EXHIBIT 4.19
ASSET PURCHASE AGREEMENT
by and among
IFCO SYSTEMS N.V.
IFCO SYSTEMS NORTH AMERICA, INC.
IFCO INDUSTRIAL CONTAINER SYSTEMS HOLDING COMPANY
IFCO ICS - CHICAGO, INC.
IFCO ICS - MIAMI, INC.
IFCO ICS - NORTH CAROLINA, INC.
IFCO ICS - MINNESOTA, INC.
CONTAINER RESOURCES CORPORATION
IFCO ICS - WASHINGTON, INC.
IFCO ICS - CALIFORNIA, INC.
IFCO ICS - FLORIDA, INC.
ENVIRONMENTAL RECYCLERS OF COLORADO, INC.
IFCO ICS - ILLINOIS, INC.
PALEX KANSAS, INC.
IFCO ICS - GEORGIA, INC.
IFCO ICS - MICHIGAN, INC.
IFCO CONTAINER SYSTEMS - SOUTH CAROLINA
IFCO ICS - WESTERN LLC
and
INDUSTRIAL CONTAINER SERVICES, LLC
November 21, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1. Purchase and Sale of Assets ........................................ 2
1.1 Purchase and Sale of Assets ........................................ 2
1.2 Consideration for Purchase and Sale ................................ 3
(a) Closing Payment ............................................... 3
(b) Zellwood Escrow ............................................... 3
(c) Buyer's Assumption of Liabilities ............................. 3
(d) Buyer's Assumption of Contracts ............................... 3
(e) Buyer's Assumption of Permits ................................. 4
1.3 Sellers' Retention of Liabilities .................................. 4
1.4 Allocation of Closing Payment ...................................... 5
1.5 Prorations ......................................................... 5
1.6 Real Estate Closing Costs .......................................... 6
ARTICLE 2 Closing the Transaction ............................................ 6
2.1 Closing ............................................................ 6
2.2 Parents' and Sellers' Deliveries at Closing ........................ 7
(a) ▇▇▇▇ of Sale .................................................. 7
(b) Deeds, Etc. ................................................... 7
(c) Other Assignment Instruments .................................. 7
(d) Consents ...................................................... 7
(e) Closing Certificates .......................................... 7
(f) Good Standing Certificates .................................... 7
(g) Lease Assignments ............................................. 8
(h) Lien Releases ................................................. 8
(i) Name Change ................................................... 8
(j) Articles, Resolutions, and Incumbency ......................... 8
(k) Check Endorsement ............................................. 8
(l) Titles ........................................................ 8
(m) Acknowledgement ............................................... 8
(n) Other Instruments ............................................. 9
2.3 Buyer's Deliveries at Closing ...................................... 9
(a) The Cash Payment .............................................. 9
(b) Acquired Assets Note .......................................... 9
(c) Zellwood Escrow Fund .......................................... 9
(d) Closing Certificate ........................................... 9
(e) Consents ...................................................... 9
(f) Articles, Resolutions and Incumbency .......................... 9
(g) Guarantees .................................................... 9
(h) Acknowledgement ............................................... 9
(i) Other Instruments ............................................. 9
i
2.4 Related Agreements ......................................................... 9
(a) Assignment and Assumption Agreement ................................... 10
2.5 Zellwood ................................................................... 10
(a) PPAs .................................................................. 10
(b) Zellwood Owner/Operator ............................................... 10
(c) Covenants Pending Zellwood Closing .................................... 10
(d) Consideration for Zellwood Purchase and Sale .......................... 11
(e) Zellwood Closing ...................................................... 13
(f) Distribution of Zellwood Escrow Fund .................................. 14
(g) Zellwood Moving Expenses .............................................. 15
(h) Assignment ............................................................ 16
ARTICLE 3 Conditions to Consummating the Transaction ................................. 16
3.1 Joint Conditions ........................................................... 16
(a) HSR Act ............................................................... 16
(b) No Injunctions or Restraints .......................................... 16
(c) Related Agreements .................................................... 16
3.2 Buyer's Conditions ......................................................... 16
(a) Parents' and Sellers' Representations True ............................ 16
(b) Parents' and Sellers' Compliance with Agreement ....................... 16
(c) Seller Consents ....................................................... 17
(d) Permits ............................................................... 17
(e) Parents' and Sellers' Closing Deliveries .............................. 17
(f) No Material Adverse Effect ............................................ 17
(g) No Litigation ......................................................... 17
(h) Financing ............................................................. 17
(i) Title Policies ........................................................ 18
(j) Surveys ............................................................... 18
(k) Certificates of Tax Authorities ....................................... 18
(l) Estoppel Certificates ................................................. 18
(m) Opinion of Sellers' Counsel ........................................... 18
3.3 Parents' and Sellers' Conditions ........................................... 19
(a) Buyer's Representations True .......................................... 19
(b) Buyer's Compliance with Agreement ..................................... 19
(c) Buyer's Closing Deliveries ............................................ 19
(d) No Litigation ......................................................... 19
(e) Opinion of Buyer's Counsel ............................................ 19
(f) Mutual Release on Option Termination Acknowledgements ................. 19
(g) Bank Consent .......................................................... 19
(h) HSR Act Filing ........................................................ 19
ARTICLE 4. Covenants to Satisfy Conditions and Consummate the Transaction ............. 20
4.1 Joint Responsibilities ..................................................... 20
(a) Defending the Agreement ............................................... 19
(b) Lifting Injunctions ................................................... 19
(c) Other Actions ......................................................... 19
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ARTICLE 5. Termination ............................................................ 20
5.1 Reasons for Termination ................................................ 20
(a) By Mutual Consent ................................................. 20
(b) By Buyer .......................................................... 20
(c) By Parents and Sellers ............................................ 21
(d) Drop-Dead Date .................................................... 21
5.2 Effect of Termination; Termination Fee ................................. 21
5.3 Extension; Waiver ...................................................... 21
ARTICLE 6. Representations and Warranties of Parents and Sellers .................. 22
6.1 Parents' and Sellers' Entry Into Agreements ............................ 22
(a) Organization and Good Standing .................................... 22
(b) Corporate Power and Authority; Validity and Authorization ......... 22
(c) Subsidiaries ...................................................... 22
(d) No Conflict ....................................................... 22
(e) Seller Consents Required .......................................... 23
6.2 Seller Financial Information ........................................... 23
(a) Financial Statements; Books and Records ........................... 23
(b) Conduct of Business ............................................... 24
(c) No Adverse Change ................................................. 25
6.3 Assets ................................................................. 25
(a) Personal Property ................................................. 25
(i) Title ...................................................... 25
(ii) Facilities and Equipment ................................... 25
(iii) Inventory .................................................. 26
(iv) Accounts Receivable ........................................ 26
(b) Real Property ..................................................... 26
(i) Fee Simple ................................................. 26
(ii) Leases; Easements and Other Interests ...................... 27
(iii) Ingress and Egress; Eminent Domain ......................... 27
(iv) Improvements ............................................... 28
(v) Real Property Taxes ........................................ 28
(c) Intellectual Property ............................................. 29
(i) Intellectual Property ...................................... 29
(ii) Agreements ................................................. 29
(iii) Operation of the Business .................................. 29
(iv) Patents .................................................... 29
(v) Trademarks ................................................. 29
(vi) Copyrights ................................................. 29
(vii) Trade Secrets .............................................. 30
(viii) Domain Names. .............................................. 30
(ix) Third-Party Interests or Marketing Rights. ................. 30
(d) Assumed Contracts ................................................. 30
(e) Necessary Assets .................................................. 31
6.4 Liabilities ............................................................ 31
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(a) Intentionally omitted ............................................ 31
(b) Tax Matters ...................................................... 31
(c) Litigation ....................................................... 32
(d) No Assumption of Liabilities ..................................... 32
(e) Warranties ....................................................... 33
(f) Products Liability ............................................... 33
(g) Contracts ........................................................ 33
6.5 Business ............................................................... 33
(a) Customers and Suppliers .......................................... 33
(b) Insurance ........................................................ 34
(c) Employees ........................................................ 34
(d) Worker's Compensation and OSHA ................................... 34
(e) Benefit Plans; ERISA ............................................. 35
(f) Labor Disputes; Compliance ....................................... 37
(g) Affiliated Transactions .......................................... 38
(h) Legal Requirements ............................................... 38
(i) Compliance with Laws ...................................... 38
(ii) Permits ................................................... 38
(iii) Certain Acts .............................................. 39
(i) Environmental Matters ............................................ 39
(i) Compliance ................................................ 39
(ii) Hazardous Materials ....................................... 39
(iii) Environmental Permits ..................................... 39
(iv) Environmental Claims ...................................... 40
(v) Releases .................................................. 40
(vi) Environmental Assessments ................................. 40
(vii) Underground Storage Tanks ................................. 40
(viii) Environmental Disclosure .................................. 41
(ix) Transportation of Hazardous Materials ..................... 41
6.6 Solvency................................................................ 41
6.7 Other .................................................................. 41
(a) No Broker Fees; No Commissions ................................... 41
(b) Full Disclosure .................................................. 41
6.8 Promissory Note Matters ................................................ 42
ARTICLE 7. Representations and Warranties of Buyer ................................ 42
7.1 Entry Into Agreements .................................................. 42
(a) Organization and Good Standing ................................... 42
(b) Corporate Power and Authority; Validity and Authorization ........ 42
7.2 Conflicts and Consents.................................................. 42
(a) No Conflict ...................................................... 43
(b) Buyer Consents Obtained .......................................... 43
7.3 No Broker Fees; No Commissions ......................................... 43
7.4 Litigation ............................................................. 43
ARTICLE 8. Covenants of Parents and Sellers ....................................... 43
iv
8.1 Conduct of Businesses of Sellers Pending Closing ............................... 43
8.2 Access to Information and Employees ............................................ 46
8.3 No Solicitation ................................................................ 46
8.4 Financial Statements ........................................................... 46
8.5 Payment of Indebtedness of Related Persons ..................................... 46
8.6 Maintain Organization .......................................................... 46
8.7 Payment of Liabilities; Waiver of Bulk Sales Compliance ........................ 47
8.8 Assist in Obtaining Permits, Etc ............................................... 47
8.9 Seller Consents ................................................................ 47
8.10 Records of Sellers ............................................................. 47
8.11 Insurance ...................................................................... 47
8.12 HSR Act Filings ................................................................ 47
8.13 Payables ....................................................................... 47
8.14 Accounts Receivable and Inventory .............................................. 48
(a) Accounts Receivable ....................................................... 48
(b) Inventory ................................................................. 48
8.15 Bank Consent ................................................................... 48
8.16 Remediation at Chicago Sites ................................................... 48
ARTICLE 9. Post-Closing Agreements ........................................................ 48
9.1 Further Actions ................................................................ 48
9.2 Use of Names and Trademarks .................................................... 49
9.3 Confidentiality ................................................................ 49
9.4 Noncompetition ................................................................. 50
(a) Parents and Sellers Restricted Activities ................................. 50
(b) Buyer Restricted Activities ............................................... 51
(c) Severability .............................................................. 51
(d) Enforcement ............................................................... 51
(e) Extension of the Term ..................................................... 52
9.5 Inspection of Records .......................................................... 52
9.6 Payroll Taxes and Payroll Records .............................................. 52
9.7 Employees and Employee Benefits ................................................ 53
(a) Information on Active Employees ........................................... 53
(b) Employment of Active Employees by Buyer ................................... 53
(c) Salaries and Benefits ..................................................... 54
(d) Sellers' Retirement and Savings Plans ..................................... 54
(e) No Transfer of Assets ..................................................... 55
(f) Collective Bargaining Matters ............................................. 56
(g) General Employee Provisions ............................................... 56
9.8 Third Party Claims ............................................................. 57
9.9 Buyer's Acceptance of Returns and Provision of Warranty Services on Sellers'
and Parents' Behalf ............................................................ 57
9.10 Payment of All Taxes Resulting from Sale of Assets by Sellers .................. 57
9.11 Restrictions on Sellers' Dissolution and Distributions ......................... 58
9.12 Removing Retained Assets ....................................................... 58
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9.13 Sellers' Access to Hired Active Employees ...................... 58
9.14 Transition Services ............................................ 58
9.15 Tax Matters Cooperation ........................................ 59
9.16 Note Receivable Collection ..................................... 60
9.17 OII Settlement ................................................. 60
9.18 Noncompetition Rights .......................................... 60
ARTICLE 10.Indemnification ................................................ 60
10.1 Survival; Right to Indemnification Not Affected by Knowledge ... 60
10.2 Indemnification and Payment of Damages by Parents and Sellers .. 60
10.3 Indemnification and Payment of Damages by Buyer ................ 62
10.4 Limitation on Certain Indemnity Payments ....................... 62
(a) Buyer Limitations ......................................... 62
(b) Seller Limitations ........................................ 63
10.5 Applicability of Limits on Indemnity ........................... 63
10.6 Time Limitations ............................................... 63
10.7 Mitigation Obligation .......................................... 64
10.8 Right of Set-Off ............................................... 64
10.9 Indemnification Process ........................................ 64
10.10. Exclusive Remedy ............................................... 66
10.11. Special Covenant ............................................... 66
10.12. Insurance Proceeds ............................................. 66
ARTICLE 11.Miscellaneous .................................................. 66
11.1 Governing Law; Attorneys' Fees ................................. 66
11.2 Successors and Assigns ......................................... 67
11.3 Entire Agreement; Amendment .................................... 67
11.4 Press Release .................................................. 67
11.5 Notices, Etc. .................................................. 68
11.6 No Third Party Beneficiary, Etc. ............................... 68
11.7 Reformation; Severability ...................................... 69
11.8 Counterparts ................................................... 69
11.9 Interpretation ................................................. 69
11.10 Reliance ....................................................... 69
11.11 Titles and Subtitles ........................................... 69
11.12 Expenses ....................................................... 69
11.13 Parents' and Sellers' Knowledge ................................ 69
11.14 Parent/Seller Representative ................................... 69
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EXHIBITS
Exhibit A - Acquired Assets
Exhibit B - Retained Assets
Exhibit C - Assumed Liabilities
Exhibit D - Allocation of Closing Payment
Exhibit E - Form of ▇▇▇▇ of Sale
Exhibit F - Form of Sellers' Closing Certificate
Exhibit G - Form of Parents' Closing Certificate
Exhibit H - Form of Lease Assignment
Exhibit I - List of Names
Exhibit J - Form of Acquired Assets Note
Exhibit K - Form of Zellwood Purchase Price Note
Exhibit L - Form of Buyer Closing Certificate
Exhibit M - Form of Guaranty
Exhibit N - Form of Assignment and Assumption Agreement
Exhibit O - Title Insurance Amounts
Exhibit P - Form of Estoppel Certificate
Exhibit Q - Mutual Release List
DISCLOSURE SCHEDULES
Schedule 3.2(c)(Seller Consents)
Schedule 6.1(a)(Organization and Good Standing)
Schedule 6.1(c)(Subsidiaries)
Schedule 6.1(d)(No Conflict)
Schedule 6.1(e)(Seller Consents)
Schedule 6.2(a)(Financial Statements; Books and Records)
Schedule 6.2(b)(Conduct of Business)
Schedule 6.3(a)(Personal Property)
Schedule 6.3(b)(Real Property)
Schedule 6.3(c)(Intellectual Property)
Schedule 6.3(d)(Assumed Contracts)
Schedule 6.4(b)(Tax Matters)
Schedule 6.4(c)(Litigation)
Schedule 6.4(d)(No Assumption of Liabilities)
Schedule 6.4(e)(Warranties)
Schedule 6.4(g)(Contracts)
Schedule 6.5(b)(Insurance)
Schedule 6.5(c)(Employees)
Schedule 6.5(d)(Worker's Compensation)
Schedule 6.5(e)(Benefit Plans; ERISA)
Schedule 6.5(f)(Labor Disputes; Compliance)
Schedule 6.5(g)(Affiliated Transactions)
Schedule 6.5(h)(Legal Requirements)
vii
Schedule 6.5(i)(Environmental Matters)
Schedule 8.1 (Conduct of Businesses of Sellers Pending Closing)
viii
INDEX OF DEFINED TERMS
Page
Accounts Receivable ....................................................... 28
Acquired Assets ........................................................... 2
Acquired Assets Note ...................................................... 9
Active Employees .......................................................... 56
Affiliate ................................................................. 40
Agreement ................................................................. 1
Assumed Contracts ......................................................... 4
Assumed Liabilities ....................................................... 3
Bank Consent .............................................................. 21
Bankruptcy Actions ........................................................ 48
Bankruptcy Code ........................................................... 48
Benefit Plans ............................................................. 37
▇▇▇▇ of Sale .............................................................. 7
Bond ...................................................................... 58
Breach .................................................................... 22
Bulk Sales Laws ........................................................... 50
Business .................................................................. 1
Buyer ..................................................................... 1
Buyer Closing Certificate ................................................. 10
Buyer Consents ............................................................ 46
Buyer Indemnified Party ................................................... 64
Cap ....................................................................... 66
Cash Payment .............................................................. 3
CERCLA .................................................................... 5
Claim Notice .............................................................. 68
Closing ................................................................... 7
Closing Date .............................................................. 7
Code ...................................................................... 34
Collective Bargaining Agreements .......................................... 56
Confidential Information .................................................. 53
Container ................................................................. 1
Copyrights ................................................................ 31
Damages ................................................................... 64
Deductible ................................................................ 66
Direct Claim .............................................................. 68
DOJ ....................................................................... 14
Domain Names .............................................................. 31
EEOC ...................................................................... 34
Environmental Claim ....................................................... 42
Environmental Laws ........................................................ 41
EPA ....................................................................... 5
ix
Equipment ........................................................ 1
Equipment Leases ................................................. 27
ERISA ............................................................ 37
ERISA Affiliate .................................................. 37
Escrow Agreement ................................................. 3
Exchange Act ..................................................... 54
FDEP ............................................................. 14
FICA ............................................................. 56
FIRPTA ........................................................... 7
FUTA ............................................................. 56
GAAP ............................................................. 25
Guaranty ......................................................... 10
Hazardous Materials .............................................. 42
Hired Active Employees ........................................... 56
HSR Act .......................................................... 17
IFCO ............................................................. 1
IFCO California .................................................. 1
IFCO Chicago ..................................................... 1
IFCO Florida ..................................................... 1
IFCO Georgia ..................................................... 1
IFCO Illinois .................................................... 1
IFCO Miami ....................................................... 1
IFCO Michigan .................................................... 1
IFCO Minnesota ................................................... 1
IFCO North Carolina .............................................. 1
IFCO South Carolina .............................................. 1
IFCO Washington .................................................. 1
IFCO Western ..................................................... 1
IICSH ............................................................ 1
Indemnified Party ................................................ 68
Indemnifying Party ............................................... 68
Intellectual Property ............................................ 31
Interim Balance Sheet ............................................ 25
Inventory ........................................................ 27
ISNA ............................................................. 1
Leased Premises .................................................. 29
Legal Requirements ............................................... 41
Liability ........................................................ 4
Liens ............................................................ 27
Listed Permits ................................................... 4
Local 705 Fund ................................................... 58
Marks ............................................................ 31
Material Adverse Effect .......................................... 18
▇▇▇▇▇▇ Lease ..................................................... 5
Minimum Accounts Receivable Amount ............................... 51
x
Multiemployer Plans ............................................... 37
Names ............................................................. 52
OII Settlement .................................................... 5
Orders ............................................................ 34
OSHA .............................................................. 37
PalEx Kansas ...................................................... 1
Parent/Seller Representative ...................................... 74
Parents ........................................................... 1
Parents' and Sellers' Closing Certificates ........................ 8
Patents ........................................................... 31
PBGC .............................................................. 38
PCBs .............................................................. 42
Pension Plans ..................................................... 37
Permits ........................................................... 4
Permitted Liens ................................................... 27
Personal Property ................................................. 27
Policies .......................................................... 36
PPA Request Letter ................................................ 14
PPAs .............................................................. 14
Proceedings ....................................................... 34
Promissory Notes .................................................. 3
Real Estate Contracts ............................................. 29
Real Property ..................................................... 28
Recovery Rights ................................................... 1
Recyclers ......................................................... 1
Related Agreements ................................................ 11
Releases .......................................................... 43
Representatives ................................................... 49
Retained Assets ................................................... 2
Retained Liabilities .............................................. 5
Return Costs ...................................................... 61
Returned Products ................................................. 60
Seller Cap ........................................................ 67
Seller Consents ................................................... 25
Seller Deductible ................................................. 67
Seller Financial Statements ....................................... 25
Seller Indemnified Party .......................................... 65
Sellers ........................................................... 1
Significant Customer .............................................. 36
Significant Supplier .............................................. 36
▇▇▇▇▇ Note ........................................................ 63
Survey ............................................................ 19
Tax ............................................................... 34
Tax Return ........................................................ 34
Tax Returns ....................................................... 34
xi
Taxes ........................................................... 34
Term ............................................................ 53
Third Party Claim ............................................... 68
Title Commitment ................................................ 19
Title Policy .................................................... 19
Trade Secrets ................................................... 31
Transition Period ............................................... 62
Unassignable Contract ........................................... 10
WARN Act ........................................................ 36
Zellwood Assets ................................................. 3
Zellwood Assumed Contracts ...................................... 13
Zellwood Assumed Liabilities .................................... 13
Zellwood Cash Fund .............................................. ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ................................................ ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Date ........................................... 14
Zellwood Consent Decree ......................................... ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Fund ............................................ 3
Zellwood Facility ............................................... 3
Zellwood Listed Permits ......................................... 13
Zellwood Moving Expenses ........................................ ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Price ......................................... ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Price Note .................................... 3
xii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
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November 21, 2001, by and among Industrial Container Services, LLC, a Delaware
limited liability company ("Buyer") on the one hand, and IFCO Systems N.V., a
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Netherlands limited liability company ("IFCO"), IFCO Systems North America,
----
Inc., a Delaware corporation ("ISNA"), IFCO Industrial Container Systems Holding
----
Company, a Delaware corporation ("IICSH"), IFCO ICS - Chicago, Inc., an Illinois
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corporation ("IFCO Chicago"), IFCO ICS - Miami, Inc., a Delaware corporation
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("IFCO Miami"), IFCO ICS - North Carolina, Inc., a Delaware corporation ("IFCO
---------- ----
North Carolina"), IFCO ICS - Minnesota Inc., a Minnesota corporation ("IFCO
-------------- ----
Minnesota"), Container Resources Corporation, a Minnesota corporation
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("Container"), IFCO ICS - Washington, Inc., a Delaware corporation ("IFCO
--------- ----
Washington"), IFCO ICS - California, Inc., a Delaware corporation ("IFCO
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California"), IFCO ICS - Florida, Inc., a Florida corporation ("IFCO Florida"),
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Environmental Recyclers of Colorado, Inc., a Colorado corporation ("Recyclers"),
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IFCO ICS - Illinois, Inc., an Illinois corporation ("IFCO Illinois"), PalEx
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Kansas, Inc., a Delaware corporation ("PalEx Kansas"), IFCO ICS - Georgia, Inc.,
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a Florida corporation ("IFCO Georgia"), IFCO ICS - Michigan, Inc., a Michigan
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corporation ("IFCO Michigan"), IFCO Container Systems - South Carolina, a
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Delaware corporation ("IFCO South Carolina") and IFCO ICS - Western LLC, a
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Colorado limited liability company ("IFCO Western"), on the other hand. IFCO and
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ISNA are sometimes jointly referred to herein as "Parents" and IICSH, IFCO
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Chicago, IFCO Miami, IFCO North Carolina, IFCO Minnesota, Container, IFCO
Washington, IFCO California, IFCO Florida, Recyclers, IFCO Illinois, PalEx
Kansas, IFCO Georgia, IFCO Michigan, IFCO South Carolina and IFCO Western are
sometimes collectively referred to herein as "Sellers."
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R E C I T A L S
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A. Buyer desires to purchase, and Sellers desire to sell, substantially all of
the assets, properties and rights of Sellers constituting the industrial
container business as conducted by Sellers (said business being the
"Business"). In connection therewith, Buyer has agreed to assume certain
--------
liabilities and contractual obligations of Sellers.
B. Each Parent acknowledges that it has received adequate consideration for
entering into this Agreement and performing its obligations hereunder, and
that it will be benefited by the transactions contemplated herein. The
parties acknowledge that Buyer would not have entered into this Agreement
without the participation, on the terms set forth herein, of each Parent.
C. Parents and Sellers have delivered to Buyer certain Disclosure Schedules
--------------------
(herein so called) of even date herewith referred to in this Agreement. The
Disclosure Schedules and the Exhibits (herein so called) referred to in
--------
this Agreement are a part of this Agreement.
1
A G R E E M E N T
-----------------
Based on the recitals set forth above and the promises contained in this
Agreement, the parties hereby agree as follows:
ARTICLE 1
Purchase and Sale of Assets
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1.1. Purchase and Sale of Assets.
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(a) Upon the terms and subject to the conditions contained in this
Agreement, and based on the representations, warranties, covenants and
agreements set forth herein, at the Closing (defined below) each Seller shall
(and each Parent shall cause each Seller to) sell, convey, transfer, assign and
deliver to Buyer, free and clear of Liens (defined below) other than Permitted
Liens (defined below) and Retained Liabilities (defined below), and Buyer shall
purchase from each Seller, substantially all of the assets, properties and
rights of each Seller, whether or not reflected in the Seller Financial
Statements (defined below), held by each Seller on the Closing Date (defined
below), and used in, related to or constituting the Business (the "Acquired
--------
Assets"). The Acquired Assets include, but are not limited to, the assets,
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properties and rights identified on Exhibit A, to this Agreement.
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Notwithstanding the foregoing, the Acquired Assets shall not include (i) those
assets identified as "Retained Assets" (herein so called) on Exhibit B to this
--------------- ---------
Agreement or on an addendum to Exhibit B hereto executed by the parties hereto
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on or prior to the Closing Date, or (ii) the Zellwood Assets (defined below)
until the Zellwood Closing occurs, at which time the Zellwood Assets actually
acquired by Buyer or its Affiliates in accordance with Section 2.5 (Zellwood) at
the Zellwood Closing (defined below) shall be deemed Acquired Assets under this
Agreement. Buyer may, in its sole discretion, notify Parents and Sellers prior
to the Closing that Buyer wishes to assign to one or more of its Affiliates
(defined below) Buyer's right to purchase some or all of the Acquired Assets
from the respective Sellers. If Buyer gives such notice, then each Affiliate of
Buyer identified in such notice shall be deemed to be a "Buyer" hereunder, to
the extent applicable; provided, however, that it is contemplated only the Buyer
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listed in the preamble shall be making the Cash Payment (defined below) and the
Promissory Notes (defined below).
