<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
MARCH 10, 1998
MAIL-WELL, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO
(State or Other Jurisdiction of Incorporation)
1-12551 84-1250533
(Commission File Number) (IRS Employer Identification Number)
23 INVERNESS WAY EAST, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 10, 1998, the Registrant, through two newly formed wholly-owned
subsidiaries of its wholly-owned subsidiary, Mail-Well I Corporation
("Mail-Well"), acquired substantially all of the assets of the North American
paper label division of Lawson Mardon Packaging ("Lawson Mardon"), a leading
supplier of glue-applied labels to the North American food and beverage
markets. The Company will operate the division under the name "Mail-Well
Labels." The purchase price was approximately U.S. $62 million, subject to
certain adjustments for delivered working capital and indemnities, which
consisted of cash and the assumption of approximately $1 million in
indebtedness of Lawson Mardon. The sellers of the assets were Lawson Mardon
Packaging, Inc., an Ontario corporation, and Lawson Mardon Packaging USA
Inc., a Delaware corporation. Each of the Lawson Mardon entities is an
affiliate of Alusuisse-Lonza Holding AG, a Swiss holding company
("Alussuisse-Lonza"). None of the Lawson Mardon entities or Alusuisse-Lonza
had any prior business or other relationship with the Registrant, Mail-Well
or any of their respective officers, directors or affiliates.
The funds used to acquire the assets came from cash on hand and draws
under Mail-Well's unsecured line of credit with Bank of America, N.A.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
2.1 Stock Purchase Agreement dated January 31, 1998, by and between
Mail-Well I Corporation and Lawson Mardon Packaging USA, Inc.
2.2 Stock Purchase Agreement dated January 31, 1998, by and between
Mail-Well Labels Company (formerly 3014597 Nova Scotia Company), a
Nova Scotia unlimited liability company and Lawson Mardon Packaging,
Inc.
The Registrant undertakes to furnish supplementally to the Commission upon
request a copy of any omitted schedule to the foregoing Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized
MAIL-WELL, INC.
(Registrant)
By: /s/ Paul V. Reilly
--------------------------------
Paul V. Reilly, President and
Chief Operating Officer
Date: March 12, 1998
<PAGE>
EXHIBIT INDEX
2.1 Stock Purchase Agreement dated January 31, 1998, by and between
Mail-Well I Corporation and Lawson Mardon Packaging USA, Inc.
2.2 Stock Purchase Agreement dated January 31, 1998, by and between Mail-Well
Labels Company (formerly 3014597 Nova Scotia Company), a Nova Scotia
unlimited liability company and Lawson Mardon Packaging, Inc.
<PAGE>
UNITED STATES
ASSET PURCHASE AGREEMENT
BETWEEN
MAIL-WELL I CORPORATION
a Delaware corporation
AND
LAWSON MARDON PACKAGING USA INC.,
a Delaware corporation
January 31, 1998
<PAGE>
UNITED STATES
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of
January, 1998 between Mail-Well I Corporation, a Delaware corporation (the
"BUYER") and Lawson Mardon Packaging USA Inc., a Delaware corporation (the
"SELLER").
RECITALS:
WHEREAS, the Seller is in the business of manufacturing,
distributing and selling glue-applied cut and roll-fed paper labels,
including laminated paper labels, and in-mold labels, and related products
for the food, beverage, household and personal products and postcard
industries (the "BUSINESS"); and
WHEREAS, the Buyer desires to purchase from the Seller, and the
Seller desires to sell to the Buyer, substantially all of the assets and
certain liabilities of the Seller used in the conduct of the Business on the
terms and conditions herein set forth;
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 2.1(j) below.
"ACQUIRED ASSET REQUIRING CONSENT" has the meaning set forth in
Section 5.2(b) below.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1 below.
"ACQUIRED EMPLOYEES" has the meaning set forth in Section 7.1(a) below.
"ACTIVELY EMPLOYED" means all full or part-time Acquired Employees of
Seller as of the Closing Date, including Acquired Employees on leave from
employment with the Seller under the Seller's sick pay policy or vacation
policy and for purposes of jury duty, military duty, maternity or parental
leave or family medical leave.
"AFFILIATE" means any Person who, directly or indirectly, through any
number of other Persons or otherwise, controls, is controlled by or is under
common control with the designated party. For purposes of this definition,
control shall mean ownership, directly or indirectly, of 50% or more of the
voting stock or other equity interest.
1
<PAGE>
UNITED STATES
"A-L" has the meaning set forth in Section 3.7 below.
"AMERICANS WITH DISABILITIES ACT" means 42 U.S.C. Sections
12101-12213.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.2 below.
"BUSINESS" has the meaning set forth in the Recitals above.
"BUYER" has the meaning set forth in the preface above.
"CLAIM" means any and all claims, demands, liabilities, encumbrances,
causes of action, arbitrations, audits, hearings, investigations, litigation
or suits, whether in contract, tort or otherwise, whether statutory or common
law, whether civil, criminal, administrative, investigative, formal or
informal, in law or in equity, whether known or unknown, fixed or contingent,
other than Permitted Encumbrances.
"CLAIMANT" has the meaning set forth in Section 10.3(a) below.
"CLAIM NOTICE" has the meaning set forth in Section 10.3(a) below.
"CLOSING" has the meaning set forth in Section 2.5 below.
"CLOSING DATE" has the meaning set forth in Section 2.5 below.
"CLOSING NWC STATEMENT" has the meaning set forth in Section 2.4(c)
below.
"COLLECTIVE BARGAINING AGREEMENT" means the Collective Bargaining
Agreement between Lawson Mardon Label and Graphic Communications
International Union Local 582.
"COMPETING BUSINESS" has the meaning set forth in Section 7.4(a) below.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses, assets and affairs of the Seller or Buyer, including but not
limited to the Business and the Acquired Assets, that is not already
generally available to the public.
"CONTRACTS" has the meaning set forth in Section 2.1(c) below.
"DEBT" means any and all monies owed to banks, leasing companies or
other third parties, whether long-term, short-term or "line-of-credit,"
including all overdrafts and prepayment penalties, but shall not include the
accounts payable or operating leases.
"DISCLOSURE SCHEDULE" has the meaning set forth in Article III below.
"DISPUTED MATTER" has the meaning set forth in Section 2.4(c) below.
"DOLLARS" or "$" means United States dollars.
"EMPLOYEE BENEFIT PLAN" means any union or nonunion (a) nonqualified
deferred
2
<PAGE>
UNITED STATES
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer Plan),
(d) Employee Welfare Benefit Plan or material fringe benefit or other
vacation, sick leave, severance, retirement, bonus, profit sharing, or
incentive plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" means a "pension benefit plan" as
defined in ERISA Section 3(2), maintained, or contributed to, by the Seller.
"EMPLOYEE WELFARE BENEFIT PLAN" means a "welfare benefit plan" as
defined in ERISA Section 3(1), maintained, or contributed to, by the Seller.
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section 3.12(a)
below.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" shall mean all United States
federal, state, and local statutes, regulations, ordinances and similar
provisions having the force or effect of law, and all judicial and
administrative orders and determinations concerning public health and safety,
worker health and safety, and pollution or protection of the environment, as
enacted and in effect on or prior to the Closing Date.
"EQUIPMENT" has the meaning set forth in Section 2.1(b) below.
"ESCROW AGENT" has the meaning set forth in Section 2.3 below.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.3 below.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.1 below.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.2 below.
"FAMILY AND MEDICAL LEAVE ACT" means 29 U.S.C. Sections 2601-2654.
"FINAL CLOSING STATEMENT" has the meaning set forth in Section 2.4(d)
below.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.7 below.
"GOVERNMENTAL AUTHORITY" means the government of the United States or
any state, municipality, territory, possession or political subdivision
thereof, or any foreign country and, any department, agency or other entity
exercising executive, legislative, regulatory or administrative functions or
powers of or pertaining to any of the foregoing.
"HART-SCOTT-RODINO ACT" means the HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, 15 U.S.C. Section 18a, as amended.
"HAZARDOUS MATERIALS" means any substance, material or waste which is in
a form regulated by any Governmental Authority because of possible effect on
public health and safety, worker health and safety, or the environment,
including, without limitation, any such
3
<PAGE>
UNITED STATES
substance, material or waste (a) defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous substance," "regulated
substance," or "restricted hazardous waste" under any applicable
Environmental, Health and Safety Law, and (b) petroleum, including crude oil
and any fraction thereof and any refined petroleum products and derivatives
thereof.
"IAS" means the International Accounting Standards promulgated by the
International Accounting Standards Committee as in effect from time to time.
"INDEMNIFIED PARTIES" has the meaning set forth in Section 10.3(b) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 10.3(b) below.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 2.1(g)
below.
"INVENTORY" has the meaning set forth in Section 2.1(a) below.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF THE SELLER" means to the knowledge of the current managers
of the Business as set forth on Schedule 1 and the actual knowledge of the
senior management of the Seller or LMP Canada.
"LICENSE AGREEMENT" has the meaning set forth in Section 6.1(l) below.
"LMP CANADA" means Lawson Mardon Packaging Inc., an Ontario corporation.
"LMP CANADA ACQUISITION AGREEMENT" means that certain Asset Purchase
Agreement of even date herewith, by and between LMP Canada and Buyer.
"LOSSES" has the meaning set forth in Section 10.1 below.
"MATERIAL ADVERSE EFFECT" means:
(i) an adverse effect of $100,000 or more on the financial
condition or results of operation of the Business; or
(ii) if an adverse effect on the Business is not reasonably
quantifiable in monetary terms pursuant to (i) above, a material and
adverse effect with respect to the Business that would affect the
willingness of a reasonable buyer to enter into and perform the
transactions contemplated hereby, or that would have a material adverse
effect on the operations or prospects of the Business taken as a whole.
"MATERIAL CONTRACTS REQUIRING CONSENT" has the meaning set forth in
Section 5.2(b) below.
"MULTIEMPLOYER PLAN" means each "multiemployer plan", as defined in ERISA
Section 3(37),
4
<PAGE>
UNITED STATES
that is set forth on SCHEDULE 3.15.
"NET WORKING CAPITAL" means total Inventories, trade Accounts
Receivable, associated receivables of the Business, reserves for bad debts,
other current assets, trade payables, associated payables of the Business and
other accruals in each case calculated in a manner consistent with Schedule
2.4(a) and to the extent transferred to and assumed by Buyer at Closing.
"NEUTRAL ACCOUNTANTS" has the meaning set forth in Section 2.4(c) below.
"NOTICE OF DISAGREEMENT" has the meaning set forth in Section 2.4(c)
below.
"OPEN ORDERS" has the meaning set forth in Section 2.1(l) below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITS AND LICENSES" has the meaning set forth in Section 2.1(i) below.
"PERMITTED ENCUMBRANCES" means:
(i) with respect to the Acquired Assets that are not Real Property
any Security Interests for (a) Taxes, assessments or other charges or levies
by a Governmental Authority not yet due and payable or which the taxpayer is
contesting in good faith through appropriate proceedings and for which
adequate reserves in accordance with IAS shall have been set aside on the
Seller's books, (b) Assumed Liabilities, including those Assumed Liabilities
pertaining to any Contracts, or (c) as set forth on SCHEDULE 3.6.
(ii) with respect to the Acquired Assets that are Real Property (a)
any Security Interests for municipal property taxes, local improvement
assessments or taxes, or other taxes, assessments or recoveries relating to
the Real Property which are not at the time due or payable, (b) any
encroachments or defects, if any, which are or would be disclosed by any
survey of the Real Property (subject to the final proviso of this
definition), (c) any subdivision, development, site plan or any other
agreement with any municipal, provincial or Governmental Authority having
jurisdiction over the Real Property, provided same have been complied with
(d) any recorded or unrecorded licenses, easements, rights-of-way, rights in
the nature of easements and agreements with respect thereto which relate to
the provision of utilities or services or access to the Real Property or any
other lands (including, without limitation, agreements, easements, licenses,
rights-of-way and interests in the nature of easements for access, sewers,
drains, gas, steam, water mains, electrical light and power, telephone or
telegraphic conduits, poles, wires, cables and other similar utilities or
services), (e) all restrictions and restrictive covenants that run with the
land, provided same have been complied with and do not constitute a Material
Adverse Effect, (f) defects or irregularities in title which are of a minor
nature and in the aggregate will not materially affect the use or
marketability of the parcel of Real Property in question, taken as a whole,
(g) any notices of lease or leases and notices of security interest against
leasehold interests which are registered
5
<PAGE>
UNITED STATES
against title to the Real Property, where the tenant is in possession and (h)
any Security Interest set forth on SCHEDULE 3.6;
(iii) any Security Interest pertaining exclusively to the
Permitted Encumbrances set forth in (i) and (ii) above; and
(iv) any other Security Interest which the Buyer approves in
writing as a Permitted Encumbrance;
PROVIDED, HOWEVER, that "Permitted Encumbrances" shall not include any
encroachment or defect that would materially affect the use or marketability
of the parcel of Real Property in question, taken as a whole, and that is
disclosed in a Survey of which the Seller is notified in writing (with a copy
of such Survey) within six (6) months after the Closing.
"PERSON" means any individual, partnership, corporation, association,
company, joint stock company, trust, joint venture, unincorporated
organization, or Governmental Authority.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section 2.1(f)
below.
"PRELIMINARY NWC STATEMENT" has the meaning set forth in Section 2.4(a)
below.
"PREMISES" means the facilities located at 295 Lillard Drive, Sparks,
Nevada and 6901 Rolling Mill Road, Baltimore, Maryland.
"PRODUCTS" has the meaning set forth in Section 3.20 below.
"PUBLIC ANNOUNCEMENT" has the meaning set forth in Section 5.5(b) below.
"PURCHASE PRICE" has the meaning set forth in Section 2.3 below.
"REAL PROPERTY" has the meaning set forth in Section 2.1(d) below.
"REAL PROPERTY LEASES" has the meaning set forth in Section 2.1(e) below.
"RECORDS" has the meaning set forth in Section 2.1(h) below.
"RELATED DOCUMENTS" has the meaning set forth in Section 3.28 below.
"REQUIRED APPROVALS" has the meaning set forth in Section 5.2(a) below.
"SECURITY INTEREST" means any mortgage, chattel mortgage, pledge,
conditional sales contract, lien, easement, encumbrance, charge, indenture or
other security interest.
"SELLER" has the meaning set forth in the preface above.
"SURVEY" means a current survey of the Real Property made, at the
Buyer's sole expense, in accordance with ALTA standards, by a registered
professional surveyor reasonably acceptable to the Seller.
6
<PAGE>
UNITED STATES
"TAXES" in the plural and "TAX" in the singular shall refer to any and
all taxes (other than Transfer Taxes), charges, fees, levies, or other
assessments of whatever kind or nature, including, but not limited to, any
federal, state, local or foreign net income, gross income, gross receipts,
unitary, license, payroll, unemployment excise, severance, stamp, occupation,
premium, windfall profits, environmental (including, but not limited to,
taxes under section 59A of the U. S. Code), occupational, leasing, lease,
fuel, customs, duties, capital stock, franchise, profits, withholding, Social
Security, disability, ad valorem, real property, personal property (tangible
and intangible), sales, use, transfer, registration, value added, alternative
or minimum, estimated, or any other kind of tax whatsoever, including the
recapture of any tax items, and including any interest, addition, penalty or
other associated charge thereto, whether disputed or not.
"THIRD PARTY CLAIM" has the meaning set forth in Section 10.3(c) below.
"TRANSFER TAXES" has the meaning set forth in Section 2.2(a) below.
"TRANSFERRED EMPLOYEES" means (i) all Acquired Employees who are
Actively Employed by the Seller and accept offers of employment from and
commence employment with Buyer; and (ii) all Acquired Employees who are not
Actively Employed by the Seller but who subsequently receive offers of
employment from Buyer and who accept such offers and commence employment with
Buyer.
"UNION EMPLOYEE BENEFIT PLANS" means the Employee Benefit Plans
instituted and maintained by the Seller pursuant to the Collective Bargaining
Agreement, specifically for the benefit of employees covered by the
Collective Bargaining Agreement.
"U.S. CODE" means the INTERNAL REVENUE CODE OF 1986, 26 U.S.C. 1 et
seq., as amended.
"WARN" means Worker Adjustment and Retraining Notification Act, 29
U.S.C. Sections 2101-2109.
ARTICLE II
THE TRANSACTION
Section 2.1 AGREEMENT TO PURCHASE AND SELL ASSETS. On the terms
and subject to the conditions of this Agreement, and in reliance on the
representations, warranties, covenants and agreements set forth in this
Agreement, the Buyer shall purchase and acquire from the Seller, and the
Seller shall sell, convey, assign, transfer, grant and deliver to the Buyer,
or to any Affiliate of the Buyer that the Buyer shall designate, all of the
Seller's right, title and interest in and to the assets used or useful in
connection with the conduct or operation of the Business as a going concern
at the time of Closing, except for the assets, if any, described on attached
SCHEDULE 2.1 (the "EXCLUDED ASSETS"), including without limitation the
following (collectively, the "ACQUIRED ASSETS"):
(a) INVENTORY. All inventories of raw materials, work-in-process,
finished goods, operating supplies and packaging materials, wherever located,
used or useful in the operation of the Business, or located at the Premises,
including, without limitation, all such
7
<PAGE>
UNITED STATES
inventory listed on SCHEDULE 2.1(a) (the "INVENTORY").
(b) EQUIPMENT. All machinery, equipment, furniture, office
equipment, computer equipment and peripherals, automobiles, other vehicles,
parts, leasehold improvements, fixed assets, items held in storage by others
for the Seller and all other personal property respectively owned by the
Seller that are used or useful in the operation of the Business, or located
at the Premises, including, without limitation, all of the equipment listed
on SCHEDULE 2.1(b), together with all express and implied warranties by the
manufacturers or sellers of those items, and all maintenance records,
brochures, catalogues and other documents relating to those items or to the
installation or functioning of those items, except to the extent that such
equipment or other property has become affixed to leased real property such
that it would constitute a fixture under applicable law (the "EQUIPMENT").
(c) CONTRACTS. All of the Seller's right, title and interest (but
not obligations, except to the extent specifically included in the Assumed
Liabilities, as defined below) in and to all its contracts, agreements,
supplier purchase orders, and other commitments relating to the Business
(excluding real property leases and personal property leases other than as
described in Sections 2.1(e) and 2.1(f) below), including but not limited to
all such commitments identified on SCHEDULE 2.1(c), and any security or
similar deposits relating to those commitments (the "CONTRACTS").
(d) REAL PROPERTY. All real property listed on SCHEDULE 2.1(d),
together with all plants, buildings, structures, erections, improvements,
appurtenances and fixtures situated thereon or forming a part thereof (the
"REAL PROPERTY").
(e) REAL PROPERTY LEASES. All real property leases listed on
SCHEDULE 2.1(e) and any security or similar deposits relating to those leases
(the "REAL PROPERTY LEASES").
(f) PERSONAL PROPERTY LEASES. All leases for all leased personal
property located at the Premises or otherwise listed on SCHEDULE 2.1(f) and
any security or similar deposits relating to those leases (the "PERSONAL
PROPERTY LEASES").
(g) INTELLECTUAL PROPERTY. All registered and unregistered
domestic and foreign patents, patent applications, inventions upon which
patent applications have not yet been filed, service marks, trade names,
trademarks, trademark registrations and applications, logos, copyrighted
works, copyright registrations and applications, trade secrets, formulae,
technology, designs, processes, software, software applications, inventions,
know-how and other intellectual property rights, currently owned, possessed
or used under license from third parties by the Seller in connection with the
operation of the Business, including but not limited to those listed on
SCHEDULE 2.1(g) (the "INTELLECTUAL PROPERTY").
(h) RECORDS. All records, customer and supplier lists, payroll
and personnel records, product information, product drawings, production
documentation, material specifications, equipment lists, formulae,
specifications, drawings, plans, reports, data, notes, correspondence,
contracts, labels, catalogues, brochures, art work (except personal objects
which belong to employees), photographs, advertising materials, marketing and
production literature, files, instruction or maintenance manuals for
Equipment, R&D documents and other records and documents relating to the
Business of the Seller in the Seller's possession, power
8
<PAGE>
UNITED STATES
or control, including the Seller's books of account, ledgers and other
financial records specifically relating to the Business, but excluding income
tax records (the "RECORDS").
(i) PERMITS AND LICENSES. All permits, licenses, orders,
franchises, authorizations and approvals relating to or maintained as part of
the Business and listed on SCHEDULE 2.1(i) (the "PERMITS AND LICENSES").
(j) ACCOUNTS RECEIVABLE. All of the Seller's accounts receivable,
notes receivable, book debts and other debts of the Business relating to the
Business and reflected on the Final Closing Statement or the Closing NWC
Statement, as the case may be, including but not limited to those listed on
SCHEDULE 2.1(j) (but exclusive of rebates, refunds and insurance claims not
included as receivables on the Final Closing Statement or the Closing NWC
Statement, as the case may be) (the "ACCOUNTS RECEIVABLE").
(k) INTANGIBLE PROPERTY RIGHTS. All of the Seller's choses in
action, claims and intangible property rights or rights to recovery or offset
of any kind or character arising from or concerning the Business, including,
without limitation, restrictive covenants, confidentiality obligations and
similar obligations.
(l) OPEN ORDERS. All of the Seller's open orders for goods and
services with customers of the Business and any additional such open orders
entered into by the Seller in the Ordinary Course of Business (the "OPEN
ORDERS"), together with related purchase orders, contracts, subcontracts and
accounts receivable and credit support associated with such Open Orders.
(m) GOODWILL. All goodwill of the Business as a going concern, and
all information and documents related thereto, including the exclusive right to
represent itself as carrying on the Business in succession to the Seller,
subject always to the provisions of the License Agreement and that the name
"Lawson Mardon Packaging" is included in the Excluded Assets.
(n) PRE-PAID EXPENSES. All pre-paid expenses of the Seller
relating to the Business to the extent reflected on the Final Closing Statement
or the Closing NWC Statement, as the case may be.
The Acquired Assets shall be transferred to Buyer free and clear of any and all
Claims, Security Interests, Debt, obligations and other restrictions, except
for Permitted Encumbrances.
Section 2.2 ASSUMPTION OF LIABILITIES. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to assume and become
responsible on the Closing Date, for the liabilities and obligations of the
Seller relating to or arising out of the conduct or operation of the Business
or the ownership of the Acquired Assets or the Premises on and after, but not
before, the Closing Date (except as specifically agreed otherwise in Sections
2.2(d) and (e) hereof, which relate to the period prior to the Closing Date)
(collectively, the "ASSUMED LIABILITIES"), including:
(a) One-half of all liabilities for federal, state, local or foreign
transfer,
9
<PAGE>
UNITED STATES
sales, use, documentary, stamp, recordation and other similar taxes,
duties or expenses (but not any income or capital gains taxes payable by the
Seller, if any) arising in connection with the consummation of the transactions
contemplated hereby (collectively, the "Transfer Taxes").
(b) All liabilities and obligations of the Seller under the
agreements, contracts, leases, licenses and other arrangements referred to in
the definition of Acquired Assets that are specifically assigned to the Buyer
or held in trust for the Buyer's benefit pursuant to Section 5.2(b).
(c) All liabilities and obligations of the Seller under the
Collective Bargaining Agreement, the Union Employee Benefit Plans and the
Multiemployer Plans (except as provided under Section 7.3) .
(d) All liabilities and obligations of the Seller relating to the
Business to the extent reflected on the Final Closing Statement or, if a Final
Closing Statement is not required to be delivered pursuant to Section 2.4, all
liabilities and obligations of the Seller relating to the Business to the
extent reflected on the Closing NWC Statement provided by the Seller to the
Buyer and finally accepted thereby under Section 2.4.
(e) All liabilities and obligations of the Seller, if any, set out
in SCHEDULE 2.2(e), ENTITLED "ASSUMED LIABILITIES."
The Buyer will not assume or have any responsibility with respect to (i) any
obligation or liability of the Seller relating to or arising out of the conduct
or operation of the Business or the ownership of the Acquired Assets before,
but not on and after, the Closing Date that is not included within the
definition of Assumed Liabilities or (ii) the obligations and liabilities of
the Seller set forth on SCHEDULE 2.2 or (iii) the Employment Agreements with
the four (4) Sparks employees (collectively the "EXCLUDED LIABILITIES").
Section 2.3 PURCHASE PRICE; ESCROW. The Buyer agrees to pay the
sum of $25,872,000 (TWENTY-FIVE MILLION EIGHT-HUNDRED SEVENTY-TWO THOUSAND
DOLLARS) to the Seller on account of the Acquired Assets (the "PURCHASE
PRICE"). An amount equal to $1,000,000 (ONE MILLION DOLLARS) of the Purchase
Price shall be deposited into an interest-bearing escrow account with
____________________ (the "Escrow Agent") pursuant to the terms of an Escrow
Agreement substantially in the form of EXHIBIT 2.3 (the "ESCROW AGREEMENT") on
the Closing Date, by wire transfer or delivery of other immediately available
funds, and the balance of the Purchase Price shall be paid to the Seller at
Closing, by wire transfer or delivery of other immediately available funds.
Section 2.4 ADJUSTMENT TO PURCHASE PRICE.
(a) Attached hereto as Schedule 2.4(a) is a statement of the
estimated Net Working Capital of the Business as of December 31, 1997, prepared
in accordance with IAS and A-L's accounting policies applied on a consistent
basis with the Financial Statements (the "Preliminary NWC Statement"). Not
later than three (3) business days prior to the Closing Date, the Seller shall
10
<PAGE>
UNITED STATES
conduct an inventory of the Business, observed by the Buyer, and at Closing
shall furnish to Buyer (i) an estimate of the Net Working Capital of the
Business calculated as of the close of business on the Closing Date, prepared
in accordance with IAS and A-L's accounting policies applied on a consistent
basis with the Financial Statements (as defined in Section 3.7 below) and the
Preliminary NWC Statement (the "ESTIMATED NWC STATEMENT"), PROVIDED, HOWEVER,
that the EstimatedNWC Statement will take into account only information within
the Knowledge of the Seller with respect to the Business on the Closing Date;
and (ii) a calculation of any required adjustment to the Purchase Price
pursuant to Section 2.4(b) hereof.
(b) If the value of the Net Working Capital as reflected in the
Estimated NWC Statement is less than $6,985,000 (SIX MILLION NINE-HUNDRED
EIGHTY-FIVE THOUSAND DOLLARS), the Purchase Price paid to the Seller at Closing
shall be decreased by the full amount of such deficiency. If the value of the
Net Working Capital as reflected in the Estimated NWC Statement exceeds
$6,985,000 (SIX MILLION NINE-HUNDRED EIGHTY-FIVE THOUSAND DOLLARS), the
Purchase Price paid to the Seller at Closing shall be increased by the full
amount of such excess.
(c) Within twenty-one (21) days following the Closing, the Seller
shall prepare and deliver to Buyer a statement of Net Working Capital, as of
the Closing Date, prepared on a basis consistent with the Estimated NWC
Statement (the "Closing NWC Statement").
(d) (i) The Closing NWC Statement shall become final and binding on
Seller and Buyer (in such event, the "Final Closing Statement")unless Buyer
gives written notice to the Seller of its disagreement with respect to any
matter contained therein (the "NOTICE OF DISAGREEMENT") within thirty (30) days
after the receipt thereof by Buyer. A Notice of Disagreement shall not be
permitted unless the aggregate amount in dispute exceeds Ten Thousand Dollars
($10,000) and shall not be permitted with respect to the inventory count (but
not the valuation of the inventory) observed by Buyer pursuant to Section
2.4(a). A Notice of Disagreement shall specify in reasonable detail the nature
of any disagreement so asserted. For a period of fifteen (15) days after the
delivery of the Notice of Disagreement, the Seller and the Buyer shall attempt
to resolve in writing all of their differences with respect to each matter
specified in the Notice of Disagreement, in which case any such resolution
shall be final and binding on the parties.
