SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 19, 1998
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333-26943
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(Commission File Number)
ANCHOR ADVANCED PRODUCTS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3084238
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(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
ANCHOR HOLDINGS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 62-1427775
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(State or Other Jurisdiction) (I.R.S. Employer Identification No.)
of Incorporation)
1111 Northshore Drive, Suite 600, Knoxville, TN 37919-4048
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(Address of Principal Executive Offices) (Zip Code)
(423) 450-5300
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(Registrant's Telephone Number, Including Area Code)
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Item 1. Changes in Control of Registrant.
On March 19, 1998 Anchor Acquisition Co., a Delaware corporation
("Purchaser"), entered into a Stock Purchase Agreement (the "Purchase
Agreement") with ML-Lee Acquisition Fund II, L.P., ML-Lee Acquisition Fund
(Retirement Accounts) II, L.P. and Thomas H. Lee Equity Partners, L.P. The
closing of the transactions contemplated by the Purchase Agreement occurred
concurrent with the signing of the Purchase Agreement (the "Closing"). Pursuant
to the terms and conditions of the Purchase Agreement, at the Closing the
Purchaser acquired all of the issued and outstanding shares of capital stock of
Anchor Holdings, Inc., whose wholly owned subsidiary is Anchor Advanced
Products, Inc.
The purchase price was $4.00 per share, of which 1,551,217.66 shares of
common stock, $.01 par value per share, were issued and outstanding, for a total
purchase price of $6,204,870.64.
Upon the Closing, the officers and directors of Anchor Holdings, Inc.
and Anchor Advanced Products, Inc. resigned and the Purchaser caused new
officers and a new director of each of those entities to be elected.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Exhibit
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2.1 Stock Purchase Agreement dated as
of March 19, 1998 by and among
Anchor Acquisition Co., Anchor
Holdings, Inc. and the Selling
Stockholders of Anchor Holdings,
Inc., together with Exhibits and
Schedules.
99.1 Press Release.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANCHOR ADVANCED PRODUCTS, INC.
Date: April 1, 1998 By: /s/ George T. Votis
George T. Votis,
Chairman and Chief Executive Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANCHOR HOLDINGS, INC.
Date: April 1, 1998 By: /s/ George T. Votis
George T. Votis,
Chairman and Chief Executive Officer
EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 19, 1998
BY AND AMONG
ANCHOR ACQUISITION CO.
ANCHOR HOLDINGS, INC.
AND
THE SELLING STOCKHOLDERS OF ANCHOR HOLDINGS, INC.
===============================================================================
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS......................................................1
SECTION 1.1. Certain Definitions; Interpretation..................1
ARTICLE II. PURCHASE AND SALE...............................................5
SECTION 2.1. Sale and Delivery by Sellers.........................5
SECTION 2.2. Consideration........................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES.................................5
SECTION 3.1. Representations and Warranties of the Company........5
(a) Organization and Qualification.......................5
(b) Capitalization.......................................5
(c) Subsidiaries; Significant Investments................6
(d) Due Authorization....................................6
(e) No Violations........................................7
(f) Financial Statements.................................7
(g) Absence of Undisclosed Liabilities and
Certain Changes or Events..........................8
(h) Title to Assets......................................8
(i) Taxes................................................8
(j) Absence of Claims...................................10
(k) Agreements..........................................10
(l) Labor Matters.......................................11
(m) Employee Benefits...................................11
(n) Compliance with Laws................................14
(o) Fees................................................14
(p) Environmental Matters...............................14
(q) Intellectual Property...............................15
(r) Insurance...........................................15
(s) Material Interests of Certain Persons...............15
(t) Affiliate Transactions..............................15
(u) Books and Records...................................15
(v) Information.........................................16
(w) Suppliers...........................................16
(x) Warranty Claims.....................................16
SECTION 3.2. Representations and Warranties of the Sellers.......16
(a) Ownership...........................................16
(b) Authority...........................................16
(c) No Conflicts........................................16
(d) Fees................................................17
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SECTION 3.3. Representations and Warranties of Purchaser.........17
(a) Organization and Qualification......................17
(b) Due Authorization...................................17
(c) No Violations.......................................17
(d) Fees................................................18
(e) Absence of Claims...................................18
(f) Access to Funds; Solvency...........................18
(g) Acquisition of Stock for Investment.................19
SECTION 3.4. Projections.........................................19
SECTION 3.5. No Additional Representations or Warranties.........19
ARTICLE IV. COVENANTS......................................................20
SECTION 4.1. Employee Benefit Matters............................20
SECTION 4.2. Publicity...........................................20
SECTION 4.3. Directors and Officers Liability....................21
SECTION 4.4. Funding Indebtedness................................21
SECTION 4.5. Non-Solicitation....................................21
ARTICLE V. TAX MATTERS.....................................................21
SECTION 5.1. Filing of Returns...................................21
SECTION 5.2. Cooperation on Tax Matters..........................22
SECTION 5.3. Tax Audits..........................................22
SECTION 5.4. Tax Adjustments.....................................23
SECTION 5.5. Tax Sharing Agreements..............................23
SECTION 5.6. Transfer Taxes......................................24
SECTION 5.7. Section 338 Election................................24
ARTICLE VI. CLOSING........................................................24
SECTION 6.1. Closing.............................................24
SECTION 6.2. Deliveries of the Company...........................24
(a) Stock Certificates..................................24
(b) Corporate Documents.................................24
(c) Consents; Resolutions...............................25
(d) Certificates of Good Standing.......................25
(e) Opinion of Counsel..................................25
(f) Consents............................................25
(g) Management Agreement................................25
SECTION 6.3. Deliveries of Purchaser.............................25
(a) Purchase Price......................................25
(b) Corporate Documents.................................25
(c) Consents; Resolutions...............................25
(d) Certificate of Good Standing........................25
(e) Opinion of Counsel..................................25
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ARTICLE VII. INDEMNIFICATION...............................................25
SECTION 7.1. Survival............................................25
SECTION 7.2. Indemnification by the Sellers......................26
SECTION 7.3. Indemnification by the Purchaser....................26
SECTION 7.4. Limits on Claims....................................26
SECTION 7.5. Notice of Claims....................................26
SECTION 7.6. Third Party Claims..................................27
SECTION 7.7. Exclusive Remedy....................................27
ARTICLE VIII. OTHER MATTERS................................................27
SECTION 8.1. Waiver..............................................27
SECTION 8.2. Counterparts........................................28
SECTION 8.3. Exhibits and Schedules..............................28
SECTION 8.4. Schedules...........................................28
SECTION 8.5. Governing Law.......................................28
SECTION 8.6. WAIVER OF JURY TRIAL................................28
SECTION 8.7. Specific Performance................................29
SECTION 8.8. Expenses............................................29
SECTION 8.9. Notices.............................................29
SECTION 8.10. Entire Agreement; Etc...............................30
SECTION 8.11. Severability........................................30
SECTION 8.12. Headings............................................30
SECTION 8.13. No Strict Construction. ...........................30
SECTION 8.14. Assignment..........................................30
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 19, 1998 (the "Agreement"),
by and among Anchor Holdings, Inc., a Delaware corporation, (the "Company"),
the undersigned Lee Stockholders (as hereinafter defined)( together with the
other stockholders delivering shares of Anchor Holdings, Inc. common stock at
the Closing, each a "Seller" and collectively, the "Sellers") and Anchor
Acquisition Co., a Delaware corporation ("Purchaser").
In consideration of the mutual covenants, representations, warranties
and agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated:
"Affiliate" means an affiliate as defined in Rule 405 of under the
Securities Act of 1933 as amended.
"Agreement" shall have the meaning set forth in the preamble.
"Claim Notice" shall have the meaning set forth in Section 7.5.
"Closing" shall have the meaning set forth in Section 6.1.
"Closing Date" shall have the meaning set forth in Section 6.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the Preamble.
"Company Balance Sheet" shall have the meaning set forth in Section
3.1(f).
"Company Balance Sheet Date" shall have the meaning set forth in
Section 3.1(f).
"Company Financial Statements" means shall have the meaning set forth
in Section 3.1(f).
"Company Stock" means the common stock of Anchor Holdings, Inc.
"Compensation and Benefit Plans" shall have the meaning set forth in
Section 3.1(m).
"Consultants" shall have the meaning set forth in Section 3.1(m).
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"Covered Employees" shall have the meaning set forth in Section 4.3.
"Damages" means any and all losses, liabilities, obligations, costs,
expenses, damages or judgments of any kind or nature whatsoever, including
reasonable attorneys', accountants' and experts' fees, disbursements of counsel,
and other costs and expenses incurred pursuing indemnification claims under
Article IX hereof net of applicable reserves on the Company Balance Sheet.
"Directors" shall have the meaning set forth in Section 3.1(m).
"DGCL" means the Delaware General Corporation Law.
"Employees" shall have the meaning set forth in Section 3.1(m).
"Environmental Laws" shall have the meaning set forth in Section
3.1(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.1(m).
"ERISA Affiliate Plan" shall have the meaning set forth in Section
3.1(m).
"GAAP" means, with respect to persons organized under the laws of the
United States, generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or any successor authority), as
applicable at the date of determination and consistently applied.
"Governmental Authority" shall have the meaning set forth in Section
3.1(p).
"Hazardous Substance" shall have the meaning set forth in Section
3.1(p).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indebtedness" means, with respect to any person, the aggregate amount
of, without duplication: (a) all obligations of such person for borrowed money;
(b) all obligations of such person evidenced by bonds, debentures, notes or
other similar instruments, and all reimbursement or other obligations of such
person in respect of letters of credit, banker's acceptances, interest rate
swaps or other financial products and all capital lease obligations; (c) all
obligations of such person to pay the deferred purchase price of assets or
services, exclusive of trade payables which, by their terms, are due and payable
within ninety (90) calendar days of the creation thereof; or (d) any guaranties
of such person of any indebtedness of another person.
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"Indemnified Party" shall have the meaning set forth in Section 9.5.
"Indemnitor" shall have the meaning set forth in Section 9.5.
"Indenture" means the Indenture dated April 2, 1997 among the Company,
Anchor Advanced Products, Inc. and State Street Bank and Trust Company, as
Trustee.
"IRS" means the Internal Revenue Service.
"Knowledge" means the actual knowledge of the Company's officers after
making due and reasonable inquiry of the Company's and its Subsidiaries'
employees and books and records.
"Lee Stockholders" means those stockholders of Anchor Holdings, Inc.
set forth on Exhibit A hereto.
"Liens" means all liens, claims, security interests, or other charges,
encumbrances or restrictions of any kind, including restrictions on transfer.
"Material Adverse Effect," with respect to a Person, means any
condition, event, change or occurrence that is reasonably likely to have a
material adverse effect upon (a) the financial condition, properties, assets,
business or results of operations of such person and its Subsidiaries, taken as
a whole, or (b) the ability of such person to perform its obligations under, and
to consummate the transactions contemplated by, this Agreement. Notwithstanding
the foregoing, the current status of customer relationships as has been
disclosed to the Purchaser in writing by the Company or orally by
representatives of the Company's customers prior to the date of this Agreement
shall not be deemed to cause a Material Adverse Effect.
"Material Contract" shall have the meaning set forth in Section 3.1(k).
"Notes" means the Anchor Advanced Products, Inc. 11-3/4% Series B
Senior Notes Due 2004.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" shall have the meaning set forth in Section 3.1(m).
"Person" includes an individual, corporation, partnership, association,
trust, limited liability company or unincorporated organization.
"Proprietary Rights" means patents, trademarks, trade names, service
marks, service names, copyrights and applications therefor, commercial and
technical trade secrets, engineering, production and other designs,
specifications, formulae, technology, computer and electronic data processing
programs and software, inventions, processes, know-how, confidential information
and other proprietary property, rights and interests.
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"Purchaser" shall have the meaning set forth in the Preamble.
"Regulation" means any statute, law, ordinance, regulation, order or
rule of any federal, state, local or other governmental agency or body or of any
other type of regulatory body, including, without limitation, those covering
environmental, energy, safety, health, transportation, bribery, record keeping,
zoning, antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Schedules" means the schedules to the representations and warranties
of each party as referenced in the Agreement.
"Sellers" shall have the meaning set forth in the Preamble.
"Shares" shall have the meaning set forth in Section 2.1.
"Subsidiary," with respect to a Person, means any other Person
controlled, directly or indirectly, by such Person.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means all federal, state, local or foreign taxes, including, without
limitation, income, gross receipts, windfall profits, gains, excise, severance,
property, production, sales, use, transfer, license, franchise, employment,
withholding, environmental, customs duty, capital stock, stamp, payroll,
unemployment, disability, production, value added, occupancy, occupation,
premium, alternative and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates,
statements, claims for refunds and information returns) required to be filed
with respect to any Tax, including any schedule or attachment thereto and any
amendment thereof.
When a reference is made in this Agreement to Sections or Schedules,
such reference shall be to a Section of, or Schedules to, this Agreement unless
otherwise indicated. The table of contents, tie sheet and headings contained in
this Agreement are for ease of reference only and shall not affect the meaning
or interpretation of this Agreement. Whenever the words "include," "includes,"
or "including" are used in this Agreement, they shall be deemed followed by the
words "without limitation." Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular.
ARTICLE II. PURCHASE AND SALE
SECTION 2.1. Sale and Delivery by Sellers. Upon the terms and subject
to the conditions contained in this Agreement, at the Closing (as defined in
Section 6.1 hereof), the
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Sellers will each sell, assign, transfer and deliver to the Purchaser, and the
Purchaser will accept and purchase the shares of Anchor Holdings, Inc. Common
Stock (the "Shares") owned by each respective Seller.
SECTION 2.2. Consideration. Upon the terms and subject to the
conditions contained in this Agreement, and in consideration of the aforesaid
sale, assignment, transfer and delivery of the Shares, the Purchaser will pay
$4.00 per Share (the "Purchase Price"). The Purchase Price shall be payable by
the Purchaser in cash by wire transfer of immediately available funds to the Lee
Stockholders and by wire transfer or certified check to each other Seller to be
allocated among the Sellers as set forth opposite their respective names on
Schedule 2.2.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to Purchaser as follows:
(a) Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and its Subsidiaries has all requisite corporate power and authority to
carry on its business as is now being conducted and to own or hold under lease
the properties and assets it now owns or holds under lease, except where the
absence of power, authority, right to own or hold would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
The Company is duly qualified to do business and is in good standing as a
foreign corporation in the jurisdictions listed on Schedule 3.1(a) and there are
no other jurisdictions in which its conduct of its business or its ownership of
assets requires such qualifications under applicable law, except where the
failures to be so qualified or in good standing could not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect.
