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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) September 3, 1998
PVC CONTAINER CORPORATION
(Exact name of registrant as specified in charter)
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Delaware 0-30067 13-2616435
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(State of other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no)
401 Industrial Way West, Eatontown, New Jersey 07724
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(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 542-0060
N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On September 3, 1998 pursuant to a Stock Purchase Agreement
among the Registrant as Buyer and Donald J. Sykes, Suzanne K. Sykes,
Kathryn F. Sykes, Jeffrey B. Sykes, Brooks Read, Trustee and Sykes
Family Investments, Ltd. as Seller and Marpac Industries, Inc. , the
Registrant acquired in consideration of the payment of a Purchase
Price of $12,000,000.00 (subject to adjustment for obligations of
Marpac Industries, Inc. satisfied by the Registrant at the Closing
resulting in a net purchase price of $9,677,138.27) all of the issued
and outstanding shares of Marpac Industries, Inc.together with
certain Real Property owned by Sykes-Ulster LLC and Sykes-KNY LLC.
The consideration was provided by Fleet Bank,N.A. pursuant to a Loan
and Security Agreement among the Registrant and its wholly-owned
subsidiaries and Fleet Bank,N.A., dated as of September 3, 1998 in
the amount of $12,000.000.00. Marpac Industries, Inc. is a technical
blow molding operation that produces bottles, containers, cartridges
and various dispensers for domestic and international customers
including office equipment, food and industrial products. Marpac
Industries,Inc. has its principal operation in Kingston, New York and
also has a facility located n Ardmore, Oklahoma.
Financial information relating to the acquisition required by Item 7 of
this Form will be filed as soon as practicable but in no event later than sixty
(60) days after the filing of this report.
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Item 7. Financial Statements and Exhibits
The following exhibit are filed herewith:
Exhibit No. Description Page Number
10. Stock Purchase Agreement
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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: September 18, 1998 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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STOCK PURCHASE AGREEMENT
BY AND AMONG
PVC CONTAINER CORPORATION, BUYER
-AND-
DONALD J. SYKES, SUZANNE K. SYKES,
KATHRYN F. SYKES, JEFFREY J. SYKES,
BROOKS READ, TRUSTEE AND SYKES FAMILY INVESTMENTS, LP, SELLERS
AND
MARPAC INDUSTRIES, INC.
AS OF
SEPTEMBER 3, 1998
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TABLE OF CONTENTS
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ARTICLE I SALE AND PURCHASE; CLOSING................................................................ -2-
SECTION 1.1 Purchase and Sale of Shares............................................................... -2-
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SECTION 1.2 Purchase Price............................................................................ -2-
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SECTION 1.3 Closing................................................................................... -3-
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SELLERS............................................................................. -3-
SECTION 2.1 Status of the Shares...................................................................... -4-
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SECTION 2.2 Title to the Shares....................................................................... -4-
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SECTION 2.3 Authority Relative to this Agreement...................................................... -4-
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SECTION 2.4 No Conflicts; Consents.................................................................... -4-
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SECTION 2.5 Corporate Existence and Power............................................................. -5-
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SECTION 2.6 Charter Documents and Corporate Records................................................... -5-
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SECTION 2.7 Financial Information..................................................................... -5-
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SECTION 2.8 Liabilities............................................................................... -6-
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SECTION 2.9 Company Receivables....................................................................... -6-
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SECTION 2.10 Inventories......................................................................... -7-
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SECTION 2.11 Absence of Certain Changes.......................................................... -7-
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SECTION 2.12 Properties.......................................................................... -8-
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SECTION 2.13 Contracts........................................................................... -9-
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SECTION 2.14 Intellectual Property............................................................... -10-
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SECTION 2.15 Claims and Proceedings.............................................................. -11-
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SECTION 2.16 Taxes............................................................................... -11-
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SECTION 2.17 Employee Benefits Plans............................................................. -13-
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SECTION 2.18 Employee-Related Matters............................................................ -15-
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SECTION 2.19 Insurance........................................................................... -16-
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SECTION 2.20 Compliance with Laws................................................................ -17-
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SECTION 2.21 Permits............................................................................. -17-
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SECTION 2.22 Environmental Matters............................................................... -17-
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SECTION 2.23 Finders; Fees....................................................................... -18-
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SECTION 2.24 Depositaries; Powers of Attorney, etc............................................... -18-
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SECTION 2.25 Year 2000........................................................................... -18-
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SECTION 2.26 Disclosure.......................................................................... -18-
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER................................................... -18-
SECTION 3.1 Authority Relative to This Agreement...................................................... -18-
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SECTION 3.2 No Conflicts; Consents.................................................................... -19-
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SECTION 3.3 Corporate Existence and Power............................................................. -19-
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SECTION 3.4 Finders; Fees............................................................................. -19-
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ARTICLE IV COVENANTS AND AGREEMENTS.................................................................. -19-
SECTION 4.1 Filings and Authorizations................................................................ -19-
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SECTION 4.2 Efforts to Consummate..................................................................... -20-
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SECTION 4.3 Notices of Certain Events................................................................. -20-
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SECTION 4.4 Public Announcements...................................................................... -20-
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SECTION 4.5 Expenses.................................................................................. -20-
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SECTION 4.6 Tax Matters............................................................................... -21-
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SECTION 4.7 Certain Renewals.......................................................................... -21-
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SECTION 4.8 Covenant Not-to-Compete................................................................... -22-
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SECTION 4.9 Return of Products of Company............................................................. -23-
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ARTICLE V CONDITIONS TO CLOSING..................................................................... -23-
SECTION 5.1 Conditions to the Obligations of the Parties.............................................. -23-
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SECTION 5.2 Conditions to the Obligations of Sellers.................................................. -23-
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SECTION 5.3 Conditions to the Obligations of Buyer.................................................... -24-
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ARTICLE VI INDEMNIFICATION........................................................................... -27-
SECTION 6.1 Survival of Representations and Warranties................................................ -27-
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SECTION 6.2 Obligation of the Sykes to Indemnify...................................................... -27-
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SECTION 6.3 Obligation of Buyer to Indemnify.......................................................... -28-
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SECTION 6.4 Notice and Opportunity to Defend Third Party Claims....................................... -28-
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SECTION 6.5 Limits on Indemnification................................................................. -29-
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SECTION 6.6 Adjustment................................................................................ -29-
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SECTION 6.7 Exclusive Remedy.......................................................................... -29-
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ARTICLE VII MISCELLANEOUS............................................................................. -30-
SECTION 7.1 Notices................................................................................... -30-
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SECTION 7.2 Entire Agreement.......................................................................... -31-
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SECTION 7.3 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies.................................................................................. -31-
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SECTION 7.4 Governing Law............................................................................. -32-
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SECTION 7.5 Binding Effect; No Assignment............................................................. -32-
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SECTION 7.6 Exhibits.................................................................................. -32-
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SECTION 7.7 Severability.............................................................................. -32-
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SECTION 7.8 Counterparts.............................................................................. -32-
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SECTION 7.9 Third Parties............................................................................. -32-
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SECTION 7.10 Further Assurances.................................................................. -32-
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SECTION 7.11 Confidentiality..................................................................... -33-
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ARTICLE VIII DEFINITIONS............................................................................... -33-
SECTION 8.1 Definitions............................................................................... -33-
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SECTION 8.2 Interpretation............................................................................ -38-
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September 3, 1998, by and among
PVC Container Corporation, a Delaware corporation ("Buyer"), Marpac Industries,
Inc., a New York corporation (the "Company"), Donald J. Sykes and Suzanne K.
Sykes (the "Sykes"), Kathryn F. Sykes, Jeffrey J. Sykes, Brooks Read, Trustee
and Sykes Family Investments LP, the Sykes, Kathryn F. Sykes, Jeffrey J. Sykes,
Brooks Read, Trustee and Sykes Family Investments, LP are sometimes hereinafter
referred to collectively as the "Sellers") and individually as a "Seller").
W I T N E S S E T H:
WHEREAS, each Seller owns (beneficially and of record) the number of
shares of Common Stock, without par value of the Company (the "Common Stock"),
set forth on Exhibit A next to the name of such Seller under the caption "Total
Number of Shares" (collectively, the "Shares"), which Shares constitute all of
the issued and outstanding shares of capital stock of the Company;
WHEREAS, each Seller desires to sell and Buyer desires to purchase all
of the Shares owned by each such Seller on the terms and conditions set forth
herein; and
WHEREAS, the Sykes desire to sell and Buyer desires to purchase certain
of the rights in and to certain of the real property(and interests therein)
owned by Sykes - Ulster LLC and all of the rights in and to the real property
(and interests therein) owned by Sykes - KNY LLC (hereinafter collectively
referred to as the "LLC's") which LLC's are owned and controlled by the Sykes
and situated in Kingston, New York together with all buildings and improvements
thereon and including an adjacent 2.3 acres free and clear of all liens,
charges, mortgages and encumbrances except as may be shown in a policy of title
insurance to be issued to the Buyer at the Closing pursuant to a bargain and
sale deed as provided herein and as more particularly described in Exhibit B
annexed hereto (the "Kingston Facility"). In addition the Buyer will acquire the
facility located in Ardmore, Oklahoma and which is owned by the Subsidiary of
the Company ("Ardmore Facility") through its acquisition of the Shares free and
clear of all liens, charges, mortgages and encumbrances (other than Permitted
Liens) except as may be shown in a policy of title insurance to be issued to or
for the benefit of the Buyer at the Closing.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
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ARTICLE I
SALE AND PURCHASE; CLOSING
SECTION 1.1 Purchase and Sale of Shares. Subject to the terms
and conditions set forth herein, at the Closing (as hereinafter defined), each
Seller shall sell, transfer and deliver to Buyer, and Buyer shall purchase and
accept from each Seller, the Shares of each such Seller as described in Exhibit
A annexed hereto.
SECTION 1.2 Purchase Price. (a) Subject to any adjustment
provided for herein and in Section 4.5 hereof, the aggregate purchase price for
the Shares and the Kingston Facility shall be Twelve Million Dollars
($12,000,000) (as so adjusted, the "Purchase Price").
(b) The Purchase Price is payable as follows:
(i) at the Closing, Buyer shall pay (i) to each of the
Sellers that portion of the Purchase Price as adjusted and as set forth in
Exhibit A allocated to the Shares and (ii) that portion of the Purchase Price as
adjusted allocated to the purchase of the Kingston Facility to each of the
LLC's, its respective portion thereof as set forth on Schedule 1.2(b)(iv)
annexed hereto, by wire transfer of immediately available funds in U.S. Dollars
in accordance with the wire instructions given to the Buyer prior to the
transfer;
(ii) at the Closing and as of the date of Closing
("Closing Date"), the Buyer will, on behalf of the Company and the Subsidiary
(a) pay, satisfy, discharge or assume, on terms acceptable to the Buyer, all or
part of unpaid obligations of the Company to institutional lenders to the
Company as set forth in Schedule 1.2(b) (ii) annexed hereto ("Company Debt") or
(b) assume such part of the Company Debt not paid, satisfied, discharged or
assumed by the Buyer pursuant to (a) hereof and use its best efforts to obtain
from such lenders releases of personal guarantees made by the Sykes of such
assumed Company Debt. In the event releases of the Sykes' personal guarantees
are not obtained, the Buyer will execute and deliver to the Sykes at the Closing
a guarantee and indemnity agreement in the form annexed hereto on Schedule
1.2(b)(ii)(A) mutually acceptable to the Buyer and the Sykes providing that the
Buyer assumes the Company Debt, guarantees the payment thereof and indemnifies
and holds the Sykes safe and harmless from any personal guarantees, liabilities
and obligations, costs and expenses, including interest, penalties and
reasonable attorneys fees and expenses, arising out of the Company Debt and
guarantees given by the Sykes in connection therewith.
(iii) at the Closing, the Buyer shall pay to the Sellers
an amount equal to the Purchase Price as adjusted minus the aggregate amount of
Company Debt on the date of the Closing as set forth in Schedule 1.2(b) (ii)
annexed, any prepayment penalties actually paid by Buyer at Closing with respect
to Company Debt as of the Closing Date and any prepayment penalties paid within
six months after the Closing Date which shall be deducted from and paid out of
the Escrow Funds ("Net Proceeds"); and
(iv) the allocation of the Purchase Price as adjusted
among the Shares and the Kingston Facility shall be made as set forth in
Schedule 1.2(b)(iv) annexed hereto and each of the parties shall make all
appropriate tax and other filings on a basis consistent with such
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allocation. The parties shall exchange drafts of any information required by
Section 1060 of the Internal Revenue Code of 1986 as amended (the "Code") and
all similar state statutes, ten (10) days prior to filing any such return.
