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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
Date of Report (Date of earliest event reported): April 14, 1998
(March 30, 1998)
GREIF BROS. CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-566 31-4388903
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
425 Winter Road, Delaware, Ohio 43015
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 740-549-6000
Not Applicable
(Former name or former address, if changed since last report)
Index to Exhibits on Page 5
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 30, 1998, pursuant to the terms of a Stock
Purchase Agreement, dated March 30, 1998, between Greif Bros.
Corporation (the "Company") and Sonoco Products Company
("Sonoco"), the Company acquired the industrial container
business of Sonoco by purchasing all of the outstanding shares of
KMI Continental Fibre Drum, Inc., a Delaware corporation ("KMI"),
Sonoco Plastic Drum, Inc., an Illinois corporation ("SPD"), GBC
Holding Co., a Delaware corporation ("GBC Holding"), and Fibro
Tambor, S.A. de C.V., a Mexican corporation ("Fibro Tambor") and
the membership interest of Sonoco in Total Packaging Systems of
Georgia, LLC, a Delaware limited liability company ("TPS"). KMI,
SPD, GBC Holding, Fibro Tambor, TPS and their respective
subsidiaries are in the business of producing, manufacturing,
selling and leasing plastic drums and fibre drums principally in
the United States and Mexico and refurbishing and reconditioning
plastic drums principally in the United States and Mexico. In
addition, on March 30, 1998, the Company entered into an
agreement with Sonoco to acquire its intermediate bulk container
business, which the parties intend to close as soon as receipt of
necessary approvals are obtained. Pending receipt of such
approvals, the Company will market and sell intermediate bulk
containers for Sonoco under a distributorship agreement.
The acquisition of the industrial container business
includes twelve fibre drum plants and five plastic drum plants
along with facilities for research and development, packaging
services and distribution. The Company has no present plans to
devote any material amount of the assets acquired to other
purposes.
As consideration for the shares of KMI, SPD, GBC
Holding and Fibro Tambor and the membership interest of Sonoco in
TPS, the Company paid $185,395,000 in cash. The purchase price
was determined through negotiations. The Company used funds
available under the Credit Agreement, dated as of March 30, 1998,
which provides a revolving credit facility of up to $325,000,000,
in order to pay the purchase price. The Credit Agreement is
filed herewith as Exhibit 99(b).
These transactions have previously been publicly
announced by the Company and a copy of the press release issued
by the Company on March 31, 1998 is included herewith as Exhibit
99(a).
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (concluded)
The description contained herein of the Stock Purchase
Agreement is qualified in its entirety by reference to the Stock
Purchase Agreement dated March 30, 1998 between the Company and
Sonoco, which is attached hereto as Exhibit 2 and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
As of the date of filing of this Current Report on Form
8-K, it is impracticable for the Company to provide the financial
statements required by this Item 7(a). No such financial
statements are presently available. In accordance with Item
7(a)(4) of Form 8-K, the required financial statements will be
filed by amendment under cover of Form 8-K/A no later than 60
days after April 14, 1998.
(b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form
8-K, it is impracticable for the Company to provide the pro forma
financial information required by this Item 7(b). No such pro
forma information is presently available. In accordance with
Item 7(b)(2) of Form 8-K, such pro forma financial information
will be filed by amendment under cover of Form 8-K/A no later
than 60 days after April 14, 1998.
(c) Exhibits.
The following documents related to the acquisition of
the shares of KMI, SPD, GBC Holding and Fibro Tambor and the
membership interest in TPS are being filed as exhibits to this
Form 8-K:
Exhibit Number Description
2 Stock Purchase Agreement, dated March 30, 1998,
between Greif Bros. Corporation and Sonoco
Products Company (the "Stock Purchase
Agreement")
99(a) Press Release issued by Greif Bros. Corporation
on March 31, 1998
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (concluded)
Exhibit Number Description
99(b) Credit Agreement, dated as of March 30, 1998,
among Greif Bros. Corporation, as Borrower,
Various Financial Institutions, as Banks, and
KeyBank National Association, as Agent (the
"Credit Agreement")
Schedules and Exhibits to the Stock Purchase Agreement have not
been filed because the Company believes they do not contain
information material to an investment decision which is not
otherwise disclosed in the Stock Purchase Agreement. A list has
been attached to the Stock Purchase Agreement briefly identifying
the contents of all omitted Schedules and Exhibits. The Company
hereby agrees to furnish supplementally a copy of any omitted
Schedule or Exhibit to the Securities and Exchange Commission
upon its request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
DATE: April 14, 1998 GREIF BROS. CORPORATION
BY /s/Michael J. Gasser
Michael J. Gasser, Chairman
and Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit Number Description Pages
2 Stock Purchase Agreement dated *
March 30, 1998 between Greif
Bros. Corporation and Sonoco
Products Company.
99(a) Press Release issued by Greif *
Bros. Corporation on
March 31, 1998.
99(b) Credit Agreement, dated as of *
March 30, 1998, among Greif
Bros. Corporation, as Borrower,
Various Financial Institutions,
as Banks, and KeyBank National
Association, as Agent.
* Included herein.
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Exhibit 2
STOCK PURCHASE AGREEMENT
BETWEEN
GREIF BROS. CORPORATION
AND
SONOCO PRODUCTS COMPANY,
AS THE SOLE SHAREHOLDER OF
KMI CONTINENTAL FIBRE DRUM, INC., A DELAWARE CORPORATION, SONOCO
PLASTIC DRUM, INC., AN ILLINOIS CORPORATION, AND GBC HOLDING CO,
A DELAWARE CORPORATION
AND AS THE SOLE MEMBER OF
TOTAL PACKAGING SYSTEMS OF GEORGIA, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
DATED: March 30, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS 2
Section 1.1. Definitions 2
ARTICLE 2. PURCHASE AND SALE OF SHARES 10
Section 2.1. Purchase and Sale of Shares and TPS
Interest 10
Section 2.2. Purchase Price 11
Section 2.3. Delivery of Share Certificates and the
Assignment of the TPS Interest 11
ARTICLE 3. CLOSING 11
Section 3.1. Closing 11
Section 3.2. Transactions at Closing 11
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER 13
Section 4.1. Authority of Seller; No Conflict 13
Section 4.2. Organization and Qualification of Each
Acquired Company 14
Section 4.3. Capitalization of Each Acquired Company 15
Section 4.4. Books and Records 15
Section 4.5. Financial Statements 16
Section 4.6. Events Subsequent to Most Recent Fiscal
Year End 16
Section 4.7. Undisclosed Liabilities 17
Section 4.8. Compliance with Legal Requirements;
Governmental Authorizations 17
Section 4.9. Legal Proceedings; Orders 18
Section 4.10. Taxes 18
Section 4.11. Real Property 19
Section 4.12. Intellectual Property 21
Section 4.13. Personal Property; Condition and
Sufficiency of Assets 23
Section 4.14. Inventory 24
Section 4.15. Contracts; No Defaults 24
Section 4.16. Notes, Accounts and Other Miscellaneous
Receivables 25
Section 4.17. Bank Accounts; Powers of Attorney 26
Section 4.18. Insurance 26
Section 4.19. Product Warranty 26
Section 4.20. Product Liability 26
Section 4.21. Labor Relations and Compliance 27
Section 4.22. Employee Benefits 28
Section 4.23. Customers 30
Section 4.24. Guaranties 30
Section 4.25. Environmental Matters 30
Section 4.26. Certain Payments 31
Section 4.27. Related Person Services 31
Section 4.28. Brokers' Fees 32
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Section 4.29. Financial Projections 32
Section 4.30. Disclosure 32
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER 32
Section 5.1. Organization and Good Standing 32
Section 5.2. Authority; No Conflict 32
Section 5.3. Certain Proceedings 33
Section 5.4. Brokers' Fees 33
Section 5.5. Investment 33
Section 5.6. No Default 33
Section 5.7. Available Funds 33
ARTICLE 6. CERTAIN AGREEMENTS 33
Section 6.1. Investigation of the Acquired Companies
by Buyer 33
Section 6.2. Preserve Accuracy of Representations and
Warranties 34
Section 6.3. Consents of Third Parties; Governmental
Authorizations 34
Section 6.4. Operations Prior to the Closing Date 35
Section 6.5. Notification by Seller of Certain Matters 36
Section 6.6. Title Abstracts and Surveys 36
Section 6.7. Compliance with Environmental Property
Transfer Acts 37
Section 6.8. Change of Corporate Names 37
ARTICLE 7. ADDITIONAL AGREEMENTS 37
Section 7.1. Covenant Not to Compete or Solicit
Business 37
Section 7.2. Access to Records after Closing 39
Section 7.3. Employees and Employee Benefit Plans 39
Section 7.4. Confidential Nature of Information 45
Section 7.5. No Solicitation 45
Section 7.6. Notes, Accounts and Other Miscellaneous
Receivables 45
Section 7.7. Environmental Matters 46
Section 7.8. Financial Statement Consents 47
Section 7.9. Delivery of Audited Financial Statements 47
Section 7.10. Certain Contracts in the Name of Seller
Relating to the Industrial Container Business 47
Section 7.11. Option to Purchase Far East Fibre Drum
Operations 48
Section 7.12. Post Closing Real Estate Matters 49
Section 7.13. Post Closing Intellectual Property
Matters 49
Section 7.14. Patent Litigation Matters 50
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE 50
Section 8.1. Conditions Precedent to Buyer's
Obligation to Close 50
Section 8.2. Conditions Precedent to Seller's
Obligation to Close 51
ARTICLE 9. COVENANTS AS TO TAX MATTERS 52
Section 9.1. Section 338(h)(10) Election 52
Section 9.2. Liability for Taxes 53
Section 9.3. Preparation and Filing of Tax Returns 54
Section 9.4. Cooperation and Assistance 55
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Section 9.5. Transfer Taxes 55
Section 9.6. Nonforeign Affidavit 55
ARTICLE 10. INDEMNIFICATION; REMEDIES 55
Section 10.1. Survival of Representations and
Warranties 55
Section 10.2. Indemnification and Payment of Damages
by Seller 56
Section 10.3. Indemnification and Payment of Damages
by Buyer 56
Section 10.4. Limitations on Indemnification 57
Section 10.5. Procedure for Indemnification--Third
Party Claims 57
Section 10.6. Procedure for Indemnification--Direct
Claims 58
Section 10.7. Procedure for Indemnification--Direct
Environmental Claims 58
ARTICLE 11. TERMINATION 61
Section 11.1. Termination 61
Section 11.2. Notice of Termination 61
Section 11.3. Effect of Termination 61
ARTICLE 12. GENERAL PROVISIONS 61
Section 12.1. Expenses 61
Section 12.2. Public Announcements 62
Section 12.3. Notices 62
Section 12.4. Further Assurances 63
Section 12.5. Waiver 63
Section 12.6. Entire Agreement and Modification 63
Section 12.7. Assignments, Successors, and No Third-
Party Rights 63
Section 12.8. Severability 64
Section 12.9. Section Headings, Construction 64
Section 12.10. Time of Essence 64
Section 12.11. Governing Law 64
Section 12.12. Counterparts 64
Section 12.13. Incorporation of Exhibits and Schedules 64
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as
of March 30, 1998, by and between Greif Bros. Corporation, a
Delaware corporation (the "Buyer"), and Sonoco Products Company,
a South Carolina corporation (the "Seller").
WITNESSETH:
WHEREAS, Seller owns (a) directly all of the issued and
outstanding shares of KMI Continental Fibre Drum, Inc., a
Delaware corporation ("KMI"), which wholly owns, as a Subsidiary,
Sonoco Fibre Drum, Inc., a Delaware corporation ("SFD"), which in
turn wholly owns, as a Subsidiary, Sonoco Packaging Services,
Inc., a Delaware corporation ("SPS"), (b) directly all of the
issued and outstanding shares of Sonoco Plastic Drum, Inc., an
Illinois corporation ("SPD"), which wholly owns, as Subsidiaries,
Sonoco Plastic Drum Southwest Division, Inc., a Texas corporation
("SPD Southwest") and Sonoco Plastic Drum, Inc., a Kentucky
corporation ("SPD Southeast"), (c) directly all of the issued and
outstanding shares of GBC Holding Co., a Delaware corporation
("GBC Holding"), (d) indirectly through wholly-owned Subsidiaries
all of the issued and outstanding shares of Fibro Tambor, S.A. de
C.V., a Mexican corporation ("Fibro Tambor") and (e) directly
100% percent of the membership interest in the equity and
earnings of Total Packaging Systems of Georgia, LLC, a Delaware
limited liability company ("TPS").
WHEREAS, KMI, SPD, GBC Holding, Fibro Tambor, TPS and
their respective Subsidiaries (including SFD, SPS, SPD Southwest
and SPD Southeast) are in the business of producing,
manufacturing, selling and leasing plastic drums, fibre drums and
intermediate bulk containers principally in the United States and
Mexico and refurbishing and reconditioning plastic drums
principally in the United States and Mexico, and the business
operations of such entities, together with the Far East Fibre
Drum Operations, constitute all of industrial container business
operation of the Seller and its affiliates (all of such business,
excluding therefrom the production, manufacturing, selling and
leasing of intermediate bulk containers pursuant to or in
connection with a License Agreement dated April 1, 1989 with
Sotralentz, S. A. (the "IBC Business") shall hereinafter be
referred to as the "Industrial Container Business").
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, the Industrial Container Business in the manner set
forth in this Agreement.
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, (a) all of the issued and outstanding shares (the
"Shares") of capital stock of (i) KMI, (ii) SPD, (iii) GBC
Holding and (iv) Fibro Tambor and (b) all of the membership
interest of Seller in the equity and earnings of TPS (the "TPS
Interest") for the consideration and on the terms set forth in
this Agreement.
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NOW, THEREFORE, in consideration of the foregoing
premises and the representations, warranties, covenants and
agreements contained herein, Buyer and Seller agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1. Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
"Accounting Firm" has the meaning specified in Section
9.3(d).
"Acquired Company" means, individually, KMI, SPD, GBC
Holding, Fibro Tambor, TPS and each of their respective
Subsidiaries, including SFD, SPD Southwest, SPD Southeast and
SPS.
"Acquired Companies" means KMI, SPD, GBC Holding, Fibro
Tambor, TPS and each of their respective Subsidiaries, including
SFD, SPD Southwest, SPD Southeast and SPS, collectively.
"Agreement" has the meaning specified in the first
paragraph of this document.
"Allocations" has the meaning specified in Section
9.1(b).
"Applicable Contract" means any Contract specified in
Section 4.15.
"Assets" means all right, title and interest in and to
all of the assets of the Acquired Companies, including, without
limitation, (a) all real property, leaseholds and subleaseholds
therein, improvements, fixtures and fittings thereon, and
easements, rights-of-way and other appurtenances thereto, (b) all
tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, manufactured and
purchased parts, goods in process and finished goods, furniture,
automobiles, trucks, tractors, trailers, tools, jigs, dies and
office equipment), (c) Intellectual Property of the Acquired
Companies (excluding the name "Sonoco" and any derivations,
abbreviations or symbols thereof), the goodwill associated
therewith, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, (d) accounts, accounts
receivable, notes receivable and all other receivables, (e) cash
and cash equivalents, (f) prepaid assets, (g) marketable
securities and (h) deposits.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any specified
consequence.
"Buyer" has the meaning specified in the first paragraph of
this Agreement.
"Buyer Ancillary Agreements" means all Contracts,
instruments and documents being or to be executed and delivered
by Buyer under this Agreement or in connection herewith.
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"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, and the
regulations promulgated thereunder.
"Closing" has the meaning specified in Section 3.1.
"Closing Date" means the date as of which the Closing
actually takes place.
"Company" means, individually, (a) KMI, (b) SPD and (c)
GBC Holding.
"Company Group" means the "affiliated group" (as
defined in Section 1504(a) of the IRC without regard to the
limitations contained in Section 1504(b) of the IRC) that
includes Seller.
"Company Property" means any real or personal property,
plant, building, facility, structure, underground storage tank,
equipment or unit, or other asset currently or formerly owned,
leased or operated by any of the Acquired Companies.
"Copyrights" means United States and foreign
copyrights, copyrightable works, and mask work, whether
registered or unregistered, and pending applications to register
the same.
"Consent" means any approval, consent, ratification,
waiver, or other authorization (including any Governmental
Authorization).
"Contaminant" means any waste, pollutant, hazardous or
toxic substance, petroleum, petroleum-based substance or waste,
or any other substance that is listed, defined, designated or
classified as, or otherwise determined to be, hazardous,
radioactive or toxic, or a pollutant or a contaminant under or
pursuant to, any Environmental Law.
"Contemplated Transactions" means all of the
transactions contemplated by this Agreement, including: (a) the
sale of the Shares of KMI, SPD, GBC Holding and Fibro Tambor by
Seller (or, in the case of the Shares of Fibro Tambor, one or
more of its wholly-owned Subsidiaries) to Buyer (or in the case
of the Shares of Fibro Tambor, one or more affiliates of Buyer
identified by Buyer; (b) the sale of the TPS Interest by Seller
to Buyer; (c) the sale of the entire Industrial Container
Business by Seller to Buyer, including the indirect acquisition
by Buyer of all of the issued and outstanding shares of SFD, SPD
Southwest, SPD Southeast and SPS, which entities are wholly-owned
Subsidiaries of either KMI or SPD; and (d) the performance by
Buyer and Seller of their respective covenants and obligations
under this Agreement.
"Contract" means any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding.
"Election" shall have the meaning specified in Section
9.1(a).
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"Encumbrance" means any lien (statutory or other),
claim, charge, security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, conditional sale or other
title retention agreement, preference, priority or other security
agreement or preferential arrangement of any kind or nature, and
any easement, encroachment, covenant, restriction, right of way,
defect in title or other encumbrance of any kind.
"Environment" means soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental Encumbrance" means an Encumbrance in
favor of any Governmental Body for (a) any Liability under any
Environmental Law or (b) damages arising from, or costs incurred
by such Governmental Body in response to, a Release or threatened
Release of a Contaminant into the Environment.
"Environmental Law" means all Legal Requirements relating to
or addressing the Environment, including those that require or
relate to: (a) advising appropriate Governmental Bodies,
employees and the public of intended or actual Release of
Contaminants, violations of discharge limits, or other
prohibitions; (b) preventing, or reducing to acceptable levels,
the Release of Contaminants into the Environment; (c) reducing
the quantities, preventing the Release, or minimizing the
hazardous characteristics, of Contaminants that are generated;
(d) reducing to acceptable levels the risks inherent in the
transportation of Contaminants; (e) cleaning up Contaminants that
have been released or paying the costs of such clean up; or (f)
making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest
to recover for injuries done to public assets. Environmental Law
includes, without limitation, the Clean Air Act, as amended,
CERCLA, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, RCRA, the
Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Hazardous & Solid Waste Amendments Act of
1984, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, and any state laws implementing or that are
analogs to the foregoing federal laws.
"Environmental Property Transfer Acts" means any
applicable Legal Requirements that, for environmental reasons,
conditions, restricts, prohibits or requires any notification or
disclosure with respect to the direct or indirect transfer, sale,
lease or closure of any property, including any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible
Property Transfer Acts."
"ERISA" means the Employee Retirement Income Security
Act of 1974 or any successor law, and regulations and rules
issued pursuant to that Act or any successor law.
"Exclusive Distributorship Agreement" means the
Exclusive Distributorship Agreement between Buyer and Seller
attached hereto as Exhibit C.
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"Expenses" means any and all expenses incurred in
connection with investigating, defending or asserting any claim,
action, suit or proceeding incident to any matter indemnified
against hereunder (including, without limitation, court filing
fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, consultants, accountants and
other professionals).
"Far East Fibre Drum Operations" has the meaning
specified in Section 7.1.
"Fibro Tambor" has the meaning specified in the
recitals of this Agreement.
"Financial Statements" has the meaning specified in
Section 4.5.
"GAAP" means generally accepted United States
accounting principles, applied on a basis consistent with the
basis on which any balance sheet or other financial statements
referred to in Section 4.5 were prepared.
"GBC Holding" has the meaning specified in the recitals
of this Agreement.
"Governmental Authorization" means any approval,
consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body" means any: (a) nation, state,
county, city, town, village, district, or other jurisdiction of
any nature; (b) federal, state, local, municipal, foreign, or
other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other
tribunal); (d) multi-national organization or body; or (e) body
exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or any successor law, and regulations
and rules issued pursuant to that Act or any successor law.
"IBC Business" has the meaning specified in the
recitals of this Agreement.
"IBC Sales Agreement" shall mean the IBC Sales
Agreement attached as Exhibit D.
"Industrial Container Business" has the meaning
specified in the recitals of this Agreement.
"Intellectual Property" means Copyrights, Patent
Rights, Trademarks and Trade Secrets and all agreements,
contracts, licenses, sublicenses, assignments and indemnities
which relate or pertain to any of the foregoing.
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"Interest Rate" has the meaning specified in Section
9.1(d).
"IRC" means the Internal Revenue Code of 1986 or any
successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" means the United States Internal Revenue Service
or any successor agency, and, to the extent relevant, the United
States Department of the Treasury.
"KMI" has the meaning specified in the first paragraph
of this document.
"Knowledge of the Seller" means the actual knowledge,
after due inquiry, of (a) any executive officer of Seller charged
with responsibility for the Industrial Container Business, (b)
any of the officers or management employees (including plant
managers) of any of the Acquired Companies, (c) any in-house
legal counsel for Seller or any of the Acquired Companies with
duties relating to the Industrial Container Business, (d) any
internal accountant, auditor or other employee of Seller or any
of the Acquired Companies charged with the responsibility for
preparing financial statements for any of the Acquired Companies
or for compliance by any of the Acquired Companies with Legal
Requirements relating to Taxes, including compliance with Legal
Requirements relating to Taxes when an Acquired Company is a
member of an affiliated, consolidated, combined or unitary group,
(e) any employee of Seller or any of the Acquired Companies
charged with responsibility for compliance by any of the Acquired
Companies with any Environmental Law or (f) any employee of
Seller or of the Acquired Companies charged with responsibility
for compliance by any of the Acquired Companies with Legal
Requirements relating to employment.
"Leased Real Property" has the meaning specified in
Section 4.11(b).
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty.
"Liability" mean any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any
liability for Taxes.
"Losses" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines,
penalties, damages, expenses, deficiencies or other charges.
"Material Adverse Effect" means any condition,
circumstance, change or effect (or any development that, insofar
as can be reasonably foreseen, would result in any condition,
circumstance, change or effect) that is materially adverse to the
Assets, business, financial condition, results of operations or
prospects of the Acquired Companies, taken as a whole.
"Most Recent Financial Statements" has the meaning
specified in Section 4.5.
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"Most Recent Fiscal Month End" has the meaning
specified in Section 4.5.
"Most Recent Fiscal Year End" has the meaning specified
in Section 4.5.
"Order" means any award, decision, injunction,
judgment, order, ruling, subpoena, or verdict entered, issued,
made, or rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"Ordinary Course of Business" means an action taken by
a Person if: (a) such action is consistent with the past
practices of such Person (including with respect to quantity and
frequency) and is taken in the ordinary course of the normal day-
to-day operations of such Person; and (b) such action is not
required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar
authority).
"Organizational Documents" means (a) the articles or
certificate of incorporation and the bylaws or code of
regulations of a corporation; (b) the partnership agreement and
any certificate or statement of partnership of a general
partnership; (c) the limited partnership agreement and the
certificate of limited partnership of a limited partnership;
(d) the articles or certificate of organization of a limited
liability company and the operating agreement or limited
liability company agreement of a limited liability company;
(e) any charter or similar document adopted or filed in
connection with the creation, formation or organization of a
Person; and (f) any amendment to any of the foregoing.
"Owned Real Property" has the meaning specified in
Section 4.11(a).
"Owned Software" has the meaning specified in Section
4.12(g).
"Patent Rights" means United States and foreign
patents, patent applications, continuations, continuations-in-
part, divisions, reissues, patent disclosures, inventions
(whether or not patentable or reduced to practice) and
improvements thereto.
"Permitted Encumbrances" means: (a) liens for Taxes and
other governmental charges and assessments arising in the
Ordinary Course of Business which are not yet due and payable,
(b) liens of landlords and liens of carriers, warehousemen,
mechanics and materialmen and other like liens arising in the
Ordinary Course of Business for sums not yet due and payable (c)
other liens on property which are not material in amount, and (d)
easements, encroachments, covenants, restrictions, rights of way,
defects in title or other encumbrance of any kind which do not
interfere with, and are not violated by, the consummation of the
Contemplated Transactions, and do not impair the marketability
of, or materially detract from the value of, or materially impair
the existing use of, the property affected thereby.
"Person" means any individual, corporation (including
any non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or
Governmental Body.
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"Plan" has the meaning specified in Section 4.22.
"Proceeding" means any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price" has the meaning specified in
Section 2.2.
"RCRA" means the Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated thereunder.
"Related Person" means, with respect to a particular
individual: (a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a
Material Interest; and (d) any Person with respect to which such
individual or one or more members of such individual's Family
serves as a director, officer, partner, executor, or trustee (or
in a similar capacity). With respect to a specified Person other
than an individual: (a) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly
or indirectly under common control with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person; (c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a
similar capacity); (d) any Person in which such specified Person
holds a Material Interest; and (e) any Person with respect to
which such specified Person serves as a general partner or a
trustee (or in a similar capacity). For purposes of this
definition, (a) the "Family" of an individual includes (i) the
individual, (ii) the individual's spouse, (iii) any other natural
person who is related to the individual or the individual's
spouse within the first degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest"
means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of
the outstanding voting power of a Person or equity securities or
other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Contaminant into the indoor or outdoor
Environment or into or out of any Company Property, including the
movement of Contaminants through or in the air, soil, surface
water, groundwater or Company Property.
"Representative" means, with respect to a particular
Person, any director, officer, employee, agent, consultant,
advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
"Seller " has the meaning specified in the first
paragraph of this Agreement.
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<PAGE>
"Seller Ancillary Agreements" means all Contracts,
instruments and documents being or to be executed and delivered
by Seller under this Agreement or in connection herewith.
"SFD" has the meaning specified in the recitals of this
Agreement.
"SPD" has the meaning specified in the recitals of this
Agreement.
"SPD Southeast" has the meaning specified in the
recitals of this Agreement.
"SPD Southwest" has the meaning specified in the
recitals of this Agreement.
"SPS" has the meaning specified in the recitals of this
Agreement.
"Shares" has the meaning specified in the recitals of
this Agreement.
"Software" means computer software programs and
software systems, including all databases, compilations, tool
sets, compilers, higher level or "proprietary" languages, related
documentation and materials, whether in source code, object code
or human readable form.
"Straddle Periods" has the meaning specified in Section
9.2(c).
"Subsidiary" means, with respect to any Person (the
"Owner"), any corporation or other Person of which securities or
other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other
than securities or other interests having such power only upon
the happening of a contingency that has not occurred) are held by
the Owner or one or more of its Subsidiaries.
"Tax" means any federal, state, local, or foreign tax
(including any income, gross receipts, capital gains, license,
lease, service, service use, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under IRC Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal
property, sales, use, ad valorem, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever) levy, assessment, tariff, duty, deficiency
or other fee, including any interest, fine, penalty, or addition
thereto, whether disputed or not, imposed, assessed or collected
by or under the authority of any Governmental Body or payable
pursuant to any Tax Sharing Arrangement or any other Contract
relating to sharing or payment of such tax, levy, assessment,
tariff, duty, deficiency or other fee or otherwise payable as a
result of being a member of an affiliated, consolidated, combined
or unitary group.
"Tax Return" means any return (including any
information return), report, statement, schedule, notice, form,
or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Body
in connection with the determination, assessment, collection, or
payment of any Tax or in connection with
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<PAGE>
the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"Tax Sharing Arrangement" means any written or
unwritten agreement or arrangement for the allocation or payment
of Tax liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Tax Return which Tax Return
includes one or more of the Acquired Companies.
"Threatened" means, in respect of any claim,
Proceeding, dispute, action, or other matter, any demand or
statement that has been made (orally or in writing) or any notice
that has been given (orally or in writing), or any other event
that has occurred or any other circumstances exist that would
lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
"TPS" has the meaning specified in the recitals of this
Agreement.
"TPS Interest" has the meaning specified in the
recitals of this Agreement.
"Trademarks" means United States, state and foreign
trademarks, service marks, logos, trade dress and trade names
(including all assumed or fictitious names under which any
Acquired Company is conducting business or has within the
previous five years conducted business), corporate names
(including, with respect to each of the foregoing, all of the
goodwill associated therewith), whether registered or
unregistered, and pending applications to register the foregoing.
"Trade Secrets" means confidential information, ideas,
compositions, trade secrets, know-how, manufacturing and
production processes and techniques, research information,
drawings, specification, designs, plans, improvements, concepts,
methods, processes, formulae, reports, data, customer and
supplier lists, mailing lists, financial, business and marketing
plans, or other proprietary information.
"Transitional Services Agreement" means the
Transitional Services Agreement between the Buyer and Seller in
the form attached hereto as Exhibit A.
ARTICLE 2. PURCHASE AND SALE OF SHARES
Section 2.1. Purchase and Sale of Shares and TPS
Interest . On and subject to the terms and conditions of this
Agreement, Buyer agrees to purchase from Seller (or, with respect
to the Shares of Fibro Tambor, Buyer and/or one or more of its
affiliates from one or more wholly-owned Subsidiaries of Seller),
and Seller agrees (and with respect to the Shares of Fibro
Tambor, Seller agrees to cause its wholly-owned Subsidiaries) to
sell, transfer, convey and deliver to Buyer (or with respect to
Fibro Tambor, Buyer and/or one or more of its affiliates), free
and clear of all Encumbrances, all of the Shares of KMI, SPD, GBC
Holding and Fibro Tambor at the Closing. On and subject to the
terms and conditions of this Agreement, Buyer also agrees to
purchase from Seller, and Seller agrees to sell, transfer, convey
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<PAGE>
and deliver to Buyer, free and clear of all Encumbrances, the TPS
Interest at the Closing. At the Closing, KMI shall own, free and
clear of all Encumbrances, all of the issued and outstanding
shares of SFD (which in turn shall own, free and clear of all
Encumbrances, all of the issued and outstanding shares of SPS),
and SPD shall own, free and clear of all Encumbrances, all of the
issued and outstanding shares of SPD Southeast and SPD Southwest.
Section 2.2. Purchase Price. The aggregate purchase
price (the "Purchase Price") for the Industrial Container
Business (including for all of the Shares and the TPS Interest)
is One Hundred Eighty-Five Million Three Hundred Ninety Five
Thousand Dollars ($185,395,000). At the Closing, Buyer shall pay
to Seller the Purchase Price by wire transfer in accordance with
written instructions delivered to Buyer from Seller at least two
business days prior to the Closing.
Section 2.3. Delivery of Share Certificates and the
Assignment of the TPS Interest. At the Closing, Seller shall
deliver to Buyer valid share certificates issued by KMI, SPD, GBC
Holding and Fibro Tambor evidencing all the Shares of each such
corporation owned of record by Seller (or in the case of Fibro
Tambor, owned of record by one or more wholly-owned Subsidiaries
of Seller), each duly endorsed in blank or with separate stock
powers duly endorsed in blank attached, with signatures
guaranteed by a commercial bank or by a member firm of the New
York Stock Exchange. At the Closing, Seller shall deliver an
assignment, duly executed by Seller, transferring all of the TPS
Interest to Buyer. The assignment shall be in such form as
Buyer's counsel may reasonably require.
ARTICLE 3. CLOSING
Section 3.1. Closing. The closing of the Contemplated
Transactions (the "Closing") shall take place at the offices of
Buyer's counsel, Vorys, Sater, Seymour and Pease LLP, at 52 East
Gay Street, Columbus, Ohio, at 2:00 p.m. (local time) on March
30, 1998.
Section 3.2. Transactions at Closing.
(a) At Closing, Seller shall deliver to Buyer the
following:
(i) the share certificates evidencing the Shares
of KMI, SPD, GBC Holding and Fibro Tambor as
provided in Section 2.3;
(ii) the original corporate minute books and stock
records of each Acquired Company, together with
the original share certificates evidencing that
(a) SFD is a wholly-owned Subsidiary of KMI,
(b) SPS is a wholly-owned Subsidiary of SFD,
(c) SPD Southwest is a wholly-owned Subsidiary
of SPD and (d) SPD Southeast is a wholly-owned
Subsidiary of SPD;
(iii) an assignment of the TPS Interest as provided
in Section 2.3, together with (a) the
releases and resignations contemplated by the
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Limited Liability Company Agreement of TPS
(including the resignations and releases of
Gary Crutchfield and Greg Wall as members of
the Members Committee of TPS) in connection
with such assignment, (b) the original minute
books of TPS and (c) copies of documents
executed in connection with the purchase by
Seller of the membership interest of Twin
City Container, Inc. in February 1998;
(iv) the certificate of an officer of Seller
described in Section 8.1(b);
(v) a certificate of good standing of Seller, as
of the most recent practicable date, from the
Secretary of State of the State of South
Carolina and from the Secretary of State of
the state of incorporation or organization
for each of the Acquired Companies;
(vi) the certificate of an officer of Seller
certifying (a) the adoption and copies of
resolutions of the Board of Directors of
Seller approving the Contemplated
Transactions and (b) the incumbency of the
officers of Seller who are either executing
this Agreement or any of the other documents
contemplated hereunder, and the certificate
of an officer of affiliates of the Seller
certifying (a) the adoption and copies of any
resolutions evidencing any other required
corporate approvals by any of the affiliates
of the Seller and (b) the incumbency of the
officers of affiliates of Seller who are
executing any of the other documents
contemplated hereunder;
(vii) the certificate of an officer of each
Acquired Company certifying and attaching
thereto true and complete copies of the
Organizational Documents of the Acquired
Company (the certificate of incorporation
attached thereto shall be certified by the
applicable Secretary of State);
(viii) opinion of counsel described in Section
8.1(d);
(ix) evidence of the receipt of the Consents, as
described in Section 8.1(f);
(x) evidence of the assignment by Seller or an
affiliate of the Seller (other than an
Acquired Company) to an Acquired Company of
specific identified Contracts (including
those requiring Consent to the assignment of
such Contract and those not requiring Consent
to the assignment of the Contract) that
relate to the Industrial Container Business
but that have as a party thereto Seller or an
affiliate of Seller other than an Acquired
Company (provided that the form of assignment
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<PAGE>
and the Acquired Company to which such
Contract shall be assigned shall be
reasonably acceptable to Buyer);
(xi) the executed Transitional Services Agreement;
(xii) evidence of the filing of the name changes
for the Acquired Companies as contemplated by
Section 6.8 of this Agreement;
(xiii) evidence of the termination of the Trademark
License Agreement as between SPC Resources,
Inc. and any one or more of the Acquired
Companies that are parties to such agreement;
(xiv) the executed IBC Sales Agreement; and
(xv) the executed Exclusive Distributorship
Agreement.
(b) At Closing, Buyer shall deliver to Seller the
following:
(i) the Purchase Price, in the manner set forth
in Section 2.2;
(ii) the certificate of an officer of Buyer
described in Section 8.2(b);
(iii) opinion of counsel described in Section
8.2(d);
(iv) certificates of incumbency of the officers of
Buyer who are executing this Agreement and
the other documents contemplated hereunder;
(v) certified copies of resolutions of the Board
of Directors of Buyer approving the
Contemplated Transactions;
(vi) the executed Transitional Services Agreement;
(vii) the executed IBC Sales Agreement; and
(viii) the executed Exclusive Distributorship
Agreement.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to Buyer as follows:
Section 4.1. Organization and Authority of Seller; No
Conflict.
(a) Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
South Carolina. Seller has full corporate power and authority to
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conduct its business as it is now being conducted. Seller has
full corporate power and authority to execute, deliver and
perform this Agreement and each Seller Ancillary Agreement to
which it is a party. This Agreement and each Seller Ancillary
Agreement has been duly approved and authorized by all requisite
corporate action. This Agreement constitutes the valid and
legally binding obligation of Seller, enforceable against Seller
in accordance with its terms. Upon the execution and delivery of
the Seller Ancillary Agreements, such agreements will constitute
the valid and legally binding obligations of Seller, enforceable
against Seller in accordance with their respective terms.
(b) Except as set forth in Schedule 4.1(b), neither
the execution and delivery of this Agreement or any of the Seller
Ancillary Agreements nor the consummation or performance of this
Agreement, any of the Seller Ancillary Agreements or any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (i) contravene, conflict with,
or result in a violation of (A) any provision of the
Organizational Documents of Seller or any of the Acquired
Companies, or (B) any resolution adopted by the board of
directors or the shareholder(s) of Seller or any of the Acquired
Companies; (ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Seller, any of the Acquired
Companies, or any of the Assets owned or used by any of the
Acquired Companies may be subject; (iii) contravene, conflict
with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
material Governmental Authorization that is held by any of the
Acquired Companies or that otherwise relates to the Industrial
Container Business of, or any of the Assets owned or used by, any
of the Acquired Companies; (iv) contravene, conflict with, or
result in a violation or breach of any provision of, or give any
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable Contract; or (v)
result in the imposition or creation of any Encumbrance upon or
with respect to any of the Assets owned or used by any of the
Acquired Companies. Except as provided under the HSR Act and
except as set forth in Schedule 4.1(b), neither Seller nor any of
the Acquired Companies is or will be required to give any notice
to or obtain any Consent from any Person (including from any
Governmental Body) in connection with the execution and delivery
of this Agreement, any of the Seller Ancillary Agreements or the
consummation or performance of any of the Contemplated
Transactions.
