FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
The Asset Purchase Agreement (the "APA") made and entered as of the
26th day of February, 1999, by and among Worthington Custom Plastics, Inc.,
an Ohio corporation ("Seller"), ▇▇▇▇▇▇ Industrial Group, Inc., a Georgia
corporation ("MGRP"), and ▇▇▇▇▇▇ Custom Plastics, Inc., a Delaware
corporation ("MCP") is hereby amended in the following respects and the
parties hereto agree as follows:
1. ASSIGNMENT OF RIGHTS; ASSUMPTION OF OBLIGATIONS. MGRP and MCP
hereby assign to ▇▇▇▇▇▇ Custom Plastics, LLC, a Delaware limited liability
company ("Buyer"), all their right, title, and interest in, to and under the
APA, and Buyer does hereby assume from MGRP and MCP, and shall pay, perform
and discharge in accordance with the terms of the APA, and shall indemnify
and hold harmless MGRP and MCP from and against, the obligations of MGRP and
MCP thereunder. Pursuant to Section 11.4 of the APA, Seller does hereby
grant its consent to this assignment; provided that neither MGRP or MCP shall
be released from its obligations under the APA.
2. ASSIGNMENT TO GE CAPITAL. The parties hereto acknowledge that
as part of the requirements for obtaining financing for the acquisition of
the assets pursuant to the APA, Buyer's lenders, including General Electric
Capital Corporation (the "Lenders"), will require an assignment of Buyer's
rights under the APA to the Lenders or their agent for collateral purposes.
Seller hereby consents to such assignment.
3. AMENDMENT TO PURCHASE PRICE. Section 2.1 of the APA is hereby
deleted and a new Section 2.1 is hereby substituted therefore as follows:
2.1 PURCHASE PRICE. The Consideration for the Assets (the
"Purchase Price") shall be (i) $25,000,000 (the "Closing Cash
Payment"); (ii) 10,000 shares of preferred stock of Parent,
without par value (the "Preferred Stock") on the terms set forth
on Exhibit A hereto (which the parties agree has a value of
$4,250,000); (iii) a Contingent Payment as provided in Exhibit
A attached hereto; and (iv) Buyer'' assumption of the Assumed
Liabilities. The Closing Cash Payment shall be paid as provided
in Section 2.3.
The Shareholder Agreement set forth in Exhibit F of the APA is hereby deleted.
4. CLOSING. Section 3.1 of the APA is hereby amended to reflect
that the Closing will take place at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇. Section 3.2 is
hereby amended by substituting the date hereof for the March 31, 1999 date
contained therein. Section 3.3 of the APA is amended by substituting April
20, 1999 for April 15, 1999.
5. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer is a limited liability company duly formed and validly
existing under the laws of the State of Delaware and is qualified to do
business as a foreign limited liability company in all jurisdictions in which
the failure to do so would have a Material Adverse Effect on the results of
operations or financial condition of Buyer. Buyer has all requisite power
and authority to enter into this First Amendment and assume and perform the
obligations of MGRP and MCP under the APA and to carry out its obligations
hereunder and thereunder.
(b) The execution and delivery of this First Amendment and the
consummation of the transactions contemplated hereby and by the APA have been
duly authorized by all necessary limited liability company actions required
on the part of the Buyer. This First Amendment has been duly executed and
delivered by Buyer, and this First Amendment and the APA constitute the valid
and legally binding obligations of Buyer and are enforceable against the
Buyer in accordance with their respective terms.
(c) Neither the execution and delivery of this First Amendment,
the assumption of MGRP's and MCP's obligations under the APA, nor the
consummation of the transactions contemplated hereby and by the APA will:
(i) violate or conflict with, or result in a breach of
any provisions of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, any
of the terms, conditions or provisions of the Articles of Organization
or Operating Agreement of the Buyer, or any note, bond, mortgage,
indenture, deed of trust, material license agreement, loan agreement or
other material agreement, instrument or obligation to which Buyer is
party, or by which Buyer or any of its properties or assets may be bound
or affected; or
(ii) violate any material judgment, order, writ,
injunction or decree, or any law, rule or regulation applicable to Buyer
or any of its properties or assets, to the extent any of the foregoing
would have a Material Adverse Effect on the results of operations or
financial condition of Buyer. Buyer is not required to give notice or
obtain any consent from any person in connection with the execution and
delivery of this First Amendment for the consummation of the
transactions contemplated hereby or by the APA.
