EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ULTRA PAC, INC.
AND
CHARGEURS ACQUISITION COMPANY
Dated as of April 22, 2000
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EXHIBITS:
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Exhibit A Form of Supply Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Form of Consent, Recognition and Attornment Agreement
Exhibit D Reserved
Exhibit E Reserved
Exhibit F Reserved
Exhibit G Reserved
Exhibit H Reserved
Exhibit I Reserved
Exhibit J Reserved
Exhibit K Reserved
Exhibit L Form of Insurance Certificate
SCHEDULES:
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Schedule 1.2 Excluded Assets
Schedule 1.4 Reserved
Schedule 1.8 (2) Net Asset Items
Schedule 1.9(c) Earn Out Payment Example
Schedule 3.7 Financial Statements
Schedule 3.8 No Material Adverse Change
Schedule 3.9 Tax Matters
Schedule 3.10 Compliance with Laws
Schedule 3.10 (a) Permits
Schedule 3.11 No Breach
Schedule 3.12 Actions and Proceedings
Schedule 3.13 Contracts
Schedule 3.14 Consents and Approvals
Schedule 3.15.1 (a) Owned Real Property
Schedule 3.15.1 (b) Owned Property Title Commitments
Schedule 3.15.2 (a) Leased Real Property
Schedule 3.15.2 (b) Leased Property Title Commitments
Schedule 3.15.2 (c) Lease Defaults
Schedule 3.15.2 (d) Easements
Schedule 3.15.3 Entire Premises
Schedule 3.16 Intangible Property
Schedule 3.17 Retained Assets
Schedule 3.18 Suppliers and Distributors
Schedule 3.19 (a) Employee Benefit Plans; Retiree Liability
Schedule 3.20 Insurance
Schedule 3.21 Operations of the Seller
Schedule 3.23 Environmental Matters
Schedule 3.23 A Facility Permits
Schedule 7.2 (1) Title Insurance Policy Requirements
Schedule 7.2 (2) Survey Requirements
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of April 22,
2000, by and between ULTRA PAC, INC. (the "Seller"), a Minnesota
corporation, and CHARGEURS ACQUISITION COMPANY (the "Buyer"), a Delaware
corporation, relating to the sale by the Seller to the Buyer of the Assets
(as defined below) used in the conduct of the Business (as defined in
Section 12.1) of the Seller.
WHEREAS, the Buyer wishes to purchase from the Seller, and the
Seller wishes to sell, assign and transfer to the Buyer, the Assets (as
defined herein) used or owned by the Seller in connection with the conduct
of the Business, and the Buyer has agreed to assume the Assumed Liabilities
(as defined herein), upon the terms and conditions hereinafter set forth.
Certain capitalized terms used in this Agreement have the
meanings assigned to them in Section 12 herein.
Accordingly, the parties agree as follows:
1. Sale of Assets and Assumption of Liabilities.
1.1 Sale of Assets. At the closing provided for in Section 2
(the "Closing") and subject to the terms and conditions of this Agreement,
the Seller shall sell to the Buyer, and the Buyer shall purchase from the
Seller, all of the properties, assets and rights (other than the Excluded
Assets) primarily relating to or used or held for use in connection with
the Business as the same may exist on the Closing Date (collectively, the
"Assets"), including, without limitation, the following, in each case,
primarily with respect to the Business:
(a) all machinery, equipment, tools, leasehold
improvements, furniture and fixtures and other fixed assets of the Seller
(including, but not limited to, any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other
person);
(b) the Owned Real Property and the leasehold interest
constituting the Leased Real Property, including therein all rights of
Seller and IPC (as defined herein) to the Olympia Marble Lease and any
construction-in-progress;
(c) all inventories of finished products, raw materials,
work-in- progress, goods, spare parts, supplies, replacement and component
parts, and office and other supplies owned by the Seller (collectively, the
"Inventories");
(d) all rights of the Seller in and to products sold or
leased by the Seller in the conduct of the Business (including, but not
limited to, products hereafter returned or repossessed and unpaid Seller's
right of rescission, replevin, reclamation and rights to stoppage in
transit);
(e) all rights of the Seller under all contracts,
including, without limitation, all Contracts (as defined herein),
arrangements, licenses, leases, Permits (as defined herein) and other
agreements, including, without limitation, any right to receive payment for
products sold or services rendered, and to receive goods and services,
pursuant to such agreements and to assert claims and take other rightful
actions in respect of breaches, defaults and other violations of such
contracts, arrangements, licenses, leases and other agreements and
otherwise;
(f) all prepaid expenses, advance payments and deposits
on leases, contracts, including, without limitation, all Contracts and
other agreements, paid by the Seller or any Predecessor;
(g) all notes receivable held by the Seller (without any
guaranty of collectibility from the Seller) and all notes, bonds and other
evidences of indebtedness of and rights to receive payments from any person
held by the Seller;
(h) subject to the provisions of Section 1.2(b) below,
all Intellectual Property (including the rights conveyed to the Buyer in
Section 5.13 of this Agreement) and all rights thereunder or in respect
thereof primarily relating to or used in or held for use in connection with
the Business (including Intellectual Property rights under research or
development) by the Seller, including but not limited to, rights to ▇▇▇ for
and remedies against past, present and future infringements or
misappropriations thereof, all income, royalties, damages and payments due
or payable at the Closing or thereafter (including, without limitation,
damages or payments for past or future infringements or misappropriations
thereof), any and all corresponding rights that, now or hereafter, may be
secured, and rights of priority and protection of interests therein under
the laws of any jurisdiction worldwide and all tangible embodiments thereof
(together with all Intellectual Property rights included in the other
clauses of this Section 1.1, the "Intellectual Property Assets");
(i) all books, records, manuals and other materials (in
any form or medium), including, without limitation, all records and
materials maintained at the headquarters or other locations of the Seller,
advertising matter, catalogues, price lists, correspondence, mailing lists,
lists of customers, distribution lists, photographs, production data, sales
and promotional materials and records, purchasing materials and records,
personnel records, manufacturing and quality control records and
procedures, blueprints, research and development files, records, data and
laboratory books, Intellectual Property disclosures, media materials and
plates, accounting records, sales order files and litigation files;
(j) to the extent their transfer is permitted by law,
all Permits and Environmental Permits, including all applications therefor;
(k) all rights to causes of action, choses in action,
lawsuits, judgments, claims (including insurance claims, to the extent that
the Buyer is added as an additional insured under insurance policies or
assigned rights thereto pursuant to Section 5.7 hereof or otherwise has
rights under such policies pursuant to this Agreement) and demands of any
nature available to or being pursued by the Seller or any Predecessor with
respect to the Business or the ownership, use, function or value of any
Asset, whether arising by way of counterclaim or otherwise;
(l) all guarantees, warranties, indemnities and similar
rights in favor of the Seller, any Predecessor or Ivex with respect to any
Assets;
(m) all interest in and to all rights and benefits
accruing in the Seller as lessee under all leases and rental agreements
covering machinery, equipment, tools, supplies, furniture or other fixed
assets;
(n) all of the Seller's right, title and interest in and
to all goodwill relating to the Business throughout the world;
(o) all of the outstanding capital stock of the Mexican
Subsidiary; and
(p) all other tangible, intangible and inchoate property
and rights relating to the Business.
1.2 Excluded Assets. The Seller will retain and not transfer,
and the Buyer will not purchase or acquire, the following assets
(collectively, the "Excluded Assets"):
(a) amounts representing Tax assets of any nature
including, without limitation, refunds of any Taxes attributable to periods
prior to Closing and any Tax attributes, such as Tax loss carryforwards of
the Seller; and, for the avoidance of doubt, such amounts shall be excluded
from the Closing Date Balance Sheet;
(b) subject to the provisions of Section 5.13 hereof, any
right, title or interest in the names "Ivex" and "Ultra Pac" or any part or
variation of such names or anything confusingly similar thereto;
(c) all accounts receivable not set forth on the Closing
Date Balance Sheet, customer lists and other goodwill, in each case, to the
extent relating to the Seller's cohesive packaging business;
(d) cash as of the Closing Date;
(e) fee interest to Bellwood facility;
(f) all Tax Returns and Tax records of the Seller; and
(g) assets not primarily relating to the Business,
including, without limitation, those assets listed on Schedule 1.2 hereto.
Any asset, property or right of the Seller owned, used or held
primarily for use in the conduct of the Business and omitted from the
definition of "Excluded Assets" shall be included in the definition of
"Assets." The parties covenant and agree that they shall promptly take all
action reasonably required, either before or after the Closing to convey
the Assets to the Buyer in accordance with the terms of this Agreement.
1.3 Assumption of Liabilities
Subject to the terms and conditions set forth herein, at the
Closing, the Buyer shall assume, and agree to pay, honor and discharge when
due, all of the following liabilities relating to the Business and the
Assets (collectively, the "Assumed Liabilities"):
(1) any and all liabilities, obligations and commitments
relating to the Business or the Assets that are (x) reflected in the
Closing Date Balance Sheet, or (y) otherwise assumed under the provisions
of this Agreement; and
(2) any and all liabilities, obligations and commitments
(whether accrued, absolute or contingent, whether known or unknown) arising
out of the Business or the operation of the Assets prior to the Closing
Date, including, without limitation, (i) any and all liabilities,
obligations and commitments arising from the Contracts set forth on
Schedule 3.13 and (ii) subject to Section 1.4, all liabilities arising
under Environmental Laws from the conduct of the Business or the ownership,
lease or operation of the Assets prior to the Closing Date.
Subject to the terms and conditions set forth herein, and in
addition to and not in limitation of the assumption of the Assumed
Liabilities by the Buyer, the Buyer shall be solely responsible for the
timely payment or other satisfaction of all of the liabilities, obligations
and commitments arising in connection with the conduct of the Business or
the use, ownership or operation of the Assets on and after the Closing
Date. No Tax liabilities of the Seller or its Affiliates arising prior to
the Closing Date shall be included, or be deemed to be included, within the
definition of the Assumed Liabilities.
Section 1.4 Excluded Liabilities. Notwithstanding the
provisions of Section 1.3 or any other provision hereof or any Schedule or
Exhibit hereto and regardless of any disclosure to the Buyer, the Buyer
shall not assume any of the following liabilities, obligations or
commitments (whether accrued, absolute or contingent, whether known or
unknown, whether disclosed or not disclosed, whether due or to become due
and whether arising from the Assets or otherwise) of the Seller or its
Affiliates (all such liabilities, the "Excluded Liabilities"): (i) all bank
and other indebtedness of the Seller and its Affiliates, except to the
extent expressly set forth on the Closing Date Balance Sheet; (ii) any and
all liabilities and obligations arising under Environmental Laws with
respect to the Bellwood facility; (iii) any and all liabilities and
obligations arising under Environmental Laws with respect to the ▇▇▇▇▇▇
facility; provided, however, that if Buyer or any Affiliate of Buyer
acquires title to such facility pursuant to the terms and conditions of the
New Sublease, then all of these liabilities shall become, in accordance
with Section 10.6(b) hereof, "Assumed Liabilities" for all purposes of this
Agreement; (iv) any and all liabilities and obligations relating to or
arising from all bonuses, incentive and similar payments payable to the
employees or consultants of the Seller or Ivex in connection with the sale
of the Assets and the Business and the consummation of the Contemplated
Transactions; (v) any and all liabilities and obligations relating to or
arising from workers' compensation claims of the employees of the Seller
arising prior to the Closing Date; (vi) any and all liabilities and
obligations relating to or arising from the businesses conducted by the
Seller and its Affiliates (including therein the consumer packaging
business distributed by Seller to IPC pursuant to the Distribution
Agreement) other than the Business or the Assets; and (vii) (A) except as
otherwise provided in this Agreement, any liability of the Seller for
income, capital gains, franchise, transfer, sales, use and other Taxes (as
defined herein) whether or not relating to the Business and whether or not
incurred prior to the Closing or (B) any liability of the Seller for the
unpaid Taxes of any Person, including Taxes imposed on the Seller as a
transferee or successor, by contract, or otherwise; and (viii) any and all
liabilities relating to or arising from all intercompany indebtedness and
accounts owed by the Business to the Seller or its Affiliates.
Section 1.5 Consent of Third Parties. Notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any Permit, Environmental Permit,
instrument, Contract, lease, or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party or governmental or regulatory body
would constitute a breach or violation thereof or affect adversely the
rights of the Buyer or the Seller thereunder, and any transfer or
assignment to the Buyer by the Seller of any interest under any such
Permit, Environmental Permit, instrument, Contract, lease or other
agreement or arrangement that requires the consent of a third party shall
be made subject to such consent or approval being obtained. In the event
any such consent or approval is not obtained by the Seller as contemplated
by Section 7.12 on or prior to the Closing Date, the Seller, if the Closing
shall have occurred, shall continue to use all reasonable efforts to obtain
any such approval or consent after the Closing Date. Until such time as
such consent or approval has been obtained, the Seller and each of its
Affiliates will cooperate with the Buyer in any lawful and commercially
practicable arrangement to provide that the Buyer shall receive the
interests of the Seller and its Affiliates, as the case may be, in the
benefits under any such instrument, contract, lease, Permit, Environmental
Permit, or other agreement or arrangement, including performance by the
Seller and its Affiliates, as the case may be, as agent. Nothing in this
Section 1.5 shall be deemed a waiver by the Buyer of its right to have
received on or before the Closing Date an effective assignment of all of
the Assets nor shall this Section 1.5 be deemed to constitute an agreement
to exclude from the Assets any assets described under Section 1.1.
1.6 Purchase Price. The Assets will be purchased by the Buyer
from the Seller on the Closing Date (as defined in Section 2.1), and
subject to the terms and conditions of this Agreement, for an aggregate
purchase price (the "Base Purchase Price") of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (U.S. $113,000,000) payable as provided in Section
1.7, and subject to adjustment in accordance with Sections 1.8 and 1.9
hereof (the Base Purchase Price, as so adjusted, the "Purchase Price").
1.7 Payments at the Closing. At the Closing, the Base Purchase
Price, net of the funds of the Buyer (if any) that are required to be
deposited in the escrow account established pursuant to the ▇▇▇▇ Escrow
Agreement, as defined herein, shall be paid by the Buyer to the Seller in
cash by wire transfer of immediately available funds.
1.8 Base Purchase Price Adjustment.
(1) The Base Purchase Price shall be adjusted after the
Closing Date as follows:
If the amount of net assets (being the difference between
assets and liabilities), exclusive of goodwill ("Closing Net Assets"),
reflected on the Closing Balance Sheet (as defined below), is greater than
Forty-four million five hundred thousand United States Dollars
($44,500,000), the Base Purchase Price shall be increased by an amount
equal to the difference between the amount of such Closing Net Assets and
$44,500,000. If the amount of Closing Net Assets is less than $44,500,000,
the Base Purchase Price shall be decreased by an amount equal to the
difference between Closing Net Assets and $44,500,000.
(This adjustment is hereinafter referred to as the "Net Assets
Adjustment")
The Buyer shall pay to the Seller or Seller shall pay to the
Buyer, as the case may be, an amount in cash equal to the Net Assets
Adjustment within fifteen (15) days after the finalization of the Closing
Balance Sheet (as hereinafter defined).
(2) Within ninety (90) days after the Closing Date, the
Buyer shall prepare an audited consolidated balance sheet of the Business
as of the Closing Date but immediately prior to the Closing (the "Draft
Closing Balance Sheet") containing the items listed on Schedule 1.8(2)
hereto. The Draft Closing Balance Sheet will fairly present the items
listed on Schedule 1.8(2) hereto as of the Closing Date and, except as
noted on Schedule 1.8(2), shall be prepared in accordance with GAAP applied
on a basis consistent with that of the Financial Statements (as defined in
Section 3.7). With respect to the preparation of the Draft Closing Balance
Sheet, subject to Schedule 1.8(2), no change in accounting principles shall
be made from those utilized in preparing the Financial Statements and the
Balance Sheet including, without limitation, with respect to the nature of
accounts, or the determination of the level of reserves or level of
accruals. For purposes of the preceding sentence, "changes in the
accounting principles" include all changes in accounting principles,
policies, practices, procedures or methodologies with respect to financial
statements, their classification or their display, as well as all changes
in practices, methods, conventions or assumptions (unless required by
objective changes in underlying events) utilized in making accounting
estimates. Buyer and Seller shall use their best efforts to complete a
physical count of the Inventories on or before the close of business on the
Closing Date. Buyer's independent certified public accountants ("Buyer's
Accountants") and the Seller's independent certified public accountants
("Seller's Accountants") shall be entitled to participate in, observe and
review such audit of the inventory. The Draft Closing Balance Sheet
(together with any work papers or other such items as the Seller shall
reasonably request) shall be delivered in written form to the Seller not
more than ninety (90) days after the Closing Date and shall become final
and binding upon the parties unless the Seller gives written notice of its
disagreement (a "Notice of Disagreement") to the Buyer within thirty (30)
days after receiving the Draft Closing Balance Sheet specifying the
Seller's disagreement with the Draft Closing Balance Sheet. If a Notice of
Disagreement is received by the Buyer in a timely manner, then the Draft
Closing Balance Sheet shall become final and binding upon the parties on
the earlier of (x) the date the Seller and the Buyer resolve in writing any
differences they may have with respect to any matter specified in the
Notice of Disagreement and (y) the date any Disputed Matters (as
hereinafter defined) are finally resolved in writing by the Arbitrator (as
hereinafter defined). Any such Notice of Disagreement shall state in
reasonable detail the nature of any disagreement so asserted. During a
period of thirty (30) days following the date of the Notice of
Disagreement, the Seller and Buyer shall promptly attempt to resolve in
writing any differences that they may have with respect to any matter
specified in the Notice of Disagreement. If, at the end of such thirty (30)
day period, amounts remain in dispute, then all such matters as specified
in the Notice of Disagreement as to which such written agreement has not
been reached (the "Disputed Matters") shall be submitted to arbitration.
