SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) AUGUST 29, 1997
BPC Holding Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 33-75706-01 35-1814673
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
101 Oakley Street
Evansville, Indiana 47710
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (812) 424-2904
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 29, 1997, Berry Plastics Corporation ("Berry Plastics"), a
Delaware corporation and wholly-owned subsidiary of BPC Holding Corporation
(the "Registrant"), acquired Venture Packaging, Inc., a Delaware corporation
("Venture"). Pursuant to the Agreement and Plan of Reorganization dated as of
August 29, 1997 (the "Agreement"), among the Registrant, Berry Plastics, VABC
Acquisition Corp., a Delaware corporation ("Merger Sub"), Venture, the
subsidiaries of Venture and the stockholders of Venture, Merger Sub was merged
(the "Merger") with and into Venture, with Venture surviving the Merger under
the name Venture Packaging, Inc. as a wholly-owned subsidiary of Berry
Plastics. Aggregate consideration of approximately $50.0 million consisted of
cash, the payment or assumption of indebtedness, $5.0 million of preferred
stock of the Registrant and warrants to purchase 9,924 shares of the
Registrant's Class B Non-Voting Common Stock. A copy of the Agreement is filed
as Exhibit 2.1 hereto, and such document is hereby incorporated by reference
herein.
Berry Plastics used the proceeds of a revolving credit facility and
a term loan provided by NationsBank, N.A. and other lenders to finance the
acquisition.
The property, plant and equipment acquired has been and will
continue to be used primarily for the manufacture of plastic products,
including injection-molded containers used in the food, dairy and various other
markets.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b)The financial statements and pro forma financial information
that are required to be included herein are not so included,
and such statements and information shall be filed not later
than November 12, 1997.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Document
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated as of
August 29, 1997, among BPC Holding Corporation,
Berry Plastics Corporation, VABC Acquisition Corp.,
Venture Packaging, Inc., and the subsidiaries and
stockholders of Venture Packaging, Inc.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BPC HOLDING CORPORATION
By: /S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Vice President, Chief Financial Officer
and Secretary
Dated: September __, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Page No.
<S> <C>
2.1 Agreement and Plan of Reorganization dated as of August
29, 1997, among BPC Holding Corporation, Berry Plastics
Corporation, VABC Acquisition Corp., Venture Packaging,
Inc. and the subsidiaries and stockholders of Venture
Packaging, Inc.
</TABLE>
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EXHIBIT 2.1
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<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
BPC HOLDING CORPORATION,
BERRY PLASTICS CORPORATION,
VABC ACQUISITION CORP.,
VENTURE PACKAGING, INC.,
THE SUBSIDIARIES OF
VENTURE PACKAGING, INC.
AND
THE SHAREHOLDERS OF
VENTURE PACKAGING, INC.
AUGUST 29, 1997
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TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL 2
1.1. The Merger 2
1.2. Effective Time of the Merger 2
1.3. Effect of the Merger 2
1.4. Charter, By-Laws, Officers and Directors of Surviving Corporation
2
1.5. Taking of Necessary Action; Further Assurances 3
1.6. Authorization of the Merger, this Agreement and the Certificate of
Merger..................................................... 3
1.7. Closing; Closing Deliveries; Filing of Certificate of Merger and
Certificate of Designation........................... 3
SECTION 2. PAYMENT OF PURCHASE PRICE; EFFECT OF MERGER ON CAPITAL STOCK OF
CONSTITUENT CORPORATIONS............................. 6
2.1. Effect on Capital Stock 6
2.2. Delivery of Funds; Surrender of Certificates 8
2.3. No Further Ownership Rights in Company Common Stock 9
2.4. Restrictive Legends 9
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER 9
3.1. Title to the Shares 10
3.2. Authority; Noncontravention; Consents 10
3.3. Investment by WJR and DCR 11
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
4.1. Organization; Good Standing; Qualification and Power 13
4.2. Equity Investments 13
4.3. Capital Stock 13
4.4. Authority; Noncontravention; Consents 13
4.5. Financial Statements 15
4.6. Absence of Undisclosed Liabilities 15
4.7. Absence of Changes 16
4.8. (a) Tax Matters 16
(b) Industrial Development Bonds. 17
4.9. Title to Assets, Properties and Rights and Related Matters 19
4.10. Real Property-Owned or Leased 20
4.11. Intellectual Property 21
4.12. Agreements, No Defaults, Etc. 22
4.13. Litigation, Etc. 24
4.14. Compliance; Governmental Authorizations 24
4.15. Labor Relations; Employees 24
4.16. ERISA Compliance 25
4.17. Environmental Matters 27
4.18. Brokers 29
4.19. Related Transactions 29
4.20. Accounts and Notes Receivable 29
4.21. Accounts and Notes Payable 30
4.22. Inventories 30
4.23. Suppliers and Vendors 30
4.24. Customers 30
4.25. Disclosure 31
4.26. Prospective Breach 31
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PARENT, BUYER AND ACQUISITION
SUB................................................. 31
5.1. Organization, Good Standing, Qualification and Power 31
5.2. Authority 32
5.3. Capital Stock 32
5.4. Noncontravention; Consents 33
5.5. SEC Documents 33
5.6. Brokers 34
5.7. Prospective Breach 34
5.8. No Defaults 34
5.9. Absence of Changes 34
5.10. Litigation, Etc. 35
SECTION 6. CERTAIN AGREEMENTS 35
6.1. Confidentiality 35
6.2. Consents 35
6.3. Efforts to Consummate 36
6.4. Public Announcements 36
6.5. Release 36
6.6. Tax Treatment of Preferred Stock and Warrants 37
6.7. Inventory 37
SECTION 7. [INTENTIONALLY OMITTED] 37
SECTION 8. INDEMNIFICATION 37
8.1. Indemnification Generally; Etc. 37
(a) By the Shareholder Group in Favor of the Buyer Group 37
(b) By the Shareholders in Favor of the Buyer Group 38
(c) By Parent, Buyer and Acquisition Sub in Favor of the
Shareholders.................................. 38
8.2. Limitations on Indemnification 39
(a) Indemnity Baskets for the Shareholder Group 39
(b) Indemnity Limitations for the Shareholder Group 39
(c) Indemnity Baskets for the Buyer Group 39
8.3. Assertion of Claims; Payment of Claims; Forfeiture of Preferred
Stock............................................... 40
8.4. Notice and Defense of Third Party Claims 41
8.5. Survival of Representations and Warranties 42
8.6. No Third Party Reliance 43
8.7. Remedies Exclusive 43
SECTION 9. ADDITIONAL AGREEMENTS 43
9.1. Expenses 43
9.2. Disclosure of Information; Noncompetition 44
9.3. Use of Name 44
9.4. Relationships with Vendors and Customers 45
9.5. Termination of Affiliate Transactions 45
SECTION 10. [INTENTIONALLY OMITTED] 45
SECTION 11. MISCELLANEOUS PROVISIONS 45
11.1. Amendment 45
11.2. Extension; Waiver 45
11.3. Entire Agreement 46
11.4. Severability 46
11.5. No Third Party Beneficiaries; Successors and Assigns 46
11.6. Headings 46
11.7. Notices 46
11.8. Counterparts 48
11.9. Governing Law 48
11.10. Incorporation of Exhibits and Schedules 48
11.11. Construction 48
11.12. Remedies 48
11.13. Waiver of Jury Trial 48
11.14. Independence of Covenants and Representations and Warranties 48
11.15. Parent Guaranty 49
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SCHEDULES AND EXHIBITS
Schedule I - Shareholders and Capitalization of the
Company
Schedule II - Capitalization of Parent
Schedule III - Exhibits to SEC Documents
Annex I - Definitions
Exhibit A - Certificate of Merger
Exhibit B - Restated Certificate of Incorporation
Exhibit C - Shareholder Materials
Exhibit D - Encore Supply Agreement
Exhibit E - WJR Employment and Noncompete Agreement
Exhibit F - DCR Employment and Noncompete Agreement
Exhibit G - Amended License Agreement
Exhibit H - Opinion of Counsel to the Company, the
Subsidiaries and the Designated Shareholders
Exhibit I - Form of Invention Assignment Agreement
Exhibit J - Form of Joinder Agreement
Exhibit K - Certificate of Designation
Exhibit L - Form of Warrant
Exhibit M - Opinion of Counsel to Parent, Buyer and Acquisition
Sub
Exhibit N - Stock Forfeiture Agreement
-ii-
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AGREEMENT AND PLAN OF
REORGANIZATION dated as of August 29, 1997,
among BPC HOLDING CORPORATION, a Delaware
corporation ("Parent"), BERRY PLASTICS
CORPORATION, a Delaware corporation and
wholly-owned subsidiary of Parent ("Buyer"),
VABC ACQUISITION CORP., a Delaware corporation
and wholly- owned subsidiary of Buyer
("Acquisition Sub"), VENTURE PACKAGING, INC.,
a Delaware corporation (the "Company"), THE
WHOLLY-OWNED SUBSIDIARIES OF THE COMPANY (as
defined below) and all of THE SHAREHOLDERS OF
THE COMPANY NAMED ON SCHEDULE I attached
hereto (each, a "Shareholder", and
collectively, the "Shareholders").
The Company, together with each of Venture Packaging Southeast,
Inc., a South Carolina corporation, and Venture Packaging Midwest, Inc., an
Ohio corporation, (each, a "Subsidiary" and collectively, the "Subsidiaries")
is engaged in the business (the "Subject Business") of manufacturing, marketing
and selling plastic packaging products and filling machines. The respective
Boards of Directors of each of Buyer, Acquisition Sub and the Company have duly
approved and adopted this Agreement and Plan of Reorganization (this
"Agreement"), the Certificate of Merger in substantially the form of EXHIBIT A
attached hereto (the "Certificate of Merger") and the proposed merger (the
"Merger") of Acquisition Sub with and into the Company in accordance with, and
subject to, the terms and conditions of this Agreement, the Certificate of
Merger and the Delaware General Corporation Law (the "Delaware Statute")
whereby, among other things, each issued and outstanding share of common stock,
$.001 par value (the "Company Common Stock"), of the Company not owned of
record by the Company will be converted into the right to receive cash and/or
certain securities of Parent in the manner set forth in Section 2 of this
Agreement and the Certificate of Merger. Capitalized terms used but not
defined herein have the meanings set forth in ANNEX I hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived from this Agreement and the Certificate of Merger and
the representations, warranties, covenants, agreements and conditions contained
herein and in the Certificate of Merger, the parties hereto hereby agree as
follows:
SECTION 1. GENERAL
1.1. THE MERGER. At the Effective Time and in accordance with, and
subject to, the provisions of this Agreement, the Certificate of Merger and the
Delaware Statute, Acquisition Sub shall be merged with and into the Company,
which, at and after the Effective Time, shall be and is hereinafter sometimes
referred to as the "Surviving Corporation." Acquisition Sub and the Company
are hereinafter sometimes collectively referred to as the "Constituent
Corporations."
1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
upon the filing by Acquisition Sub of the Certificate of Merger with the
Secretary of State of the State of Delaware. The Certificate of Merger shall
conform with and shall be executed and delivered in the manner provided under
the Delaware Statute and filed with the Secretary of State of the State of
Delaware so as to become effective as of the Closing Date. The date and time
when the Merger shall become effective is referred to herein as the "Effective
Time."
1.3. EFFECT OF THE MERGER. Except as specifically set forth herein
or in the Certificate of Merger, at the Effective Time, the identity,
existence, corporate organization, purposes, powers, objects, franchises,
privileges, rights, immunities, restrictions, debts, disabilities, liabilities
and duties (collectively, the "Corporate Rights") of the Company shall continue
in effect and be unimpaired by the Merger, and the Corporate Rights of
Acquisition Sub shall be merged with and into the Company, which shall, as the
Surviving Corporation, be fully vested therewith. At the Effective Time, the
separate existence and corporate organization of Acquisition Sub shall cease,
and Acquisition Sub shall be merged with and into the Surviving Corporation and
the Merger shall have the effects set forth in Section 259 of the Delaware
Statute.