(c) On or prior to the Closing Date, Buyer, Sykes and an
escrow agent selected by Buyer and Sellers ("Escrow Agent") will execute and
deliver an escrow agreement ("Escrow Agreement") substantially in the form of
Exhibit C hereto pursuant to which Buyer will deliver to Escrow Agent an amount
(the "Escrow Funds") out of the Purchase Price payable to Sykes equal to
$600,000 (the "Indemnification Funds"), which amount will provide a fund for a
period of 18 months following the Closing for the payment of any Losses for
which Buyer may be entitled to indemnification as and to the extent provided in
Article VI. The Fees and expenses of the Escrow Agent shall be shared equally by
the Buyer and the Sykes.
(d) Certain assets of the Company shall be excluded from
the acquisition of the Shares without adjustment of the Purchase Price as set
forth in Schedule 1.2(d) annexed hereto.
SECTION 1.3 Closing. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares and the Kingston Facility
contemplated hereby (the "Closing") shall take place simultaneously with the
execution by the parties of this Agreement at 10:00 a.m., local time, at the
offices of Baer Marks & Upham LLP, 805 Third Avenue, 20th floor, New York, New
York 100122, on September 3, 1998, or at such other place and time as the
parties may mutually agree (the "Closing Date") and if on such date the
conditions specified in Article V shall not have been satisfied or waived (other
than conditions requiring the delivery of the Purchase Price as adjusted,
certificates representing the Shares and a bargain and sale deed to the Kingston
Facility).
(b) At the Closing the Buyer will deliver to the Sellers
the Purchase Price as adjusted and allocated to the Sellers as consideration for
the Shares and to the LLC's as adjusted as consideration for the Kingston
Facility and the Sellers will deliver to the Buyer the Shares in good negotiable
form, and the LLC's will deliver a bargain and sale deed for the Kingston
Facility and the Sellers will deliver as part of the consideration for the
Shares a stock certificate representing all of the issued and outstanding shares
of capital stock of the Subsidiary of the Company, in the name of the Company,
or such other documents reasonably satisfactory to the Buyer evidencing the
ownership of such shares by the Company, subject to such security interests
therein as shall have been disclosed herein to the Buyer, and the Buyer and the
Sellers will deliver to each other the documents referred to in the Article V of
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SELLERS
The Sykes, jointly and severally, represent and warrant to
Buyer that as of the Closing:
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SECTION 2.1 Status of the Shares. The authorized and
outstanding shares of Common Stock (which is the only class of capital stock of
the Company outstanding) is as set forth on Schedule 2.1. Other than the Shares,
at the Closing, the Company will not have outstanding any rights, warrants or
options to acquire securities of the Company or any convertible or exchangeable
securities and, other than pursuant to this Agreement, no person will have any
right to acquire any securities of the Company. All of the Shares have been duly
authorized and duly and validly issued and are fully paid and non-assessable,
and none were issued in violation of any preemptive rights, rights of first
refusal or other contractual or legal restrictions of any kind.
SECTION 2.2 Title to the Shares. Each Seller owns and holds
good and marketable title to its Shares free and clear of any Lien of any kind.
Upon consummation of the Contemplated Transactions (as hereinafter defined) in
accordance herewith, Buyer will own all of the issued and outstanding shares of
capital stock of the Company.
SECTION 2.3 Authority Relative to this Agreement. The Company
and each Seller have full power, capacity and authority to execute and deliver
this Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby and thereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which the Company and such
Seller is a party have been duly and validly authorized by the Company or such
Seller and no other proceedings on the part of the Company or such Seller (or
any other person) are necessary to authorize the execution and delivery by the
Company or such Seller of this Agreement or the consummation of the Contemplated
Transactions to which the Company or such Seller is a party. When this Agreement
and the other Transaction Documents to which the Company or such Seller is a
party have been duly and validly executed and delivered by the Company or such
Seller, and (assuming the valid execution and delivery thereof by the other
parties thereto) they will constitute the legal, valid and binding agreements of
the Company and such Seller enforceable against the Company and such Seller in
accordance with their respective terms except as such obligations and their
enforceability may be limited by applicable bankruptcy and other similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 2.4 No Conflicts; Consents. The execution, delivery
and performance by the Company and each Seller of this Agreement and each other
Transaction Document to which they are a party, the consummation of the
Contemplated Transactions to which the Company or each Seller is a party or the
contemplated change of control of the stock ownership of the Company, will not
(i) violate any provision of the certificate of incorporation or by-laws or
comparable instruments of the Company or the Subsidiary; (ii) require Sellers,
the Company or the Subsidiary to obtain any consent, approval or action of or
waiver from, or make any filing with, or give any notice to, any Governmental
Body or any other person, except as set forth on Schedule 2.4 (the "Sellers
Required Consents"); (iii) if Sellers Required Consents are obtained prior to
Closing, violate, conflict with or result in a breach or default under (after
the giving of notice or the passage of time or both), or permit the termination
of, any Contract of a type required to be listed on Schedule 2.13 to which any
Seller, the Company or the Subsidiary is a party or by which any of them or any
of their Assets may be bound or subject, or result in the creation of any Lien
upon the Shares or upon any of the Assets of the Company or the Subsidiary
pursuant to the terms of any such Contract; (iv) if Sellers
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Required Consents are obtained prior to Closing, violate any Law or Order of any
Governmental Body against, or binding upon, any Seller, the Company or the
Subsidiary or upon their respective Assets or the Business; or (v) if Sellers
Required Consents are obtained prior to Closing, violate or result in the
revocation or suspension of any Permit.
SECTION 2.5 Corporate Existence and Power. (a) The Company and
the Subsidiary are each corporations duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and have all
requisite powers and all material Permits required to carry on the Business as
now conducted. The Company and its Subsidiary are each duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary except where the failure to be so
qualified would not have a material adverse effect upon the Company or the
Subsidiary or affect the validity of any contracts or the obligation to file tax
returns. Schedule 2.5 sets forth the name of each Subsidiary, its jurisdiction
of incorporation or other organization, each jurisdiction in which it is duly
qualified to do business as a foreign corporation, the authorized capital stock
or other ownership interests of, and the securities issued by, each Subsidiary.
Except as described on Schedule 2.5, the Company does not directly or indirectly
own any interest or investment in any other person.
(b) All of the outstanding capital stock or other
ownership interests of the Subsidiary is owned by the Company, directly or
indirectly, free and clear of any Lien and any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests) except as set forth in Schedule
2.5(b) annexed hereto. All of the outstanding capital stock or other ownership
interests of each Subsidiary is validly issued, fully paid and nonassessable and
was not issued in violation of any preemptive rights, rights of first refusal or
any other contractual or legal restrictions of any kind. The Subsidiary does not
have outstanding any rights, warrants or options to acquire securities of
another Subsidiary or any convertible or exchangeable securities and no person
has any right to acquire any securities of the Subsidiary.
SECTION 2.6 Charter Documents and Corporate Records. The
Company and Sellers have heretofore delivered to Buyer true and complete copies
of the articles of organization, by-laws and minute books, or comparable
instruments, of the Company and of the Subsidiary as in effect on the date
hereof. The stock and transfer books of the Company and the Subsidiary have been
made available to Buyer for its inspection and are true and complete.
SECTION 2.7 Financial Information. (a) The Company and Sellers
have previously furnished to Buyer true and complete copies of (i) the Company's
consolidated financial statements at and for the twelve-month periods ended
February 28, 1998, March 1, 1997, March 2, 1996, February 28, 1995, February 26,
1994 and February 27, 1993 (the "Annual Statements") and (ii) the Company's
unaudited consolidated internally prepared financial statements at and for the
four month period ended June 27, 1998 (the "Interim Statements"). The Annual
Statements have been prepared in accordance with GAAP consistently applied as
set forth in the notes thereto and were audited by Ernst & Young LLP ("E&Y")
(without qualification in the report thereof). Each delivered financial
statement presents fairly the consolidated financial position of the Company and
its Subsidiary as of its date, and its consolidated earnings, changes in
stockholders' equity and cash flow for the periods then ended. Except for the
Interim Statements, each delivered balance sheet
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fully sets forth all consolidated Assets and Liabilities of the Company and its
Subsidiary existing as of its date which, under GAAP, should be set forth
therein, and each delivered statement of earnings sets forth the items of
consolidated income and expense of the Company and its Subsidiary which should
appear therein under GAAP, except that the Interim Statements do not contain all
of the disclosures required by GAAP but have been prepared in a manner
consistent with the Annual Statements and present fairly management of the
Company's estimate of the financial position of the Company as of the date of
the Interim Statements.
(b) All financial, business and accounting books, ledgers,
accounts and official and other records relating to the Company and its
Subsidiary have been properly and accurately kept and completed in all material
respects, and there are no material inaccuracies or discrepancies contained or
reflected therein.
SECTION 2.8 Liabilities. Except as and to the extent reflected
in the audited consolidated balance sheet of the Company and its Subsidiary
("the Latest Balance Sheet") at February 28, 1998 ("the Latest Balance Sheet
Date") referred to in Section 2.7 or except as and to the extent there is no
material adverse effect on the Company, the Business or the Subsidiary, the
Company and its Subsidiary did not have, as of the Latest Balance Sheet Date,
any Liabilities or obligations (other than obligations of continued performance
under Contracts and other commitments and arrangements entered into in the
ordinary course of business); and except as described in Schedule 2.8 hereto,
neither the Company nor its Subsidiary has incurred any Liabilities since the
Latest Balance Sheet Date except (i) current Liabilities for trade or business
obligations such as trade payables to suppliers, accrued expenses and deferred
tax liabilities all incurred in connection with the purchase of goods or
services in the ordinary course of the Business and consistent with past
practice, (ii) Liabilities reflected on any balance sheet included in the
Interim Statements, (iii) Liabilities or obligations of continued performance
under Contracts and other commitments entered into in the ordinary course of the
Business, and (iv) Liabilities incurred since the date of the Interim Statements
in the ordinary course of business and consistent with past practices including,
but not limited to, liabilities incurred in connection with this transaction.
Schedule 2.8 shall also set forth a listing and aging of accounts payable of the
Company and Subsidiary as of August 29, 1998 and such Schedule shall be updated
as of the Closing Date. As of the Closing Date, there will exist no Company
Debt, other than the Company Debt to be paid by Buyer pursuant to Section
1.2(b(ii)-(iii) and Schedule 1.2(b)(ii) annexed, and there will exist no notes
receivable to the Company from officers/shareholders of the Company. Other than
Company Debt which is to be paid by the Buyer pursuant to Section 1.2(b)(ii-iii)
or which the Buyer is assuming and which will result in an adjustment of the
Purchase Price, the Company and its Subsidiary will not be obligated for any
liabilities on the Closing Date other than those incurred in the ordinary course
of Business or as otherwise provided for in this Agreement including without
limitation tax accruals.
SECTION 2.9 Company Receivables. Except to the extent of the
amount of the reserve for doubtful accounts reflected in the Latest Balance
Sheet or as set forth in Schedule 2.9, all the Receivables of the Company and
the Subsidiary reflected therein, and all Receivables that have arisen since the
Latest Balance Sheet Date (except Receivables as have been collected since such
date) are valid and enforceable claims, and constitute bona fide Receivables
resulting from the sale of goods and services in the ordinary course of the
Business. Except as referred to in Schedule 2.9 annexed hereto, the Receivables
are not subject to any valid defense, offsets, returns, allowances or credits of
any kind. Except for Receivables or as set forth in Schedule 2.9, neither the
Company nor the Subsidiary has made any loan or advance to any person. Schedule
2.9 shall also set forth a
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description of aged accounts receivable and any bill and hold items of the
Company and Subsidiary as of August 29, 1998 and such Schedule shall be updated
as of the Closing Date.
SECTION 2.10 Inventories. Except as and to the extent there is
no material adverse effect on the Company, the Business or the Subsidiary,
Schedule 2.10 sets forth a true and complete list of Inventory by category and
location as of June 27, 1998 and all Inventories described herein and in
Schedule 2.10 shall be, as of the Closing Date, useable and saleable in the
ordinary course of the Business. All Inventory disposed of by Seller since June
27, 1998 has been disposed of only in the ordinary course of the Business
consistent with past practice. The Inventory does not include any materials held
by Company and its Subsidiary on consignment from third parties.
