UNITED STATES
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
September 2, 1999
(Date of earliest event reported)
Commission file number: 0-20704
ACX TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1208699
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
16000 Table Mountain Parkway, Golden, Colorado 80403
(Address of principal executive offices) (Zip Code)
(303) 271-7000
(Registrant's telephone number, including area code)
Item 2. Disposition of Assets
ACX Technologies, Inc. ("ACX" or the "Company") sold the assets
and business of its flexible packaging division ("the Business")
to Sonoco Products Company for approximately $105 million in
cash. The transaction occurred on September 2, 1999. The
Business, a leading North American converter of flexible
packaging materials for consumer products industries includes
manufacturing facilities in Charlotte, North Carolina; Franklin,
Ohio; Montreal, Quebec; Toronto, Ontario; Winnipeg, Manitoba;
and Vancouver, British Columbia.
ACX will use the proceeds from the sale of the Business, less
transaction costs, to reduce debt associated with its recent
acquisition of the folding carton business of Fort James
Corporation.
Item 7. Financial Statements & Exhibits
The asset purchase agreement related to the sale of the flexible
packaging division is included as Exhibit 2.
Set forth below is the information required by Item 7(b), Pro
Forma Financial Statements, of Form 8-K with respect to the
Company's sale of its flexible packaging division to Sonoco as
disclosed on the Company's Form 8-K, filed with the Securities
and Exchange Commission on August 4, 1999.
ACX TECHNOLOGIES, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
INTRODUCTION
(U.S. DOLLARS)
(Unaudited)
The following unaudited pro forma condensed balance sheet and
statements of income illustrate the Company's disposition of its
flexible packaging division. The Pro Forma Condensed Balance
Sheet at June 30, 1999 was prepared as if the sale occurred
on June 30, 1999. The Pro Forma Condensed Statement of Income
for the Year Ended December 31, 1998 and for the Six Months Ended
June 30, 1999 were prepared as if the disposition occurred on
January 1, 1998.
The pro forma adjustments reflect the sale of the flexible
packaging division for cash proceeds of approximately
$105,000,000, less transactions costs.
The Pro Forma Financial Information is presented for illustrative
purposes only and does not purport to represent what the
Company's financial position or results of operations would have
been had the transaction described in fact occurred on the date
or at the beginning of the periods indicated or to project the
Company's financial position or results of operations for any
future date or period. The pro forma disposition adjustments are
based upon available information which the Company believes is
reasonable under the circumstances.
The following Pro Forma Condensed Financial Information should be
read in conjunction with (i) the audited financial statements of
the Company and its subsidiaries for the year ended December 31,
1998, which are contained in the Company's 1998 Annual Report on
Form 10-K, and (ii) the unaudited condensed financial statements
of the Company for the six months ended June 30, 1999.
ACX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(In thousands)
ACX Flexible
Historical Division Pro Forma
Balance Balance Balance
Sheet Sheet Sheet
June 30, June 30, Pro Forma June 30,
1999 1999 Adjustments 1999
---------- --------- ----------- ---------
ASSETS
Current assets:
Cash and cash
equivalents $37,321 $4,215 $33,106
Accounts receivable 107,549 12,830 94,719
Inventories 153,385 17,196 136,189
Notes receivable 60,423 0 60,423
Other assets 35,730 1,125 34,605
---------- --------- ----------- ---------
Total current assets 394,408 35,366 --- 359,042
---------- --------- ----------- ---------
Properties, net 400,423 37,439 362,984
Goodwill, net 227,645 14,836 212,809
Other assets 24,469 877 23,592
---------- --------- ----------- ---------
Total assets $1,046,945 $88,518 $--- $958,427
========== ========= =========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of
long-term debt $85,929 $12 ($85,917)[1] $---
Other current liabilities 140,356 16,265 14,378 [2] 138,469
---------- --------- ----------- ---------
Total current
liabilities 226,285 16,277 (71,539) 138,469
Long-term debt 277,071 8 (14,083)[1] 262,980
Other long-term
liabilities 60,156 8,179 51,977
---------- --------- ----------- ---------
Total liabilities 563,512 24,464 (85,622) 453,426
Minority interest 13,169 13,169
Common stock 284 4,525 4,525 [3] 284
Paid-in capital 452,020 61,364 61,364 [3] 452,020
Retained earnings 22,690 8,646 30,214 [3] 44,258
Accumulated other
comprehensive loss (4,730) (10,481) (10,481)[3] (4,730)
---------- --------- ----------- ---------
Shareholders' equity 470,264 64,054 85,622 491,832
---------- --------- ----------- ---------
Total liabilities and
shareholders' equity $1,046,945 $88,518 $--- $958,427
========== ========= =========== =========
ACX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
(In thousands, except per share data)
ACX
Historical
Income Flexible
Statement Division
December 31, December 31, Pro Forma Pro Forma
1998 1998 Adjustments Combined
------------ ------------ ----------- ---------
Net sales $988,391 $119,239 $869,152
Costs and expenses:
Cost of goods sold 793,946 101,879 692,067
Marketing, general and
administrative 106,105 15,002 91,103
Asset impairment and
restructuring charges 33,210 21,286 11,924
------------ ------------ ----------- ---------
Total operating
expenses 933,261 138,167 --- 795,094
------------ ------------ ----------- ---------
Operating income (loss) 55,130 (18,928) 74,058
Other income (expense)-
net 576 --- 576
Interest income(expense)-
net (20,141) (4) 7,000 [4] (13,137)
------------ ------------ ----------- ---------
Income (loss) before
income taxes 35,565 (18,932) 7,000 61,497
Income tax expense
(benefit) 14,300 (7,573) 2,800 [5] 24,673
------------ ------------ ----------- ---------
Net income $21,265 ($11,359) $4,200 $36,824
============ ============ =========== =========
Net income (loss) per
basic share $0.75 $1.29
============ =========
Net income (loss) per
diluted share 0.73 $1.27
============ =========
Weighted average shares
outstanding - basic 28,504 28,504
============ =========
Weighted average shares
outstanding - diluted 29,030 29,030
============ =========
ACX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
(In thousands, except per share data)
ACX
Historical
Income Flexible
Statement Division
June 30, June 30, Pro Forma Pro Forma
1999 1999 Adjustments Combined
------------ ------------ ----------- ---------
Net sales $501,561 $60,379 $441,182
Costs and expenses:
Cost of goods sold 397,964 49,062 348,902
Marketing, general and
administrative 58,536 6,639 51,897
Asset impairment and
restructuring charges --- --- ---
------------ ------------ ----------- ---------
Total operating
expenses 456,500 55,701 --- 400,799
------------ ------------ ----------- ---------
Operating income 45,061 4,678 40,383
Other income(expense)-
net 16 --- 16
Interest income
(expense)- net (10,597) (167) 3,500 [4] (6,930)
------------ ------------ ----------- ---------
Income before income
taxes 34,480 4,511 3,500 33,469
Income tax expense 13,500 1,804 1,400 [5] 13,096
------------ ------------ ----------- ---------
Net income $20,980 $2,707 $2,100 $20,373
============ ============ =========== =========
Net income (loss) per
basic share $0.74 $0.72
============ =========
Net income (loss) per
diluted share $0.73 $0.71
============ =========
Weighted average shares
outstanding - basic 28,435 28,435
============ =========
Weighted average shares
outstanding - diluted 28,734 28,734
============ =========
ACX TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(U.S. DOLLARS)
(Unaudited)
Note 1: Net proceeds of $100,000 used to pay down short-term and
long-term debt of ACX.
Note 2: Estimated increase in tax liability for gain on sale,
plus accrual for transaction costs.
Note 3: Elimination of equity accounts, plus estimated gain on
sale.
Note 4: Reduced interest expense.
Note 5: Taxes calculated at 40%.
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 hereunto duly authorized.
September 17, 1999 ACX TECHNOLOGIES, INC.
By:/s/Beth A. Parish
-------------------------------
Beth A. Parish
(Controller and Principal
Accounting Officer)
EXHIBIT 2
_______________________________
ASSET PURCHASE AGREEMENT
_______________________________
DATED AS OF JULY 25, 1999,
AMONG
GRAPHIC PACKAGING CORPORATION and GP HOLDINGS, INC., as
Seller,
AND
SONOCO PRODUCTS COMPANY, as Purchaser
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE 1
1.1 Agreement to Sell 1
1.1.1 Included Assets 2
1.1.2 Excluded Assets 2
1.2 Agreement to Purchase and Assume 3
1.3 The Purchase Price 3
1.3.1 Purchase Price 3
1.3.2 Payment of Purchase Price 3
1.3.3 Allocation of Purchase Price 4
1.3.4 Risk of Loss 4
1.4 Assumption of Liabilities 4
1.4.1 Assumed Liabilities 4
1.4.2 Excluded Liabilities 4
1.5 Closing Statement of Transferred Assets and
Assumed Liabilities 5
ARTICLE II CLOSING AND CERTAIN MATTERS 6
2.1 Closing 6
2.2 Items to be Delivered at Closing 6
2.3 Third-Party Consents 8
2.4 Change in Name 8
2.5 Further Assurances 8
ARTICLE III REPRESENTATIONS AND WARRANTIES 9
3.1 Representations and Warranties of the Seller 9
3.1.1 Corporate Existence 9
3.1.2 Corporate Power; Authorization
Enforceable Obligations 9
3.1.3 No Interest in Other Entities or
Business Assets 9
3.1.4 Capital Stock of Transferred
Subsidiaries 9
3.1.5 Validity of Contemplated
Transactions, etc. 10
3.1.6 No Third-Party Options 10
3.1.7 Financial Statements 10
3.1.8 Accounts Receivable 10
3.1.9 Inventory 11
3.1.10 Tax and Other Returns and Reports 11
3.1.11 Books and Records 11
3.1.12 Existing Conditions 11
3.1.13 Compliance with Law; Authorizations 12
3.1.14 Litigation 13
3.1.15 Insurance 13
3.1.16 Contracts and Commitments 13
3.1.17 Description of and Title to Assets 14
3.1.18 Limitation of Warranties and Remedies 15
3.1.19 Labor Matters 15
3.1.20 Employee Benefit Plans and
Arrangements 15
(a) Identification of U.S. Employee
Benefit Plans 15
3.1.21 Intellectual Property Matters 18
3.1.22 Environmental Matters 18
3.1.23 Real Property 19
(a) Real Property Defined 19
(b) Title to Owned Real Property 19
(c) Leased Real Property 20
(d) No Violations 20
3.1.24 Availability of Documents 20
3.1.25 Y2K 20
3.1.26 Undisclosed Liabilities 21
3.2 Representations and Warranties of Purchaser 21
3.2.1 Corporate Existence 21
3.2.2 Corporate Power and Authorization 21
3.2.3 Validity of Contemplated
Transactions, etc 21
3.3 Investment Intent; Status 21
ARTICLE IV AGREEMENTS PENDING CLOSING 22
4.1 Agreements of Seller Pending the Closing 22
4.1.1 Business in the Ordinary Course 22
4.1.2 Existing Condition 22
4.1.3 Maintenance of Physical Assets 22
4.1.4 Employees and Business Relations 22
4.1.5 Maintenance of Insurance 22
4.1.6 Maintenance of Authorizations, etc. 22
4.1.7 Update Schedules 22
4.1.8 Conduct of Business 23
4.1.9 Sale of Assets; Negotiations 23
4.1.10 Access 23
4.2 Agreements of Purchaser Pending the Closing 23
4.2.1 Actions of Purchaser 24
4.2.2 Confidentiality 24
4.2.3 Financial Capacity 24
4.3 Hart-Scott-Rodino Act 24
4.4 Press Releases 24
4.5 Compliance with Bulk Sales Laws 24
ARTICLE V CONDITIONS PRECEDENT TO THE CLOSING 25
5.1 Conditions Precedent to Purchaser's Obligations 25
5.1.1 Representations and Warranties True
as of the Closing Date 25
5.1.2 Compliance with this Agreement 25
5.1.3 Closing Certificate 25
5.1.4 No Pending Litigation 25
5.1.5 Consents and Approvals 25
5.1.6 HSR Act 25
5.1.7 Approval of Counsel; Corporate
Matters 25
5.1.8 Opinion of Counsel 26
5.1.9 Competition Act 26
5.2 Conditions Precedent to the Obligations of
Seller 26
5.2.1 Representations and Warranties True
as of the Closing Date 26
5.2.2 Compliance with this Agreement 26
5.2.3 Closing Certificates 26
5.2.4 No Pending Litigation 26
5.2.5 Approval of Counsel; Corporate
Matters 26
5.2.6 Competition Act 27
5.2.7 HSR Act 27
ARTICLE VI OTHER MATTERS 27
6.1 Labor and Employment 27
6.1.1 Offers of Employment 27
6.1.2 Collective Bargaining Agreements 28
6.1.3 Workers Compensation 28
6.1.4 Vacation Pay 28
6.1.5 Plant Closing Laws 28
6.2 Employee Benefits 28
6.2.1 Seller's Obligations and Plan Assets 28
6.2.2 Credit for Service and Payments 28
6.2.3 COBRA 29
6.2.4 401(k) Plan Transfer 29
6.2.5 Contribution to the Pension Plan 30
6.3 Maintenance of Books and Records 30
6.4 Payments Received 30
6.5 Use of Names 31
6.6 Asset Acquisition Statement 31
6.7 Tax Agreements 31
6.8 Limitations With Respect to Graphic Packaging
Canada Corporation. 31
6.9 Section 116 Certificate 32
6.10 Covenant Not to Compete or Solicit Business 32
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATION 33
7.1 Survival of Representations and Warranties of
Seller 33
7.2 Survival of Representations and Warranties of
Purchaser 35
7.3 Defense of Claims 36
7.3.1 Third Party Claims 36
7.3.2 Other Claims 37
7.4 Continued Liability for Indemnity Claims 38
7.5 Limitations on Indemnification 38
7.5.2 Limitation on Recovery 38
7.5.3 Time Limits on Claims 38
7.6 Exclusive Remedies 38
7.7 No Avoidance 39
7.8 Effect of Representations and Warranties 39
ARTICLE VIII TERMINATION 39
8.1 Termination 39
8.2 Effect of Termination 40
ARTICLE IX MISCELLANEOUS 40
9.1 Section 338(h)(10) Election 40
9.2 Brokers' and Finders' Fees 41
9.3 Sales, Transfer and Documentary Taxes, etc. 41
9.4 Expenses 42
9.5 Contents of Agreement; Parties in Interest;
etc. 42
9.6 Assignment and Binding Effect 42
9.7 Waiver 42
9.8 Notices 42
9.9 Governing Law 43
9.10 No Benefit to Others 43
9.11 Headings, Gender and "Person." 44
9.12 Schedules and Exhibits 44
9.13 Severability 44
9.14 Counterparts 44
DEFINITIONS TO ASSET PURCHASE AGREEMENT 46
DISCLOSURE SCHEDULE TO ASSET PURCHASE AGREEMENT 48
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of July 25, 1999, by
and among GRAPHIC PACKAGING CORPORATION, a Delaware
corporation ("GPC"), GP HOLDINGS, INC., a Colorado
corporation ("Holdings") (collectively, GPC and Holdings are
referred to herein as "Seller"), and SONOCO PRODUCTS
COMPANY, a South Carolina corporation ("Purchaser").
RECITALS
A. Seller and Seller's subsidiaries, through Seller's
Flexible Packaging Division, are in the business of
converting flexible packaging materials for the beverage,
confectionery, coffee, bakery, salty snack and other
packaged consumer goods industries and supplying strategic
customers within the medical industry with a range of
packaging products. Seller is headquartered in Golden,
Colorado and converts flexible packaging materials at six
dedicated manufacturing facilities, four of which are
located in Canada (Winnipeg, MN; Mississauga, ON;
Terrebonne, PQ; and Vancouver, BC) and two of which are
located in the United States (Franklin, OH; and Charlotte,
NC). The business operations of Seller described above
(collectively, the "Business") are carried on as an
autonomous and distinct business.
