<PAGE>
EXECUTION COPY
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND AMONG
HOWARD P. HOEPER,
HPH INDUSTRIES, LTD.,
PACKAGING RESOURCES GROUP, INC.,
PACKAGING RESOURCES INCORPORATED
AND
VAN LEER HOLDING INC.
DATED AS OF DECEMBER 13, 2000
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Continued)
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS.......................................................1
1.1 Previously Defined Terms..........................................1
1.2 Definitions.......................................................1
1.3 Interpretation...................................................10
ARTICLE 2 PURCHASE AND SALE, PURCHASE PRICE, ALLOCATION AND OTHER
RELATED MATTERS .................................................10
2.1 Purchase and Sale................................................10
2.2 Purchase Price...................................................10
2.3 Payment of Purchase Price........................................11
2.4 Final Net Working Capital Calculation............................11
2.5 Assumed Liabilities..............................................13
2.6 Sales and Transfer Taxes.........................................15
2.7 Allocation of Purchase Price.....................................15
2.8 Nonassignable Contracts and Nonassignable Permits................15
ARTICLE 3 CLOSING AND CLOSING DATE DELIVERIES..............................16
3.1 Closing..........................................................16
3.2 Closing Deliveries by Seller.....................................16
3.3 Closing Deliveries by Purchaser..................................17
3.4 Cooperation......................................................18
ARTICLE 4 PRE-CLOSING FILINGS..............................................18
4.1 HSR Filing.......................................................18
4.2 Other Governmental Filings.......................................18
ARTICLE 5 COVENANTS........................................................19
5.1 Alternative Transaction..........................................19
5.2 Conduct of Business Prior to Closing.............................19
5.3 Preparation for Closing..........................................19
5.4 Access to Information............................................20
5.5 Notice of Developments...........................................20
5.6 Taxes............................................................20
5.7 Corporate Name...................................................20
5.8 Employment Matters...............................................20
5.9 Aurora Supply Arbitration........................................22
ARTICLE 6 FINANCIAL STATEMENTS; DISCLOSURE LETTER..........................22
6.1 Pre-Signing Deliveries by Seller.................................22
ARTICLE 7 WARRANTIES AND REPRESENTATIONS OF SELLER.........................22
7.1 Incorporation and Qualification of Seller........................22
7.2 Authority........................................................22
7.3 No Conflict......................................................23
7.4 Consents and Approvals...........................................23
-i-
<PAGE>
7.5 Brokers..........................................................23
7.6 Financial Statements.............................................23
7.7 Absence of Changes...............................................24
7.8 Absence of Undisclosed Liabilities...............................24
7.9 Compliance with Laws.............................................25
7.10 Property, Plant and Equipment....................................25
7.11 Intellectual Property............................................27
7.12 Inventories......................................................28
7.13 Accounts Receivable..............................................28
7.14 Taxes............................................................28
7.15 Contracts........................................................29
7.16 Nature of Material Contracts.....................................30
7.17 Powers of Attorney...............................................30
7.18 Insurance and Risk Management....................................30
7.19 Litigation.......................................................30
7.20 Labor and Employment Matters.....................................31
7.21 Employee Benefit Matters.........................................31
7.22 Environmental, Health and Safety.................................33
7.23 Affiliated Transactions..........................................34
7.24 Government Contracts.............................................34
7.25 Distributors, Customers and Suppliers............................34
7.26 No Illegal Payments; Etc.........................................34
7.27 Books and Records................................................35
7.28 Title to Assets..................................................35
7.29 All Assets Used to Conduct Business..............................35
7.30 Product Warranties; Defects; Liability...........................35
7.31 Disclaimer Regarding Estimates and Projections...................35
ARTICLE 8 WARRANTIES AND REPRESENTATIONS OF PURCHASER......................36
8.1 Incorporation and Qualification of Purchaser.....................36
8.2 Authority........................................................36
8.3 No Conflict......................................................36
8.4 Consents and Approvals...........................................36
8.5 Litigation.......................................................37
8.6 Brokers..........................................................37
8.7 Financial Ability................................................37
ARTICLE 9 CONDITIONS TO CLOSING APPLICABLE TO PURCHASER....................37
9.1 No Termination...................................................37
9.2 Bring-Down of Seller's Warranties................................37
9.3 Pending Actions..................................................37
9.4 Consents and Approvals...........................................38
9.5 No Material Adverse Effect.......................................38
9.6 All Necessary Documents..........................................38
9.7 Access to Facilitate Transition..................................38
9.8 Dismissal of Pending Action......................................38
9.9 HSR Act..........................................................38
-ii-
<PAGE>
9.10 Representation and Warranty Insurance............................38
9.11 Releases.........................................................38
9.12 Transfer Documents...............................................38
ARTICLE 10 CONDITIONS TO CLOSING APPLICABLE TO SELLER.......................39
10.1 No Termination...................................................39
10.2 Bring-Down of Purchaser Warranties...............................39
10.3 Pending Actions..................................................39
10.4 Consents and Approvals...........................................39
10.5 All Necessary Documents..........................................39
10.6 HSR Act..........................................................40
ARTICLE 11 INDEMNIFICATION..................................................40
11.1 Indemnification by Seller........................................40
11.2 Indemnification by Purchaser.....................................40
11.3 Third Person Claims..............................................40
11.4 Exclusive Remedy.................................................41
11.5 Monetary Limitations on Indemnification..........................42
11.6 Time Limitations on Indemnification..............................43
ARTICLE 12 TERMINATION......................................................44
12.1 Termination......................................................44
ARTICLE 13 NON-COMPETITION AND CONFIDENTIALITY..............................44
13.1 Non-competition..................................................44
13.2 Confidentiality..................................................44
13.3 Remedy...........................................................45
13.4 Confidentiality Covenant of Seller...............................45
ARTICLE 14 CERTAIN OTHER UNDERSTANDINGS.....................................46
14.1 Records..........................................................46
14.2 Further Actions..................................................47
14.3 Waiver of Bulk Sales Law.........................................47
ARTICLE 15 MISCELLANEOUS....................................................47
15.1 Costs and Expenses...............................................47
15.2 Entire Agreement.................................................47
15.3 Counterparts.....................................................47
15.4 Assignment; Successors and Assigns...............................47
15.5 Savings Clause...................................................48
15.6 Headings.........................................................48
15.7 Arbitration......................................................48
15.9 Public Announcements.............................................49
15.10 U.S. Dollars.....................................................49
15.11 Notices..........................................................49
15.12 No Third-Party Beneficiaries.....................................50
15.13 Construction.....................................................51
-iii-
<PAGE>
15.14 Waiver of Jury Trial.............................................51
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit 2.3(b)(i) Form of Working Capital Escrow Agreement
Exhibit 2.3(b)(ii) Form of Contract Escrow Agreement
Exhibit 2.7 Allocation of Purchase Price
Exhibit 3.2(a)(i) Form of Bill of Sale and Assignment
Exhibit 3.2(a)(ii) Form of IP Bill of Sale and Assignment
Exhibit 3.2(e) Form of Opinion of Winston & Strawn
Exhibit 3.2(f) Form of Acknowledgement and Release of Claims Relating to
Severance Plan
Exhibit 3.2(g) Form of Management Termination Agreement
Exhibit 3.2(h) Form of Change of Control Termination Agreement
Exhibit 3.3(c) Form of Assumption Agreement
Exhibit 3.3(g) Form of Opinion of Ropes & Gray
Exhibit 6.1(a) Financial Statements
</TABLE>
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of December 13, 2000
(as amended or modified from time to time in accordance with the terms hereof,
this "AGREEMENT") is by and among Packaging Resources Incorporated, a Delaware
corporation (together with its successors and permitted assigns, "SELLER"),
Packaging Resources Group, Inc., a Delaware corporation ("GROUP"), HPH
Industries, Ltd., a Delaware corporation ("HPH"), Howard P. Hoeper ("HOEPER"),
and Van Leer Holding Inc., a Delaware corporation (together with its successors
and permitted assigns, "PURCHASER"). References to the "COMPANY" herein shall
mean Group and Seller, individually and collectively.
R E C I T A L S:
----------------
A. Seller is in the business of manufacturing and supplying rigid
plastic food packaging and rigid plastic beverage cups (the "BUSINESS").
B. Purchaser desires to acquire from Seller, and Seller desires to
sell to Purchaser, the Business and substantially all of Seller's assets on the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto hereby
covenant and agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 PREVIOUSLY DEFINED TERMS. Each term defined in the first paragraph and
Recitals of this Agreement shall have the meaning set forth above whenever used
herein, unless otherwise expressly provided or unless the context clearly
requires otherwise.
1.2 DEFINITIONS. In addition to the terms defined in the first paragraph
and Recitals of this Agreement, whenever used herein, the following terms shall
have the meanings set forth below unless otherwise expressly provided or unless
the context clearly requires otherwise:
"ADJUSTMENT REPORT" shall have the meaning set forth in SECTION
2.4(c).
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"AGREEMENT" shall have the meaning set forth in the Introduction
hereto.
"ALTERNATIVE TRANSACTION" shall have the meaning set forth in SECTION
5.1.
<PAGE>
"ASSUMED LIABILITIES" shall have the meaning set forth in SECTION
2.5(a).
"ASSUMPTION AGREEMENT" means the Assumption Agreement to be executed
by and between Purchaser and Seller on the Closing Date, substantially in
the form attached hereto as EXHIBIT 3.3(c).
"BILL OF SALE AND ASSIGNMENT" means the Bill of Sale and Assignment
substantially in the form attached hereto as EXHIBIT 3.2(a)(i).
"BUSINESS" has the meaning set forth in the Recitals to this
Agreement.
"BUSINESS DAY" means any day of the year on which banks are not
required or authorized to be closed in Chicago, Illinois.
"CASH" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP.
"CERCLA" shall have the meaning set forth in the definition of
"Environmental Laws."
"CHEMICAL SUBSTANCE" means (i) petroleum or any fraction thereof; (ii)
asbestos or asbestos-containing material; (iii) polychlorinated biphenyl;
(iv) chlorofluoracarbons; and (v) pollutant, contaminant, substance or
waste, which is identified or regulated as hazardous or toxic under any
Environmental Law or Safety Law, as now in effect.
"CLOSING" shall have the meaning set forth in SECTION 3.1.
"CLOSING DATE" shall have the meaning set forth in SECTION 3.1.
"CLOSING PAYMENT" shall have the meaning set forth in SECTION 2.3(b).
"CLOSING PURCHASE PRICE" shall have the meaning set forth in SECTION
2.3(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the Recitals hereto.
"CONTRACT ESCROW DEPOSIT" shall have the meaning set forth in SECTION
2.3(b).
"CONTRACT ESCROW AGREEMENT" means the Contract Escrow Agreement
substantially in the form attached hereto as EXHIBIT 2.3(b)(ii).
"CONTRACTS" means all contracts, agreements, license agreements,
purchase and sale orders, foreign exchange contracts, leases of machinery
and equipment, and conditional sales contracts and title retention
agreements relating to machinery and equipment, in each case, to which the
Company is a party and all other commitments and binding arrangements of
the Company, including, without limitation, the Contracts listed in Section
7.15 of the Disclosure Letter.
-2-
<PAGE>
"DISCLOSURE LETTER" means the letter dated as of the date of this
Agreement and delivered by Seller to Purchaser pursuant to SECTION 6.1(b)
simultaneously with the execution and delivery of this Agreement.
"DISPUTE" shall have the meaning set forth in SECTION 15.7(a).
"DOJ" shall have the meaning set forth in SECTION 4.1.
"EMPLOYEE PLAN" shall have the meaning set forth in SECTION 7.21(a).
"ENVIRONMENT" means soil, land surface or subsurface strata, real
property, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins and wetlands), groundwater, water body
sediments, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life and any other environmental medium or
natural resource.
"ENVIRONMENTAL LAWS" mean the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Resource Conservation and
Recovery Act, the Clean Air Act, and the Clean Water Act, each, as amended
and any other applicable federal, state, local or foreign law or
regulation, as now in effect, relating to: (a) the Release, containment,
removal, remediation, response, cleanup or abatement of any Chemical
Substance; (b) the manufacture, generation, use, treatment, handling,
storage, recycling, disposal or transportation of any Chemical Substance;
(c) the exposure of persons, including employees, to any Chemical
Substance; (d) the pollution, protection or clean up of the Environment; or
(e) noise.
"ENVIRONMENTAL PERMIT" means any permit from any governmental
authority required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" shall have the meaning set forth in SECTION 2.3(b).
"ESTIMATED NET WORKING CAPITAL CALCULATION" shall have the meaning set
forth in SECTION 2.3(a).
"EQUIPMENT LEASES" shall have the meaning set forth in SECTION
7.10(c).
"EXEMPTED CLAIMS" shall have the meaning set forth in SECTION 11.4.
"EXISTING PLAN" shall have the meaning set forth in SECTION 7.21(a).
"FACILITIES" means the facilities of Seller located on or forming a
part of the real property specified in clause (a) of the definition of
"Purchased Assets."
"FINANCIAL STATEMENTS" means (a) the audited balance sheets and income
statements of Seller at and for the years ended February 29, 1998, 1999 and
2000 and (b)
-3-
<PAGE>
the unaudited balance sheets and income statements of Seller at and for the
six months ended August 31, 2000 and at and for the month ended October 31,
2000, copies of which are attached hereto as EXHIBIT 6.1(a).
"FINAL NET WORKING CAPITAL BALANCE SHEET" shall have the meaning set
forth in SECTION 2.4(a).
"FINAL NET WORKING CAPITAL CALCULATION" shall have the meaning set
forth in SECTION 2.4(a).
"FTC" shall have the meaning set forth in SECTION 4.1.
"FUNDED INDEBTEDNESS" means the aggregate amount (including the
current portions thereof) of all indebtedness for money borrowed by the
Company from others, deferred purchase price of property or services,
purchase money indebtedness of the Company, conditional sale or other
retention agreement and capitalized leases (but not operating leases,
including Equipment Leases that are operating leases) leases to which the
Company is a party, including, without limitation, all amounts (including
any interest and prepayment penalties) payable pursuant to (i) the PRI
Credit Agreement, (ii) the PRI Indenture and (iii) the Group Indenture.
"GAAP" means United States generally accepted accounting principles in
effect on the date of this Agreement, consistently applied in accordance
with the past practice of the Company.
"GROUP INDENTURE" means that certain Indenture dated as of June 30,
1993, as amended and restated as of September 24, 1996, by and between
Group and Harris Trust and Savings Bank, as further amended, restated,
supplemented and otherwise modified from time to time.
"HPH AFFILIATED GROUP" shall mean the affiliated Group filing a
federal consolidated tax return of which HPH Industries, Ltd. is the common
parent.
"HSR ACT" shall have the meaning set forth in SECTION 4.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION
11.3(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION
11.3(a).
"INDEMNITY INSURANCE" shall have the meaning set forth in SECTION 9.8.
"INDEPENDENT AUDITORS" shall have the meaning set forth in SECTION
2.4(d).
"INFORMATION" shall have the meaning set forth in SECTION 13.2.
"INTELLECTUAL PROPERTY" means all proprietary rights of every kind and
nature, including patents, copyrights, trademarks, trade names, mask works,
trade secrets and proprietary information, all applications for any of the
foregoing, and any license or
-4-
<PAGE>
agreements granting rights related to the foregoing that are used in or
related to the Business.
"IP BILL OF SALE AND ASSIGNMENT" means the Bill of Sale and Assignment
of Patents, Trademarks, Trademark Applications, Copyrights and Goodwill
substantially in the form attached hereto as EXHIBIT 3.2(a)(ii).
"KNOWLEDGE" means the actual awareness or understanding of the facts
or matters on which a representation is based; PROVIDED, that for the
purposes of this Agreement, "Seller's Knowledge" shall mean the Knowledge
of the Management Group, after due inquiry with appropriate employees,
consultants, and advisors of the Company.
"LICENSES" shall have the meaning set forth in SECTION 7.11.
