CONFORMED COPY
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT
by and among
THE INTERLAKE COMPANIES, INC.,
INTERLAKE DRC LIMITED,
THE INTERLAKE CORPORATION,
EXTONDEW LIMITED
and
EXTONBROOK LIMITED
dated as of
December 19, 1997
_______________________
TABLE OF CONTENTS
RECITALS
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Previously Defined Terms . . . . . . . . . . . . . . . . . . . 3
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2
PURCHASE AND SALE OF ACQUIRED STOCK,
PURCHASE PRICE, ALLOCATION AND OTHER RELATED MATTERS . . . . . . . . . . 11
2.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . 11
2.4 Closing Balance Sheet. . . . . . . . . . . . . . . . . . . . . 12
2.5 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . 14
2.6 Subsequent Sale. . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES. . . . . . . . . . . . . . . . . . . 18
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Closing Deliveries by Sellers. . . . . . . . . . . . . . . . . 18
3.3 Closing Deliveries by Purchasers . . . . . . . . . . . . . . . 22
3.4 Senior Credit Agreement Payments . . . . . . . . . . . . . . . 23
3.5 Australian Credit Facilities . . . . . . . . . . . . . . . . . 24
3.6 Intercompany Loans . . . . . . . . . . . . . . . . . . . . . . 24
3.7 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 4
WARRANTIES AND REPRESENTATIONS OF SELLERS . . . . . . . 25
4.1 Incorporation and Qualification of Sellers and Others. . . . . 25
4.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 28
4.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Acquired Stock . . . . . . . . . . . . . . . . . . . . . . . . 29
4.7 No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 30
4.8 Required Assets. . . . . . . . . . . . . . . . . . . . . . . . 30
4.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 31
4.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . 32
4.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 33
4.12 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . 34
4.13 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.14 Real Properties. . . . . . . . . . . . . . . . . . . . . . . . 38
4.15 Tangible Personal Property . . . . . . . . . . . . . . . . . . 38
4.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.17 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 40
4.18 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . 40
4.19 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 44
4.21 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.22 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.23 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . 47
4.24 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 48
4.25 Customers and Suppliers. . . . . . . . . . . . . . . . . . . . 49
4.26 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.27 Investments, Grants and Subsidies. . . . . . . . . . . . . . . 50
4.28 Dexion Incorporated. . . . . . . . . . . . . . . . . . . . . . 50
4.29 DISCLAIMER OF WARRANTIES . . . . . . . . . . . . . . . . . . . 50
ARTICLE 5
WARRANTIES AND REPRESENTATIONS OF PURCHASERS . . . . . . 51
5.1 Incorporation and Qualification of Purchaser . . . . . . . . . 51
5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.3 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 53
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.7 Financial Ability. . . . . . . . . . . . . . . . . . . . . . . 54
5.8 Investigation. . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 6
INDEMNIFICATION. . . . . . . . . . . . . . 55
6.1 Sellers' Indemnity . . . . . . . . . . . . . . . . . . . . . . 55
6.2 Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Purchasers Indemnity . . . . . . . . . . . . . . . . . . . . . 60
6.4 Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . 61
6.5 Indemnification Proceeding . . . . . . . . . . . . . . . . . . 61
ARTICLE 7
CERTAIN OTHER UNDERSTANDINGS . . . . . . . . . . 63
7.1 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.2 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . 65
7.3 Certain Tax Matters. . . . . . . . . . . . . . . . . . . . . . 66
7.4 Change of Control. . . . . . . . . . . . . . . . . . . . . . . 69
7.5 No Reversals of Corporate Action.. . . . . . . . . . . . . . . 70
7.6 No Insurance Advice. . . . . . . . . . . . . . . . . . . . . . 70
7.7 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.8 Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . . 72
7.9 Third Party Undertakings . . . . . . . . . . . . . . . . . . . 72
7.10 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 72
7.11 KERP Payments. . . . . . . . . . . . . . . . . . . . . . . . . 73
7.12 Certain Commercial Relationships . . . . . . . . . . . . . . . 74
7.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 74
7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . 76
8.1 Cost and Expenses. . . . . . . . . . . . . . . . . . . . . . . 76
8.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 76
8.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.4 Assignment; Successors and Assigns . . . . . . . . . . . . . . 77
8.5 Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . 78
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.7 GOVERNING LAW\JURISDICTION . . . . . . . . . . . . . . . . . . 79
8.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . 79
8.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.10 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.11 Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.12 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . 81
8.13 Negotiation between Executives . . . . . . . . . . . . . . . . 81
8.14 Restrictive Trade Practices Acts . . . . . . . . . . . . . . . 82
8.15 Interest on Late Payments. . . . . . . . . . . . . . . . . . . 82
8.16 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT ("Agreement") is made this 19th day
of December, 1997 AMONG (1) The Interlake Companies, Inc. ("Interlake
Companies"), a company organized under the laws of Delaware and having its
principal office at 550 Warrenville Road, Lisle, Illinois 60532-4357,
U.S.A.; (2) Interlake DRC Limited ("Interlake DRC"), a company organized
under the laws of Delaware and having its principal office at 550
Warrenville Road, Lisle, Illinois 60532-4357, U.S.A. (and collectively with
Interlake Companies, "Sellers"); (3) The Interlake Corporation
("Guarantor"), a company organized under the laws of Delaware and having
its principal office at 550 Warrenville Road, Lisle, Illinois 60532-4387,
U.S.A.;
(4) Extondew Limited ("Extondew"), a company organized under the laws of
England (No. 3437667), with its registered office at 200 Aldersgate Street,
London EC1A 4JJ; and (5) Extonbrook Limited ("Extonbrook"), a company
organized under the laws of England (No.3437286), with its registered
office at 200 Aldersgate Street, London EC1A 4JJ (and, together with
Extondew, "Purchasers").
R E C I T A L S:
a. The Acquired Companies (as defined herein) and the
Subsidiaries (as defined herein), are engaged in the business of
designing, manufacturing and selling storage rack, shelving,
conveyors and related order fulfilment equipment for use in
warehouses, distribution centers, retail stores and for other
storage applications, and supplying equipment for retail display
and office interiors, such activities as carried out by the
Acquired Companies and the Subsidiaries at the date hereof being
the "Business" for purposes of this Agreement.
b. Interlake Companies owns all of the issued and outstanding
capital stock of each of Dexion (Australia) Pty Limited (ACN 000
083), a corporation organized under the laws of New South Wales,
Australia ("Australia"), Dexion (North Asia) Ltd., a Hong Kong
corporation ("North Asia"), and Dexion Incorporated, a Delaware
corporation with branch offices in Malaysia and Singapore
("Dexion Inc."). North Asia owns all of the registered capital
of Dexion Storage Equipment (Shanghai) Co. Ltd., a limited
liability company organized under the laws of the People's
Republic of China ("Shanghai", the "Interlake Companies
Subsidiary").
c. Interlake DRC owns, subject only to statutory qualifying
shares, all of the issued and outstanding shares of Dexion Group
Limited, incorporated in England and Wales on October 21, 1937,
and registered as a public limited company under number 332803,
and reregistered as a limited company on December 17, 1997
("Dexion Group"). Dexion Group owns, directly or indirectly,
subject only to statutory qualifying shares, all of the issued
and outstanding shares (or other equity interests) of Dexion
Holdings Limited, Dexion International Limited, Dexion Limited,
and Redirack Limited, all private limited companies incorporated
in England and Wales (the "English Subsidiaries"); Dexion
Holding GmbH, Dexion GmbH, Dexion Produktions GmbH, Apton GmbH,
Redirack GmbH and Dexion-Aura GmbH, all German companies (the
"German Subsidiaries"); S.A. Dexion-Redirack N.V., a Belgian
company; Dexion S.A., a French company; Dexion s.r.o., a Czech
company; Dexion KFT, a Hungarian company; and Dexion South
Africa (Proprietary) Limited, a South African company
(collectively, including the English Subsidiaries and the German
Subsidiaries, the "Dexion Group Subsidiaries"; and together with
the Interlake Companies Subsidiary, the "Subsidiaries").
d. Purchasers or their designees desire to acquire (i) from
Interlake Companies all of the issued and outstanding capital
stock of Australia, North Asia and Dexion Inc., and (ii) from
Interlake DRC all of the issued and outstanding shares of Dexion
Group, pursuant to and in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Previously Defined Terms. Each term defined in the first
paragraph and Recitals of this Agreement shall have the meaning set forth
above whenever used herein, unless otherwise expressly provided or unless
the context clearly requires otherwise.
1.2 Definitions. In addition to the terms defined in the first
paragraph and Recitals of this Agreement, whenever used herein, the
following terms shall have the meanings set forth below unless otherwise
expressly provided or unless the context clearly requires otherwise:
"Accounting Referee" - See Section 2.4(c).
"Acquired Companies" means, Australia, North Asia, Dexion Inc. and
Dexion Group.
"Acquired Stock" means (i) 400,000 common shares and 578,257
preference shares of Australia, (ii) 40,000 Class "A" shares and 10,000
Class "B" shares of North Asia, (iii) 250 shares of common stock of Dexion
Inc., and (iv) 500,000 preference shares and 44,971,200 ordinary shares of
Dexion Group to be transferred to Purchasers or their designees at the
Closing and, which, as of the date hereof, constitute all of the issued and
outstanding capital stock of each of the Acquired Companies.
"Affiliate" means, with respect to any Person, a Person that, at the
relevant time, directly or indirectly is controlled by, controls, or is
under common control with such Person. As used in the preceding sentence,
"control" shall mean and include, but not necessarily be limited to,
(i) the ownership of 50% or more of the voting securities or other voting
interests of any Person, or (ii) the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Australian Credit Facilities" means the Credit Facilities provided
by ANZ Bank to Australia.
"Balance Sheet" means the combined balance sheet at November 23, 1997
for the Business attached hereto as Exhibit 2.4 and exclusive of financial
items (cash, cash equivalents and indebtedness for borrowed money).
"Base Line Net Worth" - See Section 2.5.
"Business Day" means any day of the year on which banks are not
required or authorized to be closed in New York, New York or London,
England.
"Benefit Plans" - See Section 4.18
"Claims Bar Date" means May 1, 1999.
"Closing" - See Section 3.1.
"Closing Date" - See Section 3.1.
"Closing Balance Sheet" - See Section 2.4
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Confidentiality Agreement" means the Confidentiality Agreement dated
May 5, 1997 between the Guarantor and Apax Partners & Co Ventures Limited.
"Contracts" means (whether oral or written) all contracts, agreements,
license agreements, purchase and sale orders, foreign exchange contracts,
leases of machinery and equipment, and conditional sales contracts and
title retention agreements relating to machinery and equipment, in each
case, to which any of the Acquired Companies or any of the Subsidiaries is
a party or by which any of them is bound and all other commitments and
binding arrangements to which any of the Acquired Companies or any of the
Subsidiaries is a party or by which any of them is bound or otherwise
relating to or for the benefit of the Business, including, without
limitation, the Contracts listed in Section 4.13 of the Disclosure Letter.
"Disclosure Letter" means the disclosure letter dated as of the date
of this Agreement and delivered by Sellers to Purchasers simultaneously
with the execution and delivery of this Agreement.
"Employees" means any individual employed by any of the Acquired
Companies or any of the Subsidiaries as of the Closing Date and any
individual formerly employed by any of the Acquired Companies, any of the
Subsidiaries or any Affiliate or predecessor of any of them in connection
with the Business prior to the Closing.
"Environmental Law" means any Law which relates to or otherwise
imposes liability or standards of conduct concerning discharges, emissions,
releases or threatened releases of pollutants, contaminants or hazardous
or toxic wastes, substances or materials into air, water, or land, or
otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or
handling of pollutants, contaminants, or hazardous or toxic wastes,
substances or materials.
"Environmental Permit" means any permit, license, approval, consent
or other authorization required by or pursuant to any applicable
Environmental Law.
"Final Year-End Net Worth" - See Section 2.5.
"Financial Statements" means (i) the unaudited balance sheets and
income statements at and for the year ended December 29, 1996 for the
Business (the "Full Year Statements") and (ii) the unaudited balance sheets
and income statements consolidated for each of the European and Asia
Pacific operation of the Business at and for the eleven fiscal months ended
November 23, 1997 for the Business (the "Interim Statements"), a copy of
all of which is attached to the Disclosure Letter (for the avoidance of
doubt the Balance Sheet is not included in the Financial Statements).
"Full Year Statements" - See definition of "Financial Statements".
"GAAP" means generally accepted accounting principles as applied in
the United States.
"Indemnitee" - See Section 6.4.
"Indemnitor" - See Section 6.4.
"Intellectual Property" means any and all trademarks, trade names,
service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing),
technology, trade secrets, inventions, know-how, designs, computer
programs, processes, and all other intangible assets, properties and
rights.
"Intellectual Property Agreements" means, collectively, the agreements
listed in Sections 3.2(j) and 3.3(d).
"Interim Statements" - See definition of "Financial Statements".
"Law" means any law, statute, regulation, ordinance or rule (including
statutory guidance) enacted, promulgated or imposed by any governmental
(supra national, federal, state or local) or quasi-governmental authority
that is applicable to the Acquired Companies or the Subsidiaries.
"Lien" means a mortgage, pledge, security interest, encumbrance, lien
or other charge, claim, right or adverse interest of another Person or
other encumbrance of a similar nature.
"Material Adverse Effect" means any change in, or effect on, the
Business as currently conducted that is or is reasonably likely to (i) be
materially adverse to the results of operations or financial condition of
the Business, taken as a whole, after giving effect to this Agreement and
the cancellation of all intercompany services and other arrangements in
effect immediately prior to the Closing and the settlement of all
intercompany accounts or (ii) materially adversely affect either Seller's
ability to consummate the transactions contemplated hereby.
"Notice of Claim" - See Section 6.4.
