SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) NOVEMBER 12, 1996
ATLANTIS PLASTICS, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 1-9487 06-1088270
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation No.)
1870 THE EXCHANGE, SUITE 200, ATLANTA, GEORGIA 30339
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (800) 497-7659
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On November 12, 1996, the Registrant completed the sale of
all of the capital stock of its wholly-owned subsidiary, Plastic
Containers, Inc., an Alabama corporation ("PCI"), to Reid
Plastics, Inc., a California corporation ("Reid"). The following
summary of the transaction is qualified in its entirety by the
more detailed information contained in the copy of the Stock
Purchase Agreement attached as Exhibit 2.1 to this Report. As
used in this Report, the term the "Registrant" refers to Atlantis
Plastics, Inc. and its subsidiaries.
PCI is a manufacturer of blow molded plastic containers.
PCI's assets include primarily its manufacturing facility in
Demopolis, Alabama, the real estate on which the facility is
located, and the associated accounts receivable, inventory, and
property, plant and equipment.
In consideration for the capital stock of PCI, the Registrant
received approximately $7.0 million in cash, after taxes and
expenses. The Registrant anticipates that it will use the
proceeds of the sale to reduce amounts outstanding under the
Registrant's revolving line of credit and for other corporate
purposes. The amount of consideration paid by Reid to the
Registrant for the capital stock of PCI was determined through
arms' length negotiations between representatives of the
Registrant and Reid.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
It is currently impracticable to provide the pro
forma financial information required pursuant to
Article 11 of Regulation S-X prior to the due
date of this Report. This Report will be amended
within 60 days of the date this Report is filed
to include such pro forma financial information.
(c) Exhibits.
Exhibit No. Description
2.1 Stock Purchase Agreement
dated as of October 18, 1996
among Reid Plastics, Inc.,
Atlantis Molded Plastics,
Inc. and Plastic Containers,
Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ATLANTIS PLASTICS, INC.
November 27, 1996
By: /S/ PAUL RUDOVSKY
Paul Rudovsky
Executive Vice President,
Finance and Administration
and Chief Financial Officer
INDEX TO ATTACHMENTS AND EXHIBIT
Exhibit No. Description
2.1 Stock Purchase Agreement dated as of October 18, 1996
among Reid Plastics, Inc., Atlantis Molded Plastics,
Inc. and Plastic Containers, Inc.
Exhibit No. 2.1
STOCK PURCHASE AGREEMENT
FOR THE DISPOSITION
OF
PLASTIC CONTAINERS, INC.
Dated as of October 18, 1996
TABLE OF CONTENTS
Page
ARTICLE I. Definitions
A. Defined Terms . . . . . . . . . . . . . . . 1
B. Other Definitional and Interpretive
Provisions. . . . . . . . . . . . . . . . . 7
ARTICLE II. Certain Closing Transactions; Purchase
Price; Closing
A. Sale and Purchase of Capital Stock . . . . 7
B. Purchase Price. . . . . . . . . . . . . . . 7
C. Payment of Purchase Price; Payment of
Funded Indebtedness . . . . . . . . . . . . 9
D. Closing . . . . . . . . . . . . . . . . . . 10
E. Taxes on Transfer . . . . . . . . . . . . . 10
ARTICLE III. Representations and Warranties of the Purchaser
A. Organization and Standing . . . . . . . . . 10
B. Authority, Enforceability, No
Violation, Etc. . . . . . . . . . . . . . . 11
C. Consents and Approvals. . . . . . . . . . . 11
D. Litigation . . . . . . . . . . . . . . . . 11
E. Brokers . . . . . . . . . . . . . . . . . . 11
F. Investment. . . . . . . . . . . . . . . . . 11
ARTICLE IV. Representations and Warranties of the
Company and the Seller With Respect to the
Company
A. Organization and Standing . . . . . . . . . 12
B. Authority to do Business. . . . . . . . . . 12
C. Charter and Bylaws; Corporate Records . . . 12
D. No Subsidiaries. . . . . . . . . . . . . . 12
E. Capitalization . . . . . . . . . . . . . . 12
F. Rights; Warrants or Options; Dividends. . . 12
G. Financial Statements . . . . . . . . . . . 13
H. Undisclosed Liabilities . . . . . . . . . . 13
I. Tangible Personal Property. . . . . . . . . 13
J. Real Property. . . . . . . . . . . . .. . . 14
K. Insurance . . . . . . . . . . . . . . . . . 14
L. Labor Relations. . . . . . . . . . . . . . 14
M. Permits; Compliance With Law. . . . . . . . 14
N. Litigation . . . . . . . . . . . . . . . . 15
O. List of Accounts. . . . . . . . . . . . . . 15
P. List of Personnel . . . . . . . . . . . . . 15
Q. Employee Benefit Plans; ERISA . . . . . . . 15
R. Tax Matters . . . . . . . . . . . . . . . . 17
S. Environmental Matters . . . . . . . . . . . 18
T. Intellectual Property . . . . . . . . . . . 19
U. Material Contracts . . . . . . . . . . . . 19
V. Transactions With Affiliates. . . . . . . . 19
W. Powers of Attorney . . . . . . . . . . . . 20
X. Inventory. . . . . . . . . . . . . . . . . 20
Y. Accounts Receivable. . . . . . . . . . . . 20
Z. Customers and Suppliers . . . . . . . . . . 20
AA. Product Warranty . . . . . . . . . . . . . 20
AB. Product Liability. .. . . . . . . . . . . . 20
AC. Actions Since June 30, 1996 . . . . . . . . 20
ARTICLE V. Representations and Warranties of the Seller
Regarding Shares and Other Matters
A. Organization and Standing . . . . . . . . . 21
B. Ownership of Shares. . . . . . . . . . . . 21
C. Authority, Enforceability, No
Violation, Etc . . . . . . . . . . . . . . 21
D. Consents and Approvals . . . . . . . . . . 22
E. Litigation. . . . . . . . . . . . . . . . . 22
F. Brokers . . . . . . . . . . . . . . . . . . 22
ARTICLE VI. Pre-Closing Covenants
A. Access to Information . . . . . . . . . . . 22
B. Conduct of Business. . . . . . . . . . . . 23
C. Pre-Closing Activities. . . . . . . . . . . 23
D. Efforts to Consummate . . . . . . . . . . . 24
E. No Shop. . . . . . . . .. . . . . . . . . . 25
F. Notice of Developments. . . . . . . . . . . 25
G. Environmental Testing . . . . . . . . . . . 25
ARTICLE VII. Conditions to Closing
A. Conditions to Purchaser's Obligations. . . 25
B. Conditions to Seller's Obligations . . . . 27
ARTICLE VIII. Additional Agreements
A. Further Assurances . . . . . . . . . . . . 28
B. Publicity. . . . . . . . . . . . . . . . . 28
C. Certain Tax Matters. . . . . . . . . . . . 28
D. [Intentionally Deleted] . . . . . . . . . 29
E. Litigation Support . . . . . . . . . . . . 30
F. Non-Competition. . . . . . . . . . . . . . 30
G. Non-Disclosure . . . . . . . . . . . . . . 30
H. Non-Solicitation of Employees,
Customers and Sales Agents . . . . . . . . 31
I. Termination of Certain Arrangements. . . . 31
ARTICLE IX. Survival; Indemnification
A. Survival of Representations and
Warranties . . . . . . . . . . . . . . . . 31
B. Indemnification . . . . . . . . . . . . . 32
C. Limitation of Recourse . . . . . . . . . . 34
D. Releases. . . . . . . . . . . . . . . . . 34
ARTICLE X. Modification, Waivers and Termination
A. Modification . . . . . . . . . . . . . . . 34
B. Waivers . . . . . . . . . . . . . . . . . 34
C. Termination. . . . . . . . . . . . . . . . 34
D. Effect of Termination. . . . . . . . . . . 35
ARTICLE XI. Miscellaneous
A. Notices . . . . . . . . . . . . . . . . . 35
B. Entire Agreement . . . . . . . . . . . . . 35
C. Benefits; Binding Effect; Assignment . . . 36
D. Waiver . . . . . . . . . . . . . . . . . . 36
E. No Third Party Beneficiary . . . . . . . . 36
F. Severability . . . . . . . . . . . . . . . 36
G. Expenses. . . . . . . . . . . . . . . . . 36
H. Section Headings . . . . . . . . . . . . . 36
I. Counterparts . . . . . . . . . . . . . . . 36
J. Litigation; Prevailing Party . . . . . . . 37
K. Remedies Cumulative. . . . . . . . . . . . 37
L. Governing Law; Waiver of Jury Trial;
Jurisdiction . . . . . . . . . . . . . . . 37
M. Equitable Remedies . . . . . . . . . . . . 37
N. Construction . . . . . . . . . . . . . . . 38
EXHIBITS AND SCHEDULES
Exhibit A - Opinion of Seller's Counsel . . . . . . . . . .A-1
Exhibit B - Deposit Escrow Agreement. . . . . . . . . . . .B-1
Exhibit C - Indemnity Escrow. . . . . . . . . . . . . . . .C-1
SCHEDULE 4.6 - Rights; Warrants or Options; Dividends
SCHEDULE 4.7 - Financial Statements
SCHEDULE 4.8 - Undisclosed Liabilities
SCHEDULE 4.9 - Title to Personal Property
SCHEDULE 4.10 - Real Property
SCHEDULE 4.11 - Insurance
SCHEDULE 4.12 - Labor Relations
SCHEDULE 4.13 - Permits; Compliance With Law
SCHEDULE 4.14 - Litigation
SCHEDULE 4.15 - List of Accounts
SCHEDULE 4.16 - List of Personnel
SCHEDULE 4.17 - Employee Benefit Plans; ERISA
SCHEDULE 4.18 - Tax Matters
SCHEDULE 4.19 - Environmental Matters
SCHEDULE 4.20 - Intellectual Property
SCHEDULE 4.21 - Material Contracts
SCHEDULE 4.22 - Transactions With Affiliates
SCHEDULE 4.23 - Powers of Attorney
SCHEDULE 4.26 - Customers and Suppliers
SCHEDULE 4.29 - Actions Since June 30, 1996
STOCK PURCHASE AGREEMENT
This Agreement is made and entered into as of October
18, 1996, by and among Reid Plastics, Inc., a California
corporation (the "Purchaser"), Atlantis Molded Plastics, Inc., a
Florida corporation (the "Seller"), and Plastic Containers, Inc.,
an Alabama corporation (the "Company").
Preliminary Statements:
a) The Company is a manufacturer of blow-molded plastic
containers used for the packaging of dairy, water, juice and
industrial products, with its principal place of business in
Demopolis, Alabama.
b) All of the issued and outstanding shares of capital
stock of the Company are owned by the Seller.
c) The Purchaser desires to purchase and the Seller
desires to sell all of the outstanding shares of capital stock of
the Company on the terms and subject to the conditions set forth
in this Agreement.
Agreement:
In consideration of the premises and the respective mutual
agreements, covenants, representations and warranties herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
A. Defined Terms. In addition to terms defined elsewhere
in this Agreement, the following terms when utilized in this
Agreement, unless the context otherwise requires, shall have the
meanings indicated, which meanings shall be equally applicable to
both the singular and plural forms of such terms:
"Accounts Receivable" means all accounts, instruments,
drafts, acceptances and other forms of receivables relating to
the Company's business, and all rights earned under the Company's
contracts to sell goods or render services.
"Adverse Consequences" means all damages (including
punitive, consequential and treble damages), costs, liabilities,
penalties, obligations, losses, expenses, and fees (including
court costs and reasonable attorneys' fees and expenses),
including, as the context may require, any of the foregoing which
arise out of or in connection with any actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees or
rulings.
"Affiliate" with respect to any Person means any Person
(a "Controlling Person") which, directly or indirectly, through
one or more intermediaries, controls the subject Person or any
Person which is controlled by or is under common control with a
Controlling Person. For purposes of this definition, "control"
(including the correlative terms "controlling", "controlled by"
and "under common control with"), with respect to any Person,
means possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by
contract or otherwise.
"Affiliated Group" means any affiliated group within
the meaning of Section 1504 of the Code.
"Agreement" means this Stock Purchase Agreement
together with all exhibits and schedules contemplated hereby.
"Authority" means any federal, state, local or foreign
governmental, regulatory or administrative agency, commission,
bureau, authority, court or arbitration tribunal, or any Person
lawfully empowered by any of the foregoing to enforce or seek
compliance with any law.
"CERCLA" is defined in Section IV.S.4 of this
Agreement.
"Charter" and "bylaws", respectively mean, with respect
to any corporation, those instruments that, among other things,
(i) define its existence, as filed or recorded with the
applicable Authority, including, without limitation, such
corporation's Articles or Certificate of Incorporation,
Organization or Association, and (ii) otherwise govern its
internal affairs, in each case as amended, supplemented, or
restated
"Closing" is defined in Section 2.4 of this Agreement.
"Closing Date" is defined in Section 2.4 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Common Stock" means the Common Stock of the Company,
par value $1.00 per share.
"Company" is defined in the Preliminary Statements to
this Agreement.
"Company Financial Statements" is defined in Section
4.7.1 this Agreement.
"Company Interim Financial Statements" is defined in
Section 4.7.1 this Agreement.
"Company 1995 Financial Statements" is defined in
Section 4.7.1 this Agreement.
"Confidential Information" means any data or other
information pertaining to the financial condition, results of
operations, business or products of the Company, including,
without limitation, customer lists, policies, techniques and
know-how, and other facts relating to sales, advertising,
promotions, financial matters, customers and prospective
customers, suppliers and agents; provided, however, that
Confidential Information does not include information that is or
becomes generally available to the public other than as a result
of a wrongful disclosure by the Seller or any of its Affiliates
or their respective employees, agents or representatives.