"LIEN" means any mortgage, pledge, lien, security interest, charge,
claim, equitable interest, encumbrance, restriction on transfer,
conditional sale or other title retention device or arrangement (including,
without limitation, a capital lease), transfer for the purpose of
subjection to the payment of any Funded Indebtedness, or restriction on the
creation of any of the foregoing, whether relating to any property or right
or the income or profits therefrom; PROVIDED, HOWEVER, that the term "Lien"
shall not include:
(i) statutory liens for Taxes to the extent that the payment
thereof is not in arrears or otherwise due;
(ii) encumbrances in the nature of zoning restrictions,
easements, rights or restrictions of record on the uses of real property if
the same do not detract from the value of the property encumbered thereby
or impair the use of such property in the business of the Company as
currently conducted;
(iii) statutory or common law liens to secure landlords, lessors
or renters under leases or rental agreements confined to the premises
rented to the extent that no payment or performance under any such lease or
rental agreement is in arrears or is otherwise due;
(iv) deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age pension
programs mandated under applicable laws or other social security
regulations; and
(v) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens to
secure claims for labor, materials or supplies and other like liens, which
secure obligations to the extent that payment thereof is not in arrears or
otherwise due;
in the case of each of (i) - (v), which have been incurred in the Ordinary
Course of Business.
"MANAGEMENT GROUP" shall mean Howard P. Hoeper, Jerry J. Corirossi,
Walter C. Riesen and Bimal A. Kalvani, collectively.
-5-
<PAGE>
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Business as currently conducted by Seller that is or is reasonably likely
to be materially adverse to the results of operations or financial
condition of the Business, taken as a whole after giving effect to this
Agreement other than as a result of any event, circumstance or market
condition occurring as a result of general economic or financial conditions
or other developments which are not unique to Seller but also affect other
persons who participate or are engaged in the lines of business in which
Seller participates or is engaged.
"MATERIAL CONTRACTS" shall have the meaning set forth in SECTION
7.15(b).
"MOST RECENT BALANCE SHEET" means the audited consolidated balance
sheet of Seller at February 29, 2000 which is included in the Financial
Statements.
"MOST RECENT YEAR-END FINANCIAL STATEMENTS" means the audited
consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow of Seller as of and for the fiscal year
ended February 29, 2000 which is included in the Financial Statements.
"NET WORKING CAPITAL" means the sum of all current assets of the
Company (other than Retained Assets), including, without limitation,
accounts receivable and inventory (other than the inventory described on
Section 1.2(a) of the Disclosure Letter and any receivable arising from the
sale or disposition of such inventory), minus all current liabilities and
accruals of the Company (other than Retained Liabilities, including,
without limitation, the current portion of Funded Indebtedness and accrued
interest), each as determined as of the Closing Date in accordance with
GAAP in a manner consistent with the application of the accounting
principles applied in preparing the Financial Statements and the principles
set forth on Section 1.2(b) of the Disclosure Letter.
"NET WORKING CAPITAL BALANCE SHEET" shall have the meaning set forth
in SECTION 2.4(a).
"NONASSIGNABLE CONTRACTS" shall have the meaning set forth in SECTION
2.8.
"NONASSIGNABLE PERMITS" shall have the meaning set forth in SECTION
2.8.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"OWNED REAL PROPERTY" shall have the meaning set forth in SECTION
7.10(a).
"PENSION PLAN" shall have the meaning set forth in SECTION 7.21(a).
"PERMITTED ENCUMBRANCES" shall have the meaning set forth in SECTION
7.28.
"PERSON" means any natural person, company, corporation, limited
liability company, partnership, joint venture, trust, association or
unincorporated entity of any kind.
-6-
<PAGE>
"PRI CREDIT AGREEMENT" means the Credit Agreement dated as of May 17,
1996 among Seller, the lenders named therein and LaSalle National Bank, as
Agent, as amended, restated, supplemented and otherwise modified from time
to time by the amendments listed in Section 1.2(c) of the Disclosure
Letter.
"PRI INDENTURE" means that certain Indenture dated as of May 17, 1996,
by and between Seller and Banc One, N.A., as successor trustee to LaSalle
National Bank, as amended, restated, supplemented and otherwise modified
from time to time.
"PROJECT GRUB" means the project of S.C. Johnson with respect to
injection molding and thermoformed ziplok products, including dinner plates
and covers, drink cup lids and flappers, and bowls and covers.
"PURCHASE PRICE" shall have the meaning set forth in SECTION 2.2.
"PURCHASED ASSETS" means the following described assets, properties,
rights and interests (excluding the Retained Assets):
(a) all real property owned by Seller in fee and all interests of
Seller in real property, including, without limitation, (i) the real
property described in Section 7.10 of the Disclosure Letter, together with
all buildings, facilities and other structures and improvements, fixtures
and fittings located on such real property and easements, rights-of-way,
and other appurtenant rights thereto, (ii) all of Seller's rights in
leasehold interests in all buildings, facilities and other structures and
improvements not located on the real property described in clause (i)
above, including, without limitation, the leasehold interests described in
Section 7.10 of the Disclosure Letter;
(b) all machinery, equipment, furniture and tools, leasehold
improvements and other tangible personal property owned by Seller on the
Closing Date, including, without limitation, the assets listed on Section
1.2(d) of the Disclosure Letter;
(c) to the extent transferable, all licenses, permits, consents and
certificates and all applications therefor of all regulatory,
administrative and other governmental agencies and bodies issued to or held
by Seller;
(d) all trade names, trademarks, trademark registrations, trademark
applications, service marks, service mark registrations, service mark
applications, patents, patent applications, copyrights, copyright
registrations, copyright applications and the licenses therefor, and all
trade secrets, know-how (including, without limitation, proprietary
know-how and use and application know-how), and related goodwill, and all
rights and interests thereunder, in each case, owned by Seller on the
Closing Date, including, without limitation, the assets listed on Section
1.2(e) of the Disclosure Letter;
(e) to the extent transferable, all Seller's right, title and
interest in and to all contracts, agreements, license agreements, purchase
and sale orders, leases (including both operating leases and financing
leases) of, and conditional sales contracts and title retention agreements
relating to, machinery and equipment of which Seller is a party and other
executory commitments and binding arrangements of Seller (the "CONTRACTS"),
-7-
<PAGE>
including, without limitation, the Contracts listed in Section 7.15 of the
Disclosure Letter, together with such additions thereto and deletions
therefrom as shall have occurred in the ordinary course of business prior
to the Closing Date, but not including any rights in Contracts that
constitute Retained Liabilities or that are related to Retained Assets;
(f) all inventories of (i) raw materials, work in process and
finished goods, replacement and spare parts, waste materials, scrap, fuels
and chemicals, stores and supplies located at the Facilities or en route to
the Facilities and (ii) finished goods stored at locations other than the
Facilities, in each case owned by Seller on the Closing Date;
(g) all customer lists, vendor lists, distributor or agency
agreements, catalogs and advertising materials owned by Seller on the
Closing Date;
(h) all Seller's general and financial records (other than
certificates of insurance obtained by Seller from third parties (including,
without limitation, contractors, suppliers and truckers)), correspondence
and other files and records customarily located at the Facilities, and any
other files and records pertaining exclusively to the Business wherever
located, except for Seller's financial and accounting records unrelated to
the continued operation of the Business;
(i) all accounts, notes, contract and other receivables owned by
Seller on the Closing Date (the "RECEIVABLES"), all prepaid items and
deposits (or portions thereof) owned by Seller on the Closing Date, all
Cash in transit as of the Closing Date and all Cash received in Seller's
lock box after the Closing Date (it being understood that Seller will not
sweep Cash from the lock box after the Closing Date and the rights to such
Cash and the lock box shall be a Purchased Asset);
(j) all Seller's goodwill in the Business as the same shall exist on
the Closing Date;
(k) all Seller's right, title and interest in and to any and all
vehicles;
(l) all claims, causes of action, choses in action, rights of
recovery and rights of set off of any kind pertaining exclusively to, and
arising exclusively out of, the Business prior to the Closing Date, but not
including any Retained Assets;
(m) all rights in and with respect to the assets associated with the
Employee Plans disclosed in Section 7.21 of the Disclosure Letter;
(n) all rights in and with respect to the active and inactive
insurance policies relating to the business of Seller, including those
described in Section 7.18 of the Disclosure Letter; and
(o) all other rights, assets and properties owned by Seller on the
Closing Date and used in or relating to the operations of the Business, but
not including any Retained Assets.
"PURCHASER" shall have the meaning set forth in the Introduction
hereto.
-8-
<PAGE>
"REAL PROPERTY LEASES" shall have the meaning set forth in SECTION
7.10(b).
"RECEIVABLES" shall have the meaning set forth in clause (i) of the
definition of "Purchased Assets".
"RELATED ENTITY" shall have the meaning set forth in SECTION 7.21(b).
"RELEASE" has the meaning set forth in CERCLA Section 101(22), 42
U.S.C. Section 9601(22).
"RESTRICTED AREA" means any state in which the Company is conducting
its Business on the Closing Date.
"RETAINED ASSETS" means any assets, properties, rights or interests of
Seller not part of or included in the Purchased Assets, whether or not
relating to the operations of the Business, including, without limitation,
the following:
(a) all Cash on hand, in banks or in the lock box, in all cases, as
of the Closing Date;
(b) Seller's corporate minute books and records, stock record books,
original income tax returns and other related tax records, reports, data
and files;
(c) claims for refunds of Taxes paid by Seller prior to the Closing
Date and any deferred Tax assets of Seller;
(d) all other assets, properties, rights and interests of Seller
described in Section 1.2(f) of the Disclosure Letter; and
(e) all rights of Seller under this Agreement and the other
agreements, documents and instruments delivered to Seller by Purchaser
pursuant to this Agreement.
"RETAINED LIABILITIES" shall have the meaning set forth in SECTION
2.5(b).
"SAFETY LAWS" means any applicable federal, state, local and foreign
law or regulation relating to health or safety, including the Occupational
Safety and Health Act, as amended, relating to exposure of employees to any
Chemical Substance.
"SELLER" shall have the meaning set forth in the Introduction hereto.
"SELLER'S DEPOSIT" shall have the meaning set forth in SECTION 2.3(b).
"SELLER'S INSURANCE OBLIGATION" shall have the meaning set forth in
SECTION 9.10.
"SETTLEMENT DATE" shall have the meaning set forth in SECTION 2.4(e).
"SEVERANCE PLAN" means the Packaging Resources Incorporated Severance
Plan dated as of April 20, 2000.
-9-
<PAGE>
"TAX" or "TAXES" means all income, gross receipts, sales, use, value
added, employment, withholding, capital stock, single business, franchise,
profits, property, excise, transfer or other taxes, fees, stamp taxes and
duties or assessments imposed by any taxing authority, together with all
interest and all penalties, additions to tax or additional amounts imposed
by any taxing authority with respect thereto.
"THIRD PERSON" shall have the meaning set forth in SECTION 11.3(a).
"THRESHOLD AMOUNT" shall have the meaning set forth in SECTION 11.5.
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in SECTION
5.8(a).
"WARN ACT" shall have the meaning set forth in SECTION 5.8(a).
"WELFARE PLAN" shall have the meaning set forth in SECTION 7.21(a).
"WORKING CAPITAL ESCROW AGREEMENT" means the Working Capital Escrow
Agreement substantially in the form attached hereto as EXHIBIT 2.3(b)(i).
1.3 INTERPRETATION. Unless the context of this Agreement otherwise
requires, (a) words of any gender shall be deemed to include each other gender,
(b) words using the singular or plural number shall also include the plural or
singular number, respectively, (c) references to "hereof", "herein", "hereby",
"hereunder" and similar terms shall refer to this entire Agreement and (d)
unless otherwise specified herein, each reference to an "ARTICLE" or "SECTION"
is to an Article or Section of this Agreement, and each reference to an "EXHIBIT
" is to an Exhibit attached to and made a part of this Agreement.
ARTICLE 2
PURCHASE AND SALE, PURCHASE PRICE,
----------------------------------
ALLOCATION AND OTHER RELATED MATTERS
------------------------------------
2.1 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, at the Closing on the Closing Date, Seller shall sell, assign,
convey, transfer and deliver to Purchaser free and clear of any lien or other
encumbrance of any kind whatsoever except for Permitted Encumbrances, and
Purchaser shall acquire from Seller, the Purchased Assets.
2.2 PURCHASE PRICE.
The purchase price for the Purchased Assets shall be an amount equal
to One Hundred Sixty-five Million Dollars ($165,000,000) PLUS the amount, if
any, by which the Final Net Working Capital Calculation exceeds $24,666,000, or
MINUS the amount, if any, by which the Final Net Working Capital Calculation is
less than $24,666,000 (the "PURCHASE PRICE").
-10-
<PAGE>
2.3 PAYMENT OF PURCHASE PRICE.
(a) At least three (3) days prior to the Closing, Seller shall
deliver to Purchaser a statement as of October 31, 2000 setting forth in detail
a calculation of the Net Working Capital Calculation at that date, prepared in
accordance with the provisions of SECTION 2.4(b) (the "ESTIMATED NET WORKING
CAPITAL CALCULATION"), and an estimate of the Purchase Price based thereon (the
"CLOSING PURCHASE PRICE").
(b) At the Closing on the Closing Date, Purchaser shall pay the
Closing Purchase Price to Seller as follows: Seller shall (i) deposit One
Million Nine Hundred Forty-one Thousand Dollars ($1,941,000) (such amount, being
equal to $3,000,000 less the $1,059,000 Estimated Net Working Capital
Calculation delivered by Seller to Purchaser pursuant to Section 2.3(a), the
"SELLER'S DEPOSIT") with LaSalle National Bank, N.A. as escrow agent (the
"ESCROW AGENT"), pursuant to a working capital escrow agreement in the form
attached hereto as EXHIBIT 2.3(b)(i), executed by Seller, Purchaser and the
Escrow Agent (the "WORKING CAPITAL ESCROW AGREEMENT"), (ii) deposit Five Million
Dollars ($5,000,000) (the "CONTRACT ESCROW DEPOSIT") with the Escrow Agent
pursuant to a contract escrow agreement in the form attached hereto as EXHIBIT
2.3(b)(ii), executed by Seller, Purchaser and the Escrow Agent (the "CONTRACT
ESCROW AGREEMENT"), and (iii) pay by wire transfer of immediately available
federal funds to accounts designated in writing by Seller to Purchaser prior to
the Closing Date an amount equal to $157,000,000, MINUS the amount of Seller's
Insurance Obligation and MINUS $43,000 (such amount being equal to Seller's
share of the deed stamp taxes payable upon the transfer to Purchaser of the
Owned Real Property) (the amounts referred to in subsection (iii) of this
sentence is referred to herein as the "CLOSING PAYMENT").
(c) [Intentionally Omitted]
(d) After the Closing, Purchaser or Seller, as appropriate, shall
make the payment, if any, required by SECTION 2.4.
(e) At the Closing on the Closing Date, Purchaser also shall assume
the Assumed Liabilities specified in and in accordance with SECTION 2.5(a).
2.4 FINAL NET WORKING CAPITAL CALCULATION. A post-closing adjustment to
the Closing Purchase Price shall be made as follows:
(a) Within seventy-five (75) days following the Closing, Purchaser
shall cause KPMG LLP, at the expense of Purchaser, to prepare and deliver to
Seller and Purchaser a balance sheet of the Company as of the Closing Date (the
"FINAL NET WORKING CAPITAL BALANCE SHEET") and a calculation of the Net Working
Capital of the Company as of such date prepared on the basis of the Final Net
Working Capital Balance Sheet (the "FINAL NET WORKING CAPITAL CALCULATION").
Seller shall have the right to examine and make copies of the work papers and
such other documents that are generated or reviewed by Purchaser in connection
with the preparation of the Final Net Working Capital Balance Sheet and the
Final Net Working Capital Calculation.
-11-
<PAGE>
(b) The Final Net Working Capital Balance Sheet and the Final Net
Working Capital Calculation shall be prepared in accordance with GAAP in a
manner consistent with the application of the accounting principles applied in
preparing the Financial Statements and the principles set forth on Section
1.2(b) of the Disclosure Letter. The accounting cutoff for the Final Net Working
Capital Balance Sheet shall be the close of business on the Closing Date.