6. GE CAPITAL FINANCING. In lieu of the financing contemplated
by the APA, the parties acknowledge that financing will be provided by Buyer
and its sole member, ▇▇▇▇▇▇ Holdings, LLC, a Delaware limited liability
company, by borrowing such funds from the Lenders.
7. SERIES 1999A PREFERRED. Exhibit A of the APA is hereby
amended to provide that the designation of the preferences, limitations and
relative rights of the Series 1999A Preferred shall be as set forth on
EXHIBIT B attached hereto and made a part hereof by this reference.
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8. TRANSITION SERVICES AGREEMENT. EXHIBIT E of the APA is hereby
amended to provide that the form of the Transition Service Agreement shall be
as set forth on EXHIBIT C, attached hereto and made a part hereof by this
reference.
9. CAPITALIZATION. Section 5.4 is hereby amended to provide that
bonds for acquisition and debt financing will not be issued by Parent and to
clarify that the Parent has outstanding employee and director stock options
in addition to those granted under Parent's 1997 Stock Option Plan.
10. OPINION OF BUYER'S COUNSEL. The opinion to be given by
Buyer's counsel as set forth in Exhibit G of the APA shall be appropriately
modified to reflect the changes in the APA made by this First Amendment and
may be delivered by separate counsel for Buyer, namely, Winston & ▇▇▇▇▇▇, as
well as Husch & Eppenberger, LLC.
11. GE BUSINESS; POSSIBLE REDUCTION IN DIVIDEND RATE. As required
pursuant to Sections 8.9 and 9.7 of the APA, Seller and Buyer have reached a
mutually acceptable agreement with respect to certain GE business which is
reflected in a separate agreement of even date. Pursuant to that agreement,
the dividend rate on the Series 1999A Preferred may be reduced; therefore, an
appropriate legend will be affixed to the certificate or certificates
evidencing the Series 1999A Preferred in the hands of Seller, substantially
as follows:
THE DIVIDEND RATE SET FORTH IN THE DESIGNATION OF PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF THE SERIES 1999A PREFERRED
MAY BE REDUCED UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THAT
CERTAIN AGREEMENT DATED APRIL 15, 1999 BY AND BETWEEN WORTHINGTON
CUSTOM PLASTICS, INC., ▇▇▇▇▇▇ INDUSTRIAL GROUP, INC., AND ▇▇▇▇▇▇
CUSTOM PLASTICS, LLC, A COPY OF WHICH IS AVAILABLE FROM THE
SECRETARY OF THE CORPORATION.
As a condition to any transfer of the Series 1999A Preferred by Seller,
Seller will require that the transferee agree in writing to the foregoing
limitations.
12. PARTIES. Buyer is hereby added as a party to the APA.
13. LEBANON IDB. The parties agree that section 1.5 of the APA
shall be deemed amended as appropriate to reflect the letter to Firstar Bank,
N.A. from Worthington Steel of Michigan, Inc. and ▇▇▇▇▇▇ Lebanon Kentucky
IRB, LLC dated as of the date hereof (the "Letter") and further that
notwithstanding any provision herein, in the Assignment and Assumption
Agreement or any other document relating to the APA, Buyer shall not assume
or be liable in respect of the IDB or the bonds issued thereunder (the
"Bonds") and the Bonds shall not be transferred to Buyer or its affiliates
until the Letter has been fully executed and delivered by all parties thereto
(and properly attested to the extent required thereby). The parties shall
use best efforts to cause such transfer and assumption to occur at the
earliest practical date.
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14. DEFINITION. Capitalized terms contained herein that are not
otherwise defined herein shall be construed as defined in the APA.