(ii) If, at the end of such 15-day period, the Seller and the
Buyer have not resolved in writing all of their differences with respect to any
such matter, then each unresolved matter (the "DISPUTED MATTER") shall be
submitted to and reviewed by a neutral "big six" accounting firm mutually
agreeable to the parties and which is independent of the Buyer, the Seller and
their respective Affiliates (the "NEUTRAL ACCOUNTANTS"). The Neutral
Accountants shall consider only the Disputed Matters and shall resolve all
Disputed Matters in writing within thirty (30) days of submission, and its
decisions with respect to the Disputed Matters, which shall be based on the
accounting policies and principles and the proviso set forth in Section
2.4(a)(i) above, shall be final and binding on the Seller and the Buyer;
PROVIDED THAT, no such resolution of the Disputed Matter shall require payment
of an amount greater than the highest amount or less than the lowest amount
suggested for such resolution by either the Seller or the Buyer. The Neutral
Accountants shall notify the Seller and the Buyer of their resolution of the
Disputed Matters, and upon receipt thereof by the Neutral
11
<PAGE>
UNITED STATES
Accountants, the Neutral Accountants shall promptly prepare a final Closing
NWC Statement reflecting the resolution of all Disputed Matters promptly
after such resolution (in such event, the "FINAL CLOSING STATEMENT") and
shall deliver it to the Buyer and the Seller.
(e) The Seller and the Buyer shall each be responsible for and shall
each pay one-half of the fees and expenses incurred in connection with the
Neutral Accountants.
(f) Within ten (10) days after receipt of the Final Closing
Statement:
(i) If the Net Working Capital as set forth in the Final
Closing Statement is less than the Net Working Capital as set forth in the
Estimated NWC Statement, the Seller shall pay to the Buyer the difference,
first by giving instructions to the Escrow Agent to distribute up to $200,000
from any remaining Escrow Fund (as such term is defined in the Escrow
Agreement), and then any additional amounts shall be paid by the Seller to the
Buyer on demand in immediately available funds; provided that, notwithstanding
the foregoing, the aggregate amount of the Escrow Fund to be distributed for
this purpose and for the purpose of any Net Working Capital adjustment, if any,
under the LMP Canada Acquisition Agreement shall not exceed $200,000.
(ii) If the Net Working Capital as set forth in the Final
Closing Statement is greater than the Net Working Capital as set forth in the
Estimated NWC Statement, the Buyer shall pay to the Seller the difference in
immediately available funds.
(g) Any payment required to be made pursuant to this Section 2.4
shall be made together with simple interest thereon from the Closing Date to
the date of payment at the annual rate (calculated on the basis of a 365-day
year) equal to the prime rate published by the WALL STREET JOURNAL, Eastern
Edition on the Closing Date.
Section 2.5 THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Goodman and Carr in Toronto, Ontario, Canada, commencing at 9:00 a.m. local
time on the fifth business day following the satisfaction or waiver of all
conditions to the obligations of the parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions to be taken
by any party at the Closing itself) or such other date as the parties may
mutually determine (the "CLOSING DATE").
Section 2.6 DELIVERIES AT THE CLOSING. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 6.1 below; (ii) the Buyer will deliver to the
Seller the various certificates, instruments, and documents referred to in
Section 6.2 below; (iii) the Seller will execute, acknowledge (if appropriate)
and deliver to the Buyer assignments (including Real Property and Intellectual
Property transfer documents) and such other instruments of sale, transfer,
conveyance and assignment as the Buyer and its counsel reasonably may request;
PROVIDED, HOWEVER, that all deeds to Real Property shall be limited or special
warranty deeds containing a covenant as to the grantor's acts only and each
assignment of lease must comply with any requirements specified in the lease to
which it relates; (iv) the Buyer will execute, acknowledge (if appropriate) and
deliver to the Seller an assumption and indemnity agreement in the form
attached hereto as EXHIBIT 2.6; and (v) the Buyer will deliver to the Seller
and the Escrow
12
<PAGE>
UNITED STATES
Agent the consideration specified in Section 2.3 above.
Section 2.7 ALLOCATION.
(a) The parties agree to allocate the Purchase Price, Assumed
Liabilities and all other capitalizable costs among the Acquired Assets for all
purposes (including financial accounting and tax purposes) in accordance with
the allocation schedule attached hereto as SCHEDULE 2.7. The Seller and the
Buyer acknowledge that such allocation represents the fair market value of the
Acquired Assets arrived at by arms' length negotiations and shall be binding
upon the parties for all applicable United States federal, state, local and
foreign tax purposes. The Seller and the Buyer each covenant to report gain or
loss or cost basis, as the case may be, in a manner consistent with SCHEDULE
2.7 on all tax returns filed by each of them subsequent to Closing and not to
voluntarily take any inconsistent position therewith in any administrative or
judicial proceeding relating to such returns, without the prior written consent
of the other party, which consent shall not be arbitrarily or unreasonably
withheld.
(b) The Seller and the Buyer shall exchange mutually acceptable and
completed IRS Forms 8594 which they shall use to report the transaction
contemplated hereunder to the IRS in accordance with such allocation.
Section 2.8 TRANSFER TAXES, COST OF TITLE INSURANCE, ETC.
(a) Each of the Seller and the Buyer shall be responsible for the
payment at Closing of one-half (1/2) of (i) the Transfer Taxes and (ii) the
cost of the title insurance policy(ies) relating to the owned Real Property
referenced in Section 6.1(m).
(b) Each of the Seller and the Buyer shall use reasonable commercial
efforts to minimize the amount of Transfer Taxes, including without limitation
executing and delivering exemption certificates and similar documents to the
extent applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to Buyer that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the particular
schedule relating to the item in question, which schedule is annexed to this
Agreement and initialed by the parties (the "DISCLOSURE SCHEDULES").
Section 3.1 CAPITALIZATION. The ownership of the outstanding
capital stock of the Seller is as set forth in SCHEDULE 3.1. All of the issued
and outstanding shares of the capital stock of the Seller are validly issued
and outstanding, fully paid and non-assessable.
Section 3.2 ORGANIZATION OF THE SELLER. The Seller is a
corporation duly incorporated and organized, validly subsisting and in good
standing under the laws of the State of Delaware and has all necessary licenses
and is duly qualified and is a validly subsisting corporation in each other
jurisdiction in which it is required to so qualify, except where the
13
<PAGE>
UNITED STATES
failure to so qualify would not have a Material Adverse Effect, such
jurisdictions being listed on SCHEDULE 3.2. The Seller has the full power
and authority to own or lease and operate the Acquired Assets as currently
owned, leased and operated and, except as set forth on SCHEDULE 3.2, to carry
on the Business as it has been and is currently conducted.
Section 3.3 AUTHORIZATION OF TRANSACTION. The Seller has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of the Seller
has duly authorized the execution, delivery, and performance of this Agreement
by the Seller. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions, except to the extent that enforcement may be limited by the laws of
bankruptcy or insolvency or laws relating to creditors' rights and remedies
generally.
Section 3.4 NONCONTRAVENTION. Except as set forth on SCHEDULE
3.4, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Article II above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any Governmental Authority or court to
which the Seller is subject or any provision of the Seller's charter or bylaws
or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the Seller
is a party or by which it is bound or to which its assets is subject (or result
in the imposition of any Security Interest upon any of its assets), except
where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Security Interest would
not have a Material Adverse Effect. Except for the Required Approvals, the
Seller does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority in order to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Article II above), except where the
failure to give such notice, make such filing, or to obtain any such
authorization, consent or approval would not have a Material Adverse Effect.
Section 3.5 BROKERS' FEES. The Seller does not have any liability
or obligation to pay any fees or commissions to any broker, finder or agent
with respect to the transactions contemplated by this Agreement for which the
Buyer could become liable or obligated.
Section 3.6 TITLE TO ASSETS. Except as set forth on SCHEDULE 3.6
and except for matters that would not have a Material Adverse Effect, the
Seller has good, valid, marketable, clear, legal, equitable and indefeasible
title to the Acquired Assets, free and clear of any Security Interest, other
than the Permitted Encumbrances. Except as set forth on SCHEDULE 3.6, there
are no agreements, options or other rights pursuant to which the Seller is or
may become obligated to sell any of the Acquired Assets other than pursuant to
purchase orders accepted by the Seller in the Ordinary Course of Business. All
of the tangible Acquired Assets or tangible evidence of intangible Acquired
Assets are in the possession, power or control of the Seller.
14
<PAGE>
UNITED STATES
Section 3.7 FINANCIAL STATEMENT. Attached hereto as EXHIBIT 3.7
are the balance sheets and statements of income as of and for the fiscal years
ended December 31, 1997, 1996, 1995 and 1994 for the Business (the "FINANCIAL
STATEMENTS"). The Financial Statements contain financial data relating to the
Business which have been or will be incorporated in the audited consolidated
balance sheets and statements of income as of and for the fiscal years ended
December 1997, 1996, 1995 and 1994 of Alusuisse-Lonza Holding AG ("A-L"). The
Financial Statements have been prepared in accordance with IAS and A-L's
accounting policies applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the Business as
of such dates and the results of operations of the Business for such periods.
Section 3.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.
Except as set forth on SCHEDULE 3.8, since December 31, 1997, there has not
been any change in the financial condition of the Business or the condition of
the Acquired Assets which would constitute a Material Adverse Effect. Without
limiting the generality of the foregoing, since that date the Seller has not
engaged in any practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business, and there has been no damage,
destruction or loss (whether or not covered by insurance) to the Acquired
Assets which has had a Material Adverse Effect.
Section 3.9 LEGAL COMPLIANCE. Except as set forth in SCHEDULES
3.9 AND 3.16, the Seller has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of all Governmental Authorities with respect to
the Acquired Assets and the operation of the Business, except where the failure
to comply would not have a Material Adverse Effect.
Section 3.10 REAL PROPERTY.
(a) SCHEDULE 2.1(d) lists all of the real property owned by Seller
used or useful in the operation of the Business.
(b) Except as set forth on SCHEDULE 3.10(b), with respect to each
parcel of owned Real Property, and except for matters which would not have a
Material Adverse Effect:
(i) The Seller has good fee simple title to the owned Real
Property, insurable by a reputable title company at regular rates,
free and clear of any Security Interest or title defect, except for
(A) Permitted Encumbrances or (B) matters disclosed by standard
exceptions contained in an ALTA or similar title insurance policy in
a form reasonably acceptable to Buyer;
(ii) There are no leases, subleases, licenses, concessions, or
other agreements granting to any party or parties the right of use or
occupancy of any portion of any parcel of Real Property; and
(iii) There are no outstanding options or rights of first
refusal to purchase any parcel of Real Property, or any portion thereof or
interest therein.
(c) SCHEDULE 2.1(e) lists all of the real property leases entered
into by the
15
<PAGE>
UNITED STATES
Seller in connection with the operation of the Business. The Seller has
delivered to the Buyer correct and complete copies of the Real Property
Leases listed in SCHEDULE 2.1. Each of the Real Property Leases listed in
SCHEDULE 2.1 is legal, valid, binding, enforceable and in full force and
effect, except where the illegality, invalidity, nonbinding nature,
unenforceability or ineffectiveness would not have a Material Adverse Effect.
Section 3.11 INTELLECTUAL PROPERTY. SCHEDULE 3.11 identifies
each patent or registration that has been issued to the Seller with respect
to any of its Intellectual Property, identifies each pending patent
application or application for registration that the Seller has made with
respect to any of its Intellectual Property and identifies each license,
agreement or other permission that the Seller has granted to any third party
with respect to any of its Intellectual Property. SCHEDULE 3.11 contains a
list of every trade name, d/b/a or other name under which the Seller has
conducted the Business during the previous five (5) years. All of the
Intellectual Property is either owned or used under license by the Seller,
and to the Knowledge of the Seller, there is no infringement of any
Intellectual Property nor any other Claim that the Intellectual Property
infringes the rights of others under patents, trademarks, trade names,
copyrights, trade secrets or licenses.
Section 3.12 CONTRACTS.
(a) SCHEDULE 3.12 lists all Contracts and Personal Property
Leases, the performance of which will involve consideration in excess of
$100,000, the Collective Bargaining Agreement and all employment agreements
with any Acquired Employees (the "EMPLOYMENT AGREEMENTS"). The Seller has
delivered to the Buyer a correct copy or summary of the material terms of
each Contract, other written agreement, Employment Agreement or Collective
Bargaining Agreement listed on SCHEDULE 3.12.
(b) Except as set forth in SCHEDULE 3.12, all Contracts are valid,
binding and in full force and effect and neither Seller nor any other party
to any Contract is in default thereunder, and the Seller has not received
written notice of, nor, to the Knowledge of the Seller, are there any facts
or circumstances which, with the passage of time or the giving of notice or
otherwise, would constitute any default thereunder except where such default
would not have a Material Adverse Effect. Except as set forth on SCHEDULE
3.12, all such Contracts and Personal Property Leases are freely assignable
to the Buyer without the prior written consent of any other parties thereto.
Section 3.13 POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of the Seller relating to the Business or the
Acquired Assets.
Section 3.14 LITIGATION. SCHEDULES 3.14 AND 3.16 set forth each
instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing or, to the Knowledge of the Seller, investigation
of, in or before any court or quasi-judicial or administrative agency of any
United States federal, state, provincial, local or foreign jurisdiction, or
(iii) has received written notice of any Claim, except where the injunction,
judgment, order, decree, ruling, charge, action, suit, proceeding, hearing,
investigation or Claim does not relate to the Business or the Acquired Assets
or would not have a Material Adverse Effect.
16
<PAGE>
UNITED STATES
Section 3.15 EMPLOYEE BENEFITS.
(a) SCHEDULE 3.15 lists each Employee Benefit Plan that the Seller
maintains or to which it contributes with respect to the Business.
(b) With respect to each Employee Benefit Plan that the Seller
maintains or has maintained during the prior six years or to which the Seller
contributes, or has been required to contribute during the prior six years:
(i) To the Knowledge of the Seller, each Employee Benefit Plan,
as indicated on SCHEDULE 3.15 (and each related trust, insurance contract,
or fund) complies in form and in operation in all material respects with
its terms and the applicable requirements of ERISA and the U.S. Code.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due prior to the
Closing Date have been paid to each such Employee Benefit Plan.
(iii) The Seller has furnished to the Buyer true,
correct and complete copies of the plan documents and summary plan
descriptions and all related trust agreements, insurance contracts
and other funding agreements which implement each such Employee
Benefit Plan.
(iv) To the Knowledge of the Seller, no action, suit,
proceeding, hearing, or investigation with respect to the administration
or the investment of the assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending, except where the action,
suit, proceeding, hearing, or investigation would not have a Material
Adverse Effect.
(v) The Seller has not incurred any liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal liability) with respect to any such Employee
Benefit Plan to which it is a party or to which it contributes.
(vi) There are no "unfunded vested benefits" (as such term is
defined under ERISA), any "accumulated funding deficiency," as defined
under Section 4.12 of U.S. Code or ERISA, and no "reportable event"
(within the meaning of ERISA) has occurred or exists, such as would
subject the Buyer, its Affiliates, or any of their respective employee
benefit or welfare plans or any of the Acquired Assets to liability
therefore.
17
<PAGE>
UNITED STATES
(c) Seller is not a member of a "controlled group" of
organizations (as defined in Sections 414(b), (c), (m) or (o) of the U.S.
Code) which sponsors or maintains any employee benefit plan within the
meaning of Section 3(3) or ERISA which under Title IV of ERISA or any section
of the U.S. Code or ERISA would subject Buyer, the Acquired Assets or any of
Buyer's employee benefit plans or the fiduciaries thereof or their respective
assets to any Taxes, Claims, encumbrances, penalties or other liabilities,
and the Buyer will not, as a result of its purchase of the Acquired Assets or
otherwise, become a "successor employer" of Seller or any such controlled
group.
Section 3.16 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. With
respect to the Premises, except as set forth in SCHEDULE 3.16, and except for
those matters that would not have a Material Adverse Effect:
(a) The Seller has complied and continues to comply with
Environmental, Health, and Safety Laws with respect to the Business.
(b) Neither Seller, nor to the Knowledge of the Seller, any
previous owner, tenant, occupant, user or operator of the Premises, released
or disposed of any Hazardous Materials on, under, in or emanating from the
Premises, except in compliance with applicable Environmental, Health and
Safety Laws.
(c) The Seller has obtained all Permits and Licenses required
pursuant to applicable Environmental, Health and Safety Laws to carry on the
Business as now conducted; PROVIDED, HOWEVER, that certain Permits and/or
Licenses may need to be transferred, reissued or amended before or as a
result of the consummation of the transactions contemplated by this Agreement.
(d) The Seller (i) is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge under any Environmental, Health and
Safety Laws, and (ii) is not a party to any action, suit, hearing, proceeding
or, to the Knowledge of the Seller, investigation of, in or before any court
or quasi-judicial or administrative agency of any United States federal,
state, local or foreign jurisdiction with respect to any Environmental,
Health, and Safety Laws.
(e) The Seller has not received any written notice or report from
any third party asserting that it is liable under any applicable
Environmental, Health, and Safety Laws, or for property damage or personal
injury from exposure to any Hazardous Materials, relating to any of the
Premises, other than notices or reports which have since been resolved.
(f) The Seller is not liable nor has the Seller received any
written notice or report that would reasonably show that it is potentially
liable, nor is the Business, , or the Acquired Assets subject to any Security
Interest (other than a Permitted Encumbrance) in connection with, the release
or threatened release of any Hazardous Materials under any applicable
Environmental, Health, and Safety Laws.
(g) To the Knowledge of the Seller, the Premises comply with all
applicable Environmental, Health, and Safety Laws, nor are there any
underground storage tanks in or under the Premises, and to the Knowledge of
the Seller no underground storage tank was
18
<PAGE>
UNITED STATES
removed from the Premises while the Seller owned, occupied or operated such
Premises.
(h) This Section 3.16 contains the sole and exclusive
representations and warranties of the Seller with respect to any
environmental, health or safety matters, including without limitation any
arising under any Environmental, Health, and Safety Laws.
(i) To the Knowledge of the Seller, no Governmental Authority has
conducted or reported on any environmental, health or safety audit of the
Business or the Acquired Assets, nor has any Governmental Authority conducted
any other evaluation which has identified any present or ongoing
noncompliance with any Environmental, Health and Safety Laws with respect to
the Business or the Acquired Assets.
Section 3.17 EASEMENTS; CONDEMNATION, ETC. The Seller has all
easements and/or servitudes and rights of ingress and egress and for
utilities and services necessary for all operations conducted by it on the
Real Property.
Section 3.18 CONDITION OF ASSETS. The buildings, offices, shops
and other structures and all land improvements, computers, computer
equipment, machinery, other equipment, fixtures, vehicles and other
properties owned or leased by the Seller (relating to the Business) have been
properly maintained and are in good operating condition and repair, subject
to reasonable wear and tear in the Ordinary Course of Business, for the
purposes of conducting the Business on the Closing Date as the Business has
been or is being conducted. The Acquired Assets represent substantially all
of the assets of the Business as conducted by the Seller.
Section 3.19 INVENTORY. The Inventory of the Seller relating to
the Business has been acquired in the Ordinary Course of Business, consists
of items of a quality and quantity usable or saleable in the normal course of
the Business, the quantities of each type are not excessive in any material
amount, have been valued on an average cost basis, and the value of obsolete
materials and of those materially below standard quality have been written
down to realizable market value or adequate reserves have been provided
therefor on the Financial Statements for the most recent fiscal year of the
Seller.
Section 3.20 PRODUCT WARRANTY AND LIABILITY. All finished goods
inventories manufactured by the Seller in the operation of the Business (the
"PRODUCTS"), have been in material conformity with all applicable contractual
commitments and all express or implied warranties (including warranties
imposed by the application of law) and no material liability exists or will
arise for replacement or damage in connection with such sales or deliveries,
except as are adequately reserved for on the Financial Statements. No
Products heretofore sold by the Seller are now subject to any guaranty,
warranty, claim for product liability or patent or other indemnity, other
than those sold in accordance with the standard terms and conditions of sale
of the Business, true and complete copies of which have been delivered to the
Buyer.
Section 3.21 ACCOUNTS RECEIVABLE. All Accounts Receivable have
arisen in the Ordinary Course of Business and have been collected or are
collectible under their respective terms and conditions in the aggregate
recorded amounts thereof less, with respect to notes and accounts receivable
shown on the
19
<PAGE>
UNITED STATES
Financial Statements for the most recent fiscal year of the Seller, the
applicable reserves in respect thereof shown thereon, or, with respect to
notes and accounts receivable to be included on the Closing NWC Statement,
the applicable reserves in respect thereof to be shown thereon. No
counterclaims or offsetting claims with respect to such accounts receivable
that would have a Material Adverse Effect are pending or threatened.
Section 3.22 PERMITS AND LICENSES The Seller has (and SCHEDULE
3.22 lists) all material Permits and Licenses necessary to conduct the
Business and the Permits and Licenses are in full force and effect. Except
as set forth on SCHEDULE 3.22, no notification to or approval of any
Governmental Authority is required for all such Permits and Licenses to be
transferred to the Buyer and to remain in full force and effect after the
Closing, subject to compliance by the Buyer with the terms and conditions
thereof. Except as set forth on SCHEDULE 3.16 or SCHEDULE 3.22, no
violations exist or have been recorded in respect of any of the Permits and
Licenses that would have a Material Adverse Effect. No proceeding is pending
or threatened to revoke or limit any of the Permits and Licenses and there is
no basis nor any grounds for any such revocation or limitation.
Section 3.23 LABOR MATTERS. The Collective Bargaining Agreement
is the only such agreement applicable to, and, to the Knowledge of the
Seller, the labor unions and collective bargaining units set forth on
SCHEDULE 3.23 are the only such unions or units that represent or claim to
represent, any Acquired Employees. Except as set forth on SCHEDULE 3.23,
there is not any matter under discussion with any labor union (including
routine procedures for the resolution of grievances), nor in the past five
years has there been any, strike, work stoppage, labor dispute or other labor
trouble relating to employees of the Seller, and there are no significant
threats of work stoppage or labor trouble by employees of the Seller.
Schedule 7.1(a) contains a complete list of all of the employees of Seller
who have been employed exclusively in the conduct or operation of the
Business as operated by the Seller prior to Closing.
Section 3.24 CAPITAL EXPENDITURES. SCHEDULE 3.24 sets forth for
fiscal years 1998, 1999, and thereafter, the anticipated expenditures for
capital improvements to the Seller's facilities (and for the continuing
operation and maintenance thereof) necessary or appropriate for the
continuation of the Business in respect of compliance with Environmental,
Health and Safety laws, regulations, ordinances or standards in effect as of
the date of this Agreement or currently scheduled to become effective after
the date of this Agreement.
Section 3.25 PUBLIC SERVICES AND UTILITIES. The Seller is
serviced by public services and utilities in amounts adequate for the
existing operation of the Business. None of the suppliers of such public
services and utilities has given notice to the Seller that it intends to
curtail or may curtail any of the public services or utilities used by the
Seller in the existing operation of its business and to the Knowledge of the
Seller of any plans by such public services or utilities for any such
curtailment.
Section 3.26 SOLVENCY. The transfer of the Acquired Assets by
the Seller in return for the Purchase Price will not render the Seller
insolvent or unable to pay its debts as they become due in the Ordinary
Course of Business or leave the Seller with an unreasonably small capital for
the business in which it will continue to engage.
20
<PAGE>
UNITED STATES
Section 3.27 CUSTOMERS AND VENDORS. SCHEDULE 3.27 sets forth a
correct and current list of the twenty (20) largest customers of and the ten
(10) largest vendors to the Business during the 9-month period ended
September 30, 1997, determined on the basis of the amount of sales made to
each such customer or by each such vendor, as the case may be, during such
period, as reasonably ascertained from readily available information, all
such amounts being estimated in good faith as being within five percent (5%)
of the actual sales made to or by such customer or vendor, as the case may
be. Except as set forth on Schedule 3.27, to the Knowledge of Seller, no
customer or vendor identified on SCHEDULE 3.27 has given notice that it
intends to cease doing business with the Business or to alter the amount of
the business that it is presently doing with the Business so as to cause a
Material Adverse Effect; PROVIDED, HOWEVER, that nothing contained herein
shall be construed as a representation or warranty that the relationships
with the customers and vendors identified on SCHEDULE 3.27 will continue or
continue on the same or similar terms.
Section 3.28 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
Except as set forth in this Agreement, the Schedules to this Agreement or any
of the Escrow Agreement, License Agreement, the certificates delivered to
Buyer pursuant to Section 6.1 or any instrument of assignment, sale, transfer
or conveyance delivered to Buyer pursuant to Section 2.6 (collectively, the
"Related Documents"), the Seller does not make any representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. The Buyer hereby acknowledges
and agrees that, except as set forth in this Agreement or any documents
delivered pursuant to this Agreement, the Buyer is purchasing the Acquired
Assets on an "as-is, where-is" basis.
Section 3.29 TAX MATTERS. The Seller has filed or will file or
cause to be filed, within the applicable period prescribed by law, all
federal, state, local, foreign or other tax returns, required by such law to
be filed by Seller with respect to the Business for all taxable periods
ending on or prior to the Closing Date, or the Seller has filed valid
extensions of the time for filing such tax returns. Seller has paid, within
the time and manner prescribed by law, all Taxes shown as due on all such tax
returns, and Seller is not delinquent in the payment of any Tax relating to
the Business, and no deficiencies for any Taxes have been asserted against
Seller relating to the Business and, to the Knowledge of the Seller, no such
deficiencies have been threatened. There are no Security Interests on any of
the Acquired Assets that have arisen in connection with any failure (or
alleged failure) by the Seller to pay any Tax and there are no judgments
against Seller for or with respect to any Tax arising out of the operation of
the Business.
Section 3.30 INSURANCE. Except as disclosed on SCHEDULE 3.30,
the fire, casualty, liability and other insurance policies insuring the
Seller or its properties or interests therein provide adequate coverage for
all normal risks incident to the Business and are in such character and
amount at least equivalent to that carried by Persons engaged in a business
that is subject to the same or similar perils or hazards and at the same
locations as the locations of the Business.
21
<PAGE>
UNITED STATES
Section 3.31 COMPLETENESS; NO MISREPRESENTATIONS. To the
Knowledge of the Seller the copies of all instruments, agreements and written
information, including without limitation the schedules hereto, delivered
pursuant to this Agreement or otherwise furnished or made available to the
Buyer by the Seller, including but not limited to the financial statements of
the Seller attached hereto as Schedule 3.31, are complete and correct in all
material respects as of the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV).
Section 4.1 ORGANIZATION OF THE BUYER. The Buyer is a
corporation duly incorporated and organized, validly subsisting and in good
standing under the laws of the jurisdiction of its incorporation.
Section 4.2 AUTHORIZATION OF TRANSACTION. The Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions, except to the extent
that enforcement may be limited by the laws of bankruptcy or insolvency or
laws relating to creditors' rights and remedies generally.
Section 4.3 NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
Article II above), will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority, or court to which the Buyer is
subject or any provision of its charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it
is bound or to which any of its assets is subject. Except for the Required
Approvals, the Buyer does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Governmental
Authority in order for the parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Article II above).
Section 4.4 FINANCING. The Buyer has disclosed to the Seller
its intended means and sources of financing the Purchase Price.
Section 4.5 BROKERS' FEES. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
22
<PAGE>
UNITED STATES
ARTICLE V
PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
Section 5.1 GENERAL. Each of the parties will execute and
deliver such other documents, certificates, agreements and other writings,
and use its best efforts to take all actions and to do all things necessary,
proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VI below).
Section 5.2 NOTICES AND CONSENTS.
(a) The Seller will give any notices to third parties and will use
its best efforts to obtain any third party consents that the Buyer reasonably
may request in connection with the matters referred to in Article III above.