(b) Capitalization. (i) Title to Stock. As of the date hereof,
the Company's authorized capital stock consists of 2,000,000 shares of common
stock, $.01 par value per share, of which 1,551,217.66 shares are issued and
outstanding and owned beneficially and of record by the Sellers as set forth on
Schedule 3.1(b). All of the outstanding shares of capital stock of the Company
are, and immediately prior to the Closing will be, validly issued, fully paid
and non-assessable and are, and immediately prior to the Closing will be, owned,
beneficially and of record, as set forth on Schedule 3.1(b). Except as set forth
on Schedule 3.1(b), as of the date hereof, the Company has no (A) capital stock
outstanding or other securities convertible into or exchangeable for shares of
its capital stock or containing profit participation features (including stock
appreciation rights plans or agreements or phantom stock plans or agreements),
(B) options, warrants or rights to subscribe for or to purchase its capital
stock or any securities convertible into or exchangeable for its capital stock
outstanding, (C) obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock, other securities or any
warrants, options or other rights to acquire its capital stock, other securities
or any warrants, options or other rights to acquire its capital stock or other
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securities, or (D) voting agreements, voting trusts or other agreements
(including, without limitation, contractual or statutory preemptive rights or
cumulative voting rights), commitments or understandings with respect to the
voting or transfer of its capital stock or other securities.
(ii) Stockholder Agreements. There are no agreements among
the Company shareholders listed on Schedule 3.1(b) regarding the voting or
transfer of any capital stock or other securities of the Company except as set
forth on Schedule 3.1(b), which agreement(s) will be terminated contemporaneous
with the Closing unless otherwise indicated on Schedule 3.1(b).
(c) Subsidiaries; Significant Investments. Schedule 3.1(c) sets
forth the only Subsidiaries of the Company and its Subsidiaries and the entire
authorized capital stock and the total number of issued and outstanding shares
of each entity and the holders of record thereof. Except as set forth on
Schedule 3.1(c) all of the shares of capital stock of each Subsidiary of the
Company are owned directly and of record by the Company or a wholly-owned
Subsidiary of the Company, in each such case fully paid and non-assessable and
free and clear of all Liens. Each of the Company's Subsidiaries are duly
qualified to do business and are in good standing as a foreign corporation in
the jurisdictions listed on Schedule 3.1(a) and there are no other jurisdictions
in which its conduct of its business or its ownership of assets requires such
qualifications under applicable law, except where the failures to be so
qualified or in good standing could not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect. None of the Company or any
of such Subsidiaries or such Subsidiaries' Subsidiaries owns any equity
securities, any security convertible or exchangeable into an equity security or
any rights to acquire any equity security except those of its Subsidiaries as
listed on Schedule 3.1(c).
(d) Due Authorization. This Agreement and the transactions
contemplated herein have been duly authorized by all necessary corporate action
of the Company. Subject to receipt of the required approvals, consents or
waivers of governmental authorities including all approvals required under any
Regulations, including the HSR Act, this Agreement is a valid and binding
agreement of the Company enforceable against it in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principals.
(e) No Violations. Except as set forth on Schedule 3.1(e), the
execution, delivery and performance of this Agreement by the Company does not,
and the consummation of the transactions contemplated hereby by the Company and
each of its Subsidiaries will not:
(i) conflict with or constitute a breach or violation of, or
a default under, any (A) law, rule or regulation or any judgment, decree, order,
governmental permit or license, or (B) agreement, obligation, indenture or
instrument of the Company or any Subsidiary of the Company or to which the
Company or any of its Subsidiaries (or any of their respective properties) is
subject, or enable any Person to enjoin the transactions contemplated hereby;
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(ii) conflict with or constitute a breach or violation of,
or a default under, the certificate of incorporation or by-laws or similar
organizational documents of the Company or any Subsidiary of the Company;
(iii) conflict with or constitute a breach or violation of,
or a default under (or an event which with due notice or lapse of time or both
would constitute a default under), or result in the termination of, accelerate
the performance required by, give rise to a right to terminate or accelerate, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon, or the loss of benefits of, any of the properties or assets of
the Company or any Subsidiary of the Company under any of the terms, conditions
or provisions of any note, bond, loan, mortgage, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which the Company or
any Subsidiary of the Company is a party, or to which any of their respective
properties or assets may be bound or affected; or
(iv) require any approval, filing, consent or waiver under
any law, ordinance, statute, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than the filing of a
pre-merger notification report under the HSR Act and the expiration or
termination of the applicable waiting period thereunder.
(f) Financial Statements. Schedule 3.1(f) contains the audited
consolidated balance sheets of the Company as of December 31, 1996 and December
31, 1997 and the related statements of income and cash flows for each of the
fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997
(the "Company Financial Statements"):
Each of the Company Financial Statements has been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby, is consistent with the books and records of the Company (which, in
turn, are accurate and complete in all material respects), and fairly presents
the financial condition, assets and liabilities, the results of operations and
cash flows for the periods related thereto of the Company. For the purposes of
this Agreement, the balance sheet of the Company as of December 31, 1997 is
referred to as the "Company Balance Sheet" and the date thereof is referred to
as the "Company Balance Sheet Date."
(g) Absence of Undisclosed Liabilities and Certain Changes or
Events. Except as set forth on Schedule 3.1(g), since the Company Balance Sheet
Date, the Company and its Subsidiaries have conducted their business only in the
ordinary course of business consistent with past practice and have not incurred
any material liability, except in the ordinary course of their business
consistent with past practice. Except as set forth on Schedule 3.1(g), since the
Company Balance Sheet Date, there has not been (i) any change in the financial
condition, properties, business or results of operations of the Company or its
Subsidiaries which, individually or in the aggregate, has had, or is reasonably
likely to have, a Material Adverse Effect on the Company, (ii) any sale,
transfer or other disposition of any of the Company's or its Subsidiaries'
assets, except for products sold in the usual and ordinary course of business,
(iii) any Liens placed upon any of the Company's or its Subsidiaries' assets, or
(iv) any increase in
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the compensation or commission rates payable by the Company or its Subsidiaries
to any employee or agent.
(h) Title to Assets. (i) The Company and each of its Subsidiaries
has good (and in the case of real property, record and marketable) title to, or
a valid leasehold interest in, all of the assets and properties which it
purports to own or lease, as the case may be (except property sold or otherwise
disposed of, or property acquired, in the ordinary course of business consistent
with past custom and practices since the Company Balance Sheet Date), free and
clear of any Liens, except for Liens disclosed on Schedule 3.1(h) and Liens for
current Taxes not yet due and payable or for Taxes the validity of which is
being contested in good faith.
(ii) Except as set forth on Schedule 3.1(h), there are no
outstanding options to purchase any parcel of real property, or any material
portion or material interest therein. Neither the Company nor any of its
Subsidiaries lease any real or personal property to others.
(iii) The addresses of all real property owned and leased by
the Company and its Subsidiaries are set forth in Schedule 3.1(h).
(i) Taxes. Except as set forth in Schedule 3.1(i) as to
all matters contained in this Section 3.1(i)(i) through (vi):
(i) Each of the Company and its Subsidiaries has filed all
Tax Returns that it was required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by any of the Company and its
Subsidiaries (whether or not shown on any Tax Return) have been paid or properly
provided for in the reserve for tax liability set forth on the face of the
Company Balance Sheet. None of the Company and its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made in writing by an authority or has otherwise become
known on the basis of personal contact with any agent of such authority in a
jurisdiction where any of the Company and its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Liens on any of the assets of any of the Company and its Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) Each of the Company and its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(iii) There is no dispute or claim concerning any Tax
Liability of any of the Company and its Subsidiaries claimed or raised by any
authority in writing or otherwise known by the Company's officers on the basis
of personal contact with such authority. The Company has made available to
Purchaser all federal, state, local and foreign income Tax Returns filed with
respect to any of the Company and its Subsidiaries for taxable periods ended on
or after December 31, 1994, and Schedule 3.1(i) indicates those returns that
have been
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audited, and indicates those Tax Returns that currently are the subject of
audit. The Company has made available to the Purchaser correct and complete
copies of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Company and its
Subsidiaries since December 31, 1995.
(iv) None of the Company and its Subsidiaries has filed a
consent under Code [section]341(f) concerning collapsible corporations. None of
the Company and its Subsidiaries has been a United States real property holding
corporation within the meaning of Code [section]897(c)(2) during the applicable
period specified in Code [section]897(c)(1)(A)(ii). None of the Company and its
Subsidiaries is a party to any Tax allocation or sharing agreement other than by
and among the Company and its Subsidiaries. None of the Company and its
Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group the common parent of which was the
Company) or (B) has any liability for the Taxes of any Person (other than any of
the Company and its Subsidiaries) under Regulation [section]1.1502-6 (or any
similar provision of state, local, or foreign law), or as a transferee or
successor, or by contract, or otherwise.
(v) The unpaid Taxes of the Company and its Subsidiaries (A)
did not, as of the Company Balance Sheet Date, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
Company Balance Sheet (rather than in any notes thereto) and (B) do not exceed
that reserve as adjusted for the passage of time from the Company Balance Sheet
Date through the Closing Date in accordance with the past custom and practice of
the Company and its Subsidiaries in filing their Tax Returns.
(vi) None of the Company and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(j) Absence of Claims. Except as set forth on Schedule 3.1(j), no
litigation, proceeding or controversy before any court or governmental agency is
pending. There is no pending claim, action or proceeding against the Company or
any of its Subsidiaries or against any officer, director or employee thereof,
which is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or to hinder or delay consummation of the
transactions contemplated hereby and, to the Company's Knowledge after
reasonable inquiry, no such litigation, proceeding, controversy, claim or action
has been threatened or is contemplated.
(k) Agreements. (i) Except as set forth on Schedule 3.1(k), as of
the date of this Agreement, neither the Company nor any of its Subsidiaries is a
party or subject to, or has amended or waived any rights under, any of the
following (whether written or oral, express or implied) (each a "Material
Contract"):
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(A) any agreement, arrangement or commitment with
respect to which the Company or any of its Subsidiaries has any liability or
obligation involving more than $100,000, contingent or otherwise;
(B) any agreement, indenture, credit agreement or other
instrument relating to the borrowing of money, the capital lease or purchase on
an installment basis of any assets by the Company or any of its Subsidiaries or
the guarantee by the Company or any such Subsidiary of any such obligation;
(C) any contract containing covenants which limit the
ability of the Company or any of its Subsidiaries to compete in any line of
business or with any Person or which involve any restriction of the geographical
area in which, or method by which, the Company and its Subsidiaries may carry on
their respective businesses (other than as may be required by law or applicable
governmental authorities); or
(D) any other contract or agreement that would be
required to be disclosed as an exhibit to the Company's annual report on Form
10-K and which has not been so disclosed.
(ii) Except as set forth on Schedule 3.1(k), neither the
Company nor any of its Subsidiaries is in default under or in violation of any
provision of any note, bond, indenture, mortgage, deed of trust, lease,
insurance policy, loan agreement or other Material Contract to which it is a
party or by which it is bound or to which any of its respective material
properties or assets is subject.
(iii) The Company has furnished to the Purchaser copies of
all Material Contracts. Each Material Contract sets forth the entire agreement
and understanding between the Company, its Subsidiary and the respective
third-parties with respect to the subject matter thereof, and, except as
indicated in Schedule 3.1(k), there have been no amendments, or side or
supplemental arrangements to or in respect of any Material Contract. Each
Material Contract is valid and binding and in full force and effect. To the
Company's Knowledge, there is no event which has occurred or existing condition
which constitutes or which, with notice, the happening of an event and/or the
passage of time, would constitute a default or breach under any Material
Contract by the Company or its Subsidiaries or would cause the acceleration of
any obligation of any party thereto, give rise to any right of termination or
cancellation or cause the creation of any Lien, by reason of the failure of the
Company or its Subsidiaries to fulfill the obligations thereunder. Each Material
Contract is valid and binding and in full force and effect.
(l) Labor Matters. Except as set forth on Schedule 3.1(l),
neither the Company or any of its Subsidiaries is a party to, or is bound by,
any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is the Company or
any of its Subsidiaries the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it or any such
Subsidiary to bargain with any labor organization as to wages and conditions of
employment,
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nor is there any strike, work stoppage, other labor dispute or organizational
effort or any labor-related arbitration, law suit or administrative proceeding
involving the Company or any of its Subsidiaries pending or threatened.
(m) Employee Benefits. (i) Schedule 3.1(m)(i), contains a
complete and accurate list of all compensation, bonus, deferred compensation,
incentive, pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock option,
severance, welfare and fringe benefit plans, and employment and severance
agreements and all similar material practices, policies and arrangements with
respect to which (A) the Company or its Subsidiaries may have any liability to
or for the benefit of any employee or former employee (the "Employees"),
consultant or former consultant (the "Consultants") or director or former
director (the "Directors") of the Company or any of its Subsidiaries, or (B) any
such Employees, Consultants or Directors are a participant or a party in their
capacity as such Employees, Consultants or Directors (the "Compensation and
Benefit Plans").
(ii) Except as set forth in Schedule 3.1(m)(ii): each
Compensation and Benefit Plan has been operated and administered in all material
respects in accordance with its terms and with applicable law, including, but
not limited to, ERISA and the Code, and all material filings, disclosures and
notices required by ERISA or the code (including notices under Section 4980B of
the Code) have been timely made; each Compensation and Benefit Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter (including a
determination that the related trust under such Pension Plan is exempt from tax
under Section 501(a) of the Code) from the Internal Revenue Service for "TRA"
(as defined in Rev. Proc. 93-39), or will file for such a determination letter
prior to the expiration of the remedial amendment period for such Pension Plan,
and the Company is not aware of any circumstances likely to result in revocation
of, or failure to receive, any such favorable determination letter; and there is
no material pending or, to the best Knowledge of the Company, threatened legal
action, suit or claim relating to any of the Compensation and Benefit Plans.