B. Purchaser desires to purchase all of the Business
and all of the Assets (as defined in Section 1.1) of Seller
used therein except for the Excluded Assets (as defined in
Section 1.1.2).
C. Upon and subject only to the terms and conditions
contained in this Agreement, Seller desires to sell and
Purchaser desires to purchase the Business and Assets.
D. Each Seller is a direct or indirect subsidiary of
ACX Technologies, Inc. ("ACX"), a Colorado corporation.
NOW, THEREFORE, in consideration of the recitals and of
the respective covenants, representations, warranties and
agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Sell. Upon and subject to the terms
and conditions of this Agreement and in reliance upon the
representations and warranties of Purchaser contained
herein, at the Closing (as defined in Section 2.1 hereof),
Seller shall grant, sell, convey, assign, transfer and
deliver to Purchaser all right, title and interest of Seller
in and to (a) the Business as a going concern and (b) all
assets, properties and rights of Seller (including the
shares of stock of the Transferred Subsidiaries held by
Seller) used exclusively or held for exclusive use therein
or generated thereby, of every kind and description, real,
personal and mixed, tangible and intangible, wherever
situated and whether owned, leased or subject to other
rights, title or interests of Seller or the Transferred
Subsidiaries (such Business, assets, properties and rights
being herein sometimes collectively called the "Assets"),
free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and encumbrances of
any nature except Permitted Liens (as defined in Section
3.1.23 hereof).
1.1.1 Included Assets. Without limiting the
generality of the foregoing Section 1.1, the Assets shall
include, without limitation, (a) all assets, properties and
rights of Seller reflected on the Closing Statement (as
defined in Section 1.5) and (b) all assets, properties and
rights of Seller specifically set forth on Schedule 1.1.1 of
the Disclosure Schedule.
1.1.2 Excluded Assets. Notwithstanding the
foregoing, the Assets shall not include any of the following
(collectively, the "Excluded Assets"):
(a) the stock or assets, properties or
rights of any subsidiaries of Seller (except Graphic
Packaging Canada Corporation ("GPCC") and Graphic Packaging
Flexible Corporation (the "Transferred Subsidiaries"));
(b) cash on hand in banks or other
depositories or other cash equivalents of Seller (including
for this purpose all collected funds and items received in
bank accounts associated with Seller through 12:01 a.m.
local time in Denver, Colorado on the Closing Date);
(c) the names "Graphic Packaging
Corporation," "Graphic Packaging Flexible Sales, Inc.,"
"Graphic Packaging Canada Corporation" and "Graphic
Packaging Flexible Corporation" and all goodwill associated
with such names, together with all French language versions
thereof provided that Purchaser may use inventory or
supplies which have such names included;
(d) the corporate seals, articles of
incorporation, corporate records, minute books, stock books,
tax returns, books of account and other records having to do
with the corporate organization of Seller;
(e) the rights that accrue or will accrue to
Seller under this Agreement;
(f) the rights to any claims for any
federal, provincial, state, local, or foreign tax refunds or
any tax credits or tax attributes belonging to or related to
Seller or the Business, including, but not limited to, such
rights related to the reimbursement, refund or other return
of monies, tax refunds, tax credits or tax attributes
(whether received before or after Closing) related to taxes
paid to Revenue Canada prior to the Closing and to the 1988
reassessments of Graphic Packaging Canada Corporation by
Revenue Canada, and any monies held in escrow pursuant to
the Escrow Agreement, dated July 1, 1994, among ACX, the
stockholders of Gravure International Capital Corporation,
and Wachovia Bank;
(g) Refunds or other monies that may be
payable to Seller or its affiliates pursuant to the
proceeding described on Schedule 3.1.14.
(h) the assets of any employee benefit plan
(as defined in Section 3.1.20(a)) and any amounts withheld
from employee salary or wages; and
(i) the assets, properties or rights set
forth in Schedule 1.1.2 of the Disclosure Schedule.
1.2 Agreement to Purchase and Assume. Upon and
subject to the terms and conditions of this Agreement and in
reliance on the representations, warranties and covenants of
Seller contained herein, at the Closing, Purchaser shall
purchase the Business and the Assets from Seller in exchange
for the Purchase Price (defined in Section 1.3). In
addition, at the Closing, Purchaser shall assume and agree
to pay, discharge or perform, as appropriate, in accordance
with their terms the Assumed Liabilities (as defined in
Section 1.4). Except as specifically excluded as Excluded
Liabilities, Purchaser shall assume and be responsible for
all liabilities and obligations of Seller related to the
Assets or the Business.
1.3 The Purchase Price.
1.3.1 Purchase Price. The Purchase Price
shall be an amount equal to:
(a) $105,000,000 in cash;
(b) (i) less, the amount, if any, by which
the Net Working Capital (hereinafter defined) on the
Closing Date as reflected on the Closing Statement
(defined in Section 1.5) is less than the Net Working
Capital on the Interim Statement (defined in Section
3.1.7); or
(ii) plus, the amount, if any, by which
the Net Working Capital on the Closing Date as
reflected on the Closing Statement is more than the Net
Working Capital on the Interim Statement.
"Net Working Capital" as of a given date means the aggregate
book value of all assets of a kind designated as current
assets on a balance sheet prepared in accordance with
generally accepted accounting principles ("GAAP") and which
would have been included in the Assets if the Closing had
taken place on such date minus the aggregate book value of
all liabilities of a kind designated as current liabilities
on a balance sheet prepared in accordance with generally
accepted accounting principles and which would have been
included in the Assumed Liabilities if the Closing had taken
place on such date.
1.3.2 Payment of Purchase Price. On the
Closing Date Purchaser shall pay to Seller, on account of
the Purchase Price, the amount of $105,000,000 (the "Closing
Payment") in cash by wire transfer of immediately available
funds. If the Purchase Price exceeds the Closing Payment,
Purchaser shall pay such excess within seven days after the
Adjustment Date (as defined in Section 1.5 hereof) to Seller
in cash by wire transfer of immediately available funds in
the amount of such excess. If the Closing Payment exceeds
the Purchase Price, Seller shall pay such excess within
seven days after the Adjustment Date to Purchaser in cash by
wire transfer of immediately available funds in the amount
of such excess. The Purchase Price is also subject to
adjustment pursuant to Section 6.9 of this Agreement.
1.3.3 Allocation of Purchase Price. The
Purchase Price and the liabilities assumed by Purchaser in
accordance with Section 1.4 hereof and any non-recourse
liabilities to which any Asset is subject (together, the
"Total Consideration") as finally determined shall be
allocated among the Assets acquired hereunder as described
on Schedule 1.3.3 of the Disclosure Schedule. Each of
Seller and Purchaser covenants and agrees that it will not
take a position on any income tax return, before any
governmental agency charged with the collection of any
income tax, or in any judicial proceeding that is in any way
inconsistent with this Section 1.3.3 and Schedule 1.3.3.
1.3.4 Risk of Loss. Until the Closing, any
loss of or damage to the Assets from fire, casualty or other
occurrence shall be the sole responsibility of Seller. If
any such loss or damage occurs prior to Closing, Seller
shall not be required to replace such Asset before or after
Closing, and at Closing (subject to the provisions of
Section 5.1) shall assign any insurance proceeds received or
to be received relating to such Asset or, if greater than
such insurance proceeds, credit against the Purchase Price
payable by Purchaser the book value of such Asset. As of
the Closing, any insurance that Seller may have with respect
to the Assets shall terminate and on or after Closing any
loss of or damage to the Assets shall be the sole
responsibility of Purchaser. No insurance policy or
coverage with respect to the Assets will be assigned to
Purchaser in connection with the sale hereunder.
1.4 Assumption of Liabilities.
1.4.1 Assumed Liabilities. At the Closing and
except as otherwise specifically provided in this
Section 1.4, Purchaser shall assume and agree to pay,
discharge or perform, as appropriate, in accordance with
their terms, all liabilities and obligations of Seller and
the Transferred Subsidiaries in respect of the Business or
any of the Assets existing as of the Closing Date, except
Excluded Liabilities (collectively "Assumed Liabilities").
For purposes of the definitions of Assumed Liabilities
and Excluded Liabilities as used in this Agreement and for
purposes of Sections 3.1.26 and 3.1.27, the term
"liabilities" shall include, without limitation, any direct
or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, liability,
obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, accrued or unaccrued, secured or
unsecured, foreseeable or unforeseeable (hereinafter
sometimes referred to as "Liabilities").
1.4.2 Excluded Liabilities. In no event shall
Purchaser assume or incur any liability or obligation of
Seller whatsoever in respect of any of the following
(collectively "Excluded Liabilities"); and to the extent
that Excluded Liabilities are the primary liability of a
Transferred Subsidiary, Seller shall assume such Excluded
Liability.
(a) any Taxes (as defined in Section 3.1.10)
payable for any period prior to the Closing Date with
respect to the business, assets, properties or operations of
Seller or any member of any affiliated group of which Seller
is a member;
(b) any liability or obligation under or arising
or incurred in connection with any of the Excluded Assets to
the extent that it relates directly to an Excluded Asset;
(c) any liability or obligation arising prior to
or as a result of the Closing to any employees, agents or
independent contractors of Seller or a Transferred
Subsidiary, whether or not employed by Purchaser after the
Closing, or under any benefit arrangement with respect
thereto, except as expressly set forth in Section 6.1
hereof;
(d) any liability or obligation of Seller or a
Transferred Subsidiary arising or incurred in connection
with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby,
including fees and expenses of counsel, accountants and
other experts; or
(e) any liability arising under the litigation
listed in Schedule 3.1.14.
1.5 Closing Statement of Transferred Assets and
Assumed Liabilities. As promptly as practicable after the
Closing Date, Seller shall cause to be prepared a Closing
Statement of Transferred Assets and Assumed Liabilities as
of the Closing Date ("Closing Statement") which shall state
the Working Capital as of the Closing Date on the same basis
as used to determine Working Capital in the Interim
Statement.
In preparing the Closing Statement, a physical
inventory shall be conducted by Seller consistent with past
practice for the purpose of preparing the Inventory
valuation and Purchaser or its representatives shall have
the right to observe the taking of such physical inventory.
Within sixty (60) calendar days after Closing, Seller shall
provide to Purchaser the draft Closing Statement including
an itemized list of the Inventory as of the Closing Date
with values for each item of Inventory valued in accordance
with GAAP, an itemized list of accounts receivable included
in the Assets as of the Closing Date and an itemized list of
the accounts payable of the Transferred Subsidiaries as of
the Closing Date. If Purchaser does not object (by written
notice to Seller) to such statement within fifteen (15)
calendar days from receipt thereof by Purchaser, the
statement shall be deemed accepted. Any written notice of
objection by Purchaser hereunder shall specify in reasonable
detail the nature of any disagreement so asserted, and shall
include all supporting schedules, analyses, working papers
and other documentation. Purchaser shall be deemed to have
agreed with all items and amounts included in the statement
except such items that are specifically disputed in its
written notice of objection. If Purchaser makes a timely
objection to the statement as prepared by Seller, Purchaser
and Seller shall have twenty (20) calendar days from receipt
of such objection by Seller in which to reach agreement as
to the statement. If no agreement is reached in said twenty
(20) calendar day period, at the end of such period,
Purchaser and Seller shall appoint PricewaterhouseCoopers,
LLP (the "Arbiter") to arbitrate the dispute and prepare the
Closing Statement. The determination of the Arbiter shall
be binding on the parties hereto. Seller and Purchaser
shall each pay one-half of the fees and expenses of the
Arbiter.
The "Adjustment Date" shall be the later of the 15th
day after delivery of the report of the Arbiter pursuant
hereto, or the next day following the day upon which any
dispute concerning the amount of the Purchase Price is
resolved.
ARTICLE II
CLOSING AND CERTAIN MATTERS
2.1 Closing. The Closing of the sale and purchase of
the Assets shall take place at 10:00 A.M. local time on
September 2, 1999 at the offices of Holme Roberts & Owen
LLP, Suite 4100, 1700 Lincoln, Denver, Colorado 80203, or on
such other date and at such other place as may be mutually
agreed upon in writing by Purchaser and Seller (the
"Closing"). The date of the Closing is sometimes herein
referred to as the "Closing Date." For purposes of the
purchase and sale of the Assets and the assumption of the
Assumed Liabilities and any prorations of expenses and
income hereunder and otherwise, the effective time of the
Closing shall be 12:01 A.M. local time in Denver, Colorado,
on the Closing Date.
2.2 Items to be Delivered at Closing. At the Closing
and subject to the terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the
following:
(i) such stock certificates, special or
limited warranty deeds and bills of sale, assignments,
and other instruments and documents of conveyance and
transfer, as shall be necessary and effective to
transfer and assign to, and vest in, Purchaser all of
Seller's right, title and interest in and to the
Assets;
(ii) all books and records of Seller and the
Transferred Subsidiaries, which includes agreements,
contracts, commitments, leases, plans, bids,
quotations, proposals, instruments, price books and
price lists, customer and subscriber lists, supplier
lists, sales records, files, correspondences, rulings
issued by governmental entities, and other documents,
books, records, papers, files, office supplies and data
belonging to Seller which are part of the Assets, and
to the extent transferable, computer programs and
software, data bases whether in the form of computer
tapes or otherwise, related object and source codes,
manuals and guidebooks; provided, however, that Seller
shall be entitled to retain copies of all terminated or
expired contracts, agreements, commitments, leases and
litigation documents;
(iii) valid share certificates issued by
the Transferred Subsidiaries evidencing all of the
issued shares of each such corporation, each duly
endorsed in blank or with separate stock powers duly
endorsed in blank attached;
(iv) the original corporate minute books and
stock records of each of the Transferred Subsidiaries;
(v) resignations and releases from each of
the officers and directors of each of the Transferred
Subsidiaries;
(vi) a certificate of good standing of ACX,
Seller and each of the Transferred Subsidiaries as of
the most recent practicable date, from the Secretary of
State of the state of incorporation or organization for
each corporation;
(vii) the certificate of an officer of
Seller certifying (a) the adoption and copies of
resolutions of the boards of Directors of ACX and
Seller approving the transactions contemplated by this
Agreement and (b) the incumbency of the officers of
Seller who are either executing this Agreement or any
of the other documents contemplated hereunder, and the
certificate of an officer of affiliates of Seller
certifying (a) the adoption and copies of any
resolution evidencing any other required corporate
approvals by any of the affiliates of Seller and
(b) the incumbency of the officers of affiliates of
Seller who are executing any of the other documents
contemplated hereunder;
(viii) the certificate of an officer of
each Transferred Subsidiary certifying and attaching
thereto true and complete copies of the Organization
Documents of the Transferred Subsidiaries (the
certificate of incorporation attached thereto shall be
certified by the applicable Secretary of State or other
authority); and
(ix) evidence of the filing of the name
changes for the Transferred Subsidiaries as
contemplated by Section 2.4 of this Agreement.
and simultaneously with such delivery, all such steps will
be taken as may be required to put Purchaser in actual
possession and operating control of the Assets.
(b) Purchaser shall deliver to Seller the
following:
(i) the Closing Payment in accordance with
Section 1.3.2 hereof; and
(ii) an assumption agreement whereby
Purchaser assumes and agrees to pay, discharge or
perform, as appropriate, the Assumed Liabilities.
(c) The parties hereto shall also deliver to each
other the agreements, opinions certificates and other
documents and instruments referred to in Article V hereof.