(c) Within thirty (30) days after the Final Net Working Capital
Balance Sheet and the Final Net Working Capital Calculation is delivered to
Seller pursuant to SECTION 2.4(a) hereof, Seller shall complete its examination
thereof and shall deliver to Purchaser either (i) a written acknowledgment
accepting the Final Net Working Capital Balance Sheet and the Final Net Working
Capital Calculation; or (ii) a written report setting forth in reasonable detail
any proposed adjustments to the Final Net Working Capital Balance Sheet and the
Final Net Working Capital Calculation (the "ADJUSTMENT REPORT"). If Seller fails
to respond to Purchaser within such thirty (30) day period, Seller shall be
deemed to have accepted and agreed to the Final Net Working Capital Balance
Sheet and the Final Net Working Capital Calculation as delivered pursuant to
SECTION 2.3(a) hereof. The acceptance by Purchaser and Seller of the Final Net
Working Capital Calculation shall not constitute or be deemed to constitute a
waiver of the rights of such party in respect of any other provision of this
Agreement.
(d) In the event Seller and Purchaser fail to agree on any of
Seller's proposed adjustments contained in the Adjustment Report within thirty
(30) days after Purchaser receives the Adjustment Report, then Seller and
Purchaser mutually agree that Ernst & Young LLP, certified public accountants
(the "INDEPENDENT AUDITORS"), shall make the final determination with respect to
the correctness of the proposed adjustments in the Adjustment Report in light of
the terms and provisions of this Agreement. The decision of the Independent
Auditors shall be final and binding on Seller and Purchaser. The costs and
expenses of the Independent Auditors and their services rendered pursuant to
this SECTION 2.4(d) shall be borne equally by Seller on one hand and Purchaser
on the other hand.
(e) The term "FINAL NET WORKING CAPITAL BALANCE SHEET" as that term
has been hereinbefore and will be hereinafter used, shall mean the Final Net
Working Capital Balance Sheet delivered pursuant to SECTION 2.4(a), as adjusted,
if at all, pursuant to this SECTION 2.4. The date on which the Final Net Working
Capital Balance Sheet and the Final Net Working Capital Calculation is finally
determined pursuant to this SECTION 2.4 shall hereinafter be referred to as the
"SETTLEMENT DATE."
(f) In the event the Final Net Working Capital Calculation is greater
than the Estimated Net Working Capital Calculation, Purchaser shall pay Seller
an amount equal to such excess, MINUS the amount, if any, of cash received by
the Company prior to or following the Closing from the sale or disposition of
the inventory disclosed in Section 1.2(a) of the Disclosure Letter.
(g) In the event the Final Net Working Capital Calculation is less
than the Estimated Net Working Capital Calculation, Seller shall pay Purchaser
an amount equal to such deficiency.
-12-
<PAGE>
(h) Any payment required pursuant to SECTIONS 2.4(g) hereof shall be
made first from Seller's Deposit, subject to the limitations and otherwise in
accordance with the Working Capital Escrow Agreement, and second by certified or
cashier's check, or, at the option of the recipient, by the transfer of
immediately available federal funds for credit to the recipient, at a bank
account designated by such recipient in writing. Any payment required pursuant
to SECTION 2.4(f) hereof shall be made consistent with the provisions of
"second" in the immediately preceding sentence.
2.5 ASSUMED LIABILITIES.
(a) Purchaser shall, at the Closing on the Closing Date, assume,
agree to perform, and in due course pay and discharge, and to indemnify Seller
against and hold it harmless from, all debts, liabilities and obligations of, or
claims (whether fixed or contingent) arising by law or by contract or otherwise,
on or prior to the date hereof or hereafter (and any and all losses, damages,
costs and expenses resulting from such debts, liabilities, obligations and
claims) against, Seller of whatever nature, whether known or unknown, primary or
secondary, direct or indirect, absolute or accrued, contingent or otherwise, as
a result of actions taken or not taken or states of fact, on or prior to the
Closing Date, other than the Retained Liabilities (the "ASSUMED LIABILITIES"),
including, without limitation:
(i) all accounts payable of Seller as of the Closing;
(ii) all accrued liabilities of Seller for earned but unused
vacation pay of the Transferred Employees as of the Closing;
(iii) all obligations and liabilities of Seller for or with
respect to claims for product or service warranties or defects for products
and/or services performed prior to the Closing;
(iv) all obligations and liabilities of Seller under the
Contracts;
(v) all obligations and liabilities of Seller with respect to
the matters described in Section 7.19 of the Disclosure Letter, except with
respect to the arbitration relating to the Aurora Supply Agreement; and
(vi) all obligations and liabilities of Seller to provide the
welfare benefits disclosed in Item 14 of Section 7.21 of the Disclosure
Letter.
(b) Purchaser shall not assume, or agree to pay, perform or discharge
or indemnify Seller against, or hold Seller harmless from, any of the following
obligations or liabilities of Seller (the "RETAINED LIABILITIES"):
(i) any obligations and liabilities in respect of indebtedness
(including under the related Contracts) of Seller, Group or HPH for
borrowed money (which shall not be deemed to include any trade accounts
payable relating to the Business), including, without limitation, the
Funded Indebtedness;
-13-
<PAGE>
(ii) any obligations and liabilities in respect of the retention
by Seller, Group or HPH of any broker, finder, investment banker, attorney,
financial advisors or similar consultant, including, without limitation
Deutsche Bank Securities, Inc., in connection with the transactions
contemplated by this Agreement;
(iii) any obligations and liabilities relating to or arising in
respect of the Retained Assets;
(iv) any liabilities for intercompany accounts payable or other
obligations owed to HPH, Group or any other Affiliate of HPH, including,
without limitation, any liabilities relating to (A) that certain Management
Agreement dated as of May 17, 1996 between Seller and HPH; (B) payments
under the Severance Plan to Tier I employees thereunder accrued before or
after the Closing or to Tier II employees thereunder accrued before the
Closing; (C) the Packaging Resources Change of Control Plan dated as of May
17, 1999 between Seller and Group; (D) the Agreement Apportioning the
Consolidated Income Tax Liability of HPH Industries, Ltd. Affiliated Group,
dated as of May 17, 1996 among HPH, Group and Seller; and (E) the Stock and
Warrant Holders Agreement dated as of June 30, 1993, by and among Seller,
Group, HPH, Hoeper, Apollo Packaging Partners L.P., TCW/Crescent Mezzanine
Partners, L.P., TCW/Crescent Mezzanine Trust and TCW/Crescent Mezzanine
Investment Partners, L.P. (as successors-in-interest to UBS Capital
Corporation), as amended;
(v) any liability incurred by an individual in the Management
Group or a family member thereof other than in the name and on behalf of
the Company and in its ordinary course of business and approved by
Purchaser;
(vi) any obligations and liabilities of the Company for Taxes
whether or not relating to the Company's business or the ownership or sale
of the Purchased Assets and whether or not incurred prior to the Closing
(other than real property Taxes and personal property Taxes for periods
following the Closing as specified in SECTION 5.6);
(vii) any obligations and liabilities for the Taxes of any Person
(including Group or HPH), including Taxes imposed by Treasury regulation
Section 1.1502-6 or any similar provision of state, local or foreign law or
regulation, as a transferee or successor, by contract, tax-sharing
agreement, or otherwise;
(viii) any obligations and liabilities of the Company to
indemnify any Person (including Group or the stockholders of Group) by
reason of the fact that (A) such Person was a director, officer, employee,
or agent of the Company or was serving at the request of such entity as a
partner, trustee, director, officer, employee, or agent of another entity
and (B) such obligation or liability arises as a result of the transactions
contemplated by this Agreement or the Stock Purchase Agreement dated as of
August 25, 2000 by and between HPH, Hoeper, Dennis Mehiel and Sweetheart
Cup Company Inc. or relates to claims by securityholders of HPH, Group or
PRI;
-14-
<PAGE>
(ix) any obligations and liabilities of the Company under this
Agreement;
(x) any obligations and liabilities of the Company or of any
other defendant in the litigation pending in the Circuit Court of Lake
County, Illinois styled PPM SPECIAL INVESTMENTS FUND, L.P. AND PPM SPECIAL
INVESTMENTS CBO II, L.P. V. PACKAGING RESOURCES INC. ET AL, including,
without limitation, any expenses relating thereto; and
(xi) any obligations and liabilities of the Company, including
filings or defects in filings, under the Securities Exchange Act of 1934,
including, without limitation, deregistration of Seller's securities under
such Act.
2.6 SALES AND TRANSFER TAXES. Purchaser and Seller shall each pay one half
of the cost of any and all stamp, transfer, goods and services, sales, purchase,
use, filing, value added, excise and similar taxes and fees which arise out of
the transactions contemplated by this Agreement, including, without limitation,
any stamp or transfer tax or filing fee relating to the transfer of shares of
capital stock, whether now in effect or hereafter adopted and regardless of upon
whom said tax or fee is imposed, but excluding any tax on or measured by net or
gross income or gain of Seller, which tax shall be paid by Seller. The parties
acknowledge that Seller's share of the deed stamp taxes payable upon the
transfer to the Purchaser of the Owned Real Property has been provided for
pursuant to Section 2.3(b).
2.7 ALLOCATION OF PURCHASE PRICE. Seller and Purchaser (i) agree that the
Purchase Price shall be allocated among the Purchased Assets as set forth in the
schedule attached hereto as EXHIBIT 2.7; and (ii) acknowledge that the
allocation set forth on EXHIBIT 2.7 was the result of "arm's-length"
negotiations. If there is any adjustment to the Purchase Price, Seller and
Purchaser shall agree upon a revised EXHIBIT 2.7 allocating the adjusted
Purchase Price among the Purchased Assets. Seller and Purchaser agree to report
the transactions contemplated by this Agreement for all tax purposes in
accordance with the allocation set forth on EXHIBIT 2.7 or a revised EXHIBIT
2.7, including, without limitation, each filing a IRS Form 8594 with its
respective federal income tax returns for the taxable year in which the Closing
occurs consistent with EXHIBIT 2.7 and a supplemental IRS Form 8594 with their
respective federal income tax returns for the taxable year in which the Purchase
Price is adjusted consistent with any revised EXHIBIT 2.7. Seller and Purchaser
each shall deliver to the other party a copy of the IRS Form 8594 as filed with
their respective federal income tax returns within thirty (30) days of the
filing of such return.
2.8 NONASSIGNABLE CONTRACTS AND NONASSIGNABLE PERMITS. Without limiting
the generality or effect of any provision of ARTICLE 11, nothing in this
Agreement will constitute a transfer or an attempted transfer of any contracts
or permits which are not capable of being transferred without the consent,
approval, novation or waiver of a third person or entity (including, without
limitation, a governmental agency), or any contracts or permits the transfer or
attempted transfer of which would constitute a breach of such contract or permit
(collectively, "NONASSIGNABLE CONTRACTS" and "NONASSIGNABLE PERMITS,"
respectively). Notwithstanding anything contained in this Agreement to the
contrary, but without limiting the generality or effect of ARTICLE 11, Seller
will not be obligated to transfer to Purchaser any of its rights and obligations
-15-
<PAGE>
in and to any Nonassignable Contract or Nonassignable Permit without first
having obtained all consents, approvals, novations and waivers necessary for
such transfer. Prior to the Closing and for a period of three months thereafter,
each party will, and will cause its Affiliates to, use commercially reasonable
efforts and cooperate with each other in obtaining all consents, approvals,
novations and waivers necessary to transfer to Purchaser all Nonassignable
Contracts and Nonassignable Permits; PROVIDED, HOWEVER, that, neither Purchaser
nor Seller will be obligated to commence any litigation or offer or grant any
accommodation (financial or otherwise) to any Person or incur any other
obligation or liability therefor, and Purchaser shall bear all costs and
expenses of Purchaser and Seller in connection therewith; and PROVIDED, FURTHER,
that Purchaser shall indemnify and hold harmless Seller and its Affiliates from
any and all losses, damages, liabilities, actions, suits, proceedings, demands,
assessments, adjustments and costs arising out of such efforts and cooperation.
Seller further covenants and agrees that in the case of any such Nonassignable
Contract or Nonassignable Permit, the beneficial interest in and to any such
property or asset shall in any event pass hereunder to Purchaser, and Seller
covenants and agrees (i) to hold and hereunder declares that it will hold any
and all such properties and assets in trust for the benefit of Purchaser, its
successors and assigns, (ii) to make or complete such transfer or transfers as
soon as reasonably possible, and (iii) to cooperate with Purchaser in any
assignment or other reasonable arrangement designed to provide for Purchaser the
benefits of and under such Nonassignable Contract or Nonassignable Permit;
provided, that Purchaser shall indemnify and hold harmless Seller and its
Affiliates from any and all losses, damages, liabilities, actions, suits,
proceedings, demands, assessments, adjustments and costs arising out of such
efforts and cooperation.
ARTICLE 3
CLOSING AND CLOSING DATE DELIVERIES
-----------------------------------
3.1 CLOSING. The term "CLOSING" as used herein shall refer to the actual
sale, assignment, conveyance, transfer and delivery of the Purchased Assets to
Purchaser in consideration for the payment to Seller of the Purchase Price.
Subject to SECTION 12.1, the Closing shall take place at the offices of Winston
& Strawn, 35 West Wacker Drive, Chicago, Illinois 60601, at 10:00 a.m. Chicago
time on December 19, 2000, or, if all of the conditions precedent set forth in
ARTICLES 9 and 10 are not satisfied or waived by the appropriate party hereto as
of such date, the third Business Day following the date upon which all of the
conditions precedent set forth in ARTICLES 9 and 10 are satisfied or waived by
the appropriate party hereto, or at such other place and time or on such other
date, in each case as is mutually agreed in writing by Seller and Purchaser
("CLOSING DATE").
3.2 CLOSING DELIVERIES BY SELLER. On or before the Closing Date, Seller
shall deliver to Purchaser:
(a) (i) the Bill of Sale and Assignment, executed by Seller;
(ii) the IP Bill of Sale and Assignment, executed by Seller; and
(iii) such other instruments of assignment or conveyance as
Purchaser may reasonably request as necessary to vest in Purchaser Seller's
title to the Purchased
-16-
<PAGE>
Assets, including, without limitation, deeds transferring title to each
parcel of Owned Real Property in a form customary for commercial
transactions in the state in which the Owned Real Property is located;
(b) the Working Capital Escrow Agreement and the Contract Escrow
Agreement, each executed by Seller;
(c) certified copies of (i) minutes or unanimous written
consents of the Board of Directors of Seller approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement and interpreting the Severance
Plan for Tier II employees referred to therein such that the termination of
such employees hereunder, coupled with an offer of comparable employment by
Purchaser, shall not be a termination of employment under the Severance
Plan, determining that Seller is the successor to the Company for purposes
of the Severance Plan, and assigning the rights and obligations of the
Company for Tier II employees under the Severance Plan to Purchaser, and
(ii) minutes or written consent of Group approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement;
(d) a certificate, dated the Closing Date, executed by an
appropriate officer of Seller, as required by SECTION 9.2;
(e) the opinion of Winston & Strawn, special counsel for Seller,
dated the Closing Date, covering the matters set forth in the form attached
hereto as EXHIBIT 3.2(e);
(f) a release as to any obligations or liability of Purchaser
relating to the Severance Plan, executed by each of the Tier I employees
listed therein, in the form attached hereto as EXHIBIT 3.2(f),
(g) the Management Termination Agreement in the form attached
hereto as EXHIBIT 3.2(g), executed by HPH and Seller;
(h) the Change of Control Termination Agreement in the form
attached hereto as EXHIBIT 3.2(h), executed by Seller and Group; and
(i) such other documents as Purchaser may reasonably request to
carry out the purposes of this Agreement, including, but not limited to,
the documents to be delivered pursuant to ARTICLE 9.
3.3 CLOSING DELIVERIES BY PURCHASER. At the Closing on the Closing Date,
Purchaser shall deliver to Seller:
(a) the payment to be delivered by Purchaser pursuant to SECTION
2.3(b);
(b) each of the Bill of Sale and Assignment and the IP Bill of
Assignment, executed by Purchaser;
(c) the Assumption Agreement, executed by Purchaser;
-17-
<PAGE>
(d) the Working Capital Escrow Agreement and the Contract Escrow
Agreement, each executed by Purchaser;
(e) certified copies of minutes or unanimous written consents of the
Board of Directors of Purchaser approving the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated under this Agreement;
(f) the certificate, dated the Closing Date, executed by the
appropriate officer of Purchaser, as required by SECTION 10.2;
(g) the opinion of Ropes & Gray, special counsel for Purchaser, dated
the Closing Date, covering the matters set forth in the form attached
hereto as EXHIBIT 3.3(g); and
(h) such other documents as Seller may reasonably request to carry
out the purposes of this Agreement, including, but not limited to, the
documents to be delivered pursuant to ARTICLE 10.
