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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) December 12, 1996
PVC CONTAINER CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-300067 13-2616435
(State of other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no
401 Industrial Way West, Eatontown, New Jersey 07724
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 542-0060
N/A
(Former name or former address, if changed since last report)
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Item 1 Changes in Control in Registrant.
(a) On December 12, 1996 Kirtland Capital Partners II L.P.
("Kirtland"), an Ohio limited partnership, located at 2550 SOM Center Road,
Suite 105, Willoughby Hills, Ohio 44094, Att: Mr. Raymond A. Lancaster, acquired
4,367,415 shares of the common stock of the Registrant (the "Shares") in
consideration of the payment in cash of the sum of $17, 469,660 pursuant to a
Stock Purchase Agreement dated December 3, 1996 among Kirtland, the Registrant
and Rimer Anstalt which sold the Shares. A copy of the Stock Purchase Agreement
is annexed as an exhibit hereto. In acquiring control of the Registrant and as a
result thereof, Kirtland owns 63% of the issued and outstanding shares of the
common stock of the Registrant.
Item 5 Other Events.
The Registrant entered into an Employment agreement as of July 1, 1996
with Phillip L. Friedman, who is President and Chief Executive Officer of the
Registrant, and a copy of such agreement is annexed as an exhibit hereto. On
November 19, 1996 the Board of Directors of the Registrant approved the 1996
Incentive Stock Option Plan authorizing the granting of options to purchase up
to 500,000 shares of common stock of the Registrant and a copy of such Plan is
annexed as an exhibit hereto.
Item 7. Exhibits.
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EXHIBITS
The following exhibits are filed herewith:
Exhibit No. Description Page Number
- ----------- ----------- -----------
10.1 Stock Purchase Agreement dated
December 3, 1996 among Registrant,
Kirtland and Rimer Anstalt
10.2 Employment Agreement dated
July 1, 1996 between the
Registrant and Phillip L. Friedman
10.3 1996 Incentive Stock Option Plan
of the Registrant
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 12, 1996 PVC CONTAINER CORPORATION
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(Registrant)
By: /s/ Phillip L. Friedman
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Phillip L. Friedman,
President
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EXHIBIT INDEX
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Exhibit No. Description
----------- -----------
10.1 Stock Purchase Agreement dated
December 3, 1996 among Registrant,
Kirtland and Rimer Anstalt
10.2 Employment Agreement dated
July 1, 1996 between the
Registrant and Phillip L. Friedman
10.3 1996 Incentive Stock Option Plan
of the Registrant
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of this 3rd day of December, 1996, by and among Kirtland Capital
Partners II L.P., an Ohio limited partnership (the "Buyer"), PVC Container
Corporation, a Delaware corporation (the "Company"), and Rimer Anstalt, a
Liechtenstein anstalt (the "Seller").
RECITALS
A. The Company has 7,004,705 shares of common stock,
par value $.01 per share (the "Shares"), issued and outstanding; and
B. The Seller is the sole record and beneficial owner
of 4,367,415 Shares (the "Purchase Shares"); and
C. The Seller is willing to sell, and the Buyer is
willing to purchase, all of the Purchase Shares on the terms set forth herein;
OPERATIVE PROVISIONS
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, conditions and agreements
herein contained, and intending to be legally bound, the parties hereto hereby
agree as follows:
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ARTICLE I
PURCHASE AND SALE OF THE PURCHASE SHARES
1.1 Sale of the Purchase Shares. At the Closing (as hereinafter
defined), the Seller shall sell, convey, transfer and deliver to the Buyer and
the Buyer shall purchase and acquire from the Seller, the Purchase Shares free
and clear of any and all liens, pledges, charges, proxies, equities,
encumbrances, contracts, commitments, title retention agreements, restrictions
on transfer (except under applicable securities laws), security interests,
warrants, options, rights or adverse claims of others of any nature with respect
thereto (collectively, the "Liens").
1.2 Purchase Price. At the Closing and in consideration for the
Purchase Shares, the Buyer shall pay to the Seller the aggregate sum of U.S.
$17,469,660 (the "Purchase Price") by wire transfer of immediately available
funds to such account of the Seller as the Seller shall specify in writing to
the Buyer.
ARTICLE II
CLOSING AND CLOSING DATE
2.1 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Jones, Day,
Reavis & Pogue, 599 Lexington Avenue, New York, New York on December 12, 1996
subject to the satisfaction or waiver of each of the conditions set forth in
Article IX hereof or such other time and place as the Buyer, the
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Company and the Seller shall agree (such date is referred to in this Agreement
as the "Closing Date").
2.2 Deliveries at the Closing. At the Closing, (a) the Seller shall
deliver to the Buyer the various certificates, instruments and documents
referred to in Section 6.1 hereof, (b) the Company shall deliver to the Buyer
the various certificates, instruments and documents referred to in Section 6.3
hereof, and (c) the Buyer shall deliver to the Seller the Purchase Price as
provided in Section 6.2 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
3.1 Corporate Status. The Seller is an anstalt duly organized, validly
existing and in good standing under the laws of Liechtenstein. The Seller has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. The Seller has heretofore made
available to the Buyer true, correct and complete copy of its Statutes.
3.2 Authority and Capacity for Agreements. The Seller has all requisite
power, authority and capacity to execute and deliver this Agreement and to carry
out and perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate
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action on the part of the Seller. This Agreement has been duly executed and
delivered by the Seller and constitutes the valid and legally binding obligation
of the Seller enforceable in accordance with its terms except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
3.3 Noncontravention. Neither the execution, delivery and performance
by the Seller of this Agreement and the consummation (in accordance with the
terms hereof) of the transactions contemplated hereby, nor compliance by the
Seller with any of the provisions hereof will violate, conflict with, or result
in (with or without the giving of notice or the lapse of time or both) a default
under or a breach or violation of, any provision of (a) the Statutes of the
Seller, (b) any mortgage, indenture, lease, contract, deed, agreement or other
instrument to which the Seller is a party or by which it is bound or to which
any of its properties or assets is subject, (c) any law, rule or regulation of
any governmental body (whether domestic or foreign), or (d) any order, judgment
or decree of any court or other governmental body (whether domestic or foreign).
Except as otherwise provided in Schedule 3.3 attached hereto, no consent,
approval, authorization, order, filing, registration, declaration or
qualification of or with any court, governmental body (whether domestic or
foreign) or third person is required to be obtained
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by or on behalf of the Seller in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
3.4 Title to the Purchase Shares. The Seller is the sole record and
beneficial owner of the Purchase Shares, free and clear of any and all Liens.
The Purchase Shares represent (a) all of the Shares owned, directly or
indirectly, by the Seller or any of its Affiliates (as hereinafter defined), and
(b) 63% of the issued and outstanding Shares. Each of the Purchase Shares has
been duly and validly authorized and issued and is fully paid and
non-assessable. Neither the Seller nor any of its Affiliates has, directly or
indirectly, any outstanding rights, options, warrants, conversion rights, calls,
puts or agreements of any nature to purchase or acquire any Shares from the
Company or any other person or entity. The Seller is not a party to any (a)
voting trust, proxy, or other agreement or understanding with respect to the
voting of any of the Shares, or (b) option, warrant, purchase right or other
contract or commitment that requires the Seller to sell, transfer or otherwise
dispose of any of the Purchase Shares (other than pursuant to this Agreement).
Upon the delivery of and payment for the Purchase Shares as provided in this
Agreement, the Buyer shall acquire good, marketable and valid title to the
Purchase Shares, free and clear of any and all Liens. For purposes of this
Agreement, "Affiliate" of any person or entity means any person or entity
directly or indirectly controlling, controlled by, or under common control with,
any such person or entity.
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3.5 No Brokers. Neither the Seller nor any Affiliate of the Seller has
retained or been approached by any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer
as follows:
4.1 Corporate Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in the jurisdictions set forth on Schedule 4.1 attached hereto, which
are the only jurisdictions in which the Company is required to be so qualified.
The Company has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company has
heretofore made available to the Buyer true, correct and complete copies of its
Certificate of Incorporation and By-Laws.
4.2 Subsidiaries. Schedule 4.2 attached hereto identifies each entity
in which the Company owns, directly or indirectly, any shares of capital stock
or other equity securities (collectively, the "Subsidiaries"). Schedule 4.2
includes for each Subsidiary (a) the name of such Subsidiary, (b) the authorized
capital stock of such Subsidiary and the number of shares of such stock owned,
directly or indirectly, by
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the Company, and (c) the jurisdiction of incorporation of such Subsidiary. All
of the issued and outstanding shares of capital stock of each Subsidiary are
duly authorized, validly issued, fully paid and nonassessable. No bonds,
debentures, notes or other instruments or evidence of indebtedness having the
right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters on which stockholders of any
Subsidiary may vote ("Subsidiary Voting Debt") are issued or outstanding. Except
as set forth in Schedule 4.2, there are outstanding: (a) no shares of capital
stock, Subsidiary Voting Debt or other voting securities of any Subsidiary; (b)
no securities of any Subsidiary convertible into, or exchangeable or exercisable
for, shares of capital stock of any Subsidiary, Subsidiary Voting Debt or other
voting securities of any Subsidiary, and (c) no options, warrants, calls, puts,
rights (including, without limitation, preemptive rights), commitments or
agreements to which any Subsidiary is a party or by which it is bound, in any
case obligating any Subsidiary to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, additional shares of capital stock of any Subsidiary or other voting
securities of any Subsidiary, or obligating any Subsidiary to grant, execute or
enter into any such option, warrant, call, put, right, commitment or agreement.