All of the costs and expenses of preparing the Draft Closing Balance Sheet
shall be borne by the Buyer.
In the event a Disputed Matter is submitted to arbitration for
review by an arbitrator (the "Arbitrator"), and the Buyer and the Seller
are unable to agree upon the identity of the Arbitrator, the Seller and the
Buyer shall each select one of the "Big Five" accounting firm having no
other relationship with any party hereto during the past two (2) years and
such accountants shall agree upon the identity of the Arbitrator, and if
such accountants cannot agree as to the identity of the Arbitrator, then
each accounting firm shall select one nominee and the Arbitrator shall be
chosen by lot. The fees and expenses of the Arbitrator with respect to the
settlement of all Disputed Matters shall be borne equally by Buyer, on one
hand, and the Seller, on the other hand. The Arbitrator shall determine,
based solely on the provisions of this Section 1.8 and the presentations by
the Seller and the Buyer, and not by independent review, only those issues
still in dispute and only as to whether such amounts were arrived at in
conformity with GAAP applied on a basis consistent with that of the
Financial Statements (except as noted on Schedule 1.8(2)), and Section
1.8(2) hereof. The Arbitrator's determination shall be made within thirty
(30) days of the Arbitrator's selection, shall be set forth in a written
statement delivered to the Seller and the Buyer and shall be final, binding
and conclusive.
(3) As used herein, "Closing Balance Sheet" shall refer
to the Draft Closing Balance Sheet in the form in which it becomes final in
accordance with the foregoing procedure.
(4) Prior to Closing, Buyer and Seller shall agree on the
allocation of the portion of the Purchase Price (as may be adjusted
pursuant to Section 1.8 only) that is allocable to real estate, equipment,
machinery, fixtures, furniture, vehicles, leasehold improvements,
trademarks and know-how and the stock of the Mexican Subsidiary. Within
fifteen (15) days following the finalization of the Closing Date Balance
Sheet, Buyer and Seller shall agree upon the allocation of the balance of
the Purchase Price among the remaining Assets. All such allocations shall
be made in accordance with the principles of Section 1060 of the Code.
Buyer and Seller agree to file all Tax Returns in a manner that is
consistent with such allocations, and to take no position that is
inconsistent with such allocations in any audit or other proceeding.
1.9 Earn-Outs.
(a) Earn-Out Payments. In addition to the payment of the
Base Purchase Price as provided for herein (as adjusted pursuant to Section
1.8), the Buyer shall pay to the Seller, as additional consideration for
the sale of the Assets and the Business, subject to the terms and
conditions set forth in this Section 1.9, an additional amount (an
"Earn-Out Payment") in cash in accordance with the following terms:
(i) in the event that, with respect to the Business,
earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the fiscal year ending December 31, 2000 ("Fiscal 2000") equals at least
$15,216,000 (the "Fiscal 2000 Target"), the Buyer shall pay to the Seller
an amount of $1,000,000 in cash;
(ii) in the event that, with respect to the Business,
EBITDA for the fiscal year ending December 31, 2001 ("Fiscal 2001") equals
at least $19,306,000 (the "Fiscal 2001 Target"), the Buyer shall pay to the
Seller an amount of $1,000,000 in cash (in addition to any Earn-Out Payment
that may be payable with respect to Fiscal 2000 pursuant to subsection
(a)(i) above); and
(iii) in the event that, with respect to the Business,
EBITDA for the fiscal year ending December 31, 2002 ("Fiscal 2002") equals
at least $22,213,000 (the "Fiscal 2002 Target," and together with the
Fiscal 2000 Target and the Fiscal 2001 Target, sometimes collectively
referred to herein as the "Earn-Out Targets"), the Buyer shall pay to the
Seller an amount of $1,000,000 in cash (in addition to any Earn-Out
Payments that may be payable with respect to Fiscal 2000 and Fiscal 2001
pursuant to subsections (a)(i) and (a)(ii) above).
The Buyer and Seller agree and acknowledge that EBITDA shall be
determined in accordance with the provisions of Section 1.9(d), and shall
only include EBITDA generated from the conduct of the Business by the Buyer
after the Closing Date, and shall not include any EBITDA generated by
operations of the Buyer not involving the Business. In the event that Buyer
shall transfer any material portion of the Assets or any material portion
of the Business to an Affiliate, EBITDA generated by such Affiliate as a
result of the operations of such Assets or the conduct of such portion of
the Business shall be included in the Business' EBITDA. If Buyer shall
transfer any material portion of the Assets or any material portion of the
Business to a third party other than an Affiliate of the Buyer and such
transfer has an effect on the Business' EBITDA, then at the request of
Buyer or Seller, Buyer and Seller shall negotiate in good faith with a view
to agreeing on new Earn-Out Targets that will reflect the impact of such
transfer on EBITDA. EBITDA shall be calculated without giving effect to
extraordinary items (including extraordinary gains and losses) as
contemplated by GAAP or other one-time charges or gains, such as, with
respect to charges, "restructuring charges." The Business's EBITDA may be
reduced by reasonable charges or allocations from Buyer or its Affiliates
that reasonably primarily benefit the Business.
(b) Partial Earn-Out Payments. If, in any of Fiscal 2000,
Fiscal 2001 or Fiscal 2002, the respective Earn-Out Targets attributable to
such years are not satisfied but at least 90% of the applicable Earn-Out
Target shall have been reached, the Seller shall nevertheless be entitled
to be paid that portion of the full Earn-Out Payment (that would otherwise
have been payable with respect to such fiscal year) equal to the sum of (x)
$500,000 and (y) the amount which is obtained by the product of (i) $50,000
and (ii) the number of percentage points (not to exceed ten) by which the
amount obtained by dividing (A) actual EBITDA for such fiscal year by (B)
the Earn-Out Target for such fiscal year exceeds 90 percentage points.
(c) Make-Up Earn-Out Payments. Notwithstanding the
provisions of Section 1.9(a) (i), (ii) and (iii) above, in the event that
any of the Earn-Out Payments (or any portion thereof, pursuant to
subsection (b) above) provided for above are not actually paid as a result
of the failure to satisfy any of the respective Earn-Out Targets, but the
sum of EBITDA for each of Fiscal 2000, Fiscal 2001 and Fiscal 2002 shall
represent at least 90% of the sum of the Earn-Out Targets (such ratio, the
"Final EBITDA Ratio"), such amounts not actually paid shall be paid
subsequent to Fiscal 2002 (on the date determined pursuant to Section
1.9(d) below) in an amount equal to the difference between: (x) the sum of
$1,500,000 plus the product of (i) $150,000 and (ii) the number of
percentage points (not to exceed ten) by which the Final EBITDA Ratio
exceeds 90 percentage points, and (y) the sum of the Earn-Out Payments or
partial Earn-Out Payments, as the case may be, previously paid or owing.
Schedule 1.9(c) sets forth an example of such calculation.
(d) Within ninety (90) days after the end of each of
Fiscal 2000, Fiscal 2001 and Fiscal 2002, the Buyer shall cause to be
prepared an audited income statement (the "Statement") setting forth EBITDA
for such year, as well as the information used in determining such EBITDA.
The Statement shall be prepared in accordance with GAAP. The Seller shall
then have thirty (30) days, following the receipt thereof, to review the
Statement, and the Statement will become final and binding upon the parties
unless the Seller gives written notice of its disagreement (a "Statement
Notice of Disagreement") to the Buyer within thirty (30) days after
receiving the Statement specifying the Seller's disagreement with the
Statement. If a Statement Notice of Disagreement is received by the Buyer
in a timely manner, then the Statement shall become final and binding upon
the parties on the earlier of (x) the date the Seller and the Buyer resolve
in writing any differences they may have with respect to any matter
specified in the Statement Notice of Disagreement and (y) the date any
Statement Disputed Matters (as hereinafter defined) are finally resolved in
writing by the Arbitrator (as hereinafter defined). Any such Statement
Notice of Disagreement shall state in reasonable detail the nature of any
disagreement so asserted. During a period of thirty (30) days following the
date of the Statement Notice of Disagreement, the Seller and Buyer shall
promptly attempt to resolve in writing any differences that they may have
with respect to any matter specified in the Statement Notice of
Disagreement. If, at the end of such thirty (30) day period, any amounts
remain in dispute then all such matters as specified in the Statement
Notice of Disagreement as to which such written agreement has not been
reached (the "Statement Disputed Matters") shall be submitted to
arbitration. All of the costs and expenses of preparing the Statement shall
be borne by the Buyer.
In the event a Statement Disputed Matter is submitted to
arbitration for review by an arbitrator (the "Statement Arbitrator"), if
the Buyer and the Seller are unable to agree upon the identity of the
Statement Arbitrator, the Seller and the Buyer shall each select one of the
"Big Five" accounting firm having no other relationship with any party
hereto during the then previous two (2) years and such accountants shall
agree upon the identity of the Statement Arbitrator, and if such
accountants cannot agree as to the identity of the Statement Arbitrator,
then each accounting firm shall select one nominee and the Statement
Arbitrator shall be chosen by lot. The fees and expenses of the Statement
Arbitrator with respect to the settlement of all Statement Disputed Matters
shall be borne equally by the Buyer and the Seller. The Statement
Arbitrator's determination shall be made within thirty (30) days of the
Statement Arbitrator's selection, shall be set forth in a written statement
delivered to the Seller and the Buyer and shall be final, binding and
conclusive.
The Buyer shall pay to the Seller the Earn-Out Payment as
calculated and finally determined in accordance with this Section 1.9
within thirty (30) days after such final determination.
(e) Interest. Interest, payable by the Buyer, shall
accrue on the amount of each Earn-Out Payment or any payment pursuant to
Section 1.9(c) (without duplication) at a rate per annum of 7.0% from and
after the Closing Date to the date such Earn- Out Payment is made.
2. The Closing.
2.1 Closing; Closing Date. The Closing of the sale and purchase
of the Assets contemplated hereby shall take place (a) at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon as practicable following satisfaction or waiver of
all of the conditions set forth in Sections 6, 7 and 8 hereof, but in no
event later than May 31, 2000 (unless extended by the Seller and the Buyer
in writing), or (b) at such other place, time or date as the Buyer and the
Seller agree in writing. The time and date upon which the Closing occurs is
herein called the "Closing Date."
3. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer as provided in this Section 3:
2.1 Due Incorporation and Authority.
(1) Each of the Seller and Ivex de Mexico S.A. de C.V.
(the "Mexican Subsidiary") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
lease and operate its respective properties and to carry on its respective
businesses as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not have a material adverse effect on the Seller's ability
to consummate the transactions contemplated hereby (the "Contemplated
Transactions").
(2) The Seller has full corporate power and authority to
execute and deliver this Agreement and to consummate the Contemplated
Transactions. The execution, delivery and performance by the Seller of this
Agreement and the consummation of the Contemplated Transactions have been
duly authorized by the Board of Directors of the Seller, and no other
corporate action on the part of the Seller is necessary to authorize the
execution and delivery by the Seller of this Agreement or the consummation
of the Contemplated Transactions. No vote of, or consent by, the holders of
any class or series of capital stock issued by the Seller or Ivex is
necessary to authorize the execution and delivery by the Seller of this
Agreement or the consummation of the Contemplated Transactions.
3.2 Execution, Validity of Agreement. This Agreement has been
duly executed and delivered by the Seller, and assuming due and valid
authorization, execution and delivery hereof by the Buyer, is a valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other
similar laws of general application affecting enforcement of creditors'
rights generally and (b) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject
to equitable defenses and would be subject to the discretion of the court
before which any proceeding therefor may be brought.
3.3 Capitalization of Mexican Subsidiary. The Mexican
Subsidiary is authorized to issue 1,000 shares of common stock, of which
1,000 shares are issued and outstanding. All of such shares have been duly
authorized and validly issued and are outstanding as fully-paid and
non-assessable shares. All of such outstanding shares are owned by the
Seller (except for director qualifying shares) and, as of the Closing Date,
shall be owned by the Seller free and clear of any Liens. There are no
shareholders' agreements, pooling agreements, voting trusts or other
agreements or understandings with respect to the voting of such shares. No
other class of shares of the Mexican Subsidiary is issued or outstanding.
The stock certificates, stock powers, endorsements, assignments and other
instruments to be delivered by the Seller to the Buyer at the Closing will
effectively vest in the Buyer good title to all the shares of the Mexican
Subsidiary, free and clear of all Liens, except restrictions on transfer
imposed by the Securities Act, any applicable state securities laws and any
applicable securities laws under the laws of Mexico. There is no
outstanding right, subscription, warrant, call, pre-emptive right, option,
or other agreement of any kind to purchase or otherwise to receive from the
Mexican Subsidiary any of the outstanding, authorized but unissued,
unauthorized or treasury shares or any other security of the Mexican
Subsidiary, and there is no outstanding security of any kind convertible
into any such capital stock.
3.4 Reserved.
3.5 Reserved.
3.6 Articles of Incorporation and Bylaws. Seller has provided
Buyer with true, complete and accurate copies of the Mexican Subsidiary's
Articles of Association and By- laws (certified by the Mexican Subsidiary's
secretary), as in effect on the date hereof.
3.7 Financial Statements. (1) True and complete copies of the
audited consolidated balance sheets of Ivex (as defined herein) as at
December 31, 1999 and December 31, 1998, together with consolidated
statements of operations, consolidated statements of changes in
stockholders' equity and cash flows for each of the two fiscal years ended
December 31, 1999 and December 31, 1998, all as audited by
PricewaterhouseCoopers LLP whose reports thereon are included therein
(collectively, the "Financial Statements"), are included in Schedule 3.7
hereto. The Financial Statements have been prepared from the books and
records of Ivex, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be stated in
the notes thereto) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations
and cash flows (and changes in financial position, if any) of Ivex as at
the dates and for the periods referred to therein. The unaudited
consolidated balance sheets of the Seller as of December 31, 1999 and 1998,
and the related unaudited consolidated statements of income and changes in
financial position for the years then ended, fairly present in all material
respects the financial position of the Seller as at such dates and the
results of operations of the Seller for such respective periods, in each
case in accordance with GAAP consistently applied for the periods covered
thereby. (The foregoing unaudited financial statements of the Seller as of
and for December 31, 1999 and December 31, 1998, are sometimes herein
called the "Unaudited Financials".)
(2) The unaudited consolidated balance sheet of the
Seller as of March 31, 2000 and the related unaudited consolidated
statement of income and changes in financial position for the three (3)
months then ended fairly present in all material respects the financial
position of the Seller as at such date and the results of operations of the
Seller for the three (3) months then ended, in each case in accordance with
GAAP applied on a basis consistent with that of the Financial Statements
(subject to normal year-end adjustments) and with all interim financial
statements of the Seller in respect of the fiscal year ended December 31,
1999. (The foregoing unaudited financial statements of the Seller as of
March 31, 2000 and for the three (3) months then ended are sometimes herein
called the "Interim Financials," the balance sheet included in the Interim
Financials is sometimes herein called the "Balance Sheet" and March 31,
2000 is sometimes herein called the "Balance Sheet Date".)
3.8 No Material Adverse Change. Except as set forth on Schedule
3.8 hereto, since December 31, 1999, no material adverse effect has
occurred nor has there been any damage, destruction or loss which could
have or has had a material adverse effect whether or not covered by
insurance.
3.9 Tax Matters.Except as set forth on Schedule 3.9:
(a) Tax Returns. All material federal, state, and local
Tax Returns required to be filed by Seller have been filed with the
governmental or regulatory bodies in all jurisdictions in which such Tax
Returns are required to be filed. All Tax Returns filed by Seller are true,
correct and complete in all material respects and are in compliance with
all applicable laws. All amounts shown as due with respect thereto have
been paid. Seller has not received any written notice of assessment or
intention to assess from any taxing authority, and to Seller's knowledge,
none of its Tax Returns are currently under examination or audit.
