income
statement for the Company and each of the
Subsidiaries at and for the year ended
December 31, 1995, and the unaudited balance
sheet and income statement for the Company
and each of the Subsidiaries at and for the
six months ended June 30, 1996 copies of each
of which are set forth in Section 6.1(a) of
the Disclosure Letter.
"First Anniversary" means the one-year anniversary of the
Effective Date.
"GAAP" means United States generally accepted
accounting principles in effect at the
relevant time.
"Hazardous Substances" means any waste, contaminant, pollutant,
hazardous substance, toxic substance,
hazardous waste, special waste, hazardous
industrial substance or waste, petroleum or
petroleum-derived substance or waste, or any
constituent of any such substance or waste,
to the extent regulated under defined by or
in respect of which liability is ascribed by
Environmental Law
"Indemnitee" see Section 12.4.
"Indemnitor" see Section 12.4.
"Information" see Section 13.1.
"Interlake Companies" has the meaning specified in the introductory
paragraph of this Agreement.
<PAGE>
"Lien" means a mortgage, pledge, security interest,
encumbrance, lien or other charge, claim,
right or adverse interest of another Person.
"Material Adverse means, relating to any occurrence of
Effect" whatever nature, any material adverse change
in, or effect on:
(a) the Business or the present or
projected business, revenues, financial
condition, operations or prospects of
the Acquired Businesses, each taken as
a whole; or
(b) the ability of Seller to timely and
fully perform any of their material
obligations hereunder or under the U.S.
Asset Purchase Agreement or the
Canadian. Stock Purchase Agreement or
any document to be delivered in
connection herewith or therewith;
provided however, that Material Adverse
Effect shall not include (i) any industry-
wide changes in the industries in which the
Company and the Subsidiaries are operating,
(ii) any changes in the general economic
conditions in the United States, Canada or
the United Kingdom, or (iii) any general
changes in the securities market in the
United States, Canada or the United Kingdom.
"Multiemployer Plan" see Section 7.16.
"Notice of Claim" see Section 12.4.
"Packaging" has the meaning specified in the introductory
paragraph of this Agreement.
"Packaging's U.S. has the meaning specified in the Recitals to
Businesses" this Agreement.
"Payables" means all accounts payable, notes payable,
contract payables and other payables which
are obligations of the Company or any of the
Subsidiaries.
"Permitted Exceptions" means, with respect to the real property
described in Section 7.12 of the Disclosure
Letter, any Liens or exceptions which, alone
or in the aggregate, do not materially
detract from, or materially interfere with,
the ownership, occupancy or use of the
properties subject thereto or affected
thereby, or otherwise materially impair the
operations conducted thereon or affect in any
material respect the value of the properties
subject thereto.
<PAGE>
"Person" means any natural person, company,
corporation, limited liability company,
partnership, joint venture, trust,
association or unincorporated entity of any
kind.
"Plans" see Section 7.16.
"Post Signing Escrow means that certain Escrow Agreement
Agreement" made and entered as of the Closing Date by
and among Harris Trust & Savings Bank, as
escrow agent, Samuel Manu-Tech and Interlake
Corporation as heretofore or hereafter
amended.
"Pre-signing Escrow means that certain Escrow Agreement, made
Agreement" and entered into as of 29 July 1996 among
Harris Trust & Savings Bank, as escrow
agent, Interlake Corporation and Samuel
Manu-Tech as heretofore or hereafter amended.
"Purchase Price" see Section 2.2.
"Purchased Shares" means 200 'B' ordinary shares of (Pounds)1
each and 1000 'A' ordinary shares of US$1
each in the capital of the Company.
"Purchaser Indemnified see Section 12.1.
Persons"
"Receivables" means all accounts receivable, notes
receivable, contract receivables and other
receivables owned by the Company or any of
the Subsidiaries.
Reorganisation the reorganisation and payment of dividends
consummated the week of 24 September 1996 as
described or substantially as described in
the letters listed in the Schedule to this
Agreement.
"Returns" means all Tax returns, computations,
information, notices and forms required to be
filed or furnished with any taxing or other
authority by the Company or any Subsidiary.
Samuel Manu-Tech" means Samuel Manu-Tech Inc, a corporation
incorporated under the laws of the Province
of Ontario.
"Samuel Tennessee" means Samuel Strapping Systems (Tennessee),
Inc., a Delaware corporation.
"Seller Indemnified see Section 12.3.
Persons"
"Senior Credit means the Amended and Restated Credit
Agreement" Agreement, dated as of September 27, 1989 and
Amended and Restated as of May 28, 1992,
among The Interlake Corporation, certain of
its subsidiaries, The Interlake Corporation
Employee
<PAGE>
Stock Ownership Trust, acting by and through
The LaSalle National Bank, as Trustee,
various banks party thereto, Chemical Bank,
as Administrative Agent, and The First
National Bank of Chicago, as Co-Agent, as
amended, modified or supplemented from time
to time.
"Subsidiaries" means the following companies, or any of
them as the context requires:
(a) Twicebonus Limited;
(b) Power Industries Limited;
(c) Acme Gerrard Limited;
(d) Pakseal Industries Limited;
(e) Power Strap Limited;
(f) Pakseal;
(g) Pakseal SARL; and
(h) Pakseal SRL.
Each of the companies referred to at (a) to
(f) (inclusive) above are companies
incorporated in England and Wales. Pakseal
SARL is a company incorporated in France, and
Pakseal SRL is a company incorporated in
Italy.
"Subsidiary Stock" means the following issued and outstanding
shares in the capital of the Subsidiaries:
(a) Twicebonus Limited - 8,600,000 ordinary
shares of (Pounds)1 each;
(b) Power Industries Limited - 43,770,420
ordinary shares of 20p each;
(c) Acme Gerrard Limited - 8,500,000
ordinary shares of (Pounds)1 each;
(d) Pakseal Industries Limited - 112,593
ordinary shares of (Pounds)1 each;
(e) Power Strap Limited - 2 ordinary shares
of (Pounds)1 each;
(f) Pakseal - 100 ordinary shares of
(Pounds)1 each;
(g) Pakseal SARL - 500 common shares
(h) Pakseal SRL (Italy) - 21,000,000 common
shares
<PAGE>
"Tangible Net Worth" means, as of the Effective Date, the value of
the Tangible Assets of the Business, minus
the Balance Sheet Liabilities in each case as
determined in accordance with Section 2.3 of
the U.S. Asset Purchase Agreement as of the
Effective Date.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, distribution,
occupation, value added, profits, property,
excise or other taxes, fees, stamp taxes and
duties, levies, imposts, contributions,
assessments or charges of any kind whatsoever
(whether payable directly or by withholding),
together with all interest and all penalties,
additions to tax or additional amounts
imposed by any taxing or other authority with
respect thereto.
"Third Anniversary" means the three-year anniversary of the
Effective Date.
"Third Party Debt" see Section 2.2.
"Transferred means any account on the books and records
Intercompany Account" of the Company or any of the Subsidiaries
that evidences amounts either payable by the
Company or any of the Subsidiaries to, or
receivable by the Company or any of the
Subsidiaries from, Packaging (but only to the
extent relating to Packaging's U.S.
Businesses) or Acme (or any subsidiary of
Acme).
"U.S. Asset Purchase means the Asset Purchase Agreement dated as
Agreement" of the date hereof by and between Samuel
Tennessee and Packaging, as amended or
modified from time to time in accordance with
the terms thereof.
1.3 Interpretation
Unless the context of this Agreement otherwise requires, (a) words of
any gender shall be deemed to include each other gender, (b) words
using the singular or plural number shall include the plural or
singular number, respectively, (c) references to "hereof", "herein",
"hereby", "hereunder" and similar terms shall refer to this entire
Agreement (d) references to documents in the agreed form are to
documents in the form of the draft agreed on behalf of the parties and
initialled on behalf of each of them for the purposes of
identification and (e) unless otherwise specified herein, each
reference to an "Article" or "Section" is to an Article or Section of
this Agreement, and each reference to an "Exhibit" is to an Exhibit
attached to and made a part of this Agreement.
1.4 If any amounts calculated pursuant to, or referred to in, this
agreement in pounds sterling are required for the purposes of this
agreement to be converted at any time into US dollars, a conversion
rate equal to the mid-range spot rate as at the close of business on
27 September 1996, as set out in the Wall Street Journal shall be
applied.
2 PURCHASE AND SALE, PURCHASE PRICE AND OTHER RELATED MATTERS
<PAGE>
2.1 Purchase and Sale
Upon the terms and subject to the conditions of this Agreement, at the
Closing on the Closing Date, Seller shall sell, assign, convey,
transfer and deliver to Purchaser, and Purchaser shall acquire from
Seller, the Purchased Shares.
2.2 Consideration
(a) The purchase price (the "Purchase Price") payable by
Purchaser for the Purchased Shares shall be an amount equal to:
(i) (A) for the 200 'B' ordinary shares of (Pounds)1 each
ONE THOUSAND DOLLARS ($1,000); and
(B) for the 1,000 'A' ordinary shares of $1 each
TWENTY NINE MILLION NINE HUNDRED AND NINETY NINE
THOUSAND DOLLARS ($29,999,000), plus
(ii) the amount of all cash (as shown by the relevant
cashbooks) and cash equivalents of the Company and each
of the Subsidiaries as of the Effective Date, plus
(iii) the amount of any and all Receivables of the Company and
each of the Subsidiaries as of the Effective Date that
are owed to the Company or any of the Subsidiaries by the
Seller or any Affiliates of the Seller (other than any
such Receivables that constitute Transferred Intercompany
Accounts), minus
(iv) all indebtedness of the Company or any of the
Subsidiaries for money borrowed from third party non-
affiliated lenders ("Third Party Debt") which is
outstanding as of the Effective Date and minus
(v) the amount of any and all Payables of the Company and
each of the Subsidiaries as of the Effective Date that
are owed by the Company or any of the Subsidiaries to the
Seller or any Affiliates of the Seller (other than any
such Payables that constitute Transferred Intercompany
Accounts).
The Purchase Price may be adjusted as provided for in Section
12.2(i). One day prior to the Closing Date, Seller shall
provide to Purchaser a certification as to the amounts of each
of the items described in clauses (ii), (iii), (iv) and (v) of
this Section 2.2(a).
All additions or subtractions pursuant to sub-sections (ii) to
(v) above and all adjustments to the Purchase Price under
Section 12.2(i) shall be made to the element of the Purchase
Price payable for the 'A' ordinary shares.
(b) At the Closing on the Closing Date, Purchaser shall pay the
Purchase Price to Seller, by the wire transfer of immediately
available federal funds to the account designated in writing by
Seller to Purchaser prior to the Closing Date.
2.3 Sales and Transfer Taxes
The Seller shall pay one-half and the Purchaser shall pay one-half of
the cost of any stamp or transfer tax relating to the transfer of the
Purchased Shares.
<PAGE>
3 CLOSING AND CLOSING DATE DELIVERIES
3.1 Closing
The term "Closing" as used herein shall refer to the actual sale,
assignment, conveyance, transfer and delivery of the Purchased Shares
to Purchaser in consideration for the payment to Seller of the
Purchase Price. Subject to Section 11.1 hereof, the Closing shall take
place at the offices of S J Berwin & Co, 222 Grays Inn Road, London
WC1X 8HB, or at such other place in London as is mutually agreed in
writing by Seller and Purchaser, at 11:00 a.m. London Time on the
later of (A) 4 October 1996, and (B) fifth Business Day occurring
after the earliest date on which all of the conditions set forth in
Articles 9 and 10 have been or are capable of being satisfied or at
such other time and/or date as is mutually agreed in writing by Seller
and Purchaser (the "Closing Date").