15. BINDING EFFECT. This First Amendment shall be binding upon
the parties and their successors and assigns. The terms and conditions of
the APA shall continue in full force and effect except as modified herein.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Asset Purchase Agreement as of this ________ day of April, 1999.
WORTHINGTON CUSTOM PLASTICS, ▇▇▇▇▇▇ INDUSTRIAL GROUP,
INC. INC.
By: By:
------------------------------- ------------------------------
Its Its
---------------------------- ---------------------------
▇▇▇▇▇▇ CUSTOM PLASTICS, INC. ▇▇▇▇▇▇ CUSTOM PLASTICS, LLC
By: By:
------------------------------- ------------------------------
Its Its
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EXHIBIT A TO FIRST AMENDMENT
CONTINGENT PAYMENT
1. SELLER'S RIGHT TO DEMAND CONTINGENT PAYMENT. Seller shall have the
right to compel Buyer to pay to Seller an amount equal to 15% of the
"Enterprise Value" (as defined below) of Buyer (the "Contingent Payment") as
of December 31, 2004 by notifying Buyer in writing of the demand within the
30-day period following the later of (i) March 31, 2005 or (ii) the date on
which Seller is provided audited financial statements of the Buyer with
respect to the year ended December 31, 2004 on the terms and conditions set
forth below.
2. BUYER RIGHT TO PROVIDE CONTINGENT PAYMENT. Buyer shall have the
right to compel Seller to receive the Contingent Payment based on the
Enterprise Value of Buyer as of December 31, 2004 by notifying Seller in
writing of the exercise of its right within the 30-day period following March
31, 2005 on the terms and conditions set forth below.
3. CONTINGENT PAYMENT ABSENT EXERCISE. If neither Seller nor Buyer
exercises its right to receive or pay the Contingent Payment based on the
December 31, 2004 Enterprise Value of Buyer, the Contingent Payment shall be
equal to 15% of the Enterprise Value of Buyer as of December 31, 2005.
4. AMOUNT OF THE CONTINGENT PAYMENT. The Enterprise Value of the
Buyer shall be the fair market value of a 100% equity ownership interest in
Buyer as of the appropriate date. Such value shall be determined by the
mutual agreement of the parties, or, if the parties cannot agree on the
Enterprise Value of the Buyer within 30 days of the exercise of the right
under Section 1 or 2 by April 30, 2006 if no exercise is made, then the
Enterprise Value of the Buyer shall be determined by appraisal as follows:
The parties shall each appoint, at its own cost, within 15 days
following the expiration of the time for mutual agreement, a qualified
appraiser ("Qualified Appraiser"), who shall be a professional appraiser,
certified public accountant, or investment banker qualified by experience and
ability to appraise a closely held business of the magnitude conducted by
Buyer. In determining the Enterprise Value of the Buyer for purposes of
determining the Contingent Payment, no discounts shall be taken for lack of
marketability of the enterprise or minority interest or the like. Rather,
the determination of Enterprise Value of the buyer shall be based on a
valuation of the Buyer as a going concern. The Contingent Payment shall then
be determined by multiplying Enterprise Value by 15%. If both Qualified
Appraisers agree on the Enterprise Value of the Buyer, their opinion, which
shall be submitted in writing, shall be conclusive and binding on the
parties. If only one of the parties appoints a Qualified Appraiser, that
appraiser's written opinion on the Enterprise Value of the Buyer shall be
conclusive and binding on the parties. If the two Qualified Appraisers
disagree on the Enterprise Value of the Buyer, they shall appoint a third
Qualified Appraiser mutually acceptable to them, and the opinion of the third
Qualified Appraiser, whose fees and expenses shall be divided equally between
the parties, shall be conclusive and binding as to the Enterprise Value of
the Buyer. Provided, however, that if the Enterprise Value of the Buyer in
question found by the third Qualified Appraiser is greater than the higher of
the first two appraisals, the higher of the first two appraisals shall
constitute the
Enterprise Value of the Buyer, and if Enterprise Value as found by the third
appraiser is less than the lower of the first two appraisals, the lower of
the first two appraisals shall constitute the Enterprise Value of the Buyer.
