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) February 28, 2000
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UNIROYAL TECHNOLOGY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State of other jurisdiction of incorporation)
0-20686 65-0341868
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(Commission File Number)(IRS Employer Identification No.)
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236
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(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (941) 366-2100
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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Pursuant to an Asset Purchase Agreement dated as of December 24, 1999,
among Spartech Corporation ("Spartech"), High Performance Plastics, Inc.
("HPPI"), Uniroyal HPP Holdings, Inc. and Uniroyal Technology Corporation (the
"Company"), HPPI, a wholly owned subsidiary of the Company, sold substantially
all of its assets to Spartech for approximately $216 million in cash. The
transaction was closed on February 28, 2000. Copies of the Asset Purchase
Agreement, without exhibits, and the Amendment to Asset Purchase Agreement are
appended to this report as Exhibit 10.51. Unaudited pro forma condensed
financial information is appended to this report as Appendix A.
Item 7. Exhibits
Table Exhibit
Item No. Exhibit Description Number
- ------------ ------------------------
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Asset Purchase Agreement dated as of
December 24, 1999, among Spartech
Corporation, High Performance
Plastics, Inc., Uniroyal HPP Holdings,
10 Inc. and Uniroyal Technology Corporation 10.51
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 thereunto duly authorized.
UNIROYAL TECHNOLOGY CORPORATION
By: /s/ Oliver J.Janney
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Oliver J. Janney
Executive Vice President, General
Counsel and Secretary
Dated: March 14, 2000
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of the 24th day of December, 1999
is made between Spartech Corporation, a Delaware corporation ("Buyer"),and High
Performance Plastics,Inc., a Delaware corporation ("Seller"), Uniroyal HPP
Holdings, Inc., a Delaware corporation ("Holdings"), and Uniroyal Technology
Corporation, a Delaware corporation ("Uniroyal").
WHEREAS, Seller carries on the Business and is willing to sell the Purchased
Assets to Buyer, and Buyer is willing to purchase the Purchased Assets and to
assume the Assumed Liabilities, all on the terms and subject to the conditions
set out in this Agreement; and
WHEREAS, Holdings owns all of the capital stock of Seller, and Uniroyal owns all
of the capital stock of Holdings, and Buyer is therefore requiring that Holdings
and Uniroyal become parties to this Agreement; and in consideration of their
interest in Seller and the benefits to be derived by them from the transactions
set forth herein, Holdings and Uniroyal are willing to become parties to this
Agreement;
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS
1.1 Agreement to Purchase and Sell. At the Closing, subject to the terms and
conditions of this Agreement, Seller shall sell and Buyer shall purchase the
Purchased Assets; and Buyer shall assume the Assumed Liabilities. Buyer shall
not purchase any of the Excluded Assets nor assume any liability which is not an
Assumed Liability. The Purchased Assets shall be transferred to Buyer free and
clear of any and all Liens other than Permitted Liens.
1.2 Amount of Purchase Price. The purchase price payable by Buyer to Seller
for the Purchased Assets (the "Purchase Price") shall be equal to the sum of:
(i) Two Hundred Seventeen Million Five Hundred Thousand Dollars
($217,500,000); plus
(ii) Any amount by which Seller's Net Working Capital as of the
Effective Time exceeds Seller's Net Working Capital as of
September 26, 1999; less
(iii) Any amount by which Seller's Net Working Capital as of September
26, 1999 exceeds Seller's Net Working Capital as of the Effective
Time; less
(iv) The amount of any capital expenditures related to the Polycast
Consolidation which have not been made as of the Effective Time.
The Purchase Price shall also be subject to any other adjustments provided for
herein.
1.3 Determination of Estimated Purchase Price. As of a date selected by Seller
which is not less than ten (10) days prior to the Closing Date, Seller shall
prepare its best estimate of the amount which would be the Purchase Price if the
Closing had occurred on such selected date, based on the information reasonably
available to Seller at the time of such estimated calculation (the "Estimated
Purchase Price"), and shall provide Buyer not less than ten (10) days prior to
the Closing Date with a written report reflecting such estimated calculation,
together with supporting documentation.
1.4 Payment of Purchase Price. The Purchase Price shall be paid as follows:
(i) The Estimated Purchase Price, less $5,000,000, shall be paid to
or as directed by Seller at the Closing, by wire transfer or
transfers to such accounts as Seller may direct. Seller shall
provide Buyer with account information for all wire recipients at
least two Business Days before the Closing Date.
(ii) The balance of the Purchase Price (subject to any subsequent
adjustments provided for herein) shall be paid to or as directed
by Seller, by wire transfer or transfers to such accounts as
Seller may direct (on at least two Business Days' notice to
Buyer), not more than two Business Days after the final
determination of the Purchase Price in accordance with Section
1.5. If the Purchase Price as finally determined is more than
$5,000,000 below the Estimated Purchase Price, Seller shall
remit the difference to Buyer by wire transfer to such
account as Buyer may direct (on at least two Business Days'
notice to Buyer), not more than two Business Days after the
final determination of the Purchase Price.
1.5 Determination of Net Working Capital and Final Purchase Price.
(a) Except as may be otherwise expressly provided for in this Agreement, the
determinations of Net Working Capital and the resulting final determination of
the Purchase Price shall be made consistent with the following procedures:
(i) Inventories as of the Effective Time shall be based on an actual
physical inventory count and valuation of each item of inventory,
conducted by representatives of Seller (assisted by the
Transferred Employees) during the two days immediately after
the Closing Date. Representatives of Buyer shall be allowed to
attend and participate in verifying and reviewing the physical
count and valuation of all items. Inventories shall be valued
according to Seller's historical valuation standards, which
approximate the lower of cost or market on a first-in,first-out
basis consistent with prior periods, and shall be net of all
appropriate valuation reserves (including but not necessarily
limited to obsolescence, write-down, variance and replacement
and adjustment reserves), which shall be at least as sufficient
at the Closing Date as at September 26, 1999. Each Party shall
bear its own costs and expenses incurred in connection with the
physical inventory count and valuation.
(ii) Current Assets shall not include any deferred taxes or other
deferred costs or any book vs. tax adjustments.
(iii) A reserve for doubtful accounts will be established consistent
with Seller's actual knowledge at Closing and otherwise
consistent with Seller's historical experience, but the reserve
shall not be a lower percentage of accounts receivable than the
percentage which the reserve reflected in Seller's September 26,
1999 audited financial statements bears to Seller's September 26,
1999 accounts receivable.
(iv) Prepaid insurance will not be included unless the underlying
policies are assumed by Buyer.
(v) Customer-Owned Inventory shall be reflected on a schedule to the
Closing Report; and the Closing Report shall reflect a liability
in an amount equal to the excess (if any) of (A) the amount of
Customer-Owned Inventory which should be in Seller's possession
at the Closing Date, based on all available information, over (B)
the Customer-Owned Inventory on hand at the Closing Date as shown
on such schedule.
(vi) Net Working Capital shall reflect prepaid or accrued rent and
other lease payments, and prorations of utilities and similar
items with respect to the Premises Leases customarily prorated in
sales of real property or assignments of leases, with Seller
responsible for such items through the Closing Date and Buyer
responsible for such items after the Closing Date.
(b) As soon as practicable, and in any event within 60 days after the Closing
Date, Seller shall prepare and deliver to Buyer a statement (the "Closing
Report") showing in line item detail, with supporting schedules, the
calculations of Net Working Capital as of September 26, 1999 and as of the
Effective Time and the resulting final calculation of the Purchase Price
(subject to Section 1.6 and any indemnification payments under Article 6).
(c) Until the date of delivery of the Closing Report, Buyer will give Seller and
its agents and representatives such assistance and access to the Books and
Records as Seller and its agents and representatives may reasonably request in
order to enable them to prepare the Closing Report.
(d) The Closing Report shall be conclusive of the amount of Net Working Capital
and the receipts and disbursements of funds made in respect of the Purchased
Assets and the Assumed Liabilities on the Closing Date, and shall be final and
binding upon the Parties unless Buyer gives to Seller a notice of objection to
any matter stated in the Closing Report not later than 30 days after the date on
which the Closing Report was delivered to Buyer.
(e) If Buyer gives a notice of objection pursuant to Section 1.5(d), then Seller
and Buyer shall consult with each other with respect to the objection. If they
are unable to reach agreement within 15 days after the notice of objection has
been given, then the dispute shall be resolved by the national accounting firm
of Ernst & Young LLP (the "Accountant"). The resolution of the dispute by the
Accountant will be final and binding on the Parties. The fees and expenses of
the Accountant, unless otherwise agreed by the Parties, will be borne equally by
Seller and Buyer.
1.6 Adjustment for Uncollected Receivables.
(a) Buyer shall use reasonable commercial efforts to collect the purchased
Receivables for a period of 90 days after the Closing Date. Unless otherwise
specified by the debtor, any amounts collected by Buyer from an account debtor
shall be applied to the debtor's oldest invoice first.
(b) Subject to the limitations set out in Section 1.6(c), any purchased
Receivables not fully collected by Buyer by 90 days after the Closing Date shall
thereupon, unless Buyer and Seller agree otherwise, be reassigned to Seller for
a price equal to the full face value of such Receivables on the Closing Date
less any amounts collected in respect thereof and less any unused reserve for
doubtful accounts taken into account in determining Net Working Capital. The
Purchase Price shall be reduced by the price of the reassigned Receivables and
either the reduction shall be accounted for in the final settlement pursuant to
Section 1.4, if that has not yet occurred, or if that settlement has occurred
the amount of the reduction shall be refunded to Buyer in the same manner
provided in Section 1.4(ii). All reassigned Receivables shall become the
property of Seller, and Buyer shall deliver to Seller promptly after receipt
thereof by Buyer any payments received by Buyer on account of any reassigned
Receivable.
(c) Seller shall not be required to repurchase pursuant to Section 1.6(b)
Receivables having, in the aggregate, a face amount exceeding the sum of
$200,000 plus the unused reserve for doubtful accounts.
1.7 Reconciliation of Accounts. The Parties agree that, conditional upon the
Closing, the benefits from the Purchased Assets and liability for costs arising
from the Assumed Liabilities shall be deemed to have passed to Buyer as of the
Effective Time. Receipts and disbursements received and made on the Effective
Date shall be for the account of Seller. Seller shall record and keep accounts
of all such receipts and disbursements.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller, Holdings and Uniroyal. As a
material inducement to Buyer entering into this Agreement and completing the
transactions contemplated by this Agreement and acknowledging that Buyer is
entering into this Agreement in reliance upon the representations and warranties
set out in this Section 2.1, Seller, Holdings and Uniroyal jointly and severally
represent and warrant to Buyer as follows:
(1) Incorporation and Power. Seller is a corporation duly organized and validly
existing under the corporation laws of the State of Delaware. Seller is duly
qualified to carry on the Business in every jurisdiction in which the nature of
the Business requires such qualification and in which failure to be qualified
could have a material adverse effect on the Business or the Purchased Assets.
Seller has filed all annual registration, franchise tax or similar reports
required to be filed under the laws of the jurisdictions of its incorporation
and qualification. Seller has the requisite corporate power and authority to own
and operate the Business, to enter into this Agreement and all the other
agreements and instruments to be executed by it as contemplated by this
Agreement (the "Related Documents") and to carry out its obligations under this
Agreement and the Related Documents. Schedule 2.1(1) contains a copy of Seller's
Certificate of Incorporation, certified by the Secretary of State of Delaware, a
copy of Seller's Bylaws as currently in effect, certified as true, complete and
correct by Seller's Secretary, and lists of Seller's officers and directors,
certified true, complete and correct by Seller's President and Secretary.
Holdings is the sole owner of Seller's capital stock, and Uniroyal is the sole
owner of Holdings' capital stock.
(2) Due Authorization. The execution and delivery of this Agreement and the
Related Documents and the completion of the transactions contemplated by this
Agreement and the Related Documents have been duly authorized by all required
votes or written consents of the boards of directors of Seller, Holdings and
Uniroyal and of the shareholders of Seller and Holdings. No vote or written
consent of the shareholders of Uniroyal is required to approve or validate the
transactions contemplated by this Agreement or the Related Documents.
(3) Enforceability of Obligations. This Agreement constitutes, and when executed
as contemplated by this Agreement the Related Documents to be executed by
Seller, Holdings or Uniroyal will constitute, valid and binding obligations of
Seller, Holdings and Uniroyal enforceable against each of them in accordance
with their respective terms.
(4) Title to and Sufficiency of Purchased Assets. Except as set out on Schedule
2.1(4), Seller has valid and marketable title to all the Purchased Assets, free
and clear of any and all Liens except Permitted Liens. Schedule 2.1(4) also
lists or otherwise identifies with reasonable particularity all Purchased Assets
which are subject to Liens which will be discharged at Closing together with the
Person holding each such Lien. Except for the Excluded Assets, the Purchased
Assets together with the rights being acquired by Buyer under the Assigned
Contracts include all assets associated with the Business as currently
conducted. Schedule 2.1(4) sets out a complete and accurate list of all
locations where Purchased Assets are located, including a brief description of
the Purchased Assets at each location. Other than this Agreement, there is no
agreement, option or other right or privilege outstanding in favor of any Person
for the purchase from Seller of the Business or of any of the Purchased Assets
outside the ordinary course of the Business.
(5) Real Property.
(i) Schedule 2.1(5) lists each parcel of Real Property, including the
street address and a general description of the use thereof in
the Business, and the interest owned therein if less than fee
simple absolute. Seller has good and marketable title to the Real
Property free and clear of all Liens except Permitted Liens.
(ii) Except as set out in Schedule 2.1(5), the Real Property and the
current use thereof by Seller comply with Applicable Law in all
material respects, and no notice of violation of any Applicable
Law or of any covenant, restriction or easement affecting the
Real Property or with respect to the use or occupancy of the Real
Property has been given by any governmental authority having
jurisdiction over the Real Property or by any other Person
entitled to enforce the same.
(iii) There are no existing or, to the Best Knowledge of Seller, any
proposed or contemplated condemnation proceedings that would
result in the taking of all or any part of the Real Property or
that would adversely affect the current use of the Real Property.
(iv) To the Best Knowledge of Seller, the Improvements on each parcel
of Real Property are located wholly within the boundaries of such
parcel, and do not encroach upon any registered or unregistered
easement or right-of-way affecting the Real Property; and to the
Best Knowledge of Seller, there is no encroachment onto the Real
Property by buildings or improvements owned by the owners of
adjoining lands.
(v) To the Best Knowledge of Seller, the Improvements on each parcel
of Real Property have been constructed in a good and workmanlike
manner in compliance with Applicable Law, all amounts for labor
and materials relating to the construction and repair of the
Improvements have been paid in full, and except for Permitted
Liens no one has a right to file a construction, mechanics or
similar lien in respect of the payment of such amounts.
(vi) With respect to each parcel of Real Property, all Taxes with
respect to the Real Property which are due have been paid in
full, and there are no local improvement charges or special
levies outstanding in respect of the Real Property nor has Seller
received any notice of proposed local improvement charges or
special levies.
(vii) To the Best Knowledge of Seller, all utilities required for the
normal operation of the Business from the Real Property connect
into the Real Property in accordance with valid registered
easements and are sufficient for the operation of the Real
Property for purposes of the Business.
(viii) None of the Real Property or the Improvements thereon has been
designated as a historic site or building pursuant to Applicable
Law, and to the Best Knowledge of Seller the Real Property is not
designated for regulation by any conservation authority pursuant
to Applicable Law.
(6) Leased Premises.
(i) Schedule 2.1(6) lists each of the Leased Premises, including the
street address and a general description of the use thereof
in the Business.
(ii) Schedule 2.1(6) also includes a copy of each of the Premises
Leases, together with all amendments thereto. Each Premises
Lease is in full force and effect, unamended by oral or written
agreement except as set out in Schedule 2.1(6), and Seller is
entitled to the full benefit and advantage of such Premises
Lease in accordance with the terms thereof. Each Premises Lease
is in good standing and there has not been any material
default, or any act or omission which upon notice or with the
passage of would constitute a material default, under any
Premises Lease nor is there any dispute between Seller and any
landlord under any of the Premises Leases. None of the Premises
Leases has been assigned by Seller in favor of any Person and
Seller has full right, title and authority to assign the
Premises Leases to Buyer subject to the consents of the lessors
as set out in Exhibit 2.1(16).
(iii) Except as set out in Schedule 2.1(6), the current uses of the
Leased Premises by Seller comply with Applicable Law in all
material respects. No notice of violation of any Applicable Law
or of any covenant, restriction or easement affecting the Leased
Premises or with respect to the use or occupancy of the Leased
Premises has been given to Seller by any governmental authority
having jurisdiction over the Leased Premises or by any other
Person entitled to enforce the same.
(iv) To the Best Knowledge of Seller, there are no existing or
proposed or contemplated condemnation proceedings that would
result in the taking of all or any part of the Leased Premises or
that would adversely affect the current use of the Leased
Premises.
