EXHIBIT 10.3
DATED 1 OCTOBER 1996
UK STOCK PURCHASE
AGREEMENT
relating to the issued share capital of Precis
(935) Limited
THE INTERLAKE COMPANIES INC AS SELLER (1)
SAMUEL STRAPPING SYSTEMS (U.K.) LIMITED, (2)
AS PURCHASER
THE INTERLAKE CORPORATION (3)
SAMUEL MANU-TECH INC (4)
Execution Text
Ref: 342/S10078.1/CF:90776.9/jmr
STOCK PURCHASE AGREEMENT
DATE
1 October 1996
PARTIES
This STOCK PURCHASE AGREEMENT (as amended or modified from time to
time in accordance with the terms hereof, this "Agreement) is by and
between The Interlake Companies, Inc., a Delaware corporation
(together with its successors and permitted assigns, "Interlake
Companies" or "Seller"), Samuel Strapping Systems (U.K.) Limited, a
company incorporated under the laws of England (together with its
successors and permitted assigns, "Purchaser"), The Interlake
Corporation, a Delaware corporation (together with its successors and
permitted assigns, "Interlake Corporation") and Samuel Manu-Tech Inc.,
a corporation incorporated under the laws of the Province of Ontario
(together with its successors and permitted assigns, "Samuel Manu-
Tech").
RECITALS
A Seller owns all of the issued and outstanding shares of Precis (935)
Limited, a company incorporated in England and Wales on 17 August 1989
under the Companies Act 1985 and registered under number 2414210 as a
private company limited by shares (the "Company"). The Company has at
the date of this agreement an authorised share capital of (Pounds)200
and $1,000 divided into 200 'B' ordinary shares of (Pounds)1 each and
1,000 'A' Ordinary Shares of $1 each all of which have been issued and
are fully paid or credited as fully paid. Seller is legal and
beneficial owner of all of the Purchased Shares.
B The Company through its Subsidiaries is in the business of
manufacturing and supplying steel and plastic strapping, and the
machinery and tools to apply such strapping, primarily to the
newspaper, lumber, metal, brick, textile, corrugated box, graphics,
can, bottle and distribution industries (collectively, the
"Business").
C Interlake Packaging Corporation (together with its successors and
permitted assigns, "Packaging") is a member of the same group of
companies as the Seller and is in the businesses of (i) supplying
plastic strapping, and the machinery and tools to apply such
strapping, primarily to the newspaper, textile, corrugated box,
graphics, can, bottle and distribution industries and (ii)
manufacturing and distributing wire stitching equipment, primarily to
the graphic arts, fruit and produce growing and corrugated box
manufacturing industries (collectively, "Packaging's U.S.
Businesses").
D Interlake Companies and Packaging own all of the issued and
outstanding capital stock of Acme Strapping Inc, a corporation
incorporated under the federal laws of Canada ("Acme").
E Purchaser desires to acquire from Seller, and Seller desires to sell
to Purchaser, the Purchased Shares on the terms and subject to the
conditions hereinafter set forth.
F Concurrently with Purchaser's purchase of all of the issued and
outstanding capital stock of the Company hereunder, (i) Samuel
Tennesse desires to acquire from Packaging, Packaging's U.S.
Businesses and substantially all of the assets of Packaging's U.S.
Businesses and (ii) Samuel Manu-Tech desires to acquire from
Interlake Companies and Packaging all of the issued and outstanding
capital stock of Acme, pursuant to and in accordance with the terms
and conditions of the U.S. Asset
Purchase Agreement (as hereinafter defined) and the Canadian Stock
Purchase Agreement (as hereinafter defined), respectively.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:
DEFINITIONS
1.1 Previously Defined Terms
Each term defined in the introductory paragraph and Recitals of this
Agreement shall have the meaning set forth above whenever used herein,
unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 Definitions
In addition to the terms defined in the first paragraph and Recitals
of this Agreement, whenever used herein, the following terms shall
have the meanings set forth below unless otherwise expressly provided
or unless the context clearly requires otherwise.
"Acquired Businesses" means the Business, Packaging's U.S.
Businesses and the businesses of Acme and its
subsidiaries, collectively.
"Affiliate" means, with respect to any Person, a Person
that, directly or indirectly is controlled
by, controls, or is under common control with
such Person. As used in the preceding
sentence, "control" shall mean and include,
but not necessarily be limited to, (i) the
ownership of 50% or more of the voting
securities or other voting interests of any
Person, or (ii) the possession, directly or
indirectly, of the power to direct or cause
the direction of the management and policies
of such Person, whether through the ownership
of voting securities, by contract or
otherwise.
"Ancillary Agreements" means the pre-signing Escrow Agreement and
the post-signing Escrow Agreement.
"Balance Sheet" means the balance sheets of the Company and
each of the Subsidiaries dated as of 30 June
1996, which constitute a part of the
Financial Statements.
"Business" has the meaning specified in the Recitals to
this Agreement.
"Business Day" means any day of the year on which banks are
not required or authorised to be closed in
Chicago, Illinois.
"Canadian Stock means the Stock Purchase Agreement dated as
Purchase Agreement" of the date hereof by and among Samuel Manu-
tech, Interlake Companies and Packaging, as
amended or modified from time to time in
accordance with the terms thereof.
"Closing" see Section 3.1.
"Closing Date" see Section 3.1.
"Consequential Damages" means any loss which is not the direct or
proximate result of any events described in
Section 12.1 or Section 12.3 of this
Agreement.
"Contingent Liabilities" means those obligations (except for
fulfilment of post-closing obligations under
the Contracts) and liabilities relating to
the operation of the Business prior to the
Effective Date and not set forth on the Final
Closing Balance Sheet or under unfulfilled
purchase orders or under a Plan including,
without limitation, any such liability or
obligation arising under any Environmental
Law, severance arrangement or with respect to
any Taxes of the Company or any of the
Subsidiaries.
"Contracts" means all contracts, agreements, license
agreements, purchase and sale orders, foreign
exchange contracts, leases of machinery and
equipment, and conditional sales contracts
and title retention agreements relating to
machinery and equipment, in each case, to
which the Company or any of the Subsidiaries
is a party and all other commitments and
binding arrangements of the Company or any of
the Subsidiaries, including, without
limitation, the Contracts listed in Section
7.11 of the Disclosure Letter.
"Covenantors" means together Seller and Interlake
Corporation, or either of them as the context
may require
"Date of the Notice of see Section 12.7.
Claim"
"Disclosure Letter" means the letter dated as of the date of this
Agreement and delivered by Seller to
Purchaser pursuant to Section 6.1(b)
simultaneously with the execution and
delivery of this Agreement.
"Effective Date" means 29 September, 1996, at 11.59 pm (London
time) or such other date and time agreed to
in writing by Seller and Purchaser.
"Environmental Laws" means any applicable national, EU,
international, foreign, federal or local law
(whether founded in legislation of whatever
nature or common law)
including without limitation, regulatory
codes of practice, guidance notes, circulars,
directives, decisions, regulations, treaties
and conventions relating to: (a) releases or
threatened releases of Hazardous Substances;
(b) the manufacture, handling, transport,
use, treatment, accumulation, keeping,
storage or disposal of Hazardous Substances
or materials containing Hazardous Substances;
or (c) the protection or endangerment of the
environment or the protection or endangerment
of human health or safety in force or enacted
on the Closing Date.
"Facilities" means the facilities of the Company located
on or forming a part of the real property
described in Section 7.12 of the Disclosure
Letter.
"Final Closing Balance has the meaning given to it in the US Asset
Sheet" Purchase Agreement
"Financial Statements" means the audited balance sheet and income
statement for the Company and each of the
Subsidiaries at and for the year ended
December 31, 1995, and the unaudited balance
sheet and income statement for the Company
and each of the Subsidiaries at and for the
six months ended June 30, 1996 copies of each
of which are set forth in Section 6.1(a) of
the Disclosure Letter.
"First Anniversary" means the one-year anniversary of the
Effective Date.
"GAAP" means United States generally accepted
accounting principles in effect at the
relevant time.
"Hazardous Substances" means any waste, contaminant, pollutant,
hazardous substance, toxic substance,
hazardous waste, special waste, hazardous
industrial substance or waste, petroleum or
petroleum-derived substance or waste, or any
constituent of any such substance or waste,
to the extent regulated under defined by or
in respect of which liability is ascribed by
Environmental Law
"Indemnitee" see Section 12.4.
"Indemnitor" see Section 12.4.
"Information" see Section 13.1.
"Interlake Companies" has the meaning specified in the introductory
paragraph of this Agreement.
"Lien" means a mortgage, pledge, security interest,
encumbrance, lien or other charge, claim,
right or adverse interest of another Person.
"Material Adverse means, relating to any occurrence of
Effect" whatever nature, any material adverse change
in, or effect on:
(a) the Business or the present or
projected business, revenues, financial
condition, operations or prospects of
the Acquired Businesses, each taken as
a whole; or
(b) the ability of Seller to timely and
fully perform any of their material
obligations hereunder or under the U.S.
Asset Purchase Agreement or the
Canadian. Stock Purchase Agreement or
any document to be delivered in
connection herewith or therewith;
provided however, that Material Adverse
Effect shall not include (i) any industry-
wide changes in the industries in which the
Company and the Subsidiaries are operating,
(ii) any changes in the general economic
conditions in the United States, Canada or
the United Kingdom, or (iii) any general
changes in the securities market in the
United States, Canada or the United Kingdom.
"Multiemployer Plan" see Section 7.16.
"Notice of Claim" see Section 12.4.
"Packaging" has the meaning specified in the introductory
paragraph of this Agreement.
"Packaging's U.S. has the meaning specified in the Recitals to
Businesses" this Agreement.
"Payables" means all accounts payable, notes payable,
contract payables and other payables which
are obligations of the Company or any of the
Subsidiaries.
"Permitted Exceptions" means, with respect to the real property
described in Section 7.12 of the Disclosure
Letter, any Liens or exceptions which, alone
or in the aggregate, do not materially
detract from, or materially interfere with,
the ownership, occupancy or use of the
properties subject thereto or affected
thereby, or otherwise materially impair the
operations conducted thereon or affect in any
material respect the value of the properties
subject thereto.
"Person" means any natural person, company,
corporation, limited liability company,
partnership, joint venture, trust,
association or unincorporated entity of any
kind.
"Plans" see Section 7.16.
"Post Signing Escrow means that certain Escrow Agreement
Agreement" made and entered as of the Closing Date by
and among Harris Trust & Savings Bank, as
escrow agent, Samuel Manu-Tech and Interlake
Corporation as heretofore or hereafter
amended.
"Pre-signing Escrow means that certain Escrow Agreement, made
Agreement" and entered into as of 29 July 1996 among
Harris Trust & Savings Bank, as escrow
agent, Interlake Corporation and Samuel
Manu-Tech as heretofore or hereafter amended.
"Purchase Price" see Section 2.2.
"Purchased Shares" means 200 'B' ordinary shares of (Pounds)1
each and 1000 'A' ordinary shares of US$1
each in the capital of the Company.
"Purchaser Indemnified see Section 12.1.
Persons"
"Receivables" means all accounts receivable, notes
receivable, contract receivables and other
receivables owned by the Company or any of
the Subsidiaries.
Reorganisation the reorganisation and payment of dividends
consummated the week of 24 September 1996 as
described or substantially as described in
the letters listed in the Schedule to this
Agreement.
"Returns" means all Tax returns, computations,
information, notices and forms required to be
filed or furnished with any taxing or other
authority by the Company or any Subsidiary.
Samuel Manu-Tech" means Samuel Manu-Tech Inc, a corporation
incorporated under the laws of the Province
of Ontario.
"Samuel Tennessee" means Samuel Strapping Systems (Tennessee),
Inc., a Delaware corporation.
"Seller Indemnified see Section 12.3.
Persons"
"Senior Credit means the Amended and Restated Credit
Agreement" Agreement, dated as of September 27, 1989 and
Amended and Restated as of May 28, 1992,
among The Interlake Corporation, certain of
its subsidiaries, The Interlake Corporation
Employee
Stock Ownership Trust, acting by and through
The LaSalle National Bank, as Trustee,
various banks party thereto, Chemical Bank,
as Administrative Agent, and The First
National Bank of Chicago, as Co-Agent, as
amended, modified or supplemented from time
to time.
"Subsidiaries" means the following companies, or any of
them as the context requires:
(a) Twicebonus Limited;
(b) Power Industries Limited;
(c) Acme Gerrard Limited;
(d) Pakseal Industries Limited;
(e) Power Strap Limited;
(f) Pakseal;
(g) Pakseal SARL; and
(h) Pakseal SRL.
Each of the companies referred to at (a) to
(f) (inclusive) above are companies
incorporated in England and Wales. Pakseal
SARL is a company incorporated in France, and
Pakseal SRL is a company incorporated in
Italy.