SECTION 2.11 Absence of Certain Changes. (a) Since the Latest
Balance Sheet Date, except as set forth in this Agreement or disclosed in
Schedule 2.11 or reflected in the Interim Statements, there has not been nor are
the Sellers aware of:
(i) Any material adverse change in the Condition of the
Business or any event, occurrence or circumstance that could reasonably be
expected to cause such a material adverse change except as may have been caused
by or resulted from any domestic or international event, act or occurrence
resulting in a material disruption of the security markets and the general
market conditions and economy of the United States;
(ii) Any transaction or Contract with respect to the
purchase, acquisition, lease, disposition or transfer of any Assets or to any
capital expenditure (in each case, other than in the ordinary course of the
Business in accordance with past practice);
(iii) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock or
assets of the Company except with respect to those assets as set forth in
Schedule 1.2(d) annexed hereto;
(iv) Any damage, destruction or other casualty loss
(whether or not covered by insurance), condemnation or other taking affecting
the Assets of the Company or the Subsidiary to the extent material to the
Company or the Subsidiary;
(v) Any change in any method of accounting or accounting
practice by the Company or the Subsidiary;
(vi) Any increase in the compensation payable or to become
payable to any officer, stockholder, director, consultant, agent or full-time
employee of the Company or the Subsidiary, or any alteration in the benefits
payable to any thereof;
(vii) Any material adverse change in the relationships of
the Company and the Subsidiary with its customers including without limitation
the Xerox Corporation, suppliers and vendors and which could have a material
adverse effect on the Business;
(viii) Except for any changes made in the ordinary course
of Business, any material change in any of the Company's or the Subsidiary's
business policies, including advertising, marketing, pricing, purchasing,
personnel, returns or budget policies; or
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(ix) Except in the ordinary course of the Business or as
the result of any prepayment of Company Debt by the Company, or as otherwise
provided for or contemplated by this Agreement or as disclosed in Schedule 2.11,
consistent with past practice, any payment, directly or indirectly, of any
Liability before the same became due in accordance with its terms.
(b) Except as set forth on Schedule 2.11, and which does
not have a material adverse effect on the Business, neither the Company nor any
Subsidiary has any Liability that is past due on the date hereof.
(c) Since the dates set forth above in (a) of this Section
2.11, the Company and the Subsidiary have (except for any transactions
contemplated by this Agreement, the Schedules annexed hereto and for the payment
of Company Debt) after first obtaining the prior written consent of the Buyer:
(i) conducted their operations according to the ordinary
and usual course of the Business consistent with past practice, preserved intact
their present business organization and structure, used reasonable efforts to
keep available the services of their present officers, agents and full-time
employees, used reasonable efforts to preserve and maintain their Assets and the
good will of the Business and used reasonable efforts to preserve their
relationships with customers and suppliers, and others having business dealings
with them;
(ii) maintained in the ordinary course of the Business,
consistent with past practice and in accordance with all Contracts, the Real
Property, all their material structures, equipment, and other tangible property
in their present repair, order and condition, subject to ordinary wear and tear;
(iii) not incurred any Liability (other than Liabilities
incurred in the ordinary course of the Business, consistent with past practice,
which are not in the aggregate material thereto), nor enter into any Contract of
a type required to be included in any Schedule annexed hereto;
(iv) not incurred any Company Debt;
(v) not undertaken (nor permitted to be undertaken) any of
the actions specified in Section 2.11;
(vi) not paid, discharged or satisfied any material Claim
or Liability other than the payment, discharge or satisfaction in the ordinary
course of the Business of Claims or Liabilities incurred in the ordinary course
of Business, consistent with past practice; or
(vii) has not renewed, amended, extended or terminated or
waived any material right under or failed to renew any Contract.
SECTION 2.12 Properties. (a) Exhibit B and Schedule 2.12(a)
sets forth a complete list and description of all real property owned or leased
by the Company and its Subsidiary (the "Real Property"). The LLC's have good,
marketable and insurable fee simple (or leasehold) title to the Real Property,
free and clear of all Liens and other title defects of any nature whatsoever,
except real estate Taxes (general and specific) not yet due and payable,
restrictions imposed by
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zoning ordinances, Liens with respect to Company Debt, or as disclosed on
Schedule 2.12(a) (collectively, the "Permitted Liens"). Schedule 2.12(a) also
sets forth with respect to such Real Property a list of all title insurance
policies, deeds, appraisal reports, surveys and environmental reports held or
controlled by the Company, the Subsidiary or any Seller, copies of which have
been provided to Buyer. To the best of Sellers' knowledge, except as set forth
in Schedule 2.12(a), all structures and buildings of the Business do not contain
any structural or other material defects that could interfere in any material
respect with the operation of the Business and are located within applicable
boundary lines. To the best of Sellers' knowledge, the Company, Subsidiary and
Business are not in violation in any material respect of any building, zoning,
anti-pollution, health, occupational safety or other Law or any Order or Permit
in respect of such Real Property, structures and buildings except as disclosed
on Schedule 2.12(a) annexed hereto. Except as disclosed on Schedule 2.12(a), no
person, other than the Company or the Subsidiary, has any right to occupy or
possess any of the Real Property or any such structures or buildings.
(b) The Company and its Subsidiary have good and
marketable title to (or valid leasehold interest in) all personal property used
in the Business, free and clear of all Liens except as disclosed in Schedule
2.12(b). To the best of Sellers' knowledge, the machinery, equipment and other
tangible personal property constituting a part of the Assets (whether owned or
leased), have been well-maintained in accordance with industry standards, are in
good condition and repair (subject to normal wear and tear) and are adequate in
quantity and quality for the operation of the Business as presently conducted.
Schedule 2.12(b) contains a list and description of all (i) equipment and (ii)
other tangible personal property of the Company or any Subsidiary with a book
value (before depreciation) of $1,000 or more. Prior to the Closing, the Company
shall acquire good and marketable title to all personal property used in the
Business that, on the date hereof, is leased by the Company from Affiliates of
the Company or any Seller except as disclosed on Schedule 2.12(b) annexed
hereto.
SECTION 2.13 Contracts. (a) Schedule 2.13 sets forth an
accurate and complete list of all Contracts to which the Company or the
Subsidiary is a party or by which it or its Assets are bound or subject, except
only for those with persons who are not Affiliates of either the Company or any
Seller relating solely to the purchase or sale of property or services by the
Company or the Subsidiary in the ordinary course of the Business which (i)
require the Company or the Subsidiary to make or receive payments not in excess
of $10,000 and (ii) have a remaining term of less than twelve months on the date
of this Agreement or are terminable by the Company or the Subsidiary without
penalty during such period. True and correct copies of all written Contracts
listed on such Schedule and summaries of the material provisions of all oral
Contracts so listed have been delivered to Buyer.
(b) All Contracts listed on Schedule 2.13 are valid,
subsisting, in full force and effect and binding upon the Company or the
Subsidiary, as the case may be, and, to the knowledge of the Company or Sellers,
the other parties thereto in accordance with their terms. Except as set forth in
Schedule 2.13, each of the Company and the Subsidiary are not in default (or
alleged default) under any such Contract in any material respect, nor, to the
knowledge of the Company or Sellers, is any other party thereto in default
thereunder in any material respect, nor does any condition exist that with
notice or the lapse of time or both would constitute a material default (or give
rise to a termination right) thereunder. To the knowledge of the Company or
Sellers, none of the other parties to any such Contract intends to terminate or
materially alter the provisions thereof by reason of the Contemplated
Transactions or otherwise except for the leases
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between the Company and the owners of Real Property including the Waldwick
facility and except for any employment agreements of the Sykes and George O'Neil
with the Company, all of which shall terminate effective as of the Closing Date.
Since the Latest Balance Sheet Date, neither the Company nor the Subsidiary has
waived any material right under any such Contract, materially amended or
extended beyond June 27, 1998 any such Contract or terminated or failed to renew
(or received notice of termination or failure to renew with respect to) any such
Contract.
SECTION 2.14 Intellectual Property.
(a) Schedule 2.14 sets forth a complete and correct list
of each United States and foreign (i) patent and patent application, indicating
as to each, the country, the patent number (or application number), the patent
title, the date filed, the date issued, and the expiry date; (ii) registered
trademark, servicemark, or tradename and application therefor, indicating, as to
each, the country, the mark, the registration number (or application number),
the date issued, the date filed, and the expiry date, and material nonregistered
trademark; (iii) copyright registration and copyright application indicating, as
to each, the country, the title of the work, the date issued, and the copyright
number, and material unregistered copyright; in each case owned in whole or in
part by the Company, Subsidiary or Sellers and included within the Intellectual
Property Rights. Company has good and marketable title in and to all such
domestic and foreign patents, patent applications and copyright, trademark and
servicemark registrations and applications free and clear of any liens other
than (i) Permitted Liens and (ii) Liens disclosed in any Schedule hereto.
(b) To the best of the knowledge of the Sellers, the
Company has the right and authority to use and enforce all of its Intellectual
Property Rights and, the operation of the Business, the manufacture, use or sale
of the products by the Company or the use of the Assets does not conflict with,
infringe upon or violate any patent, trademark, copyright, trade secret or other
proprietary, personal or other right of any other Person and no written claim
has been made to that effect. There are no pending, or to Sellers knowledge,
threatened administrative, judicial, arbitration or other adversary proceedings
concerning the Intellectual Property Rights.
(c) The Intellectual Property Rights are not subject to
any Liens, licenses or sublicenses in favor of third parties, except as set
forth on Schedule 2.14. Such Schedule sets forth a complete and correct list of
each of the Intellectual Property Rights license agreements to which Company is
a party or by which it is bound (whether as the licensor or licensee)
indicating, as to each, the parties (specifying which party is the licensor and
which party is the licensee), the title of the agreement, the date executed, and
the general subject matter. All of the software programs used by the Company in
the conduct of the Business are subject to valid and effective license
agreements between the Company and the licensors. The Sellers will not retain
after the Closing any interest in any intellectual property related to the
Business.
(d) The applications and registrations set forth on
Schedule 2.14 are subsisting in good standing, all maintenance fees have been
paid, and no challenges thereto are pending before the applicable intellectual
property registry. The Company is the current record owner of all registrations
and applications set forth on Schedule 2.14, except as noted on such Schedule.
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(e) To the best of Sellers' knowledge, the items of
Intellectual Property Rights are valid and enforceable and there are no
infringements of the Company's rights in and to the Intellectual Property Rights
by any third party. Seller has not entered into any consent, indemnification,
forbearance to sue or settlement agreement with any Person relating to any item
of Intellectual Property Rights.
SECTION 2.15 Claims and Proceedings. Except as set forth on
Schedule 2.15, there are no outstanding Orders of any Governmental Body against
or involving the Company, the Subsidiary or the Business. Except as set forth on
Schedule 2.15, there are no actions, suits, claims or counterclaims or legal,
administrative or arbitral proceedings or investigations (collectively,
"Claims") (whether or not the defense thereof or Liabilities in respect thereof
are covered by insurance), pending or threatened on the date hereof, against or
involving the Company, the Subsidiary or any of their respective Assets or the
Business. Schedule 2.15 also indicates those Claims the defense thereof or
Liabilities in respect thereof are covered by insurance. Except as set forth on
Schedule 2.15, to the best of the knowledge of the Company or Sellers, on the
date hereof, there is no fact, event or circumstances that would give rise to
any uninsured Claim. All notices required to have been given to any insurance
company listed as insuring against any Claim set forth on Schedule 2.15 have
been timely and duly given and, except as set forth on Schedule 2.15, no
insurance company has asserted that such Claim is not covered by the applicable
policy relating to such Claim. There are no Claims pending or, to the knowledge
of the Company or Sellers, threatened that would give rise to any right of
indemnification on the part of any seller, director or officer of the Company or
the Subsidiary or the heirs, executors or administrators of such seller,
director or officer, against the Company or any of the Subsidiary.