2.3 Third-Party Consents. To the extent that Seller's
rights under any agreement, contract, commitment, lease,
Authorization (as defined in Section 3.1.13) or other Asset
to be assigned to Purchaser hereunder may not be assigned
without the consent of another person which has not been
obtained, this Agreement shall not constitute an agreement
to assign or an assignment of the same if such agreement or
assignment would constitute a breach thereof or be unlawful,
and Seller shall use reasonable efforts (but without any
obligation to make any unreimbursed expenditure other than
routine administrative costs and expenditures that would be
required in any event in respect of any period prior to
Closing) to obtain any such required consent as soon as
practicable after the date hereof. If any such consent
shall not be obtained prior to Closing or if any attempted
assignment would be ineffective or would impair Purchaser's
rights under the Asset in question so that Purchaser would
not in effect acquire the benefit of such rights, Seller
shall cooperate after Closing with Purchaser in any
reasonable arrangement for a reasonable period of time
designed to provide such benefits to Purchaser. If such
arrangement cannot be made, Purchaser shall not have any
obligation with respect to such Asset intended to be
assigned.
2.4 Change in Name. On the Closing Date, Seller shall
deliver to Purchaser or to the applicable governmental
authority all such executed documents as may be required to
change the name of each of the Transferred Subsidiaries to
another name bearing no similarity to Graphic Packaging
Corporation, such replacement names to be provided to Seller
by Purchaser not later than five business days prior to
Closing. Such executed documents shall include, but not be
limited to, a name change amendment with the Secretary of
State or other applicable governmental authority in the
state or other jurisdiction where the applicable Transferred
Subsidiary is incorporated or otherwise organized and an
appropriate name change notice for each province, state or
other jurisdiction where the applicable Transferred
Subsidiary is qualified to do business. Seller appoints
effective on and after the Closing Purchaser as its attorney-
in-fact to file such documents, provided that Purchaser
agrees that it shall file such documents on the Closing Date
or as promptly thereafter as practicable.
2.5 Further Assurances. Each of Seller and Purchaser
from time to time after the Closing, upon request of the
other, will execute, acknowledge and deliver to each other
such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other
documents, certifications and further assurances as may be
reasonably required (but without any obligation on the part
of any party to make any unreimbursed expenditure other than
routine administrative costs and expenditures) in order to
vest more effectively in Purchaser, or to put Purchaser more
fully in possession of, any of the Assets, or to better
enable or cause Purchaser to complete, perform or discharge
any of the Assumed Liabilities or to protect Seller's or
Purchaser's rights under this Agreement. Each of the
parties hereto will use reasonable efforts (but without any
obligation on the part of any party to make any unreimbursed
expenditure other than routine administrative costs and
expenditures) to cooperate with the other and execute and
deliver to the other parties hereto such other instruments
and documents and take such other actions as may be
reasonably requested from time to time by any other party
hereto as necessary to carry out, evidence and confirm the
intended purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller.
Sellers represent and warrant to Purchaser as of the date
hereof, except as set forth on the Disclosure Schedule
attached hereto, each of which exceptions shall specifically
identify the relevant subsection hereof to which it relates,
as set forth below.
For purposes of this Agreement "Material Adverse
Effect" shall mean any event, change, occurrence or
condition, singly or together with any other event, change,
occurrence or condition, which would have a material adverse
effect on the condition, financial or otherwise, of the
Assets or the Business, in each case taken as a whole, and
references to "Business Entities" means Seller and the
Transferred Subsidiaries.
3.1.1 Corporate Existence. Each Business
Entity (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation and (ii) is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction where failure to so qualify would have a
Material Adverse Effect.
3.1.2 Corporate Power; Authorization
Enforceable Obligations. Seller has the corporate power,
authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of
this Agreement by Seller have been duly authorized by all
necessary corporate and shareholder action. This Agreement
has been, and the other agreements, documents and
instruments required to be delivered by Seller in accordance
with the provisions hereof (the "Seller's Documents") will
be, duly executed and delivered on behalf of Seller by duly
authorized officers of Seller, and this Agreement
constitutes, and the Seller's Documents when executed and
delivered will constitute, the valid and binding obligations
of Seller as it is a party thereto, enforceable against it
in accordance with their respective terms.
3.1.3 No Interest in Other Entities or
Business Assets. Except for interests in the entities
described in Schedule 3.1.3 of the Disclosure Schedule (such
entities are hereinafter referred to as the "Subsidiaries"),
no shares of any corporation or any ownership or other
investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or
other legal entity relating to the Business are owned by any
Business Entity, other than shares of capital stock
representing immaterial, non-controlling interests obtained
by Seller in the ordinary course of the Business. The
Assets being transferred hereby constitute all of the
assets, properties and rights of Seller used exclusively in
and constituting the Business.
3.1.4 Capital Stock of Transferred
Subsidiaries. All of the issued and outstanding shares of
capital stock of the Transferred Subsidiaries as set forth
on Schedule 3.1.4 of the Disclosure Schedule (collectively,
the "Transferred Subsidiary Shares") are owned directly by
GPC or, except in the case of GPCC only, through Holdings.
All of the Transferred Subsidiary Shares have been duly
authorized and validly issued and are fully paid and non-
assessable. At Closing the Transferred Subsidiary Shares
will not be subject to any liens or restrictions on
transfer, other than restrictions imposed by applicable
securities laws. There is no authorized or outstanding
option, subscription, warrant, call, right, commitment or
other agreement obligating any of the Transferred
Subsidiaries to issue or transfer any shares of their
respective capital stock or any securities convertible into
or exercisable for any shares of their capital stock.
3.1.5 Validity of Contemplated Transactions,
etc. Except for filings as may be required under (i) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") or (ii) the Competition Act (Canada)
(the "Competition Act"), and except as set forth in
Schedule 3.1.5 of the Disclosure Schedule, the execution,
delivery and performance of this Agreement by Seller does
not and will not violate, conflict with or result in the
breach of any term, condition or provision of, or result in
the creation or imposition of any lien upon any of the
Assets under, or require the consent of any other person
under, or give any person the right to terminate, modify,
accelerate or otherwise adversely change the existing rights
or obligations of any Business Entity under, (a) any law,
ordinance, or governmental rule or regulation to which any
Business Entity is subject, (b) any judgment, order, writ,
injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which
is applicable to any Business Entity or (c) the charter
documents of any Business Entity or any securities issued by
any Business Entity, except in the case of clauses (a) and
(b) as would not reasonably be expected to cause a Material
Adverse Effect. Except as aforesaid, no authorization,
approval or consent of, and no registration or filing with,
any governmental or regulatory official, body or authority
is required in connection with the execution, delivery or
performance of this Agreement by Seller.
3.1.6 No Third-Party Options. There are no
existing agreements, options, commitments or rights with, of
or to any person to acquire any of the Assets or any
interest therein, except for those contracts entered into
in the ordinary course of business consistent with past
practice of Seller and the Transferred Subsidiaries.
3.1.7 Financial Statements. Seller has
delivered to Purchaser copies of the unaudited balance sheet
of the Business at December 31, 1998, and the related
statements of income and cash flow for the year then ended,
copies of which are attached to this Agreement (collectively
referred to as the "Financial Statement") and the Interim
Statement (the "Interim Statement") dated as of December 31,
1998 (the "Interim Statement Date"). The Financial
Statements (and the Interim Statement to the extent
applicable) comply with GAAP in all material respects and
present fairly the financial condition of the Business as of
such date and the results of operations for such period.
The Financial Statements and the Interim Statement contain
all adjustments, which are solely of a normal recurring
nature, necessary to present the financial position of the
Business at and for the period then ended and the Net
Working Capital consistent with GAAP.
3.1.8 Accounts Receivable. The accounts
receivable of Seller and the Transferred Subsidiaries
arising from the Business as set forth on the Interim
Statement or arising since the date thereof are valid and
genuine; have arisen out of bona fide sales and deliveries
of goods, performance of services and other business
transactions in the ordinary course of business consistent
with past practice; are not subject to valid defenses, set-
offs or counterclaims; and are collectible within the terms
of those agreements and at the full recorded amount thereof
less, in the case of accounts receivable appearing on the
Interim Statement, the recorded allowance for collection
losses on the Interim Statement. The allowance for
collection losses on the Interim Statement has been
determined in accordance with GAAP consistent with Seller's
and the Transferred Subsidiaries' past practice.
3.1.9 Inventory. All inventory of Seller and
the Transferred Subsidiaries used in the conduct of the
Business, including, without limitation, raw materials, work-
in progress and finished goods, reflected on the Interim
Statement or acquired since the date thereof was acquired
and has been maintained in the ordinary course of the
Business.
3.1.10 Tax and Other Returns and Reports. To
the knowledge of Seller, all material Returns (as defined
below) required to be filed on or on behalf of the Seller
and Transferred Subsidiaries have been duly filed and to the
knowledge of the Seller such returns are true, complete and
correct in all material respects. For purposes of this
section, "Returns" are defined as all reports, estimates,
declarations of estimated tax, information statements and
returns relating to, or required to be filed in connection
with any federal, state, local, provincial or foreign taxes,
assessments, interest, penalties, deficiencies, fees and
other governmental charges or impositions, (including,
without limitation, all income tax, unemployment
compensation, social security, payroll, sales and use,
excise, privilege, property, goods and services, ad valorem,
franchise, license, school and any other tax or similar
governmental charge or imposition under laws of the United
States or Canada or any state or provincial or municipal or
political subdivision thereof or any foreign country or
political subdivision thereof) (collectively "Taxes").
3.1.11 Books and Records. The books, records
and accounts maintained with respect to the Business
accurately and fairly reflect, in reasonable detail and in
all material respects, the transactions and the assets and
liabilities of Seller and the Transferred Subsidiaries with
respect to the Business. Seller and the Transferred
Subsidiaries have not engaged in any material transaction
with respect to the Business, maintained any bank account
for the Business or used any of the funds of Seller in the
conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the
normally maintained books and records of the Business. The
minute books of the Transferred Subsidiaries contain
accurate and complete records of all meetings held of, and
action taken by, the stockholders, the boards of directors
and the committees of the board of directors of the
Transferred Subsidiaries and no meeting of any such
stockholders, board of directors or committees has been held
for which minutes have not been prepared and are not
contained in such minute books.
3.1.12 Existing Conditions. Since the Interim
Statement Date, none of Seller or the Transferred
Subsidiaries has, with respect to the Business:
(a) incurred any liabilities required by GAAP to
be shown on the Interim Statement, other than liabilities
incurred in the ordinary course of business consistent with
past practice, or discharged or satisfied any lien or
encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice;
(b) sold, encumbered, assigned or transferred any
material assets or properties that would have been included
in the Assets if the Closing had been held on the Interim
Statement Date or on any date since then, except for the
sale of inventory in the ordinary course of business
consistent with past practice and except for the sale of any
Excluded Assets;
(c) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or
subjected any of its Assets to any mortgage, lien, pledge,
security interest, conditional sales contract or other
encumbrance, except for Permitted Liens (as defined in
Section 3.1.23);
(d) suffered any damage, destruction or loss to
any Asset, whether or not covered by insurance, that would
reasonably be expected to have a Material Adverse Effect or
suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other
services required to conduct the Business and utilize the
Assets;
(e) suffered a Material Adverse Effect;
(f) received notice of any actual or threatened
labor troubles, strike or other similar occurrence that
would reasonably be expected to have a Material Adverse
Effect;
(g) made any material commitments or agreements
for capital expenditures or capital additions or betterments
except such as may be involved in ordinary repair,
maintenance or replacement of its assets;
(h) except in the ordinary course of business
consistent with past practice, increased the salaries or
other compensation of, or made any advance or loan to, any
of its employees or made any increase in, or any addition
to, other benefits to which any of its employees may be
entitled;
(i) changed any of the accounting principles
followed by it or the methods of applying such principles;
or
(j) entered into any material transaction other
than in the ordinary course of business consistent with past
practice.
3.1.13 Compliance with Law; Authorizations.
Except as set forth on Schedule 3.1.22, each Business Entity
has complied and is in compliance with each law, ordinance,
or governmental or regulatory rule or regulation, whether
federal, state, provincial, local or foreign, to which the
Business Entities' business, operations, assets or
properties is subject ("Regulations"), except where the
failure to so comply would not reasonably be expected to
have a Material Adverse Effect. The Business Entities own,
hold, possess or lawfully use in the operation of the
Business all franchises, licenses, permits, approvals,
filings, registrations and other authorizations from any
governmental or regulatory official body or authority
("Authorizations") that are material to the conduct of the
Business, and the Business Entities are in compliance with
the terms of the Authorizations and Regulations, except
where the failure to so own, hold, possess or use or to so
comply would not reasonably be expected to have a Material
Adverse Effect.
3.1.14 Litigation. Except as set forth in
Schedule 3.1.14 of the Disclosure Schedule, except as would
not reasonably be expected to have a Material Adverse Effect
and except as may relate to litigation with respect to
Excluded Liabilities, no litigation, including any
arbitration, investigation or other proceeding of or before
any court, arbitrator or governmental or regulatory
official, body or authority is pending or, to the best
knowledge of Seller, threatened against any Business Entity
or which relates to the Assets or the transactions
contemplated by this Agreement, nor does Seller know of any
reasonably likely basis for any such litigation,
arbitration, investigation or proceeding. No Business
Entity is a party to or subject to, and the Assets are not
subject to, the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which
would reasonably be expected to have a Material Adverse
Effect.
3.1.15 Insurance. The Business and Assets are
insured under various policies of general liability and
other forms of insurance coverage as such coverage is
described in Schedule 3.1.15 of the Disclosure Schedule.
3.1.16 Contracts and Commitments. Except as
set forth in Schedule 3.1.16 of the Disclosure Schedule, no
Business Entity is a party to any written or oral:
(a) agreement, contract or commitment for the
future purchase of, or payment for, supplies or products, or
for the performance of services by a third party which
supplies, products or services are used in the conduct of
the Business involving in any one case $250,000 or more;
(b) agreement, contract or commitment to sell or
supply products or provide services ("Supply Contracts") in
connection with the Business involving in any one case
$500,000 or more;
(c) agreement, contract or commitment relating to
the Business not otherwise listed on the Disclosure Schedule
and continuing over a period of more than one year from the
date hereof or exceeding $500,000 in aggregate value;
(d) distribution, dealer, representative or sales
agency agreement, contract or commitment relating to the
Business;
(e) lease under which a Business Entity is either
lessor or lessee relating to any material Asset or any
property at which the Assets are located;
(f) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement or
other contract or commitment for the borrowing or lending of
money relating to the Business, or agreement or arrangement
for a line of credit or guarantee, pledge or undertaking of
the indebtedness of any other person relating to the
Business;
(g) agreement, contract or commitment for any
charitable or political contribution relating to the
Business;
(h) commitment or agreement for any capital
expenditure or leasehold improvements in excess of $500,000
relating to the Business except as may be involved in
ordinary repair, maintenance or replacement of assets;
(i) agreement, contract or commitment limiting or
restraining Seller, any Transferred Subsidiary or any
successor thereto, from engaging or competing in any
business nor, to Seller's knowledge, except for agreements
between Seller, the Transferred Subsidiaries and their
employees, is any employee of Seller or a Transferred
Subsidiary subject to any such agreement, contract or
commitment;
(j) license, franchise, distributorship or other
agreement that relates to any software, patent, trademark,
trade name, service mark or copyright or to any ideas,
technical assistance or other know-how of or used by any
Business Entity and material in the conduct of the Business;
or
(k) an employment contract or written arrangement
relating to any Business Employee, or
(l) other material agreement, contract or
commitment relating to the Business not made in the ordinary
course of business.