(iii) No material liability (other than for payment of
premiums to the PBGC which have been made or will be made on a timely basis)
under Title IV of ERISA has been or is expected to be incurred by the Company or
any of its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer plan of
any entity (an "ERISA Affiliate") which is or was considered one employer with
the Company under Section 4001(b) of ERISA or Section 414(b) or (c) of the Code
(an "ERISA Affiliate Plan"). The Company and its Subsidiaries have not incurred,
do not expect to incur and have no exposure to incur any withdrawal liability
with respect to a "multiemployer plan" (within the meaning of Section 3(37) of
ERISA) under Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate) or any material liability in connection with the
reorganization or termination of any multiemployer plan. No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has
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not been waived, has been required to be filed for any Compensation and Benefit
Plan or by any ERISA Affiliate Plan within the 12-month period ending on the
date hereof, and no notice will be required to be filed under Section 4043(b) of
ERISA with respect thereto as a result of the transactions contemplated by this
Agreement. To the Knowledge of the Company, the PBGC has not instituted
proceedings to terminate any Pension Plan or ERISA Affiliate Plan and, to the
Company's Knowledge, no condition exists that presents a material risk that such
proceedings will be instituted.
(iv) All contributions required to be made under applicable
law or the terms of any Compensation and Benefit Plan or ERISA Affiliate Plan
have been timely made or have been reflected on the Company's Financial
Statements. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and all required payments to the
PBGC with respect to each Pension Plan or ERISA Affiliate Plan have been made on
or before their due dates. Neither the Company nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
ERISA Affiliate Plan pursuant to Section 307 of the ERISA or Section 401(a)(29)
of the Code. The unfunded redetermined actuarial accrued liability of the Anchor
Advanced Products, Inc. Salaried Plan was determined by the Company's actuary to
be $260,990 as of January 1, 1996. The unfunded redetermined actuarial accrued
liability of the Anchor Advanced Products, Inc. Hourly Pension Plan was
determined by the Company's actuary to be $199,754 as of January 1, 1997. To the
knowledge of the Company, events since the date of each such actuarial report
are not reasonably likely to have materially increased the unfunded redetermined
actuarial accrued liability of the plans.
(v) Except as set forth in Schedule 3.1(m)(v), neither the
Company nor any of its Subsidiaries has any obligations to provide retiree
health and life insurance benefits or other death benefits under any
Compensation and Benefit Plan, other than benefits mandated by Section 4980B of
the Code or other applicable law. No Compensation and Benefit Plan is, or has
its benefits provided through, a "multiple employer welfare arrangement" within
the meaning of Section 3(40) of ERISA.
(vi) Except as set forth on Schedule 3.1(m)(vi), with
respect to each Compensation and Benefit Plan, the Company has provided or made
available to Purchaser, as applicable, true and complete copies of existing: (A)
Compensation and Benefit Plan documents and amendments thereto; (B) trust
instruments and insurance contracts; (C) two most recent Forms 5500 filed with
the IRS; (D) most recent actuarial report and financial statement; (E) any and
all material employee communications, including the most recent summary plan
description and material modifications thereto; (F) most recent forms filed with
the PBGC (other than for premium payments); (G) most recent determination letter
issued by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and (I)
most recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(vii) All Compensation and Benefit Plans covering foreign
Employees comply in all material respects with applicable local law. Except as
set forth in Schedule
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(m)(vii), the Company and its Subsidiaries have no material unfunded liabilities
with respect to any Compensation and Benefit Plan which covers foreign
Employees. Any liabilities of the Company and its Subsidiaries with respect to
Compensation and Benefit Plans covering foreign Employees are reflected in the
Company's Financial Statements.
(viii) Except as set forth in Schedule 3.1(m)(viii), the
consummation of the transactions contemplated by this Agreement will not,
directly or indirectly (including, without limitation, as a result of any
termination of employment prior to or following the Closing Date) (A) entitle
any Employee, Consultant or Director to any payment (including severance pay or
similar compensation), (B) result in the vesting or acceleration of any material
benefits under any Compensation and Benefit Plan or (C) result in any material
increase in benefits under any Compensation and Benefit Plan.
(ix) Except as set forth in Schedule 3.1(m)(ix), as a
result, directly or indirectly, of the transactions contemplated by this
Agreement (including, without limitations, as a result of any termination of
employment prior to or following the Closing Date) none of the Purchaser, the
Company or any of their respective Subsidiaries, will be obligated to make a
payment with respect to any Compensation and Benefit Plans or other arrangement
in existence on or before the Closing Date to an individual who is a
"disqualified individual," that would be characterized as an "excess parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
(x) With respect to each Compensation and Benefit Plan: (A)
to the Knowledge of the Company, no breach of fiduciary duty has occurred with
respect to which the Company, its Subsidiaries, or the plan may be liable or
otherwise damaged in any material respect; (B) to the Knowledge of the Company,
no audits or investigations by any governmental authority are pending, or
threatened; and (C) to the Knowledge of the Company, no "prohibited transaction"
(within the meaning of either Section 4975(c) of the Code or Section 406 of
ERISA) has occurred with respect to which the Company, its Subsidiaries, or the
plan may be liable or otherwise damaged in any material respect.
(n) Compliance with Laws. The Company and each of its
Subsidiaries have complied in all material respects with all applicable laws.
The Company and each of its Subsidiaries has, or can obtain without undue
expense or delay, all permits, licenses, certificates of authority, orders and
approvals of federal, state, local and foreign governmental or regulatory bodies
that are required in order to permit it to carry on its business as it is
presently conducted.
(o) Fees. Except as set forth in Schedule 3.1(o), neither the
Company nor any of its Subsidiaries, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder, investment
banker or financial adviser or incurred any liability for any financial advisory
fees, brokerage fees, commissions, or finder's fees, and no broker, finder,
investment banker or financial adviser has acted directly or indirectly for the
Company or any Subsidiary of the Company, in connection with the Agreement or
the transactions contemplated hereby.
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(p) Environmental Matters. (i) Except as set forth in Schedule
3.1(p), (A) the Company and each of its Subsidiaries have complied in all
material respects with applicable Environmental Laws; (B) no property (including
buildings and any other structures) currently owned or operated by the Company
or any of its Subsidiaries, or, to the Company's Knowledge, formerly owned or
operated by the Company, has been contaminated with, or has had any release of,
any Hazardous Substance in violation of any applicable Environmental Law; (C)
neither the Company nor any of its Subsidiaries has been ruled the owner or
operator under any Environmental Law of any property in which it has currently
or formerly held a Lien or leasehold; (D) neither the Company nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third-party property (including property owned by any
Governmental Authority, and natural resources); (E) neither the Company nor any
of its Subsidiaries has received any written notice, demand letter, claim or
request for information alleging any violation of, or liability under, any
Environmental Law; and (F) neither the Company nor any of its Subsidiaries is
subject to any order, decree, injunction or other agreement with any
Governmental Authority relating to any Environmental Law.
(ii) The following definitions apply for purposes of this
Section 3.1(p): (A) "Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, agency requirement with force
of law relating to (1) the protection or restoration of the environment, health
or safety (in each case relating to the environment or human health) or natural
resources or (2) the handling, use, presence, storage, transportation, disposal,
release or threatened release of any Hazardous Substance; (B) "Hazardous
Substance" means any substance in any concentration that is (1) listed,
classified or regulated pursuant to any Environmental Law or (2) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; and (C)
"Governmental Authority" means any court, administrative agency or commission or
other federal, state or local governmental authority or instrumentality.
(q) Intellectual Property. Except as set forth on Schedule
3.1(q), (i) The Company and each of its Subsidiaries owns and possesses all
rights, title and interest in and to, or has a valid license to use, all
Proprietary Rights necessary for the operation of its business as presently
conducted; (ii) no claim by any third party contesting the validity,
enforceability, use or ownership of any such Proprietary Rights, is currently
outstanding or, to the Company's Knowledge, threatened; (iii) neither the
Company, any of its Subsidiaries, nor any registered agent thereof has received
any notices of any infringement or misappropriation by, or conflict with, any
third Person with respect to such Proprietary Rights, nor has the Company, any
of its Subsidiaries, or any registered agent thereof received any claims of
infringement or misappropriation of or other conflict with any Proprietary
Rights of any third Person; and (iv) to the Company's Knowledge, the Company has
not infringed, misappropriated or otherwise violated any Proprietary Rights of
any third Person. Schedule 3.1(q) sets forth all patents, trademarks, service
marks, trade names, copyrights, franchises, licenses, and all royalty agreements
and other rights with respect to foregoing owned or used by the Company or its
Subsidiaries in connection with their respective businesses.
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(r) Insurance. Schedule 3.1(r) lists all insurance policies
maintained by or for the benefit of the Company or its Subsidiaries or any of
their directors, officers, employees or agents, specifying the (i) type of
policy and a brief description thereof, (ii) policy limits and (iii) self
insurance amounts. All insurance policies and bonds maintained by the Company
and its Subsidiaries are in full force and effect, the Company and its
Subsidiaries are not in default thereunder and all claims thereunder have been
filed in due and timely fashion. Except as otherwise indicated on Schedule
3.1(r), all liability insurance policies are on an "occurrence" basis. All
premiums due to date under such policies have been paid. Each of the Company and
its Subsidiaries is covered by insurance in scope and amount customary for the
business in which it is engaged. Except as otherwise indicated on Schedule
3.1(r), neither of the Company nor its Subsidiaries have received any notices of
any proposed increase in the premiums payable for coverage, or proposed
reduction in the scope (or discontinuation entirely) of coverage, under any of
such insurance policies.
(s) Material Interests of Certain Persons. Except as set forth on
Schedule 3.1(s), neither the Company, nor any of its Affiliates, has any
interest in any contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of the Company or any of its Subsidiaries.
(t) Affiliate Transactions. Schedule 3.1(t) sets forth the
parties to and the date, nature and amount of each transaction involving the
transfer of any cash, property or rights to or from the Company, to or for the
benefit of any Affiliate since the Company Balance Sheet Date.
(u) Books and Records. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in accordance with
applicable legal and accounting requirements and reflect in all material
respects the substance of events and transactions that should be included
therein. The Company has delivered to Purchaser true and complete copies of (i)
its charter and by-laws and (ii) the charter and by-laws of each Subsidiary of
the Company.
(v) Information. As of their respective dates no registration
statement, schedule, report, proxy statement or information statement filed by
the Company with the Securities and Exchange Commission contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(w) Suppliers. To the Knowledge of the Company, all suppliers
material to the Company and its Subsidiaries or the conducting of their business
will continue to sell to the Company and its Subsidiaries after the Closing the
lines of products presently sold to the Company and its Subsidiaries. The
Company and its Subsidiaries are not delinquent by more than 15 days in their
payments to any creditor. Except as set forth on Schedule 3.1(w), during the
previous twelve months no significant supplier has terminated, or threatened to
terminate, its relationship (in whole or in part) with the Company or its
Subsidiaries, or has decreased
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materially or threatened to decrease or limit materially the services, supplies
or materials supplied to the Company or its Subsidiaries.
(x) Warranty Claims. The only warranty extended by the Company is
for repair and replacement of nonconforming parts. The warranty reserves on the
Company Balance Sheet are adequate to cover any warranty claims relating to
products sold prior to the Closing.
SECTION 3.2. Representations and Warranties of the Sellers. Each Seller
severally represents and warrants to Purchaser with respect to itself and its
Shares that:
(a) Ownership. All Shares owned by such Seller are validly
issued, fully paid and nonassessable. Other than this Agreement, there is no
subscription, option, warrant, call, right, agreement or commitment relating to
the issuance, sale, delivery or transfer by such Seller (including any right of
conversion or exchange under any outstanding security or other instrument) of
such Shares. Upon consummation of the transactions contemplated hereby, the
Purchaser will acquire good title to the Shares held by such Seller, free and
clear of all Liens.
(b) Authority. Each Seller has full power and authority to
perform his, her or its obligations hereunder.
(c) No Conflicts. The consummation of the transactions
contemplated hereby will not conflict with or result in a breach or violation of
any term or provision of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which such Seller is a party or by which such Seller or such Seller's Shares are
bound, or violate any statute, law, ordinance, rule, regulation, permit, order,
writ, judgment, injunction, decree or award issued, enacted or promulgated by
any Governmental Authority applicable to such Seller.
(d) Fees. Except as set forth on Schedule 3.2(d), such Seller has
not employed any broker, finder, investment banker or financial adviser or
incurred any liability for any financial advisory fees, brokerage fees,
commissions, or finder's fees, and no broker, finder, investment banker or
financial advisor has acted directly or indirectly for such Seller in connection
with the transactions contemplated hereby.
SECTION 3.3. Representations and Warranties of Purchaser. The Purchaser
represents and warrants to the Company and the Sellers that:
(a) Organization and Qualification. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has all requisite corporate power and authority to
carry on its business as is now being conducted and to own or hold under lease
the properties and assets it now owns or holds under lease, except where the
absence of power, authority, right to own or hold would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
Purchaser is duly qualified to do business and is in good standing as a foreign
corporation in the jurisdictions
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listed on Schedule 3.3(a) and there are no other jurisdictions in which its
conduct of its business or its ownership of assets requires such qualifications
under applicable law, except where the failures to be so qualified or in good
standing could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect.
(b) Due Authorization. This Agreement and the transactions
contemplated herein have been duly authorized by all necessary corporate action
of Purchaser. Subject to receipt of the required approvals, consents or waivers
of governmental authorities referred to in Section 6.1(a), this Agreement is a
valid and binding agreement of Purchaser enforceable against it in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principals.
(c) No Violations. Except as set forth in Schedule 3.3(c), the
execution, delivery and performance of this Agreement by Purchaser does not, and
the consummation of the transactions contemplated hereby by Purchaser will not:
(i) conflict with or constitute a breach or violation of, or
a default under, any (A) law, rule or regulation or any judgment, decree, order,
governmental permit or license, or (B) material agreement, obligation, indenture
or instrument of Purchaser or to which Purchaser (or any of their respective
properties) is subject, or enable any Person to enjoin the transactions
contemplated hereby;
(ii) conflict with or constitute a breach or violation of,
or a default under, the certificate of incorporation or by-laws or similar
organizational documents of Purchaser;
(iii) conflict with or constitute a breach or violation of,
or a default under (or an event which with due notice or lapse of time or both
would constitute a default under), or result in the termination of, accelerate
the performance required by, give rise to a right to terminate or accelerate, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon, or the loss of material benefits of, any of the material
properties or assets of Purchaser under any of the terms, conditions or
provisions of any note, bond, loan, mortgage, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which Purchaser is a
party, or to which any of their respective properties or assets may be bound or
affected; or
(iv) require any approval, filing, consent or waiver under
any law, ordinance, statute, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than the filing of a
pre-merger notification report under the HSR Act and the expiration or
termination of the applicable waiting period thereunder.
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(d) Fees. Except as set forth in Schedule 3.3(d), neither
Purchaser nor any of its officers, directors, employees or agents, has employed
any broker, finder, investment banker or financial adviser or incurred any
liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees, and no broker, finder, investment banker or financial advisor has
acted directly or indirectly for Purchaser in connection with the Agreement or
the transactions contemplated hereby.