Except as otherwise disclosed on Schedule 4.2 attached hereto, the Company,
directly or indirectly, has good and marketable title to, and is the sole legal
and beneficial owner of, all of the issued and outstanding
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shares of capital stock of each Subsidiary, free and clear of any and all Liens.
Each Subsidiary is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation as set forth on Schedule
4.2 and is duly qualified to do business as a foreign corporation and is in good
standing in the jurisdictions set forth on Schedule 4.2 attached hereto, which
are the only jurisdictions in which any such Subsidiary is required to be
qualified. Each Subsidiary has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
4.3 Authority and Capacity for Agreement. The Company has all requisite
power, authority and capacity to execute and deliver this Agreement and to carry
out and perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and legally binding obligation of the Company enforceable
in accordance with its terms except that the enforcement hereof may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
4.4 Noncontravention. Neither the execution, delivery and performance
by the Company of this Agreement and the
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consummation (in accordance with the terms hereof) of the transactions
contemplated hereby, nor compliance by the Company with any of the provisions
hereof will violate, conflict with, or result in (with or without the giving of
notice or the lapse of time or both) a default under or a breach or violation
of, any provision of (a) the Certificate of Incorporation or By-Laws of the
Company, (b) any mortgage, indenture, lease, contract, deed, agreement or other
instrument to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, (c) any law, rule or regulation of
any governmental body (whether domestic or foreign), or (d) any order, judgment
or decree of any court or other governmental body (whether domestic or foreign).
Neither the Company nor any of its Subsidiaries is a party to or otherwise bound
by any agreement or other instrument providing for the payment of any benefit as
a result of the consummation of the transactions contemplated hereby. Except as
otherwise provided in Schedule 4.4 attached hereto, no consent, approval,
authorization, order, filing, registration, declaration or qualification of or
with any court, governmental body (whether domestic or foreign) or third person
is required to be obtained by or on behalf of the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.5 Capital Structure. The authorized capital stock of the Company
consists solely of (a) 10,000,000 shares of common stock, par value $.01 per
share, of which 7,004,705 are issued and outstanding, and (b) 1,000,000 shares
of preferred stock, par
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value $1.00 per share, of which none are issued and outstanding. There are no
employment, executive termination or similar agreements providing for the
issuance of any shares of capital stock of the Company. No bonds, debentures,
notes or other instruments or evidence of indebtedness having the right to vote
(or convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company's stockholders may vote (the
"Company Voting Debt") are issued or outstanding. Except as set forth in this
Section 4.5, there are outstanding: (a) no Shares, Company Voting Debt or other
voting securities of the Company; (b) no securities of the Company convertible
into, or exchangeable or exercisable for, Shares, Company Voting Debt or other
voting securities of the Company; and (c) no options, warrants, calls, puts,
rights (including, without limitation, preemptive rights), commitments or
agreements to which the Company is a party or by which it is bound, in any case
obligating the Company to issue, deliver, sell, purchase, redeem or acquire, or
cause to be issued, delivered, sold, purchased, redeemed or acquired, additional
shares of capital stock or any Company Voting Debt or other voting securities of
the Company, or obligating the Company to grant, extend or enter into any such
option, warrant, call, put, right, commitment or agreement. There are not any
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting of
any Shares that will limit in any way the
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solicitation of proxies by or on behalf of the Company from, or the casting of
votes by, the stockholders of the Company.
4.6 SEC Filings. Each report, schedule, registration statement and
definitive proxy statement filed by the Company (the "Company SEC Documents")
with the Securities and Exchange Commission (the "SEC") complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents. None of the
Company SEC Documents contained any untrue statement of material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principals ("GAAP") applied on a
consistent basis during the periods involved and present fairly, in all material
respects, in accordance with applicable requirements of GAAP the consolidated
financial position of the Company and its consolidated subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of the Company and its consolidated subsidiaries for the periods
presented therein.
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4.7 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents, since September 30, 1996, the business of the Company has
been carried on only in the ordinary and usual course and there has not been any
adverse change in its business, results of operations or financial condition.
4.8 Compliance with Applicable Laws. To the knowledge of the Company,
the Company and its Subsidiaries hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all governmental bodies
necessary for the lawful conduct of their respective businesses (the "Company
Permits"). To the knowledge of the Company and except as disclosed in the
Company SEC Documents, the businesses of the Company and its Subsidiaries are
not being conducted in violation of any law, ordinance or regulation of any
governmental body. To the knowledge of the Company, no investigation or review
by any governmental body with respect to the Company or any of its Subsidiaries
is pending or threatened.
4.9 Litigation. To the knowledge of the Company and except as disclosed
in the Company SEC Documents, there is no suit, action or proceeding pending or
threatened against or affecting the Company or any Subsidiary of the Company,
nor is there any written judgement, decree, injunction, rule or order of any
governmental body or arbitrator outstanding against the Company or any
Subsidiary of the Company, which is reasonably likely to result in a material
adverse effect on the Company or its ability to consummate the transactions
contemplated hereby.
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4.10 Taxes. (a) To the knowledge of the Company, except as set forth in
Schedule 4.10(a), (i) all Tax (as hereinafter defined) returns, statements,
reports and forms (including estimated tax or information returns and reports)
required to be filed with any Taxing Authority (as hereinafter defined) with
respect to any Pre-Closing Tax Period (as hereinafter defined) by or on behalf
of the Company or any Subsidiary (collectively, the "Returns") have, to the
extent required to be filed on or before the date hereof, been filed when due in
accordance with all applicable laws; (ii) as of the time of filing, the Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and status of the Company and its Subsidiaries; (iii) all
Taxes shown as due and payable on the Returns that have been filed have been
timely paid, or withheld and remitted to the appropriate Taxing Authority; (iv)
the reserves established for Taxes with respect to the Company and its
Subsidiaries for any Pre-Closing Tax Period (including any Pre-Closing Tax
Period for which no Return has yet been filed) reflected on the books of the
Company and its Subsidiaries (excluding any provision for deferred income taxes)
are adequate in accordance with GAAP; (v) neither the Company nor any Subsidiary
is delinquent in the payment of any Tax or has requested any extension of time
within which to file any Return except for extensions granted as a matter of
right; (vi) neither the Company nor any Subsidiary (or any member of any
affiliated, consolidated, combined or unitary group of which the Company or any
Subsidiary is or has been a member) has granted
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any extension or waiver of the statute of limitations period applicable to any
Return, which period (after giving effect to such extension or waiver) has not
yet expired; (vii) there is no action, suit or proceeding now pending and no
claim, audit or investigation now pending or any action, suit, claim, audit or
investigation threatened against or with respect to the Company or any
Subsidiary in respect of any Tax; (viii) neither the Company nor any Subsidiary
owns any interest in real property in the State of New York or in any other
jurisdiction in which a Tax is imposed on the transfer of a controlling interest
in an entity that owns any interest in real property; (ix) none of the Company,
any Subsidiary or any other person on behalf of the Company or any Subsidiary
has entered into any agreement or consent pursuant to Section 341(f) of the
Code; (x) there are no Liens for Taxes upon the assets of the Company or any
Subsidiary except Liens for current Taxes not yet due; (xi) neither the Company
nor any Subsidiary will be required to include any adjustment in taxable income
for any Post-Closing Tax Period (as hereinafter defined) under Section 481(c) of
the Code (or any similar provision of the Tax laws of any jurisdiction) as a
result of a change in method of accounting for a Pre-Closing Tax Period or
pursuant to the provisions of any agreement entered into with any Taxing
Authority with regard to the Tax liability of the Company or any Subsidiary for
any Pre-Closing Tax Period; and (xii) neither the Company nor any Subsidiary has
been a member of an affiliated, consolidated, combined or unitary group or
participated in any other arrangement whereby any income,
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revenues, receipts, gain or loss of the Company or any Subsidiary was determined
or taken into account for Tax purposes with reference to or in conjunction with
any income, revenues, receipts, gain, loss, asset or liability of any other
person or entity. To the knowledge of the Company, except as set forth on
Schedule 4.10(a), neither the Company nor any of its Subsidiaries is a party to
or bound by any agreement providing for the allocation or sharing of Taxes with
any entity which is not, either directly or indirectly, a Subsidiary of the
Company (a "Tax Sharing Agreement").
(b) Schedule 4.10(b) contains a list of all jurisdictions
(whether foreign or domestic) to which any Tax imposed on overall net income is
properly payable by the Company or any Subsidiary. The Company has previously
delivered or made available to Buyer true, correct and complete copies of its
federal income tax returns for each of the fiscal years ended December 31, 1990
through December 31, 1995.
(c) For purposes of this Agreement, (i) "Tax" shall mean (a)
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
withholding on amounts paid to or by the Company or any Subsidiary, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority
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(domestic or foreign) responsible for the imposition of any such tax (a "Taxing
Authority"), (b) any liability of the Company or any Subsidiary for the payment
of any amounts of any of the types described in clause (a) above as a result of
being a member of an affiliated, consolidated, combined or unitary group, or
being a party to any agreement or arrangement whereby liability of the Company
or any Subsidiary for payment of such amounts was determined or taken into
account with reference to the liability of any other person, and (c) liability
of the Company or any Subsidiary for the payment of any amounts as a result of
being party to any Tax Sharing Agreement or with respect to the payment of any
amounts of any of the foregoing types as a result of any express or implied
obligation to indemnify any other person; (ii) "Pre-Closing Tax Period" shall
mean any Tax period (or portion thereof) ending on or before the close of
business on the Closing Date; and (iii) "Post-Closing Tax Period" shall mean any
Tax period (or portion thereof) ending after the close of business on the
Closing Date.