(v) To the Best Knowledge of Seller, the Improvements occupied by
Seller in any Leased Premises have been constructed in a good and
workmanlike manner in compliance with Applicable Law, all amounts
for labor and materials relating to the construction and repair
of such Improvements have been paid in full, and except for
Permitted Liens no one has a right to file a construction,
builders, mechanics or similar lien against such Improvements.
(vi) To the Best Knowledge of Seller, all Taxes with respect to the
Leased Premises which are due have been paid in full, and there
are no local improvement charges or special levies outstanding in
respect of the Leased Premises nor has Seller received any notice
of proposed local improvement charges or special levies.
(vii) To the Best Knowledge of Seller, all utilities required for the
normal operation of the Business from the Leased Premises connect
into the Leased Premises through adjoining public highways or, if
they pass through adjoining private land, do so in accordance
with valid registered easements and are sufficient for the
operation of the Leased Premises for purposes of the Business.
(viii) To the Best Knowledge of Seller, none of the Improvements has
been designated as an historical site or building pursuant to
Applicable Law, and none of the Leased Premises are designated
for regulation by any conservation authority pursuant to
Applicable Law.
(7) Personal Property. Schedule 2.1(7) lists, by location, each item of Personal
Property which as of November 28, 1999 had a book value in the accounting
records of Seller of more than $25,000 or is otherwise material to the Business.
All Personal Property is in good operating condition and repair, ordinary wear
and tear excepted.
(8) Personal Property Leases. Schedule 2.1(8):
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(i) Lists all of the Personal Property Leases, the lessor thereof,
and the property subject thereto;
(ii) Specifically identifies all of the Financing Leases (all of
which will be paid off by the Closing);
(iii) Specifically and separately identifies all of the other Personal
Property Leases which cannot be terminated by Seller without
liability at any time upon less than 30 days' notice or which
involve payment by Seller in the future of more than $25,000, and
(iv) Includes a copy of each of such Personal Property Leases which is
not a Financing Lease.
Each Personal Property Lease is in full force and effect and has not been
amended except as set out in Schedule 2.1(8), and Seller is entitled to the full
benefit and advantage of each Personal Property Lease in accordance with its
terms. Each Personal Property Lease is in good standing and there has not been
any default by any party under any Personal Property Lease nor any dispute
between Seller and any other party under any Personal Property Lease.
(9) Contracts. Schedule 2.1(9):
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(i) Lists and briefly describes all Material Contracts not included
in Schedule 2.1(6), Schedule 2.1(8), Schedule 2.1(22) or Schedule
2.1(23), provided that individual purchase or release orders need
not be listed if they are subject to a blanket purchase or supply
agreement which is listed and described;
(ii) Separately lists and briefly describes all Excluded Contracts;
and
(iii) Includes a copy of each written Material Contract, including all
amendments thereto, and a written description of the material
terms of any oral Material Contract, including all amendments
thereto.
Seller is not in default (and to the Best Knowledge of Seller there has not been
a default by any other party) under any Material Contract, and to the Best
Knowledge of Seller there has not occurred any event which, with a lapse of time
or giving of notice, or both, would constitute such a default. Except as set out
in Schedule 2.1(9), each Material Contract is in full force and effect,
unamended by written or oral agreement, and Seller is entitled to the full
benefit and advantage of each Material Contract in accordance with the terms of
each Material Contract. There are no open purchase or sales orders other than
those entered into in the ordinary course of the Business.
(10) Receivables. Schedule 2.1(10) is a list of all Receivables by debtor, due
date or aging, and dollar amount, as of November 28, 1999, which list will be
updated at Closing to a specified date not more than ten (10) days prior to the
Closing Date. All Receivables are valid obligations which arose in the usual,
ordinary and customary course of business. Except as set out in Schedule
2.1(10), none of the Receivables is due from an Affiliate or other Person with
whom Seller does not deal at arm's length. To the Best Knowledge of Seller, the
amounts of Receivables set out in Seller's books are not overstated and there
exist no facts or circumstances (other than general economic conditions) which
could reasonably be expected to result in any material increase in the
uncollectability of the Receivables if pursued with good faith diligent efforts.
Schedule 2.1(10) also lists all Seller's known bad debts.
(11) Payables. Schedule 2.1(11) is a list of (i) all trade accounts payable and
(ii) all other accounts payable, by creditor, due date or aging, and dollar
amount, as of November 28, 1999, which list will be updated at Closing to a
specified date not more than ten (10) days prior to the Closing Date. All
accounts payable are valid obligations which arose in the usual, ordinary and
customary course of business, and except as set out in Schedule 2.1(11), to the
Best Knowledge of Seller the accounts payable are not subject to any known
defenses, set-offs or counterclaims. Schedule 2.1(11) also lists separately (i)
all accounts payable that are due to an Affiliate and (ii) all accounts payable
that are due to any other Person other than an Affiliate with whom Seller does
not deal at arm's length. To the Best Knowledge of Seller, the amounts of
accounts payable set out in Seller's books are not understated. No failure by
Seller to pay its accounts payable in full will subject Buyer to claims under
any bulk sales laws, cause any creditor of Seller to attempt to induce Buyer to
pay any such unpaid account payable to such creditor as a condition of such
creditor's willingness to continue doing business with such creditor after the
Closing, or otherwise interfere with or adversely affect Buyer's conduct of the
Business after the Effective Time.
(12) Inventories. Except as set out in Schedule 2.1(12), the Inventories consist
of items of a quality and quantity usable and saleable in the ordinary course of
business and are valued in accordance with GAAP. All items included in the
Inventories are owned by Seller. No items included in the Inventories are held
by Seller on consignment from others or have been pledged as collateral except
pursuant to Permitted Liens.
(13) Intellectual Property.
(i) Schedule 2.1(13) lists all issued patents, patents pending, and
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registered and unregistered trade names and trademarks Related to
the Business, and all other registrations and applications for
registration of the Intellectual Property, by jurisdiction and
with applicable filing, renewal and expiration dates and other
payment due dates. All the registrations and applications for
registration of the Intellectual Property are valid and
subsisting in good standing and are recorded in the name of
Seller. No application for registration of any of the
Intellectual Property currently used in the Business has been
rejected. No registration of any of the Intellectual Property
currently used in the Business has been terminated or has
lapsed or expired.
(ii) Except as set out in Schedule 2.1(13), Seller is the only owner
of the Intellectual Property and is entitled to the exclusive and
uninterrupted use of the Intellectual Property without payment of
any royalty or other fees. No shareholder, officer, director or
employee of Seller or any third party has any right, title or
interest in any of the Intellectual Property.
(iii) Seller has diligently protected its legal rights to the
exclusive use of the Intellectual Property.
(iv) All of Seller's permissions and licenses currently in effect to
use the industrial or intellectual property of other Persons in
the Business are disclosed in Schedule 2.1(13). Seller is not
currently permitting or licensing any Person to use any of the
Intellectual Property except as disclosed in Schedule 2.1(13).
All licenses referred to in Schedule 2.1(13) are in full force
and effect and neither Seller nor the other party is in default
of its obligations.
(v) Except as set out in Schedule 2.1(13): (A) no Person has
challenged the validity of any registrations for the
Intellectual Property or Seller's rights to any of the
Intellectual Property, (B) to the Best Knowledge of Seller,
neither the use of the Intellectual Property nor the conduct of
the Business has infringed or currently infringes upon the
industrial or intellectual property rights of any other Person,
(C) to the Best Knowledge of Seller, no other Person has
infringed Seller's rights to the Intellectual Property, and
(D) there is no governmental prohibition or restriction on the
use of the Intellectual Property.
(14) Data Processing. Schedule 2.1(14) sets out:
(i) A brief description of Seller's computer equipment and associated
peripheral devices and the related operating and application
systems and other software owned, leased or licensed by Seller
and used by it in connection with the Business other than
off-the-shelf personal computer software subject to transferable
licenses (together, the "Data Processing System");
(ii) A description of the ownership, management and control of the
Data Processing System and the employment of the staff related
thereto as among Seller, Holdings and Uniroyal, and a description
of any agreement or arrangement between Seller and Holdings or
Uniroyal pertaining to the use, management, control or staffing
of the Data Processing System, including a copy of all written
agreements; and
(iii) A list of all other agreements or arrangements, including
warranties, leases and licenses and any agreement or arrangement
with any other Person, relating to the Data Processing System.
Except as set out in Schedule 2.1(14), Holdings and Uniroyal do not own
or have any interest in the Data Processing System. The Data
Processing System adequately meets the data processing needs of
the Business and operations of Seller as presently conducted.
Seller has taken appropriate action by instruction, agreement or
otherwise with its Employees or other persons permitted access to
system application programs and data files used in the Data
Processing System to protect against unauthorized access, use,
copying, modification, theft and destruction of such programs and
files, including the use of login passwords to access system
application programs and data files used in the Data Processing
System. Seller has arranged for back-up data processing services
adequate to meet the data processing needs of the Business in the
event the Data Processing System or any of its components is
rendered temporarily or permanently inoperative as a result of a
natural or other disaster, as described in Schedule 2.1(14). The
Data Processing System has been tested for "Year 2000"
compliance, the results of which testing are set out in Schedule
2.1(14), and to the Best Knowledge of Seller, except as set out
in Schedule 2.1(14) the Data Processing System is "Year 2000"
compliant. Seller has received no information that any of the
principal customers, suppliers, utilities or transportation
service providers of the Business anticipates any material "Year
2000"-related delays or interruptions in such Person's business,
or in such Person's ability to carry on its normal business with
Seller with respect to the Business, as a result of the "Year
2000" transition. Seller has not experienced any "Year
2000"-related delays or interruptions in the Business which have
had any material adverse effect on the Business or the Purchased
Assets.
(15) Licenses and Permits. Schedule 2.1(15) lists all the Licenses and Permits
and identifies the ones that by their terms are not transferable. Seller holds
all Licenses and Permits free and clear of any and all Liens. All Licenses and
Permits, including details as to whether or not such Licenses and Permits are
transferable, are described in Schedule 2.1(15). Such rights are in full force
and effect, and to the Best Knowledge of Seller, Seller is not in violation of
any term or provision or requirement of any such Licenses and Permits, and no
Person has threatened to revoke, amend or impose any condition in respect of, or
commenced proceedings to revoke, amend or impose conditions in respect of, any
License or Permit.
(16) Consents and Approvals. Except for the Consents and Approvals listed in
Schedule 2.1(16), no consent of or approval by any Person is required in
connection with the execution and delivery of this Agreement or the completion
of the transactions contemplated by this Agreement.
(17) Notices. Except for the notices listed in Schedule 2.1(17), the notices
required to secure the Consents and Approvals listed in Schedule 2.1(16), and
the required notification under the HSR Act, no notice is required to be
delivered by Seller to any Person by Seller in connection with the execution and
delivery of this Agreement or the completion of the transactions contemplated by
this Agreement.
(18) Absence of Conflicting Agreements. The execution, delivery and performance
of this Agreement by Seller and the completion (with any required Consents and
Approvals) of the transactions contemplated by this Agreement do not and will
not result in or constitute any of the following:
(i) A default, breach or violation, or an event that with notice or
lapse of time or both would be a default, breach or violation, of
any of the terms, conditions or provisions of Seller's
certificate of incorporation or by-laws or of any Contract or
License or Permit, none of which defaults, breaches or violations
would, either singly or in the aggregate, have a material adverse
effect on the Business or the Purchased Assets;
(ii) Any event which, pursuant to the terms of any Contract or License
or Permit, causes any right or interest of Seller to come to an
end or be amended in any way that is detrimental to the Business
in any material respect or entitles any other Person to terminate
or amend any such right or interest in any material respect;
(iii) The creation, imposition or foreclosure of any Lien on any
Purchased Asset; or
(iv) The violation of any Applicable Law applicable to or affecting
Seller.
(19) Litigation. Schedule 2.1(19) lists and briefly describes the nature of any
action, suit, proceeding, claim, application, complaint or investigation in any
court or before any arbitrator or before or by any regulatory body or
governmental or non-governmental body pending, or to the Best Knowledge of
Seller threatened, by or against Seller or Holdings or Uniroyal Related to the
Business or affecting the Condition of the Business or the transactions
contemplated by this Agreement. To the Best Knowledge of Seller, except as set
out on Schedule 2.1(19) there is no factual or legal basis which could give rise
to any action, suit, proceeding, claim, application, complaint or investigation
which if pending or threatened at the date hereof would be required to be
disclosed on Schedule 2.1(19).
(20) Insurance. A list of the policies of insurance Related to the Business and
related to the Purchased Assets, with coverage limits and deductibles, is set
out in Schedule 2.1(20). All such policies are in full force and effect and
Seller is not in default, whether as to the payment of premium or otherwise,
under the terms of such policies.
(21) Environmental Matters. Except as set out in Schedule 2.1(21):
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(i) The Business has been and is currently carried on by Seller, and
the Purchased Assets and Leased Premises have been and are
currently used by Seller, in compliance with all Environmental
Laws in all material respects.
(ii) Seller has not used any machinery, equipment or facility included
in the Purchased Assets or otherwise on or in any Real Property
or Leased Premises, or permitted the Real Property or Leased
Premises to be used, to generate, manufacture, refine, treat,
transport, store, handle, dispose of, transfer, produce or
process any Hazardous Substance except in compliance with all
Environmental Laws in all material respects.
(iii) Seller is not, and has not been, subject to any proceedings
alleging the violation of any Environmental Law in relation to
the Business or the Purchased Assets and no part of the Business
or the Purchased Assets is the subject of any proceedings to
evaluate whether any remedial action is needed to respond to the
Release or presence of a Hazardous Substance on the Real Property
or the Leased Premises.
(iv) There are no circumstances that could reasonably be expected to
give rise to any civil or criminal proceedings or liability
regarding (A) the Release by Seller or presence of a Hazardous
Substance brought by Seller onto lands used in or related to
the Business and the Purchased Assets or, to the Best Knowledge
of Seller, on lands where Seller has disposed or arranged for
the disposal of materials arising from the conduct of the
Business or (B) the violation of any Environmental Law by
Seller, its Employees, agents or, to the Best Knowledge of
Seller, others for whom it is responsible in relation to the
Business.
(v) The Environmental Permits listed in Schedule 2.1(21) constitute
all Environmental Permits which are required for the operation
of the Business, including any machinery, equipment or facility
constituting the assets of the Business, as it is presently
being conducted. The Environmental Permits presently held are
valid and in full force and effect, and no violations thereof
have been experienced, noted, or recorded, and no proceedings
are pending or threatened to revoke or limit any of them.
(vi) All Hazardous Substances disposed of, treated or stored by Seller
on lands owned or occupied by Seller or, to the Best Knowledge of
Seller, off-site of such lands, have been disposed of, treated
and stored in compliance with all Environmental Laws in all
material respects.
(vii) There are no proceedings, nor, to the Best Knowledge of Seller,
any circumstances or material facts which could, if true, give
rise to any proceedings, in which it is alleged that Seller or
any previous owner of the Real Property or the Business is
potentially responsible for a domestic or foreign federal,
provincial, state, municipal or local clean-up or remediation of
lands contaminated with Hazardous Substances or for any other
remedial or corrective action under an Environmental Law.
(viii) To the Best Knowledge of Seller, there are no proceedings, nor
any circumstances or material facts which could, if true, give
rise to any proceedings, in which it is alleged that the owner of
the Leased Premises or any previous lessee of the Leased Premises
is potentially responsible for a domestic or foreign federal,
provincial, state, municipal or local clean-up or remediation of
the Leased Premises as a resultof contamination with Hazardous
Substances or for any other remedial or corrective action under
an Environmental Law.
(ix) Seller has maintained all environmental and operating documents
and records Related to the Business and the Purchased Assets in
the manner and for the time periods required by any Environmental
Law.
(x) Schedule 2.1(21) lists every environmental audit which Seller
or, to the Best Knowledge of Seller, any third party (other
than Buyer) has ever conducted of the Business or the Purchased
Assets, and Seller has provided to Buyer copies of all
environmental audits in its possession relating to the Business
or the Purchased Assets (for purposes of this Section, an
environmental audit includes any evaluation, assessment, review
or study performed at the request of or on behalf of Seller, a
prospective purchaser of the Business or the Purchased Assets,
a court or governmental authority).
(xi) There are no underground storage tanks located on the Real
Property or, to the Best Knowledge of Seller, on the Leased
Premises.
(xii) For purposes of the representations and warranties made in
Sections 2.1(21)(i) through 2.1(21)(x), the term "Seller" shall
include Holdings and Uniroyal (and any predecessors by merger)
with respect to all periods of time in which either of them or
any of their Affiliates conducted the Business or occupied the
Real Property or the Leased Premises.
(22) Employees.
(a) Schedule 2.1(22) lists:
----------------
(i) All the Employees of Seller as of the date of this Agreement; the
work location, age, position, status, length of service or date
of hire and current salary or wage rate, respectively; the salary
or wages, bonus and other compensation (separately itemized) paid
to each of them for fiscal 1999; and whether each is employed
under a collective bargaining agreement; and
(ii) All the employees of Holdings or Uniroyal who perform services
for Seller, a description of such services, and the approximate
percentage of the employee's working time devoted to such
services.