(b) Tax Liabilities on Assets. Seller has no material Tax
liabilities or Tax liens of any nature, whether accrued, absolute,
contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to Tax obligations of others, or
liabilities for Taxes due or accrued) which will encumber the Assets after
the Closing.
(c) U.S. Person. The Seller is a United States person
within the meaning of I.R.C.ss.7701(a)(30).
(d) Withholding Tax. The sale of the Assets by the Seller
to the Buyer pursuant to this Agreement is not subject to the withholding
tax provisions of subchapter A of Chapter 3 of the Code..
3.10 Compliance with Laws. Except as set forth on Schedule
3.10, the Seller and IPC and PPI (to the extent IPC and PPI owned or
operated the Business and the Assets) (IPC and PPI, and the entity or
entities of which they are the successors are, to the foregoing extent,
hereafter referred to as the "Predecessors") have complied, since the
beginning of the Statute of Limitations Period, in a timely manner with all
Laws except for violations or failures so to comply, if any, that are not
reasonably expected to have a material adverse effect. Schedule 3.10 (a)
sets forth all licenses, permits, consents, orders, approvals,
registrations with or from any governmental or regulatory body, that are
necessary or appropriate to conduct the Business or operate the Assets
(collectively, "Permits") except those Permits where the failure to have
such a Permit would not have a material adverse effect. All Permits of the
Seller are in full force and effect and there are, or, with respect to the
Predecessors, there were no violations of any Permit, except for violations
that would not have a material adverse effect. Notwithstanding the
foregoing, this Section 3.10 shall not apply to Environmental Laws (as
defined in Section 3.23 hereof) and any Permits required thereunder, which
are exclusively the subject of the representations contained in Section
3.23 hereof. All Permits of the Predecessors have been properly transferred
to, or reissued in the name of, Seller except where any such failure to do
so would not reasonably be expected to have a material adverse effect.
3.11 No Breach. Except as set forth on Schedule 3.11 hereto,
the execution, delivery and performance of this Agreement by Seller and the
consummation of the Contemplated Transactions will not (i) violate,
conflict with or result in the breach of any provision of the Articles of
Incorporation or Bylaws of the Seller; (ii) violate or result in the breach
of any of the terms of, result in a modification of, or otherwise give any
other contracting party the right to terminate, or declare a default under,
any Contract (as defined below); (iii) violate any order, writ, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, the Business or the Assets; (iv)
violate any Law applicable to the Business or the Assets; or (v) violate or
result in the revocation or suspension of any Permit, excluding from the
foregoing clauses (ii), (iii), (iv) and (v) such violations, breaches or
defaults which would not have a material adverse effect.
3.12 Actions and Proceedings. Except as set forth on Schedule
3.12 hereto, there are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or governmental or regulatory
body relating to the Business or the Assets and there are no actions, suits
or legal or administrative proceedings pending, or to the knowledge of the
Seller, threatened against or involving the Business or the Assets, except
for any orders, judgments, injunctions, awards, decrees, actions, suits or
proceedings which would not have a material adverse effect.
3.13 Contracts. Schedule 3.13 sets forth a complete and correct
list of all of the written and oral contracts, arrangements and agreements
(other than purchase orders, receivables and trade payables in the ordinary
course of business) to which the Seller is a party with an annual value (or
with respect to guaranties, potential value) in excess of $100,000 and
which relate to the conduct of the Business or the use or operation of the
Assets (the "Contracts"): (i) contracts with any current or former officer,
director, shareholder, employee or consultant; (ii) contracts with any
labor union or association representing any employee; (iii) contracts with
any person to manufacture, sell, distribute, broker or otherwise market any
of the products sold or marketed in the conduct of the Business; (iv)
contracts for the sale of any Assets other than in the ordinary course of
business or for the grant to any person of any option or preferential
rights to purchase any Assets; (v) joint venture, partnership and other
similar agreements; (vi) contracts containing covenants not to compete in
any line of business or with any person in any geographical area or
covenants of any other person not to compete with the Seller in any line of
business or in any geographical area; (vii) contracts relating to the
acquisition by the Seller of any operating business or the capital stock of
any other person; (viii) contracts relating to the borrowing of money; (ix)
contracts obligating the Seller to guaranty or otherwise support the
liabilities or obligations of any other person; (x) contracts relating to
the ownership, operation or use of any real property; or (xi) any other
contracts pursuant to the terms of which there is either a current or
future obligation of the Seller to make or receive payments in excess of
$100,000. There have been made available to the Buyer true and complete
copies of all of the Contracts. All of such Contracts are valid and binding
upon the Seller in accordance with their terms, the Seller is not in
default under any of such Contracts, nor is any other party to any such
Contract in default thereunder, except for any default which would not have
a material adverse effect.
The Predecessors obtained all consents and approvals necessary
in order for all contracts relating to the Business or the Assets
(including therein the Contracts) to be validly assigned to Seller and to
be enforceable by Seller against the other party (or parties) thereto,
except where the failure to obtain such consents and approvals would not
reasonably be expected to have a material adverse effect.
3.14 Consents and Approvals. Except pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and except as set forth on Schedule 3.14 hereto, and except where
the failure to obtain such consents or approvals or make such filings or
notices would not have a material adverse effect, the execution and
delivery by the Seller of this Agreement and the performance by the Seller
of its obligations hereunder do not require the Seller or Ivex to obtain
any consent or approval of, or make any filing with or give any notice to,
any governmental or regulatory body (collectively, the "Required
Consents"). The Predecessors obtained all consents and approvals necessary
in connection with the contribution of the Business to the Seller pursuant
to the Contribution Agreements, except where the failure to obtain such
consents and approvals would not reasonably be expected to have a material
adverse effect.
3.15 Real Estate.
3.15.1 Ownership of Real Property. The Seller has good
and marketable title to the land described in Schedule 3.15.1(a) hereto and
to all of the buildings, structures and other improvements located thereon
(collectively, the "Owned Real Property"), free and clear of any Liens or
other matters affecting title except (i) for the security interests of the
Seller's lenders that will be released simultaneously with the Closing,
(ii) as disclosed by the commitments from Chicago Title Insurance Company
attached hereto as Schedule 3.15.1(b) (the "Owned Property Title
Commitments") to issue a title insurance policy with respect to the Owned
Real Property; (iii) Liens for current taxes and assessments not yet due
and payable or that are being contested in good faith so long as such
contest does not involve any material danger of sale, forfeiture, loss of
any assets or claims against the Seller; (iv) for the security interests of
the City of Troy, Ohio that will be released simultaneously with the
Closing and (v) easements, rights of way, restrictions (including zoning
restrictions), restrictive covenants, matters of plat, minor defects or
irregulatories in title or other similar charges or encumbrances which do
not have a material adverse effect on the use of the Real Property.
3.15.2 Leased Properties and Easements. (1) All leases
and subleases pursuant to which the Seller leases real property as lessor
or lessee are set forth on Schedule 3.15.2(a) (the "Leased Real Property,"
and together with the Owned Real Property sometimes collectively referred
to as the "Real Property"). A commitment from Chicago Title Insurance
Company to issue a leasehold title policy with respect to the Leased Real
Property is attached hereto as Schedule 3.15.2(b) (the "Leased Property
Title Commitment" and, together with the Owned Property Title Commitments,
the "Title Commitments").
(2) All leases and subleases referred to in clause
(1) above are valid, binding and enforceable in accordance with their terms
and are in full force and effect. Except as set forth on Schedule 3.15.2(c)
, the Seller is not in material default under any such lease or sublease,
nor, to the knowledge of the Seller, is any other party to any such lease
or sublease in material default thereunder.
(3) Except as set forth on Schedule 3.15.2(d) or as
disclosed on the Title Commitments, there are no contracts, licenses,
rights-of-way, servitudes or easements of any type whatsoever
(collectively, the "Easements") under which the Seller uses or occupies or
has the right to use or occupy, now or in the future, any real property
owned by third parties.
3.15.3 Entire Premises. Except as set forth on Schedule
3.15.3, all of the land, buildings and structures used by the Seller in the
conduct of the Business or the operation of the Assets are included in the
Real Property. Except as set forth on Schedule 3.15.3, all of the
machinery, equipment and fixtures used by the Seller in the conduct of the
Business or the operation of the Assets at the Leased Real Property are
included in the Assets.
3.15.4 Additional Real Property Rights. The Owned Real
Property shall be deemed to include the following other property, rights
and easements, with respect to each parcel of Owned Real Property:
(1) All machinery, equipment and fixtures of every
kind and nature whatsoever now used in connection with the operation and
maintenance of the Owned Real Property, including, without limiting the
generality of the foregoing, any of the following: boilers, pumps, tanks,
electric panel switchboards, lighting equipment and wiring, heating,
plumbing and ventilating apparatus, elevators, escalators, conveyors,
hoists, platforms, stairways and tracks, refrigerating, air-conditioning
and air-cooling equipment and, in addition thereto, all machinery,
apparatus, appliances, tools, fittings and articles of personal property of
whatever kind or nature located in or upon the Owned Real Property and used
or usable in connection with the operation and maintenance of the Owned
Real Property including, without limitation, spare parts and supplies. The
foregoing shall include all items now owned by the Seller, all items
hereinafter acquired by the Seller and all replacements of any or all of
the foregoing;
(2) All of Seller's right, title and interest, if
any, in and to any land lying in the bed of any street, road, avenue or
way, open or proposed, in front of or adjoining the Owned Real Property, to
the center thereof;
(3) All of Seller's right, title and interest, if
any, in and to all strips and gores adjacent to and abutting or used in
connection with the Owned Real Property;
(4) All of Seller's right, title and interest, if
any, in and to rights of way and easements for access and utilities, and
all other easements currently appurtenant to the Owned Real Property,
including but not limited to privileges or rights of way over adjoining
premises enuring to the benefit of the Owned Real Property or the fee owner
thereof and over such streets, lots, avenues and ways, and any and all
other appurtenances, privileges and hereditaments belonging to or in any
way appertaining to the Owned Real Property.
3.15.5 Condemnation. There are no proceedings instituted
or, to the knowledge of the Seller, threatened, by any governmental or
regulatory body to condemn or acquire the Real Property or any portion
thereof, by eminent domain.
3.15.6 Ownership. The Seller is the sole owner of the
Owned Real Property and the sole holder of any leasehold interest in the
Leased Real Property. Except as set forth in the Lease Agreement dated
December 5, 1996 between State Street Bank and Trust Company and IPC there
does not exist, any option to purchase all or any portion of the Real
Property, or any other agreements whereby any party may acquire any
interest in the Real Property.
3.15.7 Insurance Notices. The Seller has not received any
written notice from any insurance carrier or insurance rating bureau or
similar agency regarding any dangerous, illegal or other material condition
requiring corrective action, with respect to the Real Property, except for
such conditions which would not represent a significant threat to health or
safety.
3.15.8 Sublease. The sublease, dated as of December 15,
1999, between the Seller and IPC relating to the Leased Real Property (the
"Sublease") is in full force and effect and has not been cancelled,
modified, assigned or supplemented. There is no default of landlord or
tenant under the Sublease.
3.15.9 The Seller holds a valid leasehold interest in
the Leased Real Property subject to Permitted Exceptions.
3.15.10 Utilities. To Seller's knowledge, all public
utilities, including without limitation, sewer, water, telephone,
electricity and gas required for the operation of the Real Property, enter
through and in accordance with valid easements, except where the failure to
have the benefit of such valid easement would not have a material adverse
effect.
3.15.11 Restrictions. The Real Property is in compliance
with the terms and provisions of any restrictive covenants or easements
affecting the Real Property, except to the extent such noncompliance would
not have a material adverse effect.
3.16 Intangible Property. Schedule 3.16 lists all of the
material patents, trademarks, and trade names, any applications for any of
the foregoing, any applications or registrations for copyrights, and any
Permits, grants and licenses or other rights running to or from the Seller
relating to any of the foregoing that are used to conduct the Business or
operate the Assets (the "Intangible Property"). The Seller has the right to
use, free and clear of any claims or rights of others all of the Intangible
Property and all trade secrets, know-how, processes, technology,
blueprints, software and designs utilized in or incident to the Business or
the Assets (collectively, "Trade Secrets"), except where the failure to own
or possess the right to use such Intangible Property or Trade Secrets would
not have a material adverse effect. Schedule 3.16 also lists all material
license agreements affecting the Intangible Property. The Seller owns all
of the Intangible Property and Trade Secrets listed on Schedule 3.16 and,
except as set forth on Schedule 3.16, there are no pending or, to the
Seller's knowledge, threatened actions, which affect, or would reasonably
be expected to affect, if adversely decided, the validity or enforceability
of the Intangible Property or Trade Secrets.
3.17 Title to Assets. Except as otherwise set forth herein, the
Seller has good and marketable title to, or a valid leasehold interest in,
all of the Assets free and clear of any Liens, except for (i) any Liens
specifically described in the notes to the Unaudited Financials; (ii)
Assets disposed of, or subject to purchase or sales orders, in the ordinary
course of business since the Balance Sheet Date; (iii) any Liens securing
taxes, assessments, governmental or regulatory body charges or levies, or
the claims of materialmen, carriers, landlords and like persons, all of
which are not yet due and payable or are being contested in good faith, so
long as such contest does not involve any substantial danger of the sale,
forfeiture, loss of any assets or claims against the Seller; (iv) Assets
held or used pursuant to any lease; (v) the Permitted Exceptions (as
defined in Schedule 7.2(1)) or (vi) purchase money and lessor liens
relating to Assets purchased or leased in the ordinary course of business.
Pursuant to the Contribution Agreement by and between the Seller and IPC,
dated as of December 15, 1999 and the Contribution Agreement by and between
PPI and the Seller, dated as of December 15, 1999, the Seller owns or has a
valid leasehold interest in all assets used in the Business, except those
assets set forth on Schedule 3.17.
3.18 Suppliers and Customers. Schedule 3.18 lists, by dollar
volume paid, for the twelve months ended December 31, 1999, (i) the 10
largest suppliers of the Seller, and (ii) the 10 largest customers of the
Seller. Except as set forth on Schedule 3.18, since the Balance Sheet Date,
there has not been any adverse change in the business relationship of the
Seller with any customer or supplier set forth on Schedule 3.18.
3.19 Employee Benefit Plans.
(1) Schedule 3.19(a) sets forth a true and complete list
of each material bonus, deferred compensation, incentive compensation,
stock purchase, stock option, employment, consulting, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, cafeteria, dependent care, educational
expense reimbursement, profit-sharing, pension or retirement plan, program,
agreement or arrangement, and each other "employee benefit plan" (within
the meaning of Section 3(3) of the Employment Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA")), whether formal or informal, written or oral, that is
maintained or contributed to by the Seller or any of its present Affiliates
for the benefit of any employee, former employee, consultant, officer or
director of the Business (a "Benefit Plan"). The Seller has heretofore made
available to the Buyer a true and complete copy of each written Benefit
Plan and any amendments thereto and each agreement creating or modifying
any related trust or other funding vehicle.
(2) No material liability under Title IV or Section 302
of ERISA has been incurred by the Seller, or any trade or business, whether
or not incorporated, that together with the Seller would be deemed a
"single employer" within the meaning of Section 4001(b) of ERISA, that has
not been satisfied in full (other than for premiums to the Pension Benefit
Guaranty Corporation not yet due and for the payment of benefits and
contributions in the ordinary course of business).
(3) The Pension Benefit Guaranty Corporation has not
instituted proceedings to terminate any Benefit Plan that is subject to
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code"),
or Section 302 or Title IV of ERISA (a "Title IV Plan") and no condition
exists that presents a material risk that such proceedings will be
instituted. To Seller's knowledge, the actuarial calculations provided to
the Buyer with respect to each such Benefit Plan are based on correct and
complete employee and former employee data.
(4) No Title IV Plan is a "multi-employer pension plan",
as defined in Section 3(37) of ERISA, nor is any Title IV Plan a plan
described in Section 4063(a) of ERISA.
(5) Each Benefit Plan has been operated and administered
in all material respects in accordance with its terms and applicable law,
including ERISA and the Code, except as would not have a material adverse
effect on the condition of the plan sponsor.
(6) Each Benefit Plan intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined to be
qualified by the Internal Revenue Service ("IRS") and to the knowledge of
the Seller, nothing has occurred since the date of such determination that
could reasonably be expected to give the IRS grounds to revoke such
determination.