3.4 COOPERATION. Seller and Purchaser shall, on request on and after the
Closing Date, cooperate with one another by furnishing any and all additional
information, executing and delivering any and all additional documents and/or
instruments and doing any and all such other things as may be reasonably
requested by the other party to consummate or otherwise implement the
transactions contemplated by this Agreement.
ARTICLE 4
PRE-CLOSING FILINGS
-------------------
4.1 HSR FILING. Purchaser and Seller each have filed with the United
States Department of Justice (the "DOJ") and the United States Federal Trade
Commission (the "FTC") the pre-merger notification and report form required
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") with respect to the transactions contemplated hereby, together
with a request for early termination of the waiting period under the HSR Act.
The parties hereto covenant and agree with each other that with respect to such
filing each shall: (a) after any request by the FTC or DOJ, promptly file any
information or documents requested by the FTC or DOJ; and (b) furnish each other
with any correspondence from or to, and notify each other of any other
communications with, the FTC or DOJ which relates to the transactions
contemplated hereunder (it being understood that Purchaser will not be required
to furnish Seller with the portions of such material that contain proprietary
information of Purchaser), and to the extent practicable, to permit the other to
participate in any conferences with the FTC or DOJ. Purchaser shall pay the
entire amount of the filing fee required by the HSR Act.
4.2 OTHER GOVERNMENTAL FILINGS. Seller and Purchaser covenant and agree
with each other to (a) promptly file, or cause to be promptly filed, with any
United States agency or any state or local governmental body or agency, all
other notices, applications or other documents as may be necessary to consummate
the transactions contemplated hereby, and (b) thereafter diligently pursue all
consents or approvals from any such governmental agencies or bodies as may be
necessary to consummate the transactions contemplated hereby.
-18-
<PAGE>
ARTICLE 5
COVENANTS
---------
5.1 ALTERNATIVE TRANSACTION. Each of Seller, Group and HPH covenants and
agrees with Purchaser that it shall not, and shall not authorize or direct any
of its officers, directors, agents or representatives to, solicit, initiate or
encourage proposals or offers from any Person (other than Purchaser or its
Affiliates) relating to any acquisition of all or a substantial part of the
assets of Seller, Group or HPH or any acquisition of a material percentage of
the capital stock of Seller, Group or HPH, including, without limitation, any
merger, consolidation, recapitalization or restructuring of Seller, Group or HPH
(an "ALTERNATIVE TRANSACTION"), or participate in any negotiations regarding or
furnish to any Person (other than Purchaser or its Affiliates or
representatives) any information with respect to, an Alternative Transaction.
Seller shall promptly notify Purchaser if it, Group or HPH receives a proposal
or offer relating to a potential Alternative Transaction.
5.2 CONDUCT OF BUSINESS PRIOR TO CLOSING. From the date of this Agreement
until the Closing Date, Seller will use commercially reasonable efforts to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees. From the date of this
Agreement until the Closing Date, Seller will not to make any capital
expenditures in excess of Two Hundred Thousand Dollars ($200,000) in the
aggregate without the prior written consent of Purchaser. From the date of this
Agreement until the Closing Date, Seller shall operate only in Ordinary Course
of Business and not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business without the prior written
consent of Purchaser. Without limiting the generality of the foregoing, Seller
shall (a) not declare, set aside, or pay any dividend or make any distribution
with respect to the capital stock of Seller or redeem, purchase, or otherwise
acquire any of the capital stock of Seller or engage in any practice, take any
action, or enter into any transaction of the sort described in SECTION 7.7, and
(b) use its commercially reasonable efforts (i) to keep available to Purchaser
the services of Seller's present officers, employees, agents and independent
contractors and (ii) to preserve for the benefit of Purchaser the goodwill of
Seller's customers, suppliers, landlords and others having business relations
with them. Subject to the foregoing, Seller shall not renegotiate, modify or
alter in any material way the terms of any Material Contract (or terminate or
elect not to renew any such Material Contract) without the prior approval of
Purchaser.
5.3 PREPARATION FOR CLOSING. Each of the parties will use its best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ARTICLES 9 and 10) and will render all reasonable assistance (not requiring
expenditure of funds) to such other party as is requested by such other party in
connection with such other party's best efforts. As soon as available, Seller
shall deliver to Purchaser the unaudited balance sheet as at, and statements of
income, changes in stockholders' equity and cash flows for the month ended
October 31, 2000, for Seller, prepared in accordance with GAAP and in a manner
consistent with the Financial Statements.
-19-
<PAGE>
5.4 ACCESS TO INFORMATION. Prior to the Closing, Seller shall permit
representatives of Purchaser, its lenders and its authorized representatives to
have full access during normal business hours, and in a manner so as not to
interfere with the normal business operations of Seller and its Affiliates, to
all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to Seller and other information with
respect to Seller as Purchaser, such lenders and authorized representatives may
reasonably request. Without limiting the foregoing, Seller acknowledges and
agrees that, subject to the Company's receipt of commitments that the consents,
approvals and releases contemplated by the second sentence of Section 10.4 shall
be obtained, commencing at 9:00 a.m., Chicago time, on December 18, 2000
representatives of Purchaser shall be permitted to have full access to such
premises, properties, personnel, books, records, contracts and documents for the
purpose of facilitating the change in ownership of the Purchased Assets
contemplated hereby and the orderly integration of the Business, including the
Transferred Employees, into Purchaser's operations; provided, however, that all
decision-making authority with respect to the Business shall remain solely with
the Seller until the Closing.
5.5 NOTICE OF DEVELOPMENTS. Seller and Purchaser will give prompt written
notice to each other of any development causing a breach of any of its own
representations and warranties in ARTICLES 7 and 8, respectively, and of any
material failure to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by such party hereunder. No disclosure by any
party pursuant to this SECTION 5.5, however, shall be deemed to amend or
supplement the schedule referred to in such representation or warranty or to
prevent or cure any misrepresentations, breach of warranty or breach of
covenant.
5.6 TAXES. Notwithstanding any other provision of this Agreement, Seller
has made adequate provision for the payment of, and shall be liable for and
indemnify Purchaser for, all Taxes attributable to the ownership or sale of the
Purchased Assets or the operations of the Business by Seller, provided, that
Taxes which are real property Taxes or personal property Taxes shall be
allocated between Seller and Purchaser based on the number of days in the
applicable period during which the Purchased Assets were owned by Seller.
5.7 CORPORATE NAME. Immediately after the Closing, each of Seller and
Group shall file an amendment to its Certificate of Incorporation deleting any
reference to "Packaging Resources" or "PRI" from their respective names.
5.8 EMPLOYMENT MATTERS.
(a) On the Closing Date, Purchaser shall offer employment to
substantially all of the persons currently employed by the Business and capable
of performing the essential functions of their respective jobs, other than, at
Purchaser's discretion, members of the Management Group (the "TRANSFERRED
EMPLOYEES") at rates of base pay and bonus opportunity substantially the same as
the rates applicable to such employees immediately prior to the Closing Date.
Within ninety (90) days of the Closing Date, Purchaser shall not cause an
employment loss, as defined in the Workers Adjustment and Retraining
Notification Act, as amended (the "WARN ACT"), in sufficient numbers such that
as a result of the employment loss caused by Purchaser the notice requirement of
the WARN Act is applicable. Seller shall terminate the employment of all
Transferred Employees as of the Closing Date. Purchaser and Seller agree to
-20-
<PAGE>
cooperate in jointly notifying the Transferred Employees of the termination of
their employment by Seller and the offer of employment by Purchaser. Nothing in
this SECTION 5.8 shall confer any rights upon any person or entity other than
the parties to this Agreement and their respective successors and permitted
assigns.
(b) ASSUMPTION OF LIABILITIES. From and after the Closing Date,
Purchaser will assume and become solely responsible for any and all claims,
liabilities, obligations, commitments, costs and expenses in respect of the
Transferred Employees and their beneficiaries and dependents for (a) accrued but
unpaid salaries, wages, commissions, vacation and sick pay, severance pay,
bonuses and incentive compensation, deferred compensation and other payroll
items incurred and accrued as of the Closing Date on the Final Net Working
Capital Balance Sheet and (b) claims for benefits, rights, entitlement, expense
reimbursements or other payments under any Employee Plan or otherwise, incurred
and accrued as of the Closing, including, all responsibilities for group health
continuation coverage under Section 4980B of the Code.
(c) SERVICE CREDITS. Purchaser will cause each of its employee
benefit plans maintained for the benefit of any Transferred Employee to
recognize the service of each such employee with Seller prior to the Closing
Date for purposes of eligibility to participate and vesting under such plans.
(d) WELFARE BENEFITS. The participation of each Transferred Employee
and his or her beneficiaries and dependents under those Employee Plans that are
Welfare Plans or fringe benefit plans of Seller shall cease, effective as of the
date such Transferred Employee is terminated by Seller; PROVIDED, that if
Purchaser elects to assume any such Welfare Plan, Seller will cooperate with
Purchaser in effecting such assumption.
(e) SEVERANCE. Subject to SECTION 2.5(b)(iv) hereof, from and after
the Closing, Purchaser and its Subsidiaries shall assume and become solely
responsible for any and all claims, liabilities, obligations, commitments, costs
and expenses arising as a result of the termination of employment of any
Transferred Employee, and any claims of any Transferred Employee for severance
or termination benefits, including, without limitation, any such claims,
liabilities, obligations, commitments, costs or expenses which are payable due
to the constructive or actual termination of any such Employee's employment in
connection with or following the consummation of the transactions contemplated
by this Agreement.
(f) WAGE REPORTING. Pursuant to the alternative procedure prescribed
by Section 5 of Revenue Procedure 84-77, (i) Seller and Purchaser shall report
on a "predecessor-successor" basis with respect to employees of Seller who are
employed by Purchaser after the Closing, (ii) Purchaser will assume Seller's
entire obligation to prepare, file and furnish Forms W-2 for the year ended
December 31, 2000, with respect to such employees PROVIDED, HOWEVER, that Seller
shall provide Purchaser with complete, true and correct information required by
such Forms W-2 for all required periods prior to the Closing Date and Purchaser
shall have no responsibility for and shall not assume any liability with respect
to such information provided by Seller, (iii) Seller and its Affiliates shall be
relieved of any obligation to provide Forms W-2 to such persons for such year,
and (iv) Seller and Purchaser will work in good faith to adopt similar
procedures under applicable state or local laws. The parties shall cooperate
with each other in preparing filings and forms relating to these procedures.
-21-
<PAGE>
5.9 AURORA SUPPLY ARBITRATION. Purchaser shall cooperate with Seller, as
reasonably requested by Seller, in connection with Seller's pending claims in
the arbitration relating to the Aurora Supply Agreement referenced in Section
7.19 of the Disclosure Letter, PROVIDED, HOWEVER, that Seller shall bear all
costs and expenses of Purchaser and Seller in connection therewith; and
PROVIDED, FURTHER, that Seller shall indemnify and hold harmless Purchaser and
its Affiliates from any and all losses, damages, liabilities, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses arising out
of such efforts and cooperation.
ARTICLE 6
FINANCIAL STATEMENTS; DISCLOSURE LETTER
---------------------------------------
6.1 PRE-SIGNING DELIVERIES BY SELLER. Seller has heretofore delivered to
Purchaser:
(a) the Financial Statements; and
(b) the Disclosure Letter, together with (or preceded by) a copy of
each Contract listed in SECTION 7.15 thereof and containing all of the
information required by the terms of this Agreement to be contained therein.
ARTICLE 7
WARRANTIES AND REPRESENTATIONS OF SELLER
----------------------------------------
Seller represents and warrants to Purchaser that the statements
contained in this ARTICLE 7 are correct and complete as of the date of this
Agreement and, unless a date is specified in such representation and warranty,
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ARTICLE 7).
7.1 INCORPORATION AND QUALIFICATION OF SELLER.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, operate and lease the Purchased Assets it
now owns, operates or leases and to carry on the Business as it is currently
conducted. Copies of Seller's certificate of incorporation and bylaws, each as
amended to date, have been heretofore delivered to Purchaser and are accurate
and complete.
(b) Seller is duly licensed or qualified to do business in each
jurisdiction in which the properties owned or leased by it or the operation of
the Business makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
7.2 AUTHORITY. Seller has the power and authority (including full
corporate power and authority) to execute and deliver this Agreement and perform
its obligations hereunder. All corporate and other actions or proceedings to be
taken by or on the part of Seller and its stockholders to authorize and permit
the execution and delivery by Seller of this Agreement and
-22-
<PAGE>
the instruments required to be executed and delivered by Seller pursuant hereto,
including without limitation delivery of the Purchased Assets to Purchaser, the
performance by Seller of its obligations hereunder and the consummation by
Seller of the transactions contemplated herein have been duly and properly
taken. This Agreement has been duly executed and delivered by Seller and
(assuming the due authorization, valid execution and delivery hereof by
Purchaser) constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms and conditions, subject
to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
7.3 NO CONFLICT. Assuming all consents, approvals, authorizations and
other actions described in SECTION 7.4 have been obtained and all filings and
notifications listed in SECTION 7.4 of the Disclosure Letter have been made or
given (except as may result from any facts or circumstances relating solely to
Purchaser), neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will: (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company or any of its property is subject or any provision of
the charter or by-laws of the Company, (b) except as disclosed in Section 7.3 of
the Disclosure Letter or as would not have a Material Adverse Effect, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel any, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Company is a party or by
which it is bound or to which any of its assets is subject or (c) result in the
imposition of any Lien upon the Company's assets.
7.4 CONSENTS AND APPROVALS. Neither Seller nor any of its Affiliates needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any third party
in order for the parties to consummate the transactions contemplated by this
Agreement, except (a) as disclosed in Section 7.4 of the Disclosure Letter, (b)
pursuant to the applicable requirements of the HSR Act, (c) where failure to
obtain such consents, approvals, authorizations or actions, make such filings or
give such notices would not have a Material Adverse Effect and (d) as may be
necessary as a result of any facts or circumstances relating solely to
Purchaser.
7.5 BROKERS. Except as disclosed in Section 7.5 of the Disclosure Letter,
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Company or Purchaser could become liable or obligated.
7.6 FINANCIAL STATEMENTS. The Financial Statements (including, with
respect to the audited financial statements only, the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, are correct and complete and present fairly in all
material respects the financial condition of Seller as of such dates and the
results of operations of Seller for such periods and are consistent with the
books and records of Seller, subject in the case of the unaudited financial
statements to (i) the absence
-23-
<PAGE>
of notes and (ii) normal and recurring year end adjustments, which in neither
case will be material.