(b) Upon the terms and subject to the conditions contained in this
Agreement, and based on the representations, warranties, covenants and
agreements set forth herein, at the Zellwood Closing (defined below), IFCO
Florida shall sell, convey, transfer, assign and deliver to Buyer, free and
clear of Liens other than Permitted Liens and Retained Liabilities, and Buyer
shall purchase from IFCO Florida, the Zellwood Assets. For purposes of this
Agreement, the term "Zellwood Assets" shall mean all of IFCO Florida's title or
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interests in owned or leased real property (including, without limitation,
improvements on such property), equipment, machinery, tools, spare parts,
supplies, inventory (including, without limitation, spare parts inventory) and
work-in-progress, all right title and interest of IFCO Florida in, to and under
the Zellwood Listed Permits (defined below), in each case to the extent such
assets are located and used in the
2
operation of the Business of IFCO Florida at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ (the "Zellwood Facility").
-----------------
1.2. Consideration for Purchase and Sale. The consideration for the
-----------------------------------
purchase and sale of the Acquired Assets shall be the following:
(a) Closing Payment. At the Closing, as consideration for the
---------------
purchase and sale of the Acquired Assets, Buyer shall pay to Sellers an
aggregate amount equal to $56,500,000, as follows: (i) a wire transfer on the
Closing Date of immediately available funds in the amount of $54,500,000 (the
"Cash Payment"), to the account or accounts designated by Sellers to Buyer prior
------------
to the Closing and (ii) $2,000,000 payable in the form of the Acquired Assets
Note (defined below, and together with the Zellwood Purchase Price Note, the
"Promissory Notes").
----------------
(b) Zellwood Escrow. At the Closing, Buyer shall deposit in escrow
---------------
with Bank One Texas, NA, or such other third party escrow agent as may be
mutually acceptable to Buyer and IFCO Florida, as escrow agent, subject to the
terms of a mutually acceptable escrow agreement (the "Escrow Agreement"), an
----------------
aggregate amount equal to $3,500,000, as follows: (i) cash in the amount of
$2,000,000 (the "Zellwood Cash Fund") and (ii) $1,500,000 in the form of the
------------------
Promissory Note (the "Zellwood Purchase Price Note" and, together with the
----------------------------
Zellwood Cash Fund, the "Zellwood Escrow Fund"); provided, however, that accrued
-------------------- -------- -------
interest payments pursuant to the Zellwood Purchase Price Note shall be paid
directly to the holder thereof. The Escrow Agreement shall provide for the
distribution of the Zellwood Escrow Fund in accordance with the terms of Section
2.5(Zellwood) of this Agreement. Buyer and Parents shall each bear one-half of
the fees and expenses of the escrow agreement in accordance with the terms of
the Escrow Agreement.
(c) Buyer's Assumption of Liabilities. At the Closing, Sellers shall
---------------------------------
assign and Buyer shall assume only the Liabilities (defined below) specifically
set forth on Exhibit C to this Agreement (collectively, the "Assumed
--------- -------
Liabilities"). Notwithstanding the foregoing, the Assumed Liabilities shall not
-----------
include the Zellwood Liabilities (defined below) except with respect to the
Zellwood Liabilities actually assumed by Buyer or its Affiliates in accordance
with Section 2.5 (Zellwood) at the Zellwood Closing.
As used herein, "Liability" shall mean, with respect to any person or
---------
entity, any liability or obligation of such person or entity of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise, and whether or not
the same is required to be accrued on the financial statements of such person or
entity.
(d) Buyer's Assumption of Contracts. At the Closing, Sellers shall
-------------------------------
assign and Buyer shall assume all contracts, intellectual property and software
licenses, real property leases, personal property leases, warranties,
commitments, agreements, arrangements and sales orders related to the Business
pursuant to which Sellers enjoy any right or benefit including the right to
3
receive income in respect thereof (collectively, the "Assumed Contracts").
-----------------
Notwithstanding the foregoing the Assumed Contracts shall not include the
Zellwood Assumed Contracts (defined below) except with respect to the Zellwood
Assumed Contracts actually assumed by Buyer or its Affiliates in accordance with
Section 2.5 (Zellwood) at the Zellwood Closing.
(e) Buyer's Assumption of Permits. At the Closing, except as
-----------------------------
otherwise provided below, Sellers shall assign and Buyer shall assume all
governmental licenses, permits, approvals, identification numbers,
authorizations, exemptions, classifications, registrations, notifications and
certificates, and all consents or agreements with governmental authorities
(collectively, "Permits") which are in effect or are pending and which will need
-------
to be obtained by Buyer or assumed by Buyer to conduct the Business in the
manner and to the extent that it has been conducted and is currently being
conducted (the "Listed Permits"). Such Listed Permits are set forth on the
--------------
Disclosure Schedule to Section 6.5(h) (Legal Requirements). Notwithstanding the
-------------------
foregoing, the Listed Permits shall not include the Zellwood Listed Permits
(defined below) except with respect to the Zellwood Listed Permits actually
assumed by Buyer or its Affiliates in accordance with Section 2.5 (Zellwood) at
the Zellwood Closing. At or prior to Closing, Sellers shall transfer to Buyer
all Listed Permits for which transfer no governmental approval is necessary. At
Closing or as soon as practicable thereafter, Sellers shall use commercially
reasonable efforts to transfer to Buyer all Listed Permits for which transfer
governmental approval to transfer is necessary. In the event the sale, transfer,
assignment, or conveyance of any of the Listed Permits is unlawful or is not
permissible under any agreement, or federal, state, or local law, rule, or
regulation, then the terms "sale, transfer or assignment," for the purposes of
this Agreement with respect to any such Listed Permits, shall be deemed to mean
and require each Seller's relinquishment of all of its right, title and interest
in, to and under such Listed Permits as of the Closing Date to the fullest
extent necessary or appropriate to enable Buyer to acquire such Listed Permits
subject to the satisfaction of Section 3.2(d) (Permits).
1.3. Sellers' Retention of Liabilities. Notwithstanding any other
---------------------------------
provision of this Agreement, Buyer shall not assume, succeed to, be liable for,
be subject to, or be obligated for, nor shall the Acquired Assets be subject to,
any Liabilities which Sellers are, or could become, subject to or liable for
(relating to any period ending on or prior to the Closing Date), other than the
Assumed Liabilities, the Assumed Contracts, the Listed Permits and other
Liabilities specifically assumed by Buyer under this Agreement or the Related
Agreements (the "Retained Liabilities").
--------------------
The Retained Liabilities are all Liabilities that are not specifically
assumed by Buyer under this Agreement or the Related Agreements (defined below),
including but not limited to Liabilities accruing, arising or associated with
conditions in existence prior to Closing from or based on contract, breach of
contract, warranty, tort, strict liability, the design, manufacture or
distribution of products (including but not limited to products liability),
employment, worker's compensation, Environmental Claims (defined below),
including without limitation, those arising under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") and its state
------
analogs and including any claims based on or resulting from the migration or
alleged migration of Hazardous Materials to, from or on any location that has
been owned, operated, leased or managed by any Seller, Taxes (defined below),
law, violation of law,
4
the ownership or transfer of the Acquired Assets, or the ownership or operation
of the Business. Without limiting the foregoing, the Retained Liabilities shall
also specifically include any Liabilities arising prior to or after Closing in
connection with any of the following: (i) the Triple Net Lease Agreement between
▇▇▇▇▇▇ Development Corp. and ▇▇▇▇▇▇ Drum & Barrel Co., Inc., dated as of August
3, 1998 (the "McCook Lease"), (ii) the settlement with the United States
------------
Environmental Protection Agency ("EPA") of the Operating Industries, Inc.
---
landfill Superfund site pursuant to the Eighth Partial Consent Decree in the
matter of United States v. Chevron, et al. (the "OII Settlement") and (iii) any
--------------
obligations under the Remedial Design/Remedial Action Consent Decree for the
Zellwood groundwater contamination site including Operating Units 1 and 2 (the
"Zellwood Consent Decree"), except as contemplated in Section 2.5 (Zellwood).
-----------------------
Notwithstanding Buyer's assumption of the Assumed Contracts or Listed Permits,
the Retained Liabilities shall include all Liabilities based on any Seller's
Breach (defined below) of the Assumed Contracts prior to the Closing Date or any
Seller's failure to comply with the Listed Permits prior to the Closing Date.
The references to any items on the Disclosure Schedules to this Agreement shall
not affect Sellers' and Parents' responsibilities for the Retained Liabilities
as outlined in this Agreement.
1.4. Allocation of Closing Payment. The Closing Payment (including the
-----------------------------
assumption by Buyer of the Assumed Liabilities), and if applicable, the Zellwood
Purchase Price and Buyer's assumption of the Zellwood Assumed Liabilities, shall
be allocated among the Acquired Assets for tax purposes in accordance with
Exhibit D to this Agreement, such exhibit to be prepared by Buyer and approved
---------
by Parents and Sellers prior to the Closing. Parents, Sellers and Buyer will
follow and use such allocation in all income, sales registration and other tax
returns, filings or other related reports made by them to any governmental
agencies.
1.5. Prorations. Ad valorem and similar taxes and assessments relating to
----------
the Acquired Assets shall be prorated between the Sellers, on one hand, and
Buyer, on the other hand, as of the Closing Date based upon estimates of the
amount of such taxes and assessments that are due and payable on the Acquired
Assets during the year during which the Closing Date occurs; provided, however,
if the payment period for any of such taxes is longer than one year, then they
will be prorated based on the length of such payment period. If Buyer receives
any reimbursement of any such taxes or assessments, then that portion of the
reimbursement actually paid to Buyer shall be shared among the applicable
Sellers and Buyer in accordance with the same sharing percentages used for
proration of the tax or assessment in question. If any assessments on the Real
Property (defined below) or Leased Premises (defined below) are payable in
installments, then the installment for the current period shall be prorated
(with Buyer assuming the obligation to pay any installments due after the
Closing Date). Any and all claims or rights to appeal the amount of any real
property taxes or other taxes changed in connection with the Real Property or
Leased Premises shall belong to Buyer following Closing. As soon as the amount
of actual taxes and assessments is known, the Parent/Seller Representative
(defined below) and Buyer shall reassess the amounts to be paid by each party
with the result that Sellers shall pay for those taxes and assessments
attributable to the time period up to and including the Closing Date and Buyer
shall pay for those taxes and assessments attributable to the period thereafter.
Prior to the Closing Date, each Seller shall request the providers of gas,
water, electricity, heat, fuel, sewer and other utilities relating to the Real
Property and, to the extent
5
separately metered and billed directly to a Seller, the Leased Premises, to
terminate service thereto under such Seller's name and to render a final billing
as of the Closing Date, and Buyer shall request all of such utility providers to
establish service to such Real Property and Leased Premises in the name of Buyer
as of the Closing Date. If, for any reason, the parties are unable to obtain a
final reading of any utility as of the Closing Date, such Seller's ▇▇▇▇ for such
utility shall be estimated based upon the prior month's ▇▇▇▇ and prorated
(subject to adjustment as set forth herein) on a per diem basis on the
assumption that utility charges were uniformly incurred during the billing
period in which the Closing Date occurs. Prepaid water, sewer, and other utility
charges shall be credited to Sellers, and accrued but unpaid charges for water,
sewer, and other utilities shall be credited to Buyer. All rental and other
payments under any of the Assumed Liabilities shall be prorated between Sellers,
on one hand, and Buyer, on the other hand, as of the Closing Date. If any item
cannot be apportioned accurately at the Closing Date or if it is apportioned
incorrectly at the Closing Date or subsequent thereto, such item shall be
apportioned or reapportioned, as the case may be, as soon as practicable after
the Closing Date or the date on which the apportionment error is discovered, as
applicable. Within ninety (90) days (or as soon thereafter as is practicable)
from the Closing Date, ISNA (on behalf of the Sellers) or Buyer, as the case may
be, shall pay the other, in immediately available funds, the net amount due
Sellers or Buyer, as the case may be, under this Section 1.5 not otherwise paid
at the Closing.
1.6. Real Estate Closing Costs. Buyer and Sellers shall each pay one-half
-------------------------
of the aggregate cost of (i) the title insurance premiums for the Title Policies
(defined below), (ii) the Surveys (defined below), (iii) any escrow fees and
other customary title company charges, (iv) any transfer taxes applicable to the
recordation of the deeds and (v) any endorsements to the Title Policies Buyer
may reasonably request. Each Seller and Buyer shall pay its own attorney's fees
and its respective share of prorations as provided in Section 1.5 (Prorations).
ARTICLE 2
Closing the Transaction
------------------------
2.1. Closing.
-------
(a) Unless this Agreement has been terminated pursuant to the
provisions of Article 5 (Termination), the consummation of the transactions
provided for herein (the "Closing") shall take place at the office of ▇▇▇▇▇▇ and
-------
▇▇▇▇▇, LLP, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at 10:00
A.M., local time, on the later of (i) December 20, 2001 or (ii) the third
business day after the satisfaction or waiver of the conditions (other than
execution or delivery of agreements, certificates, legal opinions or other
instruments to be delivered at Closing) contained herein, or at such other date
and time as Parent and Sellers, on one hand, and Buyer, on other hand, mutually
agree. The time and date of the Closing are referred to herein as the "Closing
-------
Date."
----
(b) The Zellwood Closing, if any, shall occur pursuant to the
provisions of Section 2.5 (Zellwood).
6
2.2. Parents' and Sellers' Deliveries at Closing. At the Closing, each
-------------------------------------------
Parent and Seller (as indicated) shall deliver or cause to be delivered, to
Buyer the following items, except to the extent related to the Zellwood Assets:
(a) ▇▇▇▇ of Sale. A ▇▇▇▇ of sale, duly executed by Sellers, in
------------
substantially the form attached as Exhibit E to this Agreement (the "▇▇▇▇ of
--------- -------
Sale"), dated as of the Closing Date, evidencing the transfer to Buyer of the
----
Acquired Assets.
(b) Deeds, Etc. Each Seller shall deliver a special warranty deed
----------
for each parcel of Real Property owned by such Seller that is not a Retained
Asset, conveying good and marketable fee simple title to Buyer, free and clear
of all Liens other than Permitted Liens (defined below), a certificate in
compliance with the Foreign Investment in Real Property Tax Act ("FIRPTA").
------
(c) Other Assignment Instruments. Any other duly executed
----------------------------
instruments of assignment reasonably necessary to evidence the transfer to Buyer
of the Acquired Assets, along with the duly endorsed original instruments (if
any) representing, evidencing or constituting such Acquired Assets (including
but not limited to patent, trademark and copyright registrations and
applications, certificates of title, certificates of origin, instruments and
Listed Permits) in recordable form where required and in the form required by
the applicable governmental agencies.
(d) Consents. Parents and Sellers shall deliver copies of all Seller
--------
Consents (defined below) obtained by Parents and Sellers set forth on the
Disclosure Schedule to Section 3.2(c) (Seller Consents).
-------------------
(e) Closing Certificates. Each Seller shall deliver to Buyer a
--------------------
closing certificate executed by Sellers in the form attached hereto as Exhibit
-------
F. Each Parent shall deliver to Buyer a closing certificate executed by such
-
Parent in the form attached hereto as Exhibit G. The closing certificates
---------
referred to in this Section 2.2(e) are collectively referred to herein as the
"Parents' and Sellers' Closing Certificates." If Parents' and Sellers' Closing
------------------------------------------
Certificates contain any amendment, modification or supplementation to Parents'
and Sellers' representations and warranties herein or the Disclosure Schedules
hereto, and if Buyer proceeds with the Closing after its receipt of such
Parents' and Sellers' Closing Certificates, unless there is a written agreement
that provides otherwise that is signed by the parties at the Closing, Parents'
and Sellers' representations and warranties herein and Disclosure Schedules
hereto shall be deemed to be amended, modified and supplemented as provided in
such Parents' and Sellers' Closing Certificates, effective as of the date first
written above.
(f) Good Standing Certificates. Each Seller shall deliver
--------------------------
certificates (i) from the appropriate governmental authority of such Seller's
jurisdiction of organization, evidencing that such Seller is existing and in
good standing under the laws of its jurisdiction of organization and (ii) from
each state listed opposite such Seller's name on the Disclosure Schedule to
-------------------
Section 6.1(a) (Organization and Good Standing) evidencing that such Seller is
qualified to do business and is in good standing as a foreign entity in such
state(s).
7
(g) Lease Assignments. For each of the Leased Premises, Sellers shall
-----------------
deliver a recordable lease assignment substantially in the form attached hereto
as Exhibit H.
---------
(h) Lien Releases. Releases (including without limitation UCC-3
-------------
termination statements) of all Liens and other encumbrances and security
interests, other than Permitted Liens, of any person or entity, including
without limitation Parents and the other Sellers, in the Acquired Assets, or
pay-off letters in form and substance reasonably satisfactory to Buyer from each
person or entity holding a Lien or other encumbrance or security interest other
than a Permitted Lien, in the Acquired Assets. Each pay-off letter shall be a
contractual undertaking of the creditor to take all reasonable action, including
without limitation preparing and filing UCC-3 termination statements, promptly
after payment of the amount set forth in each pay-off letter.
(i) Name Change. An amendment to the articles of incorporation, or
-----------
other appropriate organizational documents of each Seller (and to each
qualification to do business as a foreign corporation of each Seller in those
states where any Seller has obtained such qualification) whereby each Seller has
changed its name to a name that is approved in advance by Buyer, in its
reasonable discretion, and that is not similar to the name "Industrial Container
Services" or any name listed on Exhibit I.
---------
(j) Articles, Resolutions, and Incumbency. ISNA and each Seller shall
-------------------------------------
deliver (i) copies of its organizational documents, certified by such entity's
secretary or comparable officer; (ii) copies of the resolutions of the Board of
Directors and stockholders of ISNA or such Seller authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement and (iii) an incumbency certificate relating to each person executing
on behalf of ISNA or such Seller any document executed and delivered to Buyer by
ISNA or such Seller pursuant to the terms hereof.
(k) Check Endorsement. Parents and Sellers shall deliver to Buyer a
-----------------
written authorization enabling Buyer to endorse checks made out to a Parent or
Seller to the extent relating to the Business and included in the Acquired
Assets for a period of sixty (60) days after Closing.
(l) Titles. Sellers shall deliver to Buyer copies of titles (including
------
the front and back of such titles) for the certificated assets that are Acquired
Assets.
(m) Acknowledgement. Parents and Sellers shall deliver to Buyer an
---------------
acknowledgement of receipt of the Buyer Closing Certificate (defined below),
which acknowledgement shall set forth or refer to any amendment hereto or any
additional agreement of the parties relating to updated or supplemental
information contained in such Buyer Closing Certificate.
(n) Other Instruments. Such other instruments, documents or information
-----------------
that Buyer reasonably requests in connection herewith and the transactions
contemplated hereby, in form and substance reasonably satisfactory to Buyer.
8
2.3. Buyer's Deliveries at Closing. At the Closing, Buyer shall deliver the
-----------------------------
following items to the applicable Parents and Sellers:
(a) The Cash Payment. The Cash Payment to Sellers.
----------------
(b) Acquired Assets Note. Buyer shall deliver to Sellers a subordinated
--------------------
promissory note executed by Buyer and payable to Sellers in the principal amount
of $2,000,000 in the form attached hereto as Exhibit J (the "Acquired Assets
--------- ---------------
Note").
----
(c) Zellwood Escrow Fund. Buyer shall deliver to the escrow agent, as
--------------------
described in Section 1.2(b)(Zellwood Escrow), the Zellwood Escrow Fund,
including the Zellwood Cash Fund and the Zellwood Purchase Price Note in the
form attached hereto as Exhibit K.
---------
(d) Closing Certificate. Buyer shall deliver to Sellers a closing
-------------------
certificate executed by Buyer (the "Buyer Closing Certificate") in the form
-------------------------
attached hereto as Exhibit L.
---------
(e) Consents. Copies of all Buyer Consents (defined below), if any,
--------
obtained by Buyer.
(f) Articles, Resolutions and Incumbency. Buyer shall deliver (i)
------------------------------------
copies of its certificate of formation, certified by Buyer's Secretary, (ii)
copies of the resolutions of the managers and members of Buyer authorizing and
approving this Agreement and the consummation of the transactions contemplated
by this Agreement, and (iii) an incumbency certificate relating to each person
executing on behalf of Buyer any document executed and delivered to the Parents
or Sellers by Buyer pursuant to the terms hereof.
(g) Guarantees. Buyer shall deliver to Sellers a guaranty of the
----------
Promissory Notes in the form attached hereto as Exhibit M (the "Guaranty"), from
--------- --------
each of Buyer's subsidiaries.
(h) Acknowledgement. Buyer shall deliver to Parents and Sellers an
---------------
acknowledgement of receipt of the Parents' and Sellers' Closing Certificates,
which acknowledgement shall set forth or refer to any amendment hereto or any
additional agreement of the parties relating to updated or supplemental
information contained in such Parents' and Sellers' Closing Certificate.
(i) Other Instruments. Such other instruments, documents or information
-----------------
that any Parent or Seller reasonably requests in connection herewith and the
transactions contemplated hereby, in form and substance reasonably satisfactory
to such Seller or Parent.
2.4. Related Agreements. The parties, as appropriate, shall execute and
------------------
deliver at Closing, the following documents:
9
(a) Assignment and Assumption Agreement. An assignment and assumption
-----------------------------------
agreement, the form of which is attached hereto as Exhibit N, effective as of
---------
the Closing Date, between Sellers on the one hand and Buyer on the other hand,
evidencing the assignment and assumption of the Assumed Contracts.
If Parents and Sellers fail to obtain any Seller Consents of any third
party to the assignment and assumption of any Assumed Contract set forth on the
Disclosure Schedule to Section 3.2(c) (Seller Consents), but not including any
-------------------
Listed Permit, then such contract (an "Unassignable Contract") shall not be an
---------------------
Assumed Contract and Buyer, at its option, may require at the Closing that
Sellers take, whereupon Sellers shall take, such commercially reasonable steps
on terms reasonably satisfactory to Sellers as may be necessary (including,
without limitation, entering into additional agreements and indemnities on terms
reasonably satisfactory to the parties thereto) to maintain such Unassignable
Contract in full force and effect and to provide to Buyer the economic benefits
of such Unassignable Contract and to cause Buyer to become liable for Sellers'
Liabilities thereunder, as if such Unassignable Contract had been assigned to
Buyer as an Assumed Contract.
The foregoing agreement, any attachments thereto, and any other agreements
executed in connection with this Agreement and named or described in this
Agreement are collectively referred to as the "Related Agreements."
------------------
2.5. Zellwood.
--------
(a) PPAs. Buyer, Sellers and Parents agree to use commercially
----
reasonable efforts to cause the EPA, DOJ (defined below) and FDEP (defined
below) to enter into the PPAs (defined below). If each of the EPA, DOJ and FDEP
execute and deliver PPAs containing terms no less favorable to Buyer than the
terms described in the PPA Request Letter (defined below), Buyer shall be
required to execute and deliver such PPAs. Buyer shall perform, at its expense,
the activities described as "Activities Contemplated by Cost Estimate" and
"Other Activities" in the PPA Request Letter and such other activities as may be
agreed to by Buyer and, as applicable, the EPA, DOJ and/or FDEP.
(b) Zellwood Owner/Operator. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement, prior to Buyer or its Affiliate accepting title to
the Real Property comprising the Zellwood Facility at the Zellwood Closing, (i)
IFCO Florida shall take all actions necessary to ensure that it remains the
owner and operator of the Zellwood Facility for purposes of Environmental Laws
(defined below), (ii) Buyer shall not be obligated to take any action that
causes it to be deemed (A) an owner or operator of the Zellwood Facility under
any applicable Environmental Laws or (B) otherwise liable for any Environmental
Claim (defined below) or the violation of any Environmental Laws, in each case,
with respect to the period prior to the Zellwood Closing.
(c) Covenants Pending Zellwood Closing.
----------------------------------
10
(i) From the Closing Date until the Zellwood Closing, IFCO
Florida shall, and ISNA and the Parents shall not take any action to cause IFCO
Florida not to, (A) use commercially reasonable efforts to maintain the Zellwood
Assets in their condition as of the Closing, (B) endeavor in good faith to
maintain the business and customer relationships relating to the operations of
the Zellwood Assets, (C) not, without the prior written consent of Buyer or its
designated Affiliate, incur any indebtedness for borrowed money that would be a
Zellwood Assumed Liability or enter into any contract or commitment that would
be Zellwood Assumed Contract that cannot be terminated on not more than thirty
(30) days' notice, (D) not, without the prior consent of Buyer or its designated
Affiliate, incur any other liability that would be a Zellwood Assumed Liability,
(E) take all actions required to maintain the Zellwood Listed Permits, (F) not
take or fail to take any action necessary to cause the representations and
warranties set forth in Article 6 (Representations and Warranties of Parents and
Sellers) to be true and correct as of the Zellwood Closing, (G) perform all
applicable covenants set forth in Article 8 (Covenants of Parents and Sellers),
as such covenants relate to the Zellwood Assets, the Zellwood Facility and
employees of the Zellwood Facility, and (H) not sell any of the Zellwood Assets
to another party without the prior written consent of Buyer or its designated
Affiliate. In addition, from the Closing Date until the Zellwood Closing, IFCO
Florida shall not, and ISNA and the Parents shall not take any action to cause
IFCO Florida to, terminate any Active Employees (defined below) employed at the
Zellwood Facility, without the prior written consent of Buyer. Effective
immediately before the Zellwood Closing, IFCO Florida will terminate all such
employees. Buyer may hire any of such Active Employees at the Closing and such
Active Employees then shall be deemed, to the extent permitted under applicable
law, to be concurrently employed by both IFCO Florida and Buyer until terminated
by IFCO Florida prior to the Zellwood Closing.
(ii) In addition to the other conditions set forth in this
Agreement, Buyer's obligation to purchase, or cause an Affiliate to purchase,
the Zellwood Assets pursuant to the terms of this Agreement at the Zellwood
Closing is conditioned upon (A) there having been no material loss or
destruction of the Zellwood Assets between the Closing Date and the Zellwood
Closing Date, (B) there being no material increase in the Zellwood Assumed
Liabilities between the Closing Date and the Zellwood Closing Date other than
increases in the ordinary course of business consistent with past practices, and
(C) IFCO Florida conveying good and marketable title to the Zellwood Assets to
Buyer or its Affiliate, free and clear of all Liens other than Permitted Liens
and Liens, if any, created by Buyer or its Affiliate.
(iii) Prior to the Zellwood Closing, (A) Buyer shall, or shall
cause its designated Affiliate to, reimburse IFCO Florida promptly after Buyer's
receipt of invoices, for the direct costs and expenses of operating the Zellwood
Facility (excluding allocations of Parents' selling, general and administrative
expenses or other expenses of Parents), and (B) IFCO Florida shall sell products
and services only to Buyer or its Affiliates, but only as required by Buyer or
its Affiliates, at a price equal to IFCO Florida's cost of producing such
products, plus 1% of such cost.
(d) Consideration for Zellwood Purchase and Sale. The consideration
--------------------------------------------
for the purchase and sale of the Zellwood Assets (whether or not the Zellwood
Facility's Real Property
11
and improvements thereon are included therein in accordance with the terms
hereof) shall be the following:
(i) At the Zellwood Closing, subject to subsection (f) below
and the terms of the Escrow Agreement, as consideration for the purchase and
sale of the Zellwood Assets (whether or not the Zellwood Facility's Real
Property and improvements thereon are included therein in accordance with the
terms hereof), Buyer or its designated Affiliate shall pay to the appropriate
Sellers an amount equal to $1,500,000 (the "Zellwood Purchase Price"), payable
-----------------------
by directing the escrow agent to deliver the Zellwood Purchase Price Note to
IFCO Florida.
