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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) July 24, 1998
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ENVIRODYNE INDUSTRIES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-5485 95-2677354
- ------------------------------ ---------- -------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification
No.)
6855 West 65th Street, Chicago, Illinois 60638
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 496-4200
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Page 1 of Pages
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
In September, 1997, Envirodyne Industries, Inc. ("Envirodyne")
retained Donaldson, Lufkin and Jenrette Securities Corporation to
explore Envirodyne's strategic alternatives. As part of this
process, Envirodyne solicited offers to purchase business units
including, among others, Sandusky Plastics, Inc. ("Sandusky") and
Clear Shield National, Inc. ("Clear Shield"). In June 1998, the
Board of Directors of Envirodyne accepted Solo Cup Company's offer
to purchase the capital stock of Clear Shield and Whirley
Industries, Inc.'s offer to purchase the capital stock of Sandusky.
On June 12, 1998, Envirodyne completed the sale of its wholly
owned subsidiary, Sandusky to Whirley Industries, Inc. for cash
pursuant to a Stock Purchase Agreement, dated June 9, 1998. The
assets and liabilities involved in the sale included, among other
things, receivables, inventories, other current assets, property,
plant and equipment, accounts payable and other current
liabilities.
On July 24, 1998, Envirodyne completed the sale of its wholly
owned subsidiary, Clear Shield, to Solo Cup Company for $140
million cash (subject to a working capital adjustment) pursuant to
a Stock Purchase Agreement, dated June 5, 1998. The assets and
liabilities involved in the sale included, among other things,
receivables, inventories, other current assets, property, plant and
equipment, excess reorganization value, accounts payable and other
current liabilities and short and long-term debt.
Item 7. - Financial Statements and Exhibits
----------------------------------
Unaudited pro forma financial information with respect to
the disposition of Clear Shield and Sandusky is attached as an
exhibit to this Form 8-K.
Exhibits:
2 Stock Purchase Agreement, dated June 5, 1998, between
Envirodyne Industries, Inc. and Solo Cup Company, as
amended.
99 Unaudited pro forma financial information of Envirodyne
with respect to the disposition of Clear Shield and
Sandusky.<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ENVIRODYNE INDUSTRIES, INC.
----------------------------
Registrant
By:/s/ Gordon S. Donovan
---------------------
Gordon S. Donovan
Vice President, Chief
Financial Officer and
Treasurer
August 10, 1998<PAGE>
Exhibit No. Description of Exhibits Page
2 Stock Purchase Agreement, dated June 5, 1998,
between Envirodyne Industries, Inc. and
Solo Cup Company, as amended.
99 Unaudited pro forma financial information of
Envirodyne with respect to the disposition of
Clear Shield and Sandusky
Exhibit 99 to Form 8-K
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information
should be read in conjunction with the historical financial
statements contained in Envirodyne's 1997 Annual Report on Form
10-K and the Quarterly Report on Form 10-Q as of June 25, 1998.
The following pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred had the
disposition of Sandusky Plastics and Clear Shield been
consummated in accordance with the assumptions set forth below,
nor is it necessarily indicative of future operating results or
financial position.
Basis of Presentation
The unaudited pro forma balance sheet presents the
consolidated financial position of Envirodyne assuming the
disposition of Clear Shield had been consummated on June 25,
1998. The unaudited pro forma statements of operation for the
year ended December 25, 1997 and for the six months ended June
25, 1998 present the consolidated results of operations of
Envirodyne assuming that both dispositions had been consummated
as of December 26, 1996.
The sale of Sandusky was completed on June 12, 1998. This
transaction was reflected in the June 25, 1998 balance sheet;
therefore, no pro forma adjustments were required to reflect the
assets and liabilities involved in this transaction.
Pro Forma Adjustments
Balance Sheet
The following notes describe the historical and pro forma
adjustments found on the accompanying balance sheet.
(1) The amounts included in the Clear Shield column reflect the
assets and liabilities involved in the transaction, including
cash, receivables, inventories, other current assets, property,
plant and equipment, excess reorganization value, accounts
payable and other current liabilities and short and long-term
debt.
(2) The amount represents estimated transaction costs.
(3) This pro forma adjustment reflects the pretax proceeds of
$140 million from the sale as an immediate reduction in short-
term debt. Envirodyne is required to use sale proceeds of $105
million to reduce the aggregate principal amount of its 12%
Senior Secured Notes Outstanding together with accrued interest
payable and a yield maintenance premium thereon. The date of
redemption will be August 24, 1998. The Company estimates that
$115.8 million of the proceeds will be used for redemption of the
12% Senior Secured Notes. The remainder of the proceeds, after
deducting taxes and transaction expenses, will be used to repay
balances outstanding under Envirodyne's Revolving Credit
Facility.
(4) Amounts represent the net gain on the sale of Clear Shield
and the related increase in deferred taxes at Envirodyne's
statutory tax rate.
Statements of Operation
The following notes describe the historical and pro forma
adjustments found on the accompanying statements of operation.
(1) The amounts included in the Clear Shield column on the
December 25, 1997 Statement of Operations reflect the operations
of the subsidiary, including net sales, cost of sales, selling,
general and administrative expenses, and amortization of
intangibles and excess reorganization expenses of the business.
Income (loss) before income taxes has been tax effected at
Envirodyne's statutory tax rate after adjusting for non-
deductible excess reorganization amortization. For the June 25,
1998 Statement of Operations, the operations of the subsidiary
are reported as Discontinued Operations.
(2) The amounts included in the Sandusky column on the December
25, 1997 Statement of Operations reflect the operations of the
subsidiary, including net sales, cost of sales, selling, general
and administrative expenses, and amortization of the intangibles
of the business. Income (loss) before income taxes has been tax
effected at Envirodyne's statutory tax rate. For the June 25,
1998 Statement of Operations, the operations of the subsidiary
are reported as Discontinued Operations.
(3) The pro forma adjustment reflects the reduction in interest
expense, as a result of $140 million of the proceeds from the
Clear Shield sale being used to redeem $105 million of the 12%
Senior Secured Notes. Interest expense was calculated using the
weighted average interest rate on domestic short-term debt
outstanding at the quarter ended June 25, 1998, which
approximates the interest rates in effect during the pro forma
periods presented.
(4) Income (loss) before income taxes has been tax effected at
Envirodyne's statutory tax rate.
<PAGE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
AS OF JUNE 25, 1998
<TABLE>
<CAPTION>
Envirodyne Less: Pro Forma
Industries, Inc. Clear Shield Adjustments Pro Forma
--------------- --------------------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 16,574 $ (670) $(2,000) (2) $15,244
Receivables, net 63,291 8,129 55,162
Inventories 110,000 13,488 96,512
Other current assets 30,968 851 30,117
-------- ------- -------- --------
Total current assets 220,833 21,798 (2,000) 197,035
Property, plant and equipment,
including those under capital lease 595,079 70,674 524,405
Less accumulated depreciation
and amortization (168,930) (15,748) (153,182)
-------- ------- --------
Property, plant and equipment, net 426,149 54,926 371,223
Deferred fianancing costs, net 4,206 4,206
Other assets 36,286 549 35,737
Excess reorganization value, net 107,392 14,000 93,392
-------- ------- -------- --------
Total assets $794,866 $91,273 $(2,000) $701,593
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Short-term debt including current portion
of long-term debt and obligations
under capital leases $206,330 $ 567 $(140,000) (3) $65,763
Accounts payable 36,324 5,456 30,868
Accrued liabilities 68,876 2,734 66,142
Current deferred income taxes 10,516 10,516
-------- ------- -------- --------
Total current liabilities 322,046 8,757 (140,000) 173,289
Long-term debt including obligations
under capital leases 336,734 1,671 335,063
Accrued employee benefits 48,194 48,194
Deferred and noncurrent income taxes 15,922 22,164 (4) 38,086
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value;
none outstanding
Common stock, $.01 par value;
14,836,444 shares issued
and outstanding 148 148
Paid in capital 136,609 136,609
Accumulated (deficit) (67,585) 34,991 (4) (32,594)
Cumulative foreign currency
translation adjustments 2,829 2,829
Unearned restricted stock issued
for future service (31) (31)
-------- -------- --------
Total stockholders' equity $71,970 34,991 $106,961
-------- ------- -------- --------
Total liabilities and
stockholders' equity $794,866 $10,428 $(82,845) $701,593
======== ======= ======== ========
<FN>
The accompanying notes are an integral part of the pro forma financial information.
</TABLE>
<PAGE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR FISCAL YEAR ENDED DECEMBER 25, 1997
<TABLE>
<CAPTION>
Envirodyne
Industries, Less: Less: Pro Forma
Inc. Clear Shield Sandusky Adjustments Pro forma
------------- -------------- -------------- ----------- ---------------
(in thousands, except number of shares and per share amounts)
<S> <C> <C> <C> <C> <C>
NET SALES $612,868 $85,916 $28,619 $498,333
COSTS AND EXPENSES
Cost of sales 459,178 64,276 28,158 366,744
Selling, general
and administrative 108,141 12,606 3,813 91,722
Amortization of intangibles
and excess reorganization
value 15,936 1,333 465 14,138
Restructuring charges 3,500 3,500
-------- -------- -------- --------
OPERATING INCOME 26,113 7,701 (3,817) 22,229
Interest income 1,416 1,416
Interest expense 55,719 71 31 $(15,000) 40,617
Other expense (income), net 3,755 491 1,200 2,064
-------- -------- -------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES (31,945) 7,139 (5,048) 15,000 (19,036)
Income tax provision (benefit) (22,300) 39 7,185 (15,154)
-------- -------- -------- ------- --------
NET INCOME (LOSS) $(9,645) $7,100 $(5,048) $7,815 $(3,882)
======== ======== ======== ====== ========
WEIGHTED AVERAGE COMMON SHARES 14,617,540 14,617,540
========== ==========
PER SHARE AMOUNTS:
NET (LOSS) -
BASIC AND DILUTED
EARNINGS PER SHARE $(.66) $(.27)
===== =====
The accompanying notes are an integral part of the pro forma financial information.
/TABLE
<PAGE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 25, 1998
<TABLE>
<CAPTION>
Less:
Envirodyne Clear Shield Pro Forma
Industries, Inc. and Sandusky Adjustments Pro Forma
---------------- --------------------- ----------- ---------
(in thousands, except for number of shares and per share amounts)
<S> <C> <C> <C> <C>
NET SALES $206,666 $206,666
COSTS AND EXPENSES
Cost of sales 152,548 152,548
Selling, general
and administrative 43,649 43,649
Amortization of intangibles and
excess reorganization value 6,939 6,939
Restructuring charges 1,500 1,500
-------- ---------
OPERATING INCOME 2,030 2,030
Interest income 302 302
Interest expense 28,027 $(7,500) (3) 20,527
Other expense (income), net 466 466
-------- ------- ---------
(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (26,161) 7,500 (18,661)
Income tax provision (benefit) (8,538) 2,925 (4) (5,613)
-------- ------- ---------
NET (LOSS) FROM CONTINUING
OPERATIONS $(17,623) 4,575 (13,048)
DISCONTINUED OPERATIONS:
Income (loss) from operations
net of income taxes 56 $ 56 (1)(2) 0
(Loss) on sale of discontinued
operations net of income tax
benefit of $998 (1,560) (1,560) (2) 0
-------- --------- ------- ---------
Net income (loss) $(19,127) $(1,504) $4,575 $(13,048)
======== ======= ====== ========
WEIGHTED AVERAGE
COMMON SHARES - BASIC 14,796,136 14,796,136
========== ==========
PER SHARE AMOUNTS:
BASIC EARNINGS (LOSS) PER SHARE:
Continuing Operations $(1.19) $(.88)
Discontinued Operations:
Income from operations .01 .00
Loss on sale of
discontinued operations (.11) .00
------ -----
Net Income (loss) $(1.29) $(.88)
====== =====
WEIGHTED AVERAGE
COMMON SHARES - DILUTED 15,030,712 15,030,712
========== ==========
DILUTED EARNINGS PER SHARE:
Continuing Operations $(1.19) $(.88)
Discontinued Operations:
Income from operations .00 .00
Loss on sale of
discontinued operations (.11) .00
------ -----
NET INCOME (LOSS) $(1.30) $(.88)
====== =====
<FN>
The accompanying notes are an integral part of the pro forma financial information.
</TABLE>
STOCK PURCHASE AGREEMENT
Between
ENVIRODYNE INDUSTRIES, INC.
and
SOLO CUP COMPANY
dated as of
June 5, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF STOCK 1
1.1 Transfer of Stock 1
1.2 Consideration 1
1.3 The Closing 1
1.4 Purchase Price Adjustment 3
1.5 Further Assurances 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF
SELLER 5
2.1 Corporate Organization 5
2.2 Capital Stock 6
2.3 Ownership of Stock 6
2.4 Authorization, Etc. 7
2.5 Financial Statements 7
2.6 No Approvals or Conflicts 9
2.7 Compliance with Law; Governmental
Authorizations 9
2.8 Litigation 10
2.9 Title to Personal Property 10
2.10 Absence of Certain Changes 11
2.11 Taxes 12
2.12 Employee Benefits 13
2.13 Labor Relations 15
2.14 Patents, Trademarks, Trade Names, Etc. 15
2.15 Contracts 15
2.16 Environmental Matters 16
2.17 Insurance 17
2.18 Title to Real Property 17
2.19 Affiliate Transactions 18
2.20 No Brokers' or Other Fees 18
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF PURCHASER 19
3.1 Organization 19
3.2 Authorization, Etc. 19
3.3 No Approvals or Conflicts 19
3.4 Acquisition for Investment 20
3.5 Financing 20
3.6 No Brokers' or Other Fees 20
ARTICLE IV CONDITIONS TO SELLER'S OBLIGATIONS 20
4.1 Representations and Warranties 21
4.2 Performance 21
4.3 Officer's Certificate 21
4.4 HSR Act 21
4.5 Injunctions 21
4.6 Consents 21
4.7 Release of Guarantees 21
4.8 Idaho Reimbursement 21
ARTICLE V CONDITIONS TO PURCHASER'S OBLIGATIONS 22
5.1 Representations and Warranties 22
5.2 Performance 22
5.3 Officer's Certificate 22
5.4 Resignation of Directors 22
5.5 HSR Act 22
5.6 Injunctions 22
5.7 Release of Guarantees 22
5.8 Consents 23
ARTICLE VI COVENANTS AND AGREEMENTS 23
6.1 Conduct of Business by Seller 23
6.2 Access to Books and
Records; Cooperation 24
6.3 Filings and Consents 24
6.4 Tax Matters 25
6.5 WARN Act 29
6.6 Supplements to Disclosure Schedule 30
6.7 Covenant to Satisfy Conditions 30
6.8 Use of "Envirodyne" Name 30
6.9 Intercompany Obligations 30
6.10 Employees; Employee Benefits 31
6.11 Insurance 34
6.12 Due Diligence 34
6.13 Customer Meetings 35
6.14 Non-Competition 35
6.15 Idaho Reimbursement 35
ARTICLE VII TERMINATION 35
7.1 Termination 35
7.2 Procedure and Effect of Termination 36
ARTICLE VIII INDEMNIFICATION 37
8.1 Indemnification 37
ARTICLE IX MISCELLANEOUS 40
9.1 Fees and Expenses 40
9.2 Governing Law 40
9.3 Amendment 41
9.4 No Assignment 41
9.5 Waiver 41
9.6 Notices 41
9.7 Complete Agreement 42
9.8 Counterparts 42
9.9 Publicity 42
9.10 Headings 43
9.11 Knowledge 43
9.12 Severability 43
9.13 Third Parties 43
9.14 Specific Performance 43
9.15 Dispute Resolution 44
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated
as of June 5, 1998, is entered into by and between Envirodyne
Industries, Inc., a Delaware corporation ("Seller"), and Solo Cup
Company, an Illinois corporation ("Purchaser").