1.4. CHARTER, BY-LAWS, OFFICERS AND DIRECTORS OF SURVIVING
CORPORATION. From and after the Effective Time, (a) the certificate of
incorporation of the Company shall be amended and restated in its entirety to
read as set forth in EXHIBIT B hereto and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving
Corporation until altered, amended or repealed as provided in the Delaware
Statute, (b) the By-laws of Acquisition Sub shall become the By-laws of the
Surviving Corporation, unless and until altered, amended or repealed as
provided in the Delaware Statute, the Surviving Corporation's certificate of
incorporation or such By-laws; and (c) the officers and directors of
Acquisition Sub shall become the officers and directors of the Surviving
Corporation, respectively, unless and until removed or until their respective
terms of office shall have expired in accordance with the Delaware Statute or
the Surviving Corporation's certificate of incorporation or By-laws, as
applicable.
1.5. TAKING OF NECESSARY ACTION; FURTHER ASSURANCES. Prior to the
Effective Time, and subject to the terms and conditions contained in this
Agreement, the parties hereto shall take or cause to be taken all such actions
as may be necessary or appropriate in order to effectuate, as expeditiously as
reasonably practicable, the Merger as of the Effective Time.
1.6. AUTHORIZATION OF THE MERGER, THIS AGREEMENT AND THE CERTIFICATE
OF MERGER. (a) Simultaneously with the execution and delivery of this
Agreement, the Shareholders, being the holders of all of the issued and
outstanding shares of Company Common Stock, shall execute a written consent in
lieu of a meeting and Buyer, as the sole shareholder of Acquisition Sub, shall
execute a written consent in lieu of a meeting, each of which written consents
shall be in accordance with Section 228 of the Delaware Statute and shall
include resolutions approving and adopting the Merger, this Agreement, the
Certificate of Merger and consummation of the transactions contemplated hereby,
in each case as required by the Delaware Statute.
(b) Each of Parent, Buyer, Acquisition Sub and the Company shall
take, as promptly as practicable, all such other actions as may be necessary or
advisable under the Delaware Statute and any other applicable law or regulation
in connection with this Agreement, the Merger or the Certificate of Merger.
The Company shall prepare and distribute any written notice or other materials
relating to the shareholder action contemplated by Section 1.6(a) required to
be delivered pursuant to the Company's Charter or the Company's By-laws, the
Delaware Statute or any other Federal or state law applicable to this
Agreement, the Merger, the Certificate of Merger or such shareholder action,
all of which are attached hereto as EXHIBIT C (collectively, the "Shareholder
Materials"); PROVIDED, HOWEVER, that Buyer, Acquisition Sub and their counsel
shall have a reasonable opportunity to review all Shareholder Materials and all
Shareholder Materials shall be reasonably satisfactory in form and substance to
Buyer, Acquisition Sub and their counsel.
1.7. CLOSING; CLOSING DELIVERIES; FILING OF CERTIFICATE OF MERGER AND
CERTIFICATE OF DESIGNATION. (a) The closing (the "Closing") for the
consummation of the transactions contemplated by this Agreement shall take
place at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza,
New York, New York 10112, simultaneously with the execution and delivery of
this Agreement (such date on which the Closing is consummated being referred to
herein as the "Closing Date").
(b) At the Closing, the Company and the Designated Shareholders
shall deliver to Buyer:
(i) counterparts of this Agreement, duly executed by the
Company, the Subsidiaries and the Shareholders;
(ii) counterparts of the Certificate of Merger, duly executed
by the Company;
(iii) counterparts of the Supply Agreement between Encore
Industries, Inc., an Ohio corporation ("Encore"), and the Surviving
Corporation in substantially the form attached hereto as EXHIBIT D (the
"Encore Supply Agreement"), duly executed by Encore;
(iv) counterparts of the Noncompetition and Employment
Agreement between Buyer, Parent and Willard J. Rathbun ("WJR")
substantially in the form attached hereto as EXHIBIT E (the "WJR
Employment and Noncompete Agreement"), duly executed by WJR;
(v) counterparts of the Noncompetition and Employment
Agreement between Buyer, Parent and D. Craig Rathbun ("DCR") substantially
in the form attached hereto as EXHIBIT F (the "DCR Employment and
Noncompete Agreement"), duly executed by DCR;
(vi) counterparts of the Amended and Restated License and
Development Agreement between Midwest and the Rathbun Family Real Estate
Group, substantially in the form attached hereto as EXHIBIT G (the
"Amended License Agreement"), duly executed by the Rathbun Family Real
Estate Group;
(vii) copies of the Shareholder Materials;
(viii)a certificate stating that the Company and the
Shareholders have performed in all material respects all obligations and
covenants required to be performed by them under this Agreement as of the
Closing Date, duly executed by the Company and each Shareholder;
(ix) an opinion of Shumaker, Loop & Kendrick, LLP, counsel for
the Company, the Subsidiaries and the Designated Shareholders, in
substantially the form attached hereto as EXHIBIT H;
(x) duly executed copies of all consents and approvals in
form and substance satisfactory to Buyer and its counsel, that the Company
determines to be required for consummation of the transactions
contemplated hereby;
(xi) a schedule of all Shareholders' Expenses incurred by or
on behalf of the Company, the Subsidiaries and the Shareholders through
the Effective Time that are unpaid as of the Effective Time, duly
certified by the Chief Financial Officer of the Company and the
Shareholders' Representative;
(xii) an Invention Assignment Agreement between Midwest and
WJR, substantially in the form attached hereto as EXHIBIT I (the
"Invention Assignment Agreements"), duly executed by WJR;
(xiii)a Joinder Agreement to the Management Stockholder
Agreement substantially in the form attached hereto as EXHIBIT J (the
"Joinder Agreements"), duly executed by WJR and DCR;
(xiv) certified copies of the resolutions of the Company's
board of directors and the Shareholders, approving the Merger, this
Agreement, all other agreements and documents contemplated hereby and the
consummation of the transactions contemplated hereby;
(xv) an officer's certificate certifying the Company's
Charter, the Company's By-laws and the incumbency of each officer
executing this Agreement or any agreement or instrument contemplated
hereby; and
(xvi) the original stock certificates representing Merger Shares
that are held by the Shareholders.
(c) At the Closing, Parent, Buyer and Acquisition Sub shall deliver
to the Company and the Designated Shareholders:
(i) counterparts of this Agreement, duly executed by Parent,
Buyer and Acquisition Sub;
(ii) counterparts of the Certificate of Merger, duly executed
by Acquisition Sub;
(iii) a copy of the Certificate of Designation, Preferences and
Rights of Series B Cumulative Preferred Stock of Parent (the "Preferred
Stock"), substantially in the form attached hereto as EXHIBIT K (the
"Certificate of Designation"), duly executed by Parent;
(iv) a stock certificate representing 150,000 shares of Series
B Preferred Stock to be issued to WJR, and a stock certificate
representing 50,000 shares of Series B Preferred Stock to be issued to
DCR, each duly executed by the proper officers of Parent;
(v) a Warrant to purchase shares of Class B Non-Voting Common
Stock of Parent, substantially in the form attached hereto as EXHIBIT L
(the "Warrants"), issued to each of WJR and DCR, duly executed by Parent;
(vi) counterparts of the Encore Supply Agreement, duly
executed by the proper officer of Midwest;
(vii) counterparts of the WJR Employment and Noncompete
Agreement, duly executed by Buyer and Parent;
(viii)counterparts of the DCR Employment and Noncompete
Agreement, duly executed by Buyer and Parent;
(ix) counterparts of the Amended License Agreement, duly
executed by the proper officer of Midwest;
(x) a certificate stating that Parent, Buyer and Acquisition
Sub have performed in all material respects all obligations and covenants
required to be performed by them under this Agreement as of the Closing
Date, duly executed by each of Parent, Buyer and Acquisition Sub;
(xi) an opinion of O'Sullivan Graev & Karabell, LLP, counsel
for Parent, Buyer and Acquisition Sub, in substantially the form attached
hereto as EXHIBIT M;
(xii) duly executed copies of all consents and approvals in
form and substance satisfactory to the Company and its counsel, that are
required for consummation of the transactions contemplated hereby;
(xiii)certified copies of the resolutions of the board of
directors of each of Parent, Buyer and Acquisition Sub and the sole
shareholder of Acquisition Sub, if required by the Delaware Statute,
authorizing and approving the Merger, this Agreement, all other agreements
and instruments contemplated hereby to be entered into by Parent, Buyer or
Acquisition Sub and the consummation of the transactions contemplated
hereby; and
(xiv) an officer's certificate of each of Parent, Buyer and
Acquisition Sub certifying their respective certificates of incorporation,
by-laws and the incumbency of each officer executing this Agreement or any
agreement or instrument contemplated hereby.
(d) Following the delivery of each of the documents set forth in
Sections 1(b) and (c) above, Acquisition Sub shall file the Certificate of
Merger with the Secretary of State of the State of Delaware, and Parent shall
file the Certificate of Designation with such Secretary of State.
SECTION 2. PAYMENT OF PURCHASE PRICE; EFFECT OF MERGER ON CAPITAL
STOCK OF CONSTITUENT CORPORATIONS
2.1. EFFECT ON CAPITAL STOCK. (a) The following terms used in this
Agreement when capitalized shall have the following respective meanings:
"MAXIMUM MERGER CONSIDERATION" means the aggregate of (i)
$25,000,000 less the aggregate amount of the Shareholders' Expenses (the
"Cash Consideration"), (ii) Warrants to purchase an aggregate of 9,924
shares of Class B Non-Voting Common Stock, $.01 par value, of Parent and
(iii) shares of the Preferred Stock with an aggregate stated value of
$5,000,000.
"MERGER SHARES" means all of the whole and fractional shares of
Company Common Stock that are issued and outstanding immediately prior to
the Effective Time that are NOT owned directly or indirectly by the
Company or any of its Subsidiaries (whether as treasury stock or
otherwise).
"PER SHARE CASH AMOUNT" means, with respect to each Merger
Share owned by any Shareholder, such Shareholder's Proportionate
Percentage of the Cash Consideration.
"SHAREHOLDERS' EXPENSES" means all fees and expenses that are
unpaid at the Effective Time that are incurred by the Company, the
Subsidiaries and the Shareholders in connection with the preparation for,
and consummation of, the transactions contemplated hereby and by the other
agreements referred to herein, which are not payable by Buyer pursuant to
Section 9.1.
(b) Anything contained in this Agreement or the Certificate of
Merger to the contrary notwithstanding, the entire consideration payable in the
Merger with respect to all Merger Shares shall not exceed the Maximum Merger
Consideration.
(c) The manner and basis of converting, exchanging or canceling the
shares of capital stock of each of the Constituent Corporations into or for
cash and/or securities of Parent (or the contingent right to receive cash or
such securities) or securities of the Surviving Corporation shall be as
follows:
(i) each share of common stock, $.01 par value, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, $.01
par value, of the Surviving Corporation;
(ii) each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time and owned directly
or indirectly by the Company or any of its Subsidiaries (whether as
treasury stock or otherwise) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be canceled and no
consideration shall be delivered in exchange therefor;
(iii) (A) each Merger Share shall, by virtue of the Merger
and without any action on the part of the holder thereof, cease to be
outstanding and be converted into the right to receive, at the Effective
Time, an amount equal to the Per Share Cash Amount, (B) the aggregate
number of Merger Shares owned by WJR shall, by virtue of the Merger and
without any action on the part of WJR, be converted into the right to
receive, in addition to the Per Share Cash Amount, Warrants to purchase
7,443 shares of Class B Non-Voting Common Stock of Parent and 150,000
shares of Preferred Stock, and (C) the aggregate number of Merger Shares
owned by DCR shall, by virtue of the Merger and without any action on
the part of DCR, be converted into the right to receive, in addition to
the Per Share Cash Amount, Warrants to purchase 2,481 shares of Class B
Non-Voting Common Stock of Parent and 50,000 shares of Preferred Stock;
and
(iv) each authorized but unissued share of Company Common
Stock immediately prior to the Effective Time shall be canceled.