(7) Except for contributory group health plan coverage
for employees on Schedule 3.19 and for the union employees under the
collective bargaining agreement described on Schedule 3.13 and for the
elective continuation of group health plan benefits at no cost to the
employer, no nonbargaining employee or former nonbargaining employee of the
Business is entitled to, or has been promised, employee welfare plan
benefits after retirement.
3.20 Insurance. Except for workers' compensation claims
occurring in the ordinary course of business, there are no outstanding or
pending claims against the Seller and the Predecessors of more than
$100,000 under any insurance policy of the Seller or the Predecessors.
Schedule 3.20 sets forth a list of all material policies or binders of
fire, liability, property and casualty, product liability, workers'
compensation, vehicular, group life, health, accident and other insurance
held by or on behalf of the Seller, for the current fiscal year. The Seller
or the Predecessors, as the case may be, has or have paid all premiums and
other amounts which are due and payable under such policies. To the
Seller's knowledge, such policies and binders are in full force and effect.
3.21 Operations of the Seller. Except as set forth on Schedule
3.21, since December 31, 1999, the Seller has conducted the Business and
operated the Assets, taken as a whole, only in the ordinary course
consistent with past practice and has used reasonable efforts to preserve
its relationships with its customers and suppliers, and has not, in
connection with or relating to the Business or the Assets:
(1) except for short-term bank or intra-company
borrowings in the ordinary course of business, incurred, assumed or
guaranteed any indebtedness or obligations for borrowed money, or modified
the terms of any outstanding indebtedness (other than immaterial
modifications made in the ordinary course of business);
(2) made any change in its accounting methods or practices
or made any change in depreciation or amortization policies or rates
adopted by it;
(3) entered into or modified any employment agreements,
made any wage or salary increase or bonus or incentive compensation
increase, or any payment or commitment to pay any severance or termination
pay to any of its officers, directors or employees or adopted, amended,
modified or terminated any Benefit Plan;
(4) except for intra-company advances made in the
ordinary course of business, made any loan or advance to any of its
shareholders, officers, directors or employees (other than travel advances
made in the ordinary course of business), or made any other loan or advance
to any person;
(5) except for materials and equipment acquired in the
ordinary course of business, made any acquisition of all the capital stock
or business of any other person;
(6) sold, leased, transferred, assigned, mortgaged,
pledged, encumbered or otherwise subjected to Lien any of its Assets (other
than the disposition of obsolete or unusable property in the ordinary
course of business);
(7) made any capital expenditure (or series of related
capital expenditures) either involving more than $100,000 or outside the
ordinary course of business;
(8) experienced any material damage, destruction or loss
(whether or not covered by insurance) from fire, flood, explosion or other
casualty;
(9) engaged in any transaction other than in the ordinary
course of business; or
(10) entered into any agreement, contract, commitment or
arrangement to do any of the foregoing.
3.22 Reserved.
3.23 Environmental Protection. Except as set forth on Schedule
3.23 or as would not have a material adverse effect:
(1) The Seller and the Predecessors (i), since the date
of their respective acquisition of the applicable portion of the Business
have been and are in compliance with all applicable Environmental Laws (as
defined below), and are not subject to any asserted liability or, to the
Seller's knowledge, any liability, in each case with respect to any
applicable Environmental Laws, (ii) hold and have held or have timely
applied for all Environmental Permits (as defined below) required to
conduct the Business or operate the Assets (a list of which is attached as
Schedule 3.23A) and (iii) are and have been in compliance with their
Environmental Permits. All Environmental Permits of the Predecessors have
been properly transferred to, or reissued in the name of Seller.
(2) neither the Seller nor any Predecessor has received
any written notice, demand, letter, claim or request for information
alleging that the Seller or any Predecessor may be in violation of, or
liable under, any Environmental Law;
(3) neither the Seller nor any Predecessor (i) has
entered into or agreed to any consent decree or order or is not subject to
any judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials (as defined below) and, to the knowledge of the Seller, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto, or (ii) is an indemnitor in connection with
any threatened or asserted claim by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous
Materials;
(4) none of the Real Property is listed or, to the
knowledge of the Seller, proposed for listing on the "National Priorities
List" under CERCLA, as updated through the date hereof, or any similar
state or foreign list of sites requiring investigation or cleanup;
(5) the Seller has made available to the Buyer or its
representatives all reports of conditions related to compliance with, or
liability under, Environmental Laws; and
(6) the Seller or a Predecessor has not waived any basis
for the appeal of the ▇▇▇▇ Title V draft permit.
3.24 Schedules and Exhibits. Disclosure of any fact or item in
any Schedule or Exhibit hereto referenced by a particular paragraph or
Section in this Agreement shall, should the existence of the fact or item
or its contents be relevant to any other paragraph or Section of this
Agreement, be deemed to be disclosed with respect to such other paragraph
or Section of this Agreement whether or not an explicit cross-reference
appears, except where such disclosure lacks sufficient detail to clearly
and actually notify the Buyer as to its applicability to another section
for which it is intended to serve as disclosure.
3.25 Labor Matters.
3.25.1 There is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or to the knowledge of Seller,
threatened or imminent, against the Seller.
3.25.2 The Seller is not a party to or bound by any
collective bargaining agreement with any labor organization applicable to
employees of the Seller and, to the Seller's knowledge, has no obligation
to bargain with any such labor organization, except, in each case, as set
forth on Schedule 3.13(ii).
3.25.3 Except as set forth on Schedule 3.13(ii), no labor
union has been certified by the National Labor Relations Board or
recognized by the Seller (or any Predecessor) as bargaining agent for any
of the employees of the Seller.
3.25.4 The Seller has not experienced any material work
stoppage or other material labor difficulty during the two-year period
ending on the date hereof.
3.25.5 There is no material unfair labor practice charge
or complaint against the Seller pending or, to the Seller's knowledge,
threatened or imminent before the National Labor Relations Board.
3.25.6 Since the enactment of the WARN Act, the Seller
(or any Predecessor) has not effectuated a "plant closing" (as defined in
the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Seller,
and there has not occurred a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Seller, and the Seller
is not subject to any similar liability under state or local law.
3.26 Disclosure; No Implied Representations. Notwithstanding
anything contained in this Section 3 or any other provision of this
Agreement, it is the explicit intent of each party hereto that the Seller
is making no representation or warranty whatsoever, express or implied,
beyond those expressly given in this Agreement. In furtherance and not in
limitation of the foregoing, it is expressly understood by each party
hereto that any cost estimates, projections or other forward-looking
statements contained in or referred to in the Schedules hereto or in the
offering materials that have been provided to the Buyer are not and shall
not be deemed to be representations and warranties of the Seller.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows:
4.1 Due Incorporation and Authority. (1) The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority would not have a
material adverse effect on the Buyer's ability to consummate the
Contemplated Transactions.
(2) The Buyer has full corporate power and authority to
execute and deliver this Agreement and to consummate the Contemplated
Transactions. The execution, delivery and performance by the Buyer of this
Agreement and the consummation of the Contemplated Transactions have been
duly authorized by the Board of Directors of the Buyer, and no other
corporate action on the part of the Buyer is necessary to authorize the
execution and delivery by the Buyer of this Agreement or the consummation
of the Contemplated Transactions. No vote of, or consent by, the holders of
any class or series of stock issued by the Buyer is necessary to authorize
the execution and delivery by the Buyer of this Agreement or the
consummation of the Contemplated Transactions.
4.2 Execution; Validity of Agreement. This Agreement has been
duly executed and delivered by the Buyer, and assuming due and valid
authorization, execution and delivery hereof by the Seller, is a valid and
binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other
similar laws of general application affecting enforcement of creditors'
rights generally and (b) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject
to equitable defenses and would be subject to the discretion of the court
before which any proceeding therefor may be brought.
4.3 Consents and Approvals. Except pursuant to the HSR Act and
except where the failure to obtain such consents and approvals would not
have a material adverse effect on the Contemplated Transactions, the
execution and delivery by the Buyer of this Agreement and the performance
by the Buyer of its obligations hereunder do not require the Buyer to
obtain any consent or approval of, or make any filing with or give notice
to, any governmental or regulatory body.
4.4 No Breach. Neither the execution and delivery of this
Agreement by Buyer nor the other documents and instruments to be executed
and delivered by Buyer pursuant hereto (a) will violate any provision of
the articles of organization or bylaws of Buyer, (b) will violate or
conflict with any applicable statute, law, ordinance, rule, regulation,
order, judgment or decree applicable to Buyer, (c) will conflict with or
constitute a default under any material contract, commitment,
understanding, arrangement, agreement or restriction of any kind binding
upon Buyer, or (d) will result in the creation of any lien or other
encumbrance upon any of Buyer's assets or properties, excluding from the
foregoing clauses (b), (c) and (d) such violations, breaches or defaults
which would not have a material adverse effect on the condition of the
Buyer.
4.5 Sufficient Funds. The Buyer or its Affiliates currently
have sufficient funds, in cash or cash equivalents and will at the Closing
have sufficient immediately available funds, in cash, to pay the Purchase
Price and to pay any other amounts payable pursuant to this Agreement and
to effect the Contemplated Transactions. The Buyer, based on conditions
that are now prevailing, knows of no circumstance or condition that it
expects will prevent the availability at the Closing of the requisite
financing to consummate the Contemplated Transactions.
4.6 Litigation. There is no claim, action, suit, proceeding or,
to the knowledge of the Buyer, governmental investigation pending or, to
the knowledge of the Buyer, threatened against the Buyer by or before any
court or governmental or regulatory body that would have or would
reasonably be expected to impede the ability of the Buyer to complete the
Contemplated Transactions.
5. Covenants and Agreements. The parties covenant and agree as
follows:
5.1 Conduct of Business. From the date hereof through the
Closing Date, the Seller shall conduct the Business in the ordinary course
and, without the prior written consent of the Buyer, shall not undertake
any of the actions specified in Section 3.21.
5.2 Disclosure Schedule: Supplement, Amendments and Updates.
(1) Seller shall, by notice in accordance with this
Agreement, supplement or amend any Schedule promptly after becoming aware
of any matter that would constitute a breach of any representation,
warranty or covenant contained herein. Such supplement or amendment shall
fully and clearly disclose the matter and specifically identify the
representation and/or Schedule that is being supplemented or amended.
(2) No later than the second business day immediately
preceding the Closing Date, Seller shall update the Schedules to correctly
reflect any changes occurring during the period from the date hereof to
such date.
(3) If, in Buyer's reasonable judgment, a supplement or
amendment of any section of the Schedules by Seller pursuant to this
Section 5.2 would have a material adverse effect, then Buyer shall have the
right to abandon the Closing and Contemplated Transactions pursuant to
Section 11.1, but such abandonment shall, except as provided in Section
11.2, be Buyer's sole remedy hereunder. Seller hereby acknowledges that
Buyer may abandon the Closing and Contemplated Transactions if such an
update describes an event, fact or circumstance that prevents one or more
of the conditions set forth in Section 7 from being satisfied.
5.3 Corporate Examinations and Investigations. Prior to the
Closing Date, the Buyer shall be entitled, through its employees,
representatives, agents and contractors to make such investigation of the
assets, liabilities, properties, business, operations and condition of the
Seller with respect to the Business, and such examination of the books,
records and condition of the Seller with respect to the Business as the
Buyer reasonably requests, subject to the terms of the following sentence.
Physical investigation of the Real Property may include inspecting and
testing any structures and the electrical, mechanical and HVAC systems
servicing the structures and may include inspecting the surface of the Real
Property; provided, however, that the Buyer shall not conduct any invasive
surface, subsurface or water testing without the Seller's prior written
consent, which Seller may withhold in its sole discretion. Any such
investigation or examination shall be conducted at reasonable times, under
reasonable circumstances and at the Buyer's expense. No investigation by
the Buyer shall diminish or obviate any of the representations, warranties,
covenants or agreements of the Seller under this Agreement. In order that
the Buyer may have full opportunity to make such physical, business,
accounting and legal review, examination or investigation of the business
and affairs of the Seller with respect to the Business, the Seller shall
make available to the representatives of the Buyer during such period all
such information and copies of such documents concerning the affairs of the
Seller with respect to the Business as such representatives may reasonably
request and shall permit the agents, contractors and representatives of the
Buyer reasonable access to the properties of the Seller with respect to the
Business. If this Agreement terminates, the Buyer and its Affiliates shall
keep confidential and shall not use in any manner any information or
documents obtained from the Seller concerning its assets, business and
operations (unless readily ascertainable from public or published
information, or trade sources, or already known or subsequently developed
by the Buyer independently of any investigation of the Seller) and shall
promptly return to the Seller all of such information received from the
Seller and destroy any documents prepared by Buyer based upon such
information.
5.4 Consent to Jurisdiction and Service of Process. The Seller
and Buyer agree that any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions may be instituted only in
the Federal courts within the State of New York, and each party agrees not
to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to
the jurisdiction of such courts, that the action, suit or proceeding is
brought in an inconvenient forum, that the venue of the action, suit or
proceeding is improper or that this Agreement or the subject matter hereof
or thereof may not be enforced in or by such courts. Each party further
irrevocably submits to the jurisdiction of such New York courts in any such
action, suit or proceeding and that service of process may be accomplished
by delivering written notice to the other party in accordance with the
provisions contained in Section 12.3 hereof. Nothing herein contained shall
be deemed to affect the right of any party to serve process in any manner
permitted by law.
5.5 Expenses of Agreement. Except as otherwise specifically
provided in Sections 5.17(b) and 11.2(iii), the Seller, on the one hand,
and the Buyer, on the other hand, shall bear their respective expenses
incurred in connection with the preparation, execution and performance of
this Agreement and the consummation of the Contemplated Transactions
(including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants); provided, however, that the
Buyer shall pay for the filing fee payable under the HSR Act.
5.6 Indemnification of Brokerage. The Seller represents and
warrants to the Buyer that, other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller's
Broker"), no broker, finder, agent or similar intermediary has acted on
behalf of the Seller in connection with this Agreement or the Contemplated
Transactions, and that except for a fee payable to the Seller's Broker
which the Seller agrees to pay in full, there are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the
Seller. The Seller agrees to indemnify and save the Buyer harmless from any
claim or demand for commission or other compensation by any broker, finder,
agent or similar intermediary claiming to have been employed by or on
behalf of the Seller (including, without limitation, the Seller's Broker),
and to bear the cost of legal expenses incurred in defending against any
such claim.
The Buyer represents and warrants to the Seller that other than
PricewaterhouseCoopers Corporate Finance S.A. (the "Buyer's Broker"), no
broker, finder, agent or similar intermediary has acted on behalf of the
Buyer in connection with this Agreement or the Contemplated Transactions,
and that except for a fee payable to the Buyer's Broker, there are no
brokerage commissions, finders' fees or similar fees or commissions payable
in connection therewith based on any agreement, arrangement or
understanding with the Buyer, or any action taken by the Buyer. The Buyer
agrees to indemnify and save the Seller harmless from any claim or demand
for commission or other compensation by any broker, finder, agent or
similar intermediary claiming to have been employed by or on behalf of the
Buyer (including, without limitation, the Buyer's Broker) and to bear the
cost of legal expenses incurred in defending against any such claim.
5.7 Insurance. Prior to the Closing Date (1) the Seller shall
have delivered to Buyer complete and accurate copies of all of the general
liability, international liability, lead umbrella and excess umbrella
policies (collectively "Liability Policies") for the last five fiscal years
and copies of the property and casualty and automobile policies presently
in effect and shall have made available to Buyer and delivered to Buyer, to
the extent requested by Buyer, copies of all Liability Policies for prior
years to the extent available to Seller, and (2) the Seller shall have
delivered to Buyer an insurance certificate substantially in the form of
Exhibit L pursuant to which Buyer shall be added as an additional insured
on such Seller's Liability Policies for the current fiscal year. In
addition, with respect to "occurrence" based liability and umbrella
policies which covered the Seller with respect to the Business or any
Predecessor prior to the Closing Date (the "Former Policies"), the Seller
hereby grants and assigns to the Buyer all of its interest in the Former
Policies solely as they relate to the Business (including with respect to
claims proceeds in connection therewith). The Seller hereby agrees to use
its commercially reasonable efforts to cooperate with and assist the Buyer
in making claims under the Former Policies relating to liabilities
pertaining to the Business. Solely for the foregoing purposes of claiming
against the insurance carriers, and only for such purposes, Seller shall be
deemed to be obligated to indemnify the Buyer to the extent, and only to
the extent, of insurance proceeds actually received by Seller or any
Predecessor.