WHEREAS, Seller is the beneficial owner of record of
all of the outstanding shares of common stock, par value $1.00
per share (the "Shares"), of Clear Shield National, Inc., a
California corporation (the "Company"); and
WHEREAS, Purchaser desires to purchase and Seller
desires to sell the Shares upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Transfer of Stock. On the Closing Date (as
-----------------
defined in Section 1.3 below) and subject to the terms and
conditions set forth in this Agreement, Seller will sell, assign,
transfer and deliver to Purchaser the Shares, free and clear of
all options, pledges, security interests, voting trust or similar
arrangements, liens, charges or other encumbrances or restric-
tions ("Encumbrances"), including those set forth in Section 2.3
of the Disclosure Schedule.
1.2 Consideration. On the Closing Date and subject to
-------------
the terms and conditions set forth in this Agreement, in reliance
on the representations, warranties, covenants and agreements of
the parties contained herein and in consideration of the sale,
assignment, transfer and delivery of the Shares, Purchaser will
pay to Seller the Purchase Price (as defined in Section 1.3(b)(i)
below).
1.3 The Closing. The closing (the "Closing") of the
-----------
transactions contemplated in this Agreement shall take place at
the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois),
333 West Wacker Drive, Chicago, Illinois 60606 at 10:00 a.m.,
local time, the later of (a) July 31, 1998 or (b) on the second
business day following the termination of all applicable waiting
periods under the HSR Act (as defined in Section 2.6 below) or as
soon after the later of such dates as practicable following the
satisfaction or waiver of all of the conditions set forth in
Articles IV and V hereof (the "Closing Date"), or at such other
place and time as may be agreed upon by Seller and Purchaser.
(a) Deliveries by Seller. At or prior to the
--------------------
Closing, Seller shall deliver or cause to be delivered to Pur-
chaser the following:
(i) certificates evidencing the Shares,
which certificates shall be properly endorsed for transfer or
accompanied by duly executed stock powers, in either case execut-
ed in blank or in favor of Purchaser or its assigns and otherwise
in a form acceptable for transfer on the books of the Company;
(ii) all other previously undelivered docu-
ments required to be delivered by Seller to Purchaser at or prior
to the Closing Date in connection with the transactions contem-
plated hereby; and
(iii) a certified copy of the Board of
Director's consent authorizing the transaction.
(b) Deliveries by Purchaser. At or prior to the
-----------------------
Closing, Purchaser shall deliver or cause to be delivered to
Seller the following:
(i) $140,000,000 by wire transfer of imme-
diately available funds to an account designated by Seller (the
"Purchase Price");
(ii) all other previously undelivered
documents required to be delivered by Purchaser to Seller at or
prior to the Closing Date in connection with the transactions
contemplated hereby; and
(iii) a certified copy of the Board of
Director's consent authorizing the transaction.
(c) Form of Deliveries. All instruments and
------------------
documents executed and delivered to Purchaser pursuant hereto
shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Purchaser. All instruments
and documents executed and delivered to Seller pursuant hereto
shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Seller.
1.4 Purchase Price Adjustment.
-------------------------
(a) As soon as practicable, but in no event later
than 75 days following the Closing Date, Seller shall prepare a
Statement of Adjusted Working Capital of the Company and the
Subsidiary (as defined in Section 2.1 hereof) as of the close of
business on the Closing Date (including the notes thereto, the
"Closing Date Statement"). The Closing Date Statement shall
present the net amount of the Company's consolidated current
assets less the Company's consolidated current liabilities in
each case excluding (i) any amounts payable to or receivable from
Seller or any of its Affiliates (as defined in Section 2.3
hereof) other than the Company and the Subsidiary (as defined in
Section 2.1) that do not remain outstanding after the Closing,
(ii) accrued state and federal income taxes, (iii) any amounts to
which the Company may be entitled to reimbursement in connection
with the tax increment financed cost of construction at the Twin
Falls, Idaho, plant (the "Idaho Reimbursement") and (iv) any
Taxes payable as result of Purchaser's election under Treasury
Regulation Section 1.338(h)(10), as of the close of business on
the Closing Date plus, from March 26, 1998 to the close of
business on the Closing Date, the net investment in fixed assets
less the net proceeds from the disposal of any fixed assets of
the Company and the Subsidiary (the "Net Working Capital Amount")
and shall be prepared with respect to such items on a basis
consistent with the March Balance Sheet Information (as defined
in Section 2.5).
(b) During the preparation of the Closing Date
Statement and the period of any dispute within the contemplation
of this Section 1.4, Purchaser shall cause the Company to (i)
provide Seller and Seller's authorized representatives with
access to the books, records, facilities, employees and accoun-
tants of the Company, (ii) provide Seller as promptly as practi-
cable after the Closing Date (but in no event later than 30 days
after the Closing Date) with normal month-end closing financial
information for the period ending on the Closing Date and (iii)
cooperate with Seller and Seller's authorized representatives,
including the provision on a timely basis of all information
necessary or useful in connection with Seller's preparation of
the Closing Date Statement.
(c) Seller shall deliver a copy of the Closing
Date Statement, together with the work papers used in the prepa-
ration thereof, to Purchaser promptly after it has been prepared
and in no event later than 75 days after the Closing Date. After
receipt of the Closing Date Statement, Purchaser shall have 30
days to review the Closing Date Statement, together with the work
papers used in the preparation thereof. Unless Purchaser deliv-
ers written notice to Seller on or prior to the 30th day after
Purchaser's receipt of the Closing Date Statement specifying all
disputed items and the basis therefor, Purchaser shall be deemed
to have accepted and agreed to the Closing Date Statement. If
Purchaser so notifies Seller of its objection to the Closing Date
Statement, Seller and Purchaser shall, within 30 days following
such notice (the "Resolution Period"), attempt to resolve their
differences and any resolution by them as to any disputed amounts
shall be final, binding and conclusive.
(d) At the conclusion of the Resolution Period,
all amounts remaining in dispute shall be submitted to Coopers &
Lybrand (the "Neutral Auditors"). In the event that Coopers &
Lybrand is unwilling to serve as the Neutral Auditor hereunder
and Purchaser and Seller are unable to agree on a substitute
therefor, Purchaser or Seller may request the American Arbitra-
tion Association to appoint a nationally recognized accounting
firm to act as Neutral Auditor hereunder who shall not have had a
material relationship with Seller or Purchaser or any of their
Affiliates within the past two years. Each party agrees to
execute, if requested by the Neutral Auditors, a reasonable
engagement letter. All fees and expenses relating to the work,
if any, to be performed by the Neutral Auditors shall be borne
equally by Seller and Purchaser. The Neutral Auditors shall act
as an arbitrator to determine, based solely on presentations by
Seller and Purchaser, and not by independent review, only those
issues still in dispute. The Neutral Auditors' determination
shall be made within 30 days of their selection, whether or not
such presentations by Seller and Purchaser have been made within
such period, and shall be set forth in a written statement
delivered to Seller and Purchaser and shall be final, binding and
conclusive. The term "Adjusted Closing Date Statement," as
hereinafter used, shall mean the definitive Closing Date State-
ment agreed to by Purchaser and Seller in accordance with Section
1.4(c) or the definitive Closing Date Statement resulting from
the determinations made by the Neutral Auditors in accordance
with this Section 1.4(d) (in addition to those items theretofore
agreed to by Seller and Purchaser), in each case prepared in the
manner set forth in the Section 1.4(a) hereof. The Net Working
Capital Amount reflected on the Adjusted Closing Date Statement
shall not be less than that specified by Purchaser in its notice
to Seller pursuant to subsection (c) above nor more than that
specified by Seller on the Closing Date Statement.
(e) The Purchase Price shall be increased or
decreased, as the case may be, dollar for dollar, to the extent
the Net Working Capital Amount reflected in the Adjusted Closing
Date Statement is greater than or less than $13,000,000, as the
case may be. The amount of any increase to or reduction of the
Purchase Price pursuant to this Section 1.4 shall bear interest
from the Closing Date through the date of payment at the publicly
announced base interest rate of Bank of America (Illinois) in
effect from time to time from the Closing Date to the date of
such payment. The amount of any reduction of the Purchase Price
pursuant to this Section 1.4(e), together with interest thereon,
shall be paid by wire transfer in immediately available funds by
Seller to the account specified by Purchaser and the amount of
any increase to the Purchase Price pursuant to this Section
1.4(e), together with interest thereon, shall be paid by wire
transfer in immediately available funds by Purchaser to the
account specified by Seller. Such payment or transfer, as the
case may be, shall be made within five business days after the
Adjusted Closing Date Statement is agreed to by Purchaser and
Seller or any remaining disputed items are ultimately determined
by the Neutral Auditors.
1.5 Further Assurances. After the Closing, each party
------------------
hereto shall, and shall cause its officers, employees, agents and
representatives to, from time to time, at the request of the
other party and without further cost or expense to such other
party, execute and deliver such other instruments of conveyance
and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the
transactions contemplated hereby and to vest in Purchaser good
and valid title to the Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.1 Corporate Organization.
----------------------
(a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of California. Carnival Brands, Inc. (the "Subsidiary") is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois. The Company and the
Subsidiary each has full corporate power and authority to own its
properties and assets and to carry on its business as now being
conducted and is duly qualified or licensed to do business as a
foreign corporation in good standing in the jurisdictions in
which the ownership of its property or the conduct of its busi-
ness requires such qualification, except where the failure to be
so qualified or licensed or to have such power or authority would
not have a Material Adverse Effect. As used in this Agreement,
"Material Adverse Effect" means any material adverse change in or
effect on the business, financial condition or results of opera-
tions of the Company and the Subsidiary taken as a single
enterprise; provided, however, that the effects of changes that
-------- -------
are generally applicable to (i) the industries in which the
Company and the Subsidiary operate their businesses, (ii) the
United States economy, or (iii) the United States securities
markets shall be excluded from such determination; and provided,
--------
further that any adverse effect on the Company or the Subsidiary
- -------
resulting from the execution of this Agreement and the
announcement of this Agreement and the transactions contemplated
hereby shall also be excluded from such determination. Seller
has delivered or made available to Purchaser complete and correct
copies of the charter and all amendments thereto to the date
hereof and the bylaws as presently in effect of the Company and
of the Subsidiary. Except for common stock of the Subsidiary and
except as set forth in Section 2.1 of the disclosure schedule to
this Agreement (the "Disclosure Schedule"), the Company does not
own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect
equity or ownership interest in any partnership, joint venture or
other business other than equity securities or ownership inter-
ests which are immaterial in amount or significance.
2.2 Capital Stock. The authorized capital stock of
-------------
the Company consists of 100,000 shares of common stock, $1.00 par
value per share, of which only the Shares are issued and out-
standing and no other shares of any other class or series of
capital stock of the Company are issued and outstanding. All of
the outstanding shares of capital stock of the Subsidiary (the
"Subsidiary Shares") are owned by the Company. Except as set
forth in Section 2.2 of the Disclosure Schedule, there are no
subscriptions, options, warrants, convertible securities calls,
rights, contracts, commitments, understandings, restrictions or
arrangements relating to the issuance, sale, redemption, acquisi-
tion, repurchase, transfer or voting of any shares of common
stock of the Company or the Subsidiary, including any rights of
conversion or exchange under any outstanding securities or other
instruments. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the
Company or the Subsidiary. All of the Shares and Subsidiary
Shares have been duly authorized, validly issued and are fully
paid, nonassessable and free of preemptive rights.
2.3 Ownership of Stock. The Shares are owned by
------------------
Seller and the Subsidiary Shares are owned by the Company, in
each case free and clear of all Encumbrances, except as set forth
in Section 2.3 of the Disclosure Schedule. Upon the consummation
of the transactions contemplated hereby, Purchaser will acquire
title to the Shares, free and clear of all Encumbrances, other
than Encumbrances arising as a result of any action taken by
Purchaser or any of its affiliates ("Affiliates") as defined in
Rule 12b-2 of the regulations promulgated pursuant to the Securi-
ties Exchange Act of 1934, as amended (the "Exchange Act").
2.4 Authorization, Etc. Seller has full corporate
------------------
power and authority to execute and deliver this Agreement and to
carry out the transactions contemplated hereby. The Board of
Directors of Seller has duly approved and authorized the execu-
tion and delivery by Seller of this Agreement and the consumma-
tion by Seller of the transactions contemplated hereby, and no
other corporate proceedings on the part of Seller are necessary
to approve and authorize the execution and delivery by Seller of
this Agreement and the consummation by Seller of the transactions
contemplated hereby. This Agreement constitutes a valid and
binding agreement of Seller, enforceable against Seller in
accordance with its terms, except that (i) the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, morato-
rium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
2.5 Financial Statements.
--------------------
(a) Seller previously has delivered or made
available to Purchaser (i) the unaudited internal statement of
operations of the Company (the "1997 Statement of Operations"),
(ii) the unaudited internal statement of managed assets of the
Company (the "1997 Statement of Managed Assets"), (iii) the
unaudited internal statement of business capitalization (the
"1997 Statement of Business Capitalization") and (iv) the unau-
dited internal statement of cash flows of the Company (the "1997
Statement of Cash Flows"), in each case as of, or for the 12
month period ended, December 25, 1997 (collectively, the "1997
Financial Statements.) The 1997 Statement of Managed Assets and
the 1997 Statement of Business Capitalization are referred to
herein collectively as the "1997 Balance Sheet Information."