(ii) At the Zellwood Closing, IFCO Florida shall assign and
Buyer or its designated Affiliate shall assume only the Zellwood Assumed
Liabilities. For purposes of this Agreement, the term "Zellwood Assumed
----------------
Liabilities" shall mean (A) any Liability of IFCO Florida that would be an
-----------
Assumed Liability under the terms of this Agreement but for this Section 2.5,
Section 1.2(b)(ii), and the other provisions of this Agreement referring to
Zellwood and (B) IFCO Florida's liability and obligation to perform the tasks
set forth in the PPA Request Letter. Notwithstanding the foregoing or anything
to the contrary contained herein, neither Buyer nor any of its Affiliates has
assumed, assumes or intends to assume, and neither the term "Assumed Liability"
nor the term "Zellwood Assumed Liability" shall be deemed or construed to mean
that Buyer or any of its Affiliates has assumed, assumes or agrees to assume,
any Retained Liability, including, without limitation, any liability or
obligation arising under the Zellwood Consent Decree or for Environmental Claims
affecting the Zellwood Facility, including, without limitation, any claim
arising under CERCLA or its state analogs.
(iii) At the Zellwood Closing, the appropriate Seller shall
assign and Buyer or its designated Affiliate shall assume all Zellwood Assumed
Contracts. For purposes of this Agreement, the term "Zellwood Assumed Contracts"
--------------------------
means all IFCO Florida's contracts, intellectual property and software licenses,
real property leases (unless excluded in accordance with the terms of this
Section 2.5), personal property leases, warranties, commitments, agreements,
arrangements and sales orders related to the Business of IFCO Florida pursuant
to which IFCO Florida enjoys any right or benefit including the right to receive
income in respect thereof.
(iv) At the Zellwood Closing, except as otherwise provided
below, the appropriate Seller shall assign and Buyer or its designated Affiliate
shall assume all Zellwood Listed Permits. For purposes of this Agreement, the
term "Zellwood Listed Permits" means all governmental licenses, permits,
-----------------------
approvals, identification numbers, authorizations, exemptions, classifications,
registrations, notifications and certificate, and all consents or agreements
with governmental authorities that are in effect or are pending and that will
need to be obtained or assumed by Buyer or its designated Affiliate to conduct
the Business of IFCO Florida in the manner and to the extent it has been
conducted and is currently being conducted, specifically excluding the Zellwood
Consent Decree. At or prior to the Zellwood Closing, Sellers shall transfer to
Buyer all Zellwood Listed Permits for which transfer no governmental approval is
necessary. At the Zellwood Closing or as soon as practicable thereafter, the
appropriate Seller
12
shall use commercially reasonable efforts to transfer to Buyer all Zellwood
Listed Permits for which transfer governmental approval to transfer is
necessary. In the event the sale, transfer, assignment, or conveyance of any of
the Zellwood Listed Permits is unlawful or is not permissible under any
agreement, or federal, state, or local law, rule, or regulation, then the terms
"sale, transfer or assignment," for the purposes of this Agreement with respect
to any such Zellwood Listed Permits, shall be deemed to mean and require the
appropriate Seller's relinquishment of all of its right, title and interest in,
to and under such Zellwood Listed Permits as of the Zellwood Closing Date to the
fullest extent necessary or appropriate to enable Buyer to acquire such Zellwood
Listed Permits.
(v) At the Zellwood Closing, Buyer and each Seller and Parent
shall perform such acts, execute and deliver such closing documents, and
prorate, incur and share expenses with respect to the sale and acquisition of
the assets of the Zellwood Facility contemplated hereby to the same extent that
it would have been required to do so pursuant to the terms of this Agreement if
the transactions included in the Zellwood Closing were included in the Closing.
Without limiting the foregoing, at the Zellwood Closing Sellers shall deliver an
owner's title insurance policy with respect to the Real Property relating to the
Zellwood Facility in the customary form, insuring Buyer and issued as of the
date of the Zellwood Closing by a title insurance company reasonably
satisfactory to Buyer, in an amount reasonably satisfactory to Buyers and
Sellers.
(e) Zellwood Closing. Subject to the satisfaction or waiver of the
----------------
conditions and the rights and obligations set forth in the other sections of
this Agreement, the consummation of Buyer's acquisition of the Zellwood Assets
provided for herein (the "Zellwood Closing") shall take place at the office of
----------------
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, Dallas, Texas at 10:00 A.M., local time, on the third
business day after the earlier of the date on which:
(i) Buyer or an Affiliate of Buyer enters into a Prospective
Purchaser Agreement with the EPA and the United States Department of Justice
(the "DOJ"), and a legally enforceable arrangement with the Florida Department
---
of Environmental Protection (the "FDEP") (collectively, the "PPAs"), in each
---- ----
case with terms and conditions that are no less beneficial to Buyer than the
terms described in that certain letter from ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP to the EPA and
DOJ dated November 14, 2001 (the "PPA Request Letter"), in which case Buyer or
------------------
its Affiliate shall purchase, and IFCO Florida shall sell, all the Zellwood
Assets in exchange for the Zellwood Purchase Price; or
(ii) Buyer determines in its sole discretion to waive the
condition of the receipt the PPAs, as described in clause (i), in which case
Buyer or its Affiliate shall purchase, and IFCO Florida shall sell, for the
Zellwood Purchase Price, at Buyer's option in its sole discretion, either (A)
all the Zellwood Assets or (B) if the conditions set forth in clause (i) above
have not been satisfied before the first anniversary of the Closing Date, the
Zellwood Assets, excluding the Real Property (including, without limitation,
improvements thereon) comprising the Zellwood Facility; or
13
(iii) provided (A) the conditions set forth in clause (i) above
have not been satisfied before the first anniversary of the Closing Date, and
(B) IFCO Florida has provided at least one hundred eighty (180) days advance
written notice of its determination to Buyer, IFCO Florida determines in its
sole discretion to sell the Zellwood Assets to Buyer or its Affiliate, in which
case Buyer or its Affiliate shall purchase, and IFCO Florida shall sell, for the
Zellwood Purchase Price the Zellwood Assets other than the Real Property
(including, without limitation, improvements thereon) comprising the Zellwood
Facility.
The applicable time and date of the Zellwood Closing are referred to herein as
the "Zellwood Closing Date."
---------------------
(f) Distribution of Zellwood Escrow Fund.
------------------------------------
(i) If the Zellwood Closing occurs following the receipt of
executed PPAs from the EPA, DOJ and FDEP, then the Zellwood Escrow Fund shall be
distributed to Sellers at the Zellwood Closing in accordance with the terms of
the Escrow Agreement.
(ii) If the Zellwood Closing occurs as a result of Buyer's
determination to waive the condition of receiving the PPAs and purchase all the
Zellwood Assets, as set forth in subsection (e)(ii)(A) above, then the Zellwood
Escrow Fund shall be distributed to Sellers at the Zellwood Closing in
accordance with the terms of the Escrow Agreement.
(iii) If the Zellwood Closing occurs as a result of Buyer's
determination to acquire the Zellwood Assets, other than the Real Property
(including, without limitation, the improvements thereon) comprising the
Zellwood Facility, after the first anniversary of the Closing Date, as set forth
in subsection (e)(ii)(B) above, then the Zellwood Escrow Fund shall be
distributed at the Zellwood Closing in accordance with the terms of the Escrow
Agreement, as follows:
(A) If the Zellwood Closing Date is after the first
anniversary of the Closing Date, then Buyer or its designated Affiliate shall
receive a distribution from the Escrow Fund equal to the lesser of (1) the
amount of the Zellwood Moving Expenses (defined below) and (2) $1,000,000. If
the Zellwood Moving Expenses are less than $500,000, then such distribution
shall be in the form of cash from the Zellwood Cash Fund. If the Zellwood Moving
Expenses are greater than $500,000, then the first $500,000 of such distribution
shall be in the form of cash from the Zellwood Cash Fund, and the balance of
such distribution shall be represented by a principal reduction of the Zellwood
Purchase Price Note. The balance of the Zellwood Escrow Fund shall be
distributed to Sellers.
(B) If the Zellwood Closing Date is later than 30
months after the Closing Date, and Buyer's determination to proceed with the
Zellwood Closing is in connection with or contemplation of a sale or refinancing
of its business, then clause (A) above shall not apply and Buyer or its
designated Affiliate shall receive a distribution from the Escrow Fund equal to
the lesser of (1) the amount of the Zellwood Moving Expenses and (2) $3,500,000.
If the Zellwood Moving Expenses are less than $1,000,000, then the first
14
$1,000,000 of such distribution shall be in the form of cash from the Zellwood
Cash Fund. If the Zellwood Moving Expenses are greater than $1,000,000, then
such distribution shall be in the form of cash from the Zellwood Cash Fund, and
the balance of such distribution shall be represented by a principal reduction
of the Zellwood Purchase Price Note. The balance of the Zellwood Escrow Fund, if
any, shall be distributed to Sellers.
(iv) If the Zellwood Closing occurs as a result of IFCO
Florida's determination to sell the Zellwood Assets, other than the Real
Property (including, without limitation, the improvements thereon) comprising
the Zellwood Facility, after the first anniversary of the Closing Date, as set
forth in subsection (e)(iii) above, then the Zellwood Escrow Fund shall be
distributed at the Zellwood Closing in accordance with the terms of the Escrow
Agreement, as follows:
(A) If the Zellwood Closing Date is after the first
anniversary of the Closing Date, then Buyer or its designated Affiliate shall
receive a distribution from the Escrow Fund equal to the lesser of (1) the
amount of the Zellwood Moving Expenses (defined below) and (2) $5,000,000. If
the Zellwood Moving Expenses are less than $2,000,000, then such distribution
shall be in the form of cash from the Zellwood Cash Fund. If the Zellwood Moving
Expenses are greater than $2,000,000, then the first $2,000,000 of such
distribution shall be in the form of cash from the Zellwood Cash Fund, and the
balance of such distribution shall be represented by a principal reduction of
the Zellwood Purchase Price Note, to the extent thereof, and thereafter by a
principal reduction of the Acquired Asset Note. The balance of the Zellwood
Escrow Fund, if any, shall be distributed to Sellers.
(B) If the Zellwood Closing Date is later than 30
months after the Closing Date, and IFCO Florida's determination to proceed with
the Zellwood Closing is in connection with or contemplation of a sale or
refinancing of either Parent's business, then clause (A) above shall not apply
and Buyer or its designated Affiliate shall receive a distribution from the
Escrow Fund equal to the lesser of (1) the amount of the Zellwood Moving
Expenses and (2) $3,500,000. If the Zellwood Moving Expenses are less than
$3,500,000, then such distribution shall be in the form of cash from the
Zellwood Cash Fund. If the Zellwood Moving Expenses are greater than $3,500,000,
then the first $2,000,000 of such distribution shall be in the form of cash from
the Zellwood Cash Fund, and the balance of such distribution shall be
represented by a principal reduction of the Zellwood Purchase Price Note. The
balance of the Zellwood Escrow Fund, if any, shall be distributed to Sellers.
(g) Zellwood Moving Expenses. For purposes of this Agreement,
------------------------
the term "Zellwood Moving Expenses" means all costs and expenses that are
------------------------
reasonable in nature and amount that are paid or incurred by Buyer or its
Affiliate to (i) move the Zellwood Assets to such new facility and install the
Zellwood Assets at such new facility such that they are in working order and
operational, (ii) replace assets that would otherwise be Zellwood Assets, but
that cannot be moved from the Zellwood Facility, and (iii) (A) acquire a new
facility in the same market area as the Zellwood Facility from which to operate
the Business conducted by IFCO Florida or (B) increase the capacity at a
business acquired by Buyer or an Affiliate of Buyer in the same market area as
the Zellwood Facility operates so that the acquired business is able to
15
absorb the Business conducted by the Zellwood Facility on a competitive and
commercially comparable basis.
(h) Assignment. Prior to the Zellwood Closing, Buyer or an Affiliate
----------
of Buyer may, in connection with any transfer, sale or assignment of any
material portion of the Business, assign to any third party transferee,
purchaser or assignee any or all of its rights under this Section 2.5
(Zellwood).
ARTICLE 3
Conditions to Consummating the Transaction
------------------------------------------
3.1. Joint Conditions. The obligations of each party to consummate the
----------------
transactions provided for in this Agreement and the Related Agreements are
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) HSR Act. The waiting period prescribed by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
-------
Antitrust Improvements Act of 1974 and the rules and regulations promulgated
thereunder (the "HSR Act") shall have expired or early termination of the
-------
waiting period under the HSR Act shall have been granted, if a filing under the
HSR Act is deemed necessary.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) Related Agreements. The parties shall have entered into the
------------------
agreements identified in Section 2.4 (Related Agreements).
3.2. Buyer's Conditions. The obligations of Buyer to consummate the
------------------
transactions contemplated by this Agreement and the Related Agreements are
subject to the satisfaction or waiver by Buyer, at or prior to the Closing Date,
of the following conditions:
(a) Parents' and Sellers' Representations True. The representations
------------------------------------------
and warranties of Parents and Sellers set forth in this Agreement or any Related
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date, as though made on and as of the
Closing Date, except to the extent that (i) the representation or warranty is
expressly limited by its terms to another date and (ii) such representation or
warranty is qualified by materiality in which case such representation or
warranty shall be true and correct in all respects, and Parents and Sellers
shall have delivered the Parents' and Sellers' Closing Certificate to that
effect.
(b) Parents' and Sellers' Compliance with Agreement. Parents and
-----------------------------------------------
Sellers shall have performed each agreement, and shall have complied with each
covenant, to be
16
performed or complied with by them, or any of them, on or prior to the Closing
Date under this Agreement or any Related Agreement, and Parents and Sellers
shall have delivered the Parents' and Sellers' Closing Certificate to that
effect.
(c) Seller Consents. Parents and Sellers shall have obtained the
------------------
Seller Consents set forth on the Disclosure Schedule to this Section 3.2(c).
-------------------
(d) Permits. Buyer shall have obtained all governmental approvals
-------
necessary to transfer the Acquired Assets and all Listed Permits, except those
Listed Permits, the transfer of which requires governmental approval, and for
those Listed Permits, assurance reasonably satisfactory to Buyer to the effect
that the necessary approvals will be forthcoming.
(e) Parents' and Sellers' Closing Deliveries. Parents and Sellers
----------------------------------------
shall have delivered to Buyer all of the closing deliveries set forth in Section
2.2 (Parents' and Sellers' Deliveries at Closing).
(f) No Material Adverse Effect. At any time on or after the date of
--------------------------
this Agreement, there shall have been no Material Adverse Effect (defined below)
with respect to Sellers taken as a whole, the Business or the Acquired Assets,
and Parents and Sellers shall have delivered the Parents' and Sellers' Closing
Certificate to that effect.
For purposes hereof, "Material Adverse Effect" means, with respect to
-----------------------
a party, a material adverse change in the business, condition (financial or
otherwise), results of operations, cash flows or prospects of such party
(including such party's subsidiaries) or a material adverse effect on such
party's ability to consummate the transactions contemplated in this Agreement
and in the Related Agreements, including, without limitation, any general
suspension of trading in securities on any national securities exchange, or any
act of war, threat of war, act of terrorism or threat of terrorism that
materially disrupts commerce in the markets for the Business' goods and services
(for example, any act of terrorism that disrupts agricultural activities in the
State of California).
(g) No Litigation. No action, suit or proceeding shall have been
-------------
commenced by any person or entity not a party hereto or threatened in writing by
any person or entity not a party hereto, or before any court or other
governmental entity against Parents, Sellers or Buyer or any of their respective
Affiliates, (i) seeking to restrain or materially and adversely alter the
transactions contemplated hereby or by the other documents contemplated hereby,
(ii) that, in the good faith judgment of Buyer could reasonably be expected to
have a Material Adverse Effect on the Sellers, the Business or the Acquired
Assets or limit or restrict the rights of Buyer under this Agreement, or (iii)
that seeks material damages against Buyer or that adversely affects the Acquired
Assets.
(h) Financing. Buyer shall have obtained, using commercially
---------
reasonable efforts, debt financing on terms no less favorable to Buyer than
those set forth in the term sheets delivered to IFCO under cover of separate
letter dated the date hereof.
17
(i) Title Policies. Sellers shall have delivered an owner's title
--------------
insurance policy (each, a "Title Policy") with respect to each parcel of Real
------------
Property owned by Sellers in the customary form, insuring Buyer and issued as of
the Closing Date by a title insurance company reasonably satisfactory to Buyer,
in the amounts set forth on Exhibit O to Buyer, showing fee simple title thereto
---------
to be vested in Buyer, with such customary extended coverages or endorsements as
Buyer may reasonably request. The Title Policies shall be issued pursuant to the
Title Commitments (defined below) but shall not contain any Liens other than
Permitted Liens. The Title Policies shall insure as part of the insured estate
all easements or other matters appurtenant to or benefiting the Real Property
and shall insure the right of access to the Real Property to the extent
authorized under applicable title insurance rules. Prior to the execution of
this Agreement, Buyer has ordered preliminary commitments for title insurance
(each, a "Title Commitment") covering the Real Property. Parents and Sellers
----------------
shall use commercially reasonable efforts to satisfy any reasonable objections
Buyer may have to matters reflected in the Title Commitments. At least three (3)
days before the Closing Date, Buyer shall have reviewed and, if all of Buyer's
objections have been cured, approved each of the Title Commitments. Further, on
the Closing Date there shall have been no change in matters of title from the
matters previously approved by Buyer.
(j) Surveys. A reasonable period of time before the Closing Date, a
-------
survey of each parcel of Real Property owned by each Seller (each, a "Survey")
------
shall be delivered, dated within a reasonable period of time before the Closing
Date, prepared by a licensed surveyor, and certified to Buyer, Buyer's lenders
and the title insurance company as having been prepared in accordance with an
American Land Title Association land survey, and showing all material
improvements to be within lot, sidelot, rearlot and setback lines, and showing
no material encroachments onto the properties. Parents and Sellers shall use
commercially reasonable efforts to satisfy any objections Buyer may reasonably
have to matters reflected in the Surveys. At least three (3) days before the
Closing Date, Buyer shall have reviewed and, if all of Buyer's objections have
been cured, approved each of the Surveys. Further, on the Closing Date there
shall have been no change in matters of survey from the matters previously
approved by Buyer.
(k) Certificates of Tax Authorities. Buyer shall have received from
-------------------------------
Sellers copies of certificates from the appropriate authorities stating that no
Taxes are due to any state or other taxing authority for which Buyer could have
liability to withhold or pay Taxes with respect to Sellers' ownership, operation
or transfer of the Acquired Assets or the Business.
(l) Estoppel Certificates. Each Seller shall have delivered estoppel
---------------------
certificates duly executed by the landlords of each of the Leased Premises of
such Seller in substantially the form attached hereto as Exhibit P, at least
---------
three (3) days before the Closing Date. Further, on the Closing Date such
estoppel certificates shall be in full force and effect with no changes from the
certificates previously delivered to Buyer.
(m) Opinion of Sellers' Counsel. Parents shall have delivered an
---------------------------
opinion of Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to Parents and Sellers, dated as of
the Closing Date, in form and substance reasonably satisfactory to Buyer.
18
3.3. Parents' and Sellers' Conditions. The obligations of Parents and
--------------------------------
Sellers to consummate the transactions contemplated by this Agreement and the
Related Agreements are subject to the satisfaction or waiver by Parents and
Sellers, at or prior to the Closing Date, of the following conditions:
(a) Buyer's Representations True. The representations and warranties
----------------------------
of Buyer set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement or any Related Agreement and as of the
Closing Date, as though made on and as of the Closing Date, except to the extent
that (i) the representation or warranty is expressly limited by its terms to
another date and (ii) such representation or warranty is qualified by
materiality in which case such representation or warranty shall be true and
correct in all respects, and Buyer shall have delivered the Buyer Closing
Certificate to that effect.
(b) Buyer's Compliance with Agreement. Buyer shall have performed
---------------------------------
each agreement, and complied with each covenant to be performed or complied with
by it on or prior to the Closing Date under this Agreement or any Related
Agreement, and Buyer shall have delivered the Buyer Closing Certificate to that
effect.
(c) Buyer's Closing Deliveries. Buyer shall have delivered to Parents
--------------------------
and Sellers all of the closing deliveries set forth in Section 2.3 (Buyer's
Deliveries at Closing).
(d) No Litigation. No action, suit or proceeding shall have been
-------------
commenced by any person or entity not a party hereto or threatened in writing by
any person or entity not a party hereto, or before any court or other
governmental entity against Parents, Sellers or Buyer or any of their respective
Affiliates seeking to restrain or materially and adversely alter the
transactions contemplated hereby or by the other documents contemplated hereby.
(e) Opinion of Buyer's Counsel. Buyer shall have delivered an opinion
--------------------------
of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel to Buyer, dated as of the Closing Date, in
form and substance reasonably satisfactory to Sellers.
(f) Mutual Release and Option Termination Acknowledgements. The
------------------------------------------------------
employees identified on Exhibit Q shall have executed and delivered to Parents a
---------
mutual release and acknowledgement of termination of options on terms reasonably
satisfactory to Parents.
(g) Bank Consent. Parents and Sellers shall have received a consent
------------
from Bank One Texas, NA, Parents' and Sellers' senior creditor, with respect to
the transactions described in this Agreement (the "Bank Consent").
------------
(h) HSR Act Filing. If a determination is made by Buyer prior to
--------------
Closing that no filing is required under the HSR Act, then Buyer shall have
delivered to Parents and Sellers a certificate to that effect, executed by an
officer of Buyer.
19
ARTICLE 4
Covenants to Satisfy Conditions and Consummate the Transaction
--------------------------------------------------------------
4.1. Joint Responsibilities. Each party shall use commercially reasonable
----------------------
efforts to satisfy the conditions to the obligations of the parties hereunder,
and to consummate and make effective as promptly as practicable the transactions
provided for herein including:
(a) Defending the Agreement. Defending lawsuits or other legal
-----------------------
proceedings challenging this Agreement or any Related Agreement or the
consummation of the transactions provided for in this Agreement or any Related
Agreement;
(b) Lifting Injunctions. Using commercially reasonable efforts to
-------------------
lift or rescind any injunction, restraining order or other order adversely
affecting the ability of the parties to consummate the transactions provided for
in this Agreement or any Related Agreement; and
(c) Other Actions. Taking such other reasonable actions that are
-------------
necessary, appropriate or advisable, unless responsibility for taking such
actions has been delegated to certain parties in any other provision of this
Agreement.
The parties shall reasonably cooperate with one another in connection
with the foregoing.
ARTICLE 5
Termination
-----------
5.1. Reasons for Termination. This Agreement may be terminated before the
-----------------------
Closing:
(a) By Mutual Consent. By the mutual written consent of the parties.
-----------------
(b) By Buyer. By Buyer if any Parent or Seller commits any material
--------
Breach of this Agreement, which Breach (i) would give rise to the failure of a
condition set forth in Section 3.1 (Joint Conditions) or Section 3.2 (Buyer's
Conditions) and (ii) is incapable of being cured by any Parent or Seller or, if
capable of being cured, is not cured by January 31, 2002 (provided that Buyer is
then not itself in willful and material Breach of this Agreement).
As used herein, the term "Breach" means any breach of, or any inaccuracy
------
in, any representation or warranty or any breach of, or failure to perform or
comply with any covenant or obligation, in or of this Agreement, any Related
Agreement or any other contract, or any event which with the passing of time of
time or the giving of notice, or both, would constitute such a breach,
inaccuracy or failure.
20
(c) By Parents and Sellers. By Parents and Sellers if Buyer commits
----------------------
any material Breach of this Agreement, which Breach (i) would give rise to the
failure of a condition set forth in Section 3.1 (Joint Conditions) or Section
3.3 (Parents' and Sellers' Conditions) and (ii) is incapable of being cured by
Buyer or, if capable of being cured, is not cured by January 31, 2002 (provided
that none of the Parents or Sellers is itself then in willful and material
Breach of this Agreement).
(d) Drop-Dead Date. By Buyer, or by Parents and Sellers acting
--------------
jointly, if the Closing shall not have occurred by January 31, 2002; provided,
--------
however, such date shall be extended by the number of days, if any, necessary to
-------
respond to a second request for information under the HSR Act; provided, that,
-------- ----
that the failure to close prior to such date is not the result of a material
Breach of this Agreement by the terminating party.
5.2. Effect of Termination; Termination Fee. Each party's right of
--------------------------------------
termination under Section 5.1 (Reasons for Termination) is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 5.1 (Reasons for Termination), all obligations
of the parties under this Agreement will terminate, except that the obligations
of the parties in this Section 5.2, Section 9.3 (Confidentiality) and Article 11
(Miscellaneous) will survive; provided, however, that if this Agreement is
-------- -------
terminated because of a Breach of this Agreement by the non-terminating party,
the terminating party's right to pursue all legal remedies will survive such
termination unimpaired, and the non-terminating party's right to pursue all
legal remedies for the terminating party's Breach also will survive such
termination unimpaired. Without limiting any other right or remedy of a party,
if this Agreement is terminated pursuant to Section 5.1(b) (By Buyer) or Section
5.1(c) (By Parents and Sellers) due to a Breach of a party's representations and
warranties, the breaching party will pay the terminating party an amount equal
to the out-of-pocket expenses of the terminating party incurred in connection
with this Agreement and the transactions contemplated hereby.
5.3. Extension; Waiver. At any time prior to the Closing Date, the
-----------------
parties may (a) extend the time for the performance of any the obligations or
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
21
ARTICLE 6
Representations and Warranties of Parents and Sellers
-----------------------------------------------------
Parents and Sellers jointly and severally hereby make to Buyer the
following representations and warranties:
6.1. Parents' and Sellers' Entry Into Agreements.
-------------------------------------------
(a) Organization and Good Standing. Each Parent and Seller is a
------------------------------
corporation or limited liability company (as applicable) duly organized and
validly existing under the laws of its jurisdiction of incorporation and is in
good standing under such laws. Each Parent and Seller has all requisite
corporate or limited liability company (as applicable) power and authority to
own, lease and operate all properties and assets owned or leased by it and to
conduct its business as previously and currently conducted by it. Each Seller is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which it is required to be so qualified, except where the
failure to be so qualified would not adversely affect the Acquired Assets or the
operation of the Business by Buyer, which jurisdictions are listed in the
Disclosure Schedule to this Section 6.1(a).
-------------------
(b) Corporate Power and Authority; Validity and Authorization. Each
---------------------------------------------------------
Parent and Seller has full corporate or limited liability company (as
applicable) power and authority to execute, deliver and perform its obligations
under this Agreement and the Related Agreements to which such Parent or Seller
is a party. This Agreement has been duly authorized, executed and delivered by
each Parent and Seller, and constitutes the legal, valid and binding obligation
of each Parent and Seller, enforceable against them in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
When the Related Agreements to which a Parent or Seller is a party are
delivered at Closing, such agreements will have been duly authorized, executed
and delivered by such Parent or Seller, as the case may be, and will constitute
the legal, valid and binding obligations of such Parent or Seller, as the case
may be, enforceable against such Parent or Seller, as the case may be, in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
(c) Subsidiaries. Except as set forth in the Disclosure Schedule to
------------ -------------------
this Section 6.1(c), no Seller owns, controls, or has voting rights with respect
to, directly or indirectly, any interest in any other corporation, partnership,
association or other business entity and no Seller is party to any agreement
relating to the acquisition of such an interest.