(b) Except as set out in Schedule 2.1(22), Seller is not a party to or
bound by any contracts or requirements of Applicable Law in respect of
any Employee, including:
(i) Any contracts or arrangements for the employment or statutory
re-employment of any Employee; or
(ii) Any bonus, deferred compensation, profit sharing, pension,
retirement, medical insurance, or other plans or arrangements
providing employee benefits, except for the Employee Plans.
(23) Collective Bargaining Agreements. Schedule 2.1(23) includes a copy of every
collective bargaining agreement, contract or legally binding commitment to any
trade union or employee organization or group in respect of or affecting
Employees to which Seller is a party. Except as set out in Schedule 2.1(23):
(i) Seller is not currently engaged in any labor negotiation;
(ii) Seller is not a party to any application, complaint or other
proceeding under any statute regarding collective bargaining;
(iii) the Business is not engaged in any unfair labor practice and
there is no complaint regarding any alleged unfair labor practice
pending or threatened against Seller;
(iv) there is no strike, labor dispute, work slowdown or stoppage
pending or, to the Best Knowledge of Seller, threatened against
the Business;
(v) there is no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement pending or, to the Best
Knowledge of Seller, threatened against the Business;
(vi) the Business has not experienced any material unscheduled work
stoppage since January 1, 1994; and
(vii) Seller is not the subject of any union organization effort.
(24) Employee Plans. Schedule 2.1(24) lists all the employee benefit, health,
welfare, supplemental unemployment benefit, bonus, pension, profit sharing,
401(k), deferred compensation, stock compensation, stock purchase, retirement,
post-retirement, medical, dental, retiree medical or dental, legal, disability
and similar plans or arrangements or practices relating to Employees or former
Employees which are currently maintained or were maintained at any time since
September 28, 1997 (the "Employee Plans"). Schedule 2.1(24) includes a copy of
each written Employee Plan (and, in the case of any unwritten Employee Plan, a
description thereof) and the most recent summary plan description for each
Employee Plan if any such description was required. Except as set out in
Schedule 2.1(24):
(i) All of the Employee Plans are and have been established,
registered, qualified, invested and administered, in all
material respects, in accordance with all Laws applicable to
the Employee Plans, including without limitation ERISA
("Applicable Employee Benefit Laws"), and each Employee Plan
which is intended to be qualified under Section 401(a) of the
Code satisfies the formal requirements for such qualification,
except that no representation is made with respect to any formal
qualification requirement for which the remedial amendment
period under Section 401(b)of the Code has not yet expired.
(ii) All obligations regarding the Employee Plans have been satisfied,
there are no outstanding defaults or violations by any party to
any Employee Plan and no Taxes, penalties or fees are owing under
any of the Employee Plans.
(iii) All contributions or premiums required to be made by Seller under
the terms of each Employee Plan or by Applicable Employee Benefit
Laws have been made in a timely fashion in accordance with
Applicable Employee Benefit Laws and the terms of the Employee
Plans, and all required contributions or premiums due with
respect to each Employee Plan will be paid in a timely manner.
(iv) There have been no improper withdrawals, applications or
transfers of assets from any Employee Plan or the trusts or other
funding media relating thereto, and neither Seller nor any of its
agents has been in breach of any fiduciary obligation with
respect to the administration of the Employee Plans or the trusts
or other funding media relating thereto.
(v) To the Best Knowledge of Seller, no Employee Plan has incurred
any material accumulated funding deficiency within the meaning of
Section 302 of ERISA, whether or not waived. To the Best
Knowledge of Seller, no Employee Plan nor any trust created
thereunder nor any trustee or administrator thereof has engaged
in a prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code for which an exception is not
available.
(vi) No Employee Plan, nor any related trust or other funding medium
thereunder, is subject to any pending investigation, examination
or other proceeding, action or claim initiated by any
governmental agency or instrumentality, or by any other party
(other than routine claims for benefits), and there exists no
state of facts which after notice or lapse of time or both could
reasonably be expected to give rise to any such investigation,
examination or other proceeding, action or claim.
(vii) All filings required by ERISA and the Code as to each Employee
Plan have been timely filed, and all notices and disclosures to
participants in the Employee Plans required by ERISA or the Code
have been timely provided.
(viii) Neither Seller nor any other Person that, together with Seller,
would be treated as a single employer under Section 414 of the
Code, has ever established, maintained or contributed to, or
otherwise participated in, any multiemployer plan as defined in
Section 3(37)(A) of Title I of ERISA.
(ix) None of the Employee Plans provides benefits to retired employees
or to the beneficiaries or dependants of retired employees.
(x) No improvements to any Employee Plan have been promised and no
amendments or improvements to an Employee Plan will be made or
promised before the Effective Time.
(25) Bonuses. Schedule 2.1(25) sets out (separately) all bonuses, fees or other
compensation in excess of normal salary or wages (i) paid for fiscal 1998, (ii)
paid for fiscal 1999, and (iii) payable but not yet paid for fiscal 1999, to
each of the Employees. Except as set out in Schedule 2.1(25), since September
27, 1998 Seller has not paid any bonus, fee, or other compensation to any Person
other than salaries, wages or bonuses paid or payable to Seller's Employees in
the ordinary course of business in accordance with current compensation levels
and practices as set out in Schedule 2.1(22) and Schedule 2.1(24).
(26) Customers and Suppliers. Schedule 2.1(26) lists the ten largest customers
and the ten largest suppliers of the Business (or such additional customers or
suppliers of the Business which were sufficient to constitute at least 10% or
more of total sales or purchases, as the case may be) for the 12-month period
ended September 26, 1999, and the aggregate amount which each customer was
invoiced and each supplier was paid during such period. To the Best Knowledge of
Seller, no such customer or supplier intends to cease doing business with Seller
or to change in any material manner any existing arrangement with Seller Related
to the Business for the purchase or supply of any products or services or is
considering doing so.
(27) Tax Withholding. Seller has timely withheld (and will timely withhold), all
Taxes required to be withheld from Employees' compensation, and has remitted
(and will remit) all amounts withheld and the employer's share of all OASDI and
Medicare Taxes to the appropriate authorities within the prescribed times.
(28) Financial Statements. Seller has furnished Buyer with the audited financial
statements of Seller for each of the fiscal years ended September 29, 1996,
September 28, 1997, and September 27, 1998, and preliminary unaudited financial
statements of Seller for the year ended September 26, 1999, (collectively, the
"Financial Statements"), as well as access to Seller's accountants' work papers
related thereto. Prior to the Closing, Seller will furnish Buyer, as soon as
available, with copies of the audited financial statements of Seller for the
year ended September 26, 1999 and any unaudited financial statements of Seller
for any interim periods, each of which shall when provided be included in the
Financial Statements. The balance sheets contained in such Financial Statements
fairly present in all material respects the financial position of Seller as of
their respective dates and the statements of operations, retained earnings and
cash flows contained in the Financial Statements fairly present in all material
respects the results of operations for the periods indicated, in each case on a
basis consistent with prior periods.
(29) Brokerage Fees. No Person will have any claim against Buyer for a broker's
commission, finder's fee or any like payment in respect of the purchase and sale
of the Purchased Assets or any other matters contemplated by this Agreement, as
a result of any agreement or understanding with Seller, Holdings or Uniroyal.
(30) Operating and Maintenance History. Seller has made available to Buyer
all existing data regarding the operating and maintenance history of
the Purchased Assets.
(31) Compliance with Applicable Laws. Seller has operated and is operating
the Business in compliance with Applicable Laws in all material
respects.
(32) Warranty Claims. Copies of all written product warranties given by Seller
in the past five years, with effective dates of use, are attached as Schedule
2.1(32). Product warranty claims against Seller have historically not been
material in amount, and no such claims will be made as to products manufactured
by Seller before the Effective Time in an aggregate amount exceeding any
warranty reserve on the Closing Report plus any amounts reimbursed to Buyer
under applicable insurance policies.
(33) Ordinary Course. Except as set out in Schedule 2.1(33), since September
26, 1999 Seller has operated the Business only in the ordinary course
consistent with past practices.
(34) Seller's Subsidiaries. Seller has no Subsidiaries.
2.2 Representations and Warranties of Buyer. Buyer represents and warrants
to each of Seller, Holdings and Uniroyal as follows:
(1) Incorporation and Power. Buyer is a corporation duly organized and validly
existing under the General Corporation Law of Delaware. Buyer has all necessary
corporate power and authority to enter into this Agreement and the Related
Documents and to carry out its obligations under this Agreement and the Related
Documents.
(2) Due Authorization. The execution and delivery of this Agreement and the
Related Documents and the completion of the transactions contemplated by this
Agreement and the Related Documents have been duly authorized by all necessary
corporate action on the part of Buyer.
(3) Enforceability of Obligations. This Agreement constitutes, and when executed
as contemplated by this Agreement the Related Documents to be executed by Buyer
will constitute, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms.
(4) Brokerage Fees. No Person will have any claim against Seller, Holdings or
Uniroyal for a broker's commission, finder's fee or any like payment in respect
of the purchase and sale of the Purchased Assets or any other matters
contemplated by this Agreement, as a result of any agreement or understanding
with Buyer.
2.3 Survival of Representations and Warranties.
(a) Notwithstanding the Closing and any inspection or inquiries made by or on
behalf of Buyer, the representations and warranties of Seller contained in
Section 2.1 or any other certificate or instrument delivered at Closing pursuant
to this Agreement shall survive the Closing and continue in full force and
effect for the benefit of Buyer for a period of two (2) years after the Closing
Date, after which time Seller shall be released from all obligations in respect
of such representations and warranties except with respect to any Claims with
respect to which a Notice of Claim has been given by Buyer before the expiration
of such period; provided that:
(i) The representations and warranties of Seller set out in Section
2.1 which relate to warranties on products manufactured by Seller
shall survive for a period ending not later than the expiration
of any applicable statutes of limitations applicable to actions
for breach of such warranties;
(ii) To the extent that the untruth of a representation or warranty by
Seller is occasioned by facts which also constitute the breach
of a representation, warranty or covenant made to Seller by a
third party (including but not limited to a Person from which
Seller acquired Purchased Assets), such representation or
warranty by Seller shall survive for a period not less than the
remainder of the period during which Seller has recourse
against the third party for the third party's breach; and
(iii) There shall be no time limit (other than as provided by
applicable statutes of limitations) on the representations and
warranties of Seller which relate to: the corporate status of
Seller, Holdings and Uniroyal; the due authorization of this
Agreement by Seller, Holdings, Uniroyal and their respective
shareholders; the enforceability of Seller's, Holdings' and
Uniroyal's obligations under this Agreement; tax matters;
environmental matters; pension matters; or the title of any
Person to any property (whether real or personal, tangible or
intangible).
(b) Notwithstanding the Closing and any inspection or inquiries made by
or on behalf of Seller, the representations and warranties of Buyer contained in
Section 2.2 or any other certificate or instrument delivered pursuant to this
Agreement shall survive the Closing and continue in full force and effect for
the benefit of Seller for a period of two (2) years after the Closing Date,
after which time Buyer shall be released from all obligations in respect of such
representations and warranties except with respect to any Claims asserted by
Seller in writing (setting out in reasonable detail the nature of the Claim and
the appropriate amount thereof) before the expiration of such period; provided
that there shall be no time limit (other than as imposed by applicable statutes
of limitations) on the representations and warranties of Buyer set out in
Section 2.2 which relate to the corporate status of Buyer, the due authorization
of this Agreement by Buyer and the enforceability of Buyer's obligations under
this Agreement.
ARTICLE 3. INTERIM PERIOD
3.1 Due Diligence Investigations. Until the Closing, Buyer and its
representatives and advisers shall be permitted to make such investigations,
inspections, surveys or tests of the properties and assets of Seller, its
predecessor companies and its Affiliates and of their respective financial and
legal condition as Buyer deems necessary or desirable to familiarize itself with
such properties, assets and other matters. Without limiting the generality of
the foregoing, Buyer shall, during normal business hours, be permitted complete
access to all documents relating to information scheduled or required to be
disclosed under this Agreement, the Employees, premises, books, minute books,
contracts, documents, data, soil test reports, environmental reports, surveys,
inspection reports, records regarding suppliers, customers and regulators, any
other reports prepared by advisers and other records of Seller, its predecessor
companies and its Affiliates (and Seller shall provide photocopies to Buyer of
all such written information and documents as may be reasonably requested by
Buyer). Any such investigations, inspections, surveys or tests shall not,
however, affect or mitigate the representations and warranties of Seller under
this Agreement which shall continue in full force and effect as provided under
this Agreement unless Buyer has knowledge of a breach thereof and fails to
notify Seller. 3.2 Authorizations. Seller shall execute and deliver any
authorizations required to permit the investigations, inspections, surveys or
tests described in Section 3.1. 3.3 Confidentiality.
(a) Each Party shall hold in strictest confidence and not use in any manner,
other than as expressly contemplated by this Agreement, any Confidential
Information of the other Party; provided that a Party may disclose Confidential
Information to its Representatives who need to know such information for the
purpose of assisting such Party with respect to this Agreement, who have been
informed by such Party of the confidential nature of the Confidential
Information, and who either agree in writing to hold such Confidential
Information confidential or who are in an employment or other relationship with
such Party in which such obligation is implicit.
(b) Section 3.3(a) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose, or whose Representative is required to disclose,
shall, as soon as possible in the circumstances, notify the other Party of the
requirement. Upon receiving such notification, the other Party may take any
reasonable action to challenge the requirement, and the affected Party shall, or
shall cause the applicable Representative to, at the expense of the other Party,
assist the other Party in taking such reasonable action.
(c) Following any termination of this Agreement, each Party shall, and shall
cause each of its Representatives to, promptly upon a request from the other
Party, return to the requesting Party all copies of any tangible items (other
than this Agreement), if any, which are or which contain Confidential
Information of the requesting Party, without retaining any copies, extracts or
other reproductions in whole or in part thereof; provided that if the Party so
obligated to return Confidential Information or its Representatives have
prepared summaries or analyses containing or concerning any Confidential
Information or made confidential notations on copies of Confidential
Information, then such Party may, instead of returning the summaries or analyses
or copies on which confidential notations have been made, destroy them (except
for an archival copy) and provide a certificate to that effect to the requesting
Party.
(d) The existing Secrecy Agreement between Buyer and Uniroyal dated October 19,
1999 shall remain in effect according to its terms until the Closing, and
thereafter with respect to information not included in the Purchased Assets and
the Business.
3.4 Public Announcements.
(a) The parties will discuss the timing of, and will give each other a
reasonable opportunity to review and comment on the substance of, any press
release or other public disclosure pertaining to this Agreement or the
transactions contemplated hereby, including those contemplated below. The
Parties will cooperate with each other to coordinate all disclosures to the
Employees and all press releases or written statements for general circulation.
(b) Except with the prior approval of the other Parties as to timing and
substance, which approval will not be unreasonably withheld or delayed, no Party
shall make any public announcement regarding this Agreement or the transactions
contemplated by this Agreement prior to the Effective Time except as provided in
this Section 3.4.
(c) Except as set forth below, the Parties agree not to disclose publicly the
terms of this Agreement prior to the Closing. The Parties agree that Seller and
Buyer will publicly disclose the existence of this Agreement by appropriate
press releases promptly after its execution, without disclosing its specific
terms, and Seller and Buyer each agree to provide the other with a draft copy of
the proposed release for review and comment. It is also understood and agreed
that the Agreement will need to be filed with the Federal Trade Commission and
the Department of Justice in order to comply with the HSR Act.
(d) Uniroyal and Buyer will each give the other a reasonable opportunity to
review and comment on any description of the transaction in such Party's Form
10-K for fiscal 1999, and any reference to the non-filing Party therein shall be
subject to the approval of the non-filing Party, which approval shall not
unreasonably be withheld.
(e) If a Party deems it necessary, in the judgment of its legal counsel, to
disclose any of the terms of this Agreement before the Closing in order to
comply with its obligations as a public company or otherwise in order to comply
with Applicable Law, it will use its best efforts to promptly advise the other
Parties and to discuss with the other Parties the timing, nature and substance
of the disclosure.
(f) The Parties agree that the terms of this Agreement will be publicly
disclosed after Closing through their separate filings of Form 8-K with the
Securities and Exchange Commission.
3.5 Risk of Loss. The Purchased Assets shall be at the risk of Seller until the
Effective Time. Until the Effective Time, Seller shall maintain in force all the
policies of property damage insurance under which any of the Purchased Assets is
insured. If before the Effective Time any of the Purchased Assets is lost,
damaged or destroyed and the loss, damage or destruction constitutes a Material
Adverse Change, then:
(i) Buyer may terminate this Agreement in accordance with the
provisions of Section 4.3; or
(ii) Buyer may require Seller to assign to Buyer the proceeds of any
insurance payable as a result of the occurrence of such loss,
damage or destruction and to reduce the Purchase Price by the
amount of the replacement cost of the Purchased Assets which were
lost, damaged or destroyed less the amount of any proceeds of
insurance payable as a result of the occurrence.