(b) Seller previously has delivered or made
available to Purchaser (i) the unaudited internal statement of
operations of the Company (the "March Statement of Operations"),
(ii) the unaudited internal statement of managed assets of the
Company (the "March Statement of Managed Assets"), (iii) the
unaudited internal statement of business capitalization (the
"March Statement of Business Capitalization") and (iv) the
unaudited internal statement of cash flows of the Company (the
"March Statement of Cash Flows"), in each case as of, or for the
three month period ended, March 26, 1998 (collectively, the
"March Financial Statements"). The March Statement of Managed
Assets and the March Statement of Business Capitalization are
referred to herein collectively as the "March Balance Sheet
Information." The 1997 Balance Sheet Information and the March
Balance Sheet Information are referred to herein collectively as
the "Balance Sheet Information." The 1997 Financial Statements
and the March Financial Statements are referred to herein collec-
tively as the "Financial Statements."
(c) Except as set forth in Section 2.5 of the
Disclosure Schedule, the Financial Statements were (i) prepared
in accordance with United States generally accepted accounting
principles ("GAAP"), (ii) prepared from, and are in accordance
with, the books and records of the Company and the Subsidiary,
and (iii) fairly present in all material respects the financial
position and results of operations of the business of the Company
and the Subsidiary as of the dates thereof and for the periods
then ended, except for the omission of any required notes thereto
and as otherwise set forth therein; provided that (A) the
--------
standard of materiality used in preparing the Financial State-
ments was the same standard used to prepare Seller's annual
audited consolidated financial statements for the corresponding
periods, (B) the Financial Statements include intercompany
charges and (C) the Financial Statements lack footnotes required
for full disclosure under GAAP.
(d) To the knowledge of Seller, except as dis-
closed in Section 2.5 of the Disclosure Schedule, as of the date
hereof, neither the Company nor the Subsidiary has any liabili-
ties or obligations, whether accrued, absolute, contingent or
otherwise that are required to be reflected on a balance sheet
prepared in accordance with GAAP, other than (i) liabilities and
obligations that are reflected, accrued or reserved for on the
March Balance Sheet Information, (ii) obligations incurred in the
ordinary course of business since the date of the March Balance
Sheet Information, (iii) liabilities that arise as a result of a
breach of the representations and warranties contained in Section
2.11 hereof, (iv) other liabilities and obligations that are
disclosed in the Disclosure Schedule or are otherwise the subject
of any other representation or warranty contained in this Article
II and (v) obligations under contracts set forth in Section 2.15
of the Disclosure Schedule.
(e) Amounts payable to the Company in connection
with the Idaho Reimbursement are not included in the Financial
Statements.
(f) The Company and the Subsidiary have no out-
standing guarantees of indebtedness or guarantees of other
obligations except guarantees related to (i) the $160,000,000
aggregate principal amount of 12% Senior Secured Notes due 2000
issued pursuant to that certain Indenture, dated June 20, 1995,
between Seller and State Street Bank and Trust Company of Con-
necticut, N.A., as trustee, and (ii) the Participation Agreement,
dated as of December 18, 1990, among Viskase Corporation, as
lessee, Seller, as guarantor, General Electric Capital Corpora-
tion, as owner participant, and State Street Bank and Trust
Company of Connecticut, N.A., as owner trustee
2.6 No Approvals or Conflicts. Except as set forth in
-------------------------
Section 2.6 of the Disclosure Schedule, neither the execution and
delivery by Seller of this Agreement nor the consummation by
Seller of the transactions contemplated hereby will (i) violate
any provision of the charter or bylaws of Seller, the Company or
the Subsidiary, (ii) violate, conflict with or result in a breach
of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties of the Company
or the Subsidiary or on Seller's interest in the Shares under any
note, bond, mortgage, indenture or deed of trust, (iii) violate,
conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under any franchise,
permit, lease, license, contract, agreement or other instrument
to which Seller, the Company, the Subsidiary or any of their
respective properties may be bound, (iv) violate any order,
injunction, judgment or ruling applicable to Seller, the Company
or the Subsidiary or any of their respective properties, (v)
violate any law or regulation of any governmental authority
applicable to Seller, the Company or the Subsidiary or any of
their respective properties or (vi) except for applicable re-
quirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), require any consent, approval
or authorization of, or notice to, or declaration, filing or
registration with, any governmental or regulatory authority;
except in the case of clause (iii), (v) or (vi) for such viola-
tions, breaches or defaults which, or filings, registrations,
notifications, authorizations, consents or approvals the failure
of which to obtain would become applicable solely as a result of
any acts or omissions by, or the status of any facts pertaining
to, Purchaser.
2.7 Compliance with Law; Governmental Authorizations.
------------------------------------------------
The Company and the Subsidiary are not in violation of any order,
injunction, judgment, ruling, law or regulation of any court or
governmental authority applicable to the property or business of
the Company or the Subsidiary, excluding defaults or violations
which would not, individually or in the aggregate, have a Materi-
al Adverse Effect or which become applicable as a result of any
acts or omissions by, or the status of any facts pertaining to,
Purchaser. Except as set forth in Section 2.7 of the Disclosure
Schedule, the licenses, permits and other governmental authoriza-
tions held by the Company and the Subsidiary are valid and
sufficient for the conduct of the Company's businesses as cur-
rently conducted in all material respects, except where the
failure to hold such licenses, permits and other governmental
authorizations would not have a Material Adverse Effect. Not-
withstanding the foregoing, this Section 2.7 shall not apply to
Environmental Laws and any permits required thereunder which are
exclusively the subject of the representation contained in
Section 2.16 hereof.
2.8 Litigation. Except as set forth in the Financial
-----------
Statements or as set forth in Section 2.8 of the Disclosure
Schedule, as of the date hereof, there are no claims, actions,
injunctions, proceedings (including arbitration proceedings) or
investigations pending or, to the knowledge of Seller, threatened
against the Company or the Subsidiary, before any court or
governmental or regulatory authority or body or arbitrator that
individually or in the aggregate would be reasonably likely to
have a Material Adverse Effect.
2.9 Title to Personal Property. To the knowledge of
--------------------------
Seller, except as set forth in Section 2.9 of the Disclosure
Schedule, on March 26, 1998 (the "March Balance Sheet Information
Date"), the Company had and, except with respect to dispositions
of assets in accordance with Section 2.10(c) since the March
Balance Sheet Information Date (including distributions of all of
the Company's and the Subsidiary's actual cash balances on
deposit with banks to Seller immediately prior to the Closing),
the Company and the Subsidiary now have, good and valid title to
all the personal property reflected on the March Balance Sheet
Information or which would have been reflected on the March
Balance Sheet Information if acquired after the March Balance
Sheet Information Date, free and clear of all Encumbrances of any
nature except for (i) exceptions to title as set forth in Section
2.9 of the Disclosure Schedule; (ii) mortgages and encumbrances
which secure indebtedness or obligations which are reflected
properly on the Financial Statements and which are described in
Section 2.9 of the Disclosure Schedule; (iii) liens for Taxes (as
defined in Section 2.11(f) below) not yet payable or any Taxes
being contested in good faith by appropriate proceedings and
which are described in Section 2.9 of the Disclosure Schedule;
(iv) liens arising as a matter of law in the ordinary course of
business, provided that the obligations secured by such liens are
not delinquent or are being contested in good faith and (v) such
imperfections of title and encumbrances, if any, as do not, in
the aggregate, materially interfere with the present use of any
of the Company's or the Subsidiary's properties and assets
subject thereto (the foregoing items (i) through (v) are collec-
tively referred to herein as "Permitted Encumbrances"). Except
for cash (which will be distributed to Seller prior to the
Closing), assets disposed of in accordance with Section 2.10(c)
since the March Balance Sheet Information Date and services
provided to the Company or the Subsidiary by Seller and described
in Section 2.9 of the Disclosure Schedule, the Company or the
Subsidiary own, or have valid leasehold interests in, all materi-
al tangible properties and assets used in the conduct of the
Company's business as of the March Balance Sheet Information Date
and the date hereof. Except as set forth in Section 2.9 of the
Disclosure Schedule, there are no leasehold interests held by the
Company or the Subsidiary which result in an annual expense in
excess of $10,000 to the Company and the Subsidiary taken as a
whole.
2.10 Absence of Certain Changes. Except as disclosed
--------------------------
in Section 2.10 of the Disclosure Schedule and as otherwise
provided herein, since the March Balance Sheet Information Date
and through the date of this Agreement:
(a) the business of each of the Company and the
Subsidiary has been conducted only in the ordinary course and
consistent with past practice in all material respects;
(b) there has been no direct or indirect redemp-
tion, purchase or other acquisition by the Company or the Subsid-
iary of any shares of its capital stock, or any declaration,
setting aside or payment of any dividend or other distribution by
the Company or the Subsidiary other than distributors of all of
the Company's and the Subsidiary's cash balances prior to the
Closing;
(c) there has been no sale, assignment or trans-
fer of any material assets of the Company or the Subsidiary
(other than sales, assignments or transfers of assets in the
ordinary course of business);
(d) the Company has not created, incurred,
assumed or guaranteed any indebtedness for borrowed money (in-
cluding capitalized lease obligations) either involving more than
$50,000 or outside the ordinary course of business, consistent
with past practice;
(e) the Company has not granted any compensation
increase in excess of $25,000 per year to any director, officer
or employee or made or granted any increase in benefits under, or
employer contributions to, any employee benefit plan or arrange-
ment other than customary increases consistent with past prac-
tice; and
(f) the Company has not made any material change
to its accounting procedures or practices (including its cash
management procedures).
2.11 Taxes.
-----
(a) Except as set forth in Section 2.11 of the
Disclosure Schedule, (i) the Company, the Subsidiary or an
Affiliate of the Company or the Subsidiary on its respective
behalf, has duly filed with the appropriate federal, state, local
and foreign taxing authorities all income Tax Returns (as defined
below) and all other material Tax Returns required to be filed by
or with respect to the Company and the Subsidiary as of the date
hereof and such Tax Returns are true, correct and complete in all
material respects; (ii) all Taxes shown as due and payable on
such Tax Returns have been paid in full or adequately reserved
for on the Statements of Managed Assets; (iii) neither the
Company nor the Subsidiary is a party to any tax sharing or tax
allocation agreement; (iv) neither the Company nor the Subsidiary
has ever been a member of an Affiliated Group other than a Seller
Group in any taxable year for which the statute of limitations
has not yet expired and (v) the Company and the Subsidiary has
withheld and paid all material Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other
third party. Except as set forth in Section 2.11 of the Disclo-
sure Schedule there are no material liens for Taxes upon the
assets of the Company or the Subsidiary except liens for current
Taxes not yet due or Taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been
established on the Statements of Managed Assets. Except as set
forth in Section 2.11 of the Disclosure Schedule, as of the date
hereof, none of the Company, the Subsidiary or any member of a
Seller Group has received any written notice of deficiency or
assessment from any federal, state, local or foreign taxing
authority with respect to liabilities for material Taxes of the
Company or the Subsidiary which have not been paid or finally
settled, and any such deficiency or assessment disclosed in
Section 2.11 of the Disclosure Schedule is being contested in
good faith through appropriate proceedings for which adequate
reserves have been established on the Statements of Managed
Assets.
(b) Except as set forth in Section 2.11 of the
Disclosure Schedule, neither the Company nor the Subsidiary (i)
is the subject of a Tax audit or other Tax examination, (ii) has
received written notification from any Tax authority that it will
be the subject of a Tax audit or other Tax examination or (iii)
has waived or consented to extend the period during which any Tax
may be assessed.
(c) For purposes of this Agreement, "Affiliated
Group" means an affiliated group as defined in Section 1504 of
the Code (or any similar combined, consolidated or unitary group
defined under state, local or foreign income Tax law).
(d) For purposes of this Agreement, "Code" means
the Internal Revenue Code of 1986, as amended through the date
hereof.
(e) For purposes of this Agreement, "Seller
Group" shall mean any Affiliated Group including the Seller and
one or more of the Company and the Subsidiary.
(f) For purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, penalties or other assess-
ments imposed by any United States federal, state, local or
foreign taxing authority, including, but not limited to, income,
service, leasing, occupation, excise, property, sales and use,
transfer, franchise, payroll, withholding, social security or
other taxes, including any interest, penalties or additions
attributable thereto.
(g) For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other
document (including any related or supporting information) filed
or required to be filed with any taxing authority with respect to
Taxes.
2.12 Employee Benefits.
-----------------
(a) Section 2.12 of the Disclosure Schedule
contains a list of all employee benefit plans, (as defined in
section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and all other material incentive,
employment, supplemental retirement, severance, deferred compen-
sation and other employee benefit plans, programs, agreements and
arrangements established, maintained, or contributed to by the
Company or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), all of which together with the Company
would be deemed a "single employer" within the meaning of Section
4001 of ERISA, for the benefit of any employees or former employ-
ees of the Company, (which plans, programs, agreements and
arrangements are collectively referred to herein as the "Benefit
Plans"). Seller or the Company has previously made available to
Purchaser true and complete copies of each of the Benefit Plans
and all related documents, including but not limited to the most
recent determination letter from the Internal Revenue Service (if
applicable) for such Benefit Plan.
(b) Except as set forth in Section 2.12 of the
Disclosure Schedule, (i) each of the Benefit Plans has been
administered in accordance with its terms and applicable law
(including, where applicable, ERISA and the Code), except where
the failure to so administer such Benefit Plan would not result
in material liability to the Company; (ii) each of the Benefit
Plans required to be "qualified" within the meaning of section
401(a) of the Code has been determined by the United States
Internal Revenue Service to be so qualified; (iii) no Benefit
Plan is subject to Title IV of ERISA or Section 302 of the Code;
(iv) all contributions that are due have been paid to each
Benefit Plan or have been accrued in accordance with the past
custom and practice of Seller and the Company; and (v) neither
the Company nor any ERISA Affiliate has engaged in a transaction
in connection with which the Company or any ERISA Affiliate could
be subject to either a material civil penalty assessed pursuant
to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code.
(c) Except as set forth in Section 2.12 of the
Disclosure Schedule, no Benefit Plan exists which provides for or
could result in the payment by the Company to any Company employ-
ee of any money or other property or rights or accelerate the
vesting or payment of such amounts or rights by the Company to
any Company employee as a result of the transactions contemplated
by this Agreement, whether or not such payment or acceleration
would constitute a parachute payment within the meaning of
Section 280G of the Code.
(d) Except as set forth in Section 2.12 of the
Disclosure Schedule, no Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Company for
periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "employee pension benefit plan," as
defined in section 3(2) of ERISA or (iii) benefits the full cost
of which is borne by the current or former employee (or his
beneficiary).
(e) As of the date hereof, there are no pending
or, to the knowledge of Seller and the Company, threatened claims
(other than routine claims for benefits) by, on behalf of or
against any of the Benefit Plans or any trusts related thereto
except for those claims which, individually or in the aggregate,
could not reasonably be expected to be material to the Company.
(f) Except as set forth on Section 2.12 of the
Disclosure Schedule, (i) each Benefit Plan is immediately termi-
nable at the option of the Company and (ii) there are no liabili-
ties with respect to the Benefit Plans other than as accrued or
reserved for on the Closing Date Statement.
