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UNITED STATES
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): May 17, 1996
CFI Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-8555 53-0174114
- ------------------------- ------------------------ ---------------------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
935 West Union Avenue, Wheaton, Illinois 60187
- --------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708/668-2838
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2
ITEM 5 OTHER EVENTS
On May 17, 1996, CFI Industries, Inc. ("CFI"), IPC, Inc. ("IPC"),
Package Acquisition, Inc. ("Acquisition"), a wholly owned subsidiary of IPC,
and Equity Holdings, entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which, on the terms and subject to conditions
set forth therein, Acquisition would be merged with and into CFI and the
stockholders of CFI would be entitled to receive an amount in cash presently
estimated to be approximately $6.25 per share of common stock, par value $1.00
per share ("Common Stock") of CFI. A copy of the Merger Agreement is filed
herewith as Exhibit 1 and is incorporated herein by reference.
Equity Holdings, owner of approximately 66.7% of the Common Stock,
joined in the Merger Agreement for the limited purpose of committing to vote in
favor of the merger to be consummated pursuant to the Merger Agreement.
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3
ITEM 7 FINANCIAL STATEMENT AND EXHIBITS
(c) Exhibits
The following is being filed as an exhibit to this Report:
1. Agreement and Plan of Merger dated as of May 17, 1996, among
CFI Industries, Inc., IPC, Inc., Package Acquisition, Inc. and
Equity Holdings
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4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
CFI INDUSTRIES, INC.
(Registrant)
By: /S/DONALD J. LIEBENTRITT
Name: Donald J. Liebentritt
Title: Vice President
Dated: May 29, 1996
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5
INDEX TO EXHIBITS
Exhibit
Number Description
- --------- ------------
1. Agreement and Plan of Merger dated as of May 17, 1996
among CFI Industries, Inc., IPC, Inc., Package
Acquisition, Inc. and Equity Holdings
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
dated as of
May 17, 1996
among
IPC, INC.,
PACKAGE ACQUISITION, INC.
CFI INDUSTRIES, INC.
and
EQUITY HOLDINGS
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Agreement Sections . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 CFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 CFI Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 CFI Counsel Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 CFI Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 CFI Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 CFI Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 Existing Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Existing Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.24 Existing Corporate Jurisdictions . . . . . . . . . . . . . . . . . . . 6
1.25 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.26 Existing Insurance Policies . . . . . . . . . . . . . . . . . . . . . . 6
1.27 Existing Intangible Assets . . . . . . . . . . . . . . . . . . . . . . 6
1.28 Existing Investments . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.29 Existing Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.30 Existing Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Existing Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.32 Existing Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.33 Existing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.35 Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.37 Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.38 Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.39 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.41 Optionholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.42 The Parent Closing Certificate . . . . . . . . . . . . . . . . . . . . 9
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1.43 The Parent Counsel Opinion . . . . . . . . . . . . . . . . . . . . . . 9
1.44 Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.45 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.46 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.47 Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Effective Time; Filing of Certificate of Merger . . . . . . . . . . . . 10
2.3 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . 10
2.4 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . 12
2.9 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 No Further Rights or Transfers;
Cancellation of Treasury Shares . . . . . . . . . . . . . . . . . . . . 15
2.11 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.12 Special Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . 16
2.13 Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . . . . 18
2.14 Deferred Performance . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.15 Existing Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Deliveries of Information . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . 23
3.7 Equity Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9 Equity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.10 The CFI Industries, Inc.
Form Your Future Plan. . . . . . . . . . . . . . . . . . . . . . . . . 24
3.11 Regulatory and Other Approvals . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Organization; Business . . . . . . . . . . . . . . . . . . . . . . . . 25
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.3 Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . 27
4.4 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . 28
4.5 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.7 Books and Records; CFI Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . 31
4.9 Buildings and Equipment . . . . . . . . . . . . . . . . . . . . . . . . 33
4.10 Existing Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.11 Performance of Contracts . . . . . . . . . . . . . . . . . . . . . . . 35
4.12 Existing Insurance Policies . . . . . . . . . . . . . . . . . . . . . . 35
4.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 35
4.14 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.16 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.17 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 39
4.18 No Pending Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . 39
4.19 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.21 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.22 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.23 Existing Permits and Violations of Law . . . . . . . . . . . . . . . . 41
4.24 Unemployment Compensation . . . . . . . . . . . . . . . . . . . . . . . 41
4.25 Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.26 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . 42
4.27 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . 43
4.28 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.29 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . 46
4.30 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.31 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.32 Content of Proxy Statement and Other
Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.1 Due Incorporation and Authority . . . . . . . . . . . . . . . . . . . . 49
5.2 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3 No Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . . . . 50
5.4 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . 50
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VI CONDUCT OF BUSINESS OF CFI PENDING
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.1 Carry on in Regular Course . . . . . . . . . . . . . . . . . . . . . . 51
6.2 Use of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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6.3 Preservation of Relationships . . . . . . . . . . . . . . . . . . . . . 52
6.4 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.5 Existing Insurance Policies . . . . . . . . . . . . . . . . . . . . . . 52
6.6 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.7 Indebtedness; Investments . . . . . . . . . . . . . . . . . . . . . . . 52
6.8 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.9 Dividends; Redemptions; Issuance
of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.11 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.12 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII CONDITIONS PRECEDENT FOR BENEFIT
OF THE PARENT AND ACQUISITION . . . . . . . . . . . . . . . . . . . . . 53
7.1 Compliance with Agreement . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.3 Representations and Warranties of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 54
7.5 Material Damage to Assets . . . . . . . . . . . . . . . . . . . . . . . 54
7.6 No Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.8 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.9 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.10 Approval of Shareholders . . . . . . . . . . . . . . . . . . . . . . . 56
7.11 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.12 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.13 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII CONDITIONS PRECEDENT FOR BENEFIT
OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.1 Compliance with Agreement . . . . . . . . . . . . . . . . . . . . . . . 57
8.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.3 Representations and Warranties of the
Parent and Acquisition . . . . . . . . . . . . . . . . . . . . . . . . 57
8.4 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.5 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.6 Approval of Shareholders; Certificate
of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.7 Closing Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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ARTICLE IX NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 58
9.1 No Survival of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.2 Directors' and Officers'
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE X REPRESENTATIONS AND WARRANTIES OF
EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . 59
10.2 Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . 60
10.3 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . 60
10.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.5 Ownership of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.2 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.3 Termination Fee Payable to
the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.4 Termination Fee Payable to
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.5 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.2 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . 65
12.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.6 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . . . . . 67
12.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 67
12.10 No Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.11 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.12 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.13 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.14 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 68
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EXHIBITS
Exhibit 1 Certificate of Merger
Exhibit 2 CFI Closing Certificate
Exhibit 3 CFI Counsel Opinion
Exhibit 4 The Parent Closing Certificate
Exhibit 5 The Parent Counsel Opinion
Exhibit 6 Form of Release
SCHEDULES
Schedule 1.11 CFI Financial Statements
Schedule 1.22 Existing Bank Accounts
Schedule 1.23 Existing Contracts
Schedule 1.24 Existing Corporate Jurisdictions
Schedule 1.25 Existing Indebtedness
Schedule 1.26 Existing Insurance Policies
Schedule 1.27 Existing Intangible Assets
Schedule 1.28 Existing Investments
Schedule 1.29 Existing Liens
Schedule 1.30 Existing Litigation
Schedule 1.31 Existing Options
Schedule 1.32 Existing Permits
Schedule 1.33 Existing Plans
Schedule 1.44 Permitted Liens
Schedule 1.46 Real Estate
Schedule 3.1 Access
Schedule 4.1(d) CFI Charter Documents
Schedule 4.8 Absence of Certain Changes
Schedule 4.9 Buildings and Equipment
Schedule 4.14 Brokers
Schedule 4.15 Tax Returns
Schedule 4.18 No Pending Acquisitions
Schedule 4.20(a) Employment Claims
Schedule 4.20(b) Labor Disputes
Schedule 4.20(c) NLRB Matters
Schedule 4.20(d) Union Matters
Schedule 4.22 Subsidiaries
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Schedule 4.24 Unemployment Compensation
Schedule 4.25(b) Claims
Schedule 4.26 Customers and Suppliers
Schedule 4.27 Environmental Protection
Schedule 4.27(g) Off-Site Locations
Schedule 4.27(i) Tanks
Schedule 4.29 Affiliate Transactions
Schedule 6.6 Employment Matters
Schedule 7.6 No Liabilities
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1996 (the
"Agreement"), among IPC, INC. (formerly named Ivex Packaging Corporation), a
Delaware corporation (the "Parent"), PACKAGE ACQUISITION, INC., a Delaware
corporation ("Acquisition"), CFI INDUSTRIES, INC., a Delaware corporation (the
"Company") and owner of all the common stock of Plastofilm Industries, Inc., a
Delaware corporation (the "Operating Subsidiary" or "Plastofilm"), and, solely
for the purposes of Section 3.7 and Article X, EQUITY HOLDINGS, an Illinois
general partnership and the owner of 1,334,592 shares of the Company's common
stock ("Equity"). The Company and Acquisition are hereinafter sometimes
collectively referred to as the "Constituent Corporations."
WHEREAS, the Boards of Directors of the Parent, Acquisition
and the Company have approved, and deem it advisable and in the best interests
of their respective shareholders to consummate the acquisition of the Company
by the Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, the Parent, Acquisition and the Company wish to
provide for the terms and conditions upon which a merger of Acquisition with
and into the Company will be consummated, and Equity desires to join in this
Agreement as specifically herein provided; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to
be legally bound hereby, the Parent, Acquisition, the Company and, to the
extent specifically provided for herein, Equity agree as follows:
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ARTICLE I
DEFINITIONS
When used in this Agreement, and in addition to the other
terms defined herein, the following terms shall have the meanings specified:
1.1 Accounts. "Accounts" shall mean all accounts receivable,
notes and associated rights owned by CFI.
1.2 Affiliate. "Affiliate" shall mean, in relation to any
party hereto, any entity directly or indirectly controlling, controlled by or
under common control with such party; provided, however, that, notwithstanding
the foregoing, the term "Affiliate" shall not include (i) any corporation or
other entity (other than the Company) having securities that are listed on a
national securities exchange or traded in the national over-the-counter market
(a "Public Company"), (ii) any Subsidiary, whether direct or indirect, of any
Public Company or (iii) Midway Airlines Corporation, Scott Sports Group, Inc.
or Sealy Corporation.
1.3 Agreement. "Agreement" shall mean this Agreement and
Plan of Merger, together with the Exhibits attached hereto and the Disclosure
Schedule, as the same may be amended from time to time in accordance with the
terms hereof.
1.4 Agreement Sections. The following terms shall have the
meanings specified in the Sections of this Agreement listed in the following
table:
TERM SECTION
Acquiring Person 11.1(vii)
Acquisition Transaction 3.4(a)(i)
CERCLA 4.27(f)
CFI Charter Documents 4.1(d)
CFI Special Meeting 2.13(a)
Closing 2.7
Closing Date 2.7
Closing Per Share Amount 2.8
Company ERISA Affiliate 4.13(a)
Company SEC Documents 4.31
Consideration Per Share 2.8
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Due Diligence Date 2.15
Effective Time 2.2
Environmental Claim 4.27(a)(i)
Environmental Laws 4.27(a)(iii)
Environmental Permits 4.27(c)
Environmental Release 4.27(a)(iv)
Exchange Act 4.31
Exchange Agent 2.9(a)
Exchange Fund 2.9(a)
Hazardous Materials 4.27(a)(ii)
HSR Act 7.9
GCL 2.1
Governmental Entity 4.17
Material Adverse Effect 1.39
Proxy Statement 2.12(b)
Representative 2.9(a)
SEC 2.12(c)
Securities Act 4.31
Superior Proposal 3.4(b)
Surviving Corporation 2.1
1.5 Buildings. "Buildings" shall mean all buildings,
fixtures, structures and improvements leased or owned by CFI.
1.6 Certificate of Merger. "Certificate of Merger" shall
mean the Certificate of Merger in substantially the form of Exhibit 1 attached
to this Agreement.
1.7 CFI. "CFI" shall mean CFI Industries, Inc., a Delaware
corporation, together with its Subsidiaries.
1.8 CFI Closing Certificate. "CFI Closing Certificate" shall
mean the Closing Certificate of the Company in the form of Exhibit 2 attached
to this Agreement.
1.9 CFI Counsel Opinion. "CFI Counsel Opinion" shall mean
the opinion of Rosenberg & Liebentritt, P.C., in substantially the form of
Exhibit 3 attached to this Agreement.
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1.10 CFI Expenses. "CFI Expenses" shall mean all reasonable
out-of-pocket costs, fees and expenses incurred by CFI, including, without
limitation, the fees and expenses of counsel, accountants, brokers,
consultants, investment bankers, financial advisers and other third parties in
connection with: (a) the negotiation, preparation, execution and delivery of
and performance under this Agreement; (b) the preparation and distribution of
the Proxy Statement and any amendment or supplement thereto; and (c) the
conduct of the CFI Special Meeting.
1.11 CFI Financial Statements. "CFI Financial Statements"
shall mean (each of which is attached to this Agreement as Schedule 1.11 of the
Disclosure Schedule):
(a) the audited Consolidated Balance Sheet,
Consolidated Statement of Operations, Consolidated Statement of Cash Flows and
Consolidated Statement of Stockholders' Equity of CFI and related notes for
each of the fiscal years ended on June 27, 1993, June 26, 1994 and June 30,
1995; and
(b) the unaudited Consolidated Balance Sheet,
Consolidated Statement of Operations and Consolidated Statement of Cash Flows
of CFI and related notes for each of the quarters ended September 30, 1995,
December 31, 1995 and March 31, 1996.
1.12 CFI Stock. "CFI Stock" shall mean shares of common
stock of the Company, $1.00 par value.
1.13 Code. "Code" shall mean the Internal Revenue Code of
1986, as the same may be in effect from time to time.
1.14 Contracts. "Contracts" shall mean all of the contracts,
agreements, and obligations, written or oral, to which CFI is a party or by
which CFI or any of its assets are bound, including, without limitation, any
loan, bond, mortgage, indenture, lease, instrument, franchise or license.
1.15 Control. "Control" (including the terms "controlling,"
"controlled by," and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
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direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or by contract.
1.16 Disclosure Schedule. "Disclosure Schedule" shall mean
the Disclosure Schedule delivered by the Company to the Parent pursuant to
Section 3.2(a) of this Agreement.
1.17 Dissenting Shares. "Dissenting Shares" shall mean
shares of the CFI Stock which dissent from the Merger in accordance with the
provisions of the GCL.
1.18 Employees. "Employees" shall mean all of the employees
of CFI.
1.19 Employee Benefit Plans. "Employee Benefit Plans" shall
mean any pension plan, profit sharing plan, bonus plan, incentive compensation
plan, stock purchase plan, stock ownership plan, stock option plan, stock
appreciation plan, employee benefit plan, employee benefit policy, retirement
plan, fringe benefit program, insurance plan, severance plan, disability plan,
health care plan, sick leave plan, death benefit plan, or any other plan,
program or policy to provide retirement income, fringe benefits or other
benefits to former or current employees of CFI (including, without limitation,
any employee pension benefit plan, employee welfare plan or multi-employer plan
as each term is defined in ERISA).