"Controlled Group of Corporations" has the meaning set
forth in Section 1563 of the Code.
"Employee Benefit Plan" means any (a) nonqualified
deferred compensation or retirement plan or arrangement which is
an Employee Pension Benefit Plan, (b) qualified defined
contribution retirement plan or arrangement which is an Employee
Pension Benefit Plan, (c) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit
Plan, or (e) any other material employment, retirement, stock,
unemployment, vacation, bonus or other benefit plan or
arrangement, whether written or oral.
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Section 3(1).
"Environmental Claim" means any written notice or claim
by any Person or any Authority alleging potential liability
(including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (a) the
presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or
leased by the Company, or (b) any violation, or alleged
violation, of any Environmental Health and Safety Law.
"Environmental Health and Safety Law" means all Laws of
federal, state, local and foreign Authorities concerning
pollution or protection of the environment, public health and
safety or employee health and safety, including Laws relating to
emissions, discharges, releases or threatened releases of
Materials of Environmental Concern into ambient air, surface
water, ground water or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental
Concern, including CERCLA, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic
Substances Control Act of 1976, as amended, the Federal Water
Pollution Control Act Amendments of 1972, the Clean Air Act, the
Clean Water Act, as amended, any so-called "Superfund" law, any
so-called "Right To Know" law, and any other similar federal,
state or local Law.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated
thereunder.
"Financial Statements" is defined in Section 4.7 of
this Agreement.
"Funded Indebtedness" means the aggregate amount
(including the current portions thereof) of all (i) indebtedness
for money borrowed from others and purchase money indebtedness
(other than accounts payable in the ordinary course) of the
Company, (ii) indebtedness of the type described in clause (i)
above guaranteed, directly or indirectly, in any manner by the
Company, or in effect guaranteed, directly or indirectly, in any
manner by the Company, through an agreement, contingent or
otherwise, to supply funds to, or in any other manner invest in,
the debtor, or to purchase indebtedness, or to purchase and pay
for property if not delivered or pay for services if not
performed, primarily for the purpose of enabling the debtor to
make payment of the indebtedness or to assure the owners of the
indebtedness against loss, but excluding endorsements of checks
and other instruments in the ordinary course, (iii) indebtedness
of the type described in clause (i) above secured by any Lien
upon property owned by the Company, even though the Company has
not in any manner become liable for the payment of such
indebtedness, and interest expense accrued but unpaid, and all
prepayment premiums, on or relating to any of such indebtedness,
(iv) capitalized lease obligations of the Company, and (v) all
prepayment premiums and penalties, and any other fees, expenses,
indemnities and other amounts payable as a result of the
prepayment and/or discharge of any Funded Indebtedness.
"GAAP" means United States generally accepted
accounting principles consistently applied with the Company's
past practices.
"Income Tax" means any federal, state, local or foreign
Tax based on, measured by or with respect to income, net worth or
capital, including any interest, penalty or addition thereto.
"Indemnified Party" is defined in Section 9.2.4 of this
Agreement.
"Indemnifying Party" is defined in Section 9.2.4 of
this Agreement.
"Intellectual Property" is defined in Section 4.20 of
this Agreement.
"Intellectual Property Licenses" is defined in Section
4.20 of this Agreement.
"IRS" means the Internal Revenue Service.
"Inventory" means all of the Company's inventories,
including without limitation, raw materials, work in progress,
finished goods, spare parts, supplies, packaging goods and other
like items.
"Knowledge", (a) when applied to the Seller means the
actual knowledge of Anthony F. Bova, Paul Rudovsky, Peter Kacer,
Bob Coleman, Robert Stone or Joe Bradley after reasonable
investigation with respect to the subject matter of the relevant
representation, and (b) when applied to the Purchaser means the
actual knowledge of the executive officers of the Purchaser after
reasonable investigation with respect to the subject matter of
the relevant representation.
"Law" means any law, statute, rule or regulation, and
any judgment or order of any Authority.
"Lien" means any lien, charge, claim, restriction,
encumbrance, security interest or pledge of any kind whatsoever.
"Listed Intellectual Property" is defined in Section
4.20 of this Agreement.
"Material Adverse Effect" means any circumstances,
developments or matters whose effect on the Company's business,
assets, properties, results of operations or financial condition
is or would reasonably expected to be materially adverse.
"Material Contract" means any contract or agreement
whether written or oral (including any and all amendments
thereto) to which the Company is a party, or by which the Company
or any of its assets is bound, and which (a) relates to Funded
Indebtedness or is a letter of credit, pledge, bond or similar
arrangement running to the account of or for the benefit of the
Company, (b) relates to the purchase, maintenance or acquisition,
or sale or furnishing of materials, supplies, merchandise,
machinery, equipment, parts or any other property or services
(excluding any such contract made in the ordinary course of the
Company's business and which is expected to be fully performed
within 90 days of the date hereof or which involves revenues or
expenditures of less than $25,000), (c) is a collective
bargaining agreement, (d) obligates the Company not to compete
with any business, or to conduct any business with only certain
parties, or which otherwise restrains or prevents the Company
from carrying on any lawful business or which restricts the right
of the Company to use or disclose any information in its
possession (excluding customary restrictive covenants contained
in agreements identified pursuant to clause (a) above), (e)
relates to (i) employment, compensation, severance, or consulting
between the Company and any of its officers or directors, or (ii)
other employees or consultants who are entitled to compensation
thereunder in excess of $25,000 per annum, including any
collective bargaining agreement, (f) is a lease or sublease of
real property (or otherwise grants to any party the right to use,
occupy or purchase any of the Company's property), or a lease,
sublease or other title retention agreement or conditional sales
agreement involving annual payments in excess of $25,000
individually or $50,000 in the aggregate for any machinery,
equipment, vehicle or other tangible personal property (whether
the Company is a lessor or lessee), (g) is a contract for capital
expenditures or the acquisition or construction of fixed assets
for or in respect of any real property involving payments in
excess of $25,000, (h) is a contract granting any Person a Lien
on any of the assets of the Company, in whole or in part (other
than Permitted Liens), (i) is a contract by which the Company
retains any manufacturer's representatives, broker or other sales
agent, distributor or representative, or advertising or marketing
entity or through which the Company is appointed or authorized as
a sales agent, distributor or representative, (j) is a contract
under which the Company has granted or received a license or
sublicense or under which the Company is obligated to pay or has
the right to receive a royalty, license fee or similar payment
(other than software licenses for purchased software), (k) is a
joint venture or partnership contract or a limited liability
company operating agreement, (l) is (i) an agreement for the
storage, transportation, treatment and disposal of any materials
subject to regulation under any Environmental Health and Safety
Laws, or (ii) a contract for storage, transportation or similar
services with carriers or warehousemen (excluding any such
contract entered into in the ordinary course and involving
aggregate annual expenditures not exceeding $50,000), (m) is an
agreement or arrangement with the Seller or any Affiliate of the
Seller, (n) other than the insurance policies and binders set
forth on Schedule 4.11, is otherwise material to the assets,
business, operations or financial condition of the Company, or
(o) is otherwise not in the ordinary course of the Company's
business and involves or could reasonably be expected to involve
over $10,000 of payments, excluding contracts or agreements
terminable without penalty on 30 days' or less notice.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products in each case with
respect to which liability or standards of conduct are imposed
pursuant to any Environmental Laws.
"Most Recent Balance Sheet" is defined in Section
4.7.1 this Agreement.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"Opinion of Seller's Counsel" means the opinion of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
counsel to the Seller, dated as of the Closing Date, addressed to
the Purchaser, in form and substance substantially as set forth
in Exhibit A hereto.
"Other Taxes" means all Taxes other than Income Taxes.
"Permits" means all material licenses, franchises,
permits, orders, approvals, registrations, authorizations,
qualification filings with all Authorities required in connection
with the operation of the business of the Company and the
ownership of the company's assets.
"Permitted Liens" means (a) Encumbrances set forth on
Schedules 4.9 or 4.10, (b) Liens for taxes that are either
(i) not yet due and payable, or (ii) are fully reserved and are
being contested in good faith by appropriate proceedings,
(c) with respect to real property, easements, covenants,
conditions and restrictions of record, (d) with respect to real
property, any zoning or other governmentally established
restrictions or encumbrances, (e) workers or unemployment
compensation Liens arising in the ordinary course of business,
(f) mechanic's, materialman's, supplier's, vendor's or similar
Liens arising in the ordinary course of business securing amounts
which are not delinquent, (g) railroad trackage agreements,
utility, slope and drainage easements, right-of-way easements and
leases regarding signs, none of which impairs in any material
respect the use or operation of the property as it is presently
being used or operated, and (h) other immaterial imperfections of
title, easements, covenants, conditions, restrictions or
Encumbrances.
"Person" means any natural person, corporation, limited
liability company, unincorporated organization, partnership,
association, joint-stock company, joint venture, trust or govern-
ment, or any agency or political subdivision of any government.
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Pre-Closing Tax Period" means any tax period
(including partial periods) that ends on or prior to the Closing
Date.
"Purchase Price" is defined in Section 2.2 of this
Agreement.
"Purchaser" is defined in the preamble of this
Agreement.
"Real Property" is defined in Section 4.10.1 of this
Agreement.
"Restriction Period" is defined in Section 8.6 of this
Agreement.
"Return" means any return, declaration (including any
declaration of estimated Taxes), report, claim for refund, or
information return or statement relating to Taxes with respect to
any income, assets or properties of the Company, including any
schedule or attachment thereto.
"Seller(s)" is defined in the preamble of this
Agreement.
"Shares" means all of the shares of Common Stock shown
opposite the Seller's name on Exhibit A hereto.
"Specified Parent Debt" means the Funded Indebtedness
arising under (i) that certain Credit Agreement, dated as of
February 22, 1993, between Atlantis Plastics, Inc. and Heller
Financial, Inc., as amended (the "Heller Agreement"), and
(ii) that certain Indenture, dated as of February 22, 1993 (the
"Indenture"), between Atlantis Plastics, Inc. and American Stock
Transfer & Trust Company, as trustee, true and correct copies of
which have been heretofore delivered to Purchaser.
"Taxes" means all federal, state, local and foreign
taxes (including, without limitation, income or profits taxes,
premium taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, ad valorem taxes, severance
taxes, capital levy taxes, transfer taxes, value added taxes,
employment and payroll-related taxes, property taxes, business
license taxes, occupation taxes, import duties and other
governmental charges and assessments), of any kind whatsoever,
including interest, additions to tax and penalties with respect
thereto.
"Third Party Claim" is defined in Section IX.B.4 of
this Agreement.
"Working Capital" means the excess, if any, of (a) the
Company's total current assets, over (b) the Company's total
current liabilities, in each case computed in accordance with
GAAP and after giving effect to the Company's (and/or the
Seller's) retirement of the Company's Funded Indebtedness,
provided that such determination will reflect all reserves,
accruals and adjustments required by GAAP to be and/or
customarily reflected in year-end financial statements.
B. Other Definitional and Interpretive Provisions. The
words "hereof", "herein", "hereunder" and "hereto" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
ARTICLE II
CERTAIN CLOSING TRANSACTIONS; PURCHASE PRICE; CLOSING
A. Sale and Purchase of Capital Stock. On the Closing
Date, and subject to the terms and conditions of this Agreement,
the Seller shall sell, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase and accept delivery
of all of the Seller's Shares, for a purchase price determined as
provided in Section II.B hereof.
B. Purchase Price.
1. a. The aggregate purchase price (the
"Purchase Price") to be paid by the Purchaser to the Seller for
the Shares and the covenants set forth in Sections 8.6, 8.7 and
8.8 hereof shall be an amount equal to the sum of (A) Seven
Million Five Hundred Thousand Dollars ($7,500,000), plus (B) the
excess, if any, of the Company's Working Capital as of the
Closing Date over $1,654,000, minus (C) the excess, if any, of
$1,654,000 over the Company's Working Capital as of the Closing
Date, minus (D) the amount of any of the Company's Funded
Indebtedness outstanding as of the Closing Date (other than the
Specified Parent Debt) and not otherwise to be satisfied with
Purchase Price proceeds, plus (E) if and only if the Closing Date
is subsequent to November 14, 1996, the additional sum of Three
Hundred Thousand Dollars ($300,000).
b. Not later than three (3) business days
prior to the Closing Date, Seller will prepare and deliver to
Purchaser a reasonably detailed calculation of the "Estimated
Purchase Price" (as hereinafter defined). For purposes hereof,
"Estimated Purchase Price" shall mean Seller's reasonable and
good faith determination of the Purchase Price, calculated in
accordance with Section II.B.1.a hereof, but assuming that the
Closing Date is October 31, 1996 (except that the additional
amount contemplated by clause (E) of Section II.B.1.a hereof
shall be included if the Closing Date is reasonably expected to
be subsequent to November 14, 1996). Seller will afford to
Purchaser the reasonable opportunity to review, discuss and make
objections to the Seller's calculation of the Estimated Purchase
Price in advance of Seller's final determination thereof (it
being agreed that Seller shall have no obligation to make any
modification requested by Purchaser).
2. a. As soon as practical (and in no event
later than 90 days after the Closing Date), Seller shall cause to
be prepared and delivered to Purchaser (i) a balance sheet for
the Company dated as of the Closing Date (the "Closing Date
Balance Sheet"), (ii) a calculation of the Company's Working
Capital as of the Closing Date, together with a calculation of
any amount required to be added or subtracted pursuant to clause
(B), (C) or (D) of Section II.B.1.a hereof (the "Purchase Price
Adjustment"), and (iii) a customary audit report of Coopers &
Lybrand, who shall be engaged jointly by Purchaser and Seller,
with respect to the Closing Date Balance Sheet. The Company will
conduct a physical count of inventory as of the Closing, at which
representatives of Seller, Purchaser and Coopers & Lybrand may be
present. The results of such physical inventory will be used in
connection with the preparation of the Closing Date Balance
Sheet. The Company will provide reasonable cooperation to Seller
in connection with the preparation of the Closing Date Balance
Sheet, including furnishing of personnel at no cost to Seller.