"Subsidiary Stock" means the following issued and outstanding
shares in the capital of the Subsidiaries:
(a) Twicebonus Limited - 8,600,000 ordinary
shares of (Pounds)1 each;
(b) Power Industries Limited - 43,770,420
ordinary shares of 20p each;
(c) Acme Gerrard Limited - 8,500,000
ordinary shares of (Pounds)1 each;
(d) Pakseal Industries Limited - 112,593
ordinary shares of (Pounds)1 each;
(e) Power Strap Limited - 2 ordinary shares
of (Pounds)1 each;
(f) Pakseal - 100 ordinary shares of
(Pounds)1 each;
(g) Pakseal SARL - 500 common shares
(h) Pakseal SRL (Italy) - 21,000,000 common
shares
"Tangible Net Worth" means, as of the Effective Date, the value of
the Tangible Assets of the Business, minus
the Balance Sheet Liabilities in each case as
determined in accordance with Section 2.3 of
the U.S. Asset Purchase Agreement as of the
Effective Date.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, distribution,
occupation, value added, profits, property,
excise or other taxes, fees, stamp taxes and
duties, levies, imposts, contributions,
assessments or charges of any kind whatsoever
(whether payable directly or by withholding),
together with all interest and all penalties,
additions to tax or additional amounts
imposed by any taxing or other authority with
respect thereto.
"Third Anniversary" means the three-year anniversary of the
Effective Date.
"Third Party Debt" see Section 2.2.
"Transferred means any account on the books and records
Intercompany Account" of the Company or any of the Subsidiaries
that evidences amounts either payable by the
Company or any of the Subsidiaries to, or
receivable by the Company or any of the
Subsidiaries from, Packaging (but only to the
extent relating to Packaging's U.S.
Businesses) or Acme (or any subsidiary of
Acme).
"U.S. Asset Purchase means the Asset Purchase Agreement dated as
Agreement" of the date hereof by and between Samuel
Tennessee and Packaging, as amended or
modified from time to time in accordance with
the terms thereof.
1.3 Interpretation
Unless the context of this Agreement otherwise requires, (a) words of
any gender shall be deemed to include each other gender, (b) words
using the singular or plural number shall include the plural or
singular number, respectively, (c) references to "hereof", "herein",
"hereby", "hereunder" and similar terms shall refer to this entire
Agreement (d) references to documents in the agreed form are to
documents in the form of the draft agreed on behalf of the parties and
initialled on behalf of each of them for the purposes of
identification and (e) unless otherwise specified herein, each
reference to an "Article" or "Section" is to an Article or Section of
this Agreement, and each reference to an "Exhibit" is to an Exhibit
attached to and made a part of this Agreement.
1.4 If any amounts calculated pursuant to, or referred to in, this
agreement in pounds sterling are required for the purposes of this
agreement to be converted at any time into US dollars, a conversion
rate equal to the mid-range spot rate as at the close of business on
27 September 1996, as set out in the Wall Street Journal shall be
applied.
2 PURCHASE AND SALE, PURCHASE PRICE AND OTHER RELATED MATTERS
2.1 Purchase and Sale
Upon the terms and subject to the conditions of this Agreement, at the
Closing on the Closing Date, Seller shall sell, assign, convey,
transfer and deliver to Purchaser, and Purchaser shall acquire from
Seller, the Purchased Shares.
2.2 Consideration
(a) The purchase price (the "Purchase Price") payable by
Purchaser for the Purchased Shares shall be an amount equal to:
(i) (A) for the 200 'B' ordinary shares of (Pounds)1 each
ONE THOUSAND DOLLARS ($1,000); and
(B) for the 1,000 'A' ordinary shares of $1 each
TWENTY NINE MILLION NINE HUNDRED AND NINETY NINE
THOUSAND DOLLARS ($29,999,000), plus
(ii) the amount of all cash (as shown by the relevant
cashbooks) and cash equivalents of the Company and each
of the Subsidiaries as of the Effective Date, plus
(iii) the amount of any and all Receivables of the Company and
each of the Subsidiaries as of the Effective Date that
are owed to the Company or any of the Subsidiaries by the
Seller or any Affiliates of the Seller (other than any
such Receivables that constitute Transferred Intercompany
Accounts), minus
(iv) all indebtedness of the Company or any of the
Subsidiaries for money borrowed from third party non-
affiliated lenders ("Third Party Debt") which is
outstanding as of the Effective Date and minus
(v) the amount of any and all Payables of the Company and
each of the Subsidiaries as of the Effective Date that
are owed by the Company or any of the Subsidiaries to the
Seller or any Affiliates of the Seller (other than any
such Payables that constitute Transferred Intercompany
Accounts).
The Purchase Price may be adjusted as provided for in Section
12.2(i). One day prior to the Closing Date, Seller shall
provide to Purchaser a certification as to the amounts of each
of the items described in clauses (ii), (iii), (iv) and (v) of
this Section 2.2(a).
All additions or subtractions pursuant to sub-sections (ii) to
(v) above and all adjustments to the Purchase Price under
Section 12.2(i) shall be made to the element of the Purchase
Price payable for the 'A' ordinary shares.
(b) At the Closing on the Closing Date, Purchaser shall pay the
Purchase Price to Seller, by the wire transfer of immediately
available federal funds to the account designated in writing by
Seller to Purchaser prior to the Closing Date.
2.3 Sales and Transfer Taxes
The Seller shall pay one-half and the Purchaser shall pay one-half of
the cost of any stamp or transfer tax relating to the transfer of the
Purchased Shares.
3 CLOSING AND CLOSING DATE DELIVERIES
3.1 Closing
The term "Closing" as used herein shall refer to the actual sale,
assignment, conveyance, transfer and delivery of the Purchased Shares
to Purchaser in consideration for the payment to Seller of the
Purchase Price. Subject to Section 11.1 hereof, the Closing shall take
place at the offices of S J Berwin & Co, 222 Grays Inn Road, London
WC1X 8HB, or at such other place in London as is mutually agreed in
writing by Seller and Purchaser, at 11:00 a.m. London Time on the
later of (A) 4 October 1996, and (B) fifth Business Day occurring
after the earliest date on which all of the conditions set forth in
Articles 9 and 10 have been or are capable of being satisfied or at
such other time and/or date as is mutually agreed in writing by Seller
and Purchaser (the "Closing Date").
3.2 Closing Deliveries by Seller.
At the Closing on the Closing Date, Seller shall deliver to Purchaser:
(a) the certificates or other documents of title in respect of
those of the Purchased Shares which are in bearer form and
transfers in respect of those of the Purchased Shares which are
in registered form duly executed by the registered holders
thereof in favour of the Purchaser or as it may direct;
(b) transfers in respect of such of the Subsidiary Stock as are not
registered in the name of the Company or a Subsidiary only duly
executed by the registered holders thereof in favour of the
Purchaser or as it may direct;
(c) certificates for the Purchased Shares and the Subsidiary Stock
and any other documents which may be required to give good title
to the Purchased Shares and the Subsidiary Stock and to enable
the Purchaser to procure registration of the same in its name or
as it may direct;
(d) written resignations, effective on the Closing Date, of,
together with releases in the agreed form in favour of the
Company and the Subsidiaries by, those directors of the Company
and each of the Subsidiaries that Purchaser shall have requested
prior to the Closing;
(e) written resignations, effective on the Closing Date, of the
auditors of the Company and each of the Subsidiaries;
(f) in relation to the Company and each of the Subsidiaries, all
corporate and other records held by the Seller, including but
not limited to, certificates of incorporation, certificates of
incorporation on change of name (if applicable), common seals,
statutory registers, minute books, share certificate books,
books of account and all other books (all duly written up to
date), Contracts, financial records and personnel records;
(g) copies of the memorandum and articles of association of the
Company and each of the Subsidiaries certified, as of the
Closing Date, by its corporate secretary;
(h) all original and copy documents of title relating to
properties owned or occupied by the Company or any of the
Subsidiaries;
(i) certified copies of board resolutions of the Company and each of
the Subsidiaries in the agreed form;
(i) recording acceptance of the resignation from office of
all the Directors (other than those requested in writing
to remain by the Purchaser) and the auditors of each
Company;
(ii) approving (subject only to proper stamping) the transfers
of those of the Purchased Shares, or the relevant
Subsidiary Stock, which are in registered form delivered
under this Agreement;
(iii) approving (subject only to proper stamping) the placing
on the register of members of the company of the names of
the transferees for registration in accordance with the
share transfer forms referred to above and authorising
the issue of appropriate share certificates;
(iv) recording the appointment of such persons as the
directors (within the maximum number permitted by the
articles of association of the relevant company),
secretaries and auditors of the company as the Purchaser
shall nominate;
(v) changing the situation of the registered office of such
of the Company and the Subsidiaries as the Purchaser may
direct to such place as the Purchaser may direct.
(j) minutes or unanimous written consents of the Board of Directors
of the Seller approving the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated by this Agreement;
(k) a certificate, dated the Closing Date, executed by an
appropriate officer of the Seller, as required by Section 9.2;
(l) such other documents as Purchaser may reasonably request to
carry out the purposes of this Agreement, including, but not
limited to, the documents to be delivered pursuant to Article 9;
(m) irrevocable powers of attorney in the agreed form executed by
the Seller to enable the Purchaser (during the period prior to
the registration of the transfer of the Purchased Shares) to
exercise all voting and other rights attaching to the Purchased
Shares;
(n) a release and discharge from the Seller's bankers and all other
persons of any fixed or floating charges over the Purchased
Shares or any other assets of the Company or any of its
Subsidiaries;
(o) releases and discharges from each of the Company's bankers and
all other persons of any fixed or floating charges over any of
the Subsidiary Stock or any other assets of the Company or any
of its Subsidiaries.
3.3 Closing Deliveries by Purchaser
At the Closing on the Closing Date, Purchaser shall deliver to Seller:
(a) the payment to be delivered by Purchaser pursuant to Section
2.2(b);
(b) certified copies of minutes or unanimous written consents of
the Board of Directors of Purchaser approving the execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated under this Agreement;
(c) the certificate, dated the Closing Date, executed by the
appropriate officer of Purchaser, as required by Section 10.2;
(d) releases of the officers and directors referred to in Section
3.2(d), in form reasonably satisfactory to the Seller; and
(e) such other documents as Seller may reasonably request to carry
out the purposes of this Agreement, including, but not limited
to, the documents to be delivered pursuant to Article 10.
3.4 Co-operation
Seller and Purchaser shall, on request on and after the Closing Date, co-
operate with one another by furnishing any and all additional
information, executing and delivering any and all additional documents
and/or instruments and doing any and all such other things as may be
reasonably requested by the other party to consummate or otherwise
implement the transactions contemplated by this Agreement.
4 PRE-CLOSING FILINGS
[clause intentionally deleted]
5 PRE-CLOSING COVENANTS
5.1 Conduct of Business Prior to Closing
(a) During the period from the date hereof to the Closing Date,
Seller shall cause the Company and each of the Subsidiaries to:
(i) use its reasonable efforts to preserve substantially
intact the business organisation of the Business, to keep
available the services of the present employees of the
Business and to preserve the current relationships of the
Company and the Subsidiaries with the customers,
suppliers and other Persons having a material business
relationship with the Business; and
(ii) operate the Business in the ordinary course consistent
with prior practice, except as set forth in Section
5.1(a) of the Disclosure Letter or as otherwise
contemplated by this Agreement.
(b) Save insofar as such act, matter or thing is necessary to give
effect to the Reorganisation, Seller covenants and agrees with
Purchaser that during the period from the date hereof to the
Closing Date Seller shall not, except with the prior written
consent of Purchaser, cause or permit the Company or any of the
Subsidiaries to:
(i) materially change its accounting methods, principles or
practices;
(ii) establish or materially increase any bonus, insurance,
severance, deferred compensation, pension, profit sharing
or other employee
benefit plan or otherwise increase the rates of
compensation payable or to become payable to any officer,
employee, agent or consultant employed by the Company,
except in the ordinary course of business consistent with
prior practice or in accordance with existing
compensation policies or the provisions of existing
contracts entered into prior to the date of this
Agreement;
(iii) sell, transfer, mortgage or acquire any of the Company's
assets other than in the ordinary course of business
consistent with prior practice or as disclosed to
Purchaser prior to the date hereof;
(iv) merge or consolidate with any other Person;
(v) declare, pay or set aside for payment any dividend or
other distribution in respect of its shares, other than
those payable in cash;
(vi) directly or indirectly, redeem, purchase or otherwise
acquire any shares , other than for cash;
(vii) issue, sell or otherwise dispose of any of its shares or
grant any options, warrants or other rights to acquire
any of its shares; or
(viii) amend its memorandum or articles of association in any
material respect or pass any shareholders' resolution;
provided, however, that, prior to the Closing, Seller may
cause the Company or any of the Subsidiaries to pay to
its employees any or all bonuses accrued on or prior to
the Closing Date.
(c) Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges and agrees that Seller intend to cause
the Company, prior to or at the Closing, to cancel all
intercompany service and supply arrangements.
(d) During the period from the Effective Date to the Closing
Seller will not cause and will not permit the Company nor any
Subsidiary to dividend, distribute or otherwise convey any
amount of cash or any other asset to, or incur any new
obligation to, Seller or any of Seller's Affiliates (other than
Acme or Packaging's U.S. Businesses): provided, that nothing in
this Section 5.1(d) shall be deemed to prohibit, during the
period between the Effective Date and the Closing Date:
(i) the borrowing by Twicebonus Limited of additional
amounts from Interlake Corporation or Seller; or
(ii) the settlement of intercompany accounts as contemplated
by Section 9.9 and Section 10.9.