Section 4.2. Organization and Qualification of Each
Acquired Company. Schedule 4.2 contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of
incorporation or organization, and other jurisdictions in which
it is authorized to do business. Each Acquired Company (other
than TPS) is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of
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<PAGE>
incorporation, and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to
be so qualified would not result in Liability of more than
$10,000 individually to any Acquired Company or more than $25,000
in the aggregate to the Acquired Companies. TPS is a limited
liability company duly organized, validly existing, and in good
standing under the laws of its jurisdiction of organization, and
is duly qualified as a foreign limited liability company and is
in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes
such qualification necessary. No other jurisdiction has
demanded, requested or otherwise indicated that any such Acquired
Company is required so to qualify. Each Acquired Company has
full power and authority to conduct its business as it is now
being conducted.
Section 4.3. Capitalization of Each Acquired Company.
Schedule 4.3 sets forth (a) the name of each Acquired Company,
(b) the authorized capital stock (or, in the case of TPS, equity
interests) of the Acquired Company, (c) the number of issued and
outstanding shares of capital stock (or, in the case of TPS,
equity interests) of each Acquired Company and (d) the beneficial
and record owner of all such shares of capital stock or equity
interest. All of the issued and outstanding shares of capital
stock (or, in the case of TPS, equity interests) of each Acquired
Company have been validly issued, are fully paid and
nonassessable. All of the issued and outstanding shares of
capital stock (or, in the case of TPS, equity interests) of each
Acquired Company are owned by the record holder thereof free and
clear of all Encumbrances. There are no outstanding
subscriptions, options, warrants, calls, rights (including
unsatisfied preemptive rights), convertible securities,
obligations to make capital contributions or advances, or voting
trust arrangements, proxies, stockholders' agreements or other
agreements, commitments or understandings of any character
relating to the issued or unissued capital stock (or, in the case
of TPS, equity interests) of any Acquired Company or securities
convertible into, exchangeable for or evidencing the right to
subscribe for any shares of such capital stock or equity
interest, or otherwise obligating Seller or any Acquired Company
to issue, transfer or sell any of such capital stock, equity
interests or such other securities. There are no outstanding or
authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to any Acquired
Company or any of its securities. Except as set forth in
Schedule 4.3, no Acquired Company owns, directly or indirectly,
of record or beneficially, or has any Contract to acquire, any
equity securities or other securities of any Person (other than
equity securities of Acquired Companies).
Section 4.4. Books and Records. The books of account,
minute books, stock record books and other corporate records of
the Acquired Companies are true and complete in all material
respects, have been maintained in accordance with Legal
Requirements and accurately present and reflect in all material
respects all the transactions therein described. The minute
books of the Acquired Companies contain accurate and complete
records of all meetings held of, and action taken by, the
stockholders (or, in the case of TPS, members), the Boards of
Directors and committees of the Boards of Directors (or in the
case of TPS, the Board of Managers) of the Acquired Companies on
or after (i) in the case of SPD, SPD Southeast and SPD Southwest,
March 3, 1986, and (ii) in the case of KMI and SFD, February 25,
1985, and no meeting of any such stockholders (or, in the case of
TPS, members), Board of Directors (or in the case of TPS, the
Board of Managers) or committee has been held for which minutes
have not been prepared and are not contained in such minute
books. At the Closing, all of those books and records (including
the minute books of the Acquired Companies) will be in the
possession of the Acquired Companies.
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Section 4.5. Financial Statements. Subject to the
provisions of Section 7.9 of this Agreement, attached hereto as
Schedule 4.5 are the following financial statements (collectively
the "Financial Statements"): (a) audited consolidated financial
statements for the fiscal year ended December 31, 1995, for the
fiscal year ended December 31, 1996 and for the fiscal year ended
December 31, 1997 (with the December 31, 1997 being referred to
as the "Most Recent Fiscal Year End") for the Acquired Companies;
and (b) unaudited interim financial statements (the "Most Recent
Financial Statements") as of and for the two months ended
February 28, 1998 (the "Most Recent Fiscal Month End") for the
Acquired Companies. The audited Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of the Acquired
Companies as of such dates and the results of operations of the
Acquired Companies for such periods. The unaudited Financial
Statements have been prepared on a consistent basis with past
practices, present fairly the financial condition of the Acquired
Companies as of such date and the results of operations of the
Acquired Companies for such period. Also attached as Schedule
4.5 are the audited consolidated financial statements for the
fiscal year ended December 31, 1995, for the fiscal year ended
December 31, 1996 and for the fiscal year ended December 31, 1997
for the Acquired Companies that covers both the Industrial
Container Business and the IBC Business.
Section 4.6. Events Subsequent to Most Recent Fiscal
Year End. Since the Most Recent Fiscal Year End, there has not
been any material adverse change in the Assets, financial
condition, operations, results of operations, or the Industrial
Container Business of the Acquired Companies. Since the Most
Recent Fiscal Year End, except as set forth in Schedule 4.6 or as
provided in this Agreement, each of the Acquired Companies has
operated in the Ordinary Course of Business. Without limiting
the generality of the foregoing, since that date, except as set
forth in Schedule 4.6 or as otherwise provided in this Agreement:
(a) the Acquired Companies have not sold, leased, transferred, or
assigned any of their Assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business and
have not incurred any Liability other than in the Ordinary Course
of Business; (b) the Acquired Companies have not entered into any
Applicable Contract outside the Ordinary Course of Business; (c)
the Acquired Companies have not accelerated, delayed or postponed
the payment of accounts payable and other Liabilities outside the
Ordinary Course of Business or the collection of notes or
accounts receivable outside the Ordinary Course of Business; (d)
the Acquired Companies have maintained inventory (including work
- -in-process) at levels consistent with their past practices in
the Ordinary Course of Business, (e) the Acquired Companies have
not accelerated, delayed or postponed the acquisition, repair or
replacement of machinery, equipment and other assets used in
connection with the business of the Acquired Companies in the
Ordinary Course of Business; (f) the Acquired Companies have not
canceled, compromised, waived, or released any right or claim (or
series of related rights and claims) outside the Ordinary Course
of Business; (g) the Acquired Companies have not experienced any
material damage, destruction, or loss (whether or not covered by
insurance) to their Assets; (h) the Acquired Companies have not
entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract or agreement outside the Ordinary Course of
Business; (i) the Acquired Companies have not made any other
change in employment terms for any of its directors, officers,
and employees outside the Ordinary Course of Business; (j) the
Acquired Companies have not made, or agreed to make, any payment
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of cash or distribution of assets to Seller or any affiliate of
Seller except for payments for services rendered or products
delivered in the Ordinary Course of Business and except for
distributions of cash made in the Ordinary Course of Business;
(k) the Acquired Companies have not made any change in the
accounting principles and practices used by the Acquired
Companies from those applied in the preparation of the Financial
Statements; (l) the Acquired Companies have not prepared or filed
any Tax Return inconsistent with past practice or, on any such
Tax Return, taken any position, made any election, or adopted any
method that is inconsistent with positions taken, elections made
or methods used in preparing or filing similar Tax Returns in
prior periods (including, without limitation, positions,
elections or methods which would have the effect of deferring
income to periods for which Buyer is liable pursuant to Section
9.2(b) or accelerating deductions to periods for which Seller is
liable pursuant to Section 9.2(a), (m) the Acquired Companies
have not paid, agreed to pay or incurred any Liability for any
payment for any contribution to any Plan other than in the
Ordinary Course of Business or paid any bonus to any employees
other than in the Ordinary Course of Business or granted any
increase in compensation to any employee other than in the
Ordinary Course of Business or made any increase or enhancement
of benefits in any of the Plans other than in the Ordinary Course
of Business and (s) there has not been any other occurrence,
event, incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving any of the Acquired
Companies.
Section 4.7. Undisclosed Liabilities. Except as set
forth in Schedule 4.7, the Acquired Companies do not have any
Liability (and there is no Basis for any present or future
Proceeding against it giving rise to any Liability), except for
(a) Liabilities set forth on the face of the Most Recent
Financial Statements and (b) Liabilities which have arisen after
the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of any Legal
Requirement); and (c) Liabilities which do not either singly or
in the aggregate exceed $20,000.
Section 4.8. Compliance with Legal Requirements;
Governmental Authorizations.
(a) Except as set forth in Schedule 4.8: (i) each
Acquired Company is and has been in compliance in all material
respects with each Legal Requirement that is or was applicable to
it or to the conduct or operation of the Industrial Container
Business or the ownership or use of any of its Assets; and (ii)
to the Knowledge of Seller, no Acquired Company has received any
notice or other communication from any Governmental Body or any
other Person regarding any actual or alleged violation of, or
failure to comply with, any material Legal Requirement.
(b) Schedule 4.8 contains a complete and accurate list
of each Governmental Authorization that is held by an Acquired
Company or that otherwise relates to the business of, or to any
of the Assets owned or used by, the Acquired Company. Each
Governmental Authorization listed or required to be listed in
Schedule 4.8 is valid and in full force and effect. The
Governmental Authorizations listed in Schedule 4.8 collectively
constitute all of the Governmental Authorizations necessary to
permit the Acquired Company to lawfully conduct and operate the
Industrial Container Business in the manner it currently conducts
and operates such business and to permit the Acquired Company to
own and use its Assets in the manner in which it currently owns
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and uses such Assets, except for such Governmental Authorizations
where the failure to have such Governmental Authorizations would
not result in Liability of more than $10,000 individually to any
Acquired Company or more than $25,000 in the aggregate to the
Acquired Companies. Except as set forth on Schedule 4.8, the
purchase of the TPS Interest and the Shares of KMI, SPD, GBC
Holding and Fibro Tambor by Buyer shall not invalidate any such
Governmental Authorization or otherwise require any filing with
or disclosure to any Governmental Body in order to maintain the
validity of, keep in full force and effect, the Governmental
Authorizations.
Section 4.9. Legal Proceedings; Orders. Except as set
forth in Schedule 4.9, there is no pending Proceeding: (a) that
has been commenced by or against an Acquired Company or that
otherwise relates to or may materially affect the business of, or
any of the Assets owned or used by, an Acquired Company; or (b)
that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions. To the Knowledge of the Seller,
no such Proceeding has been Threatened. Except as set forth in
Schedule 4.9: (a) there is no Order to which an Acquired Company,
or any of the Assets owned or used by an Acquired Company, is
subject; and (b) to the Knowledge of the Seller, no officer,
director, agent, or employee of Acquired Company is subject to
any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Acquired Company.
Section 4.10. Taxes.
(a) Except as set forth in Schedule 4.10, (i) each
Acquired Company and each Company Group has duly and timely filed
all Tax Returns required to be filed on or before the Closing
Date (taking into account permitted extensions), (ii) all items
of income, gain, loss, deduction and credit or other items
required to be included in each such Tax Return have been so
included and all information provided in each such Tax Return is
true, correct and complete, (iii) all Taxes owed by an Acquired
Company or a Company Group which have become due with respect to
the period covered by each such Tax Return have been timely paid
in full, (iv) all withholding Tax requirements imposed on or with
respect to an Acquired Company or a Company Group have been
satisfied in full, and (v) no penalty, interest or other charge
is or will become due with respect to the late filing of any such
Tax Return or late payment of any such Tax.
(b) None of the Tax Returns of an Acquired Company
that only contain financial information concerning the Acquired
Company has been audited by a Governmental Body except as set
forth in Schedule 4.10 and except for Tax Returns for periods for
which the statute of limitations has expired.
(c) There is no claim against an Acquired Company for
any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of an
Acquired Company that only contains financial information
concerning the Acquired Company other than those disclosed in
Schedule 4.10. To the Knowledge of the Seller, there is no Basis
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for any assessment, deficiency or adjustment with respect to any
Tax Return of an Acquired Company that only contains financial
information concerning the Acquired Company.
(d) Except as set forth in Schedule 4.10, there is not
in force any extension of time with respect to the due date for
the filing of any Tax Return of an Acquired Company that only
contains financial information concerning the Acquired Company or
any waiver or agreement for any extension of time for the
assessment or payment of any Tax of or with respect to an
Acquired Company.
(e) Except as set forth in Schedule 4.10, none of the
Acquired Companies has any Liability for the Taxes of any Person
as a transferee or successor, by Contract or otherwise.
(f) There are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the Assets of any
Acquired Company.
(g) All Tax Sharing Arrangements and Tax indemnity
arrangements relating to any Acquired Company (other than this
Agreement) will terminate prior to the Closing Date, and no
Acquired Company will have any Liability thereunder on or after
the Closing Date.
(h) None of the Acquired Companies is or has been a
United States Real Property Holding Corporation (as defined in
Section 897(c)(2) of the IRC) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the IRC.
(i) TPS is disregarded as an entity separate from its
owner for federal income Tax purposes and has not elected
otherwise pursuant to Treasury Regulation Section 301.7701-3.
Section 4.11. Real Property.
(a) Schedule 4.11(a) contains a brief description of
(i) each parcel of real property owned by an Acquired Company
(the "Owned Real Property") (showing the record title holder,
legal description, permanent index number, location,
improvements, the uses being made thereof and any indebtedness
secured by an Encumbrance thereon) and (ii) each option held by
an Acquired Company to acquire any real property. Except as set
forth in Schedule 4.11(a), each Acquired Company has good,
marketable and insurable (at ordinary rates) title in fee simple
absolute to all Owned Real Property held of record by such
Acquired Company and to all buildings, structures and other
improvements thereon, in each case free and clear of all
Encumbrances, except for Permitted Encumbrances. Except as set
forth on Schedule 4.11(a), each Acquired Company has fulfilled
and performed in all material respects all its obligations, and
all obligations binding upon any Owned Real Property, under each
of the Encumbrances to which any Owned Real Property is subject,
and, to the Knowledge of Seller, no Acquired Company is in breach
or default under, or in violation of or noncompliance with, any
such Encumbrances, and to the Knowledge of Seller, no event has
occurred and no condition or state of facts exists which, with
the passage of time or the giving of notice or both, would
constitute such a breach, default, violation or noncompliance.
Except as set forth on Schedule 4.11(a), each Owned Real Property
has received all Governmental Authorizations required in
connection with the operation thereof and has been operated and
maintained in all material respects in accordance with all Legal
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Requirements (including all Legal Requirements relating to
zoning). The consummation of the Contemplated Transactions by
this Agreement will not result in any breach or violation of,
default under or noncompliance with, or any forfeiture or
impairment of any rights under, any Encumbrance to which any
Owned Real Property is subject, or require any consent, approval
or act of, or the making of any filing with, any Person party to
or benefited by or possessing the power or authority to exercise
rights or remedies under or with respect to any such Encumbrance.
All public utilities currently utilized at each Owned Real
Property give adequate service to the Owned Real Property, and
the Owned Real Property has unlimited access to and from publicly
dedicated streets, the responsibility for maintenance of which
has been accepted by the appropriate Governmental Body. Complete
and correct copies of any instruments evidencing Encumbrances,
commitments for the issuance of title insurance, title opinions,
surveys and appraisals in Seller's or the Acquired Company's
possession and any policies of title insurance currently in force
and in the possession of Seller or the Acquired Company with
respect to each such parcel have heretofore been delivered by
Seller to Buyer.
(b) Schedule 4.11(b) sets forth a list and brief
description of each lease or similar agreement (showing the
parties thereto, annual rental, expiration date, renewal,
purchase and termination options, if any, the improvements
thereon, the uses being made thereof, and the location and the
legal description of the real property covered by, and the space
occupied under, such lease or other agreement) under which (i) an
Acquired Company is lessee or sublessee of, or holds, uses or
operates, any real property owned by any third Person (the
"Leased Real Property") or (ii) an Acquired Company is lessor of
any of the Owned Real Property. Except as set forth in Schedule
4.11(b), each Acquired Company has the right to quiet enjoyment
of all the Leased Real Property described in such Schedule for
the full term of each such lease or similar agreement (and any
renewal option) relating thereto, and the leasehold or other
interest of the Acquired Company in such Leased Real Property is
not subject or subordinate to any Encumbrance, except for
Permitted Encumbrances. Except as set forth on Schedule 4.11(b)
and except for Permitted Encumbrances, there are no agreements or
other documents governing or affecting the occupancy or tenancy
of any of the Leased Real Property by an Acquired Company or of
any of the Owned Real Property by any Person other than an
Acquired Company. With respect to each lease and similar
agreement listed in Schedule 4.11(b), except as set forth on
Schedule 4.11(b) : (i) the lease is legal, valid, binding,
enforceable, and is in full force and effect; (ii) no Acquired
Company, and to the Knowledge of the Seller, no other party is in
breach or default, and to the Knowledge of Seller, no event has
occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or
acceleration thereunder; (iii) no Acquired Company, and to the
Knowledge of the Seller, no other party to the lease has
repudiated any provision thereof; (iv) there are no disputes,
oral agreements, or forbearance programs in effect as to the
lease; (v) no Acquired Company has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold; (vi) to the Knowledge of Seller all facilities
leased or subleased thereunder have received all Governmental
Authorizations required in connection with the operation thereof
and have been operated and maintained in accordance with all
Legal Requirements (including all Legal Requirements relating to
zoning); (vii) all facilities leased thereunder are supplied with
public utilities that give adequate service to the Leased Real
Property, and the Leased Real Property has unlimited access to
and from publicly dedicated streets, the responsibility for
maintenance of which has been accepted by the appropriate
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Governmental Body, (viii) no rights or interests of any Acquired
Company under the leases or subleases have been waived or
released; and (ix) no consent of the lessor is required in
connection with the Contemplated Transactions. Complete and
correct copies of any instruments evidencing Encumbrances,
commitments for the issuance of title insurance, title opinions,
surveys and appraisals in Seller's or an Acquired Company's
possession and any policies of title insurance currently in force
and in the possession of Seller or an Acquired Company with
respect to each such parcel of Leased Real Property have
heretofore been delivered by Seller to Buyer.
(c) Neither the whole nor any part of the Owned Real
Property or any Leased Real Property is subject to any Proceeding
for condemnation, eminent domain or other taking by any public
authority, and, to the Knowledge of the Seller, no such
condemnation or other taking is Threatened.
(d) Neither Seller nor any Acquired Company has
received any notice from any Governmental Body concerning any
actual or contemplated public improvements made or to be made by
any Governmental Body, the costs of which are or are to become
special assessments and a lien upon any Owned Real Property or
Leased Real Property, and, to the Knowledge of the Seller, no
such public improvement is Threatened.
Section 4.12. Intellectual Property.
(a) Schedule 4.12(a) contains a list and description
(showing in each case any product, device, process, service,
business or publication covered thereby, the registered or other
owner, expiration date and number, if any) of all Copyrights,
Patent Rights and Trademarks owned by, licensed to or used by an
Acquired Company.
(b) Schedule 4.12(b) contains a list and description
(showing in each case any owner, licensor or licensee) of all
Software owned by, licensed to or used by an Acquired Company
which is material to the Industrial Container Business, except
Software licensed to an Acquired Company that is available in
consumer retail stores and subject to "shrink-wrap" license
agreements.
(c) Schedule 4.12(c) contains a list and description
(showing in each case the parties thereto and the material terms
thereof) of all agreements, contracts, licenses, sublicenses,
assignments and indemnities which relate to (i) any Copyrights,
Patent Rights or Trademarks listed in Schedule 4.12(a), (ii) any
Trade Secrets owned by, licensed to or used by an Acquired
Company or (iii) any Software listed in Schedule 4.12(b).
(d) Except as disclosed in Schedule 4.12(d), an
Acquired Company either (i) owns the entire right, title and
interest in and to the Intellectual Property and Software
included in its Assets, free and clear of any Encumbrance or (ii)
has the perpetual, royalty-free right to use the same.
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(e) Except as disclosed in Schedule 4.12(e), (i) all
registrations for Copyrights, Patent Rights and Trademarks
identified in Schedule 4.12(a) as being owned by an Acquired
Company are valid and in force, and all applications to register
any unregistered Copyrights, Patent Rights and Trademarks so
identified are pending and in good standing, all without
challenge of any kind, (ii) the Intellectual Property owned by an
Acquired Company is valid and enforceable, (iii) an Acquired
Company has the sole and exclusive right to bring actions for
infringement or unauthorized use of the Intellectual Property and
Software owned by the Acquired Company and, to the Knowledge of
the Seller, there is no Basis for any such action, (iv) each
Acquired Company has taken all actions necessary to protect, and
where necessary register, the Copyrights, Trademarks, Software,
Patent Rights or Trade Secrets which is material to the
Industrial Container Business and (v) no Acquired Company is in
material breach of any agreement affecting the Intellectual
Property, and no Acquired Company has taken any action which
would impair or otherwise adversely affect its rights in the
Intellectual Property. Correct and complete copies of
(x) registrations for all registered Copyrights, Patent Rights
and Trademarks identified in Schedule 4.12(a) as being owned by
an Acquired Company and (y) all pending applications to register
unregistered Copyrights, Patent Rights and Trademarks identified
in Schedule 4.12(a) as being owned by an Acquired Company
(together with any subsequent correspondence, notices or filings
relating to the foregoing) have heretofore been delivered by
Seller to Buyer.
(f) Except as set forth in Schedule 4.12(f), (i) no
infringement of any Intellectual Property of any other Person has
occurred or results in any way from the operations, activities,
products, Software, equipment, machinery or processes used in the
Industrial Container Business of the Acquired Companies, (ii) no
claim of any infringement of any Intellectual Property of any
other Person has been made or asserted in respect of the
operations of the Industrial Container Business of the Acquired
Companies, (iii) no claim of invalidity of any Copyright,
Trademark or Patent Right, Software or Trade Secret has been
made, and (iv) no Proceedings are pending or, to the Knowledge of
the Seller, Threatened which challenge the validity, ownership or
use of any Intellectual Property.
(g) Except as disclosed in Schedule 4.12(g), (i) the
Software which is material to the Industrial Container Business
included in the Assets of the Acquired Companies is not subject
to any transfer, assignment, reversion, site, equipment, or other
limitations, (ii) each Acquired Company has maintained and
protected the Software which is material to the Industrial
Container Business included in the assets and properties of such
Acquired Company that it owns (the "Owned Software") (including
all source code and system specifications) with appropriate
proprietary notices, confidentiality and non-disclosure
agreements and such other measures as are necessary to protect
the proprietary, trade secret or confidential information
contained therein, (iii) the Owned Software has been registered
or is eligible for protection and registration under applicable
copyright law and has not been forfeited to the public domain,
(iv) the Acquired Companies have copies of all prior releases or
separate versions of the Owned Software so that the same may be
subject to registration in the United States Copyright Office,
(v) the Acquired Companies have complete and exclusive right,
title and interest in and to the Owned Software, (vi) the Owned
Software does not infringe any Intellectual Property of any other
Person, and (vii) any Owned Software includes the source code,
system documentation, statements of principles of operation and
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schematics, as well as any pertinent commentary, explanation,
program (including compilers), workbenches, tools, and higher
level (or "proprietary") language used for the development,
maintenance, implementation and use thereof, so that a trained
computer programmer could develop, maintain, enhance, modify,
support, compile and use all releases or separate versions of the
same.
(h) Except as disclosed in Schedule 4.12(h), to the
Knowledge of the Seller, all employees, agents, consultants or
contractors who have contributed to or participated in the
creation or development of any Intellectual Property material to
the Industrial Container Business or Software material to the
Industrial Container Business on behalf of an Acquired Company or
any predecessor in interest to any of them either (i) is a party
to a "work-for-hire" agreement under which the Acquired Company
is deemed to be the original owner/author of all property rights
therein or (ii) has executed an assignment or an agreement to
assign in favor of the Acquired Company (or such predecessor in
interest, as applicable) of all right, title and interest in such
material.
(i) The Acquired Companies have not permitted any third
party access to the Intellectual Property material to the
Industrial Container Business, except for Persons who have entered
into, and who are in full compliance with, confidentiality and
nondisclosure agreements with regard to the Intellectual Property
material to the Industrial Container Business. The Acquired
Companies have not permitted any third party to use, copy or
otherwise exploit any of the Intellectual Property except pursuant
to a valid and legally enforceable license agreement which protects
the proprietary rights of the Acquired Companies in such
Intellectual Property.
(j) No Person has asserted any royalty claim or other
claim whatsoever, including but not limited to claims of ownership,
direct or indirect, in respect of the Intellectual Property.
Section 4.13. Personal Property; Condition and
Sufficiency of Assets.
(a) Except as set forth in Schedule 4.13(a), each of
the Acquired Companies has good title to all of its personal
property (other than leased personal property), free and clear of
all Encumbrances, except for Permitted Encumbrances. Except with
respect to the sales of inventory in the Ordinary Course of
Business, no Acquired Company is a party to a Contract whereby
another Person has acquired the right or option to purchase,
obtain or acquire rights in any of the Assets.
(b) Schedule 4.13(b) contains a brief description of
each lease or other agreement under which an Acquired Company is
lessee of, or holds or operates, any machinery, equipment,
vehicle or other tangible personal property owned by a third
Person, except for any such lease, agreement or right that is
terminable by the Acquired Company without penalty or payment on
notice of 90 days or less, or which involves the payment by the
Acquired Company of rentals of less than $25,000 per year.
(c) To the Knowledge of the Seller, the buildings,
plants, structures, machinery and equipment of the Acquired
Companies that are material to the operation of the Industrial
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Container Business as currently conducted are operational and are
adequate for the uses to which they are being put. To the
Knowledge of the Seller, except as set forth on Schedule 4.13(c),
the buildings, plants and structures are not in need of
maintenance or repairs except for ordinary, routine maintenance
and repairs that are done in the Ordinary Course of Business and
are not material in nature or cost.
Section 4.14. Inventory. All inventory of the
Acquired Companies, whether or not reflected in the Most Recent
Financial Statements, are in good, merchantable and useable
condition in the Ordinary Course of Business, except for obsolete
items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Most
Recent Financial Statements. All inventories not written off
have been priced at the lower of cost or market on an accounting
basis consistent with the Acquired Companies' past practices.
The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are consistent in all
material respects with amounts of such inventory maintained by
the Acquired Companies in the Ordinary Course of Business
consistent with past practices.
Section 4.15. Contracts; No Defaults.
(a) Except as set forth in Schedule 4.15(a) or as
disclosed in this Agreement, no Acquired Company is a party to or
bound by: (i) any Contract for the purchase or sale of real
property; (ii) any Contract that involves the future performance
of services or delivery of goods or materials by one or more
Acquired Companies of an amount or value in excess of $100,000;
(iii) any Contract that involves the future performance of
services or delivery of goods or materials to one or more
Acquired Companies of an amount or value in excess of $100,000;
(iv) any Contract that is an output, requirements or exclusive
dealings contract (as such terms are used in Article 2 the
Uniform Commercial Code); (v) any Contract that requires or
commits any Acquired Company to purchase materials or inventory
from any Person of an amount or value in excess of $100,000,
including, without limitation, any paper supply contract; (vi)
any guarantee or similar undertaking of the obligations of
customers, suppliers, officers, directors, employees, Seller,
affiliates of Seller or others; (vii) any collective bargaining
agreement with any labor union or other employee representative
of a group of employees; (viii) any joint venture, partnership
and other Contract (however named) involving a sharing of
profits, losses, costs or liabilities by any Acquired Company
with any other Person; (ix) any Contract containing covenants
that in any way purport to restrict the business activity of any
Acquired Company or limit the freedom of any Acquired Company to
engage in any line of business or to compete with any Person; (x)
any Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods
other than Contracts entered into in the Ordinary Course of
Business with employees and other sales personnel paying
commissions or bonuses; (xi) any Contract which provides for, or
relates to, the incurrence by an Acquired Company of debt for
borrowed money; (xii) any Contract that was not entered into in
the Ordinary Course of Business or that was entered into at a
price or prices materially in excess of those otherwise available
at the time of such Contract; (xiii) any employment Contract
regarding employees or field representatives performing services
for the Industrial Container Business which is not terminable
within thirty days without payment of any amount for any reason
whatsoever (except for amounts earned or accrued prior to
termination), (xiv) a Contract that involves any Liability of
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more than $100,000 over time, (xv) any Contract that materially
and adversely affects the ownership or leasing of any of the
Assets or any maintenance or service agreements relating to any
of the Asset, (xvi) any Contract that involves an account
receivable or note receivable of more than $100,000 and (xvii)
any other Contract which is material to the Acquired Companies,
as a whole.
(b) Except as set forth in Schedule 4.15(a) or in any
other Schedule hereto, each of the Contracts listed in Schedules
4.11(b), 4.12, 4.13(b) and 4.15(a) (collectively, the "Applicable
Contracts") constitutes a valid and binding obligation of the
parties thereto and is in full force and effect and (except as
set forth in Schedule 4.15(a) and except for those Applicable
Contracts which by their terms will expire prior to the Closing
Date) will continue in full force and effect after the Closing,
in each case without breaching the terms thereof or resulting in
the forfeiture or impairment of any rights thereunder and without
the Consent of, or the making of any filing with, any other
party. To the Knowledge of Seller, each Acquired Company is, and
at all times has been, in compliance in all material respects
with all applicable terms and requirements of each Applicable
Contract under which the Acquired Company has or had any
obligation or Liability or by which it or any of its Assets owned
or used is or was bound. Each other Person that has or had any
obligation or Liability under any Applicable Contract under which
the Acquired Company has or had any rights is, and at all times
has been, in compliance in all material respects with all
applicable terms and requirements of such Contract. No event has
occurred or, to the Knowledge of Seller, circumstance exists that
(with or without notice or lapse of time) may contravene,
conflict with, or result in a violation or breach of, or give the
Acquired Company or other Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
Applicable Contract. No Acquired Company has given to or
received from any other Person, at any time since January 1,
1997, any notice or other communication (whether oral or written)
regarding any actual or alleged violation or breach of, or
default under, any Applicable Contract. There are no
renegotiations of, attempts to renegotiate, or outstanding rights
to renegotiate any material amounts paid or payable to the
Acquired Company under any Applicable Contracts with any Person.
Complete and correct copies of each of the Applicable Contracts
have heretofore been delivered to Buyer by Seller.
(c) Except as set forth in Schedule 4.15(c): (i)
neither Seller nor any Related Person of the Seller (excluding
any of the Acquired Companies) has any rights or obligations
under any Contract that relates to the Industrial Container
Business of, or any of the Assets owned or used by, an Acquired
Company; and (ii) no officer, director, agent, or employee of an
Acquired Company is bound by any Contract that purports to limit
the ability of such officer, director, agent, or employee, to (A)
engage in or continue any conduct, activity, or practice relating
to the Industrial Container Business of the Acquired Company, or
(B) assign to an Acquired Company or to any other Person any
rights to any invention, improvement, or discovery.
Section 4.16. Notes, Accounts and Other Miscellaneous
Receivables. All notes, accounts and other miscellaneous
receivables of each Acquired Company are reflected properly on
its books and records, are valid receivables subject to no
setoffs or counterclaims, and, subject only to the reserve for
bad debts for accounts receivable set forth on the face of the
Most Recent Financial Statements as adjusted for the passage of
time through the Closing Date in accordance with the past custom
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and practice of the Acquired Company (which bad debt reserve for
accounts receivable, shall not exceed $700,000), are
collectible.
Section 4.17. Bank Accounts; Powers of Attorney.
(a) Schedule 4.17(a) sets forth a complete and correct
list of all bank accounts and safe deposit boxes of the Acquired
Companies and Persons authorized to sign or otherwise act with
respect thereto.
(b) Except as set forth on Schedule 4.17(b), There are
no outstanding powers of attorney executed on behalf of any
Acquired Company.
Section 4.18. Insurance.
(a) Schedule 4.18(a) sets forth a list and brief
description (including nature of coverage, limits, deductibles,
whether it is occurrence based or claims made policy, and the
loss experience for the most recent five calendar years with
respect to each type of coverage) of all policies of insurance
maintained, owned or held by or for the benefit of the Acquired
Companies during the past five calendar years. Schedule 4.18(a)
also identifies any insurance policies that apply exclusively to
one or more of the Acquired Companies. Seller shall cause the
Acquired Companies to keep or cause such insurance or comparable
insurance to be kept in full force and effect through the Closing
Date. Seller and each Acquired Company have complied with each
of such insurance policies and have not failed to give any notice
or present any claim thereunder in a due and timely manner.
Copies of all such policies have been made available to Buyer.
(b) Schedule 4.18(b) describes any self-insurance
arrangement by or affecting the Acquired Companies, including any
reserves established thereunder.
(c) Schedule 4.18(c) describes all contractual
obligations of the Acquired Companies to third Persons with
respect to insurance (including such obligations under leases for
the Leased Real Property and other Applicable Contracts) and
identifies the policy under which such coverage is provided.
Section 4.19. Product Warranty. To the Knowledge of
Seller, each product manufactured, sold, leased, or delivered by
the Acquired Companies has been in conformity in all material
respects with all applicable contractual commitments and all
express and implied warranties. No product manufactured, sold,
leased, or delivered by an Acquired Company is subject to any
guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Schedule 4.19
includes copies of the standard terms and conditions of sale or
lease for an Acquired Company (containing applicable guaranty,
warranty, and indemnity provisions).
Section 4.20. Product Liability. To the Knowledge of
Seller, the Acquired Companies do not have any Liability arising
out of any injury to individuals or property as a result of the
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ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Acquired Companies.
Section 4.21. Labor Relations and Compliance.
(a) Schedule 4.21(a) contains a complete and accurate
list of the following information for each salaried employee or
commissioned salesperson of Acquired Companies with annual base
compensation in 1997 in excess of $100,000 excluding commissions,
bonuses, in-kind compensation and benefits: (i) name; (ii) job
title; (iii) current annual compensation paid or payable.
(b) To the Knowledge of the Seller, no officer or
other management employee of the Acquired Companies (i) is a
party to, or is otherwise bound by, any Contract, including any
confidentiality, noncompetition, or proprietary rights agreement,
between such employee and any other Person that in any way
adversely affects or will affect the performance of his duties as
an employee of an Acquired Company or the ability of an Acquired
Company to conduct its business, (ii) is engaged in activities in
connection with his employment by an Acquired Company that will
give rise to any valid claim by a former employer that the current
employee or the Acquired Company has appropriated or used any
Intellectual Property of the former employer or (iii) has any
plans to terminate employment with an Acquired Company.
(c) Except as set forth in Schedule 4.21(c), no
Acquired Company is a party to any collective bargaining or other
labor Contract. Except as set forth in Schedule 4.21(c), since
January 1, 1994, no Acquired Company has experienced (i) any
strike, slowdown, picketing or work stoppage, (ii) any Proceeding
against or affecting the Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations
or employment matters (including any charge or complaint filed by
an employee or union with the National Labor Relations Board, the
Equal Employment Opportunity Commission, or any comparable
Governmental Body), organizational activity, or other labor or
employment dispute against or affecting the Acquired Company or
any of its premises, or (iii) any application for certification
of a collective bargaining agent. To the Knowledge of the
Seller, no organizational effort is presently being made or
Threatened by or on behalf of any labor union with respect to
employees of any Acquired Company. To the Knowledge of the
Seller, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute.
There is no lockout of any employees by an Acquired Company, and
no such action is contemplated by an Acquired Company.
(d) Except as set forth in Schedule 4.21(d), each
Acquired Company has complied in all material respects with all
Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security
and similar Taxes, occupational safety and health, and plant
closing. The Acquired Company is not liable for the payment of
any compensation, damages, Taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of
the foregoing Legal Requirements.
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Section 4.22. Employee Benefits.
(a) Schedule 4.22 lists each "employee benefit
plan," as such term is defined in section 3(3) of ERISA
(including, but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA)
("Plan"), sponsored, maintained or contributed to by Seller or
any of the Acquired Companies for the benefit of the employees of
the Acquired Companies, or that has been so sponsored, maintained
or contributed to by Seller or any of the Acquired Companies
within six years prior to the Closing. With respect to each
Plan, Seller has provided or will provide within thirty days
after the execution of this Agreement copies of (i) all documents
that set forth the terms of each Plan and of any related trust,
including (A) all plan descriptions and summary plan descriptions
and (B) all summaries and descriptions furnished to participants
and beneficiaries regarding the Plans for which a plan
description or summary plan description is not required; (ii) all
registration statements filed with respect to any Plan; (iii) all
insurance policies purchased by or to provide benefits under any
Plan; (iv) all Contracts with third party administrators,
actuaries, investment managers, consultants, and other
independent contractors that relate to any Plan; (v) the Form
5500 filed in each of the most recent two plan years, including
all schedules thereto and the opinions of independent
accountants; and (vi) with respect to each Plans intended to
qualify under Section 401(a) of the IRC, the most recent
determination letter issued by the IRS.