"Permitted Exceptions" means, with respect to the real property used
in the Business, the following:
(a) all liens for Taxes, assessments (both general and special)
and other governmental charges which are not due and payable as of
the Closing Date;
(b) all published building codes and zoning ordinances and
other laws, ordinances, regulations, rules, orders or determinations
of any applicable governmental authority in any jurisdiction in which
the Business operates on the Closing Date heretofore made or issued
by any such authority affecting the property and of general
applicability and except for orders or determinations of non-compliance
which could reasonably be expected to have a Material Adverse Effect;
(c) all easements, rights-of-way, covenants, conditions,
restrictions, reservations, licenses, agreements and other similar
matters, whether or not of record, in each case which have been
disclosed in the title documents supplied to the Purchasers prior to
the date hereof;
(d) all encroachments, overlaps, boundary line disputes,
shortages in area, drainage and other easements, cemeteries and
burial grounds and other similar matters not of record which would be
disclosed by an accurate survey or inspection of the property, except
in each case, those that would have a Material Adverse Effect;
(e) all electric power, telephone, gas, sanitary sewer, storm
sewer, water and other utility lines, pipelines, service lines and
facilities of any nature now located on, over or under the property;
(f) all existing public and private roads and streets (whether
dedicated or undedicated), and all railroad lines and rights-of-way
affecting the property;
(g) all minerals of whatever kind and character (including,
without limitation, all coal, iron ore, oil, gas, sulfur, methane gas
in coal seams, limestone and other minerals, metals and ores) located
on, in or under each parcel of the property and all rights with
respect to the mining, extraction and removal of the minerals so
located, which have been granted, leased, excepted or reserved and
which have been disclosed in the title documents supplied to the
Purchasers prior to the date hereof;
(h) all Liens for construction in progress arising in the
ordinary course of business; and
(i) all Liens described in Section 4.14 of the Disclosure
Letter.
"Person" means any natural person, company, corporation, limited
liability company, partnership, joint venture, trust, association or
unincorporated entity of any kind.
"Purchase Price" - See Section 2.2.
"Purchaser Indemnified Persons - See Section 6.1.
"Receivables" - See Section 4.22.
"Returns" means all returns and forms required to be filed or
furnished with respect to any Tax applicable to the Business.
"Second Anniversary" means the two-year anniversary of the Closing
Date.
"Seller Indemnified Persons" - See Section 6.3.
"Senior Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of September 27, 1989 and Amended and Restated as of
May 28, 1992, among the Guarantor, certain of its subsidiaries, The
Interlake Corporation Employee Stock Ownership Trust, acting by and through
LaSalle National Bank, as Trustee, various banks party thereto, Chemical
Bank, as Administrative Agent, and The First National Bank of Chicago, as
Co-Agent, as amended, modified or supplemented from time to time.
"Tax" or "Taxes" means all income, corporation, capital gains, gross
receipts, sales, value-added, use, employment, franchise, profits,
property, customs, excise or other taxes, fees, stamp taxes and duties,
assessments or fiscal charges of any kind whatsoever (whether payable
directly or by withholding) imposed by any applicable governmental
authority in any jurisdiction in which the Business operates on the Closing
Date or has at any time operated or in which any Acquired Company or
Subsidiary is resident for Tax purposes, together with all interest and
penalties, additions to tax or additional amounts imposed by any such
authority with respect thereto.
"Transferred Intercompany Account" means any account on the books and
records of any of the Acquired Companies or any of the Subsidiaries that
evidences amounts either payable by any of the Acquired Companies or any
of the Subsidiaries to, or receivable by any of the Acquired Companies or
any of the Subsidiaries from, any other of the Acquired Companies or the
Subsidiaries.
"Threshold" - See Section 6.2(b).
"Year-End Net Worth" - See Section 2.4.
1.3 Interpretation. Unless the context of this Agreement otherwise
requires, (a) words of any gender shall be deemed to include the other
gender, (b) words using the singular or plural number shall also include
the plural or singular number, respectively, (c) references to "hereof",
"herein", "hereby", "hereunder" and similar terms shall refer to this
entire Agreement and (d) unless otherwise specified herein, each reference
to an "Article" or "Section" is to an Article or Section of this Agreement,
and each reference to an "Exhibit" is to an Exhibit attached to and made
a part of this Agreement.
ARTICLE 2
PURCHASE AND SALE OF ACQUIRED STOCK,
PURCHASE PRICE, ALLOCATION AND OTHER RELATED MATTERS
2.1 Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing on the Closing Date, Interlake DRC shall
sell, assign, convey, transfer and deliver to Extondew, and Extondew shall
purchase and accept from Interlake DRC, the Acquired Stock relating to
Dexion Group and Interlake Companies shall sell, assign, convey, transfer
and deliver to Extonbrook, and Extonbrook shall purchase and accept from
Interlake Companies, the other Acquired Stock.
2.2 Consideration.
(a) Subject to adjustment in accordance with Section 2.4, the
aggregate purchase price (the "Purchase Price") payable by Purchasers for
the Acquired Stock shall be an amount equal to Forty-One Million Seven
Hundred and Fifty-Six Thousand English Pounds Sterling (41,756,000 English
pounds sterling).
(b) At the Closing, Purchasers shall pay to Sellers by wire
transfer of same day funds in such denominations and to such accounts as
shall be designated in Exhibit 2.2 an amount equal to the Purchase Price.
2.3 Allocation of Purchase Price. Sellers and Purchasers agree that
the Purchase Price shall be allocated as follows:(i) 6,500,000 English
pounds sterling in respect of the capital stock of Australia; (ii)
4,250,000 English pounds sterling in respect of the capital stock of North
Asia; (iii) 2,500,000 English pounds sterling in respect of the capital
stock of Dexion Inc.; and (iv) 28,506,000 English pounds sterling in
respect of the capital stock of Dexion Group in such manner as Sellers and
Purchasers shall reasonably agree. Neither Sellers nor Purchasers shall
file any Return or take a position with a tax authority which is
inconsistent with the allocations contemplated by this Section 2.3, or by
Section 7.3(c) or Section 7.3(d). Any adjustments, pursuant to this
Section 2, to the consideration shall be apportioned amongst the Acquired
Stock in the proportions set out in Section 2.3 above.
2.4 Closing Balance Sheet. (a) As promptly as practicable, but no
later than 60 days, after the Closing Date, Purchasers will cause to be
prepared and delivered to Sellers a balance sheet (the "Closing Balance
Sheet") and a certificate based on such Closing Balance Sheet setting forth
Purchasers' calculation of Year-End Net Worth. The Closing Balance Sheet
shall (i) fairly present the combined financial position of the Business
as at the close of business on December 28, 1997 on a basis consistent with
that, and including line items consistent with those, used in the
preparation of the Balance Sheet and (ii) be based upon the financial
statements for the European and Asia-Pacific operations of the Business as
of the fiscal year ending December 28, 1997, prepared in a manner
consistent with the Financial Statements and in accordance with accounting
policies and practices in accordance with the accounting manual of Dexion
Group and the Guarantor, respectively. "Year-End Net Worth" means the
excess of the value of the assets (excluding cash and cash equivalents)
over the amount of the liabilities (excluding indebtedness for borrowed
money, for example, bank borrowings, capital leases and loans) of the
Business as at December 28, 1997, excluding the effect (including the Tax
effect) of any act of the Purchasers occurring after the Closing. For the
purposes of calculating the Year-End Net Worth, amounts in currency other
than English pounds sterling shall be converted to English pounds sterling
at the same exchange rates utilised in compiling the Balance Sheet.
(b) If Sellers disagree with Purchasers' calculation of Year-End
Net Worth delivered pursuant to Section 2.4(a), Sellers may, within 30 days
after delivery of the documents referred to in Section 2.4(a), deliver a
notice to Purchasers disagreeing with such calculation and setting forth
Sellers' calculation of such amount. Any such notice of disagreement shall
specify those items or amounts as to which Sellers disagree.
(c) If a notice of disagreement shall be delivered pursuant to
Section 2.4(b), Purchasers and Sellers shall use their best efforts to
reach agreement on the disputed items or amounts in order to determine, as
may be required, the amount of Year-End Net Worth, which amount shall not
be less than the amount thereof shown in Purchasers' calculations delivered
pursuant to Section 2.4(a) nor more than the amount thereof shown in
Sellers' calculation delivered pursuant to Section 2.4(b). If during such
period, Purchasers and Sellers are unable to reach such agreement, they
shall promptly thereafter cause the London Office of Arthur Andersen (the
"Accounting Referee") promptly to review this Agreement and the disputed
items or amounts for the purpose of calculating Year-End Net Worth. In
making such calculation, the Accounting Referee shall consider only those
items or amounts in the Closing Balance Sheet or Purchasers' calculation
of Year-End Net Worth as to which Sellers have disagreed, and shall make
such calculation based on the manner of preparation prescribed for the
Closing Balance Sheet in Section 2.4(a). The Accounting Referee shall
deliver to Purchasers and Sellers, as promptly as practicable, a report
setting forth such calculation. Such report shall be final and binding
upon each Purchaser and each Seller. The cost of such review and report
shall be borne equally by Purchasers, jointly and severally, on the one
hand, and Sellers, jointly and severally, on the other hand.
(d) Purchasers and Sellers agree that they will, and agree to
cause their respective independent accountants to, cooperate fully and
assist in the preparation of the Closing Balance Sheet and the calculation
of Year-End Net Worth and in the conduct of the audits and reviews referred
to in this Section 2.4, including without limitation, making available all
relevant books, records, work papers and personnel.
2.5 Adjustment of Purchase Price. (a) If Base Line Net Worth exceeds
Final Year-End Net Worth, Sellers shall pay to Purchasers, in the manner
and with interest as provided in Section 2.5(c), the amount of such excess.
"Final Year-End Net Worth" means Year-End Net Worth (i) as shown in
Purchasers' calculation delivered pursuant to Section 2.4(a) if no notice
of disagreement with respect thereto is duly delivered pursuant to Section
2.4(b); or (ii) if such a notice of disagreement is delivered, (A) as
agreed by Purchasers and Sellers pursuant to Section 2.4(c) or (B) in the
absence of such agreement, as shown in the Accounting Referee's calculation
delivered pursuant to Section 2.4(c); provided that in no event shall Final
Year-End Net Worth be less than Purchasers' calculation of Year-End Net
Worth delivered pursuant to Section 2.4(a) or more than Sellers'
calculation of Year-End Net Worth delivered pursuant to Section 2.4(b).
"Base Line Net Worth" means the sum of 23,500,000 English pounds sterling
(i) adjusted downwards for the amount by which cash and cash equivalents
as of the Closing (determined in accordance with Section 2.5(c)) exceeds
11,500,000 English pounds sterling, (ii) adjusted upwards for the amount
by which cash and cash equivalents as of the Closing is less than
11,500,000 English pounds sterling, (iii) adjusted downwards for net
positive cash flow from Closing through December 28, 1997 (other than due
to financing items)and (iv) adjusted upwards for negative net cash flow
from Closing through December 28, 1997 (other than due to financing items).
Purchasers acknowledge that Sellers might disagree with Purchasers'
calculation of Year-End Net Worth, but may choose not to challenge it
because even as computed by Purchasers it results in no adjustment to the
Purchase Price hereunder, and that in such case Sellers shall not be deemed
to have waived any rights to challenge and in no way shall be deemed to
have agreed with Purchasers' calculation by virtue of their failure to
challenge Purchasers' calculation if such calculation shall be relevant in
any other dispute or context.
(b) Any payment pursuant to Section 2.5(a) shall be made within
5 Business Days after Final Year-End Net Worth has been determined, by
Sellers causing such payments to be credited to such account of such other
party as may be designated by such other party. The amount of any payment
to be made pursuant to this Section 2.5 shall bear interest from and
including the Closing Date to but excluding the date of payment at a rate
per annum equal to the Base Rate of Barclays Bank plc in effect on the
Closing Date. Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of
a year of 365 days and the actual number of days elapsed.
(c) No later than December 22, 1997 Purchasers shall deliver to
Sellers verification of the aggregate amount of cash and cash equivalents
held by the Acquired Companies and the Subsidiaries as at the close of
business on the Closing Date, based on the cash books of those entities
maintained in the ordinary course, but reduced of the amount by which the
outstanding aggregate principal amounts of all finance leases under which
any such entity is obligated exceeds 756,000 English pounds sterling (when
adjusted for rounding)and reduced by the amount by which the sum of any
financial debt or borrowings outstanding (prior to any repayment at
Closing) exceeds the English pound sterling equivalent of 7,500,000
Australian dollars plus $7,806,297.89, plus 10,409,908.50 English pounds
sterling (as adjusted, the "Cash Amount"). If Purchasers agree with the
amounts shown in such verification, then in the event that Cash Amount is
less than 11,500,000 English pounds sterling (the "Deficiency"), then
Sellers shall pay the amount of the deficiency to Purchasers, no later than
December 23, 1997. In the case of disagreement by Sellers with the amounts
shown in such verification, or in the case Sellers or Purchasers shall
request substantiation that cash transactions (including the collection of
receivables and payment of payables) were handled in the ordinary course
of business in accordance with the normal practices of the Business prior
to Closing, then Sellers and Purchasers will use reasonable efforts to
agree the Cash Amount no later than December 23, 1997 after delivery of the
verification. If Sellers and Purchasers cannot agree such amount in such
time, (i) the Sellers shall pay to the Purchasers an amount in respect of
the Deficiency (as calculated based on the verification) up to a maximum
of 250,000 English pounds sterling (such payment, the "Interim Payment")
and Sellers and Purchaser shall refer such disagreement to the Accounting
Referee for resolution substantially in accordance with the procedures
provided in Section 2.4(c). In the event that the Deficiency (as
determined by the Accounting Referee or otherwise agreed by the parties)
is determined to be more than the Interim Payment, then Sellers shall pay
the remaining portion of the Deficiency to Purchasers. In the event that
such Deficiency is determined to be less than the Interim Payment, then
Purchasers shall pay to Sellers the amount by which the Interim Payment
exceeds such Deficiency. Any payment described in the previous two
sentences shall be made no later than December 23, 1997 or, in the case
either party requests substantiation as described above, within 5 days
after agreement of the Deficiency by Sellers and Purchaser or determination
by the Accounting Referee, as the case may be. The amount of any payment
under this Section shall bear interest at the rate determined in accordance
with Section 2.5(b), from the Closing Date until the date of payment.