(e) Absence of Claims. No litigation, proceeding or controversy
before any court or governmental agency is pending, and there is no pending
claim, action or proceeding against Purchaser or any of its Subsidiaries, which
is reasonably likely, individually or in the aggregate, to hinder or delay
consummation of the transactions contemplated hereby and, to Purchaser's
knowledge after reasonable inquiry, no such litigation, proceeding, controversy,
claim or action has been threatened or is contemplated.
(f) Access to Funds; Solvency. Purchaser has all funds necessary
to consummate the transactions contemplated hereby, pay the aggregate Purchase
Price and will have the ability to repay any outstanding Indebtedness of the
Company required to be repaid in connection with the transactions contemplated
hereby. Purchaser believes that any financing being incurred in connection with
the transactions contemplated hereby will not create any liability to the
directors, officers or stockholders of the Company under any federal or state
fraudulent conveyance or transfer law.
(g) Acquisition of Stock for Investment. The Purchaser is
acquiring the Shares for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing of selling such Shares. The Purchaser agrees that none of the
Shares may be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act of 1933 as
amended, except pursuant to an exemption from such registration available under
such Act.
SECTION 3.4. Projections. In connection with the Purchaser's
investigation of the Company and its Subsidiaries and their businesses, the
Purchaser, its Affiliates and representatives have received from the Company,
its Affiliates and representatives certain estimates, plans, projections and
other forecasts for the Company, its Subsidiaries and their respective
businesses, and certain plan and budget information. The Purchaser hereby
acknowledges that there are uncertainties inherent in attempting to make such
estimates, projections, other forecasts, plans and budgets, that the Purchaser
is familiar with such uncertainties, that the Purchaser is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
estimates, projections, forecasts, plans and budgets so furnished to it
(including without limitation the reasonableness of the assumptions underlying
such estimates, projections, forecasts, plans and budgets), and that neither the
Purchaser nor its Affiliates will have, nor will they assert, any claim against
the Company or any of its directors, officers, employees, agents, stockholders,
Affiliates, consultants, counsel, accountants, investment bankers or
representatives or any of their respective directors, officers, employees,
agents, Affiliates, consultants, counsel, accountants, investment bankers,
stockholders or representatives,
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or hold the Company or any such Persons liable, with respect thereto.
Accordingly, the Company makes no representation or warranty with respect to any
estimates, projections, forecasts, plans or budgets (or any such underlying
assumption).
SECTION 3.5. No Additional Representations or Warranties. The Purchaser
acknowledges and agrees that it (i) has made its own inquiry and investigation
into, and, based thereon, has formed an independent judgment concerning, the
Company and its Subsidiaries and (ii) has been furnished with or given adequate
access to such representatives of the Company and its Subsidiaries, and books,
records and other information about the business of the Company and its
Subsidiaries as it has requested. The Purchaser acknowledges that neither the
Company nor any other Person has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding the
Company, its Subsidiaries or their businesses, except as expressly set forth in
this Agreement and the Schedules. The Purchaser further agrees that neither the
Company nor any other person shall have, or be subject to, any liability to
Purchaser or any other person resulting from the distribution to, or the use by,
Purchaser, its financiers and its directors, officers, employees, agents,
stockholders, Affiliates, consultants, counsel, accountants, investment bankers
or representatives of any such information, including, without limitation, the
documentation provided in connection with their due diligence inquiry and any
information, document or material made available to the them in the documents
provided, management presentations or any other form in connection with the
transactions contemplated by this Agreement. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN SECTION 3.1 AND 3.2, THE COMPANY AND THE
SELLERS MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF THE COMPANY, ITS SUBSIDIARIES OR ANY OF THEIR ASSETS,
LIABILITIES OR OPERATIONS, OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND PURCHASER
EXPRESSLY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY. EXCEPT FOR THE EXPRESS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.1, PURCHASER AGREES THAT
IT IS ACQUIRING THE COMPANY ON AN "AS IS" AND "WHERE IS" BASIS.
ARTICLE IV. COVENANTS
Each of the parties hereto respectively agrees that (except as
expressly contemplated or permitted by this Agreement or to the extent that the
Company and Purchaser shall otherwise consent in writing):
SECTION 4.1. Employee Benefit Matters. For purposes of employee benefit
plans, programs and arrangements provided by Purchaser or any of its
Subsidiaries after the Closing Date to employees who were employees of the
Company or its Subsidiaries as of the Closing Date ("Covered Employees"),
Purchaser shall, and shall cause its Subsidiaries to, treat service of each
Covered Employee with the Company and its Subsidiaries before the Closing Date
(to the
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same extent such service is recognized under analogous plans, programs and
arrangements of the Company and its Subsidiaries as of the Closing Date) as
service rendered to Purchaser and its Subsidiaries, solely for the purpose of
eligibility to participate and vesting thereunder.
(b) In order that the consummation of the transactions
contemplated by this Agreement not result in the immediate payment of benefits
under Supplemental Executive Retirement Benefits Agreements to which the Company
or its Subsidiaries are parties, the Purchaser hereby assumes the obligations
and liabilities under such agreements as of the Closing Date and agrees to
discharge such obligations and liabilities as they come due if and to the extent
the same are not discharged by the Company or its Subsidiaries.
SECTION 4.2. Publicity. The initial press release announcing this
Agreement shall be a joint press release and, subject to the requirements of law
(including, without limitation, regulatory requirements) and relevant stock
exchange or self-regulatory organization obligations, thereafter the Company and
Purchaser shall consult with each other in issuing any press releases or
otherwise making public statements with respect to the other or the transactions
contemplated hereby and in making any filings with any governmental entity or
with any national securities exchange with respect thereto.
SECTION 4.3. Directors and Officers Liability.
(a) The certificate of incorporation and bylaws of the Company
contain provisions with respect to indemnification on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Closing Date in any manner that would
adversely affect the rights thereunder of persons who at any time prior to the
Closing Date were identified as prospective indemnified parties under the
certificate of incorporation or bylaws of the Company in respect of actions or
omissions occurring at or prior to the Closing Date (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by applicable law.
(b) Purchaser shall cause each of the Persons covered by the
policies of directors' and officers' liability insurance maintained by or on
behalf of the Company and its Subsidiaries to be covered with respect to matters
occurring prior to the Closing Date for a continuous period of not less than six
(6) years from the Closing Date (without any gap or lapse in coverage) under the
directors' and officers' liability insurance policies most recently maintained
by or on behalf of the Company and its Subsidiaries (provided that Purchaser may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and containing terms and conditions which are no less
advantageous) to the extent such policies are available; provided, that if
Purchaser is unable to obtain, or cause to be obtained, insurance to the full
extent required by this clause (c), Purchaser will obtain, or cause to be
obtained, as much comparable insurance as is available.
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(c) The provisions of this Section 4.3 are intended to be for the
benefit of, and shall be enforceable by, each such party and his or her heirs
and representatives.
SECTION 4.4. Funding Indebtedness. (a) Purchaser shall cause the
Company to repay all Indebtedness of the Company required to be repaid in
connection with the transactions contemplated hereby.
(b) Purchaser shall cause the Company and its Subsidiaries to
comply in all respects with the terms of the Indenture from and following the
Closing Date, including without limitation, Section 4.14 of the Indenture.
SECTION 4.5. Non-Solicitation. The Lee Stockholders each agree for a
period of one year from the date hereof not to solicit to employ any of the
officers or key employees of the Company without obtaining the prior written
consent of the Purchaser.
ARTICLE V. TAX MATTERS
SECTION 5.1. Filing of Returns. The Sellers shall cause the Company and
its Subsidiaries to prepare and file, consistent with past practices, all Tax
Returns of the Company and its Subsidiaries which are due on or before the
Closing Date. Purchaser shall prepare and file all other Tax Returns of the
Company and its Subsidiaries; provided, however, that to the extent any such Tax
Return, including amended Tax Returns, covers a period ending on, before or
including the Closing Date, the Sellers shall be entitled to review and
participate in the preparation of such Tax Returns, such Tax Returns shall be
prepared consistent with past practices, and no position can be taken on the Tax
Return that would give rise to an indemnification obligation of the Sellers
hereunder without the prior written consent of the Sellers, which consent shall
not unreasonably be withheld.
SECTION 5.2. Cooperation on Tax Matters.
(a) Purchaser and the Company and its Subsidiaries and the
Sellers shall cooperate fully, as and to the extent reasonably requested by any
other party, in connection with the filing of Tax Returns pursuant to Section
5.1 and any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon any other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees (or in the case of
the Sellers making any individual Seller) available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. The Purchaser, the Company and its Subsidiaries and the Sellers agree
(i) to retain all books and records with respect to Tax matters pertinent to the
Company and its Subsidiaries relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Purchaser or the Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such
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books and records and, if the other party so requests, the Purchaser, the
Company and its Subsidiaries or the Sellers, as the case may be, shall allow the
other party to take possession of such books and records.
(b) Purchaser, the Company and the Sellers further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(c) Purchaser, the Company and the Sellers further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
SECTION 5.3. Tax Audits. With respect to any examination, audit,
contest, appeal or other proceeding relating to Taxes of the Company and its
Subsidiaries that could give rise to indemnification obligations of the Sellers
hereunder, the Sellers may elect to control the contest and settlement of any
such proceeding. However, if the Sellers elect to control the contest and
settlement of any proceeding under this Section 5.3, Sellers shall indemnify the
Purchaser, the Company and its Subsidiaries for any Tax liability arising from
such contest or settlement for which it would otherwise have an indemnification
obligation hereunder without regard to any limitations on survival under Section
9.1. Purchaser, the Company and its Subsidiaries shall cooperate with the
Sellers and shall provide the Sellers with access to Tax Returns, books and
records and other relevant information and shall execute any necessary powers of
attorney relevant to the Sellers' authority hereunder. In the event that the
Sellers elect not to control such contest and settlement, the Sellers shall have
the right to participate in such contest and settlement and Purchaser, the
Company and its Subsidiaries shall not settle any audit or proceeding without
the written consent of the Sellers, which consent shall not be unreasonably
withheld.
Purchaser will promptly advise the Sellers of any notice received by
it, the Company or its Subsidiaries from any taxing authority regarding any
audit or other proceedings with respect to Taxes for which the Sellers may be
liable under this Agreement or otherwise.
SECTION 5.4. Tax Adjustments. In calculating the amount of any claim
for indemnification under Article IX hereunder, any amount payable shall be
reduced by (i) any Tax Benefit realized in connection with the payment,
incurrence or accrual of the indemnified loss, calculated at the Effective Tax
Rate, and (ii) the Offsetting Tax Benefit, calculated at the Effective Tax Rate.
The term "Tax Benefit" means the amount by which the liability for Taxes payable
and owing to the appropriate taxing authority by Purchaser, the Company, its
Subsidiaries or any affiliate is or would be reduced by loss, deduction, refund
or credit, determined as set forth below. The term "Offsetting Tax Benefit"
means the amount of any Tax Benefit realized by Purchaser, the Company, its
Subsidiaries or any affiliate in a taxable period attributable to an adjustment,
such as a timing adjustment deferring a tax deduction, including depreciation or
amortization, to a subsequent taxable period, resulting in an additional
liability
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for Taxes in a taxable period subject to indemnification by the Sellers
hereunder, determined as set forth below. The "Effective Tax Rate" means the sum
of (i) the maximum federal income tax rate imposed on corporations for the
period in question plus (ii) the product of (A) the weighted average of the
maximum state and local income tax rates imposed by all jurisdictions entitled
to tax income of Purchaser, or the Company, its Subsidiaries or any affiliate,
as the case may be, times (B) one minus the maximum federal income tax rate
referred to in clause (i). For purposes of the determination of any Tax Benefit
and any Offsetting Tax Benefit, it shall be assumed that (i) any Tax Benefit of
Purchaser or the Company, its Subsidiaries or any affiliate (including any
Offsetting Tax Benefit) will currently reduce income that is taxable at the
Effective Tax Rate, (ii) Purchaser or the Company, its Subsidiaries or any
affiliate shall have sufficient taxable income to use any Tax Benefit (including
any Offsetting Tax Benefit) in the respective taxable periods in which such Tax
Benefit (including any Offsetting Tax Benefit) first arose or will first arise,
and (iii) the failure of Purchaser or the Company, its Subsidiaries or any
affiliate to claim a Tax Benefit or an Offsetting Tax Benefit shall not preclude
any indemnifying party from receiving the benefit hereunder.
SECTION 5.5. Tax Sharing Agreements. All tax sharing agreements or
similar agreements with respect to or involving the Company and its Subsidiaries
are set forth on Schedule 5.5. Except as set forth in Schedule 5.5 hereof, all
tax sharing agreements or similar agreements with respect to or involving the
Company and its Subsidiaries shall be terminated as of the Closing Date and,
after the Closing Date, the Company shall not be bound thereby or have any
liability thereunder.
SECTION 5.6. Transfer Taxes. The Purchaser shall be liable for, shall
hold the Company and the Sellers harmless against, and agree to pay all sales,
transfer, stamp, stock transfer, value added, use, real property transfer or
gains and similar Taxes other than capital gains and income taxes of the Sellers
from the sale of their stock incurred as a result of the transactions
contemplated hereby and shall execute and deliver all instruments and
certificates necessary to enable the Company and the Sellers to comply with any
pre-Closing filing requirements. The Purchaser shall, at its own expense,
procure any stock transfer stamps required by, and properly file on a timely
basis all necessary Tax Returns and other documentation with respect to, any
transfer Tax and provide to the Company evidence of payment of all transfer
Taxes.
SECTION 5.7. Section 338 Election. No election shall be made (or deemed
made) under Section 338(g) or Section 338(h)(10) of the Code with respect to the
transaction contemplated under this Agreement.
ARTICLE VI. CLOSING
SECTION 6.1. Closing. Subject to satisfaction of the conditions in
Article VI, the closing of the transactions contemplated hereby (the "Closing")
will take place at the offices of Hutchins, Wheeler & Dittmar, A Professional
Corporation, 101 Federal Street, Boston, Massachusetts 02110 simultaneously with
the execution hereof which shall be the earlier to
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occur of (a) one (1) business day following receipt of the consent of a majority
of the holders of the Notes, (b) eleven (11) business days following the mailing
of a consent solicitation to the holders of the Notes or (c) March 19, 1998 (the
"Closing Date").