3.2 Closing Deliveries by Seller.
At the Closing on the Closing Date, Seller shall deliver to Purchaser:
(a) the certificates or other documents of title in respect of
those of the Purchased Shares which are in bearer form and
transfers in respect of those of the Purchased Shares which are
in registered form duly executed by the registered holders
thereof in favour of the Purchaser or as it may direct;
(b) transfers in respect of such of the Subsidiary Stock as are not
registered in the name of the Company or a Subsidiary only duly
executed by the registered holders thereof in favour of the
Purchaser or as it may direct;
(c) certificates for the Purchased Shares and the Subsidiary Stock
and any other documents which may be required to give good title
to the Purchased Shares and the Subsidiary Stock and to enable
the Purchaser to procure registration of the same in its name or
as it may direct;
(d) written resignations, effective on the Closing Date, of,
together with releases in the agreed form in favour of the
Company and the Subsidiaries by, those directors of the Company
and each of the Subsidiaries that Purchaser shall have requested
prior to the Closing;
(e) written resignations, effective on the Closing Date, of the
auditors of the Company and each of the Subsidiaries;
(f) in relation to the Company and each of the Subsidiaries, all
corporate and other records held by the Seller, including but
not limited to, certificates of incorporation, certificates of
incorporation on change of name (if applicable), common seals,
statutory registers, minute books, share certificate books,
books of account and all other books (all duly written up to
date), Contracts, financial records and personnel records;
(g) copies of the memorandum and articles of association of the
Company and each of the Subsidiaries certified, as of the
Closing Date, by its corporate secretary;
(h) all original and copy documents of title relating to
properties owned or occupied by the Company or any of the
Subsidiaries;
<PAGE>
(i) certified copies of board resolutions of the Company and each of
the Subsidiaries in the agreed form;
(i) recording acceptance of the resignation from office of
all the Directors (other than those requested in writing
to remain by the Purchaser) and the auditors of each
Company;
(ii) approving (subject only to proper stamping) the transfers
of those of the Purchased Shares, or the relevant
Subsidiary Stock, which are in registered form delivered
under this Agreement;
(iii) approving (subject only to proper stamping) the placing
on the register of members of the company of the names of
the transferees for registration in accordance with the
share transfer forms referred to above and authorising
the issue of appropriate share certificates;
(iv) recording the appointment of such persons as the
directors (within the maximum number permitted by the
articles of association of the relevant company),
secretaries and auditors of the company as the Purchaser
shall nominate;
(v) changing the situation of the registered office of such
of the Company and the Subsidiaries as the Purchaser may
direct to such place as the Purchaser may direct.
(j) minutes or unanimous written consents of the Board of Directors
of the Seller approving the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated by this Agreement;
(k) a certificate, dated the Closing Date, executed by an
appropriate officer of the Seller, as required by Section 9.2;
(l) such other documents as Purchaser may reasonably request to
carry out the purposes of this Agreement, including, but not
limited to, the documents to be delivered pursuant to Article 9;
(m) irrevocable powers of attorney in the agreed form executed by
the Seller to enable the Purchaser (during the period prior to
the registration of the transfer of the Purchased Shares) to
exercise all voting and other rights attaching to the Purchased
Shares;
(n) a release and discharge from the Seller's bankers and all other
persons of any fixed or floating charges over the Purchased
Shares or any other assets of the Company or any of its
Subsidiaries;
(o) releases and discharges from each of the Company's bankers and
all other persons of any fixed or floating charges over any of
the Subsidiary Stock or any other assets of the Company or any
of its Subsidiaries.
3.3 Closing Deliveries by Purchaser
At the Closing on the Closing Date, Purchaser shall deliver to Seller:
(a) the payment to be delivered by Purchaser pursuant to Section
2.2(b);
<PAGE>
(b) certified copies of minutes or unanimous written consents of
the Board of Directors of Purchaser approving the execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated under this Agreement;
(c) the certificate, dated the Closing Date, executed by the
appropriate officer of Purchaser, as required by Section 10.2;
(d) releases of the officers and directors referred to in Section
3.2(d), in form reasonably satisfactory to the Seller; and
(e) such other documents as Seller may reasonably request to carry
out the purposes of this Agreement, including, but not limited
to, the documents to be delivered pursuant to Article 10.
3.4 Co-operation
Seller and Purchaser shall, on request on and after the Closing Date, co-
operate with one another by furnishing any and all additional
information, executing and delivering any and all additional documents
and/or instruments and doing any and all such other things as may be
reasonably requested by the other party to consummate or otherwise
implement the transactions contemplated by this Agreement.
4 PRE-CLOSING FILINGS
[clause intentionally deleted]
5 PRE-CLOSING COVENANTS
5.1 Conduct of Business Prior to Closing
(a) During the period from the date hereof to the Closing Date,
Seller shall cause the Company and each of the Subsidiaries to:
(i) use its reasonable efforts to preserve substantially
intact the business organisation of the Business, to keep
available the services of the present employees of the
Business and to preserve the current relationships of the
Company and the Subsidiaries with the customers,
suppliers and other Persons having a material business
relationship with the Business; and
(ii) operate the Business in the ordinary course consistent
with prior practice, except as set forth in Section
5.1(a) of the Disclosure Letter or as otherwise
contemplated by this Agreement.
(b) Save insofar as such act, matter or thing is necessary to give
effect to the Reorganisation, Seller covenants and agrees with
Purchaser that during the period from the date hereof to the
Closing Date Seller shall not, except with the prior written
consent of Purchaser, cause or permit the Company or any of the
Subsidiaries to:
(i) materially change its accounting methods, principles or
practices;
(ii) establish or materially increase any bonus, insurance,
severance, deferred compensation, pension, profit sharing
or other employee
<PAGE>
benefit plan or otherwise increase the rates of
compensation payable or to become payable to any officer,
employee, agent or consultant employed by the Company,
except in the ordinary course of business consistent with
prior practice or in accordance with existing
compensation policies or the provisions of existing
contracts entered into prior to the date of this
Agreement;
(iii) sell, transfer, mortgage or acquire any of the Company's
assets other than in the ordinary course of business
consistent with prior practice or as disclosed to
Purchaser prior to the date hereof;
(iv) merge or consolidate with any other Person;
(v) declare, pay or set aside for payment any dividend or
other distribution in respect of its shares, other than
those payable in cash;
(vi) directly or indirectly, redeem, purchase or otherwise
acquire any shares , other than for cash;
(vii) issue, sell or otherwise dispose of any of its shares or
grant any options, warrants or other rights to acquire
any of its shares; or
(viii) amend its memorandum or articles of association in any
material respect or pass any shareholders' resolution;
provided, however, that, prior to the Closing, Seller may
cause the Company or any of the Subsidiaries to pay to
its employees any or all bonuses accrued on or prior to
the Closing Date.
(c) Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges and agrees that Seller intend to cause
the Company, prior to or at the Closing, to cancel all
intercompany service and supply arrangements.
(d) During the period from the Effective Date to the Closing
Seller will not cause and will not permit the Company nor any
Subsidiary to dividend, distribute or otherwise convey any
amount of cash or any other asset to, or incur any new
obligation to, Seller or any of Seller's Affiliates (other than
Acme or Packaging's U.S. Businesses): provided, that nothing in
this Section 5.1(d) shall be deemed to prohibit, during the
period between the Effective Date and the Closing Date:
(i) the borrowing by Twicebonus Limited of additional
amounts from Interlake Corporation or Seller; or
(ii) the settlement of intercompany accounts as contemplated
by Section 9.9 and Section 10.9.
5.2 Access to Information
From the date hereof until the Closing, upon reasonable notice, Seller
shall cause the Company, the Subsidiaries and each of their respective
officers, directors, employees, auditors and agents to:
(a) afford the officers, employees and authorised agents and
representatives of Purchaser reasonable access, during normal
business hours, to the offices, properties, books and records of
the Business, the Company and each of the
<PAGE>
Subsidiaries (with facilities to take such copies of all such
documents as they request) and to the officers and employees of
the Seller, the Company and each of the Subsidiaries; and
(b) furnish to the officers, employees and authorised agents and
representatives of Purchaser such additional financial and
operating data and other information regarding the assets,
properties, goodwill and business of the Business, the Company
and each of the Subsidiaries including, without limitation, all
accountants working papers in relation to unaudited accounts or
statements as Purchaser may from time to time reasonably
request; provided, however, that such investigation shall not
unreasonably interfere with any of the businesses or operations
of the Company or any of its Affiliates or subsidiaries.
6 FINANCIAL STATEMENTS; DISCLOSURE LETTER; FINANCING COMMITMENT LETTER
6.1 Pre-Signing Deliveries by Seller
Seller has heretofore delivered to Purchaser:
(a) the Financial Statements; and
(b) the Disclosure Letter, together with (or preceded by) a copy
of each Contract listed in Section 7.11 thereof and containing
all of the information required by the terms of this Agreement
to be contained therein.
6.2 Pre-Signing Deliveries by Purchaser
Purchaser has heretofore delivered to Seller a true and complete copy
of the written binding commitment of a reputable lending institution
to provide the funds necessary for Purchaser and Samuel Tennessee to
purchase the Purchased Shares hereunder, Packaging's U.S. Business
under the U.S. Asset Purchase Agreement and all of the outstanding
shares of Acme under the Canadian Stock Purchase Agreement.
7 WARRANTIES AND REPRESENTATIONS OF SELLER
Seller warrants and represents to Purchaser (which warranties and
representations shall, subject to Section 12.2(a), survive the
Closing) as follows:
7.1 Incorporation and Qualification of the Company, the Subsidiaries and
Seller
(a) The Company is a company validly existing under the laws of
England and Wales and has all requisite corporate power and
authority to own, operate and lease the assets it now owns,
operates or leases and to carry on the Business as it is
currently conducted.
(b) Except as set forth in Section 7.1 of the Disclosure Letter,
the Company is duly licensed or qualified to do business in each
jurisdiction in which the properties owned or leased by it or
the operation of the Business makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(c) The Subsidiaries (other than Pakseal SARL and Pakseal SRL) are
companies validly existing under the laws of England and Wales
and have all requisite corporate power and authority to own,
operate and lease the assets it now
<PAGE>
owns, operates or leases and to carry on its business as it is
currently conducted.
(d) Pakseal SARL is a corporation validly existing under the laws of
France and has all requisite corporate power and authority to
own, operate and lease the assets it now owns, operates or
leases and to carry on its business as it is currently
conducted.
(e) Pakseal SRL is a corporation validly existing under the laws of
Italy and is now in liquidation.
(e) The Subsidiaries are each duly licensed or qualified to do
business in each jurisdiction in which the respective properties
owned or leased by them or the operation of their respective
businesses makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would
not, individually or in the aggregate, have a Material Adverse
Effect.
(f) Seller is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to own, operate and lease the
assets it now owns, operates or leases and to carry on its
business as it is currently conducted.
7.2 Authority
Seller has all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller, the
performance by Seller of its obligations hereunder and the
consummation by Seller of the transactions contemplated hereby have
been duly authorised by all requisite corporate action on the part of
Seller. This Agreement has been duly executed and delivered by Seller
and (assuming the due authorisation, valid execution and delivery
hereof by Purchaser) is a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency,
reorganisation, moratorium or similar laws affecting creditors' rights
and remedies generally, and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).
7.3 No Conflict
Assuming all consents, approvals, authorisations and other actions
described in Section 7.4 have been obtained and all filings and
notifications listed in Section 7.4 of the Disclosure Letter have been
made or given (except as may result from any facts or circumstances
relating solely to Purchaser), the execution, delivery and performance
of this Agreement by Seller do not and will not: (a) conflict with or
violate any provision of the organisational documents of the Company
or the Seller; (b) except as set forth in Section 7.3 of the
Disclosure Letter or as would not have a Material Adverse Effect,
result in any breach of, or constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a
default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation
of any Lien on any of the assets of the Company or the Purchased
Shares pursuant to, any Contract or any instrument, license, agreement
or commitment to which the Seller is a party or by which the Seller is
bound; or (c) except as set forth in Section 7.3 of the Disclosure
Letter or as would not have a Material Adverse Effect, conflict with
or violate any law, rule, regulation, order, writ, judgment,
injunction or
<PAGE>
decree applicable to the Company, the Subsidiaries, the Purchased
Shares, the Business or the Seller.
7.4 Consents and Approvals
The execution and delivery by Seller of this Agreement does not, and
compliance by Seller with the terms hereof and consummation by Seller
of the transactions contemplated hereby will not, require the Seller
or the Company or any of the Subsidiaries to obtain any consent,
approval, authorisation or other action of, or make any filing with or
give any notice to, any court, administrative agency or other
governmental authority, except (a) as disclosed in Section 7.4 of the
Disclosure Letter, (b) where failure to obtain such consents,
approvals, authorisations or actions, make such filings or give such
notices would not have a Material Adverse Effect and (c) as may be
necessary as a result of any facts or circumstances relating solely to
Purchaser.
7.5 Brokers
Neither this Agreement nor the sale of the Purchased Shares nor any
other transaction contemplated by this Agreement was induced or
procured through any Person acting on behalf of or representing the
Seller or any of their respective Affiliates as broker, finder,
investment banker, financial advisor or in any similar capacity.
7.6 No Subsidiaries
Except for the Subsidiary Stock, the Company does not own any capital
stock or other equity securities or any other direct or indirect
equity interest in any Person.
7.7 Intellectual Property
(a) To the knowledge of Seller, except as set forth in Section 7.7
or 7.14 of the Disclosure Letter, there is not now and has not
been during the past three (3) years any infringement, misuse or
misappropriation in any material respect by the Company or any
of the Subsidiaries of any valid patent, trademark, trade name,
service mark, copyright or trade secret which is owned by any
other Person, and there is not now any existing or, to the
knowledge of Seller, any threatened claim asserted in writing
against the Company or any of the Subsidiaries of any
infringement, misuse or misappropriation in any material respect
by the Company or any of the Subsidiaries of any patent,
trademark, trade name, service mark, copyright or trade secret.