2.6 Subsequent Sale. In the event that the either Purchaser (or both
of them) should sell the shares or business of Dexion Group or any English
Subsidiary (other than a sale of Redirack Limited or a sale or syndication
of up to 20% of the indirect interest of Apax Partners & Co.), either
together with any other of the Acquired Companies or Subsidiaries or alone,
within a period of 9 months of the Closing Date, then Purchasers shall
immediately pay to the Sellers 50% of any amounts received by Purchasers
(net of any taxes and costs incurred in such disposal) in excess of the
amounts allocable to such Acquired Company or Subsidiary pursuant to
Section 2.3 plus 5%. The provisions of this Section shall not apply to
sales by way of reorganization or reconstruction as a result of which the
ultimate control of the relevant business or company does not change.
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES
3.1 Closing. The term "Closing" as used herein shall refer to the
actual sale, assignment, conveyance, transfer and delivery of the Acquired
Stock to Purchasers in consideration for the payment to Sellers of the
Purchase Price. The Closing shall take place on the date hereof (the
"Closing Date"), immediately after execution of this Agreement, at the
offices of Clifford Chance, 200 Aldersgate Street, London EC1A 4JJ,
England.
3.2 Closing Deliveries by Sellers. At the Closing on the Closing
Date, Sellers shall deliver to Purchasers:
(a) stock or share certificate(s) representing the Acquired
Stock together with duly executed: stock powers in favor of Extondew in
respect of the common stock of Dexion Inc.; and stock transfer forms in
favor of Extondew or Extonbrook, as the case may be, in respect of the
shares in Dexion Group, Australia and North Asia;
(b) written resignations in the agreed form, effective on the
Closing Date, of those directors and officers of each of the Acquired
Companies and the Subsidiaries as Purchasers shall have requested in
writing prior to the Closing;
(c) all corporate and other records of each of the Acquired
Companies and Subsidiaries, including but not limited to, certificates or
articles of incorporation, by-laws, business registration certificate for
North Asia, corporate or common seals, statutory registers, minute books
and stock transfer records; provided, however, that Sellers may retain
copies of any such records that are reasonably deemed by the Sellers to be
necessary or useful for the purpose of filing with or responding to any
taxing authority with respect to any Taxes for periods during which the
Acquired Companies and/or Subsidiaries and/or any of their respective
businesses were owned, directly or indirectly, by the Guarantor or any of
its Affiliates or predecessors;
(d) copies of the certificate or articles of incorporation and
by-laws (or similar organizational documents) of each of the Acquired
Companies and the Subsidiaries certified, as of the Closing Date, by such
entity's corporate secretary;
(e) certified copies of board resolutions of each of the
Acquired Companies and each of the Subsidiaries, as applicable, and, if
required, stockholder resolutions of any of the foregoing, in the agreed
form:
(i) recording acceptance of the resignation from
office of each of the directors and officers
referred to in Section 3.2(b);
(ii) approving (subject only to proper stamping) the
transfers of those of the shares of the relevant
company, which are in registered form delivered
under this Agreement;
(iii) approving (subject only to proper stamping) the
placing on the register of members of each such
company of the names of the transferees for
registration in accordance with the share
transfer forms referred to above and authorizing
the issue of appropriate share certificates;
(iv) recording the appointment of such persons as the
directors (within the maximum number permitted by
the articles of association of the relevant
company), secretaries and other officers and
auditors of each such company as Purchasers have
nominated in writing prior to the Closing;
(v) changing the situs of the registered office of
each such company as Purchasers have directed to
such place as Purchasers have directed in writing
prior to the Closing;
(f) certified copies of minutes or unanimous written consents
of the Board of Directors of each Seller and, if required, the stockholders
of each Seller, approving the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement;
(g) an executed power of attorney in favor of the relevant
Purchaser or its nominee(s) generally in respect of the Acquired Stock and
which enables such Purchaser or its nominee(s) to attend and vote at
general meetings of the Acquired Companies acquired by it;
(h) share certificates for all issued shares in the capital of
each of the Subsidiaries held by the Acquired Companies and executed but
uncompleted transfers and declarations of trust by the registered owner in
respect of all those shares that are beneficially owned by but not
registered in the name of an Acquired Company;
(i) a copy of a letter to each of the Acquired Companies and
Subsidiaries from its auditors resigning their office with effect from
Closing and containing the statement in respect of the English Subsidiaries
and Dexion Group referred to in section 394 of the Companies Act 1985, the
original of the letter having been deposited at the registered office of
the relevant company;
(j) the following documents relating to Intellectual Property
(each in the form agreed by the parties):
(i) a Patent/Know How Licence Agreement from
Interlake Companies and Interlake Material
Handling, Inc. in favor of Dexion Group;
(ii) a "Pick to Light" Licence Agreement from
Interlake Material Handling, Inc. in favor of
Dexion Group;
(iii) a "Wallaby" Licence Agreement from Interlake
Material Handling, Inc. in favor of Dexion Group;
(iv) a "Wallaby" Trade Mark Territory Agreement
between Dexion Group and others and Interlake
Material Handling, Inc. and Interlake Companies;
and
(v) a "Redirack" Trade Mark Territory Agreement
between Dexion Group and Interlake Material
Handling, Inc.; and
(k) a letter from any person holding security over the assets
of the Acquired Companies, Subsidiaries or the Acquired Stock evidencing
the release and discharge of such security.
3.3 Closing Deliveries by Purchasers. At the Closing Purchasers
shall deliver to Sellers:
(a) the payment to be delivered by Purchasers pursuant to
Section 2.2(b);
(b) certified copies of minutes or unanimous written consents
of the Board of Directors of each Purchaser approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated under this Agreement;
(c) the following documents relating to Intellectual Property
(each in the form agreed by the parties):
(i) a Patent/Know How Licence Agreement from
Australia in favor of Interlake Material
Handling, Inc.;
(ii) a Patent/Know How Licence Agreement from Dexion
Group in favour of Interlake Material Handling,
Inc.;
(iii) a "Pick to Light" Licence Agreement from Dexion
Group in favor of Interlake Material Handling,
Inc.;
(iv) a "Wallaby" Trade Mark Territory Agreement
between Dexion Group and others and Interlake
Material Handling, Inc. and Interlake Companies;
and
(v) a "Redirack" Trade Mark Territory Agreement
between Dexion Group and Interlake Material
Handling, Inc.;
(d) as soon as practicable after the Sellers' request, written
resignations in the agreed form, effective on the Closing Date, of Wayne
Osman, Martin Webster and David Beck as directors of Interlake DRC.
3.4 Senior Credit Agreement Payments. Simultaneously with the
Closing, Purchasers shall cause the Acquired Companies and/or the
Subsidiaries to pay an amount sufficient to discharge any indebtedness
(excluding any costs or charges payable because of early repayment) they
have outstanding under the Senior Credit Agreement.
3.5 Australian Credit Facilities. The Purchasers shall use best
endeavours (without being required to expend any money) to cause the
Guarantor to be released in writing from all letters of awareness, guaranty
or comfort with respect to the Australian Credit Facilities. The Purchasers
agree to indemnify and hold harmless the Guarantor from any loss, cost or
expense incurred by the Guarantor after Closing as a result of the
Guarantor's obligations in respect of any such letter of awareness,
guaranty or comfort.
3.6 Intercompany Loans. Simultaneously with Closing, the Purchasers
shall, or shall cause the Acquired Companies and/or the Subsidiaries to,
make aggregate payments in the amount of 9,639,000 English pounds sterling
to the Sellers, which amount shall be deemed to be sufficient to settle the
loans then existing between and owed by the Acquired Companies or the
Subsidiaries to either Seller or any of their Affiliates (other than any
of the Acquired Companies or any of the Subsidiaries), other than the
following loans: a loan in the amount of 1,887,000 Singapore dollars, and
a loan in the amount of 3,128,000 Malaysian Ringgits, in each case owed by
Dexion Inc. to Interlake Companies and/or the Guarantor (together, the
"Outstanding Loans"). Purchasers shall pay, or shall cause to be paid, no
later than January 24,1998 (but shall endeavour to pay or cause to be paid
not later than December 28, 1997), the Outstanding Loans, by payment to
Sellers on or before such date of 1,173,000 English pounds sterling,
together with interest from Closing at a rate of 5% per annum, upon which
payment the Outstanding Loans shall be deemed fully paid.
3.7 Cooperation. Sellers and Purchasers shall, on request on and
after the Closing Date, cooperate with one another by furnishing any and
all additional information, executing and delivering any and all additional
documents and/or instruments and doing any and all such other things as may
be reasonably requested by the other party to consummate or otherwise
implement the transactions contemplated by this Agreement.
ARTICLE 4
WARRANTIES AND REPRESENTATIONS OF SELLERS
Sellers, jointly and severally, warrant and represent to
Purchasers (which warranties and representations shall, subject to
Section 6.2, survive the Closing) as follows:
4.1 Incorporation and Qualification of Sellers and Others. (a) Each
Seller is a corporation validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, operate and lease the assets it now owns, operates or
leases and to carry on the Business currently conducted by it as it is
currently conducted. Each of the Acquired Companies is a company validly
existing under the laws of the jurisdiction of its incorporation (listed
in Section 4.1 of the Disclosure Letter) and has all requisite corporate
power and authority to own, operate and lease the assets it now owns,
operates or leases and to carry on the Business currently conducted by it
as it is currently conducted. Each of the Subsidiaries is a corporation
validly existing and in good standing under the laws of the jurisdiction
of its organization and has all requisite corporate power and authority to
own, operate and lease the assets it now owns, operates or leases and to
carry on the Business currently conducted by it as it is currently
conducted.
(b) Each Seller, each of the Acquired Companies and each of the
Subsidiaries is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by
it or the operation of the Business by it makes such licensing or
qualification necessary. Section 4.1(b) of the Disclosure Letter sets
forth a complete and accurate list of all jurisdictions in which each
Seller, each of the Acquired Companies and each of the Subsidiaries is so
qualified.
(c) No order has been made, petition presented or resolution
passed for the winding up or appointment of a receiver or manager over the
Acquired Companies and Subsidiaries and such terms are to be construed as
to include equivalent or analogous proceedings under the law of the
jurisdiction in which the relevant company is incorporated or carries on
business. None of the Acquired Companies or Subsidiaries are insolvent.
4.2 Authority. Each Seller has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations
hereunder and to carry out the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement by each Seller, the
performance by each Seller of its obligations hereunder and the
consummation by each Seller of the transactions contemplated hereby have
been duly authorized by all requisite corporate action (board of directors,
stockholders or otherwise) on the part of such Seller and no other
corporate action on the part of the Sellers is necessary to authorize this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each Seller and (assuming
the due authorization, valid execution and delivery hereof by each
Purchaser) is, and as of the Closing will be, a legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its
terms.
4.3 No Conflict. Assuming all consents, approvals, authorizations
and other actions described in Section 4.4 have been obtained and all
filings and notifications listed in Section 4.4 of the Disclosure Letter
have been made or given (except as may result from any facts or
circumstances relating to either Purchaser), the execution, delivery and
performance of this Agreement and all other instruments, agreements,
certificates and documents delivered to Purchasers pursuant hereto by
Sellers does not and will not: (a) conflict with or violate any provision
of the Certificate of Incorporation or By-Laws of either Seller or the
organizational documents of any of the Acquired Companies or any of the
Subsidiaries; (b) except as set forth in Section 4.3 of the Disclosure
Letter, conflict with or result in any breach or termination of, or
constitute a default (or event which the giving of notice or lapse of time,
or both, would become a default) under, or give rise to a loss of any
benefit to which any of the Acquired Companies or any of the Subsidiaries
is entitled under any provision of any agreement, or give to any Person any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any Lien on any of the assets of the Acquired
Companies or the Subsidiaries or the Acquired Stock pursuant to, any
instrument, license, agreement or commitment pertaining to the Business to
which either Seller is a party or by which any of the assets of the
Acquired Companies or the Subsidiaries or the Acquired Stock are bound; or
(c) except as set forth in Section 4.3 of the Disclosure Letter,
contravene, conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction or decree binding upon or applicable to any of
the Acquired Companies or any of the Subsidiaries or to the Acquired Stock
or the assets of the Acquired Companies or the Subsidiaries.
4.4 Consents and Approvals. The execution and delivery by each
Seller of this Agreement and compliance by each Seller with the terms
hereof and consummation by each Seller of the transactions contemplated
hereby will not, require either Seller to obtain any consent, approval,
authorization or other action of, or make any filing with or give any
notice to, any court, administrative agency or other governmental
authority, domestic or foreign, except (a) as disclosed in Section 4.4 of
the Disclosure Letter, (b) as contemplated by Section 7.3 of this
Agreement, and (c) as may be necessary as a result of any facts or
circumstances relating solely to either Purchaser.
4.5 Brokers. Neither this Agreement nor the sale of the Acquired
Stock or any other transaction contemplated by this Agreement was induced
or procured through any Person acting on behalf of or representing Sellers
or any of their Affiliates as broker, finder, investment banker, financial
advisor or in any similar capacity except Credit Suisse First Boston
Corporation the fees of which are the sole responsibility of Sellers.
Sellers shall indemnify and hold harmless Purchasers against any fees owed
to Credit Suisse First Boston Corporation for acting as financial advisor
to Sellers in connection with this Agreement.
4.6 Acquired Stock.
(a) Each of the Acquired Companies has an authorized, issued and
outstanding capital as set forth in Section 4.6 of the Disclosure Letter.
