<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report(Date of earliest event reported): September 17, 1996
------------------
RYMAC Mortgage Investment Corporation
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(Exact name of Registrant as specified in its charter)
Maryland 1-10001 25-1577534
- --------------- ------------ -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
100 North Fourth Street, Suite 813
P.O. Box 250, Steubenville, Ohio 43952
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(Address of principal executive offices)
Registrant's telephone number, including area code: (800) 666-6960
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Item 1. Changes in Control of Registrant.
None
Item 2. Acquisition or Disposition of Assets.
None
Item 3. Bankruptcy or Receivership.
None
Item 4. Changes in Registrants Certifying Accountant.
None
Item 5. Other Events.
On September 12, 1996, RYMAC Mortgage Investment Corporation (AMEX: RM)
("RYMAC") and Navistar International Transportation Corp., a subsidiary of
Navistar International Corporation (NYSE: NAV) ("Navistar") jointly announced
that they had entered into a definitive asset purchase agreement, whereby RYMAC
will acquire a majority interest in Navistar's Columbus Plastics Operation.
The Columbus Plastics Operation manufactures large sheet molding compound
components for original equipment manufacturers, such as Navistar, Yamaha and
General Motors. RYMAC had previously announced that an agreement in principle
had been reached with Navistar and filed a Form 8-K on May 21, 1996 regarding
this acquisition. The purchase agreement is incorporated into this document as
Exhibit 2 under Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
Item 6. Resignations of Registrant's Directors.
None
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a.) Financial Statements of Business Acquired
None
(b.) Pro Forma Financial Information
None
2
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(continued)
(c.) Exhibits
Exhibit 2. Plan of Acquisition - Asset Purchase Agreement Between
Navistar International Transportation Corp. and RYMAC Mortgage
Investment Corporation, dated as of September 12, 1996
Exhibit 99.1 Additional Exhibits - Press Release dated September
12, 1996
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
RYMAC Mortgage Investment Corporation
-------------------------------------
(Registrant)
By: /s/ Richard R. Conte
-----------------------------------------
Richard R. Conte, Chairman of the
Board, Chief Executive Officer and
Principal Financial Officer
Date: September 17, 1996
4
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RYMAC MORTGAGE INVESTMENT CORPORATION
EXHIBITS
filed with
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report: September 17, 1996
Commission File No. 1-10001
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RYMAC MORTGAGE INVESTMENT CORPORATION
Exhibit Index
to
Exhibits filed with Current Report on Form 8-K
September 17, 1996
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Exhibit No. Description
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2. Asset Purchase Agreement Between Navistar
International Transportation Corp. and RYMAC
Mortgage Investment Corporation, dated as of
September 12, 1996
99.1 Press Release dated September 12, 1996
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Exhibit 2
===============================================================================
ASSET PURCHASE AGREEMENT
between
NAVISTAR INTERNATIONAL TRANSPORTATION CORP.
and
RYMAC MORTGAGE INVESTMENT CORPORATION
----------------
Dated as of September 12, 1996
----------------
===============================================================================
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TABLE OF CONTENTS
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1. Purchase and Sale of Assets; Assumption of Liabilities...................................................1
(a) Certain Definitions.............................................................................1
(b) Purchase and Sale of Assets.....................................................................3
(c) Excluded Assets.................................................................................4
(d) Assumed Liabilities.............................................................................5
(e) Excluded Liabilities............................................................................6
(f) Purchase Price..................................................................................7
(g) Purchase Price Adjustment.......................................................................7
(h) Allocation of Purchase Price...................................................................12
2. Closing.................................................................................................13
3. Conditions to Closing...................................................................................14
(a) Buyer's Obligation.............................................................................14
(b) Seller's Obligation............................................................................16
4. Representations and Warranties of Seller................................................................19
(a) Authority......................................................................................19
(b) No Conflicts...................................................................................19
(c) Title to Tangible Assets Other than Real Property Interests....................................20
(d) Title to Real Property.........................................................................20
(e) Intellectual Property..........................................................................20
(f) Contracts......................................................................................21
(g) Litigation; Decrees............................................................................22
(h) Financial Statements...........................................................................22
(i) Compliance with Applicable Laws................................................................22
(j) Asset Sufficiency..............................................................................23
(k) Seller's Employee Benefit Plans................................................................23
(l) Condition of Assets............................................................................23
(m) Absence of Undisclosed Liabilities.............................................................23
5. Covenants of Seller.....................................................................................24
(a) Access.........................................................................................24
(b) Ordinary Conduct...............................................................................24
6. Representations and Warranties of Buyer.................................................................25
(a) Authority; No Conflicts........................................................................25
(b) Capital Stock..................................................................................26
(c) Subsidiaries; Investments......................................................................26
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TABLE OF CONTENTS (cont.)
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(d) Financial Statements...........................................................................26
(e) Absence of Undisclosed Liabilities.............................................................27
(f) Absence of Certain Developments................................................................27
(g) Assets.........................................................................................28
(h) Contracts......................................................................................28
(i) Intellectual Property..........................................................................28
(j) Reports with the Securities and Exchange Commission............................................28
(k) Tax Matters....................................................................................29
(l) Buyer's Employee Benefit Plans.................................................................30
(m) Litigation; Decrees............................................................................31
(n) Compliance with Applicable Laws................................................................31
(o) Guidelines or Policies.........................................................................31
7. Covenants of Buyer......................................................................................32
(a) Confidentiality................................................................................32
(b) No Additional Representations..................................................................33
(c) Board of Directors; Officers...................................................................33
(d) Certain Other Actions..........................................................................33
(e) New IAM Agreement..............................................................................33
8. Additional Covenants....................................................................................33
(a) Proxy Statement/Prospectus; Registration Statement.............................................33
(b) Consents.......................................................................................34
(c) Cooperation....................................................................................34
(d) Notification...................................................................................34
(e) Publicity......................................................................................35
(f) Governmental Approvals.........................................................................35
(g) Sales and Transfer Taxes, etc..................................................................35
(h) Supply Agreement...............................................................................35
(i) Registration Rights Agreements.................................................................35
(j) Transition Services Agreement..................................................................36
(k) Employees......................................................................................36
(l) IAM Agreement..................................................................................36
(m) Employee Benefit Plans for Non-Represented Employees...........................................38
(n) Miscellaneous Employee Benefit Matters.........................................................41
(o) By-Laws of Buyer...............................................................................42
(p) No Authority To Bind...........................................................................42
(q) Records........................................................................................42
(r) Initial Board of Directors; Vacancies of Board.................................................42
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TABLE OF CONTENTS (cont.)
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(s) Ordinary Conduct of Buyer......................................................................43
9. Further Assurances......................................................................................44
10. Indemnification.........................................................................................44
(a) Indemnification by Seller......................................................................44
(b) Indemnification by Buyer.......................................................................44
(c) Exclusive Remedy...............................................................................45
(d) Losses Net of Insurance and Tax Benefit........................................................46
(e) Termination of Indemnification.................................................................46
(f) Procedures Relating to Indemnification.........................................................46
(g) Offset.........................................................................................47
11. Assignment..............................................................................................47
12. No Third-Party Beneficiaries............................................................................48
13. Termination.............................................................................................48
14. Survival of Representations.............................................................................49
15. Expenses................................................................................................49
16. Amendment and Waiver....................................................................................49
17. Notices.................................................................................................50
18. Interpretation..........................................................................................51
19. No Strict Construction..................................................................................51
20. Counterparts............................................................................................51
21. Entire Agreement........................................................................................51
22. Brokerage...............................................................................................51
23. Disclaimer Regarding Estimates and Projections..........................................................52
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TABLE OF CONTENTS (cont.)
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24. Schedules...............................................................................................52
25. Reserved. ..............................................................................................52
26. Severability............................................................................................52
27. Bulk Transfer Laws......................................................................................52
28. Governing Law...........................................................................................53
29. Exhibits and Schedules..................................................................................53
30. Dispute Resolution......................................................................................53
(a) Negotiation....................................................................................53
(b) Arbitration....................................................................................53
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EXHIBITS AND SCHEDULES
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Exhibit A Buyer Note
Exhibit B Special Warranty Deed
Exhibit C Supply Agreement
Exhibit D Registration Rights Agreement
Exhibit E Transition Services Agreement
Schedule 1(b)(ii) Equipment
Schedule 1(b)(iii) Computer Software
Schedule 1(b)(iv) Contracts
Schedule 1(b)(vii) Real Property
Schedule 1(g)(vi) Categories and Methodology
Schedule 1(h) Allocation of Purchase Price
Schedule 3(a)(iv) Company and Third Party Approvals
Schedule 3(a)(v) Governmental Approvals
Schedule 3(b)(xv) Disclosed Liabilities
Schedule 4(c) Liens
Schedule 4(d) Existing Leases, Liens and Possession or Occupancy Agreements
Schedule 4(e) Intellectual Property
Schedule 4(f) Disclosure with respect to non-binding Contracts
Schedule 4(g) Litigation
Schedule 4(h) Financial Statements
Schedule 4(i) Compliance with Laws
Schedule 4(j) Asset Sufficiency
Schedule 4(k) Seller Plans
Schedule 4(m) Undisclosed Liabilities
Schedule 5(b) Non-Ordinary Conduct
Schedule 6(b)(i) Certain Stock
Schedule 6(b)(ii) Articles and By-Laws
Schedule 6(b)(iii) Recourse Against Buyer
Schedule 6(b)(iv) Stockholder Agreements
Schedule 6(c) Subsidiaries; Investments
Schedule 6(d) Buyer Financial Schedules
Schedule 6(h)(i) Buyer Contracts
Schedule 6(h)(ii) Non-terminable Contracts without penalty or premium
Schedule 6(h)(iii) Contracts in breach or default
Schedule 6(k)(i) Tax Matters
Schedule 6(k)(ii) NOL's
Schedule 6(k)(iii) Territories Buyer Required to File Tax Returns
Schedule 6(m) Buyer Litigation
Schedule 6(n) Compliance with Laws
Schedule 6(o) Guidelines or Policies
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Schedule 8(k) Hired Employees of Seller
Schedule 30 Representatives of Buyer
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INDEX OF DEFINED TERMS
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1997 Excess EBIT.................................................................................................11
1998 Excess EBIT.................................................................................................11
49 Percentage Point Increase.....................................................................................10
Adjustment Based on Closing Date Ownership........................................................................9
Affiliated Group..................................................................................................1
Agreement.........................................................................................................1
Ancillary Agreements.............................................................................................15
Assets............................................................................................................3
Assumed Liabilities...............................................................................................5
Assumption Agreement.............................................................................................13
Benefitted Party.................................................................................................46
Bill of Sale.....................................................................................................13
Buyer.............................................................................................................1
Buyer Contracts..................................................................................................25
Buyer Directors..................................................................................................42
Buyer Financial Schedules........................................................................................26
Buyer Note........................................................................................................7
Buyer Resolutions ...............................................................................................13
Claim............................................................................................................46
Closing..........................................................................................................13
Closing Date.....................................................................................................13
Closing Date Balance Sheet........................................................................................8
Closing Date Ownership Determination.............................................................................10
Code.............................................................................................................13
Common Stock......................................................................................................7
Common Technical Information......................................................................................3
Company and Third-Party Approvals................................................................................15
Confidentiality Agreement........................................................................................32
Contracts.........................................................................................................3
Defined Benefit Plan.............................................................................................31
Definitive Proxy Statement/Prospectus............................................................................33
Delivered Shares..................................................................................................9
EBIT.............................................................................................................11
EBIT Certificate.................................................................................................11
Employee Benefit Plan............................................................................................23
Employee Pension Benefit Plan....................................................................................23
Employee Welfare Benefit Plan....................................................................................23
Environmental Report.............................................................................................16
Equipment.........................................................................................................3
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INDEX OF DEFINED TERMS (cont.)
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ERISA............................................................................................................23
Excess Shares.....................................................................................................9
Excluded Assets...................................................................................................4
Excluded Liabilities..............................................................................................6
Financial Statements.............................................................................................22
Five Percent Shareholder.........................................................................................10
Forecasted EBIT..................................................................................................11
Governmental Approvals...........................................................................................15
Hired Employees..................................................................................................36
HSR Act..........................................................................................................15
IAM...............................................................................................................1
IAM Agreement.....................................................................................................1
IPP..............................................................................................................40
Incidents........................................................................................................39
Indemnified party ...............................................................................................46
Independent Director.............................................................................................42
Information Memorandum...........................................................................................32
Institute........................................................................................................33
Intellectual Property.............................................................................................1
Inventory.........................................................................................................1
Knowledge.........................................................................................................2
Latest Balance Sheet.............................................................................................27
Liens............................................................................................................20
Loss..............................................................................................................2
New Hire Plans...................................................................................................38
New Hires........................................................................................................38
Net Tangible Assets...............................................................................................8
NOL..............................................................................................................30
Nontransferable Contracts........................................................................................34
Notice of Closing Date Ownership Determination...................................................................10
Outside Notice Date..............................................................................................10
PBGC.............................................................................................................31
Permitted Liens..................................................................................................20
Person............................................................................................................2
Plant.............................................................................................................2
Plastics Business ................................................................................................2
Plastics Business Intellectual Property Rights....................................................................3
Products..........................................................................................................2
Proportionate Share..............................................................................................45
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INDEX OF DEFINED TERMS (cont.)
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Proxy Statement/Prospectus.......................................................................................33
Public Group.....................................................................................................10
Purchase Price....................................................................................................7
Real Property.....................................................................................................4
Records..........................................................................................................42
Registration Rights Agreement....................................................................................35
REIT.............................................................................................................30
Representatives..................................................................................................53
Responsible Party ...............................................................................................47
Seller............................................................................................................1
Seller Directors.................................................................................................42
Seller Entities...................................................................................................3
Seller Information...............................................................................................32
Seller Plan......................................................................................................23
Seller Plans.....................................................................................................23
Seller Resolutions...............................................................................................13
SEP..............................................................................................................30
Stock............................................................................................................10
Supply Agreement.................................................................................................35
Survey...........................................................................................................15
Tangible Assets..................................................................................................20
Tax...............................................................................................................2
Tax Returns.......................................................................................................3
Transition Services Agreement....................................................................................35
Triggering Event..................................................................................................9
Union.............................................................................................................1
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This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
September 12, 1996, by and between NAVISTAR INTERNATIONAL TRANSPORTATION
CORP., a Delaware corporation ("Seller"), and RYMAC MORTGAGE INVESTMENT
CORPORATION, a Maryland corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Seller desires to sell or cause to be sold to Buyer
all of the Assets, and Buyer desires to purchase such Assets and to assume all
of the Assumed Liabilities, upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets; Assumption of Liabilities.
(a) Certain Definitions. As used in this Agreement
(including the Schedules and Exhibits hereto), the following definitions shall
apply:
(i) "Affiliated Group" means an affiliated group as
defined in Section 1504 of the Code (or any analogous combined,
consolidated or unitary group defined under state, local or foreign
income Tax law).
(ii) "IAM Agreement" means the August 1, 1995 collective
bargaining agreement between Seller and the International Association
of Machinists and Aerospace Workers ("IAM"), its district No. 28,
region 2, lodge number 1471 ("Union").
(iii) "Intellectual Property" means all (A) patents,
patent applications, patent disclosures and inventions,
(B) trademarks, service marks, trade dress, trade names, logos and
legal names and registrations and applications for registration
thereof together with all of the goodwill associated therewith,
(C) copyrights (registered or unregistered) and copyrightable works
and registrations and applications for registration thereof, (D) mask
works and registrations and applications for registration thereof,
(E) computer software, data, data bases and documentation thereof,
(F) trade secrets and other confidential information (including ideas,
formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and
production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans and
customer and supplier lists and information), (G) other intellectual
property rights and (H) copies and tangible embodiments thereof (in
whatever form or medium).
(iv) "Inventory" means, as of any date, all inventories
of raw materials, packaging materials, work-in-process, and finished
Products that are held or used in connection with
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the conduct of the Plastics Business as of such date, but expressly
excluding (A) all inventories of raw materials, packaging materials
and work-in-process not held or used primarily in connection with the
conduct of the Plastics Business and (B) all finished Products that
have been sold to, or otherwise incorporated into other products of,
Seller or its affiliates or any third party customer.
(v) The term "knowledge," when used in the phrase "to
the knowledge of Buyer," shall mean, and shall be limited to, the
actual knowledge of the following individual after reasonable inquiry:
Richard Conte. The term "knowledge," when used in the phrase "to the
knowledge of Seller," shall mean, and shall be limited to, the actual
knowledge of the following individuals after reasonable inquiry:
Thomas M. Hough and for purposes of Section 4(l) only, Thomas E.
Rigsby.
(vi) "Loss" means, with respect to any Person, any
damage, injury, liability, demand, claim, action, cause of action,
cost, deficiency, Tax, penalty, fine or other loss, payment or
expense, whether or not arising out of a claim, including all
interest, penalties, reasonable attorneys' fees and expenses and all
amounts paid or incurred in connection with any action, demand,
proceeding, investigation or claim by any third party (including any
government entity) against or affecting such Person, together with
interest thereon from the date on which such Person provides the
written notice of the related claim as described in Section 10(f)
through and including the date on which the total amount of the claim,
including such interest, is recovered or recouped pursuant to Section
10.
(vii) "Person" shall mean any individual, corporation,
estate, trust, association, company, partnership, joint venture, or
similar organization, or any other entity described in Treasury
Regulations Section 1.382-3(a)(1)(i).
(viii) "Plastics Business" means the business currently
conducted by Seller at Seller's facility at 800 Manor Park Drive,
Columbus, Ohio (the "Plant") primarily relating to the manufacture,
marketing and sale of the Products.
(ix) "Products" means any fiberglass and plastic
component parts produced by the Plastics Business at the Plant, but
expressly excluding all other products manufactured, processed,
marketed or sold by any of Seller or its affiliates (including
fiberglass and component parts not produced by the Plastics Business
at the Plant).
(x) "Tax" means, with respect to any Person any (A)
federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee or
other withholding, or other tax, of any kind whatsoever, including any
interest, penalties or additions to tax or additional amounts in
respect of the foregoing; (B) liability of such
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Person for the payment of any amounts of the type described in clause
(A) arising as a result of being (or ceasing to be) a member of any
Affiliated Group (or being included (or required to be included) in any
Tax Return relating thereto); and (C) liability of such Person for the
payment of any amounts of the type described in clause (A) as a result
of any express or implied obligation to indemnify or otherwise assume
or succeed to the liability of any other Person.
(xi) "Tax Returns" means returns, declarations, reports,
claims for refund, information returns or other documents (including
any related or supporting schedules, statements or information) filed
or required to be filed in connection with the determination,
assessment or collection of Taxes of any party or the administration
of any laws, regulations or administrative requirements relating to
any Taxes.