Each party will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, transfers, assignments,
waivers and approvals of any Governmental Authority necessary to consummate
the transactions contemplated by this Agreement (the "REQUIRED APPROVALS").
Without limiting the generality of the foregoing, each party will file any
notification and report forms and related material that it may be required to
file with, and apply for any available advance rulings from the United States
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Hart-Scott-Rodino Act and will use its best
efforts to obtain a waiver from any applicable waiting period and will make
any further filings pursuant thereto that may be necessary, proper, or
advisable in connection with any of the foregoing. Each of the Seller and
the Buyer shall be responsible for the payment of one-half (1/2) of the
filing fees for such notifications and related materials, and any accounting
therefor shall be paid on the Closing Date to the extent known, and
thereafter on demand.
(b) (i) Nothing in this Agreement shall be construed as an
attempt by the Seller to assign to Buyer any Contract, agreement, Permit or
License, franchise, Claim or asset included in the Acquired Assets (A) which
is by its terms or by law nonassignable without the consent of any other
party or parties, unless such consent or approval shall have been given, or
(B) as to which all the remedies for the enforcement thereof available to the
Seller would not by law pass to the Buyer as an incident of the assignments
provided for by this Agreement (an "ACQUIRED ASSET REQUIRING CONSENT").
(ii) Prior to the Closing Date, the Seller shall use its best
efforts to obtain consents or approvals to the assignment of the Contracts,
Open Orders, Permits and Licenses, and Real and Personal Property Leases
described on SCHEDULE 5.2(b) (collectively "MATERIAL CONTRACTS REQUIRING
CONSENT"); PROVIDED, that the Seller shall not be required to pay more than
$10,000 in cash or other consideration or grant any forbearances or
accommodation (financial or otherwise) having such value, in the aggregate,
to any other parties to such Material Contracts Requiring Consent to effect
such consents or approvals.
(iii) To the extent that any such consent or approval in
respect of, or a novation of, an Acquired Asset Requiring Consent shall not
have been obtained on or before
23
<PAGE>
UNITED STATES
the Closing Date, the parties hereto shall use reasonable efforts and shall
cooperate in any reasonable arrangement to assure the Buyer the benefits of
such Acquired Asset Requiring Consent to the extent permitted by law. To the
extent lawful, practicable and reasonable in the circumstances, including the
obtaining of any such necessary consent or approval after the Closing Date
(provided that the Seller and its Affiliates shall not be required to pay
more than $10,000 in cash or other consideration or any grant or
accommodation (financial or otherwise) forbearances having such value, in the
aggregate, to any other parties to such Material Contracts Requiring Consent
to effect such consents or approvals), the Seller at the request and under
the direction of the Buyer shall take all reasonable actions to assure that
the rights of the Seller under the Acquired Asset Requiring Consents shall be
preserved for the benefit of the Buyer to the extent not involving any undue
hardships upon the Seller or unreasonable time constraints in the request or
compliance with such instructions. The Buyer shall reimburse the Seller and
its Affiliates for their reasonable out-of-pocket expenses in excess of
$10,000 related to any actions taken by the Seller at the request of the
Buyer after the Closing Date.
(iv) Except with respect to the Material Contracts Requiring
Consent, the Buyer acknowledges that certain consents to the assignments may
be required from parties to all other Acquired Assets Requiring Consent and
that such consents may not be obtained. The Buyer agrees that the Seller
shall not have any liability to the Buyer arising solely out of or solely
relating to the failure to obtain any consents that may have been or may be
required in connection with the assignments, or because of the default under
or acceleration or termination of, any other Acquired Asset Requiring Consent
solely as a result thereof. The Buyer further agrees that no representation,
warranty or covenant of the Seller contained herein shall be breached or
deemed breached as a result of the failure to obtain any such consent, or as
a result of any default, acceleration or termination resulting solely from
such failure. The Buyer further agrees that no condition to the Buyer's
obligations to close the transactions contemplated by this Agreement shall be
deemed not satisfied as a result of the failure to obtain any such consent,
except consents with respect to Material Contracts Requiring Consent.
(v) The Buyer and the Seller shall jointly cooperate in
attempting to obtain any consents required in connection with the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the
Seller shall not be required to incur out-of-pocket expenses in excess of
$10,000, commence any litigation or offer or grant any forbearance or
accommodation (financial or otherwise) to any third party.
Section 5.3 OPERATION OF BUSINESS. The Seller will not engage
in any practice, take any action or enter into any transaction outside the
Ordinary Course of Business. Without limiting the foregoing, the Seller
shall use its commercially reasonable efforts to preserve the Business intact
as a going concern, to retain the services of its officers and key employees,
and to preserve its business relationships with customers, suppliers and
others. The Seller will perform usual and customary maintenance on the
tangible Acquired Assets consistent with past custom and practices, and shall
maintain insurance on the Acquired Assets consistent in amount, scope and
coverage to that in effect on the date of this Agreement.
Section 5.4 FULL ACCESS. The Seller, upon reasonable prior
notice, will permit authorized representatives of the Buyer to have full
access to the Real Property, personnel and Records of or pertaining to the
Business during reasonable hours, but in a
24
<PAGE>
UNITED STATES
manner that will not interfere with the normal business operations of the
Seller and subject to the prior approval of the Seller; PROVIDED, HOWEVER,
that the Buyer shall not be provided with access to any of the foregoing to
the extent that such access would violate or conflict with (i) any law,
regulation, order or injunction to which the Seller or any of the Acquired
Assets is subject; or (ii) any agreement, instrument or understanding by
which the Seller is bound.
Section 5.5 CONFIDENTIALITY; PUBLIC ANNOUNCEMENT.
(a) The Seller and the Buyer shall take all reasonable precautions
to maintain the confidentiality of any Confidential Information concerning
the Business, the other party or any party's Affiliates that is provided to
or discovered by it or its representatives in the course of negotiating this
Agreement and shall not disclose such Confidential Information to anyone
other than (a) those persons directly involved in the investigation and
negotiations pertaining to the transactions contemplated by this Agreement,
including without limitation, financial advisors, legal counsel, accountants,
appraisers, insurance brokers and similar representatives, (b) such lenders
or investors as may be necessary to finance the transactions contemplated
hereby and (c) such Persons or governmental authorities whose consents or
approvals may be necessary or to whom notice need be given to permit
consummation of the transactions contemplated hereby. The Buyer will not use
any of the Confidential Information except in connection with the negotiation
of this Agreement and the consummation of the transactions contemplated
hereby and, if this Agreement is terminated for any reason whatsoever, will
return to the Seller all tangible, digital or electronic embodiments (and all
copies) of the Confidential Information which are in its possession or under
its control or that of its advisors.
(b) Other than jointly-issued announcements and disclosure to
Seller's and Buyer's employees, customers and vendors, no party to this
Agreement shall, without the prior written consent of the other parties
hereto, make or cause to be made any press release or other public statement
or announcement (a "PUBLIC ANNOUNCEMENT") that directly or indirectly
discloses the transactions contemplated by this Agreement; PROVIDED, that any
party may make a Public Announcement if such disclosure is, in the reasonable
good faith opinion of such party's outside counsel, required by law. If a
party determines that it is required by law to make any such Public
Announcement, it will give the other party reasonable advance notice thereof,
including the text of such Public Announcement and shall consult with such
other party regarding the nature, content and timing of such Public
Announcement.
Section 5.6 NOTICE OF DEVELOPMENTS.
(a) The Seller may elect at any time to notify the Buyer of any
development causing a breach of any of its representations and warranties in
Article III above. Unless the Buyer has the right to terminate this
Agreement pursuant to Section 8.1(b) below by reason of the development and
exercises that right within the period of 10 business days referred to in
Section 8.1(b) below, the written notice pursuant to this Section 5.6(a) will
be deemed to have amended the Schedules, to have qualified the
representations and warranties contained in Article III above and to have
cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
25
<PAGE>
UNITED STATES
(b) Each party will give prompt written notice to the other party
of any material adverse development causing a breach of any of its own
representations and warranties in Articles III or IV above. No disclosure by
any party pursuant to this Section 5.6(b), however, shall be deemed to amend
or supplement the Schedules or to prevent or cure any misrepresentation or
breach of warranty.
Section 5.7 EXCLUSIVITY. The Seller will not solicit, initiate
or encourage the submission of any proposal or offer from any Person relating
to the acquisition of the Business or the Acquired Assets, other than sales
of inventory in the Ordinary Course of Business, (including any acquisition
structured as a merger, consolidation or share exchange); nor will they
permit any of their respective officers, directors or agents, nor any
Affiliate of either the Seller or any officers, directors or agents thereof
to (i) solicit any proposal or offer from any person or entity (other than
the Buyer) relating to the sale of the Acquired Assets, the Business or any
material portion of its assets, (ii) provide any non-public information to
any person or entity (other than the Buyer) for use in preparing any proposal
or offer relating to the sale of the Acquired Assets, the Business or any
material portion of its assets, or (iii) respond to or enter into any
negotiations regarding any proposal or offer from any Person concerning any
of the foregoing (other than the Buyer).
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
Section 6.1 CONDITIONS TO OBLIGATION OF THE BUYER. The
obligation of the Buyer to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(a) The representations and warranties set forth in Article III
above shall be true and correct in all respects at and as of the Closing
Date, except those representations not already qualified by "Material Adverse
Effect," which shall be true and correct in all material respects;
(b) The Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement, or any action or proceeding by or before any
court or Governmental Authority pending or threatened in writing which
attempts to restrain, enjoin or otherwise prevent, or that any damages will
be recovered as a result of, the consummation of the transactions
contemplated by the Agreement;
(d) The Seller shall have delivered to the Buyer a certificate of
the President and of the Chief Financial Officer of Seller to the effect that
each of the conditions specified above in Section 6.1(a)-(c) is satisfied in
all respects;
(e) All applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Seller shall
26
<PAGE>
UNITED STATES
have received and delivered to the Buyer all Required Approvals of
Governmental Authorities referred to in Section 3.4 above.
(f) The Buyer shall have received from counsel to the Seller the
opinions in form and substance as set forth in EXHIBITS 6.1 (a), (b) AND (c)
attached hereto, addressed to the Buyer, and dated as of the Closing Date;
(g) All corporate actions necessary to authorize and effectuate
the consummation of the transactions contemplated by this Agreement by the
Seller shall have been duly taken prior to the Closing and the Seller shall
have delivered to Buyer a certificate of a duly authorized officer of the
Seller to that effect;
(h) The Seller and the Escrow Agent shall have executed and
delivered the Escrow Agreement;
(i) The Buyer shall have received all agreements, documents and
instruments incidental to the Seller's performance of the transactions
contemplated by this Agreement, in form and substance reasonably satisfactory
to the Buyer and its legal counsel, and copies of all documents that it may
reasonably have requested in connection with such transactions;
(j) The conditions to the obligations of the Buyer to consummate
the transactions contemplated by the LMP Canada Acquisition Agreement set
forth in Section 6.1 thereof shall have been satisfied or waived;
(k) On the Closing Date, the Seller shall deliver to the Buyer
physical possession of all tangible property included in the Acquired Assets
and any tangible evidence of all intangible property included in the Acquired
Assets;
(l) The Seller shall have executed and delivered to the Buyer a
license agreement, effective as of the Closing Date, substantially in the
form of Exhibit 6.1(l), pursuant to which the Seller grants to the Buyer a
limited license to use certain intellectual property and proprietary software
(the "License Agreement"); and
(m) The Buyer shall have received an ALTA or similar title
insurance policy issued by a reputable title company mutually agreeable to
the Buyer and the Seller at regular rates insuring the Buyer's title to the
Real Property with standard exceptions.
(n) The Seller shall have received the consents or approvals to
the assignment of the Material Contracts Requiring Consent in form and
substance satisfactory to counsel for Buyer acting reasonably.
(o) Alusuisse-Lonza America Inc., a Delaware corporation and the
parent company of Seller, shall have executed the separate guarantee
provisions set forth at the end of this Agreement and the Seller shall have
furnished to the Buyer the legal opinion regarding the due authorization,
execution, delivery and legal and binding effect of the guarantee provisions
in form and substance set forth in Exhibit 6.21 attached hereto, addressed to
the Buyer, and dated as of the Closing Date.
27
<PAGE>
UNITED STATES
(p) The Seller shall have delivered to the Buyer discharges, in
form and substance satisfactory to counsel for Buyer acting reasonably, with
respect to any Security Interest on or against the Acquired Assets, or the
Premises, except with respect to Permitted Encumbrances.
The Buyer may waive any condition specified in this Section 6.1 if it
executes a writing so stating at or prior to the Closing.
Section 6.2 CONDITIONS TO OBLIGATION OF THE SELLER. The
obligations of the Seller to consummate the transactions to be performed by
them in connection with the Closing are subject to satisfaction of the
following conditions:
(a) The representations and warranties set forth in Article IV
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) The Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement, or any action or proceeding by or before any
court or Governmental Authority pending or threatened in writing which
attempts to restrain, enjoin or otherwise prevent, or that any damages will
be recovered as a result of, the consummation of the transactions
contemplated by the Agreement;
(d) The Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in Section 6.2(a)-(c)
is satisfied in all respects;
(e) All applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and Buyer shall have received and delivered to the Seller all
Required Approvals of Governmental Authorities referred to in Section 4.3
above.
(f) The Seller shall have received from counsel to the Buyer an
opinion in form and substance as set forth in EXHIBIT 6.2 attached hereto,
addressed to the Seller, and dated as of the Closing Date;
(g) All corporate actions necessary to authorize and effectuate
the consummation of the transactions contemplated by this Agreement by the
Buyer shall have been duly taken prior to the Closing and the Buyer shall
have delivered to the Seller certificates of duly authorized officers of the
Buyer to that effect;
(h) The Buyer and the Escrow Agent shall have executed and
delivered the Escrow Agreement;
(i) The Seller shall have received all agreements, documents and
instruments incidental to the Buyer's performance of the transactions
contemplated by this
28
<PAGE>
UNITED STATES
Agreement, in form and substance reasonably satisfactory to the Seller and
its legal counsel, and copies of all documents that they may reasonably have
requested in connection with such transactions;
(j) All other actions to be taken by the Buyer in connection with
consummation of the transactions contemplated by this Agreement and all
certificates, opinions, instruments and other documents required to effect
the transactions contemplated by this Agreement will be reasonably
satisfactory in form and substance to the Seller;
(k) The conditions to the obligations of the Seller to consummate
the transactions contemplated by the LMP Canada Acquisition Agreement set
forth in Section 6.2 thereof shall have been satisfied or waived;
(l) The Buyer shall have executed and delivered to the Seller the
License Agreement; and
(m) The Buyer shall have paid the Purchase Price in accordance
with Article II of this Agreement.
(n) Mail-Well, Inc., a Colorado corporation shall have executed
the separate guarantee provisions set forth at the end of this Agreement and
the Buyer shall have furnished to the Seller the legal opinion regarding the
due authorization, execution, delivery and legal and binding effect of the
guarantee provisions in form and substance set forth in Exhibit 6.21 attached
hereto, addressed to the Buyer, and dated as of the Closing Date.
The Seller may waive any condition specified in this Section 6.2 if it
executes a writing so stating at or prior to the Closing.
ARTICLE VII
POST-CLOSING COVENANTS
Section 7.1 EMPLOYMENT OF SELLERS' EMPLOYEES.
(a) As of the Closing Date, the Seller shall terminate the
employment of all of Seller's employees listed on SCHEDULE 7.1(a) (the
"ACQUIRED EMPLOYEES"), and Buyer will on the Closing Date, or within five (5)
days after Closing but effective as at Closing, extend to all such Acquired
Employees who are Actively Employed, offers of employment for comparable jobs
at comparable rates of pay (including commission structure) not less than
each such Acquired Employee's rate of pay immediately prior to the Closing
Date. The Buyer further agrees to offer to hire any Acquired Employee of the
Seller who is not Actively Employed on the Closing Date because such employee
is on short-term medical leave, short-term disability leave or other leave of
absence, such offer to be made if and when such Acquired Employee reports to
work with the Buyer within six (6) months of the Closing Date and is able to
perform the essential functions of the job, with or without reasonable
accommodation, as those terms are defined by the Americans with Disabilities
Act.
(b) SCHEDULE 7.1(b) sets forth those Acquired Employees of the
Seller who are either (i) Actively Employed but are expected to be on any
leave on the Closing Date or
29
<PAGE>
UNITED STATES
(ii) are not expected to be Actively Employed by the Seller on the Closing
Date.
(c) The Seller shall retain and be obligated to satisfy all Claims
for workers' compensation which have been filed against the Seller prior to
the Closing Date, whether insured or uninsured, and shall at its own expense
honor, or cause its insurance carriers to honor, such Claims in accordance
with the terms and conditions of such programs or applicable workers'
compensation statutes. The Seller shall be entitled to retain all accruals
on the Seller's books with respect to such Claims.
(d) Seller shall retain the responsibility for providing, and
shall provide, notice of the right to continue group health coverage under
Section 4980B of the U.S. Code to all Acquired Employees of the Seller as of
the Closing Date.
(e) Seller shall, within thirty (30) days after Closing but
effective as of the Closing, adopt amendments to its Lawson Mardon Packaging
USA 401(k) Investment Plan and any other defined benefit or defined
contribution plan, but excluding any Union Employee Benefit Plans, covering
any Acquired Employees to provide for the acceleration of full vesting of
such Acquired Employees under such plans, and Seller shall not make any
"rollover" or other lump sum distributions out of such plans until such
amendments are in effect.
Section 7.2 EMPLOYEE BENEFITS MATTERS. Notwithstanding the
foregoing provisions of SECTION 7.1, the Buyer agrees to continue to provide
benefits to Transferred Employees covered under the Collective Bargaining
Agreement pursuant to the terms thereof, PROVIDED, HOWEVER, that Buyer shall
not assume any Employee Welfare Benefit Plan, but shall establish health and
welfare plans for the benefit of the Transferred Employees who are covered
under the Collective Bargaining Agreement in such form as to provide for the
level of benefits as set forth in the Collective Bargaining Agreement, and
PROVIDED, FURTHER, that Buyer shall not assume the Lawson Mardon Packaging
USA 401(k) Investment Plan and its related assets and liabilities but shall
provide the Transferred Employees who are covered under the Collective
Bargaining Agreement with the opportunity to participate in a comparable
tax-qualified defined contribution plan maintained by the Buyer. Transferred
Employees who are not covered under the Collective Bargaining Agreement will
be entitled to receive and participate in such benefits and plans as the
Buyer maintains for similarly situated employees. The Buyer shall give to
all Transferred Employees who are covered by a Collective Bargaining
Agreement, service credit for time worked at the Seller (including
predecessors and Affiliates) for purposes of eligibility and vesting
requirements in Buyer's retirement and health and welfare plans, seniority
and determining leave entitlement and other benefits under the terms of the
Collective Bargaining Agreement. The Buyer shall give to all Transferred
Employees who are not covered by the Collective Bargaining Agreement, service
credit for time worked at the Seller (including predecessors and Affiliates)
for purposes of eligibility and vesting requirements in Buyer's retirement
and health and welfare plans and for purposes of determining sick leave,
vacation pay, maternity, parental or family medical leave entitlement under
the Buyer's policies. The Buyer shall also waive any and all waiting periods
and pre-existing condition limitations existing under Buyer's medical, vision
and dental plans for all Transferred Employees.
Section 7.3 WITHDRAWAL LIABILITY. The Sellers and the Buyer
intend to take advantage of Section 4204 of the Multiemployer Pension Plan
Amendment Act of 1980
30
<PAGE>
UNITED STATES
("MEPPA") to avoid any withdrawal liability relating to the LMP USA
Multiemployer Plans as of the Closing Date. As such, Buyer shall contribute
to such Plans for substantially the same number of contribution base units
for which the Sellers had an obligation to contribute to the Plans with
respect to the Business as of the Closing Date. Effective on the Closing
Date, Buyer shall provide to such Plans any bond required by Section
4204(a)(1))(B) of MEPPA. Seller agrees that if the Buyer withdraws in a
complete withdrawal, or partial withdrawal, under any such Plan prior to the
end of the fifth (5th) full plan year beginning after the Closing, Seller
shall be secondarily liable for any withdrawal liability Seller would have
had to the Plans (but for Section 4204 of MEPPA) if Buyer does not pay its
withdrawal liability to the Plans. Notwithstanding the foregoing, the
Sellers shall reimburse the Buyer for all costs of obtaining and maintaining
the bond to be provided by Buyer and shall indemnify and hold Buyer harmless
from any withdrawal liability under any Plan that Buyer incurs prior to the
end of the fifth (5th) full plan year beginning after the Closing; provided,
that Seller's liability under such indemnity shall not exceed the withdrawal
liability Seller would have had to the Plan (but for Section 4204 of MEPPA)
as of the Closing Date plus interest thereon at the average rate of return
earned by the Plan from the Closing Date through the end of the last plan
year ending prior to Buyer's withdrawal. Within five (5) business days after
execution of this Agreement (but no later than the Closing Date), Buyer and
the Seller shall agree on the mechanics of compliance with Section 4204 of
MEPPA.
Section 7.4 NONCOMPETITION. As additional consideration for the
mutual undertakings of the Buyer and the Seller contained in this Agreement,
the Buyer and the Seller agree as follows:
(a) The Seller shall not, and represents and warrants to and
covenants with the Buyer that no Affiliate of the Seller shall, for a period
of four (4) years after the Closing Date, directly or indirectly, either for
itself or any other Person,
(i) engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation,
financing, or control of, be associated with, or in any manner connected
with, lend its name or any similar name to, lend its credit to, or render
services or advice to, any business whose products or activities compete
as a whole or in part with the products or activities of the Business as
of the date of this Agreement, anywhere within the United States or Canada
(a "Competing Business"); PROVIDED, however, that the Seller and any
Affiliate of the Seller may purchase or otherwise acquire up to (but not
more than) one percent of any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange
or have been registered under Section 12(g) of the Securities Exchange Act
of 1934; PROVIDED, further, that the covenant set forth in this subsection
(a)(i) of this SECTION 7.4 shall not apply to any of the foregoing actions
taken by the Seller or any Affiliates of the Seller with respect to any
enterprise whose operations include one or more Competing Businesses whose
aggregate gross revenues from all such Competing Businesses in the United
States and Canada do not exceed U.S. $30,000,000 in any calendar year
during the term of this Section 7.4(a), in which case the Seller or such
Affiliate shall not be prevented hereby from taking any such action, nor
shall the Seller or such Affiliate, in the case of an acquisition of any
interest in such an enterprise, be required to divest or discontinue any
such Competing Business;
31
<PAGE>
UNITED STATES
(ii) (A) induce or attempt to induce any Acquired Employee to
leave the employ of the Buyer, (B) in any way interfere with the
relationship between the Business and any such Acquired Employee,
(C) employ, or otherwise engage as an employee, independent contractor, or
otherwise, any Acquired Employee, or (D) induce or attempt to induce any
customer, supplier, licensee, or business relation of the Business to
cease doing business with it, or in any way interfere with the
relationship between the Business and any such customer, supplier,
licensee, or business relation; or
(iii) solicit the business of any Person known to the Seller
to be a customer of the Business, whether or not the Seller has had direct
contact with such Person, with respect to products or activities which
compete as a whole or in part with the products or activities of the
Business as of the date of this Agreement.
(b) The Buyer shall not, and represents and warrants to and
covenants with the Seller that no Affiliate of the Buyer shall, for a period
of one (1) year after the Closing Date, permit any of its managerial
personnel (directly or through a third party contractor) to induce or attempt
to induce any employee of the Seller to leave the employ of the Seller,
except by means of general advertisement or notice.
(c) The covenants set forth in subsection (a) of this Section 7.4
are reasonable with respect to duration, geographical area and scope.
(d) Neither party shall, at any time during or after the four (4)
year period referred to in this Section 7.4, disparage in any manner the
other party, its products, activities or business, or any of the other
party's Affiliates, shareholders, directors, officers, employees or agents.
Section 7.5 ACCESS TO RECORDS. Each party shall preserve all
Records for a period of five (5) years from the Closing Date and shall allow
each other party and its respective representatives, upon reasonable prior
notice during normal business hours and without unreasonably interfering with
operations, full access to and the right to examine and copy any Records that
may be necessary or desirable for the preparation, filing and audit of all
tax returns for all periods beginning prior to the Closing Date and the
Closing NWC Statement. During such 5-year period, the Seller shall, to the
extent reasonably requested in writing by the Buyer, provide the Buyer with
photocopies of those income tax records which relate solely to the Business
subject to such confidentiality covenants of the Buyer as the Seller shall
reasonably request.
Section 7.6 FURTHER ASSURANCES.
(a) From time to time after Closing, at the Buyer's reasonable
request and without further consideration, the Seller will, consistent with
Section 2.6 of this Agreement, execute and deliver such other and further
instruments of conveyance, assignment and transfer, and take such other
actions, as the Buyer may reasonably request, for the effective conveyance
and transfer of the Acquired Assets.
32
<PAGE>
UNITED STATES
(b) After Closing, the Buyer will provide the Seller with such
assistance by the controllers of the Business as the Seller may reasonably
deem to be necessary or desirable for the prompt and accurate preparation of
the Closing NWC Statement.
(c) After Closing, the Buyer and the Seller shall cooperate as may
be reasonably requested by either party for the purpose of obtaining the bond
as required under Section_4204 of MEPPA pursuant to Section 7.3 above, or to
obtain a waiver of such requirement by the PBGC, as the case may be.
(d) After Closing, Buyer shall reasonably cooperate with Seller to
effect the vesting of Acquired Employees under Sellers plans as required
under Section 7.1(e) above.
Section 7.7 TAX COLLECTION AND INFORMATION REPORTING
OBLIGATIONS. The Buyer and the Seller agree to cooperate fully with the
other's efforts to comply with any tax collection and information reporting
obligations imposed upon the other with respect to the consummation of the
transactions contemplated hereby and agrees to provide the other with such
information as Seller may reasonably request from time to time in connection
with such obligations.
Section 7.8 ACCOUNTS RECEIVABLE. The Buyer shall use its best
efforts to collect the Accounts Receivable consistent with the past practices
of the Business. All amounts collected from an account debtor in respect of
an Account Receivable shall be first applied to such Account Receivable.
Buyer shall not compromise or otherwise settle any Account Receivable without
Seller's consent, which consent shall not be unreasonably withheld, and, in
the event Buyer fails to request such consent of Seller, Buyer shall not be
entitled to indemnification from Seller with respect to the uncollected
portion of any such compromised or settled Account Receivable. In the event
that the Buyer successfully asserts and the Seller pays a claim for
indemnification under Article X with respect to any uncollected Account
Receivable or portion thereof, the Buyer shall assign such uncollected
Account Receivable to the Seller.
Section 7.9 NO MERGER, ETC. Seller agrees that it shall not
dissolve, merge out of existence, or sell substantial assets, as such assets
exist on the date of this Agreement, prior to the sixth (6) anniversary of
the Closing Date, without requiring any successor and/or purchaser to become
liable for the obligations of Seller hereunder. Seller may be relieved of
this covenant at any time by providing Buyer with a guarantee of Seller's
ultimate corporate parent (or, with the consent of Buyer, an Affiliate of
Seller) in a form reasonably acceptable to the Buyer.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION OF AGREEMENT. The parties may terminate
this Agreement as provided below:
(a) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
33
<PAGE>
UNITED STATES
(b) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event (i) the
Seller has within the previous ten (10) days given the Buyer any notice
pursuant to Section 5.6(a) above and (ii) the development that is the subject
of the notice, either individually or in the aggregate with all other
developments that are the subject of notices given pursuant to Section
5.6(a), has had or is reasonably expected to have a Material Adverse Effect.