(b) Except as otherwise set forth in Schedule 4.22:
(i) neither Seller, any of the Acquired Companies nor
any Commonly Controlled Entity contributes to or has an
obligation to contribute to, and have not at any time within six
years prior to the Closing contributed to or had an obligation to
contribute to, a multi-employer plan within the meaning of
Section 3(37) of ERISA as the result of their employment of
employees of the Acquired Companies; and as of the Closing,
neither Seller, or any of the Acquired Companies nor any Commonly
Controlled Entity has incurred any Liability for either a
complete or partial withdrawal from a multi-employer plan;
(ii) all reports and disclosures relating to the Plans
required to be filed with or furnished to governmental agencies,
Plan participants or Plan beneficiaries have been filed or
furnished in accordance with applicable law in a timely manner,
and each Plan has been administered in all material respects in
compliance with its governing documents and in accordance with
ERISA, the IRC, and other applicable Legal Requirements;
(iii) there are no Proceedings pending (other than
routine claims for benefits) or, to the Knowledge of the Seller,
threatened against, or with respect to, any of the Plans or their
assets;
(iv) to the Knowledge of Seller, no act, omission or
transaction has occurred which would result in imposition on the
Seller or any Acquired Company of (A) breach of fiduciary duty
liability damages under the applicable provisions of ERISA,
including, but not limited to, Section 409 of ERISA, (B) a civil
penalty assessed pursuant to subsections (c), (i) or (l) of
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Section 502 of ERISA or (C) a tax imposed pursuant to Chapter 43
of Subtitle D of the IRC;
(v) each of the Plans intended to be qualified under
Section 401(a) of the IRC, to the Knowledge of Seller, satisfies
the requirements of such Section and has received a favorable
determination letter from the Internal Revenue Service regarding
such qualified status and has not, since receipt of the most
recent favorable determination letter, been amended or, to the
Knowledge of the Seller, operated in any way which would
adversely affect such qualified status;
(vi) no Plan is subject to Title IV of ERISA;
(vii) as to any Plan intended to be qualified under
Section 401(a) of the IRC, there has been no termination or
partial termination of the Plan within the meaning of
Section 411(d)(3) of the IRC;
(viii) with respect to any Plan which is sponsored,
maintained or contributed to, or has been sponsored, maintained
or contributed to within six years prior to the Closing Date, by
any corporation, trade, business or entity under common control
with the Seller, within the meaning of Section 414(b), (c) or (m)
of the IRC or Section 4001 of ERISA ("Commonly Controlled
Entity"), (A) no withdrawal liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal
liability has not been satisfied, (B) no Liability to the Pension
Benefit Guaranty Corporation ("PBGC") has been incurred by any
Commonly Controlled Entity, which Liability has not been
satisfied, (C) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412
of the IRC has been incurred, and (D) all contributions
(including installments) to such Plan required by Section 302 of
ERISA and Section 412 of the IRC have been timely made;
(ix) no benefit is provided under any Plan through a
voluntary employees' beneficiary association, as defined in
Section 501(c)(9) of the IRC;
(x) no amendment has been made, or is reasonably
expected to be made, to any Plan that has required or could
require the provision of security under ERISA Section 307 or IRC
Section 401(a)(29); and
(xi) Since the last valuation date for each Plan, no
event has occurred or circumstance exists that would increase the
amount of benefits under any such Plan or that would cause the
excess of Plan assets over benefit liabilities (as defined in
ERISA Section 4001) to decrease, or the amount by which benefit
liabilities exceed assets to increase.
(c) Except as set forth in Schedule 4.22, no Acquired
Company is a party to or is bound by any severance agreements,
programs or policies. Schedule 4.22 sets forth, and the Seller
has provided to Buyer, true and correct copies (where in writing)
of (i) all agreements with employees or consultants of each
Acquired Company, (ii) all non-competition agreements with an
Acquired Company executed by officers of the Acquired Company,
and (iii) all plans, programs, agreements and other arrangements
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of the Acquired Company with or relating to the employment and to
the remuneration and compensation of its employees.
(d) (i) Except as set forth in Schedule 4.22, no Plan
provides retiree medical or retiree life insurance benefits to
any person and (ii) the Acquired Companies are not contractually
or otherwise obligated (whether or not in writing) to provide any
person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the
provisions of Section 601 through 608 of ERISA and Section 4980B
of the IRC.
(e) Except as set forth in Schedule 4.22 or as
contemplated in this Agreement, Seller and the Acquired
Companies have not amended, terminated or taken any other actions
with respect to any of the Plans or any of the plans, programs,
agreements, policies or other arrangements described in
Section 4.22 of this Agreement since the Most Recent Fiscal Year
End.
(f) Seller, each Acquired Company and each Commonly
Controlled Entities have complied with the provisions of ERISA
Section 601 et seq. and IRC Section 4980B.
(g) No payment that is owed or may become due to any
director, officer, employee, or agent of any Acquired Company
will be non-deductible to the Acquired Companies or subject to
tax under IRC Section 280G or Section 4999; nor will any Acquired
Company be required to "gross up" or otherwise compensate any
such Person because of the imposition of any excise tax on a
payment to such Person.
(h) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any
benefit.
Section 4.23. Customers. Schedule 4.23 sets forth
(i) a list of names and addresses of the twenty largest customers
(measured by dollar volume of purchases during the eleven month
period ended November 30, 1997) of the Acquired Companies (which
dollar volume includes sales not only related to the Industrial
Container Business, but also the IBC Business). Except as set
forth in Schedule 4.23, there exists no actual or threatened
termination, cancellation or limitation of, or any modification
or change in, the business relationship with any customer or
group of customers listed in Schedule 4.23 with respect to the
Industrial Container Business or the IBC Business, or whose
purchases individually or in the aggregate are material to the
Industrial Container Business or the IBC Business or the
operation of such businesses. To the Knowledge of Seller, an
Acquired Company is not materially affected by any dispute or
controversy with a union or with respect to unionization or
collective bargaining involving any supplier or customer of an
Acquired Company.
Section 4.24. Guaranties. The Acquired Companies are
not a guarantor or otherwise liable for any Liability or
obligation (including indebtedness) of any other Person.
Section 4.25. Environmental Matters. Except for
matters disclosed in Schedule 4.25, none of the Acquired
Companies and the properties and operations of an Acquired
Company are subject to any existing, pending or, to the Knowledge
of the Seller, threatened Proceeding by or before any
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Governmental Body under any Environmental Law. Except for
matters disclosed in Schedule 4.25, (a) the properties,
operations and activities of the Acquired Companies are, and have
at all time been, in compliance in all material respects with all
applicable Environmental Laws; (b) all notices, permits,
licenses, or similar Governmental Authorizations, if any,
required to be obtained or filed by any Acquired Company under
any Environmental Law in connection with any aspect of the
Industrial Container Business of the Acquired Company, including
without limitation those relating to the treatment, storage, or
Release of a Contaminant, have been duly obtained or filed, and
each Acquired Company is in compliance in all material respects
with the terms and conditions of all such notices, permits,
licenses and similar Governmental Authorizations; (c) there are
no physical or environmental conditions existing on any Company
Property or resulting from the Acquired Company's operations or
activities, past or present, at any location, that would give
rise to any material on-site or off-site remedial obligations
imposed on an Acquired Company under any Environmental Laws;
(d) to the Knowledge of the Seller , since the effective date of
the relevant requirements of applicable Environmental Laws and to
the extent required by such applicable Environmental Laws, all
Contaminants generated by an Acquired Company have been
transported only by carriers authorized under Environmental Laws
to transport such Contaminants, and disposed of only at
treatment, storage, and disposal facilities authorized under
Environmental Laws to treat, store or dispose of such
Contaminants; (e) to the Knowledge of Seller there has neither
been any exposure of any Person or property to any Contaminant
released by an Acquired Company, nor to the Knowledge of Seller
has there been any Release of any Contaminant into the
Environment by an Acquired Company or in connection with its
properties or operations that could reasonably be expected to
give rise to any claim against an Acquired Company for damages or
compensation; (f) there is not now, nor to the Knowledge of the
Seller has there ever been, on or in any Company Property, any
treatment, recycling, storage or disposal of any hazardous waste,
as that term is defined under Section 40 CFR Part 261 or any
state equivalent, that requires or required a Governmental Permit
pursuant to Section 3005 of RCRA or any underground storage tank
or surface impoundment or landfill or waste pile; and (g) Seller
has made, or will within thirty days after the execution of this
Agreement make, available to Buyer all internal and external
environmental audits and studies and all correspondence on
substantial environmental matters in the possession of Seller or
any Acquired Company relating to any of Company Property or the
current or former operations of the Acquired Companies.
Section 4.26. Certain Payments. To the Knowledge of Seller,
neither an Acquired Company nor any director, officer, agent, or
employee of an Acquired Company has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or
public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii)
to obtain special concessions or for special concessions already
obtained, for or in respect of the Acquired Company, or (iv) in
violation of any Legal Requirement, or (b) established or
maintained any fund or asset that has not been recorded in an
Acquired Company's books and records.
Section 4.27. Related Person Services. Schedule 4.27 sets
forth (a) a description of all material services provided during
or after the Most Recent Fiscal Year End to an Acquired Company
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by Seller or any affiliate of Seller(other than an Acquired
Company) utilizing either (i) assets not owned or leased by an
Acquired Company or (ii) employees not employed by an Acquired
Company and (b) the manner in which the costs of providing such
services have been allocated to the Acquired Company and the
amounts of such allocations. On or before the Closing Date, the
Trademark License Agreement between SPC Resources, Inc. and one
or more of the Acquired Companies has been terminated by such
parties, and none of the Acquired Companies has any Liability
under such agreement.
Section 4.28. Brokers' Fees. Neither Seller nor any
Acquired Company has any Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the
Contemplated Transactions.
Section 4.29. Financial Projections. Seller has made
available to Buyer certain financial projections with respect to
the Industrial Container Business and the IBC Business, which
projections were prepared for internal use only. Seller makes no
representation or warranty regarding the accuracy of such
projections or as to whether such projections will be achieved or
otherwise, except that Seller represents and warrants that such
projections were prepared in good faith and are based on
assumptions believed by Seller to be reasonable.
Section 4.30. Disclosure. The representations and
warranties of the Seller in this Agreement do not contain any
untrue statement or omit to state a material fact necessary to
make the statements herein, in light of the circumstances in
which they were made, not misleading.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 5.1. Organization and Good Standing. Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Buyer has full
corporate power and authority to conduct its business as it is
now being conducted.
Section 5.2. Authority; No Conflict.
(a) Buyer has full corporate power and authority to
execute, deliver and perform this Agreement and each Buyer
Ancillary Agreement to which it is a party. This Agreement and
each Buyer Ancillary Agreement has been duly approved and
authorized by all requisite corporate action. This Agreement
constitutes the valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Upon the
execution and delivery of the Buyer Ancillary Agreements, such
agreements will constitute the valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance
with their respective terms.
(b) Except as set forth in Schedule 5.2(b), neither
the execution and delivery of this Agreement or any of the Buyer
Ancillary Agreements nor the consummation or performance of this
Agreement, any of the Buyer Ancillary Agreements or any of the
Contemplated Transactions will, directly or indirectly (with or
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without notice or lapse of time): (i) contravene, conflict with,
or result in a violation of (A) any provision of the
Organizational Documents of Buyer, or (B) any resolution adopted
by the board of directors or the shareholder(s) of Buyer; (ii)
contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to
which Buyer may be subject; or (iii) contravene, conflict with,
or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Contract to which Buyer is a
party. Except as provided under the HSR Act and except as set
forth in Schedule 5.2(b), Buyer is not and will not be required
to give any notice to or obtain any Consent from any Person
(including from any Governmental Body) in connection with the
execution and delivery of this Agreement, any of the Buyer
Ancillary Agreements or the consummation or performance of any of
the Contemplated Transactions.
Section 5.3. Certain Proceedings. There is no pending
Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such
Proceeding has been Threatened.
Section 5.4. Brokers' Fees. Buyer has no Liability or
obligation to pay any fees or commissions to any broker, finder
or agent with respect to the Contemplated Transactions for which
Seller could become liable or obligated.
Section 5.5. Investment. Buyer is not purchasing the Shares
with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act of 1933, as
amended.
Section 5.6 No Default. No event of default or default, or
event which with the giving of notice, lapse of time or both,
would constitute a default or event of default under any Contract
to which Buyer is a party or by which it or its properties are
bound, exists, the effect of which would be to materially
interfere with or prevent the consummation of the Contemplated
Transactions.
Section 5.7 Available Funds. Buyer has or will have at
Closing sufficient funds to consummate the Contemplated
Transactions.
ARTICLE 6. CERTAIN AGREEMENTS
Buyer and Seller covenant and agree as follows:
Section 6.1. Investigation of the Acquired Companies
by Buyer. Seller shall afford and cause the Acquired Companies
to afford to the Representatives of Buyer complete access during
normal business hours to the offices, properties (including for
subsurface testing), employees and business and financial records
(including computer files, retrieval programs and similar
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documentation and such access and information that may be
necessary in connection with an environmental audit) of Seller
and the Acquired Companies relating to the Industrial Container
Business to the extent Buyer shall deem necessary or desirable.
Seller shall furnish, and shall cause the Acquired Companies to
furnish, to Buyer or its Representatives such information
concerning the Assets, business and the operations of the
Acquired Companies as shall be requested, including all such
information as shall be necessary to enable Buyer or its
Representatives to verify the accuracy of the representations and
warranties contained in this Agreement, to verify that the
covenants of Seller contained in this Agreement have been
complied with and to determine whether the conditions set forth
herein have been satisfied. Buyer agrees that such investigation
shall be conducted in such a manner as not to interfere
unreasonably with the operations of Seller or the Acquired
Companies. No investigation made by Buyer or its Representatives
hereunder shall affect the representations and warranties of
Seller hereunder.
Section 6.2. Preserve Accuracy of Representations and
Warranties. Each of the parties hereto shall refrain from taking
any action which would render any representation or warranty
contained in Article 4 or 5 of this Agreement inaccurate as of
the Closing Date. Each of Buyer, as a party on the one hand, and
Seller, as a party on the other, shall promptly notify the other
of any Proceeding that shall be instituted or Threatened against
such party to restrain, prohibit or otherwise challenge the
legality of any of the Contemplated Transactions. Seller shall
promptly notify Buyer of (a) any Proceeding that may be
Threatened, brought, asserted or commenced against an Acquired
Company which would have been listed in Schedule 4.9 if such
Proceeding had arisen prior to the date hereof and (b) any other
event or matter which becomes known to Seller or an Acquired
Company that would cause any other representation or warranty
contained in Article 4 to be inaccurate in any material respect.
Section 6.3. Consents of Third Parties; Governmental
Authorizations.
(a) Seller will (and will cause the Acquired Companies
to) act diligently and reasonably to secure the Consent, in form
and substance reasonably satisfactory to Buyer, from any party to
any Applicable Contract required to be obtained to permit the
consummation of the Contemplated Transactions or to otherwise
satisfy the conditions set forth in Article 8; provided that (i)
none of Seller, the Acquired Companies or Buyer shall have any
obligation to offer or pay any consideration in order to obtain
any such Consents and (ii) Seller shall not make (or permit any
Acquired Company to make) any agreement or understanding
affecting the Assets or business of the Acquired Companies as a
condition for obtaining any such Consent except with the prior
written consent of Buyer. During the period prior to the Closing
Date, Buyer shall act diligently and reasonably to cooperate with
Seller and the Acquired Companies to obtain the Consents
contemplated by this Section 6.3(a).
(b) During the period prior to the Closing Date,
Seller and Buyer shall (and Seller shall cause the Acquired
Companies to) act diligently and reasonably, and shall cooperate
with each other, in making any required filing or notification
and in securing any Consents of any Governmental Body required to
be obtained by them in order to permit the consummation of the
Contemplated Transactions, or to otherwise satisfy the conditions
set forth in Article 8; provided that Seller shall not make (or
permit any Acquired Company to make) any agreement or
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understanding affecting the assets or business of the Acquired
Companies as a condition to obtaining any such Consents except
with the prior written consent of Buyer.
(c) Buyer and Seller have made, and will make, such
filings as are required by the HSR Act or any other antitrust law
with respect to the consummation of the Contemplated Transactions
and will file as promptly as practicable any supplemental
information which may be requested. All such filings will comply
in all material respects with Legal Requirements pursuant to
which they are filed.
Buyer has paid the filing fee required under the HSR
Act. Buyer shall be responsible, and Seller shall cooperate, to:
(i) obtain all Governmental Authorizations of any Governmental
Body under, or satisfy the requirements of, the HSR Act or other
applicable antitrust laws that may be or become necessary in
connection with the consummation of the contemplated
transactions; and (ii) resolve any governmental or private
complaint or litigation under antitrust laws that may seek to
prevent, delay or impair consummation of the Contemplated
Transactions.
Section 6.4. Operations Prior to the Closing Date.
(a) Seller shall cause the Acquired Companies to
operate and carry on their business only in the Ordinary Course
of Business and substantially as presently operated. Consistent
with the foregoing, Seller shall maintain the Assets in the same
working order and condition as such Assets are in as of the date
of this Agreement (reasonable wear and tear excepted) and shall
use its best efforts consistent with good business practice to
maintain the business organization of the Acquired Companies
intact and to preserve the goodwill of the suppliers,
contractors, licensors, employees, customers, distributors and
others having business relations with the Acquired Companies.
(b) Except as expressly contemplated by this Agreement
or except with the express written approval of Buyer, Seller
shall not permit any Acquired Company to: (i) amend its
Organizational Documents; (ii) issue, grant, sell or encumber any
shares of its capital stock or other securities; or issue, grant,
sell or encumber any security, option, warrant, put, call,
subscription or other right of any kind, fixed or contingent,
that directly or indirectly calls for the acquisition, issuance,
sale, pledge or other disposition of any shares of its capital
stock or other securities or make any other changes in the equity
capital structure of any Acquired Company; (iii) make any
material change in the business or the operations of the Acquired
Companies; (iv) make any capital expenditure or enter into any
contract or commitment therefor, other than capital expenditures
or commitments for capital expenditures currently budgeted; (v)
enter into any Contract which requires the Consent of any third
party to consummate the Contemplated Transactions; or make any
material modification to any existing Applicable Contract or to
any Governmental Authorization, other than changes made in good
faith to cure document deficiencies; (vi) enter into any Contract
for the purchase, lease (as lessee) or other occupancy of real
property or for the sale of any Owned Real Property or exercise
any option to purchase real property listed in Schedule 4.11(a)
or any option to extend a lease listed in Schedule 4.11(b); (vii)
sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers from any Acquired Company to Seller or
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any affiliates of Seller), or mortgage or pledge, or impose or
suffer to be imposed any Encumbrance (other than a Permitted
Encumbrance) on, any of the Assets of any Acquired Company, other
than inventory and minor amounts of personal property sold or
otherwise disposed of for fair value in the Ordinary Course of
Business; (viii) cancel any debts owed to or claims held by any
Acquired Company (including the settlement of any claims or
litigation) other than in the Ordinary Course of Business; (ix)
create, incur or assume, or agree to create, incur or assume, any
indebtedness for borrowed money or enter into, as lessee, any
capitalized lease obligations (as defined in Statement of
Financial Accounting Standards No. 13); (x) accelerate or delay
collection of any notes or accounts receivable in advance of or
beyond their regular due dates or the dates when the same would
have been collected in the Ordinary Course of Business; (xi)
delay or accelerate payment of any account payable or other
Liability beyond or in advance of its due date or the date when
such Liability would have been paid in the Ordinary Course of
Business; (xii) allow the levels of raw materials, supplies,
work-in-process or other materials included in the inventory of
the Acquired Companies to vary in any material respect from the
levels customarily maintained; (xiii) make, or agree to make, any
payment of any dividend or distribution of Assets to Seller or
any affiliate of any Seller other than distributions of cash in
the Ordinary Course of Business; (xiv) institute any increase in
any profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability,
welfare or other employee benefit plan with respect to employees
of the Acquired Companies; (xv) make any change in the
compensation of the employees of the Acquired Companies, other
than changes made in accordance with normal compensation
practices and consistent with past compensation practices; (xvi)
make any material change in the accounting policies applied in
the preparation of the Financial Statements contained in Schedule
4.5; (xvii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods (including, without
limitation, positions, elections or methods which would have the
effect of deferring income to periods for which Buyer is liable
pursuant to Section 9.2(b) or accelerating deductions to periods
for which Seller is liable pursuant to Section 9.2(a); or (xviii)
enter into any agreement or take any action that would prohibited
by this Section 6.4.
Section 6.5. Notification by Seller of Certain
Matters. During the period prior to the Closing Date, Seller
will promptly advise Buyer in writing of (a) any material adverse
change in the Acquired Companies or the condition of their
Assets, (b) any notice or other communication from any third
Person alleging that the Consent of such third Person is or may
be required in connection with the Contemplated Transactions and
(c) any material default under any Applicable Contract or event
which, with notice or lapse of time or both, would become such a
default on or prior to the Closing Date and of which Seller has
knowledge.
Section 6.6. Title Abstracts and Surveys. Seller shall
cause to be delivered to Buyer on or prior to the Closing Date,
with respect to each parcel of Owned Real Property, (i) real
estate title abstracts providing that an Acquired Company has
good and marketable title to each such parcel of Owned Real
Property (including all appurtenant easements), free and clear of
all Encumbrances, except for Permitted Encumbrances, and each
such abstract shall be accompanied by legible copies of all
documents referenced in or otherwise forming the basis of the
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abstract (including all Permitted Encumbrances), and (ii) an ALTA
land title survey, acceptable to Buyer, of a recent date with
respect to each such parcel showing no encroachments or other
survey defects with respect to the buildings, structures and
other improvements located on such property. Buyer and Seller
shall share equally the cost and expense of obtaining the title
abstracts and the surveys.
Section 6.7. Compliance with Environmental Property
Transfer Acts. Seller shall provide or cause to be provided
documentation deemed adequate by Buyer demonstrating full
compliance with any applicable Environmental Property Transfer
Act. Buyer shall cooperate with Seller in obtaining such
compliance.
Section 6.8. Change of Corporate Names. On or prior
to the Closing Date, Seller shall change the corporate names of
each Acquired Company to a name acceptable to Buyer and that does
not contain the word "Sonoco". In connection with such name
changes, Seller shall comply with all Legal Requirements and
shall make all filings with Government Bodies as required by
applicable Legal Requirements.
ARTICLE 7. ADDITIONAL AGREEMENTS
Section 7.1. Covenant Not to Compete or Solicit
Business.
(a) In furtherance of the sale of Industrial Container
Business to Buyer and to protect the value and goodwill of the
Industrial Container Business of the Acquired Companies and in
consideration for the Purchase Price, Seller covenants and agrees
that, after the Closing:
(i) for a period ending on the tenth
anniversary of the Closing Date, neither Seller
nor any of Seller's affiliates will directly or
indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own,
manage, operate, control, participate in, or
otherwise carry on, a business that manufactures,
sells or leases plastic drums, fibre drums or
intermediate bulk containers or refurbishes or
reconditions plastic drums anywhere in the world;
provided, however, that Buyer expressly
acknowledges and agrees that Seller or any
affiliate of Seller may manufacture and sell fibre
drums in Indonesia, Singapore and Malaysia (the
"Far East Fibre Drum Operations") without
violating the foregoing covenant; provided,
further, that Buyer expressly acknowledges and
agrees that Seller may conduct the IBC Business
without violating the foregoing covenant; and,
provided further, that nothing set forth in this
Section 7.1 shall prohibit Seller or Seller's
affiliates from owning not in excess of 5% in the
aggregate of any class of capital stock of any
corporation if such stock is publicly traded and
listed on any national or regional stock exchange
or on the NASDAQ national market system;
(ii) for a period ending on the tenth
anniversary of the Closing Date, neither Seller
nor any of Seller's affiliates will directly or
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indirectly induce or attempt to persuade any
supplier or customer of an Acquired Company to
terminate or alter such business relationship with
such Acquired Company; or
(iii) except as approved by Buyer for a
period ending on the third anniversary of the
Closing Date, neither Seller nor any of Seller's
affiliates will employ or otherwise retain the
services of any Person (A) who was employed by any
of the Acquired Companies at any time between
December 1, 1997 and the Closing Date except for
those employees actively involved with the IBC
Business who remain as employees of Seller after
the Closing and (B) who was either a salaried
and/or commissioned employee; provided, however,
that Buyer expressly acknowledges and agrees that
Seller or any affiliate of Seller may, without
violating the foregoing covenant, (A) employ Gary
Crutchfield at any time or (B) immediately employ
any Person who Buyer or any of the Acquired
Companies voluntarily terminates after the Closing
Date; and provided, further, that Seller expressly
acknowledges and agrees that, upon the closing
contemplated by the IBC Sales Agreement, that the
exception set forth in this paragraph relating to
employees actively involved in the IBC Business
shall no longer be applicable.
(b) In addition, Seller covenants and agrees that
neither Seller nor any affiliate of Seller will divulge or make
use of any Trade Secrets of the Acquired Companies other than (i)
to disclose such secrets and information to Buyer and (ii) to use
such Trade Secrets in connection with the Far East Fibre Drum
Operations.
(c) In the event Seller or any affiliate of Seller
violates any of such Person's obligations under this Section 7.1,
Buyer or any of the Acquired Companies may proceed against such
Person in law or in equity for such damages or other relief as a
court may deem appropriate. Seller acknowledges that a violation
of this Section 7.1 may cause Buyer or the Acquired Companies
irreparable harm which may not be adequately compensated for by
money damages. Seller therefore agrees that in the event of any
actual or threatened violation of this Section 7.1, Buyer or any
of the Acquired Companies shall be entitled, in addition to other
remedies that it may have, to a temporary restraining order and
to preliminary and final injunctive relief against Seller or such
affiliate of Seller to prevent any violations of this Section
7.1, without the necessity of posting a bond. The prevailing
party in any action commenced under this Section 7.1 shall also
be entitled to receive reasonable attorneys' fees and court
costs.
(d) It is the intent and understanding of each party
hereto that if, in any Proceeding before any Governmental Body or
arbitrator legally empowered to enforce this Section 7.1, any
term, restriction, covenant or promise in this Section 7.1 is
found to be unreasonable and for that reason unenforceable, then
such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such
Governmental Body or arbitrator.
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Section 7.2. Access to Records after Closing.
(a) For a period of six years after the Closing Date,
Seller and its Representatives shall have reasonable access to
all of the books and records of the Acquired Companies to the
extent that such access may reasonably be required by Seller in
connection with matters relating to or affected by the operations
of the Acquired Companies prior to the Closing Date. Such access
shall be afforded by Buyer upon receipt of reasonable advance
notice and during normal business hours. Seller shall be solely
responsible for any costs or expenses incurred by it pursuant to
this Section 7.2. If Buyer shall desire to dispose of any of
such books and records prior to the expiration of such six-year
period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Sellers' expense, to segregate and
remove such books and records as Seller may select.
(b) For a period of six years after the Closing Date,
Buyer and its Representatives shall have reasonable access to all
of the books and records relating to the Acquired Companies which
Seller or any of its affiliates may retain after the Closing
Date. Such access shall be afforded by Seller upon receipt of
reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 7.2. If Seller or any of
its affiliates shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Seller
shall, prior to such disposition, give Buyer a reasonable
opportunity, at Buyer's expense, to segregate and remove such
books and records as Buyer may select.
Section 7.3. Employees and Employee Benefit Plans.
(a) Defined Benefit Pension Plans.
(i) As of the Closing Date, each salaried
employee of the Industrial Container Business who was actively
employed and eligible, as of the Closing Date, to participate in
the Sonoco Products Company Pension Plan (the "Sonoco Pension
Plan") shall become eligible to participate in the Greif Bros.
Corporation Employees Retirement Income Plan (the "Greif Salaried
Pension Plan") and each hourly paid employee of the Industrial
Container Business who was actively employed and eligible, as of
the Closing Date, to participate in the Sonoco Pension Plan shall
become eligible to participate in the Retirement Plan for Certain
Hourly Employees of Greif Bros. Corporation (the "Greif Hourly
Pension Plan"); provided, however, any such hourly paid employee
who, as of the Closing Date, would be classified by Buyer as an
office or salary employee shall become eligible to participate in
the Greif Salaried Plan. For purposes of the Greif Salaried
Pension Plan and the Greif Hourly Pension Plan, all employees of
the Industrial Container Business shall, for eligibility and
vesting purposes (but not for benefit accrual), receive credit
for all service with Seller or any Subsidiary prior to the
Closing Date. Benefits to be provided to salaried employees of
the Industrial Container Business on and after the Closing Date
under the Greif Salaried Pension Plan shall be substantially
similar to those benefits provided to similarly situated
employees of Buyer under such plan. Benefits to be provided to
non-union hourly paid employees of the Industrial Container
Business under the Greif Hourly Pension Plan on and after the
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Closing Date shall be substantially similar to the benefits
provided to similarly situated employees of Buyer under such
plan. Benefits provided to union hourly paid employees of the
Industrial Container Business under the Greif Hourly Pension Plan
on and after the Closing Date shall be those benefits required
under each respective collective bargaining agreement in effect
with respect to such employees.
(ii) Seller shall retain all liabilities and
obligations under the Sonoco Pension Plan as in effect on the
Closing Date, with respect to benefits accrued thereunder by
employees or former employees of the Industrial Container
Business prior to the Closing Date. No assets of the Sonoco
Pension Plan will be transferred to any plan maintained by Buyer
or the Acquired Companies. No additional benefits shall accrue
under the Sonoco Pension Plan with respect to employees or former
employees of the Industrial Container Business on or after the
Closing Date. The benefits for each employee of the Industrial
Container Business under the Sonoco Pension Plan shall not be
payable prior to such employee's termination of employment with
Buyer or the Acquired Companies. Seller shall provide that, with
respect to all employees of the Industrial Container Business as
of the Closing Date, uninterrupted service on or after the
Closing Date with Buyer, any of the Acquired Companies or any
other affiliate of Buyer shall qualify as service under the
Sonoco Pension Plan solely for purposes of determining vesting
and retirement eligibility credit (but not for the purpose of
calculating benefit accrual) under the Sonoco Pension Plan.
Buyer shall deliver to Seller, from time to time as requested, at
Buyer's expense, the requisite post-Closing Date employee service
information so that Seller may properly fulfill its
responsibilities under this paragraph.
(iii) As of the Closing Date, Seller shall
assign to Buyer all of its rights in the annuity contract
purchased from Metropolitan Life Insurance Company (the
"Annuity") to satisfy benefit obligations to employees of the
Industrial Container Business under the Continental Group, Inc.
Salaried Pension Plan and the Continental Can Company, Inc. Basic
Non-contributory Hourly Pension Plan (collectively, the
"Continental Plans"). Seller shall execute any and all documents
required by Metropolitan Life Insurance Company to effectuate the
assignment of rights under the Annuity. Any and all benefit
obligations under the Continental Plans with respect to employees
of the Industrial Container Business shall be satisfied by the
Annuity. Neither Buyer nor any of the Acquired Companies shall
have any obligation or liability to pay any benefits accrued
under the Continental Plans from either the assets of the Greif
Salaried Pension Plan, the Greif Hourly Pension Plan, the general
assets of Buyer or the general assets of any of the Acquired
Companies, and Seller shall indemnify and hold harmless Buyer,
the Acquired Companies, the Greif Salaried Pension Plan and the
Greif Hourly Pension Plan for any benefit obligations under the
Continental Plans which are not satisfied by the Annuity.
(b) Section 401(k) Plans.
(i) As of the Closing Date, each salaried
employee of the Industrial Container Business who was actively
employed and eligible, as of the Closing Date, to participate in
the Sonoco Savings Plan (the "Sonoco Savings Plan") shall become
eligible to participate in the Greif Bros. Corporation 401(k)
Retirement Plan and Trust (the "Greif Salaried Savings Plan") and
each hourly paid employee of the Industrial Container Business
who was actively employed and eligible, as of the Closing Date,
to participate in the Sonoco Savings Plan shall become eligible
to participate in the Greif Bros. Corporation Production
Associates 401(k) Retirement Plan and Trust (the "Greif Hourly
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Savings Plan"); provided, however, any such hourly paid employee
who, as of the Closing Date, would be classified by Buyer as an
office or salary employee shall become eligible to participate in
the Greif Salaried Savings Plan. For purposes of the Greif
Salaried Savings Plan and the Greif Hourly Savings Plan, all
employees of the Industrial Container Business shall, for
eligibility and vesting purposes, receive credit for all service
with Seller or any Subsidiary prior to the Closing Date.
Benefits to be provided to salaried employees of the Industrial
Container Business on and after the Closing Date under the Greif
Salaried Savings Plan shall be substantially similar to those
benefits provided to similarly situated employees of Buyer under
such plan. Benefits to be provided to non-union hourly paid
employees of the Industrial Container Business under the Greif
Hourly Savings Plan on and after the Closing Date shall be
substantially similar to the benefits provided to similarly
situated employees of Buyer under such plan.
(ii) As soon as administratively feasible
following the Closing Date, Seller shall cause the trustee of the
trust established under the Sonoco Savings Plan to transfer to
the appropriate trust for either the Greif Salaried Savings Plan
or the Greif Hourly Savings Plan, pursuant to the usual
procedures utilized under the Sonoco Savings Plan for such
transfers, and Buyer shall cause the Greif Salaried Savings Plan
and the Greif Hourly Savings Plan to accept, an amount of cash
equal to the value of the account balances of the employees of
the Industrial Container Business under the Sonoco Savings Plan
as of the transfer date. Prior to the transfer required under
this paragraph (b)(ii), (A) the entire account balance of each
employee of the Industrial Container Business shall be fully
vested; (B) all common shares of Seller credited to such account
balances shall be converted to cash at their then fair market
value; and (C) the employees of the Industrial Container Business
shall retain all rights as participants in the Sonoco Savings
Plan, except for the right to receive additional contributions.
Seller and Buyer will make appropriate arrangements for the
payment of benefits which become due and payable under the Sonoco
Savings Plan or either the Greif Salaried Savings Plan or the
Greif Hourly Savings Plan prior to the date such cash transfer is
made.
(c) Multi-employer Plans. As of the Closing Date,
Buyer shall assume all obligations to make contributions to any
multi-employer pension, savings or health and welfare plan
covering any employee of the Industrial Container Business, in
accordance with the terms of each respective collective
bargaining agreement and shall indemnify and hold harmless Seller
for any multi-employer plan withdrawal liability.
(d) Health and Welfare Benefits.
(i) As of April 1, 1998 (or, if applicable, as of
the first day following the end of the Transition Period as
described in paragraph (f)(i) below), each salaried employee of
the Industrial Container Business who is Actively at Work shall
receive health and welfare benefits from Buyer, through its
health and welfare plans (the "Buyer Welfare Plans"). As of
April 1, 1998 (or, if applicable, as of the first day following
the end of the Transition Period, as described in paragraph
(f)(i) below), each non-union hourly paid employee of the
Industrial Container Business who is Actively at Work shall
receive health and welfare benefits from Buyer, through the Buyer
Welfare Plans. As of April 1, 1998 (or, if applicable, as of the
first day following the end of the Transition Period, as
described in paragraph (f)(i) below), each union hourly paid
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employee of the Industrial Container Business shall be provided
by Buyer, through the Buyer Welfare Plans, with those health and
welfare benefits required under each respective collective
bargaining agreement in effect with respect to such employees.
For purposes of this paragraph (d), an employee of the Industrial
Container Business shall be considered to be "Actively at Work"
if such employee is not on disability status (either short term
or long term), layoff status or on leave of absence (either paid
or unpaid). Any employee of the Industrial Container Business
who is not Actively at Work as of April 1, 1998 will not be
eligible to receive health and welfare benefits from Buyer (as
described in this paragraph) until such date such employee
returns to active employment with Buyer or the Acquired
Companies. All such disabled employees shall receive from Seller
full continuation of health and welfare coverage as well as any
disability income benefits to which they would have otherwise
been entitled in the absence of the sale of the Industrial
Container Business.
(ii) From the Closing Date through March 31, 1998,
Seller shall continue to provide all employees of the Industrial
Container Business with all health and welfare benefits that they
were entitled to receive as of the day preceding the Closing
Date. Seller, through its health and welfare plans (the "Seller
Welfare Plans"), shall remain responsible for all claims for
injuries incurred and illnesses suffered prior to April 1, 1998.
In addition, Seller shall provide, through the Seller Welfare
Plans, all continuation of coverage rights required under Section
4980B of the Code with respect to employees and former employees
(and their dependents) of the Industrial Container Business who
are not Actively at Work (as described in subparagraph (i) above)
on April 1, 1998. Buyer, through the Buyer Welfare Plans, will
be responsible for all claims for injuries incurred and illnesses
suffered on and after April 1, 1998. On or before October 31,
1998, Seller shall provide to Buyer a report regarding all
benefits paid under the Seller Welfare Plans to employees of the
Industrial Container Business (and their dependents) arising from
injuries incurred and illnesses suffered prior to April 1, 1998
which had been filed with Seller as of the date of such report.
Except as may be required under the terms of a collective
bargaining agreement, Buyer shall not assume any obligation under
any of the Seller Welfare Plans, including, but not limited to
any obligation under any severance plans maintained by Seller.
(e) Retiree Welfare Benefits.