2.13 Labor Relations. None of Seller, the Company or
---------------
the Subsidiary is a party to any collective bargaining agreement
applicable to employees of the Company or the Subsidiary. Except
as set forth in Sections 2.8 and 2.13 of the Disclosure Schedule,
(a) there is no material unfair labor practice or labor arbitra-
tion proceedings pending or to the knowledge of Seller threatened
against the Company or the Subsidiary, (b) there is no labor
strike, dispute, slowdown or stoppage actually pending or, to the
knowledge of Seller, threatened against or affecting the Company
or the Subsidiary and (c) to the knowledge of Seller, there is no
organizational activities on behalf of any labor organization
actually pending against, threatened against, or affecting, the
Company or the Subsidiary.
2.14 Patents, Trademarks, Trade Names, Etc. Section
--------------------------------------
2.14 of the Disclosure Schedule contains a description identify-
ing all registered patents, trademarks, service marks, trade
dress, trade names and copyrights (collectively, the "Intellectu-
al Property") used in the business of the Company and the Subsid-
iary as presently conducted or owned by the Company or the
Subsidiary and a list of all material licenses and other agree-
ments relating thereto. Except as set forth in Section 2.14 of
the Disclosure Schedule, (i) the consummation of the transactions
contemplated by this Agreement will not impair the validity,
enforceability, ownership or right to use of the Intellectual
Property, (ii) no claims have been asserted in writing by any
person to the use of any such Intellectual Property, or challeng-
ing or questioning the validity or effectiveness of any such
license or agreement and (iii) to the Company's knowledge, the
use of the Intellectual Property by the Company and the Subsid-
iary does not infringe the rights of any person.
2.15 Contracts. Section 2.15 of the Disclosure
---------
Schedule contains a list of each of the following to which the
Company or the Subsidiary is a party: (i) all agreements and
arrangements relating to the borrowing of money by the Company or
the Subsidiary or any mortgaging or pledging of any assets owned
by the Company or the Subsidiary, (ii) any guaranties by the
Company or the Subsidiary of any obligation for borrowed money of
any third party, (iii) all employment, management, consulting or
severance agreements between the Company and any officer, direc-
tor, employee or full-time consultant of the Company providing
for annual compensation in excess of $50,000 in the aggregate or
any extraordinary payments as a result of a change in control of
the Company, (iv) any capitalized Lease Obligations providing for
payments in excess of $50,000 in the aggregate and (v) any
agreements that prohibit the Company in any material respect from
freely engaging in its business. Except as set forth in Section
2.15 of the Disclosure Schedule, each of the material contracts,
agreements and understandings to which the Company or the Subsid-
iary is a party or by which any of its assets or operations are
bound is in full force and effect, and there are no existing
breaches or defaults by the Company or the Subsidiary or, to the
knowledge of Seller, any other party thereunder nor has any event
occurred which would permit the termination or acceleration
thereof or which, with notice or lapse of time, would constitute
a breach or default thereunder, except in each case where such
breach or default would not have a Material Adverse Effect.
Except as set forth in Section 2.15 of the Disclosure Schedule,
the Company has not entered into any agreement with any director,
officer or employee that will require the acceleration of any
compensation or the payment of any bonus as a result of the
consummation of the transactions contemplated hereby.
2.16 Environmental Matters.
---------------------
(a) Except as set forth in Section 2.16 of the
Disclosure Schedule, neither the Company nor the Subsidiary has
received any written notice, since January 1, 1993, alleging the
violation of or any liabilities arising under, any applicable
Environmental Laws, in each case which would result in a Material
Adverse Effect, and to the knowledge of Seller, the Company and
the Subsidiary (i) are in compliance in all material respects
with all Environmental Laws, (ii) the Company and the Subsidiary
have obtained, and are in material compliance with, all material
permits required pursuant to Environmental Laws with respect to
the business of the Company and the Subsidiary as currently
conducted, (iii) no hazardous waste, hazardous substance or other
material regulated pursuant to Environmental Laws has been
stored, treated or disposed of by the Company or the Subsidiary
on the real estate currently owned or operated by the Company and
the Subsidiary except in compliance in all material respects with
applicable Environmental Laws and (iv) the Company and the
Subsidiary lawfully have disposed of their hazardous substances
and wastes in all material respects.
(b) No written notice of Release of Hazardous
Material has been filed since January 1, 1993 by or on behalf of
the Company or the Subsidiary pursuant to Environmental Laws,
and, to the knowledge of Seller, no property or facility now
owned or operated by the Company or the Subsidiary is on the
CERCLA National Priorities List, the Comprehensive Environmental
Response, Compensation, and Liability Information System Index or
any similar state list.
(c) For purposes of this Section 2.16, (i)
"Environmental Laws" shall mean all federal, state, local and
foreign statutes, rules, regulations, ordinances and other such
provisions having the force and effect of law, all judicial and
administrative orders concerning pollution or protection of the
environment, including without limitation all those relating to
the presence, use, production, generation, handling, transporta-
tion, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, Release, threatened Release,
control or cleanup of any Hazardous Material; (ii) "Hazardous
Material" shall mean anything that is a "hazardous substance"
pursuant to the Comprehensive Response, Compensation, and Liabil-
ity Act ("CERCLA"), any substance that is a "solid waste" or
"hazardous waste" pursuant to the Resource Conservation and
Recovery Act, any pesticide, pollutant, contaminant, toxic
chemical, petroleum product or byproduct, asbestos or polychlori-
nated biphenyl, and (iii) "Release" shall have the meaning set
forth in CERCLA.
2.17 Insurance. Section 2.17 of the Disclosure
---------
Schedule lists all material insurance policies covering the
assets, employees and operations of the Company and the Subsid-
iary as of the date hereof. All insurance coverage and bonds
with respect to the properties and business of the Company and
the Subsidiary that are in effect as of the date hereof shall be
terminated as of the Closing Date.
2.18 Title to Real Property.
----------------------
(a) Section 2.18 of the Disclosure Schedule lists
all real property owned by the Company or the Subsidiary. Except
as set forth in Section 2.18 of the Disclosure Schedule, with
respect to each such parcel of owned real property: (i) the
identified owner has good and valid title to the parcel of real
property, free and clear of any Encumbrance, except for (A)
statutory liens for current taxes or other governmental charges
with respect to such real property not yet due and payable or the
amount or validity of which is being contested in good faith by
appropriate proceedings by the Company or the Subsidiary, (B)
mechanics', carriers', workers' and other similar statutory liens
arising or incurred in the ordinary course of business with
respect to obligations that are not delinquent, (C) zoning,
entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the real property
which are not violated by the current use and operation of the
real property, and (D) covenants, conditions, restrictions,
easements and other matters affecting title to the real property
which do not materially impair the use of the real property for
the purposes for which it is used in connection with the busi-
nesses of the Company and the Subsidiary (the foregoing items (A)
through (D) collectively referred to as "Permitted Liens"); (ii)
there are no pending or, to the knowledge of Seller, threatened
condemnation proceedings relating to such parcel of real proper-
ty; (iii) there are no leases, subleases, licenses, concessions,
or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of such
parcel of real property; and (iv) there are no outstanding
options or rights of first refusal to purchase such parcel of
real property, or any portion thereof or interest therein.
(b) Section 2.18 of the Disclosure Schedule
attached hereto lists and describes briefly all real property
that is used or occupied by the Company or the Subsidiary in
connection with their businesses but not owned by the Company or
the Subsidiary and the leases, subleases and agreements by which
such property is used and occupied. Except as otherwise de-
scribed in Section 2.18 of the Disclosure Schedule, with respect
to each such parcel of leased real property: (i) the leases and
subleases described in Section 2.18 of the Disclosure Schedule
constitute all of the leases, subleases and agreements under
which the Company or the Subsidiary holds any interest in any
real estate used in connection with their businesses; (ii) the
Company has made available to Purchaser and its counsel true,
correct and complete copies of all of the leases, subleases and
agreements described in Section 2.18 of the Disclosure Schedule;
(iii) each such lease, sublease or agreement is in full force and
effect; (iv) there are no leases, subleases, licenses, conces-
sions, or other agreements, written or oral, to which Seller or
the Company is a party granting to any party or parties (other
than the Company or the Subsidiary) the right of use or occupancy
of such parcel of leased real property; (v) all rents payable by
the Company under such leases and subleases due prior to the date
hereof have been paid and neither the Company nor the Subsidiary
nor, to the knowledge of Seller, any other party to any such
lease, sublease or agreement is in material breach or default
thereof, and no event has occurred which, with notice or the
lapse of time, or both, would constitute such a breach or default
or permit termination, modification or acceleration thereof or
thereunder; and (vi) the transactions contemplated by this
Agreement do not cause a breach of any such lease and no lessor
consent under any such lease is required to consummate the
transactions contemplated by this Agreement.
2.19 Affiliate Transactions. Except as disclosed in
----------------------
Section 2.19 of the Disclosure Schedule, no officer, director,
employee, stockholder or Affiliate of the Company or the Subsid-
iary, or any immediate family member of any of the foregoing
(collectively, the "Insiders"), is a party to any agreement or
contract with the Company or the Subsidiary or has any interest
in any material property, real or personal or mixed, tangible or
intangible, used in the business of the Company or the Subsid-
iary.
2.20 No Brokers' or Other Fees. Except for the fees
--------------------------
payable to Donaldson, Lufkin & Jenrette Securities Corporation by
Seller, no broker, finder or investment banker is entitled to any
fee or commission in connection with the transactions contemplat-
ed hereby based upon arrangements made by or on behalf of Seller
or the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as
follows:
3.1 Organization. Purchaser is a corporation duly
------------
organized, validly existing and in good standing under the laws
of the State of Illinois.
3.2 Authorization, Etc. Purchaser has full corporate
------------------
power and authority to execute and deliver this Agreement and the
other documents contemplated hereby and to carry out the transac-
tions contemplated hereby and thereby. The Board of Directors of
Purchaser has duly approved and authorized the execution and
delivery by Purchaser of this Agreement and the other documents
contemplated hereby and the consummation by Purchaser of the
transactions contemplated hereby and thereby, and no other
corporate proceedings on the part of Purchaser are necessary to
approve and authorize the execution and delivery by Purchaser of
this Agreement and the other documents contemplated hereby and
the consummation by Purchaser of the transactions contemplated
hereby and thereby. This Agreement constitutes a valid and
binding agreement of Purchaser, enforceable against Purchaser in
accordance with its terms, except that (i) the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, morato-
rium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
3.3 No Approvals or Conflicts. Except as set forth in
--------------------------
Section 3.3 of the Disclosure Schedule, neither the execution and
delivery by Purchaser of this Agreement nor the consummation by
Purchaser of the transactions contemplated hereby will (i)
violate, conflict with or result in a breach of any provision of
the charter or bylaws of Purchaser, (ii) violate, conflict with
or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
Purchaser's properties under, any note, bond, mortgage, inden-
ture, deed of trust, license, franchise, permit, lease, contract,
agreement or other instrument to which Purchaser or its subsid-
iaries or any of their respective properties may be bound, (iii)
violate any order, injunction, judgment, ruling, law or regula-
tion of any court or governmental authority applicable to Pur-
chaser or its subsidiaries or any of their respective properties
or (iv) except for applicable requirements of the Exchange Act
and the HSR Act, require any consent, approval or authorization
of, or notice to, or declaration, filing or registration with,
any governmental or regulatory authority, which, in the case of
clauses (ii), (iii) and (iv) above, would have a material adverse
effect on the business, operations or financial condition of
Purchaser and its subsidiaries, considered as a single enterprise
or on Purchaser's ability to consummate the transactions contem-
plated hereby.
3.4 Acquisition for Investment. Purchaser is acquir-
--------------------------
ing the Shares solely for its own account and not with a view to
any distribution or other disposition of such Shares, and the
Shares will not be transferred except in a transaction registered
or exempt from registration under the Securities Act of 1933, as
amended.
3.5 Financing. Purchaser has as of the date hereof
---------
and will have as of the Closing Date sufficient funds (through
existing credit arrangements or through holding cash and cash
equivalents) to consummate the transactions contemplated hereby.
3.6 No Brokers' or Other Fees. No broker, finder or
-------------------------
investment banker is entitled to any fee or commission in connec-
tion with the transactions contemplated hereby based upon ar-
rangements made by or on behalf of Purchaser.
ARTICLE IV
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to effect the Closing under
this Agreement are subject to the satisfaction, at or prior to
the Closing, of each of the following conditions, unless waived
in writing by Seller.
4.1 Representations and Warranties. The representa-
------------------------------
tions and warranties made by Purchaser in this Agreement shall be
true and correct in all material respects on the Closing Date as
though such representations and warranties were made at such
date, except for any representation or warranty that expressly
speaks only as of a specific date, which representation or
warranty shall be true and correct in all material respects on
such date, and except for changes expressly permitted by this
Agreement or the other agreements referred to herein.
4.2 Performance. Purchaser shall have performed and
-----------
complied in all material respects with all agreements, obliga-
tions and conditions required by this Agreement to be so per-
formed or complied with by Purchaser prior to the Closing.
4.3 Officer's Certificate. Purchaser shall have
---------------------
delivered to Seller a certificate, dated the Closing Date and
executed by the President or a Vice President of Purchaser,
certifying to the fulfillment of the conditions specified in
Sections 4.1 and 4.2 hereof.
4.4 HSR Act. All applicable waiting periods under the
-------
HSR Act with respect to the transactions contemplated hereby
shall have expired or been terminated.
4.5 Injunctions. On the Closing Date there shall be
-----------
no injunction, writ, preliminary restraining order or other order
in effect of any nature issued by a court or governmental agency
of competent jurisdiction directing that the transactions provid-
ed for herein not be consummated as provided herein.
4.6 Consents. Those material governmental and third
--------
party consents set forth in Section 4.6 of the Disclosure Sched-
ule necessary to effect the Closing and for the Company to
operate its business in all material respects after the Closing
as presently operated shall have been obtained.
4.7 Release of Guarantees. On or prior to the
----------------------
Closing Date, Seller shall be unconditionally released from all
obligations with respect to all outstanding guarantees of indebt-
edness and all other obligations related to the ongoing business
of the Company or the Subsidiary.
4.8 Idaho Reimbursement. On or prior to the Closing
-------------------
Date, the Company and the Subsidiary shall have assigned all
right, title and interest in the Idaho Reimbursement to the
Seller.
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to effect the Closing
under this Agreement are subject to the satisfaction, at or prior
to the Closing, of each of the following conditions, unless
waived in writing by Purchaser.
5.1 Representations and Warranties. The representa
------------------------------
tions and warranties made by Seller in this Agreement shall be
true and correct in all material respects on the Closing Date as
though such representations and warranties were made at such
date, except for any representation or warranty that expressly
speaks only as of a specific date, which representation or
warranty shall be true and correct in all material respects on
such date, and except for changes expressly permitted by the
terms of this Agreement or the other agreements referred to
herein.