All of the issued and outstanding shares of capital stock of each of the
Acquired Companies have been duly authorized, validly issued, are fully
paid and nonassessable or credited as fully paid. Except for the Liens
which are disclosed in Section 4.6 of the Disclosure Letter and which will
be released prior to or at the Closing, (i) Interlake Companies has the
whole legal and beneficial interest in the outstanding capital stock of
each of the Acquired Companies other than Dexion Group free and clear of
all Liens and (ii) subject only to statutory qualifying shares, Interlake
DRC has the whole legal and beneficial interest in the outstanding shares
of Dexion Group free and clear of all Liens.
(b) Each of the Subsidiaries has an authorized, issued and
outstanding capital as set forth in Section 4.6 of the Disclosure Letter.
All of the issued and outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized, validly issued, are fully paid and
nonassessable or credited as fully paid and, subject only to statutory
qualifying shares, are legally and beneficially owned by one of the
Acquired Companies or one of the other Subsidiaries (as indicated in
Section 4.6 of the Disclosure Letter) free and clear of all Liens other
than those disclosed in Section 4.6 of the Disclosure Letter.
(c) The transfer of the Acquired Stock hereunder to Purchasers
will transfer to the relevant Purchaser good title to the Acquired Stock
transferred to it, free and clear of all Liens.
(d) Except as disclosed in Section 4.6 of the Disclosure Letter,
there are no voting trust agreements or other contracts, agreements or
arrangements restricting voting or dividend rights or transferability with
respect to the Acquired Stock or the capital stock of any of the
Subsidiaries.
(e) Except as disclosed in Section 4.6 of the Disclosure Letter,
there are no outstanding options, warrants, rights, privileges or other
arrangements, preemptive or otherwise, to purchase or acquire any rights
with respect to or to require the issuance of any shares or other
securities of any of the Acquired Companies or any of the Subsidiaries.
4.7 No Subsidiaries. Except for the shares of capital stock of the
Subsidiaries, none of the Acquired Companies owns any capital stock or
other equity securities or any other direct or indirect equity interest in
any Person.
4.8 Required Assets. Except as set forth in Section 4.8 of the
Disclosure Letter, at and immediately after Closing, the Acquired Companies
own, lease or otherwise have the right to use, either directly or through
the Subsidiaries, all of the material rights, properties and assets
necessary for the conduct of the Business as presently conducted. Except
for changes in assets, properties and rights in the ordinary course of the
Business, the Acquired Companies own as of the date hereof such assets,
properties and rights as were sufficient to produce the income reflected
in the Financial Statements for the periods covered thereby.
4.9 Intellectual Property.
(a) Set forth in Section 4.9 of the Disclosure Letter is a true
and complete list of all of the registered Intellectual Property
(including, without limitation, applications for registration) in respect
of which the Acquired Companies or the Subsidiaries are the registered
owner or applicant for registration or which are used in the conduct of the
Business as of the date hereof. Except as disclosed in Section 4.9 of the
Disclosure Letter:
(b) all such Intellectual Property used in the conduct of the
Business at the date hereof is valid and enforceable and is owned solely
by the Sellers, the Acquired Companies and/or the Subsidiaries free and
clear of all Liens, and none of the Intellectual Property used in the
conduct of the Business is subject to any license, royalty or other
agreement, and neither the Acquired Companies nor the Subsidiaries has
granted any license or agreed to pay or receive any royalty in respect of
any Intellectual Property;
(c) none of the Acquired Companies' or any Subsidiaries'
Intellectual Property is or has been the subject of any pending or, to the
knowledge of Sellers, threatened litigation (including, without limitation,
any opposition or action for revocation or cancellation in whole or in
part) or claim of infringement;
(d) the products manufactured or sold by the Acquired Companies
or the Subsidiaries and any process, part, design, material or other
Intellectual Property any of them employs, and the marketing and use by
them of any such product, service or other Intellectual Property, do not
infringe, to the best of Sellers' knowledge, on any Intellectual Property
or confidential or proprietary rights of another Person; and neither the
Acquired Companies nor any Subsidiary has received any written notice
contesting its right to use any Intellectual Property;
(e) to the best of Sellers' knowledge, and subject to any
exception noted in Section 7.9 of the Disclosure Letter, the Acquired
Companies and the Subsidiaries own or possess adequate rights in and to all
Intellectual Property necessary to conduct the Business as it is currently
conducted; and
(f) None of the Acquired Companies or the Subsidiaries is, and
to the best of the Sellers' knowledge no other party to any agreement
relating to the use by the Acquired Companies or the Subsidiaries of the
Intellectual Property is, in breach of any such agreement.
4.10 Financial Statements. (a) The Full Year Statements present
fairly the financial condition and the results of operation of the Business
at the date and for the periods indicated therein in conformity with GAAP
and the past accounting practices of Sellers applied consistently during
such periods. The Interim Statements present fairly in all material
respects (subject to year-end adjustments) the financial condition and the
results of operation of the Business at the date and for the periods
indicated therein and were prepared on a basis and using accounting
principles consistent with those used in the preparation of the Full Year
Statements.
(b) The annual accounts for each of the Acquired Companies and
the Subsidiaries for the year ended December 29, 1996 have each been
prepared in accordance with the relevant accounting principles and
practices for companies registered in that jurisdiction and in compliance
with all applicable laws. The audited accounts for such period of Dexion
Group and of the English Subsidiaries show a true and fair view of the
assets, liabilities and state of affairs of the relevant company as at the
December 29, 1996.
(c) No material change in accounting policies and principles has
been made in preparing unaudited balance sheets and income statements for
the years ending 1995, 1994 and 1993 from the accounting policies and
practices used in preparing the Financial Statements.
4.11 Compliance with Laws. None of the Sellers, the Acquired
Companies or the Subsidiaries is in violation of or default under or with
respect to any civil or criminal law, rule or regulation, or any order,
judgment or decree, in any case applicable thereto or by which any of its
properties is bound or affected, except as set forth in Section 4.11 of the
Disclosure Letter; provided, however, that Purchasers acknowledge and agree
that Sellers' representations and warranties under this Section 4.11 are
not made with respect to any Environmental Laws and that Sellers'
representations and warranties to Purchasers with respect to Environmental
Laws are made only in Section 4.20.
4.12 Licenses and Permits. Except as set forth in Section 4.12 of the
Disclosure Letter, to the knowledge of Sellers, each of the Acquired
Companies and each of the Subsidiaries has, or has applied for, all
governmental and quasi-governmental licenses, franchises, permits,
approvals, authorizations, exemptions, certificates, registrations and
similar documents or instruments necessary to carry on the Business as it
is currently conducted. Other than as disclosed in Section 4.12 of the
Disclosure Letter, none of such licenses, franchises, permits, approvals,
authorization, exemptions, certificates, registrations and similar
documents or instruments will be subject to forfeiture, revocation,
limitation or restriction as a result of the transactions contemplated
hereby. Each Purchaser acknowledges and agrees that Sellers'
representations and warranties under this Section 4.12 are not made with
respect to any Environmental Laws and that Sellers' representations and
warranties to Purchasers with respect to Environmental Laws are made only
in Section 7.20.
4.13 Contracts. (a) Section 4.13 of the Disclosure Letter lists all
the Contracts and arrangements of the following types to which any of the
Acquired Companies or any of the Subsidiaries is a party or by which any
of them, any of their respective assets or properties or the Acquired Stock
is, or will by operation of this Agreement be, bound or liable as of the
date hereof:
(i) any Contract or arrangement of any nature which
involves an outstanding obligation or liability of
more than 150,000 English pounds sterling per annum,
except Contracts which are terminable by one of the
Acquired Companies or one of the Subsidiaries, as the
case may be, without penalty on no more than thirty
(30) days' notice;
(ii) any Contract or arrangement with a sales
representative, manufacturer's representative,
distributor, dealer, broker, sales agency, advertising
agency or other Person that is engaged in sales,
distributing or promotional activities and that
transacted business with any of the Acquired Companies
or Subsidiaries during the year ended December 29,
1996 in an amount in excess of 150,000 English pounds
sterling or where transacted business in the year
ending December 31, 1997 would be likely to exceed
150,000 English pounds sterling;
(iii) any Contract or arrangement (including indentures,
credit agreements, loan agreements, notes, mortgages,
or security agreements) pursuant to which any of the
Acquired Companies or any of the Subsidiaries has made
or will make loans or advances, or has or will have
incurred debt or become a guarantor or surety or
pledged its credit on or otherwise become responsible
with respect to any undertaking of another (except for
the negotiation or collection of negotiable
instruments in transactions in the ordinary course of
business), in each case other than (A) intercompany
debt, (B) debts or other obligations under the Senior
Credit Agreement and (C) debt not exceeding 150,000
English pounds sterling;
(iv) any lease of personal property requiring payments in
excess of 150,000 English pounds sterling in any one
year, or any lease of real property in excess of
10,000 English pounds sterling per year;
(v) any Contract or arrangement involving any restrictions
with respect to the geographical area of operations or
scope or type of business of any of the Acquired
Companies or any of the Subsidiaries;
(vi) any power of attorney or agency agreement or
arrangement with any Person pursuant to which such
Person is granted the authority to act for or on
behalf of any of the Acquired Companies or any of the
Subsidiaries other than (i) any such agreement entered
into in the ordinary course of the Business and
related to customs activities; and (ii) any such
agreement entered into in the ordinary course of the
Business with any sales representative, manufacturer's
representative, distributor, dealer or similar agent;
(vii) any Contract or arrangement entered into other than by
way of a bargain at arms length which is with an
Affiliate of the Guarantor (other than the Acquired
Companies or Subsidiaries); and
(viii) Any Contract or arrangement by which it is a member of
a joint venture, consortium, partnership or
association.
(b) Sellers have delivered or made available to Purchasers true
and complete copies of each document listed in Section 4.13 of the
Disclosure Letter, and a written and fair description of each oral
arrangement so listed.
(c) In the year ending on the date of this Agreement no
substantial customer or supplier of the Business has or indicated in
writing an intention to stop trading with or supplying the Business or
indicated in writing an intention to reduce its supplies or changed or
indicated in writing an intention to change materially the terms upon which
it is prepared to trade or supply with the Business.
(d) No third party has given written notice of its intention to
terminate or has in writing sought to repudiate or disclaim any of the
Contracts.
4.14 Real Properties. (a) Section 4.14 of the Disclosure Letter
contains a list of all real property owned (leases are separately described
in Section 4.13)in whole or in part by each of the Acquired Companies and
each of the Subsidiaries as of the date hereof. Each of the Acquired
Companies and each of the Subsidiaries has good title to all real
properties owned by it and used in the Business, free and clear of all
Liens except for Permitted Exceptions.
(b) No fact or circumstance exists which materially and
adversely affects the value of any of the real properties or the use or
enjoyment of any of the real properties or casts doubt on each of the
Acquired Companies right or title to any of the real properties.
(c) None of the Acquired Companies are in breach or default of
any leases or contracts relating to any of the real properties, their
ownership, occupation, possession or existing use and to the Sellers'
knowledge, no other party to any such lease or contract is in breach or
default thereof.
(d) Except in relation to the real properties owned by any of
the Acquired Companies or the Subsidiaries or used in the Business none of
the Acquired Companies have any liability (actual or contingent) arising
out of a lease, tenancy or license relating to land, premises or an
interest in land or premises, which has been transferred or assigned or
sub-let to another party (excluding, for the avoidance of doubt, sub-leases).
4.15 Tangible Personal Property. Each of the Acquired Companies and
each of the Subsidiaries has good title to all the material tangible
personal property owned by it and valid and subsisting leases with respect
to all of the material tangible personal property leased by it. All such
owned tangible personal property is owned free and clear of all Liens,
except: (a) as set forth in Section 4.15 of the Disclosure Letter; and (b)
liens for Taxes and assessments not yet payable which arise without any
attachment action.
4.16 Litigation. Except as set forth in Section 4.9 and Section 4.16
of the Disclosure Letter, (a) there are no actions, claims, proceedings or
governmental or quasi-governmental investigations pending or, to the
knowledge of Sellers, threatened against the Business, or any of the assets
of any of the Acquired Companies or any of the Subsidiaries at law or in
equity or relating to Sellers' ownership of the Acquired Stock or the
transactions contemplated by this Agreement, before or by any governmental
or quasi-governmental entity or by any other Person; and (b) neither the
Business nor any of the assets of any of the Acquired Companies or any of
the Subsidiaries is subject to any order, judgment or decree of any court
or governmental or quasi-governmental agency. Except as set forth in
Section 4.16 of the Disclosure Letter, none of the Acquired Companies and
none of the Subsidiaries has entered into any agreement to settle or
compromise any proceeding pending or threatened against it which as of the
date hereof involves any executory obligation on the part of such Acquired
Company or Subsidiary other than the payment of money. There are no
claims, actions, suits, proceedings or investigations pending or, to the
best of Sellers' knowledge, threatened by or against the Business, any of
the Acquired Companies or any of the Subsidiaries with respect to this
Agreement, or in connection with the transactions contemplated hereby or
thereby.
4.17 Labor Matters. (a) Section 4.17 of the Disclosure Letter contains
a list of the collective bargaining agreements to which any of the Acquired
Companies or any of the Subsidiaries is a party or by which any of them is
bound as of the date hereof. Except as disclosed in Section 4.17 of the
Disclosure Letter, (a) there are no labor controversies pending or, to the
knowledge of Sellers, threatened against any of the Acquired Companies or
any of the Subsidiaries which could reasonably be expected to have a
Material Adverse Effect; and (b) there are no grievances outstanding, or
unfair labor practice complaints pending before any governmental agency
under any such agreement or contract which could reasonably be expected to
have a Material Adverse Effect.
(b) Details of any Employees who are entitled to remuneration
during the course of a year exceeding 30,000 English pounds sterling (or
the equivalent in any other denomination at today's exchange rate) or which
have an employment contract which cannot be terminated by three months
notice or less without giving rights to a claim for damages of compensation
and are set out in Section 4.17 of the Disclosure Letter. No such Employee
will become entitled to any benefit or payment which arises as a result of
the transaction contemplated by this Agreement.
