<PAGE> 1
PAGE 1 OF 54 PAGES
EXHIBIT INDEX ON PAGE 2.
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
DATE OF REPORT JUNE 11, 1996:
MTL INC.
3108 CENTRAL DRIVE, PLANT CITY, FLORIDA 33567
813-754-4725
<TABLE>
<S> <C> <C>
INCORPORATED UNDER THE LAWS OF THE COMMISSION FILE NUMBER I.R.S. EMPLOYER IDENTIFICATION NUMBER
STATE OF FLORIDA 0-24180 59-3239073
</TABLE>
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 11, 1996 the company closed on a share purchase
agreement wherein the Company acquired all the outstanding stock of
Levy Transport Ltd. ("Levy"), a Quebec-based tank truck carrier. Levy
services the chemical, petroleum and glass industries with a fleet of
over 400 trucks and tank trailers. The Company intends to continue
providing these services and expand upon existing customer
relationships by increasing fleet size in these markets. The purchase
price of $5,148,745.00 was financed with borrowings from the Company's
unsecured line of credit with SunTrust Bank. The terms of the
agreement stipulated $4,416,949.00 be paid in cash at the time of
closing and a promissory note in the amount of $365,898.00 be
executed. Additionally, $365,898.00 will be held in escrow as
security for the Company in the event any unanticipated claim is
asserted. The purchase price was determined based upon fair market
value of assets acquired and the discounted, projected profit potential
of the Levy operation after consolidation with the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Levy Transport LTD.
(b) Pro Forma Financial Information
(c) Exhibits
2 Levy Share Purchase Agreement
(Reference is made to Form 10-K dated March 20, 1996)
2.1 Modifications to Levy Share Purchase Agreement
2.2 Promissory Note
2.3 Employment Agreement
2.4 Non-competition and Confidentiality Agreement
23 Consent of Samson Belair/Deloitte & Touche, S.E.N.C.
2
<PAGE> 3
Item 7(a)
LEVY TRANSPORT LTD.
FINANCIAL STATEMENTS
February 29, 1996
3
<PAGE> 4
LEVY TRANSPORT LTD.
TABLE OF CONTENTS
<TABLE>
<S> <C>
AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Statement of earnings 2
Statement of retained earnings 3
Balance sheet 4,5
Statement of changes in financial position 6
Notes to the financial statements 7-13
</TABLE>
4
<PAGE> 5
AUDITORS' REPORT
To the Shareholders of
LEVY TRANSPORT LTD.
We have audited the balance sheet of LEVY TRANSPORT LTD. as at February 29,
1996 and the statements of earnings, retained earnings and changes in financial
position for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at February 29, 1996 and the
results of its operations and the changes in its financial position for the
year then ended in accordance with generally accepted accounting principles.
Chartered Accountants
March 29, 1996
5
<PAGE> 6
6
LEVY TRANSPORT LTD.
<TABLE>
<CAPTION>
STATEMENT OF EARNINGS
YEAR ENDED FEBRUARY 29, 1996 1995
(Note 10)
- -------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Transportation $37,324,784 $31,856,589
Other 453,198 564,118
----------- -----------
37,777,982 32,420,707
----------- -----------
Expenses
Operating 32,732,858 27,590,199
Administrative 2,802,379 3,006,832
Gain on sale of fixed assets (177,292) (322,649)
----------- -----------
35,357,945 30,274,382
----------- -----------
2,420,037 2,146,325
----------- -----------
Financial expenses
Long-term debt 980,359 774,651
Short-term debt 245,819 172,985
----------- -----------
1,226,178 947,636
----------- -----------
Share in the earnings of EEYOU Transport ltee - 20,777
----------- -----------
Earnings before income taxes 1,193,859 1,219,466
----------- -----------
Income taxes
Current 94,395 13,451
Deferred 337,821 484,460
----------- -----------
432,216 497,911
----------- -----------
NET EARNINGS $ 761,643 $ 721,555
=========== ===========
</TABLE>
Net earnings include depreciation and amortization of $2,938,786.
6
<PAGE> 7
7
LEVY TRANSPORT LTD.
<TABLE>
<CAPTION>
STATEMENT OF RETAINED EARNINGS
YEAR ENDED FEBRUARY 29, 1996 1995
(Note 10)
- ---------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year $2,555,470 $1,833,915
Net earnings 761,643 721,555
---------- ----------
3,317,113 2,555,470
Dividend (1,165,000) -
---------- ----------
Balance, end of year $2,152,113 $2,555,470
========== ==========
</TABLE>
7
<PAGE> 8
4
LEVY TRANSPORT LTD.
<TABLE>
<CAPTION>
BALANCE SHEET
AS AT FEBRUARY 29, 1996 1995
(Note 10)
- -----------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 31,834 $ 199,543
Accounts receivable
Trade 5,367,621 4,914,431
Affiliated companies 9,571 21,156
Receivable from affiliated companies 126,696 134,528
Inventories 268,139 235,608
Prepaid expenses 138,776 101,695
----------- -----------
5,942,637 5,606,961
LONG-TERM INVESTMENTS 5,040 119,164
FIXED ASSETS (Note 3) 15,328,744 15,569,535
OTHER ASSETS - at unamortized cost
Goodwill 10,000 15,000
----------- -----------
$21,286,421 $21,310,660
=========== ===========
</TABLE>
ON BEHALF OF THE BOARD
__________, Director
8
<PAGE> 9
5
<TABLE>
<CAPTION>
1996 1995
(Note 10)
- ------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Bank loan (Note 4) $ 2,634,906 $ 1,647,850
Accounts payable and accrued expenses 3,361,199 4,083,966
Income taxes payable 88,118 36,714
Due to affiliated companies 97,315 -
Current portion of long-term debt (Note 5) 2,102,125 2,329,398
Current portion of obligation under
capital leases (Note 6) 1,120,026 1,666,620
----------- -----------
9,403,689 9,764,548
LONG-TERM DEBT (Note 5) 3,915,208 4,218,421
OBLIGATION UNDER CAPITAL LEASES (Note 6) 2,239,483 2,699,114
DEFERRED INCOME TAXES 1,380,238 1,042,417
----------- -----------
16,938,618 17,724,500
----------- -----------
SHAREHOLDERS' EQUITY
Share capital (Note 7) 2,195,690 1,030,690
Retained earnings 2,152,113 2,555,470
----------- -----------
4,347,803 3,586,160
----------- -----------
$21,286,421 $21,310,660
=========== ===========
</TABLE>
9
<PAGE> 10
10
LEVY TRANSPORT LTD.
<TABLE>
STATEMENT OF CHANGES IN FINANCIAL POSITION
YEAR ENDED FEBRUARY 29, 1996 1995
(Note 10)
- --------------------------------------------------------------------------------------
<S> <C> <C>
NET INFLOW (OUTFLOW) OF CASH RELATED TO
THE FOLLOWING ACTIVITIES:
OPERATING
Net earnings $ 761,643 $ 721,555
Items not affecting cash
Depreciation of fixed assets 2,933,786 2,676,659
Amortization of goodwill 5,000 6,673
Gain on sale of fixed assets (177,292) (322,649)
Deferred income taxes 337,821 484,460
Loss on sale of investments 24,124 -
Share in the income of a subsidiary - (20,777)
----------- -----------
3,885,082 3,545,921
Changes in non-cash operating working
capital items (1,182,580) 540,272
----------- -----------
2,702,502 4,086,193
----------- -----------
FINANCING
Long-term debt 2,115,669 5,799,757
Obligation under capital leases 673,350 3,241,312
Repayment of long-term debt (2,646,155) (2,363,357)
Repayment of obligation under capital leases (1,679,575) (1,417,585)
Issue of shares 1,165,000 220,000
Dividend (1,165,000) -
----------- -----------
(1,536,711) 5,480,127
----------- -----------
INVESTING
Disposal of investments 90,000 170
Acquisition of fixed assets (3,791,424) (9,891,819)
Disposal of fixed assets 1,275,721 1,054,028
Due to affiliated companies 97,315 (482,217)
Receivable from affiliated companies 7,832 (582,626)
----------- -----------
(2,320,556) (9,902,464)
----------- -----------
NET CASH OUTFLOW (1,154,765) (336,144)
CASH POSITION, BEGINNING OF YEAR (1,448,307) (1,112,163)
----------- -----------
CASH POSITION, END OF YEAR $(2,603,072) $(1,448,307)
----------- -----------
Represented by
Cash $ 31,834 $ 199,543
Bank loan (2,634,906) (1,647,850)
----------- -----------
$(2,603,072) $(1,448,307)
=========== ===========
</TABLE>
10
<PAGE> 11
11
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
The Company is incorporated under Part 1A of the Quebec Companies Act and
is part of the merger on March 1st, 1995 of Levy Transport Ltd. and
Transport P. Moderne Ltd. The Company is engaged primarily in
truckload transportation.