(c) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (i) in the event the
Seller has breached any representation, warranty or covenant contained in
this Agreement in any respect, the Buyer has notified the Seller of the
breach and the breach has continued without cure for a period of fifteen (15)
days after the notice of breach, except where such breach would not have a
Material Adverse Effect or (ii) if the Closing shall not have occurred on or
before March 31, 1998, by reason of the failure of any condition precedent
under Section 6.1 hereof (unless the failure results primarily from the Buyer
breaching any representation, warranty or covenant contained in this
Agreement); and
(d) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (i) in the event the
Buyer has breached any representation, warranty or covenant contained in
this Agreement in any material respect, the Seller has notified the Buyer of
the breach, and the breach has continued without cure for a period of fifteen
(15) days after the notice of breach or (ii) if the Closing shall not have
occurred on or before March 31, 1998, by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure results
primarily from the Seller breaching any representation, warranty, or covenant
contained in this Agreement).
Section 8.2 EFFECT OF TERMINATION. If any party terminates this
Agreement pursuant to Section 8.1 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in breach); PROVIDED,
HOWEVER, that the provisions of Sections 5.5 above shall survive termination.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.
(a) All representations and warranties made by the Seller or the
Buyer as to any fact or condition existing on or before the Closing Date in
this Agreement, in any Exhibit, Schedule or in any certificate delivered
pursuant hereto, shall survive the Closing for a period of eighteen (18)
months, except the representations and warranties contained in Sections 3.3,
3.10(b) and 4.3 and the representations and warranties regarding title to the
Acquired Assets contained in Section 3.6 which shall survive for three (3)
years, those representations and warranties contained in Section 3.16 which
shall survive for six (6) years and those representations and warranties
regarding Taxes which shall survive until the expiration of the applicable
statute of limitations period within which any assessment, reassessment or
other determination of an amount owing can be made or (ii) six (6) months
after such time as a final determination of such assessment, reassessment or
other determination of an amount owing has
34
<PAGE>
UNITED STATES
been made and all appeal rights have been exhausted or no appeal has been
made within the time prescribed for any such appeal.
(b) All covenants made by the Seller or the Buyer in this
Agreement or any Exhibit, whether to be fulfilled or complied with before or
after the Closing Date, shall survive the Closing for a period of six (6)
years;
PROVIDED, that there shall be no termination of any such representation,
warranty or covenant as to which a claim has been asserted in writing prior
to the termination of any such survival period.
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNITY BY SELLER. The Seller shall defend,
indemnify and hold the Buyer, its officers, directors, employees,
subsidiaries and Affiliates harmless from and against all Claims, damages,
losses, liabilities, costs, penalties, fines and expenses (including
reasonable attorneys' fees and disbursements and any other legal costs)
(collectively, "LOSSES") arising out of or resulting from:
(a) Any breach of, or failure to be true and correct, of the
representations and warranties made by the Seller in this Agreement or any
agreement or instrument executed and delivered to the Buyer by or on behalf
of the Seller pursuant to this Agreement;
(b) Any failure by the Seller to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and materials
delivered by the Seller pursuant to this Agreement;
(c) Any Claims of third parties against the Buyer relating to or
arising out of the ownership, occupation and/or operation of the Business,
the Acquired Assets, or the Premises, before (but not on or after) the
Closing Date, including the Excluded Liabilities and excluding the Assumed
Liabilities;
(d) The failure to comply with any applicable bulk sales or bulk
transfer laws;
(e) Any Claims arising out of the cost of remediating any of the
Premises if and as required by applicable Environmental, Health and Safety
Laws and to the extent the Hazardous Materials addressed through such
remediation were released or threatened to be released to the environment as
of the Closing Date; and
(f) Any Claim brought by any Person or Governmental Authority
arising out of any of the matters referred to in this Section 10.1.
A claim for indemnification under this Section 10.1, except under
Section 10.1(a) above, may be made regardless of whether or not the matter
giving rise to such claim would constitute a breach of a representation or
warranty made in this Agreement or any Exhibit, Schedule, certificate or
other document delivered pursuant hereto.
35
<PAGE>
UNITED STATES
Section 10.2 INDEMNITY BY THE BUYER. The Buyer shall defend,
indemnify and hold the Seller, its officers, directors, employees,
subsidiaries and Affiliates harmless from and against all Losses arising out
of or resulting from:
(a) Any breach of, or failure to be true and correct, of the
representations and warranties made by the Buyer in this Agreement or any
agreement or instrument executed and delivered to the Seller by or on behalf
of the Buyer pursuant to this Agreement;
(b) Any failure by the Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and materials
delivered by the Buyer pursuant to this Agreement;
(c) The Assumed Liabilities;
(d) Any Claims of third parties against the Seller relating to or
arising out of the ownership, occupation and/or operation of the Business,
the Acquired Assets or the Premises on or after (but not before) the Closing
Date, including the Assumed Liabilities and excluding the Excluded
Liabilities; and
(e) Any Claim brought by any Person or Governmental Authority
arising out of any of the matters referred to in this Section 10.2.
(f) Any liability arising under the WARN Act with respect to the
Acquired Employees whose termination of employment occurs on the Closing Date
or six months thereafter; and
(g) Any and all Claims of interference, retaliation,
discrimination and/or wrongful termination arising under the Family and
Medical Leave Act of 1993, the Americans with Disabilities Act, comparable
state disability discrimination and family/medical leave statutes, applicable
federal and state race, gender, age and similar discrimination laws, and/or
applicable state workers' compensation laws with respect to Seller's
termination pursuant to Section 7.1(a) of those Acquired Employees listed on
SCHEDULE 7.1(b) whether or not such Acquired Employees subsequently qualify
as Transferred Employees;
(h) Any and all Claims for workers' compensation by Transferred
Employees that are filed on or after the Closing Date, regardless of whether
such Claims have arisen or will arise out of events occurring prior to the
Closing Date, and whether insured or uninsured, and all expenses, incident to
causing its own insurance carriers to honor such Claims in accordance with
the terms and conditions of such programs or applicable workers' compensation
statutes.
A claim for indemnification under this Section 10.2, except under
Section 10.2(a) above, may be made regardless of whether or not the matter
giving rise to such claim would constitute a breach of a representation or
warranty made in this Agreement or any Exhibit, Schedule, certificate or
other document delivered pursuant hereto.
36
<PAGE>
UNITED STATES
Section 10.3 INDEMNIFICATION CLAIMS.
(a) If the Seller or the Buyer, as the case may be (in such
instance, the "CLAIMANT") wishes to assert an indemnification claim
hereunder, the Claimant shall deliver to the indemnifying party a written
notice (a "CLAIM NOTICE") setting forth:
(i) the matter giving rise to the claim for indemnification,
(ii) a description of all of the facts and circumstances known to
the Claimant giving rise to the claim, and
(iii) a description of, and a reasonable estimate of the total
amount of, the monetary amounts actually incurred or expected to be incurred
for which indemnification is sought.
The untimely delivery of a Claim Notice by the indemnified party to the
indemnifying party shall relieve the indemnifying party of liability with
respect to such Claim only to the extent such indemnifying party has been
prejudiced by lack of timely notice with respect to such Claim.
(b) The Buyer and the Seller, in the event such party delivers
such Claim Notice, are referred to herein as "INDEMNIFIED PARTIES," and the
persons from whom indemnification may be sought pursuant to this Article X
are referred to as an "INDEMNIFYING PARTY". Within twenty (20) days after
receipt of any Claim Notice, the Indemnifying Party will (i) acknowledge in
writing its responsibility for all or part of such matter for which
indemnification is sought under this Article X, and will either (x) pay or
otherwise satisfy the portion of such matter as to which responsibility is
acknowledged, or (y) take such other action as is reasonably satisfactory to
the Indemnified Party to provide reasonable security or other assurances for
the performance of its obligations hereunder, and/or (ii) give written notice
to the Indemnified Party of its intention to dispute or contest all or part
of such responsibility. Upon delivery of such notice of intention to contest,
the parties will negotiate in good faith to resolve as promptly as possible
any dispute as to responsibility for, or the amount of, any such matter.
(c) If an Indemnification Claim is a third party Claim, (a "THIRD
PARTY CLAIM"), the Indemnifying Party will have the right at its expense to
assume the defense thereof using counsel reasonably acceptable to the
Indemnified Party. The Indemnified Party shall have the right to
participate, at its own expense, with respect to any such Third Party Claim.
In connection with any such Third Party Claim, the parties shall cooperate
with each other and provide each other with reasonable access to relevant
books and records in their possession. No such Third Party Claim shall be
settled without the prior written consent of the Indemnified Party. If a
firm written offer is made to settle any such Third Party Claim and the
Indemnifying Party proposes to accept such settlement and the Indemnified
Party refuses to consent to such settlement, then: (i) the Indemnifying
Party shall be excused from, and the Indemnified Party shall be solely
responsible for, all further defense of such Third Party Claim; (ii) the
maximum liability of the Indemnifying Party relating to such Third Party
Claim shall be the amount of the proposed
37
<PAGE>
UNITED STATES
settlement if the amount thereafter recovered from the Indemnified Party on
such Third Party Claim is greater than the amount of the proposed settlement;
and (iii) the Indemnified Party shall pay all attorneys' fees and legal costs
and expenses incurred after rejection of such settlement by the Indemnified
Party.
Section 10.4 PROVISIONS REGARDING INDEMNITIES. Each party's
indemnification obligations under the provisions of Section 10.1 and 10.2 is
subject to the following limitations: (i) except for (A) any failure by the
Buyer to pay the Purchase Price in accordance with Section 2.3, (B) any
adjustments to the Purchase Price under Section 2.4, (C) knowing and
intentional breaches of representations, warranties or covenants, or (D) the
Excluded Liabilities set forth on Schedule 2.2, no party shall be entitled to
indemnification unless the total amount of indemnity owed to such party,
together with (in the case of the indemnification of Buyer under Section
10.1) all matters disclosed pursuant to Section 5.6(a), individually or in
the aggregate (except to the extent such matters are reflected in the Net
Working Capital of the Business shown on the Final NWC Statement), equals or
exceeds $100,000 (in which event the party entitled to indemnification shall
be entitled to indemnification for all Losses, including the initial
$100,000); (ii) no party shall be entitled to any consequential or punitive
damages against the other, unless such amounts are awarded in or paid in
connection with a third party claim for which there is indemnification; (iii)
any indemnification owed by any party hereunder shall be reduced by any
amounts paid to the Indemnified Party under insurance policies or otherwise
received or reasonably recoverable by the Indemnified Party seeking
indemnification from third parties; and (iv) the amount of any
indemnification owed by either party hereunder shall not exceed the Purchase
Price.
Section 10.5. SUBROGATION. To the extent that the Indemnifying
Party or LMP Canada makes or is required to make any indemnification payment
to any Indemnified Party, the Indemnifying Party or LMP Canada shall be
entitled to exercise, and shall be subrogated to, any rights and remedies
(including rights of indemnity, rights of contribution and other rights of
recovery) that the Indemnified Party or any Affiliates of the Indemnified
Party may have against any other person (other than any Buyer Indemnified
Party or Seller Indemnified Party) with respect to any damages, circumstances
or matter to which such indemnification payment is directly or indirectly
related. The Indemnified Party shall permit the Indemnifying Party or LMP
Canada to use the name of the Indemnified Party and the names of the
Affiliates of the Indemnified Party in any transaction or in any proceeding
or other matter involving any of such rights or remedies; and the Indemnified
Party shall take such actions as the Indemnifying Party or LMP Canada may
reasonably request for the purpose of enabling the Indemnified Party, at its
own expense, to perfect or exercise the Indemnifying Party's or LMP Canada's
right of subrogation hereunder.
Section 10.6. EXCLUSIVITY. The right of each party hereto to
assert indemnification claims and receive indemnification payments pursuant
to this Article X shall be the sole and exclusive right and remedy
exercisable by any person or entity entitled to indemnification hereunder
with respect to any breach by the other party hereto of any representation,
warranty or covenant.
ARTICLE XI
MISCELLANEOUS
Section 11.1 NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the parties and
their respective successors
38
<PAGE>
UNITED STATES
and permitted assigns.
Section 11.2 ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement between the
parties and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, to the extent
they related in any way to the subject matter hereof.
Section 11.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other party. No assignment of this Agreement
shall release either party from their respective obligations hereunder.
Section 11.4 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
Section 11.5 HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.6 NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if
(and then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: Copy to:
----------------- --------
Lawson Mardon Packaging USA Inc. J. Robertson MacIver, Esquire
1101 Wheaton Avenue Vice President, General Counsel
Millville, NJ 08332-2047 & Secretary
Alusuisse-Lonza America Inc.
1101 Wheaton Avenue
Millville, NJ 08332-2047
If to the Buyer: Copy to:
---------------- --------
Mail-Well, Inc. Roger Wertheimer, Esquire
23 Inverness Way East Vice President, General Counsel &
Suite 160 Secretary
Englewood, CO 80112 Mail-Well, Inc.
Attention: Chairman 23 Inverness Way East
Suite 160
Englewood, CO 80112
39
<PAGE>
UNITED STATES
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
Section 11.7 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Maryland
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Maryland or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Maryland.
Section 11.8 AMENDMENTS AND WAIVERS. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by the Buyer and the Seller. The Seller may consent to any such amendment at
any time prior to the Closing with the prior authorization of their boards of
directors. No waiver by any party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
Section 11.9 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 11.10 EXPENSES. Except as otherwise provided in Sections
2.8 and 5.2, or in Article X, the Buyer and the Seller will each bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
Section 11.11 CONSTRUCTION. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any United States
federal, state, provincial, local, or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including without
limitation.
Section 11.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
Section 11.13 BULK TRANSFER AND SIMILAR LAWS. In consideration of
the
40
<PAGE>
UNITED STATES
indemnity provided herein by Seller to Buyer, the Buyer waives compliance by
the Seller with the provisions of any applicable bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement.
Section 11.14 CONSENT TO JURISDICTION, SERVICE AND VENUE. For the
purpose of any suit, action or proceeding arising out of or relating to this
Agreement, each of the parties hereby agrees that personal jurisdiction and
venue in any suit between the parties shall be exclusively in the United States
District Court for the District of Maryland, Northern Division, regardless of
the convenience of such forum, and the parties further agree and consent to
accept and acknowledge all service of process carried out by means of
registered mail, return receipt requested in connection with any such matter.
Section 11.15 EQUITABLE RELIEF. The parties expressly agree that a
breach by any party of its obligations pursuant to Sections 5.5, 7.4, or 7.9 of
this Agreement would result in irreparable harm to the party against which the
breach or threatened breach is committed and that money damages would not be a
sufficient remedy for any such breach. Accordingly, in the event of a breach
or threatened breach by a party or by any of its authorized representatives of
any of the provisions of Sections 5.5, 7.4 or 7.9 of this Agreement, and in
addition to any other remedy provided herein or by law or in equity, the party
against which the breach or threatened breach is committed shall be entitled to
appropriate equitable relief, including injunctive relief and specific
performance, in any court of competent jurisdiction. In addition, the party
against which the breach or threatened breach is committed shall be entitled to
receive from the breaching party its costs and reasonable attorneys' fees in
connection with any successful enforcement of its rights under this Agreement.
Section 11.16 TIME OF ESSENCE. Time shall be of the essence of this
Agreement.
Section 11.17 NO WAIVER. No investigation made by Buyer (except for
the pre-Closing Inventory taken by Seller and observed by Buyer) or disclosure
made by Seller shall have the effect of diminishing any representation or
warranty made herein by Seller or any indemnity set forth herein by Seller or
Buyer. No waiver by Buyer of any provision, in whole or in part, of this
Agreement shall operate as a waiver of any other provision.
Section 11.18 LMP CANADA ACQUISITION AGREEMENT. No inference
regarding the interpretation of this Agreement shall be drawn because of any
difference in the wording of the LMP Canada Acquisition Agreement.
41
<PAGE>
UNITED STATES
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LAWSON MARDON PACKAGING USA INC. MAIL-WELL I CORPORATION
By: /s/ J.R. MacIver By: /s/ Roger Wertheimer
--------------------------------- ----------------------------------
Title: General Counsel and Secretary Title: Vice President-General Counsel
------------------------------ -------------------------------
42
<PAGE>
UNITED STATES
GUARANTEE OF ALUSUISSE-LONZA AMERICA INC.,
a Delaware corporation
WHEREAS, Alusuisse-Lonza America Inc., a Delaware corporation ("Seller")
desires to enter into an Asset Purchase Agreement dated as of _____________,
1998 (the "Agreement") with Mail-Well I Corporation, a Delaware corporation
("Buyer"); and
WHEREAS, Alusuisse-Lonza America Inc., a Delaware corporation ("Guarantor
I")is the parent company of Seller; and
NOW THEREFORE, in order to induce the Buyer to enter into and perform
the Agreement, Guarantor I hereby guarantees to the Buyer the payment by the
Seller of any amount due and owing by the Seller to the Buyer pursuant to
this Agreement, and the performance by Seller of all other obligations of
Seller under this Agreement, including but not limited to those arising under
Article X, subject to any defenses available to the Seller thereunder or
otherwise available to the Seller pursuant to law or in equity, save and
except (i) any stay, discharge or other defenses arising in the course of any
bankruptcy or insolvency proceeding of the Seller or (ii) voidance of the
obligation of Seller under any fraudulent transfer legislation or in any
bankruptcy or insolvency proceedings involving Seller. Buyer shall not be
required to exercise all or any of its rights and remedies or to exhaust its
recourse against Seller or others, before being entitled to claim against the
Guarantor I. Any arrangement, accommodation or settlement between Buyer and
Seller shall be conclusively binding on the Guarantor I. No change in
thecertificate of incorporation, bylaws, ownership, direct or indirect
control of Seller or any other circumstance of any kind whatsoever affecting
either Seller or Guarantor I which might otherwise afford a legal or
equitable defense to the Guarantor I or a discharge of the guarantee herein
shall in any way limit or lessen the liability of the Guarantor I hereunder.
No delay on the part of Buyer in exercising its rights shall constitute a
waiver. No defense shall be raised by Guarantor I that Seller lacks
capacity, power OR authority, may not be a legal or suable entity or arising
out of any irregularity, defect or informality whether or not known to the
Seller. Any amount previously paid by Seller to Buyer which is rescinded or
returned for any reason, including without limitation the insolvency,
bankruptcy or reorganization of Seller, shall be deemed to be reinstated and
to be owing by Seller for purposes hereof. Buyer shall have no obligation to
keep Guarantor I informed. Guarantor I waives any rights it may have as
surety that are inconsistent with the provisions hereof. This guarantee
provision is in addition to and no in substitution for any other rights of
Buyer. This guarantee provision shall be governed by and subject to the laws
of the Province of Ontario and the Guarantor I hereby accepts and irrevocably
submits the jurisdiction of the Courts of the Province of Ontario. Except to
the extent inconsistent with the provisions of this guarantee provision, the
general provisions of the within Asset Purchase Agreement shall apply to
Guarantor I as if Guarantor I was the Seller. Notwithstanding the foregoing,
Buyer shall not invoke this Guarantee unless and until it has first given to
Seller thirty (30) days notice and opportunity to cure any claim for breach
or indemnity.
IN WITNESS WHEREOF, the Guarantor I has caused this Agreement to be duly
executed as of __________, 1998, to be effective as of the Closing Date.
43
<PAGE>
UNITED STATES
ALUSUISSE-LONZA AMERICA INC.,
a Delaware corporation
By:
-----------------------
Title:
--------------------
Dated:
44
<PAGE>
UNITED STATES
GUARANTEE OF MAIL-WELL, INC.,
a Colorado corporation
WHEREAS, Lawson Mardon Packaging USA Inc., a Delaware corporation
("Seller") desires to enter into an Asset Purchase Agreement dated as of
_____________, 1998 (the "Agreement") with Mail-Well I Corporation, a
Delaware corporation ("Buyer"); and
WHEREAS, Mail-Well, Inc., a Colorado corporation ("Guarantor II")is
the parent company of Buyer; and
NOW THEREFORE, in order to induce the Seller to enter into and perform
the Agreement, Guarantor II hereby guarantees to the Seller the payment by
the Buyer of any amount due and owing by the Buyer to the Seller pursuant to
this Agreement, and the performance by Buyer of all other obligations of
Buyer under this Agreement, including but not limited to those arising under
Article X, subject to any defenses available to the Buyer thereunder or
otherwise available to the Buyer pursuant to law or in equity, save and
except (i) any stay, discharge or other defenses arising in the course of any
bankruptcy or insolvency proceeding of the Buyer or (ii) voidance of the
obligation of Buyer under any fraudulent transfer legislation or in any
bankruptcy or insolvency proceedings involving Buyer. Seller shall not be
required to exercise all or any of its rights and remedies or to exhaust its
recourse against Buyer or others, before being entitled to claim against the
Guarantor II. Any arrangement, accommodation or settlement between Buyer and
Seller shall be conclusively binding on the Guarantor II. No change in the
constating documents, ownership, direct or indirect control of Buyer or any
other circumstance of any kind whatsoever affecting either Buyer or Guarantor
II which might otherwise afford a legal or equitable defense to the Guarantor
II or a discharge of the guarantee herein shall in any way limit or lessen
the liability of the Guarantor II hereunder. No delay on the part of Buyer
in exercising its rights shall constitute a waiver. No defense shall be
raised by Guarantor II that Buyer lacks capacity, power OR authority, may not
be a legal or suable entity or arising out of any irregularity, defect or
informality whether or not known to the Buyer. Any amount previously paid by
Buyer to Seller which is rescinded or returned for any reason, including
without limitation the insolvency, bankruptcy or reorganization of Buyer,
shall be deeded to be reinstated and to be owing by Buyer for purposes
hereof. Buyer shall have no obligation to keep Guarantor II informed.
Guarantor II waives any rights it may have as surety that are inconsistent
with the provisions hereof. This guarantee provision is in addition to and
no in substitution for any other rights of Seller. This guarantee provision
shall be governed by and subject to the laws of the State of Maryland and the
Guarantor II hereby accepts and irrevocably submits the jurisdiction of the
Courts of the State of Maryland. Except to the extent inconsistent with the
provisions of this guarantee provision, the general provisions of the within
Asset Purchase Agreement shall apply to Guarantor II as if Guarantor II was
the Seller. Notwithstanding the foregoing, Seller shall not invoke this
Guarantee unless and until it has first given to Buyer thirty (30) days
notice and opportunity to cure any claim for breach or indemnity.
45
<PAGE>
UNITED STATES
IN WITNESS WHEREOF, the Guarantor II has caused this Agreement to be
duly executed as of __________, 1998, to be effective as of the Closing Date.
MAIL-WELL, INC.,
a Colorado corporation
By:
-----------------------
Title:
--------------------
Dated:
46
<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
3014597 Nova Scotia Company,
a Nova Scotia unlimited liability company
AND
LAWSON MARDON PACKAGING INC.,
an Ontario corporation
January 31, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE I ......................................................... 1
DEFINITIONS ......................................................... 1
ARTICLE II ..................................................... 8
THE TRANSACTION ........................................................ 8
Section 2.1 Agreement to Purchase and Sell Assets...................8
Section 2.2 Assumption of Liabilities...............................10
Section 2.3 Purchase Price, Escrow..................................11
Section 2.4 Adjustment to Purchase Price............................11
Section 2.5 The Closing.............................................13
Section 2.6 Deliveries at the Closing...............................13
Section 2.7 Allocation..............................................14
Section 2.8 Transfer Taxes, Etc....................................15
Section 2.9 ........................................................15
ARTICLE III .......................................................15
REPRESENTATIONS AND WARRANTIES OF THE SELLER..............................15
Section 3.1 Capitalization..........................................15
Section 3.2 Organization of the Seller..............................15
Section 3.3 Authorization of Transaction............................16
Section 3.4 Non-contravention.......................................16
Section 3.5 Brokers' Fees...........................................16
Section 3.6 Title to Assets.........................................16
Section 3.7 Financial Statements....................................16
Section 3.8 Events Subsequent to Most Recent Fiscal Year End........17
Section 3.9 Legal Compliance........................................17
Section 3.10 Real Property...........................................17
Section 3.11 Intellectual Property...................................18
Section 3.12 Contracts...............................................18
Section 3.13 Powers of Attorney......................................18
Section 3.14 Litigation..............................................18
Section 3.15 Employee Benefits.......................................19
Section 3.16 Environmental...........................................19
Section 3.17 Easements, Condemnation, Etc............................21
Section 3.18 Condition of Assets.....................................21
Section 3.19 Inventory...............................................21
Section 3.20 Product Warranty and Liability..........................21
Section 3.21 Accounts Receivable.....................................21
Section 3.22 Permits and Licenses....................................22
Section 3.23 Labor Matters...........................................22
Section 3.24 Capital Expenditures....................................22
Section 3.25 Public Services and Utilities...........................22
Section 3.26 Solvency................................................22
Section 3.27 Canada Non-Resident.....................................22
Section 3.28 Customers and Vendors...................................23
-i-
<PAGE>
Section 3.29 Disclaimer of other Representations and Warranties......23
Section 3.30 Tax Matters.............................................23
Section 3.31 Insurance...............................................24
Section 3.32 Completeness, no Misrepresentations.....................24
Section 3.33 [intentionally deleted].................................24
Section 3.34 Certified Amount........................................24
ARTICLE IV .......................................................24
REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................24
Section 4.1 Organization of the Buyer...............................24
Section 4.2 Authorization of Transaction............................24
Section 4.3 Non-contravention.......................................24
Section 4.4 Financing...............................................25
Section 4.5 Brokers' Fees...........................................25
Section 4.6 [intentionally deleted].................................25
ARTICLE V .......................................................25
PRE-CLOSING COVENANTS.....................................................25
Section 5.1 General.................................................25
Section 5.2 Notices and Consents....................................25
Section 5.3 Operation of Business...................................27
Section 5.4 Full Access.............................................27
Section 5.5 Confidentiality Public Announcement.....................27
Section 5.6 Notice of Developments..................................28
Section 5.7 Exclusivity.............................................28
Section 5.8 Competition Act.........................................29
ARTICLE VI .......................................................29
CONDITIONS TO OBLIGATION TO CLOSE.........................................29
Section 6.1 Conditions to Obligation of the Buyer...................29
Section 6.2 Conditions to Obligation of the Seller..................31
ARTICLE VII .......................................................32
POST-CLOSING COVENANTS....................................................32
Section 7.1 Employment of Sellers' Employees........................32
Section 7.2 Employee Benefits Matters...............................33
Section 7.3 Non-competition.........................................33
Section 7.4 Access to Records.......................................34
Section 7.5 Further Assurances......................................35
Section 7.6 Tax Collection and Information Reporting Obligations....35
Section 7.7 Accounts Receivable.....................................35
Section 7.8 No Merger, etc..........................................35
-ii-
<PAGE>
ARTICLE VIII ........................................................36
TERMINATION ........................................................36
Section 8.1 Termination of Agreement...............................36
Section 8.2 Effect of Termination..................................36
ARTICLE IX .......................................................36
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.....................36
Section 9.1 Survival of Representations,
Warranties and Covenants................................36
ARTICLE X ........................................................37
INDEMNIFICATION 37
Section 10.1 Indemnity by Seller.....................................37
Section 10.2 Indemnity by the Buyer..................................38
Section 10.3 Indemnification Claims..................................39
Section 10.4 Provisions Regarding Indemnities........................40
Section 10.5 Subrogation.............................................40
Section 10.6 Exclusivity.............................................41
ARTICLE XI .........................................................41
MISCELLANEOUS 41
Section 11.1 No Third-Party Beneficiaries............................41
Section 11.2 Entire Agreement........................................41
Section 11.3 Succession and Assignment...............................41
Section 11.4 Counterparts............................................41
Section 11.5 Headings................................................41
Section 11.6 Notices.................................................41
Section 11.7 Governing Law...........................................42
Section 11.8 Amendments and Waivers..................................42
Section 11.9 Severability............................................42
Section 11.10 Expenses...............................................43
Section 11.11 Construction...........................................43
Section 11.12 Incorporation of Exhibits and Schedules................43
Section 11.13 Bulk Transfer and Similar Laws.........................43
Section 11.14 Consent to Jurisdiction. Service and Venue.............43
Section 11.15 Equitable Relief.......................................43
Section 11.16 Time of Essence........................................44
Section 11.17 No Waiver..............................................44
Section 11.18 LMP USA Acquisition Agreement..........................44
Section 11.19 Fax Execution .........................................44
-iii-
<PAGE>
SCHEDULES
Schedule 1 Knowledge of Seller
Schedule 2.1 Excluded Assets and Acquired Assets
Schedule 2.1 Excluded Assets and Acquired Assets
Schedule 2.1(a) Inventory
Schedule 2.1(b) Equipment
Schedule 2.1(c) Contracts
Schedule 2.1(d) Real Property
Schedule 2.1(e) Real Property Leases
Schedule 2.1(f) Personal Property Leases
Schedule 2.1(g) Intellectual Property
Schedule 2.1(i) Permits and Licenses
Schedule 2.1(j) Accounts Receivable
Schedule 2.2 Excluded Liabilities
Schedule 2.2(f) Debt Instrument
Schedule 2.2(h) Employment Agreements
Schedule 2.4(a) December 31, 1997
Net Working Capital Statement
Schedule 2.7 Allocation
Schedule 3.1 Capitalization
Schedule 3.2 Organization of the Seller
Schedule 3.4 Non-contravention
Schedule 3.6 Title to Assets
Schedule 3.9 Legal Compliance
Schedule 3.10 (b) Title Exceptions
Schedule 3.11 Intellectual Property
Schedule 3.12 Contracts
Schedule 3.14 Litigation
Schedule 3.15 Employee Benefit Plans
Schedule 3.16 Environmental, Health and Safety Matters
Schedule 3.22 Permits and Licenses
Schedule 3.23 Labor Controversies
Schedule 3.24 Capital Expenditures
Schedule 3.28 Customers and Vendors
Schedule 3.31 Insurance
Schedule 3.8 Events Subsequent to Most Recent Fiscal
Year End
Schedule 5.2(b) Material Contracts Requiring Consent
Schedule 7.1 Acquired Employees
EXHIBITS
Exhibit 2.3 Escrow Agreement
Exhibit 2.6 Assumption Agreement
Exhibit 3.7 Financial Statements
Exhibit 6.1(a)-(d) Opinion(s) of Seller's Counsel
Exhibit 6.1(l) License Agreement
Exhibit 6.2 Opinion(s) of Buyer's Counsel
</TABLE>
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of this 31ST day of
January, 1998 between 3014597 Nova Scotia Company, a Nova Scotia unlimited
liability company (the "BUYER") and Lawson Mardon Packaging Inc., an Ontario
corporation (the "SELLER").