7.7 ABSENCE OF CHANGES. Since February 29, 2000 and except as disclosed in
Section 7.7 of the Disclosure Letter, the Company has conducted its businesses
only in the Ordinary Course of Business and there has not been: (a) any sale,
lease, transfer, or assignment of any of the Company's assets, tangible or
intangible, other than sales of inventory for a fair consideration in the
Ordinary Course of Business; (b) any Contract other than in the Ordinary Course
of Business; (c) any acceleration, termination, modification or cancellation of
any Contract to which the Company is a party or by which it is bound; (d) to
Seller's Knowledge, the creation or imposition of any Lien upon any of the
Company's assets, tangible or intangible; (e) any capital expenditure (or series
of related capital expenditures) involving more than $3,500,000 in the
aggregate; (f) any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions); (g) any grant of any License, or any
entering into any settlement regarding any infringement of its rights to, any
Intellectual Property; (h) to Seller's Knowledge, any threat or notification,
orally or in writing, that, and there has not been, one or more material
distributors, customers or suppliers that have terminated or, to Seller's
Knowledge, intend to terminate or are considering terminating, their respective
business relationships or have modified or, to Seller's Knowledge, intend to
modify, such relationships with the Company in a manner which is less favorable
in any material respect to the Company or have agreed not to or will not agree
to do business on such terms and subject to conditions at least as favorable in
all material respects as the terms and conditions provided to the Company as of
February 29, 2000, and Seller has no Knowledge of any facts which would form the
basis for such termination or modification; (i) any damage, destruction, or loss
(whether or not covered by insurance) to the Company's property; (j) any loan
to, or any other transaction with, any of the directors, officers or employees
of the Company outside the Ordinary Course of Business; (k) any employment
contract or collective bargaining agreement, written or oral, or modification of
the terms of any existing such contract or agreement or modification or change
in the employment terms for any of the directors, officers, and employees of the
Company outside the Ordinary Course of Business; (l) any increase, modification
or change in the compensation of any of the directors, officers or employees of
the Company outside the Ordinary Course of Business; (m) any adoption,
amendment, modification or termination of any plan that is, or upon such
adoption or prior to such termination would be described as, an Existing Plan;
(n) any payment pursuant to any Existing Plan outside the Ordinary Course of
Business; (o) any pledge to make, or making of, any charitable or other capital
contribution outside the Ordinary Course of Business; (p) any payment of any
amount to any third party outside the Ordinary Course of Business; (q) any
modification or change in the application of GAAP to Seller's financial or
accounting records from the manner in which it was applied in the Most Recent
Year-End Financial Statements; (r) any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving the Company which would be likely to have a Material Adverse Effect;
(s) any delay or postponement of reflecting property on Seller's books and
records in accordance with GAAP, or payment of, accounts payable and other
liabilities outside the Ordinary Course of Business and (t) any commitment to
any of the foregoing.
7.8 ABSENCE OF UNDISCLOSED LIABILITIES. On February 29, 2000, the Company
did not have any material debts, liabilities or obligations of a nature required
to be reflected on a balance
-24-
<PAGE>
sheet prepared in accordance with GAAP, which were not fully disclosed,
reflected or reserved against in the Most Recent Balance Sheet, except as
disclosed in Section 7.8 of the Disclosure Letter. Except for current
liabilities or obligations which have been incurred since February 29, 2000 in
the Ordinary Course of Business and except as disclosed in Section 7.8 of the
Disclosure Letter, since February 29, 2000, the Company has not incurred any
material debt, liability or obligation of a nature required to be reflected on a
balance sheet prepared in accordance with GAAP. To Seller's Knowledge, there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any material debts, liabilities or obligations of a nature which would
require such item to be reflected on a balance sheet in accordance with GAAP.
7.9 COMPLIANCE WITH LAWS. Each of Group and Seller and any of either of
their predecessors is in compliance in all material respects with all now
applicable laws, rules, regulations or ordinances, and, to Seller's Knowledge,
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against or received by any of them
alleging any failure so to comply except as disclosed in Section 7.9 of the
Disclosure Letter. Neither the ownership nor use of properties of the Company
nor the conduct of the Business conflicts with the rights of any other Person or
violates, or with the giving of notice or the passage of time or both will
violate, conflict with or result in a default, right to accelerate or loss of
rights under, any terms or provisions of its charter or by-laws or any Lien,
lease, license, agreement, understanding, law, ordinance, rule or regulation, or
any order, judgment or decree to which the Company is a party or by which it may
be bound or affected, except (a) as set forth in Section 7.9 of the Disclosure
Letter and (b) for violations of the existence of which could not reasonably be
expected to have a Material Adverse Effect. Seller has no Knowledge of any
proposed laws, rules, regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other formal or informal proceedings
which would be applicable to its business, operations or properties and which
could reasonably be expected to have a Material Adverse Effect on its
properties, assets, liabilities, operations or properties; PROVIDED, HOWEVER,
that Purchaser acknowledges and agrees that Seller's representations under this
SECTION 7.9 are not made with respect to any Environmental Laws, or any
environmental condition, fact or circumstance, and that Seller's representations
and warranties with respect to Environmental Laws, and any environmental
condition, fact or circumstance, are made exclusively in SECTION 7.22.
7.10 PROPERTY, PLANT AND EQUIPMENT.
(a) OWNED REAL PROPERTY. Group owns no real property. Section 7.10(a)
of the Disclosure Letter lists all real property that Seller owns (the "OWNED
REAL PROPERTY"). Except as disclosed in Section 7.10(a) of the Disclosure
Letter, with respect to each such parcel of Owned Real Property:
(i) Seller has good and marketable title to the Owned Real
Property, free and clear of any Lien;
-25-
<PAGE>
(ii) there are no pending or, to Seller's Knowledge, threatened
condemnation proceedings, lawsuits, or administrative actions relating to
the Owned Real Property or other matters which would materially adversely
affect the use or occupancy or value thereof;
(iii) each facility located on such parcel has received all
approvals of governmental authorities (including licenses and permits)
which to Seller's Knowledge are required in connection with the ownership
or operation thereof and have been operated and maintained in accordance
with applicable laws, rules, and regulations except where such failure to
operate or maintain would not be reasonably expected to have a Material
Adverse Effect;
(iv) each facility located on such parcel of Owned Real Property
is supplied with utilities and other services necessary for the operation
of such facility, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are adequate for current uses
in accordance with all applicable laws, ordinances, rules, and regulations;
and
(v) each parcel of Owned Real Property has direct vehicular
access to a public road or access to a public road via a permanent
appurtenant easement.
(b) REAL PROPERTY LEASES. Group does not lease or sublease any real
property. Section 7.10(b) of the Disclosure Letter lists all real property
leased or subleased to Seller. The Company has provided Purchaser with correct
and complete copies of the lease and sublease agreements and amendments relating
to real property leased or subleased to Seller (the "REAL PROPERTY LEASES").
With respect to each Real Property Lease, except as disclosed in Section 7.10(b)
of the Disclosure Letter:
(i) the lease or sublease is legal, valid and binding obligation
of Seller, enforceable against Seller and in full force and effect;
(ii) neither Seller nor, to Seller's Knowledge, any other party
to the lease or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration thereunder except such
breaches, defaults and events which would not be reasonably expected to
have a Material Adverse Effect;
(iii) to Seller's Knowledge, no party to the lease or sublease
has repudiated any provision thereof;
(iv) to Seller's Knowledge, there are no disputes, oral or
written agreements, or forbearance programs in effect as to the lease or
sublease except such disputes, agreements and forbearance programs which
would not be reasonably expected to have a Material Adverse Effect;
(v) with respect to each sublease, to Seller's Knowledge, the
representations and warranties set forth in subsections (i) through (v)
above are true and correct with respect to the underlying lease;
-26-
<PAGE>
(vi) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(vii) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
which to Seller's Knowledge are required in connection with the operation
thereof and have been operated and maintained in accordance with applicable
laws, rules, and regulations except where such failure to operate or
maintain would not be reasonably expected to have a Material Adverse
Effect; and
(viii) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the current operation of
said facilities.
(c) FORMERLY OWNED OR LEASED PROPERTIES. To Seller's Knowledge,
Section 7.10(c) of the Disclosure Letter lists all properties, together
with addresses, other than those currently owned or leased properties
listed pursuant to subsections (a) and (b) above and other than former
warehouse leases, which the Company has owned or leased within the ten
years preceding the date of this Agreement.
(d) EQUIPMENT. Group neither owns nor leases any equipment. The
Company has provided Purchaser with correct and complete copies of all
agreements by which Seller leases equipment (the "EQUIPMENT LEASES").
Section 7.10(d) of the Disclosure Letter lists all equipment leased by
Seller and identifies whether any related Equipment Lease is an operating
lease or a capitalized lease. Each item of equipment (other than inventory)
has been maintained in good operating condition and repair (subject to
normal wear and tear) and is suitable, adequate and sufficient for the
purposes for which it is presently used.
7.11 INTELLECTUAL PROPERTY. Section 7.11 of the Disclosure Letter lists (a)
all Intellectual Property that is in each case material to the conduct of the
Business in the Ordinary Course of Business; (b) each license or other contract
(including all amendments) under which any such Intellectual Property is held or
used by the Company (the "LICENSES"); and (c) all consents of any Person that
will be required for the use of the Intellectual Property by Purchaser following
the Closing Date. Except as described in Section 7.11 of the Disclosure Letter,
there is no License under which the Company is obligated as licensor or licensee
with respect to any Intellectual Property. Except as disclosed in Section 7.11
of the Disclosure Letter, the Company has not received any written notice that
the use by the Company of the Intellectual Property in the Business and in the
areas where the Business is currently conducted infringes or has infringed any
rights of any third party. To Seller's Knowledge, the Company's use of
Intellectual Property does not infringe and has not infringed any rights of any
third party and no activity of any third party infringes upon the rights of the
Company with respect to any Intellectual Property. Subject to obtaining
necessary consents as disclosed in Section 7.11 of the Disclosure Letter, each
of the Licenses will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby. The Company owns or has the right to use all
Intellectual Property necessary or desirable for the operation of the Business
as presently conducted.
-27-
<PAGE>
7.12 INVENTORIES. Group has no inventory. The inventory of Seller consists
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods of a quality and quantity usable and salable in the
Ordinary Course of Business, consistent with past practice and none of which is
obsolete, below standard quality, damaged, or defective, subject only to the
reserve for inventory writedown set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with GAAP and the past custom and
practice of the Company. The inventory, taken as a whole, as reflected in the
Most Recent Balance Sheet is valued at the lower of cost (on a first-in,
first-out basis) or market in accordance with GAAP. Since February 29, 2000, no
inventory has been sold or disposed of except in the Ordinary Course of
Business.
7.13 ACCOUNTS RECEIVABLE. Taking into account the reserves for
uncollectible accounts set forth in the Most Recent Balance Sheet and except as
disclosed in Section 7.13 of the Disclosure Letter, all of the accounts
reflected on the Most Recent Balance Sheet were accounts receivable that (i)
arose from bona fide sales made or orders received in the Ordinary Course of
Business, (ii) to Seller's Knowledge, are not subject to any set-off or
counterclaim, and (iii) are collectible in the Ordinary Course of Business. All
accounts receivable of the Company are reflected properly on its books and
records in accordance with GAAP.
7.14 TAXES. Except as disclosed in Section 7.14 of the Disclosure Letter:
(a) All Tax Returns that Seller, Group, HPH or any Affiliated Group
which includes any of them was required to file have been timely filed and all
such Tax Returns were true, correct and complete in all respects. Seller has
delivered to Purchaser copies of such Tax Returns for each of the last three
taxable years. All Taxes due and payable by Seller, Group, HPH or any Affiliated
Group which includes any of them (whether or not shown on any Tax Return) have
been paid. All Taxes of Seller, Group, HPH or any Affiliated Group which
includes any of them that are not yet due and payable have been fully accrued on
the books of Group, Seller or HPH, as the case may be. No claim has ever been
made by any authority in a jurisdiction where Group, Seller or HPH does not file
or is not included in a Tax Return that Group, Seller or HPH is or may be
subject to taxation by that jurisdiction. There are no Liens with respect to
Taxes upon any of the property or assets of Group, Seller or HPH other than
statutory liens for current Taxes not yet due and payable.
(b) Each of Group, Seller and HPH have withheld and timely paid to
the proper authority all Taxes required to have been withheld in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) Neither Group, Seller nor HPH has ever been a member of an
affiliated group filing a consolidated return for U.S. federal income tax
purposes other than the group that is headed by HPH. Neither Group, Seller nor
HPH has any liability for Taxes of another person as a transferee, successor, by
contract, or otherwise. Neither Group, Seller nor HPH is a party to a joint
venture, partnership, or other arrangement that could be treated as a
partnership for federal, state, local, or foreign income tax purposes.
(d) Neither Group, Seller nor HPH has filed, or had filed on its
behalf, a consent under Code Section 341(f) concerning collapsible corporations.
Seller is not required to
-28-
<PAGE>
make, and is not a party to any agreement that would require it to make, any
payments that would be non-deductible under Code Section 280G or that would be
subject to an excise tax under Section 4409 of the Code.
(e) None of Group, Seller or HPH or any Affiliated Group of which any
of them is a member has agreed to any extension of the period for assessment,
reassessment or collection of any Taxes. No power of attorney granted by Group,
Seller or HPH or any Affiliated Group of which any of them is a member with
respect to any Taxes will be in force following the Closing Date.
(f) No Tax audit, investigation, dispute, claim, administrative
proceeding or court proceeding is presently pending with regard to any Taxes or
Tax Returns of Group, Seller or HPH or any Affiliated Group of which any of them
is a member.
(g) Neither Group, Seller nor HPH is a party to any tax sharing
agreement or similar arrangement for the sharing of Tax liabilities or benefits.
7.15 CONTRACTS.
(a) SECTION 7.15 of the Disclosure Letter contains a true and
complete list of all of the following Contracts of the Company:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $100,000;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year or
involve consideration in excess of $100,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any Funded Indebtedness in
excess of $100,000 or under which it has imposed a Lien on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement among the Company and its Affiliates relating
to their respective assets and liabilities or business between or among
them;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
-29-
<PAGE>
(ix) any agreement providing for the employment or consultancy
with any individual on a full-time, part-time, consulting or other basis in
excess of $50,000 or providing severance or retirement benefits in excess
of $50,000;
(x) any agreement under which the Company has advanced or loaned
any amount to any of its Affiliates, directors, officers, or employees
other than in the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default or
termination would be reasonably likely to have a Material Adverse Effect;
or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
(b) The Company has heretofore made available to Purchaser a true and
complete copy of each Contract listed in Section 7.15 of the Disclosure Letter,
each as in effect on the date hereof, including, without limitation, all
amendments thereto (all of the foregoing, together with the Real Property Leases
and the Equipment Leases, are referred to herein collectively as the "MATERIAL
CONTRACTS").
7.16 NATURE OF MATERIAL CONTRACTS. Except as disclosed in Section 7.16 of
the Disclosure Letter, no breach or default by the Company under any of the
Material Contracts has occurred and is continuing, and, to Seller's Knowledge,
no event has occurred which with notice or lapse of time would constitute such a
breach or default or permit termination, modification or acceleration by any
other Person under any of the Material Contracts, other than any such breaches,
defaults and events which would not be reasonably expected to have a Material
Adverse Effect. To Seller's Knowledge, no breach or default by any Person other
than the Company under any of the Material Contracts has occurred and is
continuing, and no event has occurred which with notice or lapse of time would
constitute such a breach or default or permit termination, modification or
acceleration by the Company under any of the Material Contracts. Except as
disclosed in Section 7.16 of the Disclosure Letter, each of the Material
Contracts is a legal, valid and binding obligation of the Company, enforceable
against the Company and is in full force and effect, and each Material Contract
will continue to be in full force and effect after giving effect to the
transactions contemplated by this Agreement.
7.17 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company in respect of its assets, liabilities or
business.
7.18 INSURANCE AND RISK MANAGEMENT. Section 7.18 of the Disclosure Letter
describes each material insurance policy maintained by the Company during the
past five years. All of such insurance policies are in full force and effect,
and the Company is not in material default with respect to its obligations under
any of such insurance policies. Section 7.18 of the Disclosure Letter also
describes any self-insurance arrangements affecting the Company.
7.19 LITIGATION. Except as disclosed in Section 7.19 of the Disclosure
Letter, there are no judicial or administrative actions, claims, suits,
proceedings or investigations pending or, to Seller's Knowledge, threatened
against the Company nor, to Seller's Knowledge, is there any basis for any such
action, claim, suit, proceeding or investigation, which, individually or in the
-30-
<PAGE>
aggregate, could reasonably be expected to have a Material Adverse Effect.
Except as disclosed in Section 7.19 of the Disclosure Letter, there are no
judgments, orders, decrees, citations, fines or penalties heretofore assessed
against the Company affecting the Business under any federal, state or local
law, which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
7.20 LABOR AND EMPLOYMENT MATTERS.
(a) Section 7.20 of the Disclosure Letter contains a list of the
collective bargaining agreements to which the Company is a party. Except as
disclosed in Section 7.20 of the Disclosure Letter, (i) there are no union
organizing activities, representation petitions before governmental authorities,
or other labor controversies pending or, to Seller's Knowledge, threatened
against the Company and (ii) there are no grievances outstanding, or unfair
labor practice charges or complaints pending before any applicable authorities,
against the Company under any such agreement or contract.