All material patents, trademarks, service marks, tradenames,
copyrights, and all applications and registrations thereof, used
in connection with the operation of the Business are set forth
in Section 7.7 of the Disclosure Letter ("Proprietary Rights").
Except as set forth in Section 7.7 of the Disclosure Letter,
Seller and their Affiliates are the sole and exclusive owners
of, or have the sole and exclusive rights to use, the
Proprietary Rights.
(b) Except as described in Section 7.7 or Section 7.14 of the
Disclosure Letter, there is no pending or threatened claim by
the Company or any of the Subsidiaries against any other Person
for infringement, misuse or misappropriation of any patent,
trademark, trade name, service mark, copyright or trade secret
owned by the Company or any of the Subsidiaries.
<PAGE>
7.8 Financial Statements
Each of the Financial Statements is consistent with the books and
records of the Company and each of the Subsidiaries and fairly
presents the financial condition, assets and liabilities of the
Company and each of the Subsidiaries as of their respective dates and
the results of operations and cash for the periods related thereto in
accordance with GAAP consistently applied among the periods which are
the subject of the Financial Statements.
7.9 Compliance with Laws
On the Closing Date, to the knowledge of Seller, neither the Company
nor any of the Subsidiaries will be in violation of any law, rule or
regulation, or any order, judgment or decree, in any case applicable
to the Company or any of the Subsidiaries or by which any of their
respective properties are bound or affected, except (a) as set forth
in Section 7.9 of the Disclosure Letter and (b) for violations the
existence of which could not reasonably be expected to have a Material
Adverse Effect; provided, however, that Purchaser acknowledges and
agrees that Seller's representations under this Section 7.9 are not
made with respect to any Environmental Laws and that Seller's
representations and warranties with respect to Environmental Laws are
made only in Section 7.18.
7.10 Licenses and Permits
Except as set forth in Section 7.10 of the Disclosure Letter, to the
knowledge of Seller, the Company and each of the Subsidiaries have, or
have applied for, all material governmental licenses, franchises,
permits, approvals, authorisations, exemptions, certificates,
registrations and similar documents or instruments necessary to carry
on the Business as it is currently conducted, except for such
governmental licenses, franchises, permits, approvals, authorisations,
exemptions, certificates, registrations and similar documents or
instruments the absence of which would not have a Material Adverse
Effect; provided, however, that Purchaser acknowledges and agrees that
Seller's representations under this Section 7.10 are not made with
respect to any Environmental Laws and that Seller's representations
and warranties with respect to Environmental Laws are made only in
Section 7.18.
7.11 Material Contracts
(a) Section 7.11 of the Disclosure Letter lists or describes all
currently existing Contracts which involve an executory
obligation of more than $100,000 in any one calendar year,
except Contracts which are terminable by the Company or any of
the Subsidiaries without penalty on no more than thirty (30)
days' notice. Complete and correct copies of all Contracts
listed in Section 7.11 of the Disclosure Letter have been
delivered to or made available for inspection by Purchaser.
(b) Neither the Company or any of the Subsidiaries nor, to the
knowledge of the Seller, any other Person, is in material breach
of, or material default under, any Contract and no event or
action has occurred, is pending or, to the knowledge of the
Seller, is threatened, which after the giving of notice, or the
lapse of time, or both, could reasonably be expected to
constitute or result in a material breach by the Company or any
of the Subsidiaries or, to the knowledge of the Seller, any
other Person, under any Contract.
<PAGE>
7.12 Real Properties
Section 7.12 of the Disclosure Letter sets forth a true and complete
list and brief description of all real property owned, leased or used
by the Company or any of the Subsidiaries, as landlord, tenant or
otherwise. The Company has good title to all real properties described
in Section 7.12 of the Disclosure Letter as being owned by it, except
for Permitted Exceptions and except as disclosed in the Disclosure
Letter.
7.13 Tangible Personal Property
The Company and each of the Subsidiaries has good title to all the
material assets consisting of tangible personal property purported to
be owned by them and valid and subsisting leases with respect to all
of the material assets consisting of tangible personal property
purported to be leased by it. All such owned tangible personal
property is owned free and clear of all Liens, except:
(a) as set forth in Section 7.13 of the Disclosure Letter;
(b) liens for assessments and charges and other claims, the
validity of which the Company or any Subsidiary is contesting in
good faith; and
(c) imperfections of title and Liens the existence of which could
not be reasonably expected to have a Material Adverse Effect.
7.14 Litigation
Except as set forth in Section 7.14 of the Disclosure Letter:
(a) there are no actions, claims, proceedings, governmental or
European Union investigations pending or, to the knowledge of
the Seller, threatened against the Company or any of the
Subsidiaries the Business or any of the assets of the Company or
any of the Subsidiaries at law or in equity, before or by any
court, agency, governmental or European Union entity, or by any
other Person, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and
(b) neither the Business nor any of the assets of the Company or
any of the Subsidiaries is subject to any order, judgment or
decree of any court, governmental or European Union agency
having or which could reasonably be expected to have a Material
Adverse Effect.
7.15 Labour Matters
Section 7.15 of the Disclosure Letter contains a list of the
collective bargaining agreements to which the Company or any of the
Subsidiaries is a party. Except as disclosed in Section 7.15 of the
Disclosure Letter:
(a) there are no labour controversies pending or, to the knowledge
of the Seller, threatened against the Company or any of the
Subsidiaries which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and
(b) there are no grievances outstanding, or unfair labour practice
complaints pending before any applicable authorities, against
the Company or any of the
<PAGE>
Subsidiaries under any such agreement or contract which could
reasonably be expected to have a Material Adverse Effect.
7.16 Employee Benefit Matters
Section 7.16 of the Disclosure Letter lists all employee benefit plans
contributed to or entered into by the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries is or
has been obligated to contribute, in either case within the last five
(5) years (the "Plans"). Except as set forth in Section 7.16 of the
Disclosure Letter, no Plan is a multiemployer plan established
pursuant to a trust agreement or a collective bargaining agreement (a
"Multiemployer Plan"). With respect to the Plans, Seller further
represents and warrants to Purchaser that, to the best of its
knowledge and belief and except as set forth in Section 7.16 of the
Disclosure Letter or to the extent that the failure of any of the
representations set forth in this sentence could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect:
(a) Each Plan has been duly registered where required, and is in
good standing under, conforms in all material respects to, and
its administration complies with, all applicable legislation,
regulatory requirements, orders or governmental
rules(collectively, "Applicable Legislation.
(b) All of the Plans are in full force and effect as written, and
the Company and the Subsidiaries have performed all material
obligations required to be performed by it under, and is not in
material default under, or in material violation of any Plan.
Without limiting the generality of the foregoing, all premiums,
contributions and other payments required to be made by the
Company, the Subsidiaries and any other party under the terms of
any Plan maintained by the Company or any of the Subsidiaries
with respect to the Business that is an occupational pension
scheme or a personal pension scheme as defined in Section 127 of
the Employment Protection (Consolidation) Act 1978 (a "Pension
Plan") have been made for all such Pension Plans, and no amounts
are owed in respect of the period prior to the Effective Date.
All amounts properly accrued to the date hereof as liabilities
of the Company or any of the Subsidiaries under or with respect
to each Plan which have not been paid are set forth in Section
7.16 of the Disclosure Letter (The Pension Plans are funded on a
proper actuarial basis (consistently applying the assumptions
used in the most recent actuarial reports)) having regard to the
benefits provided by such plans.
(c) All premiums, contributions and other payments required to be
made under all Applicable Legislation by the Company or any of
the Subsidiaries before the Closing Date with respect to the
Pension Plans will have been made before the Closing Date to
each of the funds established for the Pension Plans in
accordance with Applicable Legislation. From the date hereof to
the Closing Date, neither the Company nor the Subsidiaries shall
improve or promise to improve any benefits provided or to be
provided in accordance with the terms of the Plans as of the
date hereof, unless required by law or collectively negotiated
agreement.
Seller may, however, cause the Company to pay prior to Closing
any bonuses to the extent accrued to such time.
<PAGE>
(e) There are no material actions, suits or claims pending, other
than routine claims for benefits, or, to the knowledge of the
Company, threatened against the Company or any of the
Subsidiaries in respect of employees who are members or former
members of any of the Pension Plans, against any of the Pension
Plans, or against the assets of any Pension Plan.
(f) Neither the Company nor any of the Subsidiaries maintains any
Plan providing post-retirement benefits other than pension
benefits provided under the Pension Plans registered in
accordance with the Applicable Legislation. The financial
obligations for post-retirement benefits has been determined in
accordance with generally accepted actuarial practice and is
reflected in the financial statements in accordance with GAAP.
Neither the Company nor any of the Subsidiaries is currently
liable for post-retirement benefits with respect to the Business
under any Plan which has been wound up and is not now maintained
by the Company or any of the Subsidiaries.
(g) The Plans are exempt schemes within the meaning of Section
592(1) of the Income and Corporation Taxes Act 1988 and the
Seller is not aware of any matter which could lead to the
withdrawal of that approval.
(h) Since the most recent actuarial evaluations, no power to
augment or alter benefits under any of the Plans has been
exercised and no employee member, or former member of any of the
Plans has been notified that such exercise may be contemplated.
(i) The Disclosure Letter contains full particulars of any benefit
or term which treats male or female beneficiaries under any of
the Plans unequally.
(j) All benefits (other than a refund of contributions with interest
where appropriate) payable under each of the Plans on the death
of a member while in an employment to which each of the Plans
relate are fully insured under a policy effected with an
insurance company and each member has been covered for such
insurance by such insurance company at their normal rates and on
its normal terms for pensions in good health.
7.17 Taxes
Each of the Company and each of the Subsidiaries has duly, timely and
correctly filed with or furnished to the appropriate United Kingdom or
foreign, federal, provincial, state, municipal and local authorities
all Returns and reports required to be filed or furnished by it; all
such Returns and reports were complete and correct in all material
respects; and, except to the extent specifically reflected or reserved
against in the Final Closing Balance Sheet each of the Company and
each of the Subsidiaries has paid all Taxes due to, or claimed to be
due from it by, any taxing authority. The Financial Statements
include full provision for all Taxes including deferred Taxes which
relate to the business, operations, properties or assets of the
Company and each of the Subsidiaries through the periods indicated
thereon which are not yet due to the appropriate taxing authority.
All Taxes that the Company or any of the Subsidiaries is or was
required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the
appropriate taxing authority. There are no Tax-related liens on the
assets of the Company or any of the Subsidiaries. Neither the Company
nor any of the Subsidiaries has executed or filed with any taxing
authority any agreement extending the period for assessment or
collection of Taxes. Neither the Company nor any of the Subsidiaries
are a party to any pending action or
<PAGE>
proceeding, nor (to the best of the knowledge of Seller or the
Company) is any such action or proceeding threatened by any
Governmental Agency for the collection of Taxes. No claim for
assessment or collection of Taxes has been asserted against the
Company or any of the Subsidiaries nor (to the knowledge of Seller or
the Company) is there any basis for any such claim. No issue has been
raised by any taxing authority in respect of an audit or examination
of any Return or report filed by the Company or any of the
Subsidiaries which has not been settled or resolved, and no
examination or audit of any Return or report filed by the Company or
any of the Subsidiaries is currently in progress or, to the best of
the knowledge of Seller or the Company, threatened or contemplated by
any taxing authority and there is no fact or circumstance which might
reasonably be expected to give rise to any such examination or audit
of any such Return or report. Neither the Company nor any of the
Subsidiaries are a party to any agreement providing for the sharing or
allocation of any Tax liability.
Except as set forth in Section 7.17 of the Disclosure Letter, neither
the Company nor any of the Subsidiaries has pending any dispute or
question with any taxing authority. The Company and the Subsidiaries
do not have any obligation to indemnify (whether statutory or
otherwise) any person in respect of Tax. The entry into of this
Agreement and/or Closing will not give rise to any Tax charge on the
Company or any of the Subsidiaries. The Company and each Subsidiary
have not paid before the date of this Agreement, and will not pay
before Closing, any dividends under Section 247(1) of the United
Kingdom Income and Corporation Taxes Act 1988 other than dividends
falling within the scope of a valid and effective election made under
Section 247(1) of that Act. To the knowledge of the Sellers, neither
the Company nor any of the Subsidiaries has entered into any
transaction in respect of which there may be substituted for any Tax
purpose a different consideration for the actual consideration given
or received by it. Other than Pakseal SARL and Pakseal SRL, neither
the Company nor any of the Subsidiaries has a permanent establishment
(as defined in any relevant double taxation relief order) outside the
United Kingdom. The carrying out of the Reorganisation and any further
steps undertaken by the Company or any of the Subsidiaries before
Closing outside the ordinary course of business of the Company or any
of the Subsidiaries will not give rise to any Tax liability in the
Company or any of the Subsidiaries. Neither the Company nor any
Subsidiary has any liability for any Taxes which are primarily
chargeable against some other person (other than the Company or any of
the Subsidiaries) or where such Taxes are the joint or joint and
several liability of the Company or any of the Subsidiaries and some
other person (other than the Company or any of the Subsidiaries) or
where the Taxes in question relate to any income, profits or gains
earned, accrued or received by any other person (other than the
Company or any of the Subsidiaries). The loan due and owing by
Twicebonus Limited to The Chemical Bank is not fixed for the purposes
of Regulation 3(6) of the Exchange Gains and Losses (Transitional
Provisions) Regulations 1994 and no election has been made under
Regulation 3(5) of the said Regulations in respect of the said Loan.