The expenses of Coopers & Lybrand in connection with auditing the
Closing Date Balance Sheet shall be shared equally by Seller and
Purchaser.
b. The following clauses (i) and (ii) set
forth the procedures for resolving disputes among the parties
with respect to the determination of the Purchase Price
Adjustment:
(1) Within sixty (60) days after delivery
to the Purchaser of Seller's calculation of the Purchase Price
Adjustment, Purchaser may deliver to Seller a written report (a
"Purchaser Report") prepared by the Purchaser advising Seller
either that the Purchaser (A) agrees with the Seller's
calculations of the Purchase Price Adjustment, or (B) deems that
one or more adjustments are required. If Seller shall concur
with the adjustments proposed by the Purchaser, or if Seller
shall not object thereto in a writing delivered to the Purchaser
within sixty (60) days after Seller's receipt of a Purchaser
Report, the calculations of the Purchase Price Adjustment set
forth in such Purchaser Report shall become final and shall not
be subject to further review, challenge or adjustment absent
fraud. If the Purchaser does not submit a Purchaser Report
within the 60-day period provided herein, then the Purchase Price
Adjustment as calculated by Seller shall become final and shall
not be subject to further review, challenge or adjustment absent
fraud.
(2) In the event that the Purchaser
submits a Purchaser Report and Seller and the Purchaser are
unable to resolve the disagreements set forth in such report
within sixty (60) days after the date of the Purchaser Report,
then such disagreements shall be referred to a recognized firm of
independent certified public accountants experienced in auditing
manufacturing companies and selected by mutual agreement of the
Purchaser and Seller (the "Settlement Accountants"), and the
determination of the Settlement Accountants shall be final and
shall not be subject to further review, challenge or adjustment
absent fraud. The Settlement Accountants shall use their best
efforts to reach a determination not more than forty-five (45)
days after such referral. The costs and expenses of the services
of the Settlement Accountants shall be paid by the Purchaser if
(A) the difference between (i) the Purchase Price Adjustment
resulting from the determinations of the Settlement Accountants,
and (ii) the Purchase Price Adjustment proposed in the Purchaser
Report, is greater than (B) the difference between (i) the
Purchase Price Adjustment resulting from the determinations of
the Settlement Accountants, and (ii) the Purchase Price
Adjustment as calculated by Seller and set forth in the initial
notice delivery pursuant to Section 2.2(a) hereof; otherwise,
such costs and expenses of the Settlement Accountants shall be
paid by Seller.
c. Promptly after the final determination of the
Purchase Price Adjustment, the difference between the Purchase
Price and the Estimated Purchase Price shall be (i) paid by
Seller to Purchaser (if the Purchase Price is less than the
Estimated Purchase Price), or (ii) paid by Purchaser to Seller
(if the Purchase Price is more than the Estimated Purchase
Price), as applicable; provided, however, that nothing herein
shall require Purchaser to pay to Seller the component of the
Purchase Price included in the "Indemnity Escrow Deposit"
contemplated by Section II.C.1(b) hereof.
C. Payment of Purchase Price; Payment of Funded
Indebtedness
1. a. Contemporaneously herewith, each of
Purchaser, Seller and Greenberg, Traurig, Hoffman, Lipoff, Rosen
& Quentel, P.A. (the "Escrow Agent") are executing the Deposit
Escrow Agreement attached hereto as Exhibit B (the "Deposit
Escrow Agreement"), pursuant to which the Purchaser is
contemporaneously delivering to the Escrow Agent the sum of Three
Hundred Thousand Dollars ($300,000) (together with any earnings
thereon, the "Deposit"). The Deposit shall be disbursed as
follows:
(1) At Closing, Purchaser and Seller shall
jointly instruct the Escrow Agent to deliver the Deposit to
Seller in partial payment of the Estimated Purchase Price.
(2) The Escrow Agent shall deliver the
Deposit to the Seller on December 2, 1996 if the Closing has not
occurred prior to such date for any reason whatsoever other than
a "Specified Seller Default" (as hereinafter defined).
(3) Purchaser shall be entitled to receive
the Deposit if and only if the conditions to Purchaser's Closing
obligations set forth in Section 7.1 hereof shall have been
satisfied on or prior to November 14, 1996, assuming Purchaser's
reasonable good faith cooperation (a "Specified Seller Default").
b. On the Closing Date the Purchaser shall
(1) pay to the Seller by wire transfer of immediately available
funds, to an account or accounts designated in writing by the
Seller at least two business days prior to the Closing Date, an
amount equal to the remainder of (x) the Estimated Purchase Price
less (y) the amount of the Deposit delivered to Seller by the
Escrow Agent pursuant to the Deposit Escrow Agreement, less
(z) $250,000, and (2) deliver to the Escrow Agent the sum of Two
Hundred Fifty Thousand Dollars ($250,000) (the "Indemnity Escrow
Deposit") in immediately available funds, which amount shall be
held by the Escrow Agent pursuant to the terms and conditions of
the Indemnity Escrow Agreement attached hereto as Exhibit C (the
"Indemnity Escrow Agreement"). The Seller may, by written
notice, direct the Purchaser to deliver a portion of the Purchase
Price to certain third parties for fees, expenses, costs or other
obligations arising out of or in connection with the transactions
contemplated in this Agreement.
2. On the Closing Date, the Seller and/or the
Company (as determined by the Seller) shall deliver to the
holders of Funded Indebtedness (other than the Specified Parent
Debt) an amount sufficient to repay all such Funded Indebtedness
outstanding immediately prior to the Closing, with the result
that immediately following the Closing there will be no further
monetary obligations of the Company with respect to any Funded
Indebtedness outstanding immediately prior to the Closing. On or
prior to the Closing Date, the Seller will provide the Purchaser
with customary pay-off letters from all holders of Funded
Indebtedness (other than indebtedness under the Specified Parent
Debt) outstanding immediately prior to the Closing, and make
arrangements reasonably satisfactory to the Purchaser for such
holders to provide to the Purchaser recordable form mortgage and
lien releases, canceled notes, trademark and patent assignments
and other documents reasonably requested by the Purchaser
simultaneously with or promptly following the Closing. Seller
shall apply the Purchase Price proceeds as required under the
Indenture and take all other action necessary to ensure that
neither the Company nor the Purchaser will, subsequent to
Closing, have any liability or obligation in connection with the
Indenture or with respect to any other Specified Parent Debt.
D. Closing. Subject to the fulfillment or waiver of the
conditions precedent set forth in Article 7 hereof, the closing
of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Mayer, Brown &
Platt, 350 South Grand Avenue, 25th Floor, Los Angeles,
California 90071-1503 at 10:00 a.m. (local time) on November 14,
1996 or, if the conditions set forth in Article 7 have not been
satisfied or waived on such date, on such other date as may be
mutually agreed upon by the parties, which date shall be no later
than the fifth day after all of the conditions set forth in
Article 7 have been satisfied or waived (other than those
conditions which by their terms are intended to be satisfied at
the Closing). The date upon which the Closing occurs is
hereinafter referred to as the "Closing Date." Except as
otherwise provided herein, all proceedings to be taken and all
documents to be executed at the Closing shall be deemed to have
been taken, delivered and executed simultaneously, and no
proceeding shall be deemed taken nor documents deemed executed or
delivered until all have been taken, delivered and executed. At
the Closing, in consideration of the Purchaser's delivery of the
Purchase Price pursuant to Section 2.3 hereof, the Seller shall
deliver to the Company a certificate or certificates representing
the Shares, duly endorsed in blank for transfer or accompanied by
stock powers duly executed in blank, sufficient in form and
substance to convey to the Purchaser good title to all of the
Shares, free and clear of all Liens.
E. Taxes on Transfer. The Purchaser shall pay all state
and/or federal transfer taxes and governmental charges (excluding
income Taxes) attributable to the physical transfer of the Shares
to the Purchaser pursuant to this Agreement. Notwithstanding
anything in this Section II.E to the contrary, any Tax assessed
against the value of real property owned by the Company for a
taxable period that includes the Closing Date shall be paid by
Seller to the Company after Closing, for payment by the Company
to the applicable taxing authority, to the extent of the amount
determined by multiplying the amount of such Tax for the entire
taxable period by a fraction, the numerator of which is the
number of days in such taxable period up to and including the
Closing Date, and the denominator of which is the total number of
days in such taxable period; provided, however, that any amount
otherwise payable pursuant to this sentence shall be reduced to
the extent of any reserve established for real property taxes
that is reflected in the Closing Date Balance Sheet and
calculation of Working Capital.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
In order to induce the Seller to enter into this Agreement
and to consummate the transactions contemplated hereby, the
Purchaser hereby represents and warrants to the Seller as
follows:
A. Organization and Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation. The Purchaser
has all requisite corporate right, power and authority to enter
into this Agreement and to consummate the transactions
contemplated hereby. Copies of the Charter and bylaws of the
Purchaser and all amendments thereto as in effect on the date
hereof have been delivered to the Seller and are complete and
correct as of the date hereof.
B. Authority, Enforceability, No Violation, Etc. The
Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement and the other agreements,
instruments, certificates and documents to be executed and
delivered by it in connection with the Closing (each a "Document"
and, collectively, the "Documents") to which it is a party, to
perform its obligations under each such Document, and to
consummate the transactions contemplated by each such Document.
The execution, delivery and performance by the Purchaser of each
Document to which it is a party and the consummation of the
transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action on the part of the
Purchaser. Each Document to which the Purchaser is a party is,
or upon its execution and delivery will be, a valid and binding
obligation of the Purchaser, enforceable against it in accordance
with the terms thereof. Neither the execution, delivery or
performance by the Purchaser of any Document to which it is a
party, nor the consummation by the Purchaser of the transactions
contemplated thereby, nor compliance by the Purchaser with any of
the provisions thereof will (i) conflict with or result in a
breach of any provision of the Purchaser's Charter or bylaws,
(ii) violate any law, statute, rule or regulation or judgment,
order, writ, injunction or decree of any Authority, in each case
applicable to the Purchaser or its assets or properties, or
(iii) with or without the passage of time or the giving of notice
or both, result in the breach of, or constitute a default or
require any consent under, or result in the creation of any Lien
upon any property or assets of the Purchaser pursuant to, any
instrument or agreement to which the Purchaser is a party or by
which the Purchaser or its properties may be bound or affected
except in each case for conflicts, violations and breaches that
would not have a material adverse effect on the Purchaser's
ability to perform its obligations under this Agreement.
C. Consents and Approvals. No filing with, and no permit,
authorization, consent or approval of any Authority or any other
Person is necessary for the consummation by the Purchaser of the
transactions contemplated by the Documents, except where the
absence of such filing, permit, authorization, consent or
approval would not have a material adverse effect on the
Purchaser's ability to perform its obligations under this
Agreement.
D. Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Purchaser,
threatened against or involving the Purchaser or any of its
assets or properties by or before any Authority that question the
validity of this Agreement or seek to prohibit, enjoin or
otherwise challenge the consummation of the transactions
contemplated hereby. There are no outstanding orders, judgments,
injunctions, stipulations, awards or decrees of any Authority
against the Purchaser or any of its assets or properties which
prohibit or enjoin the consummation of the transactions
contemplated hereby.
E. Brokers. The Purchaser has not employed any broker or
finder and has not incurred and will not incur any broker's,
finder's or similar fees, commissions or expenses payable by the
Purchaser in connection with the transactions contemplated by
this Agreement.
F. Investment. The Purchaser acknowledges that the Shares
have not been registered under the Securities Act of 1933, as
amended, or under the securities laws of any state or other
jurisdiction. The Purchaser is acquiring the Shares solely for
the Purchaser's own account and not with a view to, or for resale
in connection with, any distribution prohibited by the Securities
Act of 1933, as amended, or the securities laws of any applicable
state or other jurisdiction. The Purchaser agrees not to resell
or offer to resell the Shares except in compliance with the
Securities Act of 1933, as amended, and other applicable
securities laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLER WITH RESPECT TO THE COMPANY
In order to induce the Purchaser to enter into this
Agreement, and to consummate the transactions contemplated
hereby, each of the Company and the Seller represents and
warrants to the Purchaser as follows.
A. Organization and Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation.
B. Authority to do Business. The Company has all
requisite corporate power and authority to own, lease and operate
its properties and to conduct its business in the manner where
now conducted. The Company is not required to be qualified to do
business as a foreign corporation in any jurisdiction where the
failure to be so qualified would have a Material Adverse Effect.
C. Charter and Bylaws; Corporate Records. Copies of the
Charter and bylaws of the Company and all amendments thereto as
in effect on the date hereof have been delivered to the Purchaser
and are complete and correct as of the date hereof. The
corporate minutes and stock records of the Company have been made
available to the Purchaser and are complete and correct as of the
date hereof.
D. No Subsidiaries. The Company has no direct or indirect
equity interest by stock ownership or otherwise in any other
corporation, partnership, joint venture, firm, association or
business enterprise.
E. Capitalization. The Company's authorized capital stock
consists solely of 1,000 shares of Common Stock, of which 1,000
shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company (x) are duly
authorized, validly issued, fully paid and nonassessable, (y) are
held of record by the Seller, and (z) were not issued in
violation of the preemptive rights of any person or any agreement
or Law by which the Company at the time of issuance was bound. No
shares of Common Stock are held by the Company in its treasury.