(i) As of the Closing Date, Seller shall be
responsible for, and shall indemnify and hold harmless Buyer and
the Acquired Companies for, all obligations to provide post-
retirement welfare benefit coverage to (A) all former employees
of the Industrial Container Business who, as of the Closing Date,
were separated from the service of Seller and receiving such
post-retirement coverage under Seller's group welfare plan; and
(B) all employees (salaried, non-union hourly and union hourly)
of the Industrial Container Business who, as of the Closing Date,
have satisfied the age and/or service requirements to receive
such post-retirement coverage had they remained in the employ of
Seller until their retirement. With respect to all former
employees described in (A) above, Seller shall provide such post-
retirement welfare benefit coverage, after the Closing Date, in
accordance with the terms of Seller's welfare benefit plan as
that plan may be amended from time to time. With respect to the
employees described in (B) above, Seller shall provide post-
retirement welfare benefit coverage at the time of their
retirement or other separation from service from Buyer or the
Acquired Companies, in accordance with the terms and conditions
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of Seller's group welfare benefit, or, in the case of union
hourly employees, in accordance with the terms of the relevant
collective bargaining agreement, in effect at such retirement or
separation from service.
(ii) As of the Closing Date, Buyer shall be
responsible for, and shall indemnify and hold harmless Seller
for, all obligations to provide post-retirement welfare benefit
coverage to all union hourly employees of the Industrial
Container Business who, as of the Closing Date, had not satisfied
the age and/or service requirements to receive such post-
retirement coverage under the terms of Seller's welfare benefit
plan. Buyer shall provide the coverage described in the
preceding sentence in accordance with the terms of each
respective collective bargaining agreement in effect at the time
of a union hourly employee's retirement or other separation from
service from Buyer or the Acquired Companies. As of the Closing
Date, (A) Buyer shall have no obligation to provide any post-
retirement welfare benefit coverage to any salaried or non-union
hourly employee of the Industrial Container Business; and such
employees will not, upon their retirement or other separation
from service from Buyer or the Acquired Companies, receive any
post-retirement welfare benefit coverage; and (B) except as
provided in paragraph (e)(iii) below, Buyer shall have no
obligation regarding post-retirement welfare benefit coverage
with respect to any employee or former employee of the Industrial
Container Business described in paragraph (e)(i) above.
(iii) To compensate Seller for its retained
obligations under paragraph (e)(i) above, Buyer shall reimburse
Seller for its actual costs incurred in providing the post-
retirement health insurance coverage described in such paragraph
(e)(i); provided such reimbursement shall not exceed $1,350,000
in any calendar year ($1,012,500 in 1998). Reimbursement
payments contemplated by this paragraph (e)(iii) shall be made by
Buyer to Seller on an annual basis, based upon invoices provided
by Seller to Buyer, which invoices shall include a listing of
each covered individual and the cost assignable to each such
individual as determined by Seller. Buyer shall have the right,
at its own expense, to audit any such invoices received from
Seller. Seller and Buyer agree to cooperate in any audit or
review made by Buyer or its representatives with respect to post-
retirement health insurance expenses.
(f) Transition Period.
(i) To the extent requested by Buyer, in writing
to Seller, within five (5) days of the Closing Date, for the
period beginning on April 1, 1998 and ending on a date determined
by Buyer, not later than December 31, 1998 (hereinafter such time
period shall be referred to as the "Transition Period"), each
employee of the Industrial Container Business (as well as the
eligible dependents of each such employee) who is a participant
in the Seller Welfare Plans and who becomes an employee of Buyer
or the Acquired Companies after the Closing Date shall remain a
participant in the Seller Welfare Plans, subject to the following
conditions:
(A) Buyer shall reimburse Seller (or, if
applicable, the Seller Welfare Plans) for all benefit claims paid
from the Seller Welfare Plans and applicable administrative fees
accrued on behalf of any employee of the Industrial Container
Business, or eligible dependent of any such employee, with
respect to any injury incurred or illness suffered on or after
April 1, 1998 and prior to the end of the Transition Period.
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(B) Subject to the approval of the relevant
insurer, Seller shall continue to pay all insurance premiums on
behalf of each employee of the Industrial Container Business to
continue the provision of any insured health and welfare benefits
for the Transition Period, except for any HMO or similar plans
that have been contracted locally by the Acquired Companies. All
insurance premiums paid by Seller pursuant to this subparagraph
shall be reimbursed to Seller by Buyer.
(C) Subject to the approval of the relevant
insurer, Seller shall continue to pay and/or agree to obtain
individual and/or aggregate stop loss insurance premiums for the
Transition Period, with respect to any self-insured health and
welfare plan of Seller, to retain such stop loss insurance
coverage during the Transition Period with respect to claims paid
on behalf of any employee of the Industrial Container Business
and any dependent of any employee by Buyer pursuant to
subparagraph (A) above. All insurance premiums paid by Seller,
with respect to the employees of the Industrial Container
Business and their eligible dependents, pursuant to this
subparagraph, shall be reimbursed to Seller by Buyer.
(ii) Notwithstanding the provisions of
subparagraph (i) of this paragraph (f), at the close of business
on March 31, 1998 (or at the end of the Transition Period, if
later), all employees of the Industrial Container Business shall
cease to be eligible to make any further deferral contributions
to any flexible spending account plan maintained by Seller
pursuant to Section 125 of the Code (the "Seller Flexible
Spending Plans"). On and after April 1, 1998, neither Buyer nor
any of the Acquired Companies shall provide any salaried employee
or non-union hourly employee with the opportunity to participate
in any flexible spending account plan sponsored by Buyer or any
of the Acquired Companies. On and after April 1, 1998, all union
hourly employees will be provided by Buyer with those flexible
spending account plans required under each respective collective
bargaining agreement in effect with respect to such employees.
With respect to salaried employees and non-union hourly employees
of the Industrial Container Business, Seller shall continue, for
the period beginning on April 1, 1998 and ending on December 31,
1998, to allow such employees to continue to submit claims for
reimbursement under the Seller Flexible Spending Plans for any
occurrence arising at any time during the 1998 calendar year.
The reimbursable claims will not exceed the amount deducted
through March 31, 1998 (or by the end of the Transition Period,
if later). With respect to union hourly employees of the
Industrial Container Business, on April 1, 1998, Seller shall
transfer the account balances of such employees under the Seller
Flexible Spending Plans to Buyer. On and after April 1, 1998,
neither Seller nor the Seller Flexible Spending Plans shall have
any obligations with respect to reimbursements to any union
hourly employee of the Industrial Container Business.
(g) Workers' Compensation, Disability and Employment
Claims. After the Closing Date, Seller shall be responsible for,
and shall indemnify and hold harmless Buyer and the Acquired
Companies for, all Liabilities and Expenses of all workers
compensation claims which arise out of any injury sustained by
any employee of the Industrial Container Business on or prior to
the Closing Date. After the Closing Date, Seller shall be
responsible for, and shall indemnify and hold harmless Buyer and
the Acquired Companies for, all Liabilities and Expenses relating
to any employee of the Industrial Container Business who is on
short or long term disability leave on the Closing Date. After
the Closing Date, Seller shall be responsible for, and shall
indemnify and hold harmless Buyer and the Acquired Companies for,
all Liabilities and Expenses relating to any claim of any
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employee of the Industrial Container Business which claim is
based upon facts occurring on or prior to the Closing Date
relating to the employment of such employee in the Industrial
Container Business.
Section 7.4. Confidential Nature of Information. Each
of Buyer, as a party on the one hand, and Seller, as a party on
the other, agrees that it will treat in confidence all documents,
materials and other information which it shall have obtained
regarding the other party during the course of the negotiations
leading to the consummation of the Contemplated Transactions
(whether obtained before or after the date of this Agreement),
the investigation provided for herein and the preparation of this
Agreement and other related documents, and, in the event the
Contemplated Transactions shall not be consummated, each party
will return to the other party all copies of nonpublic documents
and materials which have been furnished in connection therewith.
Such documents, materials and information shall not be
communicated to any third Person (other than, in the case of
Buyer, to its counsel, accountants, financial advisors or
lenders, and in the case of Seller, to its counsel, accountants
or financial advisors). No Person shall use any confidential
information in any manner whatsoever except solely for the
purpose of evaluating the proposed purchase and sale of the
Shares or the negotiation or enforcement of this Agreement or any
agreement contemplated hereby; provided that after the Closing,
Buyer and the Acquired Companies may use or disclose any
confidential information related to the Acquired Companies or
their Assets or business. The obligation of each party to treat
such documents, materials and other information in confidence
shall not apply to any information which (i) is or becomes
lawfully available to such party from a source other than the
furnishing party, (ii) is or becomes available to the public
other than as a result of disclosure by such party or its agents,
(iii) is required to be disclosed under applicable law or
judicial process, but only to the extent it must be disclosed or
(iv) such party reasonably deems necessary to disclose to obtain
any of the Consents contemplated hereby.
Section 7.5. No Solicitation. After the date hereof
until the termination of this Agreement or Closing, neither
Seller nor any of the Acquired Companies will directly or
indirectly, through any Representative of Seller or any Acquired
Company (i) solicit or initiate the submission of any proposal or
offer from any Person (other than Buyer) with respect to the
acquisition of all or a portion of the outstanding capital stock
of any Acquired Company or the merger, consolidation or sale of
all or a significant portion of the Assets of any Acquired
Company (an "Acquisition Proposal"), or (ii) engage in
negotiations or discussions with, or furnish any information or
data to any third party relating to an Acquisition Proposal
(other than the transactions contemplated hereby). Seller shall
cause the Acquired Companies to comply with the provisions of
this Section 7.5.
Section 7.6. Notes, Accounts and Other Miscellaneous
Receivables. Subject to a bad debt reserve of $700,000 for
accounts receivable, Seller guarantees to Buyer the collection of
all notes, accounts and other miscellaneous receivables that are
reflected on the books and records of any of the Acquired
Companies as of the Closing Date or that otherwise arise out of
sales or transactions occurring on or before the Closing Date
relating to the Industrial Container Business or the IBC Business
(the "Receivables"). From and after the Closing, Buyer shall
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use, or shall cause the applicable Acquired Company to use,
reasonable efforts to collect the Receivables generally in
accordance with Buyer's normal billing and collection practices.
With respect to accounts receivable, if, at any time after ninety
days after the Closing Date, the Acquired Companies shall have
outstanding to be collected more than $700,000 of accounts
receivable, upon the request of Buyer, Seller shall pay to Buyer
(or to one or more of the Acquired Companies as Buyer may direct)
within ten days of such request the difference between the total
amount of such accounts receivables outstanding and $700,000;
provided, however, that concurrently with any such payment by
Seller, Buyer shall cause one or more of the Acquired Companies
to assign to Seller the accounts receivables theretofore not
collected in an amount equal to the amount of the payment by the
Seller. With respect to notes receivable (including, without
limitation, the note receivable in the original principal amount
of $287,464 from Horton Sales Development Corp.) and other
miscellaneous receivables, if, at any time after the Closing
Date, any obligor under any note receivable or miscellaneous
receivable shall fail to pay when due any amounts owing under the
notes receivable or miscellaneous, upon the request of Buyer,
Seller shall pay to Buyer (or to one or more of the Acquired
Companies as Buyer may direct) within ten days of such request
the entire unpaid amount of the note receivable or miscellaneous
receivable; provided, however, that concurrently with any such
payment by Seller, Buyer shall cause one or more of the Acquired
Companies to assign to Seller the note receivable or
miscellaneous receivable theretofore not collected in an amount
equal to the amount of the payment by the Seller. To the extent
that any accounts receivable relating to the IBC Business is on
the books and records of the Seller as of the Closing Date,
Seller hereby assigns such accounts receivable to the Buyer.
Section 7.7. Environmental Matters. Subject to the
following sentence, Seller shall promptly reimburse Buyer for
one-half (50%) of all costs incurred in connection with
conducting additional environmental investigations to define the
scope and extent of environmental impacts at Seller's facilities
which are identified in Environmental Resource Management's
("ERM's") proposal No. P98-DG-2001 attached hereto as Schedule
7.7. Notwithstanding the foregoing, Buyer and Seller mutually
agree that the environmental investigations set forth in ERM's
proposal for the facilities at Hightstown, New Jersey, Carteret,
New Jersey and Overland, Missouri will not be conducted by ERM
pursuant to this Section 7.7. Buyer and Seller further agree
that, upon the request of Seller, Seller may request another
estimate of the costs of the environmental investigations from
its ERM representative or from another environmental consulting
firm reasonably acceptable to Buyer. In the event such further
estimates result in lower costs for the environmental
investigations and the scope of such work in such estimates is
acceptable to Buyer, Buyer and Seller may agree to use another
environmental consultant to perform such environmental
investigations. Buyer shall have sole authority to direct and
authorize this and future environmental investigations, if
necessary. Seller shall indemnify and hold Buyer harmless
against any and all costs, including expert fees, consultants'
fees, and attorneys' fees, for all necessary and appropriate
additional environmental investigation and remediation required
to demonstrate that environmental conditions at the identified
facilities comply with applicable Environmental Law and to
prevent or abate any threat to human health or the environment at
Seller's facilities identified herein. Seller shall reimburse
Buyer for all costs incurred in connection with those
environmental matters identified on Schedule 4.25, including but
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not limited to costs of investigation, removal actions, remedial
actions, operations and maintenance, government oversight costs,
natural resource damages and claims by third parties for
contribution.
Section 7.8. Financial Statement Consents . In
connection with the delivery of the audited Financial Statements
referenced in Section 7.9 of this Agreement, Seller shall cause
its independent auditors to deliver to Buyer upon reasonable
request of Buyer such consents as may be required under the
Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder
in connection with the use of such statements by Buyer.
Section 7.9. Delivery of Audited Financial Statements.
The audited consolidated financial statement for the fiscal
year ended December 31, 1995, December 31, 1996 and December 31,
1997 for the Acquired Companies relating only to the Industrial
Container Business of the Acquired Companies referenced in
Section 4.5 of this Agreement were not completed as of the
Closing Date. Seller shall deliver or cause to be delivered such
audited consolidated financial statements to the Buyer within
thirty days after the Closing Date. Such audited consolidated
financial statements shall be in a form acceptable for Buyer to
file with its Form 8-K with the Securities and Exchange
Commission. For purposes of this Agreement, such audited
financial statements shall be deemed to have been delivered as of
the Closing Date. In addition, in the event that the
transactions contemplated by the IBC Sales Agreement close,
Seller shall deliver or cause to be delivered such audited
consolidated financial statements for such three year period
relating to the IBC Business to the Buyer at such closing or
within thirty days after this Closing Date, whichever is later.
Such audited consolidated financial statements relating to the
IBC Business shall be in a form acceptable for Buyer to file with
its Form 8-K with the Securities and Exchange Commission.
Section 7.10. Certain Contracts in the Name of Seller
Relating to the Industrial Container Business.
(a) Prior to the Closing Date, Seller was a party to
various executory Contracts relating to the Industrial Container
Business. Except as set forth on Schedule 7.10, Seller agrees
that all such executory Contracts have been lawfully assigned to
an Acquired Company (which, as of the Closing Date, is a lawful
party to such Contract) and, to the extent required by any such
Contract, Seller has obtained any Consent required in connection
with such assignment. Seller shall indemnify and hold harmless
Buyer and each Acquired Company from all Damages incurred by
Buyer or an Acquired Company in the event that any required
Consent to such assignment was not obtained or the assignment was
otherwise not lawfully effected or binding. The representations
set forth in Section 4.15(b) are hereby also made with respect to
the Contracts described in this Section 7.10(a).
(b) With respect to the Contracts listed in Schedule
7.10 (including, without limitation, the Supply Contract between
Seller and Merck & Co., Inc. relating to the Industrial Container
Business), Seller shall indemnify and hold harmless Buyer and
each Acquired Company from all Damages incurred by Buyer or an
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Acquired Company arising from or in connection with the failure
of the Seller to lawfully assign such Contract to an Acquired
Company on or prior to the Closing Date or otherwise failing to
obtain any required Consent to such assignment.
(c) In the event that, after the Closing Date, Buyer
or an Acquired Company discovers that Seller is a party to a
Contract relating to the Industrial Container Business that has
not been lawfully assigned to an Acquired Company and that is
not described on Schedule 7.10, upon the request of the Buyer,
after the Closing Date. Seller agrees to use it best efforts to
obtain the lawful assignment of such Contract to an Acquired
Company and, to the extent required by any such Contract, to
obtain any Consent required in connection with such assignment.
Seller shall indemnify and hold harmless Buyer and each Acquired
Company from all Damages incurred by Buyer or an Acquired Company
arising from or in connection with the failure of the Seller to
lawfully assign such Contract to an Acquired Company or otherwise
failing to obtain any required Consent to such assignment.
Section 7.11. Option to Purchase Far East Fibre Drum
Operations.
(a) For a period of ten years after the Closing Date,
Buyer shall have the irrevocable prior right and option to
purchase from Seller (or, if applicable, an affiliate of the
Seller) the Far East Fibre Drum Operations. Buyer may exercise
the option by giving written notice of exercise to Seller of its
intention to purchase the Far East Fibre Drum Operations. Upon
receipt of such notice, Seller and Buyer shall enter into a
mutually satisfactory confidentiality agreement and, subject to
such agreement, Seller shall provide to Buyer all financial and
business information concerning the Far East Fibre Drum
Operations as may be reasonably requested by Buyer. Following
delivery and receipt of such information, Seller and Buyer shall
be required to negotiate reasonably and in good faith for a
period of not less than sixty days such terms and conditions of
the purchase and sale of the Far East Fibre Drum Operations as
may be mutually satisfactory to both Seller and Buyer.
(b) If, at any time during the ten year period after
the Closing Date, Seller or an affiliate of the Seller enters
into, or proposes to enter into, an agreement to sell all or any
part of the Far East Fibre Drum Operations to an unrelated third
Person, Seller shall give written notice to Buyer of such
agreement or proposed agreement (the "Transfer Notice"). The
Transfer Notice shall specify all of the material terms and
conditions of such agreement or proposed agreement. Upon receipt
of such Transfer Notice, Buyer shall have the irrevocable prior
right and option to purchase from Seller (or, if applicable, an
affiliate of the Seller) the Far East Fibre Drum Operations on
the same terms and conditions as set forth in the Transfer Notice
(the "First Right of Refusal"). Upon receipt of such Transfer
Notice, Seller and Buyer shall enter into a mutually satisfactory
confidentiality agreement and, subject to such agreement, Seller
shall provide to Buyer all financial and business information
concerning the Far East Fibre Drum Operations as may be
reasonably requested by Buyer. Buyer may exercise the First
Right of Refusal to purchase the Far East Fibre Drum Operations
on the same terms and conditions as set forth in the Transfer
Notice by giving written notice to the Seller within sixty days
after receipt of the Transfer Notice. If Buyer exercises such
First Right of Refusal, Buyer and Seller shall reasonably and in
good faith negotiate an agreement containing the terms that are
set forth in the Transfer Notice. If the Buyer does not exercise
its First Right of Refusal within sixty days after receipt of the
Transfer Notice, Seller may sell the Far East Fibre Drum
Operations to the unrelated third Person identified in the
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Transfer Notice strictly in accordance with the terms of the
Transfer Notice.
Section 7.12. Post_Closing Real Estate Matters. Buyer
and Seller agree and acknowledge that certain issues relating to
the Owned Real Property and the Leased Real Property may not be
resolved until after the Closing Date. Such issues include the
following:
(a) The transfer and conveyance of certain Owned Real
Property located in Lockport, Illinois from Seller to SPD and the
transfer and conveyance of certain Owned Real Property located in
Saraland, Alabama from the Industrial Development Board of the
City of Mobile, Alabama to SFD (such transfers being referred to
herein collectively as the "Post Closing Transfers"); and
(b) The resolution of certain matters relating to and
arising out of the completion of accurate surveys of the Owned
Real Property, including (i) the encroachment onto property
owned by, or to be owned by, SPD and located in Lockport,
Illinois, of a building which is located on property adjacent to
such SPD property, (ii) the encroachment onto property owned by
SFD and located in Van Wert, Ohio, of an above-ground swimming
pool and a storage shed which is located on property adjacent to
such SFD property, and (iii) the potential encroachment of a
parking lot and fence, owned and utilized by SFD at its
Tonawanda, New York property, onto property located adjacent to
such SFD property (collectively, the "Post Closing Survey
Matters").
Seller agrees to be responsible for and to indemnify Buyer
against all expenses, transfer taxes, documentary stamp charges,
recording fees and similar charges arising out of or in
connection with the Post Closing Transfers. Additionally,
Seller agrees to be responsible for and to indemnify Buyer
against all costs, expenses and charges incurred by Buyer in
resolving the Post Closing Survey Matters; provided, however,
that Buyer agrees that, with respect to the matter set forth in
Section 7.12(b)(i), Buyer shall not seek to be indemnified by the
Seller for the value of the land that is the subject of the
encroachment. The agreements between Seller and Buyer pursuant
to this Section 7.12 shall neither diminish nor limit the
liability of Seller arising out of the breach by Seller of any of
its representations and warranties contained in this Agreement.
Section 7.13. Post_Closing Intellectual Property
Matters.
(a) In connection with Seller's acquisition of part of
the Industrial Container Business from KMI Continental Inc.
pursuant to a Purchase Agreement dated February 25 ,1985, Seller
(or one or its affiliates) had assigned to it certain patents
that are listed on Schedule 7.13, together with all Patent Rights
associated with such patents. The assignment of such patents,
however, was not recorded in the United State Patent and
Trademark Office. Seller represents to Buyer that, although it
or one of its affiliates owns all the Patent Rights associated
with such patents and all such Patent Rights to such patents are
being assigned to GBC Holding Co., the patents listed on
Schedule 7.13 are not currently being used in the Industrial
Container Business. Seller agrees that if Buyer or one of its
affiliates decides to use any such patent prior to the expiration
of such patent, Seller shall, within thirty days of written
notice of Buyer's intent to use such patent obtain, at Seller's
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sole cost and expense, all necessary documentation from any
person as may be necessary to establish that GBC Holding Co. is
the record owner of such patent as reflected upon the records of
the United States Patent and Trademark Office.
(b) Although, as of the Closing Date, Seller and its
affiliates have assigned all of their right, title and interest
in and to all Patent Rights and Trademarks used in connection
with the Industrial Container Business to GBC Holding Co., Seller
has not caused the assignments of all such Patent Rights and
Trademarks that, pursuant to Legal Requirement, should be filed
and recorded with a Governmental Body (including, without
limitation, the United States Patent and Trademark Office).
Seller agrees that, within ninety days after the Closing, Seller
shall, at its sole cost and expense, cause all such assignments
of all such Patent Rights and Trademarks that, pursuant to Legal
Requirement, should be filed and recorded with a Governmental
Body to be properly recorded with the appropriate Governmental
Body. Upon the request of Seller, Buyer agrees that it shall
undertake to file and record, on behalf of the Seller, all such
assignments with the appropriate Governmental Body provided that
Seller shall promptly reimburse Buyer for all costs and expenses
incurred by Buyer in connection with such action (including,
without limitation, all filing fees of the Governmental Body and
reasonable attorneys fees incurred in connection with such
action).
Section 7.14. Patent Litigation Matters. Seller and
Buyer agree that, with respect to the pending patent litigation
referenced in Item 1 and Item 2 of Schedule 4.9 to this
Agreement, Seller agrees to assign all rights (including all
rights to damages in connection with any settlement or judgment)
to such patent litigation to Buyer (or one of its affiliates as
may be designated by Buyer). Seller agrees that it shall be
responsible for all costs and expenses (including attorney fees)
incurred on or prior to the Closing Date relating to such patent
litigation. Buyer agrees that, after the Closing Date, it shall
be responsible for all costs and expenses (including attorney
fees) incurred after the Closing Date relating to such patent
litigation. Buyer and Seller agree to execute such documents as
may be necessary or appropriate in connection with any Legal
Requirement (including local Court Rules) to evidence the
foregoing.
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
Section 8.1. Conditions Precedent to Buyer's Obligation to
Close. The obligation of Buyer to consummate the transactions to
be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(a) The representations and warranties made by Seller
to Buyer in this Agreement or any document or instrument
delivered to Buyer on the Closing Date shall be true and correct
(i) in all material respects when made and (ii) on the Closing
Date with the same force and effect as though such
representations and warranties had been made on and as of such
date (except for changes contemplated by this Agreement or
occurring in the Ordinary Course of Business which do not singly
or in the aggregate have a Material Adverse Effect).
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(b) Seller shall have duly performed all of the
covenants required to be performed by it or any of its affiliates
under this Agreement on or before the Closing Date, and an
authorized officer of Seller shall deliver to Buyer a certificate
dated as of the Closing Date certifying to the fulfillment of
this condition and the condition set forth in Section 8.1(a).
(c) There shall not be pending any Proceeding brought
by any Person before any Governmental Body challenging,
affecting, or seeking material damages in connection with, this
Agreement or any of the Contemplated Transactions.
(d) A favorable opinion of Sinkler & Boyd, P.A.,
counsel for Seller, shall have been delivered to Buyer dated as
of the Closing Date, in the form agreed to by the parties.
(e) Early termination of or expiration of the waiting
period under the HSR Act shall have occurred on or prior to the
Closing Date.
(f) Consents (including all Governmental
Authorizations and all Consents required to be obtained by Seller
or under any Applicable Contracts to prevent a breach of such
Contract) required of Seller or an Acquired Company shall have
been obtained, on terms and conditions reasonably satisfactory to
Buyer, and Seller and the Acquired Company shall provide evidence
of the receipt of such Consents to Buyer.
(g) Buyer shall have satisfactorily completed its due
diligence review of the Acquired Companies.
Section 8.2. Conditions Precedent to Seller's Obligation to
Close. The obligation of Seller to consummate the transactions
to be performed by them in connection with the Closing is subject
to satisfaction of the following conditions:
(a) The representations and warranties made by Buyer
to Seller in this Agreement or any document or instrument
delivered to Seller on the Closing Date shall be true and correct
(i) in all material respects when made and (ii) on the Closing
Date with the same force and effect as though such
representations and warranties had been made on and as of such
date (except for changes contemplated by this Agreement or which
do not singly or in the aggregate have a material adverse effect
on the ability of Buyer to consummate the Contemplated
Transactions).
(b) Buyer shall have duly performed all of the
covenants required to be performed by it under this Agreement on
or before the Closing Date, and an authorized officer of Buyer
shall deliver to Seller a certificate dated as of the Closing
Date certifying to the fulfillment of this condition and the
condition set forth in Section 8.2(a).
(c) There shall not be pending any Proceeding brought
by any Person before any Governmental Body challenging,
affecting, or seeking material damages in connection with, this
Agreement or any of the Contemplated Transactions.
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(d) A favorable opinion of Vorys, Sater, Seymour and
Pease LLP, counsel for Buyer, shall have been delivered to Seller
dated as of the Closing Date, in the form agreed to by the
parties.
(e) Early termination of or expiration of the waiting
period under the HSR Act shall have occurred on or prior to the
Closing Date.
(f) Consents (including all Governmental
Authorizations) required of Buyer shall have been obtained, on
terms and conditions reasonably satisfactory to Seller, and Buyer
shall provide evidence of the receipt of such Consents to Seller.
ARTICLE 9. COVENANTS AS TO TAX MATTERS
Section 9.1. Section 338(h)(10) Election .
(a) Buyer and Seller agree to file the election
provided for by IRC Section 338(h)(10) and any comparable
election under state, local or foreign law (collectively and
separately, the "Election") with respect to (i) the acquisition
of the Shares of each Acquired Company pursuant to this Agreement
and (ii) the deemed acquisition of the shares of each Subsidiary
of each Acquired Company. Each party shall provide to the other
all information necessary to permit the Election to be made.
Seller and Buyer shall, within the time periods established by
applicable Legal Requirements, execute and file IRS Form 8023-A
and all other forms, returns, elections, schedules and documents
as may be required to effect and preserve a timely Election.
(b) Seller and Buyer acknowledge and agree that for
federal income tax purposes the acquisition of the Shares
pursuant to the Election will be treated as a sale of the Assets
of each Company and each Subsidiary of each Company followed by a
complete liquidation of each Company and each Subsidiary of each
Company into Seller. In connection with the Election and within
the time periods established by applicable Legal Requirements,
Seller and Buyer shall act together in good faith (i) to
determine and agree upon the amount of the deemed sale price of
the Shares as well as the deemed sale price of the shares of each
Subsidiary (within the meaning of Treasury Regulations
Section 1.338(h)(10)-1(f)) and (ii) to agree upon the proper
allocations (the "Allocations") of the deemed sale price of the
Shares and the shares of each Subsidiary among the Assets of each
Company and each Subsidiary of each Company in accordance with
the IRC and the Treasury Regulations promulgated thereunder.
Neither Seller nor Buyer, nor any of their affiliates, will take
any position inconsistent with the Election, the Allocations or
the amount of the deemed sale prices so determined in any Tax
Return or otherwise. Within the time periods established by
applicable Legal Requirements for making and filing the Election,
the Allocations shall be set forth in Schedule 9.1(b) to this
Agreement. Except as provided below, any Liability for Taxes
resulting from the Election will be borne by Seller, including,
but not limited to, any income, franchise or similar Taxes
imposed by any state, local or foreign taxing authority that does
not allow or respect an election under IRC Section 338(h)(10) (or
any comparable election under state, local or foreign law).
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(c) If Seller breaches any covenant set forth in this
Section 9.1, Seller shall indemnify and hold Buyer, each Acquired
Company and each of their affiliates harmless against any and all
Taxes due from an Acquired Company which result from such breach
for any and all taxable periods beginning after the Closing Date
(including, but not limited to, the portion of all Straddle
Periods allocable to Buyer pursuant to Section 9.2(c) hereof),
together with all Expenses related thereto. For purposes of this
Section 9.1(c), the term "Taxes" shall mean the present value as
of the Closing Date of the step up in the adjusted basis of the
Assets of each Acquired Company that would have resulted from a
valid Election, computed on the following assumptions: (i) the
allocations determined pursuant to paragraph (b) hereof (taking
into account Buyer's transaction costs) are correct; (ii) each
highest marginal rate of tax applied to income of a corporation
as of the Closing Date pursuant to applicable federal, state,
local and foreign law shall apply; and (iii) the discount rate
shall be the rate of interest that Key Bank, N.A., publishes as
its prime rate as of the Closing Date (the "Interest Rate").
Seller shall pay such Taxes and Expenses to Buyer in immediately
available funds within thirty (30) days after written demand
therefor, together with interest from the Closing Date at a rate
per annum equal to the Interest Rate. Buyer shall deliver with
such written demand evidence of such Expenses.
Section 9.2. Liability for Taxes.
(a) Seller shall indemnify and hold Buyer, each of
the Acquired Companies and each of their affiliates harmless
against any and all Taxes due from any Acquired Company for any
taxable period ending on or before the Closing Date in excess of
the aggregate amount reflected as reserves for Taxes of the
Acquired Companies on the balance sheets of the Most Recent
Financial Statements, together with all Expenses related thereto.
Seller shall be entitled to all refunds of Taxes payable with
respect to the Acquired Companies for taxable periods ending on
or before the Closing Date.
(b) Buyer shall indemnify and hold Seller and its
affiliates harmless against any and all Taxes due from any of the
Acquired Companies for any taxable period beginning after the
Closing Date, together with all Expenses related thereto. Buyer
shall be entitled to all refunds of Taxes payable with respect to
the Acquired Companies for such taxable periods.
(c) Buyer and Seller shall allocate any Liability of
the Acquired Companies for Taxes relating to taxable periods that
begin before and end after the Closing Date ("Straddle Periods").
For this purpose, the portion of such Liability allocable to
Seller in accordance with paragraph (a) hereof and the portion of
such Liability allocable to Buyer in accordance with paragraph
(b) hereof shall be determined, in the case of property, ad
valorem or franchise Taxes (other than those measured by, or
based upon, net income), on a per diem basis and, in the case of
other Taxes, on the basis of an interim closing of the books as
of the end of the Closing Date (except that (i) exemptions,
allowances and deductions for any Straddle Period that are
calculated on an annual or periodic basis, such as the deduction
for depreciation, shall be apportioned on a per diem basis and
(ii) real property taxes shall be apportioned in accordance with
IRC Section 164(d)). All refunds of Taxes payable with respect
to the Acquired Companies for a Straddle Period shall be
apportioned between Buyer and Seller on the basis of their
respective Liability for such Straddle Period; provided, however,
that any refunds of Taxes with respect to the Acquired Companies
for any Straddle Period which is related to an item for which
Buyer or Seller was liable and which was paid by Buyer or Seller
shall be refunded to Buyer or Seller, as the case may be.
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(d) Seller shall indemnify, defend and hold Buyer, the
Acquired Companies and their affiliates harmless against any
Losses and Expenses incurred by reason of the breach by Seller of
any representation or warranty set forth in Section 4.10.
Section 9.3. Preparation and Filing of Tax Returns.
(a) Seller shall be solely responsible for preparing
and filing on a timely basis, for all taxable periods ending on
or before the Closing Date, all Tax Returns with respect to the
income, Assets, operations, activities, status or other matters
of any of the Acquired Companies. Seller shall be solely
responsible for and pay on a timely basis all Taxes shown due
thereon.
(b) If for federal, state, local or foreign tax
purposes, the taxable period of any of the Acquired Companies
does not terminate on the Closing Date, Buyer and Seller shall
elect, to the extent permitted by applicable law, with the
relevant taxing authority to treat a portion of any Straddle
Period as a short taxable period ending as of the close of
business on the Closing Date, and such short taxable period shall
be treated as ending on or before the Closing Date for purposes
of this Agreement. Seller and Buyer shall jointly prepare (and
Buyer shall file or cause to be filed on a timely basis), for all
Straddle Periods, all Tax Returns with respect to the income,
Assets, operations, activities, status or other matters of any of
the Acquired Companies. Seller shall be solely responsible for
any Taxes shown due thereon to the extent attributable to the
portion of such taxable period ending on the Closing Date, and
shall pay such amount over to Buyer in immediately available
funds no later than three business days prior to the due date of
such Tax Return. Buyer shall be solely responsible for the
balance of the Taxes shown as due thereon and for payment of all
amounts shown as due thereon to the appropriate Governmental
Body. Notwithstanding the foregoing, to the extent that Seller
has made payments of estimated Taxes with respect to any of the
Acquired Companies for any Straddle Period, Seller shall be
entitled to reduce its payments to Buyer under this Section
9.3(b) by the aggregate amount of such payments and, to the
extent that the aggregate amount of such payments exceeds
Seller's Liability for Taxes for any Straddle Period, Buyer shall
pay over to Seller the amount of such excess in immediately
available funds no later than three Business Days prior to the
due date of the Tax Return with respect to which the estimated
Taxes were payable.
(c) Buyer shall be solely responsible for preparing
and filing all Tax Returns relating to any of the Acquired
Companies for all taxable periods beginning after the Closing
Date and for paying all Taxes shown due thereon.
(d) If Buyer and Seller cannot agree as to the amount of
Taxes due with respect to any Tax Return filed for any Straddle
Period, or as to the portion of such Taxes allocable to each of
Buyer and Seller pursuant to Section 9.2(c) hereof, Buyer and
Seller shall jointly select a nationally recognized accounting
firm (the "Accounting Firm"), the determination of which
regarding the resolution of the item(s) in dispute shall be
binding on Buyer and Seller. If the Accounting Firm is unable to
determine the proper resolution of the items in dispute prior to
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the five business days before the due date (after giving effect
to extensions) of the Tax Return at issue, the Tax Return shall
be filed with the resolution of the item(s) in dispute as
proposed by Buyer, and Seller shall be required to pay to Buyer
in immediately available funds three business days prior to the
due date of the Tax Return the amount determined by Seller to be
due by Seller. Within five business days after the Accounting
Firm has reached its determination, Buyer shall pay to Seller or
Seller shall pay to Buyer, as the case may be, the amount of the
overpayment or underpayment by Seller in immediately available
funds with interest at a rate per annum equal to the Interest
Rate, computed from the due date of the Tax Return.
Section 9.4. Cooperation and Assistance. Buyer and
Seller agree to furnish or cause to be furnished to each other,
upon written request, as promptly as practicable, such
information (including without limitation reasonable access to
books, records, schedules, work papers and other documents
relating thereto during the providing party's regular business
hours) and reasonable assistance relating to the Acquired
Companies necessary for the filing of any Tax Return required to
be filed after the Closing Date, preparation for any audit or
prosecution or defense of any Proceeding relating to any proposed
adjustment, or the verification by any party hereto of an amount
payable under this Article 9 to, or receivable under this Article
9 from, another such party. Buyer and Seller shall cooperate
with each other in the conduct of any audit or other Proceeding
involving any of the Acquired Companies or any Person with which
either of or both of them is consolidated or combined for any
purposes relating to Taxes, and each shall execute and deliver
such documents as are necessary to carry out the intent of this
Section 9.4.
Section 9.5. Transfer Taxes. In the event there shall be
any stock transfer Taxes, sales Taxes, use Taxes, real estate
transfer or gains Taxes, or other similar Taxes, if any, imposed
on the Contemplated Transactions, Seller and Buyer shall share
equally in the payment of such Taxes. Notwithstanding the
foregoing, Seller shall be solely responsible for the payment of
any such Taxes to the extent such Taxes result from the transfer
of the Assets, if any, of the IBC Business to Seller on or prior
to the Closing Date or to the extent such Taxes result from the
transfer of Assets of the IBC Business from Seller to Buyer after
the Closing Date.