Each of the agreements, contracts, commitments,
leases and other instruments, documents and undertakings
listed in the Disclosure Schedule in response to this
Section (collectively, the "Contracts and Commitments"),
under which Purchaser is to acquire any material rights or
obligations under this Agreement is valid and enforceable in
accordance with its terms, each Business Entity is in
substantial compliance with the provisions thereof and, to
Seller's knowledge, no event has occurred which, with or
without the giving of notice or lapse of time, or both,
would constitute a default thereunder.
3.1.17 Description of and Title to Assets.
(a) Schedule 3.1.17(a) of the Disclosure Schedule sets forth
materially accurate lists and summary descriptions of
inventory, equipment and furniture and fixtures and other
tangible personal property of each Business Entity included
in the Assets as of the Interim Statement Date; and
(b) Schedule 3.1.17(b) of the Disclosure Schedule
sets forth materially accurate lists and summary
descriptions of all real property and interests in real
property owned, leased or otherwise held by each Business
Entity exclusively for the conduct of the Business or upon
which the Assets are located as of the Interim Statement
Date.
(c) The Business Entities have good and insurable
(at ordinary rates) title (and with respect to GPCC, good
and marketable title) to all of the Owned Real Property and
good title to all of the personal property (other than
leased property) constituting a part of the Assets, in each
case free and clear of any liens, claims, charges, options,
rights of tenants or other encumbrances, except for
Permitted Liens. All public utilities currently utilized at
each Real Property give adequate service to the Real
Property, and the Real Property has adequate access to and
from publicly dedicated streets, the responsibility for
maintenance of which has been accepted by the appropriate
Governmental Body.
3.1.18 Limitation of Warranties and Remedies.
All items of machinery, equipment and other tangible
property included in the Assets are in good operating
condition and state of repair, ordinary wear and tear
excepted. Except for the representations and warranties set
forth in this Agreement or any document executed in
connection herewith, GRAPHIC PACKAGING CORPORATION AND GP
HOLDINGS, INC.,EXPRESSLY DISCLAIM AND NEGATE AS TO THE
ASSETS AND ALL PERSONAL PROPERTY AND FIXTURES INCLUDED IN
THE SALE OF THE ASSETS (a) ANY IMPLIED OR EXPRESS WARRANTY
OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
AND (d) ANY RIGHTS OF PURCHASER UNDER APPLICABLE STATUTES TO
CLAIM DIMINUTION OF CONSIDERATION. The parties hereto agree
that, to the extent required by applicable law to be
operative, the disclaimers of warranties contained in this
Section 3.1.18 are "conspicuous" disclaimers for the
purposes of any applicable law, rule or order.
3.1.19 Labor Matters. Except as set forth in
Schedule 3.1.19 of the Disclosure Schedule, Seller and the
Business Entities are not parties to any collective
bargaining agreement covering any Business Employee, no
collective bargaining agent has been certified as a
representative of any of the employees of a Business Entity
and, to Seller's knowledge, no representation campaign or
election is now in progress with respect to any of the
employees of a Business Entity.
3.1.20 Employee Benefit Plans and Arrangements.
(a) Identification of U.S. Employee Benefit
Plans. Schedule 3.1.20 of the Disclosure Schedule lists the
employee benefit plans sponsored, maintained or contributed
to by Seller with respect to employees paid through U.S.
Payrolls. Seller has made available copies of each document
that sets forth the terms of an employee benefit plan and,
as applicable, its related trust, summary plan description,
summary description furnished to participants and
beneficiaries, insurance policies, IRS determination
letters, and Forms 5500 for the most recent two years. For
the purposes hereof, the term "employee benefit plan"
includes all plans, funds, programs and policies providing
benefits of economic value to any current employee of the
Business, or beneficiary, dependent or assignee of any such
employee other than regular salary, wages or commissions
paid substantially concurrently with the performance of the
services for which paid. Without limitation, the term
"employee benefit plan" includes all employee welfare
benefit plans within the meaning of section 3(l) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all employee pension benefit plans within the
meaning of section 3(2) of ERISA but excludes Canadian
Employee Benefit Plans. Each plan providing benefits which
are funded through a policy of insurance is indicated by the
word "insured" placed by the listing of the plan in the
Disclosure Schedule.
(b) With respect to U.S. employee benefit plans,
except as set forth in the Disclosure Schedule and except
with respect to any of the following as would not reasonably
be expected to have a Material Adverse Effect:
(i) Each employee benefit plan has been
established, maintained and operated in all material
respects in compliance with all applicable federal,
provincial, state and local statutes, orders,
governmental rules and regulations, including where
applicable, but not limited to, ERISA and the Internal
Revenue Code of 1986, as amended (the "Code").
(ii) Seller, either directly or indirectly as a
member of a controlled group within the meaning of
Sections 414(b), (c), (m) and (o) of the Code
("Controlled Group"), does not have any liability that
remains unsatisfied as of the date hereof for (A) the
termination of any single employer plan under Sections
4062 or 4064 of ERISA, or withdrawal from a single
employer plan under Section 4063 of ERISA, (B) any
interest payments under Section 302(e) of ERISA or
Section 412(m) of the Code, (C) any excise tax imposed
by Section 4971, 4975 or 4980B of the Code, (D) any
minimum funding contributions under Section 302(c)(11)
of ERISA or Section 412(c)(11) of the Code, (E) any
accumulated funding deficiency within the meaning of
Section 412(a) of the Code, whether or not waived, or
(F) to the Internal Revenue Service, the Department of
Labor, the Pension Benefit Guaranty Corporation, or any
employee benefit plan or any multi-employer plan (as
defined in Section 3(37) of ERISA) ("Multi-Employer
Plan") under Subtitle D or Subtitle E of Title IV of
ERISA, under Subchapter D of Chapter 1 of Subtitle A of
the Code or under Chapter 43 of Subtitle D of the Code.
(iii) No action, suit, grievance, arbitration
or other manner of litigation or claim with respect to
any employee benefit plan (other than routine claims
for benefits made in the ordinary course of plan
administration for which plan administrative procedures
have not been exhausted) is pending or, to Seller's
knowledge, threatened or imminent against or with
respect to any employee benefit plan, Seller, any
member of a Controlled Group that includes Seller, or
any fiduciary within the meaning of Section 3(21) of
ERISA with respect to an employee benefit plan. Seller
has no knowledge of any facts that could give rise to
any action, suit, grievance, arbitration or any other
manner of litigation or claim with respect to any
employee benefit plan.
(c) Canadian Employee Benefit Plans.
(i) Schedule 3.1.20 sets forth all the
employee benefit, health, welfare, supplemental
unemployment benefit, bonus, pension, profit sharing,
deferred compensation, compensation payable on
termination, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental,
legal, disability and similar plans, funds, programs
and policies providing economic value to employees or
former employees of GPCC (the "GPCC Employees") which
are currently maintained by GPCC or under which GPCC
has any current obligations, excluding plans
established by a government entity pursuant to statute
(the "Canadian Employee Benefit Plans"). No material
changes have occurred to the Canadian Employee Benefit
Plans or are expected to occur which would affect the
actuarial reports or financial statements required to
be provided to the Purchaser pursuant to this Section
3.1.20, no improvements to any Canadian Employee
Benefit Plan have been promised and no amendments or
improvements to a Canadian Employee Benefit Plan will
be made or promised prior to the Closing Date. No GPCC
Employee participates in any employee benefit plan
other than a Canadian Employee Benefit Plan.
(ii) All of the Canadian Employee Benefit
Plans are and have been established, registered,
qualified, invested and administered, in all respects,
in accordance with all laws, regulations, orders or
other legislative, administrative or judicial
promulgations applicable to the Canadian Employee
Benefit Plans ("Applicable Canadian Benefit Laws") and
in accordance with all written understandings between
GPCC and the GPCC Employees. There have been no
improper withdrawals, applications or transfers of
assets to or from any Canadian Employee Benefit Plan or
the trusts or other funding media relating thereto, and
neither GPCC nor any of its agents has been in breach
of any fiduciary obligation with respect to the
administration of the Canadian Employee Benefit Plans
or the trusts or other funding media relating thereto.
(iii) All obligations regarding the
Canadian Employee Benefit Plans have been satisfied,
there are no outstanding defaults or violations by any
party thereto and no taxes, penalties or fees are owing
or exigible under any of the Canadian Employee Benefit
Plans. All contributions or premiums required to be
made by GPCC under the terms of each Canadian Employee
Benefit Plan or by Applicable Canadian Benefit Laws,
including amounts payable by GPCC on behalf of GPCC
Employees or their spouses under any registered
retirement savings plan, have been made in a timely
fashion in accordance with Applicable Canadian Benefit
Laws and the terms of the Canadian Employee Benefit
Plans, and GPCC does not have, and as of Closing will
not have, any liability (other than liabilities
accruing after the Closing Date and liabilities with
respect to an unfunded liability and a solvency
deficiency under the Graphic Packaging Corporation
Retirement Plan for Hourly Employees who are Members of
Local 5 of Pulp & Paper Workers of Canada) with respect
to any of the Canadian Employee Benefit Plans.
(iv) No Canadian Employee Benefit 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 or to affect the
registration of any Canadian Employee Benefit Plan
required to be registered.
(v) GPCC has made available to the Purchaser
true, correct and complete copies of all the Canadian
Employee Benefit Plans as amended as of the date hereof
together with all related documentation including,
without limitation, funding agreements, actuarial
reports, funding and financial information returns and
statements, advance tax rulings, plan summaries,
booklets and personnel manuals, and will make available
to the Purchaser all employee data necessary to
administer each Canadian Employee Benefit Plan within
ten business days after the execution of this
Agreement, which data will be true and correct as of
such date. GPCC will notify the Purchaser of any
changes to such data occurring prior to the Closing
Date.
(vi) Each Canadian Employee Benefit Plan is
fully funded or fully insured on both an ongoing and
solvency basis, with the exception of the Graphic
Packaging Corporation Retirement Plan for Hourly
Employees who are Members of Local 5 of Pulp & Paper
Workers of Canada which has an unfunded liability and
solvency deficiency, calculated in accordance with the
actuarial assumptions and methods used in the most
recent valuation report on such plan filed with the
applicable pension regulatory authorities. No
insurance policy or any other contract or agreement
affecting any Canadian Employee Benefit Plan requires
or permits a retroactive increase in premiums or
payments due thereunder.
(vii) Except as disclosed in Schedule
3.1.20, none of the Canadian Employee Benefit Plans,
other than the registered pension plans and group
registered retirement savings plans identified on such
schedule, provides benefits to retired GPCC Employees
or to the beneficiaries or dependants of retired GPCC
Employees.
3.1.21 Intellectual Property Matters. To the
best of Seller's knowledge, the Business Entities, in the
conduct of the Business, did not and do not utilize any
patent, trademark, trade name, service mark, copyright,
software, trade secret or know-how in the Business except
for those listed in Schedule 3.1.21 of the Disclosure
Schedule (the "Intellectual Property"), all of which are
owned or licensed by a Business Entity, or if not owned or
licensed would not have a Material Adverse Effect. No
Business Entity has received any notice of any claim of
infringement or any other claim or proceeding relating to
any such patent, trademark, tradename, service mark,
copyright or trade secret.
3.1.22 Environmental Matters.
Notwithstanding the generality of any other
representations and warranties in this Agreement, this
Section 3.1.22 shall be deemed to contain the only
representations and warranties in this Agreement with
respect to environmental matters. In addition,
Schedule 3.1.22 may contain items which are not required to
be listed pursuant to the language of Section 3.1.22, and
the listing of items shall not be used to interpret the type
of items covered by Section 3.1.22, to provide further
meaning to the term Material Adverse Effect, or to suggest
that Seller has responsibility for such items. Except as
set forth in Schedule 3.1.22 of the Disclosure Schedule or
as otherwise disclosed or known to Purchaser and except with
respect to any of the following as would not reasonably be
expected to have a Material Adverse Effect and to the best
of Seller's knowledge (defined for purposes of this
representation and warranty as the knowledge of Paul Adams
and Jill Sisson):
(a) No Business Entity has received written
notification from a governmental authority that it does not
have all material Authorizations which are required in
connection with the conduct of the Business under
Regulations relating to pollution or protection of the
environment, including Regulations relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including,
without limitation, ambient air, surface water, groundwater,
or land).
(b) No Business Entity has received written
notification from a governmental authority that it is not in
material compliance in the conduct of the Business with the
terms and conditions of such Authorizations and Regulations
relating to pollution or protection of the environment as
aforesaid.
(c) There is no civil, criminal or administrative
action, suit, claim, hearing, notice of violation, or
proceeding pending or overtly threatened against any
Business Entity Seller in connection with the conduct of the
Business relating in any way to, those laws or any
regulation, code, plan, order, decree, judgment, or
injunction entered, promulgated or approved thereunder.
Notwithstanding any item disclosed in Schedule 3.1.22 of the
Disclosure Schedule, with respect to any asset, property,
business or other matter addressed by the Asset Purchase
Agreement, dated March 19, 1991, by and among Package
Products Flexible Corporation, Gravure International
Corporation, and Engraph, Inc., Seller makes no
representation and warranty that would cover any matter,
condition, event or circumstance existing prior to April 19,
1991.
3.1.23 Real Property.
(a) Real Property Defined. All real property
(including, without limitation, all interests in and rights
to real property) and improvements located thereon which are
owned or leased by a Business Entity and used exclusively in
connection with the Business and included in the Assets (the
"Real Property") are described in Schedule 3.1.17(b) of the
Disclosure Schedule.
(b) Title to Owned Real Property. With respect
to the Real Property owned by a Business Entity and used
exclusively in the conduct of the Business ("Owned Real
Property"), a Business Entity has title as described in
Section 3.17(c) to such Real Property in fee simple, free
and clear of all Liens, except Permitted Liens.
"Permitted Liens" shall mean (i) liens for current real
or personal property taxes not yet due and payable,
(ii) liens disclosed in Schedule 3.1.23 (a) of the
Disclosure Schedule in response to this Section 3.1.23,
(iii) worker's, carrier's and materialman's liens, (iv)
liens under worker's compensation, unemployment insurance,
social security or other similar legislation, (v) liens,
deposits, or pledges to secure performance bids, tenders,
contracts, leases, surety, performance or other similar
bonds or other similar obligations arising in the ordinary
course of business, (vi) liens and encumbrances such as
easements, license and rights of way that do not materially
detract from the value of the properties used in the
Business or materially interfere with the present use of the
properties in the Business, and (vii) liens that will be
discharged at or prior to the Closing Date.
(c) Leased Real Property. With respect to the
Real Property leased by a Business Entity and used
exclusively in the Business:
(i) Seller has delivered to Purchaser a true
and complete copy of every lease and sublease to which
a Business Entity is a tenant or subtenant and which
are included in the Assets (the "Leases") and such
Leases are described in Schedule 3.1.17(b) of the
Disclosure Schedule; and
(ii) each Lease is in full force and effect
and has not been assigned, modified, supplemented or
amended except as listed on the Disclosure Schedule,
and neither Seller nor, to Seller's knowledge, the
landlord or sublandlord under any Lease is in default
in any material respect under any of the Leases, and no
circumstance presently exists which, with the giving of
notice or passage of time, or both, would permit the
landlord or sublandlord under any Lease to terminate
any Lease.
(d) No Violations. Except where the failure to
so comply would not reasonably be expected to have a
Material Adverse Effect, the Real Property and the present
uses thereof comply with all Regulations of all governmental
bodies having jurisdiction over the Real Property, and
Seller has received no notices, oral or written, from any
governmental body that the Real Property or any improvements
erected or situate thereon, or the uses conducted thereon or
therein, violate in any material respect any Regulations of
any governmental body having jurisdiction over the Real
Property.