4.11 Pension And Benefit Plans; ERISA.
To the knowledge of the Company, Schedule 4.11 attached hereto contains
a true and complete list of each "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries for the benefit of current, former and
retired employees (the "Company ERISA Plans") and each other material plan,
contract, program or arrangement
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maintained, contributed to or required to be contributed to by the Company or
any of its Subsidiaries for the benefit of current, former and retired employees
and directors (the "Company Benefit Arrangements"). To the knowledge of the
Company, each Company ERISA Plan and each Company Benefit Arrangement complies
in all material respects with its terms and all applicable laws, including
ERISA, and no "reportable event," "prohibited transaction" or breach of
fiduciary duty (within the meaning of ERISA) or termination has occurred with
respect to any Company ERISA Plan under circumstances which present a risk of
any material liability to any governmental authority or other person. To the
knowledge of the Company, none of the Company ERISA Plans or Company Benefit
Arrangements is a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA
or a "multiple employee plan" within the meaning of Section 413(c) of the Code
or Section 4063 of ERISA. To the knowledge of the Company, no event has occurred
which would cause the Company to incur (i) any liability to the Pension Benefit
Guaranty Corporation under Section 4069 of ERISA or (ii) any withdrawal
liability to a "multiemployer plan." Copies or descriptions of each Company
ERISA Plan and Company Benefit Arrangement (and, where applicable, the most
recent summary plan description, actuarial report, determination letter, annual
report (Form 5500) and trust agreement relating to such Company ERISA Plan and
Company Benefit Arrangement), and such other information as has been reasonably
requested by Buyer, have been made available to Buyer for review prior to the
date hereof. To the knowledge of the Company, each Company ERISA Plan and each
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Company Benefit Arrangement intended to qualify under section 401(a) of the
Code, is so qualified, and each trust maintained in connection with each such
plan is tax exempt under Code Section 501(a). To the knowledge of the Company,
the Internal Revenue Service ("IRS") has issued favorable determination letters
with respect to the qualification of each qualified Company ERISA Plan and each
qualified Company Benefit Arrangement and related trust, and the IRS has not
taken any action to revoke any such letter. To the knowledge of the Company, if
and to extent applicable, no Company ERISA Plan and no Company Benefit
Arrangement has or has incurred an accumulated funding deficiency within the
meaning of ERISA Section 302 or Code Section 412, nor has any waiver of the
minimum funding standards of ERISA Section 302 and Code Section 412 been
requested of or granted by the IRS with respect to any Company ERISA Plan or
Company Benefit Arrangement, nor has any lien in favor of any such plan arisen
under Code Section 412(n) or ERISA Section 302(f). To the knowledge of the
Company, with respect to any insurance policy providing funding for benefits
under any Company ERISA Plan or Company Benefit Arrangement, there is no
liability of the Company in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, there will be no
such liability arising wholly or partially out of events occurring prior to the
execution of this Agreement, nor would there be any such liability if the
Company cancelled such policy as of the execution of this Agreement.
4.12 Environmental Matters.
(a) For purposes of this Agreement:
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(i) "Environmental Law" means any applicable law regulating or
prohibiting Releases into any part of the environment (indoor or
outdoor), or pertaining to the protection of natural resources or the
environment including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C.Sections 6901,
et seq.), the Clean Water Act (33 U.S.C. Sections 1251, et seq.),
the Clean Air Act (33 U.S.C. Sections 7401, et seq.), the Toxic
Substances Control Act (15 U.S.C. Sections 7401, et seq.) and the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136, et seq.), and the regulations promulgated pursuant
thereto, and any such applicable state or local statutes, and the
regulations promulgated pursuant thereto, as such laws are in effect on
the date hereof;
(ii) "Hazardous Material" means any substance, material or
waste which is regulated by any public or governmental body in the
jurisdictions in which the Company or any of its Subsidiaries conducts
business, or the United States, including, without limitation, any
material or substance which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste" or
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"toxic substance" under any provision of any Environmental Law;
(iii) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment,
including, without limitation, any property owned, operated or leased
by the Company or any of its Subsidiaries; and
(iv) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental body
or required under any Environmental Law, or voluntarily undertaken to
(a) clean up, remove, treat, or in any other way ameliorate or address
any Hazardous Materials or other substance in the indoor or outdoor
environment; (b) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not endanger
or threaten to endanger the public health or welfare of the indoor or
outdoor environment; (c) perform preremedial studies and investigations
or post-remedial monitoring and care pertaining or relating to a
Release; or (d) achieve or maintain compliance with any Environmental
Law.
(b) To the knowledge of the Company, the operations of the Company and
its Subsidiaries have complied and currently comply with all Environmental Laws.
Except as set forth in
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Schedule 4.12 attached hereto, neither the Company nor any of its Subsidiaries
has received any notice with respect to any of its facilities of any alleged
violation of any Environmental Law or any possible liability or remediation
obligation arising under any Environmental Law.
(c) To the knowledge of the Company, the Company and its Subsidiaries
are not subject to any outstanding orders, judgments, agreements or contracts
with or issued by any governmental body or other person respecting (i)
Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened
Release of a Hazardous Material except as described in Schedule 4.12 attached
hereto.
4.13 No Brokers. Neither the Company nor any Affiliate of the Company
has retained or been approached by any broker, finder or agent in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller and the Company
as follows:
5.1 Corporate Status. The Buyer is a limited partnership duly formed
and existing under the laws of the State of Ohio.
5.2 Authority and Capacity for Agreement. The Buyer has all requisite
power, authority and capacity to execute and deliver this Agreement and to carry
out and perform its
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obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary partnership action on the part of the Buyer. This Agreement has
been duly executed and delivered by the Buyer and constitutes the valid and
legally binding obligation of the Buyer enforceable in accordance with its terms
except that the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
5.3 Noncontravention. Neither the execution, delivery and performance
by the Buyer of this Agreement and the consummation (in accordance with the
terms hereof) of the transactions contemplated hereby, nor compliance by the
Buyer with any of the provisions hereof will violate, conflict with, or result
in (with or without the giving of notice or the lapse of time or both) a default
under or a breach or violation of, any provision of (a) the Buyer's certificate
of limited partnership or agreement of limited partnership, (b) any mortgage,
indenture, lease, contract, deed, agreement or other instrument to which the
Buyer is a party or by which it is bound or to which any of its properties or
assets is subject, (c) any law, rule or regulation of any governmental body
(whether domestic or foreign), or (d) any order, judgment or decree of any court
or other governmental body (whether domestic or foreign). Except as otherwise
provided
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in Schedule 5.3 attached hereto, no consent, approval, authorization, order,
filing, registration, declaration or qualification of or with any court,
governmental body or third person is required to be obtained by or on behalf of
the Buyer in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
5.4 No Brokers. Except for George R. Begley, neither the Buyer nor any
Affiliate of the Buyer has retained or been approached by any broker, finder or
agent in connection with this Agreement or the transactions contemplated hereby.
All of the fees and expenses of George R. Begley due and payable on account of
this Agreement and the transactions contemplated hereby shall be borne by the
Buyer.
5.5 Investment. The Buyer is purchasing the Purchase Shares for its own
account and not with a view to the distribution thereof in violation of the
Securities Act or the rules and regulations promulgated thereunder.
ARTICLE VI
CLOSING DELIVERIES
6.1 Deliveries by the Seller. At the Closing, the Seller shall deliver
to the Buyer the following documents:
(a) One or more certificates representing the Purchase Shares, duly
endorsed (or with duly executed stock powers attached) for transfer to the Buyer
with all transfer taxes, if any, paid, and free of any restrictive legends
except legends, if any, reflecting the limitations on the transferability of the
23
<PAGE> 24
securities represented thereby which result from the fact that such securities
have not been registered under the Securities Act;
(b) A receipt for payment of the Purchase Price duly executed by the
Seller;
(c) A certified copy of the resolutions of a Director of the Seller
authorizing the execution, delivery and performance of this Agreement; and
(d) An opinion of counsel to the Seller and the Company in a form
mutually acceptable to the Buyer and such counsel.
6.2 Deliveries by the Buyer. At the Closing, the Buyer shall deliver to
the Seller the Purchase Price in the manner contemplated by Section 1.2 hereof.
6.3 Deliveries by the Company. At the Closing, the Company shall
deliver to the Buyer the following documents:
(a) Counterpart signature pages to (i) a Registration Rights Agreement
by and between the Buyer and the Company in a form to be agreed upon between the
Buyer and the Company on or prior to the Closing Date (the "Registration Rights
Agreement") and (ii) a Consulting Agreement by and between Kirtland Capital
Corporation, an Affiliate of the Buyer ("KCC"), and the Company in a form to be
agreed upon between the Buyer and the Company on or prior to the Closing Date
(the "Consulting Agreement"), each duly executed by the Company;
(b) A certified copy of the resolutions of the Board of Directors of
the Company authorizing the execution, delivery
24
<PAGE> 25
and performance of this Agreement, the Registration Rights Agreement and the
Consulting Agreement; and
(c) A certificate, in form and substance satisfactory
to Buyer, pursuant to Treas. Reg. Section 1.897-2(g)(1)(i)(A) providing that the
Purchase Shares do not constitute equity interests of a United States real
property holding corporation.