5.8 Employees; Employee Benefits.
(1) If any Retained Employee (as defined in Section
5.8(1)) becomes or continues to be a participant in any employee benefit
plan, practice or policy of the Buyer or any of its Affiliates, such
Retained Employee shall be given credit under such plan for all service
prior to the Closing Date with the Seller or any predecessor employer (to
the extent such credit was given by the Seller or any predecessor
employer), and all service with the Buyer following the Closing Date but
prior to the time such employee becomes such a participant, for purposes of
determining eligibility and vesting and for all other purposes for which
such service is either taken into account or recognized, provided, however,
such service need not be credited to the extent it would result in a
duplication of benefits, including benefit accrual under defined benefit
plans. Such service also shall apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
preexisting condition limitations. Employees shall be given credit for
amounts paid under a corresponding benefit plan during the same period for
purposes of applying deductibles, copayments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and
conditions of the comparable Buyer employee benefit plan. The Buyer agrees
to offer employment at the Closing to (i) all hourly employees and active
salaried employees at the ▇▇▇▇▇▇ and ▇▇▇▇ facilities and (ii) those
employees identified as "Chargeurs" on Schedule 5.8 with respect to the
Bellwood facility. All such employees are hereafter referred to as the
"Retained Employees."
(2) If any Retained Employee is discharged by the Buyer
as of or after the Closing, then the Buyer shall be responsible for any and
all severance costs for such Retained Employee. The Buyer shall be
responsible for all notices or payments due to any Retained Employees, and
all notices, payments, fines or assessments due to any governmental or
regulatory body, pursuant to any applicable Law, common law, statute, rule
or regulation with respect to the employment, discharge or layoff of
employees by the Buyer after the Closing, including the WARN Act and any
rules or regulations as have been issued in connection with the foregoing.
(3) From and after the Closing, the Buyer shall be
responsible for, and shall indemnify and hold harmless the Seller and its
Affiliates and their officers, directors, employees, Affiliates and agents
and the fiduciaries (including plan administrators) of the Benefit Plans,
from and against any and all claims, losses, damages, costs and expenses
(including attorneys' fees and expenses) and other liabilities and
obligations relating to or arising out of (i) all salaries, wages,
commissions, employee incentive or other compensation, severance, holiday,
vacation, health, dental or retirement benefits unpaid as of the Closing
and post-Closing bonuses due to any Retained Employee, in each case to the
extent accrued on the Closing Balance Sheet, and (ii) any claims of, or
damages or penalties sought by, any Retained Employee, or any governmental
or regulatory body on behalf of or concerning any Retained Employee, with
respect to any act or failure to act by the Buyer to the extent arising
after the Closing from the employment, discharge, layoff or termination of
any Retained Employee.
(4) Upon the terms and conditions hereinafter provided,
Seller shall transfer, or cause the trustee of the Ivex Packaging
Corporation Retirement Plan (the "Ivex 401(k) Plan") to transfer, the
account balances of the Retained Employees participating in the Ivex 401(k)
Plan to a tax-qualified 401(k) plan and related trust to be established by
the Buyer (the "Buyer 401(k) Plan"). The Buyer shall establish or cause to
be established the Buyer 401(k) Plan and provide Seller with a copy of a
favorable determination letter from the IRS with respect to the Buyer
401(k) Plan. Upon receipt of such determination letter, the Seller shall
transfer, or cause the trustee of the Ivex 401(k) Plan to promptly
transfer, to the Buyer 401(k) Plan the assets and liabilities of the Ivex
401(k) Plan attributable to the account balances of Retained Employees
determined as of the valuation date under the Ivex 401(k) Plan immediately
prior to the date of transfer. Seller and Buyer shall file at least 30 days
prior to the transfer any Form 5310As required to be filed in connection
with such transfer, and Buyer and Seller shall cooperate in the preparation
of such forms. The assets to be transferred from the Ivex 401(k) Plan
hereunder shall be in the form of cash or securities acceptable to the
Trustee of the Buyer 401(k) Plan and any notes representing loans to
Retained Employees and shall not be greater than, or less than, the amount
required to satisfy Section 414(l) of the Code. From and after the date of
such transfer, the Buyer shall have full responsibility for the assets and
liabilities transferred hereunder as sponsor of the Buyer 401(k) Plan;
provided, that the Seller and Buyer shall cause any inaccuracies in the
accounts transferred to be corrected promptly after becoming aware of such
inaccuracies. During the period from and after the Closing and prior to the
date of transfer, Seller shall continue to administer the Ivex 401(k) Plan
in respect of Retained Employees; provided however, that no further
contributions shall be made by or on behalf of Retained Employees for any
period from and after the Closing Date. Buyer shall deduct any principal
and interest payments due on any loan with respect to a Retained Employee
on or after the Closing but prior to the date of transfer of such notes to
the Buyer 401(k) Plan, from the Retained Employee's compensation and remit
such amount to the trustee of the Ivex 401(k) Plan in accordance with
written instructions provided by Seller. Seller shall provide Buyer with
the amount and payment due dates, along with such other documentation that
Buyer may reasonably request.
(5) Prior to the Closing, Seller shall discontinue the
participation of the Retained Employees in all Benefit Plans (other than
the L&CP Corporation Pension Plan No. 004 and the L&CP Pension Plan No. 005
(collectively hereinafter called the "Defined Benefit Plans")) and, except
as otherwise provided in this agreement or any such plan, the Retained
Employees and their beneficiaries and dependants will cease as of the
Closing Date to participate in or be covered or entitled to benefits under
such plans or arrangements. In addition, concurrently with the Closing, the
Seller shall amend the Defined Benefit Plans to substitute the Buyer as
plan sponsor effective as of the Closing. Prior to the Closing, the Buyer
shall adopt as sponsor, effective as of the Closing, the Defined Benefit
Plans, and the related funding agreements. At the Closing, the Seller shall
deliver to the Buyer all documents and records relating to the Defined
Benefit Plans of which the Buyer becomes sponsor hereunder.
(6) Through December 31, 2000, Retained Employees may
continue to participate in the Ivex Packaging Corporation Flexible Spending
Account Plan (the "Ivex Flex Plan"), including the health care and
dependent care reimbursement options thereunder, in accordance with the
terms thereof as in effect from time to time as though the transactions
completed by the Agreement had not occurred, and Buyer shall be treated as
a participating employer thereunder through December 31, 2000. Commencing
at the Effective Time and continuing through December 31, 2000, Buyer shall
reduce the compensation of its employees participating in the Ivex Flex
Plan in accordance with their salary reduction elections as agent for
Buyer. In addition, Buyer will promptly pay Seller on demand therefore (i)
all reasonable administrative costs incurred as a result of continued
participation of Buyer's employees in the Ivex Flex Plan from and after the
Closing Date, and (ii) 7/12 of the excess, if any, of (A) the aggregate
claims paid before and after the Closing Date in respect of the Plan Year
ending December 31, 2000 to or on behalf of Buyer's employees under the
Ivex Flex Plan over (B) the aggregate amount of salary reductions of
Buyer's employees before and after the Closing Date in respect of such plan
year under the Ivex Flex Plan. Seller and Buyer shall cooperate in
providing each other all information reasonably requested in order to
provide for such continued participants in the Ivex Flex Plan.
(7) The Seller's group health plan(s) shall provide all
notices and coverage required under Section 4980B of the Code and Part 6 of
Title I of ERISA with respect to qualifying events that occurred on or
prior to the Closing Date under such plan(s).
(8) The Seller shall use all reasonable commercial
efforts to provide Buyer with information needed by Buyer to establish or
cause Buyer to establish welfare benefit plans for Retained Employees to be
effective as of the Closing. Upon written request of the Buyer communicated
to the Seller at least seven (7) days before the Closing Date, the Seller
shall use its reasonable efforts to enable the Buyer to continue to cover
its eligible employees under any or all of the welfare benefit plans of the
Seller and its Affiliates for a period of up to three (3) months after the
Closing provided that such continued coverage is in compliance with
applicable law, is acceptable to the respective insurance carriers, and
does not include the Seller's self-insured medical coverage. The Buyer
shall pay the premium for the Buyer's employees under each plan under which
the Buyer elects to continue coverage of employees of the Buyer no later
than the date such premiums are due under the group insurance contract.
(9) The noninsured group health plan(s) of the Seller and
its Affiliates shall pay (i) all covered expenses for health care services
rendered on or before the Closing Date, and (ii) all covered expenses for
health care services rendered after the Closing Date with respect to
retired salaried covered employees listed on Schedule 3.19 hereto and their
dependents. The Buyer shall have responsibility for group health plan
coverage for (i) health care services rendered after the Closing Date with
respect to Retained Employees and their dependents, and (ii) all expenses
for health care services rendered before and after the Closing Date covered
under the collective bargaining agreements assumed by the Buyer.
(10) The short-term disability plan(s) of the Seller and
its Affiliates shall pay all benefits thereunder on account of illness or
injury arising on or before the Closing Date, whether such benefits became
due before or after the Closing Date, regardless of termination of the
recipient's employment with the Seller in connection with the Contemplated
Transactions. Except for claims that are payable by a state or an insurance
company, the Seller shall be responsible for all workers' compensation
benefits on account of workplace injuries or illnesses arising on or before
the Closing Date, whether such benefits become due on or before the Closing
Date or after the Closing Date.
5.9 Transition Services. Except pursuant to any transition
services agreement to be entered into between the Seller or IPC and the
Buyer as of the Closing Date (the "Transition Services Agreement"), all
data processing, accounting, insurance, banking, personnel, legal,
communications and other products and services provided with respect to the
Business to the Seller by the Seller or any Affiliate of the Seller,
including any agreements or understandings (written or oral) with respect
thereto, shall terminate simultaneously with the Closing without any
further action or liability on the part of the parties thereto.
Notwithstanding the foregoing, the provision of any services (similar to
those contemplated by the preceding sentence) by the Seller or IPC to the
Buyer from and after the Closing shall be for the convenience, and at the
expense, of the Buyer only and shall be furnished without any liability on
the part of the Seller or IPC with respect thereto, except for gross
negligence or willful misconduct on the part of the Seller or IPC.
5.10 [Reserved]
5.11 [Reserved]
5.12 Maintenance of Books and Records. Each of the parties
hereto shall preserve, until at least the third anniversary of the Closing
Date, all pre-Closing Date records possessed or to be possessed by such
party relating to the Business or the Assets (provided that the foregoing
shall not abridge Seller's obligation to transfer all books and records
that constitute Assets). After the Closing Date and up until at least the
third anniversary of the Closing Date, upon any reasonable request from a
party hereto or its representatives, the party holding such records shall
(a) provide to the requesting party or its representatives reasonable
access to such records during normal business hours and (b) permit the
requesting party or its representatives to make copies of such records, in
each case at no cost to the requesting party or its representatives (other
than for reasonable out-of-pocket expenses); provided, however, that
nothing herein shall require either party to disclose any information to
the other if such disclosure would jeopardize any attorney-client or other
legal privilege or contravene any applicable law. Upon Buyer's written
request delivered to Seller within thirty (30) days after the expiration of
such period, all records pertaining to the Business or the Assets shall be
delivered from Seller to Buyer. Such records may be sought under this
Section for any reasonable purpose, including to the extent reasonably
required in connection with the audit, accounting, tax, litigation, federal
securities disclosure or other similar needs of the party seeking such
records. Notwithstanding the foregoing, any and all such records may be
destroyed by a party if such destroying party sends to the other parties
hereto written notice of its intent to destroy such records, specifying in
reasonable detail the contents of the records to be destroyed, such records
may then be destroyed after the 30th day following such notice unless the
other party hereto notifies the destroying party that such other party
desires to obtain possession of such records, in which event the
destroying party shall transfer the records to such requesting party and
such requesting party shall pay all reasonable expenses of the destroying
party in connection therewith.
5.13 Seller's Trademarks and Logos. Except as expressly set
forth in Section 1.1 hereof, it is expressly agreed that (a) the Assets
shall not include any right, title or interest in the name "Ivex" or "Ultra
Pac" or any part or variation of such names or anything confusingly similar
thereto and (b) neither the Buyer nor its Affiliates shall make any use of
the names "Ivex" or "Ultra Pac" from and after the Closing; provided,
however, that the Buyer will be entitled to retain and use for a period of
four (4) years following the Closing Date, and such right shall be deemed
to be included in the Assets, the name "Ivex," but only in conjunction with
the name "Novacel" in the conduct of the Business after the Closing.
5.14 Insurance Policies. (a) Except as provided in subsection
(c) and in Section 5.7, the Buyer shall not, and shall cause the Buyer's
Affiliates not to, assert, by way of claim, action, litigation or
otherwise, any right to any Insurance Policy or any benefit under any such
Insurance Policy. Except as provided in subsection (c) and in Section 5.7,
the Seller and its Affiliates shall retain all right, title and interest in
and to the Insurance Policies, including the right to any credit or return
premiums due, paid or payable in connection with the termination thereof.
The term "Insurance Policy" shall mean any insurance policy maintained by
the Seller or any of its Affiliates, other than any state workers'
compensation policy, the premiums of which are paid by the Seller prior to
the Closing Date.
(b) Except as provided in subsection (c) and in Section
5.7, at the Closing, the Buyer shall release, and shall cause its
Affiliates, to release, all rights to all Insurance Policies or similar
insurance which covered the Seller prior to the Closing Date. Except as
provided in subsection (c) and in Section 5.7, all Insurance Policies
issued prior to the Closing Date in the name of or to the Seller or its
Affiliates shall remain with the Seller or its Affiliates.
(c) The Buyer shall retain all rights under any state
workers' compensation policy the premiums of which are paid directly by the
Seller or its Affiliates prior to the Closing.
5.15 Mutual Cooperation. As soon as practicable, but in any
event within thirty (30) days after either the Buyer's or the Seller's
request, the Buyer shall deliver to the Seller or the Seller shall deliver
to the Buyer, as the case may be, such information and other data relating
to the Assets, including but not limited to the Tax Returns and Taxes of
the Seller and shall provide such other assistance as may reasonably be
requested, to cause the completion and filing of all Tax Returns or to
respond to audits by any taxing authorities with respect to any Tax Returns
or taxable periods or to otherwise enable the Buyer or the Seller to
satisfy their accounting or Tax requirements. For a period of five (5)
years from and after the Closing, the Buyer and the Seller shall, and shall
cause their affiliates to, maintain and make available to the other party,
on such other party's reasonable request, copies of any and all
information, books and records referred to in this Section 5.15. After such
five year period, the Buyer or the Seller may dispose of such information,
books and records.
5.16 Further Assurances.
(1) Prior to the Closing, upon the terms and subject to
the conditions of this Agreement, Buyer and Seller shall use their
respective reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done and cooperate with each other in order to
do, all things necessary, proper or advisable (subject to any applicable
laws) to consummate the Closing and the Contemplated Transactions as
promptly as practicable, including the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Closing
and the Contemplated Transactions and the taking of such actions as are
necessary to obtain any requisite approvals, authorizations, consents,
orders, licenses, permits, qualifications, exemptions or waivers by any
third party or governmental body. In addition, no party hereto shall take
any action after the date hereof that could reasonably be expected to
materially delay the obtaining of, or result in not obtaining, any
permission, approval or consent from any governmental or regulatory body or
other person required to be obtained prior to Closing.
(2) Prior to the Closing, each party shall promptly
consult with the other party hereto with respect to, provide any necessary
information with respect to, and provide the other parties (or their
respective counsel) with copies of, all filings made by such party with any
governmental or regulatory body or any other information supplied by such
party to a governmental body in connection with this Agreement and the
Contemplated Transactions. Each party hereto shall promptly inform the
other of any communication received by such party from any governmental or
regulatory body regarding any of the Contemplated Transactions; if any
party hereto or Affiliate thereof receives a request for information or
documentary material from any such governmental body with respect to any of
the Contemplated Transactions, then such party shall endeavor in good faith
to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other parties, an appropriate response in compliance
with such request.
(3) In addition to and without limiting the agreements of
the parties contained above, Buyer and Seller shall (i) comply at the
earliest practicable date with any request for additional information or
documentary material received by Buyer, Seller or any of their Affiliates
from the FTC or the DOJ pursuant to the HSR Act or from any state Attorney
General or other governmental body in connection with antitrust matters,
(ii) cooperate with each other in connection with any filing under the HSR
Act and in connection with resolving any investigation or other inquiry
concerning the Contemplated Transactions commenced by the FTC, DOJ, any
state Attorney General or any other governmental body, and (iii) advise the
other parties promptly of any material communication received by such party
from the FTC, DOJ, any state Attorney General or any other governmental
body regarding any of the Contemplated Transactions, and of any
understandings, undertakings or agreements (oral or written) such party
proposes to make or enter into with the FTC, DOJ, any state Attorney
General or any other governmental body in connection with the Contemplated
Transactions. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, Seller and Buyer shall each
request early termination of the HSR Act waiting period.
5.17 Tax Matters.
(a) Bulk Sales Tax. Buyer hereby waives compliance by the
Seller with the provisions of all applicable bulk sales tax laws including
those of the State of Ohio, the State of Illinois and the Commonwealth of
Massachusetts. Seller shall indemnify Buyer for any taxes imposed on Buyer
as a result of any such waiver.