RECITALS:
WHEREAS, the Seller is in the business of manufacturing,
distributing and selling glue-applied cut and roll-fed paper labels,
including laminated paper labels, and in-mold labels and related products for
the food, beverage, household, personal products and postcard industries (the
"BUSINESS"); and
WHEREAS, the Buyer desires to purchase from the Seller, and the
Seller desires to sell to the Buyer, substantially all of the assets and
certain liabilities of the Seller used in the conduct of the Business on the
terms and conditions herein set forth;
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 2.10) (j)
below.
"ACQUIRED ASSET REQUIRING CONSENT" has the meaning set forth in Section
5.2(b) below.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1 below.
"AFFILIATE" means any Person who, directly or indirectly, through any
number of other Persons or otherwise, controls, is controlled by or is under
common control with the designated party. For purposes of this definition,
control shall mean ownership, directly or indirectly, of 50% or more of the
voting stock or other equity interest.
"A-L" has the meaning set forth in Section 3.7 below.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.2 below.
"BUSINESS" has the meaning set forth in the Recitals above.
<PAGE>
-2-
"BUYER" has the meaning set forth in the preface above.
"CANADIAN COMPETITION ACT" means the Competition Act (Canada).
"CANADA INCOME TAX ACT" means the Income Tax Act (Canada)
"CLAIM" means any and all claims, demands, liabilities, encumbrances,
causes of action, arbitrations, audits, hearings, investigations, litigation
or suits, whether in contract, tort or otherwise, whether statutory or common
law, whether civil, criminal, administrative, investigative, formal or
informal, in law or in equity, whether known or unknown, fixed or contingent,
other than Permitted Encumbrances.
"CLAIMANT" has the meaning set forth in Section 10.3(a) below.
"CLAIM NOTICE" has the meaning set forth in Section 10.3(a) below.
"CLOSING" has the meaning set forth in Section 2.5 below.
"CLOSING DATE" has the meaning set forth in Section 2.5 below.
"ESTIMATED CLOSING NWC STATEMENT" has the meaning set forth in Section
2.4(a) below.
"CLOSING NWC STATEMENT" has the meaning set forth in Section 2.4(c)
below.
"COLLECTIVE BARGAINING AGREEMENTS" means:
(a) the Collective Agreement between Lawson Mardon Label - Montreal
and Syndicat International des Communications Graphiques Local 555 Montreal
- Lithographing section;
(b) the Collective Agreement between Lawson Mardon Label - Montreal
and Syndicat International des Communications Graphiques Local 555 Montreal
- maintenance and warehouse department;
(c) the Collective Agreement between Lawson Mardon Label - Montreal
and Syndicat International des Communications Graphiques Local 555 Montreal
- finishing section, Montreal;
(d) the Collective Agreement between Lawson Mardon Label - Montreal
and Syndicat International des Communications Graphiques Local 555 Montreal
- typographic press section; and
(e) the Collective Agreement between Lawson Mardon Label P.S. and
Syndicat International des Communications Graphiques Local 555 Montreal;
"COMPETING BUSINESS" has the meaning set forth in Section 7.3(a) below.
<PAGE>
-3-
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses, assets and affairs of the Seller or Buyer, including but not
limited to the Business and the Acquired Assets, that is not already
generally available to the public.
"CONTRACTS" has the meaning set forth in Section 2.1(c) below.
"DEBT" means any and all monies owed to banks, leasing companies or
other third parties, whether long-term, short-term or "line-of-credit,"
including all overdrafts and prepayment penalties, but shall not include the
accounts payable or any amount payable with respect to operating leases.
"DIRECTOR" means the Canadian Director of Investigation and Research
appointed under the Canada Competition Act.
"DISCLOSURE SCHEDULE" has the meaning set forth in Article III below.
"DISPUTED MATTER" has the meaning set forth in Section 2.4(c) below.
"DOLLARS" or "$" means Canadian dollars, except where otherwise
specifically provided.
"EMPLOYEE BENEFIT PLAN" means any union or non-union employee benefit
plans, arrangements or policies, including without limitation, any
multiemployer pension, retirement, savings, profit sharing, stock option,
stock purchase, deferred compensation, severance, health, life insurance,
disability, dependent care, flexible spending, sick leave, vacation pay,
holiday pay, employee loan, education assistance, incentive or bonus plan,
policy or arrangement or any employment, indemnification, consulting or
severance agreement, which Seller maintains, sponsors or contributes to on
behalf of current or former employee or directors of Seller, whether written
or oral.
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section 3.12(a)
below.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" shall mean all Canadian
federal, provincial and local statutes, regulations, ordinances and similar
provisions having the force or effect of law, concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, as enacted and in effect on or prior to the Closing Date.
"EQUIPMENT" has the meaning set forth in Section 2.1(b) below.
"ESCROW AGENT" has the meaning set forth in Section 2.3 below.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.3 below.
"EXCISE TAX ACT" means the EXCISE TAX ACT (Canada)
"EXCLUDED ASSETS" has the meaning set forth in Section 2.1 below.
<PAGE>
-4-
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.2 below.
"FINAL CLOSING STATEMENT" has the meaning set forth in Section 2.4(d)
below.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.7 below.
"GOVERNMENTAL AUTHORITY" means the government of Canada, any province,
municipality, territory, possession or political subdivision thereof, and any
department, agency or other entity exercising executive, legislative,
regulatory or administrative functions or powers of or pertaining to any of
the foregoing.
"GST" has the meaning set forth in Section 2.7(e) below.
"HAZARDOUS MATERIALS" means any substance, material or waste which is in
a form regulated by any Governmental Authority because of possible effect on
public health and safety, worker health and safety, or the environment,
including, without limitation, any such substance, material or waste (a)
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous substance," "regulated substance" or "restricted
hazardous waste" under any applicable Environmental, Health and Safety Law,
and (b) petroleum, including crude oil and any fraction thereof and any
refined petroleum products and derivatives thereof.
"IAS" means the International Accounting Standards promulgated by the
International Accounting Standards Committee as in effect from time to time.
"INDEMNIFIED PARTIES" has the meaning set forth in Section 10.3(b) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 10.3(b) below.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 2.1(g)
below.
"INVENTORY" has the meaning set forth in Section 2.1(a) below.
"INVESTMENT CANADA ACT" means the INVESTMENT CANADA ACT (Canada).
"KNOWLEDGE OF THE SELLER" means to the knowledge of the current managers
of the Business set forth in Schedule 1 and the knowledge of the senior
management of the Seller or LMP USA.
"LICENSE AGREEMENT" has the meaning set forth in Section 6.1(1) below.
"LMP USA" means Lawson Mardon Packaging USA Inc., a Delaware corporation.
"LMP USA ACQUISITION AGREEMENT" means that certain Asset Purchase
Agreement of even date herewith, by and between LMP USA and Mail-Well I
Corporation.
"LOSSES" has the meaning set forth in Section 10.1 below.
<PAGE>
-5-
"MATERIAL ADVERSE EFFECT" means:
(i) an adverse effect of Cdn$150,000 or more on the financial
condition or results of operation of the Business;
(ii) if an adverse effect on the Business is not reasonably
quantifiable in monetary terms pursuant to (i) above, a material and adverse
effect with respect to the Business that would affect the willingness of a
reasonable buyer to enter into and perform the transactions contemplated
hereby, or that would have a material adverse effect on the operations or
prospects of the Business taken as a whole.
"MATERIAL CONTRACTS REQUIRING CONSENT" has the meaning set forth in
Section 5.2(b) below.
"NET WORKING CAPITAL" means total Inventories, trade Accounts
Receivable, associated receivables of the Business, reserves for bad debts,
other current assets, trade payables, associated payables of the Business and
other accruals, in each case calculated in a manner consistent with Schedule
2.4(a), to the extent transferred to and assumed by Buyer at Closing.
"NEUTRAL ACCOUNTANTS" has the meaning set forth in Section 2.4(c) below.
"NOTICE OF DISAGREEMENT" has the meaning set forth in Section 2.4(c)
below.
"OPEN ORDERS" has the meaning set forth in Section 2.1(1) below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent past custom and practice (including with respect to quantity and
frequency).
"PENSION BENEFITS ACT" means the Pension benefits Act (Ontario).
"PERMITS AND LICENSES" has the meaning set forth in Section 2.1(i) below.
"PERMITTED ENCUMBRANCES" means:
(i) with respect to the Acquired Assets that are not Real Property
(a) any Security Interests for Taxes, assessments or other charges or levies
by a Governmental Authority not yet due and payable (b) Assumed Liabilities,
including Assumed Liabilities pertaining to a Contract and (c) any Security
Interest set forth in Schedule 3.6;
(ii) with respect to the Acquired Assets that are Real Property (a)
any Security Interests for municipal property taxes, local improvement
assessments or taxes, or other taxes, assessments or recoveries relating to
the Real Property which are not at the time due or payable, (b) all
reservations, limitations, provisos and conditions expressed in the original
grant from the Crown provided that same do not constitute a Materially
Adverse Effect, (c) any encroachments or defects, if any, which are or would
be disclosed by any survey of the Real Property (subject to the final
<PAGE>
-6-
proviso of this definition), (d) any subdivision, development, site plan or
any other agreement with any Governmental Authority having jurisdiction over
the Real Property, provided same have been complied with, (e) any registered
or unregistered licenses, easements, rights-of-way, rights in the nature of
easements and agreements with respect thereto which relate to the provision
of utilities or services to the Real Property or any other lands (including,
without limitation, agreements, easements, licenses, rights-of-way and
interests in the nature of easements for access, sewers, drains, gas, steam,
watermains, electrical light and power, telephone or telegraphic conduits,
poles, wires, cables and other similar utilities or services), (f) all
restrictions and restrictive covenants that run with the land, provided same
have been complied with and do not constitute a Material Adverse Effects, (g)
defects or irregularities in title which are of a minor nature and in the
aggregate will not materially affect the use or marketability of the parcel
of Real Property in question, taken as a whole, (h) any notices of lease or
leases and notices of security interest against leasehold interests which are
registered against title to the Real Property, where the tenant is in
possession, (i) the qualifications contained in the Land Titles Act (Ontario)
if applicable and (j) any Security Interest set forth on SCHEDULE 3.6;
(iii) any Security Interest pertaining exclusively to any of the
Permitted Encumbrances set forth in clauses (i) and (ii) above; and
(iv) any other Security Interest which the Buyer approves in
writing as a Permitted Encumbrance;
PROVIDED, HOWEVER, that "Permitted Encumbrances" shall not include
any encroachment or defect that would materially affect the use or
marketability of any parcel of Real Property in question, taken as a whole,
and that is disclosed in a Survey of which the Seller is notified in writing
(with a copy of such Survey) within six (6) months after the Closing.
"PERSON" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization,
company or Governmental Authority.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section 2.l(f)
below.
"PRELIMINARY NWC STATEMENT" has the meaning set forth in Section 2.4(a).
"PREMISES" means the facilities located at 128 Oak Street, Leamington,
Ontario and 2277 Autoroute des Laurentides, Laval, Quebec.
"PRODUCTS" has the meaning set forth in Section 3.20 below.
"PUBLIC ANNOUNCEMENT" has the meaning set forth in Section 5.5(b) below.
"PURCHASE PRICE" has the meaning set forth in Section 2.3 below.
"QST" has the meaning set forth in Section 2.7(e) below.
<PAGE>
-7-
"QUEBEC SALE OF ENTERPRISE LEGISLATION" means the provisions of the
CIVIL CODE OF QUEBEC, dealing with the sale of an enterprise.
"QUEBEC SALES TAX ACT" has the meaning set forth in Section 11.13 below.
"QUEBEC TAXATION ACT" means the Taxation Act (Quebec).
"REAL PROPERTY" has the meaning set forth in Section 2.1(d) below.
"REAL PROPERTY LEASES" has the meaning set forth in Section 2.1(e) below.
"RECORDS" has the meaning set forth in Section 2.l(h) below.
"REQUIRED APPROVALS" has the meaning set forth in Section 5.2(a) below.
"REVENUE CANADA" means Revenue Canada Customs, Excise and Taxation.
"SECURITY INTEREST" means any mortgage, chattel mortgage, conditional
sales contract, hypothec (legal or conventional), priority, pledge, lien,
easement, encumbrance, charge, deemed trust, indenture or other security
interest.
"SELLER" has the meaning set forth in the preface above.
"SUPPLEMENTAL PENSION PLANS ACT" means the Supplemental Pension Plans
Act, (Quebec).
"SURVEY" means a current survey of the Real Property made, at the
Buyer's sole expense, by a registered professional surveyor reasonably
acceptable to the Seller.
"TAXES" in the plural and "TAX" in the singular means all Canadian
federal, provincial or local net or gross income, gross receipts, capital,
consumption, workmen's compensation, large corporations, goods and services,
sales, use, real property gains or transfer, ad valorem, value-added,
production, windfall profit, withholding, payroll, employment, excise or
similar taxes, assessments, duties, fees, levies or other governmental
charges, together with any interest thereon, any penalties, additions to tax
or additional amounts with respect thereto and any interest in respect of
such penalties, additions or additional amounts, save and except "Taxes" and
"Tax" shall not include Transfer Taxes.
"THIRD PARTY CLAIM" has the meaning set forth in Section 10.3(c) below.
"TRANSFER TAXES" has the meaning set forth in Section 2.2(a) below.
"UNION EMPLOYEE BENEFIT PLANS" means the Employee Benefit Plans
instituted and maintained by the Seller pursuant to a Collective Bargaining
Agreement, specifically for the benefit of employees covered by any such
Collective Bargaining Agreement.
<PAGE>
-8-
ARTICLE II
THE TRANSACTION
Section 2.1 AGREEMENT TO PURCHASE AND SELL ASSETS. On the terms
and subject to the conditions of this Agreement, and in reliance on the
representations, warranties, covenants and agreements forth in
this Agreement, the Buyer shall purchase and acquire from the Seller, and the
Seller shall sell, convey, assign, transfer, grant and deliver to the Buyer,
or any Affiliate of the Buyer which the Buyer may designate, all of the
Seller's right, title and interest in and to the property, assets and
undertakings used or useful in connection with the conduct or operation of
the Business as a going concern at the time of Closing, except for the
assets, if any, described on attached SCHEDULE 2.1 (the "EXCLUDED ASSETS"),
including without limitation the following (collectively, the "ACQUIRED
ASSETS"):
(a) INVENTORY. All inventories of raw materials, work-in-process,
finished goods, operating supplies and packaging materials, wherever located,
used or useful in the operation of the Business, or located at the Premises,
including, without limitation, all such inventory listed on Schedule 2.1(a)
(the "Inventory").
(b) EQUIPMENT. All machinery, equipment, furniture, office
equipment, computer equipment and peripherals, automobiles, other vehicles,
parts, leasehold improvements, fixed assets, items held by others for the
Seller in storage and all other personal property owned by the Seller that
are used or useful in the operation of the Business, or located at the
Premises, including, without limitation, all of the equipment listed on
SCHEDULE 2.1(b), together with all express and implied warranties by the
manufacturers or sellers of those items, and all maintenance records,
brochures, catalogues and other documents relating to those items or to the
installation or functioning of those items, except to the extent that such
equipment or other property has become affixed to leased real property such
that it would constitute a fixture under applicable law (the "EQUIPMENT").
(c) CONTRACTS. All of the Seller's right, title and interest (but
not obligations, except to the extent specifically included in the Assumed
Liabilities, as defined below) in and to all its contracts, agreements,
supplier purchase orders, and other commitments relating to the Business and
all benefits thereto (excluding real property leases and personal property
leases other than as described in Sections 2.1(e) and 2.1(f) below),
including but not limited to all such commitments identified on Schedule
2.1(c), and any security or similar deposits relating to those commitments
(the "Contracts").
(d) REAL PROPERTY. All real property or immovable property listed
on SCHEDULE 2.1(d), together with all plants, buildings, structures,
erections, improvements, appurtenances and fixtures situated thereon or
forming a part thereof (the "REAL PROPERTY").
(e) REAL PROPERTY LEASES. All real property or immovable property
leases listed on Schedule 2.1(e), all benefits thereof and any security or
similar deposits relating to those leases (the "REAL PROPERTY LEASES").
<PAGE>
-9-
(f) PERSONAL PROPERTY LEASES. All leases for all leased personal
or movable property located at the Premises or otherwise listed on Schedule
2.1(f), all benefits thereof and any security or similar deposits relating to
those leases (the "Personal Property Leases").
(g) INTELLECTUAL PROPERTY. All registered and unregistered
domestic and foreign patents, patent applications, inventions upon
which patent applications have not yet been filed, service marks, trade
names, trademarks, trademark registrations and applications, logos,
copyrighted works, copyright registrations and applications, trade secrets,
formulae, technology, designs, processes, software, software applications,
inventions, know-how and other intellectual property rights, currently owned,
possessed or used under license from third parties by the Seller in
connection with the operation of the Business, including but not limited to
those listed on SCHEDULE 2.1(g) (the "INTELLECTUAL PROPERTY").
(h) RECORDS. All records, customer and supplier lists, payroll and
personnel records, product information, product drawings, production
documentation, material specifications, equipment lists, formulae,
specifications, drawings, plans, reports, data, notes, correspondence,
contracts, labels, catalogues, brochures, art work (except personal objects
which belong to employees), photographs, advertising materials, marketing and
production literature, files, instruction or maintenance manuals for
Equipment, R&D documents and other records and documents relating to the
Business in the Seller's possession, power or control, including the Seller's
books of account, ledgers and other financial records specifically relating
to the Business, but excluding income tax records (the "RECORDS").
(i) PERMITS AND LICENSES. All permits, licenses, orders,
franchises, authorizations and approvals relating to or maintained as part of
the Business, including without limitation those listed on Schedule 2.1(i)
(the "PERMITS AND LICENSES").
(j) ACCOUNTS RECEIVABLE. All of the Seller's accounts receivable,
notes receivable, book debts and other debts of the Business relating to the
Business and reflected on the Final Closing Statement or the Closing NWC
Statement, as the case may be, including but not limited to those listed on
SCHEDULE 2.1(j) (but exclusive of rebates, refunds and insurance claims not
included as receivables on the Final Closing Statement or the Closing NWC
Statement, as the case may be) (the "ACCOUNTS RECEIVABLE").
(k) INTANGIBLE PROPERTY RIGHTS. All of the Seller's choses in
action, claims and intangible property rights or rights to recovery or offset
of any kind or character arising from or concerning the Business, including,
without limitation, restrictive covenants, confidentiality obligations
and similar obligations.
(l) OPEN ORDERS. All of the Seller's open orders for goods and
services with customers of the Business and any additional such open orders
entered into by the Seller in the Ordinary Course of Business (the "OPEN
ORDERS"), together with related purchase orders, contracts, subcontracts and
accounts receivable and credit support associated with such Open Orders.
<PAGE>
-10-
(m) GOODWILL. All goodwill of the Business as a going concern,
including the exclusive right to represent itself as carrying on the Business
in succession to the Seller, subject always to the provisions of the License
Agreement and that the name "Lawson Mardon Packaging", is included among the
Excluded Assets.
(n) PRE-PAID EXPENSES. All pre-paid expenses of the Seller
relating to the Business to the extent reflected in the Final Closing
Statement or the Closing NWC Statement, as the case may be.
The Acquired Assets shall be transferred to Buyer free and clear of any and
all Claims, Security Interests, Debts, obligations and other restrictions,
except for the Permitted Encumbrances.
Section 2.2 ASSUMPTION OF LIABILITIES. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to assume and become
responsible on the Closing Date, for the liabilities and obligations of the
Seller relating to or arising out of the conduct or operation of the Business
or the ownership of the Acquired Assets on and after, but not before the
Closing Date (except as specifically agreed otherwise in sections 2.2(c), (d)
and (e), which relate to the period prior to the Closing Date) (collectively,
the "ASSUMED LIABILITIES"), including:
(a) One-half of all liabilities for federal, provincial or local
transfer, sales, use, documentary, stamp, recordation and other similar
taxes, duties or other expenses (including, for greater certainty, the
filing fees payable under the Canadian Competition Act but not including any
income or capital gains taxes payable by the Seller, if any) arising in
connection with the consummation of the transactions contemplated hereby
(collectively, the "TRANSFER TAXES").
(b) All liabilities and obligations of the Seller under the
agreements, contracts, leases, licenses and other arrangements referred to in
the definition of Acquired Assets that are specifically assigned to the Buyer
or held in trust for the Buyer's benefit pursuant to Section 5.2(b).
(c) All liabilities and obligations of the Seller relating to the
Business to the extent reflected on the Final Closing Statement or, if a
Final Closing Statement is not required to be delivered pursuant to Section
2.4, all liabilities and obligations of the Seller relating to the Business
to the extent reflected on the Closing NWC Statement provided by the Seller
to the Buyer and finally accepted thereby under Section 2.4.
(d) All liabilities and obligations relating to termination pay,
severance pay or damages arising out of the Buyer failing to give reasonable
notice of termination of employment, on or after the Closing Date, including
any deemed termination by Seller arising at law on the sale of the Business,
to the employees to whom the Buyer is required to make offers of employment
pursuant to Section 7.1 hereof, including in respect of their period of
service both before and after the Closing Date, provided that Buyer shall not
be liable under the preceding clause of Section
<PAGE>
-11-
2.2(d) hereof in respect of any employees who are at the time of Closing on
sick leave, long term disability, sabbatical or other extended leave as set
forth in Schedule 7.1 if such employees do not report to work within six (6)
months of Closing or, if they so report to work, are unwilling or unable to
substantially perform the duties for which they were previously employed, any
and all other such liabilities and obligations in respect of any employees of
the Business to be for the account of the Seller.
(e) All liabilities and obligations of the Seller, if any, set out
in SCHEDULE 2.2(e), entitled "Assumed Liabilities".
(f) The debt of the Seller under the agreement with the Federal
Office of Regional Development (Quebec) dated March 3, 1993 annexed as
Schedule 2.2(f) in an amount, not to exceed Cdn.$1,000,000, specified in a
certificate of an officer of the Seller delivered to the Buyer at Closing
(the "CERTIFIED AMOUNT")
(g) All liabilities and obligations of the Seller under the
Collective Bargaining Agreements.
(h) All liabilities and obligations of the Seller under the two
(2) employment agreements described in Schedule 2.2(h).
The Buyer will not assume or have any responsibility with respect to (i) any
obligation or liability of the Seller relating to or arising out of the
conduct or operation of the Business or the ownership of the Acquired Assets
or the Premises before, but not on and after the Closing Date, that is not
included in the definition of Assumed Liabilities or (ii) with respect to the
obligations or liabilities of the Seller set forth on SCHEDULE 2.2
(collectively, the "EXCLUDED LIABILITIES").
Section 2.3 PURCHASE PRICE, ESCROW. The Buyer agrees to pay the
Canadian equivalent of the sum of U.S.$35,728,000 (Thirty Five Million, Seven
Hundred and Twenty Eight Thousand United States Dollars), payable in Canadian
dollars converted at Closing in the manner provided in Section 2.9, less the
Certified Amount, to Seller on account of the Acquired Assets (the "PURCHASE
PRICE"). An amount equal to the Canadian equivalent of U.S.$1,000,000 (One
Million United States Dollars), payable in Canadian dollars converted at
Closing in the manner provided in Section 2.9, of the Purchase Price shall be
deposited into an interest-bearing escrow account with (the "ESCROW AGENT")
pursuant to the terms of an Escrow Agreement substantially in the form of
Exhibit 2.3 (the "ESCROW AGREEMENT") on the Closing Date, by wire transfer or
delivery of other immediately available funds, and the balance of the
Purchase Price shall be paid to the Seller at Closing, by wire transfer or
delivery of other immediately available funds.
Section 2.4 ADJUSTMENT TO PURCHASE PRICE.
(a) Attached hereto as Schedule 2.4(a) is a statement of the
estimated Net Working Capital of the Business as of December 31, 1997,
prepared in accordance with IAS and A-L's accounting policies applied on a
consistent basis with the Financial Statements (the "Preliminary NWC
Statement"). Not later than three (3) business days prior to the Closing
Date, the Seller shall conduct an inventory of the
<PAGE>
-12-
Business, observed by the Buyer and, at the Closing Date, shall furnish to
Buyer (i) an estimate of the Net Working Capital of the Business calculated
as of the close of business on the Closing Date, prepared in accordance with
IAS and A-L's accounting policies applied on a consistent basis with the
Financial Statements (as defined in Section 3.7 below) and the Preliminary
NWC Statement and expressed in Canadian dollars (the "ESTIMATED NWC
STATEMENT"), PROVIDED, HOWEVER, that the Estimated NWC Statement will take
into account only information within the Knowledge of the Seller with respect
to the Business on the Closing Date; and (ii) a calculation of any required
adjustment to the Purchase Price pursuant to Section 2.4(b) hereof.
(b) If the value of the Net Working Capital as reflected in the
Estimated NWC Statement is less than an amount equal to the Canadian dollar
equivalent of U.S.$4,590,000, converted at Closing in the manner provided in
Section 2.9, the Purchase Price paid to the Seller at Closing shall be
decreased by the full amount of such deficiency. If the value of the Net
Working Capital as reflected in the Estimated NWC Statement exceeds an amount
equal to the Canadian dollar equivalent of U.S.$4,590,000, converted at
Closing in the manner provided in Section 2.9, the Purchase Price paid to the
Seller at Closing shall be increased by the full amount of such excess.