1.20 Equipment. "Equipment" shall mean all machinery,
equipment, boilers, furniture, fixtures, motor vehicles, furnishings, parts,
tools, office equipment, computers and other items of tangible personal
property owned or used by CFI.
1.21 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as the same may be in effect from time to time.
1.22 Existing Bank Accounts. "Existing Bank Accounts" shall
mean any and all checking accounts, savings accounts, money market accounts,
custodial accounts, certificates of deposit, safe deposit boxes and other bank
accounts maintained by CFI, all of which are listed on Schedule 1.22 of the
Disclosure Schedule.
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1.23 Existing Contracts. "Existing Contracts" shall mean
those Contracts which are listed on Schedule 1.23 of the Disclosure Schedule.
1.24 Existing Corporate Jurisdictions. "Existing Corporate
Jurisdictions" shall mean those states, provinces and foreign countries in
which CFI is qualified to do business as a foreign corporation as listed on
Schedule 1.24 of the Disclosure Schedule.
1.25 Existing Indebtedness. "Existing Indebtedness" shall
mean all Indebtedness of CFI, all of which is listed on Schedule 1.25 of the
Disclosure Schedule.
1.26 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect and
owned by CFI, all of which are listed on Schedule 1.26 of the Disclosure
Schedule.
1.27 Existing Intangible Assets. "Existing Intangible
Assets" shall mean the Intangible Assets of CFI which are listed or identified
on Schedule 1.27 of the Disclosure Schedule.
1.28 Existing Investments. "Existing Investments" shall mean
all Investments of CFI, all of which are listed on Schedule 1.28 of the
Disclosure Schedule.
1.29 Existing Liens. "Existing Liens" shall mean those Liens
affecting any of the assets or properties of CFI which Liens are listed on
Schedule 1.29 of the Disclosure Schedule.
1.30 Existing Litigation. "Existing Litigation" shall mean
all pending or, to the knowledge of the Company, threatened actions, suits,
claims, worker's compensation claims, litigation or other governmental or
judicial proceedings or investigations, arbitrations and product warranty
claims against CFI or any of its or their properties, assets or business, or,
to the knowledge of the Company and if and to the extent CFI is, through
indemnity or otherwise, liable therefor, any of CFI's current or former
directors or officers or any other person whom CFI has agreed to indemnify, all
of which are listed on Schedule 1.30 of the Disclosure Schedule.
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1.31 Existing Options. "Existing Options" shall mean any of
the following relating to any capital stock or other equity interest of CFI,
all of which are listed on Schedule 1.31 of the Disclosure Schedule: (a)
options or warrants to purchase or other rights (including registration
rights), agreements, arrangements or commitments of any character to which CFI
is a party relating to the issued or unissued capital stock or other equity or
phantom equity interests of CFI to grant, issue or sell any shares of the
capital stock or other equity or phantom equity interests of CFI by sale,
lease, license or otherwise; (b) rights to subscribe for or purchase; or (c)
Contracts with respect to any right to purchase, put or call.
1.32 Existing Permits. "Existing Permits" shall mean those
permits, licenses, approvals, qualifications, authorizations, and registrations
required by Law which CFI has or holds which are listed on Schedule 1.32 of the
Disclosure Schedule.
1.33 Existing Plans. "Existing Plans" shall mean all
Employee Benefit Plans of CFI, all of which are listed on Schedule 1.33 of the
Disclosure Schedule.
1.34 Indebtedness. "Indebtedness" shall mean all liabilities
or obligations of CFI, whether primary or secondary or absolute or contingent,
in excess of $10,000 as to any single item: (a) for borrowed money; or (b)
evidenced by notes, bonds, debentures or similar instruments; or (c) secured by
Liens on any assets of CFI.
1.35 Intangible Assets. "Intangible Assets" shall mean (a)
any invention, United States and foreign patents, pending patent applications,
trade names, trade dress, logos, corporate names, trademarks, service marks,
trademark registrations, service mark registrations, pending trademark
applications, pending service mark applications, registered copyrights, and
pending copyright applications, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (b) proprietary software; and (c) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and tech-
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<PAGE> 16
niques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals).
1.36 Investment. "Investment" by CFI shall mean: (a) any
transfer or delivery of cash, stock or other property or value by CFI in
exchange for equity, debt, preferred stock, partnership interest, participation
or any other security of another Person; (b) any loan or capital contribution
to or in any other Person; (c) any guaranty of any obligation to pay money of
any other Person; and (d) any investments in any fixed property or fixed assets
other than fixed properties and fixed assets acquired and used in the ordinary
course of the business of CFI.
1.37 Law. "Law" shall mean any foreign, federal, state or
local governmental law, rule, regulation or requirement, including any rules,
regulations and orders promulgated thereunder and any orders, decrees, consents
or judgments of any governmental regulatory agencies and courts having the
force of law, other than any Environmental Laws.
1.38 Lien. "Lien" shall mean, with respect to any asset
(real, personal or mixed): (a) any mortgage, pledge, lien, easement, lease,
title defect or imperfection or any other form of security interest, whether
imposed by Law or by Contract; and (b) the interest of a vendor or lessor under
any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.
1.39 Material Adverse Effect. "Material Adverse Effect"
shall mean a material adverse effect on the business, condition (financial or
otherwise), results of operations, assets, liabilities, prospects, liquidity or
properties of CFI taken as a whole.
1.40 Merger. "Merger" shall mean the merger of Acquisition
with and into the Company pursuant to this Agreement.
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1.41 Optionholders. "Optionholders" shall mean all Persons
holding the Existing Options.
1.42 The Parent Closing Certificate. "The Parent Closing
Certificate" shall mean the Closing Certificate of the Parent in the form of
Exhibit 4 attached to this Agreement.
1.43 The Parent Counsel Opinion. "The Parent Counsel
Opinion" shall mean the opinion of Skadden, Arps, Slate, Meagher & Flom in
substantially the form of Exhibit 5 attached to this Agreement.
1.44 Permitted Liens. "Permitted Liens" shall mean those of
the Existing Liens which are expressly noted as Permitted Liens on Schedule
1.44 of the Disclosure Schedule, and any other Liens that do not materially
detract from the value of the property or assets of CFI taken as a whole
subject thereto and do not materially impair the business or operations of CFI
taken as a whole.
1.45 Person. "Person" shall mean a natural person,
corporation, limited liability company, association, joint stock company,
trust, partnership, governmental entity, agency or branch or department
thereof, or any other legal entity.
1.46 Real Estate. "Real Estate" shall mean the parcels of
real property identified in Schedule 1.46 of the Disclosure Schedule.
1.47 Shareholders. "Shareholders" shall mean all Persons
owning any shares of CFI Stock.
1.48 Subsidiary. "Subsidiary" shall mean any corporation, at
least a majority of the outstanding capital stock of which (or any class or
classes, however designated, having ordinary voting power for the election of
at least a majority of the board of directors of such corporation) shall at the
time be owned by the relevant Person directly or through one or more
corporations which are themselves Subsidiaries.
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ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "GCL"), at the Effective Time (as defined in Section 2.2),
Acquisition shall be merged with and into the Company, and the Company shall be
the surviving corporation in the Merger (in such capacity, the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware. At the Effective Time, the separate existence of
Acquisition shall cease. The Merger shall be pursuant to the provisions of,
and shall be with the effect provided in, the GCL. In accordance with the GCL,
all of the rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all of the debts,
liabilities and duties of the Company and Acquisition shall become the debts,
liabilities and duties of the Surviving Corporation.
2.2 Effective Time; Filing of Certificate of Merger. The
Merger shall be effected by the filing at the time of the Closing (as defined
in Section 2.7) of a properly executed Certificate of Merger (in the form
attached as Exhibit 1 hereto) with the Secretary of State of the State of
Delaware in accordance with the provisions of Section 251 of the GCL. The
Merger shall become effective at the time of such filing (the "Effective
Time"). At the Closing, the Parent and the Constituent Corporations shall
cause a properly executed Certificate of Merger to be filed with the Secretary
of State of the State of Delaware as provided in the GCL, and shall take any
and all other lawful actions and do any and all other lawful things to cause
the Merger to become effective.
2.3 Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of Acquisition as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
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2.4 By-Laws. The By-laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
2.5 Directors and Officers. The directors and officers
of Acquisition immediately prior to the Effective Time shall be the directors
and officers of the Surviving Corporation. Each director and officer of the
Surviving Corporation shall hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation.
2.6 Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
consistent with the terms of this Agreement any further assignments or
assurances in law or any other acts are necessary or desirable (i) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of either Constituent Corporation
acquired or to be acquired by reason of, or as a result of, the Merger, or (ii)
otherwise to carry out the purposes of this Agreement, then, subject to the
terms and conditions of this Agreement, each such Constituent Corporation and
its officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments and assurances in law and to do all acts necessary or proper
to vest, perfect or confirm title to and possession of such property or rights
in the Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the officers and directors of the Surviving Corporation are
fully authorized in the name of either Constituent Corporation to take any and
all such action.
2.7 Time and Place of Closing. Subject to the provisions
of Articles VII, VIII and XI, the closing of the Merger (the "Closing") shall
take place (a) at the offices of Skadden, Arps, Slate, Meagher & Flom, 333 West
Wacker Drive, Suite 2100, Chicago, Illinois 60606 as soon as practicable
following satisfaction or waiver of all of the conditions set forth in such
Articles VII and VIII, but in no event later than October 31, 1996, or (b) at
such other place, at such other time or on such other date as the Parent and
the Company may mutually agree
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(the date of the Closing is hereinafter sometimes referred to as the "Closing
Date").
2.8 Conversion of Company Common Stock.
(a) Each share of the CFI Stock issued and
outstanding immediately prior to the Effective Time (except for Dissenting
Shares), shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive $6.34 in cash per
share (the "Consideration Per Share"), representing as of this date an
aggregate price of $12,679,866.86 for all 1,999,979 outstanding shares of
capital stock of the Company on the date hereof, subject to payment of certain
fees and expenses (if any) as contemplated by Section 12.1 (the cash amount
actually to be received by or on behalf of each Shareholder at the Effective
Time, after the payment of any such fees and expenses, being hereinafter
referred to as the "Closing Per Share Amount"), in cash payable to the Exchange
Agent (as hereinafter defined) on behalf of the holder thereof, without any
interest thereon, as soon as reasonably practicable after the later to occur of
(x) the surrender of the certificate(s) representing such CFI Stock as provided
in Section 2.9 or (y) the Closing Date. It is presently anticipated by CFI
that the Closing Per Share Amount will be approximately $6.25.
(b) Each share of common stock, par value $0.01 per
share, of Acquisition issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one share of common stock of the Surviving
Corporation. Each certificate evidencing ownership of any such shares shall,
following the Merger, evidence ownership of the same number of shares of common
stock of the Surviving Corporation.
(c) Payments in respect of the Existing Options are
provided for in Section 2.15 below.
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2.9 Exchange of Shares.
(a) Prior to the Effective Time, the Company shall
appoint a Person that is reasonably acceptable to the Parent to act as the
exchange agent hereunder (the "Exchange Agent") for the benefit of the
Shareholders for exchange in accordance with this Section 2.9. Parent hereby
acknowledges that American Stock Transfer & Trust Company would be acceptable
as the Exchange Agent.
As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a share certificate
which immediately prior to the Effective Time represented outstanding CFI
Stock: (1) a letter of transmittal (a "Letter of Transmittal") which shall (u)
specify that delivery shall be effected, and risk of loss and title to each
such certificate shall pass, only upon delivery of such certificates to the
Exchange Agent, (v) contain a representation in a form reasonably satisfactory
to the Parent as to the good and marketable title to the CFI Stock held by such
holder free and clear of any Lien, (w) consent to the withholding of the fees
and expenses contemplated by Section 12.1 and (x) contain such other provisions
as the Company and the Parent may reasonably specify; and (2) instructions to
effect the surrender of such certificate(s) in exchange for a check in an
amount equal to the Closing Per Share Amount multiplied by the number of shares
of CFI Stock represented by such certificate(s).
At the Closing, immediately prior to the Effective Time,
Parent shall cause Acquisition to deposit with the Exchange Agent, on behalf of
the Shareholders, an aggregate amount in cash equal to the Consideration Per
Share times the number of shares of CFI Stock outstanding as of the Closing
(such aggregate amount being hereinafter referred to as the "Exchange Fund"),
and then, upon surrender to the Exchange Agent of certificate(s) for
cancellation together with a duly executed Letter of Transmittal and such other
documents as the Exchange Agent may reasonably require, make payment of the
Closing Per Share Amount provided for in Section 2.8(a) to the holder of such
certificate(s) out of the Exchange Fund.
Thereafter (except as otherwise provided for in Section
2.9(c)), each holder of certificate(s) representing CFI Stock not delivered to
the Exchange Agent at
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the Effective Time may surrender such certificate(s) to the Exchange Agent and
(subject to applicable abandoned property, escheat and similar laws) receive
from the Exchange Agent in exchange therefor an amount equal to the product of
(x) the Closing Per Share Amount and (y) the number of shares of CFI Stock
represented by the certificate(s) so surrendered, without interest, but such
holder shall have no rights whatsoever against the Surviving Corporation.
Upon the surrender of any such certificate(s) to the Exchange
Agent, the Exchange Agent shall promptly surrender such certificate(s) to the
Surviving Corporation for cancellation.
(b) If the consideration payable for any CFI Stock
is to be delivered to a person other than the person in whose name the
certificate(s) representing such CFI Stock is registered, it shall be a
condition of such delivery that the certificate(s) so surrendered shall be
properly endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name of the record holder appears on such certificate,
and shall otherwise be in proper form for transfer, and that the person
requesting such delivery shall pay to the Exchange Agent or the Surviving
Corporation, as the case may be, any transfer or other taxes required by law as
a result of such delivery to a person other than the record holder of the
certificate(s) surrendered or shall establish to the Exchange Agent's and the
Surviving Corporation's reasonable satisfaction that such tax has been paid or
is not payable.
(c) Any portion of the Exchange Fund delivered upon
the Closing Date to the Exchange Agent pursuant to this Agreement that remains
unclaimed for one (1) year after the Closing Date shall be delivered by the
Exchange Agent to the Surviving Corporation, upon demand, and any Shareholders
who have not theretofore complied with Section 2.9(a) shall thereafter look
only to the Surviving Corporation for delivery of the Closing Per Share Amount,
subject in all events to all applicable escheat and other similar laws.
(d) Until surrender as contemplated by this Section
2.9 of this Agreement, certificate(s) representing CFI Stock shall be deemed at
all times after the
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<PAGE> 23
Effective Time to represent only the right to receive upon surrender the
consideration to be paid therefor as specified in this Agreement.
(e) No interest shall accrue or be payable with
respect to any amounts which any Shareholder or Optionholder shall be entitled
to receive pursuant to this Agreement. The Exchange Agent shall be authorized
to pay the Closing Per Share Amount attributable to any certificate(s)
representing CFI Stock which has been lost or destroyed upon receipt of
evidence of ownership of the CFI Stock represented thereby and of appropriate
indemnification and/or bond in each case reasonably satisfactory to the Company
(but no bond shall be required in cases of 25 shares or less).
(f) Neither the Exchange Agent nor any party to this
Agreement shall be liable to any Shareholder or Optionholder for any CFI Stock,
any Existing Options, the Closing Per Share Amount or cash delivered to a
public official pursuant to any abandoned property, escheat or similar law.