SECTION 2.16 Taxes. (a) Except as set forth in Schedule 2.16:
(i) the Company and its Subsidiary have timely filed all
Tax Returns required to be filed by them for all taxable periods ending on or
before the Closing or filed extensions of such tax returns and all such Tax
Returns or extensions are true, correct and complete;
(ii) the Company and its Subsidiary have paid or, if
payment is not yet due, will, on or before the Closing Date if due, pay to the
appropriate Tax Authority or have established, in accordance with GAAP and
consistent with past practice, accruals that are reflected on the Interim
Statements for the payment of, all Taxes of the Company and its Subsidiary for
all taxable periods ending on or before the Closing Date;
(iii) Except as provided in Schedule 2.16 annexed hereto,
no extension of time has been requested or granted for the Company or its
Subsidiary to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid and neither the Company nor its Subsidiary have
granted a power of attorney that remains outstanding with regard to any Tax
matter;
(iv) neither the Company nor its Subsidiary has received
notice of a determination by a Tax authority that Taxes are owed by the Company
or any of its Subsidiaries (such determination to be referred to as a "Tax
Deficiency") and, to the knowledge of the Company or Sellers, no Tax Deficiency
is proposed or threatened;
(v) all Tax Deficiencies have been paid or finally settled
and all amounts determined by settlement to be owed have been paid;
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<PAGE> 15
(vi) there are no Tax Liens on or pending against the
Company, its Subsidiary or any of their properties;
(vii) there are no presently outstanding waivers or
extensions or requests for waiver or extension of the time within which a Tax
Deficiency may be asserted or assessed;
(viii) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"Tax Audit") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(ix) there are no pending or, to the knowledge of the
Company or Sellers, threatened Tax Audits of the Company or its Subsidiary;
(x) neither the Company nor its Subsidiary has ever been
required to include in income any adjustment pursuant to section 481 of the Code
or pursuant to a closing agreement as defined in section 7121 of the Code and no
Tax Authority has ever made or proposed any such adjustment;
(xi) neither the Company nor its Subsidiary owns any
property that is tax-exempt use property within the meaning of section 168(h) of
the Code or that is described in section 168(f)(8) of the Internal Revenue Code
as in effect prior to its amendment by the Tax Reform Act of 1986;
(xii) neither the Company nor its Subsidiary is a party to
any arrangement to which section 280G of the Code could under any circumstances
apply;
(xiii) neither the Company nor its Subsidiary has filed a
consent pursuant to section 341(f) of the Code or agreed for section 341(f)(2)
to apply to the disposition of any asset;
(xiv) neither the Company nor its Subsidiary is now or has
ever been (a) an includable member of an "affiliated group" within the meaning
of section 1504(a) of the Code other than an affiliated group consisting only of
the Company and its Subsidiary, (b) a member of any consolidated, combined or
unitary Tax Return filing group other than a group consisting only of the
Company and its Subsidiary, (c) a party to an agreement that obligates it to
make any payment computed by reference to the Taxes, taxable income or tax
losses of any other individual or entity, (d) a personal holding company as
defined in section 542 of the Code, (e) the owner of an interest in an entity
that is or is treated as a partnership, trust, regulated investment company as
defined in section 851 of the Code, real estate investment trust as defined in
section 856 of the Code or foreign personal holding company as defined in
section 552(a) of the Code, (f) a United States shareholder as defined in
section 951(b) of the Code of a controlled foreign corporation as defined in
section 957 of the Code or (g) a United States real property holding company
within the meaning of section 897(c)(2) of the Code;
(xv) neither the Company nor its Subsidiary has any
deferred intercompany gains or losses that have not been fully taken into income
for income Tax purposes;
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(xvi) there are no transfer or other taxes imposed by the
State of New York or Oklahoma on either the Company or Buyer by virtue of the
Contemplated Transactions.
Each reference to a provision of the Code in this Section
2.16 shall be treated for state and local Tax purposes as a reference to
analogous or similar provisions of state and local law.
(b) Schedule 2.16 contains (i) a schedule of the filing
dates of all Tax Returns required to be filed by the Company or its Subsidiary,
(ii) a description of all past Tax Audits involving the Company or its
Subsidiary, (iii) a list of all elections made by the Company or its Subsidiary
relating to Taxes, (iv) a description of the accounting methods employed by the
Company and its Subsidiary and any changes in such accounting methods that
occurred during a year for which the statute of limitations remains open, (v) a
schedule of the Company's and Subsidiary's tax basis in its assets and the
annual depreciation deductions for such assets over their remaining tax recovery
period, (vi) a schedule of the amortization period and annual amortization
deductions for each item subject to amortization and a description of the asset
or other item that is subject to amortization, (vii) a schedule of the tax basis
of the Company in the stock of its Subsidiary, (viii) a schedule of the tax
attributes of the Company and the Subsidiary (including but not limited to net
operating and capital losses and investment and alternative minimum tax credits)
shown on a separate entity basis, together with a description of all limitations
to which such tax attributes are subject (e.g., Section 382 limitations or
separate return limitation year restrictions) that can be carried forward to the
Company's taxable year ending after February 28, 1998. Except as set forth in
Schedule 2.16, the Company and its Subsidiary have retained all supporting and
backup papers, receipts, spreadsheets and other information necessary for (i)
the preparation of all Tax Returns that have not yet been filed and (ii) the
defense of all Tax Audits involving taxable periods either ending on or during
the six (6) years prior to the Closing Date or from which there are unutilized
net operating loss, capital loss or investment tax credit carryovers.
(c) Except as set forth in Schedule 2.16 and except for
sales Taxes which result from the consummation of the Contemplated Transactions,
the Company and its Subsidiary have collected and remitted to the appropriate
Tax Authority all sales and use or similar Taxes required to have been collected
on or prior to the Closing Date and have been furnished properly completed
exemption certificates for all exempt transactions. The Company and its
Subsidiary have maintained and have in their possession all records, supporting
documents and exemption certificates required by applicable sales Tax statutes
and regulations to be retained in connection with the collection and remittance
of sales and use Taxes for all periods up to and including the Closing Date.
SECTION 2.17 Employee Benefits Plans. (a) Except as set forth
on Schedule 2.17, neither Sellers, the Company or its Subsidiary nor any
Affiliate of Company or its Subsidiary, nor the Business, nor any portion of the
Business (all of the above hereinafter individually and collectively called the
"Entity"), nor any other company or entity which together with the Entity
constitutes a member of the Entity's "controlled group" or "affiliated service
group" (within the meaning of Sections 4001(a)(14) and/or (b) of ERISA and/or
Sections 414(b), (c), (m) or (o) of the Code (such group or groups hereinafter
referred to individually and collectively as the "Group")), has at any time
adopted or maintained, or has any present or future obligation to contribute to
or make payment under (i) any employee benefit plan (as defined in Section 3(3)
of ERISA), or (ii) any other benefit plan, program, contract or arrangement of
any kind whatsoever (whether for the benefit of present, former, retired or
future employees, officers, directors or consultants of the
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Entity or the Group, or for the benefit of any other person or persons)
including, without limitation, arrangements providing for contributions,
benefits or payments in the event of a change of ownership or control in whole
or in part of the Entity or the Group, or with respect to disability,
relocation, child care, educational assistance, deferred compensation, pension,
retirement, profit sharing, thrift, savings, stock ownership, stock bonus,
restricted stock, health, dental, medical, life, hospitalization, stock
purchase, stock option, incentive, bonus, sabbatical leave, vacation, severance
or other contribution, benefit or payment of any kind, or (iii) any employment,
consulting, service or other employment contract of any kind whatsoever (all
such employee benefit plans and other benefit plans, programs, contracts or
arrangements and such employment, consulting, service or other Contracts
hereinafter individually and collectively called the "Employee Benefit
Plan(s)"). No Entity and no member of the Group is or has at any time been
obligated to contribute to any Employee Benefit Plan subject to Title IV of
ERISA. No Entity and no member of the Group has completely or partially
withdrawn from any "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(b) In addition, except as set forth in Schedule 2.17
hereof, to the best knowledge of Sellers, (i) there have been no "prohibited
transactions" within the meaning of Section 406 of ERISA or Section 4975 of the
Code with respect to any of the Employee Benefit Plans; (ii) no Liability has
been or is expected to be incurred by the Entity or any member of the Group
under Title IV of ERISA with respect to any Employee Benefit Plan currently or
formerly maintained by any of them; (iii) any and all amounts which the Entity
or any member of the Group are required to pay as contributions or otherwise to,
or with respect to the Employee Benefit Plans have been timely made; (iv) no
Employee Benefit Plan has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, and neither Entity nor any member of the Group has provided, or is
required to provide, security to any Employee Benefit Plan which is subject to
Title IV of ERISA or otherwise; (v) the current value of all "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under each
Employee Benefit Plan which is subject to Title IV of ERISA or otherwise, does
not exceed the current value of the assets of such Employee Benefit Plan
allocable to such benefit liabilities; (vi) each of the Employee Benefit Plans
has been operated and administered in accordance with all applicable Laws; (vii)
each of the Employee Benefit Plans which is intended to be "qualified" within
the meaning of Sections 401(a) and 501(a) of the Code has been determined by the
IRS to be so qualified and continues to be so qualified; (viii) there are no
pending, threatened or anticipated Claims involving any of the Employee Benefit
Plans; (ix) the Entity and the Group have not incurred and do not expect to
incur any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA; (x) no notice of a "reportable event" within
the meaning of Section 4043 of ERISA has been required to be filed with respect
to any Employee Benefit Plan; (ix) neither the Entity nor any member of the
Group is a party to, or participates in, or has any Liability or contingent
Liability with respect to any multiemployer plan; (xii) neither the execution
and delivery of this Agreement nor the consummation of the Contemplated
Transactions will accelerate benefits or any payments under any Employee Benefit
Plan; (xiii) neither the Entity nor any member of the Group has any commitment
to create any additional Employee Benefit Plan, or to amend any Employee Benefit
Plan so as to increase benefits thereunder; and (xiv) there is no liability of
the Company and its Subsidiary under any pension plan which has been terminated.
(c) Schedule 2.17 identifies all Employee Benefit Plans
covering current, former or retired employees, officers, directors and
consultants of the Entity and the Group (the "Entity Plans"). A true and correct
copy of each of the Entity Plans (and all amendments thereto,
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<PAGE> 18
whether currently effective or to become effective at a later date) listed on
Schedule 2.17 and all contracts relating thereto, or to the funding thereof
(including, without limitation, all trust agreements, insurance contracts,
investment management agreements, subscription and participation agreements,
administration and recordkeeping agreements) have been provided to Buyer. All
Entity Plans have at all times been established and maintained in accordance
with their terms. Each Entity Plan can be unilaterally terminated without
penalty by the Company on no more than sixty (60) days' notice. In the case of
any Entity Plan which is not in written form, an accurate description of such
Entity Plan has been provided to Buyer. A true and correct copy of the most
recent annual report, actuarial report, summary plan description, and IRS
determination letter and/or ruling with respect to each such Entity Plan, and a
current schedule of assets (and the fair market value thereof assuming
liquidation of any asset which is not readily tradeable) held with respect to
any funded Entity Plan has been provided to Buyer, and there have been no
material changes in the financial condition in the respective Entity Plans (or
other information provided hereunder) from that stated in such annual report,
actuarial reports and schedule of assets.
SECTION 2.18 Employee-Related Matters. (a) Schedule 2.18
contains a true and correct list of all directors, full-time employees and
consultants of the Company and its Subsidiary as of the Closing Date, including
any agreement relating thereto, and a description of the rate and nature of all
compensation payable by the Company or such Subsidiary to each such person.
Schedule 2.18 also contains a description of all duties, existing severance,
accrued vacation policies or retiree benefits of any current or former director,
officer, employee or consultant (to the extent not included in Schedule 2.17).
Except as set forth on such Schedule, the employment or consulting arrangement
of all such persons is, subject to applicable laws involving the wrongful
termination of employees, terminable at will.
(b) Except as set forth in Schedule 2.18, (i) the Company
and the Subsidiary are not a party to any Contract with any labor organization
or other representative of their employees; (ii) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the Company or
Sellers, threatened against the Company or the Subsidiary; (iii) the Company and
the Subsidiary have not experienced any labor strike, slowdown, work stoppage or
similar material labor controversy within the past three years; (iv) no
representation question has been raised respecting any of the Company's or the
Subsidiary's employees working within the past three years, nor, to the
knowledge of the Company or Sellers, are there any campaigns being conducted to
solicit authorization from the Company's employees or the Subsidiary's employees
to be represented by any labor organization; (v) no Claim before any
Governmental Body brought by or on behalf of any employee, prospective employee,
former employee, retiree, labor organization or other representative of the
Company's employees or any of the Subsidiary's employees, is pending or, to the
knowledge of the Company or Sellers, threatened against the Company or the
Subsidiary; (vi) neither the Company nor the Subsidiary is a party to, or
otherwise bound by, any Order relating to its employees or employment practices;
and (vii) except with respect to ongoing disputes of a routine nature involving
immaterial amounts, the Company and the Subsidiary have paid in full to all of
their employees all wages, salaries, commissions, bonuses, benefits and other
compensation due and payable to such employees; (viii) there are no complaints,
lawsuits or other proceedings pending or, to the knowledge of the Company or the
Sellers threatened in any forum by or on behalf of any present or former
employee, any applicant for employment in the Business or classes of the
foregoing, alleging breach of any express or implied contract of employment, any
law governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship;
(ix) prior to the Closing Date, Seller has
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<PAGE> 19
not or will not have effectuated (A) a "plant closing" (as defined in the Worker
Adjustment Retraining Notification Act of 1988 (the "WARN Act")) affecting the
site of employment of the Business or one or more facilities or operating units
within any site of employment or facility of the Business, or (B) a "mass
layoff" (as defined in the WARN Act) affecting the site of employment or
facility of the Business; (x) The Company or its Subsidiary have not been
affected by any transaction or engaged in layoffs or employment terminations in
respect of the Business sufficient in number to trigger application of any state
or local law comparable to the WARN Act; (xi) the Company has complied with all
laws relating to employment or labor, including, without limitation, ERISA, the
WARN Act, the American with Disabilities Act, the Family Medical Leave Act and
federal, state and local laws relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity and
payment and withholding of Taxes, except for instances of noncompliance that,
individually or in the aggregate, would not have a material adverse effect on
the conduct of the Business; and (xii) no provisions of this Agreement shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Company or its
Subsidiary in respect of employment with Buyer or in respect of any benefits
that may be provided, directly or indirectly, under any employee benefit plan,
contract, policy or arrangement which may be established by Buyer. No provision
of this Agreement shall constitute a limitation on rights to amend, modify or
terminate after the Closing Date any such plans, contracts, policies or
arrangements of Buyer.