5.2 Access to Information
From the date hereof until the Closing, upon reasonable notice, Seller
shall cause the Company, the Subsidiaries and each of their respective
officers, directors, employees, auditors and agents to:
(a) afford the officers, employees and authorised agents and
representatives of Purchaser reasonable access, during normal
business hours, to the offices, properties, books and records of
the Business, the Company and each of the
Subsidiaries (with facilities to take such copies of all such
documents as they request) and to the officers and employees of
the Seller, the Company and each of the Subsidiaries; and
(b) furnish to the officers, employees and authorised agents and
representatives of Purchaser such additional financial and
operating data and other information regarding the assets,
properties, goodwill and business of the Business, the Company
and each of the Subsidiaries including, without limitation, all
accountants working papers in relation to unaudited accounts or
statements as Purchaser may from time to time reasonably
request; provided, however, that such investigation shall not
unreasonably interfere with any of the businesses or operations
of the Company or any of its Affiliates or subsidiaries.
6 FINANCIAL STATEMENTS; DISCLOSURE LETTER; FINANCING COMMITMENT LETTER
6.1 Pre-Signing Deliveries by Seller
Seller has heretofore delivered to Purchaser:
(a) the Financial Statements; and
(b) the Disclosure Letter, together with (or preceded by) a copy
of each Contract listed in Section 7.11 thereof and containing
all of the information required by the terms of this Agreement
to be contained therein.
6.2 Pre-Signing Deliveries by Purchaser
Purchaser has heretofore delivered to Seller a true and complete copy
of the written binding commitment of a reputable lending institution
to provide the funds necessary for Purchaser and Samuel Tennessee to
purchase the Purchased Shares hereunder, Packaging's U.S. Business
under the U.S. Asset Purchase Agreement and all of the outstanding
shares of Acme under the Canadian Stock Purchase Agreement.
7 WARRANTIES AND REPRESENTATIONS OF SELLER
Seller warrants and represents to Purchaser (which warranties and
representations shall, subject to Section 12.2(a), survive the
Closing) as follows:
7.1 Incorporation and Qualification of the Company, the Subsidiaries and
Seller
(a) The Company is a company validly existing under the laws of
England and Wales and has all requisite corporate power and
authority to own, operate and lease the assets it now owns,
operates or leases and to carry on the Business as it is
currently conducted.
(b) Except as set forth in Section 7.1 of the Disclosure Letter,
the Company is duly licensed or qualified to do business in each
jurisdiction in which the properties owned or leased by it or
the operation of the Business makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(c) The Subsidiaries (other than Pakseal SARL and Pakseal SRL) are
companies validly existing under the laws of England and Wales
and have all requisite corporate power and authority to own,
operate and lease the assets it now
owns, operates or leases and to carry on its business as it is
currently conducted.
(d) Pakseal SARL is a corporation validly existing under the laws of
France and has all requisite corporate power and authority to
own, operate and lease the assets it now owns, operates or
leases and to carry on its business as it is currently
conducted.
(e) Pakseal SRL is a corporation validly existing under the laws of
Italy and is now in liquidation.
(e) The Subsidiaries are each duly licensed or qualified to do
business in each jurisdiction in which the respective properties
owned or leased by them or the operation of their respective
businesses makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would
not, individually or in the aggregate, have a Material Adverse
Effect.
(f) Seller is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to own, operate and lease the
assets it now owns, operates or leases and to carry on its
business as it is currently conducted.
7.2 Authority
Seller has all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller, the
performance by Seller of its obligations hereunder and the
consummation by Seller of the transactions contemplated hereby have
been duly authorised by all requisite corporate action on the part of
Seller. This Agreement has been duly executed and delivered by Seller
and (assuming the due authorisation, valid execution and delivery
hereof by Purchaser) is a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency,
reorganisation, moratorium or similar laws affecting creditors' rights
and remedies generally, and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).
7.3 No Conflict
Assuming all consents, approvals, authorisations and other actions
described in Section 7.4 have been obtained and all filings and
notifications listed in Section 7.4 of the Disclosure Letter have been
made or given (except as may result from any facts or circumstances
relating solely to Purchaser), the execution, delivery and performance
of this Agreement by Seller do not and will not: (a) conflict with or
violate any provision of the organisational documents of the Company
or the Seller; (b) except as set forth in Section 7.3 of the
Disclosure Letter or as would not have a Material Adverse Effect,
result in any breach of, or constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a
default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation
of any Lien on any of the assets of the Company or the Purchased
Shares pursuant to, any Contract or any instrument, license, agreement
or commitment to which the Seller is a party or by which the Seller is
bound; or (c) except as set forth in Section 7.3 of the Disclosure
Letter or as would not have a Material Adverse Effect, conflict with
or violate any law, rule, regulation, order, writ, judgment,
injunction or
decree applicable to the Company, the Subsidiaries, the Purchased
Shares, the Business or the Seller.
7.4 Consents and Approvals
The execution and delivery by Seller of this Agreement does not, and
compliance by Seller with the terms hereof and consummation by Seller
of the transactions contemplated hereby will not, require the Seller
or the Company or any of the Subsidiaries to obtain any consent,
approval, authorisation or other action of, or make any filing with or
give any notice to, any court, administrative agency or other
governmental authority, except (a) as disclosed in Section 7.4 of the
Disclosure Letter, (b) where failure to obtain such consents,
approvals, authorisations or actions, make such filings or give such
notices would not have a Material Adverse Effect and (c) as may be
necessary as a result of any facts or circumstances relating solely to
Purchaser.
7.5 Brokers
Neither this Agreement nor the sale of the Purchased Shares nor any
other transaction contemplated by this Agreement was induced or
procured through any Person acting on behalf of or representing the
Seller or any of their respective Affiliates as broker, finder,
investment banker, financial advisor or in any similar capacity.
7.6 No Subsidiaries
Except for the Subsidiary Stock, the Company does not own any capital
stock or other equity securities or any other direct or indirect
equity interest in any Person.
7.7 Intellectual Property
(a) To the knowledge of Seller, except as set forth in Section 7.7
or 7.14 of the Disclosure Letter, there is not now and has not
been during the past three (3) years any infringement, misuse or
misappropriation in any material respect by the Company or any
of the Subsidiaries of any valid patent, trademark, trade name,
service mark, copyright or trade secret which is owned by any
other Person, and there is not now any existing or, to the
knowledge of Seller, any threatened claim asserted in writing
against the Company or any of the Subsidiaries of any
infringement, misuse or misappropriation in any material respect
by the Company or any of the Subsidiaries of any patent,
trademark, trade name, service mark, copyright or trade secret.
All material patents, trademarks, service marks, tradenames,
copyrights, and all applications and registrations thereof, used
in connection with the operation of the Business are set forth
in Section 7.7 of the Disclosure Letter ("Proprietary Rights").
Except as set forth in Section 7.7 of the Disclosure Letter,
Seller and their Affiliates are the sole and exclusive owners
of, or have the sole and exclusive rights to use, the
Proprietary Rights.
(b) Except as described in Section 7.7 or Section 7.14 of the
Disclosure Letter, there is no pending or threatened claim by
the Company or any of the Subsidiaries against any other Person
for infringement, misuse or misappropriation of any patent,
trademark, trade name, service mark, copyright or trade secret
owned by the Company or any of the Subsidiaries.
7.8 Financial Statements
Each of the Financial Statements is consistent with the books and
records of the Company and each of the Subsidiaries and fairly
presents the financial condition, assets and liabilities of the
Company and each of the Subsidiaries as of their respective dates and
the results of operations and cash for the periods related thereto in
accordance with GAAP consistently applied among the periods which are
the subject of the Financial Statements.
7.9 Compliance with Laws
On the Closing Date, to the knowledge of Seller, neither the Company
nor any of the Subsidiaries will be in violation of any law, rule or
regulation, or any order, judgment or decree, in any case applicable
to the Company or any of the Subsidiaries or by which any of their
respective properties are bound or affected, except (a) as set forth
in Section 7.9 of the Disclosure Letter and (b) for violations the
existence of which could not reasonably be expected to have a Material
Adverse Effect; provided, however, that Purchaser acknowledges and
agrees that Seller's representations under this Section 7.9 are not
made with respect to any Environmental Laws and that Seller's
representations and warranties with respect to Environmental Laws are
made only in Section 7.18.
7.10 Licenses and Permits
Except as set forth in Section 7.10 of the Disclosure Letter, to the
knowledge of Seller, the Company and each of the Subsidiaries have, or
have applied for, all material governmental licenses, franchises,
permits, approvals, authorisations, exemptions, certificates,
registrations and similar documents or instruments necessary to carry
on the Business as it is currently conducted, except for such
governmental licenses, franchises, permits, approvals, authorisations,
exemptions, certificates, registrations and similar documents or
instruments the absence of which would not have a Material Adverse
Effect; provided, however, that Purchaser acknowledges and agrees that
Seller's representations under this Section 7.10 are not made with
respect to any Environmental Laws and that Seller's representations
and warranties with respect to Environmental Laws are made only in
Section 7.18.
7.11 Material Contracts
(a) Section 7.11 of the Disclosure Letter lists or describes all
currently existing Contracts which involve an executory
obligation of more than $100,000 in any one calendar year,
except Contracts which are terminable by the Company or any of
the Subsidiaries without penalty on no more than thirty (30)
days' notice. Complete and correct copies of all Contracts
listed in Section 7.11 of the Disclosure Letter have been
delivered to or made available for inspection by Purchaser.
(b) Neither the Company or any of the Subsidiaries nor, to the
knowledge of the Seller, any other Person, is in material breach
of, or material default under, any Contract and no event or
action has occurred, is pending or, to the knowledge of the
Seller, is threatened, which after the giving of notice, or the
lapse of time, or both, could reasonably be expected to
constitute or result in a material breach by the Company or any
of the Subsidiaries or, to the knowledge of the Seller, any
other Person, under any Contract.
7.12 Real Properties
Section 7.12 of the Disclosure Letter sets forth a true and complete
list and brief description of all real property owned, leased or used
by the Company or any of the Subsidiaries, as landlord, tenant or
otherwise. The Company has good title to all real properties described
in Section 7.12 of the Disclosure Letter as being owned by it, except
for Permitted Exceptions and except as disclosed in the Disclosure
Letter.
7.13 Tangible Personal Property
The Company and each of the Subsidiaries has good title to all the
material assets consisting of tangible personal property purported to
be owned by them and valid and subsisting leases with respect to all
of the material assets consisting of tangible personal property
purported to be leased by it. All such owned tangible personal
property is owned free and clear of all Liens, except:
(a) as set forth in Section 7.13 of the Disclosure Letter;
(b) liens for assessments and charges and other claims, the
validity of which the Company or any Subsidiary is contesting in
good faith; and
(c) imperfections of title and Liens the existence of which could
not be reasonably expected to have a Material Adverse Effect.
7.14 Litigation
Except as set forth in Section 7.14 of the Disclosure Letter:
(a) there are no actions, claims, proceedings, governmental or
European Union investigations pending or, to the knowledge of
the Seller, threatened against the Company or any of the
Subsidiaries the Business or any of the assets of the Company or
any of the Subsidiaries at law or in equity, before or by any
court, agency, governmental or European Union entity, or by any
other Person, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and
(b) neither the Business nor any of the assets of the Company or
any of the Subsidiaries is subject to any order, judgment or
decree of any court, governmental or European Union agency
having or which could reasonably be expected to have a Material
Adverse Effect.
7.15 Labour Matters
Section 7.15 of the Disclosure Letter contains a list of the
collective bargaining agreements to which the Company or any of the
Subsidiaries is a party. Except as disclosed in Section 7.15 of the
Disclosure Letter:
(a) there are no labour controversies pending or, to the knowledge
of the Seller, threatened against the Company or any of the
Subsidiaries which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and
(b) there are no grievances outstanding, or unfair labour practice
complaints pending before any applicable authorities, against
the Company or any of the
Subsidiaries under any such agreement or contract which could
reasonably be expected to have a Material Adverse Effect.
7.16 Employee Benefit Matters
Section 7.16 of the Disclosure Letter lists all employee benefit plans
contributed to or entered into by the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries is or
has been obligated to contribute, in either case within the last five
(5) years (the "Plans"). Except as set forth in Section 7.16 of the
Disclosure Letter, no Plan is a multiemployer plan established
pursuant to a trust agreement or a collective bargaining agreement (a
"Multiemployer Plan"). With respect to the Plans, Seller further
represents and warrants to Purchaser that, to the best of its
knowledge and belief and except as set forth in Section 7.16 of the
Disclosure Letter or to the extent that the failure of any of the
representations set forth in this sentence could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect:
(a) Each Plan has been duly registered where required, and is in
good standing under, conforms in all material respects to, and
its administration complies with, all applicable legislation,
regulatory requirements, orders or governmental
rules(collectively, "Applicable Legislation.
(b) All of the Plans are in full force and effect as written, and
the Company and the Subsidiaries have performed all material
obligations required to be performed by it under, and is not in
material default under, or in material violation of any Plan.