3.1.24 Availability of Documents. Seller has
made available to Purchaser copies of all documents,
including, without limitation, all agreements, contracts,
commitments, summaries of insurance policies, leases, plans,
instruments, undertakings authorizations, permits, licenses,
patents, trademarks, trade names, service marks, copyrights
and applications therefor listed in the Disclosure Schedule
hereto or referred to herein.
3.1.25 Y2K. Seller has conducted a review of
its computer software, computer firmware, computer hardware
(whether general or special purpose) and other similar or
related items of automated, computerized or software systems
that are used by the Business Entities in the conduct of the
Business (the "Computer Assets"). Seller has no reason to
believe that the Computer Assets will malfunction, cease to
function, generate incorrect data or produce incorrect
results when processing, providing or receiving (1) date
related data from, into or between the Twentieth and Twenty-
first Centuries, or (2) date related data in connection with
any valid date in the Twentieth and Twenty-first Centuries
in such a manner as would have a Material Adverse Effect.
3.1.26 Undisclosed Liabilities. The
Transferred Subsidiaries do not have any Liabilities as
defined in Section 1.4.1 and there is no basis for any
present or future claim against it giving rise to any
Liability except for (i) Liabilities shown on the Financial
Statements, (ii) Liabilities which have arisen after such
Financial Statements in the ordinary course of business
(none of which results from, arises out of, relates to, is
in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of any
legal requirements), and (iii) Liabilities which do not
either singly or in the aggregate exceed $20,000.
3.1.27 Intercompany Liabilities. At Closing,
there shall be no Liability from a Transferred Subsidiary to
the Seller or any affiliate of Seller.
3.2 Representations and Warranties of Purchaser.
Purchaser represents and warrants as of the date hereof to
Seller as follows:
3.2.1 Corporate Existence. Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of the State of South Carolina.
3.2.2 Corporate Power and Authorization.
Purchaser has the corporate power, authority and legal right
to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and
delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms.
3.2.3 Validity of Contemplated Transactions,
etc. Except for filings as may be required under (i) the
HSR Act or (ii) the Competition Act, and except as disclosed
in Schedule 3.2.3 of the Disclosure Schedule, the execution,
delivery and performance of this Agreement by Purchaser does
not and will not violate, conflict with or result in the
breach of any term, condition or provision of, or require
the consent of any other person under, or give any person
the right to terminate, modify, accelerate or otherwise
adversely change the existing rights or obligations of
Purchaser under, (a) any law, ordinance, or governmental
rule or regulation to which Purchaser is subject, (b) any
judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official,
body or authority which is applicable to Purchaser, (c) the
charter documents or bylaws of, or any securities issued by,
Purchaser, or (d) any mortgage, indenture, agreement,
authorization, or other instrument, document or
understanding, oral or written, to which Purchaser is a
party, by which Purchaser may have rights, except in the
case of clause of (a), (b) and (d) as would not reasonably
be expected to adversely affect Purchaser's ability to
perform its obligations under this Agreement. Except as
aforesaid, no authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory
official, body or authority is required in connection with
the execution, delivery or performance of this Agreement by
Purchaser.
3.3 Investment Intent; Status. The Transferred
Subsidiary Shares will be acquired hereunder solely for the
account of Purchaser and its specified designees for
investment, and not with a view to the resale or
distribution thereof, subject to the right of Purchaser and
any such designees to sell, assign, transfer or distribute
any or all of the Transferred Subsidiary Shares to any
corporation which is an affiliate of the Purchaser.
Purchaser is an "accredited investor" within the meaning of
Regulation 501 promulgated under the Securities Act of 1933,
as amended.
ARTICLE IV
AGREEMENTS PENDING CLOSING.
4.1 Agreements of Seller Pending the Closing. Seller
covenants and agrees that, pending the Closing and except as
otherwise agreed to in writing by Purchaser or as would not
have a Material Adverse Effect:
4.1.1 Business in the Ordinary Course. The
Business shall be conducted solely in the ordinary course
consistent with past practice. The corporate existence of
the Transferred Subsidiaries will be maintained, and no
Transferred Subsidiary shall issue any equity securities or
rights to acquire equity securities to any person.
4.1.2 Existing Condition. Seller shall not
cause nor permit (to the extent within its control) to occur
any of the events or occurrences described in Section 3.1.12
hereof.
4.1.3 Maintenance of Physical Assets. Seller
shall continue to maintain and service the physical assets
used in the conduct of the Business in substantially the
same manner as has been its consistent past practice.
4.1.4 Employees and Business Relations.
Seller shall use its reasonable efforts to keep available
the services of the present employees and agents of the
Business and to maintain the relations and goodwill with the
suppliers, customers, distributors and any others having
business relations with the Business.
4.1.5 Maintenance of Insurance. Seller shall
notify Purchaser of any materially adverse changes in the
terms of the insurance coverage referred to on Schedule
3.1.15 of the Disclosure Schedule hereto.
4.1.6 Maintenance of Authorizations, etc.
Seller shall use reasonable efforts to maintain in full
force and effect all Authorizations currently in effect used
in the conduct of the Business.
4.1.7 Update Schedules. On or before Closing,
Seller shall update the Schedules with any information that
would make its representations and warranties or the
Schedules in any material respect incomplete or no longer
correct in any material respect after the date hereof until
the Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or supplement
the representations and warranties of Seller or the
schedules hereto for the purposes of Article V hereof in a
manner that would have a Material Adverse Effect, unless
Purchaser shall have consented thereto in writing.
4.1.8 Conduct of Business. Seller shall
conduct the Business in such a manner that on the Closing
Date the representations and warranties of Seller contained
in this Agreement shall be true in all material respects,
except as specifically contemplated by this Article IV, as
though such representations and warranties were made on and
as of such date. Seller shall cooperate with Purchaser and
use reasonable efforts to cause all of the conditions to the
obligations of Purchaser under this Agreement to be
satisfied on or prior to the Closing Date.
4.1.9 Sale of Assets; Negotiations. After the
date hereof, Seller shall not, directly or indirectly, sell
or encumber (except for Permitted Liens) all or any part of
the Assets, other than in the ordinary course of the
Business consistent with past practice or initiate or
participate in any discussions or negotiations or enter into
any agreement to do any of the foregoing, and Seller shall
not provide any confidential information concerning the
Business or the Assets to any third party other than in the
ordinary course of business. Purchaser acknowledges that
Seller has provided information concerning the Business and
the Assets to others under terms of confidentiality and non-
use substantially similar to those contained in the
Purchaser Confidentiality Agreement (as defined in Section
4.1.10) (the "Other Confidentiality Agreements") in
connection with its efforts to sell the Business and the
Assets, and Purchaser hereby releases Seller from any
obligation or liability arising out of the breach of the
Other Confidentiality Agreements by the parties thereto
other than Seller or its advisors. To the extent they are
assignable, the Other Confidentiality Agreements shall be
assigned to Purchaser at Closing. Seller will request prior
to Closing that all confidential information provided
pursuant to the Other Confidentiality Agreement be returned
by the recipients.
4.1.10 Access. Seller shall give to
Purchaser's officers, employees, counsel, accountants and
other representatives reasonable access to and the right to
inspect, upon reasonable notice and during normal business
hours, all of the premises, properties, assets, records,
contracts and other documents relating to the Business and
shall permit them to consult with the officers of Seller
identified on Schedule 4.1.10 of the Disclosure Schedule and
accountants, counsel and agents of Seller for the purpose of
making such investigation of the Business, including,
without limitation, the Interim Statement, as Purchaser
shall desire to make, provided that such investigation shall
not unreasonably interfere with Seller's business
operations. All information provided pursuant to this
Section 4.1.10 shall be subject to the confidentiality
agreement signed by Purchaser (the "Purchaser
Confidentiality Agreement"), which is deemed incorporated by
this reference into this Agreement. Furthermore, subject to
the Purchaser Confidentiality Agreement, Seller shall
furnish to Purchaser all such documents and copies of
documents and records and information with respect to the
affairs of the Business as Purchaser shall from time to time
reasonably request and shall permit Purchaser and its agents
to make such physical inventories and inspections of the
Assets as Purchaser may request from time to time.
4.2 Agreements of Purchaser Pending the Closing.
Purchaser covenants and agrees that, pending the Closing and
except as otherwise agreed to in writing by Seller:
4.2.1 Actions of Purchaser. Purchaser will not
take any action that would result in a breach of any of its
representations and warranties hereunder in any material
respect. Purchaser shall cooperate with Seller and use
reasonable efforts to cause all of the conditions to the
obligations of Seller under this Agreement to be satisfied
on or prior to the Closing Date.
4.2.2 Confidentiality. Unless and until the
Closing has been consummated, Purchaser will hold, and shall
cause its counsel, independent certified public accountants,
appraisers, investment bankers and other agents to hold in
confidence any data or information made available to
Purchaser with respect to the Business using the same
standard of care to protect such data or information as is
used to protect Purchaser's confidential information. If
the transactions contemplated by this Agreement are not
consummated, Purchaser agrees that it shall return or cause
to be returned to Seller all written materials and all
copies thereof that were supplied to Purchaser by Seller and
that contain any such data or information. The provisions
of the Section are in addition to the provisions contained
in the Purchaser Confidentiality Agreement with respect to
Seller or the Business.
4.2.3 Financial Capacity. Purchaser has, or
at Closing will have, funds sufficient to pay the Purchase
Price.
4.3 Hart-Scott-Rodino Act. Within 15 days after the
execution of this Agreement, Seller and Purchaser shall, in
cooperation with the other, file in connection with the
transactions contemplated by this Agreement any reports or
notifications that may be required to be filed by them under
the HSR Act, with each of the Department of Justice and the
Federal Trade Commission and, if applicable, under the
Competition Act (Canada) and each of Seller and Purchaser
shall comply promptly with all requests for further
documents and information made by the Department of Justice
and the Federal Trade Commission and the Competition Bureau
(Canada), and shall furnish to the other all such
information in its possession as may be necessary for the
completion of the reports or notifications to be filed by
the other and shall use reasonable efforts to take or
cooperate in the taking of all steps as may be necessary to
expedite the termination of the waiting period under the HSR
Act. Each party shall bear its own costs and expenses
(including fees and disbursements of counsel) in connection
with the application. In the event a suit is threatened or
instituted challenging the purchase of the Business and
Assets as violative of any antitrust laws, each party shall
use reasonable efforts to avoid the filing of, resist or
resolve such suit.
4.4 Press Releases. Each party shall consult with the
other to the extent practicable with regard to all press
releases and other announcements issued at or prior to the
Closing concerning this Agreement or the transactions
contemplated hereby.
4.5 Compliance with Bulk Sales Laws. Purchaser and
Seller hereby waive compliance by Purchaser and Seller with
the bulk sales law and any other similar laws in any
applicable jurisdiction in respect of the transactions
contemplated by this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to Purchaser's Obligations.
All obligations of Purchaser under this Agreement are, at
its sole option, subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following
conditions precedent:
5.1.1 Representations and Warranties True as
of the Closing Date. The representations and warranties of
Seller set forth in this Agreement that are qualified as to
materiality shall be true and correct, and any such
representations and warranties not so qualified shall be
true and correct in all material respects, at and as of the
time of the Closing as if made at and as of such time,
except to the extent that any representation is made as of a
specified date in which case such representation shall be
true and correct to the extent specified above as of such
date.
5.1.2 Compliance with this Agreement. Seller
shall have performed and complied in all material respects
with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or
at the Closing.
5.1.3 Closing Certificate. Purchaser shall
have received a certificate from Seller, dated the Closing
Date, certifying that the conditions specified in sections
5.1.1 and 5.1.2 hereof have been fulfilled and certifying
that Seller has obtained all consents and approvals required
by Section 5.1.5 hereof.
5.1.4 No Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or
final judgment relating thereto, shall be pending before any
court or governmental or regulatory official, body or
authority in which it is sought to materially restrain or
prohibit or to obtain substantial damages or other relief in
connection with this Agreement or the consummation of the
transactions contemplated hereby.
5.1.5 Consents and Approvals. Seller shall
have obtained all approvals, authorizations and consents of
any governmental or regulatory official, body or authority
and parties to contracts as are required to consummate the
transactions contemplated herein and to permit Purchaser to
own and operate the Business and the Assets following the
Closing except where the failure to have so obtained the
same would not be reasonably expected to have a Material
Adverse Effect.
5.1.6 HSR Act. The waiting period under the
HSR Act shall have expired or been terminated.
5.1.7 Approval of Counsel; Corporate Matters.
All actions, proceedings, resolutions, instruments and
documents required to carry out this Agreement or incidental
hereto and all other related legal matters shall have been
approved on the Closing Date by counsel for Purchaser, in
the exercise of their reasonable judgment.
5.1.8 Opinion of Counsel. An opinion of
counsel for Seller shall have been delivered to Purchaser
dated as of the Closing Date in the form agreed to by the
parties.
5.1.9 Competition Act. The applicable waiting
period under Section 123 of the Competition Act (Canada)
shall have expired or been earlier terminated and the
Commissioner of Competition (the "Commissioner") appointed
under the Competition Act (Canada) shall have issued an
advance ruling certificate under Section 102 of the
Competition Act (Canada) in respect of the purchase of the
Purchased Assets or the Commissioner or his representative
shall have advised the Purchaser (on terms and conditions
and in a form satisfactory to the Purchaser) that the
Commissioner does not intend to make an application under
Part VIII of the Competition Act (Canada) in respect of the
purchase of Purchased Assets under this Agreement and
neither the commissioner nor any of his representatives
shall have rescinded or amended such advice.
5.2 Conditions Precedent to the Obligations of Seller.
All obligations of Seller under this Agreement are, at its
sole option, subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following
conditions precedent:
5.2.1 Representations and Warranties True as
of the Closing Date. The representations and warranties of
Purchaser set forth in this Agreement that are qualified as
to materiality shall be true and correct, and any such
representations and warranties not so qualified shall be
true and correct in all material respects, at and as of the
time of the Closing as if made at and as of such time,
except to the extent that any representation is made as of a
specified date in which case such representation shall be
true and correct to the extent specified above as of such
date.
5.2.2 Compliance with this Agreement.
Purchaser shall have performed and complied in all material
respects with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or
at the Closing.
5.2.3 Closing Certificates. Seller shall have
received a certificate from Purchaser dated the Closing Date
certifying that the conditions specified in Sections 5.2.1
and 5.2.2 hereof have been fulfilled.
5.2.4 No Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or
final judgment relating thereto, shall be pending before any
court or governmental or regulatory official, body or
authority in which it is sought to materially restrain or
prohibit or to obtain substantial damages or other relief in
connection with this Agreement or the consummation of the
transactions contemplated hereby.
5.2.5 Approval of Counsel; Corporate Matters.
All actions, proceedings, resolutions, instruments and
documents required to carry out this Agreement or incidental
hereto and all other related legal matters shall have been
approved on the Closing Date by counsel for Seller, in the
exercise of their reasonable judgment.
5.2.6 Competition Act. The applicable waiting
period under Section 123 of the Competition Act (Canada)
shall have expired or been earlier terminated and the
Commissioner of Competition (the "Commissioner") appointed
under the Competition Act (Canada) shall have issued an
advance ruling certificate under Section 102 of the
Competition Act (Canada) in respect of the purchase of the
Purchased Assets or the Commissioner or his representative
shall have advised the Seller (on terms and conditions and
in a form satisfactory to the Seller) that the Commissioner
does not intend to make an application under Part VIII of
the Competition Act (Canada) in respect of the purchase of
Purchased Assets under this Agreement and neither the
commissioner nor any of his representatives shall have
rescinded or amended such advice.