3.6 Conduct of Business During Interim Period. During the Interim Period,
except as Buyer may otherwise consent, Seller shall:
(i) Carry on the Business in the normal course and only in the normal
course, except as otherwise contemplated by this Agreement;
(ii) Not make any material change in its customary operating methods,
or create or discharge Receivables or Liabilities or acquire or
dispose of Purchased Assets except in the ordinary course of the
Business;
(iii) Not acquire or dispose of any fixed assets having a value of more
than $50,000 (except as already planned pursuant to the Polycast
Consolidation), or make any commitment to do so, without the
approval of Buyer;
(iv) Maintain and keep the Purchased Assets in good repair (normal
wear and tear excepted), and maintain insurance with respect to
the Purchased Assets and business in accordance with past
practice;
(v) Use reasonable efforts to preserve for Buyer the good will of
Seller's suppliers, customers, landlords, Employees and others
having a business relationship with the Business;
(vi) Notify Buyer immediately of any Material Adverse Change and of
any breach of any representation, warranty or covenant in this
Agreement, and supplement the Schedules to this Agreement
promptly as required to correct any errors therein or to reflect
any changes in the information required to be set out therein;
and
(vii) Not commit any act or omission that would cause a breach of any
representation, warranty or covenant contained in this Agreement.
3.7 Exclusive Dealings. During the Interim Period, Seller, Holdings and Uniroyal
shall not take any action, directly or indirectly, to encourage, initiate or
engage in discussions or negotiations with, or provide any information to any
Person, other than Buyer and its designated and authorized representatives,
concerning any sale, transfer, assignment, license, merger or similar
transaction involving a change in ownership or control of Seller, the Business
or the Purchased Assets except as contemplated by this Agreement. Seller shall
notify Buyer promptly if any such discussions or negotiations are sought or if
any proposal for a sale, transfer, assignment, license, merger or similar
transaction affecting the Business is received or being considered.
3.8 Consents and Approvals. Seller shall use its best efforts to obtain all
Consents and Approvals before the Closing Date at Seller's expense; and Buyer
will cooperate with Seller in these efforts.
3.9 Regulatory Approvals. Buyer and Seller will promptly make all required
filings under the HSR Act. Seller shall cooperate with Buyer and render all
necessary assistance required by Buyer, at Buyer's expense, in connection with
any application, notification or filing required of Buyer or in connection with
Buyer's application for any Licenses and Permits which may be required in order
for Buyer to be able to carry on the Business after the Effective Time.
3.10 Updates to Information. Seller shall update on or before the Closing, by
written amendment or supplement, any of the Schedules referred to in this
Agreement and any other disclosures from Seller to Buyer, as soon as reasonably
possible after new or conflicting information comes to the attention of Seller.
3.11 Viplex/Happel Consolidation . Seller shall advise Buyer fully as to its
plans to consolidate the operations of its Viplex and Happel Marine operations,
and shall not take any action to further consolidate such operations without
Buyer's consent, which shall not be withheld or delayed unreasonably in light of
Buyer's plans for the Business.
ARTICLE 4. CONDITIONS OF CLOSING
4.1 Conditions to Buyer's Obligation to Close. Buyer shall not be obliged to
complete the purchase and sale of the Purchased Assets pursuant to this
Agreement unless, at or before the Closing, each of the following conditions has
been satisfied, it being understood that the following conditions are included
for the exclusive benefit of Buyer and may be waived, in whole or in part, in
writing by Buyer at any time; and Seller agrees with Buyer to take all such
actions, steps and proceedings as are reasonably within its control as may be
necessary to ensure that the following conditions are satisfied at or before the
Closing:
(i) Representations and Warranties. The representations and
warranties of Seller in Section 2.1 shall be true and correct in
all material respects as of the time of execution hereof and at
the Closing as though made at the Effective Time.
(ii) Seller's Compliance. Seller shall have performed and complied in
all material respects with all of the terms and conditions in
this Agreement on its part to be performed or complied with at or
before Closing and shall have executed and delivered or caused to
have been executed and delivered to Buyer at the Closing all the
documents contemplated in Section 5.2 or elsewhere in this
Agreement.
(iii) Changes to Schedules. Any material supplements, amendments or
corrections to the Schedules hereto made after the date hereof
shall be reasonably acceptable to Buyer; provided that any such
Schedule shall be deemed acceptable unless Buyer notifies Seller
of its objection within ten (10) days after its receipt of such
Schedule or by the completion of the Closing, whichever occurs
first.
(iv) Due Diligence Investigation. Buyer shall have conducted and
completed its investigation of Seller, the Business and the
Purchased Assets, and as a result of its investigations carried
out pursuant to Section 3.1:
(A) Buyer shall be satisfied with the results of any
environmental or safety audit of the Business or its
properties and with any survey of the Leased Premises
commissioned by Buyer, and in particular (without
limitation) the parties shall have agreed to Buyer's
reasonable satisfaction upon procedures for the
further investigation, and/or remediation, and/or
allocation of remediation costs, related to any risks
identified in any such audit or survey; and
(B) Buyer shall be satisfied with the results of its other due
diligence investigations, provided that Buyer will
promptly, and in any event within ten (10) days after
discovery, advise Seller of any due diligence results to
which Buyer objects or with which Buyer is dissatisfied,
and shall give Seller a reasonable opportunity to respond
to such objection or attempt to remedy the cause of such
dissatisfaction.
(v) Material Adverse Change. During the Interim Period, there shall
have been no Material Adverse Change.
(vi) No Litigation. There shall be no litigation or proceedings
pending or threatened against either of the Parties or against
any of their respective Affiliates or any of their respective
directors or officers:
(A) For the purpose of enjoining, preventing or restraining
the completion of the transactions contemplated hereby or
otherwise claiming that such completion is improper, and
which in the written opinion of outside legal counsel for
Buyer would more likely than not survive a motion to
dismiss; or
(B) Which the Chief Executive Officer of Buyer certifies,
based on his information and belief, would (if successful)
materially and adversely affect the right of Buyer to
acquire or retain the Purchased Assets or to continue the
operations of the Business after Closing, or would, in the
judgment of such Chief Executive Officer, make the
completion of the transactions contemplated by this
Agreement inadvisable.
(vii) Consents and Approvals. All the material Consents and Approvals
shall have been obtained. The waiting period (and any extension
thereof) under the HSR Act applicable to the transactions
contemplated hereby shall have expired or been terminated.
(viii) Permits. Buyer shall have no reason to believe that Buyer will
not receive all necessary building, environmental and other
permits required to operate the Business in compliance with all
Applicable Law effective as of the Effective Time in all material
respects.
(ix) Title Insurance. Commitments for owners' policies of title
insurance with respect to the Real Property shall have been
issued to Buyer, on an ALTA standard form with only such
exceptions as are either Permitted Liens or are otherwise
reasonably satisfactory to Buyer, in such amounts as shall be
reasonably determined by Buyer not to exceed the fair market
value of the respective properties.
(x) Collective Bargaining Agreements. Each union party to a
collective bargaining agreement described in Schedule 2.1(23)
shall have agreed to Buyer's assumption of the agreement
without change except as to employee benefit plans, which will
be those offered by Buyer. The collective bargaining agreement
with employees at Seller's Stamford, Connecticut facility shall
have been extended to April, 2001 on substantially the same
terms as in the current agreement set out in Schedule 2.1(23)
except for a $.65 per hour pay increase and
prescription drug card coverage with a $750 individual/$1,500
family maximum.
(xi) No Financing Leases. All Financing Leases shall be paid up by
Seller and title to the subject property shall have been
transferred to Seller or shall be transferable directly to Buyer
free and clear of all Liens subject only to the lessor's receipt
of payment in a stated amount as set out in a payoff letter;
(xii) No Liens. All indebtedness of the Business to Seller's commercial
lenders shall have been paid off, and the Purchased Assets shall
be free and clear of all Liens other than Permitted Liens on Real
Property.
4.2 Conditions to Seller's Obligation to Close. Seller shall not be obliged to
complete the transactions contemplated by this Agreement unless, at or before
the Closing, each of the following conditions has been satisfied, it being
understood that the following conditions are included for the exclusive benefit
of Seller, and may be waived, in whole or in part, in writing by Seller at any
time; and Buyer agrees with Seller to take all such actions, steps and
proceedings within Buyer's reasonable control as may be necessary to ensure that
the following conditions are satisfied at or before the Closing:
(i) Representations and Warranties. The representations and
warranties of Buyer in Section 2.2 shall be true and correct in
all material respects as of the time of execution hereof and at
the Closing as though made at the Effective Time.
(ii) Buyer's Compliance. Buyer shall have performed and complied in
all material respects with all of the terms and conditions in
this Agreement on its part to be performed or complied with at or
before the Closing and shall have executed and delivered or
caused to have been executed and delivered to Seller at the
Closing all the documents contemplated in Section 5.3 or
elsewhere in this Agreement.
(iii) No Litigation. There shall be no litigation or proceedings
pending or threatened against either of the Parties or against
any of their respective Affiliates or any of their respective
directors or officers for the purpose of enjoining, preventing or
restraining the completion of the transactions contemplated
hereby or otherwise claiming that such completion is improper,
and which in the written opinion of outside legal counsel for
Seller would more likely than not survive a motion to dismiss.
(iv) Consents and Approvals. All the material Consents and Approvals
shall have been obtained. The waiting period (and any extension
thereof) under the HSR Act applicable to the transactions
contemplated hereby shall have expired or been terminated.
4.3 Effect of Failure to Close. If any condition in Section 4.1 or Section 4.2
shall not have been fulfilled at or before the Closing, or if the Closing has
not occurred by March 31, 2000, then the Party entitled to the benefit of such
condition may, in its sole discretion, without limiting any rights or remedies
available to Seller at law or in equity, either:
(i) Terminate this Agreement by notice to the other Party, subject to
compliance with Section 8.4, in which event the Parties shall be
released from all obligations under this Agreement; or
(ii) Waive compliance with any such condition or extend or defer the
Closing in order to permit compliance, without prejudice to its
right of termination in the event of non-fulfillment of any other
condition;
provided that a Party's completion of the Closing shall constitute a waiver of
all unsatisfied conditions to such Party's obligation to close.
ARTICLE 5. CLOSING ARRANGEMENTS
5.1 Closing. The Closing shall take place at 9:00 a.m. local time on February
15, 2000 or such earlier or later date as may be agreed upon in writing by
Seller and Buyer (the "Closing Date"), at Seller's executive offices in
Sarasota, Florida or such other place as may be agreed orally or in writing by
Seller and Buyer. If Seller or Buyer notifies the other Parties that despite its
diligent efforts it will be unable to close on the Closing Date as then fixed,
specifying the reason therefor, then the Closing Date will be extended for one
week or such lesser period as is specified in the notice, subject to possible
termination of this Agreement as set out in Section 4.3.
5.2 Seller's Closing Deliveries. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following documents:
(i) A Bill of Sale substantially in the form of Exhibit A and an
Assignment and Assumption Agreement substantially in the form of
Exhibit B, duly executed by Seller, together with such other
bills of sale or instruments of conveyance, assignment or
transfer as may be reasonably required by Buyer;
(ii) A certificate of the Chairman and Chief Executive Officer of
Seller or the Vice Chairman of Seller dated as of the Closing
Date as to compliance with Seller's representations, warranties
and covenants, substantially in the form of Exhibit C;
(iii) A certificate of the Secretary or other authorized officer of
Seller as to compliance with corporate requirements,
substantially in the form of Exhibit D;
(iv) An opinion of Seller's Counsel, substantially in the form of
Exhibit E;
(v) Copies of all written Consents and Approvals to the transactions
contemplated by this Agreement, in form and substance reasonably
satisfactory to Buyer;
(vi) Payoff letters, releases or other evidence reasonably
satisfactory to Buyer as to the release (or agreement to release
upon receipt of payment) of all Liens against the Purchased
Assets which are to be released at or before the Closing; and
(vii) Such other deeds of conveyance, bills of sale, assurances,
transfers, assignments, consents, agreements, documents and
instruments as are required to evidence satisfaction of the
conditions set out in Section 4.1 or as may be reasonably
required by Buyer to complete the transactions provided for in
this Agreement.
5.3 Buyer's Closing Deliveries. At the Closing, Buyer shall deliver or
cause to be delivered to Seller the following documents and payments:
(i) An Assignment and Assumption Agreement substantially in the form
of Exhibit B, duly executed by Buyer;
(ii) A certificate of the President or Executive Vice President of
Buyer dated as of the Closing Date as to compliance with Buyer's
representations, warranties and covenants, substantially in the
form of Exhibit F;
(iii) A certificate of the Secretary or other authorized officer of
Buyer as to compliance with corporate requirements, substantially
in the form of Exhibit G;
(iv) An opinion of Buyer's Counsel, substantially in the form of
Exhibit H;
(v) The payments provided in Section 1.4 to be made at Closing; and
(vi) Such other assurances, agreements, documents and instruments as
are required to evidence satisfaction of the conditions set out
in Section 4.2 or as may be reasonably required by Seller to
complete the transactions provided for in this Agreement.
5.4 Possession. On the Closing Date, Seller shall deliver or cause to be
delivered to Buyer possession of the Purchased Assets.
5.5 Non-Transferable and Non-Assignable Assets. To the extent that any of the
Purchased Assets to be transferred to Buyer, or any claim, right or benefit
arising under or resulting from such Purchased Assets (a "Right") is not capable
of being transferred without the approval, consent or waiver of any third
Person, or if the transfer of a Right would constitute a breach of any
obligation under, or a violation of, any Assigned Contract or Applicable Law
unless the approval, consent or waiver of such third Person is obtained, then,
except as expressly otherwise provided in this Agreement and without limiting
the rights and remedies of Buyer contained elsewhere in this Agreement, this
Agreement shall not constitute an agreement to transfer such Right unless and
until such approval, consent or waiver has been obtained. Until all such Rights
are transferred to Buyer, Seller shall:
(i) Maintain its existence and hold the Rights in trust for Buyer;
(ii) Comply with the terms and provisions of the Rights as agent for
Buyer at Buyer's cost and for Buyer's benefit;
(iii) Cooperate with Buyer in any reasonable and lawful arrangements
designed to provide the benefits of such Rights to Buyer; and
(iv) Enforce, at the request of Buyer and at the expense and for the
account of Buyer, any rights of Seller arising from such Rights
against any third Person, including the right to elect to
terminate any such rights in accordance with the terms of such
rights upon the written direction of Buyer.
In order that the full value of the Rights may be realized for the benefit of
Buyer, Seller shall, at the request and expense and under the direction of
Buyer, in the name of Seller or otherwise as Buyer may specify, take all such
action and do or cause to be done all such things as are, in the opinion of
Buyer, reasonably necessary in order that the obligations of Seller under such
Rights may be performed in such manner that the value of such Rights is
preserved and inures to the benefit of Buyer, and that any moneys due and
payable and to become due and payable to Buyer in and under the Rights are
received by Buyer. Seller shall promptly pay to Buyer all moneys collected by or
paid to Seller in respect of every such Right. Buyer shall indemnify and hold
Seller harmless from and against any claim or liability under or in respect of
such Rights arising because of any action of Seller taken pursuant to this
Section 5.5.
ARTICLE 6. INDEMNIFICATION
6.1 Indemnity by Seller. Seller shall indemnify and hold harmless Buyer, its
directors, officers, employees, agents, representatives and Buyer's Affiliates
and their respective directors, officers and employees, in respect of any claim,
demand, action, cause of action, damage, loss, cost, liability or expense
including reasonable attorneys' fees (hereinafter referred to as a "Claim")
which may be made or brought against an Indemnified Party or which it may suffer
or incur directly or indirectly as a result of, in respect of or arising out of:
(i) Any material incorrectness in or breach of any representation or
warranty of Seller contained in this Agreement or in any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement, unless Buyer was aware of the
incorrectness or breach before completion of the Closing; or
(ii) Any material breach or non-fulfillment of any covenant or
agreement on the part of Seller under this Agreement or under any
other agreement, certificate or instrument executed and delivered
pursuant to this Agreement, unless Buyer was aware of the breach
or non-fulfillment before the completion of the Closing; or
(iii) Any liability not described in Section 6.1(i) or Section 6.1(ii)
arising out of Seller's conduct of the Business or ownership of
the Purchased Assets prior to the Effective Time, other than an
Assumed Liability.
6.2 Indemnity by Buyer. Buyer shall indemnify and hold harmless Seller, its
directors, officers, employees, agents, representatives and Seller's Affiliates
and their respective directors, officers and employees, in respect of any Claim
which may be made or brought against an Indemnified Party or which it may suffer
or incur directly or indirectly as a result of in respect of or arising out of:
(i) Any material incorrectness in or breach of any representation or
warranty of Buyer contained in this Agreement or in any other
agreement, certificate or instrument executed and delivered
pursuant to this Agreement, unless Seller was aware of the
incorrectness or breach before completion of the Closing; or
(ii) Any material breach or non-fulfillment of any covenant or
agreement on the part of Buyer under this Agreement or under any
other agreement, certificate or instrument executed and delivered
pursuant to this Agreement, unless Seller was aware of the breach
or non-fulfillment before the completion of the Closing; or
(iii) Any Assumed Liability, and any liability not described in Section
6.2(i) or Section 6.2(ii) arising out of Buyer's conduct of the
Business or ownership of the Purchased Assets after the Effective
Time.