(b) Purchase and Sale of Assets. On the terms and
subject to the conditions of this Agreement, at the Closing Seller shall sell,
convey, transfer and assign to Buyer, and Buyer shall purchase from Seller all
of Seller's rights, title and interest in the following assets relating
exclusively to the Plastics Business (collectively, the "Assets"):
(i) all cash and cash equivalents and accounts and notes
receivable of Seller and its affiliates (collectively, the "Seller
Entities") reflected on the Closing Date Balance Sheet, other than
intercompany accounts and notes receivable, and all Inventory in
existence as of the Closing;
(ii) all machinery, equipment, vehicles, furniture and
fixtures (and all spare parts inventory relating exclusively to any of
the foregoing) and other tangible assets (except any items excluded
pursuant to Section 1(c)) (A) located on the Real Property at the
Plant and relating primarily to the Plastics Business, or (B) listed
or described on Schedule 1(b)(ii) (collectively, the "Equipment");
(iii) the computer software, data, databases and
documentation listed or described on Schedule 1(b)(iii) attached
hereto;
(iv) all contracts, agreements, licenses, mortgages,
leases (for both real and personal property), and other agreements or
arrangements, whether oral or written, (A) that are listed or
described on Schedule 1(b)(iv) attached hereto and (B) if not so
listed or described, that relate exclusively to the Plastics Business
and are in existence as of the Closing, including all commitments and
orders for the purchase and sale of goods and equipment and services
(including advertising, maintenance and other incidental services)
relating exclusively to the Plastics Business (collectively, the
"Contracts");
(v) all Intellectual Property (other than (x) computer
software, data, databases and documentation and (y) other items set
forth on Schedule 4(j)) relating exclusively to the Products or the
current manufacture of the Products (the "Plastics Business
Intellectual
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Property Rights"); provided, however, that it is recognized by Buyer
and Seller that certain Plastics Business Intellectual Property Rights
including, without limitation, engineering drawings, specifications,
test results and analyses, engineering standards, material
specifications, computer software and manufacturing methods ("Common
Technical Information"), is and has been also used by Seller in the
conduct of its other businesses. Buyer expressly agrees that,
notwithstanding anything contained in this Agreement to the contrary,
Seller has the absolute right to also use such Common Technical
Information in its other businesses and to sell, pledge, or otherwise
dispose of any of such Common Technical Information to any third
party. Buyer agrees to exercise reasonable efforts to maintain such
Common Technical Information in confidence except to the extent that
such information would be disclosed to the public in the ordinary
course of the Plastics Business.
(vi) subject to Section 8(q), all existing customer and
vendor lists, price lists and other business and operational records
pertaining to the conduct of the Plastics Business, including records
relating to its third party customers and suppliers;
(vii) all right, title and interest in the real property
listed or described on Schedule 1(b)(vii) attached hereto
(collectively, the "Real Property"), together with all buildings,
fixtures and improvements located thereon;
(viii) to the extent transferable, any permits or licenses
issued by any governmental agency that are used exclusively in the
Plastics Business;
(ix) all prepayments by Seller relating to the operations
of the Plastics Business to the extent reflected on the Closing Date
Balance Sheet; and
(x) all other intangible personal property of whatever
kind or character, whether evidenced in writing or not, including
current choices in action, claims, causes of action (whether fixed or
contingent), and goodwill, owned by Seller and relating exclusively to
the Products and the Plastics Business, but expressly excluding all
such intangible personal property relating to Excluded Assets or
Excluded Liabilities.
SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO
THE ASSETS, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY MADE IN SECTION 4 WHICH
SHALL EXPIRE AT THE CLOSING , INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY
AS TO THE CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF ANY OF THE ASSETS AND INCLUDING ANY REPRESENTATION OR WARRANTY OF
ANY KIND WITH RESPECT TO THE PHYSICAL OR STRUCTURAL CONDITION OF THE REAL
PROPERTY, THE REAL PROPERTY'S COMPLIANCE WITH THE AMERICANS WITH DISABILITIES
ACT, OR WITH RESPECT TO THE EXISTENCE OR ABSENCE OF TOXIC OR HAZARDOUS
SUBSTANCES OR WASTES OR STORAGE TANKS IN, ON, UNDER OR AFFECTING THE REAL
PROPERTY, AND IT IS UNDERSTOOD THAT, EXCEPT FOR THE EXPRESS
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REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN SECTION 4 WHICH SHALL
EXPIRE AT THE CLOSING, BUYER TAKES THE ASSETS ON AN "AS IS" AND "WHERE IS"
BASIS.
(c) Excluded Assets. The Assets shall not include any
assets other than the assets listed or described in Section 1(b), and, without
limiting the generality of the foregoing, shall expressly exclude the following
(collectively, the "Excluded Assets"):
(i) all securities and investments of the Seller
Entities;
(ii) all insurance policies and claims thereunder of the
Seller Entities, claims for and rights to receive tax refunds, all tax
returns relating to the Plastics Business and any notes, worksheets,
files or documents relating thereto, and any legal files or other
documents covered by an evidentiary privilege that are not primarily
related to the Assumed Liabilities;
(iii) all books, documents, records and files of the
Seller Entities, except as otherwise described in Section 1(b)(vi);
(iv) all of Seller's rights under or pursuant to this
Agreement and the other agreements between Buyer and Seller
contemplated hereby;
(v) all minute books and stockholder and stock transfer
records and similar corporate records of the Seller Entities;
(vi) all Intellectual Property of the Seller Entities
(except as otherwise listed or described in Sections 1(b)(iii) and
1(b)(v));
(vii) all assets of the Seller Plans;
(viii) all leaseholds and fee simple real property and
improvements thereon of the Seller Entities (except for the assets
listed or described in Sections 1(b)(iv) and 1(b)(vii)); and
(ix) all other assets which are listed or described on
Schedule 4(j).
(d) Assumed Liabilities. Buyer shall assume on the
Closing Date and shall pay, perform and discharge when due the following
obligations and liabilities relating to the Plastics Business, the Products or
the Assets absolute or contingent, whether or not accrued, and whether arising
before, on or after the Closing Date which are (collectively, together with all
other liabilities assumed by Buyer pursuant to Sections 8 (l), (m) and (n) of
this Agreement and the Schedules hereto, the "Assumed Liabilities"):
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(i) all obligations and liabilities of Seller under the
Contracts (other than, except for liabilities for which reserves have
been specifically established on the Closing Date Balance Sheet (but
only up to the amount of such reserves), liabilities with respect to
claims relating to breaches or alleged breaches of Contracts by Seller
arising prior to the Closing Date);
(ii) except as specifically provided in the Supply
Agreement, all obligations and liabilities of Seller for claims,
actions, suits or other legal or administrative proceedings made by
any Person from and after the Closing Date in respect of any and all
Products (including Inventory) manufactured, formulated, marketed,
sold or distributed at any time prior to, on or after the Closing Date
(including all obligations and liabilities in connection with the
manufacture, formulation, marketing, sale or distribution thereof) in
connection with the Plastics Business, including all product liability
and infringement claims, all obligations and liabilities arising out
of or relating to the activities and operations of third-party
contract manufacturers, and all obligations and liabilities for
refunds, adjustments, exchanges, returns and warranty, merchantability
and other claims, actions or demands;
(iii) all obligations and liabilities of Seller reflected
on the Closing Date Balance Sheet (including all obligations and
liabilities for matters reflected in the notes thereto);
(iv) all other obligations and liabilities relating to
the Products, the Plastics Business or the Assets arising out of acts
or omissions of the Buyer occurring from and after the Closing Date or
based primarily upon an event occurring or claim arising after the
Closing Date (including, without limitation, any claims relating to a
breach or alleged breach of any Contract).
Buyer's obligations under this Section 1(d) shall not be
subject to offset or reduction by reason of any actual or alleged breach of any
representation, warranty or covenant contained in this Agreement or any
agreement or document delivered in connection herewith or any right or alleged
right to indemnification hereunder.
(e) Excluded Liabilities. Except as specifically
provided in this Agreement and the Schedules hereto, Buyer shall not assume any
obligations or liabilities of Seller (the obligations and liabilities of Seller
not specifically assumed by Buyer being referred to collectively herein as the
"Excluded Liabilities"). Notwithstanding anything in this Agreement to the
contrary and without limiting the generality of the foregoing, Buyer shall not
assume or be liable for any of the following obligations or liabilities:
(i) any other obligation or liability of Seller under
this Agreement and the other agreements with Buyer contemplated
hereby;
(ii) except as otherwise provided in Sections 3(a),
8(f), 8(g) and 15 of this Agreement or in the Ancillary Agreements
(including the Related Documents, as defined in
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<PAGE> 17
the Buyer Note), any obligation or liability of Seller for expenses or
fees incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement and the other agreements
contemplated hereby or the consummation (or preparation for the
consummation) of the transactions contemplated hereby and thereby,
including attorneys' and accountants' fees;
(iii) except for those expressly accrued for and reflected
on the Closing Date Balance Sheet, any obligation or liability of
Seller relating to the Plastics Business with respect to federal,
state, local or foreign income Taxes and any liabilities for interest,
penalties or additions to any of such income Taxes (except income
Taxes and related liabilities with respect to the Plastics Business
relating to periods from and after the Closing Date and other income
Taxes and related liabilities specifically allocated to, prorated to
or assumed by Buyer under this Agreement);
(iv) except for those expressly accrued for and reflected
on the Closing Date Balance Sheet or as otherwise provided in
Section 8, any obligation or liability of Seller with respect to the
Seller Plans;
(v) except for those expressly accrued for and reflected
on the Closing Date Balance Sheet, any claim, suit, action or other
legal or administrative proceeding based primarily upon an event
occurring or a claim arising (x) on or prior to the Closing Date and
regardless of whether or not such claim, suit, action or other
proceeding is disclosed on Schedule 4(i) or (y) after the Closing Date
but solely in the case of (and to the extent that) such claim, suit,
action or other proceeding relates primarily to or arises primarily
out of acts or omissions of the Seller Entities occurring prior to the
Closing Date (including, without limitation, any claims relating to a
breach or alleged breach of any Contract) other than, in each case as
contemplated by Sections 1(d) (i) or (ii) above; and
(vi) any other obligation or liability with respect to or
arising out of any Products, the Assets or the conduct of the Plastics
Business prior to the Closing Date that are not Assumed Liabilities.
(f) Purchase Price. The purchase price (the "Purchase
Price") for the Assets shall be:
(i) $25,504,000 subject to adjustment as provided in
Section 1(g), payable to Seller at the Closing by delivery of a
secured promissory note (the "Buyer Note") in the form of Exhibit A
attached hereto (with such changes thereto and to the related
documentation as may be reasonably requested by the parties providing
the financing to the Buyer under the Credit Agreement (as defined in
the Buyer Note) and which are acceptable to Seller in its sole
discretion); provided that Buyer shall reduce the principal amount of
the Buyer Note by delivering to Seller at Closing by wire transfer of
immediately available funds an amount equal to such reduction pursuant
to financing arrangements that, in the opinion of Buyer and
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<PAGE> 18
Seller, would not reasonably be expected to have a material adverse
effect on the ability of Buyer to secure loans for working capital and
project finance use after the Closing; and
(ii) 4,264,000 shares of Buyer's Common Stock, par value
$.01 per share (the "Common Stock") representing approximately 45% of
the total number of shares of the Common Stock issued and outstanding
on a fully diluted basis after giving effect to the transactions
contemplated hereby and the payment of any fees contemplated by
Section 22.
(g) Purchase Price Adjustment.
(i) If Net Tangible Assets as of the Closing Date
exceeds Net Tangible Assets as of January 31, 1996, the amount of such
excess shall be paid to Seller, at Seller's option by (A) the issuance
by Buyer to Seller of additional shares of the Common Stock (valued,
for purposes of this adjustment only, at $2.50 per share) by delivery
of certificates representing such shares of the Common Stock, duly
endorsed in blank or accompanied by stock powers duly endorsed in
blank in proper form for transfer, with appropriate transfer stamps,
if any, affixed thereto, provided that the aggregate amount of shares
of the Common Stock issued to Seller by Buyer pursuant to this Section
1(g)(i), together with the shares of the Common Stock referred to in
Section 1(f)(ii) that are to be issued to Seller by Buyer at the
Closing, may, subject to Section 1(g)(iii), not exceed 45% of the
total number of shares of the Common Stock issued and outstanding on a
fully diluted basis after giving effect to the transactions
contemplated hereby and the payment of any fees contemplated by
Section 22, (B) an increase in the principal amount of the Buyer Note
delivered at the Closing by delivery of an amended Buyer Note
increased in principal amount by the amount of such increase, in
exchange for the Buyer Note delivered at Closing which amended Buyer
Note shall be identical to the Buyer Note delivered at Closing except
for the principal amount of such Buyer Note, or (C) a combination of
any or all of the options described in clauses (A) or (B) above. If
Net Tangible Assets on January 31, 1996 exceeds Net Tangible Assets as
of the Closing Date, the principal amount of the Buyer Note delivered
at the Closing shall be decreased by the amount of such excess by
delivery of an amended Buyer Note reduced in principal by the amount
of such decrease, in exchange for the Buyer Note delivered at Closing
which amended Buyer Note shall be identical to the Buyer Note
delivered at Closing except for the principal amount of such Buyer
Note. For purposes hereof "Net Tangible Assets" means, as of the
Closing Date, the amount reflected as (Total Assets minus Intangible
Assets) minus (Total Liabilities minus Intangible Liabilities) on the
Closing Date Balance Sheet, and as of January 31, 1996 means the
amount reflected as (Total Assets minus Intangible Assets) minus
(Total Liabilities minus Intangible Liabilities) on Seller's books of
the Plastics Business on such date. Net Tangible Assets as of
January 31, 1996 is $25,969,000.
(ii) The adjustment described in Section 1(g)(i) shall be
effected no later than seven business days after preparation and final
determination, pursuant to this Section 1(g)(ii), of the Closing Date
Balance Sheet. Within 45 days after the Closing Date, Seller
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<PAGE> 19
shall prepare and deliver to Buyer based upon the books and records of
the Plastics Business and consistent with past practices, a balance
sheet of the Plastics Business (including footnotes thereto) (the
"Closing Date Balance Sheet"), as of the Closing Date. Buyer and its
authorized representatives shall be entitled to review the Closing Date
Balance Sheet and the books, records and work papers of the Seller used
to prepare such Closing Date Balance Sheet. If Buyer disagrees with
any item on the face of the Closing Date Balance Sheet, Buyer shall
notify Seller in writing of such disagreement (stating the reasons
therefor) within 30 days after Buyer's receipt of the Closing Date
Balance Sheet from Seller, and Buyer and Seller shall attempt to
resolve such disagreement. If Buyer does not provide such notice
within such 30 days, the Closing Date Balance Sheet shall be deemed to
be the initial balance sheet submitted by Seller under this Section
1(g)(ii) for all purposes of this Agreement, and Net Tangible Assets as
of the Closing Date shall be the amount reflected on the Closing Date
Balance Sheet. If Buyer and Seller are unable to resolve any
disagreement (with respect to which timely notice of such disagreement
has been provided) within 15 days after Seller receives such notice of
disagreement, Buyer and Seller shall submit the disagreement to a
national independent public accounting firm acceptable to Buyer and
Seller. If Buyer and Seller are unable to agree upon the selection of
such firm within 20 days after Seller receives the above notice of
disagreement, an accounting firm of national reputation will be
selected within five days thereafter by lot after eliminating (A)
Deloitte & Touche LLP (Seller's independent accountants), (B) Ernst &
Young LLP (Buyer's independent accountants) and (C) one additional
accounting firm for each of Buyer and Seller, should either Buyer or
Seller or both, find such accounting firm(s) to be objectionable.
Buyer and Seller shall cause the accounting firm so selected, within 15
days after its selection, to resolve such disagreement, which
resolution shall be binding on the parties, and the Closing Date
Balance Sheet shall be so finally adjusted in accordance with such
resolution for all purposes of this Agreement. The fees and expenses of
such accounting firm shall be paid 100% by Buyer unless Net Tangible
Assets as determined pursuant to this Section 1(g)(ii) is not within
20% of the Net Tangible Assets reflected on the initial balance sheet
submitted by Seller under this Section 1(g)(ii), in which case, the
fees and expenses of such accounting firm shall be paid one-half by
Buyer and one-half by Seller.
(iii) In the event that at any time within 3 years prior
to the Closing any Person(s) or Public Group(s) was (were) or became
Five Percent Shareholder(s) of Buyer and the effect of such Five
Percent Shareholder(s) together with the issuance of shares of Buyer's
Common Stock to Seller pursuant to Section 1(f) (ii) and Section
1(g)(i) would be to cause a 49 Percentage Point Increase (such event
being herein a "Triggering Event"), then the Purchase Price as
determined under clauses (i) and (ii) of Section 1(f) (as adjusted
pursuant to Section 1(g)(i) and (vi)) shall be adjusted, effective as
of the Closing, as follows (the "Adjustment Based on Closing Date
Ownership"):
(A) the $25,504,000 payment under Section 1(f)(i) (as
adjusted pursuant to Section 1(g)(i)) shall be
increased by an amount equal to the sum of (x) to
the extent that Seller's ownership of Common Stock
of Buyer effective as of the
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<PAGE> 20
Closing, would, on account of the operation of this
Section 1(g)(iii) be reduced below 40% of the total
shares of Common Stock of Buyer issued and
outstanding as of the effective time of Closing, the
product derived by multiplying $7.50 times the total
number of Excess Shares (as defined in subparagraph
(B) below) that, if retained by Seller, would cause
Seller's ownership of Common Stock of Buyer
effective as of the Closing, to equal 40% of the
total shares of Common Stock of Buyer issued and
outstanding as of the effective time of Closing plus
(y) the product derived by multiplying the total
number of all remaining Excess Shares times $5.00,
and
(B) the number of shares of Buyer's Common Stock
deliverable to Seller under Section 1(f)(ii) and
Section 1(g)(i) (collectively the "Delivered
Shares") shall be reduced reducing first shares
deliverable under Section 1(f)(ii) and then shares
deliverable under Section 1(g)(i) by such number of
shares (the "Excess Shares") such that the number of
shares then deliverable under such Sections when
taken together with ownership changes of all Five
Percent Shareholder(s) of Buyer within the 3 year
period prior to Closing would be one share short of
causing a 49 Percentage Point Increase.
All Excess Shares shall be void ab initio, with the effect that the Excess
Shares shall be treated as never having been issued. Seller shall immediately
return to Buyer all certificates evidencing Excess Shares, together with all
dividends and distributions at any time received by Seller with respect to
Excess Shares.
(iv) For purposes of this Agreement:
"Five Percent Shareholder" shall mean any Person or Public
Group whose ownership in Buyer would cause such Person or
Public Group to be a "5-percent shareholder" of Buyer within
the meaning of Treasury Regulations Section 1.382-2T(g)(1)(i)
or (ii);
"49 Percentage Point Increase" shall mean an increase of 49
percentage points or more of the Stock of Buyer owned by
Five Percent Shareholders over the lowest percentage of Stock
owned by such 5-percent shareholders at any time during the
three-year period preceding the Closing, such determination
to be made in accordance with Treasury Regulations Section
1.382-2T(c) as if the Closing Date were a "testing date."