4.18 Employee Benefit Matters. Section 4.18 of the Disclosure Letter
lists all pension, death benefit, profit sharing, bonus, retirement,
disability, hospitalization and medical insurance plans (or other, similar
arrangements) and promises contributed to or entered into or announced by
the Acquired Companies or any of the Subsidiaries or any Affiliate or
predecessor of any of them for the benefit of, or in respect of any of the
Employees or to which any of them is or has been or may be obligated to
contribute (the "Benefit Plans") and true and accurate details of each of
the Benefit Plans and of the powers and discretions exercised thereunder
have been supplied to the Purchasers sufficient to establish the
entitlement to benefits in respect of each of the Employees. With respect
to the Benefit Plans, except as set forth in Section 4.18 of the Disclosure
Letter: (a) each of the Benefit Plans is and always has been maintained,
funded, insured and administered in compliance in all material respects
with all applicable laws and regulations and in accordance with its own
powers and provisions; (b) no such Benefit Plan, nor any participating
employer, trustee or administrator thereof, has, to the knowledge of the
Sellers, engaged in a transaction which could subject such Benefit Plan or
benefit paid or payable thereunder or participating employer, trustee or
administrator thereof, or any of the Employees or any person dealing with
such plan, to any material excise tax or penalty under any applicable law
or regulation or to any legal proceeding or dispute; (c) no Benefit Plan
has been terminated and, to the knowledge of the Sellers, no event has
occurred which might lead to its termination and, to the knowledge of the
Sellers, no proceedings to terminate any Benefit Plan have been or are
intended to be instituted by any Person or any governmental authority
having jurisdiction over such plan or have been communicated to any Person;
(d) with respect to any Benefit Plan maintained for the benefit of the
Employees of the Business in Belgium or the Netherlands that is required
to be funded, each such Benefit Plan has been properly funded in accordance
with applicable Law and properly provided for in the Financial Statements,
(e) the memorandum dated December 17, 1997 from Martin S. Webster to Pieter
Hooft (a copy of which is attached to the Disclosure Letter) fairly
presents the situation with respect to the pension arrangements for Bernd
Stiller, and (f)except as set forth in Section 4.18 of the Disclosure
Letter, as at June 1, 1996 the Dexion Group Pension and Assurance Scheme
(the "UK Scheme") was funded as set out in the disclosed actuarial
valuation as at June 1, 1996 relating to the UK Scheme (the "Valuation").
No act or omission since the effective date of the Valuation has had a
materially adverse effect on the funding level of the UK Scheme as
disclosed in the Valuation. The information supplied for the purposes of
the Valuation was true, complete and not misleading.
4.19 Taxes.
(a) Each of the Acquired Companies and each of the Subsidiaries
has duly and timely filed all Returns required to be filed by it; all such
Returns were complete and correct in all material respects; and, except to
the extent reflected or reserved against in the Financial Statements, each
of the Acquired Companies and each of the Subsidiaries has paid all Taxes
due to, or claimed to be due from it by, any taxing authority.
(b) The Financial Statements include full provisions in
accordance with GAAP for liabilities of the Acquired Companies and
Subsidiaries for all Taxes, including deferred Taxes, which relate to the
Business through the periods indicated thereon which are not yet due to the
appropriate taxing authority. Since 23.ll.97 none of the Acquired
Companies and Subsidiaries has incurred any liability for Tax outside the
ordinary course of the Business.
(c) All Taxes that any of the Acquired Companies or any of the
Subsidiaries is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to
the appropriate taxing authority.
(d) As of the date hereof, none of the Acquired Companies and none
of the Subsidiaries has executed or filed with any taxing authority any
agreement extending the period for assessment or collection of Taxes.
(e) Except as set forth in Section 4.19 of the Disclosure
Letter, none of the Acquired Companies and none of the Subsidiaries is a
party to any pending action or proceeding, nor, to the knowledge of Seller,
is any such action or proceeding threatened for the collection of Taxes.
No claim for assessment or collection of Taxes has been asserted against
any of the Acquired Companies or any of the Subsidiaries.
(f) Except as disclosed in Section 4.19 of the Disclosure
Letter, none of the Acquired Companies and none of the Subsidiaries is a
party to any agreement providing for the sharing or allocation of any Tax
liability.
(g) Except as disclosed in Section 4.19 of the Disclosure
Letter, no power of attorney which is currently effective has been granted
by or with respect to any of the Acquired Companies or the Subsidiaries
with respect to any matter relating to Taxes.
(h) No Acquired Company or Subsidiary has any liability for
Taxes in respect of the provision or receipt of goods or services to an
Affiliate except those liabilities that have been paid or reserved for in
the Financial Statements.
(i) Save as Pieter Hooft and Neil Brown are at today's date
aware none of the Acquired Companies will incur any liability for Taxes
solely as a result of the sale and purchase of the Acquired Stock
contemplated by this Agreement save for those, if any, arising as a result
of the ownership interest of Apax Partners & Co. and/or its Affiliates in
the Purchasers.
(j) There have been no intra-group transfers of assets which
have resulted in the book value of any asset in the hands of the relevant
Acquired Company or Subsidiary exceeding the tax base cost of such asset.
Notwithstanding any other provision of this Section 4.19, the
Purchasers acknowledge that the property of Dexion S.A. is subject to liens
pertaining to unpaid Taxes and penalties, and no breach of this Agreement
may be claimed based on such liens unpaid Taxes or penalties.
4.20 Environmental Matters.
(a) Each of the Acquired Companies and each of the Subsidiaries
is in compliance with all Environmental Laws in effect as of the date
hereof and applicable to the Business currently conducted by it as it is
currently conducted;
(b) Each of the Acquired Companies and each of the Subsidiaries
possesses all Environmental Permits required for the conduct or operation
of the Business (or any part thereof) currently conducted by it as it is
currently conducted, and is in compliance with all of the requirements and
limitations included in such Environmental Permits;
(c) None of the Acquired Companies and none of the Subsidiaries
has received any written notice from any governmental authority or any
other Person that any aspect of the Business conducted by it or any land
or other asset owned, occupied, possessed or used by any of them is in
violation of any Environmental Law or Environmental Permit except for
notices that, to the Sellers' knowledge, have been resolved;
(d) None of the Acquired Companies and none of the Subsidiaries
is the subject of any active or, to the Sellers' knowledge, pending
litigation or proceedings in any forum, judicial or administrative,
involving a demand for damages, injunctive relief, penalties, or other
potential liability with respect to violations of any Environmental Law or
Environmental Permit;
(e) Under applicable Environmental Law, none of the Acquired
Companies and Subsidiaries has a liability (actual or contingent) under
current law, or would have were any future Environmental Law brought into
force before the Second Anniversary to apply at today's date to make good,
repair, re-instate or clean up land (including any water on or in the land)
or another asset on or before the date of this Agreement owned, occupied,
possessed or used by any of them; and
(f) Each of the Acquired Companies and each of the Subsidiaries
have always complied in all material respects with all Environmental Laws
and any requirements and limitations included in any Environmental Permits
applicable to the Business as conducted at the relevant time, and in
respect of land or other assets owned, occupied, possessed or used by any
of them at any time on or before the date of this Agreement.
Notwithstanding any other provision of this Section 4.20, (i) the
Purchasers acknowledge that an upgrade to the paint plants at Hemel
Hempstead is required to comply with Environmental Laws applicable in
England and no breach of this Agreement may be claimed based upon such
need; and (ii) a claim may be made for Loss (as defined in Section 6.1)
by virtue of a claimed breach of this Section 4.20 with respect to any
Environmental Law not in effect on the date hereof only if (A) a claim has
been made against an Acquired Company or a Subsidiary by a governmental,
quasi-governmental or private third party, or (B) a reputable law firm
acceptable to Sellers has delivered to an Acquired Company or Subsidiary
its unqualified legal opinion that corrective action with respect to which
the Loss is being claimed is required by Environmental Law to be completed
within the ensuing one-year period.
4.21 Inventory. All of the inventories which are reflected in the
balance sheets constituting a part of the Financial Statements were
purchased or acquired in the ordinary and regular course of the conduct of
the Business and in a manner consistent with the regular inventory
practices relating to the Business, and have been or are expected to be
used or sold in the ordinary and regular course of the Business and in a
manner consistent with regular inventory practices; all of the inventories
which are reflected in the balance sheets constituting a part of the
Financial Statements were priced at the lower of cost or market, and were
(as to classes of items inventoried and methods of accounting and pricing)
determined in a manner consistent with prior years; and all inventories
which have been purchased or acquired for the Business since December 29,
1996 were purchased or acquired in the ordinary and regular course of the
Business and in a manner consistent with regular inventory practices and
have been or are expected to be used or sold in the ordinary and regular
course of the Business and in a manner consistent with regular inventory
practices.
4.22 Receivables. All of the accounts receivable, notes receivable,
contract receivables and other receivables ("Receivables") which are
reflected in the balance sheets constituting a part of the Financial
Statements were created in the ordinary and regular course of the conduct
of the Business; and all of the Receivables which have been or will be
created since December 29, 1996 were or will be created in the ordinary and
regular course of the conduct of the Business and are not the subject of
any factoring agreement.
4.23 Undisclosed Liabilities. On December 29, 1996, none of the
Acquired Companies and none of the Subsidiaries had any debts, liabilities
or obligations (i) in the nature of borrowing or (ii) otherwise of a nature
required to be reflected on a balance sheet prepared in accordance with
GAAP, in each case which were not fully disclosed, reflected or reserved
against in the balance sheet as of that date included as a part of the
Financial Statements. As of the date hereof, except for current
liabilities or obligations which have been incurred in the ordinary course
of the Business and except as disclosed in Section 4.23 of the Disclosure
Letter, none of the Acquired Companies and none of the Subsidiaries has
incurred since November 23, 1997 any debt, liability or obligation (i) in
the nature of borrowing or (ii) otherwise of a nature required to be
reflected on a balance sheet prepared in accordance with GAAP.
4.24 Conduct of Business. Except as listed in Section 4.24 of the
Disclosure Schedule, since December 29, 1996, as of the date hereof, the
Business has been conducted only in its ordinary course and none of the
Acquired Companies and none of the Subsidiaries has:
(a) changed its accounting methods, systems, policies,
principles or practices, except as required by law, GAAP or generally
accepted accounting principles applicable to any of the Acquired Companies
or any of the Subsidiaries;
(b) other than in the ordinary course of business consistent
with past practice, established or materially increased any bonus,
insurance, severance, deferred compensation, pension, profit sharing or
other employee benefit plan or otherwise increased the compensation payable
or to become payable to any officer, director, employee, agent or
consultant of any of the Acquired Companies or any of the Subsidiaries;
(c) other than in the usual and ordinary course of the Business
consistent with past practice, acquired or leased any assets or sold,
transferred, conveyed, assigned or otherwise disposed of, or agreed to
sell, transfer, convey, assign or otherwise dispose of, any of its assets
or properties, or permitted the creation of any Lien which adversely
affects the aggregate value of its assets or properties;
(d) altered or amended in any manner its organizational
documents or adopted any shareholders' resolution to take such action,
split, combined, or reclassified any shares of its capital stock, declared,
set aside or paid any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital
stock, or redeemed or otherwise acquired any of its capital stock or other
securities save for a dividend approved and declared by Dexion Inc. on
December 16th, 1997 of approxiamately $1,056,000;
(e) issued, sold or become contractually committed to issue or
sell any of its shares of capital stock or other securities, or amended any
of the terms of any such capital stock or other securities;
(f) authorized or incurred any capital expenditures in excess
of $4 million, individually or in the aggregate with the other Acquired
Companies and Subsidiaries; or
(g) merged or consolidated or entered into any agreement to
merge or consolidate with any other Person.
4.25 Customers and Suppliers. Section 4.25 of the Disclosure Letter
sets forth:
(a) a list of the ten largest customers of the Business in terms
of revenue during the year ended December 29, 1996 showing the total
revenue received in such period from each such customer; and
(b) a list of the ten largest suppliers of the Business in terms
of dollar amount of purchases during the year ended December 29, 1996 and
showing the approximate dollar amount of total purchases in each such
period from such supplier.
4.26 Insurance. Section 4.26 of the Disclosure Letter contains a list
of each current insurance and indemnity policy in respect of which the
Acquired Companies and the Subsidiaries have an interest and details of any
claim which is outstanding under any of those policies. All such policies
are in full force and effect.
4.27 Investments, Grants and Subsidies. None of the Acquired
Companies or Subsidiaries is liable to repay an investment or other grant
or subsidy made to it by virtue of the transactions contemplated by this
Agreement.
4.28 Dexion Incorporated. Dexion Incorporated does not have any
assets or liabilities other than in respect of the offices located in
Malaysia and Singapore and save for those countries it does not carry on
any business or have any branches in any other part of the world.
4.29 DISCLAIMER OF WARRANTIES. EXCEPT WITH RESPECT TO THE WARRANTIES
AND REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLERS MAKE
NO WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY, SUITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE ASSETS OF THE
ACQUIRED COMPANIES OR ANY OF THE SUBSIDIARIES OR ANY PART THEREOF, OR AS
TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD BY PURCHASERS THAT
SUCH ASSETS ARE TO BE ACQUIRED BY IT BY VIRTUE OF PURCHASERS' ACQUISITION
OF THE ACQUIRED STOCK HEREUNDER "AS IS" ON THE DATE HEREOF, AND IN THEIR
PRESENT CONDITION, SUBJECT TO REASONABLE USE, WEAR AND TEAR BETWEEN THE
DATE HEREOF AND THE CLOSING DATE, AND EACH PURCHASER SHALL RELY UPON ITS
OWN EXAMINATION THEREOF.
ARTICLE 5
WARRANTIES AND REPRESENTATIONS OF PURCHASERS
Each Purchaser warrants and represents to Sellers (which
warranties and representations shall survive the Closing) as follows:
5.1 Incorporation and Qualification of Purchasers.
(a) Each Purchaser is a corporation validly existing and in good
standing under the laws of England and Wales and has all requisite corporate
power and authority to own, operate and lease the assets it now owns,
operates or leases and to carry on its business as currently conducted.