(b) To Seller's Knowledge, except as disclosed in Section 7.20 of the
Disclosure Letter, no executive, key employee, or group of employees has any
plans to terminate employment with the Company. The Company is in compliance in
all material respects with all applicable laws respecting employment and
employment practices and terms and conditions of employment.
7.21 EMPLOYEE BENEFIT MATTERS.
(a) DISCLOSURE. Section 7.21 of the Disclosure Letter sets forth (I)
all Employee Plans to which the Company contributes or is obligated to
contribute, or under which the Company has or may have any liability for
premiums or benefits, or which relates to any employee or former employee of the
Company or the beneficiaries of any such employee or former employee as well as
(II) all plans, agreements, policies and arrangements that would be described in
(I) above if the term "employee" were construed to include outside directors,
consultants or other independent contractors who provide services to or for the
benefit of the Company (an "EXISTING PLAN"). For purposes of this Agreement, the
term "EMPLOYEE PLAN" means any plan, program, agreement, policy or arrangement
(a "PLAN"), whether or not reduced to writing, that is: (i) a welfare benefit
plan within the meaning of Section 3(1) of ERISA (a "WELFARE PLAN"); (ii) a
pension benefit plan within the meaning of Section 3(2) of ERISA (a "PENSION
PLAN"); (iii) a stock bonus, stock purchase, stock option, restricted stock,
stock appreciation right or other equity-based plan; or (iv) any other
deferred-compensation, retirement, welfare-benefit, severance,
change-in-control, bonus, incentive or fringe-benefit plan. With respect to each
Existing Plan, Seller has provided or made available to Purchaser accurate,
current and complete copies of each of the following: (1) where the plan has
been reduced to writing, the plan document together with all amendments; (2)
where the plan has not been reduced to writing, a written summary of all
material plan terms; (3) where applicable, copies of any trust agreements,
custodial agreements, insurance policies, administration agreements and similar
agreements, and investment management or investment advisory agreements; (4)
copies of any summary plan descriptions, employee handbooks or similar employee
communications; (5) in the case of any plan that is intended to be qualified
under Section 401(a) of the Code, a copy of the most recent determination letter
from the IRS, if any, and any related
-31-
<PAGE>
correspondence, including a copy of the request for such determination; (6) in
the case of any funding intended to qualify as a VEBA under Section 501(c)(9) of
the Code, a copy of any IRS letter determining that it so qualifies; (7) in the
case of any plan for which Forms 5500 are required to be filed, a copy of the
three most recently filed Forms 5500, with all schedules attached; and (8)
copies of any notices, letters or other correspondence from the IRS or the
Department of Labor relating to the plan. Except as provided under an Existing
Plan, the Company has made no other commitments to its employees, former
employees or their beneficiaries under which it is or would be obligated to
provide any benefit.
(b) DEFINED BENEFIT PENSION PLANS. Neither the Company nor any
corporation, trust, partnership or other entity that would be considered as a
single employer with the Company under Section 4001(b)(1) of ERISA or Sections
414(b), (c), (m) or (o) of the Code (a "RELATED ENTITY") has ever maintained,
contributed to, or been required to contribute to any Employee Plan subject to
Title IV of ERISA, or to any "MULTIEMPLOYER PLAN" within the meaning of Section
3(37) or Section 4001(a)(3) of ERISA.
(c) PLAN QUALIFICATION; PLAN ADMINISTRATION; CERTAIN TAXES AND
PENALTIES. Each Existing Plan that is intended to be qualified under Section
401(a) of the Code is so qualified. Except as disclosed in Section 7.21 of the
Disclosure Letter, each Existing Plan, including any associated trust or fund,
has been administered in all material respects in accordance with its terms and
with all applicable law, and nothing has occurred with respect to any Existing
Plan that has subjected or could subject the Company directly or indirectly to a
penalty under ERISA or any excise tax under the Code. The requirements of Part 6
of Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each Existing Plan that is a Welfare Plan subject to such provisions.
(d) ALL CONTRIBUTIONS AND PREMIUMS PAID. Except as disclosed in
Section 7.21 of the Disclosure Letter: (i) all required contributions,
assessments and premium payments on account of each Existing Plan have been
timely paid and (ii) no event has occurred that has resulted in or could subject
Company to a tax under Section 4971 of the Code or its assets to a lien under
Section 412(n) of the Code.
(e) CLAIMS. With respect to each Employee Plan that either of the
Company or any Related Entity maintains or ever has maintained or to which any
of them contributes, ever has contributed, or ever has been required to
contribute, there are no existing (or, to Seller's Knowledge, threatened)
lawsuits, claims or other controversies, other than claims for information or
benefits in the normal course.
(f) RETIREE BENEFITS; CERTAIN WELFARE PLANS. Except as described in
Section 7.21 of the Disclosure Letter, and other than as required under Section
601 et seq. of ERISA, no Existing Plan that is a Welfare Plan provides benefits
or coverage following retirement or other termination of employment. Each
welfare benefit trust or fund that constitutes or is associated with an Existing
Plan and that is intended to be exempt from federal income tax under Section
501(c)(9) of the Code is so exempt.
(g) NO RESTRICTIONS ON TERMINATION. No provision of any Existing Plan
would result in any limitation on the ability of the Company or Purchaser to
terminate the Plan.
-32-
<PAGE>
(h) SEVERANCE, ETC. Except for benefits, if any, due under the
Severance Plan, the transactions contemplated by this Agreement shall not,
whether alone or upon the occurrence of any additional or subsequent event,
result in any payment of severance or other compensation to, or acceleration,
vesting or increase in benefits under any Employee Plan for the benefit of any
current or former director, officer or employee of the Company.
7.22 ENVIRONMENTAL, HEALTH AND SAFETY.
(a) Except as disclosed in Section 7.22 of the Disclosure Letter or
in the Environmental Assessment of Seller dated October 5, 2000 prepared for
Huhtamaki Van Leer Oyj:
(i) the Company is and has been in compliance with all
applicable Environmental Laws and Safety Laws except for violations which
would not be reasonably expected to have a Material Adverse Effect;
(ii) the Company is and has been in material compliance with the
conditions of all Environmental Permits required for the continued conduct
of the business of the Company in the manner now conducted;
(iii) to Seller's Knowledge, the Company has filed all required
material applications, notices and other documents necessary to effect the
timely renewal or issuance of all material Environmental Permits required
for the continued conduct of the business of the Company in the manner now
conducted;
(iv) to Seller's Knowledge, there are no circumstances or
conditions present at or arising out of the present or former owned or
leased properties of the Company in respect of off-site storage,
transportation or disposal of, or any off-site Release of, a Chemical
Substance which would reasonably be expected to have a Material Adverse
Effect;
(v) to Seller's Knowledge, there are no circumstances or
conditions present at or arising out of the present or former owned or
leased properties of the Company, including but not limited to any on-site
storage, use, disposal or Release of a Chemical Substance, which would
reasonably be expected to have a Material Adverse Effect;
(vi) the Company is not subject to, any outstanding written
order, decree, judgment, complaint, agreement, claim, citation, or notice
nor is it subject to any ongoing judicial or administrative proceeding
indicating that the Company or the past and present assets of the Company
are or may be: (i) in material violation of any Environmental Law; (ii) in
material violation of any Safety Laws; or (iii) responsible for the Release
of any Chemical Substance; and, to Seller's Knowledge, no such proceeding
is threatened;
(vii) to Seller's Knowledge, as a result of the transactions
contemplated by this Agreement, the Company and the assets acquired thereby
will not be subject to,
-33-
<PAGE>
the requirements of any Environmental Laws which require notice,
disclosure, cleanup or approval prior to transfer of such assets or which
will impose Liens on such assets;
(viii) Section 7.22 of the Disclosure Letter sets forth a list of
all underground storage tanks currently owned or operated by the Company
and, except as disclosed in Section 7.22 of the Disclosure Letter, to
Seller's Knowledge, such tanks are in material compliance with applicable
Environmental Law; and
(ix) Section 7.22 of the Disclosure Letter lists all
environmental audit reports, inspection reports, assessment reports or
investigation reports in the Company's possession relating to the Business
or the Company's compliance with applicable Environmental Laws and Safety
Laws.
(b) Purchaser acknowledges that the Company's representation and
warranties with respect to Environmental Laws, Safety Laws and environmental
conditions, facts or circumstances are made exclusively in this SECTION 7.22.
7.23 AFFILIATED TRANSACTIONS. Except as disclosed in Section 7.23 of the
Disclosure Letter, neither Group nor Seller is a party to or bound by any
Contract with any of its Affiliates or any members of its Affiliates' families
and none of the stockholders, directors or officers of either Group or Seller or
any of its Affiliates or members of its Affiliates' families owns or otherwise
has any rights to or interests in any asset, tangible or intangible, which is
used in the Business.
7.24 GOVERNMENT CONTRACTS. Except as disclosed in Section 7.24 of the
Disclosure Letter, the Company is not a party to any contract or arrangement
with any federal, state or local governmental agency.
7.25 DISTRIBUTORS, CUSTOMERS AND SUPPLIERS. Section 7.25 of the Disclosure
Letter sets forth a complete and accurate list of: (i) all of the distributors
of the Company's products during the seven-month period ended September 30,
2000, (ii) the ten largest customers (by dollar volume) of the Company during
the fiscal year ended February 29, 2000, indicating the existing contractual
arrangements, and (iii) all suppliers of materials or services to the Company
involving consideration in excess of $1,000,000, indicating the existing
contractual arrangements.
7.26 NO ILLEGAL PAYMENTS; ETC. Neither the Company nor any of its
directors, officers, employees or agents, has: (a) directly or indirectly given
or agreed to give any illegal gift, contribution, payment or similar benefit to
any supplier, customer, governmental official or employee or other person who
was, is or may be in a position to help or hinder the Company (or assist in
connection with any actual or proposed transaction) or made or agreed to make
any illegal contribution, or reimbursed any illegal political gift or
contribution made by any other person, to any candidate for federal, state,
local or foreign public office (i) which might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding or
(ii) the non-continuation of which would be reasonably likely to have a Material
Adverse Effect or (b) established or maintained any unrecorded fund or asset or
made any false entries on any books or records for any purpose.
-34-
<PAGE>
7.27 BOOKS AND RECORDS. The books and all corporate (including minute books
and stock record books) and financial records of the Company are complete and
correct in all material respects.
7.28 TITLE TO ASSETS. Seller has good and marketable title to, or a valid
and subsisting leasehold interest in, the properties and assets used by it,
located on its premises, or reflected on the Most Recent Balance Sheet or
acquired after the date thereof (except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance
Sheet), free and clear of all Liens, except (i) as set forth in Section 7.28 of
the Disclosure Letter, (ii) Liens for Taxes and assessments not yet payable;
(iii) Liens for Taxes, assessments and charges and other claims as set forth in
Section 7.28 of the Disclosure Letter, the validity of which Seller is
contesting in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Financial Statements, and (iv)
minor imperfections of title or encumbrances, none of which are substantial in
amount, materially detracts from the value or impairs the use of the assets
subject thereto, or impairs the operations of Seller (the items referenced in
subsections (ii), (iii) and (iv) of this sentence are referred to herein
collectively as "PERMITTED ENCUMBRANCES"). Group has no assets other than its
ownership of all of the outstanding capital stock of Seller.
7.29 ALL ASSETS USED TO CONDUCT BUSINESS. The Purchased Assets comprise all
of the assets, properties and rights of every type and description, real,
personal, tangible and intangible (other than the Retained Assets) used by the
Company in the conduct of the Business as currently conducted, and all assets,
properties and rights necessary, in the reasonable opinion of the Management
Group, to operate the Business as currently conducted.
7.30 PRODUCT WARRANTIES; DEFECTS; LIABILITY. To Seller's Knowledge, each
product manufactured, sold, leased, or delivered by the Company has been in
conformity in all material respects with all applicable federal, state, local or
foreign laws and regulations, contractual commitments and all express and
implied warranties, and the Company does not have any liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any liability)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with GAAP and the
past custom and practice of the Company. Except as disclosed in Section 7.30 of
the Disclosure Letter or except as set forth in any of the Contracts disclosed
on Section 7.15 of the Disclosure Letter, no product manufactured, sold, or
delivered by the Company is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale.
7.31 DISCLAIMER REGARDING ESTIMATES AND PROJECTIONS. In connection with
Purchaser's investigation of the Company, Purchaser has received from or on
behalf of Seller and the Company certain estimates, forecasts, plans and
financial projections. Purchaser acknowledges that there are uncertainties
inherent in attempting to make such estimates, forecasts, plans and projections,
that Purchaser is familiar with such uncertainties, that Purchaser is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all estimates, forecasts, plans and projections so furnished to it (including
the reasonableness of the
-35-
<PAGE>
assumptions underlying such estimates, forecasts, plans and projections), and
that Purchaser shall have no claim against Seller with respect thereto.
Accordingly, Seller makes no representation or warranty with respect to such
estimates, forecasts, plans and projections (including any underlying
assumptions).
ARTICLE 8
WARRANTIES AND REPRESENTATIONS OF PURCHASER
-------------------------------------------
Purchaser warrants and represents to Seller that the statements contained
in this ARTICLE 8 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date.
8.1 INCORPORATION AND QUALIFICATION OF PURCHASER. Purchaser is a
corporation validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, operate and
lease the assets it now owns, operates or leases and to carry on its business as
currently conducted.
8.2 AUTHORITY. Purchaser has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of Purchaser. This Agreement has been
fully executed and delivered by Purchaser and (assuming the due authorization,
valid execution and delivery hereof by Seller) is a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
8.3 NO CONFLICT. Assuming all consents, approvals, authorizations and
other actions described in SECTION 8.4 have been obtained, made or given (except
as may result from any facts or circumstances relating solely to Seller),
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (i) conflict or violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Purchaser is subject or any provision of its charter or bylaws or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel any, result in the imposition of any Lien upon any of its
assets under, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Purchaser is a party or by
which it is bound or to which any of its assets is subject.
8.4 CONSENTS AND APPROVALS. The execution, delivery and performance by
Purchaser of this Agreement do not, and compliance by Purchaser with the terms
hereof and consummation by Purchaser of the transactions contemplated hereby
will not, require Purchaser to obtain any
-36-
<PAGE>
consent, approval, authorization or other action of, or make any filing with or
give any notice to, any court, administrative agency or other governmental
authority, except (a) pursuant to the applicable requirements of the HSR Act,
(b) where failure to obtain such consents, approvals, authorizations or actions,
make such filings or give such notice would not prevent Purchaser from
performing any of its material obligations under this Agreement and (c) as may
be necessary as a result of any facts or circumstances relating solely to
Seller.
8.5 LITIGATION. There are no actions, claims, proceedings or governmental
investigations pending against Purchaser or any of its assets or properties at
law or in equity, before any federal, provincial or municipal court, agency or
other governmental entity, or by any other Person, which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Purchaser or its ability to consummate the transactions contemplated hereby.
8.6 BROKERS. Purchaser has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company or Seller could become
liable or obligated.
8.7 FINANCIAL ABILITY. At the Closing on the Closing Date, Purchaser will
have the funds necessary to purchase the Purchased Assets and consummate the
transactions contemplated hereby.
ARTICLE 9
CONDITIONS TO CLOSING APPLICABLE TO PURCHASER
---------------------------------------------
The obligation of Purchaser to consummate the transactions herein
contemplated is subject to the following conditions precedent:
9.1 NO TERMINATION. Neither Purchaser nor Seller shall have terminated
this Agreement pursuant to SECTION 12.1.
9.2 BRING-DOWN OF SELLER'S WARRANTIES. The warranties and representations
made by Seller herein to Purchaser shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date, and
Seller shall have performed and complied with all agreements, covenants and
conditions on its part required to be performed or complied with on or prior to
the Closing Date; and at the Closing, Purchaser shall have received a
certificate executed by the President or any Vice President of Seller to the
foregoing effect.
9.3 PENDING ACTIONS. Purchaser's consummation of the purchase of the
Purchased Assets and the other transactions contemplated hereby shall not be
prohibited by any legal requirement and shall not, except as expressly
contemplated hereby, subject Purchaser to any penalty or Tax or other liability.