SECTION 2.19 Insurance. Schedule 2.19 sets forth a list of all
insurance policies, fidelity and surety bonds and fiduciary liability policies
("the Insurance Policies") covering the Assets, the Business, operations,
employees, officers and directors of the Company and the Subsidiary and true and
complete copies of all such Insurance Policies have been delivered to Buyer.
Schedule 2.19 also sets forth (a) with respect to each Insurance Policy the
applicable deductible amounts and any material limitations to coverage and (b)
any letter of credit relating to any such Insurance Policy and all inspections
and reports delivered to the Company or the Subsidiary by any insurer with
respect to such Insurance Policies, copies of which have been delivered to
Buyer. Except as set forth in Schedule 2.19, there is no Claim by the Company or
the Subsidiary pending under any of such Insurance Policies as to which coverage
has been questioned, denied or disputed by the underwriters of such Insurance
Policies or requirement by any insurer to perform work which has not been
satisfied. No premiums payable under all Insurance Policies are overdue and the
Company and the Subsidiary are otherwise in compliance in all material respects
with the terms and conditions of all such Insurance Policies. All Insurance
Policies are in full force and effect. The insurance in effect with respect to
the Kingston Facility is in full force and effect and is in an amount of the
full replacement value of the Kingston Facility, including the buildings and
improvements thereon. Neither the Company nor Sellers know of any threatened
termination of, premium increase with respect to, or uncompleted requirements
under any Insurance Policy. No premiums, except for immaterial premiums (in each
case less than $2,500) which become due after the Closing as a result of premium
audits are or will be payable under Insurance Policies after the Closing in
respect of insurance provided for periods prior to the Closing Date.
SECTION 2.20 Compliance with Laws. Neither the Company nor the
Subsidiary is in violation in any material respect of any material order,
judgment, injunction, award, citation, decree, consent decree or writ
(collectively, "Orders"), or any material law, statute, code, ordinance, rule,
regulation or other requirement (collectively, "Laws"), of any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency or
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instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "Governmental Bodies") affecting its Assets or the
Business.
SECTION 2.21 Permits. The Company and the Subsidiary have
obtained all licenses, permits, certificates, certificates of occupancy, orders,
authorizations and approvals of (collectively, "Permits") , and have made all
required registrations and filings with, any Governmental Body that are material
to the conduct of the Business. To the best knowledge of Sellers, all Permits
material to the Business are listed on Schedule 2.21 and are in full force and
effect; no material violations are or have been recorded in respect of any
Permit; and no proceeding is pending or, to the knowledge of the Company or
Sellers, threatened to revoke or limit any Permit.
SECTION 2.22 Environmental Matters. (a) Except as disclosed in
Schedule 2.22, to Sellers' best knowledge, there has been, directly or
indirectly, no use, manufacture, generation, refining, storage, transport,
disposal or treatment of Hazardous Substances by or on behalf of the Company or
the Subsidiary (or, to the knowledge of the Company or Sellers, any predecessor
in interest), or any Release at, on or under any Real Property by or on behalf
of the Company or the Subsidiary, or, to the knowledge of the Company or
Sellers, by any other person, in violation of any Environmental Law or which
would require remedial action under any Environmental Law; to the best of
Sellers' knowledge, neither the Company, the Subsidiary nor Sellers has
contaminated the soil, ground water or surface water of such Real Property, and
to the knowledge of the Company or Sellers, none of the soil, ground water or
surface water of such Real Property is or has been contaminated by any Release.
(b) Except as disclosed in Schedule 2.22, no portion of
the Real Property has ever been used as a petroleum storage, refining or
distribution facility or terminal, or a gasoline station by the Company, the
Subsidiary, or any tenant or licensee of the Company, the Subsidiary or Sellers.
(c) To Sellers' best knowledge, as to the ownership or
operation of the Assets or the Business, neither the Company, the Subsidiary nor
Sellers have created, suffered or permitted, and have not received any written
notice of (i) any alleged violation with respect to any Environmental Law; or
(ii) any prior, pending or threatened Regulatory Action or other Claim involving
any such party or any present or former owner, lessee or operator of the Real
Property.
(d) (i) Except as disclosed in Schedule 2.22, to Sellers'
best knowledge, there are no incinerators, septic tanks, underground or
aboveground tanks or cesspools, pipes or pipelines for the storage or
transportation of Hazardous Materials, including without limitation, heating
oil, fuel oil, gasoline and/or other petroleum products, whether such tanks,
pipelines or pipes are in operation, closed or abandoned (the "Tanks") located,
or to the knowledge of the Company or Sellers, which have been located, on, at
or under the Real Property, (ii) all sewage from the Real Property is discharged
into a public sanitary sewer system, and (iii) there has been no Release by or
on behalf of the Company or the Subsidiary, or to the Company's or Sellers
knowledge, by any other party, into the atmosphere, any adjoining or adjacent
body of water, or adjoining or adjacent property in violation of Environmental
Law. The Company has delivered to Buyer copies of all environmental reports and
all other written materials held or controlled by or on behalf of the Company,
the Subsidiary or Sellers regarding the environmental matters set forth in this
Section 2.22. Notwithstanding the foregoing, if the Real Property contains or
contained any
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such Tanks, the Company and Sellers represent that, to the best of their
knowledge, the Company and the Subsidiary are in compliance in all material
respects with all registration and other requirements of Environmental Law
(including U.S.C. Section 6991, "Regulation of Underground Storage Tanks")
regulating the existence, usage and removal thereof.
SECTION 2.23 Finders; Fees. Except as set forth in Schedule
2.23 annexed hereto, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of any
Seller, the Company or the Subsidiary who might be entitled to any fee or
commission from any Seller, the Company or the Subsidiary upon consummation of
the Contemplated Transactions.
SECTION 2.24 Depositaries; Powers of Attorney, etc. Schedule
2.24 sets forth (i) the name of each bank or similar entity in which the Company
or the Subsidiary has an account, lock box or safe deposit box and the names of
all persons authorized to draw thereon or to have access thereto; and (ii) the
name of each person holding a general or special power of attorney from the
Company and the Subsidiary and a description of the terms thereof.
SECTION 2.25 Year 2000. The Company has corrected its
recordkeeping and computer programming in order to satisfy any year 2000 issues.
SECTION 2.26 Disclosure. Neither this Agreement, the Exhibits
and Schedules annexed hereto, nor any audited or unaudited financial statements,
documents or certificates furnished or to be furnished to Buyer by or on behalf
of the Company or any Seller pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers and LLC's jointly and
severally that:
SECTION 3.1 Authority Relative to This Agreement. Buyer has
full power and authority to execute and deliver this Agreement and each other
Transaction Document to which it is or, at the Closing, will be a party and to
consummate the Contemplated Transactions. The execution and delivery of this
Agreement and the consummation of the Contemplated Transactions to which Buyer
is or, at the Closing, will be a party have been duly and validly authorized and
approved by the board of directors thereof and no other corporate proceedings on
the part of Buyer are necessary to authorize the execution and delivery by Buyer
of this Agreement or the consummation of the Contemplated Transactions to which
it is or, at the Closing, will be a party. This Agreement has been and, at the
Closing, the other Transaction Documents to which Buyer is a party will have
been duly and validly executed and delivered by Buyer and (assuming the valid
execution and delivery thereof by the other parties thereto) constitutes or will
at the Closing constitute, as the case may be, the legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with their
respective terms, except as such obligations and their enforceability may be
limited by applicable bankruptcy and other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the
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discretion of the court before which any proceeding therefor may be brought
(whether at law or in equity).
SECTION 3.2 No Conflicts; Consents. The execution, delivery
and performance by Buyer of this Agreement and each other Transaction Document
to which it is or, at the Closing, will be a party and the consummation of the
Contemplated Transactions to which it is or, at the Closing, will be a party do
not and will not (i) violate any provision of the certificate of incorporation
or by-laws of Buyer; (ii) require Buyer to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other person, except as set forth in Schedule 3.2 (the
"Buyer Required Consents"); (iii) if Buyer Required Consents are obtained prior
to the Closing, violate, conflict with or result in the breach or default under
(after the giving of notice or the passage of time); or permit the termination
of, any material Contract to which Buyer is a party or by which Buyer or its
assets may be bound or subject; or (iv) if Buyer Required Consents are obtained
prior to the Closing, violate any Law or Order of any Governmental Body against,
or binding upon, Buyer or upon its assets or business.
SECTION 3.3 Corporate Existence and Power. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
SECTION 3.4 Finders; Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Buyer who might be entitled to any fee or commission from
Buyer upon consummation of the Contemplated Transactions.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 Filings and Authorizations. The Company and
Sellers, on the one hand, and Buyer, on the other, as promptly as practicable,
shall make, or cause to be made, all filings and submissions under such Laws as
are applicable to them or to their respective Subsidiaries and Affiliates, as
may be required for them to consummate the Contemplated Transactions in
accordance with the terms of this Agreement and shall furnish copies thereof to
each other party prior to such filing and shall not make any such filing or
submission to which Buyer or Sellers, as the case may be, reasonably objects in
writing. All such filings shall comply in form and content in all material
respects with applicable Law.
SECTION 4.2 Efforts to Consummate. Subject to the terms and
conditions herein, each party hereto, without payment or further consideration,
shall use its good faith efforts to take or cause to be taken all action and to
do or cause to be done all things necessary, proper or advisable under
applicable Laws, Permits and Orders to consummate and make effective, as soon as
reasonably practicable, the Contemplated Transactions, including, but not
limited to, the obtaining of all the Company, Subsidiary and Sellers Required
Consents and Buyer Required Consents and Permits or consents of any third party,
whether private or governmental, required in connection with
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such party's performance of such transactions and each party hereto shall
cooperate with the other in all of the foregoing.
SECTION 4.3 Notices of Certain Events. The Company and
Sellers, on the one hand, and Buyer, on the other, shall promptly notify the
other of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the Contemplated Transactions;
(b) any notice or other communication from any
Governmental Body in connection with the Contemplated Transactions; and
(c) any event, condition or circumstance occurring from
the date hereof through the Closing Date that would constitute a material
violation or breach of any representation or warranty, whether made as of the
date hereof or as of the Closing Date, or that would constitute a material
violation or breach of any covenant of any party contained in this Agreement.
SECTION 4.4 Public Announcements. The Company and Sellers, on
the one hand, and Buyer, on the other, will consult with each other before
issuing any press release or otherwise making any public statement with respect
to the Contemplated Transactions, and will not issue any such press release or
make any such public statement without the prior approval of Buyer or Sellers as
the case may be, except as may be required by applicable Law in which event the
other party shall have the right to review and comment upon (but not approve)
any such press release or public statement prior to its issuance.
SECTION 4.5 Expenses. (a) Buyer and Sellers shall each pay 50%
of the expenses (up to a maximum of $7,000) incurred in connection with the
title insurance (in an amount not to exceed the fair market value of the Real
Property) and surveys referred to in Section 5.3(f). Except as otherwise
specifically provided in this Agreement, Buyer and Sellers shall bear their
respective expenses, and Sellers will bear the expenses of the Company, in each
case, incurred in connection with the preparation, execution and performance of
this Agreement and the Contemplated Transaction, including, without limitation,
all fees and expenses of their respective Representatives.
(b) Any expenses as set forth in Schedule 4.5 as annexed
hereto of the Company or the Sellers relating to the Contemplated Transactions
paid by the Company in the ordinary course of its Business, shall be accounted
for by the Sellers and unless the Company is reimbursed by Sellers prior to or
at the Closing deducted from the Purchase Price as adjusted at the Closing, and
such expenses shall include bonuses paid to employees of the Company in relation
to the Contemplated Transactions.
(c) All excise, sales, value added, use, registration,
stamp, transfer and similar taxes, levies, charges and fees, including, without
limitation, any real estate transfer taxes relating to the Kingston Facility,
any fees required to record the warranty deed for the Kingston Facility, any
personal property transfer taxes relating to the Assets of the Business incurred
in connection with this Agreement and the Contemplated Transactions and
customarily borne by the sellers of real property shall be borne by Sellers.
Buyer will cooperate with Sellers and the LLC's in providing any appropriate
resale exemption certificates and other appropriate tax documentation.
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SECTION 4.6 Tax Matters. (a) Unless otherwise required by the
relevant Tax Authority or by applicable Laws, Sellers and Buyer agree to cause
the Company and the Subsidiary (i) to file all Tax Returns on the basis that the
taxable period that includes the Closing Date ends at the close of business on
the Closing Date and (ii) to elect to file Tax Returns on that basis where such
an election is available.
(b) All real estate taxes allocable to the Real Property
owned by Sykes- Ulster LLC and transferred to the Buyer pursuant to this
Agreement shall be apportioned as of the Closing Date and, at the Closing, Buyer
or Sellers shall reimburse each other, as appropriate, for amounts payable
pursuant to this sentence.