Without limiting the generality of the foregoing, all premiums,
contributions and other payments required to be made by the
Company, the Subsidiaries and any other party under the terms of
any Plan maintained by the Company or any of the Subsidiaries
with respect to the Business that is an occupational pension
scheme or a personal pension scheme as defined in Section 127 of
the Employment Protection (Consolidation) Act 1978 (a "Pension
Plan") have been made for all such Pension Plans, and no amounts
are owed in respect of the period prior to the Effective Date.
All amounts properly accrued to the date hereof as liabilities
of the Company or any of the Subsidiaries under or with respect
to each Plan which have not been paid are set forth in Section
7.16 of the Disclosure Letter (The Pension Plans are funded on a
proper actuarial basis (consistently applying the assumptions
used in the most recent actuarial reports)) having regard to the
benefits provided by such plans.
(c) All premiums, contributions and other payments required to be
made under all Applicable Legislation by the Company or any of
the Subsidiaries before the Closing Date with respect to the
Pension Plans will have been made before the Closing Date to
each of the funds established for the Pension Plans in
accordance with Applicable Legislation. From the date hereof to
the Closing Date, neither the Company nor the Subsidiaries shall
improve or promise to improve any benefits provided or to be
provided in accordance with the terms of the Plans as of the
date hereof, unless required by law or collectively negotiated
agreement.
Seller may, however, cause the Company to pay prior to Closing
any bonuses to the extent accrued to such time.
(e) There are no material actions, suits or claims pending, other
than routine claims for benefits, or, to the knowledge of the
Company, threatened against the Company or any of the
Subsidiaries in respect of employees who are members or former
members of any of the Pension Plans, against any of the Pension
Plans, or against the assets of any Pension Plan.
(f) Neither the Company nor any of the Subsidiaries maintains any
Plan providing post-retirement benefits other than pension
benefits provided under the Pension Plans registered in
accordance with the Applicable Legislation. The financial
obligations for post-retirement benefits has been determined in
accordance with generally accepted actuarial practice and is
reflected in the financial statements in accordance with GAAP.
Neither the Company nor any of the Subsidiaries is currently
liable for post-retirement benefits with respect to the Business
under any Plan which has been wound up and is not now maintained
by the Company or any of the Subsidiaries.
(g) The Plans are exempt schemes within the meaning of Section
592(1) of the Income and Corporation Taxes Act 1988 and the
Seller is not aware of any matter which could lead to the
withdrawal of that approval.
(h) Since the most recent actuarial evaluations, no power to
augment or alter benefits under any of the Plans has been
exercised and no employee member, or former member of any of the
Plans has been notified that such exercise may be contemplated.
(i) The Disclosure Letter contains full particulars of any benefit
or term which treats male or female beneficiaries under any of
the Plans unequally.
(j) All benefits (other than a refund of contributions with interest
where appropriate) payable under each of the Plans on the death
of a member while in an employment to which each of the Plans
relate are fully insured under a policy effected with an
insurance company and each member has been covered for such
insurance by such insurance company at their normal rates and on
its normal terms for pensions in good health.
7.17 Taxes
Each of the Company and each of the Subsidiaries has duly, timely and
correctly filed with or furnished to the appropriate United Kingdom or
foreign, federal, provincial, state, municipal and local authorities
all Returns and reports required to be filed or furnished by it; all
such Returns and reports were complete and correct in all material
respects; and, except to the extent specifically reflected or reserved
against in the Final Closing Balance Sheet each of the Company and
each of the Subsidiaries has paid all Taxes due to, or claimed to be
due from it by, any taxing authority. The Financial Statements
include full provision for all Taxes including deferred Taxes which
relate to the business, operations, properties or assets of the
Company and each of the Subsidiaries through the periods indicated
thereon which are not yet due to the appropriate taxing authority.
All Taxes that the Company or any of the Subsidiaries is or was
required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the
appropriate taxing authority. There are no Tax-related liens on the
assets of the Company or any of the Subsidiaries. Neither the Company
nor any of the Subsidiaries has executed or filed with any taxing
authority any agreement extending the period for assessment or
collection of Taxes. Neither the Company nor any of the Subsidiaries
are a party to any pending action or
proceeding, nor (to the best of the knowledge of Seller or the
Company) is any such action or proceeding threatened by any
Governmental Agency for the collection of Taxes. No claim for
assessment or collection of Taxes has been asserted against the
Company or any of the Subsidiaries nor (to the knowledge of Seller or
the Company) is there any basis for any such claim. No issue has been
raised by any taxing authority in respect of an audit or examination
of any Return or report filed by the Company or any of the
Subsidiaries which has not been settled or resolved, and no
examination or audit of any Return or report filed by the Company or
any of the Subsidiaries is currently in progress or, to the best of
the knowledge of Seller or the Company, threatened or contemplated by
any taxing authority and there is no fact or circumstance which might
reasonably be expected to give rise to any such examination or audit
of any such Return or report. Neither the Company nor any of the
Subsidiaries are a party to any agreement providing for the sharing or
allocation of any Tax liability.
Except as set forth in Section 7.17 of the Disclosure Letter, neither
the Company nor any of the Subsidiaries has pending any dispute or
question with any taxing authority. The Company and the Subsidiaries
do not have any obligation to indemnify (whether statutory or
otherwise) any person in respect of Tax. The entry into of this
Agreement and/or Closing will not give rise to any Tax charge on the
Company or any of the Subsidiaries. The Company and each Subsidiary
have not paid before the date of this Agreement, and will not pay
before Closing, any dividends under Section 247(1) of the United
Kingdom Income and Corporation Taxes Act 1988 other than dividends
falling within the scope of a valid and effective election made under
Section 247(1) of that Act. To the knowledge of the Sellers, neither
the Company nor any of the Subsidiaries has entered into any
transaction in respect of which there may be substituted for any Tax
purpose a different consideration for the actual consideration given
or received by it. Other than Pakseal SARL and Pakseal SRL, neither
the Company nor any of the Subsidiaries has a permanent establishment
(as defined in any relevant double taxation relief order) outside the
United Kingdom. The carrying out of the Reorganisation and any further
steps undertaken by the Company or any of the Subsidiaries before
Closing outside the ordinary course of business of the Company or any
of the Subsidiaries will not give rise to any Tax liability in the
Company or any of the Subsidiaries. Neither the Company nor any
Subsidiary has any liability for any Taxes which are primarily
chargeable against some other person (other than the Company or any of
the Subsidiaries) or where such Taxes are the joint or joint and
several liability of the Company or any of the Subsidiaries and some
other person (other than the Company or any of the Subsidiaries) or
where the Taxes in question relate to any income, profits or gains
earned, accrued or received by any other person (other than the
Company or any of the Subsidiaries). The loan due and owing by
Twicebonus Limited to The Chemical Bank is not fixed for the purposes
of Regulation 3(6) of the Exchange Gains and Losses (Transitional
Provisions) Regulations 1994 and no election has been made under
Regulation 3(5) of the said Regulations in respect of the said Loan.
Notwithstanding any other provisions of this Section 7.17, Seller
shall not be deemed to be in breach of this Section 7.17 by virtue of
any Taxes with respect to any period including or ending prior to the
Effective Date which result from Purchaser causing the write-up of
assets.
7.18 Environmental Compliance
(a) Compliance
To the knowledge of Seller, except as set forth in Section 7.18
of the Disclosure Letter:
(i) the Company and each of the Subsidiaries are in
compliance with and do not have any liability under all
applicable Environmental Laws as presently in effect;
(ii) the Company and each of the Subsidiaries possess all
required permits, licenses, consents, authorisations,
certifications, approvals, agreements, undertakings and
arrangements under the Environmental Laws as presently in
effect relating to the use, occupancy or operation of the
Business; and
(iii) the Company and each of the Subsidiaries are in
compliance with all requirements or conditions imposed
under their permits, licenses, consents, authorisations,
certifications, approvals, agreements, undertakings and
arrangements and have filed all required notices
information and applications. To the knowledge of the
Seller, there are no facts or circumstances which would
lead the Seller to believe that any such non-compliance
or liability will arise following the Closing Date.
(b) No Hazardous Substance
Except as set forth in Section 7.18 of the Disclosure Letter,
the Company and the Subsidiaries have never generated, used,
transported, treated, stored, kept, accumulated, disposed of or
otherwise handled any Hazardous Substance at any site, location
or facility in connection with the use, occupancy or operation
of the Business, other than in compliance in all material
respects with Environmental Laws in effect at the time in
question. Except as set forth in Section 7.18 of the Disclosure
Letter, the Company and the Subsidiaries have not owned or
operated any underground storage tanks ("USTs") in connection
with the use or occupancy of their real property or the
operation of the Business, other than in compliance in all
material respects with all applicable Environmental Laws.
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of the Seller there has been no release, spill or
discharge of any Hazardous Substance in connection with the use
or occupancy of their real property or the operation of the
Business in material violation of or giving rise to material
liability or requiring or which is likely to lead to a
requirement for reporting, removal or remediation under any
Environmental Laws in effect at the time in question which has
not been reported, removed or remediated, as the case may be.
(c) No Actions or Proceedings
Except as set forth in Section 7.18 of the Disclosure Letter,
neither the Company nor any of the Subsidiaries are subject to,
nor, to Seller's knowledge, are the subject of, any threatened
private, administrative, regulatory or judicial inquiry,
investigation, proceeding, notice, order or action resulting
from or relating to violations of or obligations under or
liability under Environmental Laws, including without limitation
liabilities relating to the generation, transportation,
treatment, accumulation, keeping storage, disposal or other
handling of Hazardous Substance or the protection or
endangerment of the environment or human health and safety in
connection with the use or occupancy of the real property of the
Company or any of the Subsidiaries or any subsidiary of the
Company or Precis or the operation of the Business.
(d) Other Conditions
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of the Seller, no facts, events or conditions
exist which could reasonably be expected to interfere with or
prevent continued compliance with applicable Environmental Laws
as in effect on the date hereof, or result in any liability,
under Environmental Laws or otherwise form the basis of any
claim, action, suit, proceeding, hearing notice or
investigation, relating to the release, discharge, generation,
use, transportation, treatment, accumulation, keeping storage,
disposal or other handling of Hazardous Substance or the
protection or endangerment of the environment or human health
and safety in connection with the use, occupancy or operation of
the real property of the Company or any of the Subsidiaries or
the Business.
7.18.2 Continuation of Permits etc.
Except as set forth in Section 7.18 of the Disclosure Letter, to
the knowledge of Seller there are no facts or circumstances
indicating that any required permits, licences, certifications,
approvals, agreements, undertakings or arrangements relating to
the use occupancy or operation of the Business would or might be
revoked, suspended, varied, modified or not renewed.
Neither the signature nor the performance of this Agreement will
itself cause any permits, licences, certifications, approvals,
agreements, undertakings or arrangements required under Environmental
Laws for the use occupancy or operation of the Business to be
withdrawn, suspended or modified.
7.19 Inventory
All of the inventories which are reflected in the balance sheet dated
30 June 1996 constituting a part of the Financial Statements were
purchased or acquired in the ordinary and regular course of the
conduct of the Business and in a manner consistent with the regular
inventory practices relating to the Business, and have been or will be
used or sold in the ordinary and regular course of the Business and in
a manner consistent with the Company's or the relevant Subsidiaries
regular inventory practices; all of the inventories which are
reflected in the balance sheets constituting a part of the Financial
Statement were priced at the lower of cost (on the first-in-first-out
basis), or market, and were (as to classes of items inventories and
methods of accounting and pricing) determined in a manner consistent
with prior years; and all inventories which have been purchased or
acquired by the Company or any of the Subsidiaries for the Business
since June 30, 1996 were purchased or acquired in the ordinary and
regular course of the Business and in a manner consistent with the
Company's or the relevant Subsidiaries regular inventory practices and
have been or will be used or sold in the ordinary and regular course
of the Company's or the relevant Subsidiaries business and in a manner
consistent with the Company's or the relevant Subsidiaries regular
inventory practices.
7.20 Receivables
All of the Receivables which are reflected in the balance sheets
constituting a part of the Financial Statements represent, and all of
the Receivables as of the Closing Date will represent, valid
obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to
the Closing Date, all of the Receivables set forth on the Seller
Closing Balance Sheet delivered under the US
Purchase Agreement will be current and enforceable (but no
representation is hereby made as to their collectability). These will
be as of the Closing Date. There is no contest, claim or asserted
right of set-off in any agreement relating to the amount or validity
of any Receivable set forth on the Seller's Closing Balance Sheet as
defined in the US Asset Purchase Agreement except those arising in the
ordinary course of business. The Seller has delivered or made
available to Purchaser a complete and accurate list of all Receivables
as of June 30, 1996, which list sets forth the ageing of such
Receivables.
7.21 Capitalisation
(a) The total authorised share capital of the Company and each of
the Subsidiaries, the number of such shares that are issued
and outstanding and the respective holders of such shares are
set forth in Section 7.21 of the Disclosure Letter. The
Purchased Shares constitute the entire issued share capital of
the Company; and the Subsidiary Stock comprises the entire
issued share capital of each of the Subsidiaries.
(b) The Purchased Shares and the Subsidiary Stock are validly
issued, and fully paid and are not subject to any pre-emptive
rights, and, except as disclosed in Section 7.21 of the
Disclosure Letter, there are no voting trust agreements or other
contracts, agreements or arrangements restricting voting or
dividend rights or transferability with respect to either the
Purchased Shares or the Subsidiary Stock.