(b) Each Purchaser is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the properties owned
or leased by it or the operation of its businesses makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on its ability to
consummate the transactions contemplated hereby or its properties or
businesses, taken as a whole.
5.2 Authority. Each Purchaser has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations
hereunder and to carry out the transactions contemplated hereby. The
execution and delivery of this Agreement by each Purchaser, the performance
by each Purchaser of its obligations hereunder and the consummation by each
Purchaser of the transactions contemplated hereby have been, duly
authorized by all requisite corporate action (board of directors,
stockholders or otherwise) on the part of such Purchaser and no other
corporate action on the part of either Purchaser is necessary to authorize
this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been fully executed and delivered by each Purchaser and
(assuming the due authorization, valid execution and delivery hereof by
Sellers) is, and as of the Closing will be, a legal, valid and binding
obligation of each Purchaser, enforceable against each Purchaser in
accordance with its terms.
5.3 No Conflict. Except as may result from any facts or
circumstances relating solely to Sellers, the execution, delivery and
performance of this Agreement and all other instruments, agreements,
certificates and documents delivered to Sellers pursuant hereto by either
Purchaser do not and will not: (a) conflict with or violate any provision
of the Memorandum and Articles of Association of either Purchaser;
(b) except as would not have a material adverse effect on either Purchaser
or its ability to consummate the transactions contemplated hereby, conflict
with or result in any breach or termination of, or constitute a default (or
event which, with the giving of notice or lapse of time, or both, would
become a default) under, or give rise to a loss of any benefit to which
either Purchaser is entitled under any provision of any agreement, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Lien on any of the assets
or properties of either Purchaser pursuant to, any instrument, license,
agreement or commitment to which either Purchaser is a party or by which
any of its assets or properties are bound; or (c) except as would not have
a material adverse effect on either Purchaser or its ability to consummate
the transactions contemplated hereby contravene, conflict with or violate
any law, rule, regulation, order, writ, judgment, injunction or decree
binding upon or applicable to either Purchaser or its assets or properties.
5.4 Consents and Approvals. The execution, delivery and performance
by either Purchaser of this Agreement do not and will not, and compliance
by either Purchaser with the terms hereof and consummation by either
Purchaser of the transactions contemplated hereby will not, require either
Purchaser to obtain any consent, approval, authorization or other action
of, or make any filing with or give any notice to, any court,
administrative agency or other governmental authority, except (a) where
failure to obtain such consents, approvals, authorizations or actions, make
such filings or give such notice would not prevent either Purchaser from
performing any of its material obligations under this Agreement and (b) as
may be necessary as a result of any facts or circumstances relating solely
to Sellers.
5.5 Litigation. There are no actions, claims, proceedings or
governmental investigations pending or, to the knowledge of either
Purchaser threatened, against either Purchaser or any of its assets or
properties at law or in equity, before or by any court, agency or other
governmental entity, or by any other Person, which could reasonably be
expected to have a material adverse effect on either Purchaser.
5.6 Brokers. Neither this Agreement nor the purchase of the Acquired
Stock or any other transaction contemplated by this Agreement was induced
or procured through any Person acting on behalf of or representing either
Purchaser or any of its Affiliates as broker, finder, investment banker,
financial advisor or in any similar capacity.
5.7 Financial Ability. At the Closing on the Closing Date,
Purchasers shall have the funds necessary to purchase the Acquired Stock
and consummate the transactions contemplated hereby.
5.8 Investigation. Each Purchaser acknowledges and agrees that it
(a) has made its own inquiry and investigation into, and based thereon has
formed an independent judgment concerning, the Business, the Acquired
Stock, and the assets and liabilities of the Acquired Companies and the
Subsidiaries, (b) has been furnished with or given adequate access to such
information about the Business, the Acquired Stock and the assets and
liabilities of the Acquired Companies and the Subsidiaries, as it has
requested, and (c) will not assert any claim against Sellers or any of
their respective officers, directors, employees, agents, stockholders,
Affiliates, consultants or representatives, or hold Sellers or any such
Person liable, for any inaccuracies, misstatements or omissions with
respect to such information (other than Sellers with respect to the express
representations and warranties made in this Agreement by Sellers).
ARTICLE 6
INDEMNIFICATION
6.1 Sellers' Indemnity. After the Closing Date, Sellers undertake
to each Purchaser (for itself and as trustee for its Affiliates and its,
and its Affiliates, officers, directors, employees and agents) to indemnify
and hold each Purchaser, its Affiliates and their officers, directors,
employees and agents (collectively, the "Purchaser Indemnified Persons")
harmless against any loss, damage or expense (including reasonable legal
fees and expenses) ("Losses") suffered as the result of (a) any breach by
Sellers of any covenants or agreements made by the Sellers in this
Agreement (other than breaches of representations and warranties made by
Sellers herein, or in the Disclosure Letter set forth in Article 4); and
(b) any inaccuracy in or breach of any of the representations or warranties
set forth in Article 4 made by Sellers herein, or in the Disclosure Letter.
6.2 Limitations. Purchasers' rights to indemnification pursuant to
Section 6.1 (b) is subject to the following specific limitations:
(a) After the Claims Bar Date, no Purchaser Indemnified Person
shall be entitled to assert any right of indemnification under Section 6.1
for any loss, damage or expense suffered by such Purchaser Indemnified
Person, except that if, as of the Claims Bar Date, there shall then be
pending any claim under Section 6.1 of which such Purchaser Indemnified
Person shall have notified Sellers in writing on or prior to the Claims Bar
Date, such Purchaser Indemnified Person shall continue to have the right
to be indemnified with respect to such claim; provided, that, (i) the
representations and warranties of the Sellers contained in Sections 4.1,
4.2 and 4.6, and the indemnification obligations of the Sellers under
Section 6.1 relating thereto, shall survive the Closing forever; (ii) the
representations and warranties contained in Section 4.19, and the
indemnification obligations of the Sellers under Section 6.1 relating
thereto, shall survive until 90 days after the expiration of the applicable
statute of limitations (including any extensions thereof); and (iii) the
representations and warranties contained in Section 4.20, and the
indemnification obligations of the Sellers under Section 6.1 relating
thereto, shall survive until the Second Anniversary.
(b) Subject to Section 6.2(c) no Purchaser Indemnified Person
shall be entitled to indemnification hereunder for any indemnification
claims until the amount of the aggregate losses, damages and expenses
required to be indemnified by Sellers pursuant to Section 6.1 (except in
respect of the representations and warranties contained in Section 4.19),
exceed 300,000 English pounds sterling (said amount is hereinafter
sometimes referred to as the "Threshold"), whereupon the Purchaser
Indemnified Persons shall be entitled to indemnification hereunder from
Sellers only for the aggregate of indemnification claims in excess of the
Threshold; provided that, if an indemnification claim is with respect to
the representations and warranties contained in Section 4.19 then a
Purchaser Indemnified Person shall be entitled to indemnification to the
extent that such aggregate indemnification claims exceed 100,000 English
pounds sterling. Solely for the purpose of calculating the entitlement to
indemnification for Losses (other than Environmental Losses, as defined in
Section 6.2(c)) the amount of Environmental Losses shall be added to the
amount of such Losses up to a maximum of 300,000 English pounds sterling.
(c) To the extent that any Purchaser Indemnified Person suffers
any loss, damage or expense solely in respect of a breach of the
representations and warranties contained in Section 4.20 ("Environmental
Losses"): (i) they shall not be entitled to indemnification unless the
Environmental Losses exceed 300,000 English pounds sterling whereupon the
Purchaser Indemnified Persons shall be entitled to 50% of the amount by
which the Environmental Losses exceeds 300,000 English pounds sterling;
(ii) if the Environmental Losses exceed 1,000,000 English pounds sterling
then in addition to the rights in (i) above, the Purchaser Indemnified
Person shall be entitled to indemnification for the amount by which the
Environmental Losses exceed 1,000,000 English pounds sterling and (iii) if
the Environmental Losses exceed 2,000,000 English pounds sterling then
notwithstanding (i) and (ii) above, the Purchaser Indemnified Person shall
be entitled to indemnification in respect of the entire amount by which the
Environmental Losses exceed 300,000 English pounds sterling. Solely for
the purpose of calculating the entitlement to indemnification for
Environmental Losses the amount of any Losses suffered by way of breach of
the representations and warranties contained in Section 4 (other than
Section 4.20) shall be added to the amount of the Environmental Losses up
to a maximum of 300,000 English pounds sterling.
(d) For the purposes of this Section 6.2, in computing such
individual or aggregate amounts of claims, the amount of each claim shall
be deemed to be an amount (i) net of any tax benefit realized by a
Purchaser Indemnified Person by reason of deductibility of such liability
or damage, and any deferred tax benefit attributable to such liability or
damage and (ii) net of any insurance proceeds and any indemnity,
contribution or other similar payment recovered by a Purchaser Indemnified
Person from any third party with respect thereto.
(e) The maximum liability of Sellers under Section 6.1(b) of
this Agreement to the Purchaser Indemnified Persons for indemnification
claims hereunder shall be in the aggregate (i) in respect of all Basic
Claims, 25,000,000 English pounds sterling and (ii) in respect of the
aggregate of all Basic Claims and Non-Basic Claims, 60,000,000 English
pounds sterling. For the purposes hereof, "Basic Claims" shall mean
indemnification claims relating to the representations and warranties other
than Sections 4.1, 4.2, 4.6, 4.19 and 4.20 and "Non-Basic Claims" shall
mean indemnification claims relating to representations and warranties in
Sections 4.1, 4.2, 4.6 4.19 and 4.20.
(f) With respect to any claim seeking indemnification under
Section 6.1, a Purchaser Indemnified Person shall deliver appropriate
claims to any relevant insurer with respect to the loss, damage or expense
giving rise to such claim. To the extent necessary, a Purchaser
Indemnified Person shall permit Sellers to assert any such claims and shall
cooperate, at Sellers' expense, with Sellers' prosecution of such claims.
In the event that Sellers make any payment to a Purchaser Indemnified
Person for indemnification for which such Purchaser Indemnified Person may
have a claim against an insurer, such Purchaser Indemnified Person and any
of such Person's successors, shall diligently pursue such claim against
such insurer. In the event that Sellers make any payment to a Purchaser
Indemnified Person for indemnification and the Purchaser Indemnified Person
subsequently recovers from another person an amount which is referable to
the matter giving rise to the claim then if the amount paid by the Sellers
is more than the Sum Recovered the Purchaser Indemnified Person shall
immediately pay to the relevant Seller the Sum Recovered. If the amount
paid by the Sellers in respect of the claim is less than or equal to the
Sum Recovered, the Purchaser Indemnified Person shall immediately pay to
the Sellers an amount equal to the amount paid by the relevant Seller. For
the purposes of this Section "Sum Recovered" means an amount equal to the
total of the amount recovered from the other person less all reasonable
costs incurred by the Purchaser Indemnified Person in recovering the amount
from the person.
(g) As a condition to accepting the benefits of Section 6.1,
each Purchaser Indemnified Person acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Article 6. In furtherance of the foregoing,
each Purchaser Indemnified Person waives, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action it
may have against Sellers arising under or based upon any applicable law,
ordinance, rule or regulation (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law,
Environmental Laws or otherwise).
(h) Except as set forth in this Agreement, Sellers are not
making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of
either Purchaser, after the consummation of the purchase and sale of the
Acquired Stock contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
(i) Sellers shall have no liability under any provision of this
Agreement for any liabilities or damages to the extent that such
liabilities or damages relate to actions taken or not taken by either
Purchaser or any other Purchaser Indemnified Person from and after the
Closing Date which are outside the ordinary course of Business as currently
carried on save to the extent that such actions are taken or not taken
pursuant to legally binding commitments entered into before Closing.
(j) Each Purchaser Indemnified Person shall take all reasonable steps
to mitigate all liabilities and damages for which a claim may be made
against Sellers pursuant to Section 6.1 upon and after becoming aware of
any event which could reasonably be expected to give rise to such
liabilities or damages.
6.3 Purchasers Indemnity. After the Closing Date, each Purchaser
agrees to indemnify and hold Sellers, their Affiliates and their officers,
directors, employees and agents (collectively, the "Seller Indemnified
Persons") harmless against any loss, damage or expense (including
reasonable attorneys' fees) suffered as the result of (a) any breach by
either Purchaser of this Agreement; (b) any inaccuracy in or breach of any
of the representations, warranties, covenants or agreements made by either
Purchaser herein; and (c) any inaccuracy or misrepresentation in a
certificate or affidavit delivered by either Purchaser at the Closing in
accordance with the provisions of this Agreement.
6.4 Notice of Claims. As soon as reasonably practicable after upon
obtaining knowledge of any claim or demand which has given rise to, or
could reasonably be expected to give rise to, a claim for indemnification
hereunder, the party seeking indemnification ("Indemnitee") shall give
written notice of such claim or demand ("Notice of Claim") to the other
party ("Indemnitor"). Indemnitee shall furnish to the Indemnitor in
reasonable detail such information as Indemnitee may have with respect to
such indemnification claim (including copies of any summons, complaint or
other pleading which may have been served on it and any written claim,
demand, invoice, billing or other document evidencing or asserting the
same). Subject to the limitations set forth in Section 6.2(a), no failure
or delay by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold
Indemnitee harmless, except to the extent that such failure or delay shall
have adversely affected Indemnitor's ability to defend against, settle or
satisfy any liability, damage, loss, claim or demand for which Indemnitee
is entitled to indemnification hereunder.