F. Rights; Warrants or Options; Dividends. Except as set
forth on Schedule 4.6 hereto, (i) there are no outstanding
subscriptions, warrants, options or, except for this Agreement,
other agreements or rights of any kind to purchase or otherwise
receive or be issued, or securities or obligations of any kind
convertible into, any shares of capital stock or any other
security of the Company, (ii) there is no outstanding contract or
other agreement of the Seller, the Company or any other person to
purchase, redeem or otherwise acquire any outstanding shares of
the capital stock of the Company, or securities or obligations of
any kind convertible into any shares of the capital stock of the
Company, (c) there are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Company, and
(d) there are no outstanding or authorized stock appreciation,
phantom stock, stock plans or similar rights with respect to the
Company.
G. Financial Statements. Attached as Schedule IV.G are
true and correct copies of the Company's unaudited balance sheet
at June 30, 1996 (the "Most Recent Balance Sheet") and the
related statements of income and cash flow for the six months
ended June 30, 1996 (the "Company Interim Financial Statements",
as well as the Company's unaudited balance sheet and statements
of income and cash flow as of and for the year ended December 31,
1995 (the "Company 1995 Financial Statements"). Except as
disclosed on Schedule IV.H, the foregoing financial statements
(collectively the "Company Financial Statements") (i) have been
prepared from and are in all material respects consistent with
the books and records of the Company (which books and records are
correct and complete in all material respects), (ii) present
fairly the financial condition of the Company and its results of
operations and cash flows as at and for the respective periods
then ended, and (iii) have been prepared in accordance with GAAP
applied consistently throughout the periods indicated; provided,
however, that the Company Interim Financial Statements are
subject to normal year-end adjustments and all of the Company
Financial Statements lack footnotes and other presentation items.
H. Undisclosed Liabilities. Except as and to the extent
reflected in the Company Financial Statements or in Schedule IV.H
hereto, the Company does not have any material (when considered
individually or in the aggregate) liabilities, debts, claims,
commitments or obligations of the type required to be disclosed
as a liability on a balance sheet prepared in accordance with
GAAP, whether absolute, accrued, contingent or otherwise, other
than those incurred in the ordinary course of business consistent
with past practice (which ordinary course liabilities shall in no
event be deemed to include liabilities resulting from any breach
of contract or violation of law) since the date of the Most
Recent Balance Sheet. To the Knowledge of Seller, the Company
has no material liabilities, debts, claims or obligations
(whether accrued, absolute, contingent or otherwise, and whether
or not of a nature required to be reflected or reserved against
in a balance sheet prepared in accordance with GAAP), except
(3) liabilities reflected in the Company Financial Statements,
(4) liabilities and obligations accrued in the Company's
financial records and incurred by the Company in the ordinary
course of business since the date of the Most Recent Balance
Sheet, (5) executory contract obligations under the Material
Contracts listed on Schedule 4.21 or under contracts not
constituting Material Contracts, and (6) liabilities set forth on
Schedule IV.H.
A. Tangible Personal Property.
1. Except as set forth on Schedule 4.9 hereto and
except for Inventory disposed of in the ordinary course of
business since the date of the Most Recent Balance Sheet, the
Company has (i) good and marketable title to all of the tangible
personal property and assets which are used in the operation of
its business and which it owns or purports to own, and (ii) valid
leasehold interests in all leases of tangible personal property
which it leases or purports to lease, in each case free and clear
of any Liens, other than Permitted Liens. The Company has
heretofore provided to Purchaser a true and correct listing of
all of its material tangible personal property and assets as of
June 30, 1996 and, to the extent that they constitute Material
Contracts, true and correct copies of all equipment and tangible
personal property leases.
2. The Company enjoys peaceful and undisturbed
possession under all of such leases of personal property under
which it is operating. There are no existing defaults, or events
which with the passage of time or the giving of notice, or both,
would constitute defaults by the Company or, to the Knowledge of
the Seller, by any other party to any such lease, except for (i)
such defaults and events as to which requisite waivers or
consents have been obtained, and (ii) defaults which,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
B. Real Property.
1. Schedule 4.10 hereto sets forth a list of all
real property owned, beneficially or of record, or leased,
subleased or otherwise occupied by the Company, indicating the
nature of its interest therein and setting forth a brief
description of the buildings and improvements located thereon
(collectively, the "Real Property"). The Company has (i) good
and marketable title to all of the Real Property which it owns or
purports to own, and (ii) valid leasehold interests in all leases
of Real Property which it leases or purports to lease, in each
case free and clear of any Liens, other than Permitted Liens.
The Company has not received notice of, and to the Knowledge of
the Seller there are no, pending condemnation, expropriation,
eminent domain or similar proceedings or administrative actions
affecting all or any portion of such Real Property and, to the
Knowledge of Seller, no such proceedings or administrative
actions are contemplated.
2. The Company enjoys peaceful and undisturbed
possession under all of such Real Property leases under which it
is operating, true and correct copies of which have been provided
to Purchaser. All of such leases are valid and binding
obligations of the Company, subsisting and in full force and
effect, no notice of termination has been received by the Company
with respect thereto and there are no existing defaults, or
events which with the passage of time or the giving of notice, or
both, would constitute defaults by the Company or, to the
Knowledge of the Seller, by any other party thereto, except for
(i) such defaults and events as to which requisite waivers or
consents have been obtained, and (ii) defaults which,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
C. Insurance. Schedule IV.K hereto sets forth a list of
all insurance policies currently in effect which are owned or
held by the Company, insuring the products, properties, assets,
business and operations of the Company and its potential
liabilities to third parties, and all general liability policies
maintained by the Company. All such policies are in full force
and effect and all premiums due and payable in respect thereof
have been paid, except to the extent set forth on Schedule 4.11.
Since the respective dates of such policies, no notice of
cancellation or non-renewal with respect to any such policy has
been received by the Company.
D. Labor Relations. The Company has provided Purchaser
with a true and correct copy of its Collective Bargaining
Agreement with the Retail, Wholesale and Department Store Union
(the "Union Contract"). Except as set forth on Schedule 4.12
hereto (i) since December 31, 1993, the Company has not been
involved in or, to the Knowledge of the Seller, threatened with
any labor dispute, strike, slowdown or work stoppage, (ii) as of
the date hereof, the Company is not involved in or, to the
Knowledge of Seller, threatened with any grievance, unfair labor
practice charge, arbitration, suit or administrative proceeding
relating to labor matters involving its employees, and (iii)
there are no actions, proceedings or claims pending or, to the
Knowledge of the Seller, threatened against the Company under any
Laws relating to employment, including any provisions thereof
relating to wages, hours, collective bargaining, withholding or
the payment of social security or other Taxes. To the Knowledge
of Seller, no key employees or groups of employees plan on
terminating employment with the Company. Except to the extent
reflected in the Closing Date Balance Sheet, the Company is not
liable for any arrears in wages or any Taxes for failure to
comply with any Law.
E. Permits; Compliance With Law. The Company holds and
complies with all Permits and complies with all requirements of
Law, in each case except where the failure to so comply would not
have a Material Adverse Effect. Except as set forth on Schedule
4.13 hereto, no notice, citation, summons or order has been
received by the Company, no complaint has been filed and served
on it, no penalty has been assessed and, to the Knowledge of the
Seller, no investigation, proceeding or review is pending or
threatened (i) with respect to any alleged violation by the
Company of any Law or Permit, or (ii) with respect to any alleged
failure by the Company to have any Permit. A true and correct
list of all Permits is set forth on Schedule IV.M.
F. Litigation. Schedule IV.N hereto sets forth a list of
all actions, suits, claims or proceedings pending or, to the
Knowledge of the Seller, threatened against or involving the
Company, any of its assets or properties, or any of the Company's
officers, directors, employees or stockholders in such
capacities, by or before any Authority. There are no outstanding
orders, judgments, injunctions, stipulations, awards or decrees
of any Authority against the Company, or any of its assets or
properties, which prohibit or enjoin the consummation of the
transactions contemplated hereby or could reasonably be expected
to have a Material Adverse Effect.
G. List of Accounts. Schedule IV.O hereto contains a list
of all bank and securities accounts, and all safe deposit boxes,
maintained by the Company and a listing of the persons authorized
to draw thereon or make withdrawals therefrom or, in the case of
safe deposit boxes, with access thereto.
H. List of Personnel. Schedule IV.P hereto sets forth (i)
the name and total compensation of each officer and director of
the Company and each other employee of the Company whose total
compensation for the twelve months ended December 31, 1995
exceeded $25,000, (ii) all wage or salary increases received by
such persons since December 31, 1995, and any Company accrual for
such increases or bonuses, and (iii) all commitments or
agreements by the Company to increase the wages or modify the
conditions or terms of employment of any of its employees.
I. Employee Benefit Plans; ERISA.
1. Schedule IV.Q hereto lists all Employee Benefit
Plans in effect as of the date hereof or that the Company
maintained or to which it contributed or under which it had any
liability since December 31, 1993, other than those arising under
the Union Contract.
a. Each such Employee Benefit Plan (and each
related trust, insurance contract or fund) and its administration
complies in form and in operation with the applicable
requirements of ERISA and the Code, except where the failure to
comply could not reasonably be expected to have a Material
Adverse Effect. The Company has not received any notice that any
Employee Benefit Plan does not comply with the applicable
requirements of ERISA or the Code.
b. All contributions (including all employer
contributions and employee salary reduction contributions, if
any) which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
c. Each such Employee Benefit Plan which is
an Employee Pension Benefit Plan has received a favorable
determination letter from the IRS as to its qualification under
Section 401(a) of the Code.
d. No "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code)
has occurred with respect to any such Employee Benefit Plan which
is an Employee Pension Benefit Plan (or its related trust) which
could subject the Company or any officer, director or employee of
the Company, to any material Tax or penalty imposed under Section
4975 of the Code or liability under Section 406 of ERISA.
e. The Company has delivered to the Purchaser
correct and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter received
from the IRS, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts and other funding
arrangements which implement each such Employee Benefit Plan.
2. With respect to each Employee Benefit Plan that
the Company has maintained or to which it has contributed:
a. No such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or partially
terminated or has been the subject of a "reportable event" (as
defined in Section 4043 of ERISA) as to which notices would be
required to be filed with the PBGC. To the Knowledge of Seller,
no proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than a Multiemployer Plan) has been
instituted.
b. The Company has not incurred any material
liability to the PBGC (except for required premium payments, if
any), or otherwise under Title IV of ERISA (including any
withdrawal liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan.
c. No action, suit, proceeding, hearing or
investigation with respect to the administration or the
investment of assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge
of Seller, threatened, except where the action, suit, proceeding,
hearing or investigation could not reasonably be expected to have
a Material Adverse Effect.
d. Except as specified in Section IV.Q.3
hereof, the Company does not contribute to, has ever contributed
to or ever has been required to contribute to any Multiemployer
Plan or has any liability (including withdrawal liability) under
any Multiemployer Plan.
e. The Company does not have any obligation
to provide health or other welfare benefits to former, retired or
terminated employees, except as specifically required under
Section 4980B of the Code. With respect to all of its past and
present employees, the Company has complied in all material
respects with the notice and continuation requirements of Part 6
of Subtitle B of Title I of ERISA and of Section 4980B of the
Code.
3. The Company has no liability with respect to any
Employee Benefit Plan arising under the Union Contract except for
the Company's obligation to contribute to the Retail, Wholesale,
and Department Store International Union and Industry Health and
Benefit Fund (the "Union Fund"), which contribution obligations
have (except to the extent reflected in the Closing Date Balance
Sheet) been fully met to the extent they apply to periods prior
to the Closing Date. Except as expressly set forth in the
preceding sentence, no representation is given in this Agreement
with respect to the Union Fund.
J. Tax Matters.
1. All Income Tax Returns and all material Other
Tax Returns required to be filed with respect to the business and
assets of the Company have been duly and timely (within any
applicable extension periods) filed with the appropriate
Authorities in all jurisdictions in which such Returns are
required to be filed, and all such Returns are in all material
respects true, complete and correct. All Taxes (including
estimated Taxes) shown to be due and payable on such Returns have
been paid.
2. The unpaid Taxes of the Company (i) did not as
of the date of the Most Recent Balance Sheet, exceed the reserve
for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and tax
income) disclosed on the face of the Most Recent Balance Sheet,
and (ii) do not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the custom of
the Company.
3. Except as set forth on Schedule 4.18 hereto,
there is no claim or assessment pending or, to the Knowledge of
the Seller, threatened against the Company for any alleged
deficiency in Income Taxes or in Other Taxes.
4. Except as set forth on Schedule 4.18 the Company
has not (a) filed any consent to the application of Section
341(f) of the Code, (b) executed a waiver or consent extending
any statute of limitations for the assessment or collection of
any Income Taxes or Other Taxes which remain outstanding, (c)
applied for a ruling relative to Income Taxes or Other Taxes, (d)
entered into a closing agreement with any Tax Authority, or (e)
filed an election under Section 338(g) or 338(h)(10) of the Code
or caused or permitted a deemed election under Section 338(e) of
the Code.
5. Except as set forth on Schedule 4.18 no Income
Tax Return or material Other Tax Return of the Company has been
audited by any Tax Authority at any time since January 1, 1991,
and all taxable years of the Company beginning prior to
January 1, 1991 applicable to Income Tax Returns and material
Other Tax Returns are closed and are no longer subject to
examination by any Tax Authority.
6. The Company is not a party to any written
agreement providing for the allocation or sharing of Taxes.
7. The Company will have no liability for the Taxes
of any other Person other than the Purchaser, the Seller and
their respective subsidiaries under Treasury Regulations Section
1.1502-6 (or any similar provision of state, foreign or local
Law) arising from pre-Closing Periods.
8. Since the 1986 acquisition of the Company by
Atlantis Plastics, Inc. ("Atlantis"), the Company has not been a
member of an Affiliated Group filing a consolidated federal
Income Tax Return other than an Affiliated Group of which the
common parent is Atlantis.