2.2. DELIVERY OF FUNDS; SURRENDER OF CERTIFICATES. (a) At the
Effective Time, upon surrender by each Shareholder to the Surviving Corporation
of the certificate(s) which, immediately prior to the Effective Time,
represented Merger Shares, such Shareholder shall, from and after the Effective
Time in accordance with the provisions hereof, be entitled to receive in
exchange therefor the cash and/or securities which such Shareholder is entitled
to receive pursuant to Section 2.1(c)(iii) above. Any such cash amount shall
be paid immediately upon surrender of certificate(s) representing Merger Shares
by the Surviving Corporation or its designee in immediately available funds by
check or wire transfer to an account designated by such Shareholder to
Acquisition Sub not later than three Business Days prior to the Closing. If
such Shareholder is to receive securities, such securities shall be issued by
Parent and delivered at the Closing immediately upon surrender of
certificate(s) representing Merger Shares. No interest will be paid or will
accrue on the Per Share Cash Amount payable upon the surrender of any
certificates representing Merger Shares; provided that if the Per Share Cash
Amount is not paid by the Surviving Corporation or its designee promptly upon
surrender of certificate(s) representing Merger Shares, then interest will be
paid on such unpaid amount at the rate of 5% per annum upon demand of such
Shareholder. Until surrendered as contemplated by this Section 2.2 and the
Certificate of Merger, each certificate representing Merger Shares shall be
deemed, at and after the Effective Time, to represent only the right to receive
upon such surrender cash or securities, if any, as contemplated by this Section
2, the Certificate of Merger and the Delaware Statute.
(b) Immediately after the Effective Time, Parent shall file the
Certificate of Designation with the Secretary of State of the State of
Delaware.
2.3. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
consideration paid in respect of the surrender of certificates representing
shares of Company Common Stock in accordance with the provisions of this
Section 2 and the Certificate of Merger shall be deemed to have been paid in
full satisfaction of all rights pertaining to such shares of Company Common
Stock. At and after the Effective Time, the stock transfer books of the
Surviving Corporation shall be closed with respect to the capital stock of the
Company, and there shall be no further registration of transfers of the capital
stock of the Company thereafter on the records of the Surviving Corporation.
If, after the Effective Time, certificates representing shares of Company
Common Stock are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 2 and the
Certificate of Merger.
2.4. RESTRICTIVE LEGENDS. In addition to any legend required by the
Delaware Statute, each certificate evidencing the Preferred Stock and the
Warrants issued at the Closing will bear the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID
ACT."
"IN ADDITION, THE SALE, TRANSFER, ASSIGNMENT, DISTRIBUTION,
PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
DATED AS OF JUNE 18, 1996, AMONG BPC HOLDING CORPORATION AND
CERTAIN HOLDERS OF OUTSTANDING CAPITAL STOCK OF SUCH
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF BPC HOLDING CORPORATION."
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to Parent, Buyer and Acquisition Sub as
follows:
3.1. TITLE TO THE SHARES. Such Shareholder is the lawful owner, of
record and beneficially, of those shares of Company Common Stock set forth
opposite his, her or its name on SCHEDULE I hereto and has good and marketable
title to such shares, free and clear of any Encumbrances whatsoever and, except
as set forth on Schedule 3.1 of the Disclosure Letter, with no restriction on
the voting rights and other incidents of record and beneficial ownership
pertaining thereto. Except for this Agreement and as set forth on Schedule 3.1
of the Disclosure Letter, there are no agreements or understandings between
such Shareholder and any other Shareholder or any other Person with respect to
the acquisition, disposition or voting of or any other matters pertaining to
any of the capital stock of the Company. Such Shareholder acquired his, her or
its shares of Company Common Stock in one or more transactions exempt from
registration under the Securities Act and in compliance with applicable state
securities laws.
3.2. AUTHORITY; NONCONTRAVENTION; CONSENTS. (a) Such Shareholder
has full and absolute legal right, capacity, power and authority to enter into
this Agreement and this Agreement is the valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other Laws affecting creditors rights generally,
by general principles of equity and applicable laws or court decisions limiting
the availability of specific performance, injunctive relief and other equitable
remedies (including the enforceability of indemnification provisions,
regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by legal and equitable limitations on the availability of
injunctive relief, specific performance and other equitable remedies. If such
Shareholder is a trust, such trust is a validly created and existing trust
under applicable state law.
(b) Neither the execution, delivery and performance of this
Agreement by such Shareholder nor the consummation of the transactions
contemplated hereby nor compliance by such Shareholder with any of the
provisions hereof will (i) conflict with, or result in any violations of, or
cause a default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, amendment, cancellation or acceleration of
any obligations contained in or the loss of any material benefit under, any
term, condition or provision of any Contract to which such Shareholder is a
party, or by which such Shareholder or any of his, her or its properties may be
bound or (ii) violate any Law applicable to such Shareholder or any of his, her
or its properties, which conflict or violation, in each case described in
subclauses (i) and (ii) above, would prevent the consummation of the
transactions contemplated by this Agreement or result in an Encumbrance on or
against any assets, rights or properties of the Company or on or against any
capital stock of the Company or give rise to any claim against the Company,
Acquisition Sub, or any Affiliate of Acquisition Sub or have any Material
Adverse Effect on the Company or Acquisition Sub.
(c) Except as contemplated by this Agreement, no Permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required in connection with the
execution, delivery and performance by such Shareholder of this Agreement or
the consummation by such Shareholder of the transactions contemplated hereby.
3.3. INVESTMENT BY WJR AND DCR. Each of WJR and DCR understands that
the issuance of the Preferred Stock and Warrants (the "Securities") pursuant to
the Merger has not been registered under the Securities Act, but is intended to
be transferred pursuant to an exemption therefrom. Each of WJR and DCR further
represents and warrants, as to himself, that:
(a) he is acquiring the Securities for investment, solely for
his own account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof;
(b) he understands that the Securities have not been
registered under the Securities Act;
(c) he has been advised that the certificates representing the
Securities will bear a restrictive legend and that a notation will be made
in the appropriate records of Parent indicating that the Securities are
subject to restrictions on transfer and, if Parent should in the future
engage the services of a securities transfer agent, appropriate stop-
transfer instructions will be issued to such agent with respect to such
Securities;
(d) he is aware of and familiar with the restrictions imposed
on the transfer of the Securities set forth therein and herein, including,
without limitation, the restrictions contained in the Joinder Agreement,
and will not, directly or indirectly, offer, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of, or solicit any offers to
purchase or otherwise acquire or take a pledge of, any of the Securities
except in accordance with the Securities Act and all applicable state
securities and "blue sky" laws and the terms of this Agreement and the
applicable Related Documents;
(e) his financial situation is such that he can afford to bear
the economic risk of holding the Securities for an indefinite period of
time and suffer complete loss of his investment in the Securities, and he
has adequate means for providing for his current needs and personal
contingencies;
(f) he has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
relating to his purchase of the Securities;
(g) he, and his representatives, if any, have been given the
opportunity to examine all documents relating to Parent and Buyer and to
ask questions of, and receive answers from, Parent and its representatives
concerning the terms and conditions of the acquisition of the Securities
and to obtain any additional information necessary to verify the accuracy
of the information delivered to him by Parent or any Affiliate thereof;
(h) he is aware that the Securities must be held indefinitely
and he must continue to bear the economic risk of his investment in the
Securities unless the Securities are subsequently registered under the
Securities Act and all applicable state securities laws or an exemption
from such registration is available;
(i) in making his decision to acquire the Securities, he has
relied upon independent investigations made by him and, to the extent
believed by him to be appropriate, his representatives, including his own
professional, financial, tax and other advisors in addition to the
representations and warranties of Parent in Section 5 hereof;
(j) he is familiar with the business, operations and finances
of Parent and Buyer;
(k) he has reviewed the filings made by Parent and Buyer with
the SEC pursuant to the rules and regulations of the Securities Act and
the Exchange Act, which have been previously delivered to him, and he
understands the risks related to the acquisition of the Securities, and no
representations or warranties have been made to him or his representatives
concerning the Securities, Parent, Buyer or their prospects or other
matters except as set forth herein; and
(l) he acknowledges that Parent and Buyer are entering into
this Agreement in reliance upon his representations and warranties
contained herein.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent, Buyer and Acquisition Sub as
follows:
4.1. ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Each of
the Company and the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
and, except as set forth on Schedule 4.1 of the disclosure letter dated the
date of this Agreement (the "Disclosure Letter") certified by the Chief
Executive Officer of the Company and each Designated Shareholder and delivered
to Buyer and Acquisition Sub, is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not
have a Material Adverse Effect on the Company and the Subsidiaries taken as a
whole. Each of the jurisdictions in which the Company and the Subsidiaries are
so qualified is set forth on Schedule 4.1 of the Disclosure Letter. The
Company has delivered to Buyer true and complete copies of the Company's
Charter and the Company's By-laws, in each case as amended to the date hereof.
4.2. EQUITY INVESTMENTS. Except as set forth on Schedule 4.2 of the
Disclosure Letter, other than the Subsidiaries, the Company has never had, nor
does it currently have, any subsidiaries, nor has it ever owned, nor does it
currently own, any capital stock or other proprietary interest, directly or
indirectly, in any Person.
4.3. CAPITAL STOCK. The authorized capital stock of the Company
consists of 3,000 shares of Common Stock, $.001 par value, of which 227.465
shares are issued and outstanding and all of which are owned of record by the
Shareholders in the amounts set forth on SCHEDULE I. All of the issued and
outstanding capital stock of each of the Subsidiaries is owned of record and
beneficially by the Company. Except as set forth on Schedule 4.3 of the
Disclosure Letter, other than the Common Stock described above, there are no
outstanding securities, options, warrants, rights or agreements or other
commitments pursuant to which the Company is or may become obligated to issue
any shares of its capital stock, or any securities convertible into or
exercisable or exchangeable for such capital stock. Other than the capital
stock of each of the Subsidiaries that is held by the Company, there is no
outstanding capital stock of the Subsidiaries, and there are no outstanding
securities, options, warrants, rights or agreements or other commitments
pursuant to which either Subsidiary is or may become obligated to issue any
shares of its capital stock, or any securities convertible into or exercisable
or exchangeable for such capital stock.
4.4. AUTHORITY; NONCONTRAVENTION; CONSENTS. (a) Each of the Company
and its Subsidiaries has all the requisite corporate power and authority to
enter into this Agreement and each Related Document to which it is a party and
any and all instruments necessary or appropriate in order to effectuate fully
the terms and conditions of this Agreement and each Related Document to which
it is a party and all related transactions contemplated thereby and to perform
its respective obligations hereunder and thereunder; the execution, delivery
and performance of this Agreement and each Related Document to which it is a
party and the consummation of the transactions contemplated hereby and thereby
by the Company or such Subsidiary, as the case may be, have been duly and
validly authorized by all necessary corporate action on the part of the Company
or such Subsidiary; and this Agreement and each Related Document to which the
Company or any Subsidiary is a party has been duly and validly executed and
delivered by the Company or such Subsidiary, as the case may be, and this
Agreement and each Related Document to which the Company or any Subsidiary is a
party is the valid and binding obligation of the Company or such Subsidiary,
enforceable against the Company or such Subsidiary, as the case may be, in
accordance with its terms and conditions, except as enforceability thereof may
be limited by any applicable bankruptcy, reorganization, insolvency or other
Laws affecting creditors rights generally, by general principles of equity and
applicable laws or court decisions limiting the availability of specific
performance, injunctive relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by legal
and equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies.