Notwithstanding any other provisions of this Section 7.17, Seller
shall not be deemed to be in breach of this Section 7.17 by virtue of
any Taxes with respect to any period including or ending prior to the
Effective Date which result from Purchaser causing the write-up of
assets.
7.18 Environmental Compliance
(a) Compliance
To the knowledge of Seller, except as set forth in Section 7.18
of the Disclosure Letter:
<PAGE>
(i) the Company and each of the Subsidiaries are in
compliance with and do not have any liability under all
applicable Environmental Laws as presently in effect;
(ii) the Company and each of the Subsidiaries possess all
required permits, licenses, consents, authorisations,
certifications, approvals, agreements, undertakings and
arrangements under the Environmental Laws as presently in
effect relating to the use, occupancy or operation of the
Business; and
(iii) the Company and each of the Subsidiaries are in
compliance with all requirements or conditions imposed
under their permits, licenses, consents, authorisations,
certifications, approvals, agreements, undertakings and
arrangements and have filed all required notices
information and applications. To the knowledge of the
Seller, there are no facts or circumstances which would
lead the Seller to believe that any such non-compliance
or liability will arise following the Closing Date.
(b) No Hazardous Substance
Except as set forth in Section 7.18 of the Disclosure Letter,
the Company and the Subsidiaries have never generated, used,
transported, treated, stored, kept, accumulated, disposed of or
otherwise handled any Hazardous Substance at any site, location
or facility in connection with the use, occupancy or operation
of the Business, other than in compliance in all material
respects with Environmental Laws in effect at the time in
question. Except as set forth in Section 7.18 of the Disclosure
Letter, the Company and the Subsidiaries have not owned or
operated any underground storage tanks ("USTs") in connection
with the use or occupancy of their real property or the
operation of the Business, other than in compliance in all
material respects with all applicable Environmental Laws.
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of the Seller there has been no release, spill or
discharge of any Hazardous Substance in connection with the use
or occupancy of their real property or the operation of the
Business in material violation of or giving rise to material
liability or requiring or which is likely to lead to a
requirement for reporting, removal or remediation under any
Environmental Laws in effect at the time in question which has
not been reported, removed or remediated, as the case may be.
(c) No Actions or Proceedings
Except as set forth in Section 7.18 of the Disclosure Letter,
neither the Company nor any of the Subsidiaries are subject to,
nor, to Seller's knowledge, are the subject of, any threatened
private, administrative, regulatory or judicial inquiry,
investigation, proceeding, notice, order or action resulting
from or relating to violations of or obligations under or
liability under Environmental Laws, including without limitation
liabilities relating to the generation, transportation,
treatment, accumulation, keeping storage, disposal or other
handling of Hazardous Substance or the protection or
endangerment of the environment or human health and safety in
connection with the use or occupancy of the real property of the
Company or any of the Subsidiaries or any subsidiary of the
Company or Precis or the operation of the Business.
<PAGE>
(d) Other Conditions
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of the Seller, no facts, events or conditions
exist which could reasonably be expected to interfere with or
prevent continued compliance with applicable Environmental Laws
as in effect on the date hereof, or result in any liability,
under Environmental Laws or otherwise form the basis of any
claim, action, suit, proceeding, hearing notice or
investigation, relating to the release, discharge, generation,
use, transportation, treatment, accumulation, keeping storage,
disposal or other handling of Hazardous Substance or the
protection or endangerment of the environment or human health
and safety in connection with the use, occupancy or operation of
the real property of the Company or any of the Subsidiaries or
the Business.
7.18.2 Continuation of Permits etc.
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of Seller there are no facts or circumstances
indicating that any required permits, licences, certifications,
approvals, agreements, undertakings or arrangements relating to
the use occupancy or operation of the Business would or might be
revoked, suspended, varied, modified or not renewed.
Neither the signature nor the performance of this Agreement will
itself cause any permits, licences, certifications, approvals,
agreements, undertakings or arrangements required under Environmental
Laws for the use occupancy or operation of the Business to be
withdrawn, suspended or modified.
7.19 Inventory
All of the inventories which are reflected in the balance sheet dated
30 June 1996 constituting a part of the Financial Statements were
purchased or acquired in the ordinary and regular course of the
conduct of the Business and in a manner consistent with the regular
inventory practices relating to the Business, and have been or will be
used or sold in the ordinary and regular course of the Business and in
a manner consistent with the Company's or the relevant Subsidiaries
regular inventory practices; all of the inventories which are
reflected in the balance sheets constituting a part of the Financial
Statement were priced at the lower of cost (on the first-in-first-out
basis), or market, and were (as to classes of items inventories and
methods of accounting and pricing) determined in a manner consistent
with prior years; and all inventories which have been purchased or
acquired by the Company or any of the Subsidiaries for the Business
since June 30, 1996 were purchased or acquired in the ordinary and
regular course of the Business and in a manner consistent with the
Company's or the relevant Subsidiaries regular inventory practices and
have been or will be used or sold in the ordinary and regular course
of the Company's or the relevant Subsidiaries business and in a manner
consistent with the Company's or the relevant Subsidiaries regular
inventory practices.
7.20 Receivables
All of the Receivables which are reflected in the balance sheets
constituting a part of the Financial Statements represent, and all of
the Receivables as of the Closing Date will represent, valid
obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to
the Closing Date, all of the Receivables set forth on the Seller
Closing Balance Sheet delivered under the US
<PAGE>
Purchase Agreement will be current and enforceable (but no
representation is hereby made as to their collectability). These will
be as of the Closing Date. There is no contest, claim or asserted
right of set-off in any agreement relating to the amount or validity
of any Receivable set forth on the Seller's Closing Balance Sheet as
defined in the US Asset Purchase Agreement except those arising in the
ordinary course of business. The Seller has delivered or made
available to Purchaser a complete and accurate list of all Receivables
as of June 30, 1996, which list sets forth the ageing of such
Receivables.
7.21 Capitalisation
(a) The total authorised share capital of the Company and each of
the Subsidiaries, the number of such shares that are issued
and outstanding and the respective holders of such shares are
set forth in Section 7.21 of the Disclosure Letter. The
Purchased Shares constitute the entire issued share capital of
the Company; and the Subsidiary Stock comprises the entire
issued share capital of each of the Subsidiaries.
(b) The Purchased Shares and the Subsidiary Stock are validly
issued, and fully paid and are not subject to any pre-emptive
rights, and, except as disclosed in Section 7.21 of the
Disclosure Letter, there are no voting trust agreements or other
contracts, agreements or arrangements restricting voting or
dividend rights or transferability with respect to either the
Purchased Shares or the Subsidiary Stock.
(c) Except as disclosed in Section 7.21 of the Disclosure Letter,
(i) Seller owns the Purchased Shares free and clear of all
Liens, and (ii) the Company owns the Subsidiary Stock free and
clear of all Liens.
(d) Except as disclosed in Section 7.21 of the Disclosure Letter,
there no outstanding options, warrants, rights, privileges or
other arrangements, pre-emptive, contractual or otherwise, to
acquire or issue any shares or other securities of the Company
or any of the Subsidiaries.
7.22 Undisclosed Liabilities
On June 30, 1996 neither the Company nor any of the Subsidiaries had
any material debts, liabilities or obligations of a nature required to
be reflected on a balance sheet prepared in accordance with GAAP,
which were not fully disclosed, reflected or reserved against in the
Balance Sheet, except as disclosed in the Disclosure Letter. Except
for current liabilities or obligations which have been incurred since
June 30, 1996 in the ordinary course of business and except as
disclosed in the Disclosure Letter, or as reflected in the Final
Closing Balance Sheet since June 30, 1996, neither the Company nor any
of the Subsidiaries has incurred any material debt, liability or
obligation of a nature required to be reflected on a balance sheet
prepared in accordance with GAAP. Except as reserved for on the Final
Closing Balance Sheet, neither the Company nor any of the Subsidiaries
has or will have any liabilities to any third party in connection with
the liquidation of Pakseal SRL.
7.23 Books and Records
The books and records maintained by the Company and each of the
Subsidiaries are fully and accurately maintained in all material
respects. To the knowledge of Seller, except as would not have a
Material Adverse Effect, the minute books of the Company and each of
the Subsidiaries are complete and accurate in all material respects
and
<PAGE>
reflect all material actions taken and resolutions passed by the
directors and shareholders of the Company and each of the Subsidiaries
since their respective dates of incorporation, and all such meetings
were duly called and held, and the share certificate books, register
of shareholders, register of transfer and registers of directors are
complete and accurate in all material respects.
7.24 Except as would not have a Material Adverse Effect, all accounts,
documents and returns required to be delivered or made to the
Registrar of Companies or any other authority by the Company or any of
the Subsidiaries have been duly and correctly delivered or made.
7.25 Full Disclosure
The materials delivered by or on behalf of the Seller in connection
with this Agreement, taken as a whole, fairly present the Business.
7.26 DISCLAIMER OF WARRANTIES. EXCEPT WITH RESPECT TO THE WARRANTIES AND
REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER MAKES
NO WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE
ASSETS OF THE COMPANY OR ANY OF THE SUBSIDIARIES OR ANY PART THEREOF,
OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD BY
PURCHASER THAT SUCH ASSETS ARE TO BE ACQUIRED BY IT BY VIRTUE OF
PURCHASER'S ACQUISITION OF THE COMPANY HEREUNDER "AS IS" ON THE DATE
HEREOF, AND IN THEIR PRESENT CONDITION, SUBJECT TO REASONABLE USE,
WEAR AND TEAR BETWEEN THE DATE HEREOF AND THE CLOSING DATE, AND
PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.
8 WARRANTIES AND REPRESENTATIONS OF PURCHASER
Purchaser warrants and represents to Seller (which warranties and
representations shall survive the Closing) as follows:
8.1 Incorporation and Qualification of Purchaser
Purchaser is a corporation validly existing and in good standing under
the laws of England and Wales and has all requisite corporate power
and authority to own, operate and lease the assets it now owns,
operates or leases and to carry on its business as currently
conducted.
8.2 Authority
Purchaser has all requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder and the
consummation by Purchaser of the transactions contemplated hereby have
been duly authorised by all requisite corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by
Purchaser and (assuming the due authorisation, valid execution and
delivery hereof by Seller) is a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, re-
organisation, moratorium or similar laws affecting creditors' rights
and
<PAGE>
remedies generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
8.3 No Conflict
Except as may result from any facts or circumstances relating solely
to Seller, the execution, delivery and performance of this Agreement
by Purchaser do not and will not:
(a) conflict with or violate any provision of the Articles of
Association of Purchaser;
(b) except as would not have a material adverse effect on
Purchaser or its ability to consummate the transactions
contemplated hereby, result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of
time, or both, would become a default) under, or give to others
any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Lien on any of
the assets or properties of Purchaser pursuant to, any
instrument, license, agreement or commitment to which Purchaser
is a party or by which any of its assets or properties are
bound; or
(c) except as would not have a material adverse effect on
Purchaser or its ability to consummate the transactions
contemplated hereby, conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction or decree
applicable to Purchaser or its assets or properties.
8.4 Consents and Approvals
The execution, delivery and performance by Purchaser of this Agreement
do not, and compliance by Purchaser with the terms hereof and
consummation by Purchaser of the transactions contemplated hereby will
not, require Purchaser to obtain any consent, approval, authorisation
or other action of, or make any filing with or give any notice to, any
court, administrative agency or other governmental authority, except:
(a) where failure to obtain such consents, approvals, authorisations
or actions, make such filings or give such notice would not
prevent Purchaser from performing any of its material
obligations under this Agreement; and
(b) as may be necessary as a result of any facts or circumstances
relating solely to Seller.
8.5 Litigation
There are no actions, claims, proceedings or governmental
investigations pending against Purchaser or any of its assets or
properties at law or in equity, before any federal, provincial or
municipal court, agency or other governmental entity, or by any other
Person, which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Purchaser or its ability
to consummate the transactions contemplated hereby.
8.6 Brokers
Neither this Agreement nor the purchase of the Purchased Shares or any
other transaction contemplated by this Agreement was induced or
procured through any
<PAGE>
Person acting on behalf of or representing Purchaser or any of its
Affiliates as broker, finder, investment banker, financial advisor or
in any similar capacity.
8.7 Financial Ability
At the Closing on the Closing Date, Purchaser will have the funds
necessary to purchase the Purchased Shares and consummate the
transactions contemplated hereby.