9. Except as set forth in Schedule 4.18, (i) the
Purchaser will not be required to deduct and withhold any amount
pursuant to Section 1445(a) of the Code upon the transfer of the
Shares to the Purchaser; (ii) the Company is not required to make
any material adjustment under Section 481(a) of the Code by
reason of a change or proposed change in accounting method or
otherwise; (iii) the Company has not taken a position on any Tax
Return for a taxable year for which the statute of limitations
for the assessment of any Tax with respect thereto has not
expired that is contrary to any publicly announced position of a
Tax Authority or, to the Knowledge of the Seller, that is
substantially similar to any position which a Tax Authority has
successfully challenged in the course of an examination of a Tax
Return of the Company or of another taxpayer, (iv) no material
issue has been raised by any Tax Authority with respect to the
Company in any audit or examination which, by application of
similar principles, could reasonably be expected to result in a
proposed material adjustment to the liability for Taxes for any
period not so examined, and (v) the Company is not obligated to
make, and as a result of any event connected with the
transactions contemplated by this Agreement, will not become
obligated to make, any "excess parachute payment" within the
meaning of Section 280G of the Code, determined without regard to
subsection (b)(4) thereof.
K. Environmental Matters. Except as disclosed on Schedule
IV.S hereto or as reflected in any environmental investigation
report prepared for the Purchaser by ATC Environmental, Inc. with
respect to the Company prior to the Closing Date:
1. The Company is in compliance with all
Environmental Health and Safety Laws, holds all required
environmental Permits and is in compliance with such Permits.
2. There is no Environmental Claim of which the
Company has received written notice or, to the Knowledge of the
Seller, threatened or recently filed against the Company or
against any Person whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by
operation of Law, or against any real or personal property or
operations which the Company owns, leases or operates.
3. There are no environmental Liens on any of the
Real Property arising as a result of any actions taken or omitted
to be taken by the Company and, to the Knowledge of the Seller,
no actions have been taken by any Authority with respect to any
of the Real Property or are in process or pending, to impose an
environmental Lien with respect to the Real Property as a result
of any such actions.
4. No Real Property presently or heretofore owned
or operated by the Company is currently listed on the National
Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or on any
comparable state list, and the Company has not received any
written notice of potential liability from any Person under or
relating to CERCLA or any comparable state or local Law.
5. To the Knowledge of the Seller, no off-site
location at which the Company has disposed or arranged for the
disposal of any waste is listed on the National Priorities List
or on any comparable state list and the Company has not received
any written notice from any Person with respect to any such
off-site location, of potential or actual liability or a written
request for information from any Person under or relating to
CERCLA or any comparable state or local Law.
6. The Company and its properties are not subject
to any litigation, proceedings, claims or orders with respect to
environmental matters, and no conditions (including, but not
limited to, the Company's past or current use or storage of
Materials of Environmental Concern) exist which with or without
the passage of time would give rise to future environmental
liabilities.
L. Intellectual Property. Schedule IV.T hereto sets forth
a list of all patents, pending patent applications, trademarks,
service marks, pending trademark or service mark applications and
trade names licensed to, applied for or registered in the name
of, the Company, or in which the Company has or purports to have
any rights, and all material copyright registrations or pending
applications for registrations of the Company, or in which the
Company has or purports to have any rights, including the nature
(e.g., patent, trademark, etc.) of the intellectual property, the
application or registration number, the jurisdiction and the
record owner (the "Listed Intellectual Property"). Except as set
forth on Schedule IV.T, with respect to the Listed Intellectual
Property, no registration relating thereto (if any) has lapsed,
expired or been abandoned or canceled or is the subject of
cancellation proceedings. The Company owns or possesses adequate
and enforceable licenses (free of Liens other than Permitted
Liens) to use all Listed Intellectual Property and any other
material intellectual property rights (including, without
limitation, drawings, trade secrets, know-how and confidential
information) currently used by the Company, or necessary to
permit the Company to conduct its business as now conducted (the
Listed Intellectual Property and the other intellectual property
rights are collectively called the "Intellectual Property").
Schedule IV.T sets forth all licenses to which the Company is a
party relating to the Intellectual Property (the "Intellectual
Property Licenses"). Except as set forth on Schedule IV.T,
(x) to the Knowledge of the Seller the Company has not infringed
on or misappropriated and is not now infringing on or
misappropriating any Intellectual Property right belonging to any
Person, (y) no claim is pending or, to the Knowledge of the
Seller, threatened to the effect that any Intellectual Property
is invalid or unenforceable and (z) the Company has not received
any written notice of any claim, dispute or alleged infringement
with respect to the Intellectual Property. To the Knowledge of
the Seller, except as set forth on Schedule IV.T, no Person is
infringing upon or violating any of the Listed Intellectual
Property.
M. Material Contracts. Schedule IV.U hereto sets forth a
list of all Material Contracts, true and correct copies of which
have been provided to Purchaser. Except as set forth on Schedule
4.21, all of the Material Contracts are valid and binding and in
full force and effect, and there are no defaults thereunder or
events which with notice or the passage of time would constitute
a default by the Company or, to the Knowledge of the Seller, by
any other party thereto, except for (i) such defaults and events
as to which requisite waivers or consents have been obtained, and
(ii) defaults which, individually or in the aggregate, would not
have a Material Adverse Effect. Except as set forth on Schedule
IV.U, (x) the Company has not received written notice of any
party's intent to terminate any Material Contract, and
(y) neither the execution, delivery or performance by the Seller
of this Agreement, nor the consummation of the transactions
contemplated hereby will result in the termination or breach of,
result in a material adverse change in the terms of, or
constitute a default or require any consent under, any Material
Contract or the Company's articles of incorporation or bylaws.
N. Transactions With Affiliates. Except as set forth on
Schedule IV.V hereto and except for normal advances to employees
consistent with past practices, payment of compensation for
employment to employees consistent with past practices, and
participation in Employee Benefit Plans by employees, the Company
has not purchased, acquired or leased any property or services
from, or sold, transferred or leased any property or services to,
or loaned or advanced any money to, or borrowed any money from,
or entered into or been subject to any management, consulting or
similar agreement with, or engaged in any other transaction with
any officer, director or shareholder of the Company or any of
their respective Affiliates. Except as set forth on Schedule
4.22, no Affiliate of the Company is indebted to the Company for
money borrowed or other loans or advances, and the Company is not
indebted to any such Affiliate.
O. Powers of Attorney. Except as set forth on Schedule
4.23 hereto, the Company has not granted any power of attorney to
any Person for any purpose whatsoever, which power of attorney is
currently in force.
P. Inventory. The Inventory consists in all material
respects of items usable and saleable in the ordinary and usual
course of business, subject to the reserve for Inventory
writedown set forth on the Most Recent Balance Sheet as adjusted
for the passage of time through the Closing Date in accordance
with GAAP and the past custom and practice of the Company. The
Inventory is valued on the Most Recent Balance Sheet at the lower
of cost (on a first-in-first-out basis) or market pursuant to
GAAP, consistently applied with prior periods.
Q. Accounts Receivable. All of the Accounts Receivable
are properly reflected on the books and records of the Company
and arose from bona fide transactions in the ordinary course of
business. The reserve for bad debts set forth on the Most Recent
Balance Sheet has been determined in accordance with GAAP.
R. Customers and Suppliers. Schedule IV.Z hereto contains
a complete and accurate list of the names and addresses of the 10
largest (by volume) customers and suppliers of the Company for
the fiscal year ended December 31, 1995. The Company maintains
satisfactory relations with each of such customers and suppliers.
Except as set forth on Schedule IV.Z, no such listed customer or
supplier has canceled, terminated or, to the Knowledge of the
Seller, made any threat to the Company to cancel or otherwise
terminate, or to materially decrease its usage of the Company's
services or products (or, in the case of such listed suppliers,
the provision of services or supplies to the Company).
S. Product Warranty. To the Knowledge of Seller, (1) each
product manufactured, sold or delivered by the Company through
the Closing Date has conformed in all material respects with all
applicable contractual commitments and all express and implied
warranties, (2) the Company has no liability (and, to the
Knowledge of Seller, there is no reasonable basis for any present
or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand giving rise to any liability) for
replacement thereof or other damages in connection therewith, as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company, and
(3) no product manufactured, sold or delivered by the Company
through the Closing Date is subject to any guaranty, warranty or
other indemnity beyond the applicable standard terms and
conditions of sale or lease.
T. Product Liability. To the Knowledge of Seller, there
is no liability (and, to the Knowledge of Seller, there is no
reasonable basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand
giving rise to any liability) arising out of any injury to
persons or property as a result of the ownership, possession or
use of any product manufactured, sold or delivered by the Company
through the Closing Date.
U. Actions Since June 30, 1996. Except as set forth on
Schedule 4.29 hereto, since June 30, 1996, the Company has in all
material respects (i) conducted its operations in the ordinary
course of business consistent with past practices, including the
maintenance of all books, records and accounts in accordance with
past practice, (ii) maintained its assets in the same condition
as in existence on June 30, 1996, ordinary wear and tear
excepted, and (iii) kept its business substantially intact,
including its operations and relationships with lessors,
licensors, suppliers, customers and employees. Without limiting
the generality of the foregoing, and except as set forth on
Schedule 4.29 hereto, since June 30, 1996, the Company has not:
(1) sold, leased, transferred or otherwise disposed
of any property or asset having a book value in excess of $10,000
individually or $50,000 in the aggregate, except for sales of
inventory in the ordinary course of business.
(2) changed in any respect the accounting methods or
practices followed by the Company, including any change in any
assumption underlying, or method of calculating, any bad debt,
contingency or reserve;
(3) acquired or agreed to acquire by merging or
consolidating with, or by purchasing any portion of the capital
stock, partnership interests or significant assets of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof;
(4) made any capital expenditures, capital additions
or capital improvements in excess of $25,000 individually or
$100,000 in the aggregate;
(5) made any Tax election or settled or compromised
any federal, state, local or foreign income Tax liability, or
waived or extended the statute of limitations in respect of any
such Taxes; or
(6) entered into any agreement or commitment to do
any of the foregoing.
ARTICLE I.
Representations and Warranties of the Seller Regarding Shares and
Other Matters
In order to induce the Purchaser to enter into this
Agreement, and to consummate the transactions contemplated
hereby, the Seller represents and warrants to the Purchaser as
follows:
A. Organization and Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the state of its incorporation. The Seller has all
requisite corporate right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
Copies of the Charter and bylaws of the Seller and all amendments
thereto as in effect on the date hereof have been delivered to
the Purchase and are complete and correct as of the date hereof.
B. Ownership of Shares. The Seller owns, beneficially and
of record, and has the right to transfer to the Purchaser, all of
the Shares, free and clear of any Liens. At the Closing the
Seller will transfer and convey, and the Purchaser will acquire,
good, valid and marketable title to the Shares, free and clear of
all Liens.
C. Authority, Enforceability, No Violation, Etc. The
Seller has all requisite corporate power and authority to execute
and deliver this Agreement, and the other Documents to which it
is a party, to perform its obligations under each such Document,
and to consummate the transactions contemplated by each such
Document. The execution, delivery and performance by the Seller
of each Document to which it is a party and the consummation of
the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action on the part of the
Seller. Each Document to which the Seller is a party is, or upon
its execution and delivery will be, a valid and binding
obligation of the Seller, enforceable against it in accordance
with the terms thereof. Neither the execution, delivery or
performance by the Seller of any Document to which it is a party,
nor the consummation by the Seller of the transactions
contemplated thereby, nor compliance by the Seller with any of
the provisions thereof will (i) conflict with or result in a
breach of any provision of the Seller's Charter or bylaws,
(ii) violate any law, statute, rule or regulation or judgment,
order, writ, injunction or decree of any Authority, in each case
applicable to the Seller or its assets or properties, or (iii)
with or without the passage of time or the giving of notice or
both, result in the breach of, or constitute a default or require
any consent under, or result in the creation of any Lien upon any
property or assets of the Seller pursuant to, any instrument or
agreement to which the Seller is a party or by which the Seller
or its properties may be bound or affected, except in each case
for conflicts, violations and breaches that would not have a
material adverse effect on the Seller's ability to perform its
obligations under this Agreement and except for a required
consent under the Heller Agreement.
D. Consents and Approvals. No filing with, and no permit,
authorization, consent or approval of any Authority or any other
Person is necessary for the consummation by the Seller of the
transactions contemplated by the Documents, except where the
absence of such filing, permit, authorization, consent or
approval would not have a material adverse effect on the Seller's
ability to perform its obligations under this Agreement, and
except for a required consent under the Heller Agreement.
E. Litigation. There are no actions, suits, claims or
proceedings pending or, to the Knowledge of the Seller,
threatened against or involving the Seller or any of his assets
or properties by or before any Authority that question the
validity of this Agreement or seek to prohibit, enjoin or
otherwise challenge the consummation of the transactions
contemplated hereby. There are no outstanding orders, judgments,
injunctions, stipulations, awards or decrees of any Authority
against the Seller or any of his assets or properties which
prohibit or enjoin the consummation of the transactions
contemplated hereby.
F. Brokers. Except for the Seller's engagement of Harris
Williams & Co., neither the Company nor the Seller has employed
any broker or finder and neither has incurred or will incur any
broker's, finder's or similar fees, commissions or expenses
payable by the Seller or the Company in connection with the
transactions contemplated by this Agreement. All amounts payable
to Harris Williams & Co. in connection with such engagement shall
be the responsibility of the Seller.
ARTICLE II.
Pre-Closing Covenants
A. Access to Information. From and after the date hereof
and until the Closing, the Seller will cause the Company to give
to the Purchaser and the Purchaser's authorized representatives
reasonable access during normal business hours to its offices,
books and records, Tax Returns, contracts, commitments, officers,
facilities, personnel and accountants, and to furnish and make
available to the Purchaser and its authorized representatives all
such documents and copies of documents and all such additional
financial and operating data and other information pertaining to
the affairs of the Company as the Purchaser and its authorized
representatives may reasonably request; provided, however, that
the activities of the Purchaser and its representatives shall be
conducted in such a manner as not to interfere unreasonably with
the operation of the businesses of the Company.