2. ACCOUNTING POLICIES
INVENTORIES
Inventories are valued at the lower of cost and replacement cost, determined
on the first in, first out basis.
FIXES ASSETS
Fixed assets are recorded at cost and depreciated or amortized according to
the following methods and annual rates:
<TABLE>
<S> <C> <C>
Automotive equipment and
automotive equipment
leased and capitalized Straight-line From 3 to 10 years,
taking into account a
residual value of 10%
of the cost
Furniture, fixtures and
equipment Declining balance 20%
Computer equipment Straight-line 20%
Leasehold improvements Straight-line Useful life without
exceeding the lease term
</TABLE>
Some automotive equipment assigned to specific contracts were depreciated
over their expected useful lives that should have been ended at the end
of the current year. The Company still uses those units and has
decided to consider a 10% residual value and revise the useful life of
some of them by adding two more years.
OTHER ASSETS
Goodwill is recorded at cost and amortized using the straight-line method
over five years.
DEFERRED INCOME TAXES
Deferred income taxes result primarily from timing differences between
revenue recorded for accounting and income tax purposes.
11
<PAGE> 12
12
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
3. FIXED ASSETS
<TABLE>
<CAPTION>
Net book value
Accumulated --------------------------------
Cost depreciation 1996 1995
(Note 10)
<S> <C> <C> <C> <C>
Automotive equipment $16,580,241 $6,409,060 $10,171,181 $10,402,128
Automotive equipment leased
and capitalized 6,120,281 1,806,826 4,313,455 4,320,671
Furniture and fixtures 300,841 162,906 137,935 121,546
Equipment 523,643 300,586 223,057 257,145
Computer equipment 176,697 83,607 93,090 75,880
Leasehold improvements 458,652 68,626 390,026 392,165
----------- ---------- ----------- -----------
$24,160,355 $8,831,611 $15,328,744 $15,569,535
=========== ========== =========== ===========
</TABLE>
4. BANK LOAN
Bank loan is secured by a general assignment of accounts receivable.
12
<PAGE> 13
13
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
1996 1995
MOVABLE HYPOTHECS (Note 10)
<S> <C> <C>
Various financial institutions, with
fixed and variable interest rates based
on bank prime rate, actually
fluctuating between 7.25% and 12%,
payable in the next five years $5,563,842 $5,848,311
Les Placements Marlin ltee, 9% to 10%,
payable in monthly instalments of a
maximum of $7,493 including interest
and maturing between May 1996 and
November 1997 76,560 155,801
Les Placements Marlin ltee, 9%, payable
in monthly instalments of a maximum of
$6,757 including interest and maturing
between March 1996 and November 1997 49,662 122,674
Marlin Chevrolet Oldsmobile inc.,
non-interest bearing, payable in
monthly instalments of $1,000, maturing
in 1997 11,000 20,370
Gestion Rene Bussieres inc., 10%,
payable in monthly instalments of
$7,648 including interest, maturing in
December 1999 291,269 350,663
NOTE PAYABLE, non-interest bearing,
payable in annual instalments of
$25,000 25,000 50,000
---------- ----------
6,017,333 6,547,819
Current portion 2,102,125 2,329,398
---------- ----------
$3,915,208 $4,218,421
========== ==========
</TABLE>
Capital repayments to be made in each of the next five years are as follows:
<TABLE>
<CAPTION>
1996-97 1997-98 1998-99 1999-2000 2000-2001
<S> <C> <C> <C> <C>
$2,102,125 $1,763,143 $1,386,938 $725,114 $40,013
</TABLE>
13
<PAGE> 14
14
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
6. OBLIGATION UNDER CAPITAL LEASES
Minimum payments due under long-term capital leases are as follows:
<TABLE>
<CAPTION>
1996 1995
(Note 10)
<S> <C> <C>
1995-96 $ - $2,026,209
1996-97 1,366,989 1,206,237
1997-98 1,108,025 1,188,804
1998-99 862,119 482,282
1999-2000 290,354 143,664
2000-2001 117,408 -
2001-2002 144,600 -
---------- ----------
Total minimum payments 3,889,495 5,047,196
Deduct: interest from 7.7% to 13% 529,986 681,462
---------- ----------
3,359,509 4,365,734
Deduct: current portion 1,120,026 1,666,620
---------- ----------
$2,239,483 $2,699,114
========== ==========
</TABLE>
Capital payments required in each of the next five years are as follows:
<TABLE>
<CAPTION>
1996-97 1997-98 1998-99 1999-2000 2000-2001
<S> <C> <C> <C> <C>
$1,120,026 $945,769 $788,891 $260,221 $100,003
</TABLE>
14
<PAGE> 15
15
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- ------------------------------------------------------------------------------
7. SHARE CAPITAL
Authorized
An unlimited number of shares without par value
Class A shares, voting and participating.
Class B shares, non-voting, non-participating, non-cumulative dividend not
exceeding 15% of the redemption price, redeemable, at the holder's option,
at their paid-up capital.
Class C shares, non-voting, non-participating, non-cumulative dividend not
exceeding 15% of the redemption price, redeemable, at the holder's option,
at their paid-up capital plus a premium of $968 per share.
Class D, non-voting, non-participating, non-cumulative dividend not exceeding
15% of the redemption price, redeemable at a price equal to the fair value
of the assets received by the Company at the moment of the issuance
representing a premium of 114$ per share.
Class E, non-voting, non-participating, non-cumulative dividend not exceeding
15% of the redemption price, redeemable at a price equal to the fair value
of the assets received by the Company at the moment of the issuance
representing a premium of $1,617 per share.
<TABLE>
<CAPTION>
Issued
1996 1995
(Note 10)
<S> <C> <C>
1 000 Class A shares $ 1,000 $ 1,000
21 930 Class B shares (10 280 in 1995) 2,193,000 1,028,000
690 Class C shares 690 690
1 000 Class D shares 100 100
900 Class E shares 900 900
---------- ----------
$2,195,690 $1,030,690
========== ==========
</TABLE>
During the year, 11,650 class B shares were issued in payment of a dividend of
$1,165,000.
15
<PAGE> 16
16
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
8. COMMITMENTS
a) The Company leases its premises under operating leases which expire in
2001. Future leases payments aggregate $1,215,000, including
an amount of $789,000 to an affiliated company. Payments required for
the forthcoming years are as follows:
<TABLE>
<S> <C> <C> <C> <C>
1996-97 1997-98 1998-99 1999-2000 2000-2001
$275,400 $266,400 $266,400 $241,200 $165,600
</TABLE>
b) The Company has agreed to pay, under operating leases on automotive
equipment, a basic global amount of $2,720,010. Payments
required for the forthcoming years are as follows:
<TABLE>
<S> <C> <C> <C>
1996-97 1997-98 1998-99 1999-2000
$721,500 $719,850 $718,460 $560,200
</TABLE>
c) The Company has guaranteed the debts of Retex Transport ltee and EEYOU
Transport ltee to financial institutions. As at February 29,
1996, these debts amount to $103,925.
16
<PAGE> 17
17
LEVY TRANSPORT LTD.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 29, 1996
- -------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
<TABLE>
<S> <C>
Capital assets purchased from and
sold to affiliated companies
Purchases $ 44,050
Sales $502,460
Revenue and expenses with respect to
affiliated companies
Revenue from operations $277,437
Revenue - management fees $105,000
Expenses - rent $159,000
Expenses - interests $ 51,570
Other expenses $ 10,958
</TABLE>
10. COMPARATIVE FINANCIAL STATEMENTS
Certain last year's figures have been reclassified in accordance with the
current year presentation.
Comparative figures are taken from the financial statements of both companies
part of the merger of March 1st, 1995.
17
<PAGE> 18
LEVY TRANSPORT LTD.
SUPPLEMENTARY INFORMATION
February 29, 1996
18
<PAGE> 19
LEVY TRANSPORT LTD.