(g) The Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any Shareholder or Optionholder such amounts as the Company
reasonably determines are required to be deducted and withheld with respect to
the making of such payment under the Code, or any provision of state, local or
foreign tax Law. To the extent that amounts are so withheld by the Exchange
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Shareholder or Optionholder in respect
of which such deduction and withholding was made by the Exchange Agent.
(h) Notwithstanding the foregoing provisions of this
Section 2.9, Equity and the Optionholders may arrange to receive the respective
payments due to such parties at the Closing directly from the Parent.
2.10 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the CFI
Stock in exchange for the right to receive the Closing Per Share Amount with
respect to each share of CFI Stock or the perfection of appraisal rights with
respect to the Dissenting Shares,
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at and after the Effective Time, the holder of shares of CFI Stock shall cease
to have any rights as a stockholder of the Company, and no transfer of shares
of CFI Stock shall thereafter be made on the stock transfer books of the
Surviving Corporation. Each share of CFI Stock held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
canceled and retired and cease to exist without any conversion thereof.
2.11 Dissenters' Rights. Shares of CFI Stock which
immediately prior to the Effective Time are held by Shareholders who have
properly exercised and perfected appraisal rights under Section 262 of the GCL
(the "Dissenting Shares") shall not be converted into the right to receive the
Consideration Per Share, but the holders of Dissenting Shares shall be entitled
to receive such consideration as shall be determined pursuant to Section 262 of
the GCL; provided, however, that if any such holder shall have failed to
perfect or shall withdraw or lose his right to appraisal and payment under the
GCL, such holder's shares of CFI Stock shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Consideration
Per Share (less pro rata fees and expenses (if any) as contemplated by Section
12.1), without any interest thereon, and such shares shall no longer be
Dissenting Shares. The Company shall give the Parent, Acquisition and the
Exchange Agent prompt notice of any claim by a Shareholder for payment of fair
value for Dissenting Shares as provided in Section 262 of the GCL.
2.12 Special Meeting of Shareholders.
(a) The Company agrees to promptly take all steps
necessary to cause a special meeting of the Shareholders (the "CFI Special
Meeting") to be duly called, noticed, convened and held as soon as practicable
for the purpose of voting to approve this Agreement and the Merger. In
connection with the CFI Special Meeting, the Board of Directors of the Company
shall, subject to Section 11.1(iv) below, unanimously recommend to the
Shareholders that the Shareholders vote in favor of the approval of this
Agreement and the Merger.
(b) In connection with the CFI Special Meeting, the
Company agrees to promptly prepare and cause
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to be filed with the SEC and, following expiration of the conditions set forth
in Section 7.12 below, mailed to the Shareholders a notice of the CFI Special
Meeting and a definitive proxy statement (the "Proxy Statement") as soon as
practicable and in any event, shall cause such notice to be mailed no later
than the time required by applicable law and the certificate of incorporation
and bylaws of the Company. The Parent and Acquisition agree to provide the
Company with any information for inclusion in the Proxy Statement (or any
amendments or supplements thereto) which is required by applicable law or which
is reasonably requested by the Company. The Company shall consult with the
Parent and Acquisition with respect to the Proxy Statement (and any amendments
or supplements thereto) and shall afford the Parent and Acquisition reasonable
opportunity to comment thereon prior to its finalization. If, at any time
prior to the CFI Special Meeting, any event shall occur relating to Company or
the transactions contemplated by this Agreement which should be set forth in an
amendment or a supplement to the Proxy Statement, the Company will promptly
notify in writing the Parent and Acquisition of such event. In such case, the
Company, with the cooperation of the Parent and Acquisition, will promptly
prepare and mail such amendment or supplement and the Company shall consult
with the Parent and Acquisition with respect to such amendment or supplement
and shall afford the Parent and Acquisition reasonable opportunity to comment
thereon prior to such mailing. The Company agrees to notify the Parent and
Acquisition at least three (3) days prior to the mailing of the Proxy Statement
(or any amendment or supplement thereto) to the Shareholders.
(c) The Parent agrees that if any event with respect
to the Parent, Acquisition or their officers or directors shall occur which is
required to be described in an amendment or supplement to the Proxy Statement
or any other filing with the Securities and Exchange Commission (the "SEC")
that may be required in connection with this Agreement, the Merger and all
matters related thereto, the Parent will promptly inform the Company thereof
and the Company will cause such event to be so described and such amendment or
supplement to be promptly filed with the SEC and, as required by law,
disseminated to the Shareholders; provided, however, that prior to such filing
or mailing the Company shall consult with the Parent and Acquisition with
respect to such amendment,
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supplement or other filing and shall afford the Parent and Acquisition a
reasonable opportunity to comment thereon.
2.13 Commercially Reasonable Efforts. So long as this
Agreement has not been terminated, the Company, the Parent and Acquisition
shall: (i) promptly make their respective filings and thereafter make any other
submissions required under all applicable laws with respect to this Agreement,
the Merger and the other transactions contemplated hereby and (ii) use their
respective commercially reasonable efforts to promptly take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary proper or appropriate to consummate and make effective the Merger as
provided for in this Agreement.
2.14 Deferred Performance. Notwithstanding the foregoing
provisions of this Article II, the Company shall be required to pursue the
preparation of the Proxy Statement but shall not be required to file the Proxy
Statement with the SEC, mail the same to the Shareholders or otherwise pursue
the holding of the CFI Special Meeting until after the date (the "Due Diligence
Date") as of which the Parent no longer has the right to terminate this
Agreement pursuant to Section 7.12 below.
2.15 Existing Options. As of the Effective Time, each
Existing Option which is outstanding at the Effective Time will be exchanged
for, and the holders of each such Existing Option will be entitled to receive
at the Closing (or thereafter, if necessary) upon surrender of such Existing
Option for cancellation, cash equal to (i) the product of (a) the difference
between $6.34 and the exercise price of each such Existing Option, times (b)
the number of shares of CFI Stock covered by such Existing Option; less (ii) an
amount equal to approximately $0.09 per share for the payment of fees and
expenses (if any) as contemplated by Section 12.1 hereof. It is presently
anticipated by CFI that the payment to be made at the Closing to the
Optionholders in respect of the Existing Options will be approximately
$1,232,250 (such amount being net of any fees and expenses referred to above
and before any income taxes and other required withholdings).
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ARTICLE III
OTHER AGREEMENTS
3.1 Access. Subject to the provisions of the Confidentiality
Agreement referred to in Section 3.6 below, and so long as this Agreement has
not been terminated as herein provided, upon reasonable request, the Company
shall grant to the Parent, Acquisition and their agents, accountants, attorneys
and other advisers reasonable access to all of the books, records, financial
statements and other documents and materials relating to its financial
condition, assets, liabilities and business, including, without limitation,
permitting the Parent (at its expense and subject to the prior approval of the
Company, which approval shall not be unreasonably withheld) to: (a) conduct
appraisals of the Equipment, Buildings, Real Estate and other properties of
CFI; and (b) conduct an environmental and occupational safety inspection of the
properties of CFI. Notwithstanding the foregoing: (i) the Parent shall not
have the right to conduct a so-called Phase II environmental study or other
physically invasive testing without the prior written consent of the Company
(which consent may be conditional upon the execution and delivery by the Parent
of an agreement, in form and substance satisfactory to the Company, concerning
matters of confidentiality and indemnification); and (ii) other than Persons
listed on Schedule 3.1 of the Disclosure Schedule, without the prior written
consent of the Company, neither the Parent nor its agents, accountants,
attorneys or other advisors shall communicate with vendors, customers or any
other Persons having business dealings with CFI concerning this Agreement, the
Merger or any matters related thereto. In addition, the Company shall confer
and consult with representatives of the Parent, as the Parent may reasonably
request, to report on operational matters, financial matters and the general
status of ongoing business operations of CFI.
3.2 Disclosure Schedule.
(a) Disclosure Schedule. The Company will deliver
to the Parent the Disclosure Schedule on or before May 21, 1996, which shall be
accompanied by a certificate signed by the President and the Secretary of the
Company stating that the Disclosure Schedule was deliv-
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ered pursuant to this Agreement and is the Disclosure Schedule referred to in
this Agreement. The Disclosure Schedule is deemed to constitute an integral
part of this Agreement and to modify the representations, warranties, covenants
or agreements of the Company contained in this Agreement.
(b) Updates. Not less than two (2) nor more than
ten (10) days prior to the Closing, the Company shall update the Disclosure
Schedule (by either (i) revision of specific Schedules included in the original
Disclosure Schedule referred to in Section 3.2(a) or (ii) addition of new
Schedules that were neither included in said original Disclosure Schedule nor
referred to in or contemplated by this Agreement as of the date of this
Agreement) as of a then current date by written notice to the Parent to reflect
any matters which have occurred from and after the date of this Agreement and
which, if existing on the date of delivery of the Disclosure Schedule, would
have been required to be described in the Disclosure Schedule. If the
Disclosure Schedule is updated by the addition of new Schedules not referred to
in or contemplated by this Agreement as of the date of this Agreement: (i) each
new Schedule shall be numbered to correspond to the applicable section or
subsection which such new Schedule is intended to modify and (ii) the
applicable section or subsection corresponding to such new Schedule shall be
read to include the words "except as set forth in Schedule [insert applicable
section or subsection number]" or words of similar meaning to appropriately
connote the modifications created by such new Schedule. If requested by the
Parent prior to the Closing, the Company shall meet and discuss with the Parent
prior to Closing any update to the Disclosure Schedule disclosed by the Company
which is, in the reasonable judgment of the Parent, adverse in any manner to
either the Company or the Parent. The delivery of an update to the Disclosure
Schedule pursuant to this Section 3.2 shall not cure any breach of any
representation or warranty made in this Agreement, have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VII of this Agreement or otherwise limit or affect the remedies available
hereunder to any party.
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3.3 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Closing Date (unless this Agreement is
terminated), the Company shall furnish promptly to the Parent:
(a) a copy of each report, schedule and other
document filed by the Company or received by the Company after the date of this
Agreement pursuant to the requirements of federal or state securities Laws
promptly after such documents are available; and
(b) the monthly financial statements of the Company
(as prepared by the Company in accordance with its normal accounting
procedures) promptly after such financial statements are available.
3.4 Acquisition Proposals.
(a) Prior to the Effective Time, the Company agrees
that neither it, any of its respective Subsidiaries or Affiliates, nor any of
the respective directors, officers, employees, agents or representatives of the
foregoing, will, directly or indirectly, (i) solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing non-public information)
any inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or the acquisition of all or any significant part of
the assets or capital stock of the Company or any Subsidiary of the Company (an
"Acquisition Transaction") or (ii) negotiate, explore or otherwise engage in
discussions with any Person (other than the Parent and its representatives)
with respect to any Acquisition Transaction, or which may reasonably be
expected to lead to a proposal for an Acquisition Transaction or enter into any
agreement, arrangement or understanding with respect to any such Acquisition
Transaction or which would require it to abandon, terminate or fail to
consummate the Merger or any other transaction contemplated by this Agreement;
provided, however, that the Company may, in response to an unsolicited written
proposal from a third party regarding a Superior Proposal (as hereinafter
defined), furnish information to and engage in discussions and negotiations
with such third party, but only if the Board of Directors of the Company
determines in good faith, after consultation with its financial advisors and
based
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upon the written advice of Richards, Layton & Finger or other independent
Delaware counsel, that failing to take such action would result in a breach of
the fiduciary duties of such Board of Directors under applicable Law. It is
understood and agreed, without limitation of the Company's obligations, that
any violation of this Section 3.4 by any director, officer, Affiliate,
investment banker, financial advisor, attorney or other advisor or
representative of the Company or any Subsidiary of the Company, whether or not
such Person is purporting to act on behalf of the Company or any other
Subsidiary of the Company, or otherwise, shall be deemed to be a breach of this
Section 3.4 by the Company.
(b) The Company agrees that, as of the date hereof,
it, its Subsidiaries and Affiliates, and the respective directors, officers,
employees, agents and representatives of the foregoing, shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Person (other than the Parent and its representatives) conducted
heretofore with respect to any Acquisition Transaction. The Company agrees to
promptly advise the Parent in writing of the existence of (x) any inquiries or
proposals (or desire to make a proposal) received by (or indicated to), any
such information requested from, or any negotiations or discussions sought to
be initiated or continued with, the Company, its Subsidiaries or Affiliates, or
any of the respective directors, officers, employees, agents or representatives
of the foregoing, in each case from a Person (other than the Parent and its
representatives) with respect to an Acquisition Transaction, and (y) the terms
thereof, including the identity of such third party and the terms of any
financing arrangement or commitment in connection with such Acquisition
Transaction, and to update on an ongoing basis or upon the Parent's reasonable
request, the status thereof. As used herein, "Superior Proposal" means a bona
fide, written and unsolicited proposal or offer made by any Person (or group)
(other than the Parent or any of its Subsidiaries) with respect to an
Acquisition Transaction on terms which, as determined by the Board of Directors
of the Company in good faith and in the exercise of reasonable judgment (based
on the advice of independent financial advisors and Richards, Layton & Finger
or other independent Delaware counsel), could reasonably be likely to be more
favorable
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to the Company and its Shareholders than the transactions contemplated hereby.
3.5 Public Announcements. Any public announcement made by or
on behalf of either the Parent or the Company prior to the termination of this
Agreement pursuant to Article XI hereof concerning this Agreement, the
transactions described herein or any other aspect of the dealings heretofore
had or hereafter to be had between the Company and the Parent and their
respective Affiliates must first be approved by the other party (any such
approval not to be unreasonably withheld), subject to either party's
obligations under applicable Law as a public company (but such party shall use
its best efforts to consult with the other party as to all such public
announcements).
3.6 Confidentiality Agreement. The Company and the Parent
agree that the Confidentiality Agreement entered into between the Company and
the Parent, dated August 22, 1995, remains in effect, but shall at the
Effective Time be deemed to have terminated without further action by the
parties.
3.7 Equity Proxy. Equity hereby agrees that during the
period commencing on the date hereof and continuing until the first to occur of
(i) the Effective Time or (ii) termination of this Agreement in accordance with
its terms, at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of CFI Stock, however called, or
in connection with any written consent of the holders of CFI Stock, Equity
shall vote (or cause to be voted) the shares of CFI Stock held of record or
beneficially owned by Equity or its Affiliates (i) in favor of the Merger, the
execution and delivery by the Company of this Agreement and the approval and
adoption of the terms thereof and each of the other actions provided for in
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement
of the Company under this Agreement; and (iii) except as otherwise agreed to in
writing in advance by the Parent, against the following actions (other than the
Merger and the transactions contemplated by this Agreement): (A) any
extraordinary corporate transaction, such
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<PAGE> 32
as a merger, consolidation or other business combination involving the Company
or its Subsidiaries; (B) any sale, lease or transfer of a material amount of
assets of the Company or its Subsidiaries, or a reorganization, restructuring,
recapitalization, special dividend, dissolution or liquidation of the Company
or its Subsidiaries; or (C)(1) any change in a majority of the persons who
constitute the board of directors of the Company; (2) any change in the present
capitalization of the Company including any proposal to sell a substantial
equity interest in the Company and its Subsidiaries; (3) any amendment of the
Company's certificate of incorporation or by-laws; (4) any other change in the
Company's corporate structure or business; or (5) any other action which, in
the case of each of the matters referred to in clauses (C)(1), (2), (3) or (4)
is intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement. Equity shall not enter into any agreement or
understanding with any Person the effect of which would be inconsistent or
violative of the provisions and agreements contained in this Section 3.7.