8.8 Investment Purpose
Purchaser confirms that it is acquiring the Purchased Shares for
investment for its own account and not with a view to the sale or
distribution of any part thereof, and that Purchaser has no present
intention of selling, granting, participating in, or otherwise
distributing the same.
9 CONDITIONS TO CLOSING APPLICABLE TO PURCHASER
The obligation of Purchaser to consummate the transactions herein
contemplated is subject to the following conditions precedent:
9.1 No Termination
Neither Purchaser nor the Seller shall have terminated this Agreement
pursuant to Section 11.1.
9.2 Bring-Down of Seller's Warranties
The warranties and representations made by Seller herein to Purchaser
shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date, and each
Seller shall have performed and complied with all agreements,
covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date; and at the Closing,
Purchaser shall have received a certificate executed by the President
or any Vice President or the Controller of Seller to the foregoing
effect.
9.3 Pending Actions
No investigation, action, suit or proceeding by any governmental or
regulatory commission, agency, body or authority shall be pending on
the Closing Date which challenges, or is reasonably likely to result
in a challenge to, this Agreement or any transactions contemplated
hereby or any action is brought by any other person which is
reasonably likely to prevent the consummation of the transactions
contemplated hereby.
9.4 Consents and Approvals
All consents, approvals or authorisations of any governmental
authority required to consummate the transactions contemplated hereby
shall have been duly obtained and shall be in full force and effect as
of the Closing Date, and Seller shall have complied with all
applicable provisions of law requiring any notification, declaration,
filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation.
<PAGE>
9.5 All Necessary Documents
All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement and all documents incident
thereto, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such documents
as Purchaser may reasonably request in connection with said
transactions, including without limitation, those documents to be
delivered pursuant to Section 3.2.
9.6 Termination of Certain Liens
Purchaser shall have received evidence, in form and substance
reasonably satisfactory to it, of the termination, cancellation and
release of the Liens set forth in Section 7.13 of the Disclosure
Letter, each of which are to be satisfied at or prior to Closing.
9.7 U.S. and Canadian Transactions
The "Closing" contemplated under each of the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
9.8 Consents under Senior Credit Agreement and Release of Liens
All consents required under the Senior Credit Agreement and the
documents and instruments executed and delivered in connection
therewith to permit Seller to consummate the transactions contemplated
hereby shall have been delivered to Seller and all Liens on the
Purchased Shares and the assets of the Company and each of the
Subsidiaries under the Senior Credit Agreement and the other documents
and instruments executed and delivered in connection therewith shall
have been released and terminated.
9.9 Certain Required Payments
At or prior to Closing, except as provided in Section 10.9, Seller
shall have paid (or caused to be paid) to the Company or any
Subsidiary any and all amounts then owed by the Seller or any
Affiliate to the Company or any Subsidiary, and shall have caused to
be paid by the Company or any Subsidiary to Seller or any Affiliate
any and all amounts then owed by the Company or any Subsidiary to such
Seller or Affiliate (in each case, other than any amounts represented
by Transferred Intercompany Accounts), but in each case only to the
extent that such amount constituted an adjustment to the Purchase
Price pursuant to Section 2.2. The Seller shall provide to the
Purchaser evidence, reasonably satisfactory to the Purchaser, of the
making of such payments
Purchaser shall have the right to waive any of the foregoing
conditions precedent.
10 CONDITIONS TO CLOSING APPLICABLE TO SELLER
The obligation of Seller to consummate the transactions herein
contemplated is subject to the following conditions precedent:
10.1 No Termination
Neither Purchaser nor the Seller shall have terminated this Agreement
pursuant to Section 11.1.
<PAGE>
10.2 Bring-Down of Purchaser Warranties
All warranties and representations made by Purchaser herein to Seller
shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date, and
Purchaser shall have performed and complied with all agreements,
covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date; and at the Closing,
Seller shall have received a certificate executed by the President or
any Vice President or Director of Purchaser to the foregoing effect.
10.3 Pending Actions
No investigation, action, suit or proceeding by any governmental or
regulatory commission, agency, body or authority shall be pending on
the Closing Date which challenges or is reasonably likely to result in
a challenge to this Agreement or any transaction contemplated hereby
or any action is brought by any other person which is reasonably
likely to prevent the consummation of the transactions contemplated
hereby.
10.4 Consents and Approvals
All consents, approvals or authorisations of any governmental
authority required to consummate the transactions contemplated hereby
shall have been duly obtained and shall be in full force and effect as
of the Closing Date, and Purchaser shall have complied with all
applicable provisions of law requiring any notification, declaration,
filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation.
10.5 All Necessary Documents
All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement, and all documents
incident thereto, shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of such
documents as they may reasonably request in connection with said
transactions, including without limitation, those documents to be
delivered pursuant to Section 3.3.
10.6 Termination of Certain Liens
Seller shall have received evidence, in form and substance reasonably
satisfactory to them, of the termination, cancellation and release of
the Liens set forth in Section 7.13 of the Disclosure Letter, each of
which are to be satisfied at or prior to Closing.
10.7 U.S. and Canadian Transactions
The "Closing" contemplated under each of the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
10.8 Consents under Senior Credit Agreement and Release of Lien
All consents required under the Senior Credit Agreement and the
documents and instruments executed and delivered in connection
therewith to permit Seller to consummate the transactions contemplated
hereby shall have been delivered to Seller
<PAGE>
and all Liens on the Purchased Shares and the assets of the Company
and each of the Subsidiaries under the Senior Credit Agreement and the
other documents and instruments executed and delivered in connection
therewith shall have been released and terminated.
10.9 Certain Required Payments
Simultaneously with the Closing, the Purchaser shall:
(i) cause the Company and/or the Subsidiaries to pay an amount
sufficient to discharge the Third Party Debt; and
(ii) cause Twicebonus Limited to pay any amounts borrowed by it
from Interlake Corporation or Seller in accordance with Section
5.1(d)(i).
10.10 Approval of Preferred Stockholders of The Interlake Corporation
The preferred stockholders of The Interlake Corporation shall have
authorised Seller's execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Seller shall have the right to waive any of the foregoing conditions
precedent.
11 TERMINATION
11.1 Termination
This Agreement may be terminated at any time prior to the Closing only
as follows, and in no other manner:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or by the Seller if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or
before 30 November 1996, or such later date as may have been
agreed upon in writing by the parties hereto; provided, that the
party seeking to terminate is not, in any material respect, in
breach of or in default under this Agreement;
(c) by Purchaser or by the Seller if any representation or warranty
made herein for the benefit of Purchaser or Seller,
respectively, or in any certificate, schedule or documents
furnished to Purchaser or Seller, respectively, pursuant to this
Agreement is untrue in any material respect, or if the Seller or
Purchaser, respectively, shall have defaulted in any material
respect in the performance of any material obligation under this
Agreement;
(d) by Seller if the Closing of the transactions contemplated by
this Agreement shall not have occurred on or before 10 October
1996, and no Competition Act Opinion (as defined in the Canadian
Stock Purchase Agreement) as of the date of Seller's notice of
termination shall have been delivered to Seller by Purchaser
within five Business Days after the date of Seller's notice of
termination under this Section 11.1(d).Any termination pursuant
to this Article 11 other than pursuant to Section 11.1(d) shall
not limit or restrict the rights or remedies of any party
hereto. Upon termination of this Agreement pursuant to Section
11.1(d), the Seller nor Purchaser shall have any further rights
hereunder.
<PAGE>
12 INDEMNIFICATION
12.1 Indemnity
After the Closing Date, Seller and Interlake Corporation (collectively
the "Covenantors") agree, jointly and severally, to indemnify and hold
Purchaser, its Affiliates (and, after the Closing, but only in
connection with a Tax Claim (as defined below) the Company and the
Subsidiaries) and their officers and directors (collectively, the
"Purchaser Indemnified Persons") harmless against any loss, damage or
expense (including reasonable attorneys' fees) ("Loss") suffered as
the result of:
(a) any breach by the Seller of this Agreement;
(b) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by the Seller herein or
in the Disclosure Letter (including, without limitation an
inaccuracy in or breach of Section 7.17 hereof (a "Tax Claim"));
(c) any inaccuracy or misrepresentation in a certificate or
affidavit delivered by the Seller at the Closing in accordance
with the provisions of this Agreement;
(d) the assertion by a third party of any Contingent Liabilities or
the compliance by Purchaser with any applicable law, rule or
order resulting in any Contingent Liabilities.
12.2 Limitation
Purchaser's right to indemnification pursuant to Section 12.1 is
subject to the following specific limitations:
(a) (i) After the Third Anniversary, no Purchaser Indemnified
Person shall be entitled to assert any right of
indemnification with respect to Section 7.18 for any loss,
damage or expense ("Loss") suffered by such Purchaser
Indemnified Person, except that if, as of the Third
Anniversary, there shall then be pending any such claim
under Section 12.1 of which such Purchaser Indemnified
Person shall have notified Seller in writing on or prior
to the Third Anniversary, such Purchaser Indemnified
Person shall continue to have the right to be indemnified
with respect to such claim.
After the expiration of the statute of limitations imposed
by any applicable law with respect to the underlying Tax
liability that forms the basis for any Purchaser
Indemnified Person's claims, such Purchaser Indemnified
Person shall not be entitled to assert any right of
indemnification under Section 12.1 with respect to any
loss, damage or expense suffered by such Purchaser
Indemnified Person as the result of a breach by Seller of
its representations and warranties set forth in Section
7.17, except that if, as of the expiration of any such
statute of limitation, there shall then be pending any
such claim under Section 12.1 of which such Purchaser
Indemnified Person shall have notified Seller in writing
on or prior to such expiration date, such Purchaser
Indemnified Person shall continue to have the right to be
indemnified with respect to such claim.
<PAGE>
(iii) Except as set forth above, after the First Anniversary, no
Purchaser Indemnified Person shall be entitled to assert
any other right of indemnification under Section 12.1
(except with respect to the second sentence of Section
7.12 or the first sentence of Section 7.13) for any loss,
damage or expense suffered by such Purchaser Indemnified
Person, except that if, as of the First Anniversary, there
shall then be pending any such claim under Section 12.1 of
which such Purchaser Indemnified Person shall have
notified Seller in writing on or prior to the First
Anniversary, such Purchaser Indemnified Person shall
continue to have the right to be indemnified with respect
to such claim.
(iv) If a claim shall be made by any taxing authority, or if
any Purchaser Indemnified Person shall become aware that
any taxing authority is considering any issues which may
give rise to such a claim, that in either event, if
successful, would result in the indemnification of a
Purchaser Indemnified Person under Section 12.1 (as
limited by Section 12.2) for a Tax Claim or would result
in a loss, damage or expense in the nature of a Tax Claim
that would be counted towards the Threshold under Section
12.2(b), such Purchaser Indemnified Person shall notify
Seller in writing of such claim or other circumstances
within ten days of receipt by any Purchaser Indemnified
Person from the taxing authority of notice of such claim,
or any such Purchaser Indemnified Person becoming aware of
such other circumstances.
(b) Subject as hereinafter provided, no Purchaser Indemnified
Person shall be entitled to indemnification hereunder for any
indemnification claim until the amount of the aggregate losses,
damages and expenses required to be indemnified by the
Covenantors pursuant to Section 12.1 (as limited by Section
12.2) together with the amount of the aggregate losses, damages
and expenses required to be indemnified by the "Sellers" and/or
"Covenantors" under Sections 12.1 of each of the U.S. Asset
Purchase Agreement and the Canadian Stock Purchase Agreement,
exceed $750,000 (said amount is hereinafter sometimes referred
to as the "Threshold"), whereupon the Purchaser Indemnified
Persons shall be entitled to indemnification hereunder from
Covenantors only for the aggregate of indemnification claims in
excess of the Threshold. For the purposes of Section 12.1 and
this Section 12.2, in computing such individual or aggregate
amounts of claims, and the amount set forth in (c) below, the
amount of each claim shall be deemed to be an amount:
(i) net of any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by a
Purchaser Indemnified Person from any third party with
respect thereto; and
(ii) net of any tax benefit realised by a Purchaser
Indemnified Person, by reason of deductibility of such
liability or damage (determined by multiplying such
deductible amount by the then applicable rate of
corporation tax, corporate tax or corporate income tax
(as the case may be) for the Purchaser Indemnified Person
concerned), and any deferred tax benefit attributable to
such liability or damage (determined on the same basis
but present valued to the extent obtained through
depreciation or amortisation deductions).
<PAGE>
(c) The maximum liability of Covenantors under this Agreement and
the "Sellers" and/or "Covenantors" under the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement to the
Purchaser Indemnified Persons for indemnification claims
hereunder and thereunder shall be $25,000,000 in aggregate.