(d) No Conflict. Except as set forth in the Disclosure Schedule to
----------- -------------------
this Section 6.1(d), neither the execution, delivery, or performance of this
Agreement or the Related
22
Agreements, nor the consummation of the transactions contemplated hereby or
thereby will (i) result in any violation of the terms of, (ii) accelerate the
performance of the obligations required under, (iii) constitute a breach of
default under, (iv) give any right of termination or cancellation under, or (v)
give any right to make any change in any of the Liabilities under, the articles
of incorporation or bylaws, or comparable organizational documents, of Parents
or Sellers, or any agreement, contract, note, bond, debenture, indenture,
mortgage, deed of trust, lease, license, judgment, decree, order, law, rule or
regulation or other restriction applicable to any Parent or Seller, or to which
any Parent or Seller is a party or by which any Parent or Seller or the Acquired
Assets are bound, including, without limitation (and subject to obtaining Seller
Consents), any of the Assumed Contracts. Neither the execution, delivery and
performance of this Agreement or the Related Agreements, nor the consummation of
the transactions contemplated hereby or thereby will result in the creation of
any Lien upon any of the Acquired Assets.
(e) Seller Consents Required. All consents, approvals, or
------------------------
authorizations of third parties, required in connection with each party's (other
than Buyer's) valid execution, delivery, or performance of this Agreement and
the Related Agreements or the consummation of any of the transactions
contemplated hereby or thereby on the part of any of them (collectively, the
"Seller Consents"), including but not limited to the consents required under the
---------------
Assumed Contracts and the transfer of Listed Permits, have been obtained by
Sellers. The Disclosure Schedule to this Section 6.1(e) lists all Seller
-------------------
Consents. IICSH, as the sole stockholder of each other Seller (except for IFCO
Western) and IFCO Chicago and Recyclers as the stockholders of IFCO Western,
have taken all other corporate action necessary for the consummation by Sellers
of the transactions contemplated by this Agreement and the Related Agreements.
6.2. Seller Financial Information.
----------------------------
(a) Financial Statements; Books and Records. Included in the
---------------------------------------
Disclosure Schedule to this Section 6.2(a) are true and correct copies of (i)
-------------------
the unaudited consolidated balance sheets for Sellers at December 31, 2000, and
the related statement of profit and loss for the one-year period then ended and
(ii) the unaudited consolidated balance sheet for Sellers at September 30, 2001
(the "Interim Balance Sheet"), and the related statement of profit and loss for
---------------------
the period then ended (collectively, the "Seller Financial Statements").
---------------------------
Seller Financial Statements fairly present the financial position of
Sellers as of the dates thereof and the results of Sellers' operations for the
periods then ended, in accordance with GAAP, except that the Seller Financial
Statements do not include notes and the Seller Financial Statements other than
as of and for the period ended December 31, 2000, are subject to quarter and
year-end adjustments and except that the parties acknowledge that there is
uncertainty about the amount of the bad debt reserves set forth in the Seller
Financial Statements. Sellers maintain a standard system of accounting,
including without limitation internal controls, established and administered in
accordance with GAAP, except for the variances from GAAP set forth in the notes
to Seller Financial Statements.
23
"GAAP" shall mean those generally accepted accounting principles and
----
practices which are used in the United States and recognized as such by the
American Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently applied for
all periods so as to fairly reflect the financial position, results of
operations and operating cash flow of Sellers, except that any accounting
principle or practice required to be changed by the Accounting Principles Board
or Financial Accounting Standards Board (or other appropriate board or
committee) in order to continue as a generally accepted accounting principle or
practice may be so changed.
Each Seller's books and records (including without limitation, all
financial records, business records, minute books, stock transfer records,
client lists, referral source lists and records pertaining to services or
products delivered to clients) (i) are complete and correct in all material
respects and accurately reflect in all material respects all transactions to
which such Seller is or has been a party, (ii) reflect all material discounts,
returns and allowances granted by such Seller with respect to the periods
covered thereby, (iii) have been maintained in accordance with customary
business practices in such Seller's industry, (iv) form the basis for Seller
Financial Statements and (v) accurately reflect the assets, liabilities,
financial position, results of operations and cash flows of such Seller. All
computer-generated reports and other computer output included in Sellers' books
and records are materially complete and correct and were prepared in accordance
with sound business practices based upon authentic data. Sellers' management
information systems are adequate for the preservation of relevant information
and the preparation of accurate reports.
(b) Conduct of Business. Except as set forth in the Disclosure
------------------- ----------
Schedule to this Section 6.2(b), since September 30, 2001, no Seller has (i)
--------
sold or transferred any assets except sales of assets in the ordinary course of
business and consistent with past practices; (ii) mortgaged, pledged or
subjected to any Lien other than Permitted Liens, any of the Acquired Assets;
(iii) incurred or became subject to any debt, Liability (including repurchase
obligations) or lease obligation, other than current Liabilities incurred in the
ordinary course of business; (iv) incurred obligations or entered into contracts
outside the ordinary course of business; (v) suffered any damage, destruction or
loss of any of the Acquired Assets; (vi) waived or relinquished any rights or
canceled or compromised any debt or claim owing to it, in either case, without
adequate consideration or not in the ordinary course of business; (vii) made any
change in its accounting methods or practices; (viii) made any change in its
billing and collection practices and procedures; (ix) made any increase in the
compensation payable or to become payable to any of its non-executive employees
over the amounts paid or payable as of such date outside the ordinary course of
business consistent with its established practice, or entered into or terminated
any deferred compensation or bonus agreement with any of such parties, or made
any loan, or commitment to loan, monies to any such parties, other than
customary travel advances; (x) changed its authorized or issued capital stock;
granted any stock option or right to purchase shares of capital stock; issued
any security convertible into such capital stock; granted any registration
rights; purchased, redeemed, retired or otherwise acquired any shares of any
such capital stock; or declared or paid any dividend or other distribution or
payment in respect of shares of capital stock; (xi) amended its organizational
documents; (xii) entered into any
24
transaction with an Affiliate of Seller other than capital infusions from, and
dividends to, and intercompany loans to and from, Parents; (xiii) together with
all the other Sellers, made any capital expenditures in excess of $50,000 on a
single basis or $250,000 in the aggregate or (xiv) agreed to do any of the
foregoing.
(c) No Adverse Change. Since the date of the Interim Balance Sheet
-----------------
delivered prior to the date hereof, each Seller has conducted its business only
in the ordinary course consistent with past practice and there has been no
adverse change in the condition (financial or otherwise), results of operations
or cash flows of Seller, the Acquired Assets or the Business, or any
developments that may have an adverse effect on the condition (financial or
otherwise), results of operations or cash flows of Seller, the Acquired Assets
or the Business.
6.3. Assets.
------
(a) Personal Property.
-----------------
(i) Title. Each Seller, as applicable, is the sole owner of
-----
its Acquired Assets and has, or at Closing will have, good and marketable title
to all Acquired Assets that are personal (the "Personal Property") (other than
-----------------
the leased Personal Property described below), in each case free and clear of
all Liens except (A) Liens imposed by mandatory provisions of law such as for
materialmen's, mechanic's, warehousemen's and other like Liens arising in the
ordinary course of business, securing indebtedness whose payment is not yet due,
(B) Liens for taxes, assessments and governmental charges or levies imposed upon
income, profits or property, if the same are not yet due and payable and (C)
other Liens, claims and encumbrances or charges that do not materially detract
from the value of, or impair the use or transfer of, such property
(collectively, the "Permitted Liens"). For purposes hereof, "Liens" shall mean
--------------- -----
security interests, liens (▇▇▇▇▇▇ or inchoate), encumbrances, mortgages,
pledges, equities, charges, assessments, easements, covenants, restrictions,
reservations, defects in title, encroachments and other burdens or restrictions
on use, whether arising by contract or under law other than inchoate statutory
liens for amounts not yet payable. With respect to any Personal Property that is
leased, each Seller, as applicable, is in compliance with each such lease, in
all material respects, and is the sole holder of a valid and subsisting
leasehold interest free and clear of any Liens, other than Permitted Liens. The
Disclosure Schedule to this Section 6.3(a) lists all of Sellers' items of leased
-------------------
Personal Property and includes a brief description of each lease agreement,
service agreement or other agreement related thereto (the "Equipment Leases").
----------------
The consummation of the transactions contemplated by this Agreement and the
Related Agreements will convey to Buyer good and marketable title to the
Personal Property and, in the case of the leased Personal Property, valid and
subsisting leasehold interests, in each case free and clear of any Liens other
than Permitted Liens.
(ii) Facilities and Equipment. Except as set forth on the
------------------------
Disclosure Schedule to this Section 6.3(a), all buildings, facilities, offices,
-------------------
improvements on real estate, fixtures, machinery, equipment, vehicles or other
properties owned or leased by Sellers for the conduct of the Business, held for
sale, rental or lease to clients, and that are Acquired Assets (A) have been
maintained in accordance with maintenance practices that are standard for
Sellers'
25
industry, are prudent, and are in compliance with all applicable laws and
regulations, (B) are in good condition and repair (ordinary wear and tear
excepted), and (C) are adequate and sufficient for all business operations
conducted by Sellers in connection with the Business.
(iii) Inventory. The inventory and supplies that are Acquired
---------
Assets, including all finished goods, work in process, raw materials, spare
parts and other materials and supplies to be used or consumed by Sellers in the
production of finished goods (the "Inventory"), consist of items of a quantity,
---------
type and quality usable, and with respect to finished goods, saleable or
leasable, as appropriate, in the ordinary course of Sellers' business, except
for items of obsolete and slow-moving items and items which are below standard
quality, all of which have been written down to estimated net realizable value.
With the exception of items of below standard quality which have been written
down to their estimated net realizable value, the Inventory is free from defects
in materials and/or workmanship. The supply of spare parts in the Inventory, the
product mix of the Inventory and the raw materials and work in process necessary
to convert to finished goods is not materially out of balance in relation to
Sellers' sales experience during the past two (2) years and is consistent with
Sellers' expectations of the demands of its customers. The Inventory is not
excessive in kind or amount, or slow moving, in light of the business of Sellers
done or expected to be done. All Inventory reflected in Seller Financial
Statements is valued at the lower of cost or market value with cost determined
using the last in, first out accounting method. All items of Inventory now on
hand that were purchased after the Interim Balance Sheet were purchased in the
ordinary course of business of Sellers at a cost not exceeding market prices
prevailing at the time of purchase. All Inventory is located at the Real
Property or Leased Premises.
(iv) Accounts Receivable. Except as set forth on the Disclosure
------------------- ----------
Schedule to this Section 6.3(a), all trade accounts receivable of Sellers (the
--------
"Accounts Receivable") were created in the ordinary course of business and have
--------------------
been collected or are collectible in the amounts thereof reflected in the books
and records of Sellers, net of reserves or contractual allowances reflected in
the Seller Financial Statements plus $100,000 notwithstanding the representation
set forth in Section 6.2(a) (Financial Statements; Books and Records). The
Seller Financial Statements accurately reflect the age of the Accounts
Receivable and include reserves that are sufficient to cover all uncollectible
Accounts Receivable. There is no contest, claim, defense or right of setoff,
other than returns in the ordinary course of business of Sellers, under any
contract with any account debtor of an Account Receivable relating to the amount
or validity of such Account Receivable. No Seller has outstanding sales on
consignment, sales on approval or guaranteed sales. The Disclosure Schedule to
-------------------
this Section 6.3(a) contains a complete and accurate list of all Accounts
Receivable as of October 25, 2001, which list sets forth the aging of each such
Account Receivable.
(b) Real Property.
-------------
(i) Fee Simple. The Disclosure Schedule to this Section 6.3(b)
---------- -------------------
sets forth an address of each parcel of real property owned by any of the
Sellers constituting part of the Acquired Assets ("Real Property"). Except as
-------------
specifically set forth in the Disclosure Schedule to this Section 6.3(b), each
-------------------
applicable Seller has, or at Closing will have, good,
26
indefeasible and marketable title in fee simple absolute to all Real Property,
including but not limited to those properties reflected on Seller Financial
Statements, and to the buildings, structures and improvements thereon, in each
case free and clear of all Liens other than Permitted Liens. No Seller has
granted any leases on, and there are no tenancies on, the Real Property. The
consummation of the transactions contemplated by this Agreement and the Related
Agreements will convey to Buyer good and marketable title to the Real Property
and, in the case of the Leased Premises valid and subsisting leasehold
interests, in each case free and clear of any Liens other than Permitted Liens.
(ii) Leases; Easements and Other Interests. The Disclosure
------------------------------------- ----------
Schedule to this Section 6.3(b) sets forth (A) a complete and correct list of
--------
all real property leases and subleases that constitute part of the Acquired
Assets, setting forth the address, landlord and tenant for each such lease or
sublease (the "Leased Premises"), and (B) a list of all other contracts and
---------------
instruments, whether or not in writing, relating to or affecting Real Property
or Leased Premises or any interest therein to which, to each Seller's knowledge,
a Seller is a party or by which the Acquired Assets or the Business, are bound
or affected. The leases, contracts and instruments described in items (A) and
(B) above are referred to herein as the "Real Estate Contracts." Each Seller has
---------------------
delivered to Buyer true and complete copies of all of the Real Estate Contracts,
including any amendments or waivers. There are no material unwritten amendments
or waivers of any Real Estate Contracts.
Each applicable Seller is the sole holder of valid and subsisting
leasehold interests in the Leased Premises it leases free and clear of any
Liens, other than Permitted Liens. All lease or rental payments and other
amounts due and payable in connection with the Real Estate Contracts are
current, there are no material defaults by any Seller with respect thereto and
no event has occurred in that would with the passing of time or the giving of
notice or both would constitute a default thereunder. All options in favor of a
Seller to purchase any of the Leased Premises, if any, are in full force and
effect. Each Seller has the right to quiet enjoyment of the Leased Premises for
the full term of the related Real Estate Contract and any renewal option related
thereto, and no leasehold or other interest of Seller in such Leased Premises is
subject to or subordinate to any Lien other than Permitted Liens, whether or not
the same renders the title to such real property or lease unmarketable, except
as specifically set forth in the Disclosure Schedule to this Section 6.3(b).
-------------------
The Real Estate Contracts are legally valid and binding and in full
force and effect as to Sellers and, to each Seller's knowledge, as to the other
parties thereto, and there are no defaults thereunder of Sellers and, to each
Seller's knowledge, of the other parties thereto. None of the rights of any
Seller under any Real Estate Contract will be impaired by the consummation of
the transactions contemplated by this Agreement or the Related Agreements, and
all of such rights will be enforceable by Buyer after the Closing Date without
the consent or agreement of any other party, except consents and agreements
specifically described in the Disclosure Schedule to this Section 6.3(b).
-------------------
(iii) Ingress and Egress; Eminent Domain. Except as set forth on
----------------------------------
the Disclosure Schedule to this Section 6.3(b), to each Seller's knowledge, it
has all easements and
27
rights of ingress and egress necessary for utilities and services and for all
operations of the Business in the manner and to the extent previously conducted
by it. Neither the whole nor any portion of any Real Property or Leased Premises
leased or occupied by a Seller and constituting part of the Acquired Assets or
used in the conduct of the Business, has been condemned, taken by right of
eminent domain, requisitioned or otherwise taken by any public authority, and no
such condemnation, taking by right of eminent domain, requisition or taking is
threatened or contemplated, and no Seller has received, nor knows of, any notice
regarding any such action.
(iv) Improvements. None of the improvements comprising the Real
------------
Property or Leased Premises, or the businesses conducted by Sellers thereon, are
(A) in material violation of any building line or use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law, code
or ordinance or public utility or other easement or (B) encroaches on the
property rights of any other person or entity. Each facility located on the Real
Property or Leased Premises currently is served by gas, electricity, water,
sewage and waste disposal and rail and other utilities necessary to operate such
facility in the manner in which it is currently being operated, and none of the
utility companies serving any such facility is threatening a Seller with any
reduction in service. All of said utilities are installed and operating and all
installation and connection charges have been paid for in full. The continued
maintenance and operation of the Real Property or Leased Premises as currently
maintained and operated is not dependent on facilities located at other property
owned or operated by Parents or their Affiliates, and the continued maintenance
and operation of any other property owned or operated by Parents or their
Affiliates is not dependent on facilities located on the Real Property or Leased
Premises. No building or other improvement not part of the Real Property or
Leased Premises relies on the Real Property or Leased Premises or any part
thereof or any interest therein to fulfill any governmental requirement. No
building or other improvement on the Real Property or Leased Premises relies on
any property owned or operated by Parents or their Affiliates not included
within the Real Property or Leased Premises to fulfill any governmental
requirement.
(v) Real Property Taxes. Except as set forth on the Disclosure
------------------- ----------
Schedule to this Section 6.3(b), there are no challenges or appeals pending
--------
regarding the amount of the Taxes on, or the assessed valuation of, the Real
Property or Leased Premises, and no special arrangements or agreements exist
with any governmental authority with respect thereto (the representations and
warranties contained in this paragraph (v) shall not be deemed to be breached by
any prospective general increase in real estate tax rates). There is no tax
assessment (other than any normal, annual general real estate tax assessment)
pending or, to the best of each Seller's knowledge, threatened with respect to
any portion of the Real Property or, to the extent any Seller is liable for
payment therefore, the Leases Premises.
28
(c) Intellectual Property.
---------------------
(i) Intellectual Property. The term "Intellectual Property"
--------------------- ---------------------
shall mean all items of intellectual property or intangible property used or
required for the operation of the Business as it is currently operated
(excluding all of the names of Sellers listed in the preamble to this Agreement
(except for the names "Container Resources Corporation" and "Environmental
Recyclers of Colorado, Inc.") and the names "IFCO" and "PalEx") and all
fictitious business names, trade names, registered and unregistered trademarks,
service marks and applications therefore (collectively, the "Marks"), all
-----
inventions, patents and patent applications (collectively, the "Patents"), all
-------
registered and unregistered copyrights in both published works and unpublished
works (collectively, the "Copyrights"), and all know-how, trade secrets,
----------
confidential information, software, technical information, process technology,
plans, drawings and blue prints (collectively, the "Trade Secrets"), and all
-------------
rights in Internet web sites and Internet domain names included on the
Disclosure Schedule to this Section 6.3(c), (collectively, the "Domain Names"),
------------------- ------------
and the goodwill associated with all of the foregoing, in each case owned, used
or licensed by a Seller as licensee or licensor in connection with the Business.
The consummation of the transactions contemplated by this Agreement and the
Related Agreements will convey to Buyer good and marketable title to the
Intellectual Property, free and clear of any Liens.
(ii) Agreements. The Disclosure Schedule to this Section 6.3(c)
---------- -------------------
contains an accurate and complete listing and summary description, including,
without limitation, any royalties paid or received by any Seller, and Sellers
have delivered to Buyer accurate and complete copies, of all Assumed Contracts
relating to the Intellectual Property. There are no outstanding and no
threatened disputes or disagreements with respect to any such agreement.
(iii) Operation of the Business. (A) The Intellectual Property
-------------------------
includes all such intellectual property used in or required for the operation of
the Business as it is currently conducted. Except as set forth on the Disclosure
----------
Schedule to this Section 6.3(c), each Seller is the owner of all right, title
--------
and interest in and to the Intellectual Property free and clear of all Liens
other than Permitted Liens, and has the right to use without payment to a third
party all the Intellectual Property. (B) Except as set forth on the Disclosure
----------
Schedule to this Section 6.3(c), no right, license or consent of, or payment to,
--------
any third party will be required for the purchase or use by Buyer, upon
consummation of the transactions contemplated by this Agreement, of the
Intellectual Property.
(iv) Patents. There are no patents or patent applications which
-------
are used or required for the operation of the Business. Each applicable Seller
is the owner of all right, title and interest in and to each of the Patents free
and clear of all Liens other than Permitted Liens. To each Seller's knowledge,
none of the products manufactured or sold, nor any processes or know-how used by
Sellers infringe or are alleged to infringe any patent or other proprietary
right of any third party.
(v) Trademarks. There are no Marks.
----------
(vi) Copyrights. There are no Copyrights.
----------
29
(vii) Trade Secrets. (A) With respect to each Trade Secret the
-------------
documentation, if any, relating to such Trade Secret is current, accurate and
sufficient in detail and content, in all material respects, to identify and
explain it, and to allow its full and proper use without reliance on the special
knowledge or memory of others. (B) Each Seller has taken all reasonable
precautions to protect the secrecy, confidentiality and value of its Trade
Secrets. (C) Each Seller has good title and an absolute right to use the Trade
Secrets. The Trade Secrets are not part of the public knowledge or literature,
nor have they been used, divulged, or appropriated for the benefit of any third
party. No Trade Secret is subject to any adverse claim nor has any Trade Secret
been challenged or threatened in any way. None of the Trade Secrets infringe or,
to each Seller's knowledge, are alleged to infringe any proprietary right of any
third party.
(viii) Domain Names. (A) The Disclosure Schedule to this Section
------------ -------------------
6.3(c) contains an accurate and complete listing and summary description of all
Domain Names, which are not material to the operation of the Business as it is
currently being conducted.
(ix) Third-Party Interests or Marketing Rights. No Seller has
-----------------------------------------
granted, transferred, or assigned any right or interest in the Intellectual
Property.
(d) Assumed Contracts. All of the Assumed Contracts are legal, valid
-----------------
and binding on Sellers, and to each Seller's knowledge, the other parties
thereto and in full force and effect. Sellers are not, and to each Seller's
knowledge, no other party to the Assumed Contracts is in violation of or default
under any of the Assumed Contracts. No event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, or the happening
of any further event or condition, would become a violation or default by any
Seller or to each Seller's knowledge any other party under any Assumed Contract.
No Seller has released any material rights under any Assumed Contract. No Seller
is subject to any legal obligations to renegotiate, nor does any Seller have
knowledge of a claim for a legal right to renegotiate, any Assumed Contract. No
Seller is subject to any Liability, or claim therefore, for or with respect to
price adjustment under any Assumed Contract with the government of the United
States or agency thereof, including any Liability for defective pricing.
The Assumed Contracts set forth in the Disclosure Schedule to this
-------------------
Section 6.3(d) constitute all of the contracts, leases and agreements that have
continuing payment obligations that will encumber Buyer or continuing rights to
receive payment that will accrue to Buyer, in each case in excess of $50,000,
and that are necessary for the conduct of the Business in the manner and to the
extent currently conducted by Sellers. Upon consummation of the transactions
contemplated by this Agreement and the Related Agreements including, if
necessary, obtaining Seller Consents and subject to the consent of third parties
as necessary, Buyer will succeed to all of the rights and privileges of Sellers
under the Assumed Contracts and all rights of Sellers under the Assumed
Contracts will be enforceable by Buyer after the Closing. Sellers have delivered
to Buyer true and complete copies of all of the Assumed Contracts listed on the
Disclosure Schedule to this Section 6.3(d), including any amendments or waivers.
-------------------
There are no unwritten
30
amendments or waivers of any Assumed Contract listed on the Disclosure Schedule
-------------------
to this Section 6.3(d) that are material to that Assumed Contract.
(e) Necessary Assets. The Acquired Assets constitute all of the
----------------
assets, rights and properties used primarily in or comprising the Business or
are reasonably necessary for the conduct of the Business in the manner and to
the extent currently conducted by Sellers, other than the Retained Assets.
Except to the extent affected by the Retained Assets, the Acquired Assets will
be adequate to enable Buyer to continue to conduct the Business on the Closing
Date in the manner and to the extent currently conducted, and include all items
of property located on the Real Property and Leased Premises, used as though
owned, that Sellers purport to own or that are reflected on Seller Financial
Statements.
6.4. Liabilities.
-----------
(a) [Intentionally omitted.]
(b) Tax Matters.
-----------
(i) Except as set forth in the Disclosure Schedule to this
-------------------
Section 6.4(b), (i) each Seller has filed or caused to be filed all Tax Returns
that each Seller was required to file pursuant to Legal Requirements (defined
below), (ii) all Tax Returns of each Seller were correct and complete in all
respects, (iii) all Taxes due and owing by any Seller (whether or not shown on
any Tax Return) have been paid or adequate reserves for such Taxes are reflected
on the Seller Financial Statements, (iv) no deficiencies, adjustments or claims
for any Taxes have been asserted or assessed or, to each Seller's knowledge,
proposed against any Seller, (v) none of the Sellers' Tax Returns are now under
audit or examination, or to each Seller's knowledge, have been selected for
audit or examination by any Tax authority, and there are no suits, actions,
proceedings or investigations pending or, to the knowledge of any Seller,
threatened against the Seller with respect to any Taxes, (vi) all Taxes that are
required by law to be withheld or collected by the Seller have been duly
withheld and collected and, to the extent required by Legal Requirements, have
been paid to the proper tax authority or properly segregated or deposited, (vii)
no property of the Seller is "tax exempt use property" within the meaning of
Section 168(h) of the Code (defined below) or under any similar provision of
state or local law, (viii) the Seller is not a party to any lease made pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or under
any similar provision of state or local law, (ix) no property of the Seller
secures any debt the interest on which is tax-exempt under Section 103(a) of the
Code or under any similar provision of state or local law, (x) the Seller is not
a borrower or guarantor of any outstanding industrial revenue bonds, and are not
a tenant, principal user or related Person to any principal user (within the
meaning of Section 144(a) of the Code) of any property which has been financed
or improved with the proceeds of any industrial revenue bonds or under any
similar provision of state or local law, (xi) Seller is not a real property
holding company within the meaning of Section 897(c) of the Code, and (xii)
Seller is not a person other than a United States person within the meaning of
the Code and the transaction contemplated herein is not subject to the
withholding provisions of Code Sec. 3406 or subchapter A of Chapter 3 of the
Code.
31
(ii) For purposes of this Agreement, the term "Taxes" means
-----
all federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, unemployment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, the term "Tax" means any one of the foregoing
---
Taxes; the term "Tax Returns" means all returns, declarations, reports,
-----------
statements and other documents required to be filed in respect of Taxes and the
term "Tax Return" means any one of the foregoing Tax Returns, and the term
----------
"Code" means the Internal Revenue Code of 1986, as amended.
----
(c) Litigation.
----------
(i) Except as set forth in the Disclosure Schedule to this
------------------
Section 6.4(c), there is no pending action, arbitration, audit, hearing,
litigation or suit (whether civil, criminal, administrative (including the Equal
Employment Opportunity Commission ("EEOC"), the EPA or similar state or federal
----
agencies), investigative or informal) (A) that has been commenced by or against
any Seller or that otherwise relates to or may affect any Seller, the Acquired
Assets, the Assumed Contracts, the Listed Permits, this Agreement, any Related
Agreement or the transactions contemplated herein or therein or (B) that has
been commenced by or against any Parent in respect of, or that otherwise relates
to or may affect any Seller, the Acquired Assets, the Assumed Contracts, the
Listed Permits, this Agreement, any Related Agreement or the transactions
contemplated herein or therein (collectively, the "Proceedings"). To each
-----------
Parent's and Seller's knowledge, no Proceeding has been threatened. Except as
set forth in the Disclosure Schedule to this Section 6.4(c), no event has
-------------------
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any Proceeding.