"Public Group" shall have the meaning set forth in Treasury
Regulations Section 1.382-2T(f)(13).
"Stock" shall mean all classes of stock of Buyer, all options
(as defined in Treasury Regulations Section 1.382-4(d)(g)) to
acquire stock of Buyer that must be treated as
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<PAGE> 21
exercised pursuant to Treasury Regulation Section
1.382-4(d)(2) and all other interests that would be treated
as stock in Buyer pursuant to Treasury Regulations Section
1.382-2T(f)(18)(iii).
(v) From and after the date of this Agreement, Buyer, as soon as
it becomes aware of any facts or circumstances which may bear upon the
existence of a Five Percent Shareholder and/or 49 Percentage Point Increase
(including knowledge of any report on Schedule 13D or 13G filed under the
Securities Exchange Act of 1934, as amended, with respect to Buyer), shall
promptly inform Seller thereof in writing. Seller's determination at any time
as to the existence of a Five Percent Shareholder and/or 49 Percent Point
Increase, the occurrence of a Triggering Event and the calculation of the
Adjustment Based on Closing Date Ownership, based on the facts and
circumstances known to it at such time, shall be binding on the parties,
subject to Section 30, and Seller's right from time to time to revise its
determination based on the discovery of new facts and circumstances (such
determination by Seller, as from time to time revised by Seller, is herein the
"Closing Date Ownership Determination"). Seller shall promptly notify Buyer in
writing of any Closing Date Ownership Determination, which notice shall set
forth, in reasonable detail, Seller's basis for determining the occurrence of a
Triggering Event and the calculation of the Adjustment Based on Closing Date
Ownership (herein a "Notice of Closing Date Ownership Determination"). In the
event that a Triggering Event is determined to exist pursuant to a Notice of
Closing Date Ownership Determination (regardless of whether such Notice is
given before or after Closing and whether one or more other Notices of Closing
Date Ownership Determination have previously been given), the Adjustment Based
on Closing Date Ownership in respect of such Triggering Event shall be
effective as of the Closing based on the ownership of Stock as of the time of
Closing as determined pursuant to such Notice. Notwithstanding anything herein
to the contrary, no further Notice of Closing Date Ownership Determination
shall be given by Seller after March 31, 1997 ("Outside Notice Date"), so that
the Closing Date Ownership Determination as in existence on the Outside Notice
Date and the Adjustment Based on Closing Date Ownership pursuant to such
Determination shall be final and binding on the parties. Prior to the Outside
Notice Date, neither Seller nor any transferee of the Delivered Shares shall
transfer any of the Delivered Shares other than to persons who agree to take
the Delivered Shares subject to the provisions of Sections 1(g)(iii), (iv) and
(v) (for which purpose, Excess Shares at any time shall first be reduced from
any remaining Delivered Shares then held by Seller and/or its affiliates, and
thereafter shall be reduced from any Delivered Shares then held by transferees
on a pro rata basis). The certificates evidencing the Delivered Shares shall
bear a legend reflecting that the Delivered Shares are subject to the
restrictions set forth in Sections 1(g)(iii), (iv) and (v) of this Agreement;
provided that such legend shall be removed at any time after the Outside Notice
Date upon request by any holder of the Delivered Shares. The provisions of
Sections 1(g)(iii), (iv) and (v) shall not be construed to limit Seller's right
not to consummate the transactions contemplated by this Agreement if the
condition set forth in Section 3(b)(xviii) has not been satisfied.
(vi) If Buyer's earnings before interest and taxes ("EBIT") for
Buyer's fiscal year ended December 31, 1997 exceed $6,512,000 ("Forecasted
EBIT"), an amount equal to the product of (x) the excess amount ("1997 Excess
EBIT") multiplied by (y) 5.55 shall be paid to Seller by an increase
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<PAGE> 22
in the principal amount of the Buyer Note by delivery of an Amended Buyer Note
increased in principal amount by such amount. If Buyer's EBIT for Buyer's
fiscal year ended December 31, 1998 exceeds Forecasted EBIT, an amount equal to
the product of (x) the excess amount ("1998 Excess EBIT") less the 1997 Excess
EBIT multiplied by (y) 4.50 shall be paid to Seller by an increase in the
principal amount of the Buyer Note by delivery of an Amended Buyer Note
increased in principal amount by such amount. If Buyer's EBIT for Buyer's
fiscal year ended December 31, 1999 exceeds the Forecasted EBIT, an amount equal
to the product of (x) the excess amount less the 1998 Excess EBIT multiplied by
(y) 2.75 shall be paid to Seller by an increase in the principal amount of the
Buyer Note by delivery of an Amended Buyer Note increased in principal amount by
such amount. For purposes of this Section 1(g)(vi), Buyer's EBIT shall be
calculated using the same methodology and based on the same types and categories
of expenses as used in the calculation of Forecasted EBIT, which categories and
types of expenses and methodology are more particularly described in Schedule
1(g)(vi) attached hereto, and shall expressly exclude any and all other types or
categories of expenses. Notwithstanding anything herein to the contrary, the
total amount by which the principal amount of the Buyer Note may be increased
pursuant to this Section 1(g)(vi) shall not exceed $24,496,000 in the aggregate.
(vii) The adjustment described in Section 1(g)(vi) shall be
effected no later than 7 business days after preparation and final
determination, pursuant to this Section 1(g)(vii), of Buyer's EBIT for each
such fiscal year. Within 90 days after the close of each such fiscal year,
Buyer shall prepare and deliver to Seller based on the books and records of
Buyer and calculated in accordance with Section 1(g)(vi) an audited balance
sheet and statement of income for such fiscal year prepared in accordance with
generally accepted accounting principles, together with a certificate ("EBIT
Certificate") dated as of the end of such fiscal year and signed by the chief
financial officer of Buyer certifying the amount of Buyer's EBIT for such
fiscal year, the amount of any excess over Forecasted EBIT and the amount to be
paid to Seller pursuant to Section 1(g)(vi) above. Seller and its authorized
representatives shall be entitled to review the EBIT Certificate and the books,
records and work papers of the Buyer used to prepare such EBIT Certificate. If
Seller disagrees with any item on the face of the EBIT Certificate, Seller
shall notify Buyer writing of such disagreement (stating the reasons therefor)
within 30 days after Seller's receipt of such EBIT Certificate from Buyer, and
Seller and Buyer shall attempt to resolve such disagreement. If Seller does
not provide such notice within such 30 days, the EBIT Certificate for such
fiscal year shall be deemed accepted by Seller and for purposes of Section
1(g)(vi) above Buyer's EBIT for such fiscal year shall be the amount reflected
on such EBIT Certificate. If Seller and Buyer are unable to resolve any
disagreement (with respect to which timely notice of such disagreement has been
provided) within 15 days after Buyer receives such notice of disagreement,
Seller and Buyer shall submit the disagreement to a national independent public
accounting firm acceptable to Buyer and Seller. If Buyer and Seller are unable
to agree upon the selection of such firm within 20 days after Buyer receives
the above notice of disagreement, an accounting firm of national reputation
shall be selected within 5 days thereafter by lot after eliminating (a)
Deloitte & Touche LLP (Seller's independent accountants) and (b) Ernst & Young
LLP (Buyer's independent accountants) and (c) one additional accounting firm
for each of Buyer and Seller, should either Buyer or Seller or both, find such
accounting firm to be objectionable. Buyer and Seller shall cause the
accounting firms so selected, within 15 days after
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<PAGE> 23
its selection, to resolve such disagreement, which resolution shall be
binding on the parties, and the Buyer's EBIT for such fiscal year shall
be so finally adjusted in accordance with such resolution for purposes
of Section 1(g)(vi) above. The fees and expenses of such accounting
firm shall be paid 100% by Seller unless Buyer's EBIT for such fiscal
year as determined pursuant to this Section 1(g)(vii) is not within 20%
of the Buyer's EBIT reflected on Buyer's initial EBIT Certificate for
such fiscal year submitted by Buyer under this Section 1(g)(vii), in
which case, the fees and expenses of such accounting firm shall be paid
one-half by Buyer and one-half by Seller.
(h) Allocation of Purchase Price. As promptly as
practicable following the date hereof, but in any event within ten business days
prior to the Closing Date, Buyer shall deliver to Seller its reasonable, good
faith determination of the fair market value of the Assets, which determination
shall be made in accordance with applicable tax laws and shall be subject to
Seller's consent (which consent shall not be unreasonably withheld or delayed).
Buyer and Seller shall then set forth such determination on Schedule 1(h)
attached hereto, which shall include an allocation of the Purchase Price among
the Assets on the basis of the fair market values thereof and which, if
necessary, shall be amended to take into account any adjustments which may be
required by Section 1(g). For tax purposes, the Purchase Price shall be
allocated among the Assets (which allocation shall be consistent with the
allocation set forth on Schedule 1(h)) and such Purchase Price shall be
allocated in accordance with Section 1060 of the Code. Neither Buyer nor
Seller, nor any of their respective affiliates, shall take any position (whether
in financial statements, audits, tax returns or otherwise) which is inconsistent
with the allocation of the Purchase Price, taking into account any adjustments
which may be required by Section 1(g), unless required to do so by applicable
law. The parties shall exchange drafts of any information returns required by
Section 1060 of the Code and any similar state statute at least 60 days prior to
filing such returns and shall discuss in good faith any modifications suggested
by the receiving party. For purposes of this Agreement, the term "Code" shall
mean the Internal Revenue Code of 1986, as amended, and any reference to any
particular Code provision shall be interpreted to include any revision of or
successor to such provision regardless of how numbered or classified.
2. Closing. The closing (the "Closing") of the
purchase and sale of the Assets and the assumption of the Assumed Liabilities
shall be held at the offices of Seller, at 10:00 a.m., local time, on the first
Monday or fiscal month-end (determined with reference to Seller's accounting
policies) that is at least three business days following satisfaction or, if
permissible, waiver of the conditions to Closing set forth in Sections 3(a) and
3(b). The date on which the Closing shall occur is hereinafter referred to as
the "Closing Date," and the Closing shall be deemed effective as of the opening
of business on the Closing Date.
(a) At the Closing, subject to and on the terms and
conditions set forth in this Agreement, Buyer shall deliver to Seller (A) the
Purchase Price, without giving effect to any adjustment which may be required
pursuant to Section 1(g), by (x) delivery of the Buyer Note, duly executed, and
(y) delivery of certificates representing 4,264,000 shares of the Common Stock,
duly endorsed in blank or accompanied by stock powers duly endorsed in blank in
proper form for transfer, with appropriate transfer stamps, if any, affixed
thereto,(B) instruments of assumption
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<PAGE> 24
(collectively, the "Assumption Agreement") in form and substance reasonably
satisfactory to Seller and its counsel evidencing and effecting the assumption
by Buyer of the Assumed Liabilities, (C) certified copies of resolutions duly
adopted by Buyer's board of directors and, where appropriate, shareholders
(collectively the "Buyer Resolutions") authorizing the execution, delivery and
performance of this Agreement and the other agreements and transactions
contemplated hereby (including Buyer's reincorporation into Delaware and the
amendments to Buyer's Articles of Incorporation and By-laws, as contemplated
hereby) and the issuance to Seller of the shares of Common Stock contemplated
hereby, (D) certified copies of Buyer's Articles of Incorporation and By-laws,
as amended as contemplated hereby and as in effect on the Closing Date, and the
other Ancillary Agreements to which Seller is not a party, (E) a certificate of
the Secretary or an Assistant Secretary of Buyer as to the incumbency of the
officer(s) of Buyer (who shall not be such Secretary or Assistant Secretary)
executing this Agreement or any Ancillary Agreement,(F)short-form certificates
of good standing of Buyer, certified by the Secretaries of State of Buyer's
state of incorporation, of Ohio and of each other state where the failure of
Buyer to qualify to do business would subject Buyer to monetary penalties by
such state, respectively, as of a date not more than three business days prior
to the Closing Date and (G) the other documents specified in Section 3(b) that
are required to be delivered to Seller as a condition to the Closing.
(b) At the Closing, subject to and on the terms and
conditions set forth in this Agreement, Seller shall deliver or cause to be
delivered to Buyer (i) such duly executed instruments of sale, assignment,
transfer and conveyance (collectively, the "Bill of Sale") in form and
substance reasonably satisfactory to Buyer and its counsel to transfer all of
Seller's right, title and interest in and to the Assets and to evidence and
effect the sale and transfer to Buyer of the Assets (it being understood,
however, that such instruments shall not require Seller or any other Person to
make any additional representations, warranties or covenants, express or
implied, not contained in this Agreement), (ii) certified copies of resolutions
duly adopted by Seller's board of directors ("Seller Resolutions") authorizing
the execution, delivery and performance of this Agreement and the other
agreements and transactions contemplated hereby, (iii) certified copies of
Seller's Certificate of Incorporation and By-laws, as in effect on the Closing
Date, (D) a certificate of the Secretary or an Assistant Secretary of Seller as
to the incumbency of the officer(s) of Seller (who shall not be such Secretary
or Assistant Secretary) executing this Agreement or any Ancillary Agreement,
(E) a short-form certificate of good standing of Seller, certified by the
Secretary of State of Delaware, and (F) the other documents specified in
Section 3(a) that are required to be delivered to Buyer as a condition to the
Closing. With respect to the Real Property included in the Assets, such
instruments to be delivered at the Closing shall consist of a limited or
special warranty deed in the form of Exhibit B attached hereto.
(c) Notwithstanding any other provision of this
Agreement to the contrary, the purchase and sale of the Assets as contemplated
by this Agreement shall be subject to the additional provisions of this
paragraph (c) and Section 8(b). Seller and Buyer shall cooperate with each
other regarding, and shall use their reasonable efforts to cause, the sale to
Buyer of all of the Assets on the Closing Date on the terms and conditions set
forth in this Agreement, and to otherwise consummate the transactions
contemplated hereby; provided, however, that such cooperation and reasonable
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<PAGE> 25
efforts by Seller shall not include any requirement of the Seller Entities to
expend money, commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party. Nothing in this Agreement shall be
construed as an attempt or agreement to assign (x) any Contract which is
nonassignable without the consent of the other party or parties thereto unless
such consent shall have been obtained (subject to the right of Buyer under
Sections 3(a)(iv) and 3(a)(v) and the right of Seller under Section 3(b)(iii))
or (y) any Contract or claim as to which the remedies for the enforcement
thereof enjoyed by Seller would not pass to Buyer as an incident of the
assignments provided for by this Agreement. The Purchase Price shall not be
subject to adjustment by reason of the fact that any Contracts or claims may
not be assigned to Buyer under the circumstances described in clauses (x) and
(y) above. Any Contract which is not properly assigned to Buyer because of the
failure to obtain a required consent shall be governed by, and subject to the
provisions of, Section 8(b).
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyer to
purchase and pay for the Assets and assume the Assumed Liabilities is subject
to the satisfaction (or waiver by Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of Seller made in
this Agreement shall be true and correct in all material respects as
of the date hereof and on and as of the Closing Date, as though made
on and as of the Closing Date, except for representations and
warranties that speak as of a specific date or time (which need only
be true and correct as of such date or time), and Seller shall have
performed or complied in all material respects with all obligations
and covenants required by this Agreement to be performed or complied
with by Seller by the time of the Closing, and Seller shall have
delivered to Buyer a certificate dated the Closing Date and signed by
a Vice President of Seller confirming the foregoing.
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect or
pending as of the Closing which would restrain or prohibit the
purchase and sale of the Assets or the exercise by Buyer of control
over the Assets.
(iii) Reserved.
(iv) Buyer and Seller shall have received or obtained all
third party, board of directors and stockholder consents and approvals
that are necessary for the consummation of the transactions
contemplated hereby or that are required in order to prevent a breach
of or default under, a termination or modification of, or acceleration
of the terms of, any Contract or any Buyer Contract and that are
identified on Schedule 3(a)(iv)attached hereto (collectively "Company
and Third-Party Approvals"), except for any such Company and
Third-Party Approval, the failure to obtain of which would not have a
material adverse effect on the transactions contemplated hereby or on
the Plastics Business as a whole.
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<PAGE> 26
(v) Buyer and Seller shall have received or obtained all
governmental and regulatory consents, approvals, licenses and
authorizations that are necessary for the consummation of the
transactions contemplated hereby and identified on Schedule 3(a)(v)
attached hereto (collectively, "Governmental Approvals"), except for
any such Governmental Approval, the failure to obtain of which would
not have a material adverse effect on the consummation of the
transactions contemplated hereby or on the Plastics Business as a
whole.
(vi) The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall
have expired or been terminated, if applicable.
(vii) Seller and Buyer shall have entered into the Supply
Agreement, the Transition Services Agreement and the Registration
Rights Agreement (collectively, with the amendment to Buyer's Articles
of Incorporation and By-laws, all as contemplated hereby, the
"Ancillary Agreements").
(viii) Seller shall have delivered to Buyer at Buyer's
expense (A) a location survey (the "Survey") of the Real Property (1)
certified as being prepared in accordance with the Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys as adopted in
1992 for an "Urban" Survey, (2) locating all improvements, easements
and other encumbrances, (3) indicating the portion of the Real
Property in a flood plain and (4) which have been certified to Buyer,
Buyer's title insurance company and any lenders designated by Buyer
and (B) a title commitment from a reputable title insurance company to
be marked up and dated as of the Closing Date in an amount equal to
the fair market value of the Real Property as set forth on Schedule
1(h) or as reasonably determined by Buyer and notified to Seller not
later than twenty (20) business days prior to the Closing Date.
(ix) Buyer shall have received a customary opinion from
in-house counsel to Seller, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer and its counsel relating to
good standing, authority, authorization and enforceability of this
Agreement.
(x) Promptly after they are available, and in no event
later than 60 days after the date of this Agreement, Seller shall
deliver an unqualified report of independent public accountants
stating that they have audited the Financial Statements and that the
Financial Statements present fairly in all material respects the
financial position of the Plastics Business as of and for the periods
referred to therein in accordance with generally accepted accounting
principles; it being understood that this condition shall be deemed to
be automatically waived by Buyer if Buyer is delivered a report that
does not satisfy this condition, but fails to object in writing to
Seller within 30 days after the receipt of such report.
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<PAGE> 27
(xi) Seller shall have delivered to Buyer a certificate
dated the Closing Date and signed by a Vice President of Seller
confirming that since the date of this Agreement, to the knowledge of
Seller, there has been no material adverse change in the Plastics
Business taken as a whole, other than changes relating to economies in
general or the Plastics Business's industry in general (including,
without limitation, changes due to seasonality) and not specifically
relating to the Plastics Business.
(xii) Seller shall have caused to be delivered to Buyer a
Phase I environmental report ("Environmental Report") on the Real
Property, the results of which are satisfactory to Buyer, in Buyer's
sole but reasonable discretion; it being understood that this
condition shall be deemed to be automatically satisfied if Buyer has
not notified Seller in writing that it is not satisfied with the
results described in the Environmental Report within 30 days after the
receipt of the Environmental Report. Buyer and Seller agree to share
equally the expenses of the Environmental Report.