6.3 Limitations.
(a) An Indemnifying Party shall have no obligation for indemnification pursuant
to Section 6.1(i) or Section 6.2(i) unless and until the accumulated aggregate
amount of Claims against the Indemnifying Party exceeds a threshold of $100,000,
but if such threshold is met all Claims shall be recoverable; provided that the
$100,000 threshold shall not apply to
(i) Any individual Claim in excess of $25,000, or
(ii) Any Claim to the extent that Seller has a right of indemnity for
such Claim against a third party which is not subject to a
threshold, or
(iv) Any Claim by Buyer arising from a breach of Sections 2.1(1),
2.1(2), 2.1(3), 2.1(4) or 2.1(29), or
(v) Any Claim by Seller arising from a breach of Section 2.2,
all of which Claims shall nevertheless count toward the $100,000 threshold.
(b) Seller shall have no obligation to indemnify Buyer from and against a breach
by Seller if and to the extent that such breach resulted in an adjustment to the
Purchase Price as provided for in Section 1.5 or Section 1.6, or, except as
otherwise set out in Section 7.9, for any amount in excess of $25,000,000.
6.4 Notice of Claim. If an Indemnified Party becomes aware of a Claim in respect
of which indemnification is provided for pursuant to either of Section 6.1 or
6.2, as the case may be, the Indemnified Party shall promptly give written
notice of the Claim (a "Notice of Claim") to the Indemnifying Party. Such notice
shall specify whether the Claim arises as a result of a claim by a Person
against the Indemnified Party (a "Third Party Claim") or whether the Claim does
not so arise (a "Direct Claim"), and shall also specify in reasonable detail (to
the extent that the information is available):
(i) The nature of and claimed factual basis for the Claim; and
(ii) The amount or approximate amount of the Claim, if and to the
extent known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive a Notice of Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the liability of the
Indemnifying Party to the Indemnified Party under this Article 6 shall be
reduced by the amount of any losses incurred by the Indemnifying Party resulting
from the Indemnified Party's failure to give such Notice of Claim on a timely
basis.
6.5 Direct Claims. In the case of a Direct Claim, the Indemnifying Party shall
have 30 days from receipt of the Notice of Claim within which to make such
investigation of the Claim as the Indemnifying Party considers necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both Parties
agree at or before the expiration of such 30-day period (or any mutually agreed
upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
binding arbitration in such manner as the Parties may agree or shall be
determined by a court of competent jurisdiction.
6.6 Third Party Claims.
(a) In the case of a Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defense of the Claim. The Indemnified Party shall have the right
to participate in the negotiation, settlement or defense of such Third Party
Claim and to retain counsel to act on its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel at its expense or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party and a representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to a conflict of interest between them. The Indemnified Party
shall co-operate with the Indemnifying Party so as to permit the Indemnifying
Party to conduct such negotiation, settlement and defense and for this purpose
shall preserve all relevant documents in relation to the Third Party Claim,
allow the Indemnifying Party access on reasonable notice to inspect and take
copies of all such documents and require its personnel to provide such
statements as the Indemnifying Party may reasonably require and to attend and
give evidence at any trial or hearing in respect of the Third Party Claim. If,
having elected to assume control of the negotiation, settlement or defense of
the Third Party Claim, the Indemnifying Party thereafter fails to conduct such
negotiation, settlement or defense with reasonable diligence, then the
Indemnified Party shall be entitled, after ten (10) days' notice to the
Indemnifying Party, to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim.
(b) If the Indemnifying Party fails to assume control of the defense of any
Third Party Claim, the Indemnified Party shall have the exclusive right to
contest, settle or pay the amount claimed. Whether or not the Indemnifying Party
assumes control of the negotiation, settlement or defense of any Third Party
Claim, the Indemnifying Party shall not settle any Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the liability of the
Indemnifying Party shall be limited to the proposed settlement amount if any
such consent is not obtained for any reason within a reasonable time after the
request therefor.
6.7 Interest on Claims. The amount of any Claim submitted under Section 6.1 or
Section 6.2 as damages or by way of indemnification shall bear interest from and
including the date any Indemnified Party is required to make payment in respect
thereof at the Prime Rate calculated from and including such date to but
excluding the date reimbursement of such Claim by the Indemnifying Party is
made, and the amount of such interest shall be deemed to be part of such Claim.
6.8 Calculation of Payment. The amount of indemnification against any Claim
submitted under Section 6.1 or 6.2 shall be determined after giving effect to
any insurance recoveries, Tax savings and recoveries from Third Parties, shall
be increased by an amount equal to any Taxes payable in respect of such amount.,
and shall also be adjusted if and to the extent applicable for any net income
tax impact on the Indemnified Party of both paying the Claim and receiving the
indemnity payment.
ARTICLE 7. OTHER MATTERS
7.1 Settlement by Seller. On or before the Closing Date, Seller shall pay or
otherwise settle with each of its Employees and independent sales
representatives all salaries, commissions, bonuses, and other amounts that may
become payable to or receivable by such Employees for all periods before the
Effective Time. Buyer will not assume any liability for salaries, wages,
Employee Plan contributions or benefits or other cash payment to or for the
benefit of Employees or independent sales representatives on account of service
before the Closing, except that Buyer will assume Seller's liability incurred in
the ordinary course of business before the Effective Time for unreimbursed
business expenses or for accrued vacation or pay in lieu of vacation, but only
with respect to Transferred Employees (which matters shall be fully accrued as
Liabilities on Seller's balance sheet for purposes of calculating Net Working
Capital).
7.2 Excluded Assets. Unless provided otherwise herein, Seller shall at its own
expense remove all tangible assets which are Excluded Assets or which are
subject to Excluded Contracts, if any, from the premises of the Business within
ten (10) days following the Closing Date, in such a manner as not to disrupt
Buyer's conduct of the Business.
7.3 Payment of Excluded Liabilities. Seller shall pay in full in a timely
manner all Liabilities of Seller other than the Assumed Liabilities which are
not otherwise paid as set out herein.
7.4 Covenant Not to Compete. Each of Seller, Holdings and Uniroyal hereby agrees
that for a period of five (5) years after the Closing Date, it will not directly
or indirectly, as a partner, joint venturer, employer, consultant, shareholder,
principal, manager, agent or otherwise, own, manage, operate, join, control or
participate in the ownership, management, operation or control of any business,
whether in corporate, limited liability company or partnership form or
otherwise, which in any way engages in North America in
(i) The business of extruding plastic sheets, or casting acrylic
sheets, blocks, rods or tubes, or stretching, finishing, coating
or laminating any plastic sheet or acrylic products, or any other
business carried on by Seller at the date hereof or at the
Closing Date; or
(ii) The business of extruding plastic sheets or profile products, or
injection molding plastic products, or compounding plastic
resins, color concentrates or other additives, or any other
business carried on by Buyer at the date hereof;
provided, however, that nothing herein shall be construed to prevent Seller,
Holdings and Uniroyal from holding collectively not more than 5% of the shares
in any company whose shares are quoted on any stock exchange, even though that
company carries on activities which would violate one or more of the foregoing
provisions if carried on by Seller, Holdings or Uniroyal. Seller, holdings and
Uniroyal acknowledge and agree that in view of the nature of the Business and
the Purchased Assets and the business objectives of Buyer in acquiring them and
the consideration paid to Seller therefor, the scope of business, territorial
and time limitations contained in this Section 7.4 are reasonable and properly
required for the adequate protection of Buyer. The Parties intend for the
covenants of this Section 7.4 to be enforceable to the maximum extent permitted
by law but to be severable, and if any reviewing court deems any of such
covenants to be unenforceable or invalid, such determination shall not affect
the enforceability of any other covenants herein; further, in the event of any
such determination the Parties authorize such court to reform the unenforceable
or invalid provisions and to impose such restrictions as reformed, as it deems
reasonable.
7.5 Further Assurances; Parent Company Guarantee. Each Party shall promptly do,
execute, deliver or cause to be done, executed and delivered all further acts,
documents and things in connection with this Agreement that the other Party may
reasonably require, for the purposes of giving effect to this Agreement.
Holdings and Uniroyal agree to use their reasonable best efforts, both
individually and as shareholders, to cause Seller to perform its covenants
hereunder, and jointly and severally guarantee the full and timely performance
of this Agreement by their respective subsidiaries.
7.6 Bulk Sales Legislation. Seller and Buyer hereby waive compliance with
any applicable bulk sales legislation.
7.7 Hiring of Employees.
(a) Buyer shall offer employment to all Employees of Seller covered under any of
the collective bargaining agreements listed in Schedule 2.1(23) (`Bargaining
Employees") and currently and actively employed in the Business, effective as of
the Effective Time. Buyer may, but need not, offer employment to any or all
Employees of Seller other than Bargaining Employees and to any or all employees
of Holdings or Uniroyal a majority of whose working time (as set out on Schedule
2.1(22)) is devoted to services for Seller, in each case on such terms as Buyer
deems acceptable, subject to the provisions of this Agreement. Seller shall use
its best efforts to assist Buyer in securing the employment of those Employees
whom Buyer wishes to hire, subject to the requirements of this Section 7.7.
Transferred Employees shall be deemed to have resigned their employment with
Seller as of the Effective Date.
(b) Buyer will advise Seller as promptly as practicable of the Employees it
does not intend to hire.
(c) Except as otherwise required by a collective bargaining agreement, a
Transferred Employee who is on a leave of absence from Seller on the Effective
Date shall not be eligible to participate in Buyer's medical plan until such
Transferred Employee's leave of absence terminates and he or she commences
employment duties for Buyer, a Transferred Employee who is hospitalized or
otherwise institutionalized for medical reasons on the Effective Date shall not
be eligible to participate in Buyer's medical plan until such Transferred
Employee is discharged from care and he or she commences employment duties for
Buyer, and a dependent of a Transferred Employee who is hospitalized or
otherwise institutionalized for medical reasons on the Effective Date shall not
be eligible to participate in Buyer's medical plan until such dependent is
discharged from care. Buyer shall provide all welfare benefits incurred after
the Effective Time for all Transferred Employees who are Bargaining Employees
according to the applicable collective bargaining agreement. Seller shall be
responsible for all welfare benefits for Transferred Employees that are incurred
prior to the Effective Time.
(d) Buyer's employee benefit plans shall provide, for eligibility and vesting
purposes, that the employment of the Transferred Employees with Seller shall be
credited as employment with Buyer (but employment with Seller's predecessors
shall be credited only if and to the extent Seller has credited such employment
for Seller's own benefit plans).
(e) If Seller pays severance or termination payments or payments in lieu of
accrued vacation to a Transferred Employee, Buyer shall not be required to carry
over the vacation accrual for such Transferred Employee. Transferred Employees
who are disabled at the Effective Time shall continue to receive disability
benefits from Seller or pursuant to a Seller disability plan until such employee
recovers from disability or is re-employed by Buyer.
(f) Except as otherwise provided in this Section 7.7, Buyer shall have no
liability to employees of Seller or Transferred Employees for events or
occurrences which take place or arise prior to Closing or for:
(i) Any obligations and claims under the Employee Plans;
(ii) Any failure to withhold or remit Taxes;
(iii) Any claims for worker's compensation benefits by employees or
former employees;
(iv) Any claims against Seller for discriminatory employment
practices; or
(v) Except as provided in paragraph 7.7(h), any obligations Seller
has to its Employees or their dependents under sections 601
through 609 of Title I of ERISA ("COBRA"), including such
obligations relating to Transferred Employees and their
dependents.
(g) Seller and Buyer will work together to enable Transferred Employees to
transfer appropriate portions of their accounts under applicable defined
contribution Benefit Plans to corresponding defined contribution benefit plans
of Buyer after the Closing.
(h) All benefits to which any Employee or his or her qualifying beneficiaries
may be entitled under COBRA for qualifying events occurring prior to the
Effective Time shall be provided for Transferred Employees and their qualifying
beneficiaries by Buyer and for all other Employees and their qualifying
beneficiaries by Seller.
(i) Except to the extent of the Assumed Liabilities, nothing in this Agreement
shall cause Buyer to have any liability under or responsibility for or with
respect to any Employee Plan.
(j) Seller, Holdings or Uniroyal will not solicit for employment any Transferred
Employee for two (2) years after the Effective Date without Buyer's prior
written consent; provided that they may solicit for employment any Transferred
Employee whose employment is terminated by Buyer or who is responding to a
general advertisement not targeted to the Transferred Employee. For purposes of
this Section 7.7(i), a Transferred Employee's employment by Buyer shall be
deemed to have been terminated by Buyer if the Transferred Employee's continued
employment is made subject to relocation of his or her place of employment by
more than 50 miles or subject to a material reduction in compensation or
benefits.
7.8 Data Processing. Seller agrees to provide Buyer with access to and the use
of Seller's existing data processing and payroll processing facilities,
equipment, software and personnel during a post-Closing transition period of up
to two years, at a cost which will not exceed Seller's incremental out-of-pocket
cost of providing such services. The manner and operational procedures for
implementing this covenant will be determined by the Parties in a timely manner
from time to time as required.
7.9 FTC Investigation.
(a) Seller will use its best efforts to obtain FTC approval of the proposed sale
to American Technical Plastics of Seller's colored cell-cast acrylic rod and
tube business, carried on by Seller at the Stirling Facility, and to consummate
the sale prior to the Closing. In such event, the assets of that business will
be Excluded Assets.
(b) In addition (and whether or not the above sale is consummated), Seller will
also endeavor to resolve the investigation currently pending at the FTC
regarding the Townsend/Glasflex Business in light of the sale to American
Technical Plastics and by attempting to convince FTC staff that (i) new
competitors and the reduced market share of Townsend/Glasflex obviate the FTC's
concerns, and (ii) there are other products that compete effectively with clear
cell-cast acrylic tubes.
(c) If by the Closing Date the FTC has not approved the sale described in
Section 7.9(a) and the matter described in Section 7.9(b) has not been resolved,
then following the Closing, to the extent required in order to obtain resolution
of such FTC investigation Buyer agrees to either divest a portion of the
Townsend/Glasflex Business in coordination with the FTC or sell the small tubes
portion of the Townsend/Glasflex Business to Seller (which may then operate such
business at the Stirling Facility notwithstanding Section 7.4).
(d) Any portion of the rod & tube business not acquired by Buyer or subsequently
divested by Buyer to resolve the FTC investigation will result in a Purchase
Price reduction, as follows:
(i) (Annual sales divested times gross margin) less direct costs of
sales = operating income contribution; and
(ii) Operating income contribution times 7.0 = value of business
divested or not acquired; and
(iii) Value of business divested or not acquired less net proceeds to
Buyer of divestiture (if any) = Purchase Price reduction.
7.10 Environmental Investigation and Remediation.
(a) Stamford Property.
-----------------
(i) Before the Closing, Seller will do further "Phase II"-type
investigations (core and groundwater samples, etc.) at Seller's
Stamford, Connecticut Real Property and Improvements thereon
(the "Stamford Property") reasonably satisfactory to Buyer, for
the purpose of defining the extent and magnitude of potential
environmental contamination resulting from all documented
historical site events (i.e. including not just oil migration
but on-site spills, leakages, fires, etc.). It is understood
that additional issues may emerge as a result of the
investigation which need to be addressed.
(ii) Seller will remediate at its expense all identified contamination
at the Stamford Property, except as agreed to by the parties, and
will do what is required for ECAF approval of title transfer.
(iii) If remediation is not completed by the Closing (as the Parties
agree is likely), then Buyer will lease the Stamford Property
from Seller, on a triple-net basis at nominal rent, for 25 years
from the Effective Date, with an option to purchase the property
at a nominal price when remediation is completed (during the term
of the lease).
(iv) Seller shall indemnify and hold harmless Buyer, its directors,
officers, employees, agents, representatives and Buyer's
affiliates and their respective directors, officers and employees
in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or
indirectly as a result of in respect of or arising out of
environmental contamination to the Stamford Property arising
prior to the Closing. This indemnity will not be subject to any
basket, cap or time limitation.
(b) Hackensack Property.
(i) Before the Closing, Seller will do further "Phase II"-type
investigation (core and groundwater samples, etc.) at Seller's
Hackensack, New Jersey Real Property and Improvements thereon
(the "Hackensack Property") reasonably satisfactory to Buyer,
for the purpose of defining the extent and magnitude of
potential environmental contamination resulting from all
documented historical site events (i.e. including not just MMA
spills but UST removal,leakages, fires, etc.). It is understood
that additional issues may emerge as a result of the
investigation which need to be addressed.
(ii) Seller will remediate at its expense all identified contamination
at the Hackensack Property, except as agreed to by the parties,
and will do what is required for ISRA approval of title transfer.