B. Conduct of Business. During the period from the date
hereof to the Closing Date, the Seller will cause the Company to
(i) continue to conduct its business affairs in the usual and
ordinary course of business and in substantially the same manner
as previously conducted, including the maintenance of all books,
records and amounts in accordance with past practice (ii)
maintain, or cause to be maintained in full force and effect, all
of its Permits and insurance, (iii) keep its business and
properties substantially intact, including its present
operations, physical facilities and relationships with lessors,
licensors, suppliers, customers and employees, (iv) comply in all
material respects with the applicable requirements of Law, and
(v) use its best efforts so that the Company's representations
herein are true and correct in all respects as of the Closing
Date.
C. Pre-Closing Activities. Except as otherwise permitted
or required by this Agreement, and without the prior written
consent of Purchaser (which consent shall not be unreasonably
withheld or delayed), prior to the Closing Date the Seller shall
not take any action to cause the Company, and shall not permit
the Company, to:
1. make any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of its
capital stock;
2. create, incur or assume any indebtedness for
borrowed money, except for trade credit incurred in the ordinary
course of business, or incur, assume or become subject, whether
directly or indirectly, by way of guaranty or otherwise, to any
obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) other than
obligations or liabilities incurred in the ordinary course of
business consistent with the past custom and practice of the
Company in the operation of its business; provided, however, that
nothing herein shall limit the Company's incurrence of
obligations with respect to Funded Indebtedness;
3. fail to discharge or to satisfy any Lien or pay
or satisfy any claim, obligation or liability (whether absolute,
accrued, contingent or otherwise) when the same shall become due
and payable;
4. sell, lease, assign, transfer or otherwise
dispose of any property or asset having a book value in excess of
$10,000 individually or $50,000 in the aggregate, except for
sales of inventory in the ordinary course of business;
5. knowingly permit or allow any property or asset
to be subjected to any Lien except Permitted Liens or Liens
securing Funded Indebtedness, or enter into any conditional sale
or other title retention agreement with respect to any property
or asset;
6. change in any respect the accounting methods or
practices followed by the Company, including any change in any
assumption underlying, or method of calculating, any bad debt,
contingency or other reserve;
7. amend or modify in any way its Charter or
bylaws;
8. reclassify, combine, split, subdivide or redeem
or otherwise repurchase any capital stock of the Company, or
create, authorize, issue, sell, deliver, pledge or encumber any
additional capital stock (whether authorized but unissued or held
in treasury) or other securities equivalent to or exchangeable
for capital stock, or grant or otherwise issue any options,
warrants or other rights with respect thereto;
9. acquire or agree to acquire by merging or
consolidating with, or by purchasing any portion of the capital
stock, partnership interests or assets of, or by any other
manner, any business or any corporation, partnership, association
or other business organization or division thereof;
10. make any loan or advance (whether in cash or
other property), or make any investment in or capital
contribution to, or extend any credit to, any Person, except (i)
short-term investments pursuant to customary cash management
policies, (ii) advances made in the ordinary course of business
to employees consistent with past practices, and (iii)
intercompany transfers among Atlantis, Seller and the Company in
the ordinary course of business;
11. enter into any agreement with any labor union or
association representing any employee, or make any wage or salary
increase or bonus, or increase in any other direct or indirect
compensation, for or to any of its officers, directors or
employees, other than in the ordinary course of business;
12. enter into, amend, terminate or fail to renew
any Material Contract;
13. make any capital expenditures, capital additions
or capital improvements in excess of $25,000 individually or
$100,000 in the aggregate;
14. make any payment to the Seller or any Affiliate
of the Seller (other than pursuant to any Material Contract
listed on Schedule 4.21 or pursuant to any arrangement described
on Schedule 4.22) or forgive any indebtedness due or owing from
the Seller or any Affiliate of the Seller to the Company;
15. institute or amend any Employee Benefit Plan
except as may be required by Law, or enter into or modify any
written employment arrangement with any individual;
16. make any Tax election or settle or compromise
any federal, state, local or foreign income Tax liability, or
waive or extend the statute of limitations in respect of any such
Taxes;
17. enter into any agreement or commitment to do any
of the foregoing.
D. Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each party hereto shall use
reasonable efforts to take or cause to be taken all actions and
do or cause to be done all things required under applicable Law
in order to consummate the transactions contemplated hereby,
including, without limitation, (i) obtaining all permits,
authorizations, consents and approvals of any Authority or other
Person which are required for or in connection with the
consummation of the transactions contemplated hereby and by the
other Documents, (ii) taking any and all reasonable actions
necessary to satisfy all of the conditions to such party's
obligations hereunder as set forth in Article 7, and
(iii) executing and delivering all agreements and documents
required by the terms hereof to be executed and delivered by such
party on or prior to the Closing. Nothing in this Agreement
shall be construed as an attempt or an agreement by the Company
to assign or cause the assignment of any contract or agreement
which is by Law nonassignable without the consent of the other
party or parties thereto, unless such consent shall have been
given.
E. No Shop. From the date of this Agreement until the
earlier of (i) the Closing Date, or (ii) the termination of this
Agreement, the Seller shall not, and shall cause the Company and
its officers, directors, employees and other agents not to,
directly or indirectly, take any action to solicit, initiate or
encourage any offer or proposal or indication of interest in a
merger, consolidation or other business combination involving any
equity interest in, or a substantial portion of the assets of the
Company, other than in connection with the transactions
contemplated by this Agreement.
F. Notice of Developments. From and after the date hereof
and until the Closing, the Seller shall promptly notify the
Purchaser in writing upon becoming aware of any development
causing a breach of any of the representations or warranties set
forth in Article 4 or 5 hereof.
G. Environmental Testing. From and after the date hereof
and until the Closing, upon reasonable notice to the Company, the
Company shall allow Purchaser and its agents access to the
Company's facilities during normal business hours to perform such
additional environmental tests as Purchaser may reasonably
determine, including (but not limited to) constructing wells for
testing the location, nature or degree of groundwater
contamination (if any). All such testing shall be at Purchaser's
sole expense.
ARTICLE III.
Conditions to Closing
A. Conditions to Purchaser's Obligations. The obligations
of the Purchaser to consummate the transactions contemplated by
this Agreement are subject to the satisfaction at or prior to the
Closing of each and every one of the following conditions
precedent, any one or more of which may be waived by the
Purchaser:
1. Each of the representations and warranties of
the Company and the Seller set forth in Articles 4 and 5 of this
Agreement shall be true and correct in all material respects on
and as of the date of this Agreement and as of the Closing Date
with the same force and effect as though made on and as of the
Closing Date, except for any representation or warranty limited
by its terms to a specific date (which representation and
warranty shall be correct in all material respects on the date so
specified).
2. The Seller shall have performed and complied in
all material respects with all of the other agreements, covenants
and obligations required under this Agreement to be performed or
complied with by it prior to or at the Closing.
3. The Seller shall have delivered to the Purchaser
a certificate, executed by a duly authorized officer of the
Seller in his capacity as such, certifying in such detail as the
Purchaser may reasonably request that the conditions specified in
Sections 7.1.1 and 7.1.2 (insofar as they are to be performed by
the Seller or the Company) have been fulfilled.
4. The Seller and the Company shall have obtained
all authorizations, consents, waivers and approvals from parties
to contracts or other agreements to which any of them is a party,
or by which they are bound, as may be required to be obtained by
them in connection with the consummation of the transactions
contemplated hereby.
5. All filings that are required to have been made
by the Seller or the Company with any Authority in order to carry
out the transactions contemplated by this Agreement shall have
been made; all authorizations, consents and approvals from all
Authorities required for the Seller to carry out the transactions
contemplated by this Agreement shall have been received; and all
statutory waiting periods in respect thereof shall have expired.
6. There shall be in force no claim, proceeding,
action, order or decree by or before any Authority of competent
jurisdiction restraining, enjoining, prohibiting, invalidating or
otherwise preventing (or seeking to prevent) the consummation of
the transactions contemplated hereby.
7. No proceeding in which either the Seller or the
Company shall be a debtor, defendant or party seeking an order
for its own relief or reorganization shall have been brought or
be pending by or against such Person under any United States or
state bankruptcy or insolvency Law.
8. The Purchaser shall have received a certificate
issued by the Secretary of State of the state in which the
Company is incorporated as of a date reasonably acceptable to the
Purchaser, as to the good standing of the Company in such state.
9. The Purchaser shall have received (i) a
certificate of the Secretary or an Assistant Secretary of the
Seller as to the incumbency and signatures of the officers of the
Seller executing this Agreement, and (ii) a certificate issued by
the Secretary of State of the state of the Seller's
incorporation, as of a date reasonably acceptable to the
Purchaser, as to the good standing of the Seller in such state.
10. The Seller shall have delivered to the Purchaser
such resignations of the officers and directors of the Company as
the Purchaser may request.
11. The Purchaser shall have received the Opinion of
Seller's Counsel.
12. The Seller shall have delivered to the Purchaser
(i) a copy of the Company's Charter, as amended to date,
certified as of the recent date by the Secretary of State of the
State of Company's state of incorporation, (ii) a copy of the
Company's bylaws, certified by a Company officer, and (iii) all
corporate minute books, stock transfer books, blank stock
certificates and corporate seals of the Company.
13. The Purchaser shall have received copies of
"payoff" or "estoppel" letters or other evidence, reasonably
satisfactory to it, of the termination, at or prior to Closing,
of (1) all Funded Indebtedness (other than the Specified Parent
Debt), (2) all guarantees with respect to the Specified Parent
Debt, and (3) any and all Liens that encumber the Company's
assets pursuant to any Funded Indebtedness (including the
Specified Parent Debt).
14. There shall not have been a material adverse
change in the Company's financial condition or results of
operations since June 30, 1996.
15. Except for amounts accrued in the ordinary
course of business through the Closing and reflected in the
Closing Date Balance Sheet and the calculation of the Purchase
Price Adjustment, all agreements and commitments between the
Company and Seller (or any Affiliate thereof) shall have been
terminated in all respects on terms reasonably satisfactory to
Purchaser.
16. The Company and the Seller shall have executed
and delivered to Purchaser all other documents reasonably
requested by Seller.
17. The Seller shall have delivered to the Purchaser
a certificate, executed under penalty of perjury and in form
reasonably satisfactory to Purchaser, stating that the Seller is
not a "foreign person" within the meaning of Section 1445(f)(3)
of the Code.
B. Conditions to Seller's Obligations. The obligations of
the Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or prior to the
Closing of each and every one of the following conditions
precedent, any one or more of which may be waived by the Seller:
1. Each of the representations and warranties of
the Purchaser set forth in Article 3 hereof shall be true and
correct on and as of the date of this Agreement and as of the
Closing Date with the same force and effect as though made on and
as of the Closing Date, except for any representation or warranty
limited by its terms to a specific date (which representation and
warranty shall be correct on the date so specified).
2. The Purchaser shall have performed and complied
in all material respects with all of the agreements, covenants
and obligations required under this Agreement to be performed or
complied with by it prior to or at the Closing.
3. The Purchaser shall have delivered to the Seller
a certificate, executed by a duly authorized officer of the
Purchaser in his capacity as such, certifying in such detail as
the Seller may reasonably request that the conditions specified
in Sections 7.2.1 and 7.2.2 (insofar as they are to be performed
by the Purchaser) have been fulfilled.
4. All filings that are required to have been made
by the Purchaser with any Authority in order to carry out the
transactions contemplated by this Agreement shall have been made;
all authorizations, consents and approvals from all Authorities
required for the Purchaser to carry out the transactions
contemplated by this Agreement shall have been received; and all
statutory waiting periods in respect thereof shall have expired.
5. There shall be in force no claim, proceeding,
action, order or decree by or before any Authority of competent
jurisdiction restraining, enjoining, prohibiting, invalidating or
otherwise preventing (or seeking to prevent) the consummation of
the transactions contemplated hereby.
6. No proceeding in which the Purchaser shall be a
debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or
against such Person under any United States or state bankruptcy
or insolvency Law.
7. The Seller shall have received (i) a certificate
of the Secretary or an Assistant Secretary of the Purchaser as to
the incumbency and signatures of the officers of the Purchaser
executing this Agreement, and (ii) a certificate issued by the
Secretary of State of the state of the Purchaser's incorporation,
as of a date reasonably acceptable to the Seller, as to the good
standing of the Purchaser in such state.
8. The Purchaser shall have executed and delivered
to Seller all other documents reasonably requested by Seller.
ARTICLE IV.
Additional Agreements
A. Further Assurances. The parties hereto shall deliver
any and all other instruments or documents required to be
delivered pursuant to, or necessary or proper in order to give
effect to, all of the terms and provisions of this Agreement
including, without limitation, all necessary stock, powers and
such other instruments of transfer as may be necessary or
desirable to transfer ownership of the Shares.
B. Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby
shall be made without advance approval thereof by the Purchaser
and the Seller (which shall not be unreasonably withheld or
delayed). The parties hereto agree to cooperate in issuing any
press release or other public announcement concerning this
Agreement or the transactions contemplated hereby. Whenever
practicable, each party shall furnish to the other party drafts
of all such press releases or announcements prior to their
release. Nothing contained in this Section 8.2 shall prevent any
party from at any time furnishing any information to any
Authority or from making any disclosures required under the
Securities Exchange Act of 1934, as amended, or under the rules
and regulations of any national securities exchange on which such
party's shares of capital stock are listed.