TABLE OF CONTENTS
<TABLE>
<S> <C>
REVIEW ENGAGEMENT REPORT 1
SUPPLEMENTARY INFORMATION
Operating and administrative expenses 2
</TABLE>
19
<PAGE> 20
REVIEW ENGAGEMENT REPORT
To the Director of
LEVY TRANSPORT LTD.
We have reviewed the supplementary information with respect to the operations
of LEVY TRANSPORT LTD. for the year ended February 29, 1996. Our review was
made in accordance with generally accepted standards for review engagements and
accordingly consisted primarily of enquiry, analytical procedures and
discussion related to information supplied to us by the Company.
A review does not constitute an audit and consequently we do not express an
audit opinion on this supplementary information.
Based on our review, nothing has come to our attention that causes us to
believe that this supplementary information is not, in all material respects,
in accordance with generally accepted accounting principles.
Chartered Accountants
March 29, 1996
20
<PAGE> 21
2
LEVY TRANSPORT LTD.
<TABLE>
<CAPTION>
OPERATING AND ADMINISTRATIVE EXPENSES
YEAR ENDED FEBRUARY 29, 1996 1995
(UNAUDITED) (Note 10)
- ------------------------------------------------------------------
<S> <C> <C>
OPERATING EXPENSES
Depreciation of fixed assets $2,832,216 $ 2,595,981
Insurance and claims 1,196,147 1,098,328
Fuel - automotive equipment 3,970,842 3,658,959
Travelling expenses 153,881 112,452
Energy and telephone 177,650 137,412
Miscellaneous 60,014 33,806
Repairs and maintenance 3,255,382 3,378,674
Supplies 217,003 179,945
Licences and permits 499,819 532,515
Equipment leasing 471,744 846,331
Personnel services fees 5,331,891 5,662,805
Rent 89,400 107,800
Salaries and fringe benefits 5,357,915 2,876,992
Subcontractors 9,118,954 6,368,199
---------- -----------
$32,732,858 $27,590,199
========== ===========
ADMINISTRATIVE EXPENSES
Depreciation of fixed assets $ 101,570 $ 80,678
Amortization of goodwill 5,000 6,673
Insurance 45,988 48,033
Doubtful accounts 40,200 70,840
Automobile expenses 30,964 94,675
Miscellaneous 86,264 77,878
Travelling expenses 186,059 175,434
Energy 148,892 143,693
Repairs and maintenance - building 52,903 84,688
Professional fees 120,031 310,542
Information system 53,725 38,786
Rent 199,240 200,818
Office stationery and supplies 139,191 125,047
Advertising 61,274 130,198
Salaries and fringe benefits 1,335,594 1,228,860
Taxes 195,484 189,989
---------- -----------
$2,802,379 $ 3,006,832
========== ===========
</TABLE>
21
<PAGE> 22
FORM 8-K ITEM 7(B)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
MTL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING PRO FORMA BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Mtl Levy Combined Adjustments Pro Forma
-------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 57 $ 179 $ 236 $ 236
Accounts receivable 26,619 4,667 31,286 31,286
Allowance for doubtful accounts (1,090) (47) (1,137) (1,137)
Current maturities of other receivables 763 0 763 763
Notes receivable 315 0 315 315
Inventories 494 210 704 704
Prepaid expenses 2,504 400 2,904 2,904
Prepaid tires 3,250 0 3,250 3,250
Income tax receivable 271 0 271 271
Deferred income taxes 2,830 0 2,830 2,830
Other 194 0 194 194
Total current assets 36,207 5,409 41,616 41,616
Property, Plant and Equipment 158,586 17,693 176,279 805 (a) 177,084
Less - accumulated depreciation and amortization (51,888) (6,791) (58,679) 0 (58,679)
-------- ------- -------- ------ --------
106,698 10,902 117,600 805 118,405
Other Assets 5,860 10 5,870 1,616 (b) 7,486
-------- ------- -------- ------ --------
$148,765 $16,321 $165,086 $2,421 $167,507
======== ======= ======== ====== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current maturities of indebtedness $ 5,752 $ 4,900 $ 10,652 $ 10,652
Accounts payable and accrued expenses 6,282 2,742 9,024 $9,024
Independent contractors payable 4,133 151 4,284 $4,284
Other current liabilities 4,121 56 4,177 4,177
Total current liabilities 20,288 7,849 28,137 28,137
Long term debt, less current maturities 40,442 2,700 43,142 5,149 (c) 48,291
Capital lease obligations, less current maturities 1,668 1,544 3,212 3,212
Other long term obligations 4,155 0 4,155 4,155
Deferred income taxes 20,108 1,194 21,302 306 (a) 21,608
Commitments and contingent liabilities
Stockholders' Equity
Common stock 45 754 799 (754) 45
Other stockholders' equity 62,059 2,280 64,339 (2,280) 62,059
-------- ------- -------- ------ --------
Total stockholders' equity 62,104 3,034 65,138 (3,034) 62,104
-------- ------- -------- ------ --------
$148,765 $16,321 $165,086 $2,421 $167,507
======== ======= ======== ====== ========
</TABLE>
(a) Asset step up and deferred tax liability
(b) Intangible asset created
(c) Financing of purchase price
The accompanying notes are an integral part of these condensed consolidating
pro-forma financial statements.
22
<PAGE> 23
FORM 8-K
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
MTL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
MTL Levy Combined Adjustments Pro Forma
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues
Transportation $46,712 $7,069 $53,781 $ 0 $53,781
Other 4,308 71 4,379 0 4,379
--------------------------------------------------------------
51,020 7,140 58,160 0 58,160
--------------------------------------------------------------
Operating Expenses
Purchased transportation 33,144 2,094 $35,238 0 35,238
Depreciation and amortization 2,763 579 $ 3,342 62 (a) 3,404
Other operating expenses 10,951 4,162 $15,113 0 15,113
Gain on sale of property
and equipment 0 (33) (33) 0 (33)
--------------------------------------------------------------
Operating income 4,162 338 4,500 (62) 4,438
Interest expense, net 780 179 959 77 (b) 1,036
Other expense (44) 0 (44) 0 (44)
--------------------------------------------------------------
Income before taxes 3,426 159 3,585 (139) 3,446
Income taxes 1,390 67 1,457 (54) 1,403
--------------------------------------------------------------
Net income $ 2,036 $ 92 $ 2,128 ($85) $ 2,043
==============================================================
Weighted average number of
shares outstanding 4,558 4,558
Net income per share $ 0.45 $ 0.45
</TABLE>
(a) Additional depreciation expense on asset step-up and additional
amortization of intangibles using 15 yr life.
(b) Additional interest expense on funds borrowed to fund purchase.
The accompanying notes are an integral part of these condensed, consolidating
pro-forma, financial statements.
23
<PAGE> 24
FORM 8-K
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
MTL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING PRO FORMA STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
MTL Levy Combined Adjustments Pro Forma
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues
Transportation $173,060 $ 25,565 $198,625 $ 0 $198,625
Other 16,995 357 17,352 0 17,352
---------------------------------------------------------------
190,055 25,922 215,977 0 215,977
---------------------------------------------------------------
Operating Expenses
Purchased transportation 120,011 6,021 $126,032 0 126,032
Depreciation and amortization 10,156 2,075 $ 12,231 248 (a) 12,479
Other operating expenses 43,535 16,666 $ 60,201 0 60,201
Gain on sale of property
and equipment (150) (331) (481) 0 (481)
---------------------------------------------------------------
Operating income 16,503 1,491 17,994 (248) 17,746
Interest expense, net 3,468 916 4,384 309 (b) 4,693
Other expense (175) 0 (175) 0 (175)
---------------------------------------------------------------
Income before taxes 13,210 575 13,785 (557) 13,228
Income taxes 5,408 225 5,633 (217) 5,416
---------------------------------------------------------------
Net income $ 7,802 $ 350 $ 8,152 ($340) $ 7,812
===============================================================
Weighted average number of
shares outstanding 4,543 4,543
Net income per share $ 1.72 $ 1.72
</TABLE>
(a) Additional depreciation expense on asset step-up and additional
amortization of intangibles using 15 yr life.
(b) Additional interest expense on funds borrowed to fund purchase.
The accompanying notes are an integral part of these condensed, consolidating
pro-forma, financial statements.