5.2 Performance. Seller shall have performed and com-
-----------
plied in all material respects with all agreements, obligations
and conditions required by this Agreement to be so performed or
complied with by Seller prior to the Closing.
5.3 Officer's Certificate. Seller shall have deliv-
---------------------
ered to Purchaser a certificate, dated the Closing Date and
executed by the President or a Vice President of Seller, certify-
ing to the fulfillment of the conditions specified in Sections
5.1 and 5.2 hereof.
5.4 Resignation of Directors. Seller shall have
------------------------
delivered to Purchaser the written resignations of all of the
directors of the Company and the Subsidiary effective as of the
Closing Date.
5.5 HSR Act. All applicable waiting periods under the
-------
HSR Act with respect to the transactions contemplated hereby
shall have expired or been terminated.
5.6 Injunctions. On the Closing Date, there shall be
-----------
no injunction, writ, preliminary restraining order or other order
in effect of any nature issued by a court or governmental agency
of competent jurisdiction directing that the transactions provid-
ed for herein not be consummated as provided herein.
5.7 Release of Guarantees. On or prior to the
----------------------
Closing Date, the Company and the Subsidiary and any liens on the
assets thereof shall be unconditionally released (by a written
agreement signed by the creditor with a copy delivered to Pur-
chaser) from all obligations with respect to all outstanding
guarantees of indebtedness and all other obligations of the
Company and the Subsidiary related to indebtedness or obligations
of Seller or its Affiliates (other than the Company and the
Subsidiary) including, without limitation, (i) the $160,000,000
aggregate principal amount of 12% Senior Secured Notes issued
pursuant to that certain Indenture, dated June 20, 1995, between
Seller and State Street Bank and Trust Company of Connecticut,
N.A., as trustee, and (ii) the Participation Agreement, dated as
of December 18, 1990, among Viskase Corporation, as lessee,
Seller, as guarantor, General Electric Capital Corporation, as
owner participant, and State Street Bank and Trust Company of
Connecticut, N.A., as owner trustee.
5.8 Consents. Those material governmental and third
--------
party consents set forth in Section 5.8 of the Disclosure
Schedule necessary to effect the Closing and for the Company to
operate its business in all material respects after the Closing
as presently operated shall have been obtained.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Conduct of Business by Seller. Seller covenants
-----------------------------
that, except (i) for actions taken to implement this Agreement
and the transactions contemplated hereby, (ii) as disclosed in
the Disclosure Schedule, (iii) for distributions of all of the
Company's then cash balances to Seller immediately prior to the
Closing or (iv) as consented to by Purchaser, from and after the
date of this Agreement and until the Closing Date Seller shall:
(a) use reasonable efforts consistent with good
business judgment to preserve intact the present business organi-
zation and relationships of the Company and the Subsidiary and
generally operate the Company and the Subsidiary in the ordinary
and regular course of business consistent with prior practices in
all material respects;
(b) not permit or suffer to occur (i) any issue,
sale or transfer of any shares of capital stock or other securi-
ties of the Company or the Subsidiary or any options, warrants or
commitments of any kind with respect thereto, (ii) any purchase,
redemption or other acquisition or disposal of any shares of
capital stock of the Company or the Subsidiary, (iii) declaring,
setting aside or paying any dividend or other distribution other
than cash management procedures in the ordinary course of Seller-
's, the Company's or the Subsidiary's business; (iv) permitting
or allowing the Company or the Subsidiary to borrow or agree to
borrow any funds or incur, whether directly or by way of guaran-
tee, any obligation for borrowed money, other than in the ordi-
nary course of business and consistent with past practice or (v)
subjecting any of the property or assets of the Company or the
Subsidiary (real, personal or mixed, tangible or intangible) to
any additional material mortgage, pledge, lien or encumbrance or
otherwise permitting or allowing the disposition of any material
property or assets of the Company or the Subsidiary (real,
personal or mixed, tangible or intangible), other than sales of
assets in the ordinary course of business;
(c) maintain the books and records of the Company
and the Subsidiary in accordance with prior practice; and
(d) not take or cause to be taken or permit or
suffer to occur, any action or event described in Section 2.10
hereof.
6.2 Access to Books and Records; Cooperation.
----------------------------------------
(a) Except as otherwise provided in Section 6.4,
each party agrees that from the date hereof until the Closing
and, with respect to any financial reporting matters or tax
matters that are the subject of Section 6.4, after the Closing
until such time as the statute of limitations with respect to
such tax matters has expired, during normal business hours, such
party will permit, at no charge, cost or expense to such party
and without disruption of such party's business, the other party
hereto and its auditors and other representatives to have reason-
able access to the properties, auditors and officers of the
Company and to all books and records relating to the Company and
to examine and take copies thereof.
(b) Each party agrees not to destroy at any time
any files or records which are subject to Section 6.2(a) without
giving reasonable notice to the other party, and within 30 days
of receipt of such notice, such other party may cause to be
delivered to it the records intended to be destroyed, at such
other party's expense.
6.3 Filings and Consents. Each of Seller and
--------------------
Purchaser (a) shall promptly prepare and make any required
filings under the HSR Act and shall request early termination of
any waiting periods thereunder and (b) shall use all reasonable
efforts to obtain and to cooperate in obtaining any consent,
approval, authorization or order of, and in making any registra-
tion or filing with, any governmental agency or body or other
third party required in connection with the execution, delivery
or performance of this Agreement. Seller and Purchaser will
furnish to one another such necessary information and reasonable
assistance as may be requested in connection with the preparation
of filings or submissions under the HSR Act.
6.4 Tax Matters.
-----------
(a) Liability of Seller for Taxable Periods
---------------------------------------
Ending On or Before Closing Date. Seller shall be liable for,
- --------------------------------
and shall indemnify and hold Purchaser, the Company and the
Subsidiary harmless against, all Taxes payable by the Company and
the Subsidiary for all taxable periods ending on or before the
Closing Date (including, without limitation, any liability for
the Taxes of any Person under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise), and any
liability for Taxes imposed on the "selling consolidated group"
that includes the Seller under Treasury Regulation Section
1.338(h)(10)-1(e)(5), but, with respect to Taxes other than
income Taxes, only to the extent that the amount of such other
Taxes exceeds the amount of such other Taxes that have been
provided for in the Closing Date Statement. Notwithstanding the
foregoing or any other provision of this Agreement, Purchaser,
the Company and the Subsidiary shall be liable for, and shall
indemnify and hold Seller and its affiliates harmless against,
all taxes arising from transactions that occur outside of the
ordinary course of business after the Closing on the Closing Date
and all sales, use, or other similar Taxes arising out of the
transfer of the Shares. Seller shall file all Tax Returns
relating to the Company and the Subsidiary for all taxable
periods ending on or before the Closing Date. Seller shall
determine the amount of taxable income or loss of the Company and
the Subsidiary for periods ending prior to the Closing Date on
the basis of its permanent records and consistent with this
Agreement and with the past Tax and accounting methods utilized
in preparing its prior Tax Returns. Such determination shall be
binding on Seller and Purchaser to the extent allowable under
applicable law.
(b) Liability of Parties for Straddle Period
----------------------------------------
Taxes. With respect to any taxable period that begins on or
- -----
before the Closing Date and ends after the Closing Date (a
"Straddle Period"), Seller shall be liable for, and shall indem-
nify and hold Purchaser, the Company and the Subsidiary harmless
against, all Taxes that relate to the portion of such period
ending on the Closing Date, but only to the extent that such
Taxes exceed the sum of (i) the aggregate estimated Tax payments
made by Seller, the Company, the Subsidiary and any Seller Group
with respect to such Taxes prior to the Closing and (ii) the
amount of Taxes reflected as a liability on the Closing Date
Statement. Purchaser, the Company and the Subsidiary shall be
liable for, and shall indemnify and hold Seller and its affili-
ates harmless against, (i) all Taxes that relate to the portion
of such period beginning on the day after the Closing Date, and
(ii) all Taxes that relate to the portion of such period ending
on the Closing Date but only to the extent of estimated Tax
payments made by the Seller, the Company, the Subsidiary or any
Seller Group with respect to such Taxes prior to the Closing or
that are reflected as a liability on the Closing Date Statement.
For these purposes, Taxes that are based on sales or net income
shall be allocated between the portion of the Straddle Period
ending on the Closing Date and the portion of the period begin-
ning after the Closing Date based upon an interim closing of the
books as of the close of business on the Closing Date. Taxes
that are not based on sales or net income shall be allocated
between the portion of the Straddle Period ending on the Closing
Date and the portion of the period beginning after the Closing
Date based upon the relative number of days in each such period.
Purchaser shall be responsible for the preparation and filing of
all Tax Returns relating to Straddle Periods, which shall be
prepared based on the permanent records of the Company and the
Subsidiary, consistent with this Agreement and with past Tax and
accounting methods utilized in preparing prior Tax Returns of the
Company and the Subsidiary, as the case may be. At least 20 days
prior to the due date for filing any such Tax Return, Purchaser
shall furnish copies of such Tax Return to Seller, along with
Purchaser's computation of the portion of such Taxes for which
Purchaser believes Seller is liable, for Seller's review and
comment. Any dispute regarding such Tax Returns or the amount
for which Seller is liable pursuant to such Tax Returns shall be
resolved in accordance with the dispute resolution procedure of
Section 6.4(g) hereof. Seller shall pay any amounts it owes to
Purchaser under this Section 6.4(b) no later than the last to
occur of (A) the date that is 10 days after the date of receipt
of Purchaser's computation of the amount owed by Seller, (B) the
date that is 10 days after the date of resolution of any dispute
resolved under the dispute resolution procedure of Section 6.4(g)
and (C) the date that is five days before the due date for
payment of the applicable Tax.
(c) Liability of Purchaser for Taxable Periods
------------------------------------------
Beginning After Closing Date. Purchaser and the Company shall
- ----------------------------
be liable for, and shall indemnify and hold Seller and any of its
affiliates harmless against, all Taxes payable by the Company or
the Subsidiary for any taxable periods beginning after the
Closing Date. Purchaser shall be responsible for the preparation
and filing of all Tax Returns relating to the Company and the
Subsidiary for all taxable periods beginning after the Closing
Date, which shall be prepared in a manner consistent with this
Agreement and past Tax and accounting methods utilized in prepar-
ing prior Tax Returns of the Company and the Subsidiary. Pur-
chaser will forego the carryback period with respect to any net
operating losses or capital losses of the Company or the Subsid-
iary under Section 172 or Section 1212 of the Code to the extent
such carryback period includes taxable periods ending on or
before the Closing Date.
(d) Refunds or Credits. Any refunds or credits
------------------
of Taxes for which Seller is liable pursuant to Section 6.4(a) or
6.4(b) shall be solely for the account of Seller, and, to the
extent that such refunds or credits are attributable to Taxes for
which Purchaser is liable pursuant to Section 6.4(b) or 6.4(c),
such refunds or credits shall be solely for the account of
Purchaser. Purchaser shall cause the Company and the Subsidiary
promptly to forward to Seller or to reimburse Seller for any such
refunds or credits due Seller after receipt thereof by Purchaser,
the Company or the Subsidiary, and Seller shall promptly forward
to Purchaser or reimburse Purchaser for any refunds or credits
due Purchaser after receipt thereof by Seller of such refunds or
credits that are for the account of the Purchaser or the Company
hereunder.
(e) Mutual Cooperation. As soon as practicable,
------------------
but in any event within 30 days after Seller's or Purchaser's
request, as the case may be, Purchaser shall or shall cause the
Company or Subsidiary to deliver to Seller, or Seller shall
deliver to Purchaser, such information and other data in the
possession of Seller, Purchaser, the Company or the Subsidiary,
as the case may be, relating to the Tax Returns and Taxes of the
Company and the Subsidiary, including such information and other
data customarily required by Seller or Purchaser, as the case may
be, to cause the payment of all Taxes or to permit the prepara-
tion of any Tax Returns for which it has responsibility or
liability or to respond to audits by any taxing authorities with
respect to any Tax Returns or Taxes for which it has any respon-
sibility or liability under this Agreement or otherwise or to
otherwise enable Seller or Purchaser, as the case may be, to
satisfy its accounting or Tax requirements. In connection with
the foregoing, Purchaser and Seller shall make available such
knowledgeable employees of Purchaser, the Company, the Subsid-
iary or Seller, as the case may be, as Seller or Purchaser may
reasonably request, which employees shall, among other things,
prepare all schedules, work papers and other documents in a
manner consistent with past practice that are reasonably neces-
sary to assist Seller in preparing Tax Returns or satisfying its
financial reporting requirements. Upon Seller's reasonable
request, Purchaser shall cause an appropriate officer of the
Company or the Subsidiary to sign Tax Returns relating to periods
ending on or prior to the Closing Date. For a period of six
years after the Closing, and, if at the expiration thereof any
Tax audit or judicial proceeding is in progress or the applicable
statute of limitations has been extended in writing, for such
longer period as such audit or judicial proceeding is in progress
or such statutory period has been agreed to be extended, Purchas-
er shall, and shall cause the Company or the Subsidiary to,
maintain and make available to Seller, on Seller's reasonable
request, copies of any and all information, books and records
referred to in this Section 6.4(e). After such period, Purchas-
er, the Company or the Subsidiary, as the case may be, may
dispose of such information, books and records, provided that
--------
prior to such disposition Purchaser shall give Seller a reason-
able opportunity to take possession of such information, books
and records.
(f) Contests. Whenever any taxing authority
--------
asserts a claim, makes an assessment or otherwise disputes the
amount of Taxes for periods for which Seller is or may be liable
under this Agreement, Purchaser shall, promptly upon receipt by
Purchaser, the Company or the Subsidiary of notice thereof,
inform Seller. Seller shall have the right to control any
resulting proceedings and to determine whether and when to settle
any such claim, assessment or dispute, to the extent such pro-
ceedings or determinations affect the amount of Taxes for which
Seller is or may be liable for all taxable periods ending on or
before the Closing Date. Whenever any taxing authority asserts a
claim, makes an assessment or otherwise disputes the amount of
Taxes for which Purchaser is liable under this Agreement, Seller
shall, promptly upon receiving notice thereof, inform Purchaser.
Purchaser shall have the right to control any resulting proceed-
ings and to determine whether and when to settle any such claim,
assessment or dispute, to the extent such proceedings or determi-
nations affect the amount of Taxes for which Purchaser is liable
under this Agreement for all taxable periods beginning after the
Closing Date. Seller and Purchaser will jointly control and
determine whether to settle any claim, assessment or dispute
asserted or made by any taxing authority with respect to Taxes
attributable to a Straddle Period. No such claim, assessment or
dispute shall be settled without the prior consent of both Seller
and Purchaser (which consent shall not be unreasonably withheld).