5.2.7 HSR Act. The waiting period under the
HSR Act shall have expired or been terminated.
ARTICLE VI
OTHER MATTERS
6.1 Labor and Employment.
6.1.1 Offers of Employment. Effective as of
the Closing Date, Purchaser shall make an offer of initial
employment to each Business Employee who is not employed by
a Transferred Subsidiary and shall continue for at least 30
days the employment of employees of the Transferred
Subsidiaries at the same base salary and on substantially
the same other terms and conditions as in effect immediately
prior to Closing. Purchaser's employment of those Business
Employees who accept an offer of employment shall be deemed
to commence on the Closing Date. A Business Employee who
accepts an offer of employment from Purchaser or who is
employed by a Transferred Subsidiary shall be referred to as
a "Hired Employee".
(a) Business Employees are hereby defined as
follows: (i) all persons who are actively employed by the
Business immediately before Closing; (ii) all persons who
are employed by the Business who are absent from work with
the Business on account of sickness or leave of absence at
Closing and are released to return to work (and actually
return to work) their regularly scheduled number of hours
within 12 weeks from the day such employee left active
employment or commenced working a reduced scheduled; (iii)
all persons for whom an obligation to recall, rehire or
otherwise return to employment exists under an Assumed
Collective Bargaining Agreement (as defined below); and (iv)
all persons who would not otherwise be employed in the
Business immediately before the Closing but who, with the
mutual consent of Seller and Purchaser, become employees of
the Business at or before the Closing.
(b) After the Closing, Seller shall not be
responsible for wages, salaries, and other employee benefits
for Hired Employees for service with the Purchaser after
Closing. Prior to the execution of this Agreement, Seller
will provide Purchaser with a preliminary list of Business
Employees, and Seller and Purchaser will agree on a final
list of Business Employees prior to the Closing, based upon
new employees hired by the Business and departures of
employees of the Business prior to Closing, and upon
mutually agreed additions and deletions to such list.
Seller shall cooperate with Purchaser and shall provide
information reasonably requested by Purchaser in order to
enable Purchaser to hire the Hired Employees and enroll the
Hired Employees in Purchaser's benefit plans.
6.1.2 Collective Bargaining Agreements. At
Closing Purchaser shall adopt and assume the collective
bargaining agreements listed on Schedule 6.1.2 (or require
the Transferred Subsidiaries to continue such agreements in
accordance with their terms) (the "Assumed Collective
Bargaining Agreements"). At and after the Closing, any
obligations that may be payable under the Assumed Collective
Bargaining Agreements with respect to services performed by
Business Employees after the Closing shall be the sole
responsibility of the Purchaser or the Transferred
Subsidiaries.
6.1.3 Workers Compensation. At Closing,
Purchaser shall assume liability for all claims under any
workers' compensation laws that occur at or after the
Closing with respect to Hired Employees who are not employed
by the Transferred Subsidiaries.
6.1.4 Vacation Pay. Purchaser shall assume
liability for all unpaid vacation pay earned, banked or
accrued by Hired Employees who are not employed by the
Transferred Subsidiaries prior to the Closing. After the
Closing Seller shall have no liability for vacation pay for
Hired Employees. The Purchase Price shall be decreased for
the amount of earned, but unused vacation pay as of Closing,
and increased for the amount of vacation paid which has not
yet been earned.
6.1.5 Plant Closing Laws. Purchaser or the
Transferred Subsidiaries shall be responsible for providing
any notice required, pursuant to the United States Federal
Worker Adjustment and Retraining Act of 1988, and successor
United States Federal law, and any other applicable law
applicable plant closing notification law with respect to a
layoff or plant closing relating to the Business that occurs
as a result of or after the Closing. Seller shall be
responsible for providing any such notice with respect to a
layoff or plant closing occurring prior to the Closing.
6.2 Employee Benefits.
6.2.1 Seller's Obligations and Plan Assets.
Seller shall pay directly to each employee of the Business,
at the time or times provided by the relevant plan, that
portion of all benefits that has been accrued on behalf of
that employee (or is attributable to expenses properly
incurred by that employee) as of the Closing Date and is
payable to or on behalf of such employee, and Purchaser
shall assume no liability therefor. Except as specifically
provided in this Section 6.2, no portion of the assets of
any plan, fund, program or arrangement, written or
unwritten, heretofore sponsored or maintained by Seller (and
no amount attributable to any such plan, fund, program or
arrangement) shall be transferred to Purchaser, and
Purchaser shall not be required to continue any such plan,
fund, program or arrangement after the Closing Date.
6.2.2 Credit for Service and Payments. All
Hired Employees shall be credited with their service for
Seller (i) for purposes of eligibility and vesting under any
"pension benefit plans" (as defined in Section 3(2) of
ERISA), and (ii) for purposes of eligibility and benefit
levels under all welfare and fringe benefit plans maintained
by Purchaser such as medical plans, dental plans, cafeteria
plans, disability plans, vacation plans, and severance
plans. In addition, Purchaser shall waive all waiting
periods and pre-existing condition limitations under any
health benefit plan applicable to Hired Employees and shall
credit those employees for deductibles and co-pay amounts
paid in the calendar year of Closing under the Seller's
health benefit plan against such amounts required under any
health benefit plan maintained by Purchaser that provides
coverage to any Hired Employees.
6.2.3 COBRA. Purchaser shall be responsible
for the administration of and shall assume any and all
obligations, if any, arising under the continuation coverage
requirements of Section 4980B of the Code and Part 6 of the
Title I of ERISA with respect to the Hired Employees who are
employed by the Transferred Subsidiaries and their
beneficiaries who are eligible to exercise their rights to
such coverage following the Closing Date.
6.2.4 401(k) Plan Transfer. If Purchaser
maintains a defined contribution plan for its employees
("Purchaser's 401(k) Plan"), assets of the Seller's 401(k)
plan equal to the account balances of the Hired Employees
under the Seller's 401(k) plan shall be transferred to
Purchaser's 401(k) Plan as soon as practicable after the
Closing. Purchaser shall amend Purchaser's 401(k) Plan to
ensure that all Code 411(d)(6) protected benefits are
preserved with respect to the account balances of the Hired
Employees being transferred and shall provide Seller with
the favorable determination letter issued by the Internal
Revenue Service with respect to Purchaser's 401(k) Plan.
Purchaser hereby warrants and represents that the
Purchaser's 401(k) Plan is qualified under Code 401(a).
Any outstanding plan loans to Hired Employees shall be
transferred with the underlying accounts. The account
balances of the Hired Employees shall be valued as of the
date on which the transfer is made. The account balances of
the Hired Employees in the Seller's 401(k) plan shall share
in the earnings, appreciation and depreciation of the
investment funds in which the accounts are invested for the
period between the Closing and the date on which the
transfer is made.
(a) Any benefits that are payable to Hired
Employees from the Seller's 401(k) plan after the Closing
and before assets are transferred shall be paid from the
Seller's 401(k) plan in the ordinary course. The amount to
be transferred to the Purchaser's 401(k) Plan shall be
reduced by the amount of such payments.
(b) The account balances to be credited under
Purchaser's 401(k) Plan for Hired Employees shall not be
less than the account balances of the Hired Employees under
the Seller's 401(k) plan as of the date on which the
transfer is made. Effective on the date of the transfer of
Seller's 401(k) plan assets for such employees, (i)
Purchaser's 401(k) Plan shall assume all liabilities in
connection with the account balances of Hired Employees
under the Seller's 401(k) plan, and (ii) Seller and the
Seller's 401(k) plan shall have no further liability with
respect to the account balances of Hired Employees. Seller
shall have no liability with respect to Purchaser's 401(k)
Plan.
6.2.5 Contribution to the Pension Plan. Prior
to the Closing Date, GPCC shall contribute the amount
determined pursuant to this Section 6.2.5 to the Graphic
Packaging Corporation Retirement Plan for Hourly Employees
who are Members of Local 5 of Pulp & Paper Workers of Canada
(the "GPCC Pension Plan"). The amount to be contributed
shall be the lesser of (a) 1,277,100 in Canadian Dollars
which the November 1, 1998 actuarial valuation prepared by
William M. Mercer Limited determined was the amount which
will fully fund the GPCC Pension Plan on a solvency basis or
(b) the amount which will fully fund the GPCC Pension Plan
on a solvency basis determined by having the November 1,
1998 actuarial valuation prepared by William M. Mercer
Limited and dated January 1999 updated to August 1, 1999
using the same methodology and assumptions of that report,
except that the interest rate shall be the August 1, 1999
interest rate, the market value of the assets shall be
determined as of July 31, 1999, and the report will be
prepared so that it can be filed with applicable pension
regulatory authorities. Purchaser agrees to the filing of a
revised valuation report for the GPCC Pension Plan as
described in this Section 6.2.5 with the applicable pension
regulatory authorities prior to the Closing Date.
6.3 Maintenance of Books and Records. Each of Seller
and Purchaser shall preserve until the seventh anniversary
of the Closing Date all books and records possessed or to be
possessed by such party relating to the Assets or the
Business prior to the Closing Date. Such books and records
shall include periods after the Closing Date, and, where
there is a legitimate purpose, such party shall provide the
other party with access, upon prior reasonable written
request specifying the need therefor, during regular
business hours, to (i) the officers and employees of such
party then employed and (ii) the books and records of such
party but, in each case, only to the extent relating to the
Assets or the Business prior to the Closing Date, and the
other party and its representatives shall have the right to
make copies of such books and records; provided, however,
that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further,
provided, that, as to so much of such information as
constitutes trade secrets or confidential business
information of such party, the requesting party and its
officers, directors and representatives will use due care to
not disclose such information except (i) as required by law,
(ii) with the prior written consent of such party, which
consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally,
or becomes generally known to competitors of such party,
through sources other than the requesting party, its
affiliates or its officers, directors or representatives.
Such records may nevertheless be destroyed by a party after
the fourth anniversary of the Closing Date if such party
sends to the other parties written notice of its intent to
destroy records, specifying with particularity the contents
of the records to be destroyed. Such records may then be
destroyed after the 60th day after such notice is given
unless the other party objects to the destruction in which
case the party seeking to destroy the records shall deliver
such records to the objecting party. Purchaser acknowledges
and agrees that it shall constitute a legitimate purpose
under this Section of any request by Seller hereunder in
connection with the tax returns or any audit, any litigation
or investigation against Seller or an affiliate thereof
involving the Assets or the Business.
6.4 Payments Received. Seller and Purchaser each
agree that after the Closing they will hold and will
promptly transfer and deliver to the other, from time to
time as and when received by them, any cash, checks with
appropriate endorsements (using their reasonable efforts not
to convert such checks into cash), or other property that
they may receive on or after the Closing that belongs to the
other party, including, without limitation, any insurance
proceeds and the reimbursement, refund or other return of
monies, tax refunds, tax credits or tax attributes (whether
received before or after Closing) related to taxes paid to
Revenue Canada prior to Closing and any funds relating to
the 1988 reassessment of Graphic Packaging Canada
Corporation by Revenue Canada, and each will account to the
other for all such receipts. From and after the Closing,
Purchaser shall have the right and authority to endorse
without recourse the name of Seller on any check or any
other evidences of indebtedness received by Purchaser on
account of the Business and the Assets transferred to
Purchaser hereunder.
6.5 Use of Names. From and after the Closing Date,
Purchaser will not use and will not permit its affiliates to
use the names "Graphic Packaging Corporation," "GP Holdings
Inc.," "Graphic Packaging Canada Corporation" and "Graphic
Packaging Flexible Corporation" or any names similar thereto
or variants thereof, provided that Purchaser may use
inventory or supplies that are Assets and which have such
names included.
6.6 Asset Acquisition Statement. The Purchase Price
(including the assumption by Purchaser of the Assumed
Liabilities) shall be allocated among the Assets for tax
purposes in accordance with Section 1.3.3. Seller and
Purchaser will follow and use such allocation in all income,
sales registration and other tax returns, filings or other
related reports made by them to any governmental agencies.
To the extent that disclosures of this allocation are
required to be made by the parties to the Internal Revenue
Service ("IRS") under the provisions of Section 1060 of the
Code or any regulations thereunder, Purchaser and Seller
will disclose such reports to the other prior to filing with
the IRS. Pursuant to the requirements of Section 1060 of
the Code, Seller shall attach to its federal income tax
return for its taxable year that includes the Closing Date a
Form 8594 Asset Acquisition Statement disclosing the
allocation of the portion of the Purchase Price paid for the
Assets purchased under this Agreement. Purchaser shall
attach to its federal income tax return corresponding Form
8594. Seller and Purchaser agree that allocations of the
Purchase Price as set forth on each Form 8594 as attached to
this Agreement are correct and will be used in preparation
of Form 8594 as filed by Seller and Purchaser.
6.7 Tax Agreements. Purchaser agrees to notify Seller
of any tax adjustments resulting from an audit by any taxing
authority which relate to the taxable year in which the
Closing Date occurs, or an earlier taxable year, if such
adjustment may affect a tax liability or tax expense of GP
Holdings Inc. or Graphic Packaging Canada Corporation and to
provide Seller with the information necessary to meet its
U.S. federal income tax reporting obligations.
6.8 Limitations With Respect to Graphic Packaging
Canada Corporation.
(a) Purchaser agrees not to pass a shareholders
resolution or take any other action to voluntarily liquidate
the entity formerly known as GPCC or convert such entity to
an entity with limited liability, prior to the year 2001.
(b) Purchaser agrees not to make any distribution
of the assets of the entity formerly known as Graphic
Packaging Canada Corporation outside the ordinary course of
business, prior to the year 2001.
(c) Purchaser agrees to prevent the entity
formerly known as Graphic Packaging Canada Corporation from
incurring liabilities outside the ordinary course of
business, prior to the year 2001.
(d) Notwithstanding the other provisions of this
Section 6.8, Purchaser shall not be limited from selling the
assets of GPCC.
6.9 Section 116 Certificate. Seller shall, on or
before the Closing Date, deliver to Purchaser a certificate
issued by the Minister of National Revenue of Canada
pursuant to subsection 116(2) of the Income Tax Act (Canada)
(a "Section 116 Certificate") in respect of the proposed
disposition by Seller of the shares of GPCC. The Section
116 Certificate shall specify as a "certificate limit" an
amount not less than the Canadian dollar equivalent of US
$80,000,000 calculated on the Closing Date (such Canadian
dollar equivalent being hereinafter called "the GPCC
Purchase Price").
In the event that the Section 116 Certificate has
not been delivered to Purchaser on or before the Closing
Date, or in the event the Section 116 Certificate that is
delivered does not specify a "certificate limit" that is no
less than the GPCC Purchase Price, Purchaser (or its
designated subsidiary) shall withhold from the GPCC Purchase
Price an amount equal to 33-1/3% of the GPCC Purchase Price
(the "Withheld Amount"). The Withheld Amount shall be
deposited with a mutually satisfactory escrow agent ("Escrow
Agent") and the amount payable by Purchaser, pursuant to
subsection 116(5) of the Income Tax Act, shall be paid out
of the Withheld Amount and remitted to the Receiver General
of Canada on the last day that the Withheld Amount may be so
remitted without interest or penalty pursuant to
subsection 116(5) of the Income Tax Act (Canada) (the
"Remittance Date") in the event that the Section 116
Certificate with a "certificate limit" that is no less than
the GPCC Purchase Price is not delivered to the Purchaser
prior to the Remittance Date. Upon delivery to the
Purchaser of the Section 116 certificate with a "certificate
limit" that is no less than the GPCC Purchase Price, Escrow
Agent shall release the remainder of the Withheld Amount
plus interest, less any applicable withholding taxes to
Seller. Seller shall indemnify and save harmless the
Purchaser against any claim or assessment made against it by
Revenue Canada in connection with the Seller's failure to
obtain a section 116 certificate on or before the Remittance
Date.