24
<PAGE> 25
FORM 8-K
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
MTL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED PROFORMA FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed, consolidated pro forma finacial
statements of MTL INC. (the "Company")have been prepared in accordance
with the instructions to Form 8-K and do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. For further information, refer
to the consolidated financial statements and notes thereto for the year
ended December 31, 1995, included in the Company's Form 10-K dated March
27, 1996.
SUPPLEMENTAL CONSOLIDATING FINANCIAL STATEMENTS. The accompanying
supplemental consolidating financial statements give retrospective effect
to the share purchase agreement between the Company and Les Placements
Marlin Lt'ee. On June 11, 1996 the Company closed on a share purchase
agreement with Les Placements Marlin Lt'ee wherein all the outstanding
shares of Levy Transport Ltd were purchased for $5,148,745.00. The
transaction was accounted for as a purchase. Details of the results of
operations of the previously seperate companys for the periods prior to
the combination are as follows:
<TABLE>
<CAPTION>
Three Months Year
Ended Ended
March 31, 1996 December 31, 1995
-------------- -----------------
(unaudited)
<S> <C> <C>
Revenue:
Mtl $51,020 $190,055
Levy $ 7,140 $ 25,922
------- --------
$58,160 $215,977
Net income:
Mtl $ 2,036 $ 7,802
Levy $ 7 $ 10
------- --------
$ 2,043 $ 7,812
Earnings per share:
Mtl $ 0.45 $ 1.72
Levy 0.00 0.00
------- --------
$ 0.45 $ 1.72
</TABLE>
25
<PAGE> 26
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 thereunto duly authorized.
MTL INC.
---------------------------------
(Registrant)
June 25, 1996 /S/ RICHARD J. BRANDEWIE,
---------------------------------
RICHARD J. BRANDEWIE, (TREASURER)
(PRINCIPAL FINANCIAL OFFICER)
26
<PAGE> 1
Item 7 Ex-2.1
AMENDING AGREEMENT
DATED this 11th day of June, 1996.
BETWEEN: MTL INC., a company incorporated under the laws of
Florida, represented herein by Charles J. O'Brien, Jr., its
President, duly authorized for the purposes hereof by a
resolution of the Company's Board of Directors dated
February 16, 1996;
(the "PURCHASER")
AND: LES PLACEMENTS MARLIN LTEE, a company incorporated
under the laws of Quebec, represented herein by Rene
Bussieres, its President, duly authorized for the purposes
hereof by a resolution of the Company's Board of Directors
dated June 11, 1996;
(the "SELLER")
WHEREAS the Purchaser and the Seller entered into a share purchase
agreement dated February 19, 1996 (the "SHARE PURCHASE AGREEMENT") regarding
the sale of all the issued and outstanding shares of Levy Transport Ltd.
("LEVY");
AND WHEREAS the Purchaser and the Seller wish to amend certain sections of
the Share Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Amending Agreement and in the Share Purchase
Agreement, it is hereby agreed as follows:
1. The above recitals form an integral part of this Amending Agreement.
2. All defined terms in this Amending Agreement shall have the meanings
respectively ascribed thereto in the Share Purchase Agreement unless
otherwise defined herein and unless the context in which such terms are
used herein otherwise requires.
27
<PAGE> 2
-28-
3. Effective on February 20, 1996 (the "AMENDMENT DATE"), the following
section is added to the Share Purchase Agreement:
"1.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price
shall be allocated amongst the Shares as follows:
<TABLE>
<CAPTION>
Number and Class Price
---------------- -----------
<S> <C>
1,000 Class A $3,733,090
10,280 Class B $1,028,000
690 Class C $668,610
1,000 Class D $114,100
900 Class E $1,456,200"
</TABLE>
4. Effective on the Amendment Date, Section 2.1 of the Share Purchase
Agreement is deleted and replaced with the following:
"2.1 DATE, TIME AND PLACE OF CLOSING. The closing of
the transactions contemplated by this Agreement (the
"CLOSING"), subject to the provisions of Section 2.3.1, shall
be held at the offices of Ogilvy Renault on June 11, 1996 at
2:00 p.m. or at such other place or date as the parties to
this Agreement may otherwise agree (such date to be referred
to in this Agreement as the "CLOSING DATE")."
5. Effective on the Amendment Date, Section 2.2(a) of the Share Purchase
Agreement is deleted and replaced with the following:
"(a) deleted."
6. Effective on the Amendment Date, the first sentence of Section 2.3 of the
Share Purchase Agreement is deleted and replaced with the following:
"The sum of $500,000 (Canadian dollars) shall be deducted
from the Purchase Price and retained as a holdback (the
"HOLDBACK"), said Holdback to be deposited with SunTrust
Bank on the date which shall coincide with the date on which
the NTA Confirmation is obtained as set out in Section 2.3.2
of this Agreement. The Holdback shall be retained for a
period (the "HOLDBACK PERIOD") commencing on the date on
which the Holdback is deposited with SunTrust Bank and
terminating on the date which is one (1) year following the
expiry of the initial term or the earlier termination of the
Petro-Canada lease referred to in Section 3.16(a). The
Purchaser shall pay to the Seller on the date on which the
NTA Confirmation is obtained
28
<PAGE> 3
-29-
an amount equivalent to 6% interest per annum on the Holdback
for a period commencing on May 15, 1996 to the date on which the
Holdback is deposited with SunTrust Bank."
Furthermore, effective on the Amendment Date, the last sentence of
Section 2.3 of the Share Purchase Agreement is deleted and replaced with
the following:
"In accordance with the terms of the Escrow Agreement, the
Escrow Agent shall, at the end of the Holdback Period, remit
to Seller the amount of the Holdback less any amount claimed
prior to such date by Purchaser as indemnification due
pursuant to Section 9.3."
7. Effective on the Amendment Date, the following section is added to the
Share Purchase Agreement:
"2.3.1 CLOSING IN ESCROW. All documents delivered at
Closing shall be held in escrow by Ogilvy Renault
until such time as (i) written confirmation has been
obtained by Ogilvy Renault from the National
Transportation Agency of Canada (the "AGENCY") to the
effect that no objection has been filed in connection
with the notice of the sale of Levy's Shares published
in the May 11, 1996 edition of the Canada Gazette,
Part I, and that the Agency no longer has jurisdiction
over the transaction contemplated herein (the "NTA
CONFIRMATION") and (ii) written confirmation has been
obtained by Ogilvy Renault from the Seller that the
payment by the Purchaser provided for in Section 2.3.2
of this Agreement has been received by the Seller (the
"SELLER'S CONFIRMATION").
Once the NTA Confirmation and the Seller's
Confirmation have been obtained by Ogilvy Renault, it
shall release all documents to the parties entitled
thereto under this Agreement.
If the NTA Confirmation has not been obtained by
Ogilvy Renault prior to June 29, 1996, either the
Seller or the Purchaser may elect not to proceed with
the Closing and may terminate this Agreement by
written notice to the other party unless the Purchaser
and the Seller have agreed in writing to extend such
date. The Purchaser and the Seller hereby undertake
to use their best efforts in order to obtain the NTA
Confirmation."
29
<PAGE> 4
-30-
8. Effective on the Amendment Date, the following section is added to the
Share Purchase Agreement:
"2.3.2 PAYMENT BY PURCHASER. Once the NTA
Confirmation has been obtained by Ogilvy Renault, the
Purchaser shall immediately pay to the Seller by
certified cheque, bank draft or wire transfer the sum
of $6,000,000 (Canadian dollars), subject to
adjustments pursuant to Sections 7.11 and 7.12 of this
Agreement, together with interest on such sum or
adjusted sum, as the case may be, calculated at the
rate of 6% per annum from May 15, 1996 to the date on
which the payment is made. Upon receipt by Seller
of such payment, the Seller shall immediately advise
Ogilvy Renault that such payment has been received."
9. Effective on the Amendment Date, Section 2.4 of the Share Purchase
Agreement is deleted and replaced with the following:
"2.4 EFFECTIVE DATE. Notwithstanding the date
of the Closing hereunder, the Effective Date of the
sale and purchase of the Shares provided for herein
shall be the close of business on April 30, 1996."