SECTION 6.2. Deliveries of the Company. At the Closing, the Company
will execute and deliver or cause to be delivered to Purchaser the following:
(a) Stock Certificates. Stock certificates of the Company duly
endorsed for transfer or accompanied by stock powers duly endorsed in blank.
(b) Corporate Documents. The Certificate of Incorporation of the
Company and its Subsidiaries, certified by the Secretary of the State of
Delaware as of a date not more than 10 days prior to the Closing Date, and the
By-laws of the Company and its Subsidiaries, certified by an officer of the
Company as in effect at the Closing Date;
(c) Consents; Resolutions. A copy of the consents or resolutions
of the Board of Directors approving this Agreement and the transactions
contemplated hereby and thereby;
(d) Certificates of Good Standing. Certificates of Good Standing,
dated not more than 10 days prior to the Closing Date, with respect to the
Company and its Subsidiaries issued by the secretaries of state of their
respective states of incorporation; and
(e) Opinion of Counsel. An opinion of Hutchins, Wheeler &
Dittmar, counsel for the Company dated as of the Closing Date.
(f) Consents. Evidence of receipt of the consents set forth in
Schedule 3.1(e).
(g) Management Agreement. Evidence of the termination of the
Management Agreement between the Company and the Thomas H. Lee Company dated
April 30, 1990.
SECTION 6.3. Deliveries of Purchaser. At the Closing, Purchaser will
execute and deliver or cause to be delivered to the Company and/or the Sellers
the following:
(a) Purchase Price. The Purchase Price in accordance with Section
2.2;
(b) Corporate Documents. The Certificate of Incorporation of
Purchaser certified by the Secretary of the State of Delaware as of a date not
more than 10 days prior to the Closing Date, and the By-laws of Purchaser,
certified by an officer of Purchaser as in effect at the Closing Date;
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(c) Consents; Resolutions. A copy of the consents or resolutions
of the Board of Directors of Purchaser approving this Agreement and the
transactions contemplated hereby and thereby;
(d) Certificate of Good Standing. Certificate of Good Standing,
dated not more than 10 days prior to the Closing Date, with respect to Purchaser
issued by the secretary of state of its respective state of incorporation; and
(e) Opinion of Counsel. An opinion of Choate, Hall & Stewart,
counsel for Purchaser dated as of the Closing Date.
ARTICLE VII. INDEMNIFICATION
SECTION 7.1. Survival. The representations and warranties contained in
Sections 3.1(b)(i), the first two sentences of 3.1(c), 3.2(a), 3.2(b), 3.3(b),
and 3.3(c) shall survive the Closing and the consummation of the transactions
contemplated hereby without limitation. Other than the foregoing, all other
representations and warranties (including without limitation those in Article
III) shall be deemed to be conditions of the Agreement and shall not survive the
Closing Date, respectively, and only those agreement and covenants of the
parties that are by their terms applicable in whole or in part after the Closing
Date shall survive the Closing Date.
SECTION 7.2. Indemnification by the Sellers. The Sellers, severally,
except that the Lee Stockholders shall be liable jointly for that portion of the
Sellers payment which is the obligation of each of the Lee Stockholders, subject
to Section 7.4 hereof, hereby indemnify and hold the Purchaser harmless from and
against any and all Damages arising out of any breach of the Company's
representation and warranty set forth in Section 3.1(b)(i) and the first two
sentences of Section 3.1(c) or the respective Seller's representations and
warranties contained in Sections 3.2(a) and 3.2(b) subject to the survival
provisions set forth in Section 7.1.
SECTION 7.3. Indemnification by the Purchaser. The Purchaser hereby
indemnifies and holds the Company and the Sellers harmless from and against any
and all Damages arising out of any breach of the Purchaser's representations and
warranties contained in Sections 3.3(b) and 3.3(c) subject to the survival
provisions set forth in Section 7.1.
SECTION 7.4. Limits on Claims. Subject to the limitations set forth in
this Article VII, notwithstanding anything to the contrary contained herein, the
maximum liability of any Seller pursuant to this Article VII shall be his or her
respective portion of the Purchase Price (as shown on Schedule 2.2).
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SECTION 7.5. Notice of Claims. (a) Any party (the "Indemnified Party")
seeking indemnification hereunder shall give to the party obligated to provide
indemnification to such Indemnified Party (the "Indemnitor") a notice (a "Claim
Notice") describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim and a
reference to the provision of this Agreement upon which such claim is based;
provided, that a Claim Notice in respect to any action at law or suit in equity
by or against a Third Person as to which indemnification will be sought shall be
given promptly after the action or suit is commenced; and, provided further that
failure to give such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor shall have been prejudiced by
such failure (it being understood that this proviso does not modify or otherwise
affect the applicable time period specified in Section 7.1).
(b) In calculating any Damages there shall be deducted (i) any
insurance recoverable in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer) and (ii) any past, present or future tax
benefit to the Indemnified Party or their Affiliates or Subsidiaries.
(c) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled under
this Article VII shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Damages suffered by it.
(d) Any indemnification payments hereunder shall be deemed an
adjustment to the purchase price for the Shares.
SECTION 7.6. Third Party Claims. (a) If an Indemnified Party receives a
Claim Notice in respect to any action at law or suit in equity by or against a
Third Person, the Indemnitor shall have fifteen (15) business days after receipt
of the Claim Notice to undertake, conduct and control, through counsel of its
own choosing (reasonably satisfactory to the Indemnified Party), and at its
expense, the settlement or defense thereof, and the Indemnified Party shall
cooperate with the Indemnitor in connection therewith; provided, that (i) the
Indemnitor shall permit the Indemnified Party to participate in any such
settlement or defense through counsel chosen by the Indemnified Party
(reasonably satisfactory to the Indemnitor), provided that fees and expenses of
such counsel shall not be borne by the Indemnitor, and (ii) the Indemnitor shall
not settle any indemnifiable claim without the Indemnified Party's consent
without a general release of liability of such Indemnified Party. So long as the
Indemnitor is vigorously contesting any such indemnifiable claim in good faith,
the Indemnified Party shall not pay or settle such claim without the
Indemnitor's consent, which consent shall not be unreasonably withheld.
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(b) If the Indemnitor does not notify the Indemnified Party
within fifteen (15) business days after receipt of the Claim Notice that it
elects to undertake the defense of the indemnifiable claim described therein,
the Indemnified Party shall have the right to contest, settle or compromise the
Indemnifiable Claim in the exercise of its reasonable discretion; provided, that
the Indemnified Party shall give prior notice to the Indemnitor of any
compromise or settlement of any such indemnifiable claim.
SECTION 7.7. Exclusive Remedy. The indemnification provided under this
Article VII shall constitute the sole and exclusive remedy of the Purchaser
subsequent to the Closing for any Damages sustained by it as a result of any
breach of this Agreement except for proven fraud.
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Waiver. Any provision of this Agreement may be: (a) waived
by the party benefitted by the provision; or (b) amended or modified at any time
(including the structure of the transaction) by an agreement in writing between
the parties hereto, except that no amendment may be made that would contravene
Section 251(d) of the DGCL.
SECTION 8.2. Counterparts. This Agreement may be executed and delivered
in counterparts each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument. One or more
counterparts may be delivered via telecopier, and any such telecopied
counterpart shall have the same force and effect as an original counterpart
hereof.
SECTION 8.3. Exhibits and Schedules. Any and all of the Exhibits and
Schedules attached to this agreement are hereby incorporated herein and made a
part hereof.
SECTION 8.4. Schedules. Items required to be disclosed on the Schedules
under Sections 3.1, 3.2 and 3.3, as the case may be, shall be deemed to be
disclosed thereon for all purposes of such respective Sections 3.1, 3.2 and 3.3,
as the case may be, irrespective of whether they are disclosed with reference to
all of the specific subsections to which they relate. The disclosure of any
information in the Schedules shall not be deemed to constitute an acknowledgment
that such information is required to be disclosed in connection with the
representations and warranties made by the Company in this Agreement or that it
is material, nor shall such information be deemed to establish a standard of
materiality.
SECTION 8.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the internal, substantive laws of the
Commonwealth of Massachusetts.
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SECTION 8.6. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES,
AND AGREES TO CAUSE EACH OF ITS SUBSIDIARIES TO WAIVE, AND COVENANTS THAT
NEITHER IT NOR ANY OF ITS SUBSIDIARIES WILL ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR
OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. PARENT ACKNOWLEDGES THAT IT HAS BEEN
INFORMED BY THE COMPANY THAT THIS SECTION 8.6 CONSTITUTES A MATERIAL INDUCEMENT
UPON WHICH THE COMPANY IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT
AND ANY OTHER AGREEMENTS RELATING HERETO OR CONTEMPLATED HEREBY. ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.6 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
SECTION 8.7. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof.
SECTION 8.8. Expenses. Except as set forth herein, each party hereto
will bear all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions will be
consummated. For purposes of the preceding sentence, all expenses of the Company
and its Subsidiaries in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, all legal, accounting and
other advisory costs and expenses, broker's or finder's fees and expenses,
investment banking fees and expenses, corporate staff expenses and all retention
or deal bonuses, if any, will be paid by the Company immediately prior to the
Closing.
SECTION 8.9. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram, telex or
facsimile (confirmed in writing) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to the Company, to:
Anchor Holdings, Inc.
1111 Northshore Drive
Knoxville, Tennessee 37919
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Telecopier: (423) 450-5379
Attention: Francis H. Olmstead, Jr.,
President and Chief Executive Officer
With copies to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
Telecopier: (617) 951-1295
Attention: James Westra, Esq.,
If to Purchaser, to:
Anchor Acquisition Co.
c/o Galt Industries, Inc.
767 Fifth Avenue, Suite 506
New York, NY 10153
Telecopier: (212) 758-1336
Attention: George T. Votis
With copies to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Telecopier: (617) 248-4000
Attention: Nora J. Schneider, Esq.
If to any Seller, to the address set forth on Exhibit B hereto.
SECTION 8.10. Entire Agreement; Etc. This Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made. All terms and provisions of the Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Nothing in this Agreement is intended to confer upon any
other Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms
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and provisions of this Agreement will nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon any such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner, to the end
that the transactions contemplated by this Agreement are consummated to the
fullest extent possible.
SECTION 8.12. Headings. The subject headings of Articles and Sections
of this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.
SECTION 8.13. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any party hereto.
SECTION 8.14. Assignment. This Agreement may not be assigned by any
party hereto without the written consent of other parties.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ANCHOR HOLDINGS, INC.
By: (s) Francis H. Olmstead, Jr.
--------------------------------
Name: Francis H. Olmstead, Jr.
Title: Chairman, President and
Chief Executive Officer
ANCHOR ACQUISITION CO.
By: (s) George T. Votis
-------------------------
Name: George T. Votis
Title: President and CEO
ML-LEE ACQUISITION FUND II, L.P.
(s) Audrey Bommer
Name: Audrey Bommer
Title: Vice President & Treasurer,
ML Mezzanine II, Inc.
ML-LEE ACQUISITION FUND (RETIREMENT
ACCOUNTS) II, L.P.
(s) Audrey Bommer
- ----------------------------------
Name: Audrey Bommer
Title: Vice President & Treasurer,
ML Mezzanine II, Inc.
THOMAS H. LEE EQUITY PARTNERS, L.P.
(s) Scott Schoen
- -------------------
Name: Scott Schoen
Title:
<PAGE>
EXHIBIT A
LEE STOCKHOLDERS
ML-Lee Acquisition Fund II, L.P.
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P.
Thomas H. Lee Equity Partners, L.P.
<PAGE>
EXHIBIT B
SELLERS ADDRESS
Thomas H. Lee Company
75 State Street
Boston, MA 02109
John W. Childs
David V. Harkins
Thomas R. Shepherd
Glenn H. Hutchins
Scott A. Schoen
C. Hunter Boll
Steven G. Segal
Anthony J. DiNovi
Thomas M. Hagerty
State Street Bank & Trust Company
as trustee for the Thomas H. Lee
1989 Nominee Trust
Anchor Advanced Products, Inc.
1111 Northshore Drive, Ste. N600
Knoxville, TN 37919
Francis H. Olmstead, Jr.
Robert T. Parkey
Phyllis Best
Claude Kyker
Joe Viglione
Robert Epley
John Nugent
Lloyd Etter
Mid-State Plastics, Inc.
P.O. Box 88 Hwy 220
Seagrove, NC 27341
Jack C. Lail
Dean F. Lail
Richard Mack
Charles Allen
Elizabeth Cox
R. Dale Johnson
<PAGE>
19 Patania Court
Lincoln, NJ 07035
John J. Nugent
<PAGE>
Schedule 2.2
Allocation of Purchase Price
<TABLE>
<CAPTION>
Stockholder Number of $ Amount of
Shares Held Shares Held
- -----------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Lee Equity Partners, L.P. 568,185.02 $2,272,740.08
- -----------------------------------------------------------------------------------
ML-Lee Acquisition Fund II, L.P. 410,677.00 $1,642,708.00
- -----------------------------------------------------------------------------------
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P. 219,323.00 $877,292.00
- -----------------------------------------------------------------------------------
John W. Childs 11,018.44 $44,073.76
- -----------------------------------------------------------------------------------
David V. Harkins 7,659.62 $30,638.48
- -----------------------------------------------------------------------------------
Thomas R. Shepherd 5,892.75 $23,571.00
- -----------------------------------------------------------------------------------
Glenn H. Hutchins 7,744.87 $30,979.48
- -----------------------------------------------------------------------------------
Scott A. Schoen 5,864.36 $23,457.44
- -----------------------------------------------------------------------------------
C. Hunter Boll 5,864.36 $23,457.44
- -----------------------------------------------------------------------------------
Steven G. Segal 2,345.83 $9,383.32
- -----------------------------------------------------------------------------------
Anthony J. DiNovi 1,172.81 $4,691.24
- -----------------------------------------------------------------------------------
Thomas M. Hagerty 1,172.81 $4,691.24
- -----------------------------------------------------------------------------------
State Street Bank & Trust Company of Connecticut (as 65,711.13 $262,844.52
successor to Continental Bank and Trust Company), not
personally but as Trustee for the 1989 Thomas H. Lee
Nominee Trust
- -----------------------------------------------------------------------------------
Robert J. Epley 20,334.00 $81,336.00
- -----------------------------------------------------------------------------------
Lloyd A. Etter 13,874.00 $55,496.00
- -----------------------------------------------------------------------------------
Claude J. Kyker 18,984.00 $75,936.00
- -----------------------------------------------------------------------------------
John J. Nugent 44,411.00 $177,644.00
- -----------------------------------------------------------------------------------
Francis H. Olmstead, Jr. 57,263.00 $229,052.00
- -----------------------------------------------------------------------------------
Robert T. Parkey Living Trust 37,242.00 $148,968.00
- -----------------------------------------------------------------------------------
Phyllis C. Best 7,316.00 $29,264.00
- -----------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------
Joseph M. Viglione 21,244.00 $84,976.00
- -----------------------------------------------------------------------------------
Jack C. Lail 9,685.23 $38,740.92
- -----------------------------------------------------------------------------------
Richard B. Mack 1,525.42 $6,101.68
- -----------------------------------------------------------------------------------
Elizabeth H. Cox 1,815.98 $7,263.92
- -----------------------------------------------------------------------------------
R. Dale Johnson 1,210.65 $4,842.60
- -----------------------------------------------------------------------------------
Charles O. Allen 1,210.65 $4,842.60
- -----------------------------------------------------------------------------------
Dean F. Lail 2,469.73 $9,878.92
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 3.1(a)