3.8 Closing Deliveries. The Company and the Parent each
covenants with the other that, provided the conditions precedent for its
benefit as set forth in Articles VII and VIII, respectively, are satisfied as
therein provided, it shall make the deliveries provided for in Section 7.7 (as
to the Company) and Section 8.4 (as to the Parent).
3.9 Equity Obligations. The Parent hereby acknowledges and
agrees that the only obligations of Equity under this Agreement or in
connection herewith or the Merger are as set forth in Section 3.7 and Article
X.
3.10 The CFI Industries, Inc. Form Your Future Plan. The
Company hereby agrees to suspend and discontinue the operation of The CFI
Industries, Inc. Form Your Future Plan on and as of July 1, 1996, immediately
after giving effect to the issuance of shares of CFI Stock pursuant to payroll
deductions which have accrued under such plan up to and as of such date.
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<PAGE> 33
3.11 Regulatory and Other Approvals.
(a) Subject to the terms and conditions herein
provided, CFI will (i) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all reasonable efforts to obtain
all approvals required by any Contract to consummate the transactions
contemplated hereby, (ii) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all reasonable efforts to obtain
all approvals, authorizations, and clearances of governmental and regulatory
authorities required of CFI to permit CFI to consummate the transactions
contemplated hereby, (iii) provide such other information and communications to
such governmental and regulatory authorities as such authorities may reasonably
request, and (iv) cooperate with Parent in obtaining all approvals,
authorizations, and clearances of governmental or regulatory authorities and
others required of Parent to consummate the transactions contemplated hereby.
(b) CFI and Parent will (i) take all reasonable
actions necessary to file as soon as practicable (which shall in any case be
filed prior to expiration of the period set forth in Section 7.12),
notifications under the HSR Act, (ii) comply at the earliest practicable date
with any request for additional information received from the Federal Trade
Commission or Antitrust Division of the Department of Justice pursuant to the
HSR Act, and (iii) request early termination of the applicable waiting period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and
Acquisition on the date of this Agreement that:
4.1 Organization; Business.
(a) Organization. Each of the Company, CFI
Recycling, Inc., Plastofilm and Plastofilm Limited is a corporation duly and
validly organized and existing under the Laws of the State of Delaware (or
Northern
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<PAGE> 34
Ireland in the case of Plastofilm Limited) and each is qualified to do business
as a foreign corporation and is in good standing in the Existing Corporate
Jurisdictions as indicated on Schedule 1.24 of the Disclosure Schedule. The
Existing Corporate Jurisdictions (as applicable) constitute all jurisdictions
where the ownership or leasing of property or the conduct of its business
requires qualification as a foreign corporation by CFI and where the failure to
so qualify would have a Material Adverse Effect.
(b) Powers. Each of the Company, CFI Recycling,
Inc., Plastofilm and Plastofilm Limited has all requisite corporate power and
authority to carry on its business as it is now conducted and to own, lease and
operate its assets and properties unless the absence of same would not have a
Material Adverse Effect.
(c) Business. The only operating business conducted
by the Company and its Subsidiaries is conducted by Plastofilm and Plastofilm
Limited.
(d) Certificate; Bylaws. Copies of the Certificate
of Incorporation and Bylaws of each of the Company, CFI Recycling, Inc.,
Plastofilm and Plastofilm Limited (the "CFI Charter Documents"), as amended to
date and certified by the Secretary of each such entity, respectively, as of
the date of delivery of the Disclosure Schedule, are included as Schedule
4.1(d) of the Disclosure Schedule and such copies are complete and correct
copies of such documents as then in effect. Neither the Company, CFI
Recycling, Inc., Plastofilm nor Plastofilm Limited is in violation of any
provision of its Certificate of Incorporation, By-laws or equivalent
organizational documents.
4.2 Capitalization.
(a) Capital Stock. The entire authorized capital
stock of the Company consists of 10,000,000 shares of common stock, $1.00 par
value, of which 1,999,979 shares are issued and outstanding as of the date
hereof, 1,000,000 shares of preferred stock, no par value, of which no shares
are issued and outstanding. No shares are held by the Company as treasury
shares and 371,000 shares are covered by the Existing Options.
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<PAGE> 35
(b) Issuance; Ownership. All of the outstanding
capital stock of the Company is duly authorized, validly issued, fully paid and
nonassessable and was not issued in violation of any preemptive rights. Except
for the Existing Options and issuances of CFI Stock pursuant to Section 4 of
The CFI Industries, Inc. Form Your Future Plan: there are no options, warrants,
conversion rights or other rights to subscribe for or purchase, or other
contracts with respect to, any capital stock of the Company, CFI Recycling,
Inc., Plastofilm or Plastofilm Limited, and there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Company or its Subsidiaries. Except as set forth in
this Agreement, to the knowledge of the Company, there are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of
the capital stock of CFI.
4.3 Authorization; Enforceability.
(a) The execution, delivery and performance of this
Agreement and, subject to the provisions hereof, all of the documents and
instruments required by this Agreement to be executed and delivered by the
Company, are within the corporate power and authority of the Company and,
subject to the provisions hereof, have been duly authorized by the Board of
Directors of the Company. Except for the approval of the Shareholders as
required by Law and the CFI Charter Documents and described in Section 4.28
hereof, no other corporate proceeding or action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement is, and the other documents and instruments required by this
Agreement to be executed and delivered by the Company will be, when executed
and delivered by the Company, the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws generally affecting the
rights of creditors and subject to general equity principles.
(b) Prior to execution and delivery of this
Agreement, the Board of Directors of the Company has (at a meeting duly called
and held) unanimously (i) ap-
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<PAGE> 36
proved this Agreement and the Merger and the other transactions contemplated
hereby and thereby, and such approval is sufficient to render the provisions of
Section 203 of the GCL inapplicable to the Merger, Equity's obligations
hereunder or any other transactions contemplated hereby, (ii) determined that
the transactions contemplated hereby are fair to and in the best interests of
the holders of the CFI Stock and (iii) determined to recommend this Agreement,
the Merger and the other transactions contemplated hereby to such holders for
approval and adoption.
4.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 8.5 of this Agreement, the
execution and delivery of this Agreement and all documents and instruments
required by this Agreement to be executed and delivered by the Company do not,
and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, (i) result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any Contract or to the
loss of a material benefit under any Contract, or result in the creation of any
Lien upon any of the properties or assets of CFI, (ii) conflict or result in
any violation of any provision of the Certificate of Incorporation or By-Laws
or other equivalent organizational document, in each case as amended, of CFI,
(iii) violate any Existing Permits or any Law applicable to CFI or any of their
respective properties or assets, other than, in the case of clauses (i) and
(iii), any such violations, defaults, rights, losses or Liens that,
individually or in the aggregate, would not have a Material Adverse Effect or
would not affect adversely the ability of CFI to consummate the Merger and the
other transactions contemplated by this Agreement.
4.5 Title to Assets. All of the real property, owned or
leased by CFI is accurately described in Schedule 1.45 of the Disclosure
Schedule. CFI owns fee simple or valid leasehold (as the case may be) title to
the Real Estate and has valid title to its other tangible assets and properties
which it owns, free and clear of any and all Liens, except for the Existing
Liens and the Permitted Liens.
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4.6 Litigation. Except for the Existing Litigation: (a)
there are no actions, suits, claims, worker's compensation claims, litigation
or other governmental or judicial proceedings or investigations, arbitrations
and product warranty claims against CFI or any of its or their properties,
assets or business, or, to the knowledge of the Company and if and to the
extent CFI is, through indemnity or otherwise, liable therefor, any of CFI's
current or former directors or officers or any other Person whom CFI has agreed
to indemnify, as such, that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; (b) there are no such actions,
suits or proceedings pending or, to the knowledge of the Company, threatened,
against any one or more of CFI or Equity by any Person which question the
legality, validity or propriety of the transactions contemplated by this
Agreement; and (c) there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against CFI, any of its or their
properties, assets or business, or, to the knowledge of the Company, any of
CFI's current or former directors or officers or any other person whom CFI has
agreed to indemnify, as such, that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.7 Books and Records; CFI Financial Statements.
(a) Audited CFI Financial Statements. A true and
correct copy of each CFI Financial Statement is included in the Disclosure
Schedule. The CFI Financial Statements comply in all material respects with
the applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, for normal year-end adjustments and lack of footnotes) applied on a
consistent basis by CFI during the periods involved (except as may be indicated
therein or in the notes thereto). The audited CFI Financial Statements fairly
present in all material respects the financial position of CFI as of the date
set forth on each of such CFI Financial Statements and the results of
operations of CFI for the periods indicated on each of the CFI Financial
Statements.
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(b) Unaudited CFI Financial Statements. Those CFI
Financial Statements which are unaudited fairly present in all material
respects the financial position of CFI as of the date set forth on each of such
CFI Financial Statements and the results of operations and cash flows of CFI
for the periods indicated on each of such CFI Financial Statements in
accordance with generally accepted accounting principles consistently applied
by CFI except that such CFI Financial Statements do not reflect normal year-end
adjustments and do not contain footnotes.
(c) Monthly Financial Statements. The monthly
financial statements which have been delivered to the Parent or will be
delivered to the Parent by the Company pursuant to Section 3.3(b) of this
Agreement fairly present in all material respects, or when delivered will
fairly present in all material respects, the financial position of CFI as of
the date set forth on each such statement and the results of operations of CFI
for the periods indicated on each such statement in accordance with generally
accepted accounting principles consistently applied by CFI except for normal
year-end adjustments and the lack of footnotes.
(d) Corporate Records. The minute books of the
Company, CFI Recycling, Inc., Plastofilm and Plastofilm Limited contain correct
and complete records of all actions taken by the shareholders and the Board of
Directors (including committees of the Board) of such entities, respectively
(except where the failure to record any such action would not have a Material
Adverse Effect), and, to the knowledge of the Company, all signatures contained
therein are the true signatures of the Persons whose signatures they purport to
be. For all matters since January 1, 1991, the share transfer books of CFI are
true, correct, complete and current in all material respects.
(e) Accounting Records. The accounting books and
records of CFI: (i) are in all material respects correct and complete; (ii) are
current in a manner consistent with past practice; and (iii) to the knowledge
of the Company, have recorded therein all the properties, assets and
liabilities of CFI (except where the failure to so record would not violate
generally accepted accounting principles as consistently applied by CFI).
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(f) Existing Bank Accounts. The Disclosure Schedule
includes a list of each Existing Bank Account and all authorized signatories
thereon.
4.8 Absence of Certain Changes.
(a) Except as set forth in Schedule 4.8 of the
Disclosure Schedule, to the knowledge of the Company, since June 30, 1995 there
has not been any:
(i) Material Adverse Effect;
(ii) transactions by CFI outside the
ordinary course of business of CFI, except for the transactions
contemplated by this Agreement;
(iii) bonus or incentive compensation paid
or accrued by CFI;
(iv) declaration or payment of any dividend
or any distribution in respect of the capital stock of the Company or
any direct or indirect redemption, purchase or other acquisition of
any such stock by the Company; or
(v) payments or distributions, other than
normal salaries, to the Shareholders as such or, except for
transactions in the ordinary course of business upon commercially
reasonable terms of CFI, any Affiliate of CFI.
(b) Except as set forth in Schedule 4.8 of the
Disclosure Schedule, without limiting the generality of the foregoing, since
December 31, 1995:
(i) CFI has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for
a fair consideration in the ordinary course of business and other than
the disposition of obsolete or unusable property;
(ii) CFI has not entered into any Contract
(other than purchase and sales orders in the ordinary course of
business in accordance with past practice) either involving
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more than $20,000 or outside the ordinary course of business;
(iii) no party (including CFI) has
accelerated, terminated, modified in any material respect, or
cancelled any Contract (other than purchase and sales orders in the
ordinary course of business in accordance with past practice)
involving more than $20,000 to which CFI is a party or by which any of
them is bound;
(iv) CFI has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 (unless such expenditure is identified in
the current business plan of Plastofilm as disclosed to Parent) or
outside the ordinary course of business;
(v) CFI has not delayed or postponed the
payment of accounts payable and other liabilities outside the ordinary
course of business;
(vi) CFI has not cancelled, compromised,
waived, or released any right or claim (or series of related rights
and claims) not covered by the reserves or accruals relating to such
claim in the CFI Financial Statements either involving more than
$20,000 or outside the ordinary course of business;
(vii) CFI has not granted any license or
sublicense of any rights under or with respect to any Intangible
Assets;
(viii) CFI has not experienced any material
damage, destruction, or loss (whether or not covered by insurance)
from fire or other casualty to its tangible property;
(ix) CFI has not made any loan to, or
entered into any other transaction with, any of its Affiliates,
directors, officers, and employees outside the ordinary course of
business;
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(x) CFI has not materially increased the
base salary of any officer or employee of CFI, or adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive,
severance, or other similar plan for the benefit of any of its
directors, officers or employees; and
(xi) CFI has not entered into a binding
commitment to any of the foregoing.
4.9 Buildings and Equipment. Except as set forth in Schedule
4.9 of the Disclosure Schedule: CFI has not received any written notice from
any governmental authority that any of the Buildings or Equipment fail to
comply with any applicable building and zoning or other similar Laws in effect
at the date hereof which notice is still outstanding; and the continuation of
the CFI Business as currently conducted will not result in the enforcement or
the threat of enforcement of any such Laws, except where such enforcement or
threat of enforcement would not result in a Material Adverse Effect. The
Buildings and Equipment are substantially in working condition for property of
its type and age, subject to ordinary wear and tear.
4.10 Existing Contracts. The Existing Contracts are the only
Contracts which constitute:
(a) a lease of, or agreement to purchase or sell,
any capital assets accounted for as such by CFI in the ordinary course of
business;
(b) any union labor contract;
(c) any management, consulting, employment, personal
service, agency or other contracts or contracts providing for employment or
rendition of personal services and which: (i) are in writing or oral and
create other than an at will employment relationship; or (ii) provide for any
commission, bonus, profit sharing, incentive, retirement or similar
compensation for personal services;
(d) any agreement or note evidencing any
Indebtedness or any guaranty of performance of another Person;
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(e) an agreement with a dealer, distributor, sales
agent or representative or franchisee;
(f) an agreement for the storage, transportation,
treatment or disposal of any Hazardous Material;
(g) a power of attorney (whether revocable or
irrevocable) given to any Person by CFI that is in force;
(h) an agreement in effect at the date hereof which
purports to limit in any respect the manner in which, or the localities in
which, CFI or any other entity is entitled to conduct all or any portion of its
business;
(i) an agreement restricting the right of CFI to use
or disclose any material information in its possession;
(j) a partnership, joint venture or similar
arrangement;
(k) any agreement which cannot be terminated without
a penalty or requiring more than 60 days prior notice;
(l) an agreement or arrangement with any Affiliate;
(m) any agreement by which CFI indemnifies or holds
harmless any other Person;
(n) any agreement pursuant to which a rebate,
discount, bonus, commission or other payment with respect to the sale of any
product of CFI is not shown in the CFI Financial Statements and will be payable
after the Effective Time;
(o) any agreement containing "change in control,"
"antitakeover" or similar provisions;
(p) any lease of real or personal property; or
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(q) any other agreement (other than purchase and
sales orders in the ordinary course of business in accordance with past
practice) which involves annual payments to or from CFI of an amount in excess
of $25,000.