6.10 Covenant Not to Compete or Solicit Business.
(a) In furtherance of the sale of the Business to
Purchaser and to protect the value and goodwill of the
Business and in consideration of the Purchaser Price, Seller
Covenants and agrees that, after the Closing:
(i) for a period ending on the third
anniversary of the Closing Date, neither Seller nor any
of Seller's subsidiaries, so long as they remain
subsidiaries, will (whether as principal, agent,
independent contract, partner or otherwise) own, manage
, operate, control, participate in, or otherwise carry
on, a business that produces and/or sells flexible
packaging materials in North America ("Compete")
excluding, however, manufacture, sale and distribution
of products of the same type and for the same markets
as are being manufactured in its plants in North
Portland, Oregon, and Malvern, Pennsylvania on the date
of this Agreement. Nothing in this Section 6.10 shall
prohibit Seller or Seller's subsidiaries from owning
not in excess of 5% in the aggregate of any class of
capital stock of any corporation if such stock is
publicly traded and listed on any national or regional
stock exchange or on the Nasdaq national market system;
and
(ii) for a period ending on the third
anniversary of the Closing Date, neither Seller nor any
of Seller's subsidiaries will induce or attempt to
persuade any supplier or customer of the Business to
terminate or alter in any material and adverse respect
such business relationship with Purchaser, except that
Seller may market folding cartons to such customers.
(b) In the event Seller or any of its
subsidiaries violates any of such Person's obligations under
this Section 6.10, Purchaser may proceed against such Person
in law or in equity for such damage or other relief as a
court may deem appropriate. Seller acknowledges that a
violation of this Section 6.10 may cause Purchaser
irreparable harm which may not be adequately compensated for
by money damages. Seller therefore agrees that in the event
of any actual or threatened violation of this Section 6.10,
Purchaser shall be entitled, in addition to other remedies
that it may have, to seek a temporary restraining order and
to preliminary and final injunctive relief against Seller or
its Subsidiaries to prevent any violations of this
Section 6.10, without the necessity of posting a bond. The
prevailing party in any action commenced under this
Section 6.10 shall also be entitled to receive reasonable
attorneys' fees and court costs.
(c) It is the intent and understanding of each
party hereto that if, in any Proceeding before any
governmental entity or arbitrator legally empowered to
enforce this Section 6.10, any term, restriction, covenant
or promise in this Section 6.10 is found to be unreasonable
and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to
the extent necessary to make it enforceable by such
governmental entity.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATION
7.1 Survival of Representations and Warranties of
Seller. Subject to limitations in Section 7.5, all
representations, warranties, agreements, covenants and
obligations made or undertaken by Seller in this Agreement
or in any document or instrument executed and delivered
pursuant hereto are material, have been relied upon by
Purchaser and shall survive the Closing hereunder and shall
not merge into the performance of any obligation by any
party hereto, and will remain in full force and effect.
Subject to the terms of this Article VII, Seller hereby
agrees to indemnify and hold Purchaser, its affiliates and
subsidiaries, their successors and assigns, and the
respective officers, employees, agents and representatives
of all of the foregoing harmless from and against any and
all liability, loss, actual damages, punitive or exemplary
damages paid to third parties, fines, penalties,
obligations, payments, costs and expenses or injury and all
reasonable costs and expenses (including reasonable counsel
and expert fees and costs of any suit, action, claim,
demand, investigation, assessment, judgment, remediation,
settlement or compromise related thereto by any Person,
including without limitation, any governmental entity)
("Liabilities") suffered or incurred by Purchaser or its
affiliates and subsidiaries existing from:
7.1.1 any misrepresentation, or breach of any
covenant or warranty of Seller contained in this Agreement,
the Schedules or Exhibits attached hereto or in any
certificate or other instrument furnished or to be furnished
by Seller at Closing hereunder;
7.1.2 any claim or debt, obligation or
liability of Seller or its affiliates existing on or before
the Closing Date which is not an Assumed Liability; and,
7.1.3 the Assumed Liabilities except for
obligations (i) under contracts disclosed to Purchaser under
Section 3.1.16 (or which would have been disclosed if such
agreements meet the thresholds for disclosure under such
Section) or (ii) shown on the Closing Statement or
(iii) payable to employees under Benefit Plans, or
(iv) arising after the Closing Date, or (v) arising under
the Pension Plan described in Section 1.6.
7.1.4 Notwithstanding the above, Seller shall
have no obligation to indemnify Purchaser for Engraph
Liabilities as defined below or environmental liabilities
where the liability arises solely due to change of
Environmental Law after Closing. "Environmental Laws," for
purposes of this Agreement, shall mean all federal,
provincial, state, local, and municipal laws, including
common law, statutes, regulations, rules, orders, codes,
ordinances, and by-laws that govern protection of public
health, safety, or the environment or that regulate or
create liability for "Hazardous Materials." "Hazardous
Materials," for purposes of this Agreement, shall mean any
hazardous substance, pollutant or contaminant, petroleum,
including crude oil or any fraction thereof, or any other
substance, material or waste that is regulated by or that
creates liability under any Environmental Laws. "Engraph
Liabilities" shall mean Liabilities attributable to an
event, condition, occurrence or circumstance existing or
originating prior to April 19, 1991, which is the Closing
Date of the Asset Purchase Agreement ("Engraph Agreement"),
dated March 19, 1991, by and among Package Products Flexible
Corporation, Gravure International Corporation, and Engraph,
Inc., relating to the assets, property, and business
addressed by the Engraph Agreement, including, but not
limited to the claim of Camden Square Associates for
$44,051. In order to claim indemnification under
Section 7.1.4 (in addition to other requirements in Section
7.3.1),
(a) the claim cannot have resulted but for
the Purchaser or any Affiliate of Purchaser actively seeking
through extraordinary measures to discover the matter or
circumstance giving rise to the claim.
(b) neither party shall contact any
governmental entity or third parties, other than their own
agents and representatives, without prior, reasonably prompt
notice to the other, when reasonably possible within the
available time constraints, provided nothing herein shall
require any delay, if such delay would violate any
Environmental Law.
7.1.5 Seller shall be given the opportunity to
defend and address any claim under Section 7.1.4. In the
event that the defense involves a need to access the Real
Property, Purchaser shall provide access to Seller, which
shall not unreasonably interfere with Purchaser's operations
and which is reasonably necessary to address the claim in
order to achieve compliance with Environmental Laws in
effect on or prior to Closing. Purchaser shall fully
cooperate with Seller in defending and addressing such
claims, and shall have a duty to mitigate damages.
7.2 Survival of Representations and Warranties of
Purchaser. Subject to the limitations in Section 7.5, all
representations, warranties, agreements, covenants and
obligations made or undertaken by Purchaser in this
Agreement or in any document or instrument executed and
delivered pursuant hereto are material, have been relied
upon by the Seller and shall survive the Closing hereunder
and shall not merge in the performance of any obligation by
any party hereto, and will remain in full force and effect.
Subject to the terms of this Article VII, Purchaser agrees
to indemnify and hold Seller, its affiliates and
subsidiaries, their successors and assigns, and the
respective officers, employees, agents and representatives
of all of the foregoing harmless from and against all
liability, loss, actual damages, punitive or exemplary
damages paid to third parties, fines, penalties, obligations
payments, costs and expenses or injury and all reasonable
costs and expenses (including reasonable counsel and expert
fees and costs of any suit, action, claim, demand,
investigation, assessment, judgment, remediation, settlement
or compromise related thereto by any Person, including
without limitation, any governmental entity) ("Liabilities")
suffered or incurred by Seller or its affiliates and
subsidiaries arising from:
7.2.1 claims for personal injury (including
death) or property damage arising out of any defective
products of the Business sold to third parties after the
Closing Date;
7.2.2 claims for negligent services rendered
or omissions made in services of the Business rendered to
third parties, after the Closing Date;
7.2.3 any and all Environmental Liabilities to
the extent arising out of (a) conditions of or from the Real
Property (whether originating on or offsite, from whatever
source) after the Closing Date; (b) events or occurrences
that occurred at the Real Property in connection with the
operation of the Business after the Closing Date;
(c) offsite storage, treatment, transportation, recycling or
disposal of Hazardous Materials generated in the operation
of the Business by Purchaser, or (d) the operation of the
Business or Assets by Purchaser after the Closing Date.
7.2.4 any other claim, suit, cause of action,
investigation or proceeding of any kind whatsoever which
relates to, or arises from, Purchaser or the Business or
Assets after the Closing Date;
7.2.5 any misrepresentation, or breach of any
covenant or warranty of Purchaser contained in this
Agreement or any certificate or other instrument executed
and delivered by Purchaser hereunder; and
7.2.6 the Assumed Liabilities except to the
extent Seller is obligated to indemnify Purchaser under
Section 7.1.3 subject to any and all limitations on Seller's
obligation to indemnify Purchaser under Section 7.5.
7.3 Defense of Claims.
7.3.1 Third Party Claims.
7.3.1.1 If any party entitled to
indemnification under this Agreement (an "Indemnitee")
receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity who
is not a party to this Agreement or an affiliate of such
party (a "Third Party Claim") against such Indemnitee,
against which a party is obligated to provide
indemnification under this Agreement (an "Indemnifying
Party"), the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event
no later than thirty (30) calendar days after receipt of
such notice of such Third Party Claim (the "Third Party
Claim Notice Period"). Such Notice will describe the Third
Party Claim in reasonable detail, and will indicate the
estimated amount, if reasonably practicable, of the
Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The failure of any Indemnitee to give the
Indemnity Notice within the Claim Notice Period shall not
impair the Indemnitee's rights hereunder except to the
extent that an Indemnifying Party demonstrates that it has
been prejudiced thereby. The Indemnifying Party will have
the right to participate in or, by giving written notice to
the Indemnitee no later than thirty (30) calendar days after
receipt of the above-described notice of such Third Party
Claim, to elect to assume the defense of any Third Party
Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good
faith in such defense. If the Indemnifying Party does not
elect to assume the defense by giving notice within thirty
(30) calendar days after receipt of the above-described
notice of such Third Party Claim, as provided in the
preceding sentence, the Indemnifying Party thereafter may
elect, by providing the Indemnitee written notice, to later
assume the defense of such Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to Indemnitee),
and the Indemnitee will cooperate in good faith in such
defense. The Indemnitee will have the right to participate
in the defense of any Third Party Claim assisted by counsel
of its own choosing at its own expense, provided that,
Indemnitee shall, if the named parties to any such
proceeding (including any impleaded parties) include both
the Indemnifying Party and the Indemnitee or if the
Indemnifying Party proposes that the same counsel represent
both the Indemnitee and the Indemnifying Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them, then the Indemnitee shall have the right to
require the Indemnifying Party to retain separate counsel
for the Indemnitee (such counsel to be selected by the
Indemnifying Party but reasonably satisfactory to
Indemnitee) at the cost and expense of the Indemnitor. If
the Indemnitee has not received written notice within such
30 calendar day period that the Indemnifying Party has
elected to assume the defense of such Third Party Claim, the
Indemnitee may, at its option, elect to settle or assume
such defense, assisted by counsel of its own choosing, and
the Indemnifying Party will be liable for all costs,
expenses, settlement amounts or other Indemnifiable Losses
paid or incurred in connection therewith, provided, however,
no settlement shall be made without the consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld.
7.3.1.2 If, within the 30 calendar days set
forth above, an Indemnitee receives written notice from an
Indemnifying Party that such Indemnifying Party has elected
to assume the defense of any Third Party Claim as provided
in Section 7.3.1.1, the Indemnifying Party will not be
liable for any legal or other expenses subsequently incurred
by the Indemnitee in connection with the defense thereof.
Without the prior written consent of the Indemnitee, which
shall not be unreasonably withheld, the Indemnifying Party
will not enter into any settlement of any Third Party Claim
or cease to defend against such claim, if pursuant to or as
a result of such settlement or cessation, injunctive or
other equitable relief would be imposed against the
Indemnitee. The Indemnifying Party and the Indemnitee shall
jointly cooperate, at each party's own expense, in the
defense or settlement of any claim to the extent that claim
seeks an order, injunction or other equitable relief against
the Indemnitee which, if successful, would be reasonably
likely to materially interfere with the business,
operations, assets, condition (financial or otherwise) or
prospects of the Indemnitee. If a firm offer is made to
settle a Third Party Claim which offer the Indemnifying
Party is permitted to settle under this Section 7.3.1.2, and
the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give written notice to
the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within 30 calendar days after its
receipt of such notice, the Indemnitee may continue to
contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such
settlement offer, and the Indemnifying Party shall be
responsible for costs and expenses paid or incurred by the
Indemnitee only through the end of such 30-day period.
7.3.1.3 Each party hereunder who has
assumed the defense of a Third Party Claim shall use all
reasonable efforts to diligently defend such claims.
7.3.2 Other Claims. In the event any
Indemnitee should have a claim under this Article VII
against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnitee shall promptly give written
notice (the "Indemnity Notice") and the details thereof,
including copies of all relevant information and documents
to the Indemnifying Party within a period of thirty (30)
days following the discovery of the claim by the Indemnitee
(the "Claim Notice Period"). The failure by any Indemnitee
to give the Indemnity Notice within the Claim Notice Period
shall not impair the Indemnitee's rights hereunder except to
the extent that an Indemnifying Party demonstrates that it
has been prejudiced thereby. The Indemnifying Party will
notify the Indemnitee within a period of thirty (30) days
after the receipt of the Indemnity Notice by the
Indemnifying Party (the "Indemnity Response Period") whether
the Indemnifying Party disputes its liability to the
Indemnitee under this Article VII with respect to such
claim. If the Indemnifying Party notifies the Indemnitee
that it does not dispute the claim described in such
Indemnity Notice, the actual Losses as finally determined
will be conclusively deemed to be a liability of the
Indemnifying Party under this Article VII and the
Indemnifying Party shall pay the amount of such Losses to
the Indemnitee on demand. If the Indemnifying Party
notifies the Indemnitee within the Indemnity Response Period
that the Indemnifying Party disputes its liability with
respect to such claim, the Indemnifying Party and the
Indemnitee will proceed in good faith to negotiate a
resolution of such dispute.
7.4 Continued Liability for Indemnity Claims. Subject
to Section 7.5.1, the liability of any Indemnifying Party
hereunder with respect to claims hereunder shall continue
for so long as any claims for indemnification may be made
hereunder and, with respect to any such indemnification
claims duly and timely made, thereafter until the
Indemnifying Party's liability therefor is finally
determined and satisfied.
7.5 Limitations on Indemnification.
7.5.1 Threshold Amount. No amount of
indemnity shall be payable by Seller in the case of a claim
by Purchaser under Section 7.1, unless, until and only to
the extent that Purchaser has suffered or incurred losses
(excluding Excluded Liabilities) aggregating in excess of
Five Hundred Thousand Dollars ($500,000) as a result of or
arising out of the matters indemnified against in
Section 7.1.
7.5.2 Limitation on Recovery. In connection
with any indemnification claim by Purchaser under this
Agreement, Seller shall not be liable to Purchaser under
Section 7.1 for losses for claims in an aggregate amount in
excess of twenty-two million dollars ($22,000,000).
7.5.3 Time Limits on Claims. Notwithstanding
anything in this Agreement to the contrary, a claim by any
Indemnitee relating to environmental matters must be made
within five (5) years of the Closing Date, and any claim not
made within the foregoing time period shall expire and be
forever barred thereafter. Claims arising under breaches of
the Representations in 3.1.10 and relating to tax matters
may be brought at any time prior to sixty (60) days after
the expiration of the statute of limitations applicable to
such Tax. Claims arising under Sections 3.1.1, 3.1.2,
3.1.4, 3.2.1, 3.2.2 and 7.2 may be brought at any time. All
other claims may be made only within two (2) years following
the Closing Date.