Jurisdictions
A. Anchor Holdings, Inc.
Jurisdiction of Incorporation: Delaware
Foreign Qualifications: Connecticut
New York
Tennessee
B. Anchor Advanced Products, Inc.
Jurisdiction of Incorporation: Delaware
Foreign Qualifications: Connecticut
Illinois
North Carolina
Tennessee
Texas
C. Anchor Advanced Products Foreign Sales Corp.
Jurisdiction of Incorporation: Barbados
D. Cepillos De Matamoros S.A. De C.V.
Jurisdiction of Incorporation: Mexico
<PAGE>
Schedule 3.1(b)
Capitalization
A. Authorized and Outstanding Capital Stock.
- -----------------------------------------------------------------------------
Issued and
Class of Equity Security Authorized Treasury Outstanding
- -----------------------------------------------------------------------------
common stock, par value $.01 per share 2,000,000 242.13 1,551,217.66
- -----------------------------------------------------------------------------
B. Ownership of Capital Stock.
Stockholder Number of Shares Held
- -----------------------------------------------------------------------------
Thomas H. Lee Equity Partners, L.P. 568,185.02
- -----------------------------------------------------------------------------
ML-Lee Acquisition Fund II, L.P. 410,677.00
- -----------------------------------------------------------------------------
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P. 219,323.00
- -----------------------------------------------------------------------------
John W. Childs 11,018.44
- -----------------------------------------------------------------------------
David V. Harkins 7,659.62
- -----------------------------------------------------------------------------
Thomas R. Shepherd 5,892.75
- -----------------------------------------------------------------------------
Glenn H. Hutchins 7,744.87
- -----------------------------------------------------------------------------
Scott A. Schoen 5,864.36
- -----------------------------------------------------------------------------
C. Hunter Boll 5,864.36
- -----------------------------------------------------------------------------
Steven G. Segal 2,345.83
- -----------------------------------------------------------------------------
Anthony J. DiNovi 1,172.81
- -----------------------------------------------------------------------------
Thomas M. Hagerty 1,172.81
- -----------------------------------------------------------------------------
State Street Bank & Trust Company of Connecticut (as 65,711.13
successor to Continental Bank and Trust Company), not
personally but as Trustee for the 1989 Thomas H. Lee
Nominee Trust
- -----------------------------------------------------------------------------
Robert J. Epley 20,334.00
- -----------------------------------------------------------------------------
Lloyd A. Etter 13,874.00
- -----------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------
Claude J. Kyker 18,984.00
- -----------------------------------------------------------------------------
John J. Nugent 44,411.00
- -----------------------------------------------------------------------------
Francis H. Olmstead, Jr. 57,263.00
- -----------------------------------------------------------------------------
Robert T. Parkey Living Trust 37,242.00
- -----------------------------------------------------------------------------
Phyllis C. Best 7,316.00
- -----------------------------------------------------------------------------
Joseph M. Viglione 21,244.00
- -----------------------------------------------------------------------------
Jack C. Lail 9,685.23
- -----------------------------------------------------------------------------
Richard B. Mack 1,525.42
- -----------------------------------------------------------------------------
Elizabeth H. Cox 1,815.98
- -----------------------------------------------------------------------------
R. Dale Johnson 1,210.65
- -----------------------------------------------------------------------------
Charles O. Allen 1,210.65
- -----------------------------------------------------------------------------
Dean F. Lail 2,469.73
- -----------------------------------------------------------------------------
C. Stockholders Agreement.
Anchor Holdings, Inc. Amended and Restated Stockholders' Agreement dated as
of July 29, 1994 (being terminated contemporaneously with the Closing)
D. Stock Options.
1. Anchor Holdings, Inc. 1990 Time Accelerated Restricted Stock Option Plan
as amended effective April 1, 1996 (being terminated contemporaneously
with the Closing)
- -----------------------------------------------------------------------------
Shareholder Options
- -----------------------------------------------------------------------------
Geoffrey A. deRohan 10,000.00
- -----------------------------------------------------------------------------
2. Anchor Holdings, Inc. 1995 Non-Qualified Time Accelerated Restricted
Stock Option Plan for the Mid-State Plastics Division (being terminated
contemporaneously with the Closing)
<PAGE>
- -----------------------------------------------------------------------------
Shareholder Options
- -----------------------------------------------------------------------------
Jack C. Lail 6,250.00
- -----------------------------------------------------------------------------
Charles O. Allen 3,750.00
- -----------------------------------------------------------------------------
R. Dale Johnson 3,750.00
- -----------------------------------------------------------------------------
Elizabeth H. Cox 3,000.00
- -----------------------------------------------------------------------------
Dean F. Lail 3,750.00
- -----------------------------------------------------------------------------
Richard B. Mack 4,500.00
- -----------------------------------------------------------------------------
<PAGE>
Schedule 3.1(c)
Subsidiaries
A. ANCHOR ADVANCED PRODUCTS, INC.
------------------------------
1. Authorized and Outstanding Capital Stock
----------------------------------------
- -------------------------------------------------------------------------------
Class of Equity Security Authorized Issued and Outstanding
------------------------ ---------- ----------------------
- -------------------------------------------------------------------------------
common stock, par value $.01 per share 3,000 100
- -------------------------------------------------------------------------------
2. Ownership of Capital Stock
--------------------------
- -------------------------------------------------------------------------------
Stockholder Number of Shares Held
----------- ---------------------
- -------------------------------------------------------------------------------
Anchor Holdings, Inc. 100
- -------------------------------------------------------------------------------
B. ANCHOR ADVANCED PRODUCTS FOREIGN SALES CORP.
--------------------------------------------
1. Authorized and Outstanding Capital Stock
----------------------------------------
- -------------------------------------------------------------------------------
Class of Equity Security Authorized Issued and Outstanding
------------------------ ---------- ----------------------
- -------------------------------------------------------------------------------
common stock unlimited 100
- -------------------------------------------------------------------------------
2. Ownership of Capital Stock
--------------------------
- -------------------------------------------------------------------------------
Stockholder Number of Shares Held
----------- ---------------------
- -------------------------------------------------------------------------------
Anchor Holdings, Inc. 100
- -------------------------------------------------------------------------------
C. CEPILLOS DE MATAMOROS, S.A. DE C.V.
-----------------------------------
1. Authorized and Outstanding Capital Stock
----------------------------------------
- -------------------------------------------------------------------------------
Class of Equity Security Authorized Issued and Outstanding
------------------------ ---------- ----------------------
- -------------------------------------------------------------------------------
Acciones Serie "A" Unlimited 1,000
- -------------------------------------------------------------------------------
Acciones Serie "B" Unlimited 1,187,459
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
Acciones Serie "C" Unlimited 0
- -------------------------------------------------------------------------------
2. Ownership of Capital Stock
--------------------------
a. Acciones Serie "A"
- -------------------------------------------------------------------------------
Stockholder Number of Shares Held
----------- ---------------------
- -------------------------------------------------------------------------------
Anchor Advanced Products, Inc. 999
- ------------------------------------------------------------------------------
Anchor Holdings, Inc. 1
- -------------------------------------------------------------------------------
b. Acciones Serie "B"
- -------------------------------------------------------------------------------
Stockholder Number of Shares Held
----------- ---------------------
- -------------------------------------------------------------------------------
Anchor Advanced Products, Inc. 1,187,459
- -------------------------------------------------------------------------------
<PAGE>
Schedule 3.1(e)
No Violations
3.1(e)(i)(B)
1. Credit Agreement by and among Anchor Advanced Products, Inc., as borrower,
the Guarantors from Time to Time Parties Thereto, the Lenders Identified
Therein and NationsBank, N.A., as agent dated as of April 2, 1997.
2. Indenture by and among Anchor Advanced Products, Inc., as issuer, Anchor
Holdings, Inc., as guarantor and State Street Bank and Trust Company, as
trustee dated as of April 2, 1997.
3. Loan Agreement by and between Anchor Advanced Products, Inc. and the
Connecticut Development Authority dated December 30, 1994.
4. Agreement by and between Abbott Laboratories and Mid-State Plastics, Inc
dated as of November 20, 1989 as supplemented by correspondence.
5. Agreement by and between the Mid-State Plastics Division of Anchor Advanced
Products, Inc. and Lydall Central, Inc./Westex Division dated as of December
1, 1997.
3.1(e)(ii)
None.
3.1(e)(iii)
See 1, 2 and 3 above.
3.1(e)(iv)
None.
<PAGE>
Schedule 3.1(f)
Financial Statements
See Attached.
<PAGE>
Schedule 3.1(g)
Change of Events
3.1(g)(iv). Employee Compensation
[bullet] Bonus Participants - Increases and bonuses for these individuals have
not yet been put in place pending the completion of the final audit. Increases
will be retroactive to January 1, 1998 and will average approximately four (4)
percent. There are 44 individuals in the bonus category.
[bullet] All other salaried employees (U.S.) were considered for increases
effective January 1, 1998. These increases have been put in place and averaged
four (4) percent.
[bullet] All hourly employees (U.S.) received increases effective January 5,
1998. These increases average three (3) percent.
[bullet] Certain hourly employees at each location are subject to normal
progression increases based on time in service in a particular classification.
These increases take place as a normal course of business and have not been
listed.
<PAGE>
Schedule 3.1(h)
Title to Assets
A. Liens.
1. Under the Credit Agreement the lenders have a security interest in
accounts receivable and inventory.
2. The Connecticut Development Authority has a security interest in machines
and equipment of Anchor Advanced Products, Inc. which (a) are located at
the Waterbury, Connecticut facility and (b) were purchased with the grant
and loan money from the State of Connecticut.
3. Harlingen Industrial Foundation, Inc. has a security interest in the
building located at 5617 S. Expressway 83, Harlingen, Cameron County,
Texas.
4. Lien on equipment under the equipment lease for equipment at Morristown,
Tennessee between Anchor Advanced Products, Inc. and Charter Financial
dated January 17, 1997.
5. Lien on equipment under the equipment lease for equipment at Matamoros,
Mexico between Anchor Advanced Products, Inc. and Wentworth Capital
Corporation dated June 26, 1996.
6. Lien on equipment under the equipment lease for equipment at Round Rock,
Texas between Anchor Advanced Products, Inc. and Wentworth Capital
Corporation dated June 24, 1996.
7. Lien on equipment under the equipment lease for equipment at Sanford,
North Carolina between Anchor Advanced Products, Inc. and Wentworth
Capital Corporation dated June 25, 1996.
8. Lien on equipment under the equipment lease between Anchor Advanced
Products, Inc. and LB Credit Corporation dated July 17, 1990.
9. Lien on equipment under the equipment lease between Anchor Advanced
Products, Inc. and IBM Credit Corporation dated May 29, 1996.
10. Lien on equipment under the equipment lease between Leasetec Systems
Credit and Anchor Advanced Products, Inc.
<PAGE>
11. Lien on equipment under the equipment lease between Spring Telimagine Inc.
and Anchor Advanced Products, Inc.
12. Lien on equipment under the equipment lease between Spring Telimagine Inc.
and Anchor Advanced Products, Inc.
13. Lien on equipment on loan from Compaq Computer Corp.
14. Lien on equipment under the equipment lease between Valley Office Systems
and Anchor Advanced Products, Inc.
15. Lien on equipment under the equipment lease between Southwest Lift Company
and Anchor Advanced Products, Inc.
16. Lien on equipment under the equipment lease between J.V. Equipment, Inc.
and Anchor Advanced Products, Inc.
B. Owned Real Property.
1. 1307 Davis Street, Morristown, Tennessee, 37814
2. 209 East DeSoto Avenue, Morristown, Tennessee, 37814 (this deed
includes the extra lot located next to the building)
3. 318 East Converse Street, Morristown, Tennessee, 37814
4. 2820 Oakmont Drive, Round Rock, Williamson County, Texas 78664 (this
deed includes the extra lot located next to the building)
5. 95 Johnson Street, Waterbury, Connecticut
6. 2.03 acres on North Carolina Highway 78, Sanford, North Carolina
7. 20.294 acres on U.S. Highway 220, Seagrove, North Carolina
8. Property located at the northwesterly corner of Avendia Lauro Villar
(Km.4) and Calle Francisco, Matamoros, Tamamulipas, Mexico
C. Leased Real Property.
1. Landmark Center, 1111 Northshore Drive, Suite N-600, Knoxville
Tennessee
<PAGE>
2. 5617 S. Expressway 83, Harlingen, Cameron County, Texas
3. 2300 Eastern Avenue, Elk Grove Village, Illinois
4. 5524 Jeffrey Lane, East Tennessee Valley Industrial District,
Morristown, Tennessee
5. JBDJ, LLC, P.O. Box 179, 1333 Oak View Land, Bldg 1, Seagrove, North
Carolina 27341
6. First Air Express DBI Bison Warehouse and Distribution, 10200 Metric
Blvd., P.O. Box 80101, Austin, Texas
D. 3.1(h) (ii): Options to purchase real property.
Option to purchase 5617 S. Expressway 83, Harlingen, Cameron County, Texas
<PAGE>
Schedule 3.1(i)
Taxes
Section 3.1(i) (iii)
See attached.
Section 3.1(i) (iv)
The Anchor Advanced Products, Inc. (together with Anchor Holdings,
Inc., the "Company") has been a member of an Affiliated Group. While
the Company was owned by North American Philips Corporation
("Philips"), it was included as a subsidiary in the Philips
consolidated tax return. That status changed in April, 1990 when
Philips sold the Company to the Thomas H. Lee Company.