(c) Except as disclosed in Section 7.21 of the Disclosure Letter,
(i) Seller owns the Purchased Shares free and clear of all
Liens, and (ii) the Company owns the Subsidiary Stock free and
clear of all Liens.
(d) Except as disclosed in Section 7.21 of the Disclosure Letter,
there no outstanding options, warrants, rights, privileges or
other arrangements, pre-emptive, contractual or otherwise, to
acquire or issue any shares or other securities of the Company
or any of the Subsidiaries.
7.22 Undisclosed Liabilities
On June 30, 1996 neither the Company nor any of the Subsidiaries had
any material debts, liabilities or obligations of a nature required to
be reflected on a balance sheet prepared in accordance with GAAP,
which were not fully disclosed, reflected or reserved against in the
Balance Sheet, except as disclosed in the Disclosure Letter. Except
for current liabilities or obligations which have been incurred since
June 30, 1996 in the ordinary course of business and except as
disclosed in the Disclosure Letter, or as reflected in the Final
Closing Balance Sheet since June 30, 1996, neither the Company nor any
of the Subsidiaries has incurred any material debt, liability or
obligation of a nature required to be reflected on a balance sheet
prepared in accordance with GAAP. Except as reserved for on the Final
Closing Balance Sheet, neither the Company nor any of the Subsidiaries
has or will have any liabilities to any third party in connection with
the liquidation of Pakseal SRL.
7.23 Books and Records
The books and records maintained by the Company and each of the
Subsidiaries are fully and accurately maintained in all material
respects. To the knowledge of Seller, except as would not have a
Material Adverse Effect, the minute books of the Company and each of
the Subsidiaries are complete and accurate in all material respects
and
reflect all material actions taken and resolutions passed by the
directors and shareholders of the Company and each of the Subsidiaries
since their respective dates of incorporation, and all such meetings
were duly called and held, and the share certificate books, register
of shareholders, register of transfer and registers of directors are
complete and accurate in all material respects.
7.24 Except as would not have a Material Adverse Effect, all accounts,
documents and returns required to be delivered or made to the
Registrar of Companies or any other authority by the Company or any of
the Subsidiaries have been duly and correctly delivered or made.
7.25 Full Disclosure
The materials delivered by or on behalf of the Seller in connection
with this Agreement, taken as a whole, fairly present the Business.
7.26 DISCLAIMER OF WARRANTIES. EXCEPT WITH RESPECT TO THE WARRANTIES AND
REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER MAKES
NO WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE
ASSETS OF THE COMPANY OR ANY OF THE SUBSIDIARIES OR ANY PART THEREOF,
OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD BY
PURCHASER THAT SUCH ASSETS ARE TO BE ACQUIRED BY IT BY VIRTUE OF
PURCHASER'S ACQUISITION OF THE COMPANY HEREUNDER "AS IS" ON THE DATE
HEREOF, AND IN THEIR PRESENT CONDITION, SUBJECT TO REASONABLE USE,
WEAR AND TEAR BETWEEN THE DATE HEREOF AND THE CLOSING DATE, AND
PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.
8 WARRANTIES AND REPRESENTATIONS OF PURCHASER
Purchaser warrants and represents to Seller (which warranties and
representations shall survive the Closing) as follows:
8.1 Incorporation and Qualification of Purchaser
Purchaser is a corporation validly existing and in good standing under
the laws of England and Wales and has all requisite corporate power
and authority to own, operate and lease the assets it now owns,
operates or leases and to carry on its business as currently
conducted.
8.2 Authority
Purchaser has all requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated
hereby. The execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder and the
consummation by Purchaser of the transactions contemplated hereby have
been duly authorised by all requisite corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by
Purchaser and (assuming the due authorisation, valid execution and
delivery hereof by Seller) is a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, re-
organisation, moratorium or similar laws affecting creditors' rights
and
remedies generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
8.3 No Conflict
Except as may result from any facts or circumstances relating solely
to Seller, the execution, delivery and performance of this Agreement
by Purchaser do not and will not:
(a) conflict with or violate any provision of the Articles of
Association of Purchaser;
(b) except as would not have a material adverse effect on
Purchaser or its ability to consummate the transactions
contemplated hereby, result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of
time, or both, would become a default) under, or give to others
any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Lien on any of
the assets or properties of Purchaser pursuant to, any
instrument, license, agreement or commitment to which Purchaser
is a party or by which any of its assets or properties are
bound; or
(c) except as would not have a material adverse effect on
Purchaser or its ability to consummate the transactions
contemplated hereby, conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction or decree
applicable to Purchaser or its assets or properties.
8.4 Consents and Approvals
The execution, delivery and performance by Purchaser of this Agreement
do not, and compliance by Purchaser with the terms hereof and
consummation by Purchaser of the transactions contemplated hereby will
not, require Purchaser to obtain any consent, approval, authorisation
or other action of, or make any filing with or give any notice to, any
court, administrative agency or other governmental authority, except:
(a) where failure to obtain such consents, approvals, authorisations
or actions, make such filings or give such notice would not
prevent Purchaser from performing any of its material
obligations under this Agreement; and
(b) as may be necessary as a result of any facts or circumstances
relating solely to Seller.
8.5 Litigation
There are no actions, claims, proceedings or governmental
investigations pending against Purchaser or any of its assets or
properties at law or in equity, before any federal, provincial or
municipal court, agency or other governmental entity, or by any other
Person, which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Purchaser or its ability
to consummate the transactions contemplated hereby.
8.6 Brokers
Neither this Agreement nor the purchase of the Purchased Shares or any
other transaction contemplated by this Agreement was induced or
procured through any
Person acting on behalf of or representing Purchaser or any of its
Affiliates as broker, finder, investment banker, financial advisor or
in any similar capacity.
8.7 Financial Ability
At the Closing on the Closing Date, Purchaser will have the funds
necessary to purchase the Purchased Shares and consummate the
transactions contemplated hereby.
8.8 Investment Purpose
Purchaser confirms that it is acquiring the Purchased Shares for
investment for its own account and not with a view to the sale or
distribution of any part thereof, and that Purchaser has no present
intention of selling, granting, participating in, or otherwise
distributing the same.
9 CONDITIONS TO CLOSING APPLICABLE TO PURCHASER
The obligation of Purchaser to consummate the transactions herein
contemplated is subject to the following conditions precedent:
9.1 No Termination
Neither Purchaser nor the Seller shall have terminated this Agreement
pursuant to Section 11.1.
9.2 Bring-Down of Seller's Warranties
The warranties and representations made by Seller herein to Purchaser
shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date, and each
Seller shall have performed and complied with all agreements,
covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date; and at the Closing,
Purchaser shall have received a certificate executed by the President
or any Vice President or the Controller of Seller to the foregoing
effect.
9.3 Pending Actions
No investigation, action, suit or proceeding by any governmental or
regulatory commission, agency, body or authority shall be pending on
the Closing Date which challenges, or is reasonably likely to result
in a challenge to, this Agreement or any transactions contemplated
hereby or any action is brought by any other person which is
reasonably likely to prevent the consummation of the transactions
contemplated hereby.
9.4 Consents and Approvals
All consents, approvals or authorisations of any governmental
authority required to consummate the transactions contemplated hereby
shall have been duly obtained and shall be in full force and effect as
of the Closing Date, and Seller shall have complied with all
applicable provisions of law requiring any notification, declaration,
filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation.
9.5 All Necessary Documents
All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement and all documents incident
thereto, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such documents
as Purchaser may reasonably request in connection with said
transactions, including without limitation, those documents to be
delivered pursuant to Section 3.2.
9.6 Termination of Certain Liens
Purchaser shall have received evidence, in form and substance
reasonably satisfactory to it, of the termination, cancellation and
release of the Liens set forth in Section 7.13 of the Disclosure
Letter, each of which are to be satisfied at or prior to Closing.
9.7 U.S. and Canadian Transactions
The "Closing" contemplated under each of the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
9.8 Consents under Senior Credit Agreement and Release of Liens
All consents required under the Senior Credit Agreement and the
documents and instruments executed and delivered in connection
therewith to permit Seller to consummate the transactions contemplated
hereby shall have been delivered to Seller and all Liens on the
Purchased Shares and the assets of the Company and each of the
Subsidiaries under the Senior Credit Agreement and the other documents
and instruments executed and delivered in connection therewith shall
have been released and terminated.
9.9 Certain Required Payments
At or prior to Closing, except as provided in Section 10.9, Seller
shall have paid (or caused to be paid) to the Company or any
Subsidiary any and all amounts then owed by the Seller or any
Affiliate to the Company or any Subsidiary, and shall have caused to
be paid by the Company or any Subsidiary to Seller or any Affiliate
any and all amounts then owed by the Company or any Subsidiary to such
Seller or Affiliate (in each case, other than any amounts represented
by Transferred Intercompany Accounts), but in each case only to the
extent that such amount constituted an adjustment to the Purchase
Price pursuant to Section 2.2. The Seller shall provide to the
Purchaser evidence, reasonably satisfactory to the Purchaser, of the
making of such payments
Purchaser shall have the right to waive any of the foregoing
conditions precedent.
10 CONDITIONS TO CLOSING APPLICABLE TO SELLER
The obligation of Seller to consummate the transactions herein
contemplated is subject to the following conditions precedent:
10.1 No Termination
Neither Purchaser nor the Seller shall have terminated this Agreement
pursuant to Section 11.1.
10.2 Bring-Down of Purchaser Warranties
All warranties and representations made by Purchaser herein to Seller
shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date, and
Purchaser shall have performed and complied with all agreements,
covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date; and at the Closing,
Seller shall have received a certificate executed by the President or
any Vice President or Director of Purchaser to the foregoing effect.
10.3 Pending Actions
No investigation, action, suit or proceeding by any governmental or
regulatory commission, agency, body or authority shall be pending on
the Closing Date which challenges or is reasonably likely to result in
a challenge to this Agreement or any transaction contemplated hereby
or any action is brought by any other person which is reasonably
likely to prevent the consummation of the transactions contemplated
hereby.
10.4 Consents and Approvals
All consents, approvals or authorisations of any governmental
authority required to consummate the transactions contemplated hereby
shall have been duly obtained and shall be in full force and effect as
of the Closing Date, and Purchaser shall have complied with all
applicable provisions of law requiring any notification, declaration,
filing, registration and/or qualification with any governmental
authority in connection with such performance and consummation.
10.5 All Necessary Documents
All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement, and all documents
incident thereto, shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of such
documents as they may reasonably request in connection with said
transactions, including without limitation, those documents to be
delivered pursuant to Section 3.3.
10.6 Termination of Certain Liens
Seller shall have received evidence, in form and substance reasonably
satisfactory to them, of the termination, cancellation and release of
the Liens set forth in Section 7.13 of the Disclosure Letter, each of
which are to be satisfied at or prior to Closing.
10.7 U.S. and Canadian Transactions
The "Closing" contemplated under each of the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement shall be
consummated concurrently with the Closing hereunder.
10.8 Consents under Senior Credit Agreement and Release of Lien
All consents required under the Senior Credit Agreement and the
documents and instruments executed and delivered in connection
therewith to permit Seller to consummate the transactions contemplated
hereby shall have been delivered to Seller
and all Liens on the Purchased Shares and the assets of the Company
and each of the Subsidiaries under the Senior Credit Agreement and the
other documents and instruments executed and delivered in connection
therewith shall have been released and terminated.
10.9 Certain Required Payments
Simultaneously with the Closing, the Purchaser shall:
(i) cause the Company and/or the Subsidiaries to pay an amount
sufficient to discharge the Third Party Debt; and
(ii) cause Twicebonus Limited to pay any amounts borrowed by it
from Interlake Corporation or Seller in accordance with Section
5.1(d)(i).
10.10 Approval of Preferred Stockholders of The Interlake Corporation
The preferred stockholders of The Interlake Corporation shall have
authorised Seller's execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Seller shall have the right to waive any of the foregoing conditions
precedent.
11 TERMINATION
11.1 Termination
This Agreement may be terminated at any time prior to the Closing only
as follows, and in no other manner:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or by the Seller if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or
before 30 November 1996, or such later date as may have been
agreed upon in writing by the parties hereto; provided, that the
party seeking to terminate is not, in any material respect, in
breach of or in default under this Agreement;
(c) by Purchaser or by the Seller if any representation or warranty
made herein for the benefit of Purchaser or Seller,
respectively, or in any certificate, schedule or documents
furnished to Purchaser or Seller, respectively, pursuant to this
Agreement is untrue in any material respect, or if the Seller or
Purchaser, respectively, shall have defaulted in any material
respect in the performance of any material obligation under this
Agreement;
(d) by Seller if the Closing of the transactions contemplated by
this Agreement shall not have occurred on or before 10 October
1996, and no Competition Act Opinion (as defined in the Canadian
Stock Purchase Agreement) as of the date of Seller's notice of
termination shall have been delivered to Seller by Purchaser
within five Business Days after the date of Seller's notice of
termination under this Section 11.1(d).Any termination pursuant
to this Article 11 other than pursuant to Section 11.1(d) shall
not limit or restrict the rights or remedies of any party
hereto. Upon termination of this Agreement pursuant to Section
11.1(d), the Seller nor Purchaser shall have any further rights
hereunder.