No investigation, action, suit or proceeding by any governmental or regulatory
commission, agency, body or authority, and no action, suit or proceeding by any
other Person, shall be pending on the Closing Date which prevents consummation
of any of the transactions contemplated by this Agreement or which challenges,
or is reasonably likely to result in a challenge to, this Agreement or any
transactions
-37-
<PAGE>
contemplated hereby, or which claims, or is reasonably likely to give rise to a
claim for, damages in a material amount as a result of the consummation of this
Agreement.
9.4 CONSENTS AND APPROVALS. Seller shall have complied with all applicable
material provisions of law requiring any notification, declaration, filing,
registration and/or qualification with any governmental authority, including,
without limitation, all notifications and other filings required in connection
with asset sales (or waivers thereof) from state tax authorities in connection
with the performance by it of this Agreement and consummation of the
transactions contemplated hereby.
9.5 NO MATERIAL ADVERSE EFFECT. There shall not have been any change which
has resulted in a Material Adverse Effect since August 31, 2000, and no event
shall have occurred since August 31, 2000 or circumstance shall exist that may
result in such a Material Adverse Effect.
9.6 ALL NECESSARY DOCUMENTS. Purchaser shall have received copies of such
documents as Purchaser may reasonably request in connection with consummation of
the transactions contemplated by this Agreement, including, without limitation,
those documents to be delivered pursuant to SECTION 3.2.
9.7 ACCESS TO FACILITATE TRANSITION. Representatives of Purchaser shall
have been granted access to the facilities of the Company in accordance with the
terms set forth in the last sentence of Section 5.4.
9.8 DISMISSAL OF PENDING ACTION. PPM Special Investments Fund, L.P. and
PPM Special Investments CBO II, L.P. shall have agreed in writing to dismiss the
litigation involving the Company and described in Section 2.5(b)(x).
9.9 HSR ACT. The waiting period applicable to the consummation of the
transactions contemplated hereunder required pursuant to the provisions of the
HSR Act shall have expired or been terminated in accordance with the HSR Act.
9.10 REPRESENTATION AND WARRANTY INSURANCE. Purchaser shall have obtained
from a third party, at Purchaser's cost and expense, insurance reasonably
satisfactory to Purchaser and Seller and sufficient to satisfy in full all
obligations of Seller to indemnify Purchaser pursuant to SECTION 11.1(a) subject
to the terms of ARTICLE 11, except for claims by Purchaser against Seller
relating to amounts paid by Purchaser to cover the amount of any deductible
under such insurance policy, not to exceed $250,000 ("INDEMNITY INSURANCE").
Prior to or at Closing, Seller shall reimburse Purchaser in accordance with
SECTION 2.3(b) for up to $210,000 of Purchaser's cost and expense in obtaining
Indemnity Insurance (the "SELLER'S INSURANCE OBLIGATION").
9.11 RELEASES. The Company shall have delivered to Purchaser copies of
releases in form satisfactory to counsel for Purchaser releasing any claims the
holders of Funded Indebtedness and any other person may have against the
Purchased Assets, other than Permitted Encumbrances.
9.12 TRANSFER DOCUMENTS. Seller shall have delivered to Purchaser at the
Closing all documents, certificates and agreements necessary to transfer to
Purchaser good and marketable
-38-
<PAGE>
title to the Purchased Assets, free and clear of any and all Liens, other than
Permitted Encumbrances. In addition, Purchaser shall have obtained a landlord
consent to the assignment of the real property lease with respect to each of the
Lake Forest, Illinois and Phoenix, Arizona properties.
Purchaser shall have the right to waive any of the foregoing conditions
precedent, except for the condition set forth in SECTION 9.7.
ARTICLE 10
CONDITIONS TO CLOSING APPLICABLE TO SELLER
------------------------------------------
The obligation of Seller to consummate the transactions herein
contemplated is subject to the following conditions precedent:
10.1 NO TERMINATION. Neither Purchaser nor Seller shall have terminated
this Agreement pursuant to SECTION 12.1.
10.2 BRING-DOWN OF PURCHASER WARRANTIES. All warranties and representations
made by Purchaser herein to Seller shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date, and
Purchaser shall have performed and complied with all agreements, covenants and
conditions on its part required to be performed or complied with on or prior to
the Closing Date; and at the Closing, Seller shall have received a certificate
executed by the President or any Vice President of Purchaser to the foregoing
effect.
10.3 PENDING ACTIONS. No investigation, action, suit or proceeding by any
governmental or regulatory commission, agency, body or authority, and no action,
suit or proceeding by any other Person shall be pending on the Closing Date
which challenges or is reasonably likely to result in a challenge to this
Agreement or any transaction contemplated hereby, or which claims, or is
reasonably likely to give rise to a claim for, damages in a material amount as a
result of the consummation of the transactions contemplated hereby.
10.4 CONSENTS AND APPROVALS. Purchaser shall have obtained all consents and
approvals required to be obtained by it pursuant to SECTION 8.4. and Purchaser
shall have complied with all applicable material provisions of law requiring any
notification, declaration, filing, registration and/or qualification with any
governmental authority in connection with such performance and consummation. The
Company shall have obtained such consents, approvals and releases of its
stockholders and holders of Funded Indebtedness as are necessary to consummate
the transactions contemplated hereby.
10.5 ALL NECESSARY DOCUMENTS. Seller shall have received copies of such
documents as Seller may reasonably request in connection with consummation of
the transactions contemplated by this Agreement, including, without limitation,
those documents to be delivered pursuant to SECTION 3.3.
-39-
<PAGE>
10.6 HSR ACT. The waiting period applicable to the consummation of the
transactions contemplated hereunder required pursuant to the HSR Act shall have
expired or been terminated in accordance with the HSR Act.
Seller shall have the right to waive any of the foregoing conditions
precedent, except for the condition set forth in SECTION 10.6.
ARTICLE 11
INDEMNIFICATION
---------------
11.1 INDEMNIFICATION BY SELLER. Seller covenants and agrees that it will
indemnify, defend, protect and hold harmless Purchaser from and against all
losses, damages, liabilities, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including reasonable attorneys' fees and
expenses of investigation) incurred by Purchaser as a result of or arising from
(a) the untruth, inaccuracy or incompleteness as of the date hereof or on the
Closing Date of any representation or warranty made by Seller or on behalf of
the Company set forth in this Agreement (including without limitation the
Disclosure Letter and any agreement, document, instrument or certificate entered
into in connection herewith or delivered pursuant hereto), as if all
qualifications as to Knowledge and materiality (including without limitation
with respect to Material Adverse Effect) were not contained therein, (b) any
breach of any covenant, obligation or agreement on the part of Seller under this
Agreement (including without limitation the Disclosure Letter and any agreement,
document, instrument or certificate entered into in connection herewith or
delivered pursuant hereto) or (c) any Retained Asset or Retained Liability.
11.2 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees that it
will indemnify, defend, protect and hold harmless Seller from and against all
losses, damages, liabilities, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including reasonable attorneys' fees and
expenses of investigation) incurred by Seller as a result of or arising from (a)
the untruth, inaccuracy or incompleteness as of the date hereof or on the
Closing Date of any representation or warranty of Purchaser set forth in this
Agreement (including without limitation the Disclosure Letter and any agreement,
document, instrument or certificate entered into in connection herewith or
delivered pursuant hereto), (b) any breach of any covenant, obligation or
agreement on the part of Purchaser under this Agreement (including without
limitation the Disclosure Letter and any agreement, document, instrument or
certificate entered into in connection herewith or delivered pursuant hereto) or
(c) any Purchased Asset or Assumed Liability.
11.3 THIRD PERSON CLAIMS.
(a) Promptly after any person hereto (the "INDEMNIFIED PARTY")
receives notice of or has knowledge of any claim by a person or entity not a
party to this Agreement ("THIRD PERSON"), or the commencement of any action or
proceeding by a Third Person, for which the Indemnified Party intends to make a
claim against the party obligated to provide indemnification pursuant to SECTION
11.1 or SECTION 11.2 (the "INDEMNIFYING PARTY"), the Indemnified Party shall
give the Indemnifying Party written notice of such claim or the commencement of
such action or
-40-
<PAGE>
proceeding, provided that the failure to give such prompt notice shall not
affect the Indemnifying Party's obligation to indemnify absent a showing of
actual prejudice to the Indemnifying Party. Such notice shall state the nature
and the basis of such claim and, to the extent determinable, a reasonable
estimate of the amount thereof.
(b) The Indemnifying Party shall have the right to defend and settle,
at its own expense and by its own counsel, any such matter so long as the
Indemnifying Party pursues the same in good faith and diligently, provided that
the Indemnifying Party shall not settle any criminal matter, without the written
consent of the Indemnified Party, or any other matter, without the written
consent of the Indemnified Party which in the case of matters which are not
criminal matters will not be unreasonably withheld or delayed. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof
and, subject to the preceding sentence, in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control. In the event that counsel to the Indemnifying Party shall have a
conflict of interest that prevents counsel for the Indemnifying Party from
representing the Indemnified Party, or in the event that the Indemnified Party
is not reasonably satisfied with the counsel selected by the Indemnifying Party,
the Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence, and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses.
(c) If the Indemnifying Party does not undertake to defend such
matter to which the Indemnified Party is entitled to indemnification hereunder,
or fails diligently to pursue such defense, (i) the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, (ii) the Indemnified Party may settle such matter, and
(iii) the Indemnifying Party shall reimburse the Indemnified Party for the
amount paid in such settlement and any other liabilities or expenses incurred by
the Indemnified Party in connection therewith; PROVIDED, HOWEVER, that under no
circumstances shall the Indemnified Party settle any such matter without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this ARTICLE 11
shall (except as prohibited by law) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by either party to
this Agreement against the other party for any breach or violation of any
representation or warranty in this Agreement or any covenant or agreement to be
performed pursuant to this Agreement on or before the Closing; PROVIDED,
HOWEVER, that nothing herein shall be construed to limit the right of a party,
in a proper case, to seek specific performance or other injunctive relief for
any such breach. Purchaser hereby
-41-
<PAGE>
acknowledges and agrees that, from and after the Closing, the Indemnity
Insurance shall be Purchaser's sole recourse for any and all claims arising
under SECTION 11.1(a) of this Agreement, except for claims against Seller
relating to the representations and warranties described in SECTION
11.5(a)(i)(A) if and only to the extent such claim or claims exceed $2,500,000
("EXEMPTED CLAIMS"). Purchaser shall have recourse directly against Seller for
Exempted Claims, subject to the terms and conditions set forth in this
Agreement.
11.5 MONETARY LIMITATIONS ON INDEMNIFICATION.
(a) (i) Seller shall have no obligation to indemnify Purchaser until
such time as the aggregate amount of all claims which Purchaser may have against
Seller, whether individually or collectively, shall exceed $250,000 (the
"THRESHOLD AMOUNT"), at which point Seller shall indemnify Purchaser for all
claims in excess of such Threshold Amount PROVIDED, HOWEVER, that the foregoing
limitation shall not apply to claims by Purchaser (A) with respect to any of the
representations and warranties made in SECTIONS 7.1 (Incorporation and
Qualification) or 7.2 (Authority) or 7.28 (Title to Assets) hereof, including
corresponding sections of the Disclosure Letter; (B) with respect to a breach or
nonfulfillment of any covenant or agreement of Seller or Group hereunder; (C)
based upon fraud; and (D) with respect to any Retained Asset or Retained
Liability.
(ii) Purchaser shall have no obligation to indemnify Seller until
such time as the aggregate amount of all claims which Seller may have
against Purchaser, whether individually or collectively, shall exceed
$250,000, at which point Purchaser shall indemnify Seller for all claims in
excess of such threshold amount PROVIDED, HOWEVER, that the foregoing
limitation shall not apply to claims by Seller (A) with respect to any of
the representations and warranties made in SECTIONS 8.1 (Incorporation and
Qualification) or 8.2 (Authority), including corresponding sections of the
Disclosure Letter; (B) with respect to a breach or nonfulfillment of any
covenant or agreement of Purchaser hereunder; (C) based upon fraud; and (D)
with respect to any Purchased Asset or Assumed Liability.
(iii) For the purposes of this SECTION 11.5, in computing such
individual or aggregate amounts of claims, the amount of each claim shall
be deemed to be an amount (x) net of any current tax benefit realized by
Purchaser or any Affiliate thereof by reason of deductibility of such
liability or damage (determined by multiplying such deductible amount by
the then applicable highest effective corporate income tax rate), and any
deferred tax benefit attributable to such liability or damage (determined
on the same basis but present valued to the extent obtained through
depreciation or amortization deductions) and (y) net of any insurance
proceeds received and any indemnity, contribution or other similar payment
recovered by Purchaser or any Affiliate or from any third party with
respect thereto (other than pursuant to the representation and warranty
insurance provided for in SECTION 9.8).
(b) Seller shall not be entitled to indemnification under this
ARTICLE 11 if and to the extent that its claim for indemnification is directly
or indirectly related to a breach by it of any representation, warranty,
covenant or other agreement set forth in this Agreement. Purchaser shall not be
entitled to indemnification under this ARTICLE 11 if and to the extent that its
claim for
-42-
<PAGE>
indemnification is directly or indirectly related to a breach by it of any
representation, warranty, covenant or other agreement set forth in this
Agreement.
(c) (i) Seller shall not be liable under this ARTICLE 11 with
respect to claims for indemnification for an amount which, in the aggregate,
exceeds $2,500,000, PROVIDED, HOWEVER, that the foregoing limitation shall not
apply to claims by Purchaser (A) with respect to any of the representations and
warranties made in SECTIONS 7.1 (Incorporation and Qualification), 7.2
(Authority) or 7.28 (Title to Assets) hereof, including corresponding sections
of the Disclosure Letter; (B) with respect to a breach or nonfulfillment of any
covenant or agreement of Seller or Group hereunder; (C) based upon fraud; and
(D) with respect to any Retained Asset or Retained Liability.
(ii) Purchaser shall not be liable under this ARTICLE 11 with
respect to claims for indemnification for an amount which, in the
aggregate, exceeds $2,500,000, PROVIDED, HOWEVER, that the foregoing
limitation shall not apply to claims by Seller (A) with respect to any of
the representations and warranties made in SECTIONS 8.1 (Incorporation and
Qualification) or 8.2 (Authority), including corresponding sections of the
Disclosure Letter; (B) with respect to a breach or nonfulfillment of any
covenant or agreement of Purchaser hereunder; (C) based upon fraud; and
with respect to any Purchased Asset or Assumed Liability.
(d) Each Indemnified Party shall use its reasonable efforts to
mitigate the losses, damages, liabilities, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including reasonable attorneys'
fees and expenses of investigation), for which it seeks indemnification
hereunder and assign to the Indemnifying Party all of such Indemnified Party's
claims for recovery against third parties as to losses, damages, liabilities,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including reasonable attorneys' fees and expenses of investigation),
whether by insurance coverage, contribution claims, subrogation or otherwise.
11.6 TIME LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary in this ARTICLE 11, neither party may assert a claim pursuant to this
ARTICLE 11 after the date which is three years after the Closing Date, except
(i) claims with respect to the representations and warranties contained in
SECTIONS 7.1 (Incorporation and Qualification), 7.2 (Authority), 7.28 (Title to
Assets), 8.1 (Incorporation and Qualification) or 8.2 (Authority), including
corresponding sections of the Disclosure Letter, shall not be subject to any
limitation as to time; (ii) claims with respect to the representations and
warranties contained in SECTION 7.24 (Environmental, Health and Safety),
including the corresponding section of the Disclosure Letter, may not be made
after the date which is sixty months after the Closing Date; (iii) claims with
respect to any breach of any covenant, obligation or agreement under this
Agreement, or based on fraud, shall not be subject to any limitation as to time
and (iv) claims with respect to the representations and warranties contained in
SECTION 7.16 (Taxes) shall not be made after the date which is 60 days after the
expiration of the applicable statute of limitations governing the Tax to which
the claim relates (after giving effect to any agreement extending or tolling
such statute of limitations).