<PAGE>
Schedule 3.1(j)
Litigation
A. Frank Eugene Wrenn v. Anchor Advanced Products, Inc.
B. Pending Workers' Compensation Cases.
1. R. Arwood v. Anchor Advanced Products, Inc.
2. L. Black v. Anchor Advanced Products, Inc.
3. K. Massey v. Anchor Advanced Products, Inc.
4. B. Sloas v. Anchor Advanced Products, Inc.
5. N. Hill v. Anchor Advanced Products, Inc.
6. E. Dalton v. Anchor Advanced Products, Inc.
C. D&M Sales & Engineering, Inc. v. Anchor Advanced Products, Inc.
D. Jewelyndia Patterson v. Mid-State Plastics and Express Personnel
Temporary Service.
<PAGE>
Schedule 3.1(k)
Agreements
A. 3.1(k)(i)(A): Material Contracts.
1. Agreement by and between Mid-State Plastics, Inc. and Abbott
Laboratories dated December 5, 1989 as amended February 17, 1997,
Consent to Assignment dated 7/29/94 and supplemental correspondence
dated 3/5/97, 9/19/95, 9/11/95, 9/5/94 and 8/5/94.
2. Memorandum of Agreement by and between Anchor Advanced Products, Inc.
and The Procter & Gamble Manufacturing Company dated December 16,
1993 as amended August 2, 1997.
3. Agreement by and between Anchor Advanced Products, Inc. and Colgate-
Palmolive Company dated as of June 30, 1996.
4. Purchase Agreement by and between Mid-State Plastics, a Division of
Anchor Advanced Products, Inc. and Compaq Computer Corporation dated
February 28, 1997.
5. Agreement by and between Anchor Advanced Products, Inc. and Anomatic
Corporation dated as of March 28, 1996.
6. Collaborative Supply Agreement by and between Anchor Advanced
Products, Inc. and Aastrom Biosciences, Inc. dated December 16, 1996.
7. Confidential Disclosure Agreement by and between Anchor Advanced
Products, Inc. and Cosmair, Inc. dated May 10, 1993.
8. Letter Agreement by and between Anchor Advanced Products, Inc. and
L'Oreal dated as of August 24, 1995 as supplemented by letter dated
March 7, 1996.
9. Sales Contract by and between Anchor Advanced Products, Inc. and
Bayer Corporation dated as of July 28, 1997.
10. Draft Supply Agreement by and between Anchor Advanced Products, Inc.
and SmithKline Beecham-currently being negotiated.
<PAGE>
11. Supply Agreement by and between Mid-State Plastics Division of Anchor
Advanced Products, Inc. and Lydall Central, Inc./Westex Division
dated as of December 1,1997.
12. Letter Agreement with Schering-Plough dated as of December 18, 1997.
13. Letter Agreement by and between Anchor Advanced Products, Inc. and
Bic Corporation dated as of November 6, 1997.
14. Letter Agreement from Summit Corporation of America dated April 18,
1997.
15. Product Sales Agreement by and between Anchor Advanced Products, Inc.
and Huntsman- currently being negotiated.
16. Assembling Agreement by and between Anchor Advanced Products, Inc.
and Cepillos de Matamoros dated as of May 9, 1990.
17. Management Agreement by and between Anchor Advanced Products, Inc.
and the Thomas H. Lee Company dated April 30, 1990. (being terminated
contemporaneously with the Closing)
18. Sales Representation Agreement by and between Anchor Advanced
Products, Inc. and PDC Associates, Inc. dated as of July 1, 1995.
19. Warehouse Service Agreement between Anchor Advanced Products, Inc.
and DuPont de Nemours dated September 15, 1995.
20. General Polymers Volume Contract by and between Anchor Advanced
Products, Inc. and Ashland Chemical, Inc. dated as of January 27,
1998.
B. 3.1(k)(i)(B): Indenture, Credit Agreement or Other Instrument Relating to
the Borrowing of Money and Capital Leases.
1. Indenture for 11 3/4% Senior Notes Due 2004 by and among Anchor
Advanced Products, Inc., as Issuer, Anchor Holdings, Inc., as
Guarantor, and State Street Bank and Trust Company, as Trustee dated
as of April 2, 1997.
2. Anchor Advanced Products, Inc. $100,000,000 11 3/4% Series B Senior
Notes Due 2004.
3. Credit Agreement by and between Anchor Advanced Products, Inc. and
NationsBank, N.A., as Agent dated as of April 2, 1997.
<PAGE>
4. Loan Agreement by and between Anchor Advanced Products, Inc. and the
Connecticut Development Authority (the "CDA") dated December 30,
1994, the Assistance Agreement by and between the State of
Connecticut acting by the Department of Economic Development and
Anchor Advanced Products, Inc. approved on January 18, 1995, Guaranty
Agreement by and between the CDA and Anchor Holdings, Inc. and
Security Agreement by and between the CDA and Anchor Advanced
Products, Inc.
5. Anchor Advanced Products, Inc. Use of Letter of Credit Agreement by
and between Anchor Advanced Products, Inc. and Reliance National
Indemnity Company dated as of April 30, 1993.
6. Equipment Lease by and between Mid-State Plastics and LB Credit
corporation dated as of May 21, 1990.
7. Lease of the property located at 5617 S. Expressway 83, Harlingen,
Cameron County, Texas.
C. 3.1(k)(i)C: Non-Competition Agreements.
Supply Agreement by and between Mid-State Plastics, a division of Anchor
Advanced Products, Inc. and Lydall Central, Inc./Westex Division dated
December 1, 1997.
D. 3.1(k)(ii): Defaults.
The Company is in default of Loan Agreement by and between Anchor
Advanced Products, Inc. and the Connecticut Development Authority dated
December 30, 1994 and the Assistance Agreement by and between Anchor
Advanced Products, Inc. and the State of Connecticut Acting by the
Department of Economic Development approved on January 18, 1995. This
default also constitutes a default under the Credit Agreement by and
between Anchor Advanced Products, Inc. and NationsBank, N.A., as agent
dated as of April 2, 1997.
<PAGE>
Schedule 3.1(l)
Labor Matters
Convenio DeTrabajo dated February 16, 1998. Terms retroactive to
January 1, 1998.
<PAGE>
Schedule 3.1(m)(i)
Employee Benefits
I. Retirement Benefit Plans
A. Defined Benefit Pension Plans
1. Anchor Advanced Products, Inc. Hourly Pension Plan
2. Anchor Advanced Products, Inc. Salaried Pension Plan
B. Defined Contribution Plans
1. Anchor Advanced Products' Employee Savings Plan
2. Mid-State Plastics Defined Contribution Plan
II. Welfare Benefit Plans
A. Anchor Advanced Products' Employee Welfare Benefit Plan
The Anchor Advanced Products' Employee Welfare Benefit Plan
includes a Section 125 cafeteria arrangement, dependent care
assistance plan and unreimbursed medical plan. Medical and
dental coverage are provided through Blue Cross Blue Shield of
Tennessee, accidental death and dismemberment, long and short
term disability and life insurance coverage are provided
through Principal Financial Group effective October 1, 1996.
Travel Accident Insurance is provided through American Home
Assurance Company to full time employees in the amount of 6
times actual salary with a maximum of $1,600,000.
B. The medical and dental coverage are provided through
self-insured plans. The medical plan has a stop-loss insurance
policy with $100,000 individual and $3,145,000 aggregate
limits. The dental plan limits the amount of reimbursement to
$1,000 per participant per year. Participants in the medical
plan can reduce their required contribution to the plan by
participating in the Company's "Wellness Program" provided
through Blue Cross/Blue Shield.
C. Prescription Drugs are offered through Eckerd Health
Services/TDI. There is no additional premium for this plan. At
retail, there is a $25 individual deductible and a $50 family
deductible.
<PAGE>
III. Executive Major Medical
Seven (7) executives are provided individual major medical policies in
addition to the basic medical plan. No retiree benefits are provided under this
plan.
IV. Employment Agreements
A. Employment Agreement by and between the Company and Francis H.
Olmstead, Jr. and dated April 1, 1996.
B. Employment Agreement by and between the Company and Robert T.
Parkey and dated April 1, 1996.
C. Employment Agreement by and between the Company and Geoffrey
A. deRohan and dated April 1, 1996.
D. Employment Agreement by and between the Company and Claude J.
Kyker and dated April 1, 1996 and extended through December
31, 1998 on January 5, 1998.
E. Employment Agreement by and between the Company and Joseph M.
Viglione and dated April 1, 1996 and extended through December
31, 1998 on January 5, 1998.
F. Employment Agreement by and between the Company and Phyllis C.
Best and dated April 1, 1996 and extended through December 31,
1998 on January 5, 1998.
V. Supplemental Executive Retirement Benefits Agreements
Each Supplemental Executive Retirement Benefits Agreement provides
different death benefit provisions and spousal survivor provisions.
A. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Francis H. Olmstead, Jr. amended and
restated November 15, 1994, and amended by letters dated June
11, 1996, and February 8, 1996.
B. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Robert T. Parkey amended and restated
November 15, 1994, and amended by letter dated June 11, 1996,
and February 8, 1996. This Agreement contains a different
formula of benefits than the other Agreements.
<PAGE>
C. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Geoffrey A. deRohan amended and
restated as of November 15, 1994.
D. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Claude J. Kyker amended and restated
November 25, 1994, and amended by letters dated June 11, 1996,
February 8, 1996, and January 5, 1998.
E. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Joseph M. Viglione amended and
restated November 25, 1994, and amended by letters dated June
11, 1996, February 8, 1996, and January 5, 1998.
F. Supplemental Executive Retirement Benefits Agreement by and
between the Company and Phyllis C. Best amended and restated
November 25, 1994, and amended by letters dated June 11, 1996,
February 8, 1996, and January 5, 1998.
G. Supplemental Executive Retirement Benefits Agreement each
amended and restated as of November 25, 1994 by and between
the Company and certain individuals named therein, all as
follows:
1. John J. Nugent (Amended by letter dated February 8, 1996)
2. Robert J. Epley (Amended by letter dated February 8, 1996)
3. Lloyd Etter
4. Warren Henricks
5. Manfred Fassler
6. Walter Simon
7. Rick D. Owens
8. Enrique Villegas
9. Edward Sherman
10. Samuel White
11. John Franz
12. Charles O. Allen
13. Dennis A. Carper
14. William R. Cavalari
15. Elizabeth H. Cox
16. Horst Herlitze
17. R. Dale Johnson
18. Terrance O. Jones
19. Richard B. Mack
20. Vincent M. Pignatelli
21. Roger Michael Price
22. Robert J. Valerian
23. Rogon Walker
24. John C. Williams
25. James V. Wisser
26. Stephen C. Hopkins
<PAGE>
27. Jack C. Lail
28. G.C. Mike Smith
29. Dean F. Lail
30. James E. Cameron
31. Carey Martin Durham
32. Kermit Lawson
33. David Scholle
34. Steven D. Shannon
35. Keith A. Stuck
36. Jeffrey J. Vokac
Although these Agreements are intended to be unfunded, unsecured
agreements to pay retirement benefits, the Company has purchased certain life
insurance policies with Sun Life Insurance Company and Central Life Assurance
Company (Amer US) to fund these Agreements.
The following individual policies are with Sun Life:
Policy Face
Participant Amount
----------- ------------
1. Charles O. Allen $ 483,425
2. Phyllis C. Best 552,782
3. James E. Cameron 564,280
4. William R. Cavalari 611,341
5. Elizabeth H. Cox 532,160
6. Carey M. Durham 532,163
7. Robert J. Epley 617,471
8. Manfred Fassier 574,650
9. John M. Franz 572,554
10. Warren L. Hendricks, Jr. 611,380
11. Horst Herlitze 617,030
12. Stephen C. Hopkins 540,721
13. R. Dale Johnson 534,085
14. Terrance O. Jones 621,618
15. Claude I. Kyker 725,125
16. Dean F. Lail 525,815
17. Jack C. Lail 565,754
18. Kermit A. Lawson 556,511
19. Richard B. Mack 547,974
20. John J. Nugent 937,074
21. Francis H. Olmstead, Jr. 877,194
22. Rick D. Owens 546,221
23. Robert T. Parkey 765,230
24. Vincent M. Pignatelli 531,343
25. Roger M. Price 542,773
<PAGE>
26. David A. Scholle 561,283
27. Steven Shannon 483,425
28. Edward W. Sherman 530,530
29. Grover C. Smith, III 539,859
30. Keith A. Stuck 529,797
31. Joseph M. Viglione 714,412
32. John C. Williams 483,425
33. J. Victor Wisser 545,426
34. Dennis Carper 1,000,000
35. Geoffrey deRohan 1,000,000
36. Enrique Villegas 1,000,000
37. Rogon Walker 1,000,000
The following individual policies are with Amer US Life Insurance
Company:
Policy Face
Participant Amount
----------- ------------
1. Robert J. Valerian $ 526,323
2. Lloyd A. Etter 407,726
3. Jeffrey J. Vocak 724,318
VI. Supplemental Compensation Agreements
Each Supplemental Compensation Agreement contains substantially similar
provisions with the exception that the formula for benefits in each Agreement is
different.
A. Supplemental Compensation Agreement by and between the Company
and Phyllis C. Best dated November 18, 1994.
B. Supplemental Compensation Agreement by and between the Company
and Claude J. Kyker dated November 18, 1994.
C. Supplemental Compensation Agreement by and between the Company
and Joseph M. Viglione dated November 18, 1994.
D. Supplemental Compensation Agreement by and between the Company
and Robert J. Epley dated November 18, 1994.
E. Supplemental Compensation Agreement by and between the Company
and Lloyd Etter dated November 18, 1994.
<PAGE>
F. Supplemental Compensation Agreement by and between the Company
and Francis H. Olmstead, Jr. dated November 18, 1994.
VII. Mexican Agreements
Certain benefits are granted to employees of the Company's Mexican
subsidiary who are subject to a collective bargaining agreement by and between
Cepillos de Matamoros S.A. de C.V. and El Sindicato de Jornaleros y Oberos
Industries. These benefits include food allowance, life insurance, vision,
wedding gifts, educational assistance plan, vacation premium, sports, union
delegate compensation, death in family, and uniforms. Certain other benefits
granted to the Company's Mexican employees by Mexican government and any lower
government body in Mexico, including local governments, include Christmas bonus,
profit sharing, holidays, vacations, sick benefits and social security (IMSS).
Other benefits provided by the Company to salaried employees include a savings
plan and a major medical plan.