(b) Neither the execution, delivery and performance of this
Agreement and the Related Documents to which the Company is a party nor the
consummation by the Company of the transactions contemplated hereby or thereby
nor compliance by the Company with any provision hereof will (i) conflict with,
or result in any violations of, or cause a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained in or the
loss of any material benefit under, or result in the creation of any
Encumbrance upon any asset of the Company or any Subsidiary under any term,
condition or provision of (x) the Company's Charter or the Company's By-laws,
(y) the certificate of incorporation or by-laws of the Subsidiaries or (z)
except as set forth on Schedule 4.4 of the Disclosure Letter, any Contract to
which the Company or either Subsidiary is a party or by which any of their
respective properties or assets are bound, or (ii) violate any Laws applicable
to the Company, either Subsidiary or any of their respective properties.
(c) Except as set forth on Schedule 4.4 of the Disclosure Letter,
no consent, approval, Order or authorization of, registration, declaration or
filing with, or notification to any Governmental Entity or any other third
party is required in connection with the execution, delivery and performance by
the Company of this Agreement or the Related Documents to which it is a party
or the consummation of the transactions contemplated hereby or thereby.
4.5. FINANCIAL STATEMENTS. The Company has previously delivered to
Buyer (i) the audited consolidated balance sheets of the Company as of
September 30, 1996 and 1995 and the related consolidated statements of
operations, retained earnings and cash flows for the fiscal years then ended;
and (ii) the unaudited consolidated balance sheet of the Company as of June 30,
1997 and the related consolidated statements of operations, retained earnings
and cash flows for the nine-month period then ended (collectively, the
"Financial Statements," and the balance sheet as of June 30, 1997 being the
"Latest Balance Sheet" and the date thereof being the "Latest Balance Sheet
Date"). Except as set forth on Schedule 4.5 of the Disclosure Letter, the
Financial Statements (i) are in accordance with the books and records of the
Company, (ii) fairly present, in all material respects, the financial position
of the Company on a consolidated basis as at the respective dates indicated and
the results of operations and cash flows of the Company for the respective
periods indicated and (iii) have been prepared in accordance with GAAP.
4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 4.6 of the Disclosure Letter, the Company and the Subsidiaries have no
material Liability, except for (i) Liabilities reflected in the Liabilities
section of the Latest Balance Sheet, (ii) Liabilities under Contracts that are
set forth in the Disclosure Letter that have arisen in the ordinary course of
business (none of which relates to a breach of contract) or other contract not
set forth in the Disclosure Letter because of the limitations set forth in
Section 4.12, (iii) Liabilities that have arisen since the date of the Latest
Balance Sheet in the ordinary course of business (iv) Liabilities reflected or
disclosed in the footnotes to the Financial Statements and (v) Liabilities that
arise out of facts or events that are expressly and explicitly set forth in the
Disclosure Letter as Liabilities or potential Liabilities. To the Best
Knowledge of the Company, there were no loss contingencies (as such term is
used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) that were not adequately
provided for or disclosed on the Latest Balance Sheet (including the footnotes
thereto). Except as set forth on Schedule 4.6 of the Disclosure Letter,
neither the Company nor either Subsidiary has, either expressly or by operation
of law, assumed or undertaken any Liability of any other Person, including,
without limitation, any obligation for corrective or remedial action relating
to Environmental, Health and Safety Laws.
4.7. ABSENCE OF CHANGES. Since the Latest Balance Sheet Date, there
has not been any Material Adverse Change. Since that date, except as set forth
on Schedule 4.7 of the Disclosure Letter, the Company and the Subsidiaries have
been operated in the ordinary course, consistent with past practice, and:
(a) no fee, interest, dividend, royalty or any other payment of
any kind has been made by the Company or either Subsidiary to the
Shareholders or any Affiliate of the Company or the Shareholders;
(b) no party (including the Company and the Subsidiaries) has
accelerated, terminated, modified or canceled any Contract (or series of
related Contracts) involving more than $25,000 to which the Company or
either Subsidiary is a party or by which the Company or either Subsidiary
is bound and, to the Best Knowledge of the Company, no party intends to
take any such action;
(c) neither the Company nor either Subsidiary has experienced
any material damage, destruction, or loss (whether or not covered by
insurance) to any material piece of property;
(d) there has not been any action or failure to act by the
Company or either Subsidiary, or to the Best Knowledge of the Company, any
other occurrence, event, incident or transaction outside the ordinary
course of business involving the Company or either Subsidiary, in each
case, that would have a Material Adverse Effect on the Company and the
Subsidiaries taken as a whole; and
(e) there has been no agreement, understanding or
authorization, whether in writing or otherwise, for the Company or either
Subsidiary to take any of the actions specified in items (a) through (d)
above.
4.8. (a) TAX MATTERS. Except as set forth on Schedule 4.8 of the
Disclosure Letter, the Company and the Subsidiaries (a) have paid all Taxes
required to be paid by them through the date hereof and (b) have filed or
caused to be filed in a timely manner (within any applicable extension periods)
all Tax Returns with appropriate Governmental Entities in all jurisdictions in
which the Tax Returns are required to be filed, and all such Tax Returns are
true and complete. Neither the Company nor either Subsidiary will as a result
of the transactions contemplated hereby incur a Tax Liability resulting from
ceasing to be a member of a consolidated or combined group which had previously
filed consolidated, combined or unitary Tax Returns. All Taxes, including
those shown to be due on each of the Tax Returns, have been timely paid in
full. Except as set forth on Schedule 4.8 of the Disclosure Letter, no Tax
liens have been filed that are currently in effect and neither the Company, any
Subsidiary nor any Designated Shareholder has been notified by the Internal
Revenue Service or any other taxing authority that any issues have been raised
(and are currently pending) by the Internal Revenue Service or any other taxing
authority in connection with any Tax Return of the Company or any Subsidiary,
and no waivers of statutes of limitation have been given or requested with
respect to the Company or either Subsidiary for any taxable periods that are
open for audit. Except as set forth on Schedule 4.8 of the Disclosure Letter,
there are no pending Tax audits of any Tax Returns of the Company or any
Subsidiary. No unresolved deficiencies or additions to Taxes have been
proposed, asserted or assessed against the Company, either Subsidiary or any
member of any affiliated or combined group of which the Company or either
Subsidiary was or is a member. No written claim has ever been made by any
Taxing authority in a jurisdiction in which the Company does not file Tax
Returns that the Company is or may be subject to taxation by that jurisdiction.
The Company has made full and adequate provision to the extent required by GAAP
(i) on the Latest Balance Sheet for all Taxes payable by it for all periods
prior to the date thereof, and (ii) on its books for all Taxes payable by it
for all periods beginning on or after such date. Neither the Company nor any
Subsidiary has incurred any Tax Liability since the Latest Balance Sheet Date,
except for Taxes incurred in the ordinary course of business. Neither the
Company nor any Subsidiary has made an election to be treated as a "consenting
corporation" under Section 341(f) of the Code and neither the Company nor any
Subsidiary is nor has it ever been a "personal holding company" within the
meaning of Section 542 of the Code. The Company, the Subsidiaries and each of
their respective predecessors have complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes and has
withheld and paid over all amounts required by Law to be withheld and paid from
the wages or salaries of employees, and neither the Company nor any Subsidiary
is liable for any Taxes for failure to comply with such Laws. Neither the
Company nor any Subsidiary is, nor has any of them ever been, a party to any
Tax sharing agreement. The Company has not agreed to nor is it required to
make any adjustments pursuant to Section 481 of the Code, and the Internal
Revenue Service has not proposed any such adjustments or changes in the
Company's accounting method. There is no Contract covering any Person that
individually or collectively could, as a result of the transactions
contemplated hereby, or otherwise, give rise to the payment of any amount being
non-deductible by the Company or any Subsidiary by reason of Section 280(G) of
the Code.
(b) INDUSTRIAL DEVELOPMENT BONDS.
(i) No event of default under the IDB Documents, the FILOT
Documents or the SSRB Documents has occurred, nor any event has occurred with
which notice or lapse of time or both would constitute such an event of
default.
(ii) Neither the Company, the Subsidiaries, nor any person or
entity affiliated with any of the foregoing has taken any action, caused or
permitted any action to be taken, omitted to take any action, or caused or
permitted any omission to occur, which would cause the interest on the IDB's to
become includable in the gross income of the recipients thereof for purposes of
federal or South Carolina income taxation, and, specifically in furtherance of
(but not in limitation of) the foregoing representation and warranty,
(A) The Company has not (x) approved any investment or
the use of any proceeds of the IDB's or any other moneys within the
control of the Company or any Person related to the Company
(including without limitation the proceeds of any insurance or any
condemnation award with respect to the Project), or the taking or
omission of any other action, which would cause the IDB's to be
"arbitrage bonds" within the meaning of Section 148 of the Code, or
(y) approved the use of any proceeds from the sale of the IDB's
otherwise than in accordance with the Bond Documents;
(B) The Company has taken all action required under
Section 148 of the Code and Treasury Regulations thereunder to
prevent loss of the exclusion of the interest on the IDB's from
gross income of the owners thereof for federal income tax purposes
under such Section, including but not limited to paying the
"rebatable arbitrage amount" to the United States of America in
accordance with the requirements set forth in the related Treasury
Regulations;
(C) Not less than 95% of the net proceeds of the IDB's
(including investment earnings on the sale proceeds of the IDB's)
expended to date have been expended for costs of the acquisition,
construction, or reconstruction or improvement of land or property
of a character subject to the allowance for depreciation, within the
meaning of Section 144(a)(1)(A) of the Code;
(D) No more than 2% of the principal amount of the IDB's
has been expended for issuance costs (including counsel fees and
placement fees) of the IDB's;
(E) Neither the Company, nor the Subsidiaries has
permitted the use of the Project by any person to whom any part of
the aggregate authorized face amount of the IDB's would be allocated
pursuant to Section 144(a)(10) of the Code if the amount so
allocated when increased as provided in Section 144(a)(10) of the
Code would exceed $40,000,000; the aggregate amount of bonds
allocable to users of the Project pursuant to Section 144(a)(10) of
the Code does not exceed $40,000,000;
(F) Neither Seller, Venture, Venture Southeast nor any
other person has made expenditures with respect to the Project
which, when added to the face amount of the IDB's, will cause the
"aggregate face amount" of the IDB's as computed under the
provisions of Section 144(a) and related sections of the Code to
exceed $10,000,000; the aggregate amount of capital expenditures
made to date with respect to the Project, together with the face
amount of the IDB's, by all persons does not exceed $10,000,000;
(G) The Project has been continuously used as a
manufacturing facility since its initial operation, and neither
Venture nor Venture Southeast has made any use of the Project which
would adversely affect the exclusion of the interest on the IDB's
from gross income for federal or South Carolina income tax purposes.
(iii) There is no liability (known or unknown) for Taxes
which Venture or any of its subsidiaries may be liable in respect of the IDB
Documents or the FILOT Documents which is not disclosed on Schedule 4.8 of the
Disclosure Letter.