4.11 Performance of Contracts. Each of the Existing
Contracts is in full force and effect and constitutes the legal and binding
obligation of CFI and, to the knowledge of the Company, constitutes the legal
and binding obligation of the other parties thereto. There are no existing
breaches or defaults by CFI or, to the knowledge of the Company, any other
party to an Existing Contract under any Existing Contract the effect of which
would constitute a Material Adverse Effect and, to the knowledge of the
Company, no event has occurred which, with the passage of time or the giving of
notice or both, could reasonably be expected to constitute such a breach or
default.
4.12 Existing Insurance Policies. All of the Existing
Insurance Policies are listed in the Disclosure Schedule. The Existing
Insurance Policies constitute all insurance coverage owned by CFI and, to the
knowledge of the Company, are in full force and effect and CFI has not received
notice of any cancellation or threat of cancellation of such insurance. The
Disclosure Schedule sets forth all property damage, personal injury or products
liability claims which have been made since January 1, 1993 or are pending
against CFI or, to the knowledge of the Company, are threatened against CFI.
Within the past two (2) years, no insurance company has canceled any insurance
(of any type) maintained by CFI.
4.13 Employee Benefit Plans.
(a) Existing Plans. Except for the Existing Plans
and as otherwise disclosed on the Disclosure Schedule, neither CFI nor any
Company ERISA Affiliate (defined below) maintains or contributes to, nor is it
bound by, nor has it maintained or contributed to at any time during the six
(6) years prior to the date hereof any Employee Benefit Plan. All of the
Existing Plans that are subject to ERISA or the Code are in compliance in all
material respects with ERISA and the Code. All of the Existing Plans which are
intended to meet the requirements of Section 401(a) of the Code have been
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determined by the Internal Revenue Service to be "qualified" within the meaning
of the Code or have been filed with the Internal Revenue Service with a request
for a determination letter on or prior to the end of the applicable remedial
amendment period and, to the knowledge of the Company, there are no facts which
would adversely affect the tax qualified status of any of the Existing Plans.
"Company ERISA Affiliate" shall mean any Person which together with CFI would
be deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) ERISA; Code. There is no accumulated funding
deficiency, within the meaning of Section 302 of ERISA or Section 412 of the
Code, in connection with the Existing Plans. No reportable event, as defined
in ERISA (other than reportable events for which the 30-day notice requirement
has been waived), has occurred in connection with the Existing Plans. The
Existing Plans have not, nor has any trustee or administrator with respect to
the Existing Plans, engaged in any prohibited transaction as defined in ERISA
or the Code. Except as set forth in the Disclosure Schedule, neither CFI nor a
Company ERISA Affiliate is contributing to, and nor has it contributed to since
January 1, 1974, any multi-employer plan, as defined in ERISA.
(c) Compliance. Neither the Company nor any Company
ERISA Affiliate has incurred, directly or indirectly, any material liability to
or on account of an Existing Plan pursuant to Title IV of ERISA; no proceedings
have been instituted to terminate any Existing Plan that is subject to Title IV
of ERISA; and, to the knowledge of the Company, no condition exists that
presents a material risk to the Company or any Company ERISA Affiliate of
incurring a liability to or on account of a Existing Plan pursuant to Title IV
of ERISA.
(d) Funding. The current value of the assets of
each of the Existing Plans that is subject to Title IV of ERISA exceeds the
present value of the accrued benefits under each such Existing Plan, based upon
the actuarial assumptions (to the extent reasonable) presently used for funding
purposes in the most recent actuarial report prepared by such Existing Plan's
actuary with respect to such Existing Plan; and all contributions or other
amounts payable by CFI as of the Effective Time with respect to each Existing
Plan in respect of current
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or prior plan years have been either paid or accrued on the balance sheet of
the Company. There are no material pending or, to the knowledge of the
Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Existing Plans or any trusts
related thereto.
(e) Other Plan Obligations. To the knowledge of the
Company, neither CFI nor any Company ERISA Affiliate, nor any Existing Plan,
nor any trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which CFI or any Company ERISA
Affiliate, any Existing Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any Existing Plan or any such trust could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code. No
Existing Plan provides death or medical benefits (whether or not insured), with
respect to current or former employees of CFI or any Company ERISA Affiliate
beyond their retirement or other termination of service other than (i) coverage
mandated by applicable Law or (ii) death benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA.
4.14 Brokers. Except as set forth in Schedule 4.14 of the
Disclosure Schedule, CFI has not incurred any brokers', finders' or any similar
fee in connection with the transactions contemplated by this Agreement.
4.15 Taxes.
(a) Tax Returns. For all years for which the
applicable statutory period of limitation has not expired, CFI has timely and
properly filed, and will through the Closing Date timely and properly file, all
federal, state, local and foreign tax returns (including but not limited to
income, franchise, sales, payroll, employee withholding and social security and
unemployment) which were or will be required to be filed. CFI has paid all
taxes (including interest and penalties) and withholding amounts owed by CFI.
No tax deficiencies have been proposed or assessed against CFI. To the
knowledge of the Company, no issue has been raised in any prior tax audit of
CFI which, by application of the same
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or similar principles, could reasonably be expected upon a future tax audit of
CFI to result in a proposed deficiency for any period. CFI has filed a
consolidated Federal income tax return since June 28, 1992 that includes no
other members other than the members listed on Schedule 4.15. CFI is not
liable for any taxes attributable to any other Person, whether by reason of
being a member of another affiliated group, being a party to a tax sharing
agreement, as a transferee or successor, or otherwise.
(b) Audits. CFI has not consented to any extension
of the statute of limitation with respect to any open federal, state or local
tax returns.
(c) Liens. There are no tax Liens upon any property
or assets of CFI except for Liens for current taxes not yet due and payable.
(d) Deliveries. As soon as practicable after the
date of this Agreement, the Company will deliver to the Parent correct and
complete copies of all tax returns and reports of CFI filed for all periods not
barred by the applicable statute of limitations through the Effective Time. No
examination or audit of any tax return or report for any period not barred by
the applicable statute of limitations has occurred, no such examination is in
progress and, to the knowledge of the Company, no such examination or audit is
planned.
(e) Withholding Taxes. CFI has properly withheld
and timely paid all withholding and employment taxes which it was required to
withhold and pay relating to salaries, compensation and other amounts
heretofore paid to its employees or other Persons. All Forms W-2 and 1099
required to be filed with respect thereto have been timely and properly filed.
(f) Other Representations. CFI has not and will not
make any elections under Section 341(f) of the Code and has and will not be
subject to Section 280G of the Code.
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4.16 Real Estate. The Real Estate: (a) constitutes all real
property and improvements leased or owned by CFI; and (b) is not subject to any
leases, tenancies, encumbrances or encroachments of any kind except for
Existing Liens and Permitted Liens.
4.17 Governmental Approvals. No permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any federal, state, local or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
authority or administrative agency (a "Governmental Entity") is required by CFI
in connection with the execution and delivery of this Agreement by the Company
or the consummation by the Company of the Merger, except for: (a) the
approvals described in Section 8.5 of this Agreement; and (b) the filing of the
Certificate of Merger as described in this Agreement.
4.18 No Pending Acquisitions. Except for this Agreement and
the previously executed confidentiality agreements set forth on Schedule 4.18
of the Disclosure Schedule, CFI is not a party to or bound by any agreement,
undertaking or commitment with respect to an Acquisition Transaction.
4.19 Investments. Except for the Existing Investments, CFI
does not own, and does not have any right or obligation to acquire, any
Investment.
4.20 Labor Matters.
(a) Employment Claims. Except as set forth in
Schedule 4.20(a) of the Disclosure Schedule, to the knowledge of the Company,
there is no present or former employee of CFI who has any claim against CFI
(whether under Law, under any employee agreement or otherwise) on account of or
for: (i) overtime pay, other than overtime pay for the current payroll period;
(ii) wages or salaries, other than wages or salaries for the current payroll
period; or (iii) vacations, sick leave, time off or pay in lieu of vacation or
time off, other than vacation, sick leave or time off (or pay in lieu thereof)
earned in the period immediately preceding the date of this Agreement or
incurred in the ordinary course of business and appearing as a liability on the
most recent CFI Financial Statements.
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(b) Labor Disputes. Except as set forth in Schedule
4.20(b) of the Disclosure Schedule: (i) there are no pending and unresolved
claims by any Person against CFI arising out of any statute, ordinance or
regulation relating to unfair labor practices, discrimination or to employees
or employee practices or occupational or safety and health standards; (ii)
there is no pending, nor has CFI experienced since January 1, 1993 any,
material labor dispute, strike or organized work stoppage; and (iii) to the
knowledge of the Company, there is no threatened material labor dispute, strike
or organized work stoppage against CFI.
(c) NLRB Matters. Except as set forth in Schedule
4.20(c) of the Disclosure Schedule: (i) there is not now pending any charge or
complaint against CFI by or before the National Labor Relations Board or any
representative thereof, or any comparable state agency or authority; and (ii)
to the knowledge of the Company, CFI has not committed any unfair labor
practices which have not heretofore been corrected and fully remedied.
(d) Union Matters. Except as set forth in Schedule
4.20(d) of the Disclosure Schedule: (i) to the knowledge of the Company, no
union organizing activities are in process or have been proposed or threatened
involving any employees of CFI; and (ii) no petitions have been filed or, to
the knowledge of the Company, have been threatened or proposed to be filed, for
union organization or representation of employees of CFI not presently
organized.
4.21 Indebtedness. Except for the Existing Indebtedness, CFI
has no Indebtedness involving more than $25,000.
4.22 Subsidiaries. The Company has no Subsidiaries other
than CFI Recycling, Inc., a Delaware corporation, Plastofilm Limited, a
Northern Ireland corporation, and Plastofilm. Schedule 4.22 of the Disclosure
Schedule sets forth a true, correct and complete list of each Subsidiary of the
Company; its authorized, issued and outstanding capital stock or other equity
interests; the percentage of such capital stock or other equity interests owned
by the Company or its Subsidiary, and the identity of such owner; the capital
stock or other equity interests held in its treasury; the capital stock re-
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served for future issuance pursuant to outstanding options or other agreements;
and the identity of all parties to any such option or other agreement. Each
Subsidiary of the Company is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. All of the outstanding shares of capital stock
or other ownership interests in each of the Subsidiaries of the Company are
duly authorized, validly issued, and are fully paid, nonassessable and, except
as set forth in Schedule 4.22 of the Disclosure Schedule, are owned by the
Company or another Subsidiary of the Company free and clear of all Liens, and
are not subject to preemptive rights created by contract, such Subsidiary's
respective Certificate of Incorporation or By-laws or equivalent organizational
documents or any agreement to which such Subsidiary is a party or by which such
Subsidiary is bound.
4.23 Existing Permits and Violations of Law. The Existing
Permits constitute all licenses, permits, approvals, exemptions, orders,
approvals, franchises, qualifications, permissions, agreements and governmental
authorizations required by Law which CFI currently has and is required to have
for the conduct of the business of CFI as currently conducted, except where the
failure to have the same would not have a Material Adverse Effect. No action
or proceeding is pending or, to the knowledge of the Company, threatened that
has a reasonable possibility of resulting in a revocation, non-renewal,
termination, suspension or other material impairment of any material Existing
Permits. The business of CFI is not being conducted in violation of any
applicable Law, except for such violations which would not have a Material
Adverse Effect. No Governmental Entity has indicated to the Company an
intention to conduct an investigation or review with respect to CFI other than,
in each case, those which would not have a Material Adverse Effect.
4.24 Unemployment Compensation. CFI has made all required
payments to its unemployment compensation reserve accounts with the appropriate
governmental departments. Except as set forth in the Disclosure Schedule, all
such unemployment compensation accounts have positive balances and there are no
former employees receiving unemployment compensation benefits which are being
currently charged against any of such accounts.
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4.25 Intangible Assets.
(a) Existing Intangible Assets. Schedule 1.27 of
the Disclosure Schedule sets forth or identifies: (i) all material common law
trademarks, service marks, tradenames, slogans and logos which are used by CFI
in the conduct of its business; (ii) information concerning all trademark
registrations, service mark registrations and pending applications for the same
held by CFI; (iii) information concerning all United States and foreign patents
and pending patent applications held by CFI; (iv) information concerning all
copyrights and pending applications for the same held by CFI; and (v) all
written licenses to CFI of rights in any material Intangible Assets.
(b) Claims. Except as set forth in Schedule 4.25(b)
of the Disclosure Schedule: (i) there are no claims, demands or proceedings
instituted, pending or, to the knowledge of the Company, threatened by any
Person contesting or challenging the right of CFI to use any of the Existing
Intangible Assets; (ii) each trademark registration, service mark registration,
copyright registration and patent identified in Schedule 1.27 of the Disclosure
Schedule exists, is owned by or licensed to CFI and, with respect to those
owned by CFI, has been maintained in good standing and, with respect to those
licensed to CFI, to the Company's knowledge, has been maintained in good
standing; (iii) there are no Intangible Assets owned by a Person which CFI is
using without license to do so, except where the failure to possess such
license could not reasonably be expected to have a Material Adverse Effect;
(iv) CFI owns or possesses adequate licenses or other rights to use all
Intangible Assets necessary to conduct its business as now conducted, except
where the failure to possess such licenses could not reasonably be expected to
have a Material Adverse Effect; and (v) the consummation of the Merger and the
transactions contemplated by this Agreement will not impair the validity,
enforceability, ownership or right of CFI to use the Existing Intangible
Assets.
4.26 Customers and Suppliers. Except as set forth in the
Disclosure Schedule, since December 31, 1995 there has been no termination,
cancellation or material curtailment of the business relationship of CFI with
any customer or supplier or group of affiliated customers or
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suppliers whose purchases from or sales to CFI, individually or in the
aggregate, constituted more than $1,000,000 of the sales or inventory,
respectively, of CFI for the twelve month period ended December 31, 1995, nor,
to the knowledge of the Company, any notice of intent to so terminate, cancel
or materially curtail.
4.27 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any and
all administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, Liens investigations, proceedings
or notices of noncompliance or violation (written or oral) by any
Person alleging liability (including, without limitation, liability
for enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from: (A) the presence or environmental
release of any Hazardous Materials at any parcel of real property; or
(B) circumstances forming the basis of any violation or alleged
violation, of any Environmental Law; or (C) any and all claims by any
Person seeking damages, contribution, indemnification, cost, recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Hazardous Materials.
(ii) "Hazardous Materials" shall mean: (A)
any petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam
insulation, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls ("PCBs") above
regulated levels and radon gas; and (B) any chemicals, materials or
substances which are now defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely
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hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import, under any
Environmental Law; and (C) any other chemical, material, substance or
waste, exposure to which is now prohibited, limited or regulated by
any governmental authority.
(iii) "Environmental Laws" shall mean any
federal, state, local or foreign statute, Law, rule, ordinance, code,
policy, rule of common law and regulations relating to pollution or
protection of human health (excluding OSHA) or the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without
limitation, Laws and regulations relating to Environmental Releases or
threatened Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iv) "Environmental Release" shall mean any
release, spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the atmosphere, soil,
surface water or groundwater.