10. Effective on the Amendment Date, the following paragraph is added to
Section 3.2 of the Share Purchase Agreement:
"Notwithstanding any of the provisions of this
Agreement, Levy shall be entitled to declare, on or
prior to February 29, 1996, a series of stock
dividends from its taxed retained earnings totalling
$1,165,000 resulting in the issuance of a total of
11,650 Class B shares to the Seller, in which event,
such newly issued Class B shares shall form part of
the Shares and the Purchaser shall purchase such newly
issued Class B shares at Closing for a total price of
$1,165,000 and the total price for Class A shares will
be reduced accordingly. The Seller represents and
warrants to the Purchaser that the calculation of the
taxed retained earnings upon which such stock dividend
is based is accurate and that the declaration of such
dividend will not result in any liability of Levy or
the Purchaser for any tax, interest or penalty, or any
other liability whatsoever. Notwithstanding any of
the provisions of this Agreement, this representation
shall
30
<PAGE> 5
-31-
survive indefinitely and shall not be subject to the
limitation to indemnification set out in Section 9.2 of this
Agreement."
11. Effective on the Amendment Date, Section 4.5 of the Share Purchase
Agreement is deleted and replaced with the following:
"4.5 AVAILABLE FUNDS. The Purchaser has or will have
at the date when Ogilvy Renault receives the NTA
Confirmation adequate funds to pay the cash
consideration set forth in Section 2.3.2 of this
Agreement."
12. Effective on the Amendment Date, Section 7.10 of the Share Purchase
Agreement is deleted and replaced with the following:
"7.10 ESCROW AGREEMENT. Prior to or simultaneously
with the Closing, the Purchaser and the Seller shall
have entered into an Escrow Agreement substantially in
the form of Exhibit 2.3."
13. Effective on the Amendment Date, Section 7.24.1 of the Share Purchase
Agreement is deleted and replaced with the following:
"7.24.1 a five-year term commencing on May 1, 1996."
14. Effective on the Amendment Date, Section 7.24.5 is deleted and replaced
with the following:
"7.24.5 a yearly minimum rental of $148,000 in respect
of each year of the term, payable in monthly
instalments of $12,333.33 with the exception of the
12-month period from November 1995 to October 1996,
for which the monthly instalments shall be of
$13,333.33 in order to compensate for the cost of
paving the parking lot of the St-Romuald property;"
15. Effective on the Amendment Date, the following section is added to the
Share Purchase Agreement:
"7.24.6 an option of Levy to purchase the St-Romuald
property at any time during the term of the lease at a
price and upon the terms and conditions to be mutually
determined by the Purchaser and the Seller prior to
Closing."
31
<PAGE> 6
-32-
16. Effective on the Amendment Date, the following section is added to the
Share Purchase Agreement:
"7.25 REIMBURSEMENT OF RENT. Levy shall have received
from Gestion Rene Bussieres Inc. an amount of
$1,519.40 reflecting overpayments in rent made by Levy
in May and June of 1996 for the St-Romuald property."
17. Effective on June 1, 1996, the following sections are added to the Share
Purchase Agreement:
"7.26 OAKVILLE LEASE. Levy and 3233979 Canada Inc.
("3233979") shall have entered into a new net net
lease in registrable form for the premises in
Oakville, Ontario, currently leased by Levy from
3233979 which will, in addition to normal commercial
lease terms, provide for the following:
7.26.1 a five-year term commencing on May 1, 1996;
7.26.2 an option of Levy to renew for five (5) years
at the expiry of the original term;
7.26.3 a right of first refusal of Levy to purchase
the property on the terms and conditions of any bona
fide offer received from any third parties;
7.26.4 all major repairs and capital expenditures
required in relation to the leased premises shall be
the responsibility of 3233979;
7.26.5 a yearly minimum rental of $68,341.56 in
respect of each year of the term, payable in monthly
instalments of $5,695.13; and
7.26.6 an option of Levy to purchase the Oakville
property at any time during the term of the lease at a
price and upon the terms and conditions to be mutually
determined by the Purchaser and the Seller prior to
Closing.
7.27 Levy and 3233979 undertake to execute an English
language version of the Oakville property lease
32
<PAGE> 7
-33-
by June 29, 1996 in registrable form in the Province of
Ontario.
7.28 BECANCOUR LEASE. Levy and 3233979 shall have
entered into a new net net lease in registrable form
for the premises in Becancour, Quebec, currently
leased by Levy from 3233979 which will, in addition to
normal commercial lease terms, provide for the
following:
7.28.1 a five-year term commencing on May 1, 1996;
7.28.2 an option of Levy to renew for five (5) years
at the expiry of the original term;
7.28.3 a right of first refusal of Levy to purchase
the property on the terms and conditions of any bona
fide offer received from any third parties;
7.28.4 all major repairs and capital expenditures
required in relation to the leased premises shall be
the responsibility of 3233979;
7.28.5 a yearly minimum rental of $32,000 in respect
of each year of the term, payable in monthly
instalments of $2,666.66; and
7.28.6 an option of Levy to purchase the Becancour
property at any time during the term of the lease at a
price and upon the terms and conditions to be mutually
determined by the Purchaser and the Seller prior to
Closing.
18. Effective on the Amendment Date, Section 8.7 of the Share Purchase
Agreement is deleted and replaced with the following:
"8.7 ESCROW AGREEMENT. Prior to or simultaneously
with the Closing, the Purchaser and the Seller shall
have entered into an Escrow Agreement substantially in
the form of Exhibit 2.3."
19. Effective on the Amendment Date, Section 11.1(d) of the Share Purchase
Agreement is deleted and replaced with the following:
33
<PAGE> 8
-34-
"(d) by Purchaser or Seller if, without fault of such
terminating party, the Agreement shall not have been
consummated on or before June 29, 1996, subject to
Section 2.3.1."
20. Except as specifically provided for in this Amending Agreement, the terms
and conditions of the Share Purchase Agreement are confirmed and continued
in full force and effect.
21. This Amending Agreement may be executed by the Purchaser and Seller in
several counterparts, each of which when so executed and delivered shall
be an original but all such counterparts shall constitute but one and the
same document.
22. Both the Purchaser and Seller have requested that this Amending Agreement
be drawn up in the English language. Tel que convenu par le vendeur et
l'acquereur, cet amendement de convention a ete redige en langue anglaise.
EXECUTED in Montreal, Quebec, on the date referred to hereinabove.
MTL INC.
Per:
--------------------------------
Name: Charles J. O'Brien, Jr.
Title: President
EXECUTED in Montreal, Quebec, on the date referred to hereinabove.
LES PLACEMENTS MARLIN LTEE
Per:
--------------------------------
Name: Rene Bussieres
Title: President
34
<PAGE> 1
Item 7 Ex-2.2
PROMISSORY NOTE
BY: 9033-2255 QUEBEC INC.], a company
incorporated under the Companies Act
(Quebec)
(the "PROMISOR")
1. PROMISE TO PAY
1.1 Pursuant to Section 2.2(b) of that certain Share Purchase
Agreement dated February 19, 1996 between Les Placements Marlin Ltee
(the "PROMISEE") and MTL Inc. (the "SHARE PURCHASE AGREEMENT"), and
subject to the terms and provisions thereof, the Promisor hereby
promises to pay the Promisee the principal amount of $500,000 in the
legal currency of Canada (the "DEBT") with interest at the annual
rate of five per cent (5%) on the outstanding balance of the Debt
payable with the instalments of principal as set out in Section 1.2
below.
1.2 The Debt shall be paid by the Promisor in five consecutive
annual instalments of $100,000 in principal plus accrued interest
(at the rate of interest hereinbefore provided) on June 11, 1997,
June 11, 1998, June 11, 1999, June 11, 2000 and June 11, 2001.
1.3 The Debt and interest payable thereon is payable by the
Promisor at 1950, 3e Rue, Saint-Romuald, Quebec, G6W 5M6.
2. PREPAYMENT
Notwithstanding the provisions of Section 1 hereof, the Promisor shall
have the right, at any time and from time to time after the date hereof,
to pay by anticipation to the Promisee, without penalty, all or part of
the Debt, with interest accrued to the date of payment.
3. NON-NEGOTIABLE
This Promissory Note is not negotiable and may not be registered or
assigned.
35
<PAGE> 2
4. NO NOVATION
This Promissory Note evidences but does not novate or otherwise discharge
the Debt and interest payable thereon.
5. SUCCESSORS
This Promissory Note shall enure to the benefit of and be binding upon
the Promisor and the Promisee and their respective successors and
representatives.
6. NON-BUSINESS DAYS
Whenever any payment to be made or any action to be taken under this
Promissory Note is required to be made or taken on a day other than a
Business Day, such payment shall be made or such action shall be taken on
the next succeeding Business Day.