ARTICLE VII
PRE-CLOSING COVENANTS
Between the date of this Agreement and the Closing Date, the Buyer, the
Seller and the Company shall, as applicable, perform the following:
7.1 General. Each of the Buyer, the Seller and the Company shall use
their respective reasonable best efforts to take all actions and to do all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Article IX hereof).
7.2 Business in Ordinary Course. The Company shall carry on its
operations (and those of its Subsidiaries) substantially in the same manner as
heretofore conducted. The Company shall not make or institute any material
change in the methods of manufacture, management, accounting or operation of the
Company or its Subsidiaries. 7.3 Contracts and Commitments. The Company shall
not (and shall not permit any of its Subsidiaries to) enter into any contract or
commitment or engage in any transaction, not in the
25
<PAGE> 26
usual and ordinary course of business and consistent with the past operation of
the Company.
7.4 Sale of Capital Assets. Except for the sale or other disposition of
excess or obsolete equipment in the usual and ordinary course of business
consistent with the past operation of the Company and its Subsidiaries, the
Company and its Subsidiaries will not sell or otherwise dispose of any capital
asset relating to the Company and its Subsidiaries.
7.5 No General Increases. The Company will not (and will cause each of
its Subsidiaries not to) grant any general or uniform increase in the rates of
pay of employees of the Company or any Subsidiary, nor grant any general or
uniform increase in the benefits under any bonus or pension plan or other
employee-related contract or commitment. The Company shall not increase the
compensation payable or to become payable to any officer or other salaried
employee with a base salary in excess of $50,000 per year or increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any such officer or salaried employee.
7.6 Preservation of Organization. The Company shall (and shall cause
each of its Subsidiaries to) use its reasonable best efforts to preserve the
business organization of the Company and each of its Subsidiaries, to keep
available the present key officers and employees of the Company and its
Subsidiaries and to preserve the present relationships of the Company and its
Subsidiaries with its suppliers and customers and others having business
relations with the Company and its Subsidiaries.
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<PAGE> 27
7.7 Full Access. The Company shall permit representatives of the Buyer
to have full access at all reasonable times to all of the facilities,
properties, personnel, books and records of the Company and each of its
Subsidiaries to permit the Buyer to complete its due diligence examination of
the Company and each of its Subsidiaries. Without limiting the generality of the
foregoing sentence, (a) the Buyer and its representatives may conduct a Phase I
environmental assessment of any of the facilities maintained by the Company or
any of its Subsidiaries, and (b) the Company shall provide the Buyer with a copy
of its monthly financial statements as promptly as possible following the
preparation of such statements, all of which shall be prepared in accordance
with GAAP applied on a consistent basis during the periods involved and shall
present fairly, in all material respects, in accordance with applicable
requirements of GAAP the consolidated financial position of the Company and its
consolidated subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and its
consolidated subsidiaries for the periods presented therein.
7.8 Exclusivity. Neither the Seller nor any Affiliate of the Seller
shall solicit, initiate, encourage the submission of, provide any information in
connection with or negotiate any proposal or offer from any person or entity, or
provide any information in connection with or negotiate any unsolicited offer or
proposal, relating to any acquisition or purchase of the Purchase Shares or
similar transaction or business combination
27
<PAGE> 28
involving the Purchase Shares or the Company. The Seller shall notify the Buyer
promptly if any person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
7.9 Tax Matters. The Company shall notify the IRS pursuant to Treas.
Reg. Section 1.897-2(h)(2) informing the IRS that the Company has provided to
the Seller a certificate indicating that the Purchase Shares do not constitute
equity interests of a United States real property holding corporation.
ARTICLE VIII
POST-CLOSING COVENANTS
8.1 Confidentiality. From and after the Closing Date, the Seller shall
retain in confidence, and require its directors, officers, employees,
consultants, professional representatives and agents to retain in confidence,
all information, financial or otherwise, which it has received relating to the
Company's business, assets, financial condition, operations or prospects. The
Seller shall deliver promptly to the Company or destroy, at the request and
option of the Company, all tangible embodiments (and all copies) of confidential
information that is in its possession. Notwithstanding the foregoing provisions
of this Section 8.1, the Seller shall not be precluded from disclosing any
information specified in this Section 8.1 to the extent required by law.
8.2 Board of Directors. (a) Promptly following the Closing Date, the
Company shall (i) increase the size of the Board of Directors of the Company to
up to seven persons and
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<PAGE> 29
(ii) subject to compliance with Section 14(f) of the Exchange Act, cause up to
five persons designated by the Buyer (the "KCP Directors") to be nominated to
the Company's Board of Directors. Promptly following the Closing Date and
subject to compliance with Section 14(f) of the Exchange Act and any other
applicable law, the Company shall take, at the Company's expense, all lawful
action necessary to effect the nomination and election of the KCP Directors,
including, without limitation, mailing to the Company's stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (the "Information Statement").
(b) None of the information supplied or to be supplied in writing by
the Company expressly for inclusion or incorporation by reference in the
Information Statement will, at the time the Information Statement is first
published, sent or given to the holders of the Shares, and at any time it is
amended or supplemented, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
8.3 Additional Assistance. From time to time after the Closing Date,
the Seller and the Company, at their own expense, shall execute and deliver, or
cause to be executed and delivered, such other instruments, conveyances and
transfers and take, or cause to be taken, such other actions as the Buyer may
reasonably request in order to fully carry out and consummate the transactions
included or provided for in this Agreement.
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<PAGE> 30
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions contemplated hereby shall be subject to
satisfaction of each of the following conditions:
(a) the representations and warranties set forth in Articles III
and IV hereof shall be true and correct in all material respects at and as of
the Closing Date;
(b) the Seller and the Company shall have performed and complied
with all of their respective covenants and agreements contained herein in all
material respects;
(c) there shall not be any action, suit or proceeding pending or
threatened before any court or quasi- judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (iii) affect materially and adversely,
including through the imposition of any divestiture requirement, the right of
the Buyer to own the Purchase Shares or to operate the business of the Company
as presently operated and as presently proposed to be operated (and no such
injunction, judgment, order, decree, ruling or charge shall be in effect);
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<PAGE> 31
(d) the Seller and the Company shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified in Section
9.1(a), (b) and (c) hereof have been satisfied in all respects;
(e) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated
without the objection of any of the relevant federal authorities;
(f) the Buyer shall have completed and shall be satisfied, in its
sole and absolute discretion, with the results of its due diligence examination
of the Company and each of its Subsidiaries;
(g) there shall not have occurred a material adverse change in the
business, operations, properties or assets, liabilities, financial condition,
results of operations or prospects of the Company and its Subsidiaries taken as
a whole;
(h) the Company shall have received notification from the New
Jersey Department of Environmental Protection and Energy satisfactory to the
Buyer in its sole discretion that the sale of the Purchase Shares may proceed in
compliance with the provisions of the New Jersey Industrial Site Recovery Act
without the imposition of any liability against the Company or the Buyer on
account of the transactions contemplated hereby;
(i) the Company and the Seller shall have obtained the consents
identified on Schedules 3.3 and 4.4 attached hereto;
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<PAGE> 32
(j) the Seller shall have executed and delivered to the Buyer the
documents identified in Section 6.1; and
(k) the Company shall have executed and delivered to the Buyer the
documents identified in Section 6.3.
The Buyer may waive any condition specified in this Section 9.1 if it
executes a writing so stating at or prior to the Closing Date.
9.2 Conditions to Obligation of the Seller and the Company. The
obligation of the Seller and the Company to consummate the transactions
contemplated hereby shall be subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in Article V shall
be true and correct in all material respects at and as of the Closing Date;
(b) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects;
(c) there shall not be any action, suit or proceeding pending or
threatened before any court or quasi- judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent the consummation of any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect);
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<PAGE> 33
(d) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified in Section 9.2 (a), (b) and (c)
hereof have been satisfied in all respects;
(e) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated
without the objection of any of the relevant federal authorities; and
(f) the Buyer shall have delivered to the Seller the Purchase
Price.
The Seller or the Company may waive any condition specified in this
Section 9.2 if either executes a writing so stating at or prior to the Closing.
ARTICLE X
TERMINATION
10.1 Termination of Agreement. This Agreement may be terminated as
follows:
(a) by the mutual written consent of the Buyer, the Seller and the
Company at any time prior to the Closing Date;
(b) the Buyer may terminate this Agreement by giving written notice
to the Seller and the Company at any time prior to the Closing if the Closing
has not occurred on or before December 15, 1996, by reason of the failure of any
closing condition contained in Section 9.1 hereof (unless the failure results
primarily from the Buyer itself breaching any of its representations,
warranties, covenants or agreements contained in
33
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this Agreement); provided, however, that the Buyer may not terminate this
Agreement under this Section 10.1(b) on account of the failure of the conditions
specified in Sections 9.1(e) or (h) until after December 31, 1996;
(c) the Seller may terminate this Agreement by giving written
notice to the Buyer any time prior to the Closing if the Closing has not
occurred on or before December 15, 1996, by reason of the failure of any closing
condition contained in Section 9.2 hereof (unless the failure results primarily
from the Seller or the Company breaching any of their respective
representations, warranties, covenants or agreements contained in this
Agreement); provided, however, that the Seller may not terminate this Agreement
under this Section 10.1(c) on account of the failure of the condition specified
in Section 9.2(e) until after December 31, 1996;
(d) the Buyer may terminate this Agreement if either the Seller or
the Company commits a material breach of any of their respective
representations, warranties, covenants or agreements contained herein; or
(e) the Seller may terminate this Agreement if the Buyer commits a
material breach of any of its representations, warranties, covenants or
agreements contained herein.