Section 9.6. Nonforeign Affidavit. Seller shall furnish
Buyer an affidavit, substantially in the form of Exhibit B
hereto, stating, under penalties of perjury, Seller's United
States taxpayer identification number and that Seller is not a
foreign person, pursuant to Section 1445(b)(2) of the IRC.
ARTICLE 10. INDEMNIFICATION; REMEDIES
Section 10.1. Survival of Representations and Warranties.
All representations, warranties, covenants and agreements set
forth in this Agreement by Buyer and Seller are material and have
been relied on by the other party hereto. All representations,
warranties, covenants and agreements set forth in this Agreement
and the remedies of Buyer and Seller with respect thereto, shall
survive the Closing Date and shall not merge in the performance
of any obligation by any party hereto; provided, however,
(a) that any claim for indemnification relating to the breach by
Buyer of any of its representations and warranties contained in
this Agreement may be made by Seller only if Seller shall notify
Buyer on or before the expiration of the second year after the
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Closing Date and (b) that any claim for indemnification relating
to the breach by the Seller of any of its representations and
warranties contained in this Agreement may be made by Buyer only
if Buyer shall notify Seller (i) on or before the expiration of
the second year after the Closing Date in the case of
indemnification relating to the breach of any of the
representations and warranties contained in Sections 4.1 through
4.2, Sections 4.4 through 4.6, Sections 4.8 through 4.9,
Sections 4.11 through 4.24 and Sections 4.26 through 4.30 , (ii)
on or before the expiration of the tenth year after the Closing
Date in the case of indemnification relating to the breach of any
of the representations and warranties contained in Section 4.7 of
this Agreement and (iii) at any time after the Closing Date in
the case of indemnification relating to the breach of any of the
representations and warranties contained in Sections 4.3, 4.10,
and 4.25 of this Agreement (subject to any applicable statutes of
limitation).
Section 10.2. Indemnification and Payment of Damages by the
Seller. Seller will indemnify and hold harmless Buyer and its
affiliates (collectively, the "Buyer Indemnified Persons") for,
and will pay to the Buyer Indemnified Persons, the amount of, any
loss, liability, claim, damage (including actual, consequential,
multiple, exemplary, punitive and incidental damage), fine,
penalty or Expenses (collectively, "Damages"), incurred by the
Buyer Indemnified Persons arising, directly or indirectly, from
or in connection with:
(a) any breach of any representation or warranty made
by Seller in this Agreement or in any other
certificate or document delivered by Seller
pursuant to this Agreement; or
(b) any breach by the Seller of any covenant or
obligation of Seller in this Agreement or in other
certificate or document delivered by Seller
pursuant to this Agreement.
The remedies provided in this Section 10.2 will not be
exclusive of or limit any other remedies that may be available to
Buyer or the other Buyer Indemnified Persons.
Section 10.3. Indemnification and Payment of Damages by
Buyer. Buyer will indemnify and hold harmless Seller and its
affiliates (the "Seller Indemnified Persons") for, and will pay
to the Seller Indemnified Persons, the amount of any Damages
incurred by the Seller Indemnified Persons arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made
by Buyer in this Agreement, or any other
certificate or document delivered by Buyer
pursuant to this Agreement; or
(b) any breach by Buyer of any covenant or obligation
of Buyer in this Agreement or in other certificate
or document delivered by Buyer pursuant to this
Agreement.
The remedies provided in this Section 10.3 will not be
exclusive of or limit any other remedies that may be available to
Seller or the other Seller Indemnified Persons.
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Section 10.4. Limitations on Indemnification
(a) Except for claims for indemnification against
Seller under Section 10.2(b), under the provisions of Article 9
or under a breach of warranty under Sections 4.3 or 4.10 of this
Agreement, no claim shall be made for indemnification against
Seller pursuant to this Agreement unless and until the aggregate
amount of Damages incurred by the Buyer Indemnified Persons under
this Agreement exceeds $1,000,000 (the "Indemnification
Threshold") and then Seller shall be liable for Damages only to
the extent of the excess over the Indemnification Threshold.
(b) Except for claims for indemnification against
Buyer under Section 10.3(b) or under the provisions of Article 9
of this Agreement, no claim shall be made for indemnification
against Buyer pursuant to this Agreement unless and until the
aggregate amount of Damages incurred by the Seller Indemnified
Persons exceeds $1,000,000 (the "Indemnification Threshold") and
then Buyer shall be liable for Damages only to the extent of the
excess over the Indemnification Threshold.
(c) The total Liability of Seller to Buyer under
Section 10.2(a) or of Buyer to Seller under Section 10.3(a)
hereof shall be limited in the aggregate (for each of Sections
10.2(a) and 10.3(a), not combined) to $100,000,000.
Section 10.5. Procedure for Indemnification--Third Party
Claims.
(a) If any Seller Indemnified Person or Buyer
Indemnified Person entitled to indemnification under this
Agreement (an "Indemnitee") receives notice of the commencement
of any Proceeding by any Person who is not a party to this
Agreement or an affiliate of such a party (a "Third Party Claim")
against such Indemnitee for which a party is obligated to provide
indemnification under this Agreement (an "Indemnitor"), the
Indemnitee will give such Indemnitor reasonably prompt written
notice thereof (the "Third Party Claim Notice"), but the failure
to so notify Indemnitor shall not relieve Indemnitor of its
indemnity obligations with respect to such Third Party Claim
unless the Indemnitor establishes that the defense of such Third
Party Claim is actually prejudiced by the Indemnitee's failure to
give such notice. The Third Party Claim Notice will describe the
Third Party Claim in reasonable detail and will indicate the
estimated amount, if reasonably practicable, of the Damages that
have been or may be sustained by the Indemnitee. Except as
otherwise set forth in this Section 10.5, the Indemnitor will
have the right to assume the defense of any Third Party Claim at
the Indemnitor's own expense and with counsel selected by the
Indemnitor (which counsel shall be reasonably satisfactory to the
Indemnitee) by giving to the Indemnitee written notice in which
the Indemnitor acknowledges its responsibility to indemnify the
Indemnitee (the "Assumption Notice") no later than thirty
calendar days after receipt of the Third Party Claim Notice. The
Indemnitor shall not be entitled to assume the defense of, and
the Indemnitee shall be entitled to have sole control over, the
defense or settlement of any Third Party Claim to the extent that
such claim seeks an order, injunction or other equitable relief
against the Indemnitee which, if successful, would be reasonably
likely to materially interfere with the business, operations,
assets, or financial condition of the Indemnitee. In the event
the Indemnitor assumes the defense of a Third Party Claim, the
Indemnitee will cooperate in good faith with the Indemnitor in
such defense and will have the right to participate in the
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defense of any Third Party Claim assisted by counsel of its own
choosing and at its own expense. Notwithstanding the foregoing,
if the named parties to the Third Party Claim (including any
impleaded parties) include both the Indemnitor and the Indemnitee
or if the Indemnitor proposes that the same counsel represent
both the Indemnitee and the Indemnitor and the Indemnitee in good
faith determines that representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them, then the Indemnitee shall have
the right to retain its own counsel at the cost and expense of
the Indemnitor. If the Indemnitee does not receive the Assumption
Notice within the thirty calendar day period set forth above or
if the Indemnitor is not entitled to assume the defense of the
Third Party Claim, the Indemnitee shall have sole control over
the defense and settlement of the Third Party Claim, and the
Indemnitor will be liable for all Damages paid or incurred in
connection therewith
(b) If the Indemnitor assumes the defense of the Third
Party Claim, the Indemnitor shall not compromise or settle such
claim without the Indemnitee's consent unless (i) there is no
finding or admission of any violation of Legal Requirements or
any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnitee, (ii) the
sole relief provided is monetary damages that are paid in full by
the Indemnitor and (iii) the settlement includes as an
unconditional term a complete release of each Indemnitee from all
liability in respect of such claim.
(c) Each Indemnitor who assumes the defense of a Third
Party Claim shall use reasonable efforts to diligently defend
such claim.
Section 10.6. Procedure for Indemnification--Direct Claims.
Except for Direct Environmental Claims (as defined in Section
10.7 of this Agreement), any claim by an Indemnitee for
indemnification under this Agreement other than indemnification
against a Third Party Claim (a "Direct Claim") will be asserted
by the Indemnitee giving the Indemnitor written notice thereof,
and the Indemnitor will have a period of thirty calendar days
within which to respond in writing to such Direct Claim. If the
Indemnitor does not respond within such thirty calendar day
period, the Indemnitor will be deemed to have rejected such
claim, in which event the Indemnitee will be free to pursue such
remedies as may be available to the Indemnitee under this
Agreement or pursuant to law.
Section 10.7. Procedure for Indemnification--Direct
Environmental Claims.
(a) If the Indemnitee shall assert against the
Indemnitor any Direct Claim for indemnification relating to
Environmental Law (a "Direct Environmental Claim"), Indemnitee
shall give the Indemnitor notice of such Direct Environmental
Claim (the "Environmental Claim Notice"), which notice shall
describe in reasonable detail the claim, the amount thereof (if
known and quantifiable), and a reasonably detailed description of
the facts giving rise to such Direct Environmental Claim.
(b) Indemnitor shall be entitled to assume principal
management of a Direct Environmental Claim which it acknowledges
to be Indemnitor's sole or principal responsibility under this
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Agreement. To assume principal management, Indemnitor must
notify Indemnitee within thirty calendar days (or such other
period as the parties may agree to in writing) of receipt of the
Environmental Claim Notice that it intends to assume principal
management, subject to Indemnitor's right to rescind such
acknowledgment upon its reasonable determination, and upon prompt
written notice to Indemnitee (a "Denial Notice"), that it does
not bear sole or principal liability under this Agreement for the
claim. Provided, however, Indemnitor shall not be entitled to
issue a Denial Notice after Indemnitee has incurred substantial
expenditures, obligations, or exposure in reliance on
Indemnitor's assumption of principal management. In the event
Indemnitor either elects not to undertake principal management or
provides Indemnitee with a Denial Notice, Indemnitee may assume
principal management of the subject matter of the claim, and
reserve whatever rights it may have against Indemnitor. Any
acknowledgment of responsibility for a claim by either the
Indemnitor or Indemnitee shall be without prejudice to any rights
to seek indemnity or contribution from third parties.
(c) The party not exercising principal management with
respect to a particular Direct Environmental Claim shall be
entitled, at its sole cost and expense, to monitor the
satisfaction of the claim. Monitoring shall include (i)
obtaining copies of all reports, work plans and analytical data
submitted to Governmental Bodies, all notices or other letters or
documents received from Governmental Bodies, any other
documentation and correspondence materially bearing on the claim,
and notices of material meetings, (ii) the opportunity to attend
and participate in such material meetings, and (iii) the right of
reasonable consultation with the party exercising principal
management. The party exercising principal management in respect
of a matter, prior to taking any action to satisfy a claim unless
not practicable in view of exigent circumstances, shall prepare a
written plan describing the details of such action (the "Remedial
Plan") and provide the other party with copies of the Remedial
Plan. Within thirty calendar days of the date that the Remedial
Plan is received, the party receiving the Remedial Plan shall
notify the party that provided the Remedial Plan, in writing, if
it believes that the Remedial Plan is not in conformity with the
standards set forth in this Section 10.7 and shall provide a
detailed explanation of the reasons for its conclusions. The
parties shall negotiate in good faith any dispute arising from
the Remedial Plan and attempt to resolve any differences within
twenty calendar days. If the parties are unable to resolve any
dispute arising from the Remedial Plan, the matter shall be
submitted to arbitration as provided in Section 10.7(g).
(d) In the event it undertakes principal management of
any matter, Indemnitor shall, upon notice to Indemnitee, have
access to the Assets necessary to implement the Remedial Plan.
Indemnitor shall use its best efforts to undertake all activities
that it conducts or coordinates hereunder in a manner which does
not unreasonably interfere with the day-to-day operation of the
Industrial Container Business.
(e) The party undertaking principal management
hereunder for any matter shall manage the matter in good faith
and in a responsible manner, and any activities conducted in
connection therewith shall be undertaken promptly and concluded
expeditiously using commercially reasonable efforts.
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(f) The adequacy of any remedial action with respect
to a claim hereunder shall be evaluated using the following
criteria: Remedial action shall be deemed adequate for purposes
of satisfying the obligations hereunder to the extent that it (i)
attains compliance in a cost-effective manner with any applicable
Legal Requirement of Environmental Laws or is otherwise necessary
to prevent or remediate a threat to human health or the
Environment; and (ii) interferes to the least extent reasonably
practicable with the operations of the Industrial Container
Business; provided, that for purposes of this provision, a
determination of what is "reasonably practicable" shall include
an evaluation of the relative costs and benefits of proposed
remedial actions. Remedial action shall not be required to
render the Assets suitable for use beyond use as a commercial or
industrial property; provided, however, that the remedial action
shall meet all Legal Requirements of Environmental Law or
otherwise imposed by the applicable Governmental Body.
(g) If a dispute arises with respect to a remedial
action hereunder, the parties agree to negotiate in good faith in
an attempt to resolve such dispute. In the event such dispute
cannot be resolved within twenty calendar days of written notice
of a dispute (or such shorter period as exigent circumstances may
warrant) the parties shall select within fourteen calendar days
thereafter (or such shorter period as exigent circumstances may
warrant) a mutually satisfactory technical consultant or attorney
(the "Environmental Arbitrator"), who shall review the
information relevant to the dispute provided by the parties and
within thirty calendar days (or such shorter period as exigent
circumstances may warrant) render a decision binding upon the
parties hereto irrespective of whether either party contests or
participates in the dispute resolution. Any fees charged by the
Environmental Arbitrator shall be allocated as determined by the
Environmental Arbitrator between Seller and Buyer. In making its
determination, the Environmental Arbitrator shall be bound by the
standards set forth in this Section 10.7. If an Environmental
Arbitrator cannot be agreed upon within the aforesaid period, the
parties shall direct the New York city office of the American
Arbitration Association Center to immediately provide a list of
six potential arbitrators. From the list provided, each party
shall have the opportunity to strike one name, and the American
Arbitration Association shall appoint the Environmental
Arbitrator from the remaining names. The final determination of
the Environmental Arbitrator shall be final and binding on the
parties and there shall be no appeal from or reexamination of
such final determination, except for fraud, perjury, evident
partiality or misconduct by the Environmental Arbitrator
prejudicing the rights of any party, and to correct manifest
clerical errors. The parties may enforce any final determination
of the Environmental Arbitrator in any court of competent
jurisdiction.
(h) Neither party shall contact any Governmental Body
or third parties, other than such party's own Representatives
regarding a potential Direct Environmental Claim without giving
reasonably prompt notice thereof to the other party, when
reasonably possible within the available time constraints,
provided nothing herein shall require any delay in contacting any
Governmental Body or third party if such delay would violate any
Legal Requirement or Environmental Law. In connection with
either party's assumption of the defense of the other party of a
Third Party Claim relating to environmental matters, the
Indemnifying Party shall promptly provide the Indemnitee with any
material correspondence with Governmental Body enforcing
Environmental Laws and any test results, work plans, reports,
data and other material information relating thereto. Either
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party shall have the right in its sole discretion to participate
in any such contact to the extent reasonably possible.
ARTICLE 11. TERMINATION
Section 11.1. Termination. Anything contained in
this Agreement to the contrary notwithstanding, this Agreement
may be terminated at any time prior to the Closing Date:
(a) by the mutual consent of Buyer and Seller;
(b) by Buyer or Seller if the Closing shall not have
occurred on or before April 30, 1998 (or such later date as may
be mutually agreed to by Buyer and Seller);
(c) by Buyer in the event of any material breach by
Seller of any of Seller's agreements, representations or
warranties contained herein and the failure of Seller to cure
such breach within seven days after receipt of notice from Buyer
requesting such breach to be cured; or
(d) by Seller in the event of any material breach by
Buyer of any of Buyer's agreements, representations or warranties
contained herein and the failure of Buyer to cure such breach
within seven days after receipt of notice from Seller requesting
such breach to be cured.
Section 11.2. Notice of Termination. Any party
desiring to terminate this Agreement pursuant to Section 11.1
shall give notice of such termination to the other party to this
Agreement.
Section 11.3. Effect of Termination. In the event
that this Agreement shall be terminated pursuant to Section
11.1(a), each party shall pay all expenses incurred by it in
connection with this Agreement, and no party shall have any
further obligations or liability for any damages or expenses
under this Agreement. In the event of any other termination, all
further obligations of the parties under this Agreement shall be
terminated without further liability of any party to the other,
but each party shall retain any and all rights incident to a
breach by the other party of any covenant, representation or
warranty under this Agreement.
ARTICLE 12. GENERAL PROVISIONS
Section 12.1. Expenses. Each of Buyer, as a party on
the one hand, and Seller, as a party on the other, will pay all
costs and expenses incident to its negotiation and preparation of
this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and
disbursements of its Representatives. All costs and expenses, if
any, incurred by the Acquired Companies in connection with this
Agreement and the Contemplated Transactions, including the fees,
expenses and disbursements of the Acquired Companies'
Representatives, shall be paid by Seller.
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Section 12.2. Public Announcements. Neither Buyer nor
Seller shall, without the approval of the other, make any press
release or other public announcement concerning the Contemplated
Transactions, except as and to the extent that counsel for a
party advises any such party that it is so obligated by Legal
Requirement or the rules of any stock exchange or quotation
system to issue a release or announcement, in which case the
other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to
be issued. Seller and Buyer will consult with each other
concerning the means by which the Acquired Companies' employees,
customers and suppliers and others having dealings with the
Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any
such communication.
Section 12.3. Notices. All notices, consents, waivers, and
other communications under this Agreement must be in writing and
will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), or (c) when received by
the addressee, if sent by certified mail or a nationally
recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set
forth below:
If to Seller :
Sonoco Products Company
1 North Second Street
Hartsville, SC 29550
Attn: President
Telecopier: (803) 383-7478
and to:
Sinkler & Boyd, P.A.
1426 Main Street, Suite 1200
Columbia, South Carolina 29201
Attn: William C. Boyd, Esq.
Telecopier: (803) 540-7878
If to Buyer:
Greif Bros. Corporation
425 Winter Road.
Delaware, Ohio 43015
Attn.: Michael J. Gasser, Chairman and
Chief Executive Officer
Fax: (614) 549-6101
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with a copy to:
Shawn M. Flahive, Esq.
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, Ohio 43216-1008
Fax : (614) 464-6350
Any party hereto may change any of the information specified
above by sending notice to the other party with such changed
information.
Section 12.4. Further Assurances. The parties agree (a) to
furnish upon request to each other such further information,
(b) to execute and deliver to each other such other documents,
and (c) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent
of this Agreement and the documents referred to in this
Agreement.
Section 12.5. Waiver. The rights and remedies of the
parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or
of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
Section 12.6. Entire Agreement and Modification. This
Agreement supersedes all prior agreements between the parties
with respect to its subject matter, including the Confidentiality
Agreement between Buyer and Seller dated September 24, 1997 and
the Letter of Intent between Buyer and Seller dated December 10,
1997. This Agreement constitutes a complete and exclusive
statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged
with the amendment.
Section 12.7. Assignments, Successors, and No Third-Party
Rights. Neither party may assign any of its rights under this
Agreement without the prior consent of the other party. This
Agreement will apply to, be binding in all respects upon, and
inure to the benefit of, the successors and permitted assigns of
the parties. Nothing expressed or referred to in this Agreement
will be construed to give any Person other than the parties to
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this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and permitted assigns.
Section 12.8. Severability. If any provision of this
Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held
invalid or unenforceable.
Section 12.9. Section Headings, Construction. The headings
of the Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All
words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the
preceding words or terms. Unless the context otherwise requires,
references herein (a) to Articles, Sections, Exhibits and
Schedules mean the Articles and Sections of and the Exhibits and
Schedules attached to, this Agreement, (b) to an agreement,
instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and by
this Agreement and (c) to a statute means such statute as amended
from time to time and includes any successor legislation thereto.
Section 12.10. Time of Essence. With regard to all dates
and time periods set forth or referred to in this Agreement, time
is of the essence.
Section 12.11. Governing Law. This Agreement will be
governed by the laws of the State of Ohio without regard to
conflicts of laws principles.
Section 12.12. Counterparts. This Agreement may be
executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the
same agreement.
Section 12.13. Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
BUYER:
Greif Bros. Corporation
By:
Its:
SELLER
Sonoco Products Company
By:
Its:
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EXHIBITS
A. Transitional Services Agreement
B. Non-Foreign Affidavit
C. Exclusive Distributorship Agreement
D. IBC Sales Agreement
SCHEDULES
Schedule 4.1(b): Conflicts
Schedule 4.2: Name, Organization and Foreign Qualifications of
each Acquired Company
Schedule 4.3: Capitalization
Schedule 4.5: Financial Statements
Schedule 4.6: Changes Outside the Ordinary Course of Business
Schedule 4.7: Undisclosed Liabilities
Schedule 4.8: Legal Requirements and Governmental Authorizations
Schedule 4.9: Legal Proceedings and Orders
Schedule 4.10: Taxes
Schedule 4.11(a): Owned Real Property
Schedule 4.11(b): Leased Real Property
Schedule 4.12: Intellectual Property
Schedule 4.13: Personal Property
Schedule 4.15: Applicable Contracts
Schedule 4.17(a): Bank Accounts
Schedule 4.17(b) Powers of Attorney
Schedule 4.18: Insurance
Schedule 4.19: Product Warranty
Schedule 4.21: Labor Relations and Compliance
Schedule 4.22: Employee Benefits
Schedule 4.23: Customers
Schedule 4.25: Environmental Matters
Schedule 4.27: Related Person Services
Schedule 5.2(b): Conflicts
Schedule 7.7: ERM Proposal
Schedule 7.10: Certain Contracts
Schedule 9.1(b): Allocations
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Exhibit 99(a)
FOR IMMEDIATE RELEASE For additional information contact:
Michael J. Gasser
Chairman and Chief Executive Officer
(740) 549-6000
GREIF BROS. CORPORATION COMPLETES SIGNIFICANT
INDUSTRIAL SHIPPING CONTAINER ACQUISITION
DELAWARE, Ohio -- (March 31, 1998) Greif Bros. Corporation
(Nasdaq: GBCOA; GBCOB) today announced that it has completed the
previously announced acquisition of the industrial container
business of Sonoco Products Company (NYSE:SON). In addition,
Greif entered into an agreement with Sonoco to acquire its
intermediate bulk container business, which the parties intend to
close as soon as receipt of necessary approvals are obtained.
Pending receipt of such approvals, Greif will market and sell the
IBCs for Sonoco under a distributorship agreement. These
businesses had combined annual net sales of approximately $210
million last year.
The purchase price for the business is approximately $225 million
in cash. This acquisition includes 12 fibre drum plants and 5
plastic drum plants along with facilities for research and
development, packaging services and distribution.
Michael J. Gasser, Chairman and Chief Executive Officer,
commented, "We are thrilled to have completed this transaction,
which positions Greif as the leader in the industrial shipping
container field. As a result of this acquisition, we have
significantly increased our capabilities to provide customers
with cost effective packaging solutions. We also add a market
accepted intermediate bulk container to our product line as well
as additional plastic drum expertise and an established vendor
management program."
Greif Bros. Corporation manufactures and markets a broad variety
of superior quality industrial packaging and components including
steel drums, fibre drums, plastic drums and multiwall bags. The
Company is integrated, from its timberlands to corrugated sheet
and box operations, including both virgin and recycled paper
mills. With operations in the United States, Canada and Mexico,
Greif Bros. provides innovative products, services and solutions
to meet the ever changing needs of its customers.
<PAGE>
Exhibit 99(b)
CREDIT AGREEMENT
dated as of March 30, 1998
among
GREIF BROS. CORPORATION,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Banks,
and
KEYBANK NATIONAL ASSOCIATION,
as Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. AMOUNT AND TERMS OF CREDIT 13
SECTION 2.1. AMOUNT AND NATURE OF CREDIT 13
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT 17
SECTION 2.3. PAYMENT ON NOTES, ETC. 19
SECTION 2.4. PREPAYMENT 19
SECTION 2.5. FACILITY AND OTHER FEES;
TERMINATION OR REDUCTION OF COMMITMENT 20
SECTION 2.6. COMPUTATION OF INTEREST AND FEES;
DEFAULT RATE 21
SECTION 2.7. MANDATORY PAYMENT 21
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS 22
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. 22
SECTION 3.2. TAX LAW, ETC. 22
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR
INTEREST RATE UNASCERTAINABLE 23
SECTION 3.4. INDEMNITY 24
SECTION 3.5. CHANGES IN LAW RENDERING
LIBOR LOANS UNLAWFUL 24
SECTION 3.6. FUNDING 24
ARTICLE IV. CONDITIONS PRECEDENT 24
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING 24
SECTION 4.2. CONDITIONS SUBSEQUENT TO CLOSING DATE 26
ARTICLE V. COVENANTS 27
SECTION 5.1. INSURANCE 27
SECTION 5.2. MONEY OBLIGATIONS 27
SECTION 5.3. FINANCIAL STATEMENTS 27
SECTION 5.4. FINANCIAL RECORDS 28
SECTION 5.5. FRANCHISES 28
SECTION 5.6. ERISA COMPLIANCE 28
SECTION 5.7. FINANCIAL COVENANTS 29
SECTION 5.8. BORROWING 29
SECTION 5.9. LIENS 30
SECTION 5.10. REGULATIONS U and X 31
SECTION 5.11. INVESTMENTS AND LOANS 31
SECTION 5.12. MERGER AND SALE OF ASSETS 32
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Page
SECTION 5.13. ACQUISITIONS 33
SECTION 5.14. NOTICE 33
SECTION 5.15. ENVIRONMENTAL COMPLIANCE 33
SECTION 5.16. AFFILIATE TRANSACTIONS 34
SECTION 5.17. CORPORATE NAMES 34
SECTION 5.18. SUBSIDIARY GUARANTIES 34
SECTION 5.19. OTHER COVENANTS 34
ARTICLE VI. REPRESENTATIONS AND WARRANTIES 35
SECTION 6.1. CORPORATE EXISTENCE; SUBSIDIARIES;
FOREIGN QUALIFICATION 35
SECTION 6.2. CORPORATE AUTHORITY 35
SECTION 6.3. COMPLIANCE WITH LAWS 35
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS 36
SECTION 6.5. TITLE TO ASSETS 36
SECTION 6.6. LIENS AND SECURITY INTERESTS 36
SECTION 6.7. TAX RETURNS 36
SECTION 6.8. ENVIRONMENTAL LAWS 36
SECTION 6.9. CONTINUED BUSINESS 37
SECTION 6.10. EMPLOYEE BENEFITS PLANS 37
SECTION 6.11. CONSENTS OR APPROVALS 38
SECTION 6.12. SOLVENCY 38
SECTION 6.13. FINANCIAL STATEMENTS 38
SECTION 6.14. REGULATIONS 38
SECTION 6.15. MATERIAL AGREEMENTS 39
SECTION 6.16. INTELLECTUAL PROPERTY 39
SECTION 6.17. INSURANCE 39
SECTION 6.18. ACCURATE AND COMPLETE STATEMENTS 39
SECTION 6.19. DEFAULTS 39
ARTICLE VII. EVENTS OF DEFAULT 40
SECTION 7.1. PAYMENTS 40
SECTION 7.2. SPECIAL COVENANTS 40
SECTION 7.3. OTHER COVENANTS 40
SECTION 7.4. REPRESENTATIONS AND WARRANTIES 40
SECTION 7.5. CROSS DEFAULT 40
SECTION 7.6. ERISA DEFAULT 40
SECTION 7.7. CHANGE IN CONTROL 40
SECTION 7.8. MONEY JUDGMENT 40
SECTION 7.9. VALIDITY OF LOAN DOCUMENTS 41
SECTION 7.10. SOLVENCY 41
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Page
ARTICLE VIII. REMEDIES UPON DEFAULT 41
SECTION 8.1. OPTIONAL DEFAULTS 41
SECTION 8.2. AUTOMATIC DEFAULTS 42
SECTION 8.3. LETTERS OF CREDIT 42
SECTION 8.4. OFFSETS 42
SECTION 8.5. EQUALIZATION PROVISION 42
ARTICLE IX. THE AGENT 43
SECTION 9.1. APPOINTMENT AND AUTHORIZATION 43
SECTION 9.2. NOTE HOLDERS 43
SECTION 9.3. CONSULTATION WITH COUNSEL 43
SECTION 9.4. DOCUMENTS 43
SECTION 9.5. AGENT AND AFFILIATES 44
SECTION 9.6. KNOWLEDGE OF DEFAULT 44
SECTION 9.7. ACTION BY AGENT 44
SECTION 9.8. NOTICES, DEFAULT, ETC. 44
SECTION 9.9. INDEMNIFICATION OF AGENT 44
SECTION 9.10. SUCCESSOR AGENT 45
ARTICLE X. MISCELLANEOUS 45
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION 45
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES 45
SECTION 10.3. AMENDMENTS, CONSENTS 45
SECTION 10.4. NOTICES 46
SECTION 10.5. COSTS, EXPENSES AND TAXES 46
SECTION 10.6. INDEMNIFICATION 47
SECTION 10.7. CAPITAL ADEQUACY 47
SECTION 10.8. OBLIGATIONS SEVERAL;
NO FIDUCIARY OBLIGATIONS 47
SECTION 10.9. EXECUTION IN COUNTERPARTS 48
SECTION 10.10. BINDING EFFECT; BORROWER'S ASSIGNMENT 48
SECTION 10.11. BANK ASSIGNMENTS/PARTICIPATIONS 48
SECTION 10.12. SEVERABILITY OF PROVISIONS; CAPTIONS 51
SECTION 10.13. INVESTMENT PURPOSE 51
SECTION 10.14. ENTIRE AGREEMENT 51
SECTION 10.15. GOVERNING LAW; SUBMISSION TO JURISDICTION 51
SECTION 10.16. LEGAL REPRESENTATION OF PARTIES 52
SECTION 10.17. JURY TRIAL WAIVER 52
SCHEDULE 1 BANKS AND COMMITMENTS 53
SCHEDULE 2 GUARANTORS OF PAYMENT 54
EXHIBIT A REVOLVING CREDIT NOTE 55
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Page
EXHIBIT B SWING LINE NOTE 57
EXHIBIT C NOTICE OF LOAN 59
EXHIBIT D COMPLIANCE CERTIFICATE 61
EXHIBIT E FORM OF ASSIGNMENT AND
ACCEPTANCE AGREEMENT 62
ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE
AGREEMENT 66
SCHEDULE 5.8 PERMITTED INDEBTEDNESS
SCHEDULE 5.9 PERMITTED LIENS
SCHEDULE 6.1 CORPORATE INFORMATION
SCHEDULE 6.4 LITIGATION
SCHEDULE 6.5 REAL PROPERTY
SCHEDULE 6.8 ENVIRONMENTAL DISCLOSURE
SCHEDULE 6.10 ERISA PLANS
SCHEDULE 6.15 MATERIAL AGREEMENTS
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<PAGE>
This Credit Agreement (as it may from time to time be amended,
restated or otherwise modified, the "Agreement") is made effective as of
the 30th day of March, 1998, among GREIF BROS. CORPORATION, a Delaware
corporation, 425 Winter Road, Delaware, Ohio 43015 ("Borrower"), the
banking institutions named in Schedule 1 attached hereto and made a part
hereof (collectively, "Banks", and individually, "Bank") and KEYBANK
NATIONAL ASSOCIATION, 127 Public Square, Cleveland, Ohio 44114-1306, as
Agent for the Banks under this Agreement ("Agent").
WITNESSETH:
WHEREAS, Borrower and the Banks desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of any
Person, or any business or division of any Person, (b) the acquisition of
in excess of fifty percent (50%) of the stock (or other equity interest) of
any Person, or (c) the acquisition of another Person (other than a Company)
by a merger or consolidation or any other combination with such Person.
"Acquisition Charges" shall mean the nonrecurring charges associated
with the Sonoco Acquisition, including, but not limited to, the closing of
plants of Borrower or the Target Companies in connection with the Sonoco
Acquisition taken (in accordance with GAAP) by Borrower on or prior to
Borrower's fiscal year ending October 31, 1998; provided, however, that all
such charges shall not exceed, on pre-tax basis, Thirty-Five Million
Dollars ($35,000,000).
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in
that Bank having less than its pro rata share of the Debt then outstanding,
than was the case immediately before such payment.
"Agent Fee Letter" shall mean the Agent Fee Letter from Agent to
Borrower, dated as of the Closing Date.
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"Applicable Facility Fee Rate" shall mean:
(a) for the period from the Closing Date through June 30, 1998,
twenty (20) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ending April 30, 1998, the number of basis points set forth in the
following matrix based on the Leverage Ratio:
<TABLE>
<CAPTION>
Applicable
Leverage Ratio Facility Fee Rate
<S> <C>
Greater than 3.00 to 1.00 20.00 basis points
Greater than 2.50 to 1.00
but less than or
equal to 3.00 to 1.00 15.00 basis points
Greater than 1.50 to 1.00
but less than or
equal to 2.50 to 1.00 12.50 basis points
Less than or equal to 1.50 to 1.00 10.00 basis points
</TABLE>
Changes to the Applicable Facility Fee Rate shall be effective on the first
day of the month following the date upon which Agent received, or, if
earlier, should have received, pursuant to Section 5.3 hereof, the
financial statements of the Companies. The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights
of the Banks to charge the Default Rate, or the rights and remedies of the
Banks pursuant to Articles VII and VIII hereof.
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through June 30, 1998,
forty-five (45) basis points; and
(b) commencing with the financial statements for the fiscal quarter
ending April 30, 1998, the number of basis points set forth in the
following matrix based on the Leverage Ratio:
<TABLE>
<CAPTION>
Applicable
Leverage Ratio Margin
<S> <C>
Greater than 3.00 to 1.00 45.00 basis points
Greater than 2.50 to 1.00
but less than or
equal to 3.00 to 1.00 37.50 basis points
Greater than 2.00 to 1.00
but less than or
equal to 2.50 to 1.00 32.50 basis points
Greater than 1.50 to 1.00
but less than or
equal to 2.00 to 1.00 27.50 basis points
Less than or equal to 1.50 to 1.00 25.00 basis points
</TABLE>
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<PAGE>
Changes to the Applicable Margin shall be effective on the first day of the
month following the date upon which Agent received, or, if earlier, should
have received, pursuant to Section 5.3 hereof, the financial statements of
the Companies. The above matrix does not modify or waive, in any respect,
the requirements of Section 5.7 hereof, the rights of the Banks to charge
the Default Rate, or the rights and remedies of the Banks pursuant to
Articles VII and VIII hereof.
"Base Rate" shall mean the greater of (a) the Prime Rate, or (b) one-
half of one percent (1/2%) in excess of the Federal Funds Effective Rate.
Any change in the Base Rate shall be effective immediately from and after
such change in the Base Rate.
"Base Rate Loan" shall mean a Loan described in Section 2.1 hereof on
which Borrower shall pay interest at a rate based on the Base Rate.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio, and, if the applicable
Business Day relates to any LIBOR Loan, on which dealings are carried on in
the London interbank eurodollar market.
"Change in Control" shall mean (a) the acquisition of ownership or
voting control, directly or indirectly, beneficially or of record, on or
after the Closing Date, by any Person (other than the estate of, or any
descendant - in any capacity, including, without limitation, the capacity
of trustee - of the individual who is Borrower's majority shareholder as of
the day before the Closing Date) or group (within the meaning of Rule 13d-3
of the SEC under the Securities Exchange Act of 1934, as then in effect),
of shares representing more than fifty percent (50%) of the aggregate
ordinary voting power represented by the issued and outstanding capital
stock of Borrower; or (b) the occupation of a majority of the seats (other
than vacant seats) on the board of directors of Borrower by Persons who
were neither (i) nominated by the board of directors of Borrower nor (ii)
appointed by directors so nominated.
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Commitment" shall mean the obligation hereunder of the Banks, during
the Commitment Period, to extend credit pursuant to the Revolving Credit
Commitments up to the Total Commitment Amount.
"Commitment Letter" shall mean the Commitment Letter from Agent to
Borrower, dated as of January 27, 1998, and accepted by Borrower on January
28, 1998, but excluding (a) the provisions which do not deal with the
syndication process or the syndication provisions set forth therein (the
"Non-Syndication Provisions"), and (b) the Summary of Terms and Conditions
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<PAGE>
attached thereto; which Non-Syndication Provisions and Summary of Terms and
Conditions have been superseded by the terms of this Agreement.
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Commitment
Percentage" as described in Schedule 1 hereof.
"Commitment Period" shall mean the period from the Closing Date to
March 31, 2003, or such earlier date on which the Commitment shall have
been terminated pursuant to Article VIII hereof.
"Company" shall mean Borrower or a Subsidiary.
"Companies" shall mean Borrower and all Subsidiaries.