6.5 Indemnification Proceeding. If the claim or demand set forth in
the Notice of Claim given by Indemnitee pursuant to Section 6.6 is a claim
or demand asserted by a third party, Indemnitor shall have fifteen (15)
days after the date such Notice of Claim is effective pursuant to
Section 8.10 to give notice to Indemnitee of its election to defend such
third-party claim or demand on behalf of the Indemnitee. If Indemnitor
elects to defend such third-party claim or demand, Indemnitee shall make
available to Indemnitor and its agents and representatives all records and
other materials which are reasonably required in the defense of such
third-party claim or demand and shall otherwise cooperate with, and assist
Indemnitor in the defense of, such third-party claim or demand, and so long
as the Indemnitor is defending such third-party claim in good faith,
Indemnitee shall not pay, settle or compromise such third-party claim or
demand. If Indemnitor elects to defend such third-party claim or demand,
Indemnitee shall have the right to participate in the defense of such
third-party claim or demand, at Indemnitee's own expense. If Indemnitor
does not elect to defend such third-party claim or demand or does not
defend such third-party claim or demand in good faith, Indemnitee shall
have the right, in addition to any other right or remedy it may have
hereunder, at Indemnitor's expense, to defend such third-party claim or
demand; provided, however, that (a) Indemnitee shall not have any
obligation to participate in the defense of, or defend, any such third-party
claim or demand; and (b) Indemnitee's defense of or its participation
in the defense of any such third-party claim or demand shall not in any way
diminish or lessen the obligations of Indemnitor under the agreements of
indemnification set forth in this Article 6.
ARTICLE 7
CERTAIN OTHER UNDERSTANDINGS
7.1 Records. (a) After the Closing, each party agrees to provide the
other with access to all relevant documents and other information insofar
as it relates to the period prior to Closing which are reasonably needed
by such party for purposes of preparing tax returns or responding to an
audit by any governmental agency or for any other reasonable purpose. Such
access will be during normal business hours, upon reasonable prior notice
and not otherwise subject to time limitations.
(b) Sellers agree that on or before the Closing, they shall
provide Purchasers with all books and records relating to the Business
including, without limitation, books and records relating to the assets of
each of the Acquired Companies and each of the Subsidiaries; provided,
however, that Sellers may retain copies of any such books and records that
they reasonably believe are necessary for the purpose of filing with or
responding to any taxing authority with respect to Taxes for periods during
which the Acquired Companies and/or Subsidiaries and/or any of their
respective businesses were owned, directly or indirectly, by the Guarantor
or any of its Affiliates or predecessors. Each Purchaser agrees that it
shall preserve and keep all books and records relating to the Business in
such Purchaser's possession until six months following the expiration of
the applicable statute of limitations (including extensions thereof)
applicable to the Returns of Sellers filed in connection with the Business
for each taxable period first ending after the Closing Date and each prior
taxable period to which such books or records are relevant. After such
time, before either Purchaser shall dispose of any of such books and
records, at least ninety (90) calendar days' prior written notice to such
effect shall be given by such Purchaser to Sellers, and Sellers shall be
given an opportunity, at their cost and expense, to remove and retain all
or any part of such books and records as Sellers may select. Duly
authorized representatives of either Seller shall, upon reasonable notice,
have access to such books and records during normal business hours to
examine, inspect, retrieve and copy such books and records.
(c) In order to facilitate the resolution of any claims made by
or against or incurred by Sellers prior to or after the Closing, upon
reasonable notice, each Purchaser shall, and shall cause the Acquired
Companies and Subsidiaries to, after the Closing: (i) afford the officers,
employees and authorized agents and representatives of Sellers reasonable
access, during normal business hours, to the offices, properties, books and
records of the Business; (ii) furnish to the officers, employees and
authorized agents and representatives of Sellers such additional financial
and other information regarding the Business as Sellers may from time to
time reasonably request; and (iii) make available to Sellers, the employees
whose assistance, testimony or presence is necessary to assist Sellers in
evaluating any such claims and in defending such claims, including the
presence of such persons as witnesses in hearings or trials for such
purposes; provided, however, that such investigation shall not unreasonably
interfere with the businesses or operations of either Purchaser or any of
its Affiliates or subsidiaries.
(d) If, in order properly to prepare documents required to be
filed with governmental authorities or its financial statements, it is
necessary that either party hereto or any successors be furnished with
additional information relating to the conduct of the Business prior to
Closing, including, without limitation, the assets of any of the Acquired
Companies or any of the Subsidiaries, and such information is in the
possession of the other party hereto, such other party agrees to use its
best efforts to furnish such information to the party needing such
information, at the cost and expense of the party being furnished such
information. In furtherance of, and not in limitation of, the foregoing,
Purchasers agree to cause each of the Acquired Companies and Subsidiaries
to provide the Guarantor on a timely basis all financial information
necessary to enable the Guarantor to prepare its 1997 fiscal year financial
statements (and, in respect of Australia, its 1998 fiscal year, interim and
quarterly financial statements) and meet its reporting requirements on the
Guarantor's normal reporting schedule.
7.2 Employee Matters. After Closing the Purchasers undertake to
procure that the Acquired Companies and the Subsidiaries will not for a
period of 3 months after Closing breach the employment contracts of the
Employees save with the consent of the Employee or a union or
representative workers' body representing 30 or more Employees.
7.3 Certain Tax Matters.
(a) Section 338(g) Election. Extondew shall make the election
provided by Section 338(g) of the Code, in accordance with Treasury
Regulation Section 1.338-1(d), with respect to its acquisition of Dexion
Group (the "Section 338(g) Election") and, if permissible, elections
comparable to the Section 338(g) Election under any other income tax laws
applicable to Dexion Group. The Section 338(g) Election shall be made on
Form 8023-A, which Form 8023-A shall be prepared by Extondew. A copy of
the final version of such Form 8023-A shall be provided to Sellers by
Extondew at least 30 days prior to the date on which Extondew is required
by Treasury Regulation Section 1.338-1(d) or by Section 7.03(a) of this
Agreement to file such Form 8023-A with the Internal Revenue Service.
Extondew shall attach a copy of such Form 8023-A to the United States
corporation income tax return, if any, that it will file for its taxable
year which includes the Closing Date. Irrespective of whether Extondew
files a United States corporation income tax return for the year which
includes the Closing Date, no later than 8-1/2 months following the month
in which the Closing occurs, Extondew shall file a copy of such Form 8023-A
with the Office of Assistant Commissioner (International) of the Internal
Revenue Service or the appropriate Internal Revenue Service Center.
(b) Section 338(h)(10) Election. Extonbrook, on the one hand,
and Interlake Companies and the Guarantor, on the other hand, shall join
with each other in making the election provided by Section 338(h)(10) of
the Code, in accordance with Treasury Regulation Section 1.338(h)(10)-1(d)(2),
with respect to the acquisition by Extonbrook of the capital stock
of Dexion Inc. (the "Section 338(h)(10) Election"), and, if permissible,
similar elections under any applicable state or local income tax laws with
respect to such entity. The Section 338(h)(10) Election shall be made on
Form 8023-A. Such Form 8023-A shall be prepared by the Guarantor and
delivered by the Guarantor to Extonbrook as promptly as practicable, but
no later than one hundred and eighty days after the Closing Date. A copy
of the final version of such Form 8023-A, after having been endorsed by
Extonbrook, shall be provided to the Guarantor by Extonbrook no later than
30 days after the date on which the Guarantor shall have delivered such
completed Form 8023-A to Extonbrook. The Guarantor shall file such Form
8023-A with the Internal Revenue Service Center in Kansas City, Missouri,
within the time period specified in Treasury Regulation Section
1.338(h)(10)-1(d)(2), and the Guarantor shall attach a copy of such Form
8023-A to the consolidated United States corporation income tax return that
it will file for its taxable year which includes the Closing Date.
Extonbrook shall attach (or shall cause Dexion Inc. to attach) a copy of
such Form 8023-A to the United States corporation income tax return that
Extonbrook (or Dexion Inc.) will file for its taxable year which includes
the Closing Date. Sellers shall be responsible for any Taxes that are due
as a result of the Section 338(h)(10) Election provided for in this
Agreement.
(c) Section 338(h)(10) Allocation. Interlake Companies and
Extonbrook shall use their best efforts to agree, as soon as practicable,
to an allocation, in accordance with the rules prescribed in Treasury
Regulation Section 1.338(b)-2T(b), of the modified aggregate deemed sales
price at which Dexion Inc. will be deemed, as a result of the Section
338(h)(10) Election, to have sold on the Closing Date all of its assets,
among the assets that Dexion Inc. owns on the Closing Date. Each of
Interlake Companies, Extonbrook and the Guarantor shall (and Extonbrook
shall cause Dexion Inc. after the Closing to) adhere to, and to be bound
by, such allocations for United States federal income tax purposes and, to
the extent the Section 338(h)(10) Election is recognized by any state or
local tax authority for state or local income tax purposes, for all such
state or local income tax purposes.
(d) Election to Treat Certain Entities as Branches. Purchasers
acknowledge that Interlake Companies has elected for United States federal
income tax purposes to treat Australia and North Asia as branches of one
of the Sellers. Each party agrees for United States federal income tax
purposes, and, if applicable, for state and local income tax purposes, to
treat the assets and properties owned by Australia and North Asia on the
Closing Date as though such assets and properties were owned by Interlake
Companies. Interlake Companies and Extonbrook further agree to use their
best efforts to agree, as soon as practicable, on an allocation of the sum
of the portion of the Purchase Price allocated pursuant to Section 2.3 to
each of Australia and North Asia plus the aggregate liabilities, as of the
Closing Date, of each such entity among the assets and properties which
each such entity own on the Closing Date. Interlake Companies and
Extonbrook each further agree (1) to complete I.R.S. Form 8594 with respect
to the acquisition by Extonbrook of Australia and North Asia, in a manner
consistent with the purchase price allocation provided for in this Section
7.3(d), (2) to cooperate with the other party in the preparation of such
I.R.S. Form 8594, (3) to furnish the other party with a copy of such I.R.S.
Form 8594, in draft form, within a reasonable period before the due date
of the United States corporation income tax return, if any, that such other
party will file for its taxable year which includes the Closing Date, and
(4) to timely file a copy of such I.R.S. Form 8594 with the United States
corporation income tax return, if any, that it or its parent corporation
will file for the taxable year which includes the Closing Date.
(e) Hold Harmless. Sellers will hold harmless Purchasers, and
the Acquired Companies in respect of any Tax detriment (net of any Tax
benefit) resulting from any of the Tax elections made pursuant to this
Section 7.3.
7.4 Change of Control. If: (a) any Contract requires a consent to
any change in control of any of the Acquired Companies and such consent has
not been obtained by the Closing Date; or (b) a Contract relates solely to
the Business but is in the name of either Seller or an Affiliate of a
Seller other than one of the Acquired Companies or one of the Subsidiaries;
then this Agreement, to the extent permitted by law, shall constitute an
equitable assignment by such Seller or such Affiliate to the appropriate
Acquired Company, as appropriate, of all rights, benefits, title and
interest, liabilities and obligations under any such Contracts. Such
Seller or Affiliate shall take all reasonable steps and action to provide
the appropriate Acquired Company with the benefits of such Contracts.
Purchaser and the appropriate Acquired Company shall take all necessary
steps to perform their obligations with respect thereto and shall indemnify
such Seller or Affiliate for any losses suffered by such Seller or
Affiliate relating to Purchaser's or the appropriate Acquired Company's
performance of such obligations. If the consent referred to in (a) of this
section can not be obtained or a Contract falling within (b) above cannot
be assigned without a third party consent and such consent cannot be
obtained then the Purchaser may require the Sellers to make all reasonable
efforts to ensure that the Contract is terminated without liability to
either party.
7.5 No Reversals of Corporate Action. With respect to any dividend
that has been declared and paid, Purchasers will not, and will neither
cause nor permit any of the Acquired Companies or Subsidiaries to, take any
action to cause any board, shareholder or other official corporate action
taken before the Closing Date to be rescinded or overridden. Furthermore,
Purchasers will cause any amount due to any taxing authority after the
Closing Date by any of the Acquired Companies or Subsidiaries with respect
to any dividend declared and paid prior to the Closing Date to be timely
paid to such taxing authority.
7.6 No Insurance Advice. Each Purchaser acknowledges that it will
make all judgments and decisions regarding appropriate levels of insurance
coverage for the Business and Purchasers' assets and properties on and
after the Closing Date. In no event shall Sellers or any of their
Affiliates, agents or employees be deemed to be an advisor to either
Purchaser with respect to insurance matters.
7.7 Withholding.
(a) Purchasers and Sellers each authorize the other parties to
withhold from any payment constituting interest made under Section 2.5 or
Section 8.15 any income tax required by applicable United States federal
or English laws to be withheld from such payment. Purchasers and Sellers
shall, to the extent they withhold any amount in accordance with the
preceding sentence, promptly provide to the other party appropriate
documentation evidencing such withholding. Except as set forth in the
first sentence of this Section 7.7, no amounts paid pursuant to this
Agreement shall be reduced on account of any income tax or other fiscal
levy imposed by the United States or England or any state or political
subdivision thereof.
(b) Any payment made by any party shall be made gross, free of
any right of counterclaim or set-off and without deduction or withholding
of any kind other than by deduction or withholding required by law. If the
paying party made a deduction or withholding required by law from any such
payment, the sum due from the paying party shall be increased to the extent
necessary to ensure that, after making of any deduction or withholding, the
recipient receives a sum equal to the sum it would have received had no
deduction or withholding been made. If any payment made to the recipient
will be or has been subject to Taxes the paying party shall on demand from
the recipient pay such amount (after taking into account Taxes payable in
respect of that amount) as will ensure that the recipient receives and
retains a net sum equal to the sum it would have received had the payment
not been subject to Taxes.
7.8 Waiver of Rights. The Sellers waive on behalf of themselves and
their Affiliates any right which any of them or their Affiliates may have
in respect of a misrepresentation, inaccuracy or omission (other than, in
each case, those resulting from fraud) in or from information or advice
supplied or given by an Acquired Company or Subsidiary or any of their
directors, officers or employees for the purpose of assisting the Sellers
to make a representation or prepare the Disclosure Letter.
7.9 Third Party Undertakings. The Guarantor undertakes not to
terminate or vary any of the confidentiality undertakings they have entered
into with third parties with regard to the proposed disposal of the
Business ("Third Party Undertakings"). The Guarantor agrees to take any
reasonable action and enforce any proceedings and give any information and
assistance as either Purchaser may reasonably request to enforce the Third
Party Undertakings on the basis that such Purchaser shall fully indemnify
the Guarantor against reasonable costs incurred as a result of such
Purchaser's request.