(ii) There is no award, decision, injunction, judgment, order,
ruling, subpoena, writ or verdict of any court, arbitrator or government agency
or instrumentality (A) to which the Acquired Assets, the Assumed Contracts, the
Listed Permits, this Agreement, any Related Agreement or the transactions
contemplated herein or therein is subject or, to each Seller's knowledge, by
which any of the foregoing may be affected or (B) to which any Parent is subject
and that relates to or affects the Acquired Assets, the Assumed Contracts, the
Listed Permits, this Agreement, any Related Agreement or the transactions
contemplated herein and therein (collectively, the "Orders").
------
(iii) No Parent has any claim, or right to initiate any
Proceeding, against any Seller.
(d) No Assumption of Liabilities. Except as set forth in the
----------------------------
Disclosure Schedule to this Section 6.4(d), neither the execution of this
-------------------
Agreement or the Related Agreements, nor the consummation of the transactions
contemplated hereby or thereby, shall result in Buyer, or any of its Affiliates,
assuming, succeeding to, being liable for, being subject to or being obligated
for, or the Acquired Assets being subject to any of the Retained Liabilities.
32
(e) Warranties. There are no warranties with respect to the
----------
quality or absence of defects of its products or services that any Seller has
sold or performed which are in force as of the date hereof except as are
described in the Disclosure Schedule to this Section 6.4(e). The Disclosure
------------------- ----------
Schedule to this Section 6.4(e) sets forth an accurate summary of all returns of
--------
defective products since January 1, 2001 that have exceeded $1,000, and all
credits and allowances for defective products given to customers during said
period that have exceeded $1,000, and said summary in each case accurately
describes the defect which resulted in the return, allowance or credit. No
Seller has any knowledge or reason to believe that the cost of warranty
obligations for products sold and services performed by any Seller for which
warranties are presently in effect and for which warranty adjustments can be
expected during unexpired warranty periods will be higher than the cost of
warranty obligations for such products and services which such Seller has sold
and performed for which warranty adjustments have been required in the past.
Except for replacement costs and repair costs under applicable warranties, no
Seller has been required to pay direct, incidental, or consequential damages in
excess of $20,000 to any person in connection with any of such products or
services at any time during the one (1) year period preceding the date hereof.
(f) Products Liability. All products and components
------------------
manufactured, sold, leased, rented or otherwise distributed by each Seller are
adequate in design, manufacture and contain adequate warnings for their intended
use. Since their acquisition by Parents, there has been no product recall,
retrofit, or warning campaign conducted by (i) any Seller for any of its
products or (ii) any manufacturer for, or supplier of, any Seller with respect
to such products. Since their acquisition by Parents, all products manufactured,
sold, leased, rented or otherwise distributed by each Seller have been
manufactured and serviced in accordance with the industry standards.
(g) Contracts. Except as set forth on the Disclosure Schedule
--------- -------------------
to this Section 6.4(g), no Seller is a party to, and the Business and Acquired
Assets are not subject to: (i) any collective bargaining agreement; (ii) any
contract or agreement restricting in any manner any Seller's right to compete
with any other person or entity, any Seller's right to sell to or purchase from
any other person or to employ any person, or the right of any other party to
compete with the Business, or the ability of such person or entity to employ any
of Sellers' employees; (iii) any secrecy or confidentiality agreement; (iv) any
service contract affecting any of the Acquired Assets where the annual service
charge is in excess of $50,000 or has an unexpired term as of the Closing Date
in excess of thirty (30) days; or (v) any supply or requirements contract which
cannot be terminated on thirty (30) days notice.
6.5. Business.
--------
(a) Customers and Suppliers. No Seller has any knowledge of
-----------------------
any intention or indication of intention by a Significant Customer (defined
below) or a Significant Supplier (defined below) to terminate its business
relationship with any Seller or to limit its business relationship with any
Seller in any material respect. As used herein, (i) "Significant Customer" means
--------------------
any of the fifty (50) largest customers of the Business, measured in terms of
sales volume
33
in dollars for the year ended December 31, 2000 and (ii) "Significant Supplier"
--------------------
means any supplier of any Seller from whom such Seller, and the other Sellers in
the aggregate, has purchased $1,000,000 or more of goods during the year ended
December 31, 2000 for use in the Business.
(b) Insurance. The Disclosure Schedule to this Section 6.5(b)
--------- -------------------
contains a complete list of each Seller's insurance policies (the "Policies"),
--------
copies of which have been provided to Buyer, and lists a description of each
claim currently pending under any Policy. No Seller has received any written
notice of cancellation or of intention not to renew any such Policy.
(c) Employees
---------
(i) The Disclosure Schedule to this Section 6.5(c)
-------------------
states the number of employees terminated by any Seller since May 1, 2001, and
contains a complete and accurate list of the following information for each such
terminated employee of any Seller and any employee whose hours of work have been
reduced by more than fifty percent (50%) by any Seller since May 1, 2001: (A)
the date of such termination, layoff or reduction in hours; (B) the reason for
such termination, layoff or reduction in hours; and (C) the location to which
the employee was assigned.
(ii) No Seller has violated the Worker Adjustment and
Retraining Notification Act (the "WARN Act") or any similar state or local Legal
--------
Requirement.
(iii) Except as set forth in the Disclosure Schedule to
-------------------
this Section 6.5(c), to each Seller's knowledge, no officer, director, agent,
employee, consultant, or contractor of any Seller is bound by any contract that
purports to limit the ability of such officer, director, agent, employee,
consultant, or contractor (A) to engage in or continue or perform any conduct,
activity, duties or practice relating to the Business or (B) to assign to any
Seller or to any other person or entity any rights to any invention,
improvement, or discovery. No current employee of any Seller is a party to, or
is otherwise bound by, any contract that in any way adversely affects, or will
reasonably affect the ability of any Seller or Buyer to conduct the Business as
heretofore carried on by the Sellers.
(d) Worker's Compensation and OSHA.
------------------------------
(i) Each Seller is self-insured as allowed under the
worker's compensation or similar statute in each state in which any Seller has
any employees and such coverage is in effect as of the date hereof. The
Disclosure Schedule to this Section 6.5(d) describes all claims currently
-------------------
pending or filed by employees of Sellers in respect of employment-related injury
or illness since January 1, 1998, and all injuries known by Sellers that may
result in claims.
(ii) Except as set forth on the Disclosure Schedule to
-------------------
this Section 6.5(d), there are no state or federal Occupational Safety and
Health Administration ("OSHA")
----
34
compliance agreements, settlement agreements, pending and unresolved or resolved
citations, or any pending or existing discussions concerning the settlement of
any OSHA citations with respect to any of the Sellers.
(e) Benefit Plans; ERISA.
--------------------
(i) The Disclosure Schedule to this Section 6.5(e) sets
-------------------
forth a true and complete list of (A) all "employee benefit plans" as defined by
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), all specified fringe benefit plans as defined in Section 6039D of the
-----
Code, and all other bonus, incentive compensation, deferred compensation, profit
sharing, stock option, stock appreciation right, stock bonus, stock purchase,
employee stock ownership, savings, severance, supplemental unemployment, layoff,
salary continuation, retirement, pension, health, life insurance, dental,
disability, accident, group insurance, vacation, holiday, sick leave, fringe
benefit or welfare plan, and any other employee compensation or benefit plan,
agreement, policy, practice, commitment, contract, or understanding (whether
qualified or nonqualified, currently effective or terminated, written or
unwritten), and any trust, escrow or other agreement related thereto, which
currently is sponsored, established, maintained or contributed to or required to
be contributed by any Seller or for which any Seller has any liability,
contingent or otherwise, and (B) all "multiemployer plans," as that term is
defined in Section 4001 of ERISA ("Multiemployer Plans") and all "employee
-------------------
benefit plans" (as defined in Section 3(3) of ERISA) that are subject to Title
IV of ERISA or Section 412 of the Code ("Pension Plans") which any Seller or any
-------------
other corporation or trade or business controlled by, controlling, or under
common control with any Seller (within the meaning of Section 414 of the Code or
Section 4001(a)(14) or 4001(b) of ERISA) ("ERISA Affiliate") has maintained or
---------------
contributed to or been required to contribute to at any time within the last six
(6) years or with respect to which, to each Seller's knowledge, any Seller or
any ERISA Affiliate has any liability (collectively, the "Benefit Plans").
-------------
(ii) Except as set forth on the Disclosure Schedule to
-------------------
this Section 6.5(e), no Benefit Plan is a Multiemployer Plan or a Pension Plan.
(iii) Except as set forth in the Disclosure Schedule to
-------------------
this Section 6.5(e), with respect to each Multiemployer Plan set forth on such
Disclosure Schedule, (i) no withdrawal liability has been incurred by Seller or
any ERISA Affiliate or would occur as a result of the transactions contemplated
by this Agreement except with respect to the Multiemployer Plan described in
Section 9.7(d)(ii) hereof, (ii) no Seller or any ERISA Affiliate has withdrawn
from any such Multiemployer Plan prior to the date of this Agreement with
respect to which there is any outstanding liability or would be any outstanding
liability, (iii) except with respect to the Multiemployer Plan described in
Section 9.7(d)(ii) hereof, to the knowledge of each Seller and each ERISA
Affiliate, no event has occurred or circumstance exists that presents a risk of
the occurrence of any withdrawal or partial withdrawal from any such
Multiemployer Plan that could result in any liability of the Buyer to any such
Multiemployer Plan, (iv) to the knowledge of each Seller and the ERISA
Affiliates, no event has occurred or circumstance exists that presents a risk of
the occurrence of the partition, termination, reorganization, or insolvency of
any such Multiemployer Plan, (v) neither any Seller nor any ERISA Affiliate has
received notice from any
35
such Multiemployer Plan that it is in reorganization or is insolvent, that
increased contributions may be required to avoid a reduction in plan benefits or
the imposition of any excise tax, or that such Plan intends to terminate or has
terminated, and (vi) to the knowledge of each Seller and the ERISA Affiliates no
such Multiemployer Plan is a party to any pending merger or asset or liability
transfer or is subject to any proceeding brought by the Pension Benefit Guaranty
Corporation ("PBGC").
----
(iv) Each of the Benefit Plans and its administration is
currently in compliance in all material respects with ERISA and the Code and all
other applicable laws and has been operated in all material respects in
accordance with the terms and conditions of the plan documents.
(v) Sellers have delivered or made available to Buyer:
(A) copies of the current Benefit Plan document
and any amendments thereto for each Benefit Plan and copies of any related
trusts, and (1) the most recent summary plan descriptions of such Benefit Plans
for which any Seller is required to prepare, file, and distribute summary plan
descriptions, and (2) the most recent copy of all summaries and descriptions
furnished to participants and beneficiaries regarding Benefit Plans for which a
plan description or summary plan description is not required;
(B) a sample copy of the forms currently used
by Sellers for providing all notifications required to be given to employees
under Section 601 et seq. of ERISA, Section 4980B of the Code, Section 9801 et
-- --- --
seq. of the Code, and under all other applicable federal and state laws
---
regulating the notice requirements of Group Health Plans (as defined in Section
607(1) of ERISA);
(C) except as set forth in the Disclosure
----------
Schedule to this Section 6.5(e), the Form 5500 filed in each of the most recent
--------
three (3) plan years with respect to each Benefit Plan, other than a
Multiemployer Plan, including all schedules thereto and any opinions of
independent accountants relating thereto;
(D) all insurance policies or agreements
regarding other funding arrangements that are currently in force which were
purchased by or that provide benefits under any Benefit Plan, other than a
Multiemployer Plan, or otherwise reimburse for benefits paid under the Benefit
Plans, other than a Multiemployer Plan;
(E) all written agreements that are currently
in force with third party administrators relating to the Benefit Plans providing
medical benefits;
(F) with respect to Benefit Plans that are
Qualified Plans, the most recent determination letter for each such Benefit
Plan;
36
(G) with respect to each trust funding a
Benefit Plan that is intended to be qualified under Section 501(c)(9) of the
Code, a copy of the determination letter for such trust; and
(H) with respect to each Benefit Plan that is a
Multiemployer Plan, copies of all correspondence from said Plan regarding the
amount and calculation of current withdrawal liability under said Plan and, with
respect to the Multiemployer Plan described in Section 9.7(d)(ii), copies of
Sellers' contribution history to said Plan for the last ten (10) years.
(vi) No Seller has engaged in or knowingly permitted to
occur and to each Seller's knowledge, no other party has engaged in or permitted
to occur any transaction prohibited by Section 406 of ERISA or "prohibited
transaction" under Section 4975(c) of the Code with respect to any Benefit Plan,
except for any transactions which are exempt under Section 408 of ERISA or
Section 4975 of the Code
(f) Labor Disputes; Compliance.
--------------------------
(i) Each Seller is in compliance in all material
respects with all Legal Requirements relating to employment practices, terms and
conditions of employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining and other
employment-related requirements, the payment of social security and similar
Taxes and occupational safety and health. No Seller is liable for the payment of
any Taxes, fines, penalties, or other amounts, however designated, for failure
to comply with any of the foregoing Legal Requirements.
(ii) Except as set forth in the Disclosure Schedule to
-------------------
this Section 6.5(f), (A) no Seller is a party to any collective bargaining
agreement or other labor contract; (B) since January 1, 1998, there has not
been, there is not presently pending or existing, and to each Seller's
knowledge, there is not threatened, any strike, slowdown, picketing, work
stoppage and since January 1, 2001 there is not presently pending or existing,
and to each Seller's knowledge, there is not threatened any employee grievance
process involving any Seller; (C) to each Seller's knowledge, no event has
occurred or circumstance within the Business exists that could provide the basis
for any work stoppage or other labor dispute; (D) there is not pending or, to
each Seller's knowledge, threatened against or affecting any Seller any
Proceeding relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or complaint
filed with any local, state, or federal administrative agency or governmental
body, including the National Labor Relations Board, OSHA, Immigration and
Naturalization Service and the EEOC, and there is no organizational activity or
other labor dispute against or affecting any Seller or any of the Real Property
or Leased Premises; (E) no application or petition for an election of or for
certification of a collective bargaining agent is pending; (F) no grievance is
pending or filed, no grievance is pending or awaiting arbitration and to each
Seller's knowledge no grievance is threatened and no other Proceeding exists
that could reasonably be expected to have an adverse effect upon any Seller or
the conduct of the Business; (G) there is no lockout of any employees by any
Seller, and no such action is contemplated by
37
any Seller; and (H) to each Seller's knowledge, there has been no charge of
discrimination filed against or threatened against any Seller with the EEOC or
similar governmental body.
(g) Affiliated Transactions. Except as set forth in the
-----------------------
Disclosure Schedule to this Section 6.5(g), none of the Sellers or any officer,
-------------------
director or Affiliate of any Seller has (i) any interest in any property
(whether real, personal or mixed and whether tangible or intangible) used in any
Seller's Business or (ii) an equity interest or any other financial or profit
interest in a person or entity that currently has (A) business dealings or a
financial interest in any transaction with any Seller or (B) engages in
competition with any Seller with respect to any line of the products or services
of any Seller in any market presently served by any Seller. No Seller or any
officer, director or Affiliate of any Seller is a party to any contract with, or
has any claim or right against, any Seller. Except as set forth in the
Disclosure Schedule to this Section 6.5(g), no Seller is indebted to any
-------------------
officer, director, employee, agent or Affiliate of any Seller (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to any Seller.
As used herein, "Affiliate" shall mean with respect to any
---------
party, a person or entity that, directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such party, where "control", "controlled by" and "under common control with"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such party, whether through the
ownership of voting securities, by voting trust, contract or similar
arrangement, as trustee or executor, or otherwise.
(h) Legal Requirements.
------------------
(i) Compliance with Laws. No Seller has violated any
--------------------
term of any judgment, writ, decree, order, law, statute, rule or regulation to
which it is subject or a party and which pertains to the Business, or by which
any of the Acquired Assets are bound or affected (collectively, "Legal
-----
Requirements"). No event has occurred that may constitute or result in a
------------
violation of a Legal Requirement. No Seller has received notice of any actual,
alleged or potential violation of a Legal Requirement.
(ii) Permits. The Disclosure Schedule to this Section
------- -------------------
6.5(h) contains a list of every Listed Permit.
All Listed Permits are in full force and effect and are not
subject to appeal. There does not exist under any of the Listed Permits any
default or violation, or event which, with notice or lapse of time or both,
would constitute a default or violation or would result in the withdrawal of
such Listed Permit, nor is there any basis for assertion of any default or
violation. Upon consummation of the transactions contemplated by this Agreement
and the Related Agreements, including, if necessary, obtaining the relevant
Seller Consents, Buyer will succeed to all of the rights and privileges of
Sellers under the Listed Permits to the extent they are transferable and all
rights of Sellers under the Listed Permits will be enforceable by Buyer after
the Closing Date to the extent they are transferable. Each Seller has delivered
to Buyer true and complete copies of all of the Listed Permits, including any
amendments thereto.
38
(iii) Certain Acts. No Seller has directly or indirectly
------------
made or agreed to make (whether or not said payment is lawful) any payment to
obtain, or with respect to, sales for the Business other than usual and regular
compensation to its employees and sales representatives with respect to such
sales.
(i) Environmental Matters.
---------------------
(i) Compliance. Except as set forth in the Disclosure
---------- ----------
Schedule to this Section 6.5(i), each Seller is in compliance with all
--------
applicable Environmental Laws and no Seller has received any communication
(written or oral), from any person that alleges that such Seller is not in
compliance with applicable Environmental Laws.
For purposes of this Agreement, "Environmental Laws" shall mean
------------------
all federal, state and local laws, statutes, rules, regulations, codes,
ordinances, or orders relating to the regulation or protection of human health,
safety, public welfare or the environment (including, without limitation,
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata and biota), including, without limitation, laws and regulations relating
to Releases (defined below) or threatened Releases of Hazardous Materials
(defined below), or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
recycling, investigation, remediation or handling of Hazardous Materials.
For purposes of this Agreement, "Hazardous Materials" shall mean
-------------------
any substance that poses a threat to, or is regulated to, protect human health,
safety, public welfare, or the environment, including without limitation: (A)
any petroleum or petroleum products, natural gas liquids, radioactive materials,
asbestos in any form that is or could become friable or polychlorinated
biphenyls ("PCBs") in any form; (B) any chemicals, materials or substances which
----
are defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "solid wastes," "toxic substances," "toxic
pollutants," "pollutants," "contaminants" or words of similar import, under any
Environmental Laws; (C) any other chemical, material, substance or waste which
is regulated under any Environmental Laws; and (D) any substance the presence or
Release of which requires reporting, investigation or remediation under
Environmental Laws.
(ii) Hazardous Materials. Except as set forth in the
-------------------
Disclosure Schedule to this Section 6.5(i), no Seller has or currently uses,
-------------------
stores, treats, disposes or otherwise handles Hazardous Materials except in
compliance with Environmental Laws and the Acquired Assets have not been used
for the disposal of Hazardous Materials, except in accordance with applicable
Environmental Laws.
(iii) Environmental Permits. Except as set forth in the
---------------------
Disclosure Schedule to this Section 6.5(i), no Permits are required under
-------------------
Environmental Laws for the conduct of the Business and none have been applied
for in connection with the operation of the Business.
39
(iv) Environmental Claims. Except as set forth in the
--------------------
Disclosure Schedule to this Section 6.5(i), there is no Environmental Claim to
-------------------
which any Seller is subject, or which is pending or threatened or likely to be
threatened, and there exists no basis for any such claim, (A) against any
Seller, (B) against any person or entity whose liability for any Environmental
Claim any Seller has or may have retained or assumed either contractually or by
operation of law, or (C) against any real or personal property or operations
which are now or have been previously owned, leased, operated or managed, in
whole or in part, by any Seller.
For purposes of this Agreement, "Environmental Claim" shall mean
-------------------
any and all administrative or judicial actions, demands, demand letters, orders,
claims, Liens, proceedings or written notices by any person or entity (including
any governmental authority) alleging potential liability (including, without
limitation, potential liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries, fines or penalties)
arising out of, based on or resulting from (A) the presence, alleged presence,
or Release or threatened Release into the environment, of any Hazardous Material
at any location that is an Acquired Asset; (B) the use of any Hazardous
Materials on, under, or about, or the migration or alleged migration of
Hazardous Materials to or from, any location that is an Acquired Asset; (C)
circumstances reasonably forming the basis of any violation, or alleged
violation, of any Environmental Law; or (D) any claim by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(v) Releases. Except as set forth in the Disclosure
-------- ----------
Schedule to this Section 6.5(i), there have been no releases, spills, emissions,
--------
leaks, injections, deposits, disposals, discharges, dispersals, emissions or
migrations (collectively, "Releases") of which any director, officer or facility
--------
manager of any Seller knows or should have known, into or onto the atmosphere,
soil, surface water, ground water or property of any Hazardous Materials that
could form the basis of any Environmental Claim against the Business or the
Acquired Assets. Except as set forth in the Disclosure Schedule to this Section
-------------------
6.5(i), no Seller has received any written communication from any person
alleging a Release or threatened Release at any facility included in the
Acquired Assets.
(vi) Environmental Assessments. Except as set forth in
-------------------------
the Disclosure Schedule to this Section 6.5(i), since January 1, 1998 there are
-------------------
no environmental reports, audits, investigations or assessments of any Seller or
of any real or personal property which are now or have been previously owned,
leased, operated or managed, in whole or in part, by Seller or in connection
with the Business or the Acquired Assets.
(vii) Underground Storage Tanks. Except as set forth in
-------------------------
the Disclosure Schedule to this Section 6.5(i), no underground storage tanks are
-------------------
or have been located on or under any real property owned, operated or leased by
any Seller and none are used by any Seller at any facility included in the
Acquired Assets.
40
(viii) Environmental Disclosure. To each Seller's
------------------------
knowledge, Sellers have disclosed to Buyer all relevant facts with respect to
potential or actual environmental liabilities of Sellers which would have an
adverse effect upon the financial condition, properties or assets of any Seller
or which may adversely affect any Seller.
(ix) Transportation of Hazardous Materials. Except
-------------------------------------
as set forth in the Disclosure Schedule to this Section 6.5(i), no Seller has
-------------------
transported, or arranged for transportation of or disposal of, any Hazardous
Material to any location that is listed or proposed to be listed on the National
Priorities list under CERCLA or on the CERCLIS or any analogous state list.
6.6. Solvency. No Parent or Seller is now insolvent, and no
--------
Parent or Seller will be rendered insolvent by the occurrence of the
transactions contemplated by this Agreement and the Related Agreements. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement and the Related Agreement and other
capital financing transactions currently contemplated by Parents, (a) each
Parent and Seller will be able to pay its Liabilities as they become due, (b) no
Parent or Seller will have unreasonably small capital with which to conduct its
present or proposed business, (c) each Parent and Seller will have assets
(calculated at fair market value) that exceed its Liabilities and (d) taking
into account all pending and threatened litigation, final judgments against any
Parent or Seller in actions for money damages are not reasonably anticipated to
be rendered at a time when, or in amounts such that, such Parent or Seller will
be unable to satisfy any such judgments promptly in accordance with their terms
(taking into account the maximum probable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered) as well as all other obligations of such Parent or Seller. The cash
available to each Parent and Seller, after taking into account all other
anticipated uses of the cash and other projected sources of capital, will be
sufficient to pay all such debts and judgments promptly in accordance with their
terms. As used in this Section, "insolvent" means that the sum of the present
fair saleable value of any Parent's or Seller's assets does not and will not
exceed its debts and other probable Liabilities.
6.7. Other.
-----
(a) No Broker Fees; No Commissions. All negotiations on
------------------------------
behalf of Parents and Sellers relative to this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby have been
carried on by Parents and Sellers directly with Buyer without any act by any
Parent, Seller or their respective Affiliates that would give rise to any claim
against Buyer for a brokerage commission, finder's fee or other similar payment.
(b) Full Disclosure. Neither this Agreement nor any
---------------
Related Agreement, instrument, document, certificate, schedule, or statement
delivered herewith or heretofore contains any untrue statement made by any
Parent or Seller of a material fact or omits to state any material fact
necessary to keep such statements, in light of the circumstances in which they
were made, from being misleading.
41
6.8. Promissory Note Matters.
-----------------------
(a) ISNA is acquiring the Promissory Note for its own account and not
with a view to its distribution within the meaning of Section 2(11) of the
Securities Act of 1933, as amended.
(b) ISNA confirms that Buyer has made available to ISNA and its
Representatives (defined below) the opportunity to ask questions of the officers
and management employees of Buyer and to acquire such additional information
about the business and financial condition of Buyer as ISNA have requested, and
all such information has been received.
ARTICLE 7
Representations and Warranties of Buyer
---------------------------------------
Buyer hereby represents and warrants to Parents and Sellers as follows:
7.1. Entry Into Agreements.
---------------------
(a) Organization and Good Standing. Buyer is a limited liability
------------------------------
company duly formed and validly existing under the laws of the State of Delaware
and is in good standing under such laws. Buyer has all requisite limited
liability company power and authority to own, lease and operate all properties
and assets owned or leased by it and to conduct its business as currently
conducted by it.
(b) Corporate Power and Authority; Validity and Authorization. Buyer
---------------------------------------------------------
has full limited liability company power and authority to execute, deliver and
perform its obligations under this Agreement, the Promissory Notes, the Guaranty
and the Related Agreements. This Agreement has been duly authorized, executed
and delivered by Buyer, and constitutes the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
When the Promissory Notes, the Guaranty and the Related Agreements to
which Buyer is a party are delivered at the Closing, such agreements will have
been duly authorized, executed and delivered by Buyer, and will constitute the
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
7.2. Conflicts and Consents.
----------------------
42
(a) No Conflict. Neither the execution, delivery, or performance of
-----------
this Agreement or the Related Agreements, nor the consummation of the
transactions contemplated hereby or thereby will (i) result in any violation of
the terms of, (ii) contravene or conflict with, (iii) accelerate the performance
of the obligations required under, (iv) constitute a default under, (v) give any
right of termination or cancellation under, or (vi) give any right to make any
change in any of the Liabilities under, the certificate of formation or
operating agreement of Buyer, or any agreement, contract, note, bond, debenture,
indenture, mortgage, deed of trust, lease, license, judgment, decree, order,
law, rule or regulation or other restriction applicable to it, or to which it is
a party or by which Buyer or its property or assets is bound.
(b) Buyer Consents Obtained. Other than the approval referred to in
-----------------------
Section 3.1(a) (HSR Act), approvals of Buyer's lenders and the Listed Permits,
no consents, approvals, or authorizations of third parties are required in
connection with Buyer's valid execution, delivery, or performance of this
Agreement and the Related Agreements or the consummation of any of the
transactions contemplated hereby or thereby on the part of it (collectively, the
"Buyer Consents").