(g) Resolution of Disagreements Between Seller
------------------------------------------
and Purchaser. If Seller and Purchaser disagree as to the amount
- -------------
for which each is liable under this Section 6.4, Seller and
Purchaser shall promptly consult with each other in an effort to
resolve such dispute. If any such point of disagreement cannot
be resolved within 15 days (or, in the case of dispute arising
under Section 6.4(b), five days) after the date of consultation,
KPMG Peat Marwick shall act as arbitrator to resolve all points
of disagreement concerning Tax matters with respect to this
Agreement.
(h) Tax Sharing Agreement. The obligations of
---------------------
the Company and the Subsidiary under any Tax sharing agreements
or similar arrangements with respect to or involving the Company
and the Subsidiary shall be terminated as of the Closing Date
and, after the Closing Date, the Company and the Subsidiary shall
not be bound thereby or have any liability thereunder.
(i) Exclusive Remedy. As between Purchaser, the
----------------
Company and the Subsidiary, on the one hand, and Seller, on the
other hand, the rights, indemnifications and obligations set
forth in this Section 6.4 will be the sole and exclusive remedies
with respect to any dispute relating to Taxes (other than dis-
putes arising with respect to Section 2.12 or 6.10, the sole and
exclusive remedies for which will be as provided in Section 8.1).
Any claims for indemnification pursuant to this Section 6.4 must
be delivered in writing by the party seeking indemnification to
the party from which indemnification is sought no later than 30
days following the date of the expiration of the statute of
limitations applicable to the Tax for which indemnification is
sought.
(j) Section 338 Elections. Seller represents
----------------------
that the Company and the Subsidiary are each a member of the
"selling consolidated group" as described in Internal Revenue
Code Section 338(h)(10) and Treasury Regulation Section 1.338(h)-
(10)-1(b)(3). Upon request by Purchaser, Seller agrees to join
in the election provided by such Section 338(h)(10) and agrees to
jointly prepare and execute the required Form 8023 in cooperation
with Purchaser. Prior to the Closing, the Purchase Price shall
be allocated among the assets in accordance with Code Sections
338 and 1060 and as required under law. Seller shall accept
Purchaser's reasonable determination of such Purchase Price
allocation.
6.5 WARN Act. Purchaser and Seller agree that for
---------
purposes of the United States Worker Adjustment and Retraining
Notification Act (the "WARN Act"), the Closing Date shall be the
"effective date" as such term is used in the WARN Act. Purchaser
acknowledges and represents that it has no present intent to
engage in a "mass layoff" or "plant closing" with respect to the
Company as defined in the WARN Act. Seller acknowledges and
represents that the Company has not engaged in any "mass layoff"
during the two years prior to the date hereof for which it has
not provided advance notice thereof pursuant to the WARN Act.
Purchaser agrees that from and after the Closing Date it shall be
responsible for any notification required under the WARN Act with
respect to the Company and shall indemnify Seller and hold Seller
harmless from and against all fines and other payments which may
become due under the WARN Act with respect to the Company and for
any other liability for all other notices or payments due to any
Affected Employees (as defined in Section 6.10(a)), payments,
fines or assessments due to any government authority, pursuant to
any applicable foreign, federal, state or local law, common law,
statute, rule or regulation with respect to the employment,
discharge or layoff of any such Affected Employees by the Pur-
chaser or its Affiliates on or after the Closing Date.
6.6 Supplements to Disclosure Schedule. From time to
-----------------------------------
time prior to the Closing, Seller and Purchaser will promptly
supplement or amend the sections of the Disclosure Schedule
relating to their respective representations and warranties in
this Agreement with respect to any matter, condition or occur-
rence hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth
or described in their respective sections of the Disclosure
Schedule. Except with respect to a supplement or amendment
objected to in writing by the other party within five business
days after receipt thereof, (i) no supplement or amendment by
Seller shall cause Seller to fail to satisfy any of the condi-
tions set forth in Sections 5.1 and 5.2 hereof or cause Seller to
fail to comply with the covenant set forth in Section 6.1 hereof,
(ii) no supplement or amendment by Purchaser shall cause Purchas-
er to fail to satisfy any of the conditions set forth in Sections
4.1 and 4.2 hereof or (iii) no supplement or amendment by either
party shall give rise to any rights of the other party to indem-
nification under Article VIII hereof. Only such supplement or
amendment to the Disclosure Schedule made pursuant to this
Section 6.6 to which the Purchaser does not object in writing
within the five business day period set forth in the immediately
preceding sentence shall be deemed to have been included in the
Disclosure Schedule as of the date of this Agreement for any and
all purposes hereunder.
6.7 Covenant to Satisfy Conditions. Each party agrees
------------------------------
to use its reasonable best efforts to ensure that the conditions
set forth in Articles IV and Article V hereof are satisfied and
to consummate the transactions contemplated hereby, insofar as
such matters are within the control of such party.
6.8 Use of "Envirodyne" Name. Except for any publica-
------------------------
tion or press release expressly permitted by Section 9.9, Pur-
chaser agrees and agrees to cause the Company and the Subsidiary
not to use the "Envirodyne" name, trademark, tradename or logo at
any time after the Closing Date; provided that for one year from
--------
the Closing Date the Company and the Subsidiary may use the
"Envirodyne" name, trademark, tradename and logo on existing
office supplies, existing packaging material and similar supplies
owned by the Company and the Subsidiary on the Closing Date.
6.9 Intercompany Obligations. Immediately prior to
------------------------
the Closing Date, (i) the Company shall eliminate (without
recourse) by write-offs without payment, in the form of a return
of capital, all indebtedness of Seller and Seller's Affiliates
(other than the Company and the Subsidiary) to the Company and
the Subsidiary, other than indebtedness for goods and services
provided to Seller or Sellers Affiliates (other than the Company
and the Subsidiary) by the Company or the Subsidiary which
indebtedness shall remain outstanding and be paid in a manner
consistent with past practice; and (ii) Seller shall eliminate by
write-offs without payment, in the form of a capital contribu-
tion, all indebtedness of the Company and the Subsidiary to
Seller and its Affiliates (other than the Company and the Subsid-
iary) to Seller, other than indebtedness for goods and services
provided to the Company or the Subsidiary by Seller or such
Affiliates, which indebtedness shall remain outstanding and be
paid in a manner consistent with past practice.
6.10 Employees; Employee Benefits.
----------------------------
(a) Purchaser shall, or shall cause its affili-
ates to, continue to employ on the Closing Date each person who
is an employee of the Company, including all active employees and
those employees who are as of the Closing Date on qualified leave
of absence or are receiving benefits under the Company's short-
term disability program (collectively, the "Affected Employees"),
on substantially equivalent terms (including with respect to
position, duties, responsibilities, compensation, incentives and
location) to those provided on the date hereof to the Affected
Employees subject, however, to continuation of their at-will
status and the absolute discretion of the Purchaser as to the
precise terms and conditions of employment. Following the
Closing, notwithstanding anything in this Agreement to the
contrary, Affected Employees who are receiving benefits as of the
Closing Date under the Company's short-term disability program
shall continue to receive from Purchaser short-term disability
benefits which are no less favorable to such Affected Employees
as those provided by the Company as of the Closing Date.
(b) Following the Closing, Purchaser shall, or
shall cause its affiliates to, provide each Affected Employee
with benefits substantially equivalent to the benefits provided
to each such Affected Employee immediately prior to the Closing.
Notwithstanding the foregoing, Purchaser agrees: (i) to assume
and honor the terms of the Clear Shield National Inc. 1998
Management Incentive Plan with respect to calendar year 1998; and
(ii) for the benefit of those Affected Employees participating in
the Envirodyne Industries, Inc. Parallel Non-Qualified Retirement
Plan (the "Excess Benefit Plan") as of the date immediately prior
to the Closing, to continue to maintain the Excess Benefit Plan
following the Closing for the balance of calendar year 1998;
provided that Seller has accrued at the Closing Date the
- ---------
liability for that part of calendar 1998 prior to the Closing.
Purchaser agrees that, for purposes of all employee benefit plans
(including, but not limited, all "employee benefit plans" within
the meaning of section 3(3) of ERISA, and all policies and
employee fringe benefit programs, including vacation policies) of
Purchaser (such plans, programs, policies and arrangements, the
"Purchaser Benefit Plans") in which the Affected Employees may
participate following the Closing under which an employee's
eligibility or benefit depends, in whole or in part, on length of
service, credit will be given to the Affected Employees for
service previously credited with the Seller and any of its
Affiliates prior to the Closing, provided, that such crediting of
service does not result in duplication of benefits. Affected
Employees shall also be given credit for any deductible or co-
payment amounts paid in respect of the Benefit Plan year in which
the Closing occurs, to the extent that, following the Closing,
they participate in any Purchaser Benefit Plan for which deduct-
ibles or co-payments are required. Purchaser shall also cause
each Purchaser Benefit Plan to waive (i) any preexisting condi-
tion restriction which was waived under the terms of any analo-
gous Benefit Plan immediately prior to the Closing or (ii)
waiting period limitation which would otherwise be applicable to
an Affected Employee on or after the Closing to the extent such
Affected Employee had satisfied any similar waiting period
limitation under an analogous Benefit Plan prior to the Closing.
(c) Purchaser acknowledges that the consummation
of the transactions contemplated by this Agreement will cause a
"Change in Control" as defined in Section F of the Clear Shield
Severance Pay Policy. Notwithstanding any other provision of
this Agreement, the Purchaser agrees specifically to assume, and
to be bound by, the terms of the Clear Shield Severance Pay
Policy as set forth in Section 6.10(c) of the Disclosure Sched-
ule, which Seller represents to be terminable at will provided,
however, that the benefits of the Clear Shield Severance Pay
Policy shall be extended for 24 months as provided in Section J
of the Clear Shield Severance Pay Policy only with respect to any
person who is a beneficiary of the Clear Shield Severance Pay
Policy at the Closing Date.
(d) As soon as practicable after the Closing
Date, but no later than six months thereafter, Seller and Pur-
chaser will cause the accounts under the Envirodyne Retirement
Income Plan (the "Seller's Savings Plan"), and the value of
assets attributable to such accounts, of the Affected Employees
to be transferred to the Solo Cup Profit Sharing Plan (the
"Purchaser's Savings Plan") in a "transfer of assets or liabili-
ties" in accordance with section 414(l) of the Code and section
208 of ERISA and the respective rules and regulations promulgated
thereunder. The assets to be transferred will be in the form of
cash, except for shares of Envirodyne common stock which will be
transferred in kind. Prior to such transfer, Purchaser will
provide Seller with such documents and other information as
Seller shall reasonably request to assure itself that the Purcha-
ser's Savings Plan and the trust established pursuant thereto (i)
are qualified and tax-exempt under sections 401(a) and 501(a) of
the Code, (ii) permit the transfer by Seller of voluntary partic-
ipant after-tax contributions; provided, however, that after tax
-------- -------
contributions shall not be permitted after the Closing Date, and
(iii) contain participant loan provisions and procedures neces-
sary to effect the orderly transfer of participant loan balances
associated with the transfer of assets. Prior to the transfer,
Seller and Purchaser will notify the Internal Revenue Service of
the transfer by timely filing Forms 5310-A, to the extent such
filings are required, and Seller will provide to Purchaser copies
of such personnel, pension, and other records of Seller pertain-
ing to the Affected Employees and such records of any agent or
representative of Seller, in each case pertaining to the Seller's
Savings Plan and as Purchaser may reasonably request in order to
administer and manage the accounts and assets transferred to the
Purchaser's Savings Plan. Upon such transfer, the Purchaser's
Savings Plan shall assume all liabilities and obligations whatso-
ever with respect to all amounts transferred from the Seller's
Savings Plan to the Purchaser's Savings Plan in respect of the
Affected Employees and Seller and each of its Affiliates and the
Seller's Savings Plan shall be relieved of all such liabilities
and obligations. Purchaser and Seller shall cooperate in the
filing of documents required by the transfer of assets and
liabilities described herein. As of the later to occur of
(i) January 15, 1999 or (ii) the completion of the transfer
described in this Section 6.10(d), the Purchaser agrees to
contribute to the account of each Affected Employee a profit-
sharing contribution in cash in respect of calendar year 1998, in
an amount which is consistent (with respect to each Affected
Employee) with the Company's past practice.
(e) Except as otherwise provided in Section
6.10(f) hereof with respect to long-term disability claims, the
Seller shall remain responsible for all claims under the applica-
ble Benefit Plans for health, accident, sickness, and disability
benefits that are deemed incurred by Affected Employees prior to
the Closing Date. For all purposes under such Benefit Plans,
such Affected Employees will be deemed to have terminated employ-
ment with the Company as of the Closing Date. For purposes of
this Agreement: (i) a claim for health benefits (including,
without limitation, claims for medical, prescription drug,
dental, and vision care expenses) will be deemed to have been
incurred on the date that health benefits services giving rise to
such claim are provided, (ii) a claim for sickness or short-term
disability benefits will be deemed to have been incurred upon the
occurrence of the event giving rise to such claim and (iii) in
the case of any claim for benefits other than health benefits
(e.g., life insurance benefits), a claim will be deemed to have
been incurred upon the occurrence of the event giving rise to
such claims.
(f) The Seller will remain responsible for all
benefits payable to Affected Employees who, as of the close of
business on the day immediately preceding the Closing Date, were
totally and permanently disabled in accordance with the applica-
ble provisions of Seller's health, accident, sickness, salary
continuation, or long-term disability benefits plans or programs
and for all workers' compensation claims based on an injury
occurring on or prior to the Closing Date, provided that the
claim relating to such injury is made within six months following
the Closing Date.
(g) The Purchaser agrees to hold the Seller
harmless from and against any and all claims, liabilities,
penalties and expenses (including reasonable legal fees) which
Seller may incur with respect to the assets transferred from the
Seller's Savings Plan to the Purchaser's Savings Plan after the
respective transfers of assets of the Seller's Savings Plan,
except to the extent that any such claims, liabilities, penalties
and expenses relate (x) to the pre-transfer administration of
such assets, or (y) to any error in the list of the individual
accrued benefits, credited service and other information of
Affected Employees provided by Seller to Purchaser pursuant to
Section 6.10(c) hereof or (z) any violation of ERISA or the Code
that occurred prior to the transfer of such assets.
(h) The Purchaser shall be responsible for, and
shall indemnify and hold harmless the Seller from and against,
any and all losses relating to or arising out of (A) all vacation
entitlements accrued on the financial records of the Seller at
the Closing, the Company or the Subsidiary on the Closing Date
but unused as of the Closing; (B) the liabilities assumed by
Purchaser under this Section 6.10 or any failure by Purchaser to
comply with the provisions of this Section 6.10 and (C) any
claims of, or damages or penalties sought by, any Affected
Employee or any governmental entity on behalf of or concerning
any Affected Employee, with respect to any act or failure to act
by Purchaser or its Affiliates to the extent arising from the
employment, discharge, layoff or termination of any Affected
Employee by Purchaser or its Affiliates on or after the Closing
Date. Seller agrees to cooperate fully with Purchaser to the
extent reasonably requested in connection with the defense of any
such claim.