-43-
<PAGE>
ARTICLE 12
TERMINATION
-----------
12.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing only as follows, and in no other manner:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or by Seller, if at or before the Closing any
conditions set forth herein for the benefit of Purchaser or Seller,
respectively, shall not have been timely met or cannot be timely met; provided,
that the party seeking to terminate is not, in any material respect, in breach
of or default under this Agreement;
(c) by Purchaser or by Seller if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or before December 19,
2000, or such later date as may have been agreed upon in writing by the parties
hereto; provided, that the party seeking to terminate is not, in any material
respect, in breach of or in default under this Agreement; or
(d) by Purchaser or by Seller if any representation or warranty made
herein for the benefit of Purchaser or Seller, respectively, or in any
certificate, schedule or documents furnished to Purchaser or Seller,
respectively, pursuant to this Agreement is untrue in any material respect, or
if either Seller or Purchaser, respectively, shall have defaulted in any
material respect in the performance of any material obligation under this
Agreement.
Any termination pursuant to this ARTICLE 12 shall not limit or restrict the
rights or other remedies of any party hereto.
ARTICLE 13
NON-COMPETITION AND CONFIDENTIALITY
-----------------------------------
13.1 NON-COMPETITION. For good and valuable consideration, each of Seller,
Group and HPH covenants and agrees with Purchaser that for a period of three (3)
years after the Closing Date, neither it nor any Affiliate controlling it or
under its control, including, without limitation, Hoeper, shall, without the
prior written consent of Purchaser, engage in, or become directly or indirectly
associated (as an owner, partner, stockholder, consultant, advisor or in any
other capacity calling for the making of investments or the rendition of
services, advice, or acts of management, operation or control) with any person
which is engaged in, any business which is competitive with the Business, within
the Restricted Area; PROVIDED, HOWEVER, that Seller and its Affiliates may own
up to five percent (5%) of any class of securities of a Person engaged in such a
competitive business if such securities are listed on a national securities
exchange, traded in a recognized over-the-counter market or registered under the
Securities Exchange Act of 1934.
13.2 CONFIDENTIALITY. Purchaser agrees with respect to all technical,
commercial and other information relating to the Company, any of its assets or
properties or the Business that is or has been furnished or disclosed to
Purchaser on, or after or before the date hereof, including, but not limited to,
information regarding the organization, personnel, business activities,
-44-
<PAGE>
customers, policies, assets, finances, costs, sales, revenues, rights,
obligations, liabilities and strategies (the "INFORMATION") of the Business and
the Company that, unless and until the transactions contemplated by this
Agreement shall have been consummated, (a) such Information is confidential
and/or proprietary to the Company and the Business and entitled to and shall
receive treatment as such by Purchaser; (b) Purchaser will, and will require all
of its employees, representatives, agents and advisors who have access to such
Information to, hold in confidence and not disclose to any other Person nor use
(except in respect of the transactions contemplated by this Agreement or as
required by law or in a court, administrative or regulatory proceeding) any such
Information; PROVIDED, HOWEVER, that Purchaser shall not have any restrictive
obligation with respect to any Information which (i) is contained in a printed
publication available to the general public, (ii) is or becomes publicly known
through no wrongful act or omission of, or violation of the terms hereof by,
Purchaser, or (iii) becomes known to Purchaser from a source which has no
confidentiality obligation with respect to such Information at the time of
receipt of such Information; and (c) all such Information, unless otherwise
specified in writing, shall remain the property of the Company and, in the event
this Agreement is terminated, shall be returned to the Company, together with
any and all copies made thereof, upon request for such return by Seller (except
for documents submitted to a governmental agency with the consent of Seller or
upon subpoena and which cannot be retrieved with reasonable effort). Purchaser
shall provide Information only to its employees, representatives, agents and
advisors who have a need to know such Information in connection with the
transactions contemplated by this Agreement. In the event that Purchaser or its
representatives is requested or required (by oral question or request for
information or documents or otherwise in any legal proceeding, interrogatory,
subpoena, civil investigative demand or similar process) to disclose any such
Information, Purchaser will notify Seller promptly of the request or requirement
so that Seller may seek an appropriate protective order or waive compliance with
the provisions of this SECTION 13.2. If, in the absence of a protective order or
the receipt of a waiver hereunder, Purchaser is, on the advice of counsel,
compelled to disclose any such Information to any tribunal or else stand liable
for contempt, Purchaser may disclose such Information to the tribunal; PROVIDED,
HOWEVER, that Purchaser shall use its best efforts to obtain, at the request of
Seller and at Seller's cost, an order or other assurance that confidential
treatment will be accorded to such portion of such Information required to be
disclosed as Seller shall designate.
13.3 REMEDY. Purchaser acknowledges that the remedy at law for any breach
by Purchaser of its obligations under SECTION 13.3 is inadequate and that, in
the event of breach by Purchaser, in addition to any other available remedies at
law or otherwise, Seller shall be entitled to equitable remedies, including
specific enforcement or an injunction, and the right to recover reasonable
attorney's fees and costs incurred by Seller or the Company in conjunction with
obtaining specific performance of SECTION 13.2.
13.4 CONFIDENTIALITY COVENANT OF SELLER. Following the Closing Date, Seller
and its representatives will treat and hold as such all Information relating to
the Company, Purchaser and its Affiliates, refrain from using any of such
Information except in connection with this Agreement and deliver promptly to
Purchaser or destroy, at the request and option of Purchaser, all tangible
embodiments (and all copies) of such Information which are in its or his
possession. In the event that Seller or its representatives is requested or
required (by oral question or request for information or documents or otherwise
in any legal proceeding, interrogatory, subpoena, civil investigative demand or
similar process) to disclose any such Information, Seller will notify
-45-
<PAGE>
Purchaser promptly of the request or requirement so that Purchaser may seek an
appropriate protective order or waive compliance with the provisions of this
SECTION 13.4. If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller is, on the advice of counsel, compelled to disclose any
such Information to any tribunal or else stand liable for contempt, Seller may
disclose such Information to the tribunal; PROVIDED, HOWEVER, that Seller shall
use its best efforts to obtain, at the request of Purchaser and at Purchaser's
cost, an order or other assurance that confidential treatment will be accorded
to such portion of such Information required to be disclosed as Purchaser shall
designate.
ARTICLE 14
CERTAIN OTHER UNDERSTANDINGS
----------------------------
14.1 RECORDS.
(a) After the Closing, each party agrees to provide the other with
access to all relevant documents and other information which may be needed by
such party for purposes of preparing tax returns or responding to an audit by
any governmental agency or for any other reasonable purpose. Such access will be
during normal business hours, upon reasonable prior notice and not otherwise
subject to time limitations.
(b) Purchaser further agrees that it shall preserve and keep all
books and records relating to the Business, including, without limitation, the
Company's assets, in Purchaser's possession until six months following the
expiration of the applicable statute of limitations (including extensions
thereof) applicable to the returns of the Company filed for each taxable period
first ending after the Closing Date and each prior taxable period to which such
books or records are relevant.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by Seller prior to or after the Closing (including any claim
constituting a Retained Asset), upon reasonable notice, Purchaser shall, after
the Closing: (i) afford the officers, employees and authorized agents and
representatives of Seller reasonable access, during normal business hours, to
the offices, properties, books and records of Purchaser with respect to the
Business; (ii) furnish to the officers, employees and authorized agents and
representatives of Seller such additional financial and other information
regarding the Business as Seller may from time to time reasonably request; and
(iii) make available to Seller, the employees of Purchaser whose assistance,
testimony or presence is necessary to assist Seller in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings or trials for such purposes; PROVIDED, HOWEVER, that such
access and assistance shall not unreasonably interfere with the businesses or
operations of the Company and the out-of-pocket expenses incurred by the
employees of Purchaser in so assisting Seller shall be paid by Seller.
(d) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary that
either party hereto or any successors be furnished with additional information
relating to the Business, including, without limitation, the Company's assets,
and such information is in the possession of the other party
-46-
<PAGE>
hereto, such other party agrees to use its best efforts to furnish such
information to the party needing such information, at the cost and expense of
the party being furnished such information.
14.2 FURTHER ACTIONS. Seller agrees that from and after the Closing Date,
if reasonably requested by Purchaser, it will execute and deliver such further
instruments of conveyance and transfer and take such other reasonable action as
may be necessary or desirable to convey and transfer more effectively to
Purchaser the Purchased Assets.
14.3 WAIVER OF BULK SALES LAW. The parties hereto acknowledge and agree
that no filings with respect to any bulk sales or similar laws have been made,
nor are they intended to be made, nor are such filings a condition precedent to
the Closing.
ARTICLE 15
MISCELLANEOUS
-------------
15.1 COSTS AND EXPENSES. Except as otherwise provided in this Agreement,
each party hereto shall pay its own fees, costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation, preparation, execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
15.2 ENTIRE AGREEMENT. The Disclosure Letter and the Exhibits referenced in
this Agreement are incorporated into this Agreement and together contain the
entire agreement between the parties hereto with respect to the transactions
contemplated hereunder, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the date
hereof, including, without limitation, the letter dated September 28, 2000 from
Van Leer Holding Inc. on behalf of Purchaser, to Group, on behalf of Seller,
regarding the transaction contemplated hereby and the Confidentiality Agreement
dated as of May 17, 2000, between Seller and an affiliate of Purchaser. No
waiver, modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the party to be
bound thereby.
15.3 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which when executed shall be deemed an original and all of which together shall
constitute one and the same instrument.
15.4 ASSIGNMENT; SUCCESSORS AND ASSIGNS. The respective rights and
obligations of the parties hereto shall not be assignable without the prior
written consent of the other parties; PROVIDED, HOWEVER, that Purchaser may
assign all or part of its rights under this Agreement and delegate all or part
of its obligations under this Agreement to a wholly-owned subsidiary of
Purchaser, in which event all the rights and powers of Purchaser and remedies
available to it under this Agreement shall extend to and be enforceable by such
subsidiary; PROVIDED, FURTHER, that no such assignment and delegation shall
release Purchaser from its obligations under this Agreement, and FURTHER,
Purchaser hereby guarantees to Seller the performance by such subsidiary of its
obligations under this Agreement and each other document or instrument to be
entered into by such subsidiary in connection with the transactions contemplated
hereby. In the
-47-
<PAGE>
event of any such assignment and delegation, the term "Purchaser" as used in
this Agreement shall be deemed to refer to such subsidiary of Purchaser where
reference is made to actions to be taken with respect to the acquisition of the
Purchased Assets, and shall be deemed to include both Purchaser and such
subsidiary where appropriate. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
15.5 SAVINGS CLAUSE. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, rule or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
15.6 HEADINGS. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
15.7 ARBITRATION.
(a) DISPUTE. Any dispute, controversy or claim arising out of or
relating to this Agreement or any agreement contemplated herein, or any breach,
interpretation, termination or validity of any of the foregoing, including any
question whether a matter is subject to arbitration hereunder, is referred to
herein as a "DISPUTE."
(b) ARBITRATION. If the parties fail to settle any Dispute within
thirty (30) days after either party has given notice to the other party hereto
of the claimed existence of a Dispute, the Dispute shall be resolved by a
confidential, binding arbitration. All such Disputes shall be arbitrated
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, as in effect from time to time, before an arbitrator or arbitrators
selected in the manner provided in such rules.
(c) ARBITRATION PROCEDURES. The arbitration shall be held at the
office of the American Arbitration Association in New York, New York. The
arbitration shall take place before a panel of three arbitrators. Each party
will select one arbitrator and the two so chosen will select a third, and
failing selection of an arbitrator by either party or by the two chosen by the
parties, the arbitrator(s) shall be selected from a panel of neutral arbitrators
provided by the American Arbitration Association and shall be chosen by the
striking method. The award or decision by a majority of the arbitrators shall be
final and binding on the parties. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction, and each party
hereto consents and submits to the jurisdiction of such court for purposes of
such action. The statute of limitations, estoppel, waiver, laches and similar
doctrines, which would otherwise be applicable in any action brought by a party,
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an
-48-
<PAGE>
action for those purposes. The Federal Arbitration Act shall apply to the
construction, interpretation and enforcement of this arbitration provision. Each
party shall bear its own expenses (including without limitation the fees and
expenses of legal counsel and accountants) in connection with such arbitration
and Purchaser and Seller shall each bear one-half of the arbitrators' fees and
expenses, provided that the arbitral award shall allocate such fees and expenses
of counsel, accountants, other advisors and the arbitrators according to the
relative success of the contesting parties in the arbitration, as determined by
the arbitrators. The arbitrators shall award an amount equal to the actual
monetary damages suffered by each contesting party, which may include interest
costs incurred by such party, but the arbitrators shall not have the authority
to award punitive damages.
15.8 GOVERNING LAW; JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE, EXCLUDING THE "CONFLICT OF LAWS" RULES
THEREOF.
(b) In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any federal or state court located in New
York, New York (and elsewhere with respect to appellate courts with jurisdiction
over such matter) in the event any dispute arises out of this Agreement or any
of the transactions contemplated hereby, and consents to service of process by
notice as provided in this Agreement, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (iii) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than a federal or state court sitting in the State of Illinois.
15.9 PUBLIC ANNOUNCEMENTS. No press release or other public statement with
respect to this Agreement or the transactions contemplated hereby shall be
issued by any party without such party having consulted with and obtained the
written consent of the other parties, which consent shall not be unreasonably
withheld; PROVIDED, HOWEVER, that no such consultation or consent is necessary
if a press release or other public statement is required to be made by
applicable law.
15.10 U.S. DOLLARS. All amounts expressed in this Agreement and all
payments required by this Agreement are in United States dollars.
15.11 NOTICES.
(a) All notices, requests, demand and other communications under this
Agreement shall be in writing and delivered in person or sent by overnight
courier or certified mail, postage prepaid, and properly addressed as follows:
-49-
<PAGE>
To Seller:
HPH Industries, Ltd.
530 Oak Knoll Road
Lake Forest, Illinois 60045
Telecopier: (847) 234-0197
Attention: Howard P. Hoeper
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Telecopier: (312) 558-5700
Attention: Steven J. Gavin
To Purchaser:
Van Leer Holding Inc.
9201 Packaging Drive
DeSoto, Kansas 66018
Telecopier: (913) 583-8700
Attention: President
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Telecopier: (617) 951-7050
Attention: Robert F. Hayes, Esq.
(b) Any party may from time to time change its address for the
purpose of notices to that party by a similar notice specifying a new address,
but no such change shall be deemed to have been given until it is actually
received by the party sought to be charged with its contents.
(c) All notices and other communications required or permitted under
this Agreement which are addressed as provided in this SECTION 15.11 if
delivered personally or by overnight courier, shall be effective upon delivery;
and if delivered by mail, shall be effective three (3) Business Days after
deposit in the United States mail, postage prepaid.
15.12 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly provided
in this Agreement, nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon or give to any Person, other than the
parties hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
-50-
<PAGE>
15.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Definitions shall be
equally applicable to both the singular and plural forms of the terms defined,
and references to the masculine, feminine or neuter gender shall include each
other gender. Accounting terms used herein and not otherwise defined herein are
used herein as defined by GAAP.
15.14 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR PASSED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT
OR CONTRACT OR OTHERWISE.
[SIGNATURE PAGE FOLLOWS]
-51-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first written above.
PACKAGING RESOURCES INCORPORATED
By: /s/ Howard P. Hoeper
-----------------------------------------------
Name: Howard P. Hoeper
Title: Chairman, President and
Chief Executive Officer
VAN LEER HOLDING INC.
By: /s/ Mark Staton
-----------------------------------------------
Name: Mark Staton
Title: President and Chief Executive
Officer
Solely for purposes of SECTIONS 5.1, 15.7, 15.8,
15.9, 15.14 and ARTICLE 13 of this Agreement:
/s/ Howard P. Hoeper
-----------------------------------------------
HOWARD P. HOEPER
Solely for purposes of SECTIONS 5.1, 5.7, 15.7,
15.8, 15.9, 15.14 and ARTICLE 13 of this
Agreement:
PACKAGING RESOURCES GROUP, INC.
By: /s/ Howard P. Hoeper
-----------------------------------------------
Name: Howard P. Hoeper
Title: Chairman, President and
Chief Executive Officer
Solely for purposes of SECTIONS 5.1, 15.7, 15.8,
15.9, 15.14 and ARTICLE 13 of this Agreement:
HPH INDUSTRIES, LTD.
By: /s/ Howard P. Hoeper
-----------------------------------------------
Name: Howard P. Hoeper
Title: Chairman, President and
Chief Executive Officer