4.9. TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
Except as set forth on Schedule 4.9 of the Disclosure Letter, the Company
and/or the Subsidiaries has good title to or the right to use the Intellectual
Property Rights as provided in Section 4.11 and good title to all other assets,
properties and interests in properties, real, personal or mixed, reflected on
the Latest Balance Sheet or acquired after the Latest Balance Sheet Date
(except property subject to a capital lease, and inventory or other property
sold or otherwise disposed of since the Latest Balance Sheet Date in the
ordinary course of business and accounts receivable and notes receivable paid
subsequent to the Latest Balance Sheet Date), free and clear of all
Encumbrances, of any kind or character, except for those Encumbrances set forth
in the Disclosure Letter and Permitted Encumbrances. Other than the Permitted
Encumbrances, there does not exist any condition (other than general business
conditions) which materially and adversely interferes with the economic value
or use of any such assets. Except as set forth on Schedule 4.9 of the
Disclosure Letter and for inventory and supplies in transit in the ordinary
course of business, all material tangible personal property is located on the
premises of the Company or the Subsidiaries. Except as set forth on Schedule
4.9 of the Disclosure Letter, the material fixed assets of the Company and the
Subsidiaries are in good operating condition (ordinary wear and the effects of
age excepted). Except as set forth on Schedule 4.9 of the Disclosure Letter,
the assets, properties and interests in properties of the Company and the
Subsidiaries to be owned by the Surviving Corporation after the Closing shall
include all assets, properties and interests in properties (real, personal and
mixed, tangible and intangible) and all Contracts necessary to enable the
Surviving Corporation to carry on the Subject Business as presently conducted
by the Company and the Subsidiaries.
4.10. REAL PROPERTY-OWNED OR LEASED. (a) Schedule 4.10 of the
Disclosure Letter contains a list and brief description of all of the owned
real property of the Company and the Subsidiaries (the "Owned Real Property",
which, for purposes of this Agreement, includes the property located in
Anderson County, South Carolina although such property is technically owned by
the County under the terms of the IDB Documents) and all real property in which
the Company or either Subsidiary has a leasehold interest held under leases
(the "Leased Property") including the name of the lessor and any requirement of
consent of the lessor to consummate the transactions contemplated hereby. The
Owned Real Property and the Leased Property (together, the "Real Property")
constitute all real properties used or occupied by the Company and the
Subsidiaries in connection with the Subject Business.
(b) With respect to the Real Property, except as set forth on
Schedule 4.10 of the Disclosure Letter and as otherwise provided in this
Section 4.10(b):
(i) with respect to the Owned Real Property, no portion thereof
is subject to any pending condemnation Proceeding or Proceeding by any
public or quasi-public authority and, with respect to the Real Property,
to the Best Knowledge of the Company, neither the Company nor any
Designated Shareholder has received any written notice of any threatened
condemnation or Proceeding with respect thereto;
(ii) the physical condition of the Real Property is sufficient
in all material respects to permit the continued conduct of the Subject
Business as presently conducted subject to the provision of usual and
customary maintenance, repair and replacement performed in the ordinary
course with respect to similar properties of like age and construction;
(iii) with respect to the Leased Property, the Company or a
Subsidiary is the owner and holder of all the leasehold estates purported
to be granted by such lease and each lease is in full force and effect and
constitutes a valid and binding obligation of the Company or such
Subsidiary;
(iv) no notice of any increase in the assessed valuation of the
Owned Real Property and no notice of any contemplated special assessment
has been received by the Company or any Subsidiary and to the Best
Knowledge of the Company, the Company has not received written notice of
any threatened special assessment pertaining to any of the Owned Real
Property;
(v) there are no Contracts, written or oral, to which the
Company or any Subsidiary is a party, granting to any other party or
parties the right of use or occupancy of any portion of the parcels of the
Owned Real Property;
(vi) there are no parties (other than the Company, the
Subsidiaries or their lessees disclosed pursuant to paragraph (v) above)
in possession of the Owned Real Property; and
(vii) with respect to the Leased Property, there have been no
discussions or correspondence with the landlord concerning renewal terms
for those leases scheduled to expire within 12 months of the date of this
Agreement.
4.11. INTELLECTUAL PROPERTY. Except in each case as set forth on
Schedule 4.11 of the Disclosure Letter:
(a) the Company, either alone or together with the
Subsidiaries, owns (and with respect to the intellectual property rights
under the License and Development Agreement dated April 27, 1995, between
the Company and the Rathbun Family Real Estate Group, the Company
controls), has the right to use, sell, license and dispose of, and has the
right to bring actions for the infringement of, and, where necessary, has
made timely and proper application for all Intellectual Property Rights
necessary or required for the conduct of the Subject Business as currently
conducted and as currently proposed to be conducted (such Intellectual
Property Rights, collectively, the "Requisite Rights"), except for such
failure to make timely and proper application that does not have a
material effect on the use of the Requisite Rights by the Company and/or
any Subsidiary, and such rights to use, sell, license, dispose of and
bring actions are exclusive with respect to Requisite Rights developed by
the Company or a Subsidiary (which rights are so identified in the
Disclosure Letter) and are sufficient for such conduct of the Subject
Business in the case of all other Requisite Rights;
(b) there are no royalties, honoraria, fees or other payments
payable by the Company or any Subsidiary to any Person by reason of the
ownership, use, license, sale or disposition of Requisite Rights;
(c) no activity, service or procedure currently conducted or
proposed to be conducted by the Company or any Subsidiary violates or will
violate any Contract of the Company or any Subsidiary with any third party
or, to the Best Knowledge of the Company, infringe any Intellectual
Property Right of any other party;
(d) to the Best Knowledge of the Company, the Company and/or
the Subsidiaries have taken reasonable and practicable steps (including,
without limitation, entering into confidentiality and nondisclosure
agreements with Persons with access to or knowledge of the Requisite
Rights) designed to safeguard and maintain the secrecy and confidentiality
of, and their proprietary rights in, all Requisite Rights;
(e) neither the Company nor any Subsidiary has received from
any third party in the past three years any notice, charge, claim or other
assertion that the Company or any Subsidiary is infringing any
Intellectual Property Right of any third party or committed any acts of
unfair competition, and, to the Best Knowledge of the Company, no such
claim is impliedly threatened by an offer to license from a third party
under a claim of use; and
(f) neither the Company nor any Subsidiary has knowledge of or
sent to any Person in the past three years any notice, charge, claim or
other assertion of any present, impending or threatened infringement by,
or misappropriation of, any Intellectual Property Right of the Company or
any Subsidiary by such other Person or any acts of unfair competition by
such other Person.
The Disclosure Letter contains a true and complete list of all applications,
filings and other formal actions made or taken pursuant to Federal, state,
local and foreign Laws by the Company and the Subsidiaries to perfect or
protect their interest in the Requisite Rights, including, without limitation,
all patents, patent applications, trademarks, trademark applications, service
marks and service mark applications.
4.12. AGREEMENTS, NO DEFAULTS, ETC. Except as set forth on Schedule
4.12 of the Disclosure Letter, neither the Company nor any Subsidiary is a
party to any:
(a) Contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other
basis or agreement with any Affiliates;
(b) Contract relating to the borrowing of money or to the
mortgaging, pledging or otherwise placing an Encumbrance on any asset or
group of assets of the Company or any Subsidiary;
(c) Contract relating to any guarantee by the Company or any
Subsidiary of any obligation of any Person for borrowed money or
otherwise;
(d) Contract with respect to the lending or investing of
funds;
(e) Contract for indemnification with respect to any form of
intangible property, including any Intellectual Property Rights or
confidential information;
(f) Contract or group of related Contracts with the same party
(excluding purchase orders entered into in the ordinary course of business
that are to be completed within three months of entering into such
purchase orders) for the purchase or sale of products or services under
which the undelivered balance of such products and services has a purchase
price in excess of $50,000;
(g) Contract that prohibits it from freely engaging in
business anywhere in the world;
(h) other Contract (x) that is not terminable by either party
without penalty upon advance notice of 30 days or less and involves
aggregate consideration in excess of $25,000 or (y) that involves
aggregate consideration in excess of $50,000 (excluding in the case of
clauses (x) and (y) above any purchase order entered into in the ordinary
course of business that is to be completed within three months of entering
into such purchase orders); or
(i) any other Contract, except where the failure to disclose
such Contract would not have a Material Adverse Effect on the Company and
the Subsidiaries, taken as a whole.
Except as set forth on Schedule 4.12 of the Disclosure Letter, there are no
vehicles, boats, aircraft, apartments or other residential or recreational
properties or facilities owned or operated by the Company or any Subsidiary for
executive, administrative or sales purposes or any social club memberships
owned or paid for by it. Except as set forth on Schedule 4.12 of the
Disclosure Letter, the Company and each Subsidiary has in all material respects
performed all the obligations required to be performed by it to date and is not
in default or alleged to be in default in any material respect under any
Contract, and there exists no event, condition or occurrence which, after
notice or lapse of time, or both, would constitute such a default by the
Company or any Subsidiary of any of the foregoing. The Company has furnished
to Buyer true and complete copies of all Contracts listed in the Disclosure
Letter or complete descriptions of all material terms of any oral Contracts
listed in the Disclosure Letter.
4.13. LITIGATION, ETC. Except as set forth on Schedule 4.13 of the
Disclosure Letter, there are no (i) Proceedings currently pending or, to the
Best Knowledge of the Company, threatened against the Company or any
Subsidiary, whether at law or in equity, or before or by any Governmental
Entity or arbitrator or (ii) Orders of any Governmental Entity or arbitrator
against the Company or any Subsidiary that are currently effective. The
Company has delivered to Buyer all material documents and correspondence
relating to such matters referred to in Schedule 4.13 of the Disclosure Letter.
4.14. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. (a) Except as set
forth on Schedule 4.14 of the Disclosure Letter, the Subject Business has not
and is not being conducted in violation in any material respect of any Law,
Order or Permit, including, without limitation, Environmental, Health and
Safety Laws. Except as set forth on Schedule 4.14 of the Disclosure Letter, no
investigation or review by any Governmental Entity with respect to the Company
or any Subsidiary is pending or, to the Best Knowledge of the Company,
threatened in writing, nor has any Governmental Entity notified the Company or
any Subsidiary of its intention to conduct the same. The Company and the
Subsidiaries have all material Permits necessary for the conduct of the Subject
Business, including those required under any Environmental, Health and Safety
Laws, such Permits are in full force and effect, no material violations are or
have been recorded in respect of any thereof and no Proceeding is currently
pending or, to the Best Knowledge of the Company, threatened in writing to
revoke or limit any thereof. The Disclosure Letter contains a true and
complete list of all material Permits under which the Company and the
Subsidiaries are operating or bound, and the Company has furnished to Buyer
true and complete copies thereof.
(b) Neither the United States Food and Drug Administration nor any
other Governmental Entity regulating the marketing, distribution, sale or
advertising of any of the products currently sold, distributed or used in
connection with the Subject Business has any pending request that any such
product be removed from the market, that substantial new product testing be
undertaken as a condition to the continued manufacturing, selling, distribution
or use of any such product or that such product be modified in a way likely to
have a Material Adverse Effect on the Company and the Subsidiaries, taken as a
whole.
4.15. LABOR RELATIONS; EMPLOYEES. Except as set forth on Schedule
4.15 of the Disclosure Letter, (i) neither the Company nor any Subsidiary is
currently delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them to date or amounts required to be reimbursed to such
employees, (ii) upon termination of the employment of any such employees, none
of the Company, any Subsidiary, the Surviving Corporation or Buyer will by
reason of any action taken or not taken prior to the Closing by the Company or
any Subsidiary be liable to any of such employees for severance pay or any
other payments, (iii) the Company and the Subsidiaries are in compliance in all
material respects with all material Laws respecting labor, employment and
employment practices, terms and conditions of employment and wages and hours,
(iv) there is no unfair labor practice complaint against the Company or any
Subsidiary pending before the National Labor Relations Board or any other
Governmental Entity, (v) there is no labor strike, material dispute or
grievance, slowdown or stoppage actually pending or, to the Best Knowledge of
the Company, threatened against or involving the Company or any Subsidiary,
(vi) other than Glass, Molders, Pottery, Plastics and Allied Workers
International Union (AFL-CIO, CLC) Local 311 (the "Workers Union"), no labor
union currently represents the employees of the Company or the Subsidiaries
and, to the Best Knowledge of the Company, no labor union has taken any action
with respect to organizing the employees of the Company or the Subsidiaries,
(vii) no employee with an annual salary in excess of $50,000 has informed the
Company, any Subsidiary, any Designated Shareholder or any senior executive of
the Company or any Subsidiary that such employee will or may terminate his or
her employment or engagement with the Company or a Subsidiary and (viii) on the
date hereof, the relations between the Company and the Subsidiaries, on one
hand, and the Workers Union, on the other hand, are generally good and the
Company, TJR and the Designated Shareholders have no reason to believe that
consummation of the transactions contemplated hereby, assuming Buyer will
comply with the terms of the agreement between Midwest and the Workers Union,
will result in a labor strike, slowdown or stoppage. Other than the Workers
Union, neither the Company nor any Subsidiary is a party to or bound by any
collective bargaining agreement, union Contract or similar agreement.