(iii) If remediation is not completed by the Closing (as the Parties
agree is likely), then Buyer will lease the Hackensack Property
from Seller, on a triple-net basis at nominal rent, for 25 years
from the Effective Date, with an option to purchase the property
at a nominal price when remediation is completed (during the term
of the lease).
(iv) Seller shall indemnify and hold harmless Buyer, its directors,
officers, employees, agents, representatives and Buyer's
affiliates and their respective directors, officers and employees
in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or
indirectly as a result of in respect of or arising out of
environmental contamination to the Hackensack Property arising
prior to the Closing. This indemnity will not be subject to any
basket, cap or time limitation.
(c) Warsaw Property.
(i) Before the Closing, Seller will have the pond/retention basin on
Seller's Warsaw, Indiana Real Property (the "Warsaw Property")
sampled, and investigate the known UST or underground spill
reservoir, for the purpose of defining the extent and magnitude
of any potential soil or groundwater contamination. If any
contamination is found, Seller will clean up the affected areas.
Buyer will have reasonable input on the extent of sampling, the
reported results, and the cleanup plans.
(ii) Seller shall indemnify and hold harmless Buyer, its directors,
officers, employees, agents, representatives and Buyer's
affiliates and their respective directors, officers and employees
in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or
indirectly as a result of in respect of or arising out of
environmental contamination to the Warsaw Property arising prior
to the Closing. This indemnity will not be subject to any basket,
cap or time limitation.
(d) Rome Property.
(i) Before the Closing, Seller will have Seller's Rome, Georgia Real
Property (the "Rome Property") sampled, for the purpose of
defining the extent and magnitude of any potential soil or
groundwater contamination that may exist from the disposal of
waste oil on the site. If any contamination is found, Seller will
clean up the affected areas. Buyer will have reasonable input on
the extent of sampling, the reported results, and the cleanup
plans.
(ii) Seller shall indemnify and hold harmless Buyer, its directors,
officers, employees, agents, representatives and Buyer's
affiliates and their respective directors, officers and employees
in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or
indirectly as a result of in respect of or arising out of
environmental contamination to the Rome Property arising prior to
the Closing. This indemnity will not be subject to any basket,
cap or time limitation.
(e) Pleasant Hill Property.
(i) Seller will use reasonable best efforts to cause the lessor of
the Leased Premises in Pleasant Hill, Iowa (the "Pleasant Hill
Site") to extend the lease of the Pleasant Hill Site to 2025 at
the same rent and with the same purchase option.
(ii) If the lease is not extended, or if ongoing remediation at the
Pleasant Hill Site substantially impairs Buyer's business
operations at the Pleasant Hill Site, Seller will reimburse Buyer
for the costs of relocating the Pleasant Hill operations, up to
$750,000.
(iii) Seller shall indemnify and hold harmless Buyer, its directors,
officers, employees, agents, representatives and Buyer's
affiliates and their respective directors, officers and employees
in respect of any Claim which may be made or brought against an
Indemnified Party or which it may suffer or incur directly or
indirectly as a result of in respect of or arising out of
environmental contamination to the Pleasant Hill Site arising
prior to the Closing. This indemnity will not be subject to any
basket, cap or time limitation.
ARTICLE 8. MISCELLANEOUS PROVISIONS
8.1 Interpretation.
(a) In this Agreement, capitalized terms shall have the meanings set out in
Appendix B hereto, unless the context requires otherwise.
(b) The division of this Agreement into Articles and Sections, the insertion of
headings, and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
(c) Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
(d) If any payment is required to be made or other action is required to be
taken pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day, but interest,
if applicable, shall continue to accrue until the date of payment.
(e) Unless the context requires otherwise, references in this Agreement to
Sections, Exhibits or Schedules are to Sections, Exhibits or Schedules of this
Agreement. The Exhibits and Schedules to this Agreement are listed following the
signature page hereof and incorporated herein by reference.
8.2 Expenses. Each Party shall be responsible for its own legal and other
expenses incurred in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the transactions contemplated by
this Agreement and for the payment of any broker's commission, finder's fee or
like payment payable by it in respect of the purchase and sale of the Purchased
Assets pursuant to this Agreement. The costs of title reports, title insurance,
title company closing services, transfer excise taxes, and similar expenses
shall be allocated equally between Buyer and Seller.
8.3 Notices. Any notice or other communication required or permitted to be given
or made under this Agreement shall be in writing and shall be delivered
personally or sent by prepaid overnight courier service, by certified mail,
return receipt requested, or by fax, in each case to the applicable address set
out below:
If to Seller, Holdings
or Uniroyal, to: Uniroyal Technology Corporation
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236-5568
Attention: Howard R. Curd,
Chairman of the Board and
Chief Executive Officer
Fax: (941) 361-2214
with a copy to: Uniroyal Technology Corporation
Two North Tamiami Trail, Suite 900
Sarasota, Florida 34236-5568
Attention: Oliver J. Janney,
Vice President, General
Counsel and Secretary
Fax: (941) 361-2214
If to Buyer, to: Spartech Corporation
120 South Central Avenue, Suite 1700
Clayton, Missouri 63105
Attention: Bradley B. Buechler,
Chairman of the Board,
President and Chief Executive
Officer
Fax: (314) 721-1447
with a copy to: Spartech Corporation
120 South Central Avenue, Suite 1700
Clayton, Missouri 63105
Attention: Jeffrey D. Fisher,
Vice President and
General Counsel
Fax: (314) 721-1543
(b) Such notice or other communication shall be deemed to be effectively given
or made only if received, as evidenced by receipt, fax confirmation or other
proof of delivery, and shall be deemed to have been given or made, and received:
(i) On the day of delivery, if delivered personally, by courier
service or by mail; or
(ii) On the day of faxing, provided that such day is a Business Day
and the transmission is completed before 5:00 p.m. local time at
the place of receipt on such day; otherwise, on the next
following Business Day.
(d) Either Party may from time to time change its address under this Section 8.3
by notice to the other Party given in the manner provided by this Section 8.3.
8.4 Pre-Termination Dispute Resolution. If any Party determines that there
is a reasonable likelihood that:
(i) One or more of the conditions to such Party's or any other
Party's obligation to complete the transactions described herein
cannot or will not be met in a timely manner, or
(ii) Such Party will not be able to complete its own obligation to
complete the transactions described herein or will otherwise
materially breach its obligations hereunder, or
(iii) Any other Party has committed or will commit a material breach
of its obligations hereunder;
then the Party making such determination shall promptly notify the other Parties
of its determination, stating the condition which may not be met or the breach
which has occurred or may occur, and describing generally the reason or reasons
therefor. Thereupon, the Parties will as promptly as practicable discuss the
matter among themselves and diligently endeavor to reach mutual agreement on
procedures or covenants which will either permit the condition to be met or
waived or the breach to be cured. This Agreement may not be terminated on
account of the failure of such condition or by reason of such breach unless and
until the Parties have diligently attempted to reach an acceptable solution
pursuant to this Section over a period of at least ten (10) days following the
initial notification, during which time the Parties' respective Chief Executive
Officers shall have met in person for such purpose at least once. Provided, that
nothing in this Section shall require a Party to waive a condition or remedy or
to incur expense on account of another party's breach.
8.5 Entire Agreement. Except as specifically set out in this Agreement and
except for the Non-Solicitation Agreement between Buyer, Seller and Uniroyal
dated December 8, 1999, this Agreement constitutes the entire agreement between
the Parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions between the
Parties in connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise).
8.6 Waiver. A waiver of any default, breach or non-compliance under this
Agreement is not effective unless in writing and signed by the Party to be bound
by the waiver. No waiver shall be inferred from or implied by any failure to act
or delay in acting by a Party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other Party. The
waiver by a Party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that Party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
8.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such prohibition or unenforceability and shall be severed from
the balance of this Agreement, all without affecting the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
8.8 Injunctive Relief. The Parties specifically acknowledge and agree that a
remedy at law for breach of the provisions of this Agreement will be inadequate
and that a Party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief.
8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri (which is the jurisdiction in
which Buyer's parent corporation is headquartered and which the Parties
acknowledge has a reasonable nexus with the subject matter of this Agreement),
exclusive of principles of conflicts of laws.
8.10 Successors and Assigns. This Agreement shall inure to the benefit of, and
be binding on, the Parties and their respective successors and permitted
assigns. Neither Party may assign or transfer, whether absolutely, by way of
security or otherwise, all or any part of its respective rights or obligations
under this Agreement without the prior written consent of the other Party;
provided, that Buyer may assign its rights and/or delegate its duties under this
Agreement in whole or in part to a wholly-owned subsidiary, but such assignment
or delegation shall not discharge Buyer from any obligations hereunder without
the express written consent of Seller.
8.11 No Third-Party Beneficiaries. No Person shall be a third-party beneficiary
of any covenant in this Agreement except as expressly provided in Article 6 or
Section 7.10.
8.12 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which taken together
shall be deemed to constitute one and the same instrument. Counterparts may be
executed either in original or faxed form and the Parties adopt any signature of
a Party received by a receiving fax machine as an original signature of the
Party; provided, however, that a Party providing its signature in such manner
shall promptly forward to the other Party an original of the signed copy of this
Agreement which was so faxed.
IN WITNESS WHEREOF, the Parties have executed this Agreement.
Buyer: SPARTECH CORPORATION
By: /s/ Bradley B. Buechler
------------------------------
Bradley B. Buechler
Chairman of the Board, President
and Chief Executive Officer
Seller: HIGH PERFORMANCE PLASTICS, INC.
By: /s/ Howard R.Curd
------------------------------
Howard R. Curd
Chairman of the Board
and Chief Executive Officer
Holdings: UNIROYAL HPP HOLDINGS, INC.
By: /s/ Howard R. Curd
------------------------------
Howard R. Curd
Chairman of the Board
and Chief Executive Officer
Uniroyal: UNIROYAL TECHNOLOGY CORPORATION
By: /s/ Howard R. Curd_____________
------------------------------
Howard R. Curd
Chairman of the Board
and Chief Executive Officer
<PAGE>
A-I
APPENDIX A - Exhibits and Schedules
EXHIBITS
A Bill of Sale
B Assignment and Assumption Agreement
C Seller's Officer's Certificate
D Seller's Secretary's Certificate
E Opinion of Seller's Counsel
F Buyer's Officer's Certificate
G Buyer's Secretary's Certificate
H Opinion of Buyer's Counsel
SCHEDULES
2.1(1) Certificate of Incorporation and Bylaws; Lists of Officers and
Directors of Seller
2.1(4) Liens; Purchased Asset Locations
2.1(5) Real Property
2.1(6) Leased Premises
2.1(7) Personal Property
2.1(8) Personal Property Leases
2.1(9) Material Contracts; Excluded Contracts
2.1(10) Receivables
2.1(11) Payables
2.1(12) Inventories
2.1(13) Intellectual Property
2.1(14) Year 2000 Readiness
2.1(15) Licenses and Permits
2.1(16) Consents and Approvals
2.1(17) Notices
2.1(19) Litigation
2.1(20) Insurance
2.1(21) Environmental Matters
2.1(22) Employees
2.1(23) Collective Bargaining Agreements
2.1(24) Employee Plans
2.1(25) Bonuses, etc.
2.1(26) Customers and Suppliers
2.1(32) Warranties
2.1(33) Exceptions to Ordinary Course of Business
<PAGE>
B-XI
APPENDIX B - Glossary
For the purposes of this Agreement:
"Accountant" has the meaning given in Section 1.5(e).
"Affiliate" means, with respect to any Person, any other Person who directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with, such Person, and includes any Person in like relation to an
Affiliate. A Person shall be deemed to control a Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the term "controlled" shall
have a corresponding meaning.
"Agreement" means this Agreement, including the Exhibits and the Schedules to
this Agreement, as it or they may be amended or supplemented from time to time,
and the expressions "hereof," "herein," "hereto," "hereunder," "hereby" and
similar expressions refer to this Agreement and not to any particular Section or
other portion of this Agreement.
"Applicable Employee Benefit Laws" has the meaning given in Section 2.1(24).
"Applicable Law" means, with respect to any Person, property, transaction, event
or other matter, any Law relating or applicable to such Person, property,
transaction, event or other matter. Applicable Law also includes, where
appropriate, any interpretation of the Law (or any part) by any Person having
jurisdiction over it, or charged with its administration or interpretation.
"Assigned Contracts" means all rights and interests of Seller to and in all
pending and/or executory contracts, agreements, leases and arrangements Related
to the Business to or by which Seller or any of the Purchased Assets or Business
is bound or affected including the Material Contracts and the Leases (but not
including the Excluded Contracts).
"Assumed Liabilities" means only the following Liabilities of Seller, subject to
the exclusions described in clauses (1) through (6) of this definition:
(i) Payables. Seller's accounts payable incurred in the ordinary
course of the Business, as they exist at the Effective Time;
(ii) Contract Liabilities. Liabilities (other than liabilities under
any Employee Plans) arising in respect of the period commencing
at the Effective Time under the Assigned Contracts;
(iii) Liabilities Related to Customer-Owned Inventory. Any liabilities
at the Effective Time with respect to Customer-Owned Inventory
on the Business premises; and
(iv) Product Warranties. Seller's warranty fulfillment obligations
with respect to products sold by Seller before the Effective Time
in the ordinary course of the Business, but only to the extent
that such obligations do not exceed the cost to Buyer of (at
Buyer's option) repair, replacement or refund of an amount not
exceeding the purchase price of the warranted Products, and
excluding incidental or consequential damages and product
liability claims.
Without limiting the foregoing, it is expressly agreed that none of the
following shall be an Assumed Liability:
(1) Any product liability claim, whether known or unknown to Seller,
or any other liability or obligation in respect of or arising out
of products manufactured or sold by Seller or services performed
by Seller, except the limited warranty fulfillment obligations
expressly set out above; or
(2) Any liability for contributions (including without limitation any
unfunded benefit liabilities) to, or for payment of benefits
under, any Employee Plan; or any liability under Title IV of
ERISA; or
(3) Any liability arising out of any litigation, claim, dispute or
employee grievance pending at the Effective Time; or
(4) Any payable or other liability, including termination and
shutdown costs, related to Seller's former facility in Newport,
Delaware or Uniroyal's facility in Stirling, New Jersey; or
(5) Any residual or contingent liability to the respective sellers
incurred by reason of Seller's purchases of Townsend Plastics,
ViPlex Corporation, Happel Marine, Inc. or the "Willow Bank
S-A-R business;" or
(6) Any claim or liability that is required to be disclosed to Buyer
under this Agreement but is not so disclosed.
"Best Knowledge of Seller," when used to qualify a statement of fact, means
that, with respect to the statement so qualified, Seller shall be deemed, for
purposes of this Agreement, to have fully satisfied and complied with its
obligations to Buyer in respect of the truth of such statement if
(i) Any of Seller's corporate officers,
(ii) Any manager of any plant, any divisional director of
manufacturing, or any department head at South Bend,
(iii) Any person in charge of a principal business function, with
respect to that function,
(iv) Any person with purchasing responsibilities, with respect to
matters involving suppliers,
(v) Any sales manager, with respect to matters involving products or
customers within such person's authority or territory, or
(vi) Any person at the level of controller or above, with respect to
financial matters,
has personal knowledge of the truth of such statement or, to the extent that
such person does not possess sufficient personal knowledge thereof, such person
has obtained and/or confirmed the truth of such statement through inquiries of
other officers or Employees of Seller who, having regard to their positions, job
descriptions and responsibilities, should reasonably be expected to have and
disclose knowledge and information relevant to the matter in question upon
inquiry.
"Books and Records" means all books, records, files and papers Related to the
Business or the Purchased Assets including drawings, engineering information,
computer programs (including source code), software programs, manuals and data,
sales and advertising materials, sales and purchases correspondence, trade
association files, research and development records, lists of present and former
customers and suppliers, personnel, employment and other records, and all copies
and recordings of the foregoing.
"Business" means the business carried on by Seller's "Polycast Acrylics" and
"Royalite Thermoplastics" divisions.
"Business Day" means any day except Saturday, Sunday or any day on which banks
are generally not open for business in the cities of Clayton, Missouri,
Sarasota, Florida or New York, New York.
"Buyer" has the meaning given in the Preamble.
"Buyer's Counsel" means Jeffrey D. Fisher, Esq., the Vice President and General
Counsel of Buyer.
"Claim" has the meaning given in Section 6.1.
"Closing" means the completion of the purchase and sale of the Purchased Assets
in accordance with the provisions of this Agreement.
"Closing Date" has the meaning given in Section 5.1.
"Closing Report" has the meaning given in Section 1.5(a).
"Condition of the Business" means the condition (financial or otherwise) of the
Business taken as a whole, having regard to its earnings, assets, liabilities,
properties, operations and prospects.