6.11 Insurance. Purchaser and Seller hereby
---------
acknowledge and agree that all insurance coverage and bonds with
respect to the properties and business of the Company and the
Subsidiary that are in effect as of the date hereof shall be
terminated as of the Closing Date.
6.12 Due Diligence. Purchaser acknowledges that it
-------------
has made its own independent examination, investigation, analysis
and evaluation of the Company and the Subsidiary, including
Purchaser's own evaluation of the value of the Company and the
Subsidiary's businesses, and that in connection with such evalua-
tion Purchaser has under taken such due diligence (including a
review of the assets, liabilities, books, records and contracts
of the Company and the Subsidiary) as Purchaser deems adequate,
except that Purchaser has not been granted access to any customer
of the Company as of the date of this Agreement.
6.13 Customer Meetings. Seller shall use all
-----------------
reasonable efforts to allow Purchaser to meet (the "Customer
Meetings") with each of the following customers of the Company
prior to Closing: Perseco; Tricon; Wal-Mart; Better Maid Plas-
tics; and Kroger (collectively, the "Customers"). A mutually
acceptable representative of each of the Purchaser and the
Company shall be present at each Customer Meeting. The agenda
and presentations to be made by Purchaser and the Company at each
Customer Meeting shall be mutually agreed upon by the parties
prior to each such meeting.
6.14 Non-Competition. Seller and its Subsidiaries
---------------
agree not to enter into, engage in, invest in or consult with any
entity that manufacturers, sells or distributes disposable
plastic cutlery, drinking straws or thermoformed plates or bowls
("Competing Products") for a five year period after the Closing
Date anywhere in the world. For a 30 month period after the
Closing Date, Seller shall not recruit or otherwise solicit or
induce any person who is an employee of the Company or the
Subsidiary who were employees of the Company or Subsidiary on the
date hereof and/or on the Closing Date to terminate his or her
employment or other relationship with the Company or the Subsid-
iary. Notwithstanding anything contained herein to the contrary,
nothing in this Agreement shall prevent Seller or any of its
subsidiaries from owning, directly or indirectly, up to 5% of any
class of securities of any entity traded on any securities
exchange regardless of whether or not such entity manufactures,
distributes or sells Competing Products or products which compete
with the Competing Products. In addition, notwithstanding
anything contained herein to the contrary, no purchaser of all or
part of Seller's or any of its Subsidiaries' operations shall, in
any way, be restricted by or governed by this Section 6.14.
6.15 Idaho Reimbursement. Purchaser and Seller
-------------------
acknowledge and agree that all rights to the Idaho Reimbursement
are the property of Seller and not of the Company. If the
Company, Purchaser or any of their Affiliates receive all or any
portion of the Idaho Reimbursement after the Closing, such entity
shall immediately pay such amount over to Seller free and clear
of all Encumbrances and without any additional consideration.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and
-----------
abandoned at any time prior to the Closing:
(a) by the mutual consent of Seller and
Purchaser;
(b) by either Seller or Purchaser in the event
the Closing has not occurred on or before August 31, 1998 (the
"Cut-Off Date"), unless the failure of such consummation shall be
due to the failure of the party seeking to terminate this Agree-
ment to comply in all material respects with the agreements and
covenants contained herein to be performed by such party on or
before the Cut-Off Date; provided, however, that the Cut-Off
-------- -------
Date may be extended through November 30, 1998 from time to time
upon written notice by Seller or Purchaser to the other party if
such an extension is necessary in connection with obtaining
clearance under the HSR Act;
(c) by either Seller or Purchaser in the event
any court or governmental agency of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree or ruling or other
action shall have become final and nonappealable;
(d) by either Seller or Purchaser if it uncovers
or discovers a material breach by the other party of a represen-
tation, warranty or covenant in this Agreement prior to the
Closing Date that is not remedied within five business days after
providing written notice thereof to the other party; or
(e) by Purchaser if, following a Customer Meet-
ing, Purchaser notifies Seller in writing within three business
days of such Customer Meeting that it has determined in its
reasonable judgment that the Customer has ceased to purchase the
Company's and the Subsidiary's products or is reasonably likely
to take such action as a result of the Customer's dissatisfaction
with the Company or the Subsidiary; provided, that Purchaser
shall have no right to terminate this Agreement pursuant to this
Section 7.1(e) if the Customer intends to take any such action as
a result of the Customer's relationship with Purchaser or as a
result of Purchaser's consummation of the transactions contem-
plated in this Agreement. Seller and Purchaser agree to use all
commercially reasonable efforts to conduct such Customer Meetings
as promptly as practicable. The right of termination set forth
in this Section 7.1(e) may not be exercised by Purchaser after 15
business days following the date of this Agreement; provided that
--------
if one or more Customer Meetings are not held with such 15
business day period and Purchaser and Seller have used all
commercially reasonable efforts to complete the Customer Meet-
ings, the right of termination in this Section 7.1(e) will be
extended for up to two additional five business day periods until
the later of (i) the third business day following the date of the
last Customer Meeting or (ii) the end of the 25th business day
after the date of this Agreement.
7.2 Procedure and Effect of Termination. In the event
-----------------------------------
of the termination and abandonment of this Agreement by Seller or
Purchaser pursuant to Section 7.1 hereof, written notice thereof
shall forthwith be given to the other party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) Each party will redeliver all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same;
(b) All confidential information received by
Purchaser or its affiliates with respect to the business of the
Company or Seller or their subsidiaries shall be treated in
accordance with the provisions of the Confidentiality Agreement,
dated as of April 6, 1998 between Purchaser and Seller (the
"Confidentiality Agreement"), which shall survive the termination
of this Agreement; and
(c) No party to this Agreement will have any
liability under this Agreement to the other except (i) as stated
in subsections (a) and (b) of this Section 7.2, (ii) for any
willful breach of any provision of this Agreement and (iii) as
provided in the Confidentiality Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. As between Purchaser, on the one
----------------
hand, and Seller, on the other hand, the rights and obligations
set forth in this Article VIII and Sections 6.4 and 6.10 hereof
and in the Confidentiality Agreement will be the sole and exclu-
sive remedies of the parties hereto with respect to any disputes
relating to this Agreement and the Confidentiality Agreement, the
events giving rise to this Agreement and the transactions provid-
ed for herein or contemplated hereby, it being agreed and under-
stood that as between Purchaser, on the one hand, and Seller, on
the other hand, the parties expressly waive any and all other
remedies, including any and all such remedies as may be provided
by statute, rule or regulation. In entering into this Agreement,
Purchaser acknowledges that none of Seller or any of its direc-
tors, officers, employees, affiliates, agents, advisers or
representatives has made to Purchaser any representation or
warranty, express or implied, other than as expressly made by
Seller in Article II and Section 6.10(c) of this Agreement.
Without limiting the generality of the foregoing, and notwith-
standing any otherwise express representations and warranties
made by Seller in Article II of this Agreement, Seller makes no
representation or warranty to Purchaser with respect to (i) any
projections, estimates or budgets heretofore delivered to or made
available to Purchaser of future revenues, expenses or expendi-
tures and future results of operations or (ii) any other informa-
tion or documents made available to Purchaser or its counsel,
accountants, or advisors with respect to the Company, except as
expressly covered by a representation and warranty contained in
Article II of this Agreement. None of the provisions of this
Section 8.1 shall apply to the claims, obligations, liabilities,
covenants and representations regarding Taxes of the Company or
the Subsidiary, which shall be governed solely by the terms of
Section 6.4.
(a) Indemnification by Seller. Subject to the
-------------------------
limits set forth in this Section 8.1, Seller agrees to indemnify,
defend and hold Purchaser, its officers, directors, agents and
affiliates, harmless from and in respect of any and all losses,
damages, costs and reasonable expenses including, without limita-
tion, reasonable expenses of counsel (collectively, "Losses"),
that they may incur arising out of or due to the inaccuracy of
any representation or the breach of any warranty, covenant,
undertaking or other agreement of Seller contained in this
Agreement if and to the extent such Losses exceed in the aggre-
gate $1,200,000; provided, however, that Seller shall not have
-------- --------
any liability to Purchaser as a result of the inaccuracy of any
representation or the breach of any warranty to the extent that
Purchaser knew that such representation or warranty was untrue or
incorrect prior to the Closing Date; provided, further that none
-------- -------
of Purchaser or its officers, directors, agents or affiliates
shall be entitled to recover from Seller, and Seller shall have
no liability to such persons under this Agreement for, more than
$40 million in the aggregate (the "Cap Amount").
(b) Indemnification by Purchaser and the Company.
--------------------------------------------
Subject to the limits set forth in this Section 8.1, Purchaser
and the Company, jointly and severally agree to indemnify, defend
and hold Seller, its officers, directors, agents and affiliates,
harmless from and in respect of any and all Losses that they may
incur (i) arising out of or due to any inaccuracy of any repre-
sentation or the breach of any warranty, covenant, undertaking or
other agreement of Purchaser contained in this Agreement and (ii)
arising out of any and all actions, suits, claims and administra-
tive or other proceedings of every kind and nature instituted or
pending against Seller or any of its affiliates at any time after
the Closing Date to the extent that such Losses (x) relate to or
arise out of or in connection with the assets, businesses,
operations, conduct, products or employees (including former
employees) of the Company and the Subsidiary, in connection with
occurrences or omissions after the Closing Date and (y) do not
arise out of a breach of Seller's representations and warranties
in, or a default in the performance of any of Seller's covenants
under, this Agreement.
(c) Survival of Representations and Warranties.
------------------------------------------
The several representations and warranties of the parties con-
tained in this Agreement or in any instrument delivered pursuant
hereto will survive the Closing Date and will remain in full
force and effect thereafter for a period of 18 months after the
Closing Date; provided, however, that such representations or
-------- -------
warranties shall survive (if at all) beyond such period with
respect to any inaccuracy therein or breach thereof, notice of
which shall have been duly given within such applicable period in
accordance with Section 8.1(d) hereof.
(d) Notice and Opportunity to Defend. If there
--------------------------------
occurs an event which a party asserts is an indemnifiable event
pursuant to Section 8.1(a) or 8.1(b), the party seeking indemni-
fication shall notify the other party obligated to provide
indemnification (the "Indemnifying Party") within 30 days of
becoming aware of such occurrence. If such event involves (i)
any claim or (ii) the commencement of any action or proceeding by
a third person, the party seeking indemnification will give such
Indemnifying Party written notice of such claim or the commence-
ment of such action or proceeding within 30 days of receiving
such notice or the commencement of such action; provided,
--------
however, that the failure to provide prompt notice as provided
- --------
herein will relieve the Indemnifying Party of its obligations
hereunder only to the extent that such failure prejudices the
Indemnifying Party hereunder. In case any such action shall be
brought against any party seeking indemnification and it shall
notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and
may elect, within 20 days of receiving such notice, to assume the
defense thereof with counsel reasonably satisfactory to such
party seeking indemnification and, after notice from the Indemni-
fying Party to such party seeking indemnification of such elec-
tion so to assume the defense thereof, the Indemnifying Party
shall not be liable to the party seeking indemnification hereun-
der for any legal expenses of other counsel or any other expenses
subsequently incurred by such party in connection with the
defense thereof. The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its counsel in
the defense against any such action or asserted liability. The
party seeking indemnification shall have the right to participate
at its own expense in the defense of such action or asserted
liability. In no event shall an Indemnifying Party be liable for
any settlement effected without its consent, which consent shall
not be unreasonably withheld. In no event shall a party seeking
indemnification be liable for any settlement effected without its
consent, which consent shall not be unreasonably withheld, unless
such settlement does not contain any terms or conditions that are
adverse to the interests of the party seeking indemnification.
(e) Adjustment for Insurance and Taxes. The
----------------------------------
amount which an Indemnifying Party is required to pay to, for or
on behalf of any other party (hereinafter referred to as an
"Indemnitee") pursuant to this Section 8.1 shall be adjusted
(including, without limitation, retroactively) (i) by any insur-
ance proceeds actually recovered by or on behalf of such Indemni-
tee in reduction of the related indemnifiable loss (the "Indemni-
fiable Loss") and (ii) (A) reduced by the present value of the
amount of any Tax savings resulting from any tax benefit to the
party seeking indemnification (or, when such party is Purchaser,
the Company or the Subsidiary) as a result of the Indemnifiable
Loss, and (B) increased by the present value of the amount of any
Tax due with respect to the indemnification payment itself.
Amounts required to be paid, as so adjusted, are hereafter
sometimes called an "Indemnity Payment." If an Indemnitee shall
have received or shall have had paid on its behalf an Indemnity
Payment in respect of an Indemnifiable Loss and shall subsequent-
ly receive insurance proceeds in respect of such Indemnifiable
Loss, or realize any net tax benefit (as computed in clause (ii)
above) as a result of such Indemnifiable Loss, then the Indemni-
tee shall pay to the Indemnifying Party the amount of such
insurance proceeds or net tax benefit or, if lesser, the amount
of the Indemnity Payment.
ARTICLE IX
MISCELLANEOUS
9.1 Fees and Expenses. Seller (and not the Company)
-----------------
shall bear its own expenses and Purchaser shall bear its own
expenses in connection with the negotiation and consummation of
the transactions contemplated by this Agreement. Each of Seller
and Purchaser shall bear the fees and expenses of any broker or
finder retained by such party in connection with the transactions
contemplated herein.
9.2 Governing Law. This Agreement shall be construed
-------------
under and governed by the laws of the State of Illinois without
regard to the conflicts of laws provisions thereof.
9.3 Amendment. This Agreement may not be amended,
---------
modified or supplemented except upon the execution and delivery
of a written agreement by the parties hereto.
9.4 No Assignment. Neither this Agreement nor any of
-------------
the rights, interests or obligations hereunder shall be assigned
by any party hereto without the prior written consent of the
other party hereto; provided that either party may assign its
--------
rights, interests or obligations hereunder without prior written
consent in connection with any sale of all or substantially all
of the assets, capital stock or business of such entity or the
merger of such entity with and into another entity in which the
other entity survives; provided further that the purchaser of
-------- -------
such assets or stock or the entity surviving such merger shall
agree in writing to assume all of the respective party's rights
and obligations under this Agreement.