(d) Prior to seeking indemnification under Section 12.1, a
Purchaser Indemnified Person shall deliver appropriate claims to
any relevant insurer or third party obligated to indemnify or
reimburse such Purchaser Indemnified Person with respect to the
loss, damage or expense giving rise to such claim. To the
extent necessary, a Purchaser Indemnified Person shall permit
Seller to assert any such claims and shall co-operate, at
Seller's expense, with Seller's prosecution of such claims. In
the event that either Covenantor makes any payment to a
Purchaser Indemnified Person for indemnification for which such
Purchaser Indemnified Person could have collected on a claim
against a third party, such Covenantor shall be entitled to
pursue claims and conduct litigations on behalf of such
Purchaser Indemnified Person and any of its successors, to
pursue and collect on any indemnification or other remedy
available to such Purchaser Indemnified Person with respect to
such claim and generally to be subrogated to the rights of such
Purchaser Indemnified Person with respect thereto.
(e) As a condition to accepting the benefits of Section 12.1, each
Purchaser Indemnified Person acknowledges and agrees that its
sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this
Article 12. In furtherance of the foregoing, each Purchaser
Indemnified Person waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action
it may have against Seller and each other Seller Indemnified
Person arising under or based upon any foreign, federal,
provincial, state or local statute, law, ordinance, rule or
regulation (including, without limitation, any such rights,
claims or causes of action arising under or based upon common
law, Environmental Laws or otherwise).
(f) Except as specifically set forth in this Agreement, Seller is
not making any representation, warranty, covenant or agreement
with respect to the matters contained herein including, without
limitation, the assets, liabilities and operations of the
Company and the Subsidiaries. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any
right on the part of Purchaser, after the consummation of the
purchase and sale of the Purchased Shares contemplated hereby,
to rescind this Agreement or any of the transactions
contemplated hereby.
(g) The Covenantors shall not have any liability under any provision
of this Agreement for any liabilities or damages to the extent
that such liabilities or damages relate to actions taken or not
taken by the Company, the Subsidiaries, Purchaser or any other
Purchaser Indemnified Person after the Closing Date. In no event
shall the Covenantors be liable for Consequential Damages.
(h) Each Purchaser Indemnified Person shall take all reasonable
steps to mitigate all liabilities and damages for which a claim
may be made against the Covenantors pursuant to Section 12.1
upon and after becoming aware of any event which could
reasonably be expected to give rise to such liabilities or
<PAGE>
damages. Purchaser shall cause the Company to refrain from
issuing credit notes against the Receivables unless Seller have
consented thereto.
(i) If at any time or from time to time either Covenantor makes any
indemnification payment under Section 12.1 or Section 12.2, such
payment shall be deemed for all purposes hereto to constitute a
reimbursement of a portion of the Purchase Price equal to the
amount so paid, and upon such reimbursement, the Purchase Price
shall be deemed to have been reduced accordingly for all
purposes hereof.
(j) (A) Subject to the resolution of any Tax dispute pursuant to
this Section 12.2(j), upon notice from Purchaser to
Seller that a Purchaser Indemnified Person is entitled to
an indemnification payment for a Loss arising from a Tax
Claim, the Covenantors shall thereupon jointly and
severally, pay to the Purchaser Indemnified Person an
amount that will indemnify and hold the Purchaser
Indemnified Person harmless from such loss or if the
claim is being handled pursuant to sub-section (B)
hereof, make such payment or provide the security
referred to in sub-section (B)(cc) hereof.
(B) Seller shall have the right to control in all respects the
dispute of any Tax Claim or any claim or possible claim by
any taxing authority that may give rise to any Tax Claim
or any loss, damage or expense in the nature of a Tax
Claim that would be counted towards the Threshold under
Section 12.2(b) (collectively, a "claim"), whether in
Seller's name or in the name of any relevant Purchaser
Indemnified Person, including, without limitation, the
right to negotiate with the relevant taxing authority with
respect thereto and, subject to the balance of this
Section 12.2(j), to settle any such claim, and each
Purchaser Indemnified Person shall take all such action in
connection with disputing such claim, including, without
limitation, providing copies of any relevant
documentation, as Seller shall reasonably request in
writing from time to time, but only if:
(aa) within 30 days (or such earlier date that any
payment of Taxes is due by the Purchaser
Indemnified Person) after the notice described
above has been given to Seller by the Purchaser
Indemnified Person, Seller advises that it wishes
to exercise its rights under this Section 12.2(j);
(bb) subject to the provisions of clause (dd) below on
the sharing of fees and expenses, the Covenantors
shall have agreed to pay to the Purchaser
Indemnified Person, as provided in this Section
12.2(j), all external costs and expenses that the
Purchaser Indemnified Person may reasonably incur
in connection with disputing such claim, including
reasonable solicitors' and accountants' fees and
disbursements;
(cc) if the Purchaser Indemnified Person is requested to
pay the Tax claimed and sue for a refund, the
Covenantors shall have either provided security to
the relevant taxing authority in form satisfactory
to such taxing authority for payment of such Tax,
or paid the amount of such claimed Tax directly to
such taxing authority on behalf of the Purchaser
Indemnified
<PAGE>
Person (but only to the extent that the Covenantors
would be required under Section 12.1 hereof (as
limited by Section 12.2) to indemnify the Purchaser
Indemnified Person in respect of such Tax so
claimed) in which event such payment shall be
deemed to constitute the advance by the Covenantors
to the Purchaser Indemnified Person, on an
interest-free basis, of the amount of such claim
and to the extent that the Covenantors are not so
obligated to indemnify such Purchaser Indemnified
Person with respect to such Tax so claimed, such
Purchaser Indemnified Person shall promptly pay the
Tax so claimed on its own, and any indemnity
provided hereunder shall not extend to any
additional interest, costs or penalties resulting
from any failure by such Purchaser Indemnified
Person to promptly pay such Tax so claimed;
(dd) the Covenantors shall have selected tax advisers
reasonably satisfactory to the Purchaser
Indemnified Person. In the case of any claim
referred to in this Section 12.2 (j), the Purchaser
Indemnified Person shall not make payment of such
claim for at least 30 days (or such shorter period
as may be required by applicable law) after the
giving of the notice required by sub-section
(a)(iv) above. The Covenantors shall keep Purchaser
informed as to the progress of any dispute pursuant
to this Section 12.2, shall consult with Purchaser
and Purchaser's advisers in good faith with respect
to such dispute and shall make available to
Purchaser and Purchaser's advisers, a reasonable
time prior to filing, any materials to be filed
with respect to such dispute. In the case of any
claim the resolution of some portion of which is
reasonably expected by Purchaser to have an adverse
effect on the Purchaser Indemnified Person as to
which there will be no indemnification by
Covenantors, then Purchaser and the Covenantors
shall agree upon the accountants and the legal
advisers to represent them in disputing such claim;
if Purchaser and the Covenantors cannot or do not
so agree within 15 days from the date on which the
need for such accountants and advisers first
arises, then one of the national accounting firms
shall serve as the accountants (the parties hereby
agree that Price Waterhouse is acceptable) and a
firm selected by both Smith Lyons and Blake,
Cassels & Graydon of Toronto, Canada shall serve as
the legal advisers in such dispute. The fees and
expenses of such accountants and legal advisers
shall be shared by the Covenantors and the
Purchaser in proportion to the amount at stake for
each. Notwithstanding anything to the contrary
herein, neither party shall settle any claim
without the prior written consent of the other
party, provided that such consent is not
unreasonably withheld or delayed, provided,
however, that if the Purchaser shall refuse to
consent to any settlement of a claim which the
Covenantors wish to agree to, then without limiting
the applicability of the $750,000 Threshold or
maximum liability of the Covenantors as provided
for in Sections 12.2(b) and (c) above, the
liability of
<PAGE>
Covenantors in connection with such claim shall be
limited to no more than the amount for which the
Covenantors would have settled; or
(ee) the Covenantors do not act unlawfully.
(C) If, after actual payment by Covenantors of an amount
advanced pursuant to sub-section (j)(B)(cc) above, the
extent of the liability of the Purchaser Indemnified
Person with respect to the indemnified matter shall be
established by the final judgment or decree of a court or
a final or binding settlement with a taxing authority
having jurisdiction thereof (the "Final Determination"),
the Purchaser Indemnified Person shall promptly pay the
Covenantor any refund received by or credited to the
Purchaser Indemnified Person with respect to the
indemnified matter (together with any interest paid or
credited thereon by the taxing authority and any recovery
of legal fees from such taxing authority) and to the
extent that the amount so paid by the Covenantor exceeds
the amount for which they are liable under Sections 12.1
and 12.2, the Purchaser Indemnified Person shall promptly
repay such excess to the Covenantor. Notwithstanding the
foregoing, the Purchaser Indemnified Person shall not be
required to make any payment under this clause (ii) before
such time as the Covenantors shall have made all payments
or indemnities then due with respect to Purchaser
Indemnified Person pursuant to Section 12.2.
(D) The Purchaser shall cause the Company to retain all
books and records that may become relevant to any Tax
Claim that may arise hereunder from time to time, until
such time as the making of any such Tax Claim is precluded
pursuant to Section 12.2(a)(ii).
(k) Notwithstanding any provision hereof, after the Tangible Net
Worth is finally calculated in accordance with Section 2.3 of
the US Asset Purchase Agreement, no Purchaser Indemnified Person
shall have any right to indemnification for any Loss suffered as
a result of any inaccuracy in or breach of the warranty
contained in Section 7.8 or Section 7.22 (to the extent such
Loss arises out of matters which were finally determined in
accordance with Section 2.3 of the U.S Asset Purchase
Agreement), Section 7.19 or Section 7.20.
(l) All sums payable by either Covenantor to any person pursuant to
this Agreement shall be paid free and clear of all deductions
or withholdings whatsoever, save only as may be required by any
applicable law.
(m) If any deductions or withholdings are required by law to be
made from any of the sums payable by either Covenantor pursuant
to this Agreement, Covenantors shall be obliged to pay to the
relevant person such sum as will, after the deduction or
withholding has been made, leave that person with the same
amount as it would have been entitled to receive in the absence
of any such requirement to make a deduction or withholding.
(n) If Tax is payable on any sum paid by either Covenantor to any
person pursuant to this Agreement, the sum otherwise so payable
shall be grossed up by such amount as will ensure that, after
payment of any Tax charged on
<PAGE>
or in respect of such payment, there shall be left a sum equal
to that which would otherwise be payable pursuant to this
Agreement.
(o) All sums payable by either Covenantor to any person pursuant to
this Agreement shall be treated as a reduction of the Purchase
Price.
12.3 Purchaser Indemnity
After the Closing Date, Purchaser and Samuel Manu-Tech, jointly and
severally, agree to indemnify and hold Seller, its Affiliates and its
officers and directors (collectively, the "Seller Indemnified
Persons") harmless against any loss, damage or expense (including
reasonable attorneys' fees) suffered as the result of:
(a) any breach by Purchaser of this Agreement;
(b) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by Purchaser herein;
(c) any inaccuracy or misrepresentation in a certificate or
affidavit delivered by Purchaser at the Closing in accordance
with the provisions of this Agreement; and
(d) except to the extent Covenantors have indemnified Purchaser
pursuant to this Section 12, the conduct of the Business or the
ownership or use of its assets by the Company or any of the
Subsidiaries before or after the Closing, including without
limitation under any Environmental Laws.
12.4 Notice of Claims
Upon obtaining knowledge of any claim or demand which has given rise
to, or could reasonably be expected to give rise to, a claim for
indemnification hereunder, the party seeking indemnification
("Indemnitee") shall give written notice of such claim or demand
("Notice of Claim") to the other party ("Indemnitor"). Indemnitee
shall furnish to the Indemnitor in reasonable detail such information
as Indemnitee may have with respect to such indemnification claim
(including copies of any summons, complaint or other pleading which
may have been served on it and any written claim, demand, invoice,
billing or other document evidencing or asserting the same). Subject
to the limitations set forth in Section 12.2(a), no failure or delay
by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold
Indemnitee harmless, except to the extent that such failure or delay
shall have adversely effected Indemnitor's ability to defend against,
settle or satisfy any liability, damage, loss, claim or demand for
which Indemnitee is entitled to indemnification hereunder.
12.5 Indemnification Proceeding
If the claim or demand set forth in the Notice of Claim given by
Indemnitee pursuant to Section 12.4 is a claim or demand asserted by a
third party, Indemnitor shall have fifteen (15) days after the Date of
the Notice of Claim to notify Indemnitee in writing of its election to
defend such third-party claim or demand on behalf of the Indemnitee.