"Consideration" shall mean, in connection with an Acquisition, the
aggregate consideration paid, including borrowed funds, cash, the issuance
of securities or notes, the assumption or incurring of liabilities (direct
or contingent), the payment of consulting fees or fees for a covenant not
to compete and any other consideration paid for the purchase.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP,
including principles of consolidation consistent with those applied in
preparation of the consolidated financial statements referred to in Section
6.13 hereof.
"Consolidated Depreciation and Amortization Charges" shall mean the
aggregate of all such charges for fixed assets, leasehold improvements and
general intangibles (specifically including goodwill) of Borrower and its
Subsidiaries for the year in question, as determined in accordance with
GAAP.
"Consolidated EBIT" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, (a) Consolidated Net Earnings for such
period plus the aggregate amounts deducted in determining such Consolidated
Net Earnings in respect of (i) income taxes, (ii) Consolidated Interest
Expense, (iii) nonrecurring noncash losses, (iv) the Restructuring Charges,
and (v) the Acquisition Charges, minus (b) (i) nonrecurring noncash gains,
and (ii) any amount of Timber Sale Gains in excess of Twenty-Five Million
Dollars ($25,000,000).
"Consolidated EBITDA" shall mean, for any period, (a) Consolidated
EBIT, plus (b) Consolidated Depreciation and Amortization Charges.
"Consolidated Interest Expense" shall mean, for any period, the
Consolidated interest expense of Borrower and its Subsidiaries for such
period, determined in accordance with GAAP.
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<PAGE>
"Consolidated Net Earnings" shall mean, for any period, the
Consolidated net income (loss) of Borrower and its Subsidiaries for such
period, determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any time, the Consolidated net
worth of Borrower and its Subsidiaries at such time, determined in
accordance with GAAP.
"Controlled Group" shall mean a Company and each "person" (as therein
defined) required to be aggregated with a Company under Code Sections
414(b), (c), (m) or (o).
"Debt" shall mean, collectively, all Indebtedness incurred by Borrower
to the Banks pursuant to this Agreement and includes the principal of and
interest on all Notes and each extension, renewal or refinancing thereof in
whole or in part, the facility fees, other fees and any prepayment premium
payable hereunder.
"Default Rate" shall mean a rate per annum which shall be two percent
(2%) in excess of the Base Rate from time to time in effect.
"Derived LIBOR Rate" shall mean a rate per annum which shall be the
sum of the Applicable Margin plus the LIBOR Rate.
"EBITDA Proviso" shall mean that, for purposes of calculating the
Consolidated EBITDA portion of the Leverage Ratio for any fiscal quarter of
Borrower ending prior to the fiscal quarter ending April 30, 1999, Borrower
shall add thereto an amount equal to: (a) Twenty One Million Three Hundred
Fifty Eight Thousand Dollars ($21,358,000) for Borrower's fiscal quarter
ending April 30, 1998; (b) Fifteen Million Five Hundred Thirty Five
Thousand Dollars ($15,535,000) for Borrower's fiscal quarter ending July
31, 1998; (c) Nine Million Seven Hundred Twelve Thousand Dollars
($9,712,000) for Borrower's fiscal quarter ending October 31, 1998; and (d)
Three Million Eight Hundred Ninety Thousand Dollars ($3,890,000) for
Borrower's fiscal quarter ending January 31, 1999.
"Environmental Laws" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the
government of the United States of America or by any state or municipality
thereof or by any court, agency, instrumentality, regulatory authority or
commission of any of the foregoing concerning health, safety and protection
of, or regulation of the discharge of substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
pursuant thereto.
"ERISA Event" shall mean: (a) the existence of any condition or event
with respect to an ERISA Plan which presents a risk of the imposition of an
excise tax or any other liability on a Company or of the imposition of a
lien on the assets of a Company, (b) a Controlled Group member has engaged
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<PAGE>
in a non-exempt "prohibited transaction" (as defined under ERISA Section
406 or Code Section 4975) or a breach of a fiduciary duty under ERISA which
could result in liability to a Company, (c) a Controlled Group member has
applied for a waiver from the minimum funding requirements of Code Section
412 or ERISA Section 302 or a Controlled Group member is required to
provide security under Code Section 401(a)(29) or ERISA Section 307, (d) a
Reportable Event has occurred with respect of any Pension Plan as to which
notice is required to be provided to the PBGC, (e) a Controlled Group
member has withdrawn from a Multiemployer Plan in a "complete withdrawal"
or a "partial withdrawal" (as such terms are defined in ERISA Sections 4203
and 4205, respectively), (f) a Multiemployer Plan is in or is likely to be
in reorganization under ERISA Section 4241, (g) an ERISA Plan (and any
related trust) which is intended to be qualified under Code Sections 401
and 501 fails to be so qualified or any "cash or deferred arrangement"
under any such ERISA Plan fails to meet the requirements of Code Section
401(k), (h) the PBGC takes any steps to terminate a Pension Plan or appoint
a trustee to administer a Pension Plan, or a Controlled Group member takes
steps to terminate a Pension Plan, (i) a Controlled Group member or an
ERISA Plan fails to satisfy any requirements of law applicable to an ERISA
Plan, (j) a claim, action, suit, audit or investigation is pending or
threatened with respect to an ERISA Plan, other than a routine claim for
benefits, or (k) a Controlled Group member incurs or is expected to incur
any liability for post-retirement benefits under any Welfare Plan, other
than as required by ERISA Section 601, et. seq. or Code Section 4980B.
"ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an
obligation to contribute to such plan.
"Eurocurrency Reserve Percentage" shall mean, for any Interest Period
in respect of any LIBOR Loan, as of any date of determination, the
aggregate of the then stated maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves), expressed as a
decimal, applicable to such Interest Period (if more than one such
percentage is applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) by the Board of Governors of the Federal Reserve System, any
successor thereto, or any other banking authority, domestic or foreign, to
which a Bank may be subject in respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Federal
Reserve Board) or in respect of any other category of liabilities including
deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that
include the LIBOR Loans. For purposes hereof, such reserve requirements
shall include, without limitation, those imposed under Regulation D of the
Federal Reserve Board and the LIBOR Loans shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without
benefit of credits for proration, exceptions or offsets which may be
available from time to time to any Bank under said Regulation D.
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<PAGE>
"Event of Default" shall mean an event or condition which constitutes
an event of default as defined in Article VII hereof.
"Federal Funds Effective Rate" shall mean for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent
(1/100 of 1%)) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve
Bank (or any successor) in substantially the same manner as such Federal
Reserve Bank computes and announces the weighted average it refers as the
"Federal Funds Effective Rate" as of the date of this Agreement.
"Fee Letter" shall mean the Fee Letter from Agent to Borrower, dated
as of January 27, 1998, and accepted by Borrower on January 28, 1998.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, chief financial officer or treasurer.
"Funded Indebtedness" shall mean all Indebtedness that is funded, if
any; provided, however, that reimbursement obligations (contingent or
otherwise) under any letter of credit, banker's acceptance, interest rate
swap, cap, collar or floor agreement or other interest rate management
device shall not be deemed to be "funded" so long as such obligation
remains solely a contingent obligation.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with
the past accounting practices and procedures of Borrower.
"Guarantor" shall mean a Person which pledges its credit or property
in any manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without limitation)
any guarantor (whether of payment or of collection), surety, co-maker,
endorser or Person which agrees conditionally or otherwise to make any
purchase, loan or investment in order thereby to enable another to prevent
or correct a default of any kind.
"Guarantor of Payment" shall mean each of the Companies listed on
Schedule 2 hereto, and any other Person which shall deliver a Guaranty of
Payment to Agent subsequent to the Closing Date.
"Guaranty of Payment" shall mean each of the guaranties of payment of
the Debt executed and delivered on or after the date hereof in connection
herewith by the Guarantors of Payment, as the same may be from time to time
amended, restated or otherwise modified.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business by such
Company), (a) all obligations to repay borrowed money, direct or indirect,
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<PAGE>
incurred, assumed, or guaranteed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional
sales or other title retention agreements, (d) all reimbursement
obligations (contingent or otherwise) under any letter of credit, banker's
acceptance, currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, (e) all lease
obligations which have been or should be capitalized on the books of such
Company in accordance with GAAP, and (f) any other transaction (including
forward sale or purchase agreements) having the commercial effect of a
borrowing of money entered into by such Company to finance its operations
or capital requirements.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the
last day of such period as selected by Borrower pursuant to the provisions
hereof and, thereafter, each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the last day of
such period as selected by Borrower pursuant to the provisions hereof. The
duration of each Interest Period for any LIBOR Loan shall be one (1) month,
two (2) months, three (3) months or six (6) months, in each case as
Borrower may select upon notice, as set forth in Section 2.2 hereof,
provided that: (a) if, as of three (3) Business Days prior to the end of
an Interest Period, Borrower has failed to select the duration of a new
Interest Period for such LIBOR Loan, Borrower shall be deemed to have
selected an Interest Period of the same duration as the previous Interest
Period for such LIBOR Loan; and (b) Borrower may not select any Interest
Period for a LIBOR Loan which ends after any date when principal is due on
such LIBOR Loan.
"Letter of Credit" shall mean any standby letter of credit which
shall be issued by Agent for the benefit of Borrower or a Guarantor of
Payment, including amendments thereto, if any, and shall have an expiration
date no later than the earlier of (a) one (1) year after its date of
issuance or (b) thirty (30) days prior to the last day of the Commitment
Period.
"Letter of Credit Commitment" shall mean the commitment of Agent, on
behalf of the Banks, to issue Letters of Credit in an aggregate outstanding
face amount of up to Twenty Million Dollars ($20,000,000), during the
Commitment Period, on the terms and conditions set forth in Section 2.1C
hereof.
"Leverage Ratio" shall mean, for the time period in question, the
ratio of Funded Indebtedness to Consolidated EBITDA for the most recently
completed four (4) fiscal quarters (subject to the EBITDA Proviso).
"LIBOR Loan" shall mean a Loan described in Section 2.1 hereof on
which Borrower shall pay interest at a rate based on the LIBOR Rate.
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"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Loan, the quotient of: (a) the per annum rate of interest, determined
by Agent in accordance with its usual procedures (which determination shall
be conclusive absent manifest error) as of approximately 11:00 A.M. (London
time) two (2) Business Days prior to the beginning of such Interest Period
pertaining to such LIBOR Loan, as provided by Telerate Service, Bloomberg's
or Reuters (or any other similar company or service that provides rate
quotations comparable to those currently provided by such companies) as the
rate in the London interbank market for dollar deposits in immediately
available funds with a maturity comparable to such Interest Period, divided
by (b) a number equal to 1.00 minus the Eurocurrency Reserve Percentage.
In the event that such rate quotation is not available for any reason, then
the rate (for purposes of clause (a) hereof) shall be the rate, determined
by Agent as of approximately 11:00 A.M. (London time) two (2) Business Days
prior to the beginning of such Interest Period pertaining to such LIBOR
Loan, to be the average of the per annum rates at which dollar deposits in
immediately available funds in an amount comparable to such LIBOR Loan and
with a maturity comparable to such Interest Period are offered to the prime
banks by leading banks in the London interbank market. The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Percentage.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property (real or personal) or
asset.
"Loan" or "Loans" shall mean the credit granted to Borrower by the
Banks in accordance with Section 2.1A or B hereof.
"Loan Documents" shall mean this Agreement, each of the Notes, each of
the Guaranties of Payment, the Commitment Letter, the Agent Fee Letter, all
documentation relating to each Letter of Credit, as any of the foregoing
may from time to time be amended, restated or otherwise modified or
replaced.
"Majority Banks" shall mean the holders of at least sixty-six and two-
thirds percent (66-2/3%) of the Commitment, or, if there is any borrowing
hereunder, the holders of at least sixty-six and two-thirds percent (66-
2/3%) of the aggregate amount outstanding under the Notes.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of Borrower and its Subsidiaries taken as a whole, or (b) the
validity or enforceability of this Agreement or any of the other Loan
Documents or the rights and remedies of Agent or the Banks hereunder or
thereunder.
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
to such company.
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<PAGE>
"Negotiated Money Market Rate" shall mean a fixed rate of interest per
annum, agreed to by Borrower and Agent.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Note" or "Notes" shall mean any Revolving Credit Note or the Swing
Line Note, or any other note delivered pursuant to this Agreement.
"Notice of Loan" shall mean a Notice of Loan in the form of the
attached Exhibit C.
"Obligor" shall mean (a) a Person whose credit or any of whose
property is pledged to the payment of the Debt and includes, without
limitation, any Guarantor, and (b) any signatory to a Related Writing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan"
(within the meaning of ERISA Section 3(2)).
"Permitted Investment" shall mean an investment of a Company in the
stock (or other debt or equity instruments) of a Person, so long as (a) the
Company making the investment is Borrower or a Guarantor of Payment; and
(b) the aggregate amount of all such investments of all Companies does not
exceed, at any time, an aggregate amount equal to fifteen percent (15%) of
the Consolidated Net Worth of the Companies, based upon the financial
statements of the Companies for the most recently completed fiscal quarter.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency
or political subdivision thereof or any other entity.
"Prime Rate" shall mean the interest rate established from time to
time by Agent as Agent's prime rate, whether or not such rate is publicly
announced; the Prime Rate may not be the lowest interest rate charged by
Agent for commercial or other extensions of credit. Each change in the
Prime Rate shall be effective immediately from and after such change.
"Private Placement" shall mean the issuance or issuances of privately
placed debt securities, up to a maximum aggregate principal amount of One
Hundred Million Dollars ($100,000,000), on such terms and conditions as may
be reasonably satisfactory to Agent and the Majority Banks; provided,
however, that if the aggregate amount of such securities at any time
exceeds Fifty Million Dollars ($50,000,000), then the Total Commitment
Amount shall be reduced by the amount of such excess.
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"Purchase Agreement" shall mean the Stock Purchase Agreement between
Borrower and Seller, dated as of March 30, 1998, as the same may from time
to time be amended, restated or otherwise modified, wherein Borrower has
agreed to acquire from Seller all of the outstanding stock or the entire
membership interest, as the case may be, of the Target Companies.
"Related Writing" shall mean the Loan Documents and any assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by Borrower,
any Subsidiary or any Obligor, or any of their respective officers, to the
Banks pursuant to or otherwise in connection with this Agreement.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by
the Secretary of Labor under Section 110 of such Act.
"Restructuring Charges" shall mean, for the fiscal year ended October
31, 1997, the charges associated with Borrower's restructuring in the
amount of Six Million Two Hundred Thousand Dollars ($6,200,000).
"Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each Bank to make Revolving Loans up
to the aggregate amount set forth opposite such Bank's name under the
column headed "Revolving Credit Commitment Amount" as listed in Schedule 1
hereof (or such lesser amount as shall be determined pursuant to Section
2.5 hereof), (b) each Bank to participate in the issuance of Letters of
Credit pursuant to the Letter of Credit Commitment and (c) Agent to make
Swing Loans pursuant to the Swing Line Commitment.
"Revolving Credit Note" shall mean any Revolving Credit Note executed
and delivered pursuant to Section 2.1A hereof.
"Revolving Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1A hereof.
"SEC" shall mean the Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principal functions.
"Seller" shall mean Sonoco Products Company, a South Carolina
corporation, and its successors and assigns.
"Sonoco Acquisition" shall mean the transactions contemplated in the
Purchase Agreement.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., or any successor to such company.
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"Subsidiary" of Borrower or any of its Subsidiaries shall mean (a) a
corporation more than fifty percent (50%) of the voting power or capital
stock of which is owned, directly or indirectly, by Borrower or by one or
more other subsidiaries of Borrower or by Borrower and one or more
subsidiaries of Borrower, (b) a partnership or limited liability company of
which Borrower, one or more other subsidiaries of Borrower or Borrower and
one or more subsidiaries of Borrower, directly or indirectly, is a general
partner or managing member, as the case may be, or otherwise has the power
to direct the policies, management and affairs thereof, or (c) any other
Person (other than a corporation) in which Borrower, one or more other
subsidiaries of Borrower or such Person, directly or indirectly, has at
least a majority ownership interest or the power to direct the policies,
management and affairs thereof.
"Swing Line" shall mean the credit facility established by Agent in
accordance with Section 2.1B hereof.
"Swing Line Commitment" shall mean the commitment of Agent to make
Swing Loans to Borrower up to the maximum aggregate amount at any time
outstanding of Twenty Million Dollars ($20,000,000) on the terms and
conditions set forth in Section 2.1B hereof.
"Swing Line Note" shall mean the Swing Line Note executed and
delivered pursuant to Section 2.1B hereof.
"Swing Loan" shall mean a Loan granted to Borrower by Agent in
accordance with Section 2.1B hereof.
"Swing Loan Maturity Date" shall mean, with respect to any Swing Loan,
the earlier of (a) thirty (30) days after such Swing Loan is made, or
(b) the last day of the Commitment Period.
"Target Companies" shall mean (a) KMI Continental Fibre Drum, Inc., a
Delaware corporation, a wholly-owned subsidiary of Sonoco Products Company,
a South Carolina corporation, (b) Sonoco Fibre Drum, Inc., a Delaware
corporation, a wholly-owned subsidiary of KMI Continental Fibre Drum, Inc.,
(c) Sonoco Packaging Services, Inc., a Delaware corporation, a wholly-owned
subsidiary of Sonoco Fibre Drum, Inc., (d) Sonoco Plastic Drum, Inc., an
Illinois corporation, a wholly-owned subsidiary of Sonoco Products Company,
(e) Sonoco Plastic Drum Southwest Division, Inc., a Texas corporation, a
wholly-owned subsidiary of Sonoco Plastic Drum, Inc., (f) Sonoco Plastic
Drum Southeast Division, Inc., a Kentucky corporation, a wholly-owned
subsidiary of Sonoco Plastic Drum, Inc., (g) Fibro Tambor, S.A. de C.V., a
Mexican corporation, (h) Total Packaging Systems of Georgia, LLC, a
Delaware limited liability company, a wholly-owned subsidiary of Sonoco
Products Company, and (i) GBC Holding Co., a Delaware Corporation, a
wholly-owned subsidiary of Sonoco Products Company.
"Timber Sale Gains" shall mean, for any period, gains properly
classified as "Gain on Timber Sales" in the audited financial statements of
the Companies for the fiscal year then ended or in the unaudited financial
statements for the fiscal quarter then ended.
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"Total Commitment Amount" shall mean the principal amount of Three
Hundred Twenty-Five Million Dollars ($325,000,000) (or such lesser amount
as shall be determined pursuant to Section 2.5 hereof).
"Unmatured Event of Default" shall mean an event or condition which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, an Event of Default and which
has not been waived by the Majority Banks in writing.
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person, and the holding of a designated percentage of Voting Power of a
Person means the ownership of shares of capital stock, partnership
interests, membership interests or other interests of such Person
sufficient to control exclusively the election of that percentage of the
members of the board of directors or similar governing body of such Person.
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan"
within the meaning of ERISA Section 3 (l).
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity all of the
securities or other ownership interest, of which having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by GAAP.
The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement, the Banks will participate to the extent
hereinafter provided in making Loans to Borrower, and issuing Letters of
Credit at the request of Borrower, in such aggregate amount as Borrower
shall request pursuant to the Commitment; provided, however, that in no
event shall the aggregate principal amount of all Loans and Letters of
Credit outstanding under this Agreement be in excess of the Total
Commitment Amount.
Each Bank, for itself and not one for any other, agrees to participate
in Loans made and Letters of Credit issued hereunder during the Commitment
Period on such basis that (a) immediately after the completion of any
borrowing by Borrower or issuance of a Letter of Credit hereunder, the
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aggregate principal amount then outstanding on the Notes (other than the
Swing Line Note) issued to such Bank, when combined with such Bank's pro
rata share of the aggregate undrawn face amount of all issued and
outstanding Letters of Credit, shall not be in excess of the amount shown
opposite the name of such Bank under the column headed "Maximum Amount" as
set forth in Schedule 1 hereto, and (b) such aggregate principal amount
outstanding on the Notes (other than the Swing Line Note) issued to such
Bank shall represent that percentage of the aggregate principal amount then
outstanding on all Notes (other than the Swing Line Note) which is such
Bank's Commitment Percentage.
Each borrowing (other than Swing Loans) from the Banks hereunder shall
be made pro rata according to the Banks' respective Commitment Percentages.
The Loans may be made as Revolving Loans and Swing Loans, and Letters of
Credit may be issued, as follows:
A. Revolving Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Banks shall make a Revolving Loan or Revolving Loans
to Borrower in such amount or amounts as Borrower may from time to time
request, but not exceeding in aggregate principal amount at any one time
outstanding hereunder the Total Commitment Amount, when such Revolving
Loans are combined with the aggregate principal amount of Swing Loans
outstanding and the aggregate undrawn face amount of all issued and
outstanding Letters of Credit. Borrower shall have the option to borrow
Revolving Loans, maturing on the last day of the Commitment Period,
hereunder by means of any combination of (a) Base Rate Loans, or (b) LIBOR
Loans.
Borrower shall pay interest on the unpaid principal amount of Base
Rate Loans outstanding from time to time from the date thereof until paid
at a rate per annum which shall be the Base Rate from time to time in
effect. Interest on such Base Rate Loans shall be payable on the last day
of each succeeding April, July, October and January of each year and at the
maturity thereof, commencing April 30, 1998. Borrower shall pay interest
on the unpaid principal amount of each LIBOR Loan outstanding from time to
time from the date thereof until paid at a rate per annum which shall be
the Derived LIBOR Rate, fixed in advance for each Interest Period (but
subject to changes in the Applicable Margin) as herein provided for each
such Interest Period. Interest on such LIBOR Loans shall be payable on
each Interest Adjustment Date with respect to an Interest Period (provided
that if an Interest Period exceeds three (3) months, the interest must be
paid every three (3) months, commencing three (3) months from the beginning
of such Interest Period).
At the request of Borrower, provided no Unmatured Event of Default or
Event of Default exists hereunder, the Banks shall convert Base Rate Loans
to LIBOR Loans at any time, subject to the notice and other provisions of
Section 2.2 hereof, and shall convert LIBOR Loans to Base Rate Loans on any
Interest Adjustment Date.
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The obligation of Borrower to repay the Base Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of Borrower substantially in the form of Exhibit A
hereto, dated the Closing Date, and payable to the order of such Bank in
the principal amount of its Revolving Credit Commitment, or, if less, the
aggregate unpaid principal amount of Revolving Loans made hereunder by such
Bank. Subject to the provisions of this Agreement, Borrower shall be
entitled under this Section 2.1A to borrow funds, repay the same in whole
or in part and re-borrow hereunder at any time and from time to time during
the Commitment Period.
B. Swing Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent shall make a Swing Loan or Swing Loans to Borrower
in such amount or amounts as Borrower may from time to time request;
provided, that Agent shall not make any Swing Loan under the Swing Line if,
after giving effect thereto, (a) the sum of (i) the aggregate outstanding
principal amount of all Revolving Loans, plus, (ii) the aggregate
outstanding principal amount of all Swing Loans, plus (iii) the aggregate
undrawn face amount of all issued and outstanding Letters of Credit, would
exceed the Total Commitment Amount, or (b) the aggregate outstanding
principal amount of all Swing Loans would exceed the Swing Line Commitment.
Each Swing Loan shall be due and payable on the Swing Loan Maturity Date
applicable thereto.
Borrower shall pay interest, for the sole benefit of Agent, on the
unpaid principal amount of each Swing Loan outstanding from time to time
from the date thereof until paid at a rate per annum which shall be the
Negotiated Money Market Rate applicable to such Swing Loan. Interest on
each Swing Loan shall be payable on the Swing Loan Maturity Date applicable
thereto. Each Swing Loan shall bear interest for a minimum of one (1) day.
The obligation of Borrower to repay the Swing Loans and to pay
interest thereon shall be evidenced by a Swing Line Note of Borrower
substantially in the form of Exhibit B hereto, dated the Closing Date, and
payable to the order of Agent in the principal amount of the Swing Loan
Commitment, or, if less, the aggregate unpaid principal amount of Swing
Loans made hereunder by Agent. Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.1B to borrow
funds, repay the same in whole or in part and reborrow hereunder at any
time and from time to time during the Commitment Period.
On any day when a Swing Loan is outstanding (whether before or after
the maturity thereof), Agent shall have the right to request that each Bank
purchase a participation in such Swing Loan, and Agent shall promptly
notify each Bank thereof (by facsimile or telephone, confirmed in writing).
Upon such notice, but without further action, Agent hereby agrees to grant
to each Bank, and each Bank hereby agrees to acquire from Agent, an
undivided participation interest in such Swing Loan in an amount equal to
such Bank's Commitment Percentage of the aggregate principal amount of such
Swing Loan. In consideration and in furtherance of the foregoing, each
Bank hereby absolutely and unconditionally agrees, upon receipt of notice
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as provided above, to pay to Agent, for its sole account, such Bank's
ratable share of such Swing Loan (determined in accordance with such Bank's
Commitment Percentage). Each Bank acknowledges and agrees that its
obligation to acquire participations in Swing Loans pursuant to this
Section 2.1B is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of an Unmatured Event of Default or an Event of Default, and
that each such payment shall be made without any offset, abatement,
recoupment, counterclaim, withholding or reduction whatsoever and whether
or not such Bank's Revolving Credit Commitment shall have been reduced or
terminated. Each Bank shall comply with its obligation under this Section
2.1B by wire transfer of immediately available funds, in the same manner as
provided in Section 2.2(b) with respect to Revolving Loans to be made by
such Bank.
If Agent elects, by giving notice to Borrower and the Banks, Borrower
agrees that Agent shall have the right, in its sole discretion, to request
that any Swing Loan be refinanced as a Revolving Loan. Such Revolving Loan
shall be a Base Rate Loan. Upon receipt of such notice by Borrower,
Borrower shall be deemed on such day to have requested a Revolving Loan in
the principal amount of the Swing Loan in accordance with Sections 2.1 and
2.2. Each Bank agrees to make a Revolving Loan on the date of such notice,
subject to no conditions precedent whatsoever. Each Bank acknowledges and
agrees that its obligation to make a Revolving Loan pursuant to Section
2.1A when required by this Section 2.1B is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, the occurrence and continuance of an Unmatured Event of Default
or Event of Default, and that its payment to Agent, for the account of
Agent, of the proceeds of such Revolving Loan shall be made without any
offset, abatement, recoupment, counterclaim, withholding or reduction
whatsoever and whether or not such Bank's Revolving Credit Commitment shall
have been reduced or terminated. Borrower irrevocably authorizes and
instructs Agent to apply the proceeds of any borrowing pursuant to this
paragraph to repay in full such Swing Loan.
C. Letters of Credit.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, Agent, in its own name, but only as agent for the Banks,
shall issue such Letters of Credit for the account of Borrower or any
Guarantor of Payment, as Borrower may from time to time request. Borrower
shall not request any Letter of Credit (and Agent shall not be obligated to
issue any Letter of Credit) if, after giving effect thereto, (a) the
aggregate undrawn face amount of all issued and outstanding Letters of
Credit would exceed the Letter of Credit Commitment, or (b) the sum of (i)
the aggregate outstanding principal amount of all Revolving Loans, plus
(ii) the aggregate undrawn face amount of all issued and outstanding
Letters of Credit, plus (iii) the aggregate outstanding principal amount of
all Swing Loans, would exceed the Total Commitment Amount. The issuance of
each Letter of Credit shall confer upon each Bank the benefits and
liabilities of a participation consisting of an undivided pro rata interest
in the Letter of Credit to the extent of that Bank's Commitment Percentage.
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Each request for a Letter of Credit shall be delivered to Agent not
later than 11:00 A.M. (Cleveland, Ohio time) three (3) Business Days prior
to the day upon which the Letter of Credit is to be issued. Each such
request shall be in a form acceptable to Agent and specify the face amount
thereof, the account party, the beneficiary, the intended date of issuance,
the expiry date thereof, and the nature of the transaction to be supported
thereby. Concurrently with each such request, Borrower, and any Guarantor
of Payment for whose benefit the Letter of Credit is to be issued, shall
execute and deliver to Agent an appropriate application and agreement,
being in the standard form of Agent for such letters of credit, as amended
to conform to the provisions of this Agreement if required by Agent. Agent
shall give each Bank notice of each such request for a Letter of Credit.
In respect of each Letter of Credit and the drafts thereunder, if any,
whether issued for the account of Borrower or a Guarantor of Payment,
Borrower agrees (a) to pay to Agent, for the pro rata benefit of the Banks,
a non-refundable commission based upon the face amount of the Letter of
Credit, which shall be paid quarterly in arrears, at the rate of the
Applicable Margin (in effect on the date such Letter of Credit is issued)
times the face amount of the Letter of Credit; (b) to pay to Agent, for its
sole account, an additional Letter of Credit Fee, which shall be paid on
the date that such Letter of Credit is issued, at the rate of one-eight of
one percent (1/8 of 1%) of the face amount of such Letter of Credit; and
(c) pay to Agent, for its sole account, such other issuance, amendment,
negotiation, draw, acceptance, telex, courier, postage and similar
transactional fees as are generally charged by Agent under its fee schedule
as in effect from time to time.
Whenever a Letter of Credit is drawn, Borrower shall immediately
reimburse Agent for the amount drawn. In the event that the amount drawn
is not reimbursed by Borrower within one (1) Business Day of the drawing of
such Letter of Credit, at the option of Agent, the amount drawn shall be
deemed to be a Revolving Loan to Borrower subject to the provisions and
requirements of Section 2.1A (unless any such requirement shall be waived
by Agent) and shall be evidenced by the Revolving Credit Notes. Each such
Revolving Loan shall be deemed to be a Base Rate Loan unless otherwise
requested by and available to Borrower hereunder. Each Bank is hereby
authorized to record on its records relating to its Revolving Credit Note
such Bank's pro rata share of the amounts paid and not reimbursed on the
Letters of Credit.
SECTION 2.2. CONDITIONS TO LOANS AND LETTERS OF CREDIT. The
obligation of the Banks to make Revolving Loans, convert any Revolving Loan
or continue any LIBOR Loan, or of Agent to issue Letters of Credit or make
Swing Loans hereunder, is conditioned, in the case of each borrowing,
conversion, continuation or issuance hereunder, upon:
(a) all conditions precedent as listed in Article IV hereof shall
have been satisfied on the Closing Date or, with respect to the items set
forth in Section 4.2 hereof, within ten (10) Business Days after the
Closing Date;
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(b) with respect to the making or conversion of any Revolving Loan,
receipt by Agent of a Notice of Loan, such notice to be received by 11:00
A.M. (Cleveland, Ohio time) on the proposed date of borrowing or conversion
with respect to Base Rate Loans and, with respect to LIBOR Loans, by 11:00
A.M. (Cleveland, Ohio time) three (3) Business Days prior to the proposed
date of borrowing or conversion. Agent shall notify each Bank of the date,
amount and initial Interest Period (if applicable) promptly upon the
receipt of such notice, and, in any event, by 2:00 P.M. (Cleveland, Ohio
time) on the date such notice is received. On the date any Revolving Loan
is to be made, each Bank shall provide Agent, not later than 3:00 P.M.
(Cleveland, Ohio time), with the amount in federal or other immediately
available funds required of it;
(c) with respect to Swing Loans, receipt by Agent of a Notice of
Loan, such notice to be received by 11:00 A.M. (Cleveland, Ohio time) on
the proposed date of borrowing;
(d) with respect to Letters of Credit, satisfaction of the notice
provisions set forth in Section 2.1C hereof;
(e) Borrower's request for (i) a Base Rate Loan shall be in an amount
of not less than Five Million Dollars ($5,000,000), increased by increments
of One Hundred Thousand Dollars ($100,000), (ii) a LIBOR Loan shall be in
an amount of not less than Five Million Dollars ($5,000,000), increased by
increments of One Million Dollars ($1,000,000), and (iii) a Swing Loan
shall be in the amount of not less than Two Hundred Fifty Thousand Dollars
($250,000), increased by increments of Twenty-Five Thousand Dollars
($25,000);
(f) the fact that no Unmatured Event of Default or Event of Default
shall then exist or immediately after the making, conversion or
continuation of the Loan or issuance of the Letter of Credit would exist;
and
(g) the fact that each of the representations and warranties
contained in Article VI hereof shall be true and correct with the same
force and effect as if made on and as of the date of the making, conversion
or continuation of such Loan, or the issuance of the Letter of Credit,
except to the extent that any thereof expressly relate to an earlier date.
At no time shall Borrower request that LIBOR Loans be outstanding for
more than fifteen (15) different Interest Periods at any one (1) time.
Each request by Borrower for the making, conversion or continuation of
a Loan, or for the issuance of a Letter of Credit, hereunder shall be
deemed to be a representation and warranty by Borrower as of the date of
such request as to the facts specified in (f) and (g) above.
Each request by Borrower for the making or continuation of a LIBOR
Loan or for the conversion of any Loan from or into a LIBOR Loan shall be
irrevocable and binding on Borrower and Borrower shall indemnify Agent and
the Banks against any loss or expense incurred by Agent or the Banks as a
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result of any failure by Borrower to consummate such transaction including,
without limitation, any loss (including loss of anticipated profits) or
expense incurred by reason of liquidation or re-employment of deposits or
other funds acquired by the Banks to fund the Loan. A certificate as to
the amount of such loss or expense submitted by the Banks to Borrower shall
be conclusive and binding for all purposes, absent manifest error.
SECTION 2.3. PAYMENT ON NOTES, ETC. All payments of principal,
interest and facility and other fees shall be made to Agent in immediately
available funds for the account of the Banks (except for any payment
received with respect to any Swing Loan, which shall be for the account of
Agent), and Agent shall promptly distribute to each Bank its ratable share
of the amount of principal, interest, and facility and other fees received
by it for the account of such Bank. Each Bank shall record (a) any
principal, interest or other payment, and (b) the principal amount of the
Base Rate Loans and the LIBOR Loans and all prepayments thereof and the
applicable dates with respect thereto, by such method as such Bank may
generally employ; provided, however, that failure to make any such entry
shall in no way detract from Borrower's obligations under each such Note.
The aggregate unpaid amount of Loans set forth on the records of Agent
shall be rebuttably presumptive evidence of the principal and interest
owing and unpaid on each Note. Whenever any payment to be made hereunder,
including without limitation any payment to be made on any Note, shall be
stated to be due on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day and such extension of time
shall in each case be included in the computation of the interest payable
on such Note; provided, however, that with respect to any LIBOR Loan, if
the next succeeding Business Day falls in the succeeding calendar month,
such payment shall be made on the preceding Business Day and the relevant
Interest Period shall be adjusted accordingly.
SECTION 2.4. PREPAYMENT. Borrower shall have the right at any time
or from time to time to prepay, on a pro rata basis for all of the Banks,
all or any part of the principal amount of the Notes then outstanding as
designated by Borrower, plus interest accrued on the amount so prepaid to
the date of such prepayment. Borrower shall give Agent notice of
prepayment of any Base Rate Loans by not later than 11:00 A.M. (Cleveland,
Ohio time) on the Business Day on which such prepayment is to be made and
written notice of the prepayment of any LIBOR Loan not later than 1:00 P.M.
(Cleveland, Ohio time) three (3) Business Days before the Business Day on
which such prepayment is to be made. Prepayments of Base Rate Loans shall
be without any premium or penalty.
In any case of prepayment of any LIBOR Loan, Borrower agrees that if
the reinvestment rate ("Reinvestment Rate") as quoted by the money desk of
Agent, shall be lower than the LIBOR Rate applicable to the LIBOR Loan
which is intended to be prepaid (hereinafter, "Last LIBOR"), then Borrower
shall, upon written notice by Agent, promptly pay to Agent, for the benefit
of the Banks, in immediately available funds, a prepayment fee equal to the
product of (a) a rate (the "Prepayment Rate") which shall be equal to the
difference between the Last LIBOR and the Reinvestment Rate, times (b) the
principal amount of the LIBOR Loan which is to be prepaid, times (c) (i)
the number of days remaining in the Interest Period of the LIBOR Loan which
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is to be prepaid divided by (ii) three hundred sixty (360). In addition,
Borrower shall immediately pay directly to Agent, for the account of the
Banks, the amount of any additional costs or expenses (including, without
limitation, cost of telex, wires, or cables) incurred by Agent or the Banks
in connection with the prepayment, upon Borrower's receipt of a written
statement from Agent. Each prepayment of a LIBOR Loan shall be in the
aggregate principal sum of not less than Five Million Dollars ($5,000,000),
except in the case of a mandatory prepayment pursuant to Article III
hereof.
In the case of prepayment of any Swing Loan, Borrower agrees to pay a
prepayment fee equal to the present value (discounted at the Discount Rate,
as hereinafter defined), of (a) the amount, if any, by which (i) the
interest rate on such Swing Loan exceeds (ii) the interest rate (as of the
date of prepayment) on United States Treasury obligations in a like amount
as the Swing Loan being prepaid, and with a maturity approximately equal to
the number of days between the prepayment date and the due date for such
Swing Loan, multiplied by (b) the amount of such Swing Loan being prepaid,
multiplied by (c) (i) the number of days between the prepayment date and
the due date for such Swing Loan divided by (ii) three hundred sixty (360).
As used herein, "Discount Rate" means a rate equal to the interest rate (as
of the date of prepayment) on United States Treasury obligations in a like
amount as the Swing Loan being prepaid and with a maturity approximately
equal to the number of days between the prepayment date and the date that
such Swing Loan was due.