10.2 Effect of Termination. If the Buyer, the Seller or the Company
terminate this Agreement pursuant to Section 10.1, all obligations hereunder
shall thereupon terminate without liability of any party hereto to any other
party hereto (except
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for any liability of any party then in breach); provided that the provisions of
(a) Sections 11.2 and 11.3 hereof and (b) that certain Confidentiality
Agreement, dated November 29, 1995, by and between the Company and KCC shall
survive any such termination and shall remain in full force and effect
thereafter.
ARTICLE XI
GENERAL
11.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Closing Date, except for
the representations and warranties contained in Sections 3.4, 3.5, 4.13 and 5.4
hereof, each of which shall survive without limitation as to duration. The
Seller shall indemnify the Buyer from and against any and all losses, costs,
fees and expenses incurred by the Buyer on account of any breach or violation of
the representations and warranties contained in Sections 3.4, 3.5 or 4.13
hereof. The Buyer shall indemnify the Seller and the Company from and against
any and all losses, costs, fees and expenses incurred by the Seller or the
Company on account of any breach or violation of the representation and warranty
contained in Section 5.4 hereof. All of the covenants and agreements contained
in this Agreement shall survive the Closing Date without limitation as to
duration.
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<PAGE> 36
11.2 Expenses. The Seller, the Company and the Buyer shall each bear
their separate expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
11.3 Press Releases and Public Announcements. None of the Buyer, the
Seller or the Company shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written approval of the Buyer, the Seller and the Company.
11.4 Waiver. Any failure of any party hereto to comply with any of its
obligations, agreements, conditions or covenants herein contained may be waived
only with the prior written consent of the party which is entitled to the
benefits thereof.
11.5 Notices. All notices shall be in writing and shall be deemed to
have been given three days after the registration if sent by registered mail,
postage prepaid, return receipt requested, or upon delivery by a nationally
recognized overnight courier service or upon confirmation of receipt if sent by
electronic facsimile transmission to the following addresses:
If to the Buyer:
Kirtland Capital Partners II L.P.
2550 SOM Center Road
Suite 105
Willoughby Hills, Ohio 44094
Attention: Raymond A. Lancaster
Telecopy No.: (216) 585-9699
with a copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Charles W. Hardin, Jr.
Telecopy No.: (216) 579-0212
If to the Seller:
36
<PAGE> 37
Rimer Anstalt
Am Schragen Weg 2
9490 Vaduz, Liechtenstein
Liechtenstein
Attention: Hubert Lampert
Telecopy No.: 011 41 075 23228 37
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, NY 10022-7513
Attention: Herbert S. Meeker
Telecopy No.: (212) 702-5941
If to the Company:
PVC Container Corporation
401 Industrial Way West
Eatontown, New Jersey 07724
Attention: Phillip L. Friedman
Telecopy No.: (908) 542-7706
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, NY 10022-7513
Attention: Herbert S. Meeker
Telecopy No.: (212) 702-5941
11.6 Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing it.
11.7 Entire Agreement and Amendment. This Agreement embodies the
entire understanding of the Buyer, the Seller and the Company, and there are no
other agreements or understandings, written or oral, in effect among the Buyer,
the Seller and the Company, relating to the subject matter hereof, unless
expressly referred to by reference herein. This Agreement may be amended or
modified only by an instrument of equal formality signed by
37
<PAGE> 38
the Buyer, the Seller and the Company, or their duly authorized
agents.
11.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Ohio without regard to the
conflicts of law principles thereof.
11.9 Submission to Jurisdiction. Any legal action or proceedings
arising out of this Agreement may be brought only in the courts of the State of
Ohio, or in the courts of the United States of America sitting in the State of
Ohio and each of the Buyer, the Seller and the Company, hereto irrevocably
submits to the exclusive jurisdiction of each such court, together with courts
having appellate jurisdiction therefrom, and waives all requirements of personal
jurisdiction or venue with respect thereto, and any writ, judgment or other
notice of legal process shall be sufficiently served on it if delivered pursuant
to Section 11.5 hereof.
11.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
11.11 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Buyer, the Seller and the Company and their
respective successors and assigns. The rights and obligations of the Buyer, the
Seller and the Company hereunder may not be assigned, provided that the Buyer
may assign its right (but not its obligation to pay the Purchase Price) to
38
<PAGE> 39
acquire some or all of the Purchase Shares to one or more
Affiliates of the Buyer.
11.12 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
39
<PAGE> 40
IN WITNESS WHEREOF, the Buyer, the Seller and the Company have duly
executed this Agreement on the date first above written.
KIRTLAND CAPITAL PARTNERS II L.P.
By: KIRTLAND CAPITAL CORPORATION,
Its General Partner
By: /s/ Raymond A. Lancaster
-------------------------------
Name: Raymond A. Lancaster
Title: President
RIMER ANSTALT
By: /s/ Hubert Lampert
-------------------------------
Name: Hubert Lampert
Title: Director
PVC CONTAINER CORPORATION
By: /s/ Phillip L. Friedman
-------------------------------
Name: Phillip L. Friedman
Title: President
40
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement")
effective as of July 1, 1996 (the "Effective Date"), by and between PVC
CONTAINER CORPORATION ("Employer"), a corporation organized under the laws of
Delaware and having its principal place of business at 401 Industrial Way West,
Eatontown, New Jersey 07724 and Phillip L. Friedman of 12 Laird Road,
Middletown, New Jersey 07748 ("Employee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of an employment agreement
dated July 1, 1982 as amended between Employer and Employee, Employee has been
and is presently employed by the Employer as its President and Chief Executive
Officer;
The parties thereto have agreed that Employer and Employee
shall enter into this Amended and Restated Employment Agreement upon the terms
and conditions set forth herein; and which on the Effective Date will replace
and supersede the employment agreement as amended dated July 1, 1982.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and adequacy of which is mutually acknowledged, it is agreed by and
between the parties as follows:
1. DEFINITIONS
For purposes of this Agreement, unless the context requires
otherwise, the following words and phrases shall have the meanings indicated
below:
"Cause" shall mean: (1) a felony conviction of the Employee
(or a plea of no lo contendere in lieu thereof); (2) the breach by the Employee
of any material provision of this Agreement, which breach, if curable, is not
remedied within thirty (30) days after the Employee's receipt of written notice
thereof; (3) an act of gross misconduct in connection with the Employee's duties
hereunder resulting in material prejudice to the Employer; or (4) habitual or
material neglect of the Employee's duties to the Employer (as determined in good
faith by the Board of Directors, continuing after prior written notice to the
Employee).
"Good Reason" shall mean (i) the material failure of the
Employer to comply with the provisions of this Agreement which failure shall not
cease promptly and in no event
<PAGE> 2
more than ten (10) days after the Employer's receipt of written notice from the
Employee objecting to such conduct; (ii) any purported termination by the
Employer of the Employee's employment other than as expressly permitted in this
Agreement; or (iii) the assignment to Employee of duties and responsibilities
inconsistent with those duties and responsibilities customarily assigned to
individuals holding the position of President and Chief Executive Officer of a
company of comparable size or the substantial reduction by Employer of
Employee's duties and responsibilities, all as determined by Employee.
2. REPRESENTATIONS AND WARRANTIES
Employee represents and warrants that he is not
subject to any restrictive covenants or other agreements or legal restrictions
in favor of any person which would in any way preclude, inhibit, impair or limit
his employment by the Employer or the performance of his duties, as contemplated
herein.
3. EMPLOYMENT
The Employer hereby employs Employee and Employee
accepts such employment as President and Chief Executive of the Employer. As its
President and Chief Executive Officer, Employee shall render such services to
the Employer as are customarily rendered by the President and Chief Executive of
comparable companies and as required by the articles and by-laws of the
Employer. Employee accepts such employment and, consistent with fiduciary
standards which exist between an employer and an employee shall perform and
discharge the duties that may be assigned to him from time to time by the
Employer in an efficient, trustworthy and businesslike manner. It is
specifically agreed that nothing in this Agreement shall prohibit Employee from
(i) serving on corporate, civic or charitable boards or committees; (ii)
engaging directly or indirectly, in activities with other public or private
companies or ventures; or (iii) making investments in any capacity whatsoever,
provided only that such activities or any of them do not significantly impair
Employee's performance of his duties for the Employer.
4. PLACE OF EMPLOYMENT
During the Term, the Employee shall render services
where and as reasonably required by the Employer. In conformance with the
foregoing and not in limitation thereof, Employee agrees to take such trips as
shall be consistent with or reasonably necessary in connection with his duties.
Employer will maintain an office within thirty (30) miles of the Employee's
residence and shall furnish the Employee both at the Employer's principal office
and at such other location with an office and secretarial help and such other
assistance, facilities and services consistent with Employee's position and
necessary for the adequate performance of his duties.