"Confidential Information" of a Party at any time means all information relating
to such Party's business, including without limitation data, plans, reports,
drawings, forecasts, trade secrets, business and financial information, which:
(i) At the time is of a confidential nature (whether or not
specifically identified as confidential) and is known or should
be known by the other Party or its Representatives as being
confidential, and
(ii) Has been or is from time to time made known to or is otherwise
learned by the other Party or any of its Representatives as a
result of the matters provided for in this Agreement,
including the terms of this Agreement. However, Confidential Information shall
not include any information that is:
(i) Already known to the receiving Party at the time of receipt
thereof; or
(ii) Publicly available at the time of its receipt by the receiving
Party or subsequently becomes publicly available other than
through a breach of the receiving Party's confidentiality
obligations to another Party; or
(iii) Received by the receiving Party from a third party who is not
under a restriction or duty of confidentiality as to such
information.
"Consents and Approvals" means all consents and approvals required to be
obtained by Seller in connection with the execution and delivery of this
Agreement and the completion of the transactions contemplated by this Agreement,
including without limitation any contractually required consents to Seller's
assignment of any Purchased Assets to Buyer.
"Customer-Owned Inventory" means customer-owned inventory in or in transit to or
from Seller's plants.
"Data Processing System" has the meaning given in Section 2.1(14).
"Direct Claim" has the meaning given in Section 6.4.
"Effective Date" means the day after the Closing Date, or such earlier or later
date as may be agreed upon in writing by the Parties.
"Effective Time" means 12:01 a.m. Eastern Standard Time on the Effective Date or
such other time as may be agreed upon in writing by the Parties.
"Employee" means an individual who is employed by Seller in the Business, or who
is employed by Holdings or Uniroyal and who is primarily assigned to or whose
employment duties are primarily rendered to the Business, and "Employees" means
every Employee.
"Employee Advances" means Seller's advances to and receivables from the
Transferred Employees, and excludes any obligations of Transferred Employees to
Employee Plans.
"Employee Plans" has the meaning given in Section 2.1(24).
"Environmental Laws" means Applicable Law in respect of the natural environment,
public or occupational health or safety, and the manufacture, importation,
handling, transportation, storage, disposal and treatment of Hazardous
Substances.
"Environmental Permits" means all permits, certificates, approvals, consents,
registrations and licenses issued or required by any Environmental Laws or any
court or governmental authority and relating to or required for the ownership
and/or operation of the Business and/or the Purchased Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Estimated Purchase Price" has the meaning given in Section 1.3.
"Excluded Assets" means only the following property and assets of Seller:
(i) Unrelated Assets. All assets, properties, interests and rights
not Related to the Business.
(ii) Excluded Receivables. Any Receivables over 90 days old at the
Closing Date which Buyer elects (not later than the Closing) not
to purchase, and any Receivables from Employees other than
Transferred Employees, or from officers, directors or Affiliates
of Seller, Holdings or Uniroyal.
(iii) Notes from Affiliates. Long-term notes receivable from Seller's
Affiliates or other related parties.
(iv) Deferred Taxes. Deferred taxes or deferred costs and similar
balance sheet accounting adjustments.
(v) Corporate Records. Any minute books, share certificates and
other records having to do with the corporate organization of
Seller.
(vi) Excluded Contracts. All Excluded Contracts.
------------------
(vii) Bank Accounts and Cash. Seller's accounts with financial
institutions, and all cash on hand or in banks or other
depositories.
(viii) Employee Plans. All rights and interests in and to all Employee
Plans of Seller and any related assets.
(ix) Certain Insurance Refunds and Proceeds. Any insurance and/or
worker's compensation premium refunds and proceeds from claims
arising out of occurrences prior to the Effective Time, and any
prepaid insurance premiums on policies which are not assigned to
Buyer.
(x) Employee Life Insurance Policies. Any insurance policies owned
by Seller on the life of any Employee or former Employee.
(xi) Customer-Owned Molds. Any ownership interest in customer-owned
molds and tooling, provided that Buyer shall succeed to whatever
possessory, contractual or other rights Seller may have in such
items.
(xii) Stirling Facility. The Real Property, including Improvements, at
Uniroyal's Stirling, New Jersey facility.
(xiii) Newport Facility. Any Real Property or Premises Leases related
to Seller's now-closed Newport, Delaware facility.
(xiv) Townsend/Glasflex Business. Any portion of the Townsend/Glasflex
Business which is not acquired by Buyer.
(xv) Rights in Transaction. The rights of Seller relating to this
Agreement or any agreements or documents made pursuant to this
Agreement.
"Excluded Contracts" means
(i) All agreements to incur, assume or repay debt, including
promissory notes, except any which Buyer may expressly agree to
assume;
(ii) All Financing Leases, except any which Buyer may expressly agree
to assume;
(iii) All employment, consulting or sales representative contracts,
except for any such contract which Buyer and the employee,
consultant or sales representative mutually agree shall be
assumed, or which is assignable to Buyer without the consent of
the other party and which Buyer may expressly agree to assume;
(iv) All contracts not Related to the Business or related solely to
Excluded Assets;
(v) All contracts not entered into in the ordinary course of the
Business, except for any such contract which Buyer may expressly
agree to assume; and
(vi) Any other contracts and agreements listed in Schedule 2.1(9) as
Excluded Contracts.
"Financial Statements" has the meaning given in Section 2.1(30).
"Financing Lease" means any lease, conditional sales contract or other agreement
of similar nature whose primary purpose is to provide a financing vehicle for
Seller's acquisition of Personal Property and under which Seller has the right
to acquire ownership of the subject Personal Property at the end of the term
thereof for a price less than its then fair market value.
"FTC" means the United States Federal Trade Commission.
"GAAP" means generally accepted United States accounting principles.
"Hackensack Property" has the meaning given in Section 7.10.
"Hazardous Substance" means any solid, liquid, gas, odor, heat, sound,
vibration, radiation or combination of them that may impair the natural
environment, injure or damage property or plant or animal life or harm or impair
the health of any individual.
"Holdings" has the meaning given in the Preamble.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act,
15 U.S.C.ss.18a, as amended.
"Improvements" means all buildings, fixtures, sidings, parking lots, roadways,
structures, fixtures and appurtenances situated on, in, under, over or forming
part of the Leased Premises or the Real Property, as the case may be.
"Including" means "including without limitation," and "includes" means "includes
without limitation."
"Indemnified Party" means a Person whom Seller or Buyer, as the case may be, has
agreed to indemnify under Article 6 or Section 7.10, as the case may be.
"Indemnifying Party" means, in relation to an Indemnified Party, the Party to
this Agreement that has agreed to indemnify that Indemnified Party under Article
6 or Section 7.10, as the case may be.
"Intellectual Property" means all rights to and interests in:
(i) All business and trade names, corporate names, brand names and
slogans Related to the Business;
(ii) All inventions, patents, patent rights, patent applications
(including all reissues, divisions, continuations,
continuations-in-part and extensions of any patent or patent
application), industrial designs and applications for
registration of industrial designs Related to the Business;
(iii) All copyrights and trademarks (whether used with wares or
services and including the goodwill attaching to such
trademarks), registrations and applications for trademarks and
copyrights (and all future income from such trademarks and
copyrights) Related to the Business;
(iv) All rights and interests in and to processes, lab journals,
notebooks, data, trade secrets, designs, know-how, product
formulae and information, manufacturing, engineering and other
drawings and manuals, technology, blueprints, research and
development reports, agency agreements, technical information,
technical assistance, engineering data, design and engineering
specifications, and similar materials recording or evidencing
expertise or information Related to the Business;
(v) All of the intellectual property affected by the registrations,
applications for registration, permissions and licenses listed in
Schedule 2.1(13);
----------------
(vi) All other intellectual and industrial property rights throughout
the world Related to the Business;
(vii) All licenses of the intellectual property listed in items (i) to
(vi) above;
(viii) All future income and proceeds from any of the intellectual
property listed in items (i) to (vi) above and the licenses
listed in item (vii) above; and
(ix) All rights to sue and rights to damages and profits by reason of
the infringement of any of the intellectual property listed in
items (i) to (vii) above;
provided that Buyer shall not acquire any interest in the name "Uniroyal."
"Interim Period" means the period from the date of this Agreement to the
Closing.
"Inventories" means all inventories of stock-in-trade and merchandise including
materials, supplies (including office supplies), work in progress, finished
goods, regrind materials, and purchased finished goods Related to the Business,
including those in possession of suppliers, customers and other third parties,
and including any and all rights of Seller in and with respect to Customer-Owned
Inventory.
"Law" means any law, rule, statute, regulation, order, decree, administrative or
judicial decision, treaty or other requirement having the force of law.
"Leased Premises" means the property subject to the Premises Leases, and the
Improvements thereon as the context permits.
"Leases" means the Personal Property Leases and the Premises Leases.
"Liabilities" means all costs, expenses (including reasonable attorneys' fees),
charges, debts, liabilities, claims, demands and obligations, whether primary or
secondary, direct or indirect, fixed, contingent, absolute or otherwise, under
or in respect of any contract, agreement, arrangement, lease, commitment or
undertaking, Applicable Law and Taxes.
"Licenses and Permits" means all governmental licenses, permits, filings,
authorizations, approvals or indicia of authority Related to the Business or
necessary for the conduct of the Business, and includes the Environmental
Permits.
"Lien" means any lien, mortgage, pledge, security interest, prior assignment,
option, warrant, lease, sublease, right to possession, encumbrance, claim, right
or restriction which affects, by way of a conflicting ownership interest or
otherwise, the right, title or interest in or to any particular property.
"Material Adverse Change" means a change in the Condition of the Business which
has had or would reasonably be expected to have a material adverse effect on the
operations or value of the Business or the value of the Purchased Assets.
"Material Contract" means an agreement (whether oral or written) Related to the
Business to which Seller is a party or by which Seller or the Business or any of
the Purchased Assets is bound or affected, except any agreement which (i) is
terminable by its terms on not more than 90 days notice without penalty or
liability for any post-termination payments and (ii) by its terms involves the
payment to or by Seller of less than $10,000 over the term of the agreement; and
which in either case is not otherwise material to the Condition of the Business.
"Net Working Capital" as of a specified date or time means Seller's current
assets as of such date or time less Seller's current liabilities as of such date
or time, all as properly carried and valued on Seller's balance sheet in
accordance with GAAP consistently applied on a basis consistent with Seller's
past practices as reflected in Seller's September 26, 1999 audited financial
statements or as otherwise described in Section 1.5, but after excluding (i)
from current assets, any current asset which is an Excluded Asset, and (ii) from
current liabilities, any liability which is not an Assumed Liability.
"Notice of Claim" has the meaning given in Section 6.4.
"Parties" means Buyer, Seller, Holdings and Uniroyal, and "Party" means any of
the Parties; and any reference to a Party includes its successors and permitted
assigns.
"Permitted Liens" means:
(i) Liens for Taxes if such Taxes are not due and payable;
(ii) Mechanics', materialmen's, warehousemen's, carriers', workers' or
other similar liens (inchoate or otherwise) which (i)
individually or in the aggregate are not material, (ii) have
arisen or were incurred in the ordinary course of business, (iii)
have not been filed or recorded in accordance with Applicable
Law, and (iv) of which notice of intent to so file or record has
not been given to Seller by the lien holder;
(iii) Minor title defects or irregularities consisting of minor survey
exceptions and other minor unrecorded restrictions as to the use
of the Leased Premises, which title defects, irregularities or
restrictions do not, in the aggregate, materially impair the
operation of the Business or the continued use of the Leased
Premises to which they relate after the Closing on substantially
the same basis as the Business is currently being operated and
such Leased Premises are currently being used;
(iv) Easements, covenants, rights of way and other restrictions of
record, provided that they do not, in the aggregate, materially
impair the operation of the Business or the continued use of the
Leased Premises to which they relate after the Closing on
substantially the same basis as the Business is currently being
operated and such Leased Premises are currently being used;
(v) Liens which will be discharged at or before the Closing; and
(vi) Liens which arise under an Assigned Contract.
"Person" is to be broadly interpreted and includes an individual, a corporation,
a partnership, a trust, an unincorporated organization, the government of a
country, state or any political subdivision thereof, or any agency or department
of any such government, and the executors, administrators or other legal
representatives of an individual in such capacity.
"Personal Property" means all machinery, equipment, furniture, motor vehicles
and other chattels Related to the Business (including those in possession of or
owned by third parties) including the personal property listed in Schedule
2.1(7).
"Personal Property Leases" means Financing Leases, rental agreements, and other
agreements granting Seller the right to use or possess personal property Related
to the Business.
"Pleasant Hill Site" has the meaning given in Section 7.10.
"Polycast Consolidation" means the project which Seller has referred to as the
"$9 million Polycast consolidation/modernization project."
"Premises Leases" means all leases, agreements to lease, subleases, license
agreements and occupancy or other agreements granting Seller the right to use or
occupy real property Related to the Business.
"Prepaid Amounts" means all prepayments, prepaid charges, deposits, and other
sums and fees Related to the Business or in respect of the Purchased Assets, but
only to the extent reasonably anticipated to be recoverable by or reimbursable
to Buyer in the course of its conduct of the Business after the Effective Time.
"Prime Rate" means the rate of interest quoted by Bank of America (Chicago) from
time to time as its "prime rate," it being understood that such rate is not
necessarily the lowest rate charged by such bank.
"Purchase Price" has the meaning given in Section 1.2.
"Purchased Assets" means all the properties, assets, interests and rights of
Seller which are Related to the Business (other than the Excluded Assets)
including the following:
(i) The Receivables, except that Buyer may elect not later than
Closing not to purchase any Receivables which are more than 90
days old as of the Closing Date, in which case such non-purchased
Receivables shall be Excluded Assets;
(ii) The Inventories;
(iii) The Prepaid Amounts;
(iv) The Employee Advances;
(v) The Personal Property;
(vi) The Real Property;
(vii) All rights and interests of Seller to and in the Leased Premises
and under the Premises Leases, including prepaid rents, security
deposits and options to renew or purchase, rights of first
refusal under the Premises Leases and all leasehold improvements
owned by Seller and forming part of the Leased Premises;
(viii) All rights and interests under or pursuant to all warranties,
representations and guarantees, express, implied or otherwise, of
or made by suppliers or others in connection with the Purchased
Assets or the Assumed Liabilities or otherwise Related to the
Business;
(ix) The Intellectual Property;
(x) The Assigned Contracts;
(xi) The Licenses and Permits, to the extent transferable to Buyer;
(xii) The Books and Records;
(xiii) All good will Related to the Business including the present
telephone numbers, Internet and e-mail addresses and other
communications numbers and addresses of the Business; and
(xiv) All proceeds of any or all of the foregoing received or
receivable after the Effective Time.
"Real Property" means any real property, and any interests in real property,
owned by Seller Related to the Business, and any Improvements thereon.
"Receivables" means all trade accounts receivable, bills and notes receivable,
insurance claims and other receivables Related to the Business together with any
unpaid interest accrued on such items and any security or collateral for such
items, including recoverable deposits.
"Related to the Business" means, directly or indirectly, used in, arising from,
or relating in any manner to the Business.
"Related Documents" has the meaning given in Section 2.1(1).
"Release" includes an actual or potential discharge, deposit, spill, leak,
pumping, pouring, emission, emptying, injection, escape, leaching, seepage or
disposal of a Hazardous Substance which is or may be in breach of any
Environmental Laws.
"Representatives" with respect to a Party means the directors, officers,
employees, agents and other representatives and advisers of such Party and its
Affiliates.
"Right" has the meaning given in Section 5.5.
"Rome Property" has the meaning given in Section 7.10.
"Seller" has the meaning given in the Preamble.
"Seller's Counsel" means Oliver J. Janney, Esq., the Vice President, General
Counsel and Secretary of Seller, Holdings and Uniroyal.
"Stamford Property" has the meaning given in Section 7.10.
"Subsidiaries" means all business entities a majority of whose equity or voting
power is owned directly or indirectly by Seller, or which are otherwise
controlled directly or indirectly by Seller.
"Taxes" means all taxes, charges, fees, levies, imposts and other assessments,
including all income, sales, use, goods and services, value added, capital,
capital gains, alternative, net worth, transfer, profits, withholding, payroll,
employer health, excise, franchise, real property and personal property taxes,
and any other taxes, customs duties, fees, assessments or similar charges in the
nature of a tax, unemployment insurance payments and workers compensation
premiums, together with any installments with respect thereto, and any interest,
fines and penalties, imposed by any governmental authority (including federal,
state, municipal and foreign governmental authorities), and whether disputed or
not.
"Third Party Claim" has the meaning given in Section 6.4.
"Townsend/Glasflex Business" means Seller's clear cell-cast acrylic tube
business, which is the subject of a current investigation by the Federal Trade
Commission. "Transferred Employees" means Employees who have accepted an offer
of employment from Buyer as of the Closing.
"Uniroyal" has the meaning given in the Preamble.
"Warsaw Property" has the meaning given in Section 7.10.
.
<PAGE>
AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment") amends
the Asset Purchase Agreement (the "Purchase Agreement") dated December 24,
1999 between Spartech Corporation ("Buyer") and High Performance Plastics,
Inc. ("Seller"), Uniroyal HPP Holdings, Inc. and Uniroyal Technology
Corporation. Capitalized terms used but not defined herein have the
meanings given to them in the Purchase Agreement.