--------------
7.3. No Broker Fees; No Commissions. All negotiations on behalf of Buyer
------------------------------
relative to this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby have been carried on by Buyer directly with
Parents and Sellers without any act by Buyer that would give rise to any claim
against Parents or Sellers or any of their respective Affiliates for a brokerage
commission, finder's fee or other similar payment.
7.4. Litigation. There is no claim, action, suit or other proceeding
----------
pending, or, to Buyer's knowledge, threatened, against or affecting Buyer which
(i) would materially impair Buyer's ability to perform its obligations
hereunder, or (ii) seeks to prevent the consummation of the transactions
contemplated hereby.
ARTICLE 8
Covenants of Parents and Sellers
--------------------------------
From the date hereof through the Closing, Parents and Sellers hereby jointly
and severally covenant and agree as follows:
8.1. Conduct of Businesses of Sellers Pending Closing. Except as set forth
------------------------------------------------
on the Disclosure Schedule to this Section 8.1 or unless otherwise expressly
-------------------
contemplated by this Agreement or approved in writing by Buyer, Sellers shall
conduct, and Parents shall cause Sellers to conduct, the businesses and
operations of Sellers only in, and Sellers shall not (and Parents shall cause
Sellers not to) take any action except in, the ordinary course of business and
consistent with past practices. Without limitation, no Seller shall take (and
Parents shall cause Sellers not to take) any of the following actions without
Buyer's prior written approval:
43
(a) sell, transfer, license, lease or otherwise dispose of or agree to
dispose (including by the granting of an option, conditional sale agreement or
otherwise), or acquire or agree to acquire, any assets or Real Property that
would be Acquired Assets except in the ordinary course of business and
consistent with past practices; provided, however, that no purchase or sale of
-------- -------
Real Property shall be in the ordinary course of business;
(b) incur any indebtedness, other than in the ordinary course of
business;
(c) pay any discretionary bonuses (other than bonuses already accrued
on the date hereof) to, or alter the compensation or benefit of, any director,
officer or employee, other than in the ordinary course of business;
(d) enter into any transaction or agreement with any Affiliate of any
Parent or Seller, other than capital infusions from, and dividends to, any
Parent or Seller;
(e) institute any planned reduction in force;
(f) close any facility or operation of any Seller that would be
included in the Acquired Assets, except in the ordinary course of business
consistent with past practices;
(g) intentionally take any action that will cause any of Parents' and
Sellers' representations or warranties to be untrue or incorrect;
(h) intentionally omit to take any action that a Seller would take in
the ordinary course of business, which omission will cause Parents' and Sellers'
representations or warranties to be untrue or incorrect;
(i) declare any dividend or other distribution on the capital stock of
a Seller other than in the ordinary course of business consistent with past
practices;
(j) pledge or willfully encumber any of the assets that will be
Acquired Assets with a Lien, except for a Permitted Lien;
(k) enter into any agreement for, or modify, amend, terminate, fail to
renew or perform or cause a loss of its rights under any Assumed Contract, other
than in the ordinary course of business (provided, however, Sellers shall not
enter into any lease or service, maintenance, management or other agreement that
is not terminable within thirty (30) days with respect to all or any portion of
the Real Property or the Leased Premises, without the prior written consent of
Buyer);
(l) amend or modify their articles of incorporation, bylaws, or
comparable organizational documents, if such amendment or modification would
have an adverse effect on the Business, the Acquired Assets or this Agreement or
the Related Agreements and the transactions contemplated hereby or thereby;
44
(m) merge or consolidate with or sell all or substantially all of the
assets or equity securities of any Seller (or enter into any agreement to merge
or consolidate with or sell all or substantially all of the assets or equity
securities of any Seller), in one transaction or a series of related
transactions, to any person or entity, or adopt or consent to a plan of
liquidation;
(n) alter in any material respect its practices and policies relating
to the payment and collection, as the case may be, of accounts payable and
accounts receivable relating to the Business or the Acquired Assets;
(o) allow the levels of raw materials, supplies or other materials
included in the Inventory to vary materially from the levels customarily
maintained as seasonally adjusted;
(p) enter into any compromise or settlement of any litigation,
proceeding or governmental investigation that will have any ongoing effect on
the Acquired Assets, the Business or the Assumed Liabilities;
(q) (i) commence or seek to commence a voluntary case under Title 11 of
the United States Bankruptcy Code, as amended from time to time, or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect and all rules and regulations promulgated thereunder ( the "Bankruptcy
----------
Code") or consent to the entry of an order for relief in an involuntary case or
----
to the conversion of any involuntary case to a voluntary case under any such law
or consent to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property, (ii) make any
assignment for the benefit of creditors or (iii) adopt any resolution or
otherwise authorize action to approve any of the action referred to in this
subclause (q) (collectively, "Bankruptcy Actions");
------------------
(r) Parents shall use commercially reasonable efforts to maintain and
preserve Sellers, and their organization, franchises, authorizations, prospects,
goodwill, employees and advantageous business relationships;
(s) allow any Listed Permit to lapse or expire or allow the deadline
for filing an application for renewal of any Listed Permit to pass without
filing an application for renewal; or
(t) agree, commit or resolve to do or authorize any of the foregoing.
Parents shall not, prior to Closing, take any action or omit to take
any action intended to prohibit or limit in any way Sellers' ability to make
their capital expenditures through the end of the fiscal year 2001.
If, prior to the Closing, any Parent proposes to effect any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of a Parent's or Seller's assets or stock or effects
any other transaction which affects Buyer's rights under this Agreement or any
Related Agreement prior to consummation of such action, the Parent shall
45
make appropriate provision to ensure that Buyer's rights and interests in this
Agreement and any Related Agreements are not impaired.
8.2. Access to Information and Employees. Parents and Sellers shall permit,
-----------------------------------
upon reasonable notice during normal business hours, Buyer and its
Representatives to visit and inspect any of the properties of Sellers, including
books and records, and to discuss the affairs, finances and accounts of Sellers'
prospects, plans and intentions with Sellers' officers, employees, brokers and
independent public accountants, as often as Buyer may deem necessary or
desirable and reasonably request.
In this Agreement, "Representatives" means, collectively, a party's
---------------
directors, managers, officers, employees, stockholders, members, partners,
financial parties in interest, agents, advisors, attorneys, accountants,
consultants, Affiliates, financing sources and representatives of any such
source, representatives, and any person or entity being considered for any such
role.
8.3. No Solicitation. Parents and Sellers shall not (and Parents shall cause
---------------
Sellers to not), directly or indirectly, through any Representatives or
otherwise, solicit, accept, or entertain offers from, negotiate with or in any
manner encourage, accept or consider any proposal of, or enter into any
agreement with any person other than Buyer relating to the acquisition of the
Business, Sellers or any stock, business or substantial asset of any Seller (or
of any Parent to the extent used in the Business), whether through purchase,
merger, consolidation or other business combination. If any Parent or Seller
receives any contact, inquiry or proposal regarding the foregoing, then such
Parent or Seller, as the case may be, shall (and each Parent shall cause each
Seller to) notify the party making such proposal that such Parent or Seller is
contractually prohibited from engaging in such discussions. Such Parent or
Seller then shall (and each Parent shall cause each Seller to) promptly notify
Buyer of any contact received by such Parent or Seller relating to any such
transaction and shall furnish to Buyer, in writing, the nature of the contact
and the terms of the proposal or offer, if any, the name of the person who
received the contact on behalf of such Parent or Seller, and the response given
by such person to the person who initiated the contact.
8.4. Financial Statements. Sellers shall (and each Parent shall cause each
--------------------
Seller to) continue to provide Buyer the same reasonable access to its internal
financial reporting system prior to the Closing that it has had immediately
before execution of this Agreement.
8.5. Payment of Indebtedness of Related Persons. Parents shall cause all
------------------------------------------
indebtedness that any Parent or any of its Affiliates owes to any Seller and all
indebtedness that any Seller owes to any Parent or any of its Affiliates to be
paid in full prior to Closing.
8.6. Maintain Organization. Sellers shall, and Parents shall cause Sellers
---------------------
to, take such action as may be commercially reasonably necessary to maintain,
preserve, renew and keep in favor and effect the existence, rights and
franchises of the Business and will use commercially reasonable efforts (a) to
maintain, preserve and renew the Business intact, and to preserve, protect and
maintain for Buyer the goodwill of the employees of the Business, (b) to keep
46
available to Buyer the present officers, employees and brokers of the Business,
and (c) to preserve for Buyer the present relationships with payors, suppliers,
referral sources, customers and clients of the Business and others having
business relationships with the Business. Parents and Sellers shall consult with
Buyer on strategies for maintaining and preserving the Business and effecting an
orderly transition to Buyer's ownership of the Business.
8.7. Payment of Liabilities; Waiver of Bulk Sales Compliance. Each Seller
-------------------------------------------------------
shall pay or otherwise satisfy in the ordinary course of business all of its
Liabilities and obligations. Buyer and each Seller hereby waives compliance with
the bulk-transfer provisions of the Uniform Commercial Code (or any similar law)
("Bulk Sales Laws") in connection with the transactions contemplated in this
---------------
Agreement and in the Related Agreements.
8.8. Assist in Obtaining Permits, Etc. Parents and Sellers shall assist
--------------------------------
Buyer in all commercially reasonable respects in obtaining all Permits necessary
for Buyer to operate the Business and, in lieu of obtaining any or all of said
Permits, to the extent reasonably requested by Buyer, Parents and Sellers shall
assist Buyer in all commercially reasonable respects in entering into
satisfactory subcontracting arrangements with Sellers under Sellers' existing
Permits, on terms reasonably satisfactory to the parties thereto.
8.9. Seller Consents. Parents and Sellers shall use commercially reasonable
---------------
efforts to obtain the Seller Consents set forth on the Disclosure Schedule to
-------------------
Section 3.2 (Seller Consents).
8.10. Records of Sellers. On or prior to the Closing Date, Parents shall
------------------
transfer or cause to be transferred to Sellers any files, books, records or
other documents relating to the Business that are the property of Sellers and
that are possessed by any Parent and that are not otherwise possessed by the
applicable Seller. Parents may make and retain copies (at their expense) of any
such files, books, records and documents transferred to Sellers.
8.11. Insurance. Sellers shall (and Parents shall cause Sellers to) use
---------
commercially reasonable efforts to continue in full force and effect the
insurance coverage under the Policies or substantially equivalent policies.
8.12. HSR Act Filings. Parents and Sellers, on one hand, and Buyer, on the
---------------
other hand, shall make their filings under the HSR Act (including causing any
filings by any ultimate parent entity as required under the HSR Act) and provide
any additional information that the Federal Trade Commission or the Justice
Department requests as promptly as practicable, and perform all other acts
required of them under the HSR Act in order to satisfy the condition contained
in Section 3.1(a) (HSR Act), if such filings are deemed necessary.
8.13. Payables. As of the Closing Date, Sellers shall have no trade payables
--------
(a) forty (40) days older than the invoice date, or, (b) if undated or if the
related invoice has not yet been received, fifty five (55) days older than the
date of receipt of the respective goods or services from the particular vendor.
47
8.14. Accounts Receivable and Inventory.
---------------------------------
(a) Accounts Receivable. Prior to Closing, Sellers shall (and Parents
-------------------
shall cause Sellers to) maintain its practices and policies relating to the
collection of Accounts Receivable in the ordinary course of business. Without
limiting the foregoing, Sellers shall not (and Parents shall cause Sellers not
to) factor, offer early payment discounts, or transfer, sell, pledge or
otherwise encumber the Accounts Receivable, except in the ordinary course of
business. As of the Closing Date, Sellers shall have at least $13,500,000 of
Accounts Receivable ("Minimum Accounts Receivable Amount").
----------------------------------
(b) Inventory. Prior to Closing, Sellers shall (and Parents shall cause
---------
Sellers to) maintain its practices and policies relating to its Inventory in the
ordinary course of business. Without limiting the foregoing, Sellers shall not
(and Parents shall cause Sellers not to) allow the levels of Inventory to vary
materially from the levels customarily maintained (as seasonally adjusted),
delay purchasing Inventory or transfer, sell, pledge or otherwise encumber the
Inventory except in the ordinary course of business.
8.15. Bank Consent. Parents and Sellers shall use commercially reasonable
------------
efforts to obtain the Bank Consent as promptly as practicable after the date of
this Agreement.
8.16. Remediation at Chicago Sites. Prior to Closing, with respect to the
----------------------------
Real Property located at ▇▇▇▇ ▇. ▇▇/▇▇/ ▇▇▇▇▇▇ and 2301 and ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
in Chicago, Illinois, if Buyer requests them to do so, Sellers shall (and
Parents shall cause Sellers to) file a claim under the relevant insurance
policies that they hold (so long as the claims are in accordance with such
policies) for remediation of such sites and shall use commercially reasonable
efforts to prosecute such claim; provided, however, Sellers shall not be
-------- -------
required to incur out-of-pocket expenses exceeding $10,000 for the prosecution
of such claim.
ARTICLE 9
Post-Closing Agreements
-----------------------
After the Closing, the respective Parents, Sellers and/or Buyer, as the case
may be, covenant and agree as follows:
9.1. Further Actions. Parents and Sellers each shall execute and deliver at
---------------
their own expense, such further instruments of transfer and conveyance,
documents and certificates as may be reasonably requested by Buyer in order to
more effectively convey and transfer to Buyer the Acquired Assets, to aid and
assist in reducing to possession or exercising rights with respect to the
Acquired Assets, or to consummate any of the transactions contemplated by this
Agreement or the Related Agreements.
Parents and Sellers shall, as promptly as practical but in no event
later than three (3) business days after receipt, deliver to Buyer any cash,
checks, mail, packages, notices and
48
other similar communications they receive pertaining to the Business, the
Acquired Assets, the Assumed Contracts, the Listed Permits and any other matter
properly belonging to Buyer as a result of the transactions consummated pursuant
to this Agreement or the Related Agreements. Buyer shall, as promptly as
practical but in no event later than three (3) business days after receipt,
deliver to the applicable Parent or Seller any cash, checks, mail, packages,
notices and other similar communications pertaining to the Retained Assets, the
Retained Liabilities and any other matter properly belonging to the Parents and
Sellers after the transactions consummated pursuant to this Agreement or the
Related Agreements. Each Parent or Seller, as applicable, shall endorse in favor
of Buyer any checks or other instruments of payment payable to such Parent or
Seller but acquired by Buyer hereunder, and Buyer shall endorse in favor of the
applicable Parent or Seller any checks or other instruments of payment payable
to Buyer but retained by the Parents and Sellers hereunder. Each Parent or
Seller, as applicable, shall immediately forward to Buyer any telephone calls
and any telecopy, telegraph or other communications that such Parent or Seller
receives in respect of the Acquired Assets or the Business, and Buyer shall
immediately forward to the applicable Parent or Seller any telephone calls and
any telecopy, telegraph or other communications that Buyer receives in respect
of the Retained Assets or the Retained Liabilities.
9.2. Use of Names and Trademarks. Parents and Sellers shall refrain from use
---------------------------
of the name "Industrial Container Services" and the names listed on Exhibit I
---------
(collectively, the "Names"), and any similar names or any other name ever used
-----
by any Parent or Seller in the conduct of the Business or related activities of
Parents and Sellers, except for the names "IFCO" and "PalEx". No later than five
(5) business days after Closing, each Seller shall cause to be filed duly
executed and acknowledged certificates of amendment to the charter documents of
such Seller and other appropriate documents that are required to change the
corporate name of such Seller to a new name approved in writing by Buyer that
does not include any Name listed on Exhibit I or any variations on such name or
---------
similar words, to the extent necessary. Parents and Sellers shall promptly
furnish Buyer with evidence of such filings. Parents and Sellers shall cooperate
with Buyer in enabling Buyer to utilize the Names. In addition, Parents and
Sellers, as promptly as practicable, but in no event later than sixty (60) days
following the Closing, shall cease all usage of the trademarks, trade names,
logos, and trade dress rights assigned herein to Buyer as part of the Acquired
Assets, including without limitation from all buildings, vehicles, business
cards, web sites, stationary, displays, signs, promotional materials, manuals,
forms, invoices, and other materials.
9.3. Confidentiality.
---------------
(a) Parents and Sellers shall keep confidential and shall not use any
Confidential Information (defined below) regarding Buyer or any of its
Affiliates and if the transactions contemplated hereby are consummated, the
Business, but may make such disclosures as, in the opinion of their counsel,
they are required by law to disclose, provided, that, prior to any such
disclosure, Buyer is given the opportunity to review and comment on the contents
of such disclosure. If requested by Buyer, Parents and Sellers shall cooperate
with Buyer in seeking a restraining order to prevent such disclosure.
"Confidential Information" means confidential business information and
------------------------
proprietary information, including, without
49
limitation, customer lists and files, prices and costs, product knowledge and
contracts, business and financial records, information relating to personnel
contracts, stock ownership, liabilities and litigation, as well as the terms of
this Agreement and the price paid or to be paid by Buyer for the Acquired
Assets. Should the transactions contemplated hereby not be consummated, upon the
request of Buyer, Parents and Sellers shall return to Buyer all Confidential
Information received from Buyer in connection with this transaction and destroy
any copies thereof, or compilations or analyses based thereon. Notwithstanding
the foregoing, Parents and Sellers may disclose the terms of this Agreement and
the transactions contemplated hereby to their respective Affiliates, employees,
attorneys and accountants who need to know such terms to assist Parents or
Sellers with the transactions contemplated herein, though Parents and Sellers
shall be liable for any breach of this Section 9.3(a) by any of their
Affiliates, employees, attorneys and accountants.
(b) Prior to the Closing and in the event that the transactions
contemplated by this Agreement are not consummated, Buyer shall keep
confidential and shall not disclose or use any Confidential Information it may
have regarding any Parents or Sellers or their respective Affiliates, but may
make such disclosures as, in the opinion of its counsel, it is required by law
to disclose, provided, that, prior to any such disclosure the Parent/Seller
Representative is given the opportunity to review and comment on the contents of
such disclosure. If requested by the Parents or Sellers, Buyer shall cooperate
with the Parents and Sellers in seeking a restraining order to prevent such
disclosure. Should the transactions contemplated hereby not be consummated, upon
the request of any Parent or Seller, Buyer shall return to the requesting party
all Confidential Information received from such Parent or Seller in connection
with this transaction and destroy any copies thereof, or compilations or
analyses based thereon. Notwithstanding the foregoing, Buyer may disclose the
information concerning the Parents and Sellers and their business to its
Affiliates, employees, attorneys and accountants and may also disclose such
information to existing and prospective lenders and prospective investors, to
the extent reasonably necessary to consummate the transactions contemplated
hereby, though Buyer shall be liable for any breach of this Section 9.3(b) by
any of its Affiliates, employees, attorneys, accountants, existing and
prospective lenders and prospective investors.
9.4. Noncompetition.
--------------
(a) Parents and Sellers Restricted Activities. Without the prior
-----------------------------------------
written consent of Buyer, no Parent or Seller will, for a period of three (3)
years from the Closing Date (the "Term"), will, either alone or in conjunction
with another person, or directly or indirectly through its present or future
Affiliates anywhere in the United States:
(i) invest, participate or engage, directly or indirectly (as
owner, partner, stockholder, director, investor, employee, advisor, consultant
or otherwise other than through the ownership of five percent (5%) or less of
any of class of securities registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) in any business of the same type as the
------------
Business;
(ii) solicit or attempt to solicit or accept business that is
competitive with the business of selling, marketing, reconditioning and
recycling steel drums and plastic
50
drums, pails and other steel and plastic industrial level containers; provided,
--------
however, that a Parent or Seller may engage in the business of leasing, owning
-------
and managing pools of reusable transport and industrial containers, or
manufacturing, re-manufacturing or recycling wooden industrial containers, but
such business shall not include, directly or indirectly, the reconditioning of
steel or plastic drums or industrial bulk containers;
(iii) contact, solicit or in any manner attempt to influence or
induce any active or inactive customer of Buyer or the Parents or Sellers to
purchase any product or service that competes with the products or services of
the Business other than as provided in subsection (ii); or
(iv) contact, solicit or in any manner attempt to influence or
induce any individual or entity which has referred clients to a Parent or Seller
to refer potential clients to any other supplier of any product or service that
competes with the products or services of the Business other than as provided in
subsection (ii);
(v) solicit or in any manner attempt to influence or induce any
employee employed as of the Closing by Buyer or any Affiliate of Buyer, to leave
such employment; or
(vi) take any action that could reasonably be expected to damage
or diminish the goodwill or reputation of the Business or Acquired Assets.
(b) Buyer Restricted Activities. Without the prior written consent of
---------------------------
the Parent/Seller Representative, Buyer will not, for the Term, either alone or
in conjunction with another person, or directly or indirectly through its
present or future Affiliates anywhere in the United States solicit or in any
manner attempt to influence or induce any employee employed as of the Closing by
any Parent or Seller or any Affiliate of any Parent or Seller, to leave such
employment.
(c) Severability. The parties hereto recognize that the laws and
------------
public policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws and policies) of
any provisions of this Section shall not render unenforceable, or impair the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(d) Enforcement. The parties hereto acknowledge and agree that any
-----------
remedy at law for any breach of the provisions of this Section would be
inadequate, and the parties hereby consent to the granting by any court of an
injunction or other equitable relief, without the
51
necessity of actual monetary loss being proved, in order that the breach or
threatened breach of such provisions may be effectively restrained.
(e) Extension of the Term. If a party violates any of the terms of
---------------------
Section 9.4(a) (Parents and Sellers Restricted Activities) or Section 9.4(b)
(Buyer Restricted Activities) and the non-violating party commences legal action
for injunctive or other relief under this Agreement, such non-violating party
shall not be deprived of the benefit of the provisions of Section 9.4(a)
(Parents and Sellers Restricted Activities) or Section 9.4(b) (Buyer Restricted
Activities) as a result of the time involved in obtaining the relief.
Accordingly, the parties agree that the Term shall be extended by the period of
time, if any, between the date of such party's first violation of any provision
of Section 9.4(a) (Parents and Sellers Restricted Activities) or Section 9.4(b)
(Buyer Restricted Activities) and the date on which relief is granted to the
non-violating party.
9.5. Inspection of Records. Each party shall retain and make its books and
---------------------
records (including work papers in the possession of its accountants) available
for inspection and copying by the other parties and their representatives, for
reasonable business purposes at all reasonable times during normal business
hours, for a seven (7) year period after the Closing Date, with respect to all
transactions of Seller occurring prior to and those relating to the Closing, and
the historical financial condition, assets, liabilities, operations and cash
flows of Sellers.
9.6. Payroll Taxes and Payroll Records.
---------------------------------
(a) Pursuant to Rev. Proc. 84-77, 1984-2 C.B. 753, Buyer, at its
election by written notice delivered to the Parent/Seller Representative prior
to January 31, 2002, may require Parents and Sellers to provide Buyer with all
necessary payroll records with respect to employees of the Business for the
calendar year which includes the Closing Date, and Buyer shall furnish a Form
W-2 to each employee employed by Buyer who had been employed by Sellers,
disclosing all wages and other compensation paid for such calendar year, and
taxes withheld therefrom, and Sellers shall be relieved of the responsibility to
do so.
(b) Subject to Section 1.3 (Sellers' Retention of Liabilities)
relating to Taxes due arising from all periods prior to the Closing Date, at the
request of Buyer, Sellers and Buyer will (i) treat Buyer as a "successor
employer" and Sellers as a "predecessor," within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Code, with respect to Hired Active Employees
(defined below) who are employed by the Buyer for purposes of Taxes imposed
under the United States Federal Unemployment Tax Act ("FUTA") or the United
----
States Federal Insurance Contributions Act ("FICA") and (ii) cooperate with each
----
other to avoid, to the extent possible, the filing of more than one IRS Form W-2
with respect to each such Hired Active Employee (defined below) for the calendar
year within which the Closing occurs.
(c) Subject to Section 1.3 (Sellers' Retention of Liabilities)
relating to Taxes due arising from all periods prior to the Closing Date, at the
request of Buyer with respect to any particular applicable Tax law relating to
employment, unemployment insurance, social security, disability, workers'
compensation, payroll, healthcare or other similar Tax other than taxes
52
imposed under FICA and FUTA, Sellers and Buyer will treat Buyer as a successor
employer and Sellers as a predecessor employer, within the meaning of the
relevant provisions of such Tax law, with respect to each such Hired Active
Employee for the calendar year within which the Closing occurs.
9.7. Employees and Employee Benefits.
-------------------------------
(a) Information on Active Employees. For the purpose of this
-------------------------------
Agreement, the term "Active Employees" shall mean all employees employed on the
----------------
Closing Date by Sellers for the Business who are:
(i) bargaining unit employees currently covered by any collective
bargaining agreement set forth on the Disclosure Schedule to Section 6.4(g) (the
-------------------
"Collective Bargaining Agreements") or
--------------------------------
(ii) employed exclusively in the Business as currently conducted,
including employees on temporary leave of absence, including family medical
leave, military leave, temporary disability or sick leave, but excluding
employees on long-term disability leave.
(b) Employment of Active Employees by Buyer.
---------------------------------------
(i) Buyer is not obligated to hire any Active Employee, except
as required under the Collective Bargaining Agreements, but may interview all
Active Employees. Buyer will provide Seller with a list of Active Employees to
whom Buyer has made an offer of employment that has been accepted to be
effective on the Closing Date (the "Hired Active Employees"); provided, however,
---------------------- -------- -------
the number of Active Employees whom Buyer elects not to hire shall not exceed
thirty (30). Subject to Legal Requirements, Buyer will have reasonable access to
the properties and personnel records (including performance appraisals,
disciplinary actions, grievances and medical records) of each Seller for the
purpose of preparing for and conducting employment interviews with all Active
Employees and will conduct the interviews as expeditiously as possible prior to
the Closing Date. Access will be provided by Sellers upon reasonable prior
notice during normal business hours. Effective immediately before the Closing,
each Seller will terminate the employment of all of its Hired Active Employees.
(ii) Neither any Seller nor any Parent nor any of their
Affiliates shall solicit the continued employment of any Active Employee (unless
and until Buyer has informed such Seller in writing that the particular Active
Employee will not receive any employment offer from Buyer) or the employment of
any Hired Active Employee after the Closing. Buyer shall inform Sellers promptly
of the identities of those Active Employees to whom it will not make employment
offers, and each Seller shall assist Buyer in complying with the WARN Act as to
those Active Employees.
(iii) It is understood and agreed that (A) Buyer's expressed
intention to extend offers of employment as set forth in this Section shall not
constitute any commitment, contract or understanding (expressed or implied) of
any obligation on the part of Buyer to a post-
53
Closing employment relationship of any fixed term or duration or upon any terms
or conditions other than those that Buyer may establish pursuant to individual
offers of employment, and (B) employment offered by Buyer is "at will" and may
be terminated by Buyer or by an employee at any time for any reason (subject to
the Collective Bargaining Agreements or any written commitments to the contrary
made by Buyer or an employee and Legal Requirements). Nothing in this Agreement
shall be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Active Employees after
the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such employees.