If Indemnitor elects to defend such third-party claim or demand,
Indemnitee shall make available to Indemnitor and its agents and
representatives all records and other materials which are reasonably
required in the defence of such third-party claim or demand and shall
otherwise co-operate with, and assist Indemnitor in the defence of,
such third-party claim or demand, and so long as the Indemnitor is
defending such
<PAGE>
third-party claim in good faith, Indemnitee shall not pay, settle or
compromise such third-party claim or demand. If Indemnitor elects to
defend such third-party claim or demand, Indemnitee shall have the
right to participate in the defence of such third-party claim or
demand, at Indemnitee's own expense. If Indemnitor does not elect to
defend such third-party claim or demand or does not defend such third-
party claim or demand in good faith, Indemnitee shall have the right,
in addition to any other right or remedy it may have hereunder, at
Indemnitor's expense, to defend such third-party claim or demand;
provided, however, that:
(a) Indemnitee shall not have any obligation to participate in the
defence of, or defend, any such third-party claim or demand;
and
(b) Indemnitee's defence of or its participation in the defence of
any such third-party claim or demand shall not in any way
diminish or lessen the obligations of Indemnitor under the
agreements of indemnification set forth in this Article 12.
12.6 Satisfaction of Claims
Except for third-party claims (including Tax Claims) being defended in
good faith, and subject to the resolution of any disputes hereunder in
accordance with Section 15.7, Indemnitor shall satisfy its obligations
under this Article 12 within thirty (30) days after the Date of Notice
of Claim.
12.7 Date of Notice of Claim
The term "Date of the Notice of Claim" as used in this Article 12
shall mean the date the Notice of Claim is effective pursuant to
Section 15.12.
13 CONFIDENTIALITY
13.1 Confidentiality
Purchaser agrees with respect to all technical, commercial and other
information relating to the Company, any of the Subsidiaries, any of
their respective assets, the Facilities or the Business that is or has
been furnished or disclosed to Purchaser on, or after or before the
date hereof, including, but not limited to, information regarding the
Company, the Subsidiary and the organisation, personnel, business
activities, customers, policies, assets, finances, costs, sales,
revenues, rights, obligations, liabilities and strategies of the
Business (the "Information"), that, unless and until the transactions
contemplated by this Agreement shall have been consummated:
(a) such Information is confidential and/or proprietary to the
Company and the Business and entitled to and shall receive
treatment as such by Purchaser;
(b) Purchaser will, and will require all of its employees,
representatives, agents and advisors who have access to such
Information to, hold in confidence and not disclose to any other
Person nor use (except in respect of the transactions
contemplated by this Agreement or as required by law or in a
court, administrative or regulatory proceeding) any such
Information; provided, however, that Purchaser shall not have
any restrictive obligation with respect to any Information
which:
(i) is contained in a printed publication available to the
general public;
<PAGE>
(ii) is or becomes publicly known through no wrongful act or
omission of, or violation of the terms hereof by,
Purchaser; or
(iii) becomes known to Purchaser from a source which has no
confidentiality obligation with respect to such
Information at the time of receipt of such Information;
and
(c) all such Information, unless otherwise specified in writing,
shall remain the property of the Company or any of the
Subsidiaries, as the case may be, and, in the event this
Agreement is terminated, shall be returned to the Company or any
of the Subsidiaries, as the case may be, together with any and
all copies made thereof, upon request for such return by the
Seller (except for documents submitted to a governmental agency
with the consent of the Seller or upon subpoena and which cannot
be retrieved with reasonable effort). Purchaser shall provide
Information only to its employees, representatives, agents and
advisors who have a need to know such Information in connection
with the transactions contemplated by this Agreement.
13.2 Remedy
Purchaser acknowledges that the remedy at law for any breach by
Purchaser of its obligations under Section 13.1 is inadequate and that
Seller shall be entitled to equitable remedies, including an
injunction, in the event of breach by Purchaser, in addition to any
other available remedies at law or otherwise.
14 CERTAIN OTHER UNDERSTANDINGS
14.1 Records
(a) After the Closing, each party agrees to provide the other with
access to all relevant documents and other information which may
be needed by such party for purposes of preparing Returns or
responding to an audit by any governmental agency or for any
other reasonable purpose. Such access will be during normal
business hours, upon reasonable prior notice and not otherwise
subject to time limitations.
(b) Seller agrees that on or before Closing, it shall provide
Purchaser with all books and records relating to the Business
including, without limitation, the books and records relating to
the assets of the Company and each Subsidiary. Purchaser agrees
that it shall preserve and keep all books and records relating
to the Business, including, without limitation, the Company's
and each Subsidiary's assets, in Purchaser's possession until
six months following the expiration of the applicable statute of
limitations (including extensions thereof) applicable to the
Returns of the Company or any of the Subsidiaries filed or
furnished for each taxable period first ending after the Closing
Date and each prior taxable period to which such books or
records are relevant. After such time, before Purchaser shall
dispose of any of such books and records, at least ninety (90)
calendar days' prior written notice to such effect shall be
given by Purchaser to Seller, and Seller shall be given an
opportunity, at its own cost and expense, to remove and retain
all or any part of such books and records as Seller may select.
Duly authorised representatives of Seller shall, upon reasonable
notice, have access to such books and records during normal
business hours to examine, inspect, retrieve and copy such books
and records.
<PAGE>
(c) In order to facilitate the resolution of any claims made by
or against or incurred by Seller prior to or after the Closing,
upon reasonable notice, Purchaser shall, after the Closing:
(i) afford the officers, employees and authorised agents and
representatives of Seller reasonable access, during
normal business hours, to the offices, properties, books
and records of Purchaser, the Company and the
Subsidiaries with respect to the Business;
(ii) furnish to the officers, employees and authorised agents
and representatives of Seller such additional financial
and other information regarding the Business as Seller
may from time to time reasonably request; and
(iii) make available to Seller, the employees of Purchaser, the
Company and the Subsidiaries whose assistance, testimony
or presence is necessary to assist Seller in evaluating
any such claims and in defending such claims, including
the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that such
investigation shall not unreasonably interfere with the
businesses or operations of the Company.
(d) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is
necessary that either party hereto or any successors be
furnished with additional information relating to the Business,
including, without limitation, the Company's and each
Subsidiary's assets, and such information is in the possession
of the other party hereto, such other party agrees to use its
best efforts to furnish such information to the party needing
such information, at the cost and expense of the party being
furnished such information; provided, that Purchaser will cause
the Company and the Subsidiaries to provide the Seller with
information relevant to the tax filings relevant to Seller
including in respect of periods ending on or prior to the
Closing Date without charge.
14.2 Further Actions
Seller agrees that from and after the Closing Date, if reasonably
requested by Purchaser, it will execute and deliver such further
instruments of conveyance and transfer and take such other reasonable
action as may be necessary or desirable to convey and transfer more
effectively to Purchaser the Purchased Shares.
14.3 Change of Control
If:
(a) any Contract requires a consent to any change in control of
the Company and such consent has not been obtained by the
Closing Date; or
(b) a Contract relates solely to the Business but is in the name
of the Seller or an Affiliate of a Seller other than the
Company;
then this Agreement, to the extent permitted by law, shall constitute
an equitable assignment by such Seller or such Affiliate to the
Company of all rights, benefits, title and interest, liabilities and
obligations under any such Contracts. The Seller or Affiliate shall
take all necessary steps and action to provide the Company with the
<PAGE>
benefits of such Contracts. Purchaser and the Company shall take all
necessary steps to perform their obligations with respect thereto and
shall indemnify the Seller or such Affiliate for any losses suffered
by the Seller or such Affiliate relating to the Purchaser's or the
Company's performance of such obligations.
14.4 Taxes
Seller shall be responsible for causing the Company to prepare and
file all Returns and reports of the Company and the Subsidiaries due
in respect of periods ended on or prior to 31 December 1995, which
Returns and reports shall be prepared and filed timely and on a basis
consistent with existing procedures for preparing such Returns and
reports and in a manner consistent with prior practice with respect to
the treatment of specific items on the Returns or reports. Seller
shall also be responsible for causing the Company and the Subsidiaries
to prepare and file all claims, elections, surrenders, disclaimers,
notices and consents for the purposes of Tax which are due in respect
of periods ended on or prior to 31 December 1995.
Except with Purchaser's written consent, Seller shall not, and shall
procure that its duly authorised agents do not, file any Tax document
which comprises or includes a claim, election, surrender, disclaimer,
notice or consent, or withdraw any such item unless the making,
giving, or withdrawal of it (as the case may be) could not have any
adverse effect on the Tax liability of the Company or any of the
Subsidiaries.
Seller shall procure that Purchaser is promptly sent a copy of any
communication from any taxing or other authority received by the
Seller.
In relation to all Returns of the Company and the Subsidiaries due in
respect of periods ended on or prior to 31 December 1995 which have
not at the date of this Agreement been submitted to the appropriate
taxing authority, Seller shall procure that:
(a) such Returns are not submitted to the appropriate taxing
authority unless they have first been given to Purchaser for
approval not less than thirty days before the date of
submission;
(b) the Company or the relevant Subsidiary takes account of any
reasonable comments made by Purchaser or its duly authorised
agent in relation to such Returns; and
(c) such Returns are submitted to the appropriate taxing authority
without amendment or only with such amendments as Purchaser
shall agree;
PROVIDED THAT neither the Company nor the Subsidiaries shall be
obliged to submit any Returns to any taxing authority unless they are
satisfied that they are full, true and accurate in all material
respects.
The Purchaser shall be, or shall cause the Company to be, responsible
for preparing and filing all Returns and reports of the Company due in
respect of the period commencing on 1 January 1996, which Returns and
reports, to the extent they relate to periods or portions of periods
ending on or prior to or including the Closing Date , shall be
prepared and filed timely and on a basis consistent with existing
procedures for preparing such Returns and in a manner consistent with
prior practice with respect to the treatment of specific items on the
return insofar as such procedures or manner are lawful and comply with
generally accepted good practice, and with respect to such Returns
Purchasers shall procure that:
<PAGE>
(a) such Returns are not submitted to the appropriate taxing
authority unless they have first been given to Seller for
approval not less than thirty days before the date of
submission;
(b) the Company or the relevant Subsidiary takes account of any
reasonable comments made by Seller or their duly authorised
agent in relation to such Returns; and
(c) such Returns are submitted to the appropriate taxing
authority without amendment or only with such amendments as
Seller shall agree.
Purchaser will cause Acme Gerrard Limited and Pakseal Industries
Limited to deposit, no later than 14 October 1996, Advance Corporation
Tax in the amounts of (Pounds)400,000 sterling and (Pounds)40,000
sterling, respectively, with respect to the dividends contemplated by
the Reorganisation.
14.5 Interlake Corporation is a party to this Agreement solely for the
purpose of joining with Seller in giving the indemnity contained in
Clause 12.2 and does not accept any other liability hereunder.
14.6 Samuel Manu-Tech is a party to this Agreement solely for the purpose
of joining with Purchaser in giving the indemnity contained in Clause
12.3 and does not accept any other liability hereunder.
15 MISCELLANEOUS
15.1 Cost and Expenses
Except as otherwise provided in this Agreement, each party hereto
shall pay its own fees, costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
15.2 Entire Agreement
The Disclosure Letter and the Exhibits referenced in this Agreement
are incorporated into this Agreement and together with this Agreement
and the Ancillary Agreements contain the entire agreement between the
parties hereto with respect to the transactions contemplated
hereunder, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the
date hereof, including, without limitation, the letter dated May 3,
1996 from Mr. Mark C. Samuel, President of Samuel Manu-Tech, to Mr. W.
Robert Reum, Chairman, President and Chief Executive Officer of The
Interlake Corporation, regarding the transaction contemplated hereby
and the Mutual Confidentiality Agreement dated as of April 26, 1996
between The Interlake Corporation and Purchaser. No waiver,
modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the
party to be bound thereby.
15.3 Counterparts
This Agreement may be executed in counterparts, each of which when
executed shall be deemed an original and all of which together shall
constitute one and the same instrument.
<PAGE>
15.4 Assignment, Successors and Assigns
The respective rights and obligations of the parties hereto shall not
be assignable without the prior written consent of the other parties;
provided, however, that Purchaser may assign all or part of its rights
under this Agreement and delegate all or part of its obligations under
this Agreement to a wholly-owned subsidiary of Purchaser, in which
event all the rights and powers of Purchaser and remedies available to
it under this Agreement shall extend to and be enforceable by such
subsidiary; provided further, however, that no such assignment and
delegation shall release Purchaser from its obligations under this
Agreement, and further, Purchaser hereby guarantees to Seller the
performance by such subsidiary of its obligations under this Agreement
and each other document or instrument to be entered into by such
subsidiary in connection with the transactions contemplated hereby. In
the event of any such assignment and delegation the term "Purchaser"
as used in this Agreement shall be deemed to refer to such subsidiary
of Purchaser where reference is made to actions to be taken with
respect to the acquisition of the Purchased Shares, and shall be
deemed to include both Purchaser and such subsidiary where
appropriate. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
15.5 Savings Clause
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, rule or regulation,
such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions
of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid and enforceable provision as
similar in terms to such illegal, invalid or unenforceable provision
as may be possible.
15.6 Headings
The captions of the various Articles and Sections of this Agreement
have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any of the provisions
of this Agreement.