(b) Transfer Taxes. Seller shall pay 50% and Buyer shall
pay 50% of all excise, sales, use, value added, registration, stamp,
franchise, property transfer, real property gains, document, recording and
similar Taxes (including all real estate transfer Taxes but excluding, for
the avoidance of doubt, any income Taxes incurred by Seller) imposed as a
result of the sale of the Assets pursuant to this Agreement ("Transfer
Taxes"). Buyer and Seller shall cooperate with one another and, subject to
the other terms of this Agreement, take any action reasonably requested by
the other party which does not cause Buyer or Seller to incur any
additional costs or material inconvenience in order to minimize Transfer
Taxes. At the request of Buyer or Seller, the other party shall deliver to
the requesting party any resale, exemption or similar certificates
(including any certificates to avoid or reduce the incidence of state or
local sales and use taxes resulting from the sale of the Assets pursuant to
this Agreement) reasonably requested by Buyer or Seller.
(c) Survival of Obligations. The obligations of the
parties set forth in this Section 5.17 shall be unconditional and absolute
and shall remain in effect until the expiration of the applicable statutes
of limitations.
5.18 ▇▇▇▇ Escrow. The Seller shall take, prior to the Closing,
any and all actions necessary or appropriate to (i) obtain the consent of
the ▇▇▇▇ ▇▇▇▇ Trustee to the Contemplated Transactions and (ii) effect,
prior to the Closing, the repayment in full of the outstanding ▇▇▇▇ ▇▇▇▇▇
and the release of all Liens of the ▇▇▇▇ ▇▇▇▇ Trustee thereunder in and to
the Assets. In the event that Seller is not able to repay the ▇▇▇▇ ▇▇▇▇▇
and release the related Liens encumbering the Troy, Ohio facility on or
prior to the Closing Date, an amount equal to the outstanding principal,
accrued interest and other amounts outstanding thereunder shall be
deposited directly by the Buyer on the Closing Date into an escrow account
established for the benefit of the Buyer pursuant to an escrow agreement
(the "▇▇▇▇ Escrow Agreement") to be executed and delivered on or prior to
the Closing Date, in form and substance satisfactory to the Buyer in its
sole discretion. All prepayment penalties, premiums, cost and expenses in
connection therewith shall be borne by the Seller. Unless and until
released from such escrow account pursuant to the terms of the ▇▇▇▇ Escrow
Agreement, the Seller agrees and acknowledges that such escrowed funds are
and will remain the sole and exclusive property of the Buyer.
5.19 Bellwood Facility. (a) Prior to the Closing Date, the
Seller shall have provided written evidence reasonably satisfactory to the
Buyer that Seller has, with respect to the Bellwood Facility:
(1) (i) Applied for all Environmental Permits or modifications of
Environmental Permits which, in Seller's reasonable judgment, are required
under applicable Environmental Laws; and (ii) formulated (at the Buyer's
option, with Buyer's participation), and to the extent feasible prior to
the Closing Date, implemented, a plan relating to the construction or
installation of any equipment or modifications needed to comply with
pretreatment or other applicable requirements of Environmental Laws (the
"Plan");
(2) Filed all reports which, in Seller's reasonable judgment, are required
under Environmental Laws, including, but not limited to, 40 CFR sections
262.34(d)(5)(iv)(C), 264.56(j), 264.77, or under CERCLA, or sections 304 or
313 of ▇▇▇▇ Title III; and
(3) Produced, and delivered copies to Buyer of, test results on sludges and
waste waters.
(b) After the Closing Date, Seller shall, at its expense and in good
faith, promptly implement, or continue implementation of, the Plan
6. Conditions to Each Party's Obligation to Effect the Closing.
The respective obligation of each party to effect the Closing shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions:
6.1 Statutes; Court Orders. No Law shall have been enacted or
promulgated by any governmental or regulatory body which prohibits the
consummation of the Closing; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the
Closing provided, however, that the parties shall use their reasonable
efforts to have any such order or injunction vacated or lifted.
6.2 HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
6.3 Consents Obtained. All material Required Consents necessary
to the consummation of the Closing and the Contemplated Transactions shall
have been obtained.
7. Conditions Precedent to the Obligation of the Buyer to Close. The
obligation of the Buyer to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
7.1 Representations and Covenants. All of the representations
and warranties of Seller set forth in this Agreement that are qualified as
to materiality shall be true and complete and any such representations and
warranties that are not so qualified shall be true and complete in all
material respects as of the date of this Agreement and as of the Closing
Date as if made on and as of the Closing Date (except to the extent that
any such representation or warranty is made as of a specific date, in which
case such representation or warranty shall be true and complete, or true
and complete in all material respects, as the case may be, as of such
specified date). The Seller shall have performed and complied in all
material respects with all covenants and agreements required by this
Agreement to be performed or complied with by the Seller on or prior to the
Closing Date. The Seller shall have delivered to the Buyer a certificate,
dated the Closing Date and signed by the Chief Financial Officer of the
Seller, to the foregoing effect.
7.2 Real Property - Title.
The Seller shall have delivered to the Buyer:
(1) the Title Policies, all as defined and in accordance
with Schedule 7.2(1);
(2) no later than seven days prior to Closing, recent
surveys of the Real Property prepared, at Seller's expense, in accordance
with Schedule 7.2(2) (the "Surveys");
(3) a special warranty deed for the Real Property located
in Troy, Ohio , in form and substance reasonably satisfactory to Buyer,
conveying good, clear and marketable title to the Owned Real Property
located in Troy, Ohio (the "Deed")'
(4) a ▇▇▇▇ of sale for all personal property located on
the Real Property (the "▇▇▇▇ of Sale");
(5) an affidavit in compliance with the exemption under
Internal Revenue Code Section 1445(b)(2), and regulations thereunder,
attesting to Seller's non-foreign status (the "FIRPTA Affidavit"); and
(6) such other affidavits, documents, instruments,
certificates and endorsements set forth as requirements in the Title
Commitments or as may reasonably be required by Chicago Title Insurance
Company for issuance of the Title Policies.
If the Seller shall not have title to the Real
Property as set forth herein, then the Buyer shall have the option to
accept such title as the Seller shall have to the Real Property. If Buyer
so elects, Buyer shall notify the Seller of Buyer's estimate of the sum
reasonably required to make the title to the Real Property conform to this
Agreement and thereupon the Base Purchase Price shall be reduced by such
estimated sum as the parties may agree is reasonably required to make the
title thereto conform to this Agreement, such adjustment to be in addition
to and not in limitation of the purchase price adjustment set forth in
Section 1.8 hereof.
7.3 Resignations. The resignations from the officers and
directors of the Mexican Subsidiary shall have been delivered to the Buyer.
7.4 Discharge of Obligations; Release of Liens. Concurrently
with the Closing, the Seller's lenders (including, without limitation, Bank
of America) and such other parties as may have encumbered the Owned Real
Property or any other Assets shall have executed and delivered to the Buyer
or the Title Company (i) appropriate releases and discharges (including
UCC-3 Termination Statements) releasing and terminating their respective
Liens on such Owned Real Property or other Assets and all indebtedness
secured thereby and (ii) appropriate mortgage releases, releasing,
discharging and terminating their respective Liens on the Real Property and
all indebtedness secured thereby.
7.5 Supply Agreement. Concurrently with the Closing, the Seller
shall have executed and delivered a supply agreement relating to the
cohesive packaging products line and such other matters as set forth
therein, substantially in the form of Exhibit A attached hereto.
7.6 Non-Competition Agreement. Concurrently with the Closing,
the Seller shall have executed and delivered in favor of the Seller a
Non-Competition Agreement in the form attached hereto as Exhibit B.
7.7 New Sublease. IPC shall have executed and delivered the
New Sublease in form and substance mutually satisfactory to Buyer and
Seller (the "New Sublease") and IPC and the Seller shall have executed and
delivered a termination of the Sublease in form and substance mutually
satisfactory to Buyer and Seller.
7.8 Opinion of Counsel for Seller. The Buyer shall have
received a written opinion or opinions of counsel to the Seller, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer.
7.9 Bellwood Lease. The Seller shall have executed and
delivered a lease of the Bellwood facility by Seller to Buyer, in form and
substance mutually satisfactory to Buyer and Seller. The Seller shall have
delivered to the Buyer a non-disturbance agreement in form and substance
mutually satisfactory to the Buyer from the holder of any mortgage covering
the Bellwood facility.
7.10 Transition Services Agreement. The Seller shall have
executed and delivered the Transition Services Agreement in form and
substance mutually satisfactory to Buyer and Seller.
7.11 Consent, Recognition and Attornment Agreement. State
Street Bank and Trust Company, as Owner Trustee (the "Lessor"), under that
certain Lease Agreement, dated as of December 5, 1996, Societe Generale
(Southwest Agency) and Nationsbanc Leasing Corporation of North Carolina
shall have entered into a Consent, Recognition and Attornment Agreement
with the Buyer in the form of Exhibit C attached hereto.
7.12 Consents. The Seller shall have obtained all material
consents or approvals necessary to transfer the Assets and the Business to
Buyer, to vest good, valid and marketable title thereto in Buyer and to
consummate the Contemplated Transactions, including, without limiting the
generality of the foregoing, all such material consents, approvals and
acknowledgements (i) as are necessary to transfer the Contracts (except
that Seller shall provide all required consents or approvals as to
Contracts), Permits and Environmental Permits to Buyer or cause the Permits
and Environmental Permits to be reissued to Buyer; (ii) as are appropriate
in Buyer's discretion, under the Champion Agreement; (iii) as are necessary
from the ▇▇▇▇ ▇▇▇▇ Trustee and (iv) as are necessary from Bank of America
under the BoA Loan Agreement.
8. Conditions Precedent to the Obligation of the Seller to Close. The
obligation of the Seller to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
8.1 Representations and Covenants. All of the representations
and warranties of Buyer set forth in this Agreement that are qualified as
to materiality shall be true and complete and any such representations and
warranties that are not so qualified shall be true and complete in all
material respects as of the date of this Agreement and as of the Closing
Date as if made on and as of the Closing Date (except to the extent that
any such representation or warranty is made as of a specific date, in which
case such representation or warranty shall be true and complete, or true
and complete in all material respects, as the case may be, as of such
specified date). The Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date. The Buyer shall have delivered to the Seller a certificate, dated the
Closing Date and signed by an officer of the Buyer, to the foregoing
effect.
8.2 Purchase Price. The Buyer shall have paid the Base Purchase
Price to the Seller pursuant to Section 1.6 hereof.
9. Survival of Representations and Warranties of the Seller.
Notwithstanding any right of the Buyer fully to investigate the affairs of
the Seller with respect to the Business and notwithstanding any knowledge
of facts determined or determinable by the Buyer pursuant to such
investigation or right of investigation, the Buyer has the right to rely
fully upon the representations and warranties of the Seller contained in
this Agreement.
All of the Seller's representations and warranties shall
survive the execution and delivery of this Agreement and the Closing
hereunder, and (except for the representations and warranties contained in
Sections 3.1(b), 3.1(c), 3.2 and 3.3, which representations and warranties
shall survive indefinitely (the "Indefinite Representations and
Warranties")) such representations and warranties shall thereafter
terminate and expire:
(1) On the date that is 24 months after the Closing Date
with respect to any claim (other than a claim under Sections 3.9, 3.17
(with respect to claims other than relating to real property claims), 3.19
(as it relates to Losses arising under ERISA) or 3.23 hereof) based upon,
arising out of or otherwise in respect of any fact, circumstance, action or
proceeding of which the party asserting such claim shall not have given
written notice on or prior to the second (2nd) anniversary of the Closing
Date to the party against which such claim is asserted;
(2) On the expiration of the applicable statute of
limitations, with respect to any Losses claim under Sections 3.9 or 3.19
(solely with respect to claims arising under ERISA) and (B) on the date
that is five years after the Closing Date with respect to any claim under
Section 3.23, in each case based upon, arising out of or otherwise in
respect of any fact, circumstance, action or proceeding of which the Buyer
shall not have given written notice on or prior to such date to the Seller;
and
(3) On the tenth (10th) anniversary of the Closing Date
with respect to any claim under Section 3.17 (other than with respect to
real property claims insured by the Title Policies).
10. General Indemnification.
10.1 Obligation of the Seller to Indemnify. (a) Subject to the
time and other limitations contained in Sections 9 and 10.4, the Seller
agrees to indemnify, defend and hold harmless the Buyer (and its directors,
officers, Affiliates successors and assigns) from and against all losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
penalties and reasonable attorney's fees and disbursements) (collectively,
"Losses") for the full amount of such Losses based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any
representation or warranty of the Seller contained in this Agreement, other
than the representations and warranties set forth in Section 3.23, which
shall be governed by Section 10.6.
(b) Seller shall indemnify, defend and hold harmless the
Buyer (and its directors, officers, Affiliates, successors and assigns)
from and against all Losses arising out of or otherwise in respect of
Excluded Liabilities and breaches of covenants and agreements.
10.2 Obligation of the Buyer to Indemnify. (a) Subject to the
time and other limitations contained in Section 9 and Section 10.4, the
Buyer agrees to indemnify, defend and hold harmless the Seller from and
against any Losses based upon, arising out of or otherwise in respect of
any inaccuracy in or any breach of any representation or warranty, of the
Buyer contained in this Agreement;
(b) Buyer shall indemnify, defend and hold harmless
Seller (and its directors, officers, Affiliates, successors and assigns)
from and against all Losses arising out of or otherwise in respect of any
Assumed Liability and breaches of covenants and agreements.
10.3 Notice and Opportunity to Defend.
10.3.1 Notice of Asserted Liability. Promptly after
receipt by any party hereto (the "Indemnitee") of notice of any demand,
claim or circumstances which, with the lapse of time, would or might give
rise to a claim or the commencement (or threatened commencement) of any
action, proceeding, Tax audit or investigation (an "Asserted Liability")
that may result in a Loss, the Indemnitee shall give written notice thereof
(the "Claims Notice") to any other party obligated to provide
indemnification pursuant to Section 10.1 or 10.2 (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary
and to the extent feasible) of the Loss that has been or may be suffered by
the Indemnitee.
10.3.2 Opportunity to Defend. The Indemnifying Party may
elect to compromise or defend, at its own expense and by its own counsel,
any Asserted Liability asserted by a third party. If the Indemnifying Party
elects to compromise or defend such Asserted Liability, it shall within
thirty (30) days (or sooner, if the nature of the Asserted Liability so
requires) notify the Indemnitee of its intent to do so, and the Indemnitee
shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted
Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability.
Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnitee may settle or compromise any claim over the objection of the
other, provided, however, that consent to settlement or compromise shall
not be unreasonably withheld. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of
such Asserted Liability. If the Indemnifying Party chooses to defend any
claim, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense (subject to appropriate confidentiality
provisions).
10.4 Limitations on Indemnification. (A) The indemnifications
provided for in Sections 10.1(a) and 10.2(a) shall be subject to the
following limitations:
(1) The Seller shall not be obligated to pay any amounts
for indemnification under Section 10.1(a) (except those based upon, arising
out of or otherwise in respect of Sections 3.1(b), 3.1(c), 3.2, 3.3, 3.9,
and 3.17 (with respect to amounts for indemnification other than relating
to real property) (collectively, the "Basket Exclusions")) until the
aggregate indemnification payments, exclusive of the Basket Exclusions,
equals $1,000,000 (the "Basket Amount"), whereupon the Seller shall be
obligated to pay all amounts in excess of $1,000,000 for indemnification in
full up to the limits set forth in clause (3) below.
(2) The Seller shall be obligated to pay the Basket
Exclusions in full without regard to the individual or aggregate amounts
thereof and without regard to whether the aggregate of such indemnification
payments shall have exceeded, in the aggregate, the Basket Amount.
(3) The Seller shall not be obligated to pay any amount
for indemnification under Section 10.1(a) (except in respect of Sections
3.1(b), 3.1(c), 3.2, and 3.9 for all of which exceptions there is no limit
of liability) in excess of $28,250,000 (the "Cap").
(4) The Buyer shall not be obligated to pay any amounts
for indemnification under Section 10.2(a) until the aggregate
indemnification payments equal $1,000,000, whereupon the Buyer shall be
obligated to pay all amounts in excess of $1,000,000 for indemnification
not in excess of the Cap.
(5) Except with respect to claims or causes of action
based on fraud, the indemnification provided for in this Section 10 shall
be the exclusive right and remedy with respect to any claim or cause of
action based upon, relating to or arising out of an inaccuracy in or breach
of any representation or warranty contained in this Agreement, whether such
claim or cause of action arises out of any contract, tort or otherwise and
no such claim or cause of action shall be enforceable unless made in
accordance with the procedures, and within the time periods, set forth in
this Section 10.