(iv) Each Parent and Seller (and each Parent shall cause each
Seller to) (A) waive any rights such Seller may have and shall not enforce any
obligations of any Hired Active Employees to such Seller pursuant to any
noncompetition agreement, inventions assignment agreement or any other type of
agreement such Seller may have with the Hired Active Employees with respect to
the Business and (B) enforce its rights against any Active Employee who is not
hired by Buyer, pursuant to any noncompetition agreement, inventions assignment
agreement or any other type of agreement such Seller may have with the Active
Employees with respect to the Business who are not hired by Buyer.
(c) Salaries and Benefits.
---------------------
(i) Each Seller shall be responsible for (A) the payment of all
wages and other remuneration due to Active Employees with respect to their
services as employees of such Seller through the close of business on the
Closing Date, including pro rata bonus payments and all vacation pay earned
prior to the Closing Date; (B) the payment of any termination or severance
payments and the provision of health plan continuation coverage in accordance
with the requirements of COBRA and Sections 601 through 608 of ERISA; and (C)
any and all payments to employees required under the WARN Act.
(ii) Each Seller shall be liable for any claims made or incurred
by Active Employees and their beneficiaries through the Closing Date under the
Benefit Plans. For purposes of the immediately preceding sentence, a charge will
be deemed incurred, in the case of hospital, medical or dental benefits, when
the services that are the subject of the charge are performed and, in the case
of other benefits (such as disability or life insurance), when an event has
occurred or when a condition has been diagnosed that entitles the employee to
the benefit.
(d) Sellers' Retirement and Savings Plans.
-------------------------------------
(i) Except as provided in Sections 9.7(d)(ii), (iii) and (iv)
and with respect to Benefit Plans contributed to pursuant to the Collective
Bargaining Agreements, all Hired Active Employees who are participants in
Sellers' retirement plans shall retain their accrued benefits under Sellers'
retirement plans as of the Closing Date, and each Seller (or such Seller's
retirement plans) shall retain sole liability for the payment of such benefits
as and when such Hired Active Employees become eligible therefore under such
plans.
54
(ii) It is agreed that Buyer has an obligation to contribute to
the Local 705 International Brotherhood of Teamsters Pension Fund (the "Local
-----
705 Fund") for substantially the same number of contribution base units for
--------
which Sellers had an obligation to contribute for 2001. Buyer shall also provide
to the Local 705 Fund for a period of five (5) plan years commencing with the
first plan year beginning after the Closing, a bond (the "Bond") issued by a
----
corporate surety company that is an acceptable surety under Section 412 of ERISA
in an amount equal to $136,606.80, or, if Closing does not occur before January
1, 2002, and the amount of contributions by Sellers to the Local 705 Fund for
2001 is higher than $136,606.80, the amount of such contributions for 2001,
which bond shall be paid to the Local 705 Fund if Buyer withdraws from the Local
705 Fund, or fails to make a contribution to the Local 705 Fund when due, at any
time during the first five (5) plan years beginning after the Closing. Buyer
shall purchase the Bond in the form of a five-year bond, if possible, and shall
notify Sellers of the premium amount for such five-year bond which amount
Sellers shall pay to the Buyer by the January 1st next following the Closing. If
Buyer is not able to purchase the Bond as a five-year bond, then Buyer shall
purchase the Bond as a one-year bond for each of the next five (5) plan years
which premium shall be paid by Sellers to Buyer by the January 1 next following
the Closing and by January 1 of each of the next four years thereafter. If
Sellers fail to pay Buyer for the bond premium on the one-year bond in any such
plan year, Buyer shall set off the amount of the premium from the amount due
under its Promissory Note. Buyer's obligation to provide the Bond described in
this Section 9.7(d) and Sellers' obligation to pay Buyer for the amount of such
Bond shall be excused if the Local 705 Fund grants Buyer a waiver. Sellers shall
be responsible for attempting to obtain said waiver on Buyer's behalf. Buyer
shall cooperate with Sellers in attempting to secure such a waiver, and any
expenses incurred by the Buyer in such attempt shall be paid by Sellers.
(iii) If Buyer withdraws from the Local 705 Fund in a complete or
partial withdrawal during the first five (5) plan years beginning after the
Closing and incurs withdrawal liability as a result of such withdrawal, Buyer
shall have the right to set off from the amount due on its Promissory Note an
amount equal to the lesser of (A) $382,000 less the amount of the Bond, if any,
or (B) the amount of Buyer's withdrawal liability less the amount of the Bond,
if any. In addition, if Buyer becomes liable to the issuer of the Bond for
amounts other than premiums, Buyer shall have the right to set off from the
amount due on the Promissory Note the amount of any such liability.
(iv) If Buyer withdraws in a complete or partial withdrawal from
the Local 705 Fund during the first five (5) plan years beginning after the
Closing, Sellers shall be secondarily liable for any withdrawal liability it
would have had to the Local 705 Fund (but for the provisions of this Section
9.7(d) and Section 4204 of ERISA) if the withdrawal liability of Buyer to the
Local 705 Fund is not paid; provided, however, Sellers' secondary liability
-------- -------
obligation shall not apply if it is not required under the applicable
regulations issued by the PBGC.
(e) No Transfer of Assets. Except as provided in Section 9.7(d)
---------------------
(Sellers' Retirement and Savings Plans), neither any Seller nor any Parent nor
their respective Affiliates will make any transfer of pension or other employee
benefit plan assets to Buyer.
55
(f) Collective Bargaining Matters. Buyer shall assume all of the
-----------------------------
Collective Bargaining Agreements of Sellers under this Agreement or by contract.
Any bargaining obligations of Buyer with any union with respect to bargaining
unit employees subsequent to the Closing, whether such obligations arise before
or after the Closing, shall be the sole responsibility of Buyer.
(g) General Employee Provisions.
---------------------------
(i) Sellers and Buyer shall give any notices required by Legal
Requirements and take whatever other actions with respect to the plans, programs
and policies described in this Section as may be necessary to carry out the
arrangements described in this Section.
(ii) Sellers and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or other information as
may be reasonably required to carry out the arrangements described in this
Section.
(iii) If any of the arrangements described in this Section are
determined by the IRS or other governmental entity to be prohibited by law,
Sellers and Buyer shall modify such arrangements to as closely as possible
reflect their expressed intent and retain the allocation of economic benefits
and burdens to the parties contemplated herein in a manner that is not
prohibited by law.
(iv) Each Seller shall provide Buyer with completed I-9 forms
and attachments with respect to all Hired Active Employees, except for such
employees as such Seller certifies in writing to Buyer are exempt from such
requirement.
(v) Except as provided in Section 9.7(d) (Sellers' Retirement
and Savings Plans) hereof and as required pursuant to the Collective Bargaining
Agreements, Buyer shall not have any responsibility, liability or obligation,
whether to Active Employees, former employees, their beneficiaries or to any
other person or entity, with respect to any employee benefit plans, practices,
programs or arrangements (including the establishment, operation or termination
thereof and the notification and provision of COBRA coverage extension)
maintained by any Seller.
(vi) Seller and each ERISA Affiliate that, prior to the Closing
Date, sponsored a group health plan (as defined in Section 5000b of the Code,
Section 607 of ERISA, or both) which provides welfare benefits to any current or
former employee of Seller will continue to maintain such group health plan after
Closing and will not, in connection with the sale (as such phrase is described
in Section 54.4980B-9, Q&A-8 of the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as those regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations), whether or not such regulations apply to this Agreement) of the
property, assets, and rights of the
56
Business as described in this Agreement, cease to provide coverage under such
group health plan to its employees.
9.8. Third Party Claims. The parties shall reasonably cooperate with
------------------
each other with respect to the defense of any claims or litigation made or
commenced by third parties subsequent to the Closing Date which are not subject
to the indemnification provisions contained in this Agreement, provided that the
party requesting cooperation shall reimburse the other party for the other
party's reasonable out-of-pocket costs and expenses of furnishing such
cooperation.
9.9. Buyer's Acceptance of Returns and Provision of Warranty Services on
-------------------------------------------------------------------
Sellers' and Parents' Behalf. After the Closing and prior to the one-year
----------------------------
anniversary of the Closing Date, subject to the terms of this Section 9.9, Buyer
shall accept returns of products of the Business that were shipped by any Seller
on or prior to the Closing Date, or that are included in the finished goods
inventory of any Seller on the Closing Date, which in either case are claimed by
the purchaser thereof to be defective, to fail to conform to the customer's
order specifications or to be subject to any warranty obligation of any Seller
(such items, "Returned Products"). All such Returned Products shall be accepted
-----------------
by Buyer solely on Sellers' and Parents' behalf, and no such action by Buyer
shall constitute Buyer's assumption of any liability to any third party in
respect of any such Returned Product. Buyer shall, at its option, repair or
replace the Returned Products in accordance with Sellers' warranty obligations,
or if no warranty obligation is in effect, in accordance with the Sellers'
practices in effect at the time of original shipment of such Returned Product.
If the aggregate amount of Return Costs (defined below) incurred by Buyer prior
to the one-year anniversary of the Closing Date exceeds $50,000, then Buyer may
deliver written notice to the Parent/Seller Representative to such effect and
thereafter Parents shall promptly reimburse Buyer for any Return Costs
thereafter incurred by Buyer prior to the one-year anniversary of the Closing
Date. If the aggregate amount of Return Costs is less than $50,000, then Buyer
shall incur all such costs and shall not seek reimbursement. After the one-year
anniversary of the Closing Date, Buyer may in its sole discretion determine to,
though it shall not be obligated to, accept the Returned Products and repair or
replace such Returned Products, in which case Sellers shall have no
responsibility to reimburse Buyer for any costs associated therewith.
"Return Costs" mean Buyer's direct costs incurred in good faith in
------------
satisfying return and warranty obligations on Sellers' and Parents' behalf, plus
an allocable share of Buyer's overhead, minus the amount of any payments with
respect to Returned Products resold by Buyer (or reasonably expected to be
resold by Buyer).
9.10. Payment of All Taxes Resulting from Sale of Assets by Sellers.
-------------------------------------------------------------
Sellers shall (and Parents shall cause Sellers to) pay in a timely manner all
Taxes resulting from or payable in connection with the sale of the Acquired
Assets pursuant to this Agreement, regardless of the person or entity on whom
such Taxes are imposed by Legal Requirements. Buyer shall promptly, but no less
than forty (40) days after receipt of an invoice from the Parent/Seller
Representative detailing the calculation and basis for the amounts paid,
reimburse Buyer for one-half of such Taxes.
57
9.11. Restrictions on Sellers' Dissolution and Distributions. No Seller
------------------------------------------------------
shall (and Parents shall cause Sellers to not) dissolve, or make any
distribution of the proceeds received pursuant to this Agreement, until the
later of (a) such Seller's payment, or adequate provision for the payment, of
all of its obligations pursuant to Sections 9.10 (Payment of all Taxes Resulting
from Sale of Assets by Sellers); or (b) the lapse of more than one (1) year
after the Closing Date.
9.12. Removing Retained Assets. On or before the Closing Date, Sellers
------------------------
shall remove all Retained Assets from all Real Property and Leased Premises to
be occupied by Buyer. Such removal shall be done in such manner as to avoid any
damage to the facilities and other properties to be occupied by Buyer and any
disruption of the business operations to be conducted by Buyer after the
Closing. Any damage to the Acquired Assets or to the facilities on the Real
Property resulting or Lease Premises resulting from such removal shall be paid
by such Sellers at the Closing. Should any Seller fail to remove the Retained
Assets as required by this Section, Buyer shall have the right, but not the
obligation, (a) to remove the Retained Assets at such Seller's sole cost and
expense; (b) to store the Retained Assets and to charge such Seller all storage
costs associated therewith; (c) to treat the Retained Assets as unclaimed and to
proceed to dispose of the same under the laws governing unclaimed property; or
(d) to exercise any other right or remedy conferred by this Agreement or
otherwise available at law or in equity. The applicable Seller shall promptly
reimburse Buyer for all costs and expenses incurred by Buyer in connection with
any Retained Assets not removed by such Seller on or before the Closing Date.
9.13 Sellers' Access to Hired Active Employees. After the Closing Date,
-----------------------------------------
Buyer will, without cost or expense to Sellers, provide Sellers reasonable
access to the Hired Active Employees and such of Buyer's records that are
necessary for Sellers' preparation of Sellers' financial statements through the
Closing Date including, but not limited to, the preparation of information for
Parents' and Sellers' quarterly filings and Parents' and Sellers' 2001 tax
returns.
9.14. Transition Services. For a period of one hundred twenty (120) days
-------------------
after the Closing Date (the "Transition Period") Sellers, at no additional
-----------------
expense to the Buyer, will maintain (i) the passwords and security clearances of
the Hired Active Employees, (ii) the data communication lines between and among
the Sellers and Sellers' Houston, Texas data processing center, whether voice,
data or both, and any other access to the Houston data processing center, (iii)
Sellers' computer software and hardware including, but not limited to, Solomon
accounting software to the extent reasonably necessary to allow the Hired Active
Employees to prepare, provide and assist with the activities contemplated in
Section 9.13 (Sellers' Access to Hired Active Employees). During the Transition
Period, Buyer may request that certain Hired Active Employees be added to or
deleted from the list of Hired Active Employees requiring passwords and security
clearance provided to Sellers at Closing in order to more effectively accomplish
the activities specified herein, and Sellers will effect such changes to the
extent reasonable.
During the Transition Period, Sellers shall (i) maintain Sellers'
computer software in operational condition, (ii) assist Buyer and the Hired
Active Employees as reasonably necessary in downloading to Buyer's computer
systems any and all records that constitute a portion of the Acquired Assets,
and (iii) provide to Buyer and the Hired Active Employees help desk and other
support services in connection with the operation of Sellers' computer software
58
for the purposes set forth herein. Buyer acknowledges and agrees that Buyer does
not intend to use Sellers as a computer service bureau or to use Sellers' data
processing services for the operation of the Business following the Closing
Date, and that Buyer's access to Sellers' computer systems and software will be
limited (i) to the transfer of information, data or other items that constitute
Acquired Assets and (ii) to the extent described in this Section 9.14 and
Section 9.13 (Sellers' Access to Hired Active Employees).
During the Transition Period, Buyer will reimburse Sellers for
the cost of data communications lines in the same amount as such costs were
historically allocated by Parents to the Sellers prior to the Closing Date.
During the Transition Period, and at no cost to Buyer, Sellers
will forward to the Hired Active Employees, at the Hired Active Employees'
email addresses on Buyer's email system (as provided to Sellers by Buyer), all
emails addressed to the Hired Active Employees that are received on Sellers'
email system, subject to Sellers' right to access such emails to filter out
and not forward to the Hired Active Employees any emails that are not personal
to the Hired Active Employees or related to the Business.
During the Transition Period, Sellers shall reasonably assist
Buyer in obtaining the services, at Buyer's expense, of Sellers' third-party
payroll processing provider. During the Transition Period, Sellers also shall,
at Buyer's reasonable request and at Buyer's expense, make available to Buyer
the services of other third-party providers whose services are used by Sellers
in connection with the Business.
9.15. Tax Matters Cooperation.
-----------------------
(a) Buyer and Sellers will cooperate in all reasonable
respects with each other in the preparation of all tax returns which include any
portion of the year 2001. In addition, Buyer and Sellers will provide each other
with access to such of its books and records as may be reasonably requested by
the other in connection with federal, state and local tax matters relating to
periods which include any portion of the year 2001.
(b) Buyer and Sellers shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with any audit,
litigation, or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such matter. Buyer
and Sellers agree (i) to retain until the expiration of the applicable statute
of limitations all books and records which are relevant to the determination o
the Tax liabilities pertinent to the Acquired Assets relating to any Tax period
prior to the Closing Date and to abide by all record retention agreements
entered into with any Tax authority, and (ii) to give the other party reasonable
written notice prior to destroying or discarding any such books and records and
if the other party so requests, Buyer or Sellers, as the case may be, shall
allow the other party to take possession of such books and records.
59
9.16. Note Receivable Collection. Prior to Closing, Parents and Sellers
--------------------------
shall use diligent efforts to collect the ▇▇▇▇▇ Note (defined below) or to enter
into a payment plan with respect to the ▇▇▇▇▇ Note, but Parents and Sellers
shall not be obligated to incur out-of-pocket expenses to third parties. After
Closing, Parents and Sellers shall cooperate in all commercially reasonable
respects with Buyer in obtaining any such payments. As used herein, the "▇▇▇▇▇
-----
Note" is the promissory note, dated October 12, 1995 issued by ▇▇▇▇ ▇▇▇▇▇ to
----
Consolidated Container Corporation.
9.17. OII Settlement. At Closing, Sellers shall pay up to $830,025 of their
--------------
proceeds from this transaction as directed in the OII Settlement; provided,
--------
however, that if such payment is not due at Closing, Sellers shall deposit such
-------
amount into a trust account of Pillsbury Winthrop LLP until the payment is to be
made, to be released when such payment becomes due.
9.18. Noncompetition Rights. All noncompetition covenants in favor of
---------------------
Sellers and Parents that are part of the Business shall be deemed Acquired
Assets to the extent assignable in accordance with their terms and applicable
law. After Closing, with respect to any of such noncompetition covenants that
are part of the Business but are not deemed Acquired Assets pursuant to the
immediately preceding sentence, at Buyer's request and expense, Sellers shall
use commercially reasonable efforts to enforce such noncompetition covenants on
the applicable Seller's behalf and on behalf of Buyer and its Affiliates.
ARTICLE 10
Indemnification
---------------
10.1. Survival; Right to Indemnification Not Affected by Knowledge. All
------------------------------------------------------------
representations, warranties, covenants, and obligations in this Agreement, any
Related Agreement, the Disclosure Schedules, any supplements to the Disclosure
Schedules, Exhibits, and any other certificate or document delivered pursuant to
this Agreement or any Related Agreement shall survive the Closing. The right to
indemnification, payment of Damages (defined below) or other remedy based on
such representations, warranties, covenants, and obligations shall not be
affected by any investigation conducted by Buyer with respect to, or any
knowledge acquired by Buyer (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. A specific waiver delivered
at the Closing and signed by the party granting such waiver, of any condition
based on the accuracy of any specified representation or warranty, or on the
performance of or compliance with any specified covenant or specified
obligation, will eliminate the right to indemnification, payment of Damages, or
other remedy based on the facts or circumstances cited in such waiver as applied
to such specified representations, warranties, covenants, or obligations.
10.2. Indemnification and Payment of Damages by Parents and Sellers. After
-------------------------------------------------------------
the Closing, Parents and Sellers, jointly and severally, shall, indemnify fully,
hold harmless,
60
reimburse and defend Buyer and its directors, officers, stockholders,
accountants, agents and employees, affiliates and its heirs, successors and
assigns (each a "Buyer Indemnified Party") from and against any and all
-----------------------
proceedings, charges, complaints, judgments, damages, dues, penalties, fines,
costs, amounts paid in settlement, liabilities, claims, Taxes, Liens, losses,
expenses (including costs of investigation, remediation and defense and
reasonable attorneys' fees and expenses), or diminution in value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
-------
indirectly, out of or relating to:
(a) any Breach of any representation or warranty made by
Parents or Sellers in this Agreement, the Disclosure Schedules, any supplements
to the Disclosure Schedules, the Related Agreements or any other certificate or
document delivered by Parents or Sellers pursuant to this Agreement or the
Related Agreements;
(b) any Breach by Parents or Sellers of any covenant or
obligation in this Agreement, in a Related Agreement or in any other
certificate, document, writing or instrument delivered by a Parent or Seller
pursuant to this Agreement or a Related Agreement;
(c) any product manufactured by or shipped by, or any services
provided by, any Seller prior to the Closing Date except for Returned Products
as set forth in Section 9.9 (Buyer's Acceptance of Returns and Provision of
Warranty Services on Sellers' and Parents' Behalf.);
(d) the Retained Liabilities;
(e) the Proceedings, whether or not listed on the Disclosure
Schedule to Section 6.4(c) (Litigation);
(f) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with any Parent or any Seller (or
any person acting on their behalf) in connection with the transactions
contemplated herein;
(g) any noncompliance with any Bulk Sales Laws or fraudulent
transfer in respect of the transactions contemplated in this Agreement and in
the Related Agreements;
(h) any liability under the WARN Act or any similar state or
local Legal Requirement that may result from an "Employment Loss," as defined by
29 U.S.C. ss. 2101(a)(6), caused by any action of any Seller prior to the
Closing or by Buyer's decision not to hire previous employees of Seller;
(i) any Benefit Plan established or maintained by any Seller,
including any withdrawal liability incurred by Buyer under the circumstances and
in the amounts described in Section 9.7(d) (Sellers' Retirement and Savings
Plans); or
61
(j) Buyer's inability to obtain Permits by the sixtieth (60/th/)
day after the Closing Date, except to the extent Buyer is denied such Permit due
to Buyer's qualifications or lack of qualifications.
For purposes of determining the amount of Damages resulting from Breach, and
therefore, any indemnification obligation under this Section, all qualifications
as to materiality set forth in Article 6 (Representations and Warranties of
Parents and Sellers) shall be ignored.
10.3. Indemnification and Payment of Damages by Buyer. After the Closing,
-----------------------------------------------
Buyer shall indemnify fully, hold harmless, reimburse and defend Parents and
Sellers and their directors, officers, stockholders, accountants, agents and
employees, affiliates and their heirs, successors and assigns (each a "Seller
------
Indemnified Party") from and against any and all Damages, arising, directly or
-----------------
indirectly, out of or relating to:
(a) any Breach of any representation or warranty made by Buyer
in this Agreement, the Disclosure Schedules, any supplements to the Disclosures
Schedules, the Related Agreements or any other certificate or document delivered
by Buyer pursuant to this Agreement or the Related Agreements;
(b) any Breach by Buyer of any covenant or obligation in this
Agreement, in a Related Agreement or in any other certificate, document, writing
or instrument delivered by Buyer pursuant to this Agreement or a Related
Agreement;
(c) the Assumed Liabilities;
(d) any leases for Leased Premises for which Buyer elects not
to solicit a required consent from the landlord of such Leased Premises; or
(e) Buyer's decision to not make any filings pursuant to the
HSR Act.
For purposes of determining the amount of Damages resulting from such Breach,
and therefore, any indemnification obligation under this Section, all
qualifications as to materiality set forth in Article 7 (Representations and
Warranties of Buyer) shall be ignored.
10.4. Limitation on Certain Indemnity Payments.
----------------------------------------
(a) Buyer Limitations.
-----------------
(i) Subject to subsection (ii) below, no claim for
indemnification under Section 10.2(a) or Section 10.2(d) (to the extent that
such claim for indemnification arises out of an Environmental Claims) may be
made, and no payment in respect thereof shall be required, unless and to the
extent the aggregate amount of Damages which Buyer Indemnified Parties have
suffered arising out of or with respect to all Breaches of the Parents' and
Sellers' representations and warranties contained in this Agreement exceeds
$225,000 and then only for the amount of such excess (the "Deductible");
----------
provided, however, that (i) the aggregate amount
-------- -------
62
of Damages in respect of which the Buyer Indemnified Parties shall be entitled
to indemnification under Section 10.2(a) shall not in any event exceed an
aggregate amount equal to $60,000,000 (the "Cap") and (ii) the Buyer Indemnified
---
Parties shall be entitled to any Damages, without regard to the Deductible or
the Cap, resulting from any Breach of Section 6.3(a)(i)(Title) and Section
6.3(b)(i) (Fee Simple), but any such Damages shall not be included for purposes
of determining whether the Deductible has been exceeded with respect to other
claims for indemnification under Section 10.2(a).
(ii) To the extent that a Buyer Indemnified Party suffers
Damages arising in connection with an indemnifiable claim that would have
effected fewer than all of the Sellers if the transactions contemplated in this
Agreement had not occurred, then the Cap on the Buyer Indemnified Party's
recovery for such Damages shall be the amount allocated to the applicable
Sellers pursuant to Exhibit D as referenced in Section 1.4 (Allocation of
---------
Closing Payment).
(b) Seller Limitations. No claim for indemnification under Section
------------------
10.3(a) may be made, and no payment in respect thereof shall be required, unless
and to the extent the aggregate amount of Damages which Seller Indemnified
Parties have suffered arising out of or with respect to all Breaches of Buyer's
representations and warranties contained in this Agreement exceeds $50,000 and
then only for the amount of such excess (the "Seller Deductible"); provided,
----------------- --------
however, that (i) the aggregate amount of Damages in respect of which the Seller
-------
Indemnified Parties shall be entitled to indemnification under Section 10.3(a)
shall not in any event exceed an aggregate amount equal to $3,500,000 (the
"Seller Cap") and (ii) the Seller Indemnified Parties shall be entitled to any
----------
Damages, without regard to the Seller Deductible or the Seller Cap, resulting
from any Breach of Section 7.3 (No Brokers Fees; No Commissions), but any such
Damages shall not be included for purposes of determining whether the Seller
Deductible has been exceeded with respect to other claims for indemnification
under Section 10.3(a).
10.5. Applicability of Limits on Indemnity. The provisions of Section
------------------------------------
10.4 (Limitation on Certain Indemnity Payments) and Section 10.6 (Time
Limitations) shall be wholly inapplicable to any claims for indemnification
under any provision of Section 10.2, other than Section 10.2(a) or Section
10.2(d)(to the extent that such claim for indemnification arises out of an
Environmental Claim), or Section 10.3, other than Section 10.3(a), regardless of
whether or not the Indemnified Parties also have any claim for indemnification
under Section 10.2(a), Section 10.2(d)(to the extent that such claim for
indemnification arises out of an Environmental Claim), or Section 10.3(a)
arising out of or relating to the same matters, and the Indemnified Parties
shall be free to pursue any claims they may have for indemnification under any
one or more of the provisions of Section 10.2 and Section 10.3 in conjunction or
in the alternative, but in no event shall the Indemnified Parties recover more
than their Damages by claiming under multiple provisions.
10.6. Time Limitations. If the Closing occurs, the representations and
----------------
warranties of Parents, Sellers and Buyer set forth in this Agreement shall
survive the Closing but shall terminate and be of no further force and effect on
the eighteen (18) month anniversary of the
63
Closing Date; provided, however, that (a) the representations and warranties
-------- -------
made in Sections 6.4(b)(Tax Matters) and 6.5(e)(Benefits Plans; ERISA) shall
survive the Closing until the expiration of the applicable statute of
limitations (including extensions thereto) and (b) the representations and
warranties made in Sections 6.3(a)(i)(Title), 6.3(b)(i)(Fee Simple),
6.5(g)(Affiliated Transactions), 6.5(i)(Environmental Matters), 6.6(Solvency),
6.7(a)(No Brokers Fees; No Commissions) and 7.3 (No Brokers Fees; No
Commissions) shall survive the Closing and remain in effect indefinitely. No
claim regarding a Breach of such representation or warranty shall be made for
the first time after the date such representation or warranty expires.
Notwithstanding the foregoing, any such representation or warranty shall survive
such expiration date for purposes of that claim (a) if prior to such expiration
date, Parents and Sellers, on one hand, or Buyer, on the other hand, shall have
been advised by such other party in writing of a Breach thereof pursuant to
Section 10.9 (Indemnification Process) or (b) if the party making such
representation or warranty made a fraudulent or intentional misrepresentation in
connection with such representation or warranty. Unless a specific period is set
forth in this Agreement (in which event such specified period shall control),
all other covenants and agreements contained in this Agreement shall survive the
Closing and remain in effect indefinitely.