WHEREAS, Seller and Buyer mutually desire to amend the Purchase
Agreement as set forth below;
THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties agree as follows:
1. Estimated Purchase Price. The Estimated Purchase Price is $215,946,477,
calculated as set out in Exhibit A attached hereto.
2. Closing and Effective Dates.
(a) The Closing Date shall be Monday, February 28, 2000.
(b) The Effective Date shall be Monday, February 28, 2000, and the
Effective Time shall be 12:01 a.m. Eastern Standard Time on the
Effective Date.
(c) The physical inventory described in Section 1.5(a)(i) of the Purchase
Agreement will take place at Seller's various locations beginning on
the dates set out on Exhibit B attached hereto, and shall be adjusted
as necessary to reflect actual Inventories as of the Effective Time.
3. Payroll Matters. For payment and tax withholding and reporting purposes,
Seller's last payroll for a Transferred Employee will be for the last shift
ending before the Effective Time, and Buyer's first payroll for the
Transferred Employees will be for the first shift ending at or after the
Effective Time. However, for purposes of the Closing Report Seller's
payroll expense for shifts straddling the Effective Time will be pro rated
based on the portion of the shift prior to the Effective Time and accrued
as a Seller account payable.
4. Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax matters
following the Closing Date:
(a) Prorations. Except with respect to conveyance taxes as provided for in
Section 8.2 of the Purchase Agreement, all personal property taxes, ad
valorem obligations and similar Taxes imposed on a periodic basis, in
each case levied with respect to the Purchased Assets, for a period
which includes the Closing Date shall be apportioned between Seller
and Buyer based on the number of days of such taxable period before
the Effective Date and the number of days of such taxable period
beginning on the Effective Date, with Seller liable for the
proportionate amount of such taxes that is attributable to the period
before the Effective Date. Seller and Buyer shall each present any
reimbursement to which it is entitled under this Section 4(a) as
promptly as practicable, together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The proration
amount shall be included on the Closing Report if practicable,
otherwise it shall be paid by the party owing it to the other within
30 days after delivery of such statement. Seller shall notify Buyer
upon receipt of any bill for real or personal property Taxes relating
to the Purchased Assets, part or all of which are attributable to the
period beginning on the Effective Date, and shall promptly deliver
such bill to Buyer who shall pay the same to the appropriate taxing
authority, provided that if such bill includes any period prior to the
Effective Date, Seller shall also remit to Buyer prior to the due date
payment for the proportionate amount of such bill that is attributable
to such period.
(b) Sales Taxes. All sales, use and other such Taxes and fees (including
any penalties and interest) incurred in connection with this Agreement
shall be paid by Buyer when due, and Buyer will, at its own expense,
file all necessary Tax returns and other documentation with respect to
all such Taxes and fees, and, if required by applicable law, Buyer
will, and will cause its affiliates to, join in the execution of any
such Tax returns and other documentation.
(c) Allocation of Purchase Price. Buyer shall prepare, or cause to be
prepared, an appraisal of the owned Real Property and the principal
items of Personal Property, which appraisal shall be reasonably
acceptable to Seller. Each of Buyer and Seller shall allocate the
Purchase Price among the Purchased Assets pursuant to Section 1060 of
the Code in accordance with the fair market values of the assets as
set forth in such appraisal. The Parties will make every effort to
agree on a valuation and allocation of the Purchased Assets for tax
purposes within 120 days after the Closing Date. Each of Buyer and
Seller shall file IRS Form 8594 in a timely manner.
(d) Cooperation on Tax Matters. Buyer and Seller shall cooperate fully, as
and to the extent reasonably requested by the other Party, in
connection with any audit, litigation or other proceeding with respect
to Taxes. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any
material provided hereunder. Each Party agrees (i) to retain all books
and records with respect to Tax matters pertinent to Seller relating
to any taxable period beginning before the Effective Date until the
expiration of the statute of limitations (and, to the extent notified
by Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the other Party reasonable written
notice prior to transferring, destroying or discarding any such books
and records and, if the other Party so requests, to allow the
requesting Party to take possession of such books and records.
5. Stirling Facility. As of the date hereof, the FTC approval described in
Section 7.9 of the Purchase Agreement has not been granted; Seller may
also find it necessary or advisable to sell its colored cell-cast acrylic
rod and tube business to a purchaser other than American Technical
Plastics, which may further delay its disposition of the business.
Therefore:
(a) The Real Property, including Improvements, at Uniroyal's Stirling, New
Jersey facility (the "Stirling Facility") and the other assets related
to the colored cell-cast acrylic rod and tube business currently
carried on at the Stirling Facility shall be Excluded Assets.
(b) The Purchase Price reduction described in Section 7.9(d) of the
Purchase Agreement shall not apply to the exclusion of the colored
cell-cast acrylic rod and tube business currently carried on at the
Stirling Facility described in the preceding paragraph.
(c) Seller's operation of the Stirling Facility after the Closing solely
for the manufacture of colored cell-cast acrylic rods and tubes shall
not by itself be deemed a violation of Section 7.4.
6. Certain Equipment at Stirling Facility. Seller acknowledges that there is
certain equipment at the Stirling Facility currently being used for the
manufacture of clear acrylic rods. With respect to such equipment, and any
other equipment at the Stirling Facility other than for the production of
acrylic tube or clear acrylic rods:
(a) Buyer shall inspect the above equipment at the Stirling Facility
promptly after the Closing to determine its proposed use in connection
with the acquired businesses.
(b) Seller will pack and ship such equipment to the Townsend or Polycast
location designated by Buyer as promptly as practicable after
receiving instructions from Buyer, at Seller's expense.
(c) Buyer and Seller will use reasonable best efforts to agree on a Supply
Agreement as promptly as practicable after Closing, whereby Seller
will temporarily continue using the above equipment to manufacture
clear acrylic rods for Buyer at a cost not exceeding Seller's direct
manufacturing costs until its removal pursuant to the preceding
paragraph (but not more than six months after Closing).
IN WITNESS WHEREOF, the Parties have executed this Amendment effective February
28, 2000.
SPARTECH CORPORATION HIGH PERFORMANCE PLASTICS, INC.
By: /s/ Jeffrey D. Fisher By: /s/ Oliver J. Janney
-------------------------- ---------------------------------
Jeffrey D. Fisher Oliver J. Janney
Vice President Vice President
UNIROYAL HPP HOLDINGS, INC.
By: /s/ Oliver J. Janney
-------------------------------
Oliver J. Janney
Vice President
UNIROYAL TECHNOLOGY CORPORATION
By: /s/ Oliver J. Janney
--------------------------
Oliver J. Janney
Vice President
<PAGE>
APPENDIX A
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial information of Uniroyal Technology
Corporation ("the Company") consists of the unaudited pro forma condensed
balance sheet as of January 2, 2000 and the unaudited pro forma condensed
statements of operations for the fiscal year ended September 26, 1999 and the
three month period ended January 2, 2000 (collectively, the "Pro Forma
Statements"). The Pro Forma Statements give effect to the consummation of the
sale to Spartech Corporation ("Spartech") of certain assets and the assumption
and satisfaction of certain liabilities of the Company's wholly-owned
subsidiary High Performance Plastics, Inc. for cash proceeds of approximately
$216,000,000 as if it had occurred, in the balance sheet on January 2, 2000, and
in the case of the statements of operations, at the beginning of the fiscal year
ended September 26, 1999 and at the beginning of the three month period ended
January 2, 2000.
The pro forma adjustments are based on currently available information and upon
certain assumptions that management of the Company believes are reasonable under
the circumstances. The Pro Forma Statements do not purport to represent what the
Company's financial position or results of operations would have been if the
sale had in fact occurred at January 2, 2000 and in the case of the condensed
statements of operations at September 28, 1998 and September 27, 1999,
respectively, or to project the Company's financial position or results of
operations at any future date or for any future periods.
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
ASSETS
January 2, 2000
-----------------------------------------------------------------------
DISPOSITION OF
HIGH PERFORMANCE PRO FORMA
HISTORICAL (9) PLASTICS, INC. ADJUSTMENTS PRO FORMA
--------------- ----------------- ----------- ----------
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 128 $ - $ 106,500 (1) $ 106,628
Trade accounts receivable - net 3,740 - - 3,740
Inventories 9,782 - - 9,782
Deferred income taxes 2,306 - - 2,306
Prepaid expenses and other current assets 4,184 - - 4,184
---------- ---------- ---------- ----------
Total current assets 20,140 - 106,500 126,640
Property, plant and equipment - net 46,195 - (1,500) (2) 44,695
Property, plant and equipment held for sale 4,217 - - 4,217
Note receivable 5,000 - - 5,000
Goodwill - net 1,296 - - 1,296
Deferred income taxes - net 16,680 - (2,474) (3) 14,206
Other assets - net 10,191 - - 10,191
---------- ---------- ---------- ----------
TOTAL ASSETS $ 103,719 $ - $ 102,526 $ 206,245
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
January 2, 2000
---------------------------------------------------------------------
DISPOSITION OF
HIGH PERFORMANCE PRO FORMA
HISTORICAL (9) PLASTICS, INC. ADJUSTMENTS PRO FORMA
--------------- ---------------- ----------- ----------
Current liabilities:
<S> <C> <C> <C> <C>
Current portion of long-term debt $ 5,086 $ - $ 157 (5) $ 5,243
Trade accounts payable 10,727 - - 10,727
Net liabilities of discontinued operations 6,289 (5,974) (4) (315) (5) -
Accrued expenses:
Compensation and benefits 6,090 - - 6,090
Interest 182 - - 182
Taxes, other than income 408 - - 408
Income taxes - - 26,800 (6) 26,800
Other 1,039 - - 1,039
---------- ---------- ---------- ----------
Total current liabilities 29,821 (5,974) 26,642 50,489
Long-term debt 24,016 - 158 (5) 24,174
Other liabilities 15,329 - 6,300 (7) 21,629
---------- ---------- ---------- ----------
Total liabilities 69,166 (5,974) 33,100 96,292
---------- ---------- ---------- ----------
Minority interest 2,411 - - 2,411
Stockholders' equity:
Common stock 150 - - 150
Additional paid-in capital 58,597 - - 58,597
(Deficit) retained earnings (3,692) - 75,400 (8) 71,708
---------- ---------- ---------- ----------
55,055 - 75,400 130,455
Less treasury stock at cost (22,913) - - (22,913)
---------- ---------- ---------- ----------
Total stockholders' equity 32,142 - 75,400 107,542
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 103,719 $ (5,974) $ 108,500 $ 206,245
========== ========== ========== ==========
</TABLE>
<PAGE>
(1) Represents the increase in cash as a result of the sale as follows (in
thousands):
Proceeds from sale $ 216,000
Repayment of outstanding debt (94,900)
Fees and expenses of the sale (7,700) (a)
Operating/capital lease buyouts (4,400)
Projected working capital adjustments (1,000)
Environmental cleanup costs (1,500)
-----------
Net cash proceeds $ 106,500
===========
(a) Represents $1,960 paid to Jesup & Lamont Securities, a related
party; $2,490 of severance; $250 of professional fees and $3,000
of bonuses awarded to certain officers and directors of the
Company.
(2) Represents the writedown of the High Performance Plastics, Inc. share of the
corporate computer system implementation costs.
(3) Represents the decrease in the Company's deferred tax asset for the tax
liability incurred on the taxable portion of the gain from the sale to Spartech
calculated at the Company's statutory rate.
(4) Represents the elimination of the net liabilities acquired by Spartech in
accordance with the asset purchase agreement.
(5) Represents High Performance Plastics, Inc. debt retained by the Company.
(6) Represents estimated income taxes payable as a result of the sale to
Spartech.
(7) Represents the liability recognized for postretirement medical benefits in
accordance with Statement of Financial Accounting Standards No. 106, "Employees
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS No. 106").
Amount was included in the Company's unrecorded transition obligation and was
being amortized into operations over 16 years.
(8) Represents the decrease in the deficit for the after tax gain on the sale
which includes an additional tax benefit of approximately $12,400,000 for the
reversal of a deferred tax valuation allowance relating to capital loss
carryforwards.
(9) Previously reported historical results as of January 2, 2000 included
reclassifications for discontinued operations.
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
FISCAL YEAR ENDED SEPTEMBER 26, 1999
-------------------------------------------------------------------------
DISPOSITION OF
HIGH PERFORMANCE PRO FORMA
HISTORICAL (5) PLASTICS, INC. ADJUSTMENTS (7) PRO FORMA
-------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
Net sales $ 201,433 $ (130,222) $ - $ 71,211
Costs, expenses and (other income):
Costs of goods sold 147,047 (93,370) - 53,677
Selling and administrative 33,814 (10,910) (1,914) (1) 20,990
Depreciation and amortization 9,157 (5,652) (223) (2) 3,282
Gain on sale of division (667) - - (667)
Gain on sale of preferred stock (898) - - (898)
Loss on assets to be disposed of 144 (144) - -
----------- ----------- ----------- ----------
Income (loss) before interest, income taxes and
minority interest 12,836 (20,146) 2,137 (5,173)
Interest (expense) income - net (9,352) 8,574 4,892 (3) 4,114
----------- ------------- ----------- ----------
Income (loss) before income taxes and minority
interest 3,484 (11,572) 7,029 (1,059)
Income tax (expense) benefit (155) 4,526 (2,812) (4) 1,559
----------- ------------- ----------- ----------
Income (loss) before minority interest 3,329 (7,046) 4,217 500
Minority interest in losses of consolidated
subsidiary 2,191 - - 2,191
----------- ------------- ----------- ----------
Income from continuing operations $ 5,520 $ (7,046) $ 4,217 $ 2,691
=========== ============= =========== ==========
Income from continuing operations per share:
Basic $ 0.45 $ 0.22
=========== ==========
Assuming dilution $ 0.42 $ 0.20
=========== ==========
Average number of shares used in computation:
Basic 12,157,996 12,157,996
Assuming dilution 13,286,334 13,286,334
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNIROYAL TECHNOLOGY CORPORATION
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
THREE MONTH PERIOD ENDED JANUARY 2, 2000
---------------------------------------------------------
PRO FORMA
HISTORICAL (6) ADJUSTMENTS (7) PRO FORMA
-------------- ---------------- -----------
<S> <C> <C> <C>
Net sales $ 15,195 $ - $ 15,195
Costs, expenses and (other income):
Costs of goods sold 11,414 - 11,414
Selling and administrative 7,380 (479) (1) 6,901
Depreciation and amortization 1,004 (56) (2) 948
Gain on sale of preferred stock (2,905) - (2,905)
----------- ----------- -----------
(Loss) income before interest, income taxes
and minority interest (1,698) 535 (1,163)
Interest (expense) income - net (314) 1,223 (3) 909
----------- ----------- -----------
(Loss) income before income taxes and
minority interest (2,012) 1,758 (254)
Income tax benefit (expense) 1,671 (703) (4) 968
----------- ----------- -----------
(Loss) income before minority interest (341) 1,055 714
Minority interest in losses of consolidated
subsidiary 1,414 - 1,414
----------- ----------- -----------
Income from continuing operations $ 1,073 $ 1,055 $ 2,128
=========== =========== ===========
Income from continuing operations per share:
Basic $ 0.09 $ 0.18
=========== ===========
Assuming dilution $ 0.08 $ 0.16
=========== ===========
Average number of shares used in computation:
Basic 11,929,316 11,929,316
Assuming dilution 13,540,108 13,540,108
</TABLE>
<PAGE>
(1) Represents the following (in thousands):
<TABLE>
<CAPTION>
For the year For the three
ended months ended
September 26, January 2,
1999 2000
-------------- -------------
<S> <C> <C>
Reduction of retiree medical expense (a) $ 739 $ 185
Corporate expense reductions (b) 550 138
Revenue from Administrative Service Agreement (c) 625 156
------------ ---------
Total reduction in selling and administrative expenses $ 1,914 $ 479
============ =========
</TABLE>
(a) Represents the reduction in retiree medical costs due to the
recognition of High Performance Plastics, Inc. portion of the Company's
previously unrecorded transition obligation in accordance with SFAS No.
106.
(b) Represents overall reductions in corporate expenses relating to
personnel and overhead.
(c) Represents revenue from Spartech under an administrative services
agreement. The agreement is for a maximum period of two years.
(d) Pro forma adjustments do not include bonuses awarded to certain
officers and directors of the Company in the amount of $1,800 (net of
taxes, approximately $1,200); however, these are nonrecurring charges
directly related to the sale of High Performance Plastics, Inc.
(2) Represents reduction in depreciation expense for the writedown of the
corporate computer system as a result of the sale of High Performance Plastics,
Inc.
(3) Represents interest earned at approximately 6.15% on the average cash
balance during the respective period.
(4) Represents the tax effect of pro forma adjustments at the statutory rate.
(5) Previously reported historical results for the fiscal year ended September
26, 1999 did not include reclassification for discontinued operations.
(6) Previously reported historical results for the three months ended January 2,
2000 included reclassification for discontinued operations.
(7) Pro forma adjustments do not include the gain realized by the Company upon
the sale of High Performance Plastics, Inc. to Spartech which is estimated to be
$63,000 (net of taxes, approximately $42,000).