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<PAGE> 3
5. TERM
Subject to the provisions of Section 10 hereof, the
term of this Agreement shall be deemed to commence on July 1, 1996 and shall
expire on June 30, 1999 (the "Initial Term"). If this Agreement is not renewed
or extended at the end of the Initial Term and each Term thereafter as
hereinafter defined for an additional period of two (2) years on substantially
the same or better terms than set forth herein for any reason whatsoever except
for Cause by the Employer, the Employer shall pay the Employee as severance the
compensation described in Paragraph 10(a) of this Agreement. The Initial Term of
this Agreement together with all renewals and extensions thereof are
collectively referred to herein as the "Term."
6. COMPENSATION
(a) As compensation for all services rendered and to
be rendered by Employee hereunder and the fulfillment by Employee of all of his
obligations herein, the Employer shall pay Employee a base salary the sum of One
Hundred and Sixty Five Thousand ($165,000) Dollars per annum payable in regular
installments consistent with the general policy of the Employer or in such other
regular installments as may be mutually agreed to by the Employee and the
Employer.
(b) The Base Salary for the twelve (12) month period
commencing July 1, 1997 and each successive twelve (12) month period of the Term
shall be reviewed and increased to the extent and in accordance with the
recommendation of the Compensation Committee of the Employer, if any, or of the
Board of Directors of the Employer.
(c) In addition to the Base Salary payable under
subparagraph (a) hereof, the Employer will pay during the Term of this Agreement
to the Employee a sum equal to four (4%) percent of the annual net income of the
Employer, before the payment of all Federal and State income taxes and
incentives paid to all employees of the Employer , as finally determined by the
regularly employed independent certified public accountants of the Employer
whose final determination shall be binding upon the Employer and the Employee.
Such additional compensation may be paid in regular quarterly installments
during the term of this Agreement based upon the net income before taxes as set
forth in the quarterly reports on Form 10-Q filed by the Employer with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 subject, however, to adjustment based upon such final determination by the
regularly employed independent certified public accountants of the Employer in
the annual report on Form 10-K filed with the Commission. If the Employer shall
not file such reports on Form 10-Q, such quarterly installments shall be based
on the unaudited quarterly financial statements of the Employer prepared in
conformity with generally accepted accounting principles on a consistent basis.
There is no maximum amount of Base Salary and additional compensation payable to
the Employee pursuant to this Section 6.
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<PAGE> 4
(d) Employee will participate in any Profit Sharing
Savings Plan, Deferred Compensation Plan, Incentive Stock Option Plan and
Employee Stock Ownership Plan of the Employer as applicable to executive
employees of the Employer.
(e) The Employer shall deduct from the compensation
described above, any Federal, state or city withholding taxes, social security
contributions and any other amounts which may be required to be deducted or
withheld by the Employer pursuant to any Federal, state or city laws, rules or
regulations.
(f) Any compensation otherwise payable to the
Employee pursuant to this Section in respect of any period during which the
Employee is disabled, as contemplated in Section 10, shall be reduced by any
amounts payable to the Employee for loss of earnings or the like under any
insurance plan or policy the premiums for which are paid for in their entirety
by the Employer.
7. BUSINESS EXPENSES
(a) The Employer shall pay, on behalf of Employee,
all dues to professional societies and other organizations as are customarily
joined by individuals holding the position of President and Chief Executive
Officer of businesses similar to the Employer and provide the Employee with a
new luxury automobile every five years. The Employer will require and shall
reimburse the Employee for his out of pocket cost of one complete physical
examination per fiscal year of the Term.
(b) The Employer agrees that the Employee is
authorized to incur reasonable expenses in the performance of his duties
hereunder and agrees that all reasonable expenses incurred by Employee in the
discharge and fulfillment of his duties for the Employer, as set forth in
Section 3, will be promptly reimbursed or paid by the Employer upon written
substantiation signed by Employee, itemizing said expenses and containing all
applicable vouchers. Employee shall be entitled to receive prompt reimbursement
for all reasonable travel and entertainment expenses and the costs of attending
conferences and seminars, so long as such expenses relate to Employee's ability
to serve the best interests of the Employer. In addition, within 30 days of the
rendition of the applicable invoices, Employer shall reimburse Employee annually
for the reasonable costs incurred by Employee in tax planning and tax return
preparation.
8. BENEFITS AND INSURANCE
(a) The Employer agrees that, during the Term, the
Employee shall be insured at the Employer's expense under all insurance policies
including any key man insurance policies on the lives of executives of the
Employer and shall receive all benefits under all pension and welfare benefit
plans (including, without limitation group life, medical,
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<PAGE> 5
major medical and disability insurance) that the Employer may maintain and keep
in force during the Term of the Agreement for the benefit of the Employer's
employees, subject to the terms, provisions and conditions of such pension and
welfare benefit plans or insurance and the agreements with underwriters relating
to same. In addition, Employer will provide medical and major medical insurance
for Employee, his spouse and children of the Employee under the age of 21 years
during the Term and for the remainder of their respective lives, notwithstanding
the termination of Employee's employment hereunder, whether voluntary or
involuntary, or his Disability or death , consistent with the level and type of
coverage provided to Employee by any of Employer's existing policies.
9. VACATION
Employee shall be entitled to an aggregate of four
(4) weeks paid vacation during each year of the Term at time or times reasonably
agreeable to both the Employee and the Employer, it being understood that,
except as hereinafter provided, any portion of such vacation not taken in such
year shall not be available to be taken during any other year. However, up to
one week not taken in a particular year may be taken in the next succeeding year
in addition to the four (4) weeks.
10. TERMINATION; CHANGE OF CONTROL; DEATH; DISABILITY
(a) This Agreement shall only be terminable by the
Employer during the Term for Cause. In the event this Agreement is not renewed
or extended at the end of the Term for any reason whatsoever except termination
for Cause by the Employer or without Good Reason by the Employee, the Employer
shall pay to the Employee as of the end of the Term his accrued but unpaid Base
Salary and vacation pay and a cash payment in an amount equal to two (2) times
the average of the sum of the Base Salary, plus the additional compensation
provided for under Section 6(c) and (d) of this Agreement during the five
calendar years prior to such end of the Term.
(b) If the Employee becomes physically or mentally
disabled during the Term so that he is unable to perform the services required
of him pursuant to this Agreement for a period of six (6) successive months, or
an aggregate of six (6) months in any twelve (12) month period, the Employer may
give the Employee written notice of its intention to terminate the services of
the Employee hereunder. In such event, the Employee's employment with the
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Employee (the "Disability Effective Date") provided the
Employee shall not have returned to the performance of the Employee's duties.
Subject to the provisions of Section 6(f), in the event the Employee's
employment is terminated by the Employer for reasons of disability, the
Employer's obligations hereunder shall be (1) to continue the Base Salary (at
the rate in effect on the Disability Effective Date) for a period of three (3)
years from the Disability Effective Date; (2) to pay all amounts previously
deferred
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<PAGE> 6
or accrued under Section 6(c) and the Deferred Compensation Plan and Profit
Sharing Plan, together with any interest accrued thereon) as prescribed by the
Employee; (3) to fully vest the Employee in any stock option which has been
granted previously to the Employee; and (4) to continue any and all such
benefits and insurance policies as required by Section 8 hereof.
(c) In the event of the Employee's death during the
Term, the Employer shall pay to his spouse, if he is survived by a spouse, or if
not, to the estate of the Employee, (1) the Employee's accrued and unpaid Base
Salary (at the rate in effect on the date of death) as of the date of death; and
(2) all amounts previously deferred or accrued under Section 6(c), the Deferred
Compensation Plan and Profit Sharing Plan as of the date of death (together with
any interest accrued thereon) and not yet paid by the Employer in the manner
prescribed by the executor of the Employee's estate. In the event of the
Employee's death during the Term, the Employee shall fully vest in any stock
option which has been granted previously to the Employee.
11. RESTRICTIVE COVENANTS
(a) For a period of two (2) years following
termination of this Agreement by the Employee without Good Reason, the Employee
(i) will not compete with the Employer in the business of the Employer as
carried at the time of termination or interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between the Employer and any
customer, supplier, lessor or employee of the Employer or any of its
subsidiaries; (ii) divulge or use any confidential information the effect of
which would be injurious to the Employer without the prior written consent of a
duly empowered officer of the Employer; and (iii) will not solicit or employ any
person, who was employed by the Employer within six months prior to the
termination of Employee's employment, in any business in which Employee has a
material interest, direct or indirect, as an officer, partner, shareholder or
beneficial owner if the effect thereof would be materially detrimental to the
business of Employer, as Employer shall determine in its reasonable discretion.
12. INDEMNIFICATION
To the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware, as the same may be amended and
supplemented, Employer shall indemnify Employee and hold him harmless from and
against any and all of the expenses, liabilities or other matters referred to or
in covered by said section (collectively, "Liabilities") if any of such
Liabilities are incurred or suffered by Employee as a result of, arising out of
or in connection with his employment by the Employer. In addition, as provided
in said section, the Employer shall advance expenses, including reasonable
attorneys' fees, of Employee. The indemnification and advancement of expenses
provided for herein shall continue after
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<PAGE> 7
Employee has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of Employee.
13. BINDING EFFECT
This Agreement shall inure to the benefit of and be
binding upon the Employer and its successors and assigns. The Employer will
require any successor and assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise of all or substantially all of its assets, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Employer would be required to perform it if no such
succession had taken place or with or into which the Employer may consolidate or
merge. Employee agrees that this Agreement is personal to him and may not be
assigned by him otherwise than by will or laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Employee's
legal representatives; and this Agreement shall upon becoming effective
supersede the Employment Agreement dated July 1, 1982 as amended which shall be
cancelled and of no further force and effect.