4.16. ERISA COMPLIANCE. (a) Set forth on Schedule 4.16 of the
Disclosure Letter is a true and complete list of all Employee Plans. Except as
set forth on Schedule 4.16 of the Disclosure Letter, all Employee Plans have
been established, maintained, operated and administered in accordance with
their respective terms and in compliance in all material respects with ERISA,
the Code and other applicable Laws.
(b) Except as set forth on Schedule 4.16 of the Disclosure Letter:
(i) each Employee Plan, if intended to be "qualified" within
the meaning of Section 401(a) of the Code, has been determined by the
Internal Revenue Service to be so qualified and the related trusts are
exempt from tax under Section 501(a) of the Code, and nothing has occurred
that has or could reasonably be expected to affect adversely such
qualification or exemption;
(ii) neither the Company, any Subsidiary nor, to the Best
Knowledge of the Company and its ERISA Affiliates, any other "disqualified
person" or "party in interest" (as such terms are defined in Section 4975
of the Code and Section 3(14) of ERISA, respectively) with respect to an
Employee Plan maintained by the Company or any Subsidiary has breached the
fiduciary rules of ERISA or engaged in a prohibited transaction with such
an Employee Plan maintained by the Company that could subject the Company
or any of its Subsidiaries to any tax or penalty imposed under Section
4975 of the Code or Section 502(i), (j) or (l) of ERISA;
(iii) all required or declared contributions (or premium
payments) by the Company or any Subsidiary to (or in respect of) all
Employee Plans have been properly made when due, and the Company and the
Subsidiaries have timely deposited all amounts withheld from employees for
pension, welfare or other benefits into the appropriate trusts or
accounts;
(iv) no Proceedings (other than routine claims for benefits)
are pending, or to the Best Knowledge of the Company, threatened, with
respect to or involving any Employee Plan;
(v) except as required by the continuation coverage
requirements of Title I, Subtitle B, Part 6 of ERISA or similar state
laws, none of the Employee Plans obligate the Company or any Subsidiary to
provide any employee or former employee, or their spouses, family members
or beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
(vi) to the Best Knowledge of the Company, each Employee Plan
that is a "group health plan" within the meaning of Section 5000 of the
Code has been maintained in compliance with Section 4980B of the Code and
Title I, Subtitle B, Part 6 of ERISA and no tax payable on account of
Section 4980B of the Code has been or is expected to be incurred;
(vii) neither the Company, any Subsidiary nor any of their
respective ERISA Affiliates is or has ever maintained or been obligated to
contribute to a "multiple employer plan" (as defined in Section 413 of the
Code), a "multi-employer plan" (as defined in Section 3(37) of ERISA) or a
"defined benefit pension plan" (as defined in Section 3(35) of ERISA);
(viii) with respect to any Employee Plan, there has not been any
act or omission by the Company, any Subsidiary or any of their respective
ERISA Affiliates that has given rise to or could give rise to any material
fines, penalties or related charges under ERISA or the Code for which the
Company, any Subsidiary or any of their respective ERISA Affiliates could
be liable;
(ix) all reporting and disclosure obligations imposed under
ERISA and the Code have been satisfied with respect to each Employee Plan;
and
(x) no benefit or amount payable or which may become payable
by the Company or any Subsidiary pursuant to any Employee Plan, agreement
or Contract with any employee, shall constitute an "excess parachute
payment," within the meaning of Section 280G of the Code, which is or may
be subject to the imposition of an excise tax under Section 4999 of the
Code or which would not be deductible by reason of Section 280G of the
Code, except to the extent such payments are exempt under Proposed
Regulation 1.280 G1, Q&A 5 through 9.
(c) The Company has provided Buyer with true and complete copies of
all documents pursuant to which each Employee Plan is maintained and
administered, the two most recent annual reports (Form 5500 and attachments)
and financial statements therefor, all governmental rulings, determinations,
and opinions (and pending requests therefor). The foregoing documents
accurately reflect all material terms of each of the Employee Plans (including,
without limitation, any agreement or provision which would limit the ability of
the Company or any Subsidiary to make any prospective amendments or terminate
any Employee Plan).
4.17. ENVIRONMENTAL MATTERS. (a) Neither the Company nor any of its
past owned or leased real property or operations are currently subject to or
the current subject of, any Proceeding, Order, settlement, or other Contract
arising under Environmental, Health and Safety Laws, nor, to the Best Knowledge
of the Company, has any investigation been commenced or is any Proceeding
currently threatened in writing against the Company under the Environmental,
Health and Safety Laws with regard to the Subject Business. For purposes of
this Section 4.17, the term "Company" shall include the Company, each of the
Subsidiaries and any predecessor of the Company or any Subsidiary, including
any Person to whose liabilities the Company or any such Subsidiary may have
succeeded, in whole or in part, pursuant to Environmental, Health and Safety
Laws, Contract, common Law or the operation of Law.
(b) Except as set forth on Schedule 4.17 of the Disclosure Letter,
neither the Company, TJR nor any Designated Shareholder has received any
written or oral notice, report or other information that the Company is
potentially responsible under the Environmental, Health and Safety Laws for any
damages, sanctions or remedies, including for response costs or natural
resource damages, as those terms are defined under the Environmental, Health
and Safety Laws, at any location and the Company has not transported or
disposed of, or allowed or arranged for any third party to transport to or
dispose of, any Hazardous Materials at any location that was then or since has
been (1) included on the National Priorities List, as defined under CERCLA, (2)
proposed for inclusion on that List, or (3) included on the CERCLIS database
prepared under CERCLA or any analogous list prepared by any state.
(c) Schedule 4.17 of the Disclosure Letter sets forth a complete
and accurate list of all real properties and facilities previously owned or
operated by the Company. Except as set forth on Schedule 4.17 of the
Disclosure Letter, none of the following has existed or occurred at any such
real property or facility or at any of the Real Property (1) at any time when
owned or operated by the Company or (2) to the Best Knowledge of the Company,
at any time prior to when owned or operated by the Company: a release of
Hazardous Materials in an amount then or now exceeding a reportable quantity as
defined under, or in a manner that then or now would support an Order by a
Governmental Entity under, Environmental, Health and Safety Laws; hazardous
waste treatment, storage or disposal facilities, as those terms are defined
under the Environmental, Health and Safety Laws; any asbestos-containing
material, underground storage tank, aboveground storage tank, landfill, waste
pile, other waste disposal area, surface impoundment, or article or equipment
containing polychemical biphenyls; and no facts, events or conditions that
would prevent compliance by the Company with, or could give rise to any
Liability or corrective or remedial obligation of the Company under,
Environmental, Health and Safety Laws.
(d) The Company has provided Buyer with correct and complete copies
of all reports and studies performed by or on behalf of, or within the
possession or control of, the Company with respect to past or present
environmental conditions or events at any of the Real Property or any property
formerly owned, leased, or operated by the Company, and to the Best Knowledge
of the Company, there are no other environmental reports or studies with
respect thereto, other than as contemplated hereby.
(e) Except as set forth on Schedule 4.17 of the Disclosure Letter,
the Company has not by Contract, consent order or other agreement assumed (1)
any obligations or liabilities of any other Person arising under Environmental,
Health and Safety Laws or (2) responsibility for, either directly or
indirectly, the remediation of any condition arising from or relating to the
release or threatened release of Hazardous Materials.
(f) Except as set forth on Schedule 4.17 of the Disclosure Letter,
(1) no environmental condition has existed and no event has occurred on or
before the Closing Date at any property currently or formerly owned, leased, or
used by the Company, any Subsidiary or any predecessor of the Company or any
Subsidiary, and (2) there has been no generation, storage, treatment, disposal,
transportation, shipment offsite, or other management of Hazardous Materials by
the Company, any Subsidiary or any predecessor of the Company or any Subsidiary
on or before the Closing Date, that in the case of either (1) or (2) above will
result in the Buyer Group suffering, sustaining or incurring a Loss.
4.18. BROKERS. None of the Designated Shareholders, the Company, the
Subsidiaries or any of their respective officers, directors or employees (or
any Affiliate of the foregoing) have employed any broker or finder or incurred
any Liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
4.19. RELATED TRANSACTIONS. Except as set forth on Schedule 4.19 of
the Disclosure Letter, and except for salary to regular employees of the
Company and the Subsidiaries, no current or former Affiliate of the Company,
the Subsidiaries or any associate (as defined in the rules promulgated under
the Exchange Act) thereof, is now, or has been during the last three fiscal
years, (i) a party to any transaction or Contract with the Company or any
Subsidiary involving greater than $15,000, or (ii) the direct or indirect owner
of an interest in any Person which is a present or potential competitor,
supplier or customer of the Company or any Subsidiary (other than non-
affiliated holdings in publicly-held companies), nor does any such Person
receive income from any source other than the Company or a Subsidiary which
relates to the business of, or should properly accrue to, the Company or such
Subsidiary.
4.20. ACCOUNTS AND NOTES RECEIVABLE. Except as set forth on Schedule
4.20 of the Disclosure Letter, all the accounts receivable and notes receivable
owing to the Company and the Subsidiaries as of the date hereof constitute, and
as of the Closing will constitute, valid and enforceable claims arising from
bona fide transactions in the ordinary course of business, and the Company has
not received notice of any claim or asserted claim, refusal to pay or other
rights of set-off against any thereof and such accounts receivable and notes
receivable will be collected within one year from the date thereof, subject to
the reserves established in accordance with GAAP. Except as set forth on
Schedule 4.20 of the Disclosure Letter, as of the date hereof, there is (i) no
account debtor or note debtor delinquent in its payment by more than 90 days,
(ii) no account debtor or note debtor that has refused or, to the Best
Knowledge of the Company, threatened in writing to refuse to pay its
obligations for any reason, (iii) to the Best Knowledge of the Company, no
account debtor or note debtor that is insolvent or bankrupt and (iv) no account
receivable or note receivable pledged to any third party by the Company or any
Subsidiary.
4.21. ACCOUNTS AND NOTES PAYABLE. Except as set forth on Schedule
4.21 of the Disclosure Letter, all accounts payable and notes payable by the
Company and the Subsidiaries to third parties as of the date hereof arose, and
as of the Closing will have arisen, in the ordinary course of business, and,
except as set forth on Schedule 4.21 of the Disclosure Letter, there is no such
account payable or note payable delinquent in any material respect in its
payment, except those contested in good faith and already disclosed on such
Schedule 4.21.
4.22. INVENTORIES. Subject to those matters reflected in any
valuation reserve on the books and records of the Company, the inventories of
the Company and the Subsidiaries as of the date hereof are of good, usable and
merchantable quality. Except as set forth on Schedule 4.22 of the Disclosure
Letter, as of the date hereof, such inventory includes no items which are below
customary quality control standards of the Company's industry and any
applicable governmental quality control, or of a quality or quantity not usable
or salable in the normal course of business (it being understood that inventory
not usable or saleable within one year constitutes obsolete inventory). Except
as set forth on Schedule 4.22 of the Disclosure Letter, the aggregate value of
the inventory has been written down on the books of account of the Company to
realizable market value or adequate reserves have been provided in accordance
with GAAP and reasonable and prudent commercial practices in the Company's
industry.