12 INDEMNIFICATION
12.1 Indemnity
After the Closing Date, Seller and Interlake Corporation (collectively
the "Covenantors") agree, jointly and severally, to indemnify and hold
Purchaser, its Affiliates (and, after the Closing, but only in
connection with a Tax Claim (as defined below) the Company and the
Subsidiaries) and their officers and directors (collectively, the
"Purchaser Indemnified Persons") harmless against any loss, damage or
expense (including reasonable attorneys' fees) ("Loss") suffered as
the result of:
(a) any breach by the Seller of this Agreement;
(b) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by the Seller herein or
in the Disclosure Letter (including, without limitation an
inaccuracy in or breach of Section 7.17 hereof (a "Tax Claim"));
(c) any inaccuracy or misrepresentation in a certificate or
affidavit delivered by the Seller at the Closing in accordance
with the provisions of this Agreement;
(d) the assertion by a third party of any Contingent Liabilities or
the compliance by Purchaser with any applicable law, rule or
order resulting in any Contingent Liabilities.
12.2 Limitation
Purchaser's right to indemnification pursuant to Section 12.1 is
subject to the following specific limitations:
(a) (i) After the Third Anniversary, no Purchaser Indemnified
Person shall be entitled to assert any right of
indemnification with respect to Section 7.18 for any loss,
damage or expense ("Loss") suffered by such Purchaser
Indemnified Person, except that if, as of the Third
Anniversary, there shall then be pending any such claim
under Section 12.1 of which such Purchaser Indemnified
Person shall have notified Seller in writing on or prior
to the Third Anniversary, such Purchaser Indemnified
Person shall continue to have the right to be indemnified
with respect to such claim.
After the expiration of the statute of limitations imposed
by any applicable law with respect to the underlying Tax
liability that forms the basis for any Purchaser
Indemnified Person's claims, such Purchaser Indemnified
Person shall not be entitled to assert any right of
indemnification under Section 12.1 with respect to any
loss, damage or expense suffered by such Purchaser
Indemnified Person as the result of a breach by Seller of
its representations and warranties set forth in Section
7.17, except that if, as of the expiration of any such
statute of limitation, there shall then be pending any
such claim under Section 12.1 of which such Purchaser
Indemnified Person shall have notified Seller in writing
on or prior to such expiration date, such Purchaser
Indemnified Person shall continue to have the right to be
indemnified with respect to such claim.
(iii) Except as set forth above, after the First Anniversary, no
Purchaser Indemnified Person shall be entitled to assert
any other right of indemnification under Section 12.1
(except with respect to the second sentence of Section
7.12 or the first sentence of Section 7.13) for any loss,
damage or expense suffered by such Purchaser Indemnified
Person, except that if, as of the First Anniversary, there
shall then be pending any such claim under Section 12.1 of
which such Purchaser Indemnified Person shall have
notified Seller in writing on or prior to the First
Anniversary, such Purchaser Indemnified Person shall
continue to have the right to be indemnified with respect
to such claim.
(iv) If a claim shall be made by any taxing authority, or if
any Purchaser Indemnified Person shall become aware that
any taxing authority is considering any issues which may
give rise to such a claim, that in either event, if
successful, would result in the indemnification of a
Purchaser Indemnified Person under Section 12.1 (as
limited by Section 12.2) for a Tax Claim or would result
in a loss, damage or expense in the nature of a Tax Claim
that would be counted towards the Threshold under Section
12.2(b), such Purchaser Indemnified Person shall notify
Seller in writing of such claim or other circumstances
within ten days of receipt by any Purchaser Indemnified
Person from the taxing authority of notice of such claim,
or any such Purchaser Indemnified Person becoming aware of
such other circumstances.
(b) Subject as hereinafter provided, no Purchaser Indemnified
Person shall be entitled to indemnification hereunder for any
indemnification claim until the amount of the aggregate losses,
damages and expenses required to be indemnified by the
Covenantors pursuant to Section 12.1 (as limited by Section
12.2) together with the amount of the aggregate losses, damages
and expenses required to be indemnified by the "Sellers" and/or
"Covenantors" under Sections 12.1 of each of the U.S. Asset
Purchase Agreement and the Canadian Stock Purchase Agreement,
exceed $750,000 (said amount is hereinafter sometimes referred
to as the "Threshold"), whereupon the Purchaser Indemnified
Persons shall be entitled to indemnification hereunder from
Covenantors only for the aggregate of indemnification claims in
excess of the Threshold. For the purposes of Section 12.1 and
this Section 12.2, in computing such individual or aggregate
amounts of claims, and the amount set forth in (c) below, the
amount of each claim shall be deemed to be an amount:
(i) net of any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by a
Purchaser Indemnified Person from any third party with
respect thereto; and
(ii) net of any tax benefit realised by a Purchaser
Indemnified Person, by reason of deductibility of such
liability or damage (determined by multiplying such
deductible amount by the then applicable rate of
corporation tax, corporate tax or corporate income tax
(as the case may be) for the Purchaser Indemnified Person
concerned), and any deferred tax benefit attributable to
such liability or damage (determined on the same basis
but present valued to the extent obtained through
depreciation or amortisation deductions).
(c) The maximum liability of Covenantors under this Agreement and
the "Sellers" and/or "Covenantors" under the U.S. Asset Purchase
Agreement and the Canadian Stock Purchase Agreement to the
Purchaser Indemnified Persons for indemnification claims
hereunder and thereunder shall be $25,000,000 in aggregate.
(d) Prior to seeking indemnification under Section 12.1, a
Purchaser Indemnified Person shall deliver appropriate claims to
any relevant insurer or third party obligated to indemnify or
reimburse such Purchaser Indemnified Person with respect to the
loss, damage or expense giving rise to such claim. To the
extent necessary, a Purchaser Indemnified Person shall permit
Seller to assert any such claims and shall co-operate, at
Seller's expense, with Seller's prosecution of such claims. In
the event that either Covenantor makes any payment to a
Purchaser Indemnified Person for indemnification for which such
Purchaser Indemnified Person could have collected on a claim
against a third party, such Covenantor shall be entitled to
pursue claims and conduct litigations on behalf of such
Purchaser Indemnified Person and any of its successors, to
pursue and collect on any indemnification or other remedy
available to such Purchaser Indemnified Person with respect to
such claim and generally to be subrogated to the rights of such
Purchaser Indemnified Person with respect thereto.
(e) As a condition to accepting the benefits of Section 12.1, each
Purchaser Indemnified Person acknowledges and agrees that its
sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this
Article 12. In furtherance of the foregoing, each Purchaser
Indemnified Person waives, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action
it may have against Seller and each other Seller Indemnified
Person arising under or based upon any foreign, federal,
provincial, state or local statute, law, ordinance, rule or
regulation (including, without limitation, any such rights,
claims or causes of action arising under or based upon common
law, Environmental Laws or otherwise).
(f) Except as specifically set forth in this Agreement, Seller is
not making any representation, warranty, covenant or agreement
with respect to the matters contained herein including, without
limitation, the assets, liabilities and operations of the
Company and the Subsidiaries. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any
right on the part of Purchaser, after the consummation of the
purchase and sale of the Purchased Shares contemplated hereby,
to rescind this Agreement or any of the transactions
contemplated hereby.
(g) The Covenantors shall not have any liability under any provision
of this Agreement for any liabilities or damages to the extent
that such liabilities or damages relate to actions taken or not
taken by the Company, the Subsidiaries, Purchaser or any other
Purchaser Indemnified Person after the Closing Date. In no event
shall the Covenantors be liable for Consequential Damages.
(h) Each Purchaser Indemnified Person shall take all reasonable
steps to mitigate all liabilities and damages for which a claim
may be made against the Covenantors pursuant to Section 12.1
upon and after becoming aware of any event which could
reasonably be expected to give rise to such liabilities or
damages. Purchaser shall cause the Company to refrain from
issuing credit notes against the Receivables unless Seller have
consented thereto.
(i) If at any time or from time to time either Covenantor makes any
indemnification payment under Section 12.1 or Section 12.2, such
payment shall be deemed for all purposes hereto to constitute a
reimbursement of a portion of the Purchase Price equal to the
amount so paid, and upon such reimbursement, the Purchase Price
shall be deemed to have been reduced accordingly for all
purposes hereof.
(j) (A) Subject to the resolution of any Tax dispute pursuant to
this Section 12.2(j), upon notice from Purchaser to
Seller that a Purchaser Indemnified Person is entitled to
an indemnification payment for a Loss arising from a Tax
Claim, the Covenantors shall thereupon jointly and
severally, pay to the Purchaser Indemnified Person an
amount that will indemnify and hold the Purchaser
Indemnified Person harmless from such loss or if the
claim is being handled pursuant to sub-section (B)
hereof, make such payment or provide the security
referred to in sub-section (B)(cc) hereof.
(B) Seller shall have the right to control in all respects the
dispute of any Tax Claim or any claim or possible claim by
any taxing authority that may give rise to any Tax Claim
or any loss, damage or expense in the nature of a Tax
Claim that would be counted towards the Threshold under
Section 12.2(b) (collectively, a "claim"), whether in
Seller's name or in the name of any relevant Purchaser
Indemnified Person, including, without limitation, the
right to negotiate with the relevant taxing authority with
respect thereto and, subject to the balance of this
Section 12.2(j), to settle any such claim, and each
Purchaser Indemnified Person shall take all such action in
connection with disputing such claim, including, without
limitation, providing copies of any relevant
documentation, as Seller shall reasonably request in
writing from time to time, but only if:
(aa) within 30 days (or such earlier date that any
payment of Taxes is due by the Purchaser
Indemnified Person) after the notice described
above has been given to Seller by the Purchaser
Indemnified Person, Seller advises that it wishes
to exercise its rights under this Section 12.2(j);
(bb) subject to the provisions of clause (dd) below on
the sharing of fees and expenses, the Covenantors
shall have agreed to pay to the Purchaser
Indemnified Person, as provided in this Section
12.2(j), all external costs and expenses that the
Purchaser Indemnified Person may reasonably incur
in connection with disputing such claim, including
reasonable solicitors' and accountants' fees and
disbursements;
(cc) if the Purchaser Indemnified Person is requested to
pay the Tax claimed and sue for a refund, the
Covenantors shall have either provided security to
the relevant taxing authority in form satisfactory
to such taxing authority for payment of such Tax,
or paid the amount of such claimed Tax directly to
such taxing authority on behalf of the Purchaser
Indemnified
Person (but only to the extent that the Covenantors
would be required under Section 12.1 hereof (as
limited by Section 12.2) to indemnify the Purchaser
Indemnified Person in respect of such Tax so
claimed) in which event such payment shall be
deemed to constitute the advance by the Covenantors
to the Purchaser Indemnified Person, on an
interest-free basis, of the amount of such claim
and to the extent that the Covenantors are not so
obligated to indemnify such Purchaser Indemnified
Person with respect to such Tax so claimed, such
Purchaser Indemnified Person shall promptly pay the
Tax so claimed on its own, and any indemnity
provided hereunder shall not extend to any
additional interest, costs or penalties resulting
from any failure by such Purchaser Indemnified
Person to promptly pay such Tax so claimed;
(dd) the Covenantors shall have selected tax advisers
reasonably satisfactory to the Purchaser
Indemnified Person. In the case of any claim
referred to in this Section 12.2 (j), the Purchaser
Indemnified Person shall not make payment of such
claim for at least 30 days (or such shorter period
as may be required by applicable law) after the
giving of the notice required by sub-section
(a)(iv) above. The Covenantors shall keep Purchaser
informed as to the progress of any dispute pursuant
to this Section 12.2, shall consult with Purchaser
and Purchaser's advisers in good faith with respect
to such dispute and shall make available to
Purchaser and Purchaser's advisers, a reasonable
time prior to filing, any materials to be filed
with respect to such dispute. In the case of any
claim the resolution of some portion of which is
reasonably expected by Purchaser to have an adverse
effect on the Purchaser Indemnified Person as to
which there will be no indemnification by
Covenantors, then Purchaser and the Covenantors
shall agree upon the accountants and the legal
advisers to represent them in disputing such claim;
if Purchaser and the Covenantors cannot or do not
so agree within 15 days from the date on which the
need for such accountants and advisers first
arises, then one of the national accounting firms
shall serve as the accountants (the parties hereby
agree that Price Waterhouse is acceptable) and a
firm selected by both Smith Lyons and Blake,
Cassels & Graydon of Toronto, Canada shall serve as
the legal advisers in such dispute. The fees and
expenses of such accountants and legal advisers
shall be shared by the Covenantors and the
Purchaser in proportion to the amount at stake for
each. Notwithstanding anything to the contrary
herein, neither party shall settle any claim
without the prior written consent of the other
party, provided that such consent is not
unreasonably withheld or delayed, provided,
however, that if the Purchaser shall refuse to
consent to any settlement of a claim which the
Covenantors wish to agree to, then without limiting
the applicability of the $750,000 Threshold or
maximum liability of the Covenantors as provided
for in Sections 12.2(b) and (c) above, the
liability of
Covenantors in connection with such claim shall be
limited to no more than the amount for which the
Covenantors would have settled; or
(ee) the Covenantors do not act unlawfully.