In determining such Enterprise Value as of any date, Buyer shall be deemed to
have additional cash assets (or, as applicable, to have its assets decreased)
in an amount equal to (a) the sum of (i) all cash distributed by Buyer to
its members in their capacity as such on or prior to such date (other than
distributions to pay or reimburse its members for tax liabilities actually
paid by such members attributable to the taxable income of Buyer) plus (ii)
the fair market value of all non-cash assets distributed by Buyer to its
members in their capacity as such (in each case determined as of the time of
distribution) on or prior to such date plus (iii) payments to Affiliates of
Buyer for products or services to the extent such payments are in excess of
their reasonable value plus (iv) interest on such distributions or excess
payments at the Wall Street Journal national prime rate of interest in effect
from time to time (the "Prime Rate") from the date of such distributions or
excess payments to the date of determining such Enterprise Value minus (b)
the sum of (i) the amount of all capital contributions made to Buyer (valued
at fair market value as of the date of such contribution) plus (ii) interest
on such capital contributions at the Prime Rate from the date of such capital
contributions to the date of determining such Enterprise Value.
In no event shall the amount of such Contingent Payment exceed $35,000,000
plus interest as provided below.
In determining such Enterprise Value, payments to Affiliates in excess of
their reasonable value shall be added back to cash flow, income or other
similar computations.
The parties hereto agree to negotiate in good faith concerning additional
adjustments to the calculation of the Contingent Payment to address
extraordinary charges or events with the respect to the Buyer which were not
contemplated by the parties hereto as of the date hereof.
For purposes of this Exhibit, the following definitions shall apply:
"AFFILIATE" shall mean, with respect to any Person (a) each Person that,
directly or indirectly, owns or controls, whether beneficiary, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the equity
or voting interest of such Persons, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person's officers, descendants of individuals of any of the foregoing. For
the purposes of this definition, "CONTROL" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other
entity or government (whether federal, state, county, city, municipal, local,
foreign, or otherwise, including any instrumentality, division, agency, body
or department thereof).
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5. PAYMENT OF CONTINGENT PAYMENT. The Contingent Payment shall be
paid in cash, or by wire transfer or certified or cashier's check on or
before the 30th day following the determination of the Contingent Payment
pursuant to Section 4 above and shall be accompanied by interest from the
date as to which the Enterprise Value is determined to the date of payment at
the Prime Rate.
6. DEBTOR-CREDITOR RELATIONSHIP. The parties intend for Seller to be
viewed as an unsecured creditor of Buyer with respect to the Contingent
Payment. Nothing in the APA (including this Amendment) shall be construed as
creating a partnership or joint venture between Seller and Buyer.
7. ACCESS TO RECORDS. Buyer shall provide to Seller access to Buyer's
officers and employees and to Buyer's books and records and all financial
information including projections as is reasonably necessary to calculate
Enterprise Value.
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RESOLUTIONS OF THE BOARD OF DIRECTORS
OF
▇▇▇▇▇▇ INDUSTRIAL GROUP, INC.
(Designating the preferences, limitations, and relative rights
of the Series ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇)
WHEREAS, the board of directors of the Corporation is authorized by the
Corporation's articles of incorporation to issue shares of preferred stock
not to exceed 2,000,000, no par value, from time to time in one or more
series; and
WHEREAS, the articles of incorporation authorizes the board of directors
to determine the preferences, limitations, and relative rights of any series
of preferred stock; and
WHEREAS, the board of directors now desires to designate a series of
preferred stock pursuant to its authority;
NOW, THEREFORE, BE IT RESOLVED, that the board of directors of ▇▇▇▇▇▇
Industrial Group, Inc. hereby designates 15,000 shares of its authorized
non-par value preferred stock as a series designated "Series ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇"; and it is
RESOLVED, that the preferences, limitations and relative rights of the
Series 1999A Preferred are as follows:
Except as otherwise provided herein, dividends on each share of
the Series 1999A Preferred shall accrue at the rate of 8% per annum of the
sum of the (i) Liquidation Value (as hereafter defined) thereof plus (ii)
all accumulated and unpaid dividends thereon as of the immediately
preceding Dividend Reference Date (as hereafter defined). Such dividends
shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends.