4.23. SUPPLIERS AND VENDORS. Except in the ordinary course of
business, since January 1, 1997, no material supplier or vendor of the Company
or any Subsidiary has canceled or otherwise terminated, or threatened to cancel
or otherwise terminate, its relationship with the Company or such Subsidiary or
has decreased, limited or otherwise modified, or threatened to decrease, limit
or otherwise modify, the services, supplies or materials it provides to the
Company or any Subsidiary, and, to the Best Knowledge of the Company, the
transactions contemplated hereby will not affect the relationship of the
Company and the Subsidiaries with any such supplier or vendor.
4.24. CUSTOMERS. Except to the extent any such business relationship
is impaired solely by virtue of an account or note receivable past 90 days due
as disclosed in the Disclosure Letter, to the Best Knowledge of the Company,
the business relationship of the Company and the Subsidiaries with its
customers is generally good and no material disagreement or, to the Best
Knowledge of the Company, problem exists between the Company (or any
Subsidiary, as the case may be) and any customer. No customer to which more
than $100,000 of the Company's annual sales (on a consolidated basis) are
attributable has threatened, or has notified the Company or any Subsidiary that
it intends, to terminate its relationship and dealings with the Company or such
Subsidiary, whether as a result of the transactions contemplated by this
Agreement or otherwise.
4.25. DISCLOSURE. To the actual knowledge of the Designated
Shareholders and Brett Bauer, neither this Agreement, any of the schedules,
attachments or exhibits hereto, nor any other written material delivered by the
Company or any representative thereof to Parent, Buyer, Acquisition Sub or any
of their respective directors, officers, employees, representatives or agents
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein, taken as a whole,
in light of the circumstances in which they were made, not misleading. None of
the Company, the Subsidiaries, the Designated Shareholders nor Brett Bauer has
actual knowledge of any fact (other than any fact relating to general economic
conditions that affect the plastics industry generally) that has not been
disclosed to Buyer which constitutes or could reasonably be anticipated to
result in a Material Adverse Change to the Company and the Subsidiaries, taken
as a whole.
4.26. PROSPECTIVE BREACH. None of the Company, the Subsidiaries, TJR
or the Designated Shareholders has actual knowledge of (i) any fact that causes
any representation or warranty by Parent, Buyer or Acquisition Sub contained in
this Agreement or any Related Document to be untrue or inaccurate in any
material respect as of the Closing or (ii) any fact that causes or could
reasonably be anticipated to cause a material breach of any obligation or
covenant of Parent, Buyer or Acquisition Sub contained in this Agreement or any
Related Document; PROVIDED, HOWEVER, that in no event shall the representation
contained in this Section 4.26 obviate or diminish the representations and
warranties of Parent, Buyer and Acquisition Sub contained in this Agreement and
the Related Documents and the indemnification obligations of such parties
contained in Section 8.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PARENT, BUYER AND
ACQUISITION SUB. Parent, Buyer and Acquisition Sub represent and warrant to
the Company and the Shareholders as follows:
5.1. ORGANIZATION, GOOD STANDING, QUALIFICATION AND POWER. Each of
Parent, Buyer and Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and, is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not have a Material Adverse Effect on Parent, Buyer and
Acquisition Sub, taken as a whole. Parent has delivered to the Company true
and complete copies of Parent's certificate of incorporation and by-laws, in
each case as amended to the date hereof.
5.2. AUTHORITY. Each of Parent, Buyer and Acquisition Sub has all
requisite corporate power and authority to enter into this Agreement and each
Related Document to which it is a party and any and all instruments necessary
or appropriate in order to effectuate fully the terms and conditions of this
Agreement and each Related Document to which it is a party and all related
transactions contemplated thereby and to perform its respective obligations
hereunder and thereunder; the execution, delivery and performance by Parent,
Buyer and Acquisition Sub of this Agreement and each Related Document to which
it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of such party; and this Agreement and each Related Document to
which any of Parent, Buyer or Acquisition Sub is a party has been duly executed
and delivered by such party and constitutes the valid and binding obligation of
such party, enforceable against such party in accordance with its terms and
conditions, except as enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency or other Laws affecting creditors'
rights generally, by general principles of equity and applicable laws or court
decisions limiting the availability of specific performance, injunctive relief
and other equitable remedies (including the enforceability of indemnification
provisions, regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by legal and equitable limitations on the
availability of injunctive relief, specific performance and other equitable
remedies.
5.3. CAPITAL STOCK. The authorized capital stock of Parent is as set
forth on SCHEDULE II hereto. All of the issued and outstanding capital stock
of Buyer is owned of record and beneficially by Parent, and all of the issued
and outstanding capital stock of Acquisition Sub is owned of record and
beneficially by Buyer. Except as set forth on SCHEDULE II, there are no
outstanding securities, options, warrants, rights or agreements or other
commitments pursuant to which Parent is or may become obligated to issue any
shares of its capital stock, or any securities convertible into or exercisable
or exchangeable for such capital stock.
5.4. NONCONTRAVENTION; CONSENTS. (a) Neither the execution,
delivery and performance of this Agreement and the Related Documents to which
Parent, Buyer or Acquisition Sub is a party nor the consummation by Parent,
Buyer or Acquisition Sub of the transactions contemplated hereby or thereby nor
compliance by Parent, Buyer or Acquisition Sub with any provision hereof or
thereof shall (i) violate any Law, the result of which would prevent the
consummation by Buyer of the transactions contemplated hereby or (ii) other
than with respect to waivers or consents received on or prior to the date
hereof, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any Contract to which
Parent, Buyer or Acquisition Sub is a party or by which the any such party is
bound or to which any of their respective properties is subject the result of
which would prevent the consummation by Parent, Buyer or Acquisition Sub of the
transactions contemplated hereby.
(b) Except for requisite filings under the HSR Act or as otherwise
contemplated by this Agreement or any Related Document, and except for consents
and waivers received on or prior to the date hereof, no material permit,
authorization, consent or approval of or by, or any material notification of or
filing with, any Person (governmental or private) is required in connection
with the execution, delivery and performance by Parent, Buyer or Acquisition
Sub of this Agreement and the Related Documents to which Parent, Buyer or
Acquisition Sub is a party or the consummation by any such party of the
transactions contemplated hereby or thereby.
5.5. SEC DOCUMENTS. Parent and Buyer have furnished the Company, WJR
and DCR with a correct and complete copy of each report, schedule, and final
registration statement filed by Parent or Buyer with the SEC on or after
January 1, 1994 (the "SEC Documents"), which are all the documents (other than
preliminary materials) that Parent and Buyer were required to file with the SEC
on or after January 1, 1994. As of their respective dates or, in the case of
registration statements, their effective dates, none of the SEC Documents
(including all exhibits and schedules thereto) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the SEC Documents
complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. The financial
statements of Parent and Buyer included in the SEC Documents complied as to
form in all material respects with the then applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may have been
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q promulgated by the SEC) and fairly present (subject, in
the case of the unaudited statements, to normal year-end audit adjustments) the
consolidated financial position of Parent or Buyer, as the case may be, and
their consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. Parent
and Buyer have filed all documents and agreements which were required to be
filed as exhibits to the SEC Documents. SCHEDULE III sets forth a correct and
complete list of all documents or agreements, if any, which would be included
as exhibits to an Annual Report on Form 10-K and which have not heretofore been
filed as an exhibit to any of the SEC Documents, if Parent or Buyer were
required to file such Form 10-K for the period ended on the date immediately
preceding the date of this Agreement and long-term debt agreements which are
not required to be filed pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K
promulgated by the SEC.
5.6. BROKERS. None of Parent, Buyer, Acquisition Sub or any of their
respective officers, directors, stockholders or employees (or any Affiliate of
any of the foregoing) has employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
5.7. PROSPECTIVE BREACH. None of Parent, Buyer or Acquisition Sub
has actual knowledge of (i) any fact that causes any representation or warranty
by the Company, any Subsidiary or any Shareholder contained in this Agreement
or any Related Document to be untrue or inaccurate in any material respect as
of the Closing or (ii) any fact that causes or could reasonably be anticipated
to cause a material breach of any obligation or covenant of the Company, any
Subsidiary or any Shareholder contained in this Agreement or any Related
Document; PROVIDED, HOWEVER, that in no event shall the representation
contained in this Section 5.7 obviate or diminish the representations and
warranties of the Company, the Subsidiaries and the Shareholders contained in
this Agreement and the Related Documents and the indemnification obligations of
the Designated Shareholders contained in Section 8.
5.8. NO DEFAULTS. Parent, Buyer and Acquisition Sub have in all
material respects performed all the obligations required to be performed by
them to date and are not in default or alleged to be in default in any material
respect under any Contract listed as an exhibit to Parent's most recently filed
Annual Report on Form 10-K (the "Form 10-K") or those contracts listed on
Schedule III attached hereto.
5.9. ABSENCE OF CHANGES. Since the date of the most recently filed
Quarterly Report on Form 10-Q of Parent, there has not been any Material
Adverse Change with respect to Parent, Buyer and Buyer's subsidiaries, taken as
a whole.
5.10. LITIGATION, ETC. Except as set forth in the Form 10-K, there
are no (i) Proceedings currently pending or, to the Best Knowledge of Parent,
threatened against Parent, Buyer or Acquisition Sub, whether at law or in
equity, or before or by any Governmental Entity or arbitrator or (ii) Orders of
any Governmental Entity or arbitrator against Parent, Buyer or the Acquisition
Sub that are currently effective that, in the case of either (i) or (ii) above,
would result in a Material Adverse Effect to Parent, Buyer and Buyer's
subsidiaries, taken as a whole.
5.11. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. The business of
Parent and Buyer has not and is not being conducted in violation in any
material respect of any Law, Order or Permit, including, without limitation,
Environmental, Health and Safety Laws. No investigation or review by any
Governmental Entity with respect to any material matter regarding Parent, Buyer
or Acquisition Sub is pending or, to the Best Knowledge of Parent, threatened
in writing, nor has any Governmental Entity notified Parent, Buyer or the
Acquisition Sub of its intention to conduct the same. Parent, Buyer and
Acquisition Sub have all material Permits necessary for the conduct of their
business, including those required under any Environmental, Health and Safety
Laws, such Permits are in full force and effect, no material violations are or
have been recorded in respect of any thereof and no Proceeding is currently
pending or, to the Best Knowledge of Parent, threatened in writing to revoke or
limit any thereof.
SECTION 6. CERTAIN AGREEMENTS.
6.1. CONFIDENTIALITY. The Designated Shareholders and TJR agree that
all confidential or proprietary information or workproducts relating to the
Subject Business that is known to the Designated Shareholders and TJR as of the
Closing Date is the sole property of the Company (other than the patents to be
licensed to Venture after the Closing Date under the Amended License
Agreement). The Designated Shareholders and TJR agree that they will not use
or disclose such information or workproduct except for the benefit of the
Company and the Surviving Corporation, and the Designated Shareholders and TJR
will take reasonable steps to protect such information and workproduct from
misuse, loss, theft or accidental disclosure.
6.2. CONSENTS. Each party shall use its reasonable best efforts, and
the other parties shall cooperate with such efforts, to obtain any consents and
approvals of, or effect the notification of or filing with, each Person or
authority, whether private or governmental, whose consent or approval is
required in order to permit the consummation of the transactions contemplated
hereby.
6.3. EFFORTS TO CONSUMMATE. Subject to the terms and conditions
herein provided, the parties shall do or cause to be done all such reasonable
acts and things as may be necessary, proper or advisable, consistent with all
applicable Laws, to consummate and make effective the transactions contemplated
hereby as soon as reasonably practicable.