(c) Refunds or credits of Taxes that were paid by the
Company or the Subsidiary with respect to any periods shall be for the account
of the Company.
(d) Sellers, the Company, the Subsidiary and Buyer shall
reasonably cooperate, and shall cause their respective Representatives
reasonably to cooperate, in preparing and filing all Tax Returns, including
maintaining and making available to each other all records necessary in
connection with the preparation and filing of Tax Returns, the payment of Taxes
and the resolution of Tax Audits and Tax Deficiencies with respect to all
taxable periods. Buyer recognizes that Sellers and their Affiliates will need
reasonable access, from time to time, after the Closing Date, to certain
accounting and Tax records and information held by the Company and the
Subsidiary and to the employees of the Company and Subsidiary that pertain to
events occurring prior to the Closing Date. Buyer therefore agrees to cause the
Company and the Subsidiary to allow Sellers and their Representatives, at times
and dates reasonably acceptable to the Company, to inspect, review and make
copies of such records as Sellers deem necessary or appropriate, provided such
activities are conducted during normal business hours on reasonable advance
notice and the Buyer will maintain all such records for a period of six years
after the Closing Date.
SECTION 4.7 Certain Renewals. With respect to each Permit
which may expire prior to the Closing Date or within sixty days thereafter, the
Company shall prior to the Closing Date (i) timely file with the appropriate
Governmental Bodies applications for renewal of each such Permit (the
"Applications"), (ii) deliver to Buyer true and complete copies of such
Applications, (iii) diligently prosecute such Applications to conclusion, and
(iv) cooperate fully with all Governmental Bodies in the processing of such
Applications.
SECTION 4.8 Covenant Not-to-Compete. During the period
commencing as of the Closing and ending five years thereafter (the "Term"):
(a) In order to preserve the Business and goodwill of the
Company, the Sellers will not, directly or indirectly, as a partner, officer,
employee, director, stockholder, proprietor, consultant, representative, agent
or otherwise become or be interested in, or associate with or render assistance
to, any person engaged in the ownership, operation and/or management of a
business which is engaged in the Business of the Company as conducted on the day
prior to the Closing Date and in the territory where the Business of the Company
and the Subsidiary is conducted. The foregoing provisions shall not, however,
prohibit the ownership by the Sellers of not more than two percent (2%) of any
class of outstanding equity securities listed for trading on a national
securities exchange or publicly traded in the over-the-counter market which
engages in such Business.
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(b) The Sellers agree that they will not, directly or
indirectly, during the Term, for their own benefit or for the benefit of any
other person interfere with the relationship between Buyer or any Affiliate and
any of such persons and any representative, agent or consultant of any Affiliate
of the Company, Subsidiary or the Buyer.
(c) After the Closing, Sellers will not, and will use
their best efforts to cause Sellers' Representatives not to, directly or
indirectly, use, disclose or make available to anyone (other than Buyer) any
confidential information concerning the ownership and/or operation of the
Business (the "Confidential Information") except as required by law, this
Agreement or in connection with the defense of a claim for indemnity pursuant to
this Agreement. The Confidential Information includes, without limitation, the
business practices, financial information, customer and prospective customers
names, leads and account information, suppliers and prospective suppliers names,
leads and account information, marketing plans, mailing lists, computer
programs, advertising campaigns (including, without limitation, displays,
drawings, memoranda, designs, styles or devices), employee names, compensation
and benefit information of Sellers pertaining to the Business.
(d) The parties agree that a violation of the foregoing
agreements not to compete or disclose, or any provision thereof, will cause
irreparable damage to Buyer, and Buyer shall be entitled (without any
requirement of posting a bond or other security), in addition to any other
rights and remedies which it may have, at law or in equity, to an injunction
enjoining and restraining Sellers and/or Sellers' Representatives from doing or
continuing to do any such act or any other violations or threatened violations
of this Section 4.8.
(e) If one or more of the provisions contained in this
Section 4.8 (or any portion of any such provision) shall for any reason be
finally held by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Section (or any portion of any such
provision), but this Section shall be construed as if such invalid, illegal or
unenforceable provision (or portion thereof) had not been contained in this
Agreement. If, for any reason, any of the restrictions or covenants contained in
this Section 4.8 is finally held by a court of competent jurisdiction to cover a
geographic area or to be for a length of time that is not permitted by
applicable Law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be determined to be null, void or of no
effect, but to the extent it is or would be valid or enforceable under
applicable Law, it shall be construed and interpreted to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained in this Section) as shall be valid and
enforceable under such applicable Law.
SECTION 4.9 Return of Products of Company. The amount of any
claim in excess of $10,000 for products sold or shipped by the Company or the
Subsidiary prior to the Closing Date and returned by the customer within ninety
(90) days after the Closing Date for any reason including claims for product
liability by the customer or third persons will become an obligation and
liability of Sellers to Buyer under Article VI hereof. The Buyer will be
reimbursed for the invoice price of any such returned products less 50% thereof
representing the resin cost and less any adjustments that the Buyer can make
with the customer. The Buyer will use its best efforts to mitigate and reduce
any costs resulting from any customer return of products.
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ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties. The
obligations of Sellers and Buyer to consummate the Contemplated Transactions are
subject to the satisfaction of the following conditions:
(a) No Injunction, etc. No provision of any applicable Law
and no Order, suit, claim, action, proceeding or investigation shall prohibit
the consummation of the Contemplated Transactions.
SECTION 5.2 Conditions to the Obligations of Sellers. The
obligations of Sellers and the Company hereunder to consummate the Contemplated
Transactions are subject, at the option of Sellers, to the fulfillment prior to
or at the Closing of each of the following further conditions:
(a) Performance. Buyer shall have performed and complied
with all agreements, obligations and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(b) Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement and in any certificate or
other writing delivered by Buyer pursuant hereto shall be true at and as of the
Closing Date as if made at and as of such time.
(c) Purchase Price.
(i) Buyer shall have paid the Purchase Price as
adjusted;
(ii) Buyer will deliver to Sellers any releases
of the guarantees (including any personal guarantees) of the Sykes listed on
Schedule 5.2(c)(ii) or shall have delivered to Sellers Buyer's indemnification
of the Sykes with respect to such guarantees in accordance with and subject to
the provisions of Section 1.2(b)(ii) and Schedule 1.2(b)(ii)A annexed hereto of
this Agreement.
(d) Buyer Required Consents. All Buyer Required Consents
shall have been obtained.
(e) Documentation. There shall have been delivered to
Sellers the following:
(i) A certificate, dated as of the Closing Date,
signed by the President or Chief Financial Officer of Buyer confirming the
matters set forth in Section 5.2(a) and (b) hereof.
(ii) A certificate, dated as of the Closing Date,
of the Secretary or Assistant Secretary of Buyer certifying, among other things,
that attached or appended to such certificate (A) is a true and correct copy of
its certificate of incorporation and all amendments if any thereto as of the
date thereof; (B) is a true and correct copy of its by-laws as of the date
thereof;
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(C) is a true copy of all corporate actions taken by it, including resolutions
of its board of directors authorizing the execution, delivery and performance of
this Agreement, and each other Transaction Document to be delivered by Buyer
pursuant hereto; and (D) are the names and signatures of its duly elected or
appointed officers who are authorized to execute and deliver this Agreement and
any certificate, document or other instrument in connection herewith.
(iii) Evidence of the good standing and corporate
existence of Buyer.
(iv) A signed opinion of Buyer's counsel, dated
the Closing Date and addressed to Sellers, in a form reasonably acceptable to
Sellers.
(v) Copies of all Buyer Required Consents.
SECTION 5.3 Conditions to the Obligations of Buyer. All
obligations of Buyer to consummate the Contemplated Transactions hereunder are
subject, at the option of Buyer, to the fulfillment prior to or at the Closing
of each of the following further conditions:
(a) Performance. Each of the Company and Sellers shall
have performed and complied with all agreements, obligations and covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date.
(b) Representations and Warranties. The representations
and warranties of each of the Company and each Seller contained in this
Agreement and in any certificate or other writing delivered by the Company or
such Seller pursuant hereto shall be true at and as of the Closing Date as if
made at and as of such time.
(c) Environmental Matters. Buyer shall have received an
environmental report from an environmental consultant which does not report any
material inaccuracies with the representations and warranties in Article II with
respect to environmental matters.
(d) Sellers Required Consents. All Sellers Required
Consents shall have been obtained.
(e) Liens. All Liens on the Assets and Real Property
(other than Permitted Liens) shall have been released and discharged in form and
substance acceptable to Buyer.
(f) Survey and Title Insurance. Buyer shall have procured
(i) title insurance with respect to the Kingston Facility (including easements,
rights-of-way, conditions and restrictions of record) and the Ardmore Facility,
which insurance shall be subject only to Permitted Liens and such exceptions as
are customary on the ALTA standard title insurance form or which are
specifically agreed to by Buyer, from a title insurance company reasonably
satisfactory to Sellers in an amount reasonably satisfactory to Buyer; (ii) a
recent survey, by a licensed surveyor selected by Buyer, of the Kingston
Facility and Ardmore Facility, showing the boundaries, monuments, easements and
rights-of-way of record, improvements and encroachments, if any, and otherwise
complying with ALTA-ASCM Land Title Survey requirements; and (iii) a bargain and
sale deed for the Kingston Facility insured by such title insurance. Sellers
shall have delivered to such title insurance company all agreements, instruments
and documents reasonably required by it to issue the title insurance referred to
above.
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(g) Claims. There shall exist no fact, event or
circumstance on the Closing Date known to the Company or Sellers that could give
rise to any Claim (other than Claims the substance of which is disclosed on a
Schedule to this Agreement) that, if pending or threatened on the Closing Date,
could individually or in the aggregate, together with all other Claims existing
or threatened on such date, reasonably be expected to have a material adverse
effect on the Condition of the Business.
(h) No Proceeding or Litigation. No Claim instituted by
any person (other than Buyer or its Affiliates), shall have been commenced or be
pending against Sellers or any of their Affiliates, officers or directors, which
Claim (i) seeks to restrain, prevent, change or delay in any material respect
the Contemplated Transactions or seeks to challenge any of the material terms or
provisions of this Agreement or seeks material damages in connection with any of
the Contemplated Transactions and (ii) could, in the reasonable opinion of the
Buyer, (x) result in a material adverse effect in the Condition of the Business
or (y) delay or otherwise affect, in a manner adverse to Buyer, the Contemplated
Transactions.
(i) Net Worth. Except as hereinafter provided, the net
worth of the Company as at the Closing Date shall not be less than $2,257,000 as
based upon the Interim Statement and as certified by the Chairman, President or
Chief Financial Officer of the Company including a representation that there has
not been any material adverse change in the financial condition of the Company
since the date of the Interim Statement. The net worth requirement will be
reduced by the amount of (A) the net book value of any excluded assets set forth
in Schedule 1.2(d) annexed hereto, (B) the write-off of the deferred financing
costs, and (C) any prepayment penalties.
(j) Management Arrangements. The Buyer will have concluded
to its satisfaction arrangements relating to the ongoing participation of the
management of the Company in the Business subsequent to the Closing Date.
(k) Due Diligence. The Buyer will have acknowledged that
it has concluded its examination of the legal, business, financial and
environmental condition of the Real Property and of the Business of the Company.
(l) Documentation. There shall have been delivered to
Buyer the following:
(i) A certificate dated the Closing Date, of
the Company and each Seller, confirming the matters set forth in Sections 5.3(a)
and (b).
(ii) A certificate, dated the Closing Date, of
the Secretary or Assistant Secretary of the Company certifying, among other
things, that attached or appended to such certificate (A) is a true and correct
copy of the certificate of incorporation and by-laws (or comparable instruments)
of the Company and the Subsidiary and all amendments, if any, thereto as of the
date thereof; (B) is a true copy of all corporate actions taken by the board of
directors of the Company and the Sellers authorizing the execution, delivery and
performance of this Agreement, and the Contemplated Transactions; and (C) are
the names of the directors and officers of the Company and each of the
Subsidiaries.
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(iii) Evidence of the good standing and
corporate existence of the Company and the Subsidiary.
(iv) A signed opinion of the Company's and
Sellers' counsel, dated the Closing Date, addressed to Buyer, in a form
reasonably acceptable to Buyer.
(v) Copies of all Sellers Required Consents and
material Permits.
(vi) Possession and control of the Assets of the
Company and the Subsidiary (including all corporate books, seals, bank accounts,
records and documents).
(vii) The resignations, dated on or before the
Closing Date, of each director and officer of the Company and the Subsidiary
except any employee (other than an officer or director of the Company) who shall
continue in the employ of the Company after the Closing Date.
(viii) A bargain and sale deed for the Kingston
Facility.
(ix) Such other instruments of assignment or
conveyance as Buyer may reasonably request as necessary or appropriate to
effectuate the Contemplated Transactions.