(xiii) Buyer and the IAM shall have entered into a
collective bargaining agreement for the employment of IAM represented
employees of Buyer at the Plastics Business.
(b) Seller's Obligation. The obligation of Seller to
sell and deliver or cause to be sold and delivered the Assets to Buyer is
subject to the satisfaction (or waiver by Seller) as of the Closing of the
following conditions:
(i) The representations and warranties of Buyer made in
this Agreement shall be true and correct in all material respects as
of the date hereof and on and as of the Closing Date, as though made
on and as of the Closing Date, except for representations and
warranties that speak as of a specific date or time (which need only
be true and correct as of such date or time), and Buyer shall have
performed or complied in all material respects with the obligations
and covenants required by this Agreement to be performed or complied
with by Buyer by the time of the Closing; and Buyer shall have
delivered to Seller a certificate dated the Closing Date and signed by
the President or a Vice President of Buyer confirming the foregoing.
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect or
pending as of the Closing which would restrain or prohibit the
purchase and sale of the Assets.
(iii) Buyer and Seller shall have received or obtained all
Governmental Approvals and Company and Third Party Approvals, except
for any such Governmental Approval and any such Company and Third
Party Approval, the failure to obtain of which would not have a
material adverse effect on the transactions contemplated hereby or on
the Plastics Business as a whole.
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<PAGE> 28
(iv) The waiting period under the HSR Act shall have
expired or been terminated, if applicable.
(v) Buyer shall have reincorporated into Delaware and
the shares of Common Stock issued to stockholders of Buyer upon
reincorporation shall contain an appropriate legend restricting the
transferability of such shares in form and substance satisfactory to
Seller.
(vi) Reserved.
(vii) Buyer shall have terminated the SEP in accordance
with applicable law.
(viii) Buyer shall have duly amended and restated its
Articles of Incorporation in a manner satisfactory to Seller to among
other things (x) reflect that Buyer will cease to be a REIT effective
for its tax year ending December 31, 1996, subject to consummation of
the transactions contemplated by this Agreement, (y) provide that
Buyer may not engage in extraordinary transactions without prior
approval of a supermajority of its stockholders and (z) provide for
restriction on transfer provisions that protect against a change in
ownership of Buyer within the meaning of Code Section 382. Buyer's
Articles of Incorporation shall be in full force and effect as of the
Closing as so amended and shall not have been further amended or
modified.
(ix) Buyer's By-laws shall have been duly amended and
restated in a manner satisfactory to Seller to among other things (A)
reflect that Buyer will cease to be a REIT effective for its tax year
ending December 31, 1996, subject to consummation of the transactions
contemplated by this Agreement, (B) permit the holders of at least 20%
of the Common Stock to call for a meeting of Buyer's stockholders in
the shortest period of time permitted by applicable law, (C) permit
any member of Buyer's board of directors to call a meeting of the
board of directors in the shortest period of time permitted by
applicable law and (D) permit the board of directors to establish the
size of the board from 3 to 7 directors. Buyer's By-laws shall be in
full force and effect as of the Closing as so amended and shall not
have been further amended or modified.
(x) Buyer and Seller shall have entered into each of the
other Ancillary Agreements and Related Documents (as defined in the
Buyer Note), which shall be in full force and effect as of the
Closing.
(xi) Buyer shall have (A) registered under the Securities
Act of 1933, as amended and (B) obtained approval for listing on the
American Stock Exchange, all of the shares of Common Stock which may
be issued hereunder to Seller.
(xii) Buyer shall have in effect an executive stock
arrangement satisfactory to Seller for its senior executives and shall
have reserved and obtained approval for listing an
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<PAGE> 29
appropriate number of shares of Common Stock for such arrangement,
subject to shareholder approval.
(xiii) Each of the individuals serving on Buyer's board of
directors prior to the Closing Date (other than the Buyer Directors)
shall have tendered his or her resignation to Buyer effective as of
the Closing Date.
(xiv) From and after the Closing Date and until the first
annual meeting of the Buyer's Board of Directors following the first
annual meeting of Buyer's stockholders following the Closing Date, the
officers of Buyer shall be comprised of individuals mutually
acceptable to Buyer and Seller, and each of the other individuals
serving as an officer of Buyer prior to the Closing Date shall have
tendered his or her resignation to Buyer effective as of the Closing
Date.
(xv) Buyer shall have delivered to Seller a schedule
marked "Schedule 3(b)(xv)," which Schedule 3(b)(xv) shall provide an
itemized list of all liabilities of Buyer and its subsidiaries in
existence as of the Closing Date, immediately prior to giving effect
to the transactions contemplated hereby and be in form and substance
reasonably satisfactory to Seller.
(xvi) Seller shall have received a customary opinion from
external counsel to Buyer, dated the Closing Date, in form and
substance satisfactory to Seller and its counsel relating to, among
other things, good standing, authority, authorization and
enforceability of this Agreement and the other Ancillary Agreements
and capital structure of Buyer after giving effect to transaction
contemplated hereby.
(xvii) Seller shall have obtained the Environmental Report,
the results of which are satisfactory to Seller, in Seller's sole but
reasonable discretion; it being understood that this condition shall
be deemed to be automatically satisfied if Seller has not notified
Buyer in writing that it is not satisfied with the results described
in the Environmental Report within 30 days after the delivery of the
Environmental Report by the Seller to Buyer.
(xviii) Buyer and the IAM shall have entered into a
collective bargaining agreement for the employment of IAM represented
employees of Buyer at the Plastics Business in form and substance
reasonably satisfactory to Seller and Buyer.
(xix) Buyer shall have delivered to Seller a certificate
dated the Closing Date and signed by the Chief Executive Officer of
Buyer confirming that, to the best of Buyer's knowledge, Buyer does
not have, and has not within the 3 year period prior to Closing had,
any Five Percent Shareholder.
(xx) (i) Buyer shall have amended Buyer's Stock Option
Plan in a manner such that the execution, delivery and performance of
this Agreement and the consummation of the
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<PAGE> 30
transactions contemplated hereby shall not result in any increase in
the number of stock options held by each holder of stock options as of
the date of this Agreement, and (ii) each holder of stock options
received pursuant to Buyer's Stock Option Plan shall have consented to
such amendment.
(xxi) Buyer shall have established Employee Benefit Plans
to cover the Hired Employees in accordance with the provisions of
Section 8(m).
4. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer as follows:
(a) Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has or prior to the Closing will have all requisite corporate power and
authority to enter into this Agreement and the Ancillary Agreements as are
contemplated hereby to be executed and delivered by it and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by Seller to authorize the execution, delivery
and performance of this Agreement and such Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have or
prior to the Closing will have been duly and properly taken. This Agreement
has been duly executed and delivered by Seller, and such Ancillary Agreements
as are contemplated hereby to be executed and delivered by Seller shall be duly
and validly executed and delivered by Seller. This Agreement and such
Ancillary Agreements constitute, or will constitute, as applicable, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms.
(b) No Conflicts. Subject to the matters disclosed on
Schedules 1(b)(iv), 3(a)(iv) and 3(a)(v), the execution and delivery by Seller
of this Agreement and the Ancillary Agreements as are contemplated hereby to be
executed and delivered by Seller do not, and the consummation by Seller of the
transactions contemplated hereby and thereby and compliance by Seller with the
terms hereof and thereof will not, conflict with, or result in any violation of
or default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or result in the
creation of any Lien of any kind upon any of the Assets under, or require any
consent, authorization or approval under (A) the Certificate of Incorporation
or By-Laws of Seller, (B) any Contract or (C) any judgment, order or decree or
any material statute, law, ordinance, rule or regulation applicable to the
Plastics Business or the Assets, other than any such conflicts, violations,
defaults, rights or Liens that, individually or in the aggregate would not have
a material adverse effect on Seller, or on the ability of Seller to consummate
the transactions contemplated hereby, and other than any such consents,
authorizations or approvals that may be required by reason of Buyer's
participation in the transactions contemplated hereby.
(c) Title to Tangible Assets Other than Real Property
Interests. Seller has good and valid title to or a valid leasehold interest
in, all of the material tangible assets included in the Assets which are
reflected on the unaudited balance sheet dated January 31, 1996 included in the
Financial Statements or were acquired after January 31, 1996, except those sold
or otherwise
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<PAGE> 31
disposed of since the date hereof in the ordinary course of business
consistent with past practice (collectively, the "Tangible Assets"),
free and clear of all mortgages, liens, security interests or
encumbrances (collectively, "Liens") of any nature whatsoever, except
(i) such as are disclosed on Schedule 4(c) or the other Schedules
hereto, (ii) mechanics', carriers', workmen's, repairmen's or other like
Liens arising or incurred in the ordinary course of business, Liens
arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course
of business, Liens arising in connection with sale-leaseback
transactions and Liens for taxes and other governmental charges which
are not due and payable or which may thereafter be paid without penalty
and (iii) other imperfections of title, restrictions or encumbrances, if
any, which imperfections of title, restrictions or encumbrances do not,
individually or in the aggregate, materially interfere with the
continued use and operation of, or materially detract from the value of,
the Assets to which they relate in the operation of the Plastics
Business as currently conducted (collectively, the "Permitted Liens").
To Seller's knowledge, Seller has in all material respects performed all
the obligations required to be performed by it with respect to all the
Tangible Assets leased by it. This Section 4(c) does not relate to real
property or interests in real property, such items being the subject of
Section 4(d).
(d) Title to Real Property. Schedules 1(b)(iv)
and 1(b)(vii) sets forth a list of all real property and interests in
real property owned in fee or leased by Seller and relating exclusively
to the Plastics Business. Seller has good and insurable fee title to
the Real Property, free and clear of all Liens of any nature whatsoever,
except (i) Permitted Liens, (ii) easements, covenants, rights-of-way
and other similar restrictions of record, (iii) any conditions that may
be shown by a current, accurate survey or physical inspection of the
Real Property made prior to Closing, (iv) current general real estate
taxes and installments for special assessments which are not yet due and
payable, (v) existing leases, licenses and possession or occupancy
agreements set forth on Schedule 4(d), and (vi) (A) zoning, building,
fire, health, environmental and pollution control laws, ordinances,
rules and safety regulations and other similar restrictions,
(B) mortgages, liens, security interests or encumbrances of record and
(C) unrecorded easements, covenants, rights-of-way or other similar
restrictions, none of which items set forth above individually or in the
aggregate materially interfere with the continued use and operation of
the Real Property in the Plastics Business as currently conducted or
materially detract from the value of the Real Property.
(e) Intellectual Property. To Seller's knowledge: (i)
Seller has not interfered with, infringed upon or misappropriated any
intellectual property rights of third parties in the conduct of the Plastics
Business; (ii) Seller has not received any complaint, claim or notice alleging
any such interference, infringement or misappropriation; (iii) no third party
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Plastics Business Intellectual Property Rights; (iv) Seller
owns or has a valid license to use and has the right to transfer and assign all
Plastics Business Intellectual Property Rights; and (v) none of such Plastics
Business Intellectual Property Rights is subject to any Lien (except Liens in
favor of the licensor, sublicensor or other owner of such Plastics Business
Intellectual Property Rights). Except as set forth on Schedule 4(e), to the
knowledge of Seller, no licenses, sublicenses or agreements pertaining to any
such Plastics Business Intellectual Property have been granted or entered into
by or on behalf of
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<PAGE> 32
Seller. For purposes of this Section 4(e), "Plastics Business
Intellectual Property Rights" shall not include any software license or
similar agreement which is generally available to the public.
(f) Contracts. Except as set forth on Schedule 1(b)(iv)
or 1(b)(vii), to the knowledge of Seller, none of the Seller Entities is party
to any written or oral agreement or arrangement as of the date of this
Agreement that relates primarily to the Plastics Business in the following
categories:
(i) employment agreement or employment contract that has
an aggregate future liability in excess of $50,000 and is not
terminable by notice of not more than 60 days for a cost of less than
$50,000;
(ii) employee collective bargaining agreement or other
contract with any labor union;
(iii) covenant not to compete;
(iv) agreement, contract or other arrangement with any
officer, director or senior employee of the Seller Entities (other
than employment agreements covered by clause (i) above or not covered
by clause (i) because such agreements do not meet the thresholds set
forth in clause (i) above);
(v) lease or similar agreement under which any Seller
Entity is a lessor or sublessor of or makes available for use by any
third party, any real property owned or leased by any Seller Entity
and used exclusively in the Plastics Business;
(vi) lease or similar agreement under which (A) the
Seller is a lessee of, or holds or uses any Tangible Assets owned by a
third party and used exclusively in the Plastics Business or (B) the
Seller is a lessor or sublessor of, or makes available for use by any
third party, any Tangible Assets owned or leased by the Seller and
used exclusively in the Plastics Business, in any such case which has
an aggregate future liability in excess of $100,000 and is not
terminable by notice of not more than 60 days for a cost of less than
$100,000;
(vii) (A) continuing contract for the future purchase of
materials, supplies or equipment, (B) management, service, consulting
or other similar type of contract or (C) advertising agreement or
arrangement, in each case relating exclusively to the Plastics
Business and in any such case which has an aggregate future liability
in excess of $100,000 and is not terminable by notice of not more than
60 days for a cost of less than $100,000;
(viii) material license or other agreements relating in
whole or in part to patents, trademarks, tradenames, service marks or
copyrights (including any license or other agree ment under which the
Seller has the right to use any of the same owned or held by a third
party);
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<PAGE> 33
(ix) mortgage, pledge, security agreement, deed of trust
or other document granting a Lien upon the Real Property or the
Tangible Assets; or
(x) other agreement, contract, lease, license,
commitment or instrument exclusively relating to the Plastics Business
to which any Seller Entity is a party or by which any of the assets of
the Plastics Business is bound or subject which has an aggregate
future liability in excess of $100,000 and is not terminable by notice
of more than 60 days for a cost of less than $100,000.
Except as disclosed on Schedule 1(b)(iv) or Schedule 4(f), to the knowledge of
Seller, each material Contract is (x)a valid and binding obligation of Seller,
(y) in full force and effect and (z) enforceable by the Seller in accordance
with its terms, except as such enforceability may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (B) general
principles of equity (whether considered in an action in equity or at law).
Except as disclosed on Schedule 4(f), to the knowledge of Seller, Seller has
performed all material obligations required to be performed by it to date under
the Contracts and, to the knowledge of Seller, Seller is not (with or without
the lapse of time or the giving of notice or both) in any breach or default in
any material respect thereunder and, to the knowledge of Seller, no other party
to any of the material Contracts is in breach or default in any material
respect thereunder.
(g) Litigation; Decrees. Schedule 4(g) sets forth a
list, as of the date of this Agreement, of all pending claims, proceedings,
actions or lawsuits of which Seller has received service of process, and to the
knowledge of Seller all threatened claims, proceedings, actions or lawsuits,
which (i) relate to or affect the Plastics Business, (ii) seek any injunctive
relief which would affect Buyer's acquisition, ownership or operation of the
Assets or (iii) directly relate to the transactions contemplated by this
Agreement. To the knowledge of Seller, except as disclosed on Schedule 4(g),
Seller, with respect to the Plastics Business, is not in default under any
material judgment, order or decree of any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, applicable to the Plastics Business or the Assets.
(h) Financial Statements. The pro forma balance sheet
as of October 31, 1995 and the pro forma statements of income and cash flow for
the year ended October 31, 1995 and the pro forma balance sheet as of January
31, 1996, prepared on the basis described in the notes thereto (the "Financial
Statements") are attached hereto as Schedule 4(h). The Financial Statements to
the knowledge of Seller, present fairly the consolidated financial condition
and results of operations and cash flow of the Plastics Business as at the
dates and for the periods then ended, except as otherwise provided in the notes
thereto.
(i) Compliance with Applicable Laws. Without in any way
limiting or modifying the scope of the other representations and warranties of
Seller, except as set forth on Schedule 4(i), to the knowledge of Seller the
Plastics Business is being conducted in compliance in all respects with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
governmental authority
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<PAGE> 34
or instrumentality (including, without limitation, all applicable
environmental laws, rules and regulations) the noncompliance of which
would have a material adverse effect on the Plastics Business taken as a
whole. Except as set forth on Schedule 4(i), to the knowledge of
Seller, since December 31, 1995 to the date of this Agreement, Seller
has not received any written communication from a governmental authority
that alleges that the Plastics Business is not in compliance, in all
respects, with all applicable federal, state, foreign or local laws,
rules and regulations (including, without limitation, all applicable,
environmental laws, rules and regulations), the noncompliance with which
would have a material adverse effect on the Plastics Business taken as a
whole.
(j) Asset Sufficiency. To the knowledge of Seller,
except as disclosed on Schedule 4(j) and except for the Excluded Assets, the
Assets include all of the Tangible Assets and all of the trade secrets,
know-how, processing procedures and the Plastic Business Intellectual Property
currently used by Seller that, together with Buyer's rights under Section 8(b)
and Section 9 and under the Ancillary Agreements, are necessary to manufacture
the Products in substantially the same manner as the Products were manufactured
by Seller since December 31, 1995 to the date of this Agreement.
(k) Seller's Employee Benefit Plans. For purposes of
this Agreement, "Employee Benefit Plan" means any (a) qualified or nonqualified
"Employee Pension Benefit Plan" (as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); (b)
"Employee Welfare Benefit Plan" (as such term is defined in Section 3(1) of
ERISA), or (c) fringe benefit plan, policy, program, and arrangement, whether or
not subject to ERISA; provided that "Employee Benefit Plan" shall not include
any "Multiemployer Plan" (as that term is defined in Section 3(37) of ERISA).
Schedule 4(k) sets forth a true, complete and correct list of all Employee
Benefit Plans and Multiemployer Plans that Seller maintains, to which it
contributes, or to which it has an obligation to contribute covering employees
and former employees of Seller at its Plastics Business (collectively, the
"Seller Plans" and individually, a "Seller Plan").
(l) Condition of Assets. To the knowledge of Seller, as
of the date of this Agreement and ordinary wear and tear excepted, none of the
items of machinery and equipment constituting a part of the Equipment and
having a fair market value exceeding $1,000,0000 is operating with any
significant and extraordinary defects that would cause Seller to have to
expend, as of the date of this Agreement, more than $100,000 on any one such
item of machinery and equipment in order for such item of machinery and
equipment to no longer operate with significant and extraordinary defects.
(m) Absence of Undisclosed Liabilities. To the
knowledge of Seller, Seller will not on the Closing Date be subject to any
obligation or liability of whatever kind and nature (whether accrued, absolute,
contingent, direct, indirect, primary, or secondary, whether due or to become
due and regardless of when asserted) arising out of transactions entered into
at or prior to the Closing, or any action or inaction of the Seller Entities at
or prior to the Closing, or any state of facts existing at or prior to the
Closing and exclusively relating to the Plastics Business other than (A)
liabilities
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<PAGE> 35
reflected on the Closing Date Balance Sheet, (B) obligations and
liabilities under the Contracts and (C) obligations and liabilities
disclosed on Schedule 4(m) and in the other Schedules hereto.