7.6 Exclusive Remedies. The indemnification provided
in this Article VII shall be the sole and exclusive remedy
after the Closing Date for monetary damages, and with
respect to environmental matters for all remedies, available
to any party hereto for breach of any of the terms,
conditions, representations or warranties contained herein
and for environmental matters. As between the parties
hereto, the rights and obligations set forth in this
Agreement will be the exclusive rights and obligations with
respect to this Agreement, the events giving rise to this
Agreement, the transactions provided for herein or
contemplated hereby and for environmental matters. Without
limiting the generality or effect of the foregoing, as a
material inducement to the other parties hereto entering
into this Agreement, each of the parties to this Agreement
hereby releases the other and its respective affiliates,
officers and directors from, and waives and discharges, any
claim or cause of action, known and unknown, foreseen and
unforeseen, which exists or may arise in the future, or
which it otherwise might assert, including without
limitation under the common law or federal or state
securities laws, trade regulation laws, Environmental Laws
(including but not limited to the Comprehensive
Environmental Response Compensation and Liability Act or
other statutes or amendments now or hereafter in effect) or
other laws, by reason of this Agreement, the events giving
rise to this Agreement and the transactions provided for
herein or contemplated hereby or thereby, except for
(i) claims or causes of action brought under and subject to
the terms and conditions of this Agreement, or (ii) except
with respect to environmental matters injunctive or other
equitable relief (other than for rescission or rescissory or
similar damages).
7.7 No Avoidance. Seller covenants and agrees with
Purchaser that: (a) it will not enter into a merger,
consolidation or other reorganization unless the entity
resulting therefrom is bound by the indemnity obligations of
Seller set forth in this Agreement; and (b) it will not
enter into any merger, consolidation or other reorganization
or liquidate or dissolve or dispose of a material portion of
its assets for no consideration, if as a result thereof
there would be a material adverse effect on the financial
ability of Seller or any successor of Seller to perform the
indemnification obligations hereunder. If the recipient of
the assets of Seller agrees to be bound by the
indemnification, it shall be deemed conclusively that there
is no material adverse effect on the financial ability of
the successor.
7.8 Effect of Representations and Warranties. The
indemnification obligations of this Article VII are not
limited by the representations and warranties of Article
III.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated by
either Seller or Purchaser, as applicable, and the
transactions contemplated hereby may be abandoned at any
time prior to the Closing:
(a) by mutual written consent of Seller and
Purchaser;
(b) by either Seller or Purchaser (by written
notice to the other) if the Closing shall not have occurred
within 90 days of the date of this Agreement, provided that
no termination right under this Section shall be available
to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or prior to such date;
(c) by either Seller or Purchaser (by written
notice to the other) if any court of competent jurisdiction
in the United States or Canada or federal, state or local
governmental or regulatory body in the United States or
Canada shall have issued an order, decree or ruling or taken
such other action that permanently restrains, enjoins or
otherwise prohibits the transactions contemplated hereby and
such order, decree, ruling or other action shall have become
final and non-appealable;
(d) by Seller (by written notice to Purchaser),
if there has been a material breach of any representation,
warranty or covenant on the part of Purchaser such that the
conditions set forth in Section 5.2 would not be satisfied;
and
(e) by Purchaser (by written notice to Seller),
if there has been a material breach of any representation,
warranty or covenant of Seller such that the conditions set
forth in Section 5.1 would not be satisfied, provided that
termination pursuant to this Section shall not be effective
unless Purchaser shall have given to Seller at least 30 days
prior notice of its claim of default so as to afford Seller
the opportunity to cure.
8.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with the
provisions of Section of 8.1 hereof, this Agreement shall
become null and void and have no further effect (except the
Purchaser Confidentiality Agreement and Section 4.2.2 which
shall survive any termination) without any liability on the
part of either of the parties except as follows:
(a) if the termination results from the willful
failure to perform its obligations, hereunder, such non-
performing party shall be fully liable for any and all
damages, costs and expenses (including, without limitation,
reasonable attorney's fees) sustained or incurred by such
other party; or
(b) if the termination results and not as a
result of willful failure of any party to perform its
obligations hereunder, but as the result of the material
breach by such party of a representation, warranty, or
covenant hereunder, such breaching party shall be liable to
the other party for all costs and expenses of the other
party in connection with the preparation, negotiation,
execution and performance of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Section 338(h)(10) Election.
(a) At any time prior to Closing, Purchaser shall
have the right to notify Seller in writing of its desire for
Purchaser and Seller to file the election provided for by
Code Section 338(h)(10) and any comparable election under
state, local or foreign law (collectively and separately,
the "Election") with respect to the acquisition of the
shares of Graphic Packaging Flexible Corporation. Each
party shall provide to the other all information necessary
to permit the Election to be made. Seller and Purchaser
shall, within the time periods established by applicable
requirements, execute and file IRS Form 8023-A and all other
forms, returns, schedules and documents as may be required
to effect and preserve a timely Election.
(b) Seller and Purchaser acknowledge and agree
that for federal income tax purposes the acquisition of the
Shares pursuant to the Election will be treated as a sale of
the Assets of Graphic Packaging Flexible Corporation
followed by a complete liquidation of Graphic Packaging
Flexible Corporation into Seller. In connection with the
Election and within the time periods established by
applicable legal requirements, Seller and Purchaser shall
act together in good faith (i) to determine and agree upon
the amount of the deemed sale price of the Shares (within
the meaning of Treasury Regulations 1.338(h)(10)-1(f)) and
(ii) to agree upon the proper allocations (the
"Allocations") of the deemed sale price of the Shares among
the Assets of Graphic Packaging Flexible Corporation in
accordance with the Code and the Treasury Regulations
promulgated thereunder. Neither Seller nor Purchaser, nor
any of their affiliates, will take any position inconsistent
with the Election, the Allocations or the amount of the
deemed sales prices so determined in any Tax Return or
otherwise. Within the time periods established by
applicable legal requirements for making and filing the
Election, the Allocations shall be set forth in
Schedule 1.3.3 to this Agreement. Any Liability for Taxes
resulting from the Election will be borne by Seller,
including, but not limited to, any income, franchise or
similar Taxes imposed by any state, local or foreign tax
authority that does not allow or respect an election under
Code Section 338(h)(10) (or any comparable election under
state, local or foreign law).
9.2 Brokers' and Finders' Fees.
(a) Seller represents and warrants to Purchaser
that all negotiations relative to this Agreement have been
carried on by it directly without the intervention of any
person who may be entitled to any brokerage or finder's fee
or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby except
Lehman Brothers (whose fees shall be paid by Seller), and
Seller agrees to indemnify and hold harmless Purchaser
against any and all claims, losses, liabilities and expenses
which may be asserted against or incurred by it as a result
of Seller's dealings, arrangements or agreements with any
such person.
(b) Purchaser represents and warrants that all
negotiations relative to this Agreement have been carried on
by it directly without the intervention of any person who
may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation
of the transactions contemplated hereby, and Purchaser
agrees to indemnify and hold harmless Seller against any and
all claims, losses, liabilities and expenses which may be
asserted against or incurred by it as a result of
Purchaser's dealings, arrangements or Agreements with any
such person.
9.3 Sales, Transfer and Documentary Taxes, etc.
Purchaser shall pay all costs and federal, provincial, state
and local sales, excise, use, and other transfer taxes, if
any, due as a result of the purchase, sale or transfer of
the Assets in accordance herewith whether imposed by law on
Seller or Purchaser. Purchaser shall indemnify, reimburse
and hold harmless Seller in respect of the liability for
payment of or failure to pay any such taxes or the filing of
or failure to file any reports required in connection
therewith. Seller and Purchaser shall jointly execute an
election under section 167 of the Excise Tax Act (Canada)
and the applicable section of the provincial sales tax
legislation of the provinces of Quebec, Ontario, Manitoba
and British Columbia, on the forms prescribed for such
purposes along with any documentation necessary or desirable
in order to effect the transfer of the Assets by Seller
without payment of any Canadian goods and services tax or
Canadian provincial sales tax. Purchaser shall file the
election forms referred to above, along with any
documentation necessary or desirable to give effect thereto,
with Revenue Canada and the applicable provincial ministers
of finance, together with Purchaser's goods and services tax
and the applicable provincial sales tax returns for the
reporting period in which the transactions contemplated
herein are consummated.
9.4 Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the
carrying out of the provisions of this Agreement, and the
consummation of the transactions contemplated hereby.
9.5 Contents of Agreement; Parties in Interest; etc.
This Agreement together with the Purchaser Confidentiality
Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby.
It shall not be amended or modified except by written
instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between the
parties regarding the subject matter hereof, whether written
or oral, are superseded by this Agreement.
9.6 Assignment and Binding Effect. This Agreement may
not be assigned prior to the Closing by any party hereto
without the prior written consent of the other party.
Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns
of Seller and Purchaser. Notwithstanding the above,
Purchaser may assign part or all of its rights and
obligations under this Agreement to its wholly-owned
subsidiaries, provided that Purchaser shall not be released
from its obligations hereunder without the written consent
of Seller.
9.7 Waiver. Any term or provision of this Agreement
may be waived at any time by Seller with respect to any term
that entitles Seller to the benefit thereof or by Purchaser
with respect to any term that entitles Purchaser to the
benefit thereof by a written instrument duly executed by
such party.
9.8 Notices. Any notice, request, demand, waiver,
consent, approval or other communication which is required
or permitted hereunder shall be in writing and shall be
deemed given only if delivered personally or sent by
facsimile or by registered or certified mail, postage
prepaid, as follows:
If to Purchaser, to:
Sonoco Products Company
One North Second Street
Hartsville, South Carolina 29550
Attention: President
Facsimile: (843) 383-7478
With a required copy to:
Sinkler & Boyd, P.A.
Suite 1200, The Palmetto Center
P.O. Box 11889
Columbia, South Carolina 29211-1889
Attention: William C. Boyd, Esq.
Facsimile: (803) 540-7878
If to Seller, to:
ACX Technologies, Inc.
16000 Table Mountain Parkway
Golden, CO 80403
Attention: Jeffrey H. Coors, President
Facsimile: (303) 271-7101
With a required copy to:
ACX Technologies, Inc.
16000 Table Mountain Parkway
Golden, CO 80403
Attention: Jill B. W. Sisson, Esq., General Counsel
Facsimile: (303) 271- 7055
With an additional required copy to:
Holme Roberts & Owen LLP
1700 Lincoln, Suite 4100
Denver CO 80203
Attention: W. Dean Salter, Esq.
Facsimile: (303) 866-0200
or to such other address as the addressee may have specified
in a notice duly given to the sender as provided herein.
Such notice, request, demand, waiver, consent, approval or
other communication will be deemed to have been given as of
the date so delivered, sent by facsimile (with confirmation
of receipt) or three days after deposited with the United
States Post Office.
9.9 Governing Law. This Agreement shall be governed
by and interpreted and enforced in accordance with the laws
of the State of Colorado without regard to conflicts of law
principles.
9.10 No Benefit to Others. The representations,
warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto and
their successors and assigns, and they shall not be
construed as conferring any rights on any other persons.
9.11 Headings, Gender and "Person." All section
headings contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement and
shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed
to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include
an individual, firm, corporation, partnership, trust,
governmental authority or body, association, unincorporated
organization or any other entity.
9.12 Schedules and Exhibits. All Exhibits and
Schedules referred to herein are intended to be and hereby
are specifically made a part of this Agreement.
9.13 Severability. Any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall
be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any
other jurisdiction.
9.14 Counterparts. This Agreement may be executed in
any number of counterparts and any party hereto may execute
any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the
same instrument. This Agreement shall become binding when
one or more counterparts taken together shall have been
executed and delivered by the parties. It shall not be
necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the
other counterparts.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement on the date first written.
ATTEST: PURCHASER:
SONOCO PRODUCTS COMPANY
By By
As its As its
ATTEST: SELLER:
GRAPHIC PACKAGING CORPORATION
By By
As its As its
ATTEST SELLER:
GP HOLDINGS, INC.
By: By:
As its As its
DEFINITIONS TO ASSET PURCHASE AGREEMENT
Definitions
Adjustment Date Section 1.5(c)
Arbitrator Section 1.5(c)
Assets Section 1.1
Assumed Liabilities Section 1.4.1
Authorizations Section 3.1.13
Books and Records Section 2.2
Business Recital C
Business Subsidiaries Section 1.1.2
Closing Section 2.1
Closing Statement of Transferred
Assets and Assumed Liabilities Section 1.5
Closing Date Section 2.1
Closing Payment Section 1.3.2
Code Section 3.1.20(b)(i)
Confidentiality Agreement Section 4.1.10
Contracts and Commitments Section 3.1.16
Controlled Group Section 3.1.20(b)(ii)
employee benefit plan Section 3.1.20(a)
ERISA Section 3.1.20(a)
Excluded Assets Section 1.1.2
Excluded Liabilities Section 1.4.2
HSR Act Section 3.1.5
Intellectual Property Section 3.1.21
Interim Statement of Transferred
Assets and Assumed Liabilities Section 3.1.7
Interim Statement of Transferred
Assets and Assumed Liabilities
Date Section 3.1.7
IRS Section 6.5
Leases Section 3.1.23(c)(i)
Material Adverse Effect Section 3.1
Multi-Employer Plan Section 3.1.20(b)(ii)
Net Working Capital Section 1.3.1
Other Confidentiality Agreements Section 4.1.9
Permitted Liens Section 3.1.23(b)
person Section 8.11
Purchase Price Section 1.3.1
Purchaser Preamble
Purchaser Confidentiality
Agreement Section 4.1.10
Real Property Section 3.1.23(a)
Regulations Section 3.1.13
Seller Preamble
Seller's Auditors Section 1.5
Seller's Documents Section 3.1.2
Subsidiaries Section 3.1.3
Supply Contracts Section 3.1.16(b)
Tax Returns Section 3.1.10
Taxes Section 3.1.10
Total Consideration Section 1.3.3
Transferred Subsidiaries Section 1.1.2
Transferred Subsidiary Shares Section 3.1.4
Unaudited ________, 1999 Balance
Sheet Section 3.1.7
DISCLOSURE SCHEDULE TO ASSET PURCHASE AGREEMENT,
DATED AS OF ____________, 1999, BY AND BETWEEN GRAPHIC
PACKAGING CORPORATION ("SELLER") AND ___________
("PURCHASER")
Note: No statement is made as to the materiality, either
individually or in the aggregate, of any item identified
in the following Disclosure Schedule
INDEX
Schedule 1.1.1 Included Assets
Schedule 1.1.2 Excluded Assets
Schedule 1.3.3 Allocation of Purchase Price
Schedule 3.1.3 Subsidiaries
Schedule 3.1.4. Capital Stock of Transferred Subsidiaries
Schedule 3.1.5 Seller's Required Filings
Schedule 3.1.15 Insurance
Schedule 3.1.16 Contracts and Commitments
Schedule 3.1.17 Description of Assets
(a) Inventory and Tangible Personal Property
(b) Real Property Interests
Schedule 3.1.19 Labor Matters
Schedule 3.1.20 Employee Benefit Plans
Schedule 3.1.21 Intellectual Property
Schedule 3.1.23
(a) Permitted Liens
Schedule 3.2.3 Purchaser's Required Filings
Schedule 4.1.10 Officers of Seller
Schedule 6.1.2 Assumed Collective Bargaining
Agreements