14. MISCELLANEOUS
(a) If any provision of this Agreement, or portion
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and this Agreement shall be carried out as if any
such invalid or unenforceable provision or portion thereof were not contained
herein. In addition, any such invalid or unenforceable provision or portion
thereof shall be deemed, without further action on the part of the parties
hereto, modified, amended or limited to the extent necessary to render the same
valid and enforceable.
(b) This Agreement, and all of the rights and
obligations of the parties in connection with the employment relationship
established hereby shall be construed and enforced in accordance with the laws
of New Jersey applicable to contracts made and fully to be performed therein,
and without giving effect to any rules of conflicts of law.
(c) All notices, requests, demands, and other
communications provided for hereunder shall be in writing and shall be given or
made when (i) delivered personally; (ii) three (3) business days following
mailing by first class postage prepaid, registered or certified mail, return
receipt requested, to the party to be notified at its or his address set forth
herein; or (iii) on the date sent by telecopier, if the addressee has compatible
receiving equipment and provided the transmittal is made on a business day
during the hours of 9:00 a.m. to 6:00 p.m. of the receiving party and if sent at
other times, on the immediately succeeding business day, or (iv) on the first
business day immediately succeeding delivery to an express overnight carrier for
the next business day delivery.
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<PAGE> 8
(d) This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Each party shall
deliver such further instruments and take such further action as may be
reasonably requested by the other in order to carry out the provisions and
purposes of this Agreement. This Agreement represents the entire understanding
of the parties with reference to the subject matter hereof and neither this
Agreement nor any provisions thereof may be modified, discharged or terminated
except by an agreement in writing signed by the party against whom the
enforcement of any waiver, charge, discharge or termination is sought. Any
waiver by either party or a breach of any provision of this Agreement must be in
writing and no waiver of a particular breach shall operate as or be construed as
waiver of any subsequent breach thereof.
IN WITNESSETH WHEREOF, the parties hereto have executed and have caused
this Amended and Restated Employment Agreement to be executed as of the day and
year first above written.
PVC CONTAINER CORPORATION
By: /s/ John C. D'Avella
--------------------------------------------
John C. D'Avella
Executive Vice President and Secretary
/s/ Phillip L. Friedman
--------------------------------------------
PHILLIP L. FRIEDMAN
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<PAGE> 1
PVC CONTAINER CORPORATION
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of this plan (the "Plan") is to secure for PVC
Container Corporation (the "Company") and its stockholders the benefits arising
from capital stock ownership by employees, officers and directors (who are also
either employees or officers) of the Company and its subsidiary corporations who
are expected to contribute to the Company's future growth and success. Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code"), shall apply only to Incentive Stock Options (as that term is defined in
the Plan). The Plan is also designed to attract and retain other persons who
will provide services to the Company.
2. TYPE OF OPTIONS AND ADMINISTRATION
(a) Types of Options. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors (the "Board") of the
Company (or a committee designated by the Board) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code ("Non-Qualified Options").
(b) Administration. The Plan will be administered by the Board
or by a committee consisting of two or more directors each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule ("Rule 16b-3") and an "outside director" within the meaning of
Treasury Regulation Section 1.162-27(e)(3) promulgated under Section 162(m) of
the Code (the "Committee") appointed by the Board, in each case whose
construction and interpretation of the terms and provisions of the Plan shall be
final and conclusive. If the Board determines to create a Committee to
administer the Plan, the delegation of powers to the Committee shall be
consistent with applicable laws or regulations (including, without limitation,
applicable state law and Rule 16b-3). The Board or Committee may in its sole
discretion grant options to purchase shares of the Company's Common Stock, $0.01
par value per share ("Common Stock"), and issue shares upon exercise of such
options as provided in the Plan. The Board or Committee shall have authority,
subject to the express provisions of the Plan, to construe the respective option
agreements and the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
option agreements, which need not be identical; and to make all other
determinations in the judgment of the Board or Committee necessary or desirable
for
<PAGE> 2
the administration of the Plan. The Board or Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any option
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such expediency. No
director or person acting pursuant to authority delegated by the Board shall be
liable for any action or determination under the Plan made in good faith.
3. ELIGIBILITY
Options may be granted to persons who are, at the time of
grant, employees, officers or directors (who are also either employees or
officers) of the Company or any subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Code, provided, that Incentive Stock Options
may only be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). Options may also be granted to other
persons, provided that such options shall be Non-Qualified Options. A person who
has been granted an option may, if he or she is otherwise eligible, be granted
additional options if the Board or Committee shall so determine.
4. STOCK SUBJECT TO PLAN
The stock subject to options granted under the Plan shall be
shares of authorized but unissued or reacquired Common Stock. Subject to
adjustment as provided in Section 15 below, the maximum number of shares of
Common Stock of the Company which may be issued and sold under the Plan is
1,000,000. If an option granted under the Plan shall expire, terminate or is
cancelled for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent option
grants under the Plan.
5. FORMS OF OPTION AGREEMENTS
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan. Such option agreements may differ among recipients.
6. PURCHASE PRICE
(a) General. The purchase price per share of stock issuable
upon the exercise of an option shall be determined by the Board or the Committee
at the time of grant of such option, provided, however, that in the case of an
Incentive Stock Option or Non-Qualified Option, the exercise price shall not be
less than 100% of the Fair Market Value (as hereinafter
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<PAGE> 3
defined) of such stock at the time of grant of such option, or less than 110% of
such Fair Market Value in the case of options described in Section 11(b). "Fair
Market Value" of a share of Common Stock of the Company as of a specified date
for purposes of the Plan shall mean the closing price of a share of the Common
Stock on a principal securities exchange on which such shares are traded on the
day immediately preceding the date as of which Fair Market Value is being
determined, or on the next preceding date on which such shares are traded if no
shares were traded on such immediately preceding day, or if the shares are not
traded on a securities exchange, Fair Market Value shall be deemed to be the
average of the high bid and low asked prices of the shares in the
over-the-counter market on the day immediately preceding the date as of which
Fair Market Value is being determined or on the next preceding date on which
such high bid and low asked prices were recorded. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock (including, in the case of
any repurchase of shares, any distributions with respect thereto which would be
repurchased with the shares) shall be determined in good faith by the Board. In
no case shall Fair Market Value be determined with regard to restrictions other
than restrictions which, by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or a check
to the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 and Regulation T promulgated by
the Federal Reserve Board).
7. EXERCISE OPTION PERIOD
Subject to earlier termination as provided in the Plan, each
option and all rights thereunder shall expire on such date as determined by the
Board or the Committee and set forth in the applicable option agreement,
provided, that such date shall not be later than ten (10) years after the date
on which the option is granted.
8. EXERCISE OF OPTIONS
Each option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as shall
be set forth in the option agreement evidencing such option, subject to the
provisions of the Plan. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board may (i) in the agreement evidencing such option, provide for the
acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.
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<PAGE> 4
9. NONTRANSFERABILITY OF OPTIONS
No option granted under this Plan shall be assignable or
otherwise transferable by the optionee, except by will or by the laws of descent
and distribution. An option may be exercised during the lifetime of the optionee
only by the optionee.
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Except as provided in Section 11(d) with respect to Incentive
Stock Options and except as otherwise determined by the Board or Committee at
the date of grant of an option, and subject to the provisions of the Plan, an
optionee may exercise an option at any time within three (3) months following
the termination of the optionee's employment or other relationship with the
Company or within one (1) year if such termination was due to the death or
disability of the optionee (to the extent such option is then exercisable) but
in no event later than the expiration date of the option. If the termination of
the optionee's employment is for cause or is otherwise attributable to a breach
by the optionee of an employment or confidentiality or non-disclosure agreement,
the option shall expire immediately upon such termination. The Board shall have
the power to determine what constitutes a termination for cause or a breach of
an employment or confidentiality or non- disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
11. INCENTIVE STOCK OPTIONS
Options granted under the Plan which are intended to be
Incentive Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options granted
under the Plan shall, at the time of grant, be specifically designated as such
in the option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is, at the time of the grant of
such option, the owner of stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (after taking into account
the attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock
Option granted to such individual:
(i) the purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than 110% of
the Fair Market Value of one share of Common Stock at the time of
grant; and
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<PAGE> 5
(ii) the option exercise period shall not exceed five (5)
years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so
provide, options granted to any employee under the Plan (and any other incentive
stock option plans of the Company) which are intended to constitute Incentive
Stock Options shall not constitute Incentive Stock Options to the extent that
such options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No
Incentive Stock Option may be exercised unless, at the time of such exercise,
the optionee is, and has been continuously since the date of grant of his or her
option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within
the period of three (3) months after the date the optionee ceases to be
an employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), to the extent it is then
exercisable, provided, that the agreement with respect to such option
may designate a longer exercise period and that the exercise after such
three (3) month period shall be treated as the exercise of a
non-statutory option under the Plan,
(ii) if the optionee dies while in the employ of the
Company, or within three (3) months after the optionee ceases to be
such an employee, the Incentive Stock Option may be exercised by the
person to whom it is transferred by will or the laws of descent and
distribution within the period of one (1) year after the date of death
(or within such lesser period as may be specified in the applicable
option agreement), to the extent it is then exercisable, and
(iii) if the optionee becomes disabled (within the meaning
of Section 22(e)(3) of the Code or any successor provisions thereto)
while in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one (1) year after the date the optionee
ceases to be such an employee because of such disability (or within
such lesser period as may be specified in the applicable option
agreement), to the extent it is then exercisable.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
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12. ADDITIONAL PROVISIONS
(a) Additional Option Provisions. The Board or the Committee
may, in its sole discretion, include additional provisions in option agreements
covering options granted under the Plan, including without limitation,
restrictions on transfer, vesting of options, repurchase rights, rights of first
refusal, commitments to pay cash bonuses or to make, arrange for or guaranty
loans or to transfer other property to optionees upon exercise of options, or
such other provisions as shall be determined by the Board or the Committee,
provided, that such additional provisions shall not be inconsistent with the
requirements of The Toronto Stock Exchange governing employee stock option and
purchase plans or with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board or the Committee
may, in its sole discretion (i) accelerate the date or dates on which all or any
particular option or options granted under the Plan may be exercised, or (ii)
extend the dates during which all, or any particular, option or options granted
under the Plan may be exercised, provided, however that no such extension shall
be permitted if it would cause the Plan to fail to comply with Section 422 of
the Code or with Rule 16b-3 (if applicable to such option).