5. Covenants of Seller. Seller covenants and agrees as
follows:
(a) Access. Prior to the Closing, Seller shall grant to
Buyer or cause to be granted to Buyer and its representatives, employees,
counsel and accountants reasonable access, during normal business hours and
upon reasonable notice, to the personnel, properties, books and records of
Seller relating to the transition of the Plastics Business to Buyer; provided,
however, that such access does not unreasonably interfere with the normal
operations of Seller or the Plastics Business; and provided further, however,
that all requests for access shall be directed to Thomas M. Hough, Vice
President and Treasurer of Seller, or such other Person as Seller may designate
from time to time. Buyer shall indemnify and hold Seller and its affiliates
and their respective officers, shareholders, directors and employees harmless
against any and all losses, liabilities, expenses and damages or actions or
claims with respect thereto suffered or incurred by Seller and its affiliates
or any of their respective officers, shareholders, directors and employees,
arising out of, or with respect to, Buyer's or its representatives', agents' or
employees' exercise of Buyer's rights under this Section 5(a). Notwithstanding
any provision in this Agreement to the contrary, Buyer's indemnity under this
Section 5(a) shall survive the termination of this Agreement and the
consummation of the transactions contemplated hereby.
(b) Ordinary Conduct. Except as permitted by the terms
of this Agreement or as set forth in Schedule 5(b), from the date hereof to the
Closing, Seller will cause the Plastics Business to be conducted in the
ordinary course consistent with past practice and will make all reasonable
efforts consistent with past practices to preserve its relationship with its
third party customers and suppliers with whom Seller deals in connection with
the Plastics Business. Except as provided in this Agreement or Schedule 5(b),
from the date hereof until the Closing, Seller will not do any of the following
without the prior written consent of Buyer:
(i) make any material change in the conduct of the
Plastics Business;
(ii) sell, lease, license or otherwise dispose of, any
interest in any of the Assets, except for sales of inventory in the
ordinary course of business consistent with past practice and except
for any such sales, leases, licenses or other dispositions in the
ordinary course of business which do not exceed $250,000 in the
aggregate;
(iii) permit, allow or subject any of the Assets or any
part thereof to any Lien or suffer such to be imposed, except for
Permitted Liens;
(iv) enter into any new, or amend or terminate any
existing, Contracts, other than in the ordinary course of business
consistent with past practices;
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<PAGE> 36
(v) grant to any Hired Employee any increase in
compensation or benefits, except as may be required under existing
agreements or in the ordinary course of business consistent with past
practice;
(vi) make any change in any method of accounting or
accounting practice or policy currently used in the preparation by
Seller of financial statements of the Plastics Business other than
those required by generally accepted accounting principles; or
(vii) enter into any agreement, whether in writing or
otherwise, to do any of the foregoing.
6. Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller as follows:
(a) Authority; No Conflicts.
(i) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland and, subject to the simultaneous closing of
the purchase and sale of the Assets contemplated hereby, on the
Closing Date shall be duly organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer
has or prior to the Closing Date will have all requisite
corporate power and authority to enter into this Agreement and
the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by Buyer (including its
shareholders) to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and
thereby and all other actions contemplated by the Buyer
Resolutions have been or prior to the Closing Date will be,
duly and properly taken. This Agreement has been duly executed
and delivered by Buyer, and the Ancillary Agreements to be
executed and delivered by Buyer shall be duly and validly
executed and delivered by Buyer. This Agreement and the
Ancillary Agreements constitute, or will constitute, as the
case may be, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms.
(ii) Subject to the matters described in Schedule
3(a)(iv) and 3(a)(v), the execution and delivery by Buyer of this
Agreement and the Ancillary Agreements do not, and the consummation by
Buyer of the transactions contemplated hereby, thereby and by the
Buyer Resolutions and compliance by Buyer with the terms hereof and
thereof will not, conflict with, or result in any violation of or
default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien of any kind upon any of the
properties or assets of Buyer or any of its affiliates under, or
require any consent, authorization or approval under any provision of
(A) the Articles of Incorporation or By-laws of Buyer or any of its
affiliates as in effect as of the date hereof, and as hereafter
amended as contemplated hereby, (B) any
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note, bond, mortgage, indenture, deed of trust, license, lease,
contract, document, instrument, commitment, plan (employee benefit or
otherwise), agreement or arrangement, whether written or oral, to
which Buyer or any of its affiliates is a party or by which any of its
or their properties or assets are bound (the "Buyer Contracts"), or
(C) any judgment, order or decree, or any material statute, law,
ordinance, rule or regulation applicable to Buyer or any of its
affiliates or its property or assets other than any such conflicts,
violations, defaults, rights or Liens that, individually or in the
aggregate, would not have a material adverse effect on the Buyer or on
the ability of Buyer to consummate the transactions contemplated
hereby, and other than any such consents, authorizations or approvals
that may be required by reason of Seller's participation in the
transactions contemplated hereby.
(b) Capital Stock.
(i) As of the Closing and immediately thereafter, the
authorized capital stock of Buyer shall consist of 50,000,000 shares
of Common Stock, of which 9,474,600 shares shall be issued and
outstanding. Except as set forth on Schedule 6(b)(i), as of the
Closing, Buyer shall not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or
securities containing any profit participation features, nor shall it
have outstanding any rights or options to subscribe for or to purchase
its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or
phantom stock plans. As of the Closing and immediately thereafter,
Buyer shall not be subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its capital
stock or any warrants, options or other rights to acquire its capital
stock. As of the Closing and immediately thereafter, all of the
outstanding shares of Buyer's capital stock shall be validly issued,
and, assuming, in the case of the shares of Common Stock to be issued
pursuant to Section 1(f), valid transfer of the Assets, fully paid and
nonassessable.
(ii) There are no statutory or, to the best of Buyer's
knowledge, contractual stockholders preemptive rights or rights of
refusal with respect to the issuance of the Common Stock hereunder.
Buyer has not violated and will not violate any applicable federal or
state corporate or securities laws, rules or regulations in connection
with the offer, sale or issuance of any of its capital stock, its
reincorporation into Delaware or its amendment of its Articles of
Incorporation or By-Laws, as contemplated hereby, or any applicable
state securities laws. Except as set forth on Schedule 6(b)(ii),
Buyer's Articles of Incorporation and By-Laws, as in effect on the
Closing Date, shall be enforceable on all stockholders of Buyer and no
present or former stockholder of Buyer shall have any appraisal
rights, except as set forth on Schedule 6(b)(iii), or other recourse
against Buyer as a result of the transactions contemplated by this
paragraph. Except as otherwise set forth on Schedule 6(b)(iv), to the
best of Buyer's knowledge, there are no agreements between Buyer's
stockholders with respect to the voting or transfer of Buyer's capital
stock or with respect to any other aspect of Buyer's affairs.
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<PAGE> 38
(c) Subsidiaries; Investments. Except as set forth on
Schedule 6(c), Buyer does not own or hold any rights to acquire any shares of
stock or any other security or interest in any other Person (including, without
limitation, a subsidiary).
(d) Financial Statements. Schedule 6(d) sets forth
Buyer's consolidated balance sheet, income statement and statement of cash
flows as of and for the period ended December 31, 1995, in each case together
with the notes thereto (collectively, the "Buyer Financial Schedules"). The
Buyer Financial Schedules have been derived from the accounting books and
records of Buyer and its affiliates and to the knowledge of Buyer, present
fairly in all material respects the consolidated financial position and the
results of operations and cash flow of Buyer and its subsidiaries as of and for
the period ended December 31, 1995, in each case in accordance with United
States generally accepted accounting principles, consistently applied, except
as otherwise provided in the notes to the Buyer Financial Schedules.
(e) Absence of Undisclosed Liabilities. To the
knowledge of Buyer, Buyer and its subsidiaries do not (and on the
Closing Date will not) have any obligation or liability of whatever kind
and nature (whether accrued, absolute, contingent, direct, indirect,
primary, secondary, unliquidated or otherwise, whether or not known to
Buyer or any subsidiary, whether due or to become due and regardless of
when asserted) arising out of transactions entered into at or prior to
the Closing, or any action or inaction at or prior to the Closing, or
any state of facts existing at or prior to the Closing other than: (i)
liabilities reflected on the latest balance sheet provided by Buyer
pursuant to Section 6(d) above (the "Latest Balance
Sheet"),(ii)liabilities and obligations to third parties which have
arisen after the date of the Latest Balance Sheet in the ordinary course
of business or in connection with the transactions contemplated hereby,
and liabilities under employment agreements in effect on the date hereof
for base salary and benefits as described therein (without giving effect
to any amendment or modification thereof).
(f) Absence of Certain Developments. Since the date of
the Latest Balance Sheet to the date of this Agreement, neither Buyer nor any
of its subsidiaries has, and since the date of the Latest Balance Sheet to the
Closing Date, neither Buyer nor any of its subsidiaries will have:
(i) issued any notes, bonds, capital stock or other
securities of any kind;
(ii) borrowed any amount or incurred or become subject to
any liabilities except as enumerated in Section 6(e);
(iii) declared or made any payment or distribution of cash
or other property to its security holders with respect to its
securities or purchased or redeemed any shares of its securities;
(iv) subjected any of its properties or assets to any
Lien;
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<PAGE> 39
(v) sold, assigned or transferred any of its assets for
other than fair value in exchange for cash, or acquired any new
assets, rights or interests, other than cash;
(vi) made capital expenditures or commitments therefor
that aggregate in excess of $10,000;
(vii) made any charitable contributions or pledges;
(viii) hired any employees to perform services for Buyer or
increased any compensation or other amounts payable to any employees;
or
(ix) entered into a new, or modified or terminated any
existing, Buyer Contract;
(x) entered into any other transaction other than in the
ordinary course of business and in furtherance of consummating the
transactions contemplated hereby or entered into any other material
transaction, whether or not in the ordinary course of business; or
(xi) agreed (whether in writing or otherwise) to do any
of the foregoing.
(g) Assets. Except as set forth on the Latest Balance
Sheet, Buyer does not own any assets. On the Closing Date, Buyer will own no
assets other than assets set forth on the Latest Balance Sheet and cash. Buyer
has good and marketable title to all of the assets listed on the Latest Balance
Sheet, free and clear of all Liens, except for properties and assets disposed
of in the ordinary course of business for fair value since the date of the
Latest Balance Sheet and except for Liens disclosed on the Latest Balance Sheet
(including any notes thereto).
(h) Contracts. Except for this Agreement, the Ancillary
Agreements or as set forth on the attached Schedule 6(h)(i), to the knowledge
of Buyer, neither Buyer nor any subsidiary is a party to or bound by any Buyer
Contract. All of the Buyer Contracts other than those designated with an
asterisk beside its name shall be terminated by Buyer without any premium or
penalty no later than 30 days prior to the Closing. Except as set forth on
Schedule 6(h)(ii), all of the Buyer Contracts designated with an asterisk
beside its name may be terminated by Buyer without any premium or penalty on no
more than 30 days prior written notice. All of the Contracts set forth on
Schedule 6(h)(i) are valid, binding and enforceable in accordance with their
respective terms. Except as set forth on Schedule 6(h)(iii), to the knowledge
of Buyer, Buyer and its subsidiaries have performed all material obligations
required to be performed by them to date under the Buyer Contracts and have not
received written notice of any breach or default in any material request
thereunder.
(i) Intellectual Property. Buyer does not (and on the
Closing Date will not) own or posses rights to any Intellectual Property.
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<PAGE> 40
(j) Reports with the Securities and Exchange Commission.
Buyer has furnished Seller with complete and accurate copies of its annual
report on Form 10-K for its three most recent fiscal years, and has furnished
or will furnish promptly after filed all other reports or documents required to
be filed by Buyer with the Securities and Exchange Commission since the filing
of the most recent annual report on Form 10-K and its most recent annual report
to its stockholders up to the Closing Date. Such reports and filings do not as
of the date of hereof (other than to the extent any representation, warranty or
disclosure made or given pursuant to this Agreement, the Schedules hereto or
any document delivered pursuant hereto revises, supersedes or is inconsistent
with the statements made therein) contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Buyer has made and
will make all filings with the Securities and Exchange Commission which it is
required to make, and Buyer has not received any request from the Securities
and Exchange Commission to file any amendment or supplement to any of the
reports described in this paragraph.
(k) Tax Matters.
(i) Buyer has timely filed (including extensions) all
Tax Returns required to be filed by it, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and
all such Tax Returns are true and accurate in all respects. All Taxes
due and payable by Buyer have been paid whether or not such Taxes are
required to be shown on a Tax Return.
(ii) Except as set forth in Schedule 6(k)(i) attached
hereto:
(A) Buyer has not requested or been granted an
extension of the time for filing any Tax Return which has not
yet been filed or consented to extend to a date later than
the date hereof the time in which any Tax may be assessed or
collected by any taxing authority;
(B) no taxable period of the Buyer is currently
under audit and the Buyer has not filed an extension of the
period for assessment of any taxes with any taxing authority;
(C) no deficiency or proposed adjustment which
has not been settled or otherwise resolved for any amount of
Tax has been proposed, asserted or assessed by any taxing
authority against Buyer and there is no action, suit, taxing
authority proceeding or audit now in progress, pending or, to
Buyer's knowledge, threatened against or with respect to
Buyer;
(D) Buyer has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party;
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<PAGE> 41
(E) Buyer does not reasonably expect any taxing
authority to claim or assess any amount of additional Taxes
against Buyer;
(F) no claim has ever been made by a taxing
authority in a jurisdiction where Buyer does not file Tax
Returns that Buyer is or may be subject to Taxes assessed by
such jurisdiction;
(G) Buyer has not been a member of an
Affiliated Group other than one of which Buyer was the common
parent, or filed or been included in a combined, consolidated
or unitary income Tax Return, other than one filed by Buyer;
(H) the Assumed Liabilities do not include any
obligation to make any payments that will be nondeductible
under Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law);
(I) the net operating loss ("NOL") of Buyer
available to be carried forward for federal income tax
purposes at December 31, 1995 was not less than $31,717,000
and at the Closing, shall not be less than $ $31,717,000; and
the capital loss carryforward of Buyer available to be
carried forward for federal income tax purposes at December
31, 1995 was not less than $4,811,000, and at the Closing
will not be less than $4,811,000, assuming in each case that
the tax year of Buyer ended at the Closing after giving
effect to the transaction contemplated hereby;
(J) the NOL's arose in the years set forth in
Schedule 6(k)(ii) in the amounts set forth therein;
(K) Buyer, since its inception through the tax
year ending December 31, 1995 has been and is a Real Estate
Investment Trust as defined in Code Section 856 ("REIT").
During such period, the Buyer has fully satisfied all of the
requirements for REIT status as set out in Code Sections
856-859, including all formation and operating requirements;
(L) To the knowledge of Buyer, Buyer has not
undergone an ownership change within the meaning of Code
Section 382 with respect to any of its NOL's described in
clauses (I) and (J) above. Buyer does not have, and has not
had since January 1, 1993, any Five Percent Shareholder; and
(M) no adverse tax consequences shall result
from Buyer revoking its election and/or ceasing to be a REIT
pursuant to Code Section 856(c) other than that Buyer shall no
longer be entitled to claim a dividend paid deduction
pursuant to Code Section 561 et. seq.
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<PAGE> 42
(iii) Schedule 6(k)(iii) contains a list of states,
territories and jurisdictions (whether foreign or domestic) in which
Buyer is required to file Tax Returns.
(l) Buyer's Employee Benefit Plans. Buyer does not
maintain, contribute to, have an obligation to contribute to, or have any other
liability or potential liability with respect to any Employee Benefit Plan or
any Multiemployer Plan, whether or not terminated, other than the Rymac Salary
Reduction Simplified Employee Pension Plan (the "SEP"). For purposes of this
Section 6(1), the term "Buyer" includes the Buyer and each member of the
controlled group of companies (within the meaning of Section 414 of the Code)
of which Buyer is a member.
(i) The SEP and all related trusts, insurance contracts,
and funds have been maintained, funded and administered in compliance
in all material respects with all applicable laws and regulations,
including but not limited to ERISA and the Code. No transaction has
occurred with respect to any Buyer Plan which could subject Buyer,
Seller, or any trustee or administrator of the SEP, or any party
dealing with the SEP, to any tax or penalty imposed by ERISA or the
Code. No actions, suits, claims, complaints, charges, proceedings,
hearings, investigations, or demands with respect to the SEP (other
than routine claims for benefits) are pending or threatened, and Buyer
has no knowledge of any facts which could give rise to or be expected
to give rise to any actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands. Buyer has no
liability or potential liability to the Pension Benefit Guaranty
Corporation (the "PBGC"). None of the assets of Buyer is the subject
of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code, Buyer has not been required to post any security pursuant to
Section 307 of ERISA or Section 401(a)(29) of the Code, and Buyer has
no knowledge of any facts which could be expected to give rise to such
lien or such posting of security.
(ii) No underfunded "Defined Benefit Plan" (as such term
is defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
companies (within the meaning of Code Section 414) of which Buyer is a
member or was a member during such five-year period.
(iii) With respect to the SEP, all required or recommended
payments, premiums, contributions, or accruals for all periods ending
prior to or as of the Closing Date shall have been made or properly
accrued.
(iv) With respect to the SEP, Buyer has provided Seller
with true, complete and correct copies, to the extent applicable, of
(A) all documents pursuant to which the SEP is maintained, funded and
administered, (B) the three most recent financial statements, and (C)
all governmental rulings, determinations, and opinions (and pending
requests for governmental rulings, determinations, and opinions),
including, but not limited to, all Internal Revenue Service approval
and opinion letters and private letter rulings.
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<PAGE> 43
(m) Litigation; Decrees. Except as set forth on the
Schedule 6(m) delivered to Seller as of the date of this Agreement, there is no
(and as of the Closing Date there shall be no) pending, or to the knowledge of
Buyer, threatened, claims, proceedings, actions or lawsuits against Buyer or
any of its subsidiaries.
(n) Compliance with Applicable Laws. Without in any way
limiting or modifying the scope of the other representations and warranties of
Buyer, except as set forth on Schedule 6(n), (i) to Buyer's knowledge the
business of Buyer is being conducted in compliance in all material respects
with all applicable statutes, laws, ordinances, rules, orders and regulations
of any governmental authority or instrumentality; and (ii) Buyer has not
received and prior to the Closing Date will not have received any written
communication from a governmental authority that alleges that its business is
not in compliance, in all material respects, with all material federal, state,
foreign or local laws, rules and regulations.
(o) Guidelines or Policies. Except as set forth on
Schedule 6(o), Buyer's board of directors have not adopted any policies or
guidelines (investment or otherwise). Buyer's board of directors shall take
such action as is necessary and appropriate to permit consummation of the
transactions contemplated hereby and operation by Buyer of the Plastics
Business after the Closing Date.
7. Covenants of Buyer. Buyer covenants as follows:
(a) Confidentiality.