6.4. PUBLIC ANNOUNCEMENTS. Each party agrees that, except (i) as
otherwise required by Law and (ii) for disclosure to its respective directors,
officers, employees, financial advisors, potential financing sources, legal
counsel, independent certified public accountants or other agents, advisors or
representatives on a need-to-know basis and with whom such party has a
confidential relationship, it will not issue any reports, statements or
releases, in each case pertaining to this Agreement or the transactions
contemplated hereby, without the prior written consent of the Company or Buyer,
as the case may be, which consent shall not unreasonably be withheld or
delayed.
6.5. RELEASE. (a) Anything contained herein to the contrary
notwithstanding, by the execution and delivery of this Agreement, in
consideration of the mutual covenants and agreements contained herein,
including, without limitation, the cash and securities of Parent to be received
in the Merger, each of the Shareholders hereby irrevocably releases and forever
discharges the Company (for the benefit of the Company, Parent, Buyer,
Acquisition Sub, the Surviving Corporation and their respective parents,
subsidiaries, Affiliates, divisions and predecessors and their past and present
directors, officers, employees, stockholders and agents, and each of their
respective successors, heirs, assigns, executors and administrators
(collectively, the "Released Persons")) of and from all manner of action and
actions, cause and causes of action, suits, rights, debts, dues, sums of money,
accounts, bonds, bills, covenants, Contracts, controversies, omissions,
promises, variances, trespasses, damages, Liabilities, judgments, executions,
claims and demands whatsoever, in law or in equity which against the Released
Persons such Shareholders ever had, now has or which he hereafter can, shall or
may have, whether known or unknown, suspected or unsuspected, matured or
unmatured, fixed or contingent, for, upon or by reason of any matter or cause
arising at any time on or prior to the Effective Date; PROVIDED, HOWEVER,
anything contained in this Agreement to the contrary notwithstanding, in no
event shall this Section 6.5 release any obligation of Parent, Buyer or
Acquisition Sub owing to the Shareholders that is set forth in this Agreement
or any Related Document.
(b) Each Shareholder specifically represents and warrants to the
Released Persons that he, she or it has not assigned any such claim set forth
in paragraph (a) above, and agrees to indemnify and hold harmless the Released
Persons from and against any and all losses or damages arising from or in any
way related to (i) any such assignment, and (ii) any action by any third party
arising from or in any way related to the relationship among such Shareholder
and the Released Persons, which is the subject of this Section 6.5.
6.6. TAX TREATMENT OF PREFERRED STOCK AND WARRANTS. Each party
agrees to report the Preferred Stock and Warrants as part of the Merger
Consideration (and not as compensation) received by WJR and DCR in exchange for
their Merger Shares for all Tax purposes on all Tax Returns.
6.7. INVENTORY. It is understood that within a reasonable time after
the Closing, the Company will create a list (the "Inventory List") of all
inventory of the Company by product that had been in inventory for one year
prior to the date of Closing (the "Excess Inventory"). Each Designated
Shareholder will review and comment on the accuracy of the Inventory List and
recommend changes to it. The Company will make reasonable revisions to the
Inventory List. Both the Company and the Designated Shareholders will make
commercially reasonable efforts to sell the Excess Inventory, including selling
such Excess Inventory to Encore; PROVIDED, HOWEVER, that no such sale shall
harm existing sales to Buyer's existing customers. Upon the first anniversary
of the date hereof, the difference between the stated inventory cost and the
scrap value of any and all Excess Inventory and the difference between the
aggregate stated inventory cost and the aggregate value received pursuant to
any and all sales which were made below the stated inventory cost will be
deemed obsolete inventory (the "Obsolete Inventory.")
SECTION 7. [INTENTIONALLY OMITTED]
SECTION 8. INDEMNIFICATION.
8.1. INDEMNIFICATION GENERALLY; ETC. From and after the Closing
Date:
(a) BY THE SHAREHOLDER GROUP IN FAVOR OF THE BUYER GROUP. The
Shareholder Group jointly and severally agrees to indemnify and hold
harmless the Buyer Group for any and all Losses they may suffer, sustain
or incur as a result of:
(i) the untruth, inaccuracy or breach of any
representation or warranty of the Company contained in Section 4 or
in the Disclosure Letter, any Related Document or any certificate
delivered in connection herewith at or before the Closing; or
(ii) the breach of any agreement or covenant of the Company
or any Subsidiary contained in this Agreement or in the Disclosure
Letter or any Related Document with respect to obligations to be
performed on or prior to the Closing Date; or
(iii) the assertion of any claim, demand, Liability or
obligation against any member of the Buyer Group arising from or in
connection with any assertion by any current or former shareholder
or optionholder of the Company or any Subsidiary or the heirs,
representatives or estate thereof of any impropriety with respect to
any actions or transactions of or involving the Company or the
Subsidiaries prior to or at the Closing (including, without
limitation, the actions and transactions contemplated by this
Agreement and the Related Documents and the manner and amount of
consideration paid to each Shareholder for the Merger Shares).
(b) BY THE SHAREHOLDERS IN FAVOR OF THE BUYER GROUP. Each
Shareholder and his, her or its successors, assigns, heirs,
representatives and estate, as the case may be, agrees (severally and not
jointly) to indemnify and hold harmless the Buyer Group for any and all
Losses they may suffer, sustain or incur as a result of:
(i) the untruth, inaccuracy or breach of any
representation or warranty of such Shareholder contained in Section
3 or in the Disclosure Letter, any Related Document to which such
Shareholder is a party or any certificate delivered by such
Shareholder in connection herewith at or before the Closing; or
(ii) the breach by such Shareholder of any agreement or
covenant to be performed by such Shareholder contained in this
Agreement or in any Related Document to which such Shareholder is a
party.
(c) BY PARENT, BUYER AND ACQUISITION SUB IN FAVOR OF THE
SHAREHOLDERS. Parent, Buyer and Acquisition Sub jointly and severally
agree to indemnify and hold harmless the Shareholders for any and all
Losses they may suffer, sustain or incur as a result of:
(i) the untruth, inaccuracy or breach of any
representation or warranty of Parent, Buyer or Acquisition Sub
contained in Section 5 or in any Related Document or any certificate
delivered in connection herewith or therewith at or before the
Closing; or
(ii) the breach of any agreement or covenant of Parent,
Buyer or Acquisition Sub contained in this Agreement or in any
Related Document.
8.2. LIMITATIONS ON INDEMNIFICATION. Anything contained herein to
the contrary notwithstanding:
(a) INDEMNITY BASKETS FOR THE SHAREHOLDER GROUP. The Buyer
Group shall not have the right to be indemnified pursuant to Section
8.1(a) (other than with respect to Designated Tax Losses and Section
4.8(b), which are addressed below) unless and until the Buyer Group shall
have incurred on a cumulative basis since the Closing Date aggregate
Losses in an amount exceeding $500,000, in which event the right to be
indemnified shall apply only to the extent such Losses exceed $500,000;
PROVIDED, HOWEVER, that in no event shall the limitations set forth in
this Section 8.2(a) apply to the rights of the Buyer Group to be
indemnified pursuant to (i) Section 8.1(a)(i) with respect to the
representations and warranties set forth in Sections 4.3, 4.4(a), 4.8,
4.18, 4.19, 4.26 and willful breaches, and (ii) Sections 8.1(a)(ii) and
(iii). Anything contained in this Section 8.2(a) to the contrary
notwithstanding, the Buyer Group shall not have the right to be
indemnified for Designated Tax Losses pursuant to Section 8.1(a)(i) with
respect to the representations and warranties set forth in Section 4.8(a)
unless and until the Buyer Group shall have incurred on a cumulative basis
since the Closing Date aggregate Losses in an amount exceeding $20,000, in
which event the right to be indemnified shall apply only to the extent
such Losses exceed $20,000. Anything contained in this Section 8.2(a) to
the contrary notwithstanding, with respect to indemnification for breaches
of Section 4.8(b), the Buyer Group shall not have the right to be
indemnified pursuant to Section 8.1(a)(i) unless and until the Buyer Group
shall have incurred on a cumulative basis since the Closing Date aggregate
Losses in an amount exceeding $50,000, in which event the right to be
indemnified shall apply only to the extent such Losses exceed $50,000.
(b) INDEMNITY LIMITATIONS FOR THE SHAREHOLDER GROUP. The sum
of all Losses pursuant to which indemnification is payable by the
Shareholder Group pursuant to Section 8.1(a) shall not exceed $4,000,000
in the aggregate; PROVIDED, HOWEVER, that in no event shall the
limitations set forth in this Section 8.2(b) apply to the rights of the
Buyer Group to be indemnified pursuant to (i) Section 8.1(a)(i) with
respect to the representations and warranties set forth in Sections 4.3,
4.4(a), 4.8 and willful breaches, and (ii) Sections 8.1(a)(ii) and (iii).
(c) INDEMNITY BASKETS FOR THE BUYER GROUP. The Shareholders
shall not have the right to be indemnified pursuant to Section 8.1(c)
unless and until the Shareholders shall have incurred on a cumulative
basis since the Closing Date aggregate Losses in an amount exceeding
$500,000, in which event the right to be indemnified shall apply only to
the extent such Losses exceed $500,000; PROVIDED, HOWEVER, that in no
event shall the limitations set forth in this Section 8.2(c) apply to the
rights of the Shareholders to be indemnified pursuant to (i) Section
8.1(c)(i) with respect to the representations and warranties set forth in
Sections 5.2, 5.3, 5.6, 5.7 and willful breaches, (ii) Section 8.1(c)(ii),
and (iii) any breach by Parent with respect to obligations of Parent set
forth in the Certificate of Designation and the Warrants.
(d) INDEMNITY LIMITATIONS FOR THE BUYER GROUP. The sum of all
Losses pursuant to which indemnification is payable by Parent, Buyer and
Acquisition Sub pursuant to Section 8.1(c) shall not exceed $4,000,000 in
the aggregate; PROVIDED, HOWEVER, that in no event shall the limitations
set forth in this Section 8.2(d) apply to the rights of the Shareholders
to be indemnified pursuant to (i) Section 8.1(c)(i) with respect to the
representations and warranties set forth in Sections 5.2, 5.3 and willful
breaches, (ii) Section 8.1(c)(ii), and (iii) any breach by Parent with
respect to obligations of Parent set forth in the Certificate of
Designation and the Warrants.
8.3. ASSERTION OF CLAIMS; PAYMENT OF CLAIMS; FORFEITURE OF PREFERRED
STOCK. (a) No claim shall be brought under Section 8.1 hereof unless the
Indemnified Persons, or any of them, at any time prior to the applicable
Survival Date, give the Indemnifying Persons (i) written notice of the
existence of any such claim, specifying the nature and basis of such claim and
the amount thereof, to the extent known or (ii) written notice pursuant to
Section 8.4 of any Third Party Claim, the existence of which might give rise to
such a claim. Upon the giving of such written notice as aforesaid, the
Indemnified Persons, or any of them, shall have the right to commence legal
proceedings subsequent to the Survival Date for the enforcement of their rights
under Section 8.1 hereof.
(b) The obligation of the Shareholder Group to indemnify the
Buyer Group shall be made by payment to Buyer or the appropriate member of the
Buyer Group, provided that so long as any shares of the Preferred Stock are
outstanding, such indemnification obligation shall be satisfied by forfeiture
of shares of Preferred Stock or dividends payable with respect thereto (at the
option of Buyer) pursuant to the terms of the Stock Forfeiture Agreement;
PROVIDED, HOWEVER, anything contained in this Agreement to the contrary
notwithstanding, in the event that all of the issued and outstanding shares of
Preferred Stock are redeemed or extinguished for consideration less than the
Liquidation Preference (as defined in the Certificate of Designation)
applicable at such time for each share of Preferred Stock plus all accrued and
unpaid dividends with respect thereto, then the indemnification obligations