(b) Environmental Laws. Except as set forth in
Schedule 4.27 of the Disclosure Schedule, CFI: (i) is in compliance with all
applicable Environmental Laws; and (ii) has not received any communication
(written or oral), from a governmental authority or third party that alleges
that CFI or any current or former Affiliate of CFI is not in compliance with
applicable Environmental Laws.
(c) Environmental Permits. Except as set forth in
Schedule 4.27 of the Disclosure Schedule, CFI has obtained all environmental,
health and safety permits and governmental authorizations (collectively, the
"Environmental Permits") required for its operations, and all such permits are
in good standing and CFI is in substantial compliance with all terms and
conditions of the Environmental Permits.
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(d) Claims. Except as set forth in Schedule 4.27 of
the Disclosure Schedule, there is no Environmental Claim pending or, to the
knowledge of the Company, threatened against CFI or any current or former
Affiliate of CFI (to the extent such Environmental Claim relates to CFI) or
against any Person whose liability for any Environmental Claim CFI has retained
or assumed either contractually or by operation of Law, or against any real or
personal property or operations which CFI owns, operates, leases, manages or
controls or, to the knowledge of the Company, which CFI owned, operated,
leased, managed or controlled.
(e) Environmental Releases. Except as set forth in
Schedule 4.27 of the Disclosure Schedule, there have been no Environmental
Releases of any Hazardous Material by CFI or any current or former Affiliate of
CFI on any parcel of real property or, to the knowledge of the Company, by any
Person on, beneath or adjacent to any parcel of real property which CFI or any
current or former Affiliate of CFI owned, leased, operated, managed or
controlled.
(f) CERCLA. Except as set forth in Schedule 4.27 of
the Disclosure Schedule, CFI has not received any written notice of potential
liability from any Person under or relating to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), or any
similar state or local Law.
(g) Off-Site Locations. Except as set forth in
Schedule 4.27(g) of the Disclosure Schedule, neither CFI nor any current or
former Affiliate of CFI has any liability with respect to any off-site location
under CERCLA or any comparable state or local Law and neither CFI nor any
current or former Affiliate of CFI has received any written notice from any
Person with respect to any off-site location, of potential or actual liability
or a written request for information from any Person under or relating to
CERCLA or any similar state or local Law.
(h) Reports. The Company has delivered or otherwise
made available for inspection to Parent true, complete and correct copies and
results of any reports, studies, analyses, tests or monitoring possessed by CFI
pertaining to Hazardous Materials in, on, beneath
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or adjacent to any property currently or formerly owned, operated or leased by
CFI or any current or former Affiliate of CFI, or regarding CFI's compliance
with applicable Environmental Laws.
(i) Tanks. Except as set forth in Schedule 4.27(i)
of the Disclosure Schedule, the Real Estate does not contain any underground
storage tanks which contained or contain any Hazardous Material.
4.28 Vote Required. The affirmative vote of the holders of
at least two-thirds (2/3rds) of the outstanding shares of CFI Stock is the only
vote of the holders of any class or series of capital stock or other securities
of the Company necessary to approve the Merger, this Agreement and the
transactions contemplated by this Agreement.
4.29 Affiliate Transactions. Except as set forth in Schedule
4.29 of the Disclosure Schedule: since June 30, 1995, CFI has not engaged in
any transaction with, or obtained any services or products from, any Affiliate
of CFI and there are no material Contracts or other transactions between CFI,
on the one hand, and any (i) officer or director of CFI or (ii) Affiliate of
CFI, on the other hand.
4.30 Returns. As of the date of this Agreement, to the
knowledge of the Company, there are no known claims against CFI to return in
excess of $10,000 (after giving effect to and exhausting any applicable
reserves and/or accruals therefor contained in the CFI Financial Statements) of
merchandise by reason of alleged overshipments, defective merchandise or
otherwise, or of merchandise in the hands of customers under an understanding
that such merchandise would be returnable for credit. To the knowledge of the
Company, there is no reasonable basis for claims against CFI to return in
excess of $10,000 (after giving effect to and exhausting any applicable
reserves and/or accruals therefor contained in the CFI Financial Statements) if
CFI's finished good inventories were sold to the intended customer therefor.
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4.31 SEC Reports. The Company has filed with the SEC, and
has heretofore made available to the Parent true and complete copies of, all
forms, reports, schedules, statements and other documents required to be filed
by it and its Subsidiaries since June 28, 1992 under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act") or the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Securities Act")
(as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates or,
if amended, as of the date of the last such amendment, the Company SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
4.32 Content of Proxy Statement and Other Filings.
(a) Neither the Proxy Statement nor any amendments
thereof or supplements thereto will, on the date the same is first mailed to
the Shareholders and at the time the CFI Special Meeting is convened, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty with
respect to any information furnished to it by the Parent or Acquisition or any
of the Parent's or Acquisition's accountants, counsel or other authorized
representatives in writing specifically for inclusion in the Proxy Statement or
any amendment or supplement thereto.
(b) None of the information with respect to the
Company or any Affiliate of the Company that has been supplied by the Company
or any of its accountants,
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counsel or other authorized representatives in writing specifically for use in
any other filing with the SEC that may be required in connection with this
Agreement and the Merger will, at the time of such filing, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The Company represents and warrants that the
Proxy Statement shall comply in all material respects with the applicable
requirements of the Exchange Act.
Except as expressly set forth in this Article IV, the Company makes no express
or implied representation or warranty of any kind whatsoever, including,
without limitation, any representation or warranty as to the condition or value
of any of the assets of CFI or the future profitability or future earnings
performance or potential of CFI. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. For purposes of this
Agreement, the "knowledge of the Company" or words of similar import shall be
deemed to be limited to (i) the actual knowledge of Philip Calian, Robert
George, Robert Zimmer, Doug Foos, Richard Partlow, Gary Sowden and Sheila
Healy, each of whom shall be deemed to have conducted a reasonable review with
respect to matters with respect to which such person has responsibility in his
or her capacity as an employee or officer of CFI in connection with which such
term is used and (ii) the actual knowledge of Donald Liebentritt (solely in his
capacity as a vice president of the Company). It being understood and agreed
that provisions of this Agreement calling for the knowledge of Mr. Liebentritt
are not intended to, and shall not constitute, a waiver by CFI of
attorney-client privilege.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION
The Parent and Acquisition represent and warrant to the
Company as follows:
5.1 Due Incorporation and Authority. Each of the Parent and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to own, lease and operate its assets
and business and to carry on its business as now being and as heretofore
conducted. Each of the Parent and Acquisition has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Merger. The execution, delivery
and performance by each of the Parent and Acquisition of this Agreement and,
subject to the provisions hereof, all of the documents and instruments required
by this Agreement to be executed and delivered by the Parent and/or
Acquisition, and the consummation by Acquisition of the Merger, have been duly
authorized by all the shareholders of Acquisition and the Board of Directors of
the Parent and Acquisition as required by Law and the organizational documents
of each such entity, and no other corporate proceedings on the part of the
Parent or Acquisition will be necessary to authorize the execution, delivery
and performance by each of the Parent and Acquisition of this Agreement, or the
consummation by Acquisition and Parent of the transactions contemplated hereby.
This Agreement is (and each of the documents and instruments required by this
Agreement to be executed and delivered by the Parent and/or Acquisition will
be, when executed and delivered by the Parent and/or Acquisition) the valid and
binding obligations of the Parent and Acquisition, as the case may be,
enforceable against the Parent and Acquisition, as the case may be, in
accordance with their respective terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws generally affecting the rights of creditors and subject to general
equity principles.
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5.2 Consents and Approvals. The execution and delivery by
each of the Parent and Acquisition of this Agreement and all documents and
instruments required by this Agreement to be executed and delivered by the
Parent and/or Acquisition, and the performance by each of the Parent and
Acquisition of its obligations hereunder and thereunder do not require the
Parent or Acquisition to obtain any consent, approval or action of, or make any
filing with or give any notice to, any person or any governmental or regulatory
body, except (i) compliance with applicable requirements of the HSR Act and
(ii) the filing and recordation of appropriate merger documents as required by
the GCL.
5.3 No Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Parent and/or Acquisition, or any action
taken by the Parent and/or Acquisition.
5.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 7.8 of this Agreement, the
execution, delivery and performance by the Parent and Acquisition of this
Agreement and all documents and instruments required by this Agreement to be
executed and delivered by the Parent and/or Acquisition do not and will not
conflict with or violate any Law, the Certificate of Incorporation or Bylaws of
the Parent or Acquisition or any material contract or agreement to which the
Parent or Acquisition is a party or by which it is bound.
5.5 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Parent, threatened against the Parent or
Acquisition or any shareholder of the Parent, by any Person which question the
validity, legality or propriety of the transactions contemplated by this
Agreement.
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ARTICLE VI
CONDUCT OF BUSINESS OF CFI PENDING THE CLOSING
From and after the date of this Agreement and until the
termination of this Agreement or the Closing Date (whichever first occurs), CFI
shall:
6.1 Carry on in Regular Course.
(a) Carry on its business in the usual, regular and
ordinary course substantially in the same manner as heretofore carried on; and
(b) Not (i) make payments or distributions (other
than normal salaries) to any Affiliate of CFI except for transactions in the
ordinary course of business upon commercially reasonable terms; (ii) sell,
lease, transfer or assign any of its assets, tangible or intangible, other than
for a fair consideration in the ordinary course of business and other than the
disposition of obsolete or unusable property; (iii) enter into any Contract
(other than purchase and sales orders in the ordinary course of business in
accordance with past practice) either involving more than $20,000 or outside
the ordinary course of business without the consent of the Parent (which
consent shall not be unreasonably withheld); (iv) accelerate, terminate, modify
in any material respect, or cancel any Contract (other than purchase and sales
orders in the ordinary course of business in accordance with past practice)
involving more than $20,000 to which CFI is a party or by which any of them is
bound without the consent of the Parent (which consent shall not be
unreasonably withheld); (v) make any capital expenditure (or series of related
capital expenditures) either involving more than $50,000 (unless such
expenditure is identified in the current business plan of Plastofilm as
disclosed to Parent) or outside the ordinary course of business; (vi) delay or
postpone the payment of accounts payable and other liabilities outside the
ordinary course of business; (vii) cancel, compromise, waive or release any
right or claim (or series of related rights and claims) not covered by the
reserves or accruals relating to such claim in the CFI Financial Statements
either involving more than $20,000 or outside the ordinary course of business
without the consent of the Parent (which consent shall not be unreasonably
with-
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held); (viii) grant any license or sublicense of any rights under or with
respect to any Intangible Assets; or (ix) make any loan to, or enter into any
other transaction with, any of its Affiliates, directors, officers and
employees outside the ordinary course of business.
6.2 Use of Assets. Use, operate, maintain and repair all of
its assets and properties in a normal business manner consistent with its past
practices.
6.3 Preservation of Relationships. Use commercially
reasonable efforts to preserve in all material respects its business
organization intact, to retain the services of the Employees and to conduct
business with suppliers, customers, creditors and others having business
relationships with CFI in the best interests of CFI.
6.4 No Default. Not knowingly do any act or knowingly omit
to do any act or, to the extent within CFI's reasonable control, knowingly
permit any act or omission to act, which will cause a breach of any of the
Existing Contracts that would have a Material Adverse Effect.
6.5 Existing Insurance Policies. Use reasonable efforts to
maintain all of the Existing Insurance Policies (or policies substantially
equivalent thereto) in full force and effect.
6.6 Employment Matters. Not: (a) except as required by any
Existing Contracts or in a manner consistent with past practice, grant any
increase in the rate of pay of any of the Employees; (b) institute or amend any
Employee Benefit Plan unless required by Law; (c) enter into or modify any
written employment agreement with any Person; or (d) pay or accrue any bonus or
incentive compensation to any Person; provided, however, that notwithstanding
anything to the contrary contained herein, CFI may pay the bonuses described on
Schedule 6.6 of the Disclosure Schedule at the time consistent with past
practice.
6.7 Indebtedness; Investments. Other than in the ordinary
course of business, not create, incur or assume any Indebtedness or make any
Investment.
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6.8 Amendments. Not amend the CFI Charter Documents.
6.9 Dividends; Redemptions; Issuance of Stock. Not: (a)
issue any additional shares of stock of any class except pursuant to the
Existing Options or pursuant to Section 4 of The CFI Industries, Inc. Form Your
Future Plan, or grant any warrants, options or rights to subscribe for or
acquire any additional shares of stock of any class (including, without
limitation, pursuant to Section 5 of The CFI Industries, Inc. Form Your Future
Plan); (b) declare or pay any dividend or make any capital, surplus or other
distributions (other than normal salaries) of any nature to the Shareholders;
or (c) directly or indirectly redeem, purchase or otherwise acquire,
recapitalize or reclassify any of its capital stock or liquidate in whole or in
part.
6.10 Taxes. Timely and properly file, or timely and properly
file requests for extensions to file, all federal, state, local and foreign tax
returns which are required to be filed, and pay or make provision for the
payment of all taxes owed by it.
6.11 Representations. Not knowingly do any act or omit to do
any act that would result in a breach of any representation by the Company set
forth in this Agreement.
6.12 Releases. Use reasonable efforts to obtain releases, in
substantially the form attached as Exhibit 6 hereto, from each of the officers
and directors of CFI.
ARTICLE VII
CONDITIONS PRECEDENT FOR BENEFIT
OF THE PARENT AND ACQUISITION
The obligation of the Parent and Acquisition to consummate the
Merger shall be subject to the satisfaction prior to or at the Closing as
hereinafter provided of the following express conditions precedent:
7.1 Compliance with Agreement. As of Closing, the Company
shall have performed and complied with its
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obligations under this Agreement in all material respects which are to be
performed or complied with by it prior to or on the Closing Date and as of the
Effective Time of Merger.
7.2 No Litigation. No suit, action or other proceeding shall
be pending in which the consummation of the transactions contemplated by this
Agreement is restrained or enjoined or in which the relief requested is to
restrain, enjoin or prohibit the consummation of such transactions.
7.3 Representations and Warranties of the Company. The
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date.
7.4 No Material Adverse Change. During the period from the
date of this Agreement to the Closing Date, there shall not have occurred any
Material Adverse Effect that continues to exist on the Closing Date and as of
the Effective Time.
7.5 Material Damage to Assets. Between the date of this
Agreement and the Closing Date and as of the Effective Time, neither the
business nor the assets and properties of CFI taken as a whole shall have been
materially adversely affected by reason of any taking, condemnation,
destruction or other physical damage, whether or not insured against.
7.6 No Liabilities. Except for liabilities or obligations
which are (i) accrued or reserved against the CFI Financial Statements (or
reflected in the notes thereto), (ii) set forth in Schedule 7.6 of the
Disclosure Schedule or (iii) incurred in the ordinary course of business since
December 31, 1995, CFI does not have any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) which are material to CFI taken as
a whole.