(i) Buyer acknowledges that all information provided to
any of it and its affiliates, agents and representatives by Seller and
its affiliates, agents and representatives is subject to the terms of
a confidentiality agreement dated December 4, 1995 between Seller and
Buyer or one of its affiliates or other beneficial owners (the
"Confidentiality Agreement"), the terms of which are hereby
incorporated herein by reference. Effective upon, and only upon, the
Closing, the Confidentiality Agreement shall terminate provided,
however, that Buyer acknowledges that the Confidentiality Agreement
shall terminate only with respect to information provided to Buyer or
its affiliates, agents or representatives that relates solely to the
Plastics Business, the Assets and the Assumed Liabilities; and
provided further, however, that Buyer acknowledges that any and all
information provided or made available to it and its affiliates,
agents and representatives by or on behalf of Seller concerning the
Seller Entities (other than information relating solely to the
Plastics Business, the Assets and the Assumed Liabilities) that is not
publicly available shall remain subject to the terms and conditions of
the Confidentiality Agreement after the Closing Date.
(ii) Buyer agrees that, after the Closing Date, Buyer
shall, and shall use all reasonable efforts to cause its directors,
officers, employees, advisors and affiliates to, at all times keep the
Seller Information confidential following the Closing Date, except
that any such Seller Information required by law or legal or
administrative process to be disclosed
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<PAGE> 44
may be disclosed without violating the provisions of this Section
7(a)(ii). For purposes of this Agreement, the term "Seller
Information" shall mean all information concerning the Seller
Entities, other than information that relates solely to the Plastics
Business, the Assets and the Assumed Liabilities and other than any
such information that is available to the public on the Closing
Date, or thereafter becomes available to the public other than as a
result of a breach of this Section 7(a)(ii).
(b) No Additional Representations. Buyer acknowledges
that none of the Seller Entities nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Assets, the Assumed Liabilities
or the Plastics Business, except for the representations and warranties
expressly set forth in this Agreement which shall expire at the Closing, and
Buyer further agrees that none of the Seller Entities nor any other Person will
have or be subject to any liability to Buyer or any other Person resulting from
the distribution to Buyer, or Buyer's use of, any information, including the
Information Memorandum prepared by Hellmold Associates, Inc. dated November
1995 (the "Information Memorandum") and any information, document, or material
made available to Buyer in certain "data rooms," management presentations or
any other form in expectation of the transactions contemplated by this
Agreement.
(c) Board of Directors; Officers. Buyer shall cause the
actions contemplated by Sections 3(b)(xiii) and 3(b)(xiv) to occur effective as
of the Closing Date. Promptly after the date of this Agreement, Buyer shall
provide to Seller a plan and procedure reasonably satisfactory to Seller that
describes how Buyer shall cause such actions to occur.
(d) Certain Other Actions. Buyer covenants and agrees
that it will take or omit to take all actions required to be taken by it in
order to cause its representations and warranties contained herein to be and
remain true and correct in all material respects on and as of the date made.
(e) New IAM Agreement. Buyer shall use its
reasonable efforts to negotiate and enter into a collective bargaining
agreement with the IAM for the employment of IAM represented employees
of Buyer at the Plastic Business that is in form and substance
satisfactory to Seller and Buyer.
8. Additional Covenants. Seller and Buyer covenant and
agree as follows:
(a) Proxy Statement/Prospectus; Registration Statement.
Buyer shall cause to be prepared and filed with the Securities and Exchange
Commission a preliminary draft of its proxy statement/prospectus to be used in
connection with the special meeting of stockholders of Buyer to solicit the
requisite approval of the transactions contemplated hereby (the "Proxy
Statement/Prospectus") as soon as practicable after the date hereof. Buyer
shall use its best efforts, and Seller shall cooperate with Buyer's efforts, to
prepare and file such preliminary draft and to respond to the comments of the
staff of the Securities and Exchange Commission in connection therewith and to
furnish all information required from it to prepare the definitive Proxy
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<PAGE> 45
Statement/Prospectus. Seller shall cooperate with Buyer in its efforts to have
such Registration Statement declared effective. Promptly after the
effectiveness of the registration statement of the Buyer, Buyer shall cause the
definitive Proxy Statement/Prospectus, together with appropriate proxies (the
"Definitive Proxy Statement/Prospectus"), to be mailed to its stockholders,
and, if necessary, after the definitive Proxy Statement/Prospectus shall have
been mailed, promptly circulate amended, supplemented or supplemental proxy
materials, and, if required in connection therewith, resolution proxies.
Except as otherwise provided herein, each of the parties, at its own expense,
shall furnish the other with all information concerning itself, its directors,
officers, stockholders and properties (including audited financial statements)
and such other matters as may be necessary or advisable for the preparation of
the registration statement, the Proxy Statement/Prospectus, and any filings
under state blue sky laws in connection with the transactions contemplated by
this Agreement. Buyer acknowledges that Seller is providing information to
Buyer pursuant to this Section 8(a) solely as an accommodation to Buyer and,
except as otherwise explicitly provided herein, Seller shall have no obligation
or liability to Buyer, its affiliates and their stockholders, officers,
directors and agents for any information provided by Seller pursuant to this
Section 8(a).
(b) Consents.
(i) Buyer acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from
parties to the Contracts and such consents have not been obtained.
Buyer agrees Seller shall not have any liability whatsoever to Buyer
arising out of or relating to the failure to obtain any consents that
may have been or may be required in connection with the transactions
contemplated by this Agreement or because of the default, acceleration
or termination of any Contract as a result thereof. Buyer further
agrees that no representation, warranty or covenant of Seller
contained herein shall be breached or deemed breached and no condition
of Buyer (other than the conditions set forth in Sections 3(a)(iv) and
3(a)(v)) shall be deemed not to be satisfied as a result of (A) the
failure to obtain any consent or as a result of any such default,
acceleration or termination or (B) any lawsuit, action, claim,
proceeding or investigation commenced or threatened by or on behalf of
any Persons arising out of or relating to the failure to obtain any
consent or any such default, acceleration or termination. At Buyer's
written request prior to the Closing, Seller shall cooperate with
Buyer in any reasonable manner in connection with Buyer's obtaining
any such consents; provided, however, that such cooperation shall not
include any requirement of the Seller Entities to expend money,
commence any litigation or offer or grant any accommodation (financial
or otherwise) to any third party.
(ii) With respect to any Contracts that may not be
properly assigned to Buyer because of the failure to obtain a required
consent ("Nontransferable Contracts") with respect to which Buyer has
requested Seller's cooperation in accordance with Section 8(b)(i) and
with respect to which Seller and Buyer are unable to obtain a separate
agreement between Buyer and the other party or parties, Buyer shall
have the right to require that Seller use reasonable efforts to
perform any such Nontransferable Contract, to the extent it relates to
the Plastics Business, as agent for and for the account of Buyer and
shall promptly remit any
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<PAGE> 46
such funds collected for the account of Buyer, for a period up to six
months following the Closing Date; provided that Buyer shall reimburse
Seller (on behalf of itself and as agent for the other Seller
Entities) for any and all costs, expenses, losses and liabilities
incurred by the Seller Entities in connection with taking such action.
(c) Cooperation. Buyer and Seller shall cooperate with
each other and shall cause their respective officers, employees, agents and
representatives to cooperate with each other for a period of 60 days after the
Closing to provide for an orderly transition of the Assets and the Assumed
Liabilities to Buyer and to minimize the disruption to the respective
businesses of the parties hereto resulting from the transactions contemplated
hereby. No party shall be required by this Section 8(c) to take any action
that would unreasonably interfere with the conduct of its business.
(d) Notification. Prior to the Closing, each party
shall promptly notify the other party if such party obtains knowledge that the
representations and warranties of the other party in this Agreement and the
Schedules hereto are not true and correct in all material respects, or if such
party obtains knowledge of any material errors in, or omissions from, the
Schedules of the other party to this Agreement.
(e) Publicity. Seller and Buyer agree that, from the
date hereof through the Closing Date, no public release or announcement
concerning the transactions contemplated hereby (including any announcement
(public or otherwise) to customers, suppliers and other business relations of
Seller) shall be issued or made by any party without the prior consent of the
other party (which consent shall not be unreasonably withheld), except (i) as
such release or announcement may be required by law or the rules or regulations
of any United States securities exchange, and (ii) Seller may make such an
announcement to employees of Seller. Notwithstanding the foregoing, Seller and
Buyer shall cooperate to prepare a joint press release to be issued on the
Closing Date and, upon the request of either Seller or Buyer, at the time of
the signing of this Agreement. Seller and Buyer agree to keep the terms of
this Agreement confidential, except to the extent disclosed as permitted
pursuant to the immediately preceding exception or for financial reporting
purposes and except that the parties may disclose such terms to their
respective accountants and other representatives as necessary in connection
with the ordinary conduct of their respective businesses (so long as such
Persons agree to keep the terms of this Agreement confidential).
(f) Governmental Approvals. Buyer and Seller shall each
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice, to the extent applicable, any notifications
required to be filed under the HSR Act with respect to the transactions
contemplated hereby, and any other acts, statutes, legislation or regulations
as may be applicable with respect to the transactions contemplated hereby.
Buyer and Seller shall bear the costs and expenses of their respective filings;
provided that Buyer shall pay all filing fees in connection therewith. Buyer
and Seller shall use their respective best efforts to make such filings
promptly (and in any event within 30 business days) following the date hereof,
to respond to any requests for additional information made by any applicable
agencies and to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date and to resist in good faith, at each of
their
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<PAGE> 47
respective cost and expense (including the institution or defense of
legal proceedings), any assertion that the transactions contemplated hereby
constitute a violation of applicable antitrust or competition laws, all to the
end of expediting consummation of the transactions contemplated hereby.
(g) Sales and Transfer Taxes, etc. Buyer shall pay all
Taxes, duties or expenses that may be imposed as a result of the sale and
transfer of the Assets, and all filing fees that may be required to be paid in
connection with the consummation of the transactions contemplated hereby,
together with any and all penalties, interest and additions to tax with respect
thereto, and Seller and Buyer shall cooperate (and Seller shall cause the
Seller Entities to cooperate) in timely making all filings, returns, reports
and forms as may be required to comply with the provisions of such laws. Buyer
and Seller shall also cooperate in providing each other with appropriate resale
exemption certifications and other similar tax and fee documentation.
(h) Supply Agreement. At the Closing, Buyer and Seller
shall execute and deliver the form of Supply Agreement attached hereto as
Exhibit C (the "Supply Agreement").
(i) Registration Rights Agreements. At the Closing,
Buyer and Seller shall execute and deliver the form of Registration Rights
Agreement attached hereto as Exhibit D (the "Registration Rights Agreement").
(j) Transition Services Agreement. At the Closing,
Buyer and Seller shall execute and deliver the form of Transition Services
Agreement attached hereto as Exhibit E (the "Transition Services Agreement").
(k) Employees. Buyer shall offer to employ those
employees of Seller who are currently employed by Seller at the Plastics
Business and who are not represented by a union, including such employees who
are absent from active employment for any reason as of the Closing Date. All
such employees who become Buyer's employees effective on the Closing Date are
referred to herein as the "Hired Employees". Buyer shall employ the Hired
Employees at the same salary and wages, and with the benefits that are
identical in all material respects, as provided by Seller immediately prior to
the Closing Date; provided, however, that Buyer shall not be required to
establish or maintain any Employee Welfare Benefit Plan for any Hired Employee
that provides post-retirement medical, dental or life insurance benefits.
Nothing in this Agreement shall limit Buyer's right, at any time, to modify,
amend or terminate any salary and wages payable, or benefit provided,
to any or all Hired Employees on or after the Closing Date, including without
limitation any Employee Welfare Benefit Plan or any Employee Pension Benefit
Plan, to the extent permitted by law. Seller shall terminate the employment of
all Hired Employees effective as of the Closing. Seller makes no
representation as to whether any such employee will accept employment with
Buyer. Seller assumes all liability for and shall indemnify, defend and hold
Buyer harmless from and against any Losses (as defined in Section 10(a)) for
any severance liability with respect to employees of Seller as of the Closing
Date under the terms of any severance policy, practice or plan of Seller, which
liability is triggered by or results from Seller's termination of each such
employee's employment with Seller effective as of the Closing Date, without
regard to whether any such
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employee accepts employment with Buyer. Schedule 8(k) sets forth a list
of each employee of Seller at the Plastics Business who is not
represented by a union, his or her date of hire, title, hourly rate of
pay or base salary and target bonus, as applicable and if any such
employee is absent from active employment with Seller as of the Closing
Date, the reason for the absence and estimated date returning to active
employment.
(l) IAM Agreement.
(i) Buyer will negotiate a collective
bargaining agreement with the IAM for the employment of
IAM-represented employees by Buyer at the Plastics Business.
Seller and Buyer recognize that certain IAM-represented
employees of Seller who are on the Closing Date eligible to
receive a pension benefit other than a deferred vested
benefit (or would be eligible to receive such pension benefit
if they did not accept employment in a position covered by
the IAM Multiemployer Plan) will be eligible for
post-retirement benefits under the Navistar International
Transportation Corp. Retirement Health Benefit and Life
Insurance Plan which was established by Seller pursuant to
Shy v. Navistar. Buyer will reimburse Seller for its cost of
such coverage for any IAM-represented employees hired by
Buyer on a pro rata basis based on the time of service with
Buyer compared to the total time of service with Seller and
Buyer. Other than Shy post-retirement benefits for
retirement-eligible employees, Buyer assumes all liability
for any post-retirement benefit liability arising from the
transactions contemplated by this Agreement or the employment
of any IAM-represented employee hired by Buyer, and Seller
will not assume any such liability or reimburse Buyer for any
amount of such liability. In the event that Seller is liable
for any amount for which Buyer is not also liable for any
post-retirement benefit for any IAM-represented employee
hired by Buyer, Buyer will reimburse Seller for a pro rata
portion of Seller's liability based on the time of the
employee's service for Buyer compared to the total time of
service with Seller and Buyer. If Buyer's collective
bargaining agreement with the IAM provides for the
establishment of a Section 401(k) plan for the employees
subject to the agreement, the agreement shall permit, and
Buyer shall cause its Section 401(k) plan to accept a
trust-to-trust transfer of the assets and liabilities
(including participant loans and amounts payable to alternate
payees under qualified domestic relations orders, but not
including any in-kind transfer of any Navistar International
Corporation stock) of Seller's Section 401(k) plan, with
respect to the IAM-represented employees hired by Buyer,
valued as of such date as Seller may reasonably determine.
Buyer shall establish its Section 401(k) plan timely and in a
form meeting the qualification requirements of the Internal
Revenue Code and provide such evidence to Seller as Seller may
reasonably request as to such qualification so as to permit
Seller to transfer timely the assets and liabilities relating
to the IAM-represented employees hired by Buyer.
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<PAGE> 49
(ii) Buyer agrees that it shall comply with the
requirements of Section 4204 of ERISA with respect to each
Multiemployer Plan described on Schedule 4(k) and, in that
regard, Buyer agrees to (A) contribute to each such
Multiemployer Plan with respect to the operations of Buyer
for substantially the same contribution base units (as set
forth in the collective bargaining agreement in effect
immediately prior to the Closing Date between Seller and the
IAM) for which Seller had an obligation to contribute to each
such Multiemployer Plan; (B) provide to each such
Multiemployer Plan for a period of five years commencing with
the first plan year beginning after the Closing Date a bond
or other security as described in Section 4204(a)(1)(B) of
ERISA (unless such requirement has been released or waived in
accordance with procedures consistent with Section 4204 of
ERISA), which security, if provided, will be paid to a
Multiemployer Plan if Buyer withdraws from the Multiemployer
Plan or fails to make a contribution to the Multiemployer
Plan when due at any time during the first five years
beginning after the Closing Date; and (C) pay when due any
withdrawal liability assessed as a result of any complete or
partial withdrawal by Buyer during the five-year period
calculated in accordance with Section 4204(b)(1) of ERISA.
Seller agrees that if, during the first five plan years
beginning after the Closing Date, Buyer withdraws in a
complete or partial withdrawal, Seller will be secondarily
liable for any withdrawal liability it would have had to the
Multiemployer Plan with respect to Seller's operations as of
the Closing Date but for the provisions of this Section 8(m).
Upon its dissolution or liquidation, Seller will provide each
Multiemployer Plan set forth on Schedule 4(k) with such
security as is required pursuant to Section 4204(a)(3)(A) of
ERISA, unless a release or waiver of such security shall be
granted by the Multiemployer Plan or the PBGC consistent with
the requirements of Section 4204(a)(3)(A) of ERISA. For
purposes of the immediately preceding sentence, the term
"Seller" shall mean the Seller and any of its affiliates
which meet the definition of "single employer" for purposes
of Section 3(37) of ERISA. Seller and Buyer agree to take all
actions necessary or desirable to assure that no withdrawal
liability arises with respect to each such Multiemployer Plan
by reason of the transactions contemplated by this Agreement.
(m) Employee Benefit Plans for Non-Represented
Employees.
(i) Seller shall retain all assets of, and
liabilities under, the Seller Plans relating to
non-represented employees, and no such Seller Plan or any
assets or liabilities thereof shall be transferred to, or
assumed by, Buyer. Buyer shall establish Employee Benefit
Plans to cover the Hired Employees as of the Closing Date
that are identical in all material respects to the Seller
Plans that covered the Hired Employees immediately prior to
the Closing Date; provided, however, that Buyer shall not be
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<PAGE> 50
obligated under this Agreement to establish or maintain any
Employee Welfare Benefit Plan for the benefit of the Hired
Employees that provides post-retirement medical, dental or
life insurance benefits. Buyer shall have no obligation to
establish any "New Hire Plans" for any Hired Employee, or any
provisions of Sellers Plans that specifically relate to "New
Hires". For the purpose of the preceding sentence, "New Hire
Plans" means plans for employees first hired by Navistar
International Transportation Corp. or an affiliate within the
meaning of Section 414 of the Code on or after January 1,
1996, and "New Hires" means an employee first hired by
Navistar International Transportation Corp. or an affiliate
within the meaning of Section 414 on or after January 1,
1996. Buyer's shall cause its Section 401(k) plan to accept
a trust to trust transfer of the assets and liabilities
(including participant loans and amounts payable to alternate
payees under qualified domestic relations orders, but not
including any in kind transfer of Navistar International
Corporation stock) of Seller's Section 401(k) plan with
respect to the Hired Employees, valued as of such date as
Seller may reasonably determine. Buyer shall establish its
Section 401(k) plan timely and in a form meeting the
qualification requirements of the Code and provide such
evidence to Seller as Seller may reasonably request as to
such qualification so as to permit Seller to transfer timely
the assets and liabilities relating to the Hired Employees.
(ii) Buyer shall waive pre-existing condition
requirements, evidence of insurability provisions, waiting
period requirements or any similar provisions under any
Employee Benefit Plan or compensation arrangements maintained
or sponsored by or contributed to by Buyer for each Hired
Employee after the Closing Date.