(c) Within 21 days following the Closing, the Seller shall prepare
and deliver to Buyer a Statement of the Net Working Capital, as of the
Closing Date, prepared on a basis consistent with the Estimated NWC Statement
and expressed in Canadian dollars (the "CLOSING NWC STATEMENT").
(d) (i) The Closing NWC Statement shall become final and binding
on Seller and Buyer (in such event, the "FINAL CLOSING STATEMENT") unless
Buyer gives written notice to the Seller of its disagreement with respect to
any matter contained therein (the "NOTICE OF DISAGREEMENT") within thirty
(30) days after the receipt thereof by Buyer. A Notice of Disagreement shall
not be permitted unless the aggregate amount in dispute exceeds Fifteen
Thousand Canadian Dollars (Cdn.$15,000 and shall not be permitted with
respect to the inventory count (but not the valuation of the inventory)
observed by Buyer pursuant to Section 2.4(a). A Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. For
a period of fifteen (15) days after the delivery of the Notice of
Disagreement, the Seller and the Buyer shall attempt to resolve in writing
all of their differences with respect to each matter specified in the Notice
of Disagreement, in which case any such resolution shall be final and binding
on the parties.
(ii) If, at the end of such 15-day period, the Seller and the
Buyer have not resolved in writing all of their differences with respect to
any such matter, then each unresolved matter (the "DISPUTED MATTER") shall be
submitted to and reviewed by a neutral "big six" accounting firm mutually
agreeable to the parties and which is independent of the Buyer, the Seller
and their respective Affiliates (the "NEUTRAL ACCOUNTANTS"). The Neutral
Accountants shall consider only the Disputed Matters and shall resolve all
Disputed Matters in writing within thirty (30) days of submission, and its
decisions with respect to the Disputed Matters, which shall be based on the
accounting policies and principles and the proviso set forth in
Section 2.4(a)(i) above, shall be final and binding on the Seller and the
Buyer; PROVIDED THAT,
<PAGE>
-13-
no such resolution of the Disputed Matters shall require payment of an amount
greater than the highest amount or less than the lowest amount suggested for
such resolution by either the Seller or the Buyer. The Neutral Accountants
shall notify the Seller and the Buyer of their resolution of the Disputed
Matters, and upon receipt thereof by the Neutral Accountants, the Neutral
Accountants shall promptly prepare a final Closing NWC Statement reflecting
the resolution of all Disputed Matters promptly after such resolution (in
such event, the "FINAL CLOSING STATEMENT") and shall deliver it to the Buyer
and the Seller.
(e) The Seller and the Buyer shall each be responsible for and
shall each pay one-half of the fees and expenses incurred in connection with
the Neutral Accountants.
(f) Within ten (10) days after receipt of the Final Closing
Statement.
(i) If the Net Working Capital as set forth in the Final Closing
Statement is less than the Net Working Capital as set forth in the
Estimated NWC Statement, the Seller shall pay to the Buyer the difference,
first by giving instructions to the Escrow Agent to distribute up to an
amount equal to the Canadian dollar equivalent of U.S.$200,000, converted
at Closing in the manner provided in Section 2.9, from any remaining Escrow
Fund (as such term is defined in the Escrow Agreement), and then any
additional amounts shall be paid by the Seller to the Buyer on demand in
immediately available funds, provided that, notwithstanding the foregoing,
the aggregate amount of the Escrow Fund to be distributed for this purpose
and for the purpose of any Net Working Capital adjustment, if any, under
the LMP U.S.A. Acquisition Agreement shall not exceed an amount equal to
the Canadian dollar equivalent of U.S.$200,000, converted at Closing in the
manner provided in Section 2.9.
(ii) If the Net Working Capital as set forth in the Final Closing
Statement is greater than the Net Working Capital as set forth in the
Estimated NWC Statement, the Buyer shall pay to the Seller the difference
in immediately available funds.
(g) Any payment required to be made pursuant to this Section 2.4
shall be made together with simple interest thereon from the Closing Date to
the date of payment at the annual rate (calculated on the basis of a 365-day
year) equal to the prime rate published by the WALL STREET JOURNAL, Eastern
Edition on the Closing Date.
Section 2.5 THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the
offices of Goodman and Carr in Toronto, Ontario, Canada, commencing at
9:00 a.m. local time on the fifth (5th) business day following the satisfaction
or waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to
actions to be taken by any party at the Closing itself) or such other date as
the parties may mutually determine (the "CLOSING DATE").
Section 2.6 DELIVERIES AT THE CLOSING. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates, instruments, and
documents referred to in
<PAGE>
-14-
Section 6.1 below; (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 6.2 below;
(iii) the Seller will execute, acknowledge (if appropriate) and deliver to
the Buyer assignments (including Real Property and Intellectual Property
transfer documents) and such other instruments of sale, transfer, conveyance
and assignment as the Buyer and its counsel reasonably may request; (iv) the
Buyer will execute, acknowledge (if appropriate) and deliver to the Seller an
assumption and indemnity agreement in the form attached hereto as EXHIBIT 2.6;
and (v) the Buyer will deliver to the Seller and the Escrow Agent the
consideration specified in Section 2.3 above.
Section 2.7 ALLOCATION.
(a) The parties agree to allocate the Purchase Price, Assumed
Liabilities and all other capitalizable costs among the Acquired Assets for
all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule attached hereto as Schedule 2.7. The Seller and
the Buyer acknowledge that such allocation represents the fair market value
of the Acquired Assets arrived at by arms' length negotiations and shall be
binding upon the parties for all applicable Canadian federal, provincial,
local and foreign tax purposes. The Seller and the Buyer each covenant to
report proceeds of acquisition or cost of acquisition, as the case may be, in
a manner consistent with SCHEDULE 2.7 on all tax returns filed by each of
them subsequent to Closing and not to voluntarily take any inconsistent
position therewith in any administrative or judicial proceeding relating to
such returns, without the prior written consent of the other party, which
consent shall not be arbitrarily or unreasonably withheld.
(b) The Seller and the Buyer shall exchange mutually acceptable
and completed forms, if any, required under the Canada Income Tax Act and the
Quebec Sales Tax Act, which they shall use to report the transaction
contemplated hereunder to, respectively, Revenue Canada and the Ministere du
Revenu du Quebec in accordance with such allocation.
(c) The Buyer and the Seller will, at the Closing Date, jointly
execute elections, in prescribed form and containing the prescribed
information to have the provisions of subsection 167(1) of the Excise Tax Act
and section 75 of the Quebec Sales Tax Act apply to the purchase and sale of
the Acquired Assets hereunder so that no tax is payable in respect of such
purchase and sale under Part IX of the Excise Tax Act or section 16 of the
Quebec Sales Tax Act. The Buyer will file such elections with the Revenue
Canada and the Ministere du Revenue Quebec within the times prescribed by the
applicable legislation.
(d) The Buyer and the Seller shall, at the time of Closing,
jointly execute elections under subsection 22(1) of the Income Tax Act and
section 184 of the Quebec Sales Tax Act in the form prescribed for such
purpose in respect of the Accounts Receivable sold by the Seller to the Buyer
pursuant to this Agreement. Such elections shall designate the portions of
the purchase price allocated to such Accounts Receivable as the consideration
paid by the Buyer to the Seller for the Accounts Receivable under this
Agreement.
<PAGE>
-15-
(e) On the Closing Date the Buyer shall provide the Seller with a
statutory declaration or certificate confirming that the Buyer has registered
pursuant to the Excise Tax Act, for the purpose of paying and receiving Goods
and Services Tax ("GST") in Canada and pursuant to the Quebec Sales Tax Act,
for purposes of paying and receiving Quebec Sales Tax ("QST") and that such
registration has not been varied, cancelled or revoked, together with a
notarial copy of the Buyer's registration confirmation and registration
number under the Excise Tax Act or the Quebec Sales Tax Act with respect to
GST and the QST under the Quebec Sales Tax Act.
Section 2.8 TRANSFER TAXES, ETC.
(a) Each of the Seller and the Buyer shall be responsible for the
payment at Closing of one-half (1/2) of the Transfer Taxes.
(b) Each of the Seller and the Buyer shall use reasonable
commercial efforts to minimize the amount of Transfer Taxes, including
without limitation executing and delivering exemption certificates and
similar documents to the extent applicable.
Section 2.9 CONVERSION OF U.S. FUNDS. Any conversion of U.S.
dollars to Canadian dollars required to be made in Sections 2.3 or 2.4 hereof
shall be made on the basis of the rate of exchange quoted in the WALL STREET
JOURNAL, Eastern Edition, published on the last business day immediately
prior to Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to Buyer that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III) except as set forth in the
particular Schedule relating to the item in question, which Schedule is
annexed to this Agreement and is initialed by the parties.
Section 3.1 CAPITALIZATION. The ownership of the outstanding
capital stock of the Seller is as set forth in SCHEDULE 3.1. All of the
issued and outstanding shares of the capital stock of the Seller are validly
issued and outstanding, fully paid and non-assessable.
Section 3.2 ORGANIZATION OF THE SELLER. The Seller is a
corporation duly incorporated and organized, validly subsisting and in good
standing under the laws of the Province of Ontario and has all necessary
licenses and is duly qualified and is a validly subsisting corporation in
each other jurisdiction in which it is required to so qualify, except where
the failure to so qualify would not have a Material Adverse Effect, such
jurisdictions being listed on SCHEDULE 3.2. The Seller has the full power
and authority to own or lease and operate the Acquired Assets as currently
owned, leased and operated and, except as set forth on SCHEDULE 3.2, to carry
on the Business as it has been and is currently conducted.
<PAGE>
-16-
Section 3.3 AUTHORIZATION OF TRANSACTION. The Seller has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of the Seller
has duly authorized the execution, delivery, and performance of this Agreement
by the Seller. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions, except to the extent that enforcement may be limited by the laws of
bankruptcy or insolvency or laws relating to creditors' rights and remedies
generally.
Section 3.4 NON-CONTRAVENTION. Except as set forth on SCHEDULE
3.4, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Article II above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any Governmental Authority or court to
which the Seller is subject or any provision of the Seller's charter, bylaws or
other constating documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Seller is a party or by which it is bound or to which its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect. Except for the Required
Approvals, the Seller does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Authority
in order to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Article II above),
except where the failure to give such notice, make such filing, or to obtain any
such authorization, consent or approval would not have a Material Adverse
Effect.
Section 3.5 BROKERS' FEES. The Seller does not have any liability
or obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
Section 3.6 TITLE TO ASSETS. Except as set forth on SCHEDULE 3.6
and except for matters that would not have a Material Adverse Effect, the Seller
has good, valid, marketable, clear, legal, equitable and indefeasible title to
the Acquired Assets free and clear of any Security Interest other than the
Permitted Encumbrances. Except as set forth on SCHEDULE 3.6, there are no
agreements, options or other rights pursuant to which the Seller is or may
become obligated to sell any of the Acquired Assets other than pursuant to
purchase orders accepted by the Seller in the Ordinary Course of Business. All
of the tangible Acquired Assets or tangible evidence of intangible Acquired
Assets are in the possession, power or control of the Seller.
Section 3.7 FINANCIAL STATEMENTS. Attached hereto as EXHIBIT 3.7
are the balance sheets and statements of income as of and for the fiscal years
ended December 31, 1997, 1996, 1995 and 1994 for the Business (the "FINANCIAL
<PAGE>
-17-
STATEMENTS"). The Financial Statements contain financial data relating to
the Business which have been or will be incorporated in the audited
consolidated balance sheets and statements of income as of and for the fiscal
years ended December 1997, 1996, 1995 and 1994 of Alusuisse-Lonza Holding AG
("A-L"). The Financial Statements have been prepared in accordance with IAS
and A-L's accounting policies applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of the
Business as of such dates and the results of operations of the Business for
such periods.
Section 3.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.
Except as set forth on SCHEDULE 3.8, since December 31, 1997, there has not
been any change in the financial condition of the Business or the condition
of the Acquired Assets which would constitute a Material Adverse Effect.
Without limiting the generality of the foregoing, since that date the Seller
has not engaged in any practice, taken any action, or entered into any
transaction outside the Ordinary Course of Business, and there has been no
damage, destruction or loss (whether or not covered by insurance) to the
Acquired Assets which has had a Material Adverse Effect.
Section 3.9 LEGAL COMPLIANCE. Except as set forth in SCHEDULES
3.9 AND 3.16, the Seller has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of all Governmental Authorities with respect
to the Acquired Assets and the operation of the Business, except where the
failure to comply would not have a Material Adverse Effect.
Section 3.10 REAL PROPERTY.
(a) Schedule 2.1(d) lists all of the real or immovable property owned
by Seller, used or useful in the conduct or operation of the Business.
(b) Except as set forth on Schedule 3.10(b), with respect to each
parcel of Real Property and except for matters which would not have a Material
Adverse Effect:
(i) The Seller has good, marketable, legal and beneficial title
to the Real Property, free and clear of any Security Interest or title
defects, except for Permitted Encumbrances;
(ii) There are no leases, subleases, licenses, concessions, or
other agreements granting to any party or parties the right of use or
occupancy of any portion of any parcel of Real Property; and
(iii) There are no outstanding options or rights of first
refusal to purchase any parcel of Real Property, or any portion thereof or
interest therein.
(c) Schedule 2.1(e) lists all of the real property leases entered
into by the Seller in connection with the operation of the Business. The Seller
has delivered to the Buyer correct and complete copies of the Real Property
Leases listed in Schedule 2.1. Each of the Real Property Leases listed in
Schedule 2.1 is legal, valid,
<PAGE>
-18-
binding, enforceable and in full force and effect, except where the
illegality, invalidity, non-binding nature, unenforceability or
ineffectiveness would not have a Material Adverse Effect.
Section 3.11 INTELLECTUAL PROPERTY. Schedule 3.11 identifies each
patent or registration that has been issued to the Seller with respect to any of
its Intellectual Property, identifies each pending patent application or
application for registration that the Seller has made with respect to any of its
Intellectual Property and identifies each license, agreement or other permission
that the Seller has granted to any third party with respect to any of its
Intellectual Property. SCHEDULE 3.11 contains a list of every trade name, d/b/a
or other name under which the Seller has conducted the Business during the
previous five (5) years. All of the Intellectual Property is either owned or
used under license by the Seller, and to the Knowledge of the Seller there is no
infringement of any Intellectual Property nor any other Claim that the
Intellectual Property infringes the rights of others under patents, trademarks,
trade names, copyrights, trade secrets or licenses.
Section 3.12 CONTRACTS.
(a) SCHEDULE 3.12 lists all Contracts and Personal Property Leases,
the performance of which will involve consideration in excess of Cdn.$100,000,
the Collective Bargaining Agreements and all employment agreements with any
employees listed on SCHEDULE 7.1 (the "EMPLOYMENT AGREEMENTS"). The Seller has
delivered to the Buyer a correct copy or summary of the material terms of each
Contract, other written agreement, Employment Agreement or Collective Bargaining
Agreement listed on SCHEDULE 3.12.
(b) Except as set forth in SCHEDULE 3.12, all Contracts are valid,
binding and in full force and effect and neither Seller nor any other party to
any Contract is in default thereunder, and the Seller has not received written
notice of, nor, to the Knowledge of the Seller, are there any facts or
circumstances which, with the passage of time or the giving of notice or
otherwise, would constitute any default thereunder except where such default
would not have a Material Adverse Effect. Except as set forth on SCHEDULE 3.12,
all such Contracts and Personal Property Leases are freely assignable to the
Buyer without the prior written consent of any other parties thereto.
Section 3.13 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Seller relating to the Business or the
Acquired Assets.
Section 3.14 LITIGATION. SCHEDULES 3.14 AND 3.16 set forth each
instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing or, to the Knowledge of the Seller, investigation of,
in or before any court or quasi-judicial or administrative agency of any
Canadian federal, state, provincial, local or foreign jurisdiction, or (iii) has
received written notice of any Claim, except where the injunction, judgment,
order, decree, ruling, charge, action, suit, proceeding, hearing,
<PAGE>
-19-
investigation or Claim does not relate to the Business or the Acquired Assets
or would not have a Material Adverse Effect.
Section 3.15 EMPLOYEE BENEFITS.
(a) SCHEDULE 3.15 lists each Employee Benefit Plan that the Seller
maintains or to which it contributes with respect to the Business.
(b) With respect to each Employee Benefit Plan that the Seller
maintains or has maintained during the prior six years or to which the Seller
contributes, or has been required to contribute during the prior six years:
(i) To the Knowledge of the Seller, each Employee Benefit Plan,
as indicated on Schedule 3.15 (and each related trust, insurance contract,
or fund) complies in form and in operation in all material respects with
the applicable requirements of the Pensions Benefit Act, the Canada Income
Tax Act, the Supplemental Pension Plans Act or other law or regulations
thereof applicable thereto and with the terms and conditions of each such
plan.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due prior to the Closing
Date have been paid to each such Employee Benefit Plan.
(iii) The Seller has furnished to the Buyer true, correct and
complete copies of the plan documents and summary plan descriptions and all
related trust agreements, insurance contracts and other funding agreements
which implement each such Employee Benefit Plan.
(iv) To the Knowledge of the Seller, no action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending, except where the action, suit,
proceeding, hearing, or investigation would not have a Material Adverse
Effect.
(v) The consummation of the transactions contemplated by this
Agreement shall not constitute an event under any Employee Benefit Plan
that shall or may result in the Buyer becoming liable for any acceleration,
vesting or increase in benefits or in the funding requirements of any
Employee Benefit Plan or in the Buyer otherwise becoming liable for any
unfunded vested benefits or unfunded deficit under any Employee Benefit
Plan. For greater certainty, the parties agree that the foregoing
representation and warranty shall not be construed as derogating from the
obligation of the Buyer at law or under Section 7.2 to recognize the period
of service prior to the Closing Date of the employees to whom an offer of
employment is required to be made under Section 7.1(a).
Section 3.16 ENVIRONMENTAL. Health, and Safety Matters. With
respect to the Premises, except as set forth in SCHEDULE 3.16, and except for
those matters that would not have a Material Adverse Effect:
<PAGE>
-20-
(a) The Seller has complied and continues to comply with
Environmental, Health, and Safety Laws with respect to the Business.
(b) Neither Seller, nor to the Knowledge of the Seller, any previous
owner, tenant, occupant, user or operator of the Premises, released or disposed
of any Hazardous Materials on, under, in or emanating from the Premises, except
in compliance with applicable Environmental, Health and Safety Laws.
(c) The Seller has obtained all Permits and Licenses required
pursuant to applicable Environmental, Health and Safety Laws to carry on the
Business as now conducted; PROVIDED, HOWEVER, that certain Permits and/or
Licenses may need to be transferred, reissued or amended before or as a result
of the consummation of the transactions contemplated by this Agreement.
(d) The Seller (i) is not subject to any outstanding injunction,
judgment, order, decreee, ruling or charge under any Environmental Health and
Safety Laws, and (ii) is not a party to any action, suit, hearing, proceeding
or, to the Knowledge of the Seller, investigation of, in or before any court or
quasi-judicial or administrative agency of any Canadian federal, provincial,
local or foreign jurisdiction with respect to any Environmental, Health, and
Safety Laws.
(e) The Seller has not received any written notice or report from any
third party asserting that it is liable under any applicable Environmental,
Health, and Safety Laws, or for property damage or personal injury from exposure
to any Hazardous Materials, relating to any of the Premises, other than notices
or reports which have since been resolved.
(f) The Seller is not liable nor has the Seller received any written
notice or report that would reasonably show that it is potentially liable, nor
is the Business or the Acquired Assets subject to any Security Interest (other
than a Permitted Encumbrance) in connection with, the release or threatened
release of any Hazardous Materials under any applicable Environmental, Health,
and Safety Laws.
(g) To the Knowledge of the Seller, the Premises comply with all
applicable Environmental , Health and Safety Laws and there are currently no
underground storage tanks in or under the Premises, and to the Knowledge of the
Seller no underground storage tank was removed from the Premises while the
Seller owned, occupied or operated the Premises.
(h) This Section 3.16 contains the sole and exclusive representations
and warranties of the Seller with respect to any environmental, health or safety
matters, including without limitation any arising under any Environmental,
Health, and Safety Laws.
(i) To the Knowledge of the Seller, no Governmental Authority has
conducted or reported on any environmental, health or safety audit of the
Business or the Acquired Assets, nor has any Governmental Authority conducted
any other evaluation which has identified any present or ongoing noncompliance
with any
<PAGE>
-21-
Environmental, Health and Safety Laws with respect to the Business or any
Acquired Assets.
Section 3.17 EASEMENTS: CONDEMNATION, ETC. The Seller has all
easements and/or servitudes and rights of ingress and egress and for utilities
and services necessary for all operations conducted by it on the Real Property.
Section 3.18 CONDITION OF ASSETS. The buildings, offices, shops and
other structures and all land improvements, computers, computer equipment,
machinery, other equipment, fixtures, vehicles and other properties owned or
leased by the Seller (relating to the Business) have been properly maintained
and are in good operating condition and repair, subject to reasonable wear and
tear in the Ordinary Course of Business, for the purposes of conducting the
Business on the Closing Date as the Business has been or is being conducted.
The Acquired Assets represent substantially all of the assets of the Business as
conducted by the Seller.
Section 3.19 INVENTORY. The Inventory of the Seller relating to the
Business has been acquired in the Ordinary Course of Business, consists of items
of a quality and quantity usable or saleable in the normal course of the
Business, the quantities of each type are not excessive in any material amount,
have been valued on an average cost basis, and the value of obsolete materials
and of those materially below standard quality have been written down to
realizable market value or adequate reserves have been provided therefor on the
most recent Financial Statements for the most recent fiscal year of the Seller.
Section 3.20 PRODUCT WARRANTY AND LIABILITY. All finished goods
inventories manufactured by the Seller in the operation of the Business (the
"PRODUCTS"), have been in material conformity with all applicable contractual
commitments and all express or implied warranties (including warranties imposed
by the application of law) and no material liability exists or will arise for
replacement or damage in connection with such sales or deliveries, except as are
adequately reserved for on the Financial Statements. No Products heretofore
sold by the Seller are now subject to any guaranty, warranty, claim for product
liability or patent or other indemnity, other than those sold in accordance with
the standard terms and conditions of sale of the Business, true and complete
copies of which have been delivered to the Buyer.
Section 3.21 ACCOUNTS RECEIVABLE. All Accounts Receivable have
arisen in the Ordinary Course of Business and have been collected or are
collectible under their respective terms and conditions in the aggregate
recorded amounts thereof less, with respect to notes and accounts receivable
shown on the Financial Statements for the most recent fiscal year of the Seller,
the applicable reserves in respect thereof shown thereon, or, with respect to
notes and accounts receivable to be included on the Closing NWC Statement, the
applicable reserves in respect thereof to be shown thereon. No counterclaims or
offsetting claims with respect to such accounts receivable that would have a
Material Adverse Effect are pending or threatened.
Section 3.22 PERMITS AND LICENSES. The Seller has (and SCHEDULE
3.22 lists) all material Permits and Licenses necessary to conduct the
<PAGE>
-22-
Business and the Permits and Licenses are in full force and effect. Except
as set forth on SCHEDULE 3.22, no notification to or approval of any
Governmental Authority is required for all such Permits and Licenses to be
transferred to the Buyer and to remain in full force and effect after the
Closing, subject to compliance by the Buyer with the terms and conditions
thereof. Except as set forth on SCHEDULE 3.16 or SCHEDULE 3.22, no
violations exist or have been recorded in respect of any of the Permits and
Licenses that would have a Material Adverse Effect. No proceeding is pending
or threatened to revoke or limit any of the Permits and Licenses and there is
no basis nor any grounds for any such revocation or limitation.
Section 3.23 LABOR MATTERS. The Collective Bargaining Agreements
are the only such agreements applicable to, and, to the Knowledge of the
Seller, the labor unions and collective bargaining units set forth on
SCHEDULE 3.23 are the only such unions or units that represent or claim to
represent any employees set forth on SCHEDULE 7.1. Except as set forth on
SCHEDULE 3.23, there is not any matter under discussion with any labor union
(including routine procedures for the resolution of grievances) nor in the
past five (5) years has there been any strike, work stoppage, labor dispute
or other labor trouble relating to employees of the Seller and there are no
significant threats of work stoppage or labor trouble by employees of the
Seller. Schedule 7.1 contains a complete list of all employees of Seller who
have been employed exclusively in the conduct or operation of the Business as
operated by the Seller prior to Closing and identifies thereon any such
employees on sick leave, long-term disability, sabbatical or other extended
leave.
Section 3.24 CAPITAL EXPENDITURES. SCHEDULE 3.24 sets forth for
fiscal years 1998, 1999 and thereafter the anticipated expenditures for capital
improvements to the Seller's facilities (and for the continuing operation and
maintenance thereof) necessary or appropriate for the continuation of the
Business in respect of compliance with Environmental, Health and Safety Laws in
effect as of the date of this Agreement or currently scheduled to become
effective after the date of this Agreement.
Section 3.25 PUBLIC SERVICES AND UTILITIES. The Seller is serviced
by public services and utilities in amounts adequate for the existing operation
of the Business. None of the suppliers of such public services and utilities
has given notice to the Seller that it intends to curtail or may curtail any of
the public services or utilities used by the Seller in the existing operation of
its business and to the Knowledge of the Seller of any plans by such public
services or utilities for any such curtailment.
Section 3.26 SOLVENCY. The transfer of the Acquired Assets by the
Seller in return for the Purchase Price will not render the Seller insolvent or
unable to pay its debts as they become due in the ordinary course of business or
leave the Seller with an unreasonably small capital for the business in which it
will continue to engage.
Section 3.27 CANADA NON-RESIDENT. Seller is not a "non-resident" of
Canada as defined in the Canada Income Tax Act or the Quebec Taxation Act.
Seller is registered for the purposes of Part IX of the Excise Tax Act and its
Registration Number is 103004545RT0001. No portion of Purchase Price will be
received by the
<PAGE>
-23-
Seller for or on behalf of LMP USA or any other Person who is a
"non-resident" of Canada as defined in the Canada Income Tax Act or the
Quebec Income Tax Act.
Section 3.28 CUSTOMERS AND VENDORS. Schedule 3.28 sets forth a
correct and current list of the twenty (20) largest customers of and the ten
(10) largest vendors to the Business during the 9-month period ended September
30, 1997, determined on the basis of the amount of sales made to each such
customer or by each such vendor, as the case may be, during such period, as
reasonably ascertained from readily available information, all such amounts
being estimated in good faith as being within five percent (5%) of the actual
sales made to or by such customer or vendor, as the case may be. Except as set
forth on Schedule 3.28, to the knowledge of the Seller, no customer or vendor
identified on Schedule 3.28 has given notice that they intend to cease doing
business with the Business or to alter the amount of the business that it is
presently doing with the Business so as to cause a Material Adverse Effect;
PROVIDED, HOWEVER, that nothing contained herein shall be construed as a
representation or warranty that the relationships with the customers and vendors
identified on SCHEDULE 3.28 will continue or continue on the same or similar
terms.
Section 3.29 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
Except as set forth in this Agreement, the Schedules to this Agreement or any
of the Escrow Agreement, License, Agreement, the certificates delivered to
Buyer pursuant to Section 6.1 or any instrument of assignment, sale, transfer
or conveyance delivered to Buyer pursuant to Section 2.6 (collectively the
"Related Documents") the Seller does not make any representation or warranty,
express or implied, at law or in equity, in respect of any of its assets
(including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. The Buyer hereby acknowledges
and agrees that, except as set forth in this Agreement or any document
delivered pursuant to this Agreement, the Buyer is purchasing the Acquired
Assets on an "as-is, where-is" basis.