(m) All leases between the Company and the owners of the
Real Property including the Waldwick facilities and all employment agreements
between the Company and any of its officers, directors, employees or
representatives will have been terminated as of the Closing.
(n) A power of attorney given to Suzanne K. Sykes.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 Survival of Representations and Warranties. (a)
Notwithstanding any right of Buyer fully to investigate the affairs of the
Company and the Subsidiary and notwithstanding any knowledge of facts determined
or determinable by Buyer pursuant to such investigation or right of
investigation, Buyer has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company and the Sykes contained in
this Agreement, or listed or disclosed on any Schedule hereto or in any
instrument delivered in connection with or pursuant to any of the foregoing. All
such representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement and the Closing hereunder.
Notwithstanding the foregoing, all representations and warranties of the Company
and the Sykes contained in this Agreement, on any Schedule hereto or in any
instrument delivered in connection with or pursuant to this Agreement (other
than the representations and warranties in Section 2.2 and 2.16 which shall
terminate and expire upon expiration of the applicable statute of limitations)
shall terminate and expire 18 months after the Closing Date; provided, however,
that the liability of Sellers shall not terminate as to any specific claim or
claims of the type referred to in Section 6.2 hereof, whether or not fixed as to
liability or liquidated as to amount, with respect to which Sellers have been
given
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specific notice on or prior to the date on which such liabilities would
otherwise terminate pursuant to the terms of this Section 6.1(a).
(b) All such representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement and the
Closing hereunder. All representations and warranties of Buyer shall terminate
and expire 18 months after the Closing Date; provided, however, that the
liability of Buyer shall not terminate as to any specific claim or claims of the
type referred to in Section 6.3 hereof, whether or not fixed as to liability or
liquidated as to amount, with respect to which Buyer has been given specific
notice on or prior to the date on which such Liability would otherwise terminate
pursuant to the terms of this Section 6.1(b).
SECTION 6.2 Obligation of the Sykes to Indemnify. The Sykes,
jointly and severally, agrees to indemnify, defend and hold harmless Buyer (and
its respective directors, officers, employees, Affiliates, successors and
assigns) from and against all Claims, losses, Liabilities, damages,
deficiencies, judgments, settlements, costs of investigation or other expenses
(including interest, penalties and reasonable attorneys' fees and disbursements
and expenses incurred in enforcing this indemnification) (collectively, the
"Losses") suffered or incurred by Buyer, the Company, the Subsidiary or any of
the foregoing persons in any action or proceeding between Buyer, Company,
Subsidiary and the Sellers or between the Buyer, Company, Subsidiary and any
third party or otherwise arising out of (i) any breach of the representations
and warranties of the Company or Sellers contained in this Agreement or in the
Schedules or any Transaction Document; or (ii) any breach of the covenants and
agreements of the Company or Sellers contained in this Agreement or in the
Schedules or any Transaction Document. Notwithstanding the foregoing, the Buyer
shall not be entitled to any recovery for any loss of profits or consequential
damages.
SECTION 6.3 Obligation of Buyer to Indemnify. Buyer agrees to
indemnify, defend and hold harmless the Sellers and LLC's (and any legal
representative, Affiliate or successors and assigns of any thereof) from and
against any Losses suffered or incurred by the Sellers and LLC's arising out of
(a) any breach of the representations and warranties of Buyer, (b) of the
covenants and agreements of Buyer contained in this Agreement or in the
Schedules or any Transaction Document or (c) any actions of the Company or
Subsidiary after the Closing. Notwithstanding the foregoing, the Sellers and the
LLC's shall not be entitled to any recovery for any loss of profits or
consequential damages.
SECTION 6.4 Notice and Opportunity to Defend Third Party
Claims. (a) Promptly after receipt by any party hereto (the "Indemnitee") of
notice of any demand, claim or circumstance which would or might give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give prompt notice thereof (the "Claims Notice") to the party
or parties obligated to provide indemnification pursuant to Section 6.2 or 6.3
(collectively, the "Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own
expense and with its own counsel, any Asserted Liability unless (i) the Asserted
Liability seeks an Order, injunction or other equitable or declaratory relief
against the Indemnitee or (ii) the Indemnitee shall have reasonably concluded
upon written advice of counsel that (x) there is a legal conflict of interest
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between the Indemnitee and the Indemnifying Party in the conduct of such defense
or (y) the Indemnitee shall have one or more defenses not available to the
Indemnifying Party. If the Indemnifying Party elects to defend such Asserted
Liability, it shall within thirty days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
defense of such Asserted Liability and make available on a reasonable basis such
books and records and personnel as may be necessary. If the Indemnifying Party
elects not to defend the Asserted Liability, is not permitted to defend the
Asserted Liability by reason of the first sentence of this Section 6.4(b), fails
to notify the Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement with respect to such Asserted
Liability, the Indemnitee may pay, compromise or defend such Asserted Liability
at the sole cost and expense of the Indemnifying Party. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the reasonable written objection of the other,
provided that the Indemnitee may settle or compromise any claim as to which the
Indemnifying Party has failed to notify the Indemnitee of its election under
this Section 6.4(b) or as to which the Indemnifying Party is contesting its
indemnification obligations hereunder. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of any
Asserted Liability. If the Indemnifying Party chooses to defend any Asserted
Liability, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense. Any Losses of any Indemnitee for which
indemnification is available hereunder shall be paid upon written demand
therefor. At any time an Asserted Liability shall be pending, the Indemnifying
Party and Indemnitee will consult with each other with respect thereto no less
frequently than monthly.
SECTION 6.5 Limits on Indemnification. (a) Except as
hereinafter provided no claim may be made against the Indemnifying Party for
indemnification pursuant to Section 6.2 or 6.3, as the case may be, unless and
only to the extent the aggregate of all Losses of the Indemnitee with respect to
such Sections shall exceed $60,000 with a single minimum item of $3,000. In no
event shall the Indemnifying Party's liability under Section 6.2 or 6.3, as the
case may be, exceed $1,200,000. There is no minimum or maximum with respect to a
violation of Section 1.2(b)(ii) or any separate indemnification or guarantee
given with respect thereto.
(b) Notwithstanding any other provision hereunder, in the
event Buyer shall allege a violation of any representation contained in Section
2.22, it shall take no remedial action until it has offered Seller the
opportunity to investigate and, if necessary, correct or remediate the alleged
condition. Sellers, at their expense, may retain such experts, attorneys and
consultants as it deems appropriate. In the event Sellers elect to control the
remediation, any remediation shall be done in a manner determined by Sellers and
to standards approved by Sellers; provided (i) such remediation shall cause the
affected property to comply with applicable Environmental Laws and (ii) Sellers
shall cooperate with Buyer to limit or minimize interference with Purchaser's
operations or use of the facility. In no event shall Sellers' costs or
obligation arising due to a breach of a representation contained in Section 2.22
exceed $1,000,000.
(c) Nothing herein shall limit the right of the
indemnifying party to make claims against third parties, including but not
limited to claims related to warranties. The Buyer, the Company and the
Subsidiary shall make available all rights available to the indemnifying party
against third parties, including assignments thereof.
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(d) As used in this Agreement, "Losses" shall be
determined after giving effect to the receipt by the Indemnitee of any insurance
proceeds relating to such Loss and any other recovery from any third party and
any tax benefit to the Indemnitee.
SECTION 6.6 Adjustment. It is the intent of the parties that
any amounts paid under Sections 6.2 or 6.3 shall represent an adjustment of the
Purchase Price and the parties will report such payments consistent with such
intent. Nevertheless, if any payment pursuant to Section 6.2 or 6.3 hereof would
be treated by any Tax Authority as other than a Purchase Price adjustment and
would, on that basis, be includable in the gross income of the Indemnitee that
is reported to such Tax Authority, then such payment shall be increased by the
amount necessary so that the Indemnitee is fully and completely indemnified on
an after-Tax basis.
SECTION 6.7 Exclusive Remedy. Except as otherwise explicitly
provided in this Agreement, the parties agree that the indemnification
provisions of this Article VI shall constitute the parties' sole and exclusive
remedies in respect of this Agreement and the Contemplated Transactions (other
than Claims in the nature of fraud).
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Notices. (a) Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally by hand or by recognized overnight courier, telecopied or mailed (by
registered or certified mail, postage prepaid) as follows:
(i) If to Buyer, one copy to:
PVC Container Corporation
401 Industrial Way West
Eatontown, New Jersey 07724
Telecopier: (732) 542-7706
Attn: Phillip L. Friedman, President
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Telecopier: (212) 702-5810
Attn: Herbert S. Meeker, Esq.
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(ii) If to the Company, one copy to:
Marpac Industries, Inc.
77 Kukuk Lane
Kingston, New York 12401
Telecopier: (917) 336-5006
Attn: Phillip L. Friedman, Chairman
with a copy to:
Schneck Weltman & Hashmall LLP
1285 Avenue of the Americas
New York, New York 10019
Telecopier: (212) 965-3252
Attn: Arthur M. Schneck, Esq.
and
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Telecopier: (212) 702-5810
Attn: Herbert S. Meeker, Esq.
(iii)If to Sellers, one copy to:
Donald J. Sykes
Suzanne K. Sykes
Kathryn F. Sykes
Jeffrey B. Sykes
Brooks Read, Trustee, and
Sykes Family Investments, LP
164 Franklin Turnpike
Waldwick, New Jersey 07463
Telecopier: (201) 670-1654
Attn: Suzanne K. Sykes
with a copy to:
Schneck Weltman & Hashmall LLP
1285 Avenue of the Americas
New York, New York 10019
Telecopier: (212) 965-3252
Attn: Arthur M. Schneck, Esq.
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(b) Each such notice or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified in Section 8.1(a) (with confirmation of
transmission); or (ii) if given by any other means, when delivered at the
address specified in Section 8.1(a). Any party by notice given in accordance
with this Section 8.1 to the other party may designate another address (or
telecopier number) or person for receipt of notices hereunder. Notices by a
party may be given by counsel to such party.
SECTION 7.2 Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) and the collateral agreements executed in
connection with the consummation of the Contemplated Transactions contain the
agreement among the parties with respect to the subject matter hereof and
related transactions and supersede all prior agreements, written or oral, with
respect thereto. The parties hereto do not make any representations or
warranties, except as expressly set forth herein.
SECTION 7.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended only by a written instrument signed by Sellers, the Company
and Buyer. The provisions hereof may be waived in writing by the party to be
charged therewith. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. Except as otherwise provided herein, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity. Any suits, proceedings and other
actions relating to, arising out of or in connection with this Agreement shall
be submitted to the in personam jurisdiction of the United States District Court
for the Southern District of New York and the Courts of the State of New York
for all such suits, proceedings and other actions. The parties hereby waive any
claims against or objection to in personam jurisdiction and venue in such
courts.
SECTION 7.4 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 7.5 Binding Effect; No Assignment. This Agreement and
all of its provisions, rights and obligations shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors,
heirs and legal representatives. This Agreement may be assigned (including by
operation of Law) by any party hereto without the express written consent of the
other provided that any such assignment shall not release the assigning party
from any of its, hers or his obligations under this Agreement. Nothing herein
express or implied is intended or shall be construed to confer upon or to give
anyone other than the parties hereto and their respective heirs, legal
representatives and successors any rights or benefits under or by reason of this
Agreement and no other party shall have any right to enforce any of the
provisions of this Agreement.
SECTION 7.6 Exhibits. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
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SECTION 7.7 Severability. If any provision of this Agreement
for any reason shall be held to be illegal, invalid or unenforceable, such
illegality shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such illegal, invalid or unenforceable
provision had never been included herein.
SECTION 7.8 Counterparts. The Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 7.9 Third Parties. Except as specifically set forth or
referred to herein, nothing herein express or implied is intended or shall be
construed to confer upon or give to any person other than the parties hereto and
their permitted successors or assigns, any rights or remedies under or by reason
of this Agreement or the Contemplated Transactions.
SECTION 7.10 Further Assurances. At any time and from time to
time after the Closing Date, upon the request of Buyer, Sellers will do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged or
delivered, all such further documents, instruments or assurances, as may be
necessary, desirable or proper to carry out the intent and accomplish the
purposes of this Agreement. Sellers and Buyer will each, respectively, bear
their or its own costs and expenses incurred in compliance with the first
sentence of this Section 8.10. In addition, at the cost of Buyer, Sellers will,
at any time and from time to time after the Closing Date, cooperate with Buyer
in obtaining all financial information regarding the Company and its
Subsidiaries for periods prior to the Closing Date required to be filed or made
publicly available by Buyer under the federal securities laws.