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7.7 Deliveries at Closing. At or prior to the Closing, the
Company shall have delivered to the Parent:
(a) a copy of the Certificate of Incorporation of
each of the Company and Plastofilm, as amended to date, each certified as of a
recent date by the Secretary of State of Delaware;
(b) all corporate minute books, stock transfer
books, blank stock certificates and corporate seals of CFI;
(c) a certificate of the Secretary of State of
Delaware as to the existence and good standing of CFI, dated as of a recent
date;
(d) a Certificate of the Secretary of the Company
dated the Closing Date certifying to: (i) the incumbency and signature of the
officers of the Company who have signed this Agreement and will sign all of the
documents, agreements and instruments to be executed and delivered pursuant to
this Agreement; (ii) the accuracy of a copy of the Bylaws of the Company, as
amended to date, attached thereto; (iii) the names of all officers and
directors of the Company as of 9:00 A.M. on the Closing Date; (iv) the adoption
and continued effect of resolutions by the Shareholders and Board of Directors
of the Company authorizing this Agreement and the Merger; and (v) the nonexis-
tence of any amendments to the Certificate of Incorporation of the Company
since the date of the certified copy thereof delivered pursuant to Section
7.7(a) of this Agreement;
(e) a Certificate of the Secretary of Plastofilm
dated the Closing Date certifying to: (i) the accuracy of a copy of the Bylaws
of Plastofilm, as amended to date, attached thereto; (ii) the names of all
officers and directors of Plastofilm as of 9:00 A.M. on the Closing Date; and
(iii) the nonexistence of any amendments to the Certificate of Incorporation of
Plastofilm since the date of the certified copy thereof delivered pursuant to
Section 7.7(a) of this Agreement; and
(f) the following documents, each properly executed
and dated the Closing Date: (i) the CFI Closing Certificate; and (ii) the CFI
Counsel Opinion.
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7.8 Affiliates. All Accounts owed by an Affiliate of CFI
(except Subsidiaries of the Company) to CFI shall have been paid in full. Any
Affiliate of CFI (except Subsidiaries of the Company) who has an amount owed to
it by CFI shall be paid prior to the Effective Time and shall execute a
release, dated the date of the Closing, in a form reasonably acceptable to the
Parent and Acquisition.
7.9 Regulatory Approvals. Clearance from the appropriate
agencies, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, as
amended (the "HSR Act"), shall have been obtained by the Company and the Parent
or the waiting period thereby required shall have expired or been terminated.
7.10 Approval of Shareholders. This Agreement, the Merger
and the transactions contemplated by this Agreement shall have received the
requisite approval and authorization of the Shareholders.
7.11 Dissenting Shares. As of Closing, the number of shares
of the CFI Stock which are qualified to be Dissenting Shares shall not be more
than 50,000 of the outstanding shares of CFI Stock.
7.12 Due Diligence. As of the close of business on June 19,
1996, the Parent and Acquisition shall have completed their investigation of
the financial condition, assets, liabilities and business of CFI pursuant to
Section 3.1 of this Agreement with results satisfactory to the Parent and
Acquisition in their sole and absolute discretion. If the conditions set forth
in this Section 7.12 have not been satisfied or waived by the Parent and
Acquisition as of the close of business on June 19, 1996, then the Parent shall
so notify the Company by notice received by the Company on or before the close
of business on such date, and in such event this Agreement shall terminate. If
the Company does not receive such a notice from the Parent by the close of
business on June 19, 1996, then the Parent shall be deemed to have waived the
condition set forth in this Section 7.12.
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7.13 Resignations. All resignations from directors of the
Company which have been previously requested in writing by Acquisition shall
have been delivered to Acquisition.
ARTICLE VIII
CONDITIONS PRECEDENT FOR BENEFIT
OF THE COMPANY
The obligation of the Company to consummate the Merger shall
be subject to the satisfaction prior to or at the Closing as hereinafter
provided of the following express conditions precedent:
8.1 Compliance with Agreement. As of Closing, the Parent and
Acquisition shall have performed and complied with its obligations under this
Agreement in all material respects which are to be performed or complied with
by it prior to or on the Closing Date and as of the Effective Time of Merger.
8.2 No Litigation. No suit, action or other proceeding shall
be pending in which the consummation of the transactions contemplated by this
Agreement is restrained or enjoined or in which the relief requested is to
restrain, enjoin or prohibit the consummation of such transactions.
8.3 Representations and Warranties of the Parent and
Acquisition. The representations and warranties made by the Parent and
Acquisition in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing
Date.
8.4 Deliveries at Closing. The Parent shall have delivered
to CFI the following documents, each properly executed and dated the Closing
Date:
(a) the Parent Closing Certificate;
(b) the Parent Counsel Opinion; and
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(c) such certificates and documents of officers of
the Parent and of public officials as shall be reasonably requested by the
Company to establish the existence and good standing of the Parent and
Acquisition and the due authorization by the Parent and Acquisition of this
Agreement and the transactions contemplated by this Agreement.
8.5 Governmental Approval. Clearance from the appropriate
agencies pursuant to the HSR Act shall have been obtained by the Company and
the Parent or the waiting period thereby required shall have expired or been
terminated.
8.6 Approval of Shareholders; Certificate of Merger. This
Agreement and the Merger shall have received the requisite approval and
authorization of the Shareholders. The Certificate of Merger shall have been
executed and filed by the Company.
8.7 Closing Payments. Acquisition shall have delivered the
Exchange Fund to the Exchange Agent and paid all amounts due to the
Optionholders as required by Section 2.15 above.
ARTICLE IX
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 No Survival of Representations and Warranties. None of
the representations, warranties, covenants, agreements and certifications of
the Company and/or Equity and/or any officer of CFI contained herein or in the
CFI Closing Certificate or the Company's Secretary Certificate shall survive
the Effective Time, and, from and after the Effective Time, neither the Parent
nor Acquisition shall be entitled to make any claim for breach of any such
representations, warranties, covenants or certifications.
9.2 Directors' and Officers' Indemnification.
(a) Subsequent to the Effective Time, Acquisition
shall cause the Surviving Corporation to, and the Surviving Corporation shall,
indemnify and hold harm-
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less each present and former director and officer of CFI (collectively, the
"Indemnified Parties") against all losses in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as director or officer occurring before the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, for a period of
six years after the Closing Date, in each case to the fullest extent permitted
under applicable Law (and shall pay any expenses in advance of the final
disposition of such action or proceeding to each Indemnified Party to the
fullest extent permitted under applicable Law, upon receipt from the
Indemnified Party to whom expenses are advanced of an undertaking to repay such
advances as required under applicable Law); provided, however, that, if any
claim for indemnification is asserted or made within such six year period, all
rights to indemnification in respect of such claim shall continue until the
disposition of such claim.
(b) In the event the Surviving Corporation or any of
its respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each such case, provision
shall be made by the Surviving Corporation so that the successors and assigns
of the Surviving Corporation shall assume the obligations set forth in this
Section 9.2.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF EQUITY
Equity hereby represents and warrants to the Company that:
10.1 Organization and Qualification. Equity is a general
partnership duly and validly organized and existing and in good standing under
the Laws of the State of Illinois and has the authority to own its assets and
properties and to carry on its business.
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10.2 Authorization; Enforceability. The execution, delivery
and performance of this Agreement by Equity as herein provided and all of the
documents and instruments required by this Agreement to be executed and
delivered by Equity are within the power of Equity and have been duly
authorized by all necessary partnership action by Equity. This Agreement is,
and the other documents and instruments required by this Agreement to be
executed and delivered by Equity will be, when executed and delivered by
Equity, the valid and binding obligations of Equity, enforceable against Equity
in accordance with their respective terms, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws generally affecting the rights of creditors and subject to
general equity principles.
10.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement by Equity as herein provided do not and will not
conflict with or violate any Laws, the partnership agreement of Equity or any
material Contract or agreement to which Equity is a party or by which it is
bound.
10.4 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of Equity, threatened against Equity by any Person
which question the validity, legality or propriety of the transactions
contemplated by this Agreement.
10.5 Ownership of Stock. On the date of this Agreement,
Equity owns beneficially and is the record owner of, and is entitled to vote in
accordance with applicable provisions of the Certificate of Incorporation of
the Company and GCL, 1,334,592 shares of CFI Stock. Equity agrees that it has
not and shall not pledge or otherwise encumber or transfer any shares of CFI
Stock owned by it in a manner that would prevent it from satisfying its
obligations under this Agreement.
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ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing (whether before or after the approval of this Agreement by the
Shareholders), as follows:
(i) by mutual written agreement of the Parent and the Company;
(ii) by the Parent if any one or more of the conditions to the
obligation of the Parent to close set forth in Article VII of this Agreement
shall not have been fulfilled by October 31, 1996 (except that the Parent shall
not have the right to terminate this Agreement pursuant to this Section
11.1(ii) if the basis therefor is attributable to a breach by the Parent of any
of its obligations hereunder);
(iii) by the Company if any one or more of the conditions to
the obligation of the Company to close set forth in Article VIII of this
Agreement shall not have been fulfilled by October 31, 1996 (except that the
Company shall not have the right to terminate this Agreement pursuant to this
Section 11.1(iii) if the basis therefor is attributable to a breach by the
Company of any of its obligations hereunder);
(iv) by the Company if the Board of Directors of the Company
shall have (A) withdrawn, or modified or changed in a manner adverse to the
Parent or Acquisition its approval or recommendation of this Agreement or the
Merger in order to approve and permit the Company to execute a definitive
agreement relating to an Acquisition Transaction, and (B) determined, after
having received the written advice of Richards, Layton & Finger or other
independent Delaware counsel, that the failure to take such action as set forth
in the preceding clause (A) would result in a breach of the Board of Directors'
fiduciary duties under applicable Law; provided, however, that the Company
shall have given the Parent and Acquisition at least thirty-six hours advance
actual notice of any termination pursuant to this Section 11.1(iv) and
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shall make concurrently with such termination the $750,000 payment referred to
in Section 11.3 hereof;
(v) by the Parent or the Company if this Agreement and the
Merger shall not have received the requisite approval and authorization of the
Shareholders by October 31, 1996;
(vi) at the election of the Parent or the Company, if any
legal proceeding is commenced or threatened by any governmental or regulatory
body directed against the consummation of the Closing or any transaction
contemplated by this Agreement and either the Parent or the Company, as the
case may be, reasonably and in good faith deems it impractical or inadvisable
to proceed in view of such legal proceeding or threat thereof;
(vii) by the Parent if (A) the Board of Directors of the
Company shall have withdrawn, or modified or changed in a manner adverse to the
Parent or Acquisition its approval or recommendation of this Agreement or
Merger or shall have recommended an Acquisition Transaction or other business
combination, or the Company shall have entered into an agreement in principle
(or similar agreement) or definitive agreement providing for an Acquisition
Transaction with a Person other than Parent, Acquisition or their Subsidiaries
(or the Board of Directors of the Company resolves to do any of the foregoing),
or (B) it shall have been publicly disclosed or the Parent or Acquisition shall
have learned that any Person or "group" (as that term is defined in Section
13(d)(3) of the Exchange Act) (an "Acquiring Person"), other than the Parent,
Acquisition or Equity, after receiving the approval of the Board of Directors
of the Company contemplated by Section 203 of the GCL, shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 14.9% of any class or series of capital stock of the
Company, through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 14.9% of any class
or series of capital stock of the Company; or
(viii) by the Parent upon the failure of Equity to perform
its obligations under Section 3.7 hereof.
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11.2 Rights on Termination. In the event of termination and
abandonment of the Merger by any party pursuant to Section 7.12 or 11.1,
written notice thereof shall forthwith be given to the other parties and this
Agreement shall terminate and the Merger and the other transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated and the transactions
contemplated hereby are not consummated pursuant to Section 7.12 or 11.1 of
this Agreement, this Agreement shall become void and of no further force and
effect, except for (a) the provisions of Section 3.1 relating to the obligation
of the Parent and Acquisition to keep confidential and not to use certain
information obtained from the Company, (b) the provisions of Section 11.3
relating to the Company's obligations to make certain payments to the Parent
and (c) the provisions of Section 11.4 relating to the Parent's obligations to
make certain payments to the Company.
11.3 Termination Fee Payable to the Parent. Notwithstanding
any provision to the contrary contained herein, the Company shall immediately
pay to the Parent (x) the amount of $750,000.00 and (y) all out-of-pocket
expenses reasonably incurred by the Parent and Acquisition in connection with
this Agreement and the Merger in an amount not to exceed $250,000.00 (A) if
this Agreement is terminated by the Parent pursuant to: (aa) Section 11.1(ii)
(for failure of any of the conditions set forth in Section 7.7, 7.8, 7.10 or
7.13); (bb) Section 11.1(ii) (for failure of any of the conditions set forth
(1) in Section 7.1 as a result of the Company doing any act or omitting to take
any act that would result in the Company's failure to perform or comply with in
all material respects the Company's obligations under this Agreement or (2) in
Section 7.3 as a result of the Company doing any act or omitting to take any
act with the intent that such act or omission would result in the
representations and warranties made by the Company in this Agreement being not
true and correct in all material respects on and as of the Closing Date; (cc)
Section 11.1(v); (dd) Section 11.1(vii); or (ee) Section 11.1(viii); or (B) if
this Agreement is terminated by the Company pursuant to Section 11.1(iv) above,
with the $750,000 to be paid concurrently with the occurrence of the event
referred to in clauses (A) or (B) and the expense amount under clause (y) to be
paid within five (5) business days after re-
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ceipt by the Company of reasonably detailed evidence of the same. Upon receipt
of such payments, the Parent shall not be entitled to and shall waive the right
to seek damages or other amounts or remedies from the Company for breach of, or
otherwise in connection with, this Agreement.
11.4 Termination Fee Payable to the Company. Notwithstanding
any provision to the contrary contained herein, the Parent shall immediately
pay to the Company (x) the amount of $750,000.00 and (y) all out-of-pocket
expenses reasonably incurred by the Company in connection with this Agreement
and the Merger in an amount not to exceed $250,000.00 if terminated pursuant to
Section 11.1(iii): (aa) for failure of any of the conditions referred to in
Section 8.1 or 8.3 as a result of the Parent or Acquisition knowingly doing any
act or omitting to take any act that would result in (1) the Parent's or
Acquisition's failure to perform or comply with in all material respects their
respective obligations under this Agreement or (2) the representations and
warranties made by the Parent and/or Acquisition in this Agreement being not
true and correct in all material respects on and as of the Closing Date); or
(bb) for failure of any of the conditions referred to in Section 8.4 or 8.7.
Upon receipt of such payments, the Company shall not be entitled to and shall
waive the right to seek damages or other amounts or remedies from the Parent or
Acquisition for breach of, or otherwise in connection with, this Agreement.
11.5 Other Remedies. Notwithstanding any provision to the
contrary contained herein, if this Agreement is terminated pursuant to Article
XI or otherwise by the Company, on the one hand, or the Parent or Acquisition,
on the other hand, and the non-terminating party is not entitled to receive the
payments described in Section 11.3 or 11.4 (as the case may be), then the
non-terminating party shall be entitled to pursue any available legal rights to
recover actual damages, including, without limitation, its reasonable costs and
expenses incurred in pursuing such recovery (including, without limitation,
reasonable attorneys' fees); provided, however, that the Parent's and
Acquisition's sole remedy for any breach by the Company of Section 4.27(b),
4.27(c), 4.27(e), 4.27(g) or 4.27(i) shall be to terminate this Agreement as
provided in Section 11.1(ii) hereof, in
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which event the provisions of Section 11.3 hereof shall not be applicable.