Section 3.30 TAX MATTERS. There are no Security Interests of any
type on any of the Acquired Assets that have arisen in connection with any
failure (or alleged failure) by the Seller to pay any Tax and there are no
judgments against Seller for or with respect to any Taxes arising out of the
operation of the Business. The Seller has filed or will file or cause to be
filed, within the applicable period prescribed by law, all federal, provincial,
local, foreign or other tax returns, required by such law to be filed by Seller
with respect to the Business for all taxable period ending on or prior to the
Closing Date, or the Seller has filed valid extensions of time for filing such
tax returns. Seller has paid, within the time and manner prescribed by law, all
Taxes shown as due on all such tax returns, and Seller is not delinquent in the
payment of any Taxes relating to the Business, and no deficiencies for any Taxes
have been asserted against Seller and, to the Knowledge of the Seller, no such
deficiencies have been threatened. There are no actions, suits, proceedings,
investigations or claims pending or, to the Knowledge of Seller, threatened
against, Seller is respect of Taxes relating to the Business, nor are there any
material matters under discussion with any governmental authority relating to
Taxes relating to the Business.
<PAGE>
-24-
Section 3.31 INSURANCE. Except as disclosed on SCHEDULE 3.31, the
fire, casualty, liability and other insurance policies insuring the Seller or
its properties or interests therein provide adequate coverage for all normal
risks incident to the Business and are in such character and amount at least
equivalent to that carried by Persons engaged in a business that is subject to
the same or similar perils or hazards and at the same locations as the locations
of the Business.
Section 3.32 COMPLETENESS: NO MISREPRESENTATIONS. To the
Knowledge of the Seller, the copies of all instruments, agreements and
written information, including without limitation the schedules hereto,
delivered pursuant to this Agreement or otherwise furnished or made available
to the Buyer by the Seller including but not limited to the Financial
Statements of the Seller attached hereto as Schedule 3.32 are complete and
correct in all material respects as of the date hereof.
Section 3.33 [INTENTIONALLY DELETED]
Section 3.34 CERTIFIED AMOUNT. No interest is required to be paid
in respect any amount owing under the agreement annexed as Schedule 2.2(f) to
the extent the payment of such amount is assumed by the Buyer as contemplated by
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV).
Section 4.1 ORGANIZATION OF THE BUYER. The Buyer is a company duly
incorporated and organized, validly subsisting and in good standing under the
laws of the jurisdiction of its incorporation.
Section 4.2 AUTHORIZATION OF TRANSACTION. The Buyer has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions, except to the extent that
enforcement may be limited by the laws of bankruptcy or insolvency or laws
relating to creditors' rights and remedies generally.
Section 4.3 NON-CONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
Article II above), will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority, or court to which the Buyer is
subject or any provision of its charter or bylaws or (ii) conflict with,
result in a
<PAGE>
-25-
breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by which it is bound or
to which any of its assets is subject. Except for the Required Approvals,
the Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Authority
in order for the parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Article
II above).
Section 4.4 FINANCING. The Buyer has disclosed to the Seller its
intended means and sources of financing the Purchase Price.
Section 4.5 BROKERS' FEES. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
Section 4.6 [INTENTIONALLY DELETED]
ARTICLE V
PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between of
this Agreement and the Closing.
Section 5.1 GENERAL. Each of the parties will execute and
deliver such other documents, certificates, agreements and other writings,
and use its best efforts to take all actions and to do all things necessary,
proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VI below).
Section 5.2 NOTICES AND CONSENTS.
(a) The Seller will give any notices to third parties and will use
its best efforts to obtain any third party consents that the Buyer reasonably
may request in connection with the matters referred to in Article III above.
Each party will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, transfers, assignments,
waivers and approvals of any Governmental Authority necessary to
consummate the transactions contemplated by this Agreement (the "REQUIRED
APPROVALS"). Without limiting the generality of the foregoing, each party
will file any notification and report forms and related material that it may
be required to file with, and apply for any available advance rulings from
(i) the Director under the Canadian Competition Act and (ii) the Minister
responsible for administering the Investment Canada Act, and will in each
case use its best efforts to obtain a waiver from any applicable waiting
period and will make any further filings pursuant thereto that may be
necessary, proper, or advisable in connection with any of the foregoing.
Each of the Seller and the Buyer shall be responsible for the payment of
one-half (1/2)
<PAGE>
-26-
of the filing fees for such notifications and related materials, and any
accounting therefor shall be paid on the Closing Date to the extent known,
and thereafter on demand.
(b) (i) Nothing in this Agreement shall be construed as an attempt
by the Seller to assign to Buyer any Contract, agreement, Permit or License,
franchise, Claim or asset included in the Acquired Assets (A) which is by its
terms or by law nonassignable without the consent of any other party or parties,
unless such consent or approval shall have been given, or (B) as to which all
the remedies for the enforcement thereof available to the Seller would not by
law pass to the Buyer as an incident of the assignments provided for by this
Agreement (an "ACQUIRED ASSET REQUIRING CONSENT").
(ii) Prior to the Closing Date, the Seller shall use its best
efforts to obtain consents or approvals to the assignment of the Contracts,
Open Orders, Permits and Licenses, and Real and Personal Property Leases
described on SCHEDULE 5.2(b) (collectively "MATERIAL CONTRACTS REQUIRING
CONSENT"); PROVIDED, that the Seller shall not be required to pay more than
Cdn.$15,000 in cash or other consideration or grant forbearances having such
value, in the aggregate, to any other parties to such Material Contracts
Requiring Consent to effect such consents or approvals.
(iii) To the extent that any such consent or approval in
respect of, or a novation of, an Acquired Asset Requiring Consent shall not
have been obtained on or before the Closing Date, the parties hereto shall
use reasonable efforts and shall cooperate in any reasonable arrangement to
assure the Buyer the benefits of such Acquired Asset Requiring Consent to the
extent permitted by law. To the extent lawful, practicable and reasonable in
the circumstances, including the obtaining of any such necessary consent or
approval after the Closing Date (provided that the Seller and its Affiliates
shall not be required to pay more than Cdn.$15,000 in cash or other
consideration or grant forbearances having such value, in the aggregate, to
any other parties to such Material Contracts Requiring Consent to effect such
consents or approvals), the Seller at the request and under the direction of
the Buyer shall take all reasonable actions to assure that the rights of the
Seller under the Acquired Asset Requiring Consents shall be preserved for the
benefit of the Buyer to the extent not involving any undue hardships upon the
Seller or unreasonable time constraints in the request or compliance with
such instructions. The Buyer shall reimburse the Seller and its Affiliates
for their reasonable out-of-pocket expenses in excess of Cdn.$15,000 related
to any actions taken by the Seller at the request of the Buyer after the
Closing Date.
(iv) Except with respect to the Material Contracts Requiring
Consent, the Buyer acknowledges that certain consents to the assignments may
be required from parties to all other Acquired Assets Requiring Consent and
that such consents may not be obtained. The Buyer agrees that the Seller
shall not have any liability to the Buyer arising solely out of or solely
relating to the failure to obtain any consents that may have been or may be
required in connection with the assignments, or because of the default under
or acceleration or termination of, any other Acquired Asset Requiring Consent
solely as a result thereof. The Buyer further agrees that no
<PAGE>
-27-
representation, warranty or covenant of the Seller contained herein shall be
breached or deemed breached as a result of the failure to obtain any such
consent, or as a result of any default, acceleration or termination resulting
solely from such failure. The Buyer further agrees that no condition to the
Buyer's obligations to close the transactions contemplated by this Agreement
shall be deemed not satisfied as a result of the failure to obtain any such
consent, except consents with respect to Material Contracts Requiring Consent.
(v) The Buyer and the Seller shall jointly cooperate
in attempting to obtain any consents required in connection with the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the
Seller shall not be required to incur out-of-pocket expenses in excess of
Cdn.$15,000, commence any litigation or offer or grant any forbearance or
accommodation (financial or otherwise) to any third party.
Section 5.3 OPERATION OF BUSINESS. The Seller will not engage
in any practice, take any action or enter into any transaction outside the
Ordinary Course of Business. Without limiting the foregoing, the Seller
shall use its commercially reasonable efforts to preserve the Business intact
as a going concern, to retain the services of its officers and key employees,
and to preserve its business relationships with customers, suppliers and
others. The Seller will perform usual and customary maintenance on the
tangible Acquired Assets consistent with past custom and practices, and shall
maintain insurance on the Acquired Assets consistent in amount, scope and
coverage to that in effect on the date of this Agreement.
Section 5.4 FULL ACCESS. The Seller, upon reasonable prior
notice, will permit authorized representatives of the Buyer to have full
access to the Premises, personnel and Records of or pertaining to the
Business during reasonable hours, but in a manner that will not interfere
with the normal business operations of the Seller and subject to the prior
approval of the Seller; PROVIDED, HOWEVER, that the Buyer shall not be
provided with access to any of the foregoing to the extent that such access
would violate or conflict with (i) any law, regulation, order or injunction
to which the Seller or any of the Acquired Assets is subject; or (ii) any
agreement, instrument or understanding by which the Seller is bound.
Section 5.5 CONFIDENTIALITY: PUBLIC ANNOUNCEMENT.
(a) The Seller and the Buyer shall take all reasonable precautions
to maintain the confidentiality of any Confidential Information concerning
the Business, the other party or any party's Affiliates that is provided to
or discovered by it or its representatives in the course of negotiating this
Agreement and shall not disclose such Confidential Information to anyone
other than (a) those persons directly involved in the investigation and
negotiations pertaining to the transactions contemplated by this Agreement,
including without limitation, financial advisors, legal counsel,
accountants, appraisers, insurance brokers and similar representatives, (b)
such lenders or investors as may be necessary to finance the transactions
contemplated hereby and (c) such Persons or governmental authorities whose
consents or approvals may be necessary or to whom notice need be given to
permit consummation of the transactions contemplated hereby. The Buyer will
not use any of
<PAGE>
-28-
the Confidential Information except in connection with the negotiation of
this Agreement and the consummation of the transactions contemplated hereby
and, if this Agreement is terminated for any reason whatsoever, will return
to the Seller all tangible, digital or electronic embodiments (and all
copies) of the Confidential Information which are in its possession or under
its control or that of its advisors.
(b) Other than jointly-issued announcements and disclosure
to Seller's and Buyer's employees, customers and vendors, no party to this
Agreement shall, without the prior written consent of the other parties
hereto, make or cause to be made any press release or other public statement
or announcement (a "PUBLIC ANNOUNCEMENT") that directly or indirectly
discloses the transactions contemplated by this Agreement; PROVIDED, that any
party may make a Public Announcement if such disclosure is, in the reasonable
good faith opinion of such party's outside counsel, required by law. If a
party determines that it is required by law to make any such Public
Announcement, it will give the other party reasonable advance notice thereof,
including the text of such Public Announcement and shall consult with such
other party regarding the nature, content and timing of such Public
Announcement.
Section 5.6 NOTICE OF DEVELOPMENTS.
(a) The Seller may elect at any time to notify the Buyer of any
development causing a breach of any of its representations and warranties in
Article m above. Unless the Buyer has the right to terminate this Agreement
pursuant to Section 8.1(b) below by reason of the development and exercises
that right within the period of 10 business days referred to in Section
8.1(b) below, the written notice pursuant to this Section 5.6(a) will be
deemed to have amended the Schedules, to have qualified the representations
and warranties contained in Article III above and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development.
(b) Each party will give prompt written notice to the other party
of any material adverse development causing a breach of any of its
own representations and warranties in Articles m or IV above. No disclosure
by any party pursuant to this Section 5.6(b), however, shall be deemed to
amend or supplement the Schedules or to prevent or cure any misrepresentation
or breach of warranty.
Section 5.7 EXCLUSIVITY. The Seller will not solicit, initiate
or encourage the submission of any proposal or offer from any Person relating
to the acquisition of the Business or the Acquired Assets other than sales of
inventory in the Ordinary Course of Business (including any
acquisition structured as a merger, consolidation or share exchange); nor
will they permit any of their respective officers, directors or agents, nor
any Affiliate of either the Seller or any officers, directors or agents
thereof to (i) solicit any proposal or offer from any person or entity (other
than the Buyer) relating to the sale of the Acquired Assets, the Business or
any material portion of its assets, (ii) provide any non-public information
to any person or entity (other than the Buyer) for use in preparing any
proposal or offer relating to the sale of the Acquired Assets, the Business
or any material portion of its assets, or (iii) respond to or enter into any
negotiations regarding any proposal or offer from any Person concerning any
of the foregoing (other than the Buyer).
<PAGE>
-29-
Section 5.8 COMPETITION ACT. Seller shall provide to the
Buyer's Canadian legal counsel, Cassels Brock & Blackwell, and Buyer shall
provide to the Seller's Canadian counsel, Goodman and Carr, all information
reasonably required to complete and file a short-form filing and/or an
advance ruling certificate application with the Director in compliance
with the pre-notification provisions of the Canadian Competition Act.
Seller and Buyer agree to execute and file and/or cause to be executed and
filed by their respective Affiliates, as necessary, with the Director all
filings, forms or other documents reasonably required for such purpose.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
Section 6.1 CONDITIONS TO OBLIGATION OF THE BUYER. The
obligation of the Buyer to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(a) The representations and warranties set forth in Article III
above shall be true and correct in all respects at and as of the Closing
Date, except those representations not already qualified by "Material Adverse
Effect", which shall be true and correct in all material respects;
(b) The Seller shall have performed and complied with all of its
covenants herein in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement, or any action or proceeding by or before any
court or Governmental Authority pending or threatened in writing to restrain,
enjoin or otherwise prevent the transactions contemplated by this Agreement
or claiming damages as a result of the consummation of the
transactions contemplated by the Agreement;
(d) The Seller shall have delivered to the Buyer a certificate,
without personal liability, of the President and Chief Financial Officer of
the Seller to the effect that each of the conditions specified above in
Section 6. 1(a)-(c) is satisfied in all respects;
(e) The Seller shall have received and delivered to the Buyer all
Required Approvals of Governmental Authorities referred to in Sections 3.4
above;
(f) The Buyer shall have received from counsel to the Seller the
opinions in form and substance as set forth in EXHIBITS 6.1(a) (CORPORATE
OPINION), (b) (TITLE OPINION ONTARIO) AND (c) (TITLE OPINION QUEBEC) attached
hereto, addressed to the Buyer, and dated as of the Closing Date. Counsel to
the Seller will include in the list of documents listed in the schedule
referred to in item D of the opinion annexed as Exhibit 6.1(a) (corporate
opinion) such of the documents delivered at Closing as is customary in the
Province of Ontario for a transaction of this type, and shall be entitled
<PAGE>
-30-
to make any additional qualifications regarding any of the listed documents
as is customary in the Province of Ontario in a transaction of this type;
(g) All corporate actions necessary to authorize and effectuate
the consummation of the transactions contemplated by this Agreement by the
Seller shall have been duly taken prior to the Closing and the Seller shall
have delivered to Buyer a certificate of a duly authorized officer of the
Seller to that effect;
(h) The Seller and the Escrow Agent shall have executed and
delivered the Escrow Agreement;
(i) The Buyer shall have received all agreements, documents and
instruments incidental to the Seller's performance of the
transactions contemplated by this Agreement, in form and substance reasonably
satisfactory to the Buyer and its legal counsel, and copies of all documents
that it may reasonably have requested in connection with such transactions;
(j) The conditions to the obligations of the Buyer to consummate
the transactions contemplated by the LMP USA Acquisition Agreement set forth
in Section 6.1 thereof shall have been satisfied or waived;
(k) On the Closing Date, the Seller shall deliver to the Buyer
physical possession of all tangible property included in the Acquired Assets
and any tangible evidence of all intangible property included in the Acquired
Assets;
(l) The Seller shall have executed and delivered to the Buyer a
license agreement, effective as of the Closing Date, substantially in the
form of Exhibit 6.1(1), pursuant to which the Seller grants to the Buyer a
limited license to use certain intellectual property and proprietary
software constituting part of the Excluded Assets (the "License Agreement);
(m) The Buyer shall have been provided with a certificate issued
by the Minister of Finance under Section 6 of the Retail Sales Tax Act
(Ontario) that all taxes payable by the Seller thereunder have been paid;
(n) The conveyance of the Real Property located in the Province of
Ontario shall be in compliance with the provisions of the Planning Act
(Ontario);
(o) [intentionally deleted]
(p) LMP USA shall have executed the separate guarantee set forth
at the end of this Agreement required to be executed by LMP USA and the
Seller shall have furnished to the Buyer a legal opinion regarding
the due authorization, execution, delivery and legal and binding effect of
the guarantee in form and substance satisfactory to the Buyer acting
reasonably, adressed to the Buyer and dated as of the Closing Date;
<PAGE>
-31-
(q) The Seller shall have delivered to the Buyer the consents or
approvals to the assignment of the Material Contracts Requiring Consent, in
form and substance satisfactory to counsel for Buyer acting reasonably;
(r) The Seller shall have delivered to the Buyer full and final
discharges, in form and substance satisfactory to counsel for Buyer acting
reasonably, with respect to any Security Interests on or against the Acquired
Assets or the Premises, except with respect to Permitted Encumbrances; and
(s) The parties shall have completed all
pre-notification requirements under the merger provisions of the Canadian
Competition Act.
The Buyer may waive any condition specified in this Section 6.1 by delivering
written notice thereof to the Seller at or prior to the Closing.
Section 6.2 CONDITIONS TO OBLIGATION OF THE SELLER. The
obligations of the Seller to consummate the transactions to be performed by
them in connection with the Closing are subject to satisfaction of the
following conditions:
(a) The representations and warranties set forth in Article IV
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) The Buyer shall have performed and complied with all of its
covenants herein in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement or any action or proceeding by or before any
court or Governmental Authority pending or threatened in writing to restrain,
enjoin or otherwise prevent the transactions contemplated by this Agreement
or claiming damages as a result of the consummation of the
transactions contemplated by the Agreement;
(d) The Buyer shall have delivered to the Seller a certificate,
without personal liability, of an officer of the Buyer to the effect that
each of the conditions specified above in Section 6.2(a)-(c) is satisfied in
all respects;
(e) The Buyer shall have received and delivered to the Seller all
Required Approvals of Governmental Authorities referred to in Section 4.3
above;
(f) The Seller shall have received from counsel to the Buyer an
opinion in form and substance as set forth in EXHIBIT 6.2 attached hereto,
addressed to the Seller, and dated as of the Closing Date. Counsel to the
Buyer will include in the list of documents listed in the schedule referred
to in the opinion annexed as Exhibit 6.2 hereto such of the documents
delivered at Closing as is customary in the Province of Ontario for a
transaction of this type and shall be entitled to make any additional
qualifications regarding any of the listed documents as is customary in the
Province of Ontario for a transaction of this type;
<PAGE>
-32-
(g) All corporate actions necessary to authorize and effectuate
the consummation of the transactions contemplated by this Agreement by the
Buyer shall have been duly taken prior to the Closing and the Buyer shall
have delivered to the Seller certificates of duly authorized officers of the
Buyer to that effect;
(h) The Buyer and the Escrow Agent shall have executed and
delivered the Escrow Agreement;
(i) The Seller shall have received all agreements, documents and
instruments incidental to the Buyer's performance of the transactions
contemplated by this Agreement, in form and substance reasonably satisfactory
to the Seller and its legal counsel, and copies of all documents that they
may reasonably have requested in connection with such transactions;
(j) All other actions to be taken by the Buyer in connection with
consummation of the transactions contemplated by this Agreement and
all certificates, opinions, instruments and other documents required to
effect the transactions contemplated by this Agreement will be reasonably
satisfactory in form and substance to the Seller;
(k) The conditions to the obligations of LMP USA to consummate the
transactions contemplated by the LMP USA Acquisition Agreement set forth in
Section 6.2 thereof shall have been satisfied or waived;
(l) The Buyer shall have executed and delivered to the Seller the
License;
(m) The Buyer shall have paid the Purchase Price in accordance
with Article II of this Agreement;
(n) The parties shall have completed all
pre-notification requirements under the merger provisions of the Canadian
Competition Act; and
(o) Mail-Well, Inc. shall have executed the seperate guarantee set
forth at the end of this Agreement required to be executed by Mail-Well, Inc.
and the Buyer shall have furnished to the Seller a legal opinion regarding
the due authorization, execution, delivery and legal and binding effect of
the guarantee in form and substance satisfactory to the Seller acting
reasonably, addressed to the Seller and dated as of the Closing Date.
The Seller may waive any condition specified in this Section 6.2 by
delivering a written notice thereof to the Buyer at or prior to the Closing.
ARTICLE VII
POST-CLOSING COVENANTS
Section 7.1 EMPLOYMENT OF SELLERS' EMPLOYEES. (a) The
Buyer covenants that it will at Closing, or within five (5) days after
Closing, but effective as at
<PAGE>
-33-
Closing, extend offers of employment to the current employees of the Business
listed on SCHEDULE 7.1 on substantially the same terms and conditions on
which they were employed by the Sellers, save and except Buyer shall not be
required to make such offers of employment to employees on sick leave, long
term disability, sabbatical or other extended leave as set forth in Schedule
7.1 unless and only if they report to work within six (6) months of Closing.
(b) The Seller shall retain and be obligated to satisfy all Claims
for workers' compensation which have been filed against the Seller prior to
the Closing Date, whether insured or uninsured, and shall at its own expense
honor, or cause its insurance carriers to honor, such Claims in accordance
with the terms and conditions of such programs or applicable workers'
compensation statutes. The Seller shall be entitled to retain all accruals
on the Seller's books with respect to such Claims.
(c) Nothing contained in this Agreement shall confer on any
former, current or future employee of Seller or Buyer, or any
personal legal representative, heir, executor or assign of such employer,
any rights or remedies, including without limitation any right to continued
employment or right to any contractual or common law seniority or right of
notice of termination, provided that for greater certainty nothing in Section
7.1(c) hereof shall render the Seller liable to the Buyer where the Seller
would not be so liable but for Section 7.1(c) hereof.
(d) Seller shall, within thirty (30) days after Closing but
effective as at Closing, adopt amendments to the Employee Benefit Plans,
including any defined benefit or defined contribution plan, but excluding any
plan covered by the Collective Bargaining Agreements, covering any employees
listed in Schedule 7.1, to provide for the acceleration of full vesting of
such employees under such plan, and Seller shall not make any "rollover" or
other lump sum distributions out of such plans until such amendments are in
effect. The parties agree that they shall, during the said 30-day period
after Closing, each co-operate with the other in reasonable ways to evaluate
other alternatives to the acceleration of full vesting provided for in the
first sentence of Section 7.1(d) hereof and in the event an alternative can
be found which is satisfactory to both parties acting in their sole and
absolute discretion, then such alternative shall be implemented in
substitution for the first sentence of Section 7.1(d) hereof provided that
such alternative shall first be approved in writing by each of the parties
hereto, which approval may be arbitrarily and unreasonably withheld.
Section 7.2 EMPLOYEE BENEFITS MATTERS. The Buyer agrees
to continue to provide benefits to the employees listed on SCHEDULE 7.1 who
are covered under the Collective Bargaining Agreements pursuant to the terms
thereof. The Buyer agrees that it will establish and register, if necessary,
with the appropriate Governmental Authorities a pension plan or plans for the
employees listed on Schedule 7.1 (the "New Plan") which New Plan will provide
to such employees substantially similar pension and other benefits provided
for under the Employee Benefit Plans, save and except nothing in Sections 7.1
or 7.2 hereof shall require Buyer to provide a defined benefit or defined
contribution or any other particular type of plan forming part of the
Employee Benefit Agreements, it being acknowledged by the parties that the
Buyer may in place of particular existing plans provide alternative or
different plans which provide benefits which are , taken as a whole,
financially
<PAGE>
-34-
equivalent to such existing plans. The Buyer agrees that the New Plan shall
recognize the period of service recognized under the Employee Benefit Plans
for the purposes of eligibility, vesting and benefit calculations under the
New Plan as required by all applicable legislation including the Pension
Benefits Act, the Canada Income Tax Act, and the Supplemental Pensions Plans
Act and any agreements forming part of the Employee Benefit Plan.
Section 7.3 NON-COMPETITION. As additional consideration for the
mutual undertakings of the Buyer and the Seller contained in this Agreement,
the Buyer and the Seller agree as follows:
(a) The Seller shall not and represents and warrants to and
covenants with the Buyer that no Affiliate of the Seller shall, for a period
four (4) years after the Closing Date, directly or indirectly, either for
itself or any other Person,
(i) engage or invest in, own, manage, operate, finance, control,
or participate in the ownership, management, operation, financing, or
control of, be associated with, or in any manner connected with, lend its
name or any similar name to, lend its credit to, or render services or
advice to, any business whose products or activities compete as a whole or
in part with the products or activities of the Business as of the date of
this Agreement, anywhere within the United States or Canada (a "Competing
Business); PROVIDED, however, that the Seller and any Affiliate of the
Seller may purchase or otherwise acquire up to (but not more than) one
percent of any class of securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if such securities are
listed on any recognized securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934, PROVIDED, further,
that the covenant set forth in this subsection (a)(i) of this Section 7.3
shall not apply to any of the foregoing actions taken by the Seller or its
Affiliates with respect to any enterprise whose operations include one or
more Competing Businesses provided that the aggregate gross revenues from
all such Competing Businesses in the United States and Canada do not exceed
U.S. $30,000,000 in any calendar year during the term of this Section
7.3(a) and the Seller or such Affiliate shall not be prevented hereby from
taking any such action, nor shall the Seller or such Affiliate, in the case
of an acquisition of any interest in such an enterprise, be required to
divest or discontinue any such Competing Business;
(ii) (A) induce or attempt to induce any Employee listed on
SCHEDULE 7.1 to leave the employ of the Buyer, (B) in any way interfere
with the relationship between the Business and any such Employee listed on
SCHEDULE 7.1, (C) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any Employee listed on SCHEDULE 7.1, or (D)
induce or attempt to induce any customer, supplier, licensee, or business
relation of the Business to cease doing business with it, or in any way
interfere with the relationship between the Business and any such customer,
supplier, licensee, or business relation; or
<PAGE>
-35-
(iii) solicit the business of any Person known to the Seller
to be a customer of the Business, whether or not the Seller has had direct
contact with such Person, with respect to products or activities which
compete as a whole or in part with the products or activities of the
Business as of the date of this Agreement.
(b) The Seller agrees that the covenants set forth in subsection
(a) of this Section 7.3 are reasonable with respect to duration, geographical
area and scope.
(c) Neither party shall, at any time during or after the four (4)
year period referred to in this Section 7.3, disparage in any manner the
other party, its products, activities or business, or any of the other
party's Affiliates, shareholders, directors, officers, employees or agents.
(d) The Buyer shall not, and represents and warrants to and
covenants with the Seller that no Affiliate of the Buyer shall, for a period
of one (1) year after the Closing Date, permit any of its managerial
personnel (directly or through a third party contractor) to induce or attempt
to induce any employees of the Seller to leave the employ of the Seller,
except by means of general advertisement or notice.
Section 7.4 ACCESS TO RECORDS. Each party shall preserve all
Records for a period of five (5) years from the Closing Date and shall allow
each other party and its respective representatives, upon reasonable prior
notice during normal business hours and without unreasonably interfering with
operations, full access to and the right to examine and copy any Records that
may be necessary or desirable for the preparation, filing and audit of all
tax returns for all periods beginning prior to the Closing Date and the
Closing NWC Statement. During such 5-year period, the Seller shall, to the
extent reasonably requested in writing by the Buyer, provide the Buyer with
photocopies of those income tax records which relate solely to the Business
subject to such confidentiality covenants of the Buyer as the Seller shall
reasonably request.
Section 7.5 FURTHER ASSURANCES.
(a) From time to time after Closing, at the Buyer's reasonable
request and without further consideration, the Seller will, consistent with
this Agreement, execute and deliver such other and further instruments of
conveyance, assignment and transfer, and take such other actions, as the
Buyer may reasonably request, for the effective conveyance and transfer of
the Acquired Assets.