SECTION 7.11 Confidentiality. The Buyer and the Sellers are
parties to a confidentiality letter-agreement dated April 21, 1998 between
Kirtland Capital Partners acting as agent for Buyer and Ernst & Young LLP acting
as agent for the Company (the "Confidentiality Agreement"). It is agreed that
the provisions of such Confidentiality Agreement shall apply with respect to the
parties to this Agreement who will abide by the transactions contemplated in the
Confidentiality Agreement. It is further agreed that such Confidentiality
Agreement shall be governed by the laws of the State of New York and that any
action to enforce its terms may be brought and litigated in the courts of the
State of New York or the United States District Court for the Southern District
of New York. Except as specifically modified herein, the Confidentiality
Agreement shall remain in full force and effect.
ARTICLE VIII
DEFINITIONS
SECTION 8.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Acquisition Proposal" shall mean any proposal involving,
directly or indirectly, (i) the acquisition of, or merger or other business
combination involving the Company or the
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Subsidiary, (ii) the sale or other transfer of any capital stock of the Company
or the Subsidiary, (iii) the sale, lease, transfer or management of the
Business, (iv) the sale or other transfer of any Assets (except in the ordinary
course) and (v) any other transaction inconsistent with the Contemplated
Transaction or which would render any of them impossible or impracticable to
consummate.
"Affiliate" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"Agreement" or "this Agreement" shall mean, and the words
"herein", "hereof" and "hereunder" and words of similar import shall refer to,
this agreement as it from time to time may be amended.
"Assets" shall mean properties, rights, interests and assets
of every kind, real, personal or mixed, tangible and intangible, used or usable
in the Business.
The term "audit" or "audited" when used in regard to financial
statements shall mean an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"Business" shall mean the ownership and operation of the
Assets comprising the business operations of the Company, the Subsidiary and the
Kingston Facility.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Condition of Business" shall mean the financial condition,
prospects or the results of operations of the Business, the Assets of the
Company and its Subsidiary, taken as a whole.
"Contract" shall mean any contract, agreement, indenture,
note, bond, lease, conditional sale contract, mortgage, license, franchise,
instrument, commitment or other binding arrangement, whether written or oral.
The term "control", with respect to any person, shall mean the
power to direct the management and policies of such person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in connection with an agreement, arrangement or understanding (written or
oral) with one or more other persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Environmental Laws" shall mean any and all Laws (including
common law), Orders, Permits, agreements or any other requirement or restriction
promulgated, imposed, enacted or issued by any federal, state, local and foreign
Governmental Bodies relating to human health or the environment, including the
emission, discharge or Release of pollutants, contaminants, Hazardous Substances
or wastes into the environment (which includes, without limitation, ambient air,
surface water, ground water, or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
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"Environmental Liabilities" shall mean any Liabilities,
obligations, responsibilities, obligations to conduct remedial actions, losses,
damages, punitive damages, consequential damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigations and feasibility studies),
fines, penalties, and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present, or future, resulting from any
claim or demand by any person, whether based in contract, tort, implied or
express warranty, strict liability, common law, criminal or civil statute,
including any Environmental Law, arising from environmental, health or safety
conditions of the Company or the manufacture, refining, storage, disposal or
treatment of Hazardous Substances by or on behalf of the Company (or any
predecessor in interest), in each case, on or prior to the Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"GAAP" shall mean generally accepted accounting principles in
effect on the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States.
"Hazardous Substances" shall mean any dangerous, toxic,
radioactive, caustic or otherwise hazardous material, pollutant, contaminant,
chemical, waste or substance defined, listed or described as any of such in or
governed by any Environmental Law, including but not limited to
urea-formaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, radon, explosives, known carcinogens, petroleum and its derivatives,
petroleum products, or any substance which might cause any injury to human
health or safety or to the environment or might subject the owner or operator of
the Real Property to any Regulatory Actions or Claims.
"Inventory" shall mean, as of any date, collectively, all
inventories of raw materials, work-in-process and finished good inventories
relating to the conduct of the Business and products as such exist on the
Closing Date, and as set forth in a list of the Inventory as of the Closing Date
by the categories of raw materials, work in progress and finished goods and all
other Inventory annexed hereto as Schedule 2.10 owned by the Company and its
Subsidiary as of such date.
"IRS" shall mean the Internal Revenue Service.
The term "knowledge" with respect to (a) any individual shall
mean actual knowledge and (b) any corporation shall mean the actual knowledge of
the directors and the executive officers of such corporation; and "knows" has a
correlative meaning.
"Liability" shall mean any direct or indirect indebtedness,
liability, assessment, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss accruals).
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"Lien" shall mean, with respect to any Asset, any mortgage,
lien (including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such Asset.
"Litigation Claims" shall mean any and all Claims against the
Company, the Subsidiary, any of their respective Assets or the Business, whether
asserted prior to or after the Closing Date, arising out of events,
transactions, facts or circumstances occurring or existing on or prior to the
Closing Date (other than Claims arising out of trade or other payables existing
on the Closing Date incurred in the ordinary course of the Business).
"1933 Act" shall mean the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
The term "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, including a government or political subdivision or an agency or
instrumentality thereof.
"Receivables" shall mean as of any date any trade accounts
receivable, notes receivable, sales representative advances and other
miscellaneous receivables of the Company and the Subsidiary arising in the
ordinary course of the Business.
"Regulatory Actions" shall mean any Claim, demand, action,
suit, summons, citation, directive, investigation, litigation, inquiry,
enforcement action, Lien, encumbrance, restriction, settlement, remediation,
response, clean-up or closure arrangement or other remedial obligation or
proceeding brought or instigated by any Governmental Body in connection with any
Environmental Law, including, without limitation, the listing of the Real
Property on any list of contaminated or potentially contaminated sites or
potential or verified Hazardous Waste sites under any Environmental Law, or any
civil, criminal and/or administrative proceedings, whether or not seeking costs,
damages, penalties or expenses.
"Release" shall mean the intentional or unintentional,
spilling, leaking, disposing, discharging or disturbance of, or emitting,
depositing, injecting, leaching, escaping, or any other release or threatened
release to or from, however defined, any Hazardous Substance in violation of any
Environmental Law.
"Reportable Event" shall mean any of the events described in
Sections 4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Subsidiary" of the Company shall mean any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are owned directly or indirectly through one or more intermediaries, or both, by
the Company.
"Tax" (including, with correlative meaning, the terms "Taxes"
and "Taxable") shall mean (i)(A) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall
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profits tax, alternative or add-on minimum tax, customs duty or other tax, fee,
duty, levy, impost, assessment or charge of any kind whatsoever (including but
not limited to taxes assessed to real property and water and sewer rents
relating thereto), together with (B) any interest and any penalty, addition to
tax or additional amount imposed by any Governmental Body (domestic or foreign)
(a "Tax Authority") responsible for the imposition of any such tax, in either
case, with respect to the Company, the Subsidiary, the Business or the Assets
(or the transfer thereof); (ii) any liability for the payment of any amount of
the type described in the immediately preceding clause (i) as a result of the
Company or the Subsidiary being a member of an affiliated or combined group with
any other corporation at any time on or prior to the Closing Date and (iii) any
liability of the Company, or the Subsidiary for the payment of any amounts of
the type described in the immediately preceding clause (i) as a result of a
contractual obligation to indemnify any other person.
"Tax Return" shall mean any return or report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be supplied to any Tax Authority.
"Transaction Documents" shall mean, collectively, this
Agreement, and each of the other agreements and instruments to be executed and
delivered by all or some of the parties hereto in connection with the
consummation of the transactions contemplated hereby.
(b) The following terms are defined in the following
sections of this Agreement:
Term Section
Annual Statements 2.7(a)
Asserted Liability 6.4(a)
Buyer Recital
Buyer Filings 4.13
Buyer Reports 3.5
Buyer Required Consents 3.2
Claims 2.15
Claims Notice 6.4(a)
Closing 1.3
Closing Date 1.3
Closing Payments 1.2(d)
Common Stock Recital
Company Recital
Company Debt 1.2(b)(ii)
Confidential Information 4.12(c)
Contemplated Transactions 2.3
Employee Benefit Plan 2.17(a)
Entity 2.17(a)
Entity Plans 2.17(c)
ERISA Affiliate 2.17(a)
ERISA Plan 2.17(a)
Escrow Agent 1.2(c)
Escrow Funds 1.2(c)
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Governmental Bodies 2.20
Indemnification Funds 1.2(c)
Indemnifying Party 6.4(a)
Indemnitee 6.4(a)
Insurance Policies 2.19
Intellectual Property Rights 2.14
Interim Statements 2.7(a)
E&Y 2.7(a)
Latest Balance Sheet 2.8
Latest Balance Sheet Date 2.8
Laws 2.20
Losses 6.2
Net Proceeds 1.2(b)(iii)
Orders 2.20
Period 5.2(d)
Permits 2.21
Permitted Liens 2.12(a)
Real Property 2.12(a)
Representatives 4.2
Securities Act 1.2(e)
Sellers Recital
Sellers Required Consents 2.4
Shares Recital
Straddle Period 4.10(b)
Tanks 2.22(d)
Tax Audit 2.16(a)
Tax Deficiency 2.16(a)
SECTION 8.2 Interpretation. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 9.1,
and those accounting terms used in this Agreement not defined in Section 9.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
-37-
<PAGE> 41
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date set forth above.
PVC CONTAINER CORPORATION
By:
-----------------------------------
Phillip L. Friedman
President
MARPAC INDUSTRIES, INC.
By:
-----------------------------------
Donald J. Sykes
Chairman
-----------------------------------
(Donald J. Sykes)
-----------------------------------
(Suzanne K. Sykes)
SYKES KNY-LLC KATHRYN F. SYKES, JEFFREY J. SYKES,
BROOKS READ, TRUSTEE and
By FAMILY INVESTMENTS LP
----------------------------------
Suzanne K. Sykes,Member
SYKES-ULSTER-LLC
By: By:
---------------------------------- -----------------------------------
Suzanne K. Sykes, Member Suzanne K. Sykes, Attorney-In-Fact
The above-named LLC's are executing this Agreement to acknowledge this agreement
and approve of the sale of the Kingston Facility for the consideration allocated
pursuant to Schedule 1.2(b)(iv) of this Agreement.
-38-
<PAGE> 42
EXHIBIT A
<TABLE>
<CAPTION>
Total No. Consideration
Name of Seller of Shares for Shares
<S> <C> <C>
Suzanne K. Sykes 1,837
Donald J. Sykes 263
Sykes Family Investments,LP 2,700
Brooks Read, Trustee, f/b/o 542
Kathryn F. Sykes u/t/d/
December 28, 1978
Brooks Read, Trustee, f/b/o 542
Jeffrey J. Sykes u/t/d
December 28, 1978
Kathryn F. Sykes 58
Jeffrey J. Sykes 58
</TABLE>
<PAGE> 43
EXHIBIT B
Description of Kingston Facility
<PAGE> 44
EXHIBIT C
Escrow Agreement
<PAGE> 45
SCHEDULE 1.2(b)(ii)
Company Debt
<PAGE> 46
SCHEDULE 1.2(b)(ii)(A)
Guarantee and Indemnity Agreement
<PAGE> 47
SCHEDULE 1.2(b)(iv)
Allocation of the Purchase Price
<PAGE> 48
SCHEDULE 1.2(d)
Excluded Assets
Description Net Book Value
<PAGE> 49
SCHEDULE 2.1
Capital Stock
<PAGE> 50
SCHEDULE 2.4
Sellers Required Consents
<PAGE> 51
SCHEDULE 2.5
Subsidiary
<PAGE> 52
SCHEDULE 2.5(b)
Lien on Capital Stock of the Subsidiary
<PAGE> 53
SCHEDULE 2.8
Liabilities
<PAGE> 54
SCHEDULE 2.9
Receivables
<PAGE> 55
SCHEDULE 2.10
Inventories by Category
<PAGE> 56
SCHEDULE 2.11
Absence of Certain Changes and Payments of any Liabilities
before or after it is due
<PAGE> 57
SCHEDULE 2.12(a)
Permitted Liens
<PAGE> 58
SCHEDULE 2.12 (b)
Equipment and Tangible Personal Property
<PAGE> 59
SCHEDULE 2.13
Contracts of the Company and the Subsidiary
<PAGE> 60
SCHEDULE 2.14
Intellectual Property Rights
<PAGE> 61
SCHEDULE 2.15
Claims and Proceedings
<PAGE> 62
SCHEDULE 2.16
Taxes
<PAGE> 63
SCHEDULE 2.17
Employee Benefit Plans
<PAGE> 64
SCHEDULE 2.18
Employee Related Matters
<PAGE> 65
SCHEDULE 2.19
Insurance
<PAGE> 66
SCHEDULE 2.22
Environmental Matters
<PAGE> 67
SCHEDULE 2.23
Finders; Fees
<PAGE> 68
SCHEDULE 2.24
Depositaries, Powers of Attorney, etc.
<PAGE> 69
SCHEDULE 3.2
Buyer's Required Consents
- None -
<PAGE> 70
SCHEDULE 4.5
Expenses Paid By The Company on Behalf of the Sellers
<PAGE> 71
SCHEDULE 5.2(c)(ii)
Guarantees of the Sykes