For the purposes hereof, "Business Day" means any day other than a
Saturday, Sunday or any other day on which the principal banks located in
Montreal, Quebec or Plant City, Florida are not open for business during
normal banking hours.
7. GOVERNING LAW
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the Province of Quebec and the laws of Canada
applicable therein.
SIGNED at Montreal, this 11th day of June, 1996.
9033-2255 QUEBEC INC.
Per:
----------------------------
Name: Richard J. Brandewie
Title: Secretary-Treasurer
GUARANTEE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is hereby acknowledged, MTL INC. hereby guarantees the payment, as and when
due, of all amounts payable by 9033-2255 Quebec Inc. under
36
<PAGE> 3
the foregoing promissory note dated June 11, 1996 in the principal amount of
$500,000 in the legal currency of Canada.
DATED at Montreal, Quebec, this 11th day of June, 1996
MTL INC.
Per:
--------------------------
Name: Charles J. O'Brien, Jr.
Title: President
37
<PAGE> 1
Item 7 Ex-2.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 11th day of June, 1996
BETWEEN: LEVY TRANSPORT LTD., a company duly incorporated under
the Companies Act (Quebec), having its head office at
1950, 3e Rue, Saint-Romuald, Quebec, G6W 5M6;
(the "COMPANY");
AND: RENE BUSSIERES, executive, domiciled at 220,
Commerciale, St-Henri-de-Levis, Quebec, G0R 3E0;
("BUSSIERES");
WITNESSETH:
WHEREAS pursuant to the terms and conditions of a share purchase agreement
between Les Placements Marlin Ltee and MTL Inc. ("MTL") dated February 19, 1996
(the "SHARE PURCHASE AGREEMENT"), 9033-2255 Quebec Inc. has purchased on this
date all of the issued and outstanding shares of the Company;
WHEREAS the Company desires to retain the services of Bussieres and
Bussieres desires to be retained by the Company upon the terms and conditions
herein set forth;
AND WHEREAS it is a condition of the Share Purchase Agreement that the
Company and Bussieres enter into a written agreement in the form and terms of
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Bussieres
hereby agree as follows:
38
<PAGE> 2
-39-
1. EMPLOYMENT
The Company hereby agrees to employ Bussieres as President of the Company
and Bussieres accepts such employment subject at all times to the
direction and control of the Board of Directors of the Company. During
the course of his employment hereunder, Bussieres shall perform and carry
out all tasks and duties as may from time to time be assigned to him by
the Board of Directors of the Company or such person as may be designated
by the latter to act on its behalf in this regard. In addition,
Bussieres agrees that he shall, throughout the period of employment
hereunder, permit his name to be placed in nomination at annual meetings
of shareholders and/or directors of the Company for election as a
director and/or President of the Company and accepts to act as one of the
directors of the Company if so elected by the shareholders and as
President of the Company if so appointed by the Board of Directors of the
Company. Bussieres shall, during the period of his employment hereunder,
use his best endeavours to promote and advance the interests of the
Company and shall devote his full time and attention to the business and
affairs of the Company and to the discharge, to the best of his ability
and experience, of his duties and responsibilities as set out herein, the
whole in accordance with the instructions, rules, policies and practices
now or hereafter established by the Company. Without limiting or in any
way affecting the obligations of Bussieres under the Non-Competition and
Confidentiality Agreement (as hereinafter defined), Bussieres shall not,
during the term of his employment hereunder, engage directly or
indirectly, in any capacity, in any business venture, enterprise or
activity which might interfere with or dilute the performance of his
duties as President of the Company as provided hereunder; provided that
Bussieres shall be permitted to continue with the management of RETEX
TRANSPORT LTEE ("RETEX"), which is involved in the transportation of
explosives, and REGUETTE TRANSPORT LTEE ("REGUETTE"), which is involved
in the transportation of propane, to the extent that his involvement in
such management does not exceed 5 hours per week and does not adversely
affect his ability to perform his duties under this Agreement and
provided that RETEX and REGUETTE do not carry on, respectively, any
business other than the transportation of explosives and propane.
2. PERIOD OF EMPLOYMENT
The period of Bussieres' employment under this Agreement shall begin on
June 11, 1996 and shall terminate automatically, without any notice
whatsoever, on June 10, 2001, unless terminated earlier in accordance
with the provisions of this Agreement.
39
<PAGE> 3
-40-
3. COMPENSATION
The Company shall pay Bussieres, during the period of employment, a total
annual compensation of CDN $150,000, consisting of an annual salary of
CDN $120,000 payable in accordance with the Company's payroll procedures
and annual expenses of Bussieres, against production of appropriate
receipts, in an amount which is the equivalent in U.S. funds of the sum
of CDN $30,000 determined as of the beginning of each year of his
employment hereunder. The Company shall withhold from Bussieres' salary
all deductions required by law.
During the period of his employment, Bussieres shall be entitled to
participate in MTL's GOCAP Program which provides for annual incentive
compensation based upon specific milestones established, from time to
time, by MTL's Chief Executive Officer in accordance with the terms of
such program. Such incentive compensation, so established, will be in an
amount of up to 40% of Bussieres' total annual compensation.
4. EMPLOYMENT BENEFITS
During the period of his employment hereunder, Bussieres shall be
entitled to receive the employment benefits described in Schedule "A"
hereto.
5. VACATION
Bussieres shall be entitled to an aggregate of four (4) weeks paid
vacation in each year of the period of his employment, which may be taken
at a time that is mutually agreed upon by the Company and Bussieres;
provided that, in addition to such vacation, Bussieres shall be entitled
to reside in the State of Florida for not more than ten (10) weeks in
each year of his employment during which time he shall continue to
perform his duties as set forth in Section 1.
6. TERMINATION
6.1 Notwithstanding anything contained in this Agreement, the
Company shall have the right to terminate the employment of
Bussieres, prior to June 10, 2001 upon simple written notice,
without being bound to pay any indemnity whatsoever, in the
following cases:
(i) if Bussieres becomes insolvent or bankrupt, makes
an assignment of his property or makes any arrangement or
compromise for the benefit of his creditors;
40
<PAGE> 4
-41-
(ii) if Bussieres becomes physically or mentally disabled
to such extent as to make him unable to normally and
adequately perform his duties for a period of six consecutive
months or for a total of six months during a period of twelve
consecutive months. In such a case, Bussieres may
continue to benefit under short-term and/or long-term
disability insurance plans which may be in existence at such
time and in which he is a participant;
(iii) if Bussieres is in default to comply with any of
the provisions of this Agreement or the Non-Competition and
Confidentiality Agreement entered into concurrently herewith
by Bussieres in favour of the Company and 9033-2255 Quebec
Inc. (the "NON-COMPETITION AND CONFIDENTIALITY AGREEMENT") and
has failed to remedy such default within a period of thirty
(30) days after having received written notice thereof;
(iv) if Bussieres gives the Company any serious reason to
terminate his employment, as contemplated in Article 2094
of the Civil Code of Quebec; or
(v) failure of the Company for two (2) consecutive years to
achieve reasonable financial objectives established within
30 days following the commencement of each fiscal year
of the Company in consultation with the Board of Directors.
6.2 The employment of Bussieres hereunder shall automatically
terminate upon his death, without the Company being bound to pay any
indemnity whatsoever, subject to the right of Bussieres' designated
beneficiary to receive any life insurance indemnity payable pursuant
to any life insurance plan of the Company which is in existence at
such time and under which Bussieres is insured.
7. REPRESENTATION OF BUSSIERES
Bussieres represents to the Company that, except as expressly stated in
Section 1, he is not subject to an employment agreement or arrangement
with any other employer, nor to any other agreements under the terms of
which he may be prohibited from accepting employment with the Company.
41
<PAGE> 5
-42-
8. OWNERSHIP OF INVENTIONS
8.1 Bussieres shall make full and prompt disclosure to the
Company of all inventions, discoveries, developments, improvements
and ideas made or designed by him during the period and in the
course of his employment, whether alone or jointly with other
persons, and relating to the business carried on by the Company or
its affiliates (the "Inventions").
8.2 Bussieres acknowledges that the Inventions shall be the sole
and absolute property of the Company and he agrees, at the request
and expense of the Company, to execute and do all such documents and
things as may be required by the Company in order to evidence,
maintain or perfect the right of the Company in and to the
Inventions.