(b) After Closing, the Buyer will provide the Seller with such
assistance by the controller of the Business as may be reasonably necessary
or desirable for the prompt and accurate preparation of the Closing NWC
Statement.
Section 7.6 TAX COLLECTION AND INFORMATION REPORTING
OBLIGATIONS. The Buyer and the Seller agree to cooperate fully with the
other's efforts to comply with any tax collection and information reporting
obligations imposed upon the other with respect to the consummation of the
transactions contemplated hereby and agrees to
<PAGE>
-36-
provide the other with such information as Seller may reasonably request from
time to time in connection with such obligations.
Section 7.7 ACCOUNTS RECEIVABLE. The Buyer shall use its best
efforts to collect the Accounts Receivable consistent with the past practices
of the Business. All amounts collected from an account debtor in respect of
an Account Receivable shall be first applied to such Account Receivable.
Buyer shall not compromise or otherwise settle any Account Receivable without
Seller's consent, which consent shall not be unreasonably withheld, and, in
the event Buyer fails to request such consent of Seller, Buyer shall not be
entitled to indemnification from Seller with respect to the uncollected
portion of any such compromised or settled Account Receivable. In the event
that the Buyer successfully asserts and the Seller pays a claim for
indemnification under Article X with respect to any uncollected Account
Receivable or portion thereof, the Buyer shall assign such uncollected
Account Receivable to the Seller.
Section 7.8 NO MERGER, ETC. Seller agrees that it shall not
dissolve, merge out of existence, or sell substantially all of its assets, as
such assets exist on the date of this Agreement, prior to the sixth (6th)
anniversary of the Closing Date, without requiring any successor
and/or purchaser to become liable for the obligations of Seller hereunder.
Seller may be relieved of this covenant at any time by providing Buyer with a
guarantee of Seller's ultimate corporate parent in form and substance
acceptable to the Buyer acting reasonably.
Section 7.9 MANAGEMENT OFFICE. Seller shall, after Closing,
permit and/or cause any Affiliate of Seller to permit, as necessary,
the Buyer to continue to use, in the same manner and to the same extent used
by the Seller in connection with the Business prior to Closing, the premises
located at 10 Akron Road, Toronto, as a management office for the Business,
on a month-to-month basis, but for no more than six (6) months from the
Closing Date, upon the payment of a monthly rent to the Seller, at the
beginning of each month, equal to the monthly inter-corporate charge paid by
the Seller, to its Affiliate who is, in respect of the premises, the owner or
tenant under a lease from a third party, in respect of the use by the Seller
of such premises in connection with the Business prior to Closing, provided
that the foregoing arrangement shall terminate at any time on at least thirty
(30) days written notice by the Buyer to the Seller and shall automatically
terminate on that day which is six (6) months from the Closing Date. Buyer
hereby indemnifies Seller from any damages resulting from any use of such
premises by the Buyer not authorized herein or any damages caused by the
negligence of the Buyer in connection with its use aforesaid of such premises.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION OF AGREEMENT. The parties may terminate
this Agreement as provided below:
<PAGE>
-37-
(a) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event (i) the
Seller has within the previous ten (10) days given the Buyer any notice
pursuant to Section 5.6(a) above and (ii) the development that is the subject
of the notice, either individually or in the aggregate with all other
developments that are the subject of notices given pursuant to Section 5.6(a)
has had or is reasonably expected to have a Material Adverse Effect.
(c) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (i) in the event the
Seller has breached any representation, warranty or covenant contained in
this Agreement in any respect, and the Buyer has notified the Seller of the
breach and the breach has continued without cure for a period of fifteen (15)
days after the notice of breach except where such breach would not have a
Material Adverse Effect or (ii) if the Closing shall not have occurred on or
before March 31, 1998, by reason of the failure of any condition precedent
under Section 6.1 hereof (unless the failure results primarily from the Buyer
breaching any representation, warranty or covenant contained in this
Agreement); and
(d) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (i) in the event the
Buyer has breached any representation, warranty or covenant contained in this
Agreement in any material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a period of fifteen
(15) days after the notice of breach or (ii) if the Closing shall not have
occurred on or before March 31, 1998, by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure results
primarily from the Seller breaching any representation, warranty, or
covenant contained in this Agreement).
Section 8.2 EFFECT OF TERMINATION. If any party terminates this
Agreement pursuant to Section 8.1 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in breach); PROVIDED,
HOWEVER, that the provisions of Sections 5.5 above shall survive termination.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties made by the Seller or the
Buyer as to any fact or condition existing on or before the Closing Date in
this Agreement, in any Exhibit, Schedule, certificate or other document
delivered pursuant hereto, shall survive the Closing for a period of eighteen
(18) months, save and except that the representations and warranties in
Sections 3.3 and 4.3 shall survive for three (3) years, the representations
and warranties in Section 3.6, 3.10(b) and 3.16 shall survive for six (6)
years and all representations and warranties regarding Taxes shall
<PAGE>
-38-
survive until the later of (i) the expiration of the applicable limitation
period within which any assessment , reassessment or other determination of
an amount owing can be made or (ii) six (6) months after such time as a final
determination of such assessment, reassessment or other determination of an
amount owing has been made and all appeal rights have been exhausted or no
appeal has been made within the time prescribe for any such appeal.
(b) All covenants made by the Seller or the Buyer in this
Agreement or any document delivered pursuant to this Agreement, whether to be
fulfilled or complied with before or after the Closing Date, shall survive
the Closing for a period of six (6) years;
PROVIDED, that there shall be no termination of any such representation,
warranty or covenant as to which a claim has been asserted in writing prior
to the termination of any such survival period.
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNITY BY SELLER. The Seller shall
defend, indemnify and hold the Buyer, its officers, directors, employees,
subsidiaries and Affiliates harmless from and against all Claims,
damages, losses, liabilities, costs, penalties, fines and expenses
(including reasonable attorneys' fees and disbursements and any other legal
costs) (collectively, "LOSSES") arising out of or resulting from:
(a) Any breach of, or failure to be true and correct, of the
representations and warranties made by the Seller in this Agreement or in any
agreement or instrument executed and delivered to the Buyer by or on behalf
of the Seller pursuant to this Agreement;
(b) Any failure by the Seller to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations under this Agreement or under any of the documents and
materials delivered by the Seller pursuant to this Agreement;
(c) Any Claims of third parties against the Buyer relating to or
arising out of the ownership, occupation and/or operation of the Business,
the Acquired Assets, or the Premises, before (but not on or after) the
Closing Date, including the Excluded Liabilities and excluding the Assumed
Liabilities;
(d) The failure to comply with any applicable bulk sales or bulk
transfer laws, including without limitation the failure to comply with the
Bulk Sales Act (Ontario) and the Quebec Sale of Enterprises Legislation;
(e) Any Claims arising out of the cost of remediating any of the
Premises if and as required by applicable Environmental, Health and Safety
Laws and
<PAGE>
-39-
to the extent the Hazardous Materials addressed through such remediation were
released or threatened to be released to the environment as of the Closing
Date;
(f) Any Claim brought by any Person or Governmental Authority
arising out of any of the matters referred to in this Section 10.1;
(g) Any Claims relating to or arising out of liabilities
and obligations relating to employees which are not Assumed Liabilities.
A claim for indemnification under this Section 10.1, except Section 10.1(a)
above, may be made regardless of whether or not the matter giving rise to
such claim constitutes a breach of a representation, warranty or covenant of
the Seller set forth in this Agreement or any Exhibit, Schedule, certificate
or other document delivered pursuant hereto.
Section 10.2 INDEMNITY BY THE BUYER. The Buyer shall defend,
indemnify and hold the Seller, its officers, directors, employees,
subsidiaries and Affiliates harmless from and against all Losses arising out
of or resulting from:
(a) Any breach of, or failure to be true and correct, of the
representations and warranties made by the Buyer in this Agreement or in any
agreement or instrument executed and delivered to the Seller by or on behalf
of the Buyer pursuant to this Agreement;
(b) Any failure by the Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities
or obligations under this Agreement or any of the documents and materials
delivered by the Buyer pursuant to this Agreement;
(c) The Assumed Liabilities, including for greater certainty those
liabilities and obligations relating to employees assumed by the Buyer under
Section 2.2(d), (g) and (h);
(d) Any Claims asserted by third parties against the Seller
relating to the ownership, occupation and/or operation of the Business, the
Acquired Assets or the Premises after Closing, including the Assumed
Liabilities but excluding the Excluded Liabilities;
(e) Any Claims brought by any Person or Governmental Authority
arising out of any of the matters referred to in this Section 10.2;
(f) Any Claims for workers' compensation by Employees listed on
SCHEDULE 7.1 to whom Buyer is required to make an offer of employment under
Section 7.1(a) that are filed on or after the Closing Date, regardless of
whether such Claims have arisen or will arise out of events occurring prior
to the Closing Date, and whether insured or uninsured, and all expenses,
incident to causing its own insurance carriers to honor such Claims in
accordance with the terms and conditions of such programs or applicable
workers' compensation statutes;
<PAGE>
-40-
(g) Any Claim made or asserted against the Seller by an employee
of the Seller to whom the Buyer is required to offer employment under Section
7.1(a) that such employee has been wrongfully terminated by the Seller
without reasonable notice or damages in lieu thereof as a result of the New
Plan referred to in Section 7.2 not being sufficiently similar to the
Employee Benefit Plan previously provided to such employee by the Seller.
A claim for indemnification under this Section 10.2, except Section 10.2(a)
above, may be made regardless of whether or not the matter giving rise to
such claim constitutes a breach of a representation, warranty or covenant of
the Buyer set forth in this Agreement or any Exhibit, Schedule, certificate
or other document delivered pursuant hereto.
Section 10.3 INDEMNIFICATION CLAIMS.
(a) If the Seller or the Buyer, as the case may be (in such
instance, the "CLAIMANT") wishes to assert an indemnification Claim
hereunder, the Claimant shall deliver to the indemnifying party a written
notice (a "CLAIM NOTICE") setting forth:
(i) the matter giving rise to the claim for indemnification,
(ii) a description of all of the facts and circumstances Claimant
giving rise to the claim, and
(iii) a description of, and a reasonable estimate of the
total amount of, the monetary amounts actually incurred or expected to be
incurred for which indemnification is sought.
The untimely delivery of a Claim Notice by the indemnified party to the
indemnifying party shall relieve the indemnifying party of liability with
respect to such claim only to the extent such indemnifying party has been
prejudiced by lack of timely notice with respect to such claim.
(b) The Buyer and the Seller, in the event such party delivers
such Claim Notice, are referred to herein as "INDEMNIFIED PARTIES," and the
persons from whom indemnification may be sought pursuant to this Article X
are referred to as an "INDEMNIFYING PARTY". Within twenty (20) days after
receipt of any Claim Notice, the Indemnifying Party will (i) acknowledge in
writing its responsibility for all or part of such matter for which
indemnification is sought under this Article X, and will either (x) pay or
otherwise satisfy the portion of such matter as to which responsibility is
acknowledged, or (y) take such other action as is reasonably satisfactory to
the Indemnified Party to provide reasonable security or other assurances for
the performance of its obligations hereunder, and/or (ii) give written notice
to the Indemnified Party of its intention to dispute or contest all or part
of such responsibility. Upon delivery of such notice of intention to contest,
the parties will negotiate in good faith to resolve as promptly as possible
any dispute as to responsibility for, or the amount of, any such matter.
(c) If an Indemnification Claim is a third party Claim, (a "THIRD
PARTY CLAIM"), the Indemnifying Party will have the right at its expense to
assume the
<PAGE>
-41-
defense thereof using counsel reasonably acceptable to the Indemnified Party.
The Indemnified Party shall have the right to participate, at its own
expense, with respect to any such Third Party Claim. In connection with any
such Third Party Claim, the parties shall cooperate with each other and
provide each other with reasonable access to relevant books and records in
their possession. No such Third Party Claim shall be settled without the
prior written consent of the Indemnified Party. If a firm written offer is
made to settle any such Third Party Claim and the Indemnifying Party proposes
to accept such settlement and the Indemnified Party refuses to consent to
such settlement, then: (i) the Indemnifying Party shall be excused from, and
the Indemnified Party shall be solely responsible for, all further defense of
such Third Party Claim; (ii) the maximum liability of the Indemnifying Party
relating to such Third Party Claim shall be the amount of the proposed
settlement if the amount thereafter recovered from the Indemnified Party on
such Third Party Claim is greater than the amount of the proposed settlement;
and (iii) the Indemnified Party shall pay all attorneys' fees and legal costs
and expenses incurred after rejection of such settlement by the Indemnified
Party.
Section 10.4 PROVISIONS REGARDING INDEMNITIES. Each party's
indemnification obligations under the provisions of Section 10.1 and 10.2 is
subject to the following limitations: (i) except for (A) any failure by the
Buyer to pay the Purchase Price in accordance with Section 2.3; (B) any
adjustments to the Purchase Price under Section 2.4; (C) knowing and
intentional breaches of representations, warranties or covenants; or (D) the
Excluded Liabilities set forth in Schedule 2.2, no party shall be entitled to
indemnification unless the total amount of indemnity owed to such party,
together with, in the case of the indemnification of Buyer under Section
10.1, all matters disclosed pursuant to Section 5.6(a), individually or in
the aggregate, except to the extent such matters are reflected in the Net
Working Capital of the Business shown on the Final NWC Statement, equals or
exceeds Cdn.$150,000, in which event the party entitled to indemnification
shall be entitled to indemnification for all Losses, including the initial
Cdn.$150,000; (ii) no party shall be entitled to any consequential or
punitive damages, unless such amounts are awarded in or paid in connection
with a third party claim for which there is indemnification; (iii) any
indemnification owed by any party hereunder shall be reduced by any amounts
paid to the Indemnified Party under insurance policies or otherwise received
or reasonably recoverable by the Indemnified Party seeking indemnification
from third parties; and (iv) the amount of any indemnification owed by either
party hereunder shall not exceed the Purchase Price.
Section 10.5 SUBROGATION. To the extent that the Indemnifying
Party or LMP USA makes or is required to make any indemnification payment to
any Indemnified Party, the Indemnifying Party or LMP USA shall be entitled to
exercise, and shall be subrogated to, any rights and remedies (including
rights of indemnity, rights of contribution and other rights of recovery)
that the Indemnified Party or any Affiliates of the Indemnified Party may
have against any other person (other than any Buyer Indemnified Party or
Seller Indemnified Party) with respect to any damages, circumstances or
matter to which such indemnification payment is directly or indirectly
related. The Indemnified Party shall permit the Indemnifying Party or LMP USA
to use the name of the Indemnified Party and the names of the Affiliates of
the Indemnified Party in any transaction or in any proceeding or other matter
involving any of such rights or remedies; and the Indemnified Party shall
take such actions as the
<PAGE>
-42-
Indemnifying Party or LMP USA may reasonably request for the purpose of
enabling the Indemnified Party, at its own expense, to perfect or exercise
the Indemnifying Party's or LMP USA's right of subrogation hereunder.
Section 10.6 EXCLUSIVITY. The right of each party hereto to
assert indemnification claims and receive indemnification payments pursuant
to this Article X shall be the sole and exclusive right and remedy
exercisable by any person or entity entitled to indemnification hereunder
with respect to any breach by the other party hereto of any representation,
warranty or covenant.
ARTICLE XI
MISCELLANEOUS
Section 11.1 NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the parties and
their respective successors and permitted assigns.
Section 11.2 ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement between the
parties and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, to the extent
they related in any way to the subject matter hereof.
Section 11.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other party. No assignment of this
Agreement shall release either party from their respective obligations
hereunder.
Section 11.4 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
Section 11.5 HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 11.6 NOTICES. All notices, requests, demands, claims,
and other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if
(and then two business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below:
<PAGE>
-43-
IF TO THE SELLER: COPY TO:
Lawson Mardon Packaging Inc. J. Robertson MacIver, Esquire
12 Akron Road Vice President, General Counsel &
Toronto, Ontario M8W 1T2 Secretary
Canada Alusuisse - Lonza America Inc.
1101 Wheaton Avenue
Millville, NJ 08332-2047
U.S.A.
IF TO THE BUYER: COPY TO:
c/o Mail-Well, Inc. Roger Wertheimer, Esquire
23 Inverness Way East Vice President, General Counsel &
Suite 160 Secretary
Englewood, CO 80112 Mail - Well, Inc.
Attention: Chairman 23 Inverness Way East
Suite 160
Englewood, CO 80112
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.
Section 11.7 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the Province of Ontario
without giving effect to any choice or conflict of law provision or rule
(whether of the Province of Ontario or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the Province
of Ontario.
Section 11.8 AMENDMENTS AND WAIVERS. No amendment of any
provision of this Agreement shall be valid unless the same shall be in
writing and signed by the Buyer and the Seller. The Seller may consent to any
such amendment at any time prior to the Closing with the prior authorization
of their boards of directors. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
Section 11.9 SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the
<PAGE>
-44-
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
Section 11.10 EXPENSES. Except as otherwise provided in Sections
2.8 and 5.2, or in Article X, the Buyer and the Seller will each bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
Section 11.11 CONSTRUCTION. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
Canadian federal, provincial, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including" shall mean
including without limitation.
Section 11.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The
Exhibits and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
Section 11.13 BULK TRANSFER AND SIMILAR LAWS. In consideration
of the indemnity provided herein by Seller to Buyer, the Buyer waives
compliance by the Seller with the provisions of any applicable bulk transfer
laws, including the Quebec Sale of Enterprise Legislation and the Ontario
Bulk Sales Act, of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer declares that it is registered for
purposes of the Quebec Sales Tax under an Act Respecting the Quebec Sales Tax
(the "Quebec Sales Tax Act").
Section 11.14 CONSENT TO JURISDICTION. SERVICE AND VENUE. For the
purpose of any suit, action or proceeding arising out of or relating to this
Agreement, each of the parties hereby agrees that personal jurisdiction and
venue in any suit between the parties shall be in the Ontario Court (General
Division), regardless of the convenience of such forum, and the parties
further agree and consent to accept and acknowledge all service of process
carried out by means of registered mail, return receipt requested in
connection with any such matter.
Section 11.15 EQUITABLE RELIEF. The parties expressly agree that
a breach by any party of its obligations pursuant to Sections 5.5 or 7.3 or
7.9 of this Agreement would result in irreparable harm to the party against
which the breach or threatened breach is committed and that money damages
would not be a sufficient remedy for any such breach. Accordingly, in the
event of a breach or threatened breach by a party or by any of its authorized
representatives of any of the provisions of Sections 5.5 or 7.3 or 7.9 of
this Agreement, and in addition to any other remedy provided herein or by law
or in equity, the party against which the breach or threatened breach is
committed shall be entitled to appropriate equitable relief, including
injunctive relief and specific performance, in any court of competent
jurisdiction. In addition, the party against which the breach or threatened
breach is
<PAGE>
-45-
committed shall be entitled to receive from the breaching party its costs and
reasonable attorneys' fees in connection with any successful enforcement of
its rights under this Agreement.
Section 11.16 TIME OF ESSENCE. Time shall be of the essence of
this Agreement.
Section 11.17 NO WAIVER. No investigation made by Buyer (except
for the pre-Closing Inventory taken by Seller and observed by Buyer) or
disclosure made by Seller shall have the effect of diminishing any
representation or warranty made herein by Seller or any indemnity set forth
herein by Seller or Buyer. No waiver by Buyer of any provision, in whole or
in part, of this Agreement shall operate as a waiver of any other provision.
Section 11.18 LMP USA ACQUISITION AGREEMENT. No inference
regarding the interpretation of this Agreement shall be drawn because of any
difference in the wording of the LMP USA Acquisition Agreement.
Section 11.19 FAX EXECUTION. This Agreement and any other
documents delivered pursuant hereto may be executed and delivered by
telecopier
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
LAWSON MARDON PACKAGING INC. 3014597 NOVA SCOTIA COMPANY
By: /s/ J. R. MacIver By: /s/ Roger Wertheimer
------------------------------ ------------------------------
Title: General Counsel and Secretary Title: Vice President-General Counsel
------------------------------ ------------------------------
<PAGE>
-46-
GUARANTEE OF LAWSON MARDON PACKAGING USA INC.
WHEREAS Lawson Mardon Packaging Inc., an Ontario corporation (the
"Seller") desires to enter into an Asset Purchase Agreement dated even date
herewith (the "Asset Purchase Agreement") with 3014597 Nova Scotia Company, a
Nova Scotia unlimited liability company (the "Buyer");
AND WHEREAS Lawson Mardon Packaging USA Inc., a Delaware
corporation ("Guarantor I") desires to contemporaneously enter into an Asset
Purchase Agreement dated even date herewith (the "U.S. Agreement") with
Mail-Well I Corporation, a Delaware corporation (the "U.S. Buyer");
AND WHEREAS Seller and Guarantor I are Affiliates within the
meaning of both the Asset Purchase Agreement and the U.S. Agreement;
AND WHEREAS Buyer and U.S. Buyer are Affiliates within the meaning
of both the Asset Purchase Agreement and the U.S. Agreement;
NOW THEREFORE IN CONSIDERATION OF the sum of One Dollar ($1.00),
now paid by Buyer to Guarantor I, in order to induce Buyer to enter into and
perform the Asset Purchase Agreement, and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
Guarantor I), Guarantor I hereby guarantees to the Buyer the payment by the
Seller of any amount due and owing by the Seller to the Buyer pursuant to the
Asset Purchase Agreement, including but not limited to those arising under
Article X thereof, and the performance by Seller of all other obligations of
Seller under the Asset Purchase Agreement, subject to any defenses available
to the Seller thereunder or otherwise available to the Seller pursuant to law
or in equity, save and except (i) any stay, discharge or other defences
arising in the course of any bankruptcy or insolvency proceeding of the
Seller or (ii) voidance of the obligation of Seller under any fraudulent
transfer legislation or in any bankruptcy or insolvency proceedings involving
Seller. Buyer shall not be required to exercise all or any of its rights and
remedies or to exhaust its recourse against Seller or others before being
entitled to claim against Guarantor I. Any arrangement, accommodation or
settlement between Buyer and Seller shall be conclusively binding on
Guarantor I. No change in the constating documents, ownership, direct or
indirect control of Seller or any other circumstance of any kind whatsoever
affecting either Seller or Guarantor I which might otherwise afford a legal
or equitable defense to Guarantor I or a discharge of the guarantee herein
shall in any way limit or lessen the liability of Guarantor I hereunder. No
delay on the part of Buyer in exercising its rights shall constitute a
waiver. No defense shall be raised by Guarantor I that Seller lacks
capacity, power or authority, may not be a legal or suable entity or arising
out of any irregularity, defect or informality whether or not known to the
Seller. Any amount previously paid by Seller to Buyer which is rescinded or
returned for any reason, including without limitation the insolvency,
bankruptcy or reorganization of Seller, shall be deemed to be reinstated and
to be owing by Seller for purposes hereof. Buyer shall have no obligation to
keep Guarantor I informed. Guarantor I waives any rights it may have as
surety that are inconsistent with the
<PAGE>
-47-
provisions hereof. This Guarantee is in addition to and not in substitution
for any other rights of Buyer. This Guarantee shall be governed by and
subject to the laws of the State of Maryland and Guarantor I hereby accepts
and irrevocably submits to the jurisdiction of the Courts of the State of
Maryland. To the extent not inconsistent with the provisions of this
Guarantee, the general provisions of the Asset Purchase Agreement shall apply
to Guarantor I as if Guarantor I was the Seller. Notwithstanding anything set
forth in this Guarantee, Buyer shall not be entitled to rely on this
Guarantee in respect of any claim for breach or indemnity against Seller
under the Asset Purchase Agreement unless Buyer has given Seller written
notice of and an opportunity, within thirty (30) days of receipt of such
notice, to cure or satisfy any such claim for breach or indemnity.
LAWSON MARDON PACKAGING USA INC.
By:
------------------------------
Title:
------------------------------
Dated January 31st, 1998.
<PAGE>
-48-
GUARANTEE OF MAIL-WELL, INC.
WHEREAS Lawson Mardon Packaging Inc., an Ontario corporation (the
"Seller") desires to enter into an Asset Purchase Agreement dated even date
herewith (the "Asset Purchase Agreement") with 3014597 Nova Scotia Company, a
Nova Scotia unlimited liability company (the "Buyer");
AND WHEREAS Lawson Mardon Packaging USA Inc., a Delaware
corporation (the "U.S. Seller") desires to contemporaneously enter into an
Asset Purchase Agreement dated even date herewith (the "U.S. Agreement") with
Mail-Well I Corporation, a Delaware corporation (the "U.S. Buyer");
AND WHEREAS Seller and U.S. Seller are Affiliates within the
meaning of both the Asset Purchase Agreement and the U.S. Agreement;
AND WHEREAS Buyer and U.S. Buyer are Affiliates within the meaning
of both the Asset Purchase Agreement and the U.S. Agreement;
AND WHEREAS Mail-Well, Inc., a Delaware corporation ("Guarantor
II") is an Affiliate of Buyer and U.S. Buyer within the meaning of both the
Asset Purchase Agreement and the U.S. Agreement;
NOW THEREFORE IN CONSIDERATION OF the sum of One Dollar ($1.00) now
paid by Seller to Guarantor II, in order to induce Seller to enter into and
perform the Asset Purchase Agreement, and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
Guarantor II), Guarantor II hereby guarantees to the Seller the payment by
the Buyer of any amount due and owing by the Buyer to the Seller pursuant to
the Asset Purchase Agreement, including but not limited to those arising
under Article X thereof, and the performance by Buyer of all other
obligations of Buyer under the Asset Purchase Agreement, subject to any
defenses available to the Buyer thereunder or otherwise available to the
Buyer pursuant to law or in equity, save and except (i) any stay, discharge
or other defences arising in the course of any bankruptcy or insolvency
proceeding of the Buyer or (ii) voidance of the obligation of Buyer under any
fraudulent transfer legislation or in any bankruptcy or insolvency
proceedings involving Buyer. Seller shall not be required to exercise all or
any of its rights and remedies or to exhaust its recourse against Buyer or
others, before being entitled to claim against Guarantor II. Any
arrangement, accommodation or settlement between Seller and Buyer shall be
conclusively binding on Guarantor II. No change in the constating documents,
ownership, direct or indirect control of Buyer or any other circumstance of
any kind whatsoever affecting either Buyer or Guarantor II which might
otherwise afford a legal or equitable defense to Guarantor II or a discharge
of the guarantee herein shall in any way limit or lessen the liability of
Guarantor II hereunder. No delay on the part of Seller in exercising its
rights shall constitute a waiver. No defense shall be raised by Guarantor II
that Buyer lacks capacity, power or authority, may not be a legal or suable
entity or arising out of any irregularity, defect or informality whether or
not known to the Buyer. Any amount previously paid by Buyer to Seller which
is rescinded or returned
<PAGE>
-49-
for any reason, including without limitation the insolvency, bankruptcy
or reorganization of Buyer, shall be deemed to be reinstated and to be owing
by Buyer for purposes hereof. Seller shall have no obligation to keep
Guarantor II informed. Guarantor II waives any rights it may have as surety
that are inconsistent with the provisions hereof. This Guarantee is in
addition to and not in substitution for any other rights of Seller. This
Guarantee shall be governed by and subject to the laws of the State of
Maryland and Guarantor II hereby accepts and irrevocably submits to the
jurisdiction of the Courts of the State of Maryland. To the extent not
inconsistent with the provisions of this guarantee, the general provisions of
the Asset Purchase Agreement shall apply to Guarantor II as if Guarantor II
was the Buyer. Notwithstanding anything set forth in this Guarantee, Seller
shall not be entitled to rely on this Guarantee in respect of any claim for
breach or indemnity against Buyer under the Asset Purchase Agreement unless
Seller has given Buyer written notice of and an opportunity, within thirty
(30) days of receipt of such notice, to cure or satisfy any such claim for
breach or indemnity.
MAIL-WELL, INC.
By:
------------------------------
Title:
------------------------------
Dated January 31st , 1998.