9.5 Waiver. Any of the terms or conditions of this
------
Agreement which may be lawfully waived may be waived in writing
at any time by each party which is entitled to the benefits
thereof. Any waiver of any of the provisions of this Agreement
by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure
to enforce any provision of this Agreement shall be deemed to or
shall constitute a waiver of such provision and no waiver of any
of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
9.6 Notices. All notices, requests, claims, demands
-------
and other communications hereunder shall be in writing and shall
be given by delivery, by telex, telecopier, overnight courier or
by mail (registered or certified mail, postage prepaid, return
receipt requested) to the respective parties as follows:
If to Purchaser:
Solo Cup Company
1700 Old Deerfield Road
Highland Park, Illinois 60035
Attention: Ronald L. Whaley
(847) 831-5849 (telecopier)
(847) 831-4800 (telephone)
With a copy to:
Fox and Grove, Chtd.
311 South Wacker Drive, Suite 6200
Chicago, Illinois 60606
Attention: Shayle P. Fox, Esq.
(312) 362-0700 (telecopier)
(312) 876-0500 (telephone)
If to Seller:
Envirodyne Industries, Inc.
701 Harger Road
Suite 190
Oak Brook, Illinois 60523
Attention: F. Edward Gustafson
(630) 571-0959 (telecopier)
(630) 575-2400 (telephone)
With a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Charles W. Mulaney, Jr.
(312) 407-0411 (telecopier)
(312) 407-0700 (telephone)
or to such other address as any party hereto may, from time to
time, designate in a written notice given in like manner.
9.7 Complete Agreement. This Agreement, the
------------------
Confidentiality Agreement and the other documents and writings
referred to herein or delivered pursuant hereto contain the
entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof and thereof. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
9.8 Counterparts. This Agreement may be executed in
------------
one or more counterparts, all of which shall be considered one
and the same agreement and each of which shall be deemed an
original. This agreement may be executed initially by telecopy
and actual signature pages may be exchanged at the convenience of
the parties.
9.9 Publicity. Seller and Purchaser will consult with
---------
each other and will mutually agree upon any publication or press
release of any nature with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such
publication or press release prior to such consultation and
agreement except as may be required by applicable law or by
obligations pursuant to any listing agreement with any securities
exchange or any securities exchange regulation, in which case the
party proposing to issue such publication or press release shall
use reasonable efforts to consult in good faith with the other
party before issuing any such publication or press release.
9.10 Headings. The headings contained in this
---------
Agreement are for reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
9.11 Knowledge. For purposes of this Agreement, the
---------
term "knowledge" means, with respect to Purchaser, the actual
knowledge of any senior corporate executive officer of Purchaser
and, with respect to Seller, the actual knowledge of any senior
corporate executive officer of Seller.
9.12 Severability. Any provision of this Agreement
------------
which is invalid, illegal or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability, without affect-
ing in any way the remaining provisions hereof in such jurisdic-
tion or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
9.13 Third Parties. Except as specifically set forth
-------------
or referred to herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person or corporation, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or
by reason of this Agreement.
9.14 Specific Performance. Each of the parties
--------------------
acknowledges and agrees that the other party would be damaged
irreparably in the event any of the provisions of this Agreement
are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees
that the other party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agree-
ment and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court having
jurisdiction over the parties and the matter, in addition to any
other remedy to which they may be entitled, at law or in equity,
and that such injunction shall be available without the parties
bringing suit being required to post any bond or undertaking.
9.15 Dispute Resolution.
------------------
(a) Arbitration. In the event of disputes
-----------
between the parties with respect to the terms and conditions of
this Agreement, such disputes shall be resolved by and through an
arbitration proceeding to be conducted under the auspices of the
American Arbitration Association (the "AAA") in Chicago, Illinois
pursuant to the AAA's Commercial Arbitration Rules as modified by
this Agreement. Such arbitration proceeding shall be conducted
in as expedited a manner as is then permitted by those rules.
The board of arbitrators (the "Board of Arbitrators") in any such
arbitration (an "Arbitration") shall be persons who are expert in
the subject matter of the dispute.
(b) Selection of Arbitrators. Seller shall
------------------------
appoint one arbitrator and Purchaser shall appoint one arbitrator
within a term of 30 calendar days from the date of any claim
hereunder, and the two arbitrators so appointed shall appoint the
third arbitrator, within a term of 15 calendar days from the date
in which the last of the two arbitrators have been selected. If
either Seller or Purchaser fails to select its arbitrator within
the term mentioned above, or in the event that the two selected
arbitrators are unable or unwilling to select a third arbitrator
within 15 calendar days following the selection of the last of
them, then AAA shall select the arbitrator that was not selected
by either of Seller or Purchaser or the third arbitrator as the
case may be, in accordance with the procedure set forth below,
and the three arbitrators shall constitute the arbitration panel
for purposes of the dispute.
(c) Procedure. Each party shall bear separately
---------
the cost of their respective attorneys, witnesses and experts in
connection with such arbitration. Time is of the essence in this
arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten days following
completion of the Arbitration. The Board of Arbitrators shall
only order a party to produce documents which the Board of
Arbitrators concludes are relevant to claims for which there is a
good faith basis in law and in fact, and it appears likely that
such documents will provide substantive evidence regarding those
claims. The Board of Arbitrators shall act by majority vote and
if requested by either of the parties, shall render a detailed
written opinion setting forth the reasons for its decision. If
requested by either party, the Board of Arbitrators shall be
entitled (but not obligated) to modify the rules applicable to
any proceeding. The Board of Arbitrators shall not be empowered
to award damages in excess of compensatory damages, and each
party hereby irrevocably waives any right to recover punitive,
exemplary or similar damages with respect to any dispute. The
Board of Arbitrators shall apply Delaware law.
(d) Exclusive Remedy. Any and all legal
----------------
proceedings to enforce this Agreement (except for any action to
compel arbitration hereunder, any action to enforce any award or
judgment rendered thereby, or any action for specific performance
under Section 9.14), shall be governed in accordance with this
Section 9.15. Both the foregoing agreement of the parties to
arbitrate any and all such claims, and the results, determina-
tion, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties thereto,
and shall be the sole and exclusive remedy between the parties
regarding any claims, counter-claims or accounting presented to
the Board of Arbitrators. The parties hereby waive any rights of
application or appeal to any court or tribunal of competent
jurisdiction without limitation the courts of the United States
to the fullest extent permitted by law in connection with any
question of law arising in the course of the arbitration or with
respect to any award made, except for any action to compel
arbitration hereunder, any action to enforce any award or judg-
ment rendered thereby, or any action for specific performance
under Section 9.14, but entry of any such judgment will not be
required to make such award effective.
IN WITNESS WHEREOF, each of Purchaser and Seller have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
ENVIRODYNE INDUSTRIES, INC.
By
----------------------------------
Name: Gordon S. Donovan
Title: Vice President
SOLO CUP COMPANY
By
-----------------------------------
Name: Ronald L. Whaley
Title: Vice President<PAGE>
AMENDMENT TO
STOCK PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT (this
"Amendment"), dated as of July 24, 1998, between ENVIRODYNE
---------
INDUSTRIES, INC., a Delaware corporation (the "Seller"), and SOLO
------
CUP COMPANY, an Illinois corporation (the "Purchaser").
---------
W I T N E S S E T H:
-------------------
WHEREAS, Seller and Purchaser are party to that certain
Stock Purchase Agreement, dated as of June 5, 1998, between
Seller and Buyer (the "Stock Purchase Agreement") (capitalized
------------------------
terms used herein and not defined herein shall have the respec-
tive meanings set forth in the Stock Purchase Agreement); and
WHEREAS, Seller and Purchaser have agreed to amend
certain provisions of the Stock Purchase Agreement as set forth
below.
NOW, THEREFORE, in consideration of the mutual promises
and covenants herein contained, the parties hereto agree as fol-
lows:
1. Purchase Price Adjustment. Section 1.4(a) of the
-------------------------
Stock Purchase Agreement is hereby amended and restated as
follows:
(a) As soon as practicable, but in no event later than
75 days following the Closing Date, Seller shall prepare a
Statement of Adjusted Working Capital of the Company and the
Subsidiary (as defined in Section 2.1 hereof) as of the
close of business on July 23, 1998 (including the notes
thereto, the "Closing Date Statement"). The Closing Date
Statement shall present the net amount of the Company's
consolidated current assets less the Company's consolidated
current liabilities in each case excluding (i) any amounts
payable to or receivable from Seller or any of its
Affiliates (as defined in Section 2.3 hereof) other than the
Company and the Subsidiary (as defined in Section 2.1) that
do not remain outstanding after the Closing, (ii) accrued
state and federal income taxes, (iii) any amounts to which
the Company may be entitled to reimbursement in connection
with the tax increment financed cost of construction at the
Twin Falls, Idaho, plant (the "Idaho Reimbursement") and
(iv) any Taxes payable as result of Purchaser's election
under Treasury Regulation Section 1.338(h)(10), in each case
as of the close of business on July 23, 1998 plus, from
March 26, 1998 to the close of business on July 23, 1998,
the net investment in fixed assets less the net proceeds
from the disposal of any fixed assets of the Company and the
Subsidiary (the "Net Working Capital Amount") and shall be
prepared with respect to such items on a basis consistent
with the March Balance Sheet Information (as defined in
Section 2.5).
2. Litigation. Section 2.10 of the Disclosure
----------
Schedule is hereby amended and restated in its entirety as set
forth on Annex A to this Amendment.
3. Patents, Trademarks, Trade Names, Etc. Section
-------------------------------------
2.14 of the Disclosure Schedule is hereby amended and restated in
its entirety as set forth on Annex B to this Amendment.
4. Employees; Employee Benefits. Section 6.10(d) of
----------------------------
the Stock Purchase Agreement is hereby amended and restated as
follows:
(d) Prior to the Closing, Seller shall "spin-off" the
accounts in the Envirodyne Retirement Income Plan (the
"Seller's Savings Plan") attributable to the Affected
Employees into a newly established Clear Shield Retirement
Income Plan (the "Company's Savings Plan"). Upon Closing,
Purchaser shall assume all liabilities and obligations
relating to the Company's Savings Plan and Seller and each
of its Affiliates shall be relieved from all such liabili-
ties. As of the earlier of (i) January 15, 1999 or (ii) if
Purchaser transfers the assets and liabilities of the
Company's Savings Plan to the Solo Cup Profit Sharing Plan
(the "Purchaser's Savings Plan") then on the date of such
transfer, the Purchaser agrees to contribute to the account
of each Affected Employee a profit-sharing contribution in
cash in respect of calendar year 1998, in an amount which is
consistent (with respect to each Affected Employee) with the
Company's past practice. Purchaser and Seller shall
cooperate in the filing of documents required by the
transfer, if any, of assets and liabilities as described in
the immediately preceding sentence.
This Section 4 of this Amendment also hereby amends Section
2.12 of the Disclosure Schedule to change references to the
Envirodyne Retirement Income Plan to the Clear Shield National
Retirement Income Plan.
5. Employees; Employee Benefits. Section 6.10(g) of
----------------------------
the Stock Purchase Agreement is hereby amended and restated as
follows:
(g) The Purchaser agrees to hold the Seller harmless
from and against any and all claims, liabilities,
penalties and expenses (including reasonable legal fees)
which Seller may incur with respect to the Company's
Savings Plan after the Closing, except to the extent that
any such claims, liabilities, penalties and expenses
relate (w) to the administration of the Seller's Savings
Plan prior to the spin-off of the Affected Employees'
accounts in such plan pursuant to Section 6.10(d) hereof,
(x) to the pre-Closing administration of the Company's
Savings Plan, (y) to any error in the list of the
individual accrued benefits, credited service and other
information of Affected Employees provided by Seller to
Purchaser pursuant to Section 6.10(c) hereof or (z) any
violation of ERISA or the Code that occurred prior to the
Closing. The direct cost related to "spinning-off" the
Company's Savings Plan shall be born by the Seller, except
that the respective legal expenses of Purchaser and Seller
relating to the "spin-off" shall be borne by the
respective party that incurs such expenses.
6. Insurance. Section 6.11 of the Stock
---------
Purchase Agreement hereby is amended and restated in its
entirety as follows:
Purchaser and Seller hereby acknowledge and agree
that all insurance coverage and bonds with respect to
the properties and business of the Company and the
Subsidiary that are in effect as of the date hereof
shall be terminated as of the Closing Date from and
after the Closing Date. Notwithstanding the forego-
ing, Seller agrees to use its commercially reasonable
efforts to add Purchaser as an additional insured
with respect to Seller's worker's compensation insur-
ance for claims of Affected Employees based upon
occurrences prior to the Closing Date and Purchaser
agrees to use its commercially reasonable efforts to
add Seller as an additional insured with respect to
Purchaser's worker's compensation insurance for
claims of Affected Employees based upon occurrences
on or after the Closing Date. The Seller also agrees
that it will remain responsible for all claims made
under the Company's General Liability policy with
Reliance National Indemnity Company which relate to
events that occurred prior to the Closing Date
(including without limitation the case of Oliver
------
Dalton v. Clear Shield National, Inc. filed in the
------------------------------------
Circuit Court of Cook County, Illinois, Case
No. 98 L 001100), and Purchaser agrees that
the Company will be responsible for all claims based
upon events that occur on or after the Closing Date
incurred under its or the Company's general liability
insurance.
7. Miscellaneous. Seller shall be liable for
-------------
amounts payable by the Company in the case of Computer
Integrate v. Nofra Development, et al., Circuit Court of
Cook County, Illinois, Case No. 95 M3 3920.
8. References. Upon the effectiveness of this
----------
Amendment, all references in the Stock Purchase Agreement
and in all other agreements, documents, certificates,
schedules and instruments executed pursuant thereto to the
Stock Purchase Agreement including, without limitation,
references to "this Agreement," "hereunder," "hereof,"
"herein" and words of like import contained in the Stock
Purchase Agreement shall, except where the context other-
wise requires, mean and be a reference to the Stock Pur-
chase Agreement, as amended.
9. Ratification. Except as expressly amended
------------
hereby, all of the provisions of the Stock Purchase
Agreement, as amended, shall remain unaltered and in full
force and effect, and, as amended hereby, the Stock Pur-
chase Agreement is in all respects agreed to and ratified
and confirmed by the parties hereto.
10. Severability. If any provision of this
-------------
Amendment shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all
other provisions of this Amendment shall not be affected
and shall remain in full force and effect.
11. Counterparts. This Amendment may be
------------
executed in one or more counterparts, all of which shall
be considered one and the same agreement and each of which
shall be deemed an original.
12. Governing Law. This Amendment shall be
-------------
construed under and governed by the laws of the State of
Illinois without regard to the conflicts-of-laws provi-
sions thereof.
* * * * * * * *
IN WITNESS WHEREOF, the parties hereto have duly
executed this Amendment as of the date first above writ-
ten.
ENVIRODYNE INDUSTRIES, INC.
By____________________________
Name: Gordon S. Donovan
Title: Vice President
SOLO CUP COMPANY
By____________________________
Name: Ronald L. Whaley
Title: Vice President