(C) If, after actual payment by Covenantors of an amount
advanced pursuant to sub-section (j)(B)(cc) above, the
extent of the liability of the Purchaser Indemnified
Person with respect to the indemnified matter shall be
established by the final judgment or decree of a court or
a final or binding settlement with a taxing authority
having jurisdiction thereof (the "Final Determination"),
the Purchaser Indemnified Person shall promptly pay the
Covenantor any refund received by or credited to the
Purchaser Indemnified Person with respect to the
indemnified matter (together with any interest paid or
credited thereon by the taxing authority and any recovery
of legal fees from such taxing authority) and to the
extent that the amount so paid by the Covenantor exceeds
the amount for which they are liable under Sections 12.1
and 12.2, the Purchaser Indemnified Person shall promptly
repay such excess to the Covenantor. Notwithstanding the
foregoing, the Purchaser Indemnified Person shall not be
required to make any payment under this clause (ii) before
such time as the Covenantors shall have made all payments
or indemnities then due with respect to Purchaser
Indemnified Person pursuant to Section 12.2.
(D) The Purchaser shall cause the Company to retain all
books and records that may become relevant to any Tax
Claim that may arise hereunder from time to time, until
such time as the making of any such Tax Claim is precluded
pursuant to Section 12.2(a)(ii).
(k) Notwithstanding any provision hereof, after the Tangible Net
Worth is finally calculated in accordance with Section 2.3 of
the US Asset Purchase Agreement, no Purchaser Indemnified Person
shall have any right to indemnification for any Loss suffered as
a result of any inaccuracy in or breach of the warranty
contained in Section 7.8 or Section 7.22 (to the extent such
Loss arises out of matters which were finally determined in
accordance with Section 2.3 of the U.S Asset Purchase
Agreement), Section 7.19 or Section 7.20.
(l) All sums payable by either Covenantor to any person pursuant to
this Agreement shall be paid free and clear of all deductions
or withholdings whatsoever, save only as may be required by any
applicable law.
(m) If any deductions or withholdings are required by law to be
made from any of the sums payable by either Covenantor pursuant
to this Agreement, Covenantors shall be obliged to pay to the
relevant person such sum as will, after the deduction or
withholding has been made, leave that person with the same
amount as it would have been entitled to receive in the absence
of any such requirement to make a deduction or withholding.
(n) If Tax is payable on any sum paid by either Covenantor to any
person pursuant to this Agreement, the sum otherwise so payable
shall be grossed up by such amount as will ensure that, after
payment of any Tax charged on
or in respect of such payment, there shall be left a sum equal
to that which would otherwise be payable pursuant to this
Agreement.
(o) All sums payable by either Covenantor to any person pursuant to
this Agreement shall be treated as a reduction of the Purchase
Price.
12.3 Purchaser Indemnity
After the Closing Date, Purchaser and Samuel Manu-Tech, jointly and
severally, agree to indemnify and hold Seller, its Affiliates and its
officers and directors (collectively, the "Seller Indemnified
Persons") harmless against any loss, damage or expense (including
reasonable attorneys' fees) suffered as the result of:
(a) any breach by Purchaser of this Agreement;
(b) any inaccuracy in or breach of any of the representations,
warranties, covenants or agreements made by Purchaser herein;
(c) any inaccuracy or misrepresentation in a certificate or
affidavit delivered by Purchaser at the Closing in accordance
with the provisions of this Agreement; and
(d) except to the extent Covenantors have indemnified Purchaser
pursuant to this Section 12, the conduct of the Business or the
ownership or use of its assets by the Company or any of the
Subsidiaries before or after the Closing, including without
limitation under any Environmental Laws.
12.4 Notice of Claims
Upon obtaining knowledge of any claim or demand which has given rise
to, or could reasonably be expected to give rise to, a claim for
indemnification hereunder, the party seeking indemnification
("Indemnitee") shall give written notice of such claim or demand
("Notice of Claim") to the other party ("Indemnitor"). Indemnitee
shall furnish to the Indemnitor in reasonable detail such information
as Indemnitee may have with respect to such indemnification claim
(including copies of any summons, complaint or other pleading which
may have been served on it and any written claim, demand, invoice,
billing or other document evidencing or asserting the same). Subject
to the limitations set forth in Section 12.2(a), no failure or delay
by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold
Indemnitee harmless, except to the extent that such failure or delay
shall have adversely effected Indemnitor's ability to defend against,
settle or satisfy any liability, damage, loss, claim or demand for
which Indemnitee is entitled to indemnification hereunder.
12.5 Indemnification Proceeding
If the claim or demand set forth in the Notice of Claim given by
Indemnitee pursuant to Section 12.4 is a claim or demand asserted by a
third party, Indemnitor shall have fifteen (15) days after the Date of
the Notice of Claim to notify Indemnitee in writing of its election to
defend such third-party claim or demand on behalf of the Indemnitee.
If Indemnitor elects to defend such third-party claim or demand,
Indemnitee shall make available to Indemnitor and its agents and
representatives all records and other materials which are reasonably
required in the defence of such third-party claim or demand and shall
otherwise co-operate with, and assist Indemnitor in the defence of,
such third-party claim or demand, and so long as the Indemnitor is
defending such
third-party claim in good faith, Indemnitee shall not pay, settle or
compromise such third-party claim or demand. If Indemnitor elects to
defend such third-party claim or demand, Indemnitee shall have the
right to participate in the defence of such third-party claim or
demand, at Indemnitee's own expense. If Indemnitor does not elect to
defend such third-party claim or demand or does not defend such third-
party claim or demand in good faith, Indemnitee shall have the right,
in addition to any other right or remedy it may have hereunder, at
Indemnitor's expense, to defend such third-party claim or demand;
provided, however, that:
(a) Indemnitee shall not have any obligation to participate in the
defence of, or defend, any such third-party claim or demand;
and
(b) Indemnitee's defence of or its participation in the defence of
any such third-party claim or demand shall not in any way
diminish or lessen the obligations of Indemnitor under the
agreements of indemnification set forth in this Article 12.
12.6 Satisfaction of Claims
Except for third-party claims (including Tax Claims) being defended in
good faith, and subject to the resolution of any disputes hereunder in
accordance with Section 15.7, Indemnitor shall satisfy its obligations
under this Article 12 within thirty (30) days after the Date of Notice
of Claim.
12.7 Date of Notice of Claim
The term "Date of the Notice of Claim" as used in this Article 12
shall mean the date the Notice of Claim is effective pursuant to
Section 15.12.
13 CONFIDENTIALITY
13.1 Confidentiality
Purchaser agrees with respect to all technical, commercial and other
information relating to the Company, any of the Subsidiaries, any of
their respective assets, the Facilities or the Business that is or has
been furnished or disclosed to Purchaser on, or after or before the
date hereof, including, but not limited to, information regarding the
Company, the Subsidiary and the organisation, personnel, business
activities, customers, policies, assets, finances, costs, sales,
revenues, rights, obligations, liabilities and strategies of the
Business (the "Information"), that, unless and until the transactions
contemplated by this Agreement shall have been consummated:
(a) such Information is confidential and/or proprietary to the
Company and the Business and entitled to and shall receive
treatment as such by Purchaser;
(b) Purchaser will, and will require all of its employees,
representatives, agents and advisors who have access to such
Information to, hold in confidence and not disclose to any other
Person nor use (except in respect of the transactions
contemplated by this Agreement or as required by law or in a
court, administrative or regulatory proceeding) any such
Information; provided, however, that Purchaser shall not have
any restrictive obligation with respect to any Information
which:
(i) is contained in a printed publication available to the
general public;
(ii) is or becomes publicly known through no wrongful act or
omission of, or violation of the terms hereof by,
Purchaser; or
(iii) becomes known to Purchaser from a source which has no
confidentiality obligation with respect to such
Information at the time of receipt of such Information;
and
(c) all such Information, unless otherwise specified in writing,
shall remain the property of the Company or any of the
Subsidiaries, as the case may be, and, in the event this
Agreement is terminated, shall be returned to the Company or any
of the Subsidiaries, as the case may be, together with any and
all copies made thereof, upon request for such return by the
Seller (except for documents submitted to a governmental agency
with the consent of the Seller or upon subpoena and which cannot
be retrieved with reasonable effort). Purchaser shall provide
Information only to its employees, representatives, agents and
advisors who have a need to know such Information in connection
with the transactions contemplated by this Agreement.
13.2 Remedy
Purchaser acknowledges that the remedy at law for any breach by
Purchaser of its obligations under Section 13.1 is inadequate and that
Seller shall be entitled to equitable remedies, including an
injunction, in the event of breach by Purchaser, in addition to any
other available remedies at law or otherwise.
14 CERTAIN OTHER UNDERSTANDINGS
14.1 Records
(a) After the Closing, each party agrees to provide the other with
access to all relevant documents and other information which may
be needed by such party for purposes of preparing Returns or
responding to an audit by any governmental agency or for any
other reasonable purpose. Such access will be during normal
business hours, upon reasonable prior notice and not otherwise
subject to time limitations.
(b) Seller agrees that on or before Closing, it shall provide
Purchaser with all books and records relating to the Business
including, without limitation, the books and records relating to
the assets of the Company and each Subsidiary. Purchaser agrees
that it shall preserve and keep all books and records relating
to the Business, including, without limitation, the Company's
and each Subsidiary's assets, in Purchaser's possession until
six months following the expiration of the applicable statute of
limitations (including extensions thereof) applicable to the
Returns of the Company or any of the Subsidiaries filed or
furnished for each taxable period first ending after the Closing
Date and each prior taxable period to which such books or
records are relevant. After such time, before Purchaser shall
dispose of any of such books and records, at least ninety (90)
calendar days' prior written notice to such effect shall be
given by Purchaser to Seller, and Seller shall be given an
opportunity, at its own cost and expense, to remove and retain
all or any part of such books and records as Seller may select.
Duly authorised representatives of Seller shall, upon reasonable
notice, have access to such books and records during normal
business hours to examine, inspect, retrieve and copy such books
and records.
(c) In order to facilitate the resolution of any claims made by
or against or incurred by Seller prior to or after the Closing,
upon reasonable notice, Purchaser shall, after the Closing:
(i) afford the officers, employees and authorised agents and
representatives of Seller reasonable access, during
normal business hours, to the offices, properties, books
and records of Purchaser, the Company and the
Subsidiaries with respect to the Business;
(ii) furnish to the officers, employees and authorised agents
and representatives of Seller such additional financial
and other information regarding the Business as Seller
may from time to time reasonably request; and
(iii) make available to Seller, the employees of Purchaser, the
Company and the Subsidiaries whose assistance, testimony
or presence is necessary to assist Seller in evaluating
any such claims and in defending such claims, including
the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that such
investigation shall not unreasonably interfere with the
businesses or operations of the Company.
(d) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is
necessary that either party hereto or any successors be
furnished with additional information relating to the Business,
including, without limitation, the Company's and each
Subsidiary's assets, and such information is in the possession
of the other party hereto, such other party agrees to use its
best efforts to furnish such information to the party needing
such information, at the cost and expense of the party being
furnished such information; provided, that Purchaser will cause
the Company and the Subsidiaries to provide the Seller with
information relevant to the tax filings relevant to Seller
including in respect of periods ending on or prior to the
Closing Date without charge.
14.2 Further Actions
Seller agrees that from and after the Closing Date, if reasonably
requested by Purchaser, it will execute and deliver such further
instruments of conveyance and transfer and take such other reasonable
action as may be necessary or desirable to convey and transfer more
effectively to Purchaser the Purchased Shares.
14.3 Change of Control
If:
(a) any Contract requires a consent to any change in control of
the Company and such consent has not been obtained by the
Closing Date; or
(b) a Contract relates solely to the Business but is in the name
of the Seller or an Affiliate of a Seller other than the
Company;
then this Agreement, to the extent permitted by law, shall constitute
an equitable assignment by such Seller or such Affiliate to the
Company of all rights, benefits, title and interest, liabilities and
obligations under any such Contracts. The Seller or Affiliate shall
take all necessary steps and action to provide the Company with the
benefits of such Contracts. Purchaser and the Company shall take all
necessary steps to perform their obligations with respect thereto and
shall indemnify the Seller or such Affiliate for any losses suffered
by the Seller or such Affiliate relating to the Purchaser's or the
Company's performance of such obligations.
14.4 Taxes
Seller shall be responsible for causing the Company to prepare and
file all Returns and reports of the Company and the Subsidiaries due
in respect of periods ended on or prior to 31 December 1995, which
Returns and reports shall be prepared and filed timely and on a basis
consistent with existing procedures for preparing such Returns and
reports and in a manner consistent with prior practice with respect to
the treatment of specific items on the Returns or reports. Seller
shall also be responsible for causing the Company and the Subsidiaries
to prepare and file all claims, elections, surrenders, disclaimers,
notices and consents for the purposes of Tax which are due in respect
of periods ended on or prior to 31 December 1995.
Except with Purchaser's written consent, Seller shall not, and shall
procure that its duly authorised agents do not, file any Tax document
which comprises or includes a claim, election, surrender, disclaimer,
notice or consent, or withdraw any such item unless the making,
giving, or withdrawal of it (as the case may be) could not have any
adverse effect on the Tax liability of the Company or any of the
Subsidiaries.