C. Certain Tax Matters.
1. Upon the condition that the Closing be effected,
the Seller will indemnify and hold harmless the Purchaser and the
Company from, against and in respect of any Adverse Consequences
the Purchaser or the Company may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any liability
of the Company for Income Taxes of any other Person under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law).
2. The Seller will include the income of the
Company (including any deferred income included in income
pursuant to Treasury Regulation Sections 1.1502-13 and 1.1502-14
and any excess loss accounts taken into income under Treasury
Regulation Section 1.1502-19) on the Seller's consolidated
federal Income Tax Returns for all Pre-Closing Tax Periods and
will pay all federal Income Taxes attributable to such income.
The Purchaser will cause the Company to provide, or cause to be
provided, to the Seller, without charge, such information as may
reasonably be requested by the Seller in connection with the
preparation of any such Tax Returns relating to Pre-Closing Tax
Periods. The income of the Company will be apportioned to the
period up to and including the Closing Date and the period after
the Closing Date by closing the books of the Company as of the
end of the Closing Date.
3. If a notice shall be given by any Tax Authority
with respect to a potential Tax liability of the Company which,
if sustained, would result in a payment by the Seller to the
Purchaser pursuant to Section 9.2.1 of this Agreement (a "Tax
Assessment"), the Purchaser shall, after receipt of such notice,
promptly notify the Seller in writing (a "Tax Notice"). The
Seller may, by written notice to the Purchaser given within 30
days after the receipt by the Seller of a Tax Notice, at the
Seller's sole cost and expense (except as hereinafter provided),
participate fully in the defense of all Tax Assessments with
respect to which the Seller may become liable pursuant to the
Seller's indemnification obligations hereunder. The Purchaser
shall diligently prosecute such defense in cooperation and
consultation with the Seller and shall provide written notice to
the Seller of, and shall allow the Seller to attend, all
conferences, meetings, proceedings and appearances before all
Authorities with respect to the defense of any such Tax
Assessment. The costs of such defense incurred by the Purchaser
shall be borne by the Seller to the extent that such defense
relates to Tax Assessments for which the Seller is liable under
the indemnification provisions hereunder. If the Seller elects
to participate in the defense of a Tax Assessment, the Purchaser
shall provide, or shall cause the Company to provide, to the
Seller (at no cost to the Seller) such information as may be
required in connection with such defense as reasonably requested
by the Seller. If the Seller elects to participate in the
defense of a Tax Assessment, the Purchaser shall give the Seller
written notice of any proposed resolution or settlement of such
Tax Assessment not less than 15 business days before the
Purchaser accepts or intends to accept such proposed resolution
or settlement. The Purchaser shall have the right to settle or
otherwise to resolve any Tax Assessment for which the Seller
would become liable pursuant to its indemnification obligations
hereunder only upon the written consent of the Seller, which
consent shall not be unreasonably withheld.
4. The Seller shall have no liability with respect
to any Taxes resulting by reason of any election made or deemed
to be made by the Purchaser or the Company subsequent to the
Closing, whether express or implied, under Section 338 of the
Code. Upon the condition that the Closing be effected, the
Purchaser and the Company, jointly and severally, will indemnify
and hold harmless the Seller from, against and in respect of any
Adverse Consequences the Seller may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any
election made or deemed to be made by the Purchaser or the
Company subsequent to the Closing, whether express or implied,
under Section 338 of the Code. Neither the Seller nor any of its
Affiliates has any obligation to make an election under Section
338 of the Code.
5. The Seller shall be entitled to any and all Tax
refunds attributable to any Pre-Closing Tax Period and any tax
attributes allocable to Seller under applicable law. If the
Purchaser or the Company voluntarily amends any Return (other
than as required by any Tax Authority) for a taxable period which
includes any Pre-Closing Tax Period, or, without the Seller's
consent (which consent shall not be unreasonably withheld),
enters into any agreement or settlement with any Tax Authority
relating to a taxable period ending after the Closing Date, and
such agreement or settlement affects any item of deduction, loss,
credit, income or gain with respect to any Pre-Closing Tax
Period, then notwithstanding any provision of this Agreement
which may be to the contrary, the Seller shall have no liability
for any Adverse Consequences with respect to any Taxes
attributable to any change in tax liability effected by such
amended Return, agreement or settlement.
6. Notwithstanding any provision of this Agreement
which may be to the contrary, the Purchaser and the Company shall
preserve all Returns, books and records in their control relating
to any liabilities for Taxes due with respect to any Pre-Closing
Tax Period until the expiration of all applicable statutes of
limitation and extensions thereof with respect to Taxes for any
such period.
D. [Intentionally Deleted].
E. Litigation Support. In the event and for so long as
any party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint,
claim or demand in connection with (i) any transaction
contemplated under this Agreement, or (ii) any fact, situation,
circumstance, status, condition, activity, practice, occurrence,
event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the
parties will cooperate with the contesting or defending party
and its or its counsel in the contest or defense, all at the sole
cost and expense of the contesting or defending party (except to
the extent the contesting or defending party is entitled to
indemnification therefor under this Agreement).
F. Non-Competition. For a period commencing on the
Closing Date and terminating on the fifth anniversary thereof
(the "Restriction Period"), the Seller will not, directly or
indirectly, engage in or have any interest in any sole
proprietorship, partnership, corporation or business or any other
Person (other than the Purchaser), whether as an employee,
officer, director, partner, agent, security holder, creditor,
consultant or otherwise, that directly or indirectly is engaged
in the States of Alabama, Georgia, Mississippi, Tennessee,
Florida, Indiana, Illinois, Kentucky, Louisiana, Missouri,
Michigan, North Carolina, South Carolina or Texas in the design,
manufacture or sale of blow-molded plastic containers similar to
those currently manufactured or currently contemplated to be
manufactured by the Company and used for the packaging of potable
liquids, food and industrial bottled products (the "Purchased
Business"); provided, however, that nothing herein shall be
deemed to prevent the Seller from (1) acquiring through market
purchases and owning, solely as an investment, less than five
percent in the aggregate of the equity securities of any class of
any issuer whose shares are registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended, and are
listed or admitted for trading on any United States national
securities exchange or are quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar
system of automated dissemination of quotations of securities
prices in common use, so long as the Seller is not a member of
any "control group" (within the meaning of the rules and
regulations of the United States Securities and Exchange
Commission) of any such issuer, (2) being acquired by an
unaffiliated Person engaged in (or affiliated with an entity
engaged in) the Purchased Business, or (3) acquiring a Person,
all or any portion of its equity interests or certain of its
businesses (the entity or businesses acquired being herein called
the "Acquired Business"), if that portion of the Acquired
Business that competes with the Purchased Business or any portion
thereof (the "Competing Business") accounted for 15% or less of
the total revenues of the Acquired Business during the most
recently completed fiscal year of the Acquired Business preceding
the date of the acquisition; provided further, however, that if
such Competing Business generated more than $5,000,000 in total
revenues during such fiscal year, Seller (or the affiliate
thereof proposing to acquire the Acquired Business) would be
required to use its best efforts to sell, transfer, divest or
otherwise dispose of (or cause such Person to use its best
efforts to sell, transfer, divest or otherwise dispose of) such
Competing Business to an unaffiliated third party within 12
months of such acquisition. The Seller agrees that the covenant
provided for in this Section 8.6 is reasonable and necessary in
terms of time, activity and territory to protect the Purchaser's
interest as a buyer of the Shares. To the extent that the
covenant provided for in this Section 8.6 may later be deemed by
a court to be too broad to be enforced with respect to its
duration or with respect to any particular activity or geographic
area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or
delete specific words or phrases to or from the provision. The
provision as modified shall then be enforced.
G. Non-Disclosure. During the Restriction Period, the
Seller will not disclose, divulge, furnish or make accessible to
anyone (other than the Purchaser or any of its Affiliates or
representatives) any Confidential Information, or in any way use
any Confidential Information in the conduct of any business that
is competitive with the business of the Company; provided,
however, that nothing in this Section 8.7 will prohibit the
disclosure of any Confidential Information (i) which is required
to be disclosed by the Seller or its representatives in
connection with any court action or any proceeding before any
Authority, (ii) in connection with the enforcement of any of the
rights of the Seller hereunder, (iii) in connection with the
defense by the Seller of any claim asserted against it hereunder,
or (iv) which is required to be disclosed under the Securities
Exchange Act of 1934, as amended, or under the rules and
regulations of any national securities exchange on which the
Seller's shares of capital stock are listed; provided, however,
that in the case of a disclosure contemplated by clause (i), no
disclosure shall be made until the Seller shall give notice to
the Purchaser of the intention to disclose such confidential
information so that the Purchaser may contest the need for
disclosure, and the Seller shall cooperate (and will cause its
representatives to cooperate) with the Purchaser in connection
with any such proceeding.
H. Non-Solicitation of Employees, Customers and Sales
Agents. During the Restriction Period, the Seller will not,
directly or indirectly, for itself or for any other Person (other
than the Purchaser), (i) attempt to employ or enter into any
contractual arrangement with any employee or former employee of
the Company until six months after such Person's employment with
the Company ended, or (b) call on or solicit any of the
customers, prospective customers, clients or sales agents of the
Company for the purpose of competing with the Company, nor shall
the Seller make known to any Person (other than the Purchaser)
the names and addresses of such customers, prospective customers,
clients or sales agents for the purpose of competing with the
Company or any information relating in any manner to the trade or
business relationships of the Company with such customers,
prospective customers, clients or sales agents. Neither the
Seller nor any of its Affiliates will take any action to
discourage any employees, customer, supplier or other person with
whom the Company has a business relationship from continuing
employment or business with the Company.
I. Termination of Certain Arrangements. Effective
immediately upon the Closing, without the taking of any further
action by any party, all obligations accruing subsequent to the
Closing under agreements between (x) the Company, on the one
hand, and (y) Seller and/or any of Seller's Affiliates, on the
other, shall terminate and be of no further force or effect.
ARTICLE V.
Survival; Indemnification
A. Survival of Representations and Warranties.
1. The representations and warranties of the Seller
contained in this Agreement shall survive the date of this
Agreement, the Closing Date and the consummation of the
transactions contemplated by this Agreement until April 30, 1998,
except (i) for the representations and warranties contained in
Section 4.18, which shall survive until ninety (90) days after
the expiration of the applicable statute of limitations, and (ii)
for the representations and warranties contained in Sections 4.4,
4.5, 4.6, 5.1, 5.2 and 5.3, which shall survive without
limitation as to time.
2. The representations and warranties of the
Purchaser contained in this Agreement shall survive the date of
this Agreement, the Closing Date and the consummation of the
transactions contemplated by this Agreement until April 30, 1998,
except for the representations and warranties contained in
Sections 3.1 and 3.2, which shall survive without limitation as
to time.
3. To preserve any claim for breach of any such
representation or warranty, the party claiming a breach shall be
obligated to notify the party claimed to be in breach in writing
of any such breach, or facts that may give rise to such breach,
before termination of such representation or warranty; otherwise,
such party's claim for breach shall be forever barred.
B. Indemnification.
1. Upon the condition that the Closing be effected,
the Seller shall indemnify, defend and hold harmless the
Purchaser, the Company and each of their respective Affiliates
from, against and in respect of any Adverse Consequences the
Purchaser or the Company shall suffer through and after the date
of the claim for indemnification resulting from, arising out of,
relating to or caused by any breach or violation of any of the
representations or warranties of the Seller contained in Article
4 of this Agreement; provided, however, that the Seller shall not
have any obligation to indemnify the Purchaser or the Company
from, against or in respect of any Adverse Consequences resulting
from, arising out of, relating to or caused by the breach or
violation of any of the representations or warranties contained
in Sections IV.A through IV.Q, and Sections IV.T through 4.29
hereof (i) until and except to the extent that the Purchaser has
suffered Adverse Consequences by reason of all such breaches or
violations in excess of a $150,000 aggregate deductible, or (ii)
to the extent the Adverse Consequences suffered by the Purchaser
by reason of all such breaches or violations exceed the sum of
$1,500,000.
2. Upon the condition that the Closing be effected,
the Seller shall indemnify, defend and hold harmless the
Purchaser, the Company and each of their respective Affiliates
from, against and in respect of any Adverse Consequences the
Purchaser or the Company shall suffer through and after the date
of the claim for indemnification resulting from, arising out of,
relating to or caused by (1) any breach or violation of any of
the representations or warranties of the Seller contained in
Article 5 of this Agreement, or (2) the failure by the Seller to
comply with any of the covenants or agreements of the Seller or
pre-Closing covenants of the Company contained in this Agreement,
or (3) any of the Company's Funded Indebtedness, including the
Specified Parent Debt.
3. Upon the condition that the Closing be effected,
the Purchaser shall indemnify, defend and hold harmless the
Seller and each of its Affiliates from, against and in respect
of, any Adverse Consequences it shall suffer through and after
the date of the claim for indemnification resulting from, arising
out of, relating to or caused by (i) any breach or violation of
any of the representations or warranties of the Purchaser
contained in this Agreement, or (ii) the failure by the Purchaser
to comply with any of the covenants or agreements of the
Purchaser contained in this Agreement.
4. A party (which, if the Purchaser is to be
indemnified, shall be deemed to include the Company) seeking
indemnification pursuant to this Section IX.B (the "Indemnified
Party") shall immediately notify the party from whom such
indemnification is sought (the "Indemnifying Party") in the event
that any person not a party to this Agreement shall make any
demand or claim, or file or threaten to file any lawsuit (a
"Third Party Claim"), which Third Party Claim may cause liability
to the Indemnifying Party pursuant to the indemnification
provisions of this Agreement. In any such event, the
Indemnifying Party shall have the right, exercisable by notice to
the Indemnified Party within 20 days after notice by the
Indemnified Party to the Indemnifying Party of the commencement
or assertion of such Third Party Claim, to retain counsel, at the
cost and expense of the Indemnifying Party, to defend any such
Third Party Claim. The Indemnified Party shall be permitted to
employ separate counsel and to participate in the defense of such
Third Party Claim, but the fees and expenses of such counsel
shall be borne by the Indemnified Party. In the event that the
Indemnifying Party shall fail to respond within 20 days after
receipt of notice from the Indemnified Party of the commencement
or assertion of any such Third Party Claim, then the Indemnified
Party shall retain counsel and conduct the defense of such Third
Party Claim as it or he may in its or his discretion deem proper,
at the cost and expense of the Indemnifying Party.