(iii) Buyer shall apply toward any deductible
requirements and out-of-pocket maximum limits under Buyer's
Employee Welfare Benefit Plans any amounts paid (or accrued)
by each Hired Employee under Seller's Plans that are Employee
Welfare Benefit Plans during the current plan year.
(iv) Seller and Seller's Plans shall be
responsible for expenses covered by Seller's medical plans;
provided, however, that such expenses were incurred prior to
the Closing Date. Buyer and Buyer's plans shall be
responsible for expenses covered by Buyer's medical plans for
all health and accident claims relating to the Hired
Employees (including, without limitation, claims arising out
out of medical conditions existing at or prior to the Closing
Date) and all Incidents relating to the Hired Employees that
occur or arise on or after the Closing Date. For purposes of
the immediately preceding sentence, the term "Incidents"
includes accident, death, disabilities, diseases and injuries.
Seller and Buyer recognize that certain Hired Employees who
become entitled to a pension benefit other than a deferred
vested benefit under the Navistar International Transportation
Corp. Retirement Plan for
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<PAGE> 51
Salaried Employees are eligible for post-retirement
benefits under the Navistar International Transportation
Corp. Retirement Health Benefit and Life Insurance Plan which
was established by Seller pursuant to Shy v. Navistar.
Buyer will reimburse Seller for its cost of such coverage of
each such Hired Employee on a pro rata basis based on the
time of service with Buyer compared to the total time of
service with Seller and Buyer. Other than the Shy
post-retirement benefits for such Hired Employees, Buyer
assumes all liability for the post retirement benefit
liability arising from this transaction or the employment of
any Hired Employee, and Seller will not assume any such
liability or reimburse Buyer for any amount of such
liability. Notwithstanding any other provision of this
Agreement, Buyer will establish and maintain, or will
maintain, any plan or plans necessary to satisfy such
liability. In the event that Seller is liable for any amount
for which Buyer is not also liable for any post-retirement
benefit for any Hired Employee, Buyer will reimburse Seller
for a pro rata portion of Seller's liability based on the
time of the employee's service for Buyer compared to the
total time of service with Seller and Buyer.
(v) Except as otherwise provided in Section
8(n)(x) below, Seller shall recognize solely for purposes of
vesting under any qualified pension plan of accrued benefits
under the Seller Plans the service of each Hired Employee
with Buyer on and after the Closing Date.
(vi) Buyer shall recognize for purposes of
participation, eligibility to commence receiving benefits
(including early retirement, disability and other subsidized
benefits), vesting and benefit accruals under its Employee
Benefit Plans, the service of each Hired Employee with Seller
or Seller's affiliates prior to the Closing Date and the
service of each Hired Employee with all other prior employers
to the extent such service is credited under the Seller
Plans; provided, however, that Buyer will be permitted to
offset the accrued benefits of each Hired Employee under each
Employee Benefit Plan of Buyer that is an Employee Pension
Benefit Plan by such Hired Employee's vested accrued
benefits, if any, as of the Closing Date under each
corresponding Seller Plan.
(vii) Seller shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section
4980B of the Code, to provide continuation coverage to or with
respect to any employee of Seller as of the Closing Date in
accordance with applicable law with respect to any "qualifying
event" occurring on or prior to the Closing Date, including
any "qualifying event" resulting from the Closing hereunder.
Buyer shall be responsible for satisfying obligations under
Section 601 et seq. of ERISA and Section 4980B of the Code, to
provide continuation coverage to or with
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<PAGE> 52
respect to any Hired Employee in accordance with applicable
law with respect to any "qualifying event" which occurs after
the Closing Date.
(viii) Seller shall be responsible for all salary
accrued but not yet paid as of the Closing Date nor reflected
on the Closing Date Balance Sheet and, if applicable, 1996
bonus accrued but not yet paid as of the Closing Date nor
reflected on the Closing Date Balance Sheet (in an amount
equal to the pro rata portion of such bonus allocable to the
period prior to the Closing Date) with respect to the Hired
Employees, and Buyer shall be responsible for the pro rata
portion of such bonus allocable to the period on and after
the Closing Date.
(ix) Seller shall pursuant to Article II of the
Navistar International Transportation Corp. Income Protection
Plan (the "IPP") extend eligibility for pension grow-in to
each Hired Employee to the extent such employee would be
eligible for pension grow-in under the IPP if such employee
were not hired by Buyer; provided that grow-in will not be
provided unless the Hired Employee either (1) continue
employment with Buyer until attaining retirement age under
the Navistar International Transportation Corp. Retirement
Plan for Salaried Employees, or (2) terminates employment
with Buyer under circumstances that if the termination were
from Seller rather than from Buyer the grow-in provisions of
the IPP would apply to such termination. No other benefits
under the IPP are being extended to any Hired Employee, and
no benefits are being provided under this provision to any
Hired Employee who would not otherwise be eligible for
pension grow-in under the terms and conditions of the IPP.
(n) Miscellaneous Employee Benefit Matters.
(i) Seller shall remain responsible for all
workers' compensation claims of Hired Employees and
IAM-represented employees hired by Buyer with respect to
which all events giving rise to the claim in each case have
occurred prior to the Closing Date without regard to the date
on which such claims are actually reported; provided, however,
that Buyer shall be responsible for all such claims accrued
for and reflected on the Closing Date Balance Sheet. Buyer
shall be responsible for all other workers' compensation
claims of Hired Employees and IAM-represented employees hired
by Buyer, including workers' compensation claims with respect
to which some, but not all, events giving rise to the claim in
each case have occurred prior to the Closing Date.
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<PAGE> 53
(ii) Buyer shall indemnify, defend and hold the
Seller Entities harmless from and against any Losses (as
defined in Section 10(a)) for severance liability suffered by
any of the Seller Entities with respect to any Hired Employee
or IAM-represented employee hired by Buyer, which employee is
terminated by Buyer on or after the Closing Date.
(iii) Seller and Buyer agree that the
responsibilities for payroll taxes with respect to the Hired
Employees and IAM-represented employees hired by Buyer shall
be assigned under the Alternative Procedure described in
Section 5 of Rev. Proc. 84-77.
(iv) Buyer represents that it does not currently
contemplate a plant closing or mass lay-off of Hired
Employees and/or IAM-represented employees hired by Buyer, or
any terminations that, in the aggregate, would constitute,
within one year following the Closing, a mass lay-off of
Hired Employees and/or IAM-represented employees hired by
Buyer. Buyer shall indemnify and defend the Seller Entities
and hold each of them harmless from and against any Losses
which may be incurred or suffered by any of them under the
Worker Adjustment and Retraining Notification Act or any
similar state law arising out of, or relating to, any actions
taken by Buyer on or after the Closing Date.
(v) Effective as of the Closing Date, Buyer shall
assume from Seller all liabilities and obligations with
respect to all vacation earned but not taken as of the
Closing Date by the Hired Employees and IAM-represented
employees hired by Buyer.
(vi) Effective as of the Closing Date, Buyer
shall terminate the SEP in accordance with applicable law.
(o) By-Laws of Buyer. Seller covenants and agrees that
for the period from the Closing Date through the sixth anniversary thereof, it
shall not vote in favor of or otherwise directly or indirectly support any
amendment of the provisions of Buyer's By-Laws relating to the indemnification
of officers and directors of Buyer which would have an adverse effect on
present or former officers or directors of Buyer (except to the extent that
withholding any such vote would be in contravention of any applicable law).
(p) No Authority To Bind. Buyer covenants and agrees
that from and after the Closing Date, without the prior written consent of
Seller, it will not hold itself out as an affiliate of
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<PAGE> 54
Seller or take any actions or omit to take any actions which would have the
effect of creating or making binding any obligation on Seller.
(q) Records. Buyer and Seller agree that Seller may
maintain copies of any books and records and other financial data
(collectively, the "Records") that are included in the Assets and that are
delivered to Buyer hereunder. Buyer agrees to maintain such Records for a
period of not less than ten years from the Closing Date (plus any additional
time during which a party has been advised that (A) there is an ongoing tax
audit with respect to periods prior to the Closing Date, or (B) such period is
otherwise open to assessment). During such period, Buyer agrees to give Seller
and its representatives reasonable cooperation, access (including copies) and
staff assistance, as needed, during normal business hours and upon reasonable
notice, with respect to the Records delivered to Buyer hereunder, and Seller
agrees to give Buyer and its representatives reasonable cooperation, access and
staff assistance, as needed, during normal business hours and upon reasonable
notice, with respect to the books and records and other financial data relating
to the Plastics Business and retained by the Seller Entities, in each case as
may be necessary for general business purposes, including the preparation of
tax returns and financial statements, the management and handling of tax audits
and reviewing the calculation (and preparing its own calculation) of the
post-closing adjustments described in Section 1(g); provided that such
cooperation, access and assistance does not unreasonably disrupt the normal
operations of Buyer or any of the Seller Entities. Buyer shall not destroy or
otherwise dispose of the Records for the period set forth in the immediately
preceding sentence without the written consent of Seller.
(r) Initial Board of Directors; Vacancies of Board.
From and after the Closing Date and until the first annual meeting of the
stockholders of Buyer following the Closing Date, the Buyer's board of
directors shall be comprised of two representatives to be designated by Seller
(the "Seller Directors"); two representatives to be designated by members of
Buyer's existing board of directors (the "Buyer Directors"); and one
representative to be mutually satisfactory to Seller and Buyer (the
"Independent Director"). With respect to vacancies on the initial board of
directors of Buyer which exist at any time prior to the first annual meeting of
the stockholders of Buyer following the Closing Date (which annual meeting
shall be no sooner than 12 months following the Closing Date), the Buyer
Directors shall have all requisite authority to act on behalf of Buyer as a
special committee of the Board of Directors of Buyer to fill vacancies created
by the resignation or removal of a Buyer Director and the Seller Director shall
have all requisite authority to act on behalf of Buyer as a special committee
of the Board of Directors of Buyer to fill vacancies created by the resignation
or removal of a Seller Director.
(s) Ordinary Conduct of Buyer. From the Closing to the
Outside Notice Date, Buyer will cause the Plastics Business to be conducted in
the ordinary course consistent with past practice of Seller and will make all
reasonable efforts consistent with past practices of Seller to preserve its
relationship with its third party customers and suppliers in connection with
the Plastics Business. From the Closing to the Outside Notice Date, Buyer will
not do any of the following without the prior written consent of Seller:
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<PAGE> 55
(i) make any material change in the conduct of
the Plastics Business;
(ii) sell, lease, license or otherwise dispose
of, any interest in any of its assets, except for sales of
inventory in the ordinary course of business consistent with
past practice of Seller;
(iii) permit, allow or subject any of its assets
or any part thereof to any Lien or suffer such to be imposed,
except for Permitted Liens;
(iv) enter into any new, or amend or terminate
any existing, Contracts or Buyer Contracts, other than in the
ordinary course of business consistent with past practices;
(v) make any change in any method of accounting
or accounting practice or policy currently used in the
preparation by Seller of financial statements of the Plastics
Business other than those required by generally accepted
accounting principles;
(vi) issue any notes, bonds, capital stock or
other securities of any kind except to Seller as expressly
contemplated hereby;
(vii) borrow any amount or incur or become
subject to any liabilities except in the ordinary course of
business consistent with Seller's past practices;
(viii) declare or make any payment or distribution
of cash or other property to its security holders with
respect to its securities or purchase or redeem any shares of
its securities; it being understood that "securities"
includes options and rights to acquire securities;
(ix) acquire any new assets, rights or
interests, other than cash;
(x) make capital expenditures or commitments
therefor that aggregate in excess of $10,000;
(xi) made any charitable contributions or
pledges;
(xii) hire any employees to perform services for
Buyer or increase any compensation or other amounts payable
to any employees;
(xiii) enter into any other material transaction
or other transaction that is not in the ordinary course of
business consistent with Seller's past practices; or
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<PAGE> 56
(xiv) enter into any agreement, whether in
writing or otherwise, to do any of the foregoing.
9. Further Assurances. From time to time, as and when
requested by any party hereto, the other party hereto shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions (subject to the limitations set forth in Section 8(a) and Section
8(b)), as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.
10. Indemnification.
(a) Indemnification by Seller. Seller shall indemnify
Buyer, its affiliates and each of their respective officers, directors,
employees and agents and hold them harmless from any Loss suffered or incurred
by any such indemnified party or to which any such indemnified party becomes
subject to the extent directly or indirectly arising from (i)any breach of (or
in the event any third party alleges facts that if true would mean Seller has
breached) any covenant of Seller contained in this Agreement or the other
agreements and instruments contemplated hereby; (ii) any Excluded Liability and
(iii) any statements or information contained in the Definitive Proxy
Statement/Prospectus relating to the Plastics Business or the Seller Entities
requested by Buyer for inclusion in the Definitive Proxy Statement/Prospectus
and supplied by Seller, provided Buyer presents such information in the
Definitive Proxy Statement/Prospectus in conformity in form and substance with
the information supplied by it to Seller.
(b) Indemnification by Buyer. Buyer shall indemnify
each of Seller, its affiliates, officers, directors, employees and agents
against and hold them harmless from any Loss suffered or incurred by any such
indemnified party or to which any such indemnified party becomes subject to the
extent directly or indirectly arising from (i) any breach of (or in the event
any third party alleges facts that if true would mean Buyer has breached) any
covenant of Buyer contained in this Agreement or the other agreements and
instruments contemplated hereby, (ii) any Assumed Liability (other than any
Loss of Seller solely in its capacity as a shareholder of Buyer arising from
any Assumed Liability described in Section 1(d)(iv)) and (iii) any
discontinuance, suspension or modification of any Benefit Plans maintained by
Buyer as contemplated by Section 3(b)(vii) hereof. Buyer shall also indemnify
each of Seller, its affiliates, officers, directors, employees and agents
against and hold them harmless from its Proportionate Share of any Loss
suffered or incurred by Buyer or any of its subsidiaries from and after the
Closing Date (including Losses suffered or incurred by Buyer to its present or
former shareholders) (x) in respect of any actions, omissions, events,
circumstances or state of facts existing or arising on, at or prior to the
Closing Date or (y) arising in connection with any statements or information
contained in the Definitive Proxy Statement/Prospectus (other than information
relating to the Plastics Business or the Seller Entities requested by Buyer for
inclusion in the Definitive Proxy Statement/Prospectus and supplied by
Seller, provided Buyer presents such information in the Definitive Proxy
Statement/Prospectus in conformity in form and substance with the information
supplied to it by Seller); provided no
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<PAGE> 57
indemnity will be made by Buyer in respect of (A) except as provided in
clause (y) of this sentence, any acts, omissions, events, circumstances or
state of facts existing or arising on, at or prior to the Closing Date relating
to this Agreement, the matters referred to in the Buyer Resolutions (other than
the Ancillary Agreements) or any of the transactions contemplated hereby or
thereby, (B) any Loss suffered or incurred by Buyer or any of its subsidiaries
from and after the Closing Date that arises from a liability that is
specifically listed (but only up to the amount listed) on Schedule 3(b)(xv) or
(C) any inability of Buyer to be able to use the NOLs described in Sections
6(k)(ii) (I) and 6(k)(ii)(J) after the Closing. For purposes hereof, at the
time of any Loss, the "Proportionate Share" of each of Seller, its affiliates,
officers, directors, employees and agents shall be the ratio, expressed as a
percentage, of the total number of shares of the Common Stock owned by such
Persons at the time of such Loss divided by the total number of shares of the
Common Stock issued and outstanding at the time of such Loss.
(c) Exclusive Remedy. Except in connection with the
exercise of remedies for breaches of Sections 5(a), 7(a), 8(e) and 22, and
except as otherwise provided in Section 1(g), the Ancillary Documents or the
Related Documents (as defined in the Buyer Note), each of Buyer and Seller
acknowledges and agrees that, from and after the Closing, its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement and the other agreements contemplated hereby (other
than tort claims of, or causes of action arising from, fraudulent
misrepresentation) shall be pursuant to the indemnification provisions set
forth in this Section 10. In furtherance of the foregoing, each of Buyer and
Seller hereby waives, from and after the Closing, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action
(other than tort claims of, or causes of action arising from, fraudulent
misrepresentation) it may have against each other relating to the subject
matter of this Agreement and the other agreements contemplated hereby arising
under or based upon any federal, state, local or foreign statute, law,
ordinance, rule or regulation or otherwise, including without limitation, any
cause of action for contribution or otherwise under the Comprehensive
Environmental Response, Liability and Compensation Act, as amended, or any
other federal, state, local or foreign law giving rise to liability for
disposal or release of hazardous substances. Buyer further acknowledges and
agrees that, (i) other than the representations and warranties of Seller
specifically contained in this Agreement (which expire at the Closing), there
are no representations or warranties of any of the Seller Entities or their
representatives or any other Person either express or implied with respect to
the Plastics Business, the Assets, the Real Property or the Assumed Liabilities
and (ii) it shall have no claim or right to indemnification with respect to any
information, documents or materials furnished by the Seller Entities or their
representatives or any other Person or any of their officers, directors,
employees, agents or advisors, including the Information Memorandum and any
information, documents or material made available to Buyer in certain "data
rooms," management presentations or any other form in expectation of the
transactions contemplated by this Agreement. Nothing contained herein shall be
deemed to limit or otherwise impair the ability of Seller to exercise its
rights and remedies (x) as a stockholder of Buyer from and after the Closing
Date, including, without limitation, the right to bring claims and causes of
action against Buyer for matters arising or accruing after the Closing Date and
(y) pursuant to Section 1(g).
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<PAGE> 58
(d) Losses Net of Insurance and Tax Benefit.
(i) The amount of any and all Losses under this
Section 10 shall be determined net of any amounts recovered or
recoverable by the indemnified party under insurance policies with
respect to such Losses. Each party hereby waives, to the extent
permitted under its applicable insurance policies, any subrogation
rights that its insurer may have with respect to any indemnifiable
Losses. Any indemnity payment under this Agreement shall be treated
as an adjustment to the Purchase Price for tax purposes.
(ii) If an indemnification obligation under this
Section 10 arises in respect of any adjustment which results in any
Tax benefit to Buyer or Seller (the "Benefitted Party"), any successor
thereto or any affiliate thereof for any taxable period (or portion
thereof) beginning and ending after the Closing Date which would not,
but for such adjustment, be available, the Benefitted Party shall pay,
or shall cause to be paid, to the party making such indemnification
payment an amount equal to the actual Tax saving produced by such Tax
benefit at the time such Tax saving is realized by the Benefitted
Party, any successor thereto or any affiliate thereof. The amount of
any such Tax saving for any taxable period shall be the amount of the
reduction in Taxes payable to a taxing authority by the Benefitted
Party, any successor thereto or any affiliate thereof with respect to
such tax period as compared to the Taxes that would have been payable
to a taxing authority by the Benefitted Party, any successor thereto
or any affiliate thereof with respect to such tax period in the
absence of such Tax benefit.