7.10 Confidentiality.
(a) The Sellers shall make every reasonable effort to prevent
the use or disclosure of information not publicly known which is used in
or otherwise relates to the Business or customers or financial or other
affairs of the Sellers or their Affiliates in relation to the Business
("Confidential Information") and shall make every reasonable effort to
prevent the use or disclosure of Confidential Information. The Sellers
shall make reasonable efforts to ensure that each of their Affiliates
complies with this Section. This Section does not apply to use or
disclosure of Confidential Information required to be used or disclosed by
law and/or which becomes publicly known other than by breach of this
Section.
(b) The Purchasers shall make every reasonable effort to prevent
the use or disclosure of information which has been disclosed to them,
which is not publicly known and which is used in or otherwise relates to
the materials handling business conducted by Sellers and their Affiliates
in the United States, Canada and Mexico (the "North American Business")
customers or financial or other affairs of the Sellers or their Affiliates
in relation to the North American Business ("North American Confidential
Information") and shall make every reasonable effort to prevent the use or
disclosure of North American Confidential Information. The Purchasers
shall make reasonable efforts to ensure that each of their Affiliates
complies with this Section. This Section does not apply to use or
disclosure of North American Confidential Information required to be used
or disclosed by law and/or which becomes publicly known other than by
breach of this Section.
7.11 KERP Payments. The Sellers agree to take responsibility for any
payments which under the current terms of the Key Executive Retention
Program are or become payable to Employees whether before or after Closing
and undertake to the Purchasers (for itself and as trustee for the
Employees) to procure that such payments are made promptly upon becoming
due. The Sellers also agree to reimburse the Purchasers upon demand in
respect of any liability to tax which arises for the Acquired Companies or
the Subsidiaries as a result of such payment to the Employees. In the
event of any tax audit in respect of such payments, the Purchasers shall
notify the Sellers of such audit and permit representatives of the Sellers
to participate in such audit, including any discussions with tax
authorities.
7.12 Certain Commercial Relationships.
(a) The Sellers shall continue to supply to the Acquired
Companies and their Subsidiaries, and the Purchasers shall cause the
Acquired Companies and their Subsidiaries to continue to supply to the
Sellers, on normal commercial terms, those parts and components that
previously have been supplied from one to the other including, without
limitation (i) the LS500 conveyor (drive box assemblies and idler wheel
assemblies); (ii) Wallaby sorter (chains, chain guides and flaps);
(iii) line shaft ZLP conveyor (electrical zone control box); (iv) push back
rack (wheels and plastic buttons); and (v) Pick to Light (hardware
components).
(b) For a period of six months after Closing, the Sellers shall
consult and share information with the Acquired Companies and their
Subsidiaries, and the Purchasers shall cause the Acquired Companies and
their Subsidiaries to consult and share information with the Sellers in
respect of Pick to Light and its implementation on their respective
installations.
(c) Without prejudice to any other agreements relating to the
Viking Munich project, Sellers will cause Interlake Material Handling, Inc.
to facilitate the supply to Dexion Group (and its Subsidiaries) with
respect to the Viking Munich job at nil cost any defective parts provided
by its supplier Gates.
7.13 Intellectual Property
(a) The Purchasers acknowledge that the Acquired Companies have
no rights to use or goodwill in the INTERLAKE name and undertakes that
following Closing, neither the Acquired Companies nor the Subsidiaries will
use the INTERLAKE name without the prior consent of the Sellers.
(b) The Sellers acknowledge that they have no rights to use or
goodwill in the names DEXION or REDIRACK, save as permitted in The Trade
Mark Licence referred to in Section 3.3(c).
(c) Save in respect of the Intellectual Property which is the
subject of the Intellectual Property Agreements the Sellers undertake that
they will at their own expense do, or procure the doing of, all acts,
including executing any documents, which the Purchasers may reasonably
require in order that each Acquired Company and Subsidiary has sufficient
rights to use any Intellectual Property owned by or licensed to the Sellers
or their Affiliates so as to enable it to carry on its business in the
manner, and to the extent and in the territory it was carried on
immediately or to the date hereof.
(d) Save in respect of the Intellectual Property which is the
subject of the Intellectual Property Agreements the Purchasers undertake
that they will at their own expense do, or procure the doing of, all acts,
including executing any documents, which the Sellers may reasonably require
in order that the Sellers and their Affiliates has sufficient rights to use
any Intellectual Property owned by or licensed to the Purchasers or the
Acquired Companies so as to enable it to carry on its business in the
manner, and to the extent and in the territory it was carried on
immediately or to the date hereof.
7.14 Further Assurances. After the Closing, each Seller shall, at the
Purchasers' request and expense, take any action, execute, deliver or file
any document or instrument reasonably necessary to vest the relevant
Purchaser with title to the Acquired Stock. In the event that the Sellers
do not deliver anything required to be delivered by Section 3.2, then, as
soon as practicable (and in any event within 5 days) after a request by the
Purchasers therefor, the Sellers shall deliver such thing to the
Purchasers.
ARTICLE 8
MISCELLANEOUS
8.1 Cost and Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own fees, costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and thereby.
8.2 Entire Agreement. The Disclosure Letter and the Exhibits
referenced in this Agreement are incorporated into this Agreement and
together with the Confidentiality Agreement and the Intellectual Property
Agreements contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereunder, and supersede all
negotiations, representations, warranties, commitments, offers, contracts
and writings prior to the date hereof. The Confidentiality Agreement shall
survive the execution of this Agreement and shall remain in full force and
effect in accordance with its terms; provided, however, that where there
is a conflict between the Confidentiality Agreement and this Agreement, the
provisions of this Agreement shall prevail. No waiver, modification or
amendment of any provision of this Agreement shall be effective unless
specifically made in writing and duly signed by the party to be bound
thereby.
8.3 Counterparts. This Agreement may be executed in counterparts,
each of which when executed shall be deemed an original and all of which
together shall constitute one and the same instrument.
8.4 Assignment; Successors and Assigns. The respective rights and
obligations of the parties hereto shall not be assignable without the prior
written consent of the other party; provided, however, that either
Purchaser (i) may assign all or part of its rights under this Agreement to
one or more Affiliates of such Purchaser, (ii) may grant security over or
assign by way of security all or any of such rights to any person providing
finance to such Purchaser for the purposes of or in connection with the
financing (whether in whole or in part) by such Purchaser of the
acquisition contemplated by this Agreement or its or any of its Affiliates'
working capital or other requirements and (iii) may assign or transfer all
or any such rights to its liquidator, administrator or any receiver or
other person entitled to enforce any such security, in which event all the
rights and powers of such Purchaser and remedies available to it under this
Agreement shall extend to and be enforceable by such Person(s); provided
further, however, that no such assignment and delegation shall release such
Purchaser from its obligations under this Agreement, and further, each
Purchaser hereby guarantees to Sellers the performance by any such
Affiliate(s) of its obligations under this Agreement and each other
document or instrument to be entered into by such Affiliate(s) in
connection with the transactions contemplated hereby. In the event of any
such assignment and delegation the term "Purchaser" as used in this
Agreement shall be deemed to refer to such Affiliate(s) of such Purchaser
where reference is made to actions taken or to be taken with respect to the
acquisition of the Business or the Acquired Stock, and shall be deemed to
include both such Purchaser and each such Affiliate(s) where appropriate.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
8.5 Savings Clause. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, rule
or regulation, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof. The remaining
provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision
or by its severance. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible.
8.6 Headings. The captions of the various Articles and Sections of
this Agreement have been inserted only for convenience of reference and
shall not be deemed to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
8.7 GOVERNING LAW\JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH ENGLISH LAW.
Except as set forth in Sections 2.4, 2.5 and 8.13 of this Agreement, the
courts of England shall have exclusive jurisdiction to hear and decide any
suit, action or proceedings, and to settle any disputes, which may arise
out of or in connection with this Agreement (respectively, "Proceedings"
and "Disputes"). Each party irrevocably submits to the jurisdiction of the
courts of England and waives any objection which it might at any time have
to the courts of England being nominated as the forum to hear and decide
any Proceedings and to settle any Disputes. Without affecting the right to
serve process in another manner permitted by law, process by which any
Proceedings are begun in England may be served on either Seller by being
delivered to Law Debenture Corporation Service Limited, Princes House, 95
Gresham Street, London EC2V 7LY.
8.8 Public Announcements. No press release or other public statement
with respect to this Agreement or the transactions contemplated hereby
shall be issued by either party without such party having consulted with
and obtained the written consent of the other party, which consent shall
not be unreasonably withheld; provided, however, that no such consultation
or consent is necessary if a press release or other public statement is
required to be made by applicable law.
8.9 Survival. All representations and warranties made by any party
in this Agreement shall be deemed made for the purpose of inducing the
other party to enter into this Agreement and, subject to Section 6.2(a),
shall survive the Closing.
8.10 Notices. (a) All notices, requests, demands and other
communications under this Agreement shall be in writing and delivered in
person or sent by overnight courier or certified mail, postage prepaid, and
properly addressed as follows:
To Sellers:
The Interlake Companies, Inc.
550 Warrenville Road
Lisle, Illinois 60532-4387
Attention: Stephen Gregory,
Vice President - Finance and Chief Financial
Officer
Stephen R. Smith,
Vice President, Secretary and General Counsel
To Purchasers:
Dexion Group Limited
Maryland Avenue
Hemel Hempstead
HP2 7DF
Attention: Wayne Osman
With a copy to:
Apax Partners & Co. Ventures Limited
15 Portland Place
London
W1N 3AA
Attention: Pieter Hooft
(b) Any party may from time to time change its address for the
purpose of notices to that party by a similar notice specifying a new
address, but no such change shall be deemed to have been given until it is
actually received by the party sought to be charged with its contents.
(c) All notices and other communications required or permitted
under this Agreement which are addressed as provided in this Section 8.10
if delivered personally or by overnight courier, shall be effective upon
delivery; and if delivered by mail, shall be effective three (3) Business
Days after deposit in the United States mail, postage prepaid.
8.11 Disclosures. To the extent fairly disclosed, all matters
disclosed by Sellers in any Section of the Disclosure Letter shall be
deemed a disclosure by Sellers for purposes of all relevant Sections of
this Agreement. It is agreed that only facts and documents which are
disclosed in the Disclosure Letter shall be deemed to be a disclosure
against the representations and warranties contained in Section 4 of this
Agreement.
8.12 No Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon or give to any
Person, other than the parties hereto, any rights, remedies or other
benefits under or by reason of this Agreement.
8.13 Negotiation between Executives. Except where compliance with
this Section would result in the expiry of any period for bringing a claim,
the parties will attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiation between the chief
executive officers of the Guarantor and either Purchaser who may be
accompanied by such other persons as they choose. Any party may give the
other party written notice of any dispute not resolved in the normal course
of business, and specifically requiring a response by referring to this
Section 8.13 of this Agreement. Within 15 days after receipt of such
notice, the receiving party will submit to the other a written response.
The notice and the response will include a statement of each party's
position and a summary of arguments supporting that position and the names
and titles of the persons who will accompany the chief executive officer.
Within 30 days after delivery of the disputing party's notice, the
executives of both parties will meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to
attempt to resolve the dispute. All reasonable requests for information
made by one party to the other will be honored.
8.14 Restrictive Trade Practices Acts. If there are provisions of
this Agreement (or of an agreement or arrangement of which it forms part)
by virtue of which particulars of this Agreement (or of an agreement or
arrangement of which it forms part) are, at the date of this Agreement,
required to be furnished to the Director General of Fair Trading under the
Restrictive Trade Practices Acts 1976 and 1977 those provisions do not take
effect until the day after those particulars have been furnished.
8.15 Interest on Late Payments. Save as otherwise provided in this
Agreement if any amount is not paid when it is due then it shall carry
interest at the rate determined in accordance with Section 2.5 during the
period from the time when it is due to the date of payment. Such interest
shall be calculated daily on the basis of a year of 365 days and the actual
number of days elapsed.
8.16 Guarantee. (a) In consideration of 1 English pound sterling and
other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Guarantor, the Guarantor irrevocably and unconditionally
guarantees to the Purchasers the due and punctual performance of each obligation
of the Sellers contained in this Agreement. The Guarantor shall pay to the
Purchasers from time to time on demand any sum of money which the Seller
is at any time liable to pay to the Purchasers under or pursuant to this
Agreement and which has not been paid at the time the demand is made. The
Guarantor's obligations are primary obligations and not those of a mere
surety. If an obligation of any of the Sellers is void, voidable or
unenforceable by reason of either Seller's lack of corporate power or
authority to enter into this Agreement or failure to duly execute or
deliver this Agreement, the Guarantor's obligations are unaffected and the
Guarantor shall perform the Sellers' obligations as if it were primarily
liable for the performance. The Guarantor's obligations are continuing
obligations and are not satisfied, discharged or affected by an
intermediate payment or settlement of account by, or a change in the
constitution or control of, or the insolvency of, winding up or analogous
proceedings relating to, either Seller. The Guarantor's liability is not
affected by an arrangement which the either Purchaser may make with the
Seller or with another person which (but for this Section) might operate
to diminish or discharge the liability of or otherwise provide a defence
to a surety (except to the extent that any such arrangement diminishes or
discharges the corresponding liability of the relevant Seller).
(b) The Guarantor's liability under this Section is not affected by
the avoidance of a payment under an enactment relating to insolvency.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement
as of the date first written above.
THE INTERLAKE COMPANIES, INC.
By: /s/Stephen R. Smith
Title: Vice President
INTERLAKE DRC LIMITED
By: /s/Stephen R. Smith
Title: Authorized Representative
THE INTERLAKE CORPORATION
By: /s/Stephen R. Smith
Title: Vice President
EXTONDEW LIMITED
By: /s/Wayne M. Osman
Title: Director
EXTONBROOK LIMITED
By: /s/Wayne M. Osman
Title: Director