10.7. Mitigation Obligation. Except with respect to a breach of Section 9.3
---------------------
(Confidentiality) hereof, each Indemnified Party (defined below) entitled to
indemnification hereunder shall take commercially reasonable steps to mitigate
losses, costs, expenses and damages after becoming aware of any event which
could reasonably be expected to give rise to losses, costs, expenses and damages
that are indemnifiable or recoverable hereunder or in connection therewith.
10.8. Right of Set-Off. Buyer shall set off any amount to which it may be
----------------
entitled under this Article 10 (Indemnification) against any amounts otherwise
payable under the Promissory Note upon written agreement between Buyer and
Parent/Seller Representative as to the amount or upon the written decision of an
arbitrator(s) (if the parties agree to binding arbitration on the matters) or a
final judgment of a court of competent jurisdiction (if there is no agreement to
arbitrate) determining such amount. The exercise of such right of set-off by
Buyer will not constitute an event of default under the Promissory Note or any
instrument securing the Promissory Note. During the pendency of any arbitration
or court proceeding relating to any such set off, Buyer shall pay interest and
principal (if applicable) payments under the Promissory Note to a mutually
acceptable escrow agent or the escrow agent named by the court or arbitrator, as
applicable, pending resolution of the claim for set-off. Fees and expenses
(including reasonable attorneys' fees) shall be equitably allocated among the
parties in the discretion of the court or arbitrator, as applicable.
10.9. Indemnification Process. Buyer Indemnified Party, Buyer Indemnified
-----------------------
Parties, Seller Indemnified Party or Seller Indemnified Parties making a claim
for indemnification under this Article shall be, for the purposes of this
Agreement, referred to as the "Indemnified Party" and the party or parties
-----------------
against whom such claims are asserted under this Article shall be, for the
purposes of this Agreement, referred to as the "Indemnifying Party." All claims
------------------
by any Indemnified Party under this Article shall be asserted and resolved as
follows:
64
(a) In the event that (i) any proceeding is asserted or instituted by
any person other than the parties to this Agreement that could give rise to
Damages for which an Indemnifying Party could be liable to an Indemnified Party
under this Agreement (such proceeding, a "Third Party Claim") or (ii) any
-----------------
Indemnified Party under this Agreement shall have a claim to be indemnified by
any Indemnifying Party under this Agreement that does not involve a Third Party
Claim (such claim, a "Direct Claim"), the Indemnified Party shall promptly send
------------
to the Indemnifying Party a written notice specifying in reasonable detail the
nature of such Third Party Claim or Direct Claim and the amount or estimated
amount thereof, which amount or estimated amount shall not be conclusive of the
final amount, if any, of such Third Party Claim or Direct Claim (a "Claim
-----
Notice"). The failure to promptly notify the Indemnifying Party of a Third Party
------
Claim or a Direct Claim in accordance with the preceding sentence will not
relieve the Indemnifying Party of any indemnification obligation hereunder,
except to the extent the Indemnifying Party establishes that the defense of the
Third Party Claim or the Direct Claim is prejudiced by the Indemnified Party's
failure to give such notice.
(b) In the event of a Third Party Claim, the Indemnifying Party shall
have the right to defend and settle, at its own expense and with counsel
reasonably satisfactory to the Indemnified Party, any such matter so long as the
Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so. The Indemnified Party shall
reasonably cooperate with the Indemnifying Party and its counsel in the defense
thereof and in settlement thereof. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense in good faith, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability. The Indemnifying Party
shall not settle any Third Person Claim without the consent of the Indemnified
Party unless the settlement thereof imposes no liability or obligation on, and
includes a complete release from liability of, the Indemnified Party. Subject to
the preceding sentence, if the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person Claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section 10.9(b) with respect to such Third Person Claim shall be
limited to the amount so offered in settlement by said third person.
(c) In the event of a Direct Claim, the Indemnifying Party shall
notify the Indemnified Party within forty-five (45) days following receipt of a
Claim Notice whether or not the Indemnifying Party disputes such claim.
(d) In addition to (and not in limitation of) the cooperation
contemplated by Section 10.9(b), from and after the delivery of a Claim Notice
relating to a Third Party Claim, at the reasonable request of the Indemnifying
Party, each Indemnified Party shall grant the Indemnifying Party and its
representatives reasonable access to the books, records, personnel and
properties of such Indemnified Party to the extent reasonably related to the
matters to which the Third Party Claim relates. All such access shall be granted
during normal business hours and shall be granted under conditions that will not
interfere with the business and operations of such
65
Indemnified Party. The Indemnifying Party shall not, and shall require its
representatives to not, use (except in connection with such Third Party Claim)
or disclose to any third party other than the Indemnifying Party's
representatives (except as may be required by applicable Law) any information
obtained pursuant to this Section.
10.10. Exclusive Remedy. In the absence of fraud, the provisions of this
----------------
Article 10 (Indemnification) shall constitute the sole and exclusive remedy of
Buyer Indemnified Parties and Seller Indemnified Parties from and after the
Closing with respect to the claims arising under this Agreement.
10.11. Special Covenant. During the period in which Buyer has the right to
----------------
assert a claim for indemnity under this Article 10 (Indemnification), but no
later than six (6) years after the Closing Date, and for so long as any claim
for such indemnity is pending, ISNA shall not (i) dissolve, or (ii) cease its
corporate existence, unless ISNA and Buyer have made arrangements (satisfactory
to Buyer) to assure that Buyer may viably assert its rights to indemnity
hereunder; provided, however, nothing herein shall be construed to limit or
-------- -------
restrict any Parent from effecting a recapitalization, reorganization, merger,
or sale of assets or stock.
10.12. Insurance Proceeds. In computing the amount of any Damages to which
------------------
a party shall be entitled to indemnification hereunder, such computation shall
be net of insurance proceeds under insurance policies maintained by the
indemnifying party, to the extent such proceeds actually are paid to the
indemnified party as a result of such Damages.
ARTICLE 11
Miscellaneous
11.1. Governing Law; Attorneys' Fees. This Agreement and the Related
------------------------------
Agreements shall be governed by, construed, interpreted and applied in
accordance with the laws of the State of Texas, without giving effect to any
conflict of laws rules that would refer the matter to the laws of another
jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the United States District Court in the State of Texas and, if such court
does not have jurisdiction, of the courts of the State of Texas, for the
purposes of any action arising out of this Agreement or any of the Related
Agreements, or the subject matter hereof or thereof, brought by any other party.
To the extent permitted by applicable law, each party hereby waives and
agrees not to assert, by way of motion, as a defense or otherwise in any such
action, any claim (a) that it is not subject to the jurisdiction of the
above-named courts, (b) that the action is brought in an inconvenient forum, (c)
that it is immune from any legal process with respect to itself or its property,
(d) that the venue of the suit, action or proceeding is improper or (e) that
this Agreement or any Related Agreement, or the subject matter hereof or
thereof, may not be enforced in or by such courts.
66
Fees and expenses (including reasonable attorneys' fees) relating to any
action or proceeding to enforce this Agreement or any Related Agreement shall be
equitably allocated among the parties in the discretion of the court.
11.2. Successors and Assigns. The provisions hereof shall inure to the
----------------------
benefit of, and be binding upon, the assigns, successors, heirs, executors and
administrators of the parties hereto. Except as set forth in this Agreement,
this Agreement may not be assigned without the written consent of all other
parties and any attempted assignment without such consent shall be null and
void; provided, however, Buyer may assign all of its rights and obligations to
-------- -------
its Affiliates; provided, further, that any assignment hereunder shall not
-------- -------
relieve any party of any obligations or liabilities hereunder.
11.3. Entire Agreement; Amendment. This Agreement (including the Disclosure
---------------------------
Schedules and Exhibits hereto), the Related Agreements and the other documents
delivered pursuant hereto and referenced herein (a) constitute the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof and (b) supersede all previous understandings and
agreements between the parties with regard to the subject matter hereof, both
oral and written (including the Letter of Intent dated as of August 3, 2001, as
supplemented by a Letter Agreement dated October 1, 2001, between Buyer and
Parents). Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the parties hereto.
11.4. Press Release. Prior to the Closing, none of the parties hereto, nor
-------------
any of their Representatives shall, without the prior written consent of the
others, which shall not be unreasonably withheld, make any statement, public
announcement or release to the press or any other third party with respect to
their discussions or this Agreement or permit any of its employees or agents to
make any such statement, announcement or release, until such time as either
party may be required by law, regulation or order to make disclosure.
The parties hereto also agree to notify each other promptly of any
disclosure with respect to such discussions or this Agreement which is required
by law, regulation or otherwise and to coordinate the disclosure of any
information so required. If any party hereto becomes legally compelled by
deposition, subpoena, or other court or governmental action to disclose any of
the information described in this Section, then such party will give the other
parties prompt notice to that effect, and will cooperate with the other parties
if the other parties seek to obtain a protective order concerning the
information described in this Section. The legally compelled party will disclose
only such information as its counsel shall advise is legally required.
Notwithstanding the foregoing, the parties acknowledge that Parents
and Sellers may disclose these discussions and this Agreement in connection with
IFCO's obligations under the Frankfurt Stock Exchange, and the rules and
regulations promulgated thereunder, the Exchange Act, and the rules and
regulations promulgated thereunder, and in connection with IFCO's registration
of offerings of securities under the Securities Act of 1933, as amended, and
67
the rules and regulations promulgated thereunder or other applicable securities
laws; provided, however, Buyer shall have the opportunity to review and comment
-------- -------
on any draft prior to such disclosure.
11.5. Notices, Etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand, messenger or reputable overnight courier,
and shall be deemed given when received at the addresses of the parties set
forth below, or at such other address furnished in writing to the other parties
hereto.
If to Parents IFCO Systems N.V.
or Sellers: ▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: CEO and CEO North America
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer: Industrial Container Services, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
11.6. No Third Party Beneficiary, Etc. Except as expressly provided in
-------------------------------
Section 6.4(d) (No Assumption of Liabilities), and Section 9.3
(Confidentiality), there shall be no third party beneficiary of this Agreement.
Neither the availability of, nor any limit on, any remedy hereunder shall limit
the remedies of any party hereto against third parties. Buyer's assumption of
the Assumed Contracts, Assumed Liabilities and Listed Permits shall not create
any right of third parties against Buyer for any acts or omissions prior to the
date of such assumption.
68
11.7. Reformation; Severability. In case any provision of this Agreement
------------------------
shall be invalid, illegal or unenforceable, such provision shall be reformed to
the extent necessary to permit enforcement thereof, and the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby. If such provision is not capable of reformation, it shall
be severed from this Agreement and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
11.8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
11.9. Interpretation. The parties hereto acknowledge and agree that: (a)
--------------
the rule of construction to the effect that any ambiguities are resolved against
the drafting party shall not be employed in the interpretation of this
Agreement, and (b) the terms and provisions of this Agreement shall be construed
fairly as to all parties hereto and not in favor of or against any party,
regardless of which party was generally responsible for the preparation of this
Agreement.
11.10. Reliance. The parties hereto agree that, notwithstanding any right
--------
of any party to this Agreement to investigate the affairs of any other party to
this Agreement, the party having such right to investigate shall have the right
to rely fully upon the representations and warranties of the other parties
expressly contained herein.
11.11. Titles and Subtitles. The titles of the paragraphs and subparagraphs
--------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. References to "Sections" herein are
references to sections of this Agreement. The words "herein," "hereof," "hereto"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision.
11.12. Expenses. Except as otherwise expressly provided herein, each party
--------
hereto will bear its respective costs and expenses incurred in connection with
the preparation, execution and performance of this Agreement, the Related
Agreements and the transactions contemplated herein or therein, including
without limitation all fees and expenses of its Representatives. Buyer will pay
the HSR Act filing fee, to the extent necessary.
11.13. Parents' and Sellers' Knowledge. For purposes of the representations
-------------------------------
and warranties in Article 6 (Representations and Warranties of Parents and
Sellers), references to "knowledge" or "best knowledge" of a Seller or Parent,
"known" by a Seller or Parent or words of similar import, shall be deemed to
include the actual conscious awareness of any director, officer or facility
manager of such Parent or Seller after reasonable inquiry within the Business.
For purposes of Article 6 (Representations and Warranties of Parents and
Sellers), each Parent or Seller is deemed to have knowledge of each of the
documents entered into in connection with the transactions contemplated hereby.
11.14. Parent/Seller Representative.
----------------------------
69
(a) To administer efficiently the rights and obligations of Parents
and Sellers under this Agreement, Parents and Sellers hereby designate and
appoint IFCO as Parents' and Sellers' Representative (the "Parent/Seller
-------------
Representative"), to serve as Parents' and Sellers' agents and attorneys in fact
--------------
for the limited purposes set forth in this Agreement.
(b) Each Parent and Seller hereby appoints the Parent/Seller
Representative as such Parent's or Seller's agent, proxy and attorney in fact,
with full power of substitution, for all purposes set forth in this Agreement,
including, without limitation, the full power and authority on such Parent's or
Seller's behalf (i) to consummate the transactions contemplated by this
Agreement, (ii) to disburse any funds received hereunder to the respective
Parents and Sellers, (iii) to execute and deliver on behalf of each Parent and
Seller any amendment or waiver under this Agreement, and to agree to resolution
of all adjustments and earnout payments pursuant to Article 1 (Purchase and Sale
of Assets), and of all claims under Article 10 (Indemnification), (iv) to retain
counsel and other professional services, at the expense of Parents and Sellers,
in connection with the performance by the Parent/Seller Representative of this
Agreement, (v) to hire and compensate, and delegate responsibility under this
Agreement to, such subagents, employees, agents, designees and other
representatives of the Parent/Seller Representative determine in their
discretion to be necessary or advisable in performing under this Agreement, and
(vi) to do each and every act and exercise any and all rights or not do so which
such Parent or Seller or the Parents and Sellers are permitted or required to do
or exercise under this Agreement and the other agreements, documents and
certificates executed in connection herewith. Each Parent and Seller agrees that
such agency and proxy are coupled with an interest (in that each Parent/Seller
Representative is also a Parent or Seller and thereby has a present, legal, and
beneficial interest in the items described in the preceding clauses (i) through
(vi) of this Section attributable to it), are therefore irrevocable without the
consent of the Parent/Seller Representative, shall survive the death, bankruptcy
or other incapacity of any Parent or Seller, and shall terminate only in
accordance with the following sentence.
(c) Each Parent and Seller hereby agrees that any amendment or waiver
under this Agreement, and any action taken on behalf of the Parents and Sellers
to enforce the rights of the Parents and Sellers under this Agreement and any
action taken with respect to any adjustment or claim shall be effective if
approved in writing by the Parent/Seller Representative.
(d) IFCO shall serve as the Parent/Seller Representative until such
entity resigns or is otherwise unable or unwilling to serve. If the
Parent/Seller Representative shall resign or otherwise become unable or
unwilling to serve, then the remaining Parents and Sellers shall select a
successor representative to fill such vacancy, shall provide prompt written
notice to Buyer of such change and such substituted representative shall then be
deemed to be the sole Parent/Seller Representative for all purposes of this
Agreement. IFCO hereby accepts appointment as the Parent/Seller Representative.
Any substitute Parent/Seller Representative shall execute an acceptance of such
appointment if requested to do so by Buyer.
* * * * *
70
This Agreement has been executed and delivered as of the date first written
above.
INDUSTRIAL CONTAINER SERVICES, LLC
By: CIC - Drumco Partners, L.P.,
its sole member
By: Drumco G.P., L.L.C.,
general partner of
CIC-Drumco Partners, L.P.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Printed Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Title: President
---------------------------
IFCO SYSTEMS N.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title: A Director and Chief Financial Officer
---------------------------------------------
IFCO SYSTEMS NORTH AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: President
---------------------------------------------
IFCO INDUSTRIAL CONTAINER SYSTEMS HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------------
Title: Vice President
---------------------------------------------
IFCO ICS - CHICAGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - MIAMI, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - NORTH CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - MINNESOTA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
CONTAINER RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - WASHINGTON, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------------------
Title: Vice President
-------------------------------------------
IFCO ICS - CALIFORNIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------------------
Title: Vice President
-------------------------------------------
IFCO ICS - FLORIDA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------------------
Title: Vice President
-------------------------------------------
ENVIRONMENTAL RECYCLERS OF COLORADO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------------------
Title: Vice President
-------------------------------------------
IFCO ICS - ILLINOIS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
------------------------------------
Title: Vice President
-------------------------------------------
PALEX KANSAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - GEORGIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO ICS - MICHIGAN, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
--------------------------------
Title: Vice President
---------------------------------------
IFCO CONTAINER SYSTEMS -
SOUTH CAROLINA
By: /s/ ▇▇▇▇▇▇ ▇▇▇
------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇
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Title: Vice President
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IFCO ICS - WESTERN LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇
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Printed Name: ▇▇▇▇▇▇ ▇▇▇
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Title: Vice President
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EXHIBIT A
Acquired Assets
The Acquired Assets include, without limitation, the following items:
1. the Inventory, except any Inventory included in the Zellwood Assets;
2. all furniture, furnishings, fixtures, equipment (including office
equipment), machinery, appliances, parts, computer hardware,
automobiles and trucks and all other tangible personal property of
every description and kind and all replacement parts therefore (other
than Inventory) located at the Real Property, except for the Zellwood
Assets, including without limitation any of the foregoing that has been
fully depreciated (collectively, the "Equipment");
---------
3. all Real Property (including real estate owned), except for the Real
Property included in the Zellwood Assets, including the structures and
improvements located herein and all fixtures and fixed assets attached
thereto or located therein, including machinery and equipment situated
thereon or forming a part thereof, together with all appurtenances,
easements, rights-of-way and other rights or interests related thereto;
4. all leasehold interests and leasehold improvements created by all
leases of personal property under which a Seller is a lessee or lessor;
5. all leasehold interests and leasehold improvements in the Leased
Premises, except for those included in the Zellwood Assets and the
▇▇▇▇▇▇ Lease;
6. all Accounts Receivable, instruments and chattel paper;
7. all deposits and rights with respect thereto;
8. all keys to any Real Property and Leased Premises being acquired;
9. all of Sellers' rights under all contracts, claims and rights (and
benefits arising therefrom) with or against all persons whomsoever,
including, without limitation, all rights against suppliers under
warranties covering any of the Inventory or Equipment and all permits,
to the extent they are legally transferable by Sellers;
10. all of Sellers' rights under all sales orders and sales contracts,
service orders and service contracts, purchase orders and purchase
contracts, quotations and bids;
11. the Intellectual Property;
12. the Assumed Contracts;
A-1
13. all customer lists, customer records and similar information to the
extent used in or comprising the Business;
14. all books and records, including without limitation, blueprints,
drawings and other technical papers, payroll, employee benefit,
accounts receivable and payable, inventory, maintenance, and asset
history records, ledgers, and books of original entry, all insurance
records and OSHA and EPA files;
15. all rights in connection with prepaid expenses with respect to the
Acquired Assets;
16. all sales and other data, policies and procedures, files and records,
manuals, invoices, customer lists, client lists, broker lists,
accounting records, business records, operating data and other data,
sales and promotional materials, catalogues and advertising literature;
17. all letters of credit issued to Sellers;
18. all computer software and programs of Sellers, including all
documentation, machine readable codes, printed listings of codes,
source codes with respect to such software and programs and licenses
and leases of software;
19. the Listed Permits;
20. all telephone numbers of Sellers;
21. all amounts recovered by any Seller for indemnity claims against
persons who are not parties to this Agreement for any event or
circumstance for which Buyer could seek indemnification pursuant to
Section 10.2 (Indemnification and Payment of Damages by Parents and
Sellers).
22. all plans and surveys, plats, specifications, engineer's drawings and
architectural renderings and similar items related to the Acquired
Assets, including, without limitation, those relating to utilities,
easements and roads;
23. the Domain Names;
24. the Zellwood Assets actually acquired by Buyer or its Affiliates in
accordance with Section 2.5 (Zellwood) at the Zellwood Closing;
25. all rights ISNA has pursuant to the Settlement and Release Agreement,
dated as of February 28, 2001, by and among ISNA, Consolidated Drum
Reconditioning Co, Inc., CDRCo HC, LLC, CDRCo SW, LLC, CDRCo NW, LLC,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and
A-2
26. except as set forth in the list of Retained Assets, to the
extent transferable, all other hardware, software, office
furniture and equipment relating to the Business, as well as
all other or additional privileges, rights, interests,
properties and assets of any Seller of every kind and
description and wherever located that are used, or intended
for use, in the Business as it has been and as it is presently
being conducted.
A-3
EXHIBIT B
Retained Assets
The Retained Assets shall consist of the following:
1. Each Seller's corporate charter, minute book and stock record books,
and seal;
2. Software, to the extent it cannot be separated from licenses held by
Parents;
3. Permits that are not transferable to Buyer;
4. all cash on hand and in banks, cash equivalents (exclusive of letters
of credit issued by customers of Sellers), investments and cash in
transit to Sellers' bank accounts;
5. all leasehold interests and leasehold improvements in the ▇▇▇▇▇▇ Lease;
6. any right any Seller has, had or may have to recover against persons
who are not parties to this Agreement for any event or circumstance for
which Buyer could seek indemnification pursuant to Section 10.2
(Indemnification and Payment of Damages by the Parents and Sellers),
including but not limited to rights of Sellers under insurance
policies, rights of indemnification, rights of contribution, joint and
several liability, strict liability, contributory negligence or other
rights ("Recovery Rights"). Recovery Rights include but are not limited
---------------
to rights to recover under insurance policies or other contracts or
from other parties for environmental damages at the Real Property or
Leased Premises, products liabilities, failures of title, business
interruptions or warranty claims;
7. the Zellwood Assets until the Zellwood Closing, and thereafter any
Zellwood Assets not acquired by Buyer or its Affiliates at the Zellwood
Closing in accordance with Section 2.5 (Zellwood); and
8. shares of stock in Coca-Cola held in the name of ▇▇▇▇▇▇ Drum & Barrel
Co. Inc., which are not reflected in the Seller Financial Statements.
B-1
EXHIBIT C
Assumed Liabilities
The Assumed Liabilities shall consist of the following:
1. all accounts payable relating to the Business or the Acquired
Assets, which have accrued in the ordinary course of business
as presently conducted, including, without limitation, the
amounts reflected in Seller Financial Statements and including
any that are no more than forty (40) days older than the
invoice date, but excluding accounts payable relating to the
Retained Assets or Retained Liabilities;
2. any Liabilities under the Assumed Contracts (other than
Liabilities that arise out of such Seller's Breach of the
Assumed Contracts prior to the Closing Date);
3. any Liabilities accruing and arising after the Closing Date
under all of the Leased Premises except for the ▇▇▇▇▇▇ Lease,
but excluding such Liabilities that arise in respect of Liens
thereon in existence at or prior to the Closing, other than
Permitted Liens;
4. any Liabilities under the Listed Permits (other than
Liabilities that arise out of such Seller's Breach of the
Listed Permits prior to the Closing Date);
5. any Liabilities arising from events or circumstances relating
to the operation of the Business that first occur after the
Closing Date;
6. any Liabilities under Sellers' Collective Bargaining
Agreements arising from events or circumstances relating to
the operation of the Business after the Closing Date;
7. any Liabilities, including withdrawal liabilities, incurred by
Buyer with respect to the Multiemployer Plans after the
Closing Date (except as set forth in Section 9.7(d) (Sellers'
Retirement and Savings Plans);
8. the Zellwood Assumed Liabilities after the Zellwood Closing;
and
9. any Liabilities with respect to the relocation of the
facilities located at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ and 2301 and ▇▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇ in Chicago, Illinois, including any remediation
required at such sites; provided, however, Buyer shall not
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assume any penalties or fines resulting from Environmental
Claims or any failure to comply with applicable zoning or land
use laws or regulations, in either case to the extent arising
out of conditions or circumstances in existence at such sites
prior to Closing, regardless of when notice for any such
penalties or fines is given; except that Buyer shall be
responsible to the extent that any such penalties or fines
C-1
result primarily from Buyer's failure to commence or complete
the remediation on a timely basis after the Closing.
C-2
EXHIBIT D
Allocation of Closing Payment
To be completed prior to Closing.
D-1
EXHIBIT E
Form of ▇▇▇▇ of Sale
E-1
EXHIBIT F
Form of Sellers' Closing Certificate
F-1
EXHIBIT G
Form of Parents' Closing Certificate
G-1
EXHIBIT H
Form of Lease Assignment
H-1
EXHIBIT I
List of Names
Acme Barrel Company, Inc.
Atlas Container Company, Inc.
Charlotte Steel Drum Corporation
Consolidated Container Corporation
Container Resources Corporation
Container Services Company NW, Inc.
Container Services Company SW, Inc.
Drum Service Co. of Florida
Environmental Recyclers of Colorado, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Drum & Barrel Co.
ICS
Industrial Container Systems Inc.
▇▇▇▇▇▇ Drum & Barrel Co., Inc.
Southern Steel Drums, Inc.
Western Container L.L.C.
Northwest Cooperage Company
Consolidated Drum Reconditioning Company, Inc.
American Steel Container Company
▇▇▇▇▇▇▇ Drum Company
▇▇▇▇▇▇ Drum Company
Tri-State Drum
Industrial Container Recyclers
I-1
EXHIBIT J
Form of Acquired Assets Note
J-1
EXHIBIT K
Form of Zellwood Purchase Price Note
K-1
EXHIBIT L
Form of Buyer Closing Certificate
L-1
EXHIBIT M
Form of Guaranty
M-1
EXHIBIT N
Form of Assignment and Assumption Agreement
N-1
EXHIBIT O
Title Insurance Amounts
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Property Address Amount of Title Insurance
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Chicago, Illinois $1,500,000
▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇▇ $ 500,000
W. Trade Street
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Kansas City, Kansas $ 400,000
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ $ 400,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ $ 200,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
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O-1
EXHIBIT P
Form of Estoppel Certificate
P-1
EXHIBIT Q
Mutual Release List
List of individuals who have executed the IFCO Confidentiality and
Noncompetition Agreement for Stock Options
Last Name First Name Subsidiary
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▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ IFCO ICS - North Carolina, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - Minnesota, Inc.
Brounsten ▇▇▇▇▇▇▇▇ IFCO ICS - California, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ IFCO ICS - Chicago, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇ IFCO ICS - California, Inc.
▇▇▇▇▇ ▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇ ▇▇▇▇▇▇ IFCO ICS - California, Inc.
▇▇▇▇▇▇ Al IFCO ICS - Florida, Inc.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - Chicago, Inc.
O'▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - California, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ IFCO ICS - Chicago, Inc.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ IFCO ICS - North Carolina, Inc.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ IFCO ICS - North Carolina, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇ IFCO ICS - Chicago, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ IFCO ICS - Chicago, Inc./IFCO ICS - Illinois, Inc.
▇▇▇▇▇ ▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ IFCO ICS - Minnesota, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇ IFCO ICS - Minnesota, Inc.
Q-1