8.3 Bussieres furthers agrees, at the request and expense of the
Company, to provide the Company with all information and to execute
and do all such documents and things as may be necessary or
desirable to enable the Company to publish or protect the
Inventions, by patents or otherwise, in any part or parts of the
world.
9. NOTICES
Any notice provided for under this Agreement shall be in writing in the
English and French languages and shall be sufficiently given to the party
to whom it is addressed if transmitted by facsimile (and confirmed by
mail), or if delivered, or if sent by prepaid registered mail to or for
such party at the address of such party indicated below or at such other
address as such party shall have theretofore notified to the other party
or parties hereto.
To the Company:
Levy Transport Ltd.
1950, 3e Rue
Saint-Romuald, Quebec
G6W 5M6
Facsimile Number: (418) 834-5056
42
<PAGE> 6
-43-
with a copy to:
Ogilvy Renault
1981 McGill College Avenue, Suite 1100
Montreal, Quebec
H3A 3C1
Attention: Mr. Richard J.F. Bowie
Facsimile Number: (514) 286-5474
and a copy to:
MTL Inc.
3108 Central Drive
Plant City, FL 33567
Attention: Mr. Richard J. Brandewie
Facsimile Number: (813) 754-3288
To Bussieres:
Mr. Rene Bussieres
220, Commerciale
St-Henri-de-Levis, Quebec
G0R 3E0
Facsimile Number: (418) 834-5056
Any notice so addressed and transmitted, delivered or mailed as aforesaid
shall be deemed to have been sufficiently given or made on the date on
which it was so transmitted by facsimile or delivered or five (5) days
following the date of mailing, as the case may be.
10. INTERPRETATION
10.1 The article, section and paragraph headings contained herein
are (i) included for convenience of reference only, (ii) not
intended to be full or accurate descriptions of the content thereof
and (iii) shall not affect or be utilized in the construction or
interpretation of this Agreement.
10.2 Words importing the singular include the plural and vice
versa; words importing gender include all genders.
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<PAGE> 7
-44-
10.3 This Agreement shall in all respects be governed by and
construed in accordance with the laws of the Province of Quebec,
including all matters of construction, validity and performance.
11. EXPENSES
Each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of its counsel,
employees, agents and representatives.
12. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the
successors, representatives and assigns of the Company. Bussieres shall
not assign or transfer this Agreement or any of his rights or obligations
hereunder.
13. SEVERABILITY
If any provision of this Agreement shall be held illegal, invalid or
unenforceable by any competent court in any relevant jurisdiction, such
illegality, invalidity or enforceability shall attach only to such
provision in such jurisdiction and such provision shall be severed
herefrom and be ineffective to the extent of such illegality, invalidity
on unenforceability and shall not affect or impair or render illegal,
invalid or unenforceable such provision in any other jurisdiction or any
other provision of this Agreement in any jurisdiction.
14. ENTIRE AGREEMENT
Except for the Non-Competition and Confidentiality Agreement and the
Share Purchase Agreement, this Agreement embodies the entire agreement
and understanding among the parties hereto and supersedes, revokes and
cancels all prior agreements, oral or written, between such parties with
respect to the employment of Bussieres with the Company, each of the
parties granting the other full and final release and discharge from any
action, cause of action, claim or demand of any nature based on the
provisions of such prior agreements. Neither this Agreement nor any of
the terms hereof may be changed, waived, discharged or terminated
otherwise than as provided in Section 6 hereof or by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. Any waiver of any term or
condition or any breach of
44
<PAGE> 8
-45-
any covenant of this Agreement shall not operate as a waiver of any
other such term or condition or breach, nor shall any failure to enforce
any provision hereof operate as a waiver of such provision or of any other
provision hereof. The provisions of this Agreement are in addition to the
Non-Competition and Confidentiality Agreement and the Share Purchase
Agreement and shall not prejudice any of the rights and remedies of the
Company or 9033-2255 Quebec Inc. thereunder.
15. COUNTERPARTS
This Agreement may be executed by the parties hereto in several
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall constitute but one and the same
instrument.
16. LANGUAGE
The parties hereto confirm having requested that this Agreement and all
notices or other communications relating thereto be drawn up in the
English language only, subject to the provisions of Section 9. Les
parties aux presentes confirment avoir requis que cette convention ainsi
que tous les avis et autres communications y relatifs soient rediges en
langue anglaise seulement, sous reserve des dispositions du paragraphe 9.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first hereinbefore written.
LEVY TRANSPORT LTD.
per:
-----------------------------
Name: Richard J. Brandewie
Title: Secretary-Treasurer
---------------------------------
RENE BUSSIERES
45
<PAGE> 1
Item 7 Ex-2.4
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made as of the 11th day of June, 1996
BETWEEN: RENE BUSSIERES, executive, domiciled at 220,
Commerciale, St-Henri-de-Levis, Quebec, G0R 3E0
("BUSSIERES");
AND: LES PLACEMENTS MARLIN LTEE, a company
incorporated under the Companies Act (Quebec),
having its head office at 1950, 3e Rue,
Saint-Romuald, Quebec, G6W 5M6
(the "VENDOR");
(Bussieres and the Vendor shall be referred to
collectively herein as the "PRINCIPALS")
(the "PURCHASER");
AND: 9033-2255 QUEBEC INC., a company incorporated
under the Companies Act (Quebec), having its head
office at 1981 McGill College, Montreal, Quebec,
H3A 3C1
(the "PURCHASER");
AND: LEVY TRANSPORT LTD., a company incorporated
under the Companies Act (Quebec), having its head
office at 1950, 3e Rue, Saint-Romuald, Quebec,
G6W 5M6
(the "COMPANY").
WITNESSETH:
WHEREAS pursuant to the terms and conditions of a share purchase agreement
between the Vendor and the Purchaser dated February 19, 1996 (the "SHARE
PURCHASE AGREEMENT"), the Purchaser has purchased from the Vendor on this date
all of the issued and outstanding shares of the Company;
46
<PAGE> 2
-47-
WHEREAS Bussieres will be employed by the Company, after completion of the
purchase and sale contemplated in the Share Purchase Agreement, pursuant to the
terms of an employment agreement as contemplated in the Share Purchase
Agreement (the "EMPLOYMENT AGREEMENT");
WHEREAS Bussieres has had, prior to the date hereof, and will have access,
during his employment with the Company, to confidential information relating to
the Purchaser and the Company and their respective businesses and processes and
Bussieres recognizes the importance for the Purchaser and the Company of
keeping such information confidential;
AND WHEREAS it is a condition of the Share Purchase Agreement that the
Principals enter into a written agreement in the form and terms of this
Agreement;
NOW, THEREFORE, in consideration of the purchase and sale of the Purchased
Shares pursuant to the Share Purchase Agreement and for other good and valuable
consideration received, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, capitalized terms not otherwise defined herein shall
have the meaning ascribed thereto in the Share Purchase Agreement.
2. NON-COMPETITION
2.1 The Principals undertake not to engage, directly or indirectly,
within the geographical limits of Canada and the United
States of America, in any manner whatsoever with the Company, nor
participate, directly or indirectly, in any manner whatsoever, in
any business or venture which is in any way competitive with the
business of the Company (the "BUSINESS") (as such Business will have
been carried on at any time during the term of the Employment
Agreement) (a "COMPETING BUSINESS"), either alone or in conjunction
with any Person(s), or as a director, officer, employee,
shareholder, partner, provider of funds, advisor of, or otherwise
have an interest in, as the case may be, a Competing Business or any
Person operating a Competing Business or being an affiliate of any
such Person, except with the prior written consent of the Purchaser
and provided that Bussieres shall be permitted (a) to continue with
the management and be a director and officer of RETEX TRANSPORT LTEE
("RETEX"), which is involved in the transport of explosives, and
REGUETTE TRANSPORT LTEE ("REGUETTE"), which is involved in the
transport of propane, to the extent that his involvement in such
management does not exceed 5 hours per week and does not adversely
affect his ability to perform his
47
<PAGE> 3
-48-
duties under the Employment Agreement and (b) to be a
shareholder, directly or indirectly, of RETEX and REGUETTE and
provided that RETEX and REGUETTE do not carry on, respectively, any
business other than the transport of explosives and propane. For
the purposes hereof, "PERSON" means an individual, partnership,
joint venture, association, cooperative, corporation, public
utility, trust or a government or any department, body or agency
thereof or any other entity with juridical personality.