SECTION 2.5. FACILITY AND OTHER FEES; TERMINATION OR REDUCTION OF
COMMITMENT.
(a) Borrower shall pay to Agent, for the ratable account of the
Banks, as a consideration for the Commitment hereunder, a facility fee from
the date hereof to and including the last day of the Commitment Period
equal to (i) the Applicable Facility Fee Rate in effect on the payment
date, times (ii) the Total Commitment Amount. The facility fee shall be
payable, in arrears, on April 30, 1998, and on the last day of each July,
October, January and April thereafter.
(b) Borrower shall pay to Agent, for its sole benefit, on April 30,
1998, and on the last day of each July, October, January and April
thereafter, all fees as set forth in the Agent Fee Letter. Borrower shall
also pay all fees required to be paid pursuant to the terms of the
Commitment Letter.
(c) Borrower may at any time or from time to time terminate in whole
or reduce the Commitment of the Banks hereunder to an amount not less than
the aggregate principal amount of the Loans and Letters of Credit then
outstanding, by giving Agent not fewer than three (3) Business Days'
written notice, provided that any such reduction shall be in an aggregate
amount for all of the Banks of Five Million Dollars ($5,000,000), increased
by increments of One Million Dollars ($1,000,000). Any reduction in the
Total Commitment Amount shall be on a pro rata basis in accordance with the
respective Commitment Percentages of the Banks. Agent shall promptly
notify each Bank of its proportionate amount and the date of each such
reduction. After each such reduction, the facility fees payable hereunder
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shall be calculated upon the Commitment of the Banks as so reduced. If
Borrower terminates in whole the Commitment of the Banks, on the effective
date of such termination (Borrower having prepaid in full the unpaid
principal balance, if any, of the Notes outstanding, together with all
interest and facility and other fees accrued and unpaid and provided that
no issued and outstanding Letters of Credit shall exist) all of the Notes
shall be delivered to Agent marked "Canceled" and redelivered to Borrower.
Any reduction in the Commitment of the Banks shall be effective during the
remainder of the Commitment Period, and if the entire Commitment is
terminated, then the Commitment Period shall be deemed to have ended on the
date of such termination.
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT RATE.
Interest on Loans and facility and other fees and charges hereunder shall
be computed on the basis of a year having three hundred sixty (360) days
and calculated for the actual number of days elapsed. Anything herein to
the contrary notwithstanding, if an Event of Default shall occur hereunder,
(a) the principal of each Note and the unpaid interest thereon shall bear
interest, until paid, at the Default Rate; and (b) the fee for the
aggregate undrawn face amount of all issued and outstanding Letters of
Credit shall be increased to two percent (2%) in excess of the then
applicable free from time to time in effect pursuant to Section 2.1C
hereof. In no event shall the rate of interest hereunder exceed the rate
allowable by law.
SECTION 2.7. MANDATORY PAYMENT.
(a) If the sum of (i) the aggregate principal amount of all Revolving
Loans outstanding, (ii) the aggregate principal amount of all Swing Loans
outstanding, and (iii) the undrawn face amount of all issued and
outstanding Letters of Credit, at any time exceeds the Total Commitment
Amount, Borrower shall, as promptly as practicable, but in no event to be
later than the next Business Day, prepay an aggregate principal amount of
the Revolving Loans sufficient to bring the aggregate outstanding principal
amount of all Revolving Loans, the aggregate outstanding principal amount
of all Swing Loans and the undrawn face amount of all issued and
outstanding Letters of Credit within the Total Commitment Amount.
(b) In addition, if Borrower, as provided herein, completes any
Private Placement and amount of the net proceeds of such Private Placement
and all previous Private Placements, if any, exceeds the aggregate amount
of Fifty Million Dollars ($50,000,000), then the Total Commitment Amount
shall be reduced to the extent that the aggregate amount of all Private
Placements exceeds Fifty Million Dollars ($50,000,000) and, after such
reduction, to the extent that the sum of (i) the aggregate principal amount
of all Revolving Loans outstanding, (ii) the aggregate principal amount of
all Swing Loans outstanding, and (iii) the undrawn face amount of all
issued and outstanding Letters of Credit then exceeds the Total Commitment
Amount as so reduced, Borrower shall (A) make an immediate prepayment in
the amount of such excess on the Revolving Loans, or on Swing Loans if no
Revolving Loans shall then be outstanding, or (B) reduce, in the amount of
such excess, the outstanding face amount of Letters of Credit, if no
Revolving Loans or Swing Loans shall then be outstanding.
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(c) Any prepayment of a LIBOR Loan pursuant to subpart (a) or (b) of
this Section 2.7 shall be subject to the prepayment fees set forth in
Section 2.4 hereof.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time
any law, treaty or regulation (including, without limitation, Regulation D
of the Board of Governors of the Federal Reserve System) or the
interpretation thereof by any governmental authority charged with the
administration thereof or any central bank or other fiscal, monetary or
other authority shall impose (whether or not having the force of law),
modify or deem applicable any reserve and/or special deposit requirement
(other than reserves included in the Eurocurrency Reserve Percentage, the
effect of which is reflected in the interest rate(s) of the LIBOR Loan(s)
in question) against assets held by, or deposits in or for the amount of
any Loans by, any Bank, and the result of the foregoing is to increase the
cost (whether by incurring a cost or adding to a cost) to such Bank of
making or maintaining hereunder LIBOR Loans or to reduce the amount of
principal or interest received by such Bank with respect to such LIBOR
Loans, then, upon demand by such Bank, Borrower shall pay to such Bank from
time to time on Interest Adjustment Dates with respect to such LIBOR Loans,
as additional consideration hereunder, additional amounts sufficient to
fully compensate and indemnify such Bank for such increased cost or reduced
amount, assuming (which assumption such Bank need not corroborate) such
additional cost or reduced amount was allocable to such LIBOR Loans. A
certificate as to the increased cost or reduced amount as a result of any
event mentioned in this Section 3.1, setting forth the calculations
therefor, shall be promptly submitted by such Bank to Borrower and shall,
in the absence of manifest error, be conclusive and binding as to the
amount thereof. Notwithstanding any other provision of this Agreement,
after any such demand for compensation by any Bank, Borrower, upon at least
three (3) Business Days' prior written notice to such Bank through Agent,
may prepay the affected LIBOR Loans in full or convert the affected LIBOR
Loans to Base Rate Loans regardless of the Interest Period of any thereof.
Any such prepayment or conversion shall be subject to the prepayment fees
set forth in Section 2.4 hereof. Each Bank shall notify Borrower as
promptly as practicable (with a copy thereof delivered to Agent) of the
existence of any event which will likely require the payment by Borrower of
any such additional amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether
or not having the force of law, any Bank shall, with respect to this
Agreement or any transaction under this Agreement, be subjected to any tax,
levy, impost, charge, fee, duty, deduction or withholding of any kind
whatsoever (other than any tax imposed upon the total net income of such
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Bank) and if any such measures or any other similar measure shall result in
an increase in the cost to such Bank of making or maintaining any LIBOR
Loan or in a reduction in the amount of principal, interest or facility fee
receivable by such Bank in respect thereof, then such Bank shall promptly
notify Borrower stating the reasons therefor. Borrower shall thereafter pay
to such Bank upon demand from time to time on Interest Adjustment Dates
with respect to such LIBOR Loans, as additional consideration hereunder,
such additional amounts as shall fully compensate such Bank for such
increased cost or reduced amount. A certificate as to any such increased
cost or reduced amount, setting forth the calculations therefor, shall be
submitted by such Bank to Borrower and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
If any Bank receives such additional consideration from Borrower
pursuant to this Section 3.2, such Bank shall use reasonable efforts to
obtain the benefits of any refund, deduction or credit for any taxes or
other amounts on account of which such additional consideration has been
paid and shall reimburse Borrower to the extent, but only to the extent,
that such Bank shall receive a refund of such taxes or other amounts
together with any interest thereon or an effective net reduction in taxes
or other governmental charges (including any taxes imposed on or measured
by the total net income of such Bank) of the United States or any state or
subdivision thereof by virtue of any such deduction or credit, after first
giving effect to all other deductions and credits otherwise available to
such Bank. If, at the time any audit of such Bank's income tax return is
completed, such Bank determines, based on such audit, that it was not
entitled to the full amount of any refund reimbursed to Borrower as
aforesaid or that its net income taxes are not reduced by a credit or
deduction for the full amount of taxes reimbursed to Borrower as aforesaid,
Borrower, upon demand of such Bank, shall promptly pay to such Bank the
amount so refunded to which such Bank was not so entitled, or the amount by
which the net income taxes of such Bank were not so reduced, as the case
may be.
Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrower, upon at least three (3)
Business Days' prior written notice to such Bank through Agent, may prepay
the affected LIBOR Loans in full or convert the affected LIBOR Loans to
Base Rate Loans regardless of the Interest Period of any thereof. Any such
prepayment or conversion shall be subject to the prepayment fees set forth
in Section 2.4 hereof.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loans, in the event that Agent
shall have determined that dollar deposits of the relevant amount for the
relevant Interest Period for such LIBOR Loans are not available to the Bank
in the applicable eurodollar market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable to such Interest Period, as the case
may be, Agent shall promptly give notice of such determination to Borrower
and (a) any notice of new LIBOR Loans (or conversion of existing Loans to
LIBOR Loans) previously given by Borrower and not yet borrowed (or
converted, as the case may be) shall be deemed a notice to make Base Rate
Loans, and (b) Borrower shall be obligated either to prepay, or to convert
to Base Rate Loans, any outstanding LIBOR Loans on the last day of the then
current Interest Period or Periods with respect thereto.
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SECTION 3.4. INDEMNITY. Without prejudice to any other provisions
of this Article III, Borrower hereby agrees to indemnify each Bank against
any loss or expense which such Bank may sustain or incur as a consequence
of any default by Borrower in payment when due of any amount hereunder in
respect of any LIBOR Loan, including, but not limited to, any loss of
profit, premium or penalty incurred by such Bank in respect of funds
borrowed by it for the purpose of making or maintaining such LIBOR Loan, as
determined by such Bank in the exercise of its sole but reasonable
discretion. A certificate as to any such loss or expense shall be promptly
submitted by such Bank to Borrower and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at
any time any new law, treaty or regulation, or any change in any existing
law, treaty or regulation, or any interpretation thereof by any
governmental or other regulatory authority charged with the administration
thereof, shall make it unlawful for any Bank to fund any LIBOR Loans which
it is committed to make hereunder with moneys obtained in the eurodollar
market, the commitment of such Bank to fund LIBOR Loans shall, upon the
happening of such event forthwith be suspended for the duration of such
illegality, and such Bank shall by written notice to Borrower and Agent
declare that its commitment with respect to such Loans has been so
suspended and, if and when such illegality ceases to exist, such suspension
shall cease and such Bank shall similarly notify Borrower and Agent. If any
such change shall make it unlawful for any Bank to continue in effect the
funding in the applicable eurodollar market of any LIBOR Loan previously
made by it hereunder, such Bank shall, upon the happening of such event,
notify Borrower, Agent and the other Banks thereof in writing stating the
reasons therefor, and Borrower shall, on the earlier of (a) the last day of
the then current Interest Period or (b) if required by such law, regulation
or interpretation, on such date as shall be specified in such notice,
either convert all LIBOR Loans to Base Rate Loans or prepay all LIBOR Loans
to the Banks in full. Any such prepayment or conversion shall be subject to
the prepayment fees described in Section 2.4 hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to,
make LIBOR Loans hereunder with funds obtained outside the United States.
ARTICLE IV. CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING. On the Closing Date,
or, with respect to any document or item to be delivered in connection with
the Sonoco Acquisition, simultaneously with the making of the first Loan or
the issuance of the first Letter of Credit, Borrower shall satisfy each of
the following conditions:
(a) NOTES. Borrower shall have executed and delivered to each Bank
its Revolving Credit Note and shall have executed and delivered to Agent
the Swing Line Note.
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(b) GUARANTIES OF PAYMENT OF DEBT. Each Guarantor of Payment (other
than any Guarantor of Payment that is Target Company) shall have executed
and delivered its Guaranty of Payment to Agent.
(c) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Borrower and each Guarantor of Payment (other than any Guarantor of Payment
that is a Target Company) shall have delivered to each Bank an officer's
certificate certifying the names of the officers of Borrower or such
Guarantor of Payment authorized to sign the Loan Documents, together with
the true signatures of such officers and certified copies of (a) the
resolutions of the board of directors of Borrower and such Guarantor of
Payment evidencing approval of the execution and delivery of the Loan
Documents and the execution of other Related Writings to which Borrower or
such Guarantor of Payment, as the case may be, is a party, and (b) the
Articles (or Certificate) of Incorporation and Bylaws (or Regulations) and
all amendments thereto of Borrower and such Guarantor of Payment.
(d) LEGAL OPINION. An opinion of counsel for Borrower and each
Guarantor of Payment (other than any Guarantor of Payment that is a Target
Company) in form and substance satisfactory to Agent and the Banks shall
have been delivered to each Bank.
(e) GOOD STANDING CERTIFICATES. Borrower shall have delivered to
Agent a good standing certificate for Borrower and each Guarantor of
Payment (other than a Guarantor of Payment that is a Target Company),
issued on or about the Closing Date by the Secretary of State in each state
in which Borrower or such Guarantor of Payment is incorporated.
(f) CLOSING AND LEGAL FEES; AGENT FEE LETTER. (a) Borrower shall
have paid to Agent, for its sole benefit, the fees described in the Fee
Letter; (b) Borrower shall have paid all legal fees and expenses of Agent
in connection with the preparation and negotiation of the Loan Documents;
and (c) Borrower shall have executed and delivered to Agent the Agent Fee
Letter.
(g) LIEN SEARCHES. With respect to the property owned or leased by
Borrower and each Guarantor of Payment, Borrower shall have caused to be
delivered to each Bank: (a) the results of U.C.C. lien searches,
satisfactory to Agent and the Banks, in such jurisdictions as may be
requested by Agent; (b) the results of federal and state tax lien and
judicial lien searches, satisfactory to Agent and the Banks, in such
jurisdictions as may be requested by Agent; and (c) U.C.C. termination
statements reflecting termination of all financing statements previously
filed by any party having a security interest not permitted under the terms
of this Agreement.
(h) PURCHASE AGREEMENT. Borrower shall have delivered to Agent an
officer's certificate, in form and substance satisfactory to Agent,
certifying to Agent that, upon funding of the first Loan hereunder by Agent
and the Banks, the transactions contemplated by the Purchase Agreement to
be consummated as of the Closing Date (as defined in the Purchase
Agreement), including, without limitation, Borrower's acquisition of direct
or indirect ownership of one hundred percent (100%) of the shares (or other
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ownership interests) of the Target Companies, will have been consummated in
accordance with the terms thereof. Borrower shall also have delivered to
Agent a signed copy of the Purchase Agreement, and copies of all ancillary
documents related thereto, certified by an officer of Borrower as being
true and complete.
(i) FINANCIAL STATEMENTS OF TARGET COMPANIES. Borrower shall have
provided to Agent and the Banks financial statements for the Target
Companies for fiscal year ended December 31, 1997, which financial
statements shall not be materially, in the opinion of Agent and the
Majority Banks, different from the financial statements previously provided
to Agent.
(j) WIRE TRANSFER INSTRUCTIONS. Borrower shall provide written wire
transfer instructions to Agent.
(k) NO MATERIAL ADVERSE CHANGE. No material adverse change, in the
opinion of Agent, shall have occurred in the financial condition,
operations or prospects of the Companies.
(l) MISCELLANEOUS. Borrower shall have provided such other items and
conditions as may be reasonably required by Agent or the Banks.
SECTION 4.2. CONDITIONS SUBSEQUENT TO CLOSING DATE. On or before
ten (10) Business Days after the Closing Date, Borrower shall satisfy each
of the following conditions:
(a) GUARANTIES OF PAYMENT OF DEBT. Each Guarantor of Payment that is
a Target Company shall have executed and delivered a Guaranty of Payment to
Agent.
(b) OFFICER'S CERTIFICATE, RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Each Guarantor of Payment that is a Target Company shall have delivered to
each Bank an officer's certificate certifying the names of the officers of
such Guarantor of Payment authorized to sign its Guaranty of Payment
together with the true signatures of such officers and certified copies of
(a) the resolutions of the board of directors of such Guarantor of Payment
evidencing approval of the execution and delivery of its Guaranty of
Payment and the execution of other Related Writings to which such Guarantor
of Payment is a party, and (b) the Articles (or Certificate) of
Incorporation and Bylaws (or Regulations) and all amendments thereto of
such Guarantor of Payment.
(c) LEGAL OPINION. An opinion of counsel for each Guarantor of
Payment that is a Target Company, in form and substance satisfactory to
Agent and the Banks, shall have been delivered to each Bank.
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(d) GOOD STANDING CERTIFICATES. Borrower shall have delivered to
Agent a good standing certificate for each Guarantor of Payment that is a
Target Company, issued on or within ten (10) Business Days after the
Closing Date by the Secretary of State in each state in which such
Guarantor of Payment that is a Target Company is incorporated.
ARTICLE V. COVENANTS
Borrower agrees that so long as the Commitment remains in effect and
thereafter until the principal of and interest on all Notes and all other
payments and fees due hereunder shall have been paid in full, Borrower
shall perform and observe, and shall cause each Subsidiary to perform and
observe, each of the following provisions:
SECTION 5.1. INSURANCE. Each Company shall (a) maintain insurance
to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated; and (b) within ten (10) days of
any Bank's written request, furnish to such Bank such information about any
Company's insurance as that Bank may from time to time reasonably request,
which information shall be prepared in form and detail satisfactory to such
Bank and certified by a Financial Officer of Borrower.
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full
(a) prior in each case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those so long
as and to the extent that the same shall be contested in good faith by
appropriate and timely proceedings and for which adequate reserves have
been established in accordance with GAAP) for which it may be or become
liable or to which any or all of its properties may be or become subject;
(b) all of its wage obligations to its employees in compliance with the
Fair Labor Standards Act (29 U.S.C. 206-207) or any comparable provisions;
and (c) all of its other obligations calling for the payment of money
(except only those so long as and to the extent that the same shall be
contested in good faith and for which adequate reserves have been
established in accordance with GAAP) before such payment becomes overdue.
SECTION 5.3. FINANCIAL STATEMENTS. Borrower shall furnish to each
Bank:
(a) within forty-five (45) days after the end of each of the first
three (3) quarter-annual periods of each fiscal year of Borrower, balance
sheets of Borrower and its Subsidiaries as of the end of such period and
statements of income (loss), stockholders' equity and cash flow for the
quarter and fiscal year to date periods, all prepared on a Consolidated
basis, in accordance with GAAP, and in form and detail satisfactory to the
Banks and certified by a Financial Officer of Borrower;
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(b) within ninety (90) days after the end of each fiscal year of
Borrower, an annual audit report of Borrower and its Subsidiaries for that
year, prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail satisfactory to the Banks and certified by an independent
public accountant satisfactory to the Banks, which report shall include
balance sheets and statements of income (loss), stockholders' equity and
cash-flow for that period, together with a certificate by the accountant
setting forth the Unmatured Events of Default and Events of Default coming
to its attention during the course of its audit or, if none, a statement to
that effect;
(c) concurrently with the delivery of the financial statements in (a)
and (b) above, a Compliance Certificate in the form of Exhibit D hereto;
(d) within ninety (90) days after the end of each fiscal year of
Borrower, an annual operating budget for Borrower and its Subsidiaries for
the then current fiscal year and, to the extent available, the next two
(2) succeeding fiscal years, to be in form acceptable to Agent;
(e) as soon as available, copies of all notices, reports, definitive
proxy or other statements and other documents sent by Borrower to its
shareholders, to the holders of any of its debentures or bonds or the
trustee of any indenture securing the same or pursuant to which they are
issued, or sent by Borrower (in final form) to any securities exchange or
over the counter authority or system, or to the SEC or any similar federal
agency having regulatory jurisdiction over the issuance of Borrower's
securities; and
(f) within ten (10) days of any Bank's written request, such other
information about the financial condition, properties and operations of any
Company as such Bank may from time to time reasonably request, which
information shall be submitted in form and detail satisfactory to such Bank
and certified by a Financial Officer of the Company or Companies in
question.
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times
maintain true and complete records and books of account including, without
limiting the generality of the foregoing, appropriate reserves for possible
losses and liabilities, all in accordance with GAAP, and at all reasonable
times (during normal business hours and upon notice to the Company in
question) permit the Banks to examine that Company's books and records and
to make excerpts therefrom and transcripts thereof.
SECTION 5.5. FRANCHISES. Each Company shall preserve and maintain
at all times its existence, rights and franchises.
SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA
Plan. Borrower shall furnish to the Banks (a) as soon as possible and in
any event within thirty (30) days after any Company knows or has reason to
know that any Reportable Event with respect to any ERISA Plan has occurred,
a statement of the Financial Officer of such Company, setting forth details
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as to such Reportable Event and the action which such Company proposes to
take with respect thereto, together with a copy of the notice of such
Reportable Event given to the PBGC if a copy of such notice is available to
such Company, and (b) promptly after receipt thereof a copy of any notice
such Company, or any member of the Controlled Group may receive from the
PBGC or the Internal Revenue Service with respect to any ERISA Plan
administered by such Company; provided, that this latter clause shall not
apply to notices of general application promulgated by the PBGC or the
Internal Revenue Service. Borrower shall promptly notify the Banks of any
material taxes assessed, proposed to be assessed or which Borrower has
reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any ERISA Plan. As used in this Section "material"
means the measure of a matter of significance which shall be determined as
being an amount equal to five percent (5%) of the Consolidated Net Worth of
Borrower and its Subsidiaries. As soon as practicable, and in any event
within twenty (20) days, after any Company becomes aware that an ERISA
Event has occurred, such Company shall provide Bank with notice of such
ERISA Event with a certificate by a Financial Officer of such Company
setting forth the details of the event and the action such Company or
another Controlled Group member proposes to take with respect thereto.
Borrower shall, at the request of Agent or any Bank, deliver or cause to be
delivered to Agent or such Bank, as the case may be, true and correct
copies of any documents relating to the ERISA Plan of any Company.
SECTION 5.7. FINANCIAL COVENANTS.
(a) LEVERAGE. The Companies shall not suffer or permit at any time
the Leverage Ratio to exceed (i) 3.50 to 1.00 from the Closing Date through
January 30, 1999, (ii) 3.25 to 1.00 from January 31, 1999 through October
30, 1999, and (iii) 3.00 to 1.00 on October 31, 1999 and thereafter, based
upon the financial statements of the Companies.
(b) INTEREST COVERAGE. The Companies shall not suffer or permit at
any time the ratio of (i) Consolidated EBIT to (ii) Consolidated Interest
Expense to be less than (A) 2.25 to 1.00 from the Closing Date through
January 30, 1999, and (B) 2.50 to 1.00 on January 31, 1999 and thereafter,
based upon the financial statements of the Companies for the most recently
completed four (4) fiscal quarters.
(c) NET WORTH. The Companies shall not suffer or permit their
Consolidated Net Worth at any time, based upon the financial statements of
the Companies for the most recently completed fiscal quarter, to fall below
the current minimum amount required, which current minimum amount required
shall be Three Hundred Sixty Four Million Five Hundred Eighty Two Thousand
Eight Hundred Dollars ($364,582,800), with such current minimum amount
required to be (a) positively increased by the Increase Amount on April 30,
1998, and by an additional Increase Amount on the last day of each fiscal
quarter thereafter, and (b) decreased by the total amount of the
Acquisition Charges (after taxes) taken, for accounting purposes, to date.
As used herein, the term "Increase Amount" shall mean an amount equal to
(i) fifty percent (50%) of the positive Consolidated Net Earnings of the
Companies for the fiscal quarter then ended, plus (ii) one hundred percent
(100%) of the proceeds from any equity offering.
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SECTION 5.8. BORROWING. No Company shall create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any
kind; provided, that this Section shall not apply to (a) the Loans; (b) any
loans or other forms of Indebtedness granted to a Company pursuant to any
other agreement now or hereafter in effect so long as the aggregate
principal amount of all such loans to all Companies does not exceed, at any
one time outstanding, the lesser of (i) ten percent (10%) of the
Consolidated Net Worth of the Companies (based upon the financial
statements of the Companies for the most recently completed fiscal
quarter), or (ii) Fifty Million Dollars ($50,000,000) (the current amounts
of such indebtedness is set forth in Schedule 5.8 hereto); (c) loans to a
Company from a Company so long as each such Company is Borrower or a
Guarantor of Payment; or (d) a Private Placement.
SECTION 5.9. LIENS. No Company shall create, assume or suffer to
exist any Lien upon any of its property (real or personal) or assets,
whether now owned or hereafter acquired; provided that this Section shall
not apply to the following:
(a) Liens for taxes not yet due or which are being actively contested
in good faith by appropriate proceedings and for which adequate reserves
have been established in accordance with GAAP;
(b) other statutory Liens incidental to the conduct of its business
or the ownership of its property and assets which (i) were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and (ii) which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use thereof in the
operation of its business;
(c) Liens on property or assets of a Subsidiary to secure obligations
of such Subsidiary to Borrower or a Guarantor of Payment;
(d) any purchase money Lien on fixed assets of a Company securing
loans or other Indebtedness pursuant to Section 5.8 (b) hereof, provided
that such Lien only attaches to the property being acquired;
(e) the Liens set forth on Schedule 5.9 hereto;
(f) easements or other minor defects or irregularities in title of
real property not interfering in any material respect with the use of such
property in the business of any Company; or
(g) any other Liens on assets of a Company so long as all such Liens
for all such Companies do not secure an aggregate amount in excess of
Twenty Million Dollars ($20,000,000) at any one time outstanding.
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No Company shall enter into any contract or agreement which would prohibit
Agent or the Banks from acquiring a security interest, mortgage or other
Lien on, or a collateral assignment of, any of the property or assets of
Borrower and/or any of its Subsidiaries.
SECTION 5.10. REGULATIONS U and X. No Company shall take any action
that would result in any non-compliance of the Loans with Regulations U and
X of the Board of Governors of the Federal Reserve System.
SECTION 5.11. INVESTMENTS AND LOANS. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any
stocks, bonds or securities of any kind, (c) be or become a party to any
joint venture or other partnership without the prior written consent of
Agent and the Majority Banks, (d) make or keep outstanding any advance or
loan to any Person, or (e) be or become a Guarantor of any kind, except
guarantees securing only indebtedness of the Companies incurred or
permitted pursuant to this Agreement; provided, that this Section shall not
apply to:
(i) any endorsement of a check or other medium of payment for deposit
or collection through normal banking channels or similar transaction in the
normal course of business;
(ii) any investment in direct obligations of the United States of
America or the Canadian government or in certificates of deposit issued by
a member bank of the Federal Reserve System;
(iii)any investment in commercial paper or securities which at the
time of such investment is assigned the highest quality rating in
accordance with the rating systems employed by either Moody's or Standard &
Poor's;
(iv) any repurchase agreement with or through Agent or any other FDIC
insured institution with which such Company has deposits;
(v) the holding of Subsidiaries listed on Schedule 6.1 hereto;
(vi) loans to a Company from a Company so long as each such Company is
Borrower or a Guarantor of Payment;
(vii)any guaranty of the Indebtedness permitted pursuant to Section
5.8(b) hereof;
(viii)any advance or loan to an officer or employee of a Company, so
long as all such advances and loans from all Companies aggregate not more
than the maximum principal sum of Fifteen Million Dollars ($15,000,000) at
any one (1) time outstanding.
(ix) any Permitted Investment;
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(x) the holding of any stock which has been acquired pursuant to an
Acquisition permitted pursuant to Section 5.13 hereof;
(xi) the creation of a Subsidiary for the purpose of making an
Acquisition permitted pursuant to Section 5.13 hereof, so long as such
Subsidiary becomes a Guarantor of Payment promptly following such
Acquisition; or
(xii)the holding of any Subsidiary as a result of an Acquisition made
pursuant to Section 5.13 hereof so long as such Subsidiary becomes a
Guarantor of Payment promptly following such Acquisition.
SECTION 5.12. MERGER AND SALE OF ASSETS. No Company shall merge or
consolidate with any other corporation or sell, lease or transfer or
otherwise dispose of all or a substantial part of its assets to any person
or entity, except that if no Unmatured Event of Default or Event of Default
shall then exist or immediately thereafter shall begin to exist:
(a) any Subsidiary may merge with (i) Borrower (provided that
Borrower shall be the continuing or surviving corporation) or (ii) any one
(1) or more Guarantors of Payment, provided that either (A) the continuing
or surviving corporation shall be a Wholly-Owned Subsidiary which is a
Guarantor of Payment, or (B) after giving effect to any merger pursuant to
this sub-clause (ii), Borrower and/or one or more Wholly-Owned Subsidiaries
which are Guarantors of Payment shall own not less than the same percentage
of the outstanding Voting Power of the continuing or surviving corporation
as Borrower and/or one or more Wholly-Owned Subsidiaries (which are
Guarantors of Payment) owned of the merged Subsidiary immediately prior to
such merger;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to (i) Borrower, (ii) any Wholly-Owned Subsidiary which
is a Guarantor of Payment, or (iii) any Guarantor of Payment, of which
Borrower and/or one or more Wholly-Owned Subsidiaries, which are Guarantors
of Payment, shall own not less than the same percentage of Voting Power as
Borrower and/or one or more Wholly-Owned Subsidiaries (which are Guarantors
of Payment) then own of the Subsidiary making such sale, lease, transfer or
other disposition;
(c) any Company may engage in any such conduct in connection with an
Acquisition permitted pursuant to Section 5.13 hereof so long as the
resulting Person is either Borrower or a Guarantor of Payment;
(d) the Companies may make timber sales in the ordinary course of
business consistent with past practice, and may dispose of assets in
connection with corporate restructuring associated with the Sonoco
Acquisition; or
(e) in addition to the sale of assets permitted pursuant to items
(b), (c) and (d) hereof, the Companies may sell any other assets so long as
all such sales of assets do not exceed the aggregate amount, for all
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Companies during any fiscal year, of Twenty Five Million Dollars
($25,000,000).
SECTION 5.13. ACQUISITIONS. No Company shall effect an Acquisition
unless (a) the transaction qualifies as a Permitted Investment; or (b) (i)
the Person that acquires the assets, stock or other equity interests that
are the subject of the Acquisition or, if applicable, is the surviving
entity of the merger, consolidation or combination associated with the
Acquisition, is Borrower or a Subsidiary that is, or promptly following
such Acquisition becomes, a Guarantor of Payment; (ii) the business
acquired by virtue of the Acquisition is reasonably related to a line of
business then being engaged in by one (1) or more of the Companies; (iii)
the Companies are in full compliance with the Loan Documents both prior to
and subsequent to the transaction; and (iv) Borrower provides to Agent and
the Banks, at least twenty (20) days prior to such Acquisition, written
notice of such Acquisition, and, in addition, in the case of any
Acquisition for Consideration in excess of Ten Million Dollars
($10,000,000), historical financial statements of the target entity and a
pro forma financial statement of the Companies accompanied by a certificate
of a Financial Officer of Borrower showing pro forma compliance with
Section 5.7 hereof, both before and after the proposed Acquisition.
SECTION 5.14. NOTICE. Borrower shall cause a Financial Officer of
Borrower to promptly notify Agent and the Banks whenever any Unmatured
Event of Default or Event of Default may occur hereunder or any other
representation or warranty made in Article VI hereof or elsewhere in this
Agreement or in any Related Writing may for any reason cease in any
material respect to be true and complete.
SECTION 5.15. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in
all respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which any Company
owns or operates a facility or site, arranges for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts for transport
any hazardous substances, solid waste or other wastes or holds any interest
in real property or otherwise, except where the failure to do so will not
cause or result in a Material Adverse Effect. Borrower shall furnish to the
Banks promptly after receipt thereof a copy of any notice any Company may
receive from any governmental authority, private person or entity or
otherwise that any material litigation or proceeding pertaining to any
environmental, health or safety matter has been filed or is threatened
against such Company, any real property in which such Company holds any
interest or any past or present operation of such Company. No Company shall
allow the release or disposal of hazardous waste, solid waste or other
wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any
Environmental Law, except where the failure to do so will not cause or
result in a Material Adverse Effect. As used in this Section, "litigation
or proceeding" means any demand, claim, notice, suit, suit in equity
action, administrative action, investigation or inquiry whether brought by
any governmental authority, private person or entity or otherwise. Borrower
shall defend, indemnify and hold Agent and the Banks harmless against all
costs, expenses, claims, damages, penalties and liabilities of every kind
or nature whatsoever (including attorneys fees) arising out of or resulting
from the noncompliance of any Company with any Environmental Law.
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SECTION 5.16. AFFILIATE TRANSACTIONS. No Company shall, or shall
permit any Subsidiary to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate (as defined below) of a Company on terms that are less favorable
to such Company or such Subsidiary, as the case may be, than those that
might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit (a) the payment of
customary and reasonable directors' fees to directors who are not employees
of a Company or any Affiliate of a Company; or (b) any transaction between
a Company and an Affiliate (if Borrower or a Guarantor of Payment) which
Borrower reasonably determines in good faith is beneficial to Borrower and
its Affiliates as a whole and which is not entered into for the purpose of
hindering the exercise by Agent or the Banks of their rights or remedies
under this Agreement. For purposes of this provision,"Affiliate" shall
mean any person or entity, directly or indirectly, controlling, controlled
by or under common control with a Company and "control" (including the
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Company, whether through the ownership of voting securities, by contract or
otherwise.
SECTION 5.17. CORPORATE NAMES. No Company shall change its
corporate name, unless, in each case, Borrower shall provide each Bank with
thirty (30) days prior written notice thereof.
SECTION 5.18. SUBSIDIARY GUARANTIES. Each Subsidiary of a Company,
created, acquired or held subsequent to the Closing Date, shall promptly
execute and deliver to Agent a Guaranty of Payment, in substantially the
same form as is executed by Virginia Fibre Corporation or in such other
form as is acceptable to Agent and the Majority Banks, along with such
corporate governance and authorization documents and an opinion of counsel
as may be deemed necessary or advisable by Agent; provided, however, that a
Subsidiary shall not be required to execute such Guaranty of Payment if:
(a) (i) the total assets of such Subsidiary are less than Five Hundred
Thousand Dollars ($500,000), and (ii) the aggregate of the total assets of
all such Subsidiaries with total asset values of less than Five Hundred
Thousand Dollars ($500,000) does not exceed the aggregate amount of Seven
Hundred Fifty Thousand Dollars ($750,000), or (b) such Subsidiary is
organized outside of the United States. In the event that the total assets
of any domestic Subsidiary which is not a Guarantor of Payment are at any
time equal to or greater than Five Hundred Thousand Dollars ($500,000),
Borrower shall provide Agent and the Banks with prompt written notice of
such asset value.
SECTION 5.19. OTHER COVENANTS. In the event that Borrower shall
enter into any other contract or agreement for the borrowing of money in
excess of the aggregate amount of Five Million Dollars ($5,000,000),
wherein the covenants and agreements contained therein are more restrictive
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than the covenants set forth herein, then the Company shall be bound
hereunder by such covenants and agreements with the same force and effect
as if such covenants and agreements were written herein.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that the statements set forth in this
Article VI are true, correct and complete.
SECTION 6.1. CORPORATE EXISTENCE; SUBSIDIARIES; FOREIGN
QUALIFICATION. Each Company is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation
and is duly qualified and authorized to do business and is in good standing
as a foreign corporation in the jurisdictions set forth opposite its name
on Schedule 6.1 hereto, which are all of the states or jurisdictions where
the character of its property or its business activities, as of the Closing
Date, makes such qualification necessary, except where the failure to so
qualify will not cause or result in a Material Adverse Effect. Schedule
6.1 sets forth each Subsidiary of Borrower, its state of incorporation, the
location of its chief executive offices and its principal place of business
as of the Closing Date. Borrower owns, directly or indirectly, all of the
capital stock of each of its Subsidiaries.
SECTION 6.2. CORPORATE AUTHORITY. Borrower has the right and power
and is duly authorized and empowered to enter into, execute, deliver the
Loan Documents to which it is a party and to perform and observe the
provisions of the Loan Documents. The Loan Documents to which Borrower is
a party have been duly authorized and approved by Borrower's Board of
Directors and are the valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.
The execution, delivery and performance of the Loan Documents will not
conflict with nor result in any breach in any of the provisions of, or
constitute a default under, or result in the creation of any Lien (other
than Liens permitted under Section 5.9 of this Agreement) upon any assets
or property of Borrower under the provisions of, Borrower's Articles (or
Certificate) of Incorporation, Bylaws (or Regulations) or any agreement.
SECTION 6.3. COMPLIANCE WITH LAWS.
(a) Each Company holds permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from
federal, state, local, and foreign governmental and regulatory bodies
necessary for the conduct of its business;
(b) Each Company is in compliance with all federal, state, local, or
foreign applicable statutes, rules, regulations, and orders including,
without limitation, those relating to environmental protection,
occupational safety and health, and equal employment practices except in
those instances, if any, where a failure of compliance will not cause or
result in a Material Adverse Effect; and
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(c) No Company is in violation of or in default under any material
agreement to which it is a party or by which its assets are subject or
bound, which violation or default has caused or will result in a Material
Adverse Effect.