5. Unless and until an Indemnifying Party assumes
the defense of a Third Party Claim as provided in Section 9.2.4,
the Indemnified Party may defend against the Third Party Claim in
any manner it may reasonably deem appropriate.
6. The Indemnifying Party, if it shall have assumed
the defense of any Third Party Claim, shall not have the right to
consent to the entry of judgment with respect to, or otherwise
settle such Third Party Claim without the prior written consent
of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed), unless the judgment or proposed settlement
involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party.
In no event will the Indemnified Party consent to the entry of
any judgment with respect to, or otherwise settle any such Third
Party Claim without the prior written consent of the Indemnifying
Party (which consent shall not be unreasonably withheld or
delayed).
7. The parties hereto shall cooperate in the
defense of any Third Party Claim and shall furnish such records,
information and testimony, and attend at such conferences,
discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith.
8. The amount of any Adverse Consequences subject
to indemnification under Sections 9.2.1 or 9.2.2 shall be
calculated net of any amounts which have been previously
recovered by the Purchaser or the Company under insurance
policies or other collateral sources (such as contractual
indemnities of any Person which are contained outside this
Agreement) as a result of, and in full or partial compensation
for, the subject matter of the indemnification claim, and the
Purchaser hereby covenants that it will not release any such
collateral sources from any obligations they may have. In the
event any such amounts recovered or recoverable under insurance
policies or other collateral sources are not received before any
claim for indemnification is paid pursuant to this Section IX.B,
then the Purchaser shall pursue such insurance policies or
collateral sources with reasonable diligence, and in the event it
receives any recovery, the amount of such recovery shall be
applied first, to reimburse the Purchaser for its out-of-pocket
expenses (including reasonable attorneys' fees) expended in
pursuing such recovery, second, to refund any payments made by
the Seller pursuant to this Section IX.B which would not have
been so paid had such recovery been obtained prior to such
payment, and third, any excess to the Purchaser. In addition,
and solely for purposes of determining whether the $150,000
deductible specified in Section 9.2.1 has been satisfied, Adverse
Consequences shall be computed in a manner such as to give effect
to the federal tax benefit (computed at an assumed tax rate of
34%), if any, resulting from or in connection with the Adverse
Consequences that would otherwise (but for the deductible)
entitle Purchaser to indemnification. For example, if the
Purchaser incurs legal fees of $100,000 that are deductible by
Purchaser for federal income tax purposes, then the "Adverse
Consequence" would be $66,000. All indemnification payments
under this Section IX.B shall be deemed adjustments to the
Purchase Price.
9. Any payment made by the Seller pursuant to its
indemnification obligations under Section 8.3.1 or this Section
IX.B shall constitute a reduction in the Purchase Price
hereunder. Any payment made by the Purchaser pursuant to the
Purchaser's indemnification obligations under this Section IX.B
shall constitute an addition to the Purchase Price hereunder.
C. Limitation of Recourse. The rights of the parties for
indemnification relating to this Agreement or the transactions
contemplated hereby shall be strictly limited to those contained
in Section IX.B hereof, and subject to the last sentence hereof
and to the provisions of Section 11.13 hereof, such
indemnification rights shall be the exclusive remedies of the
parties subsequent to the Closing Date with respect to any matter
in any way relating to this Agreement or arising in connection
herewith. To the maximum extent permitted by Law, the Purchaser
hereby waives and shall use its reasonable best efforts to cause
its Affiliates to waive all other rights and remedies with
respect to any such matter, whether under any Laws (including,
without limitation, any right or remedy under CERCLA or any other
Environmental Health and Safety Law), at common law or otherwise.
No claim, action or remedy shall be brought or maintained
subsequent to the Closing Date by the Purchaser or the Company or
their respective Affiliates, successors or permitted assigns
against the Seller, and no recourse shall be brought or granted
against the Seller, by virtue of or based upon any alleged
misstatement or omission respecting an inaccuracy in or breach of
any of the representations, warranties or covenants of the Seller
set forth or contained in this Agreement, except to the extent
that the same shall have been the result of fraud by any such
Person (and in the event of fraud, recourse shall only extend to
those Persons committing fraud).
D. Releases.
1. The Purchaser and the Company hereby release
Earl W. Powell, Phillip T. George, M.D., Anthony F. Bova, Paul
Rudovsky, Peter W. Klein, Peter Kacer and Marilyn Kuffner from
any and all claims by or liabilities to the Company, whether
known or unknown, whether now existing or hereinafter discovered
to exist, arising as a result of a breach of their fiduciary
duties as officers or directors of the Company, except to the
extent that any such breach involved knowing wrongdoing,
fraudulent or criminal activity.
2. The Purchaser and the Company do hereby release
Trivest, Inc. ("Trivest") from any and all claims by or
liabilities to the Company, whether known or unknown, whether now
existing or hereinafter discovered to exist, arising in
connection with Trivest's Management Agreement with Atlantis,
except to the extent the claim results from knowing wrongdoing,
fraudulent or criminal activity on the part of Trivest.
ARTICLE VI.
Modification, Waivers and Termination
A. Modification. The parties hereto may, by mutual
consent, amend, modify or supplement this Agreement in such
manner as may be agreed upon by them in writing at any time.
B. Waivers. The Purchaser, by an instrument in writing,
may extend the time for or waive the performance of any of the
obligations of the Seller or waive compliance by the Seller with
any of the covenants or conditions of the Seller contained
herein, and the Seller, by an instrument in writing, may extend
the time for or waive the performance of any of the obligations
of the Purchaser or waive compliance by the Purchaser with any of
the covenants or conditions of the Purchaser contained herein.
C. Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, prior to the Closing
as follows:
1. by the Purchaser and the Seller by mutual
written consent at any time;
2. by the Purchaser by giving written notice to the
Seller at any time (i) in the event the Seller has breached any
of its representations, warranties, covenants or agreements
contained in this Agreement (and all prior notices pursuant to
Section VI.F) in any material respect, the Purchaser has notified
the Seller of the breach and the breach has continued without
cure for a period of 30 days after the notice of breach, or (ii)
if the Closing shall not have occurred on or before November 30,
1996 (unless the failure results primarily from the Purchaser
itself breaching any representation, warranty, covenant or
agreement of the Purchaser contained in this Agreement);
3. by the Seller by giving written notice to the
Purchaser at any time (i) in the event the Purchaser has breached
any representation, warranty, covenant or agreement of the
Purchaser contained in this Agreement in any material respect,
the Seller has notified the Purchaser of the breach, and the
breach has continued without cure for a period of 30 days after
the notice of breach, or (ii) if the Closing shall not have
occurred on or before November 30, 1996 (unless the failure
results primarily from the Seller itself breaching any of its
representations, warranties, covenants or agreements contained in
this Agreement); or
4. by the Seller or by the Purchaser at any time
prior to the Closing Date if the Closing shall violate any order,
decree or judgment of any court or any Authority having competent
jurisdiction.
D. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 10.3, all rights and obligations
of the parties hereunder shall terminate without liability of any
party to any other party (except as contemplated by the Deposit
Escrow Agreement and except for any liability of any party then
in breach); provided, however, that the provisions of Section
11.7 and this 10.4 shall remain in full force and effect.
ARTICLE VII.
Miscellaneous
A. Notices. Any notices, requests, demands and other
communications required or permitted to be given hereunder shall
be in writing and, except as otherwise specified in writing,
shall be given by personally delivery, facsimile transmission,
Airborne Express (or other similar courier service) or by
registered or certified mail, postage prepaid, return receipt
requested (i) if to the Seller, c/o Trivest, Inc., 2665 South
Bayshore Drive, Suite 800, Miami, Florida 33133, telecopier:
(305) 858-1629, attention: General Counsel, and (ii) if to the
Purchaser, to the address for notices set forth on the signature
page hereto (with copies, as applicable, as set forth on such
signature page), or to such other addresses as any party hereto
may from time to time give notice of (complying as to delivery
with the terms of this Section 11.1) to the other. Notice by
registered or certified mail shall be effective three days after
deposit in the United States mail. Notice by any other permitted
means will be effective upon receipt.
B. Entire Agreement. This Agreement and the
Confidentiality Letter, dated March 18, 1996, between the
Purchaser and Harris Williams & Co. constitute the entire
agreement among the parties hereto with respect to the
transactions contemplated hereby and supersede all prior
agreements, understandings, negotiations and discussions, both
written and oral, among the parties hereto with respect to
thereto, including, without limitation, the Letter of Intent
dated May 21, 1996 among Atlantis Plastics, Inc., and certain
Affiliates of Purchaser.
C. Benefits; Binding Effect; Assignment. This Agreement
shall be for the benefit of and binding upon the parties hereto,
their respective successors and, where applicable, assigns. No
party may assign this Agreement or any of its rights, interests
or obligations hereunder without the prior approval of the other
party; provided, however, that (i) before the Closing is
effected, the Purchaser may (A) assign any or all of its rights
and interests hereunder to one or more of its Affiliates, and (B)
designate one or more of its Affiliates to perform its
obligations hereunder (but in any or all of such cases the
Purchaser shall nonetheless remain responsible for the
performance of all of its obligations hereunder), and (ii) after
the Closing is effected, any or all of the rights and interests
of the Purchaser hereunder (A) may be assigned to any purchaser
of substantially all of the assets of the Purchaser, (B) may be
assigned as a matter of law to the surviving entity in any merger
of the Purchaser, and (C) may be assigned as collateral security
to any lender or lenders (including any agent for any such lender
or lenders) providing financing to the Purchaser in connection
with the transactions contemplated hereby, or to any assignee or
assignees of any such lender, lenders or agent.
D. Waiver. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall any
such waiver constitute a continuing waiver unless otherwise
expressly so provided.
E. No Third Party Beneficiary. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any Person other than the parties hereto and
their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
F. Severability. It is the desire and intent of the
parties hereto that the provisions of this Agreement be enforced
to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of
this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as
not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly
drawn, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
G. Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, all legal, accounting and
other costs and expenses incurred in connection with this
Agreement and any of the transactions contemplated hereby on
behalf of the Purchaser shall be borne and paid by the Purchaser,
and all such costs and expenses incurred on behalf of the Seller
shall be borne and paid by the Seller.
H. Section Headings. The section and other headings
contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of any provisions
of this Agreement.
I. Counterparts. This Agreement may be executed in any
number of counterparts and by the several parties hereto in
separate counterparts, each of which shall be deemed to be one
and the same instrument.
J. Litigation; Prevailing Party. In the event of any
litigation with regard to this Agreement, the prevailing party
shall be entitled to receive from the non-prevailing party and
the non-prevailing party shall pay all reasonable fees and
expenses of counsel for the prevailing party.
K. Remedies Cumulative. No remedy made available by any
of the provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to ever other remedy given
hereunder or now or hereafter existing at law or in equity.
L. Governing Law; Waiver of Jury Trial; Jurisdiction.
1. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK TO BE APPLIED; PROVIDED, HOWEVER, THAT
WITH RESPECT TO ANY REAL ESTATE OWNED OR LEASED BY THE COMPANY,
THE DOMESTIC LAWS OF THE STATE WHERE SUCH REAL ESTATE IS LOCATED
SHALL GOVERN. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW
OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S
CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
2. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING ARISING HEREUNDER.
3. The parties to this Agreement agree that any and
all actions arising under or in respect of this Agreement shall
be litigated exclusively in any federal or state court of
competent jurisdiction located in the State of Georgia. By
execution and delivery of this Agreement, each party to this
Agreement irrevocably submits to the personal and exclusive
jurisdiction of such courts for itself, himself or herself and in
respect of its, his or her property with respect to such action.
Each party to this Agreement agrees that venue would be proper in
any of such courts, and hereby waives any objection that any such
court is an improper or inconvenient forum for the resolution of
any such action. The parties further agree that the mailing by
certified or registered mail, return receipt requested, to the
addresses specified for notice in this Agreement, of any process
or summons required by any such court shall constitute valid and
lawful service of process against them, without the necessity for
service by any other means provided by statute or rule of court.
M. Equitable Remedies. The Seller acknowledges and agrees
that the Purchaser would not have an adequate remedy at law in
the event any of the provisions of Sections 8.6, 8.7 and 8.8 of
this Agreement are not performed in accordance with their
specific terms or are breached. Accordingly, each of the parties
hereto agrees that the Purchaser shall be entitled to an
injunction or injunctions to prevent breaches of Sections 8.6,
8.7 and 8.8 of this Agreement and to enforce specifically the
terms and provisions hereof in any action instituted in any court
of competent jurisdiction, in addition to any other remedies
which may be available to it. Neither rescission nor reformation
of this Agreement shall be available as a remedy to any of the
parties hereto.
N. Construction. The provisions of this Agreement shall
be construed according to their fair meaning and neither for nor
against any party hereto irrespective of which party caused such
provisions to be drafted. Each of the parties acknowledge that
it has been represented by an attorney in connection with the
preparation and execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have each executed
and delivered this Agreement as of the day and year first above
written.
ATLANTIS MOLDED PLASTICS, INC.
By:_____________________________
PLASTIC CONTAINERS, INC.
By:_____________________________
REID PLASTICS, INC.
By:_____________________________
Address for Notices:
440 East Huntington Drive
Arcadia, California 91006-3776
Attention: President
With copies to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: James B. Carlson