Seller shall procure that Purchaser is promptly sent a copy of any
communication from any taxing or other authority received by the
Seller.
In relation to all Returns of the Company and the Subsidiaries due in
respect of periods ended on or prior to 31 December 1995 which have
not at the date of this Agreement been submitted to the appropriate
taxing authority, Seller shall procure that:
(a) such Returns are not submitted to the appropriate taxing
authority unless they have first been given to Purchaser for
approval not less than thirty days before the date of
submission;
(b) the Company or the relevant Subsidiary takes account of any
reasonable comments made by Purchaser or its duly authorised
agent in relation to such Returns; and
(c) such Returns are submitted to the appropriate taxing authority
without amendment or only with such amendments as Purchaser
shall agree;
PROVIDED THAT neither the Company nor the Subsidiaries shall be
obliged to submit any Returns to any taxing authority unless they are
satisfied that they are full, true and accurate in all material
respects.
The Purchaser shall be, or shall cause the Company to be, responsible
for preparing and filing all Returns and reports of the Company due in
respect of the period commencing on 1 January 1996, which Returns and
reports, to the extent they relate to periods or portions of periods
ending on or prior to or including the Closing Date , shall be
prepared and filed timely and on a basis consistent with existing
procedures for preparing such Returns and in a manner consistent with
prior practice with respect to the treatment of specific items on the
return insofar as such procedures or manner are lawful and comply with
generally accepted good practice, and with respect to such Returns
Purchasers shall procure that:
(a) such Returns are not submitted to the appropriate taxing
authority unless they have first been given to Seller for
approval not less than thirty days before the date of
submission;
(b) the Company or the relevant Subsidiary takes account of any
reasonable comments made by Seller or their duly authorised
agent in relation to such Returns; and
(c) such Returns are submitted to the appropriate taxing
authority without amendment or only with such amendments as
Seller shall agree.
Purchaser will cause Acme Gerrard Limited and Pakseal Industries
Limited to deposit, no later than 14 October 1996, Advance Corporation
Tax in the amounts of (Pounds)400,000 sterling and (Pounds)40,000
sterling, respectively, with respect to the dividends contemplated by
the Reorganisation.
14.5 Interlake Corporation is a party to this Agreement solely for the
purpose of joining with Seller in giving the indemnity contained in
Clause 12.2 and does not accept any other liability hereunder.
14.6 Samuel Manu-Tech is a party to this Agreement solely for the purpose
of joining with Purchaser in giving the indemnity contained in Clause
12.3 and does not accept any other liability hereunder.
15 MISCELLANEOUS
15.1 Cost and Expenses
Except as otherwise provided in this Agreement, each party hereto
shall pay its own fees, costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
15.2 Entire Agreement
The Disclosure Letter and the Exhibits referenced in this Agreement
are incorporated into this Agreement and together with this Agreement
and the Ancillary Agreements contain the entire agreement between the
parties hereto with respect to the transactions contemplated
hereunder, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the
date hereof, including, without limitation, the letter dated May 3,
1996 from Mr. Mark C. Samuel, President of Samuel Manu-Tech, to Mr. W.
Robert Reum, Chairman, President and Chief Executive Officer of The
Interlake Corporation, regarding the transaction contemplated hereby
and the Mutual Confidentiality Agreement dated as of April 26, 1996
between The Interlake Corporation and Purchaser. No waiver,
modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the
party to be bound thereby.
15.3 Counterparts
This Agreement may be executed in counterparts, each of which when
executed shall be deemed an original and all of which together shall
constitute one and the same instrument.
15.4 Assignment, Successors and Assigns
The respective rights and obligations of the parties hereto shall not
be assignable without the prior written consent of the other parties;
provided, however, that Purchaser may assign all or part of its rights
under this Agreement and delegate all or part of its obligations under
this Agreement to a wholly-owned subsidiary of Purchaser, in which
event all the rights and powers of Purchaser and remedies available to
it under this Agreement shall extend to and be enforceable by such
subsidiary; provided further, however, that no such assignment and
delegation shall release Purchaser from its obligations under this
Agreement, and further, Purchaser hereby guarantees to Seller the
performance by such subsidiary of its obligations under this Agreement
and each other document or instrument to be entered into by such
subsidiary in connection with the transactions contemplated hereby. In
the event of any such assignment and delegation the term "Purchaser"
as used in this Agreement shall be deemed to refer to such subsidiary
of Purchaser where reference is made to actions to be taken with
respect to the acquisition of the Purchased Shares, and shall be
deemed to include both Purchaser and such subsidiary where
appropriate. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
15.5 Savings Clause
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, rule or regulation,
such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof. The remaining provisions
of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid and enforceable provision as
similar in terms to such illegal, invalid or unenforceable provision
as may be possible.
15.6 Headings
The captions of the various Articles and Sections of this Agreement
have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any of the provisions
of this Agreement.
15.7 Arbitration
(a) Exclusive Procedure
Save for any dispute which falls to be dealt with under Section
12.2(j)(B)(dd), any dispute arising out of or relating to this
Agreement will be resolved in accordance with the procedures
specified in this Section 15.7, and this is the sole and
exclusive procedure for resolution of any such dispute. Each
party waives its right to court proceedings, in consideration of
the parties' agreement to negotiate and arbitrate.
(b) Negotiation between Executives
The parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by
negotiation between the Presidents of The Interlake Corporation
and Samuel Manu-Tech. (as of the date hereof, W. Robert Reum and
Mark C. Samuel, respectively), who may be accompanied
by such other persons as they choose. Any party may give the
other party written notice of any dispute not resolved in the
normal course of business, and specifically require a response
by referring to this Section of this Agreement. Within 15 days
after receipt of such notice, the receiving party will submit to
the other a written response. The notice and the response will
include a statement of each party's position and a summary of
arguments supporting that position and the names and titles of
the persons who will accompany the Chief Executive Officer.
Within 30 days after delivery of the disputing party's notice,
the executives of both parties will meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute.
All reasonable requests for information made by one party to the
other will be honoured.
(c) Arbitration under the CPR Rules
Save for any dispute which falls to be dealt with under Section
12.2(j)(B)(dd), any dispute arising out of or relating to this
Agreement which has not been resolved within 60 days of the
initial written notice of the dispute under sub-section (b)
above will be settled by arbitration. If, however, either party
will not participate in the negotiations required above, then
the other party may initiate arbitration before expiration of
the period specified above. The following rules will apply to
the arbitration:
(i) the then current CPR Non-Administered Arbitration Rules
(adopted by the CPR Institute for Dispute Resolution)
will govern, and the United States Federal Arbitration
Act, 9.U.S.C. (S) 1-16, will also govern to the extent
consistent;
(ii) there will be three independent and impartial
arbitrators, of whom each party will appoint one and the
third will be appointed by the other two;
(iii) the place of arbitration will be metropolitan Chicago;
(iv) the arbitrators shall not be empowered to award damages
in excess of compensatory damages, and each party hereby
irrevocably waives any right to recover any such damages;
(v) as a primary goal of this Section is to conclude disputes
in a speedy manner at substantially less cost to the
parties than litigation, the arbitrators are therefore to
conduct the proceedings in a speedy and expeditious
manner and to conclude and issue an award as soon as
possible after appointment of the third arbitrator; and
(vi) the arbitrators' decision will be final and binding and
judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction.
(d) Statute of Limitations
The statute of limitations of the State of Illinois applicable
to the commencement of a lawsuit will apply to the commencement
of an arbitration, except that no defences will be available in
arbitration based upon the passage of time during any
negotiation called for by this Section.
(e) Costs
Each party must bear its own costs of resolving any dispute
under this Agreement and the parties each hereby severally agree
to pay 50% of the costs of any arbitrators engaged.
(f) Confidentiality
Any information or documents disclosed under this Section;
(i) will be treated as settlement negotiations under any
rules of evidence;
(ii) must be kept confidential and (iii) may not be used
except to attempt to settle the dispute.
(g) Continued Performance
Each party is required to continue to perform its obligations
under this Agreement pending final resolution of any dispute
arising out of or relating to this Agreement, unless to do so
would be impossible or impracticable under the circumstances.
15.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, EXCLUDING
THE "CONFLICT OF LAWS" RULES THEREOF.
15.9 Public Announcements
No press release or other public statement with respect to this
Agreement or the transactions contemplated hereby shall be issued by
any party without such party having consulted with and obtained the
written consent of the other parties, which consent shall not be
unreasonably withheld; provided, however, that no such consultation or
consent is necessary if a press release or other public statement is
required to be made by applicable law.
15.10 U.S. Dollars
All amounts expressed in this Agreement and all payments required by
this Agreement are in United States dollars.
15.11 Survival
All representations and warranties made by any party in this Agreement
shall be deemed made for the purpose of inducing the other parties to
enter into this Agreement and, subject to Section 12.2(a) shall
survive the Closing.
15.12 Notices
(a) All notices, requests, demand and other communications under
this Agreement shall be in writing and delivered in person or
sent by overnight courier or certified mail, postage prepaid, or
by facsimile (with a copy by overnight courier or certified
mail, postage prepaid) and properly addressed as follows:
To Seller or Interlake Corporation:
The Interlake Companies, Inc
550 Warrenville Road
Lisle, Illinois 60532-4387
Fax No: (630) 719 7242
Attention: Stephen Gregory,
Vice President - Finance and
Chief Financial Officer
Stephen R. Smith,
Vice President, Secretary and
General Counsel
To Purchaser or Samuel Manu-Tech Inc:
c/o Samuel Manu-Tech Inc.
191 The West Mall
Suite 418
Etobicoke, Ontario
Canada M9C 5K8
Fax No: (416) 626 5969
Attention: Mark C. Samuel, President
Wallace H. Rayner, Executive Vice-President
and Chief Financial Officer
with a copy to:
Smith Lyons
40 King Street West
Suite 5800, Scotia Plaza
Toronto, Ontario
Canada M5H 3Z7
Fax No: (416) 369 7250
Attention: D. William Mutch
and a copy to:
S J Berwin & Co
222 Gray's Inn Road
London WC1X 8HB
Fax No: (171) 533 2000
Attention: Peter W Anderson
(b) Any party may from time to time change its address for the
purpose of notices to that party by a similar notice specifying
a new address, but no such change shall be deemed to have been
given until it is actually received by the party sought to be
charged with its contents.
(c) All notices and other communications required or permitted
under this Agreement which are addressed as provided in this
Section 15.12 if delivered personally, by facsimile or by
overnight courier, shall be effective upon delivery; and if
delivered by mail, shall be effective three (3) Business Days
after deposit in the United States mail, postage prepaid.
15.13 Disclosures
All matters disclosed by Seller in any Section of the Disclosure
Letter shall be deemed a disclosure by Seller for purposes of all
relevant Sections of this Agreement.
15.14 No Third-Party Beneficiaries
Except as otherwise expressly provided in this Agreement, nothing in
this Agreement, expressed or implied, is intended or shall be
construed to confer upon or give to any Person, other than the parties
hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
15.5 This Stock Purchase Agreement will become effective upon the execution
and coming into effect of the US Asset Purchase Agreement and the
Canadian Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement in London England as of the date first written
above.
THE INTERLAKE COMPANIES, INC.
By: /s/ Stephen R. Smith
Title: Vice President, Secretary
and General Counsel
STRAPPING SYSTEMS (U.K.) LIMITED
By: /s/ Michael Evelyn
Title: Corporate Controller &
Secretary
THE INTERLAKE CORPORATION
By: /s/ Stephen R. Smith
Title: Vice President, Secretary
and General Counsel
SAMUEL MANU-TECH INC
By: /s/ Michael Evelyn
Title: Corporate Controller &
Secretary
SCHEDULE
1 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 31 May 1996 and headed 'Application for clearance under Section
707 ICTA 1988 Interlake DRC Limited and its subsidiaries';
2 Letter from Price Waterhouse to the Inland Revenue (Capital Gains
Clearance Section) dated 31 May 1996 and headed 'Application for
clearance under Section 138 TCGA 1992 Interlake DRC Limited and its
subsidiaries';
3 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 15 July 1996 and headed 'Application for clearance under Section
707 ICTA 1988 Interlake DRC Limited and its subsidiaries';
4 Letter from Price Waterhouse to the Inland Revenue (Capital Gains
Clearance Section) dated 15 July 1996 and headed 'Application for
clearance under Section 138 TCGA 1992 Interlake DRC Limited and its
subsidiaries';
5 Letter from the Inland Revenue (Capital Gains Clearance Section) to
Price Waterhouse dated 30 July 1996 and headed 'Interlake DRC Ltd,
Precis (935) Ltd, Twicebonus Ltd';
6 Letter from the Inland Revenue (Section 703 Group) to Price Waterhouse
dated 1 August 1996 and headed 'Interlake DRC Ltd'.
7 Letter from Price Waterhouse to the Inland Revenue (Section 703 Group)
dated 28 August 1996 and headed "Application for Clearance Under
Section 707 ICTA 1988 Interlake DRC and its subsidiaries".
8 Letter from the Inland Revenue (Section 703 Group) to Price Waterhouse
dated 16 September 1996 and headed "Interlake DRC Ltd".