(6) Notwithstanding the above, if indemnification of any
Losses results in a current deduction, credit or other tax benefit to the
Indemnitee under federal or state tax law, the amount indemnifiable under
this Section 10 shall be reduced to reflect such current tax benefit;
provided, however, that to the extent that any such tax benefit will not be
realized until a future date, the amount indemnifiable under this Section
10 shall be paid in full when due and payable hereunder, and the Indemnitee
Party shall refund to the Indemnifying Party the amount of such tax benefit
when, and only if, realized by the Indemnitee.
(7) Each Indemnitee shall use reasonable efforts
(including the filing of reasonable claims under its applicable insurance
policies) to attempt to mitigate any Losses for which it may claim
indemnification under this Section 10.
(B) For the avoidance of doubt, the obligations of
Buyer and Seller under Sections 10.1(b) and 10.2(b) are not subject to the
limitations set forth in Section 10.4(A).
(C) Solely for purposes of measuring the amount of
the Losses indemnifiable hereunder, whenever a representation or warranty
is qualified by a materiality standard (e.g. the adjective "material" or
the words "in all material respects") such representation or warranty shall
be deemed to be inaccurate or to have been breached if (x) there results a
Loss to Buyer in excess of $150,000 in the case of a single event or
occurrence or (y) there results a Loss to Buyer in excess of $150,000 in
the case of a series of reasonably related events or occurrences. Any such
Loss shall be fully credited against the Basket Amount and, to
the extent the Basket Amount shall be exceeded, Buyer shall be fully
indemnified therefor by the Seller (subject to the Cap and time provisions
of Section 9 hereof).
10.5 Bellwood Facility Environmental Indemnity.
Notwithstanding any other provision of this Agreement
(including Section 3.23), Seller shall indemnify, defend and hold harmless
the Buyer (and Buyer's previous, present and future Affiliates, officers,
directors, employees, representatives and agents) from and against all
losses, claims, fines, penalties, actions, causes of actions, sanctions and
any consequential damages arising or resulting from noncompliance with
Environmental Laws at the Bellwood facility prior to Closing (collectively,
"Bellwood Losses"), including, without limitation, any such Bellwood Losses
arising after the Closing Date out of the fact that (i) the Bellwood
facility is or was not properly Permitted or (ii) Buyer has been denied
Environmental Permits necessary to operate the Bellwood facility. This
indemnity shall survive indefinitely and shall not be subject to, nor shall
it be credited against, the Basket Amount, the Cap or Section 9 hereof.
Seller's obligations shall be limited only to the extent that it can prove,
by a preponderance of the evidence, that Buyer caused or contributed to
conditions giving rise to the Bellwood Loss through actions taken after
Closing in violation of Environmental Laws, provided that the occurrence of
migration or continued presence of contamination existing prior to Closing
shall not constitute an action by Buyer in violation of Environmental Laws
for purposes of this Section 10.5(a). Any claim hereunder shall be subject
to the provisions of Section 10.3, provided that Buyer may, if the
condition constitutes an imminent threat of endangerment to human health or
the environment, immediately correct any condition which is not in
compliance with Environmental Laws without regard to Section 10.3, and may
thereafter obtain indemnification subject to the terms and limitations of
such section. Unless otherwise required by applicable law or by order of a
governmental or regulatory body (after delivery of 30 days' written notice
to Seller or such shorter period as may be necessitated by the order at
stake) or if third parties (including any governmental or regulatory body)
shall have filed a claim, lawsuit or action against Buyer on account of any
alleged breach of Environmental Laws, the Buyer shall not conduct any
invasive surface, subsurface or water testing without the prior written
consent of the Seller, which the Seller may withhold in its sole
discretion.
Seller shall have the exclusive right to control and
manage any remediation and environmental project relating to the Bellwood
facility except, to the extent necessary (as determined in good faith by
Buyer) in order for Buyer to operate the Bellwood facility in compliance
with Environmental Laws. Buyer may participate during its term as lessee,
at its own cost and expense, in activities related to the remediation,
including, but not limited to, participation in meetings with respect to
the determination of applicable Remediation Standards or methods for
conducting the remediation.
10.6 Environmental Indemnification.
(a) General. Subject to the provisions of Section 10.5
above (concerning the Bellwood plant) and Section 10.6(b) below
(concerning the ▇▇▇▇▇▇ plant) and Section 10.6 (c) below (concerning the
▇▇▇▇ plant), any claim for indemnification pursuant to Section 3.23 shall
be subject to the following:
(i) the limitations of Section 9 and Section 10.4(A)
(including the Cap) shall apply; and
(ii) after giving effect to such limitations, any
Losses shall be shared between Buyer and Seller as follows: 10% to Buyer
and 90% to Seller. For the avoidance of doubt, the 10% share borne by Buyer
shall not be included in the Cap.
(b) ▇▇▇▇▇▇.
(1) (A) If Buyer purchases the Real Property in
▇▇▇▇▇▇ pursuant to its option in the "New Sublease" (the "Option") and:
(x) within five (5) years of the exercise of such option, Buyer
sells the Real Property in ▇▇▇▇▇▇ ("▇▇▇▇▇▇ Real Property"), then any
remediation costs incurred by the Seller since the Closing Date and
any remediation costs that might be necessary or advisable in order
for Buyer to offer and sell the ▇▇▇▇▇▇ Real Property borne by Buyer
as well as any remediation costs for its then intended use (such use
to be determined by Buyer in its entire discretion) shall be paid for
in accordance with Section 12(d) of the New Sublease; or
(y) Buyer does not sell the ▇▇▇▇▇▇ Real Property within 5 years
of the exercise of the Option, then any remediation costs that Buyer
might incur in order to put the ▇▇▇▇▇▇ Real Property for sale for its
then intended use shall be borne solely by Buyer.
(B) Subparagraph (b)(1)(A) shall not preclude
any claim for indemnification under Section 10.6(a); provided that Seller
shall only be obligated to indemnify, defend and hold harmless Buyer only
so long as Buyer shall not have undertaken any invasive testing of the
▇▇▇▇▇▇ Real Property without the Seller's consent in Seller's sole
discretion. For the avoidance of doubt, Buyer shall not be deemed to have
undertaken invasive testing on its own initiative if it is required to
conduct such testing by applicable law or by order of a governmental or
regulatory body (after delivery of 30 day written notice to Seller or such
shorter period as may be necessitated by the order at stake) or if third
parties (including any governmental or regulatory body) shall have filed a
claim, lawsuit or action against Buyer on account of any alleged breach of
Environmental Laws, whereupon Buyer shall be permitted to conduct such
testing subject to the sole control and management of Seller in accordance
with Section 10.6(b)(3) below.
(C) If Buyer exercises the Option and sells
the ▇▇▇▇▇▇ Real Property within five (5) years of such exercise, the
Environmental Liabilities arising out of or in connection with the ▇▇▇▇▇▇
Real Property shall constitute Excluded Liabilities. If Buyer exercises the
Option and does not sell the ▇▇▇▇▇▇ Real Property within five (5) years of
such exercise, the Environmental Liabilities arising out of or in
connection with the ▇▇▇▇▇▇ Real Property shall constitute Assumed
Liabilities from and after the date of such exercise.
(D) If , prior to the fifth anniversary of the
Closing Date, Buyer wishes to sell the ▇▇▇▇▇▇ Real Property and, to that
effect, wishes to undertake invasive testing of the ▇▇▇▇▇▇ Real Property,
Buyer shall request Seller's consent in writing. If Seller denies such
consent, Seller agrees that it shall enter into such indemnification
agreement with the purchaser of the ▇▇▇▇▇▇ Real Property as Buyer may
require so as to indemnify the purchaser of the ▇▇▇▇▇▇ Real Property on
account of Environmental Liabilities, so long as Seller shall have the same
obligations as Buyer under such indemnification agreement. As between Buyer
and Seller, each shall be responsible for 50% of any Losses arising out of
any claims which the purchaser may make on account of Environmental
Liabilities.
(2) If Buyer has not exercised the Option:
(A) While Buyer is sublessee under the
New Sublease, Seller shall indemnify, defend and hold harmless Buyer
against all Losses arising under Environmental Laws ("Environmental
Losses") at the ▇▇▇▇▇▇ Real Property in accordance with Section 10.6(a),
except for, and only to the extent of, Environmental Losses caused by Buyer
during the period it operated the ▇▇▇▇▇▇ Real Property, in which case
Seller shall have the burden of proving, by a preponderance of the
evidence, that Buyer actually caused such Environmental Losses, provided
that Seller shall only be obligated to indemnify, defend and hold harmless
Buyer so long as Buyer shall not have undertaken, any invasive testing of
the ▇▇▇▇▇▇ Real Property without the Seller's consent in Seller's sole
discretion. Buyer shall not be deemed to have undertaken invasive testing
on its own initiative if it is required to conduct such testing by
applicable law or by order of a governmental or regulatory body (after
delivery of 30 days' written notice to Seller or such shorter period as may
be necessitated by the order at stake) or if third parties (including any
governmental or regulatory body) shall have filed, a claim, lawsuit, or
action against Buyer on account of any alleged breach of Environmental
Laws, whereupon Buyer shall be permitted to conduct such testing subject to
the sole control and management of Seller.
(B) After Buyer is no longer the Sublessee,
Seller shall indemnify, defend and hold harmless Buyer against all
Environmental Losses, except to the extent caused by Buyer during the
period it operated the ▇▇▇▇▇▇ Real Property, in which case Seller shall
have the burden of proving, by a preponderance of the evidence, that Buyer
actually caused such Environmental Losses.
(C) At the expiration of the New Sublease,
Buyer shall deliver the ▇▇▇▇▇▇ Real Property in substantially the same
condition as on the Closing Date as in regards the presence of Hazardous
Materials in the air, surface water, groundwater or land at or in the
vicinity of the ▇▇▇▇▇▇ Real Property (the "Environmental Condition"),
provided Seller shall have the burden of proving, by a preponderance of the
evidence, that and the extent to which, the Environmental Condition at the
time of the expiration of the New Sublease is worse than the Environmental
Condition on the Closing Date. In that event, Buyer's sole obligation shall
be to return the ▇▇▇▇▇▇ Real Property in the Environmental Condition that
prevailed on the Closing Date (as demonstrated by Seller by a preponderance
of the evidence) and, under no circumstances, shall Buyer be obligated to
deliver the ▇▇▇▇▇▇ Real Property in an Environmental Condition which is
required due to any change in use of the ▇▇▇▇▇▇ Real Property on or after
the expiration or termination of the New Sublease, or any change in use
established under zoning procedures at any time.
(D) For the avoidance of doubt, in this Section
10.6(b)(2) Environmental Liabilities arising out of or in connection with
the ▇▇▇▇▇▇ Real Property shall constitute Excluded Liabilities.
(3) During the Control Period, Seller shall have
the exclusive right to control and manage any remediation and environmental
project relating to the ▇▇▇▇▇▇ Real Property, except to the extent
necessary (as determined in good faith by the Buyer) in order for Buyer to
operate the ▇▇▇▇▇▇ Real Property in compliance with Environmental Laws.
Buyer may, during the Control Period, participate at its own cost and
expense, in activities related to any remediation at the ▇▇▇▇▇▇ Real
Property, including but not limited to, participation in meetings with
respect to the determination of applicable Remediation Standards or methods
for conducting the remediation. "Control Period" shall mean the expiration
of the five (5) year survival period applicable to the representations and
warranties made under Section 3.23, provided that, to the extent that any
remediation resulting in indemnifiable Losses to the Seller at the ▇▇▇▇▇▇
Real Property is ongoing on the fifth (5th) anniversary of the Closing
Date, the Control Period shall extend solely with respect to such
remediation until the completion of such remediation; provided, further, in
any event, the Seller shall have the exclusive right to control and manage
any remediation and environmental project relating to the ▇▇▇▇▇▇ Real
Property during Seller's or its Affiliates' ownership or lease, as the case
may be, subject to Buyer's right, to the extent necessary (as determined in
good faith by Buyer) to operate the ▇▇▇▇▇▇ Real Property in compliance with
Environmental Laws.
(c) ▇▇▇▇
Pursuant to that certain Agreement of Settlement and
Release, dated as of September 20, 1991 between Frantschach AG and Champion
International, Inc. together with the Agreement of Settlement and Release
dated November 2, 1994 (the "Champion Agreement") between Frantschach AG,
Ivex Converted Products Corporation (n/k/a IPC) and PNL Investments, B.V.,
and a Novation Agreement of the same date among Frantschhach A.G., Ivex
converted Products Corporation and Champion International Corporation
("Champion") Champion has agreed to bear 75% of the costs and expenses of
the clean-up of certain hazardous materials at the ▇▇▇▇ plant, all as more
fully set forth in such agreements. It is understood that Seller (as IPC's
successor of the ▇▇▇▇ plant) and IPC shall continue to bear 25% of such
clean-up costs, subject to the terms of Sections 9 and 10.4(A), except to
the extent of any accrual or reserve reflected on the Closing Date Balance
Sheet. Seller shall only have such obligation to the extent it has sole
control and management over any remediation.
The parties agree and acknowledge to act in good faith
and in compliance with Environmental Laws to effect the foregoing
provisions.
11. Termination of Agreement.
11.1 Termination. This Agreement may be terminated prior to the
Closing Date as follows:
(1) At the election of the Seller if any one or more of
the conditions to its obligation to close has not been fulfilled in all
material respects by the Closing Date and such condition cannot be
fulfilled within thirty (30) days of the Closing Date;
(2) At the election of the Buyer, if any one or more of
the conditions to its obligation to close has not been fulfilled in all
material respects by the Closing Date and such condition cannot be
fulfilled within 30 days of the Closing Date;
(3) At any time on or prior to the Closing Date, by mutual
written consent of the Seller and the Buyer;
(4) By either party, if the Closing shall not have
occurred on or prior to May 31, 2000, and such party is not in material
breach of this Agreement at the time such party seeks to terminate this
Agreement; or
(5) By the Buyer, if (i) a supplement or amendment of any
Schedule made by Seller pursuant to Section 5.2 (a) would have a material
adverse effect and (ii) any breach of a representation, warranty, covenant
or other agreement referred to in such supplement or amendment cannot be or
has not been cured within thirty (30) days after such supplement or
amendment is made by the Seller.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, except as provided in Section 11.2.
11.2 Survival. If this Agreement is terminated and the
Contemplated Transactions are not consummated as described above, this
Agreement shall become void and of no further force and effect, (i) except
for the provisions of Section 5.3 relating to the obligation of the Buyer
to keep confidential and not to use certain information and data obtained
by it from the Seller and to return documents to the Seller and except for
the provisions of Sections 5.5 and 5.6, (ii) except that any party hereto
shall have all of the rights and remedies available under law, at equity or
otherwise against the other parties hereto in the event this Agreement is
wrongfully terminated or terminated in bad faith pursuant to clauses (1),
(2) or (5) of Section 11.1 and (iii) if such termination occurs pursuant to
Section 11.1(5), Seller shall reimburse Buyer for all reasonable
legal/accounting and out-of-pocket expenses (except those relating to any
financing or investment banking arrangements, provided, however, that
Seller shall reimburse the reasonable expenses and disbursement of Buyer's
investment banking advisors incurred subsequent to the date hereof and
prior to such termination) incurred by Buyer subsequent to the date hereof
and prior to such termination.
12. Miscellaneous.
12.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"Affiliate" with respect to any person, means any
other person controlling, controlled by or under common control with such
person. "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of, the management and policies of a
person, whether through the ownership of voting securities by contract or
otherwise.
"Agreement" means this Asset Purchase Agreement by and
between Ultra Pac., Inc. and Chargeurs Acquisition Company, dated as of
April 22, 2000.
"Arbitrator" shall have the meaning set forth in
Section 1.8(2) hereto.
"Asserted Liability" shall have the meaning set forth
in Section 10.3.1 hereto
"Assets" shall have the meaning set forth in
Section 1.1 hereto.
"Assumed Liabilities" shall have the meaning set forth
in Section 1.4 hereto.
"Balance Sheet" shall have the meaning set forth in
Section 3.7(1) hereto.
"Balance Sheet Date" shall have the meaning set forth
in Section 3.7(1) hereto.
"Base Purchase Price" shall have the meaning set forth
in Section 1.6 hereto.
"Basket Amount" shall have the meaning set forth in
Section 10.4.1 hereto.
"Basket Exclusions" shall have the meaning set forth
in Section 10.4.1 hereto.
"Bellwood Losses" shall have the meaning set forth in
Section 10.5 hereto.
"Benefit Plan" shall have the meaning set forth in
Section 3.19(1) hereto.