13. GENERAL RESTRICTIONS
(a) Investment Representations. The Company may require any
person to whom an option is granted, as a condition of exercising such option or
award, to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Common Stock subject to
the option or award for his or her own account for investment and not with any
present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate in order to comply
with federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each option shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option or award upon any securities exchange or automated quotation
system or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition, is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, such option or award may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board or the Committee. Nothing herein shall be
deemed to require the
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<PAGE> 7
Company to apply for or to obtain such listing, registration or qualification,
or to satisfy such condition.
14. RIGHTS AS A STOCKHOLDER
The holder of an option shall have no rights as a stockholder
with respect to any shares covered by the option (including, without limitation,
any right to vote or to receive dividends or non-cash distributions with respect
to such shares) until the effective date of exercise of such option and then
only to the extent of the shares of Common Stock so purchased. No adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of exercise.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS,
REORGANIZATIONS AND RELATED TRANSACTIONS
(a) Recapitalizations and Related Transactions. If, through or
as a result of any recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction (i) the outstanding
shares of Common Stock are increased, decreased or exchanged for a different
number or kind of shares or other securities of the Company, or (ii) additional
shares or new or different shares or other non-cash assets are distributed with
respect to such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then-outstanding
options under the Plan, and (z) the price for each share subject to any
then-outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (A) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable to such option), or (B) would be
considered as the adoption of a new plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All
outstanding options under the Plan shall become fully exercisable for a period
of sixty (60) days following the occurrence of any Trigger Event (as defined
below), whether or not such options are then exercisable under the provisions of
the applicable agreements relating thereto. For purposes of the Plan, a "Trigger
Event" is any one of the following events:
(i) the date on which shares of Common Stock are first
purchased pursuant to a tender offer or exchange offer (other than such
an offer by the Company, any subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company or any
entity holding shares or other securities of the Company for or
pursuant to the terms of such plan), whether or not such offer is
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approved or opposed by the Company and regardless of the number of
shares purchased pursuant to such offer;
(ii) the date the Company acquires knowledge that any
person or group deemed a person under Section 13(d)-3 of the Exchange
Act (other than the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company or any entity holding shares of Common Stock or other
securities of the Company for or pursuant to the terms of any such plan
or any individual or entity or group or affiliate thereof which
acquired its beneficial ownership interest prior to the date the Plan
was adopted by the Board), in a transaction or series of transactions,
has become the beneficial owner, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of securities of the Company
entitling the person or group to 30% or more of all votes (without
consideration of the rights of any class or stock to elect directors by
a separate class vote) to which all stockholders of the Company would
be entitled in the election of the Board were an election held on such
date;
(iii) the date, during any period of two (2) consecutive
years, when individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the
stockholders of the Company, of each new director was approved by a
vote of at least a majority of the directors then still in office who
were directors at the beginning of such period; and
(iv) the date of approval by the stockholders of the
Company of an agreement (a "reorganization agreement") providing for:
(A) The merger or consolidation of the Company with
another corporation (x) where the stockholders of the Company,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
stockholders to 80% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders
of such corporation would be entitled in the election of
directors, or (y) where the members of the Board, immediately
prior to the merger or consolidation, do not, immediately
after the merger or consolidation, constitute a majority of
the Board of Directors of the corporation issuing cash or
securities in the merger or consolidation, or
(B) The sale or other disposition of all or
substantially all the assets of the Company.
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(c) Board Authority to Make Adjustments. Any adjustments under
this Section 15 will be made by the Board or the Committee, whose determination
as to what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive. No fractional shares will be issued under the
Plan on account of any such adjustments.
16. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.
(a) General. In the event of any sale, merger, transfer or
acquisition of the Company or substantially all of the assets of the Company in
which the Company is not the surviving corporation, provided that after the
merger, transfer or acquisition the Company shall have requested the acquiring
or succeeding corporation (or an affiliate thereof) that equivalent options
shall be substituted and such successor corporation shall have refused or failed
to assume all options outstanding under the Plan or issue substantially
equivalent options, then any or all outstanding options under the Plan shall
accelerate and become exercisable in full immediately prior to such event. The
Board or Committee will notify holders of options under the Plan that any such
options shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the options will terminate upon expiration of such
notice.
(b) Substitute Options. The Company may grant options under
the Plan in substitution for options held by employees of another corporation
who become employees of the Company, or a subsidiary of the Company, as the
result of a merger or consolidation of the employing corporation with the
Company or a subsidiary of the Company, or as a result of the acquisition by the
Company, or one of its subsidiaries, of property or stock of the employing
corporation. The Company may direct that substitute options be granted on such
terms and conditions as the Board considers appropriate in the circumstances.
17. NO SPECIAL EMPLOYMENT RIGHTS
Nothing contained in the Plan or in any option shall confer
upon any optionee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the Company
at any time to terminate such employment or to increase or decrease the
compensation of the optionee.
18. OTHER EMPLOYEE BENEFITS
Except as to plans which by their terms include such amounts
as compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing,
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life insurance or salary continuation plan, except as otherwise specifically
determined by the Board.
19. AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN
(a) The Board may at any time modify, amend or terminate the
Plan provided, however, that if at any time the approval of the stockholders of
the Company is required under Section 422 of the Code or any successor provision
with respect to Incentive Stock Options, or under Rule 16b-3, the Board may not
effect such modification or amendment without such approval.
(b) The modification, amendment or termination of the Plan
shall not, without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionee
affected, the Board or the Committee may amend or modify outstanding option
agreements in a manner not inconsistent with the Plan. The Board shall have the
right to amend or modify (i) the terms and provisions of the Plan and of any
outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and (ii) the terms and
provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.
20. WITHHOLDING
(a) The Company shall have the right to deduct from payments
of any kind otherwise due to the optionee any federal, state or local taxes of
any kind required by law to be withheld with respect to any shares issued upon
exercise of options under the Plan. Subject to the prior approval of the
Company, which may be withheld by the Company in its sole discretion, the
optionee may elect to satisfy such obligations, in whole or in part by (i)
causing the Company to withhold shares of Common Stock otherwise issuable
pursuant to the exercise of an option, or (ii) delivering to the Company shares
of Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such withholding obligation as
of the date that the amount of tax to be withheld is to be determined. An
optionee who has made an election pursuant to this Section 20(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) The acceptance of shares of Common Stock upon exercise of
an Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two (2) years from the date the option was granted or within one (1) year
from the date the shares were issued to the optionee pursuant to the exercise of
the option, and (ii) if required by law, to remit to the Company,
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at the time of and in the case of any such disposition, an amount sufficient to
satisfy the Company's federal, state and local withholding tax obligations with
respect to such disposition, whether or not, as to both (i) and (ii), the
optionee is in the employ of the Company at the time of such disposition.
21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
The Board or the Committee shall have the authority to effect,
at any time and from time to time, with the consent of the affected optionees
the (i) cancellation of any or all outstanding options under the Plan and the
grant in substitution therefor of new options under the Plan covering the same
or different numbers of shares of Common Stock and having an option exercise
price per share which may be lower or higher than the exercise price per share
of the cancelled options, or (ii) amendment of the terms of any and all
outstanding options under the Plan to provide an option exercise price per share
which is higher or lower than the then-current exercise price per share of such
outstanding options.
22. EFFECTIVE DATE AND DURATION OF THE PLAN
(a) Effective Date. The Plan shall become effective when
adopted by the Board, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, no
options previously granted under the Plan shall be deemed to be Incentive Stock
Options and no Incentive Stock Options shall be granted thereafter. Amendments
to the Plan not requiring stockholder approval shall become effective when
adopted by the Board and amendments requiring stockholder approval (as provided
in Section 19) shall become effective when adopted by the Board, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve (12) months of the Board's adoption of such amendment, any Incentive
Stock Options granted on or after the date of such amendment shall terminate to
the extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated by the Board, the
Plan shall terminate upon the close of business on the day next preceding the
tenth anniversary of the date of its adoption by the Board. After termination of
the Plan, no further options may be granted under the Plan; provided however,
that such termination will not affect any options granted prior to termination
of the Plan.
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23. PROVISION FOR FOREIGN PARTICIPANTS
The Board may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
24. GOVERNING LAW
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.
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