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Except as
disclosed on Schedule 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against Borrower
or any of its Subsidiaries, or in respect of which Borrower or any of its
Subsidiaries may have any liability, in any court or before any
governmental authority, arbitration board, or other tribunal, (b) no
orders, writs, injunctions, judgments, or decrees of any court or
government agency or instrumentality to which any Company is a party or by
which the property or assets of any Company are bound and (c) no
grievances, disputes, or controversies outstanding with any union or other
organization of the employees of any Company, or threats of work stoppage,
strike, or pending demands for collective bargaining, which, as to
subsections (a) through (c) hereof, would have or would be reasonably
expected to have a Material Adverse Effect.
SECTION 6.5. TITLE TO ASSETS. Each Company has good title to and
ownership of all property it purports to own, which property is free and
clear of all Liens, except those permitted under Section 5.9 hereof.
Schedule 6.5 hereto sets forth all real property owned by each Company as
of the Closing Date.
SECTION 6.6. LIENS AND SECURITY INTERESTS. On and after the Closing
Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there
is no financing statement outstanding covering any personal property of any
Company, other than a financing statement in favor of Agent on behalf of
the Banks, if any; (b) there is no mortgage outstanding covering any real
property of any Company, other than a mortgage in favor of Agent on behalf
of the Banks, if any; and (c) no real or personal property of any Company
is subject to any security interest or Lien of any kind other than any
security interest or Lien which may be granted to Agent on behalf of the
Banks. On and after the Closing Date, no Company has entered into any
contract or agreement which would prohibit Agent or the Banks from
acquiring a security interest, mortgage or other Lien on, or a collateral
assignment of, any of the property or assets of Borrower and/or any of its
Subsidiaries which are not encumbered by Liens permitted under Section 5.9
hereof.
SECTION 6.7. TAX RETURNS. All federal, state and local tax returns
and other reports required by law to be filed in respect of the income,
business, properties and employees of Borrower have been filed and all
taxes, assessments, fees and other governmental charges which are due and
payable have been paid, except as otherwise permitted herein or the failure
to do so does not and will not cause or result in a Material Adverse
Effect. The provision for taxes on the books of Borrower is adequate for
all years not closed by applicable statutes and for the current fiscal
year.
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SECTION 6.8. ENVIRONMENTAL LAWS. Except as set forth on Schedule
6.8 hereto, (a) each Company is in compliance with any and all
Environmental Laws (except where the failure to so comply would have or
would not reasonably be expected to have a Material Adverse Effect),
including, without limitation, all Environmental Laws in all jurisdictions
in which any Company owns or operates, or has owned or operated, a facility
or site, arranges or has arranged for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts or has accepted for
transport any hazardous substances, solid waste or other wastes or holds or
has held any interest in real property or otherwise, and (b) no litigation
or proceeding arising under, relating to or in connection with any
Environmental Law is pending or, to the best of their knowledge, threatened
against any Company, any real property in which any Company holds or has
held an interest or any past or present operation of any Company which, if
adversely decided, would have a Material Adverse Effect. No release,
threatened release or disposal of hazardous waste, solid waste or other
wastes is occurring, or has occurred (other than those that are being
cleaned up in accordance with Environmental Laws), on, under or to any real
property in which any Company holds any interest or performs any of its
operations, in violation of any Environmental Law. As used in this Section,
"litigation or proceeding" means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry whether
brought by any governmental authority, private person or entity or
otherwise.
SECTION 6.9. CONTINUED BUSINESS. Except with respect to the
consolidations and adjustments with respect to the Sonoco Acquisition,
there exists no actual, pending, or, to Borrower's knowledge, any
threatened termination, cancellation or limitation of, or any modification
or change in the business relationship of any Company and any customer or
supplier, or any group of customers or suppliers, whose purchases or
supplies, individually or in the aggregate, are material to the business of
the Companies taken as a whole, and there exists no present condition or
state of facts or circumstances which would have a Material Adverse Effect
on the Companies' ability to conduct such business or the transactions
contemplated by this Agreement in substantially the same manner as
theretofore conducted.
SECTION 6.10. EMPLOYEE BENEFITS PLANS. Schedule 6.10 hereto
identifies each ERISA Plan. No ERISA Event has occurred or is expected to
occur with respect to an ERISA Plan. Full payment has been made of all
amounts which a Controlled Group member is required, under applicable law
or under the governing documents, to have been paid as a contribution to or
a benefit under each ERISA Plan. The liability of each Controlled Group
member with respect to each ERISA Plan has been fully funded based upon
reasonable and proper actuarial assumptions, has been fully insured, or has
been fully reserved for on its financial statements. Except for the
changes resulting from the Sonoco Acquisition, no changes have occurred or
are expected to occur that would cause a material increase in the cost of
providing benefits under the ERISA Plan. With respect to each ERISA Plan
that is intended to be qualified under Code Section 401(a): (a) the ERISA
Plan and any associated trust operationally comply with the applicable
requirements of Code Section 401(a), (b) the ERISA Plan and any associated
trust have been amended to comply with all such requirements as currently
in effect, other than those requirements for which a retroactive amendment
can be made within the "remedial amendment period" available under Code
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Section 401(b) (as extended under Treasury Regulations and other Treasury
pronouncements upon which taxpayers may rely), (c) the ERISA Plan and any
associated trust have received a favorable determination letter, or is in
the process of getting such a letter, from the Internal Revenue Service
stating that the ERISA Plan qualifies under Code Section 401(a), that the
associated trust qualifies under Code Section 501(a) and, if applicable,
that any cash or deferred arrangement under the ERISA Plan qualifies under
Code Section 401(k), unless the ERISA Plan was first adopted at a time for
which the above-described "remedial amendment period" has not yet expired,
(d) the ERISA Plan currently satisfies the requirements of Code Section
410(b), without regard to any retroactive amendment that may be made within
the above-described "remedial amendment period", and (e) no contribution
made to the ERISA Plan is subject to an excise tax under Code Section 4972.
With respect to any Pension Plan, the "accumulated benefit obligation" of
Controlled Group members with respect to the Pension Plan (as determined in
accordance with Statement of Accounting Standards No. 87, "Employers'
Accounting for Pensions") does not exceed the fair market value of Pension
Plan assets. The aggregate potential amount of liability that would result
if all Controlled Group members withdrew from all Multiemployer Plans in a
"complete withdrawal" (within the meaning of ERISA Section 4203) would not
exceed Five Million Dollars ($5,000,0000).
SECTION 6.11. CONSENTS OR APPROVALS. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person is required to be obtained or
completed by Borrower in connection with the execution, delivery or
performance of any of the Loan Documents, which has not already been
obtained or completed.
SECTION 6.12. SOLVENCY. Borrower has received consideration which is
the reasonable equivalent value of the obligations and liabilities that
Borrower has incurred to the Banks. Borrower is not insolvent as defined in
any applicable state or federal statute, nor will Borrower be rendered
insolvent by the execution and delivery of the Loan Documents to Agent and
the Banks. Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it are or will be an
unreasonably small amount of capital, taking into consideration the
obligations to Agent and the Banks incurred hereunder. Borrower does not
intend to, nor does it believe that it will, incur debts beyond its ability
to pay them as they mature.
SECTION 6.13. FINANCIAL STATEMENTS. The audited Consolidated
financial statements of the Companies for the fiscal year ended October 31,
1997 and the interim financial statements of the Companies for the period
ended January 31, 1998, furnished to Agent and the Banks, are true and
complete, have been prepared in accordance with GAAP, and each fairly
presents the Companies' financial condition as of the date thereof and the
results of the Companies' operations for the period then ending. Since the
dates of such statements, there has been no material adverse change in any
Company's financial condition, properties or business nor any change in any
Company's accounting procedures.
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SECTION 6.14. REGULATIONS. Borrower is not engaged principally or as
one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any "margin stock" (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System of the United States of America). Neither the granting of any Loans
(or any conversion thereof) nor the use of the proceeds of the Loans will
violate, or be inconsistent with, the provisions of Regulation U or X of
said Board of Governors.
SECTION 6.15. MATERIAL AGREEMENTS. Except as disclosed on Schedule
6.15 hereto, neither Borrower nor any of its Subsidiaries is a party to any
(a) debt instrument; (b) lease (capital, operating or otherwise), whether
as lessee or lessor thereunder; (c) contract, commitment, agreement, or
other arrangement involving the purchase or sale of any inventory by it, or
the license of any right to or by it; (d) contract, commitment, agreement,
or other arrangement with any of its "Affiliates" (as such term is defined
in the Securities Exchange Act of 1934, as amended); (e) management or
employment contract or contract for personal services with any of its
Affiliates which is not otherwise terminable at will or on less than ninety
(90) days' notice without liability; (f) collective bargaining agreement;
or (g) other contract, agreement, understanding, or arrangement which, as
to subsections (a) through (g), above, if violated, breached, or terminated
for any reason, would have or would be reasonably expected to have a
Material Adverse Effect.
SECTION 6.16. INTELLECTUAL PROPERTY. Each Company owns, possesses,
or has the right to use all the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the
foregoing necessary for the conduct of its business without any known
conflict with the rights of others, except where the failure to do so would
not result in a Material Adverse Effect.
SECTION 6.17. INSURANCE. Each Company maintains with financially
sound and reputable insurers insurance with coverage and limits as required
by law and as is customary with persons engaged in the same businesses as
the Companies.
SECTION 6.18. ACCURATE AND COMPLETE STATEMENTS. Neither the Loan
Documents nor any written statement made by any Company in connection with
any of the Loan Documents contains any untrue statement of a material fact.
After due inquiry by Borrower, there is no known fact which any Company has
not disclosed to Agent and the Banks which would have a Material Adverse
Effect.
SECTION 6.19. DEFAULTS. No Unmatured Event of Default or Event of
Default exists hereunder, nor will any begin to exist immediately after the
execution and delivery hereof.
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ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 7.1. PAYMENTS. If the principal of any Note shall not be
paid in full when due and payable or the interest on any Note or any
facility or other fee shall not be paid in full when due and payable or
within five (5) Business Days thereafter.
SECTION 7.2. SPECIAL COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe Sections 5.7, 5.8, 5.9, 5.11, 5.12 or
5.13 hereof.
SECTION 7.3. OTHER COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe any agreement or other provision (other
than those referred to in Sections 7.1 or 7.2 hereof) contained or referred
to in this Agreement or any Related Writing that is on such Company's or
Obligor's part, as the case may be, to be complied with, and that Unmatured
Event of Default shall not have been fully corrected within thirty (30)
days after the giving of written notice thereof to Borrower by Agent or any
Bank that the specified Unmatured Event of Default is to be remedied.
SECTION 7.4. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company or any
Obligor to the Banks or any thereof or any other holder of any Note, shall
be false or erroneous.
SECTION 7.5. CROSS DEFAULT. If any Company or any Obligor shall
default in the payment of principal or interest due and owing upon any
other obligation for borrowed money in excess of the aggregate, for all
such obligations, of Five Million Dollars ($5,000,000), beyond any period
of grace provided with respect thereto or in the performance or observance
of any other agreement, term or condition contained in any agreement under
which such obligation is created, if the effect of such default is to allow
the acceleration of the maturity of such indebtedness or to permit the
holder thereof to cause such indebtedness to become due prior to its stated
maturity.
SECTION 7.6. ERISA DEFAULT. The occurrence of one or more ERISA
Events which (a) the Majority Banks determine could have a Material Adverse
Effect, or (b) results in a Lien on any of the assets of any Company in
excess, for all such Liens, of Five Hundred Thousand Dollars ($500,000).
SECTION 7.7. CHANGE IN CONTROL. If any Change in Control shall
occur.
SECTION 7.8. MONEY JUDGMENT. A final judgment or order for the
payment of money shall be rendered against any Company or any Obligor by a
court of competent jurisdiction, which remains unpaid or unstayed and
undischarged for a period (during which execution shall not be effectively
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stayed) of thirty (30) days after the date on which the right to appeal has
expired, provided that the aggregate of all such judgments shall exceed
Five Million Dollars ($5,000,000).
SECTION 7.9. VALIDITY OF LOAN DOCUMENTS. (a) Any material
provision, in the reasonable opinion of Agent, of any Loan Document shall
at any time for any reason cease to be valid and binding and enforceable
against Borrower or any Guarantor of Payment; (b) the validity, binding
effect or enforceability of any Loan Document against Borrower or any
Guarantor shall be contested by any Company or any other Obligor; (c)
Borrower or any Guarantor of Payment shall deny that it has any or further
liability or obligation thereunder; or (d) any Loan Document shall be
terminated, invalidated or set aside, or be declared ineffective or
inoperative or in any way cease to give or provide to Agent and the Banks
the benefits purported to be created thereby.
SECTION 7.10. SOLVENCY. If any Company or any Obligor shall
(a) discontinue business (except as specifically permitted pursuant to the
terms of this Agreement), (b) generally not pay its debts as such debts
become due, (c) make a general assignment for the benefit of creditors,
(d) apply for or consent to the appointment of a receiver, a custodian, a
trustee, an interim trustee or liquidator of all or a substantial part of
its assets, (e) be adjudicated a debtor or have entered against it an order
for relief under Title 11 of the United States Code, as the same may be
amended from time to time, (f) file a voluntary petition in bankruptcy or
file a petition or an answer seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law (whether federal or
state) relating to relief of debtors, or admit (by answer, by default or
otherwise) the material allegations of a petition filed against it in any
bankruptcy, reorganization, insolvency or other proceeding (whether federal
or state) relating to relief of debtors, (g) suffer or permit to continue
unstayed and in effect for thirty (30) consecutive days any judgment,
decree or order entered by a court of competent jurisdiction, which
approves a petition seeking its reorganization or appoints a receiver,
custodian, trustee, interim trustee or liquidator of all or a substantial
part of its assets, or (h) take, or omit to take, any action in order
thereby to effect any of the foregoing.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 8.1. OPTIONAL DEFAULTS. If any Event of Default referred to
in Section 7.1, 7.2., 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 or 7.9 hereof shall
occur, the Majority Banks shall have the right in their discretion, by
directing Agent, on behalf of the Banks, to give written notice to
Borrower, to:
(a) terminate the Commitment and the credits hereby established, if
not theretofore terminated, and, immediately upon such election, the
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obligations of Banks, and each thereof, to make any further Loan or Loans
and the obligation of Agent to issue any Letter of Credit hereunder
immediately shall be terminated, and/or
(b) accelerate the maturity of all of the Debt (if it be not already
due and payable), whereupon all of the Debt shall become and thereafter be
immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby
waived by Borrower.
SECTION 8.2. AUTOMATIC DEFAULTS. If any Event of Default referred
to in Section 7.10 hereof shall occur:
(a) all of the Commitment and the credits hereby established shall
automatically and immediately terminate, if not theretofore terminated, and
no Bank thereafter shall be under any obligation to grant any further Loan
or Loans hereunder, nor shall Agent be obligated to issue any Letter of
Credit hereunder, and
(b) the principal of and interest on any Notes then outstanding, and
all of the Debt to the Banks, shall thereupon become and thereafter be
immediately due and payable in full (if it be not already due and payable),
all without any presentment, demand or notice of any kind, which are hereby
waived by Borrower.
SECTION 8.3. LETTERS OF CREDIT. If the maturity of the Notes is
accelerated pursuant to Sections 8.1 or 8.2 hereof, Borrower shall
immediately deposit with Agent, as security for Borrower's and any
Guarantor of Payment's obligations to reimburse Agent and the Banks for any
then outstanding Letters of Credit, cash equal to the sum of the aggregate
undrawn balance of any then outstanding Letters of Credit. Agent and the
Banks are hereby authorized, at their option, to deduct any and all such
amounts from any deposit balances then owing by any Bank to or for the
credit or account of any Company, as security for Borrower's and any
Guarantor of Payment's obligations to reimburse Agent and the Banks for any
then outstanding Letters of Credit.
SECTION 8.4. OFFSETS. If there shall occur or exist any Event of
Default referred to in Section 7.10 hereof or if the maturity of the Notes
is accelerated pursuant to Section 8.1 or 8.2 hereof, each Bank shall have
the right at any time to set off against, and to appropriate and apply
toward the payment of, any and all Debt then owing by Borrower to that Bank
(including, without limitation, any participation purchased or to be
purchased pursuant to Section 8.5 hereof), whether or not the same shall
then have matured, any and all deposit balances and all other indebtedness
then held or owing by that Bank to or for the credit or account of
Borrower, all without notice to or demand upon Borrower or any other
person, all such notices and demands being hereby expressly waived by
Borrower.
SECTION 8.5. EQUALIZATION PROVISION. Each Bank agrees with the
other Banks that if it, at any time, shall obtain any Advantage over the
other Banks or any thereof in respect of the Debt (except under Article III
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hereof), it shall purchase from the other Banks, for cash and at par, such
additional participation in the Debt as shall be necessary to nullify the
Advantage. If any such Advantage resulting in the purchase of an additional
participation as aforesaid shall be recovered in whole or in part from the
Bank receiving the Advantage, each such purchase shall be rescinded, and
the purchase price restored (but without interest unless the Bank receiving
the Advantage is required to pay interest on the Advantage to the person
recovering the Advantage from such Bank) ratably to the extent of the
recovery. Each Bank further agrees with the other Banks that if it at any
time shall receive any payment for or on behalf of Borrower on any
indebtedness owing by Borrower to that Bank by reason of offset of any
deposit or other indebtedness, it will apply such payment first to any and
all indebtedness owing by Borrower to that Bank pursuant to this Agreement
(including, without limitation, any participation purchased or to be
purchased pursuant to this Section or any other Section of this Agreement).
Borrower agrees that any Bank so purchasing a participation from the other
Banks or any thereof pursuant to this Section may exercise all its rights
of payment (including the right of set-off) with respect to such
participation as fully as if such Bank was a direct creditor of Borrower in
the amount of such participation.
ARTICLE IX. THE AGENT
The Banks authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Banks in respect of this
Agreement upon the terms and conditions set forth elsewhere in this
Agreement, and upon the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers hereunder as are delegated to Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. Neither Agent nor any of its directors, officers, attorneys or
employees shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith, except for its or their own
gross negligence or willful misconduct.
SECTION 9.2. NOTE HOLDERS. Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed
with it, signed by such payee and in form satisfactory to Agent.
SECTION 9.3. CONSULTATION WITH COUNSEL. Agent may consult with
legal counsel selected by it and shall not be liable for any action taken
or suffered in good faith by it in accordance with the opinion of such
counsel.
SECTION 9.4. DOCUMENTS. Agent shall not be under any duty to
examine into or pass upon the validity, effectiveness, genuineness or value
of any Loan Documents or any other Related Writing furnished pursuant
hereto or in connection herewith or the value of any collateral obtained
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hereunder, and Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
SECTION 9.5. AGENT AND AFFILIATES. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not Agent, and Agent and its affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with any Company or affiliate thereof.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and
agreed that Agent shall be entitled to assume that no Unmatured Event of
Default or Event of Default has occurred and is continuing, unless Agent
has been notified by a Bank in writing that such Bank believes that an
Unmatured Event of Default or Event of Default has occurred and is
continuing and specifying the nature thereof.
SECTION 9.7. ACTION BY AGENT. So long as Agent shall be entitled,
pursuant to Section 9.6 hereof, to assume that no Unmatured Event of
Default or Event of Default shall have occurred and be continuing, Agent
shall be entitled to use its discretion with respect to exercising or
refraining from exercising any rights which may be vested in it by, or with
respect to taking or refraining from taking any action or actions which it
may be able to take under or in respect of, this Agreement. Agent shall
incur no liability under or in respect of this Agreement by acting upon any
notice, certificate, warranty or other paper or instrument believed by it
to be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be
necessary or desirable in the premises.
SECTION 9.8. NOTICES, DEFAULT, ETC. In the event that Agent shall
have acquired actual knowledge of any Unmatured Event of Default, Agent
shall promptly notify the Banks and shall take such action and assert such
rights under this Agreement as the Majority Banks shall direct and Agent
shall inform the other Banks in writing of the action taken. Agent may take
such action and assert such rights as it deems to be advisable, in its
discretion, for the protection of the interests of the holders of the
Notes.
SECTION 9.9. INDEMNIFICATION OF AGENT. The Banks agree to indemnify
Agent (to the extent not reimbursed by Borrower), ratably according to
their respective Commitment Percentages from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against Agent in its
capacity as agent in any way relating to or arising out of this Agreement
or any Loan Document or any action taken or omitted by Agent with respect
to this Agreement or any Loan Document, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorney
fees) or disbursements resulting from Agent's gross negligence, willful
misconduct or from any action taken or omitted by Agent in any capacity
other than as agent under this Agreement.
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SECTION 9.10. SUCCESSOR AGENT. Agent may resign as agent hereunder
by giving not fewer than thirty (30) days' prior written notice to Borrower
and the Banks. If Agent shall resign under this Agreement, then either (a)
the Majority Banks shall appoint from among the Banks a successor agent for
the Banks (with the consent of Borrower so long as an Event of Default has
not occurred and which consent shall not be unreasonably withheld), or (b)
if a successor agent shall not be so appointed and approved within the
thirty (30) day period following Agent's notice to the Banks of its
resignation, then Agent shall appoint a successor agent who shall serve as
agent until such time as the Majority Banks appoint a successor agent (with
the consent of Borrower so long as an Event of Default has not occurred and
which consent shall not be unreasonably withheld or delayed). Upon its
appointment, such successor agent shall succeed to the rights, powers and
duties as agent, and the term "Agent" shall mean such successor effective
upon its appointment, and the former agent's rights, powers and duties as
agent shall be terminated without any other or further act or deed on the
part of such former agent or any of the parties to this Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any
Company or with respect to the statements contained in any information
memorandum furnished in connection herewith or in any other oral or written
communication between Agent and such Bank. Each Bank represents that it has
made and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in
connection with the extension of credit hereunder, and agrees that Agent
has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect
thereto (other than such notices as may be expressly required to be given
by Agent to the Banks hereunder), whether coming into its possession before
the granting of the first Loans hereunder or at any time or times
thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course
of dealing on the part of Agent, any Bank or the holder of any Note in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy hereunder. The remedies herein provided
are cumulative and in addition to any other rights, powers or privileges
held by operation of law, by contract or otherwise.
SECTION 10.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to
any variance therefrom, shall be effective unless the same shall be in
writing and signed by the Majority Banks and then such waiver or consent
shall be effective only in the specific instance and for the specific
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purpose for which given. Anything herein to the contrary notwithstanding,
unanimous consent of the Banks shall be required with respect to (a) any
increase in the Commitment hereunder, (b) the extension of maturity of the
Notes, the payment date of interest thereunder, or the payment of facility
or other fees or amounts payable hereunder, (c) any reduction in the rate
of interest on the Notes, or in any amount of principal or interest due on
any Note, or the payment of facility or other fees hereunder or any change
in the manner of pro rata application of any payments made by Borrower to
the Banks hereunder, (d) any change in any percentage voting requirement,
voting rights, or the Majority Banks definition in this Agreement, (e) the
release of any Guarantor of Payment, or (f) any amendment to this Section
10.3 or Section 8.5 hereof. Notice of amendments or consents ratified by
the Banks hereunder shall immediately be forwarded by Borrower to all
Banks. Each Bank or other holder of a Note shall be bound by any amendment,
waiver or consent obtained as authorized by this Section, regardless of its
failure to agree thereto.
SECTION 10.4. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to
Borrower, mailed or delivered to it, addressed to it at the address
specified on the signature pages of this Agreement, if to a Bank, mailed or
delivered to it, addressed to the address of such Bank specified on the
signature pages of this Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to each of
the other parties. All notices, statements, requests, demands and other
communications provided for hereunder shall be given by overnight delivery
or first class mail with postage prepaid by registered or certified mail,
addressed as aforesaid, or sent by facsimile with telephonic confirmation
of receipt, except that all notices hereunder shall not be effective until
received.
SECTION 10.5. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on
demand all costs and expenses of Agent, including, but not limited to, (a)
administration and out-of-pocket expenses of Agent in connection with the
administration of the Loan Documents, the collection and disbursement of
all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and
documents to be delivered hereunder, (c) the reasonable fees and
out-of-pocket expenses of special counsel for Agent, with respect thereto
and of local counsel, if any, who may be retained by said special counsel
with respect thereto, and (d) all costs and expenses, including reasonable
attorneys' fees, in connection with the restructuring or enforcement of the
Loan Documents or any Related Writing. Borrower also agrees to pay any
expenses of Agent incurred in connection with the preparation of the Loan
Documents and any Related Writings. In addition, Borrower shall pay any
and all stamp and other taxes and fees payable or determined to be payable
in connection with the execution and delivery of the Loan Documents, and
the other instruments and documents to be delivered hereunder, and agrees
to hold Agent and each Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes or fees.
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SECTION 10.6. INDEMNIFICATION. Borrower agrees to defend, indemnify
and hold harmless Agent and the Banks from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorney fees) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent or any Bank in connection with any investigative,
administrative or judicial proceeding (whether or not such Bank or Agent
shall be designated a party thereto) or any other claim by any Person
relating to or arising out of this Agreement or any actual or proposed use
of proceeds of the Loans hereunder or any activities of any Company or any
Obligor or any of their affiliates; provided that no Bank nor Agent shall
have the right to be indemnified under this Section for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. All obligations provided for in this Section 10.6 shall
survive any termination of this Agreement.
SECTION 10.7. CAPITAL ADEQUACY. To the extent not covered by Article
III hereof, if any Bank shall have determined, after the date hereof, that
the adoption of any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its lending office)
with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Bank's capital (or the capital of its holding company) as a consequence of
its obligations hereunder to a level below that which such Bank (or its
holding company) could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies or the policies
of its holding company with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within fifteen
(15) days after demand by such Bank (with a copy to Agent), Borrower shall
pay to such Bank such additional amount or amounts as shall compensate such
Bank (or its holding company) for such reduction. Each Bank shall
designate a different lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
Failure on the part of any Bank to demand compensation for any reduction in
return on capital with respect to any period shall not constitute a waiver
of such Bank's rights to demand compensation for any reduction in return on
capital in such period or in any other period. The protection of this
Section shall be available to each Bank regardless of any possible
contention of the invalidity or inapplicability of the law, regulation or
other condition which shall have been imposed.
SECTION 10.8. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing
contained in this Agreement and no action taken by Agent or the Banks
pursuant hereto shall be deemed to constitute the Banks a partnership,
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association, joint venture or other entity. No default by any Bank
hereunder shall excuse the other Banks from any obligation under this
Agreement; but no Bank shall have or acquire any additional obligation of
any kind by reason of such default. The relationship among Borrower and the
Banks with respect to the Loan Documents and the Related Writings is and
shall be solely that of debtor and creditors, respectively, and neither
Agent nor any Bank has any fiduciary obligation toward Borrower with
respect to any such documents or the transactions contemplated thereby.
SECTION 10.9. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
SECTION 10.10. BINDING EFFECT; BORROWER'S ASSIGNMENT. This Agreement
shall become effective when it shall have been executed by Borrower, Agent
and by each Bank and thereafter shall be binding upon and inure to the
benefit of Borrower, Agent and each of the Banks and their respective
successors and assigns, except that Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior
written consent of Agent and all of the Banks.
SECTION 10.11. BANK ASSIGNMENTS/PARTICIPATIONS.
A. Assignments of Commitments. Each Bank shall have the right at
any time or times to assign to another financial institution, without
recourse, all or a percentage of all of the following: (a) that Bank's
Commitment, (b) all Loans made by that Bank, (c) that Bank's Notes, and (d)
that Bank's interest in any Letter of Credit and any participation
purchased pursuant to Section 2.1B or 8.5 hereof; provided, however, in
each such case, that the assignor and the assignee shall have complied with
the following requirements:
(i) Prior Consent. No assignment may be consummated pursuant to
this Section 10.11 without the prior written consent of Borrower and
Agent (other than an assignment by any Bank to any affiliate of such
Bank which affiliate is either wholly-owned by such Bank or is wholly-
owned by a Person that wholly owns, either directly or indirectly,
such Bank), which consent of Borrower and Agent shall not be
unreasonably withheld; provided, however, that, Borrower's consent
shall not be required if, at the time of the proposed assignment any
Unmatured Event of Default or Event of Default shall then exist.
Anything herein to the contrary notwithstanding, any Bank may at any
time make a collateral assignment of all or any portion of its rights
under the Loan Documents to a Federal Reserve Bank, and no such
assignment shall release such assigning Bank from its obligations
hereunder;
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(ii) Minimum Amount. Each such assignment shall be in a minimum
amount of the lesser of Ten Million Dollars ($10,000,000) of the
assignor's Commitment or the entire amount of the assignor's
Commitment;
(iii) Assignment Fee; Assignment Agreement. Unless the
assignment shall be to an affiliate of the assignor or the assignment
shall be due to merger of the assignor or for regulatory purposes, the
assignor shall remit to Agent, for its own account, an administrative
fee of Three Thousand Five Hundred Dollars ($3,500). Unless the
assignment shall be due to merger of the assignor or a collateral
assignment for regulatory purposes, the assignor shall (A) cause the
assignee to execute and deliver to Borrower and Agent an Assignment
and Acceptance Agreement, in the form of Exhibit E hereto (an
"Assignment Agreement"), and (B) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such
additional amendments, assurances and other writings as Agent may
reasonably require; and
(iv) Non-U.S. Assignee. If the assignment is to be made to an
assignee which is organized under the laws of any jurisdiction other
than the United States or any state thereof, the assignor Bank shall
cause such assignee, at least five (5) Business Days prior to the
effective date of such assignment, (A) to represent to the assignor
Bank (for the benefit of the assignor Bank, Agent and Borrower) that
under applicable law and treaties no taxes will be required to be
withheld by Agent, Borrower or the assignor with respect to any
payments to be made to such assignee in respect of the Loans
hereunder, (B) to furnish to the assignor (and, in the case of any
assignee registered in the Register (as defined below), Agent and
Borrower) either (1) U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 or (2) United States Internal
Revenue Service Form W-8 or W-9, as applicable (wherein such assignee
claims entitlement to complete exemption from U.S. federal withholding
tax on all interest payments hereunder), and (C) to agree (for the
benefit of the assignor, Agent and Borrower) to provide the assignor
Bank (and, in the case of any assignee registered in the Register,
Agent and Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9,
as applicable, upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable
U.S. laws and regulations and amendments duly executed and completed
by such assignee, and to comply from time to time with all applicable
U.S. laws and regulations with regard to such withholding tax
exemption.
Upon satisfaction of the requirements specified in clauses (i) through
(iv) above, Borrower shall execute and deliver (A) to Agent, the assignor
and the assignee, any consent or release (of all or a portion of the
obligations of the assignor) required to be delivered by Borrower in
connection with the Assignment Agreement, and (B) to the assignee, an
appropriate Note or Notes. After delivery of the new Note or Notes, the
assignor's Note or Notes being replaced shall be returned to Borrower
marked "replaced".
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Upon satisfaction of the requirements of set forth in (i) through
(iv), and any other condition contained in this Section 10.11A, (A) the
assignee shall become and thereafter be deemed to be a "Bank" for the
purposes of this Agreement, (B) in the event that the assignor's entire
interest has been assigned, the assignor shall cease to be and thereafter
shall no longer be deemed to be a "Bank" and (C) the signature pages hereto
and Schedule 1 hereof shall be automatically amended, without further
action, to reflect the result of any such assignment.
Agent shall maintain at its address referred to in Section 10.4 a copy
of each Assignment Agreement delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and Borrower, Agent and the Banks may treat each
financial institution whose name is recorded in the Register as the owner
of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
B. Sale of Participations. Each Bank shall have the right at any
time or times, without the consent of Agent or Borrower, to sell one or
more participations or sub-participations to a financial institution, as
the case may be, in all or any part of (a) that Bank's Commitment, (b) that
Bank's Commitment Percentage, (c) any Loan made by that Bank, (d) any Note
delivered to that Bank pursuant to this Agreement, and (e) that Bank's
interest in any Letter of Credit and any participation, if any, purchased
pursuant to Section 2.1B or 8.5 hereof or this Section 10.11B.
The provisions of Article III and Section 10.7 shall inure to the
benefit of each purchaser of a participation or sub-participation and Agent
shall continue to distribute payments pursuant to this Agreement as if no
participation has been sold.
In the event that any Bank shall sell any participation or sub-
participation, that Bank shall, as between itself and the purchaser, retain
all of its rights (including, without limitation, rights to enforce against
Borrower the Loan Documents and the Related Writings) and duties pursuant
to the Loan Documents and the Related Writings, including, without
limitation, that Bank's right to approve any waiver, consent or amendment
pursuant to Section 10.3, except if and to the extent that any such waiver,
consent or amendment would:
(i) reduce any fee or commission allocated to the participation or
sub-participation, as the case may be,
(ii) reduce the amount of any principal payment on any Loan allocated
to the participation or sub-participation, as the case may be, or
reduce the principal amount of any Loan so allocated or the rate
of interest payable thereon, or
(iii) extend the time for payment of any amount allocated to the
participation or sub-participation, as the case may be.
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No participation or sub-participation shall operate as a delegation of
any duty of the seller thereof. Under no circumstance shall any
participation or sub-participation be deemed a novation in respect of all
or any part of the seller's obligations pursuant to this Agreement.
SECTION 10.12. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. The several captions to Sections and
subsections herein are inserted for convenience only and shall be ignored
in interpreting the provisions of this Agreement.
SECTION 10.13. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrower that it is entering into this Agreement with the
present intention of acquiring any Note issued pursuant hereto for
investment purposes only and not for the purpose of distribution or resale,
it being understood, however, that each Bank shall at all times retain full
control over the disposition of its assets.
SECTION 10.14. ENTIRE AGREEMENT. This Agreement, any Note and any
other Loan Document or other agreement, document or instrument attached
hereto or executed on or as of the date hereof integrate all the terms and
conditions mentioned herein or incidental hereto and supersede all oral
representations and negotiations and prior writings with respect to the
subject matter hereof.
SECTION 10.15. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by
and construed in accordance with the laws of the State of Ohio and the
respective rights and obligations of Borrower and the Banks shall be
governed by Ohio law, without regard to principles of conflict of laws.
Borrower hereby irrevocably submits to the non-exclusive jurisdiction of
any Ohio state or federal court sitting in Cleveland, Ohio, over any action
or proceeding arising out of or relating to this Agreement, any Loan
Document or any Related Writing, and Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such Ohio state or federal court. Borrower, on behalf of
itself and its Subsidiaries, hereby irrevocably waives, to the fullest
extent permitted by law, any objection it may now or hereafter have to the
laying of venue in any action or proceeding in any such court as well as
any right it may now or hereafter have to remove such action or proceeding,
once commenced, to another court on the grounds of FORUM NON CONVENIENS or
otherwise. Borrower agrees that a final, nonappealable judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
SECTION 10.16. LEGAL REPRESENTATION OF PARTIES. The Loan Documents
were negotiated by the parties with the benefit of legal representation and
any rule of construction or interpretation otherwise requiring this
Agreement or any other Loan Document to be construed or interpreted against
any party shall not apply to any construction or interpretation hereof or
thereof.
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SECTION 10.17. JURY TRIAL WAIVER. BORROWER, AGENT AND EACH OF THE
BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND
THE BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED
THERETO.
Address: 425 Winter Road GREIF BROS. CORPORATION
Delaware, Ohio 43015
Attention: Chief Financial Officer By:__________________________
Michael J. Gasser, Chairman
and Chief Executive Officer
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square as Agent and as a Bank
Cleveland, Ohio 44114-1306
Attention: Large Corporate By:__________________________
Banking Division Thomas A. Crandell, Vice
President
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<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING
CREDIT
COMMITMENT COMMITMENT
BANKING INSTITUTIONS PERCENTAGE AMOUNT MAXIMUM AMOUNT
<S> <C> <C> <C>
KeyBank National
Association 100% $325,000,000 $325,000,000
Total Commitment
Amount 100% $325,000,000 $325,000,000
</TABLE>
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<PAGE>
SCHEDULE 2
GUARANTORS OF PAYMENT
GBC Holding Co., a Delaware corporation
Greif Holding, Inc., (f.k.a. KMI Continental Fibre Drum, Inc.), a Delaware
corporation
Greif Fibre Drum, Inc. (f.k.a. Sonoco Fibre Drum, Inc.), a Delaware
corporation
Greif Packaging Services, Inc. (f.k.a. Sonoco Packaging Services, Inc.), a
Delaware corporation
Greif Packaging Systems, LLC (f.k.a. Total Packaging Systems of Georgia,
LLC), a Delaware limited liability company
Greif Plastic Drum, Inc. (f.k.a. Sonoco Plastic Drum, Inc.), an Illinois
corporation
Greif Plastic Drum Southwest Division, Inc. (f.k.a. Sonoco Plastic Drum
Southwest Division,Inc.), a Texas corporation
Greif Plastic Drum Southeast Division, Inc. (f.k.a. Sonoco Plastic Drum
Southeast Division,Inc.), a Kentucky corporation
Michigan Packaging Company, a Delaware corporation
Soterra, Incorporated, a Delaware corporation
Virginia Fibre Corporation, a Virginia corporation
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