No dividends can be paid on any share of Common Stock until all
accumulated dividends on the Series 1999A Preferred have been paid.
Dividends on the Series 1999A Preferred shall be paid annually on
the last day of each March beginning March 31, 2000, ("Dividend Reference
Date") either, at the option of the Corporation, in cash or by issuance of
that number of additional shares of Series 1999A Preferred equal to the
dividend payable divided by 1,000; provided, however, that no dividends on
the Series 1999A Preferred shall be declared by the board of directors of
the Corporation or paid or set apart for payment by the Corporation at such
time as, and to the extent that, the terms and provisions of any agreement
of the Corporation, including any agreement relating to its indebtedness,
or any provisions of
the Corporation's articles of incorporation or a declaration relating to
any series of preferred shares ranking senior to the Series 1999A Preferred
as to dividends, prohibit such declaration, payment or setting apart for
payment or provide that such declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or if
such declaration or payment will be prohibited by law. Notwithstanding
the foregoing, dividends on the Series 1999A Preferred shall accrue whether
or not the Corporation has earnings, whether or not there are funds legally
available for payment of such dividends and whether or not such dividends
are declared.
The Series 1999A Preferred shall not have any voting powers
either general or specified.
The shares of Series 1999A Preferred shall not be subject to
conversion into any other securities of the Corporation.
The Corporation shall purchase or redeem five years after the
date of initial issuance of any of such shares (herein the "Maturity
Date"), the entire amount of the Series 1999A Preferred then issued and
outstanding, and pay the holders of the shares so purchased or redeemed an
amount equal to $1,000.00 per share plus the unpaid accumulated dividends
accrued thereon (including such dividends which have accrued but not been
declared). In the event any of the shares of Series 1999A Preferred are
not tendered for redemption hereunder, the Corporation may deposit the
aggregate redemption price with any bank or trust company in the City of
Columbus, Ohio named in a notice sent to the holders of the Series 1999A
Preferred, payable in the amounts stated to the respective record holders
of the shares to be redeemed on endorsement and surrender of their stock
certificates, and upon the making of such deposit the holders shall cease
to be shareholders with respect to the Series ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and from and
after the making of such deposit the holders shall have no interest in or
claim against the Corporation with respect to the shares of Series 1999A
Preferred, but shall be entitled only to receive the monies from the bank
or trust company without interest. Any monies unclaimed at the end of one
year from the date of the deposit shall be repaid to the Corporation.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, there shall be paid to the holders of the
Series 1999A Preferred $1,000.00 per share ("Liquidation Value") plus
accrued and unpaid dividends before any sum shall be paid to or any assets
distributed among the holders of the Common Stock; and after such payment
to the holders of the Series 1999A Preferred all remaining assets and funds
of the Corporation shall be paid to the holders of the Common Stock
according to their respective shares without further participation by the
holders of the Series 1999A Preferred.
The rights and preferences conferred here on the Series 1999A
Preferred shall not be changed or altered or revoked without the consent of
the holders of the majority of the Series 1999A Preferred outstanding at
the time.
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The consolidation or merger of the Corporation at any time, or
from time to time with any other corporation, shall not be regarded or
construed to be a liquidation, dissolution or winding up of the Corporation
within the meaning herein, but no such consolidation or merger shall in any
way impair the rights of the Series 1999A Preferred.
The Corporation may issue one or more additional series of
preferred stock without the consent of the holders of the Series 1999A
Preferred so long as the ranking as to preference on liquidation,
dissolution or winding up of the Corporation is either subordinate to such
rights of the Series 1999A Preferred or on a parity with the Series 1999A
Preferred.
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