"▇▇▇▇ of Sale" shall have the meaning set forth in
Section 7.2(4) hereto.
"Business" means the specialty coating business of
Seller, as more fully described in that certain "Information Memorandum"
dated January 2000, including the manufacture, sale and distribution of
coated paper and film for use as surface protection products and coated and
laminated products for the graphic laminations, gummed products and surface
texturing markets at and from the ▇▇▇▇▇▇, ▇▇▇▇ and Bellwood plants of
Seller. Without limiting the foregoing, the Business includes the
"Business" as this term is defined in each of the Contribution Agreements
between IPC and Seller and PPI and Seller.
"BoA Loan Agreement" means IPC's Senior, credit
agreement, as amended and restated, among IPC and the other signatories
thereto providing for the availability of a credit facility to IPC and its
Affiliates (including the Seller), and all security agreements, promissory
notes, guarantees and other documents, certificates and instruments
executed in connection therewith.
"Buyer 401(k) Plan" shall have the meaning set forth
in Section 5.8(4) hereto.
"Buyer" means Chargeurs Acquisition Company.
"Buyer Flex Plan" shall have the meaning set forth in
Section 5.8(6) hereto.
"Buyer's Accountant" shall have the meaning set forth
in Section 1.8(2) hereto.
"Buyer's Broker" shall have the meaning set forth in
Section 5.6 hereto.
"Cap" shall have the meaning set forth in Section
10.4.3 hereto.
"Champion" shall have the meaning set forth in
Section 10.6(c) hereto.
"Champion Agreement" shall mean as defined in
Section 10.6 (c).
"Claims Notice" shall have the meaning set forth in
Section 10.3.1 hereto.
"Closing" shall have the meaning set forth in
Section 1.1 hereto.
"Closing Balance Sheet" shall have the meaning set
forth in Section 1.8(3) hereto.
"Closing Date" shall have the meaning set forth in
Section 2.1 hereto.
"Closing Net Assets" shall have the meaning set forth
in Section 1.8(1) hereto.
"Code" shall have the meaning set forth in Section
3.19(3) hereto.
"Contemplated Transaction" shall have the meaning set
forth in Section 3.1(1) hereto.
"Contracts" shall have the meaning set forth in
Section 3.13 hereto.
"Contribution Agreement" means (1) that certain
Contribution Agreement dated December 15, 1999 between the Seller and IPC,
(2) that certain Contribution Agreement dated December 15, 1999 between PPI
and the Seller, and (3) that certain Contribution Agreement dated December
15, 1999 between the Seller and IPC, relating to the Mexican Subsidiary.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Deeds" shall have the meaning set forth in Section
7.2(3) hereto.
"Disputed Matters" shall have the meaning set forth in
Section 1.8(2) hereto.
"Distribution Agreement" means that certain
Distribution Agreement dated February 29, 2000 between Seller and IPC.
"DOJ" means the Antitrust Division of the United States
Department of Justice.
"Draft Closing Balance Sheet" shall have the meaning
set forth in Section 1.8(2) hereto.
"Earn-Out Payment" shall have the meaning set forth in
Section 1.9(a) hereto.
"Earn-Out Targets" shall have the meaning set forth in
Section 1.9(a)(iii) hereto.
"Easements" shall have the meaning set forth in
Section 3.15.3 hereto.
"EBITDA" shall have the meaning set forth in
Section 1.9(a)(i) hereto.
"Environmental Conditions" shall have the meaning set
forth in Section 10.6(b)(2)(C) hereto.
"Environmental Laws" means any federal, state, local
or foreign statute, law, ordinance, regulation, rule, code, treaty, writ or
order and any enforceable judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree,
judgment, stipulation, injunction, permit, authorization, policy, opinion,
or agency requirement, in each case having the force and effect of law,
relating to the pollution, protection, investigation or restoration of the
environment, health and safety or natural resources, including, without
limitation, those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property or to the siting,
construction, operation, closure and post-closure care of waste disposal,
handling and transfer facilities.
"Environmental Losses" shall have the meaning set
forth in Section 10.6(b)(2)(A) hereto.
"Environmental Permits" means any permit, approval,
identification number, license and other authorization required under any
applicable Environmental Law for the current operations at any plant or
facility of the Seller.
"ERISA" shall have the meaning set forth in
Section 3.19(1) hereto.
"Excluded Assets" shall have the meaning set forth in
Section 1.2 hereto.
"Excluded Liabilities" has the meaning set forth in
Section 1.4 hereof.
"Final EBITDA Ratio" shall have the meaning set forth
in Section 1.9(c) hereto.
"Financial Statements" shall have the meaning set
forth in Section 3.7 hereto.
"FIRPTA Affidavit" shall have the meaning set forth
in Section 7.2(5) hereto.
"Fiscal 2000" shall have the meaning set forth in
Section 1.9(a)(i) hereto.
"Fiscal 2000 Target" shall have the meaning set forth
in Section 1.9(a)(i) hereto.
"Fiscal 2001" shall have the meaning set forth in
Section 1.9(a)(ii) hereto.
"Fiscal 2001 Target" shall have the meaning set forth
in Section 1.9(a)(ii) hereto.
"Fiscal 2002" shall have the meaning set forth in
Section 1.9(a)(iii) hereto.
"Fiscal 2002 Target" shall have the meaning set forth
in Section 1.9(a)(iii) hereto.
"GAAP" means generally accepted accounting principles
in effect in the United States.
"governmental or regulatory body" means any government
or political subdivision thereof, whether federal, state, local or foreign, or
any agency or instrumentality of any such government or political
subdivision.
"Hazardous Materials" means (a) any petroleum,
petroleum products, by-products or breakdown products, radioactive
materials, asbestos-containing materials or polychlorinated biphenyls or
(b) any chemical, material or other substance defined or regulated as toxic
or hazardous or as a pollutant or contaminant or waste under any applicable
Environmental Law.
"HSR Act" shall have the meaning set forth in
Section 3.14 hereto.
"Indefinite Representations and Warranties" shall
have the meaning set forth in Section 9 hereto.
"Indemnifying Party" shall have the meaning set forth
in Section 10.3.1 hereto.
"Indemnitee" shall have the meaning set forth in
Section 10.3.1 hereto.
"Insurance Policy" shall have the meaning set forth
in Section 5.14 hereto.
"Intangible Property" shall have the meaning set
forth in Section 3.16 hereto.
"Intellectual Property" means any and all United States
and foreign: (a) patents (including design patents, industrial designs and
utility models) and patent applications (including docketed patent
disclosures awaiting filing, reissues, divisions, continuous-in-part and
extensions), patent disclosures awaiting filing determination, inventions
and improvements thereto; (b) trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, Internet domain names
and registrations and applications for registration thereof; (c)
inventions, processes, designs, formulae, trade secrets, knowhow,
industrial models, confidential and technical information, manufacturing,
engineering and technical drawings, product specifications and confidential
business information ; (d) copyrights, copyrightable works; (e) computer
software, including but not limited to, data, databases, and documentation;
(f) intellectual property rights similar to any of the foregoing; and (g)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media) and any registrations or applications for any
of the foregoing.
"Intellectual Property Assets" shall have the meaning
set forth in Section 1.1(h) hereto.
"Interim Financials" shall have the meaning set forth
in Section 3.7(1) hereto.
"Inventories" shall have the meaning set forth in
Section 1.1(c) hereto.
"IPC" means IPC, Inc., the parent company of Seller.
"IRS" means the United States Internal Revenue Service.
"Ivex" means Ivex Packaging Corporation, the parent
company of IPC.
"Ivex Flex Plan" shall have the meaning set forth in
Section 5.8(6) hereto.
"knowledge" means the knowledge possessed, or which
should have been possessed by the officers and directors of the Seller, PPI and
IPC after reasonable inquiry.
"Laws" means all United States federal, state and
local, and foreign laws, statutes, regulations, ordinances, rules,
judgments, orders, injunctions, awards, decrees and determinations of any
governmental or regulatory body.
"Lease" shall have the meaning set forth in Section
10.1 hereto.
"Leased Property Title Commitment" shall have the
meaning set forth in Section 3.15.2 hereto.
"Leased Real Property" shall have the meaning set
forth in Section 3.15.2 hereto.
"Liens" means any mortgage, pledge, lien, security
interest, charge, claim, equitable interest, encumbrance, restriction on
transfer, conditional sale or other title retention device or arrangement
(including, without limitation, a capital lease), transfer for the purpose
of subjection to the payment of any indebtedness, or restriction on the
creation of any of the foregoing, whether relating to any property or right
or the income or profits therefrom; provided, however, that the term "Lien"
shall not include (i) statutory liens for Taxes to the extent that the
payment thereof is not in arrears or otherwise due and payable, (ii)
encumbrances in the nature of zoning restrictions, easements, rights or
restrictions of record on the uses of real property if the same do not
impair the use of such property in the conduct of the Business as currently
conducted, (iii) statutory or common law liens to secure landlords, lessors
or renters under leases or rental agreements confined to the premises
rented to the extent that no payment or performance under any such lease or
rental agreement is in arrears or is otherwise due and payable, (iv)
deposits or pledges made in connection with, or to secure payment of,
worker's compensation, unemployment insurance, old age pension programs
mandated under applicable laws or other social security regulations and (v)
statutory or common law liens to secure claims for labor, materials or
supplies and other like liens, which secure obligations to the extent that
payment thereof is not in arrears or otherwise due and payable.
"material adverse effect" means, any effect that
would reasonably be expected to be materially adverse to the Business or
the Assets taken as a whole; provided, however, that any adverse change,
circumstance or effect that is primarily caused by conditions affecting the
United States economy as a whole or the general conditions in the industry
in which such person operates shall not be taken into account in
determining whether there has been or would be a "material adverse effect."
"Mexican Subsidiary" means Ivex de Mexico S.A. de C.V.
"Net Assets Adjustment" shall have the meaning set
forth in Section 1.8(1) hereto.
"New Sublease" shall have the meaning set forth in
Section 7.7 hereto.
"▇▇▇▇▇▇ Real Property" shall have the meaning set
forth in Section 10.6(b)(1)(A) hereto.
"Notice of Disagreement" shall have the meaning set
forth in Section 1.8(2) hereto.
"Olympia Marble Lease" means the lease dated
September 1, 1990 between L&CP Realty Corporation, as landlord and Olympia
Marble and Granite, Inc. as tenant covering 8,199 rentable square feet at
the corner of Oak Streets, Newton, Massachusetts.
"Option" shall have the meaning set forth in Section
10.6(b) hereto.
"Owned Real Property" shall have the meaning set
forth in Section 3.15.1 hereto.
"Permit" shall have the meaning set forth in
Section 3.10.
"Permitted" shall have a concomitant meaning.
"Permitted Exception" has the meaning set forth in
Schedule 7.2(1).
"Person" means any individual, corporation,
partnership, limited liability company or partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
"PPI" shall mean Product Packaging Inc., a wholly-owned
subsidiary of IPC.
"Predecessors" shall have the meaning set forth in
Section 3.10 hereto.
"Purchase Price" shall have the meaning set forth in
Section 1.6 hereto.
"Real Property" shall have the meaning set forth in
Section 3.15.2 hereto.
"Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any property, including the movement
of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
"Remediation Standard" means a numerical standard
that defines the concentrations of Hazardous Substances that may be
permitted to remain in any environmental media after an investigation,
remediation or containment of a release of Hazardous Materials.
"Required Consents" shall have the meaning set forth
in Section 3.14 hereto.
"Retained Employee" shall have the meaning set forth
in Section 5.8(1) hereto.
"Seller" means Ultra Pac, Inc.
"Statement" shall have the meaning set forth in
Section 1.9(d) hereto.
"Statement Arbitrator" shall have the meaning set
forth in Section 1.9(d) hereto.
"Statement Disputed Matters" shall have the meaning
set forth in Section 1.9(d) hereto.
"Statement Notice of Disagreement" shall have the
meaning set forth in Section 1.9(d) hereto.
"Statute of Limitations Period" means the period
commencing on the first day on which any claim or cause of action may arise
or may have arisen and shall end on the date which is the last day on which
such claim or cause of action may be properly asserted at law or equity.
"Sublease" shall have the meaning set forth in
Section 3.15.8 hereto.
"Surveys" shall have the meaning set forth in
Section 7.2(2) hereto.
"Taxes" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, value added, license, net
worth, payroll, franchise, transfer and recording taxes, fees and charges,
imposed by the IRS or any other taxing authority (whether domestic or
foreign), and shall include any interest, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments.
"Tax Return" means any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes.
"Title IV Plan" shall have the meaning set forth in
Section 3.19(3) hereto.
"Title Commitment" shall have the meaning set forth
in Section 3.15.2 hereto.
"Trade Secrets" shall have the meaning set forth in
Section 3.16 hereto.
"Transfer Taxes" shall have the meaning set forth in
Section 3.9(e) hereto.
"Transition Services Agreement" shall have the meaning
set forth in Section 5.9 hereto.
"▇▇▇▇ ▇▇▇▇▇" means the outstanding Convertible
Floating Rate Demand Economic Revenue Bonds Series 1988 issued pursuant to
an Indenture of Trust between the Central Trust Company, N.A. as Trustee
(the "▇▇▇▇ ▇▇▇▇ Trustee") and the City of Troy, Ohio.
"▇▇▇▇ Escrow Agreement" shall have the meaning set
forth in Section 5.15 hereto.
"Unaudited Financials" shall have the meaning set
forth in Section 3.7 hereto.
12.2 Publicity. No publicity release or announcement concerning
this Agreement or the transactions contemplated hereby shall be made
without advance approval thereof by the Seller and the Buyer.
12.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be (i) delivered
personally, (ii) sent by facsimile transmission (provided that a
confirmation copy shall be sent the same day for delivery by a reputable
overnight international courier service), (iii) sent by certified or
registered mail, postage prepaid, or (iv) sent by reputable overnight or
international courier service. Any such notice shall be deemed given when
so delivered personally or sent by facsimile transmission (provided that a
confirmation copy shall be sent the same way for delivery by a reputable
overnight or international courier service) or, if mailed, five (5) days
after the date of deposit in the United States mail, or if sent by
overnight courier service, two (2) business days after delivery to such
courier service, or if sent by international courier service, five (5) days
after delivery to such courier service. Notice of change of address shall
also be governed by this section. In the event of a general discontinuance
of postal service due to strike, lockout or otherwise, notice or other
communications shall be delivered in accordance with clauses (i), (ii) or
(iv) and shall be deemed to have been received in accordance with this
section. Notices and other communications shall be addressed as follows:
(1) if to the Buyer, to:
Chargeurs Protective Films
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇
Telephone: (▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇
Telecopy: (▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇
Attention: Chairman
with copies to:
Chargeurs
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
General Counsel
Telephone: (▇▇)-▇-▇▇-▇▇-▇▇-▇▇
Telecopy: (▇▇)-▇-▇▇-▇▇-▇▇-▇▇
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
Suite 3600
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if to the Seller, to:
Ivex Packaging Corporation
▇▇▇ ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with copies to:
Ivex Packaging Corporation
▇▇▇ ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices
hereunder.
12.4 Entire Agreement. This Agreement (including the Schedules
and Exhibits) and the collateral agreements executed in connection with the
consummation of the transactions contemplated hereby contain the entire
agreement among the parties with respect to the purchase of the Assets and
the Business and supersede all prior agreements, written or oral, with
respect thereto.
12.5 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by
a written instrument signed by the Buyer and the Seller, or, in the case of
a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof. Nor shall any waiver on the part of any party of any
such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or
the exercise of any other such right, power or privilege.
12.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York.
12.7 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement is not assignable without
the prior written consent of the other party, except that the Buyer may
assign its rights hereunder to any direct or indirect wholly-owned
subsidiary of the Buyer; provided, however, that such assignment by Buyer
shall not release Buyer from any obligations that Buyer has hereunder.
12.8 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as
the context may require.
12.9 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all of the parties hereto. A telecopy of a signature hereto shall
constitute a legal, valid and binding counterpart.
12.10 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein
to Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall
otherwise require.
12.11 Headings. The headings and square-bracketed textual
references, containing a brief description of the Section preceding them,
in this Agreement are for reference only, and shall not affect the
interpretation of this Agreement.
12.12 Severability of Provisions. If any provision or any
portion of any provision of this Agreement or the application of any such
provision or any portion thereof to any person or circumstance, shall be
held invalid or unenforceable, the remaining portion of such provision and
the remaining provisions of this Agreement, or the application of such
provision or portion of such provision as is held invalid or unenforceable
to persons or circumstances other than those as to which it is held invalid
or unenforceable, shall not be affected thereby.
12.13 Interpretation. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
ULTRA PAC, INC.
By: /s/ G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: Vice President
Name: G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
CHARGEURS ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Title: President
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