VIII. Stock Option Plan (being terminated contemporaneously with the Closing)
A. Anchor Holdings, Inc. 1995 Non-Qualified Time Accelerated
Restricted Stock Option Plan for the Mid-State Plastics
Division
B. Anchor Holdings, Inc. 1990 Time Accelerated Restricted Stock
Option Plan as amended effective April 1, 1996.
IX. Stock Option Agreements (being terminated contemporaneously with the
Closing)
A. Stock Option Agreement by and between the Company and Geoffrey
A. deRohan dated April 1, 1996 pursuant to the Anchor
Holdings, Inc. 1990 Time Accelerated Restricted Stock Option
Plan as amended effective April 1, 1996.
B. The following individuals have Agreements pursuant to the
Anchor Holdings, Inc. 1995 Non Qualified Time Accelerated
Restricted Stock Option Plan for the Mid-State Plastics
Division:
1. Jack C. Lail
2. Richard Mack
3. Charles Allen
4. Dean Lail
5. R. Dale Johnson
6. Elizabeth Cox
X. Severance
<PAGE>
The Company provides a severance to salaried employees who are placed
on permanent layoff due to a work force reduction or plant closing or who are
terminated without cause equal to one week's pay per year of service to the
Company. Officers are granted salary and benefits continuation for a minimum of
one full year for termination without cause and paid a prorated bonus prorated
based on date of termination.
XI. Scholarship Program
The Company provides a scholarship to sons and/or daughters of
full-time United States employees who have completed one year of continuous
service as of January 1 of the year the award is to be made. The scholarship is
in an amount of $6,000 ($1,500 per year) granted to students attending a two- or
four-year accredited college or university on a full-time basis as a first-time
freshman.
XII. Educational Assistance Plan
The Company provides to full-time employees educational assistance for
subjects related to their job function. Employees may not receive reimbursement
for failing grades. The Company limits the reimbursements to $4,000 per year,
per employee.
XIII. Holiday and Vacation Pay
Full-time employees of the Company receive 11 paid holidays. Full-time
employees of the Mid-States Plastic Division receive nine (9) paid holidays. In
the event that a company holiday overlaps with an employee's vacation days, the
employee is granted an additional vacation day(s).
Employees of the Company earn two weeks vacation in their first year of
employment, three weeks of vacation after five years of employment, and four
weeks of vacation after fifteen years of employment.
The vacation policy for Mid-State Plastics Company is as follows:
Six months of vacation one week
One year of employment two weeks
Five years of employment two weeks plus one day
Six years of employment two weeks plus two days
Seven years of employment two weeks plus three days
Eight years of employment two weeks plus four days
Ten years of employment three weeks
Twelve years of employment three weeks plus one day
Fourteen years of employment three weeks plus two days
<PAGE>
Sixteen years of employment three weeks plus three days
Eighteen years of employment three weeks plus four days
Twenty years of employment four weeks
Vacation days not used at the end of the year do not rollover into the
next year and are not paid out as unused.
XIV. Annual Bonus Program
The Company sponsors the Annual Bonus Program pursuant to which
eligible employees (sales people, officers, managers, and selected individual
directors) receive a cash bonus based on performance against objectives.
Employees who participate in this program are not eligible to participate in the
Anchor Share Plan, below.
XV. Anchor Share Plan
The Company provides this productivity-based plan to eligible employees
(hourly and salaried employees). Each individual plant has its own Anchor Share
Plan. These plans are substantially similar in that each is a productivity-based
plan whereby productivity gains, absent capital investment by the Company, will
be rewarded. Each individual plant has set different standards to be achieved
for earning the productivity bonus.
XVI. Employee Assistance Plan
The Company provides substance abuse, alcoholism and family counseling
services to employees. The employee may obtain a referral from the Company or
get a self-referral. The first two (2) visits under this plan are free to
employees.
XVII. Other
A. The Company provides to officers, sales people, and plant managers a
leased vehicle for their own use. The vehicles provided to officers are "perk"
vehicles and are provided tax free. The other vehicles require a monthly
employee contribution of $35.
B. As a perquisite, officers of the Company receive free tax and estate
planning advice.
C. As a perquisite, officers of the Company receive free physical
examinations.
D. Certain employees receive service awards.
E. Good Attendance Awards provided to certain employees.
<PAGE>
F. Jury Duty/Death in the Family. The Company provides 3 days paid
death in the family leave. The Company reimburses employees for the difference
between base pay and jury duty pay.
XVIII. Retiree Medical Benefits
The Company has promised retiree medical benefits to one participant
who retired in 1990. The former employee contributes $61.00 per month toward the
premiums.
<PAGE>
Schedule 3.1(m)(ii)
Employee Benefits
None.
<PAGE>
Schedule 3.1(m)(v)
Employee Benefits
The Company is obligated under an agreement memorialized in a letter
dated July 12, 1990, to provide medical benefits to Heinz Beretta, a retired
former employee of North American Philips.
<PAGE>
Schedule 3.1(m)(vi)
Employee Benefits
Purchaser has been provided with sample forms of life insurance contracts and
the face values of the other life insurance policies.
Purchaser has been provided with one Executive Medical Policy to review as a
sample.
<PAGE>
Schedule 3.1(m)(vii)
Employee Benefits
None.
<PAGE>
Schedule 3.1(m)(viii)
Employee Benefits
Employment Agreements
A. Severance Amount. Each of the Agreements contains the same
severance pay provisions.
1. The Severance Amount payable upon termination under
paragraphs relating to disability and to death, shall be equal to one year's
Base Salary in effect at the time of such termination and Bonus computed using
the last full-year Bonus, if any, paid to the Employee, pro-rated to the
effective date of termination. The Bonus portion of the Severance Amount shall
be considered earned notwithstanding any right of discretion in the Board not to
grant such bonus.
2. The Severance Amount payable upon termination under
paragraphs relating to termination by the Employee for cause and to termination
by the Employer without "just cause" shall be an amount equal to Base Salary
computed to the end of the Term and Bonus computed using the last full-year
Bonus, if any, paid to the Employee, pro-rated to the effective date of
termination. The Bonus portion of the Severance Amount shall be considered
earned notwithstanding any right of discretion in the Board not to grant such
bonus.
3. The Severance Amount payable at the option of the Employer
upon termination for just cause or upon the voluntary resignation of the
Employee without cause or reason, shall be equal to one half of one year's Base
Salary as in effect for at least three (3) months prior to such termination.
Bonus shall not be considered.
B. The following Employment Agreements are in effect:
1. Employment Agreement by and between the Company and
Francis H. Olmstead, Jr. and dated April 1, 1996.
2. Employment Agreement by and between the Company and Robert
T. Parkey and dated April 1, 1996.
3. Employment Agreement by and between the Company and
Geoffrey A. deRohan and dated April 1, 1996.
4. Employment Agreement by and between the Company and Claude
J. Kyker and dated April 1, 1996 and extended through
December 31, 1998 on January 5, 1998.
<PAGE>
5. Employment Agreement by and between the Company and Joseph
M. Viglione and dated April 1, 1996 and extended through
December 31, 1998 on January 5, 1998.
6. Employment Agreement by and between the Company and
Phyllis C. Best and dated April 1, 1996 and extended
through December 31, 1998 on January 5, 1998.
Supplemental Executive Retirement Benefits Agreements As Amended
If the Executive's Employment (i) voluntarily terminates on or after
the Executive's completion of five years of Credited Service or (ii) is
terminated by the Corporation for any reason other than Cause or Death, then
benefits under the Supplemental Executive Retirement Plan Agreement shall be
payable to the Executive commencing as of the first day of the month next
following the latest of the Executive's termination date, Early Retirement Date,
or the date on which benefit payments are scheduled to begin in the normal
course of retirement. Such benefits shall be payable monthly in an amount equal
to the Normal Retirement Benefit as reduced by 0.5% times the number of months
from the date the payments are schedule to begin until the Executive's Normal
Retirement Date.
<PAGE>
Schedule 3.1(m)(ix)
Employee Benefits
None.
<PAGE>
Schedule 3.1(o)
Fees
None.
<PAGE>
Schedule 3.1(p)
Environmental Matters
A. Volatile organic contamination was discovered at the Company's Building
B, Davis Street, Morristown, Tennessee and is being remediated pursuant
to a Consent Order and Agreement dated as of July 26, 1996 between
Philips Electronics North America Corporation ("PENAC") and the
Tennessee Department of Environment and Conservation at no expense to
the Company.
B. The Company has been identified as a potentially responsible party by
the United States Environmental Protection Agency ("U.S. EPA") and is a
codefendant, along with over 1000 other codefendants, in a case brought
by the U.S. EPA regarding contamination at the Solvents Recovery
Systems of New England Site, a National Priority List superfund site in
Southington, Connecticut. The Company is being defended and indemnified
in this matter by PENAC. This case was still unresolved as of the last
report from PENAC on February 12, 1998.
C. In 1991 an oil spill was discovered at the Cepillos de Matamoros site.
This spill was remediated, and the Company received a compliance
certificate from the Mexican Environmental Protection Agency
thereafter.
<PAGE>
Schedule 3.1(q)
Intellectual Property
A. 3.1(q)(i).
It appears that an error made by the World Intellectual Property
Organization in the handling of the Patent Cooperation Treaty ("PCT")
application corresponding to U.S. Application No. 08/489,607, entitled,
"BRUSH FOR IMPROVED TUFT RETENTION AND ANCHOR WIRE THEREFORE" may have
compromised Anchor's ability to perfect patent rights to the invention
claimed in the PCT application in certain countries outside of the U.S.
B. 3.1(q)(ii).
None.
C. 3.1(q)(iii).
In October 1991, the Company received a letter from an Italian company,
Offalysine s.r.l., asserting a potential claim of infringement arising
out of the manufacture by the Company of a "disposable cosmetic system
for sampling purposes." To the Knowledge of the Company, there is no
current activity on this matter.
D. 3.1(q)(iv).
None.
E. U.S. and Foreign Patents and Patent Applications for Anchor Advanced
Products, Inc.
See attached.
F. U.S. Trademarks for Anchor Advanced Products, Inc.
See attached.
<PAGE>
G. U.S. Patents under which Anchor Advanced Products, Inc. Manufactures
products for Patent Holder.
<TABLE>
<CAPTION>
Date of Patent Patent Number Assignee/Inventor Claims
-------------- ------------- ----------------- ------
<S> <C> <C> <C>
5/22/90 4,927,281 L'Oreal/Gueret Twisted wire brush with mixed
Filed 2/10/89 filament shapes/sizes
12/19/89 4,887,622 L'Oreal/Gueret Twisted wire brush with bristle
Filed 11/30/87 diameter .10 to .25mm (.004"-
.010") w/approx. 10-40 bristles
per turn. TWB with varying
bristle density. Brush with
hollow or irregularly shaped
bristles.
</TABLE>
H. Licenses.
License Agreement by and between Anchor Brush Company, Inc. and
Sanderson- Macleod, Inc. dated as of February, 1, 1989 whereby Anchor
Brush Company, Inc. receives a license under United States Letters
Patent No. 4,733,425-Mascara Brush.
<PAGE>
Schedule 3.1(r)
Insurance
A. Directors & Officers Liability Insurance.
[bullet] Aon Risk Services
Annual
Limit of Liability Retention Premium
------------------ --------- -------
$3,000,000.00 $25,000.00 $25,000.00
B. See Attached.
<PAGE>
Schedule 3.1(s)
Material Interest
None.
<PAGE>
Schedule 3.1(t)
Affiliate Transactions
Lease payments of $19,008.00 have been made since the Balance Sheet
date for warehouse space leased from a company owned by Jack Lail, a
former director and officer of the Company, located at JBDJ, LLC, P.O.
Box 179, 1333 Oak View Land, Bldg 1, Seagrove, North Carolina.
<PAGE>
Schedule 3.2(d)
Fees
None.
<PAGE>
Schedule 3.3(a)
None.
<PAGE>
Schedule 3.3(c)
None.
<PAGE>
Schedule 3.3(d)
None.
<PAGE>
Schedule 5.5
Tax Sharing Agreements
1. A transfer pricing agreement was reached between Anchor Advanced
Products, Inc. and Cepillos de Matamoros ("Cepillos") which satisfies
the U.S. transfer pricing rules and the transfer pricing guidelines of
the Organization for Economic Cooperation and Development (the OECD) to
which the Mexican government subscribes. The OECD is the international
body which recommends international tax standards for its twenty-five
member countries (including the United States and Mexico). Pursuant to
this transfer pricing Agreement, Cepillos should provide contract
manufacturing services to Anchor for a fee which will allow it to earn
a cost plus markup of between 5.4 and 8.92% each year. Income taxes are
then paid to the Mexican government and are deductible as an expense on
Anchor's U.S. tax return.
2. Cepillos de Matamoros has agreed to comply with tax obligations for
those U.S. citizens who work in Mexico and receive payment of their
salaries from foreign corporations. Taxes are withheld from their U.S.
wages and deposited with the Mexican government. The employees are
furnished proof of withholding at year end, and are allowed to take a
deduction from their IRS tax return.
EXHIBIT 99.1
FOR: Anchor Advanced Products, Inc.
APPROVED BY: Phyllis C. Best
Sr. Vice President, Finance
(423) 450-5365
CONTACT: Jeanne Carr
MacKenzie Partners, Inc.
(212) 929-5500 (collect)
(800) 322-2885
FOR IMMEDIATE RELEASE
Knoxville, Tennessee, March 19, 1998 -- Anchor Advanced Products, Inc.
(the "Company") announced today that it had received consents, pursuant to its
consent solicitation commenced on March 3, 1998 (the "Consent Solicitation"),
from all the holders of its 11-3/4% Series B Senior Notes due 2004 (the "Notes")
to certain amendments (the "Amendments") and a waiver (the "Waiver") of certain
provisions of the Indenture governing the Notes (the "Indenture"). The Consent
Solicitation has expired in accordance with its terms. The Company also
announced today the consummation of the acquisition (the "Acquisition") of the
stock of its parent, Anchor Holding, Inc., by Anchor Acquisition Co., a company
affiliated with George Votis.
The purpose of the Waiver was to allow the consummation of the
Acquisition to occur without triggering a "Change of Control" under the
Indenture, and without requiring the Company to offer to repurchase the Notes in
connection with, or upon the consummation of, the Acquisition. The purpose of
the Amendments was to provide that the occurrence of certain transactions would
not constitute a "Change of Control" under the Indenture. Anchor will make a
consent payment of $12.50 for each $1,000 in principal amount of the Notes to
each holder of the Notes. Credit Suisse First Boston Corporation acted as the
solicitation agent, and MacKenzie Partners, Inc. acted as the information agent,
in connection with the Consent Solicitation.