15.7 Arbitration
(a) Exclusive Procedure
Save for any dispute which falls to be dealt with under Section
12.2(j)(B)(dd), any dispute arising out of or relating to this
Agreement will be resolved in accordance with the procedures
specified in this Section 15.7, and this is the sole and
exclusive procedure for resolution of any such dispute. Each
party waives its right to court proceedings, in consideration of
the parties' agreement to negotiate and arbitrate.
(b) Negotiation between Executives
The parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by
negotiation between the Presidents of The Interlake Corporation
and Samuel Manu-Tech. (as of the date hereof, W. Robert Reum and
Mark C. Samuel, respectively), who may be accompanied
<PAGE>
by such other persons as they choose. Any party may give the
other party written notice of any dispute not resolved in the
normal course of business, and specifically require a response
by referring to this Section of this Agreement. Within 15 days
after receipt of such notice, the receiving party will submit to
the other a written response. The notice and the response will
include a statement of each party's position and a summary of
arguments supporting that position and the names and titles of
the persons who will accompany the Chief Executive Officer.
Within 30 days after delivery of the disputing party's notice,
the executives of both parties will meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute.
All reasonable requests for information made by one party to the
other will be honoured.
(c) Arbitration under the CPR Rules
Save for any dispute which falls to be dealt with under Section
12.2(j)(B)(dd), any dispute arising out of or relating to this
Agreement which has not been resolved within 60 days of the
initial written notice of the dispute under sub-section (b)
above will be settled by arbitration. If, however, either party
will not participate in the negotiations required above, then
the other party may initiate arbitration before expiration of
the period specified above. The following rules will apply to
the arbitration:
(i) the then current CPR Non-Administered Arbitration Rules
(adopted by the CPR Institute for Dispute Resolution)
will govern, and the United States Federal Arbitration
Act, 9.U.S.C. (S) 1-16, will also govern to the extent
consistent;
(ii) there will be three independent and impartial
arbitrators, of whom each party will appoint one and the
third will be appointed by the other two;
(iii) the place of arbitration will be metropolitan Chicago;
(iv) the arbitrators shall not be empowered to award damages
in excess of compensatory damages, and each party hereby
irrevocably waives any right to recover any such damages;
(v) as a primary goal of this Section is to conclude disputes
in a speedy manner at substantially less cost to the
parties than litigation, the arbitrators are therefore to
conduct the proceedings in a speedy and expeditious
manner and to conclude and issue an award as soon as
possible after appointment of the third arbitrator; and
(vi) the arbitrators' decision will be final and binding and
judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction.
(d) Statute of Limitations
The statute of limitations of the State of Illinois applicable
to the commencement of a lawsuit will apply to the commencement
of an arbitration, except that no defences will be available in
arbitration based upon the passage of time during any
negotiation called for by this Section.
<PAGE>
(e) Costs
Each party must bear its own costs of resolving any dispute
under this Agreement and the parties each hereby severally agree
to pay 50% of the costs of any arbitrators engaged.
(f) Confidentiality
Any information or documents disclosed under this Section;
(i) will be treated as settlement negotiations under any
rules of evidence;
(ii) must be kept confidential and (iii) may not be used
except to attempt to settle the dispute.
(g) Continued Performance
Each party is required to continue to perform its obligations
under this Agreement pending final resolution of any dispute
arising out of or relating to this Agreement, unless to do so
would be impossible or impracticable under the circumstances.
15.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, EXCLUDING
THE "CONFLICT OF LAWS" RULES THEREOF.
15.9 Public Announcements
No press release or other public statement with respect to this
Agreement or the transactions contemplated hereby shall be issued by
any party without such party having consulted with and obtained the
written consent of the other parties, which consent shall not be
unreasonably withheld; provided, however, that no such consultation or
consent is necessary if a press release or other public statement is
required to be made by applicable law.
15.10 U.S. Dollars
All amounts expressed in this Agreement and all payments required by
this Agreement are in United States dollars.
15.11 Survival
All representations and warranties made by any party in this Agreement
shall be deemed made for the purpose of inducing the other parties to
enter into this Agreement and, subject to Section 12.2(a) shall
survive the Closing.
15.12 Notices
(a) All notices, requests, demand and other communications under
this Agreement shall be in writing and delivered in person or
sent by overnight courier or certified mail, postage prepaid, or
by facsimile (with a copy by overnight courier or certified
mail, postage prepaid) and properly addressed as follows:
To Seller or Interlake Corporation:
<PAGE>
The Interlake Companies, Inc
550 Warrenville Road
Lisle, Illinois 60532-4387
Fax No: (630) 719 7242
Attention: Stephen Gregory,
Vice President - Finance and
Chief Financial Officer
Stephen R. Smith,
Vice President, Secretary and
General Counsel
To Purchaser or Samuel Manu-Tech Inc:
c/o Samuel Manu-Tech Inc.
191 The West Mall
Suite 418
Etobicoke, Ontario
Canada M9C 5K8
Fax No: (416) 626 5969
Attention: Mark C. Samuel, President
Wallace H. Rayner, Executive Vice-President
and Chief Financial Officer
with a copy to:
Smith Lyons
40 King Street West
Suite 5800, Scotia Plaza
Toronto, Ontario
Canada M5H 3Z7
Fax No: (416) 369 7250
Attention: D. William Mutch
and a copy to:
S J Berwin & Co
222 Gray's Inn Road
London WC1X 8HB
Fax No: (171) 533 2000
Attention: Peter W Anderson
(b) Any party may from time to time change its address for the
purpose of notices to that party by a similar notice specifying
a new address, but no such change shall be deemed to have been
given until it is actually received by the party sought to be
charged with its contents.
<PAGE>
(c) All notices and other communications required or permitted
under this Agreement which are addressed as provided in this
Section 15.12 if delivered personally, by facsimile or by
overnight courier, shall be effective upon delivery; and if
delivered by mail, shall be effective three (3) Business Days
after deposit in the United States mail, postage prepaid.
15.13 Disclosures
All matters disclosed by Seller in any Section of the Disclosure
Letter shall be deemed a disclosure by Seller for purposes of all
relevant Sections of this Agreement.
15.14 No Third-Party Beneficiaries
Except as otherwise expressly provided in this Agreement, nothing in
this Agreement, expressed or implied, is intended or shall be
construed to confer upon or give to any Person, other than the parties
hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
15.5 This Stock Purchase Agreement will become effective upon the execution
and coming into effect of the US Asset Purchase Agreement and the
Canadian Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement in London England as of the date first written
above.
THE INTERLAKE COMPANIES, INC.
By: /s/ Stephen R. Smith
Title: Vice President, Secretary
and General Counsel
<PAGE>
STRAPPING SYSTEMS (U.K.) LIMITED
By: /s/ Michael Evelyn
Title: Corporate Controller &
Secretary
THE INTERLAKE CORPORATION
By: /s/ Stephen R. Smith
Title: Vice President, Secretary
and General Counsel
SAMUEL MANU-TECH INC
By: /s/ Michael Evelyn
Title: Corporate Controller &
Secretary
<PAGE>
SCHEDULE
1 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 31 May 1996 and headed 'Application for clearance under Section
707 ICTA 1988 Interlake DRC Limited and its subsidiaries';
2 Letter from Price Waterhouse to the Inland Revenue (Capital Gains
Clearance Section) dated 31 May 1996 and headed 'Application for
clearance under Section 138 TCGA 1992 Interlake DRC Limited and its
subsidiaries';
3 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 15 July 1996 and headed 'Application for clearance under Section
707 ICTA 1988 Interlake DRC Limited and its subsidiaries';
4 Letter from Price Waterhouse to the Inland Revenue (Capital Gains
Clearance Section) dated 15 July 1996 and headed 'Application for
clearance under Section 138 TCGA 1992 Interlake DRC Limited and its
subsidiaries';
5 Letter from the Inland Revenue (Capital Gains Clearance Section) to
Price Waterhouse dated 30 July 1996 and headed 'Interlake DRC Ltd,
Precis (935) Ltd, Twicebonus Ltd';
6 Letter from the Inland Revenue (Section 703 Group) to Price Waterhouse
dated 1 August 1996 and headed 'Interlake DRC Ltd'.
7 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 28 August 1996 and headed "Application for Clearance Under
Section 707 ICTA 1988 Interlake DRC and its subsidiaries".
8 Letter from the Inland Revenue (Section 703 Group) to Price Waterhouse
dated 16 September 1996 and headed "Interlake DRC Ltd".
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-25-1994 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-25-1994 APR-02-1995 JUL-02-1995 OCT-01-1995
<CASH> 12,939 22,473 27,217 8,926
<SECURITIES> 26,769 0 0 14,970
<RECEIVABLES> 132,066 129,227 132,149 136,786
<ALLOWANCES> 2,977 3,171 3,411 3,376
<INVENTORY> 73,853 82,508 83,260 81,176
<CURRENT-ASSETS> 248,990 239,346 248,637 249,521
<PP&E> 382,840 392,327 395,084 397,402
<DEPRECIATION> 237,106 246,404 250,211 252,009
<TOTAL-ASSETS> 444,953 435,604 443,994 444,708
<CURRENT-LIABILITIES> 181,371 167,520 151,739 153,135
<BONDS> 0 0 0 0
<COMMON> 23,229 23,229 23,229 23,229
39,155 39,155 39,155 39,155
0 0 0 0
<OTHER-SE> (319,664) (315,607) (318,498) (317,177)
<TOTAL-LIABILITY-AND-EQUITY> 444,953 435,604 443,994 444,708
<SALES> 622,105 170,683 341,082 516,952
<TOTAL-REVENUES> 622,105 170,683 341,082 516,952
<CGS> 482,263 130,184 260,252 397,100
<TOTAL-COSTS> 575,780 156,104 312,186 474,759
<OTHER-EXPENSES> (621) (69) (624) (871)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 46,123 12,190 23,526 35,586
<INCOME-PRETAX> (11,013) 2,930 6,746 8,710
<INCOME-TAX> 8,103 2,264 4,536 5,857
<INCOME-CONTINUING> (23,251) (750) (542) (701)
<DISCONTINUED> (17,500) 1,144 1,631 2,112
<EXTRAORDINARY> 0 0 (3,448) (3,448)
<CHANGES> 0 0 0 0
<NET-INCOME> (40,751) 394 (2,359) (2,037)
<EPS-PRIMARY> (1.85) 0.02 (0.10) (0.09)
<EPS-DILUTED> 0.00 0.01 (0.08) (0.07)
<FN>
Footnote 1: Income statement information on the Financial Data Schedules for periods other than the Nine Months Ended September
29, 1996 has been restated to reflect the sale of the Company's packaging businesses on October 4, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-29-1996 DEC-29-1996 DEC-29-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996 JUN-30-1996 SEP-29-1996
<CASH> 9,703 20,692 29,206 26,978
<SECURITIES> 31,859 0 0 0
<RECEIVABLES> 135,756 134,670 133,958 115,756
<ALLOWANCES> 3,425 3,240 2,955 2,200
<INVENTORY> 78,730 86,035 79,202 61,480
<CURRENT-ASSETS> 267,723 255,061 255,264 216,342
<PP&E> 402,125 403,479 407,707 380,233
<DEPRECIATION> 253,315 256,306 259,252 238,845
<TOTAL-ASSETS> 459,802 444,925 446,056 428,208
<CURRENT-LIABILITIES> 167,952 155,528 155,977 139,705
<BONDS> 0 438,529 437,248 445,299
<COMMON> 23,229 23,229 23,229 23,229
39,155 0 0 0
0 39,155 39,155 39,155
<OTHER-SE> (314,906) (314,404) (310,274) (306,940)
<TOTAL-LIABILITY-AND-EQUITY> 459,802 444,925 446,056 428,208
<SALES> 689,913 165,222 339,873 513,911
<TOTAL-REVENUES> 689,913 165,222 339,873 513,911
<CGS> 530,465 127,709 262,680 397,031
<TOTAL-COSTS> 632,309 152,505 312,943 472,552
<OTHER-EXPENSES> (1,043) (215) (1,279) (1,627)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 47,486 11,903 23,661 35,491
<INCOME-PRETAX> 12,941 1,519 5,375 8,796
<INCOME-TAX> 7,415 1,422 3,590 5,826
<INCOME-CONTINUING> 993 (866) (258) 178
<DISCONTINUED> 3,220 1,310 2,494 4,271
<EXTRAORDINARY> (3,448) 0 0 0
<CHANGES> 0 1,610 1,610 1,610
<NET-INCOME> 765 2,054 3,846 6,059
<EPS-PRIMARY> 0.03 0.09 0.17 0.26
<EPS-DILUTED> 0.03 0.07 0.12 0.19
<FN>
Footnote 1: Income statement information on the Financial Data Schedules for periods other than the Nine Months Ended September
29, 1996 has been restated to reflect the sale of the Company's packaging businesses on October 4, 1996.
</FN>
</TABLE>