(e) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, pursuant to Sections 10(a) and
10(b), shall terminate on the sixth anniversary of the Closing Date; provided,
however, that such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the Person to be indemnified or
the related party thereto shall have, prior to the sixth anniversary of the
Closing Date, previously made a claim by delivering a written notice (stating
in reasonable detail the nature of, and factual and legal basis for, any such
claim for indemnification, and the provisions of this Agreement upon which such
claim for indemnification is made) to the indemnifying party.
(f) Procedures Relating to Indemnification.
(i) In order for a party (the "indemnified party") to be
entitled to any indemnification provided for under this Agreement with
respect to any matter (including any matter in respect of, arising out
of or involving a claim or demand made by any Person, firm,
governmental authority or corporation against the indemnified party (a
"Claim")), such indemnified party must notify the indemnifying party
in writing, and in reasonable detail, of the Claim as promptly as
reasonably possible after receipt by such indemnified party of notice
of the Claim; provided, however, that failure to give such
notification on a timely basis shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure. Thereafter,
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<PAGE> 59
the indemnified party shall deliver to the indemnifying party, within
five business days after the indemnified party's receipt thereof, copies
of all notices and documents (including court papers) received by the
indemnified party relating to the Claim.
(ii) Upon receipt by either Buyer or Seller of notice
that it bears responsibility for any matter under this Section 10, or
with respect to any matter for which either party affirmatively
undertakes responsibility hereunder, and assuming that the
indemnifying party provides the indemnified party with evidence
reasonably acceptable to the indemnified party that the indemnifying
party will have the financial resources to defend against the Claim
and fulfill its indemnification obligations hereunder, such party (the
"Responsible Party") shall have the authority, at its option, to
undertake control over all aspects and settlements of such matter,
including without limitation, negotiations and settlements with
interested government agencies and third parties. The Responsible
Party shall keep the other party apprised of major developments
relating to such matter and shall, subject to applicable legal
privileges, make all reports, filings, and other documents relating to
such matter available for inspection by the other party upon request.
So long as the Responsible Party is managing the defense of the Claim
in accordance with this Section 10(f)(ii), the indemnified party may
retain separate co-counsel or other representatives at its sole cost
and expense and participate in the management of the Claim. The
parties agree to reasonably cooperate with one another in connection
with any matter addressed hereunder, including without limitation
allowing one another reasonable access to relevant personnel, records,
and facilities. In the course of addressing any such matter, the
Responsible Party and its representatives shall make best efforts to
prevent any unreasonable interference with day-to-day operations at
the Real Property on and after the Closing. In the event the
Responsible Party declines to undertake control over a Claim or does
not have the authority to undertake such Claim in accordance with this
Section 10(f)(ii),(a) the indemnified party may manage the Claim in
any manner it reasonably may deem appropriate, with consent from the
Responsible Party, which consent will not be unreasonably withheld,
(b) the indemnifying parties will reimburse the indemnified party as
and when incurred for the costs of defending against or otherwise
managing the Claim (including reasonable attorneys' fees and
expenses), and (c) the indemnifying parties will remain responsible
for any Losses the indemnified party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Claim
to the fullest extent provided in this Section 10(f)(ii).
(g) Offset. In the event that Buyer shall be entitled
to indemnification under Section 10(a), the amount of any Losses, at Seller's
option, shall be reimbursed by, first, forgiving interest accrued to the date
on which Buyer and Seller agree Buyer is entitled to indemnification or as of
the date of determination of the amount to which Buyer is entitled pursuant to
Section 30 (to the extent theretofor unpaid) plus future interest payments when
and as the same become due under the Buyer Note and, second, by forgiving
principal payments on the Buyer Note as the same become due, in each case in an
amount equal to the total amount of such Losses.
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<PAGE> 60
11. Assignment. This Agreement shall be binding upon
the respective parties and their respective successors and assigns; provided,
however, this Agreement and any rights and obligations hereunder shall not be
assignable or transferable by Buyer (including by operation of law
in connection with a merger or sale of stock, or sale of substantially all the
assets, of Buyer) without the prior written consent of Seller and any purported
assignment without such consent shall be void and without effect.
12. No Third-Party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto, and their permitted assigns and nothing
herein express or implied (including Sections 8(k), 8(l), 8(m), 8(n) and 10)
shall give or be construed to give to any Person, other than the parties
hereto, and such permitted assigns, any legal or equitable rights hereunder
and, in the case of Section 8(o) only, the present or former officers or
directors of Buyer, who are the intended beneficiaries of Section 8(o).
13. Termination. (a) Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(i) by the mutual written consent of Seller and Buyer;
(ii) by Seller if (x) at any time after October 31, 1996
any of the conditions set forth in Section 3(b) shall have become
incapable of fulfillment, and shall not have been waived by Seller,
(y) Seller has delivered to Buyer on or prior to September 15, 1996 a
notice that it is terminating this Agreement because it is not
completely satisfied in all respects with its business, legal,
environmental and accounting due diligence review and investigation of
Buyer or (z) Buyer shall not have delivered to Seller by September 30,
1996 copies of the Buyer Resolutions that are in form and substance
reasonably satisfactory to Seller;
(iii) by Buyer if (x) at any time after October 31, 1996
any of the conditions set forth in Section 3(a) shall have become
incapable of fulfillment, and shall not have been waived by Buyer, (y)
Buyer has delivered to Seller on or prior to September 15, 1996 a
notice that it is terminating this Agreement because it is not
completely satisfied in all respects with its business, legal,
environmental and accounting due diligence review and investigating of
the Plastics Business or (z) Seller shall not have delivered to Buyer
by September 30, 1996 copies of the Seller Resolutions that are in
form and substance reasonably satisfactory to Buyer;
(iv) by Seller or Buyer if the Closing does not occur on
or prior to December 31, 1996; provided, however, that the party
seeking termination pursuant to clause (ii) or (iii) above (other than
clause (ii)(y) or (iii)(y) above) is not in breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement, which breach has resulted in the failure of a condition in
Section 3(a) or 3(b), as applicable.
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<PAGE> 61
(b) In the event of termination by Seller or Buyer
pursuant to this Section 13, written notice thereof shall forthwith be given to
the other party and the transactions contemplated by this Agreement shall be
terminated, without further action by any party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) Buyer shall return all documents and copies and
other materials received from or on behalf of Seller relating to the
transactions contemplated hereby, whether so obtained before or after
the execution hereof, to Seller; and
(ii) all confidential information received by Buyer with
respect to the Assets, the Assumed Liabilities and the Plastics
Business shall be treated in accordance with the Confidentiality
Agreement, which shall remain in full force and effect notwithstanding
the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 13, this
Agreement shall become void and of no further force and effect, except for the
provisions of (i) Section 7(a) relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (ii) Section 8(e)
relating to publicity, (iii) Section 5(a) relating to indemnification in
connection with the matters contemplated thereby, (iv) Section 15 relating to
certain expenses, (v) Section 22 relating to finder's fees and broker's fees
and (vi) this Section 13. Nothing in this Section 13 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or to impair the right of any party to compel
specific performance by another party of its obligations under this Agreement.
14. Survival of Representations. The representations
and warranties in this Agreement and in any Schedules delivered in connection
herewith shall expire at, and not survive, the Closing.
15. Expenses. Whether or not the transactions
contemplated hereby are consummated, and except as otherwise specifically
provided in this Agreement or in any other agreement, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs or expenses; provided
that all costs and expenses incurred by Seller in connection with the
preparation and delivery to Buyer of audited financial statements of the
Plastics Business prior to the Closing Date shall be shared equally by Buyer
and Seller.
16. Amendment and Waiver. This Agreement may be
amended, or any provision of this Agreement may be waived; provided that any
such amendment or waiver shall be binding upon Seller only if set forth in a
writing executed by Seller and referring specifically to the provision alleged
to have been amended or waived, and any such amendment or waiver shall be
binding upon Buyer only if set forth in a writing executed by Buyer and
referring specifically to the provision alleged to have been amended or waived.
No course of dealing between or among any Persons
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<PAGE> 62
having any interest in this Agreement shall be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any Person under or by reason of this Agreement.
17. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent by prepaid telex, cable or telecopy, or sent, postage
prepaid, by registered, certified or express mail, or reputable overnight
courier service and shall be deemed given when so delivered by hand, telexed,
cabled or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:
(i) if to Buyer,
Chief Executive Officer
Rymac Mortgage Investment Corporation
Penn Center West II
Suite 311
Pittsburgh, PA 15276
Attention: Chief Executive Officer
Facsimile: (412)788-3691
with a copy to:
Brown & Wood
One World Trade Center
New York, New York 10048
Attention: Edward J. Fine, Esq.
Facsimile No: (212) 839-5599
(ii) if to Seller,
Navistar International
455 North City Front Plaza Drive
Chicago, Illinois 60611
Attn: Vice President/Treasurer
Facsimile No.: (312)836-2573
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<PAGE> 63
with a copy to:
Navistar International
455 North City Front Plaza Drive
Chicago, Illinois 60611
Attn: General Counsel
Facsimile No.: (312)836-3982
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Michael H. Kerr, P.C.
Facsimile No.: (312) 861-2000
18. Interpretation. The headings and captions contained
in this Agreement, in any Exhibit or Schedule hereto and in the table of
contents to this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Any capitalized
terms used in any Schedule or Exhibit and not otherwise defined therein shall
have the meanings set forth in this Agreement. The use of the word "including"
herein shall mean "including without limitation." The use of the word "or"
shall not be exclusive.
19. No Strict Construction. Notwithstanding the fact
that this Agreement has been drafted or prepared by one of the parties, both
Buyer and Seller confirm that both they and their respective counsel have
reviewed, negotiated and adopted this Agreement as the joint agreement and
understanding of the parties, and the language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Person.
20. Counterparts. This Agreement may be executed in one
or more counterparts (including by means of telecopied signature pages), all of
which shall be considered one and the same instrument, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
21. Entire Agreement. This Agreement and the other
agreements referred to herein (including the Confidentiality Agreement) contain
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
22. Brokerage. Buyer has not used a broker or finder in
connection with the transactions contemplated by this Agreement, and there are
no claims for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this
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<PAGE> 64
Agreement based on any arrangement or agreement by or on behalf of Buyer, other
than with Hellmold Associates, Inc. and Nomura Securities International, Inc.,
for which Buyer is solely responsible. Seller has not retained any broker or
finder or incurred any liability or obligation for any brokerage fees,
commissions or finder's fees with respect to this Agreement or the transactions
contemplated hereby, except pursuant to an arrangement with Hellmold Associates,
Inc., for which Seller is solely responsible. Notwithstanding anything to the
contrary in Section 10, Buyer shall indemnify and hold Seller harmless for any
breach of its representation in this Section 22, and Seller shall indemnify and
hold Buyer harmless for any breach of its representation in this Section 22.
23. Disclaimer Regarding Estimates and Projections. In
connection with Buyer's investigation of the Plastics Business, Buyer has
received from or on behalf of Seller certain projections, including projecting
set forth in the Information Memorandum. Buyer acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that Buyer is familiar with such uncertainties, that
Buyer is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates and projections and other forecasts and
plans so furnished to it (including the reasonableness of the assumptions
underlying such estimates, projections and forecasts), and that Buyer shall
have no claim against the Seller Entities with respect thereto (other than for
fraudulent misrepresentation). Accordingly, Seller makes no representation or
warranty with respect to such estimates and projections and other forecasts and
plans (including the reasonableness of the assumptions underlying such
estimates and projections and forecasts). In addition, except for the
representations and warranties set forth in this Agreement which expire at the
Closing, Seller makes no representation or warranty with respect to information
relating to historical income from operations set forth in the Information
Memorandum, in any "data room," in connection with any management presentation,
or otherwise, and Buyer acknowledges and agrees that it is not relying on such
information in any manner whatsoever.
24. Schedules. The inclusion of information in the
Schedules hereto shall not be construed as an admission that such information
is material to the Assets, the Plastics Business, Seller or Buyer, as
applicable. In addition, matters reflected in the Schedules are not
necessarily limited to matters required by this Agreement to be reflected in
such Schedules. Such additional matters are set forth for informational
purposes only and do not necessarily include other matters of a similar nature.
Prior to the Closing, each party shall have the right, without the prior
consent of the other party, to supplement, modify or update the Schedules
hereto, but only in order to reflect changes in the information set forth in
the Schedules that have arisen in the ordinary course of its business prior to
the Closing, and such supplements, modifications or updates shall be given
effect and shall be deemed to have modified the applicable representations and
warranties for purposes of Section 3; provided that, notwithstanding anything
contained herein to the contrary, no supplement, modification or update of
Schedule 6(m) or a material supplement, modification or update of Schedule
3(b)(xv) may be made by Buyer or given any effect, without the prior written
consent of Seller.
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<PAGE> 65
25. Reserved.
26. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be valid and effective
under applicable law, but if any provision of this Agreement or the application
of any such provision to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
27. Bulk Transfer Laws. Buyer hereby waives compliance
by Seller with the provisions of any so-called bulk transfer laws of any
jurisdiction in connection with the sale of the Assets.
28. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Ohio
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
29. Exhibits and Schedules. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
30. Dispute Resolution.
(a) Negotiation. Except as otherwise provided in
Section 1(g), in the event of any dispute or disagreement between Seller and
Buyer as to the interpretation of any provision of this Agreement (or the
performance of obligations hereunder), the matter, upon written request of
either party, shall be referred to representatives of the parties (the
"Representatives") for decision, it being understood that representatives of
Buyer shall be the individuals listed on Schedule 30, whom shall have all
requisite authority to unanimously act on behalf of Buyer as a special
committee of the Board of Directors of Buyer, including the authority to
initiate proceedings on behalf of Buyer solely with respect to claims against
any Seller Entity under this Agreement. The Representatives shall promptly meet
in a good faith effort to resolve the dispute. If the Representatives do not
agree upon a decision within 30 calendar days after reference of the matter to
them, each of Buyer and Seller shall be free to exercise the remedies available
to it under Section 30(b).
(b) Arbitration. Any controversy, dispute or claim
arising out of or relating in any way to this Agreement or the other agreements
contemplated hereby (other than the Supply Agreement or the Registration Rights
Agreements) or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation pursuant to Section 30(a) shall (except as otherwise
provided by Section 1(g)) be settled exclusively by arbitration in the City of
Chicago, Illinois. Such arbitration shall be administered by the Center for
Public Resources Institute for Dispute Resolutions (the "Institute") in
accordance with its then prevailing Rules for Non-Administered Arbitration of
Plastics Business Disputes (except as otherwise provided herein), by three
independent and impartial arbitrators, one of whom shall be appointed by Seller
and one of
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<PAGE> 66
whom shall be appointed by Buyer. Notwithstanding anything to the contrary
provided in Section 28 hereof, the arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Section 1 et seq. The fees and expenses of the
Institute and the arbitrators shall be shared equally by the parties and
advanced by them from time to time as required; provided that at the conclusion
of the arbitration, the arbitrators shall award costs and expenses (including
the costs of the arbitration previously advanced and the fees and expenses of
attorneys, accountants and other experts) and interest at the Applicable Rate to
the prevailing party. No pre-arbitration discovery shall be permitted, except
that the arbitrators shall have the power in their sole discretion, on
application by either party, to order pre-arbitration examination of the
witnesses and documents that the other party intends to introduce in its
case-in-chief at the arbitration hearing. The arbitrators shall render their
award within 90 days of the conclusion of the arbitration hearing.
Notwithstanding anything to the contrary provided in this Section 30(b) and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for temporary injunctive or other provisional judicial
relief if such action is necessary to avoid irreparable damage or to preserve
the status quo until such time as the arbitration panel is convened and
available to hear such party's request for temporary relief. The award rendered
by the arbitrators shall be final and not subject to judicial review and
judgment thereon may be entered in any court of competent jurisdiction.
* * * * *
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<PAGE> 67
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
NAVISTAR INTERNATIONAL
TRANSPORTATION CORP.
By: /s/ T. M. HOUGH
------------------------
Name: T. M. Hough
Title: Vice President
and Treasurer
RYMAC MORTGAGE INVESTMENT
CORPORATION
By: /s/ RICHARD R. CONTE
------------------------
Name: Richard R. Conte
Title: Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.1 PRESS RELEASE DATED SEPTEMBER 12, 1996
================================================================================
RYMAC contact: Richard Conte -- (412) 788-5726
Navistar contact: Andy Opila -- (312) 836-2901
================================================================================
RYMAC, NAVISTAR SIGN PURCHASE AGREEMENT
FOR COLUMBUS PLASTICS OPERATION
STEUBENVILLE, OHIO (September 12, 1996) -- RYMAC MORTGAGE INVESTMENT
CORPORATION (AMEX: RM) and Navistar International Transportation Corp., a
subsidiary of Navistar International Corporation (NYSE: NAV), today entered
into a definitive purchase agreement, whereby RYMAC will acquire a majority
interest in Navistar's Columbus Plastics Operation.
Under the terms of the agreement, RYMAC will acquire all the assets of
the Columbus Plastics Operation for a note in the principal amount of
$25,504,000 and 4,264,000 newly issued shares of RYMAC common stock, resulting
in an aggregate purchase price of approximately $38,000,000. The issuance of
4,264,000 shares of RYMAC common stock to Navistar will result in Navistar
becoming a 45% stockholder of RYMAC.
The agreement provides that the shares to be issued to Navistar will
be reduced, if necessary, to preserve RYMAC's capability to apply its net
operating losses to post-closing income. Such price adjustments could be
triggered in the event existing RYMAC stockholders or other investors purchase
RYMAC common stock that would result in an ownership position of 5% or more by
any single investor or by investors acting together. The reduction of shares
issued to Navistar would be compensated by an increase in the note due to
Navistar by an amount significantly in excess of the assumed value of the
reduced shares.
Additionally, should the combined company achieve earnings results
above projected levels during 1997 through 1999, Navistar will receive
incremental consideration in the form of additional principal amounts on its
note.
RYMAC, based in Steubenville, Ohio, is a publicly traded real estate
investment trust (REIT), whose investments have substantially been liquidated.
Upon completion of the transaction, RYMAC will terminate its status as a REIT
and will be headquartered in Columbus, Ohio.
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<PAGE> 2
RYMAC, NAVISTAR SIGN PURCHASE AGREEMENT -- 2
The transaction is expected to be completed by year end and is
contingent upon approval of RYMAC stockholders at a special stockholders
meeting and other conditions.
Columbus Plastics was opened by Navistar in 1981 and has 480
employees. It produces large sheet molding compound (SMC) components for
original equipment manufacturers (OEMs) such as Navistar, Yamaha and General
Motors. Its 1995 sales were approximately $65 million.
All of the employees at Columbus Plastics will remain with the new
company. Contracts with the International Association of Machinists and
Aerospace Workers, Local 1471, are expected to essentially remain in place.
Chicago-based Navistar manufactures and markets International(R) brand
medium and heavy trucks, school bus chassis, and mid-range diesel engines in
the United States, Canada and Mexico. The company is the North American market
share leader in combined sales of medium and heavy duty trucks and school
buses. In addition, Navistar is the worldwide leader in manufacturing
mid-range engines from 160 to 300 horsepower.
######