2.2 The Principals undertake not to offer or permit any firm,
partnership or corporation in which they have any direct or indirect
interest to offer employment to or engage as an employee,
consultant, agent, distributor or representative any person who was
an employee of the Company at the Closing Date or at any time during
the term of the Employment Agreement.
2.3 Without limiting the generality of Sections 2.1 and 2.2, the
Principals shall not request, induce or attempt to influence (i) any
supplier of goods or services to the Company or any customer of the
Company to curtail or cancel any business it transacts with the
Company with respect to the Business, or (ii) any employee of the
Company to terminate his or her employment with the Company.
2.4 The restrictions set forth in Sections 2.1, 2.2 and 2.3 shall
apply from the date hereof until the latest of the following dates:
(i) five (5) years from the date hereof; or
(ii) two (2) years from the expiry of the original
term of the Employment Agreement; or
(iii) two (2) years from the expiry of any renewal
term, if any, of the Employment Agreement.
Such restrictions, except for those set forth in Section 2.2, shall
cease to apply if, after five (5) years from the date of this
Agreement, the employment of Bussieres is terminated or not renewed
for a reason specified in Section 6.1(vi) of the Employment
Agreement.
2.5 The restrictions set forth in Sections 2.2 and 2.3 shall apply
within the geographical limits of the territories set out in
Section 2.1.
2.6 The restrictions set forth in Sections 2.1 and 2.2 shall not
prohibit each of the Principals from owning an interest, as a
passive investor, in any Competing Business provided that such
interest does not exceed three
48
<PAGE> 4
-49-
percent (3%) of all the outstanding equity securities of a
Person (the equity securities of which are listed on a recognized
securities exchange) and with which the Principals have no other
connection whatsoever.
3. CONFIDENTIALITY
3.1 The Principals agree that, during the period of time referred
to in Section 2.4 and at any time thereafter, they shall keep
secret and confidential and shall not, directly or indirectly, in
any manner whatsoever, divulge, communicate or disclose to any
Person, nor use for his benefit or for the benefit of any Person
other than the Purchaser or the Company, any information, which is
not otherwise of public knowledge, relating to the Business and the
Purchaser's or the Company's business strategies, financial affairs,
services or products, drawings, industrial designs, patents, patent
rights, copyrights, trademarks, specifications, blueprints, reports,
technical know-how, customer lists, computer systems, internal
pricing, marketing strategies or activities, billing procedures,
supplier lists, sales data or contractual relationships with third
parties, except with the prior written consent of the Purchaser.
3.2 Bussieres shall deliver to the Purchaser or the Company, upon
termination of employment or upon request, all documents, files,
lists, samples and other information and property belonging to the
Purchaser or the Company or relating to the Business and copies
thereof in his possession or under his control.
4. EQUITABLE REMEDIES
The Principals agree that the Purchaser and/or the Company shall be
entitled to equitable remedies, including injunctive relief, to ensure
compliance on their part with the terms of this Agreement,
notwithstanding and without prejudice to the Purchaser's and the
Company's other rights and remedies available under this Agreement or
under applicable laws.
5. ENFORCEABILITY AND SEVERABILITY
5.1 The Principals have carefully considered the nature and
extent of the restrictive covenants set forth herein and agree that
the same are reasonable including with respect to duration, scope of
activity and geographical area and necessary to protect the
Purchaser's and the Company's legitimate interests. In particular,
Bussieres agrees that
49
<PAGE> 5
-50-
said restrictive covenants do not prevent him from reasonably
earning his living.
5.2 Without limiting the foregoing, the parties agree that each
of the provisions in this Agreement shall be deemed to be separate
and distinct and if, for any reason whatsoever, any of the
provisions in this Agreement are held null or unenforceable by the
final determination of a court of competent jurisdiction and all
appeals therefrom shall have failed or the time for such appeals
shall have expired, such provision shall be deemed deleted from this
Agreement without affecting the validity or enforceability of such
provision in any other jurisdiction or any other provision hereof
which shall remain in full force and effect.
6. NOTICES
Any notice provided for under this Agreement shall be in writing in the
English and French languages and shall be sufficiently given to the party
to whom it is addressed if transmitted by facsimile (and confirmed by
mail), or if delivered, or if sent by prepaid registered mail to or for
such party at the address of such party indicated below or at such other
address as such party shall have theretofore notified to the other party
or parties hereto.
To Bussieres:
Mr. Rene Bussieres
220 Commerciale
St-Henri-de-Levis, Quebec
G0R 3E0
Facsimile Number: (418) 834-5056
To the Vendor:
Les Placements Marlin Ltee
1950, 3e Rue
Saint-Romuald, Quebec
G6W 5M6
Facsimile Number: (418) 834-5056
50
<PAGE> 6
-51-
To the Purchaser:
9033-2255 Quebec Inc.
1981 McGill College Avenue, Suite 1100
Montreal, Quebec
H3A 3C1
Attention: Mr. Richard J.F. Bowie
Facsimile Number: (514) 286-5474
with a copy to:
MTL Inc.
3108 Central Drive
Plant City, FL 33567
Attention: Mr. Richard J. Brandewie
Facsimile Number: (813) 754-3288
To the Company:
Levy Transport Ltd.
1950, 3e Rue
Saint-Romuald, Quebec
G6W 5M6
Facsimile Number: (418) 834-5056
with a copy to:
Ogilvy Renault
1981 McGill College Avenue, Suite 1100
Montreal, Quebec
H3A 3C1
Attention: Mr. Richard J.F. Bowie
Facsimile Number: (514) 286-5474
Any notice so addressed and transmitted, delivered or mailed as aforesaid
shall be deemed to have been sufficiently given or made on the date on
which it was so transmitted by facsimile or delivered or five (5) days
following the date of mailing, as the case may be.
51
<PAGE> 7
-52-
7. INTERPRETATION
7.1 The article, section and paragraph headings contained herein
are (i) included for convenience of reference only, (ii) not
intended to be full or accurate descriptions of the content thereof
and (iii) shall not affect or be utilized in the construction or
interpretation of this Agreement.
7.2 Words importing the singular include the plural and vice
versa; words importing gender include all genders.
7.3 This Agreement shall in all respects be governed by and
construed in accordance with the laws of the Province of Quebec,
including all matters of construction, validity and performance.
8. EXPENSES
Each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of its counsel,
employees, agents and representatives.
9. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the
respective successors, representatives and assigns of the Company and the
Purchaser.
Neither of the Principals shall assign or transfer this Agreement or any
of their obligations hereunder. This Agreement shall enure to the
benefit of and be binding upon the successors and representatives of the
Vendor only and not upon the heirs or beneficiaries of Bussieres.
10. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements between such parties
with respect to the subject matter hereof. Neither this Agreement nor
any of the terms hereof may be changed, waived, discharged or terminated
otherwise than by an instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is
sought. Any waiver of any term or condition or any breach of any covenant
of this Agreement shall not operate as a waiver of any other such term or
condition or breach, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision
hereof.
52
<PAGE> 8
-53-
11. COUNTERPARTS
This Agreement may be executed by the parties hereto in several
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall constitute but one and the same
instrument.
12. LANGUAGE
The parties hereto confirm having requested that this Agreement and all
notices or other communications relating thereto be draw-up in the
English language only, subject to the provisions of Section 6. Les
parties aux presentes confirment avoir requis que cette convention ainsi
que tous les avis et autres communications y relatifs soient rediges en
langue anglaise seulement, sous reserve des dispositions du paragraphe 6.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first hereinbefore written.
RENE BUSSIERES
LES PLACEMENTS MARLIN LTEE
per:
------------------------------
Name: Rene Bussieres
Title: President
9033-2255 QUEBEC INC.
per:
------------------------------
Name: Richard J. Brandewie
Title: Secretary-Treasurer
LEVY TRANSPORT LTD.
per:
------------------------------
Name: Richard J. Brandewie
Title: Secretary-Treasurer
53
<PAGE> 1
Item 7 Exhibit (c) 23
CONSENT OF INDEPENDENT
CHARTERED ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation in
this Form 8-K of our audit report dated March 29, 1996 on Levy Transport Inc.
financial statements as of February 29, 1996. It should be noted that we have
not audited any financial statements of the Company subsequent to February 29,
1996 or performed any audit procedures subsequent to the date of our report.
SAMSON BELAIR
DELOITTE & TOUCHE, G.P.
Chartered Accountants
June 18, 1996
54