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. If this Agreement and the transactions
contemplated hereby are consummated, all CFI Expenses up to $200,000 shall be
paid by the Surviving Corporation and the balance thereof shall be paid by the
Exchange Agent out of the Exchange Fund. If this Agreement is not consummated,
the Parent and Acquisition, on the one hand, and the Company, on the other
hand, shall bear their respective legal fees and expenses.
12.2 Entire Agreement; Amendment. This Agreement and the
documents referred to in this Agreement and required to be delivered pursuant
to this Agreement constitute the entire agreement among the parties pertaining
to the subject matter of this Agreement, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written, and there are no warranties, representations
or other agreements between the parties in connection with the subject matter
of this Agreement, except as specifically set forth in this Agreement. No
amendment, supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
12.3 Governing Law. This Agreement shall be governed and
construed (i) with respect to the Merger, in accordance with the laws of the
State of Delaware and (ii) with respect to all other transactions contemplated
hereunder, in accordance with the laws of the State of Illinois, applicable to
agreements made and to be performed entirely within such States.
65
<PAGE> 74
12.4 Assignment. Prior to the Closing, this Agreement may
not be assigned by any party hereto, except with the prior written consent of
the other parties hereto.
12.5 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have
been given at the earlier of the date personally delivered or sent by
telephonic facsimile transmission or one day after sending via nationally
recognized overnight courier or five days after deposit in the United States
mail, certified or registered mail, postage prepaid, return receipt requested,
and addressed as follows, unless and until any of such parties notifies the
others in accordance with this Section of a change of address:
If to the Parent: IPC, Inc.
c/o Ivex Packaging Corporation
100 Tri-State Drive
Suite 200
Lincolnshire, Illinois 60069
Telephone: (847) 945-9100
Telecopy: (847) 945-2355
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker
Suite 2100
Chicago, Illinois 60606
Telephone: (312) 407-0700
Telecopy: (312) 407-0411
Attention: William R. Kunkel, Esq.
If to the Company: CFI Industries, Inc.
935 West Union Avenue
Wheaton, IL 60187
Telephone:
Fax No. (708) 668-5431
Attention: Robert W. George
66
<PAGE> 75
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza,
Suite 1515
Chicago, IL 60606
Telephone: (312) 454-0335
Fax No. (312) 906-9225
Attention: Donald Liebentritt
If to Equity: Equity Holdings
Two North Riverside Plaza
Chicago, IL 60606
Telephone: (312) 466-3990
Fax No. (312) 454-0531
Attention: Sheli Z. Rosenberg
12.6 Counterparts; Headings. This Agreement may be executed
in several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
12.7 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in the plural number shall extend to and include
the singular, and all words in any gender shall extend to and include all
genders.
12.8 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, shall not be affected thereby unless
such invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
12.9 Specific Performance. The parties agree that the assets
and business of CFI as a going concern constitute unique property and,
accordingly, each party shall be entitled, at its option and in addition to any
other remedies
67
<PAGE> 76
available as herein provided, to the remedy of specific performance to effect
the Merger as provided in this Agreement.
12.10 No Reliance. Except for the parties to this Agreement:
(a) no Person is entitled to rely on any of the representations, warranties and
agreements of the parties contained in this Agreement; and (b) the parties
assume no liability to any Person because of any reliance on the
representations, warranties and agreements of the parties contained in this
Agreement.
12.11 Exhibits and Schedules. The Exhibits and Schedules are
a part of this Agreement as if fully set forth herein. All references herein
to Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
12.12 Tax Treatment. The parties agree that for federal and
state tax purposes they will treat the Merger as a sale of the CFI Stock by the
Shareholders to the Company.
12.13 Liability. The liability of the Parent and Acquisition
under this Agreement is joint and several, and their obligations are mutual
except with respect to the obligations of Acquisition pursuant to Section 9.2
which shall be solely the obligations of Acquisition.
12.14 No Third Party Beneficiary. Except as provided
pursuant to Section 9.2 hereof, the terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto and their respective
successors and assigns and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person.
68
<PAGE> 77
IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
IPC, INC. (formerly named Ivex
Packaging Corporation)
By:_________________________________
PACKAGE ACQUISITION, INC.
By:_________________________________
CFI INDUSTRIES, INC.
By:_________________________________
Attest:_____________________________
EQUITY HOLDINGS
By:_________________________________
One of its General Partners
69
<PAGE> 78
EXHIBIT 1
CERTIFICATE OF MERGER
OF
PLASTIC ACQUISITION, INC.
INTO
CFI INDUSTRIES, INC.
- --------------------------------------------------------------------------------
Pursuant to Section 251(c) of the General
Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
CFI Industries, Inc., a Delaware corporation, does hereby certify to
the following facts relating to the merger of Package Acquisition, Inc. into
CFI Industries, Inc. (the "Merger"):
FIRST: The names and states of incorporation of the constituent
corporations to the Merger are as follows:
Name State
- ---- -----
CFI INDUSTRIES, INC. Delaware
PACKAGE ACQUISITION, INC. Delaware
SECOND: An Agreement and Plan of Merger, dated as of May 17, 1996, has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the corporation surviving the Merger is CFI
Industries, Inc. (the "Surviving Corporation").
<PAGE> 79
FOURTH: The text of the Certificate of Incorporation of the Surviving
Corporation as it shall be amended in its entirety at the effective time of the
Merger is set forth as Exhibit A to this Certificate of Merger.
FIFTH: An executed copy of the Agreement and Plan of Merger is on file
at the principal place of business of the Surviving Corporation, 935 West Union
Avenue, Wheaton, Illinois 60187. A copy of the Agreement and Plan of Merger
will be furnished upon request and without cost to any Stockholder of either
constituent corporation.
IN WITNESS WHEREOF, CFI Industries, Inc. has caused this Certificate of
Merger to be executed in its corporate name this ____ day of June, 1996.
CFI INDUSTRIES, INC.
By:_________________________
Name:
Title:
2
<PAGE> 80
EXHIBIT A
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "PACKAGE ACQUISITION, INC.", FILED IN THIS OFFICE ON THE
SIXTEENTH DAY OF MAY, A.D. 1996, AT 11 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] Edward J. Freel
-------------------------------------------
Edward J. Freel, Secretary of State
2624328 8100
AUTHENTICATION: 7949014
960142154
DATE: 05-16-96
<PAGE> 81
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:00 AM 05/16/1996
960142154-2624328
CERTIFICATE OF INCORPORATION
OF
PACKAGE ACQUISITION, INC.
FIRST: The name of the Corporation is Package
Acquisition, Inc. (hereinafter the "Corporation").
SECOND: The address of the registered office of
the Corporation in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to
engage in any lawful act or activity for which a
corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in
Title 8 of the Delaware Code (the "GCL").
FOURTH: The total number of shares of stock
which the Corporation shall have authority to issue is
1,000 shares of Common Stock, each having a par value of
one penny ($.01).
FIFTH: The name and mailing address of the
Sole Incorporator is as follows:
Deborah M. Reusch
P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted
for the management of the business and the conduct of the
affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation
and of its directors and stockholders:
(1) The business and affairs of the
Corporation shall be managed by or under the
direction of the Board of Directors.
(2) The directors shall have concurrent
power with the stockholders to make, alter,
<PAGE> 82
amend, change, add to or repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
(4) No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Article SIXTH by
the stockholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of
such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, subject, nevertheless, to
the provisions of the GCL, this Certificate of Incorporation, and any
By-Laws adopted by the stockholders; provided, however, that no By-Laws
hereafter adopted by the stockholders shall invalidate any prior act of
the directors which would have been valid if such By-Laws had not been
adopted.
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws
2
<PAGE> 83
may provide. The books of the Corporation may be kept (subject to any
provision contained in the GCL) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and
all rights conferred upon stockholders herein are granted subject to
this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the GCL, do
make this Certificate, hereby declaring and certifying that this is my
act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 16th day of May, 1996.
Deborah M. Reusch
-----------------------
Deborah M. Reusch
Sole Incorporator
3
<PAGE> 84
EXHIBIT 2
OFFICER'S CERTIFICATE
CFI INDUSTRIES, INC.
The undersigned, (___________), President and Chief Executive
Officer of CFI Industries, Inc., a Delaware corporation (the
"Company"), pursuant to Section 7.7(f)(i) of that certain Agreement and
Plan of Merger dated as of May 17, 1996 (the "Merger Agreement"), by
and between the Company, IPC, Inc., a Delaware corporation, Package
Acquisition, Inc., a Delaware corporation, and, solely for the purposes
of Section 3.7 and Article X of the Merger Agreement, Equity Holdings,
an Illinois general partnership, acting as such President and Chief
Executive Officer, hereby certifies that, to the best of his knowledge
and belief, after diligent inquiry:
1. As of the Closing, (i) the Company has performed and
complied with its obligations under the Merger Agreement in all material
respects which are to be performed or complied with by the Company prior
to or on the Closing Date and as of the Effective Time and (ii) all
conditions to the obligations of the Company pursuant to the Merger
Agreement have been satisfied or waived in writing.
2. Except as otherwise disclosed in the Disclosure Schedule
updates delivered pursuant to Section 3.2(b) of the Merger Agreement,
the representations and warranties made by the Company in the Merger
Agreement are true and correct in all material respects on the Closing
Date with the same force and effect as though made on and as of the
Closing Date.
Capitalized terms used herein and not otherwise defined shall
have the meaning set forth in the Merger Agreement.
<PAGE> 85
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
_____ day of June, 1996.
__________________
(____________)
President and
Chief Executive Officer
2
<PAGE> 86
EXHIBIT 3
[FORM OF OPINION FOR CFI COUNSEL]
1. Each of the Company, CFI Recycling, Inc., Plastofilm and
Plastofilm Limited is a corporation duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware (or
Northern Ireland in the case of Plastofilm Limited) and each is duly qualified
and in good standing as a foreign corporation authorized to do business in the
Existing Corporate Jurisdictions as indicated on Schedule I attached hereto.
2. Equity is a general partnership duly organized and validly
existing as a partnership in good standing under the laws of the State of
Illinois.
3. To our knowledge, based solely on our review of the Company's
corporate minute and stock record books, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of common stock, par value $1.00 per
share (the "Common Stock"), of which [2,002,579] shares are issued and
outstanding and (ii) 1,000,000 shares of preferred stock, no par value (the
"Preferred Stock"), of which no shares are issued and outstanding. To our
knowledge, based solely on our review of the Company's corporate minute and
stock record books, all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. To our knowledge, except as set forth in or contemplated by the
Agreement, including, without limitation, the Existing Options exercisable for
371,000 shares of Common Stock, there are not as of the date hereof any
outstanding or authorized options, warrants, calls, rights, commitments or any
other agreements of any character requiring the Company to issue, purchase,
redeem or acquire, or the Company or Equity to transfer or sell, any shares of
capital stock or any securities or rights convertible into, or exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock of the
Company. To our knowledge, all of the issued and outstanding shares of capital
stock of the Company were duly registered under the Securities Act of 1933, as
amended (the "Securities
<PAGE> 87
Act"), or were issued pursuant to a valid exemption from registration under the
Securities Act.
4. Each of the Company and Equity has the corporate or partnership
(as the case may be) power and authority to execute and deliver the Agreement
and to perform its respective obligations thereunder. The execution and
delivery of the Agreement by the Company and the consummation of the
transactions contemplated thereby have been duly authorized by requisite
corporate action on the part of the Company, including all required shareholder
approvals. The execution and delivery of the Agreement by Equity and the
consummation of the transactions contemplated thereby have been duly
authorized by requisite action on the part of Equity. The Agreement has been
duly executed and delivered by the Company and Equity and is a valid and binding
obligation of the Company and Equity, as the case may be, enforceable against
the Company and Equity in accordance with its terms, except that enforcement
thereof may be limited by (i) bankruptcy, insolvency reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in
proceeding in equity or at law).
5. Neither the execution and delivery by the Company or Equity, as
the case may be, of the Agreement nor the consummation of the transactions
contemplated thereby, (i) conflicts with or violates any provision of the
Certificate of Incorporation or By-Laws of the Company or the [Equity
Partnership Agreement], (ii) requires on the part of the Company or Equity any
filing with, or permit, authorization, consent or approval of, any governmental
or regulatory agency which has not been made or obtained, (iii) to our
knowledge, except as listed on the Schedules to the Agreement, conflicts with,
results in a breach of, constitutes a default under or requires any consent or
waiver under, any contract, lease, license, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness or other
agreement to which the Company or Equity is a party or by which the Company or
Equity is bound, (iv) violates any order, writ, injunction or decree binding on
the Company
2
<PAGE> 88
or Equity of which we are specifically aware or (v) violates any law, rule or
regulation.
6. Upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, the Merger will become effective pursuant to
the Delaware General Corporation Law with the effect set forth in Section
259(a) thereof.
7. To our knowledge, without having made any independent investigation
or search, CFI (i) is not subject to any unsatisfied judgment, order, decree or
injunction and (ii) is not a party to any legal or governmental actions or
proceedings other than as described in the Agreement or any Schedule thereto
which, individually or in the aggregate, are likely to have a material adverse
effect on the business of CFI taken as a whole.
3
<PAGE> 89
EXHIBIT 4
OFFICER'S CERTIFICATE
IPC, INC.
The undersigned, [________], President and Chief Executive Officer of
IPC, Inc., a Delaware corporation (the "Parent"), pursuant to Section 8.4(a) of
that certain Agreement and Plan of Merger, dated as of May 17, 1996 (the
"Merger Agreement"), by and between the Parent, Package Acquisition, Inc., a
Delaware corporation, CFI Industries, Inc., a Delaware corporation, and, solely
for the purposes of Section 3.7 and Article X of the Merger Agreement, Equity
Holdings, an Illinois general partnership, acting as such President and Chief
Executive Officer, hereby certifies that, to the best of his knowledge and
belief, after diligent inquiry:
1. As of the Closing, (i) the Parent and Acquisition have performed
and complied with their respective obligations under the Merger Agreement in
all material respects which are to be performed or complied with by the Parent
or Acquisition, as the case may be, prior to or on the Closing Date and as of
the Effective Time and (ii) all conditions to the obligations of the Parent and
Acquisition pursuant to the Merger Agreement have been satisfied or waived in
writing.
2. The representations and warranties made by the Parent and
Acquisition in the Merger Agreement are true and correct in all material
respects on the Closing Date with the same force and effect as though made on
and as of the Closing Date.
Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Merger Agreement.
<PAGE> 90
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____
day of June, 1996.
_________________________
[_____________]
President and
Chief Executive Officer
2
<PAGE> 91
EXHIBIT 5
[FORM OF OPINION FOR PARENT AND ACQUISITION COUNSEL]
1. Each of the Parent and Acquisition has the
corporate power and corporate authority to execute and
deliver the Agreement, and to perform its respective
obligations contemplated thereby. The execution and
delivery of the Agreement by the Parent and Acquisition
and the consummation of the transactions contemplated
thereby have been duly authorized by requisite corporate
action on the part of the Parent and Acquisition. The
Agreement has been duly executed and delivered by the
Parent and Acquisition and is a valid and binding obliga-
tion of the Parent and Acquisition, as the case may be,
enforceable against the Parent and Acquisition in accor-
dance with its terms, except that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws
now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether enforceability is con-
sidered in proceeding in equity or at law).
<PAGE> 92
EXHIBIT 6
RELEASE AND WAIVER
[Form to be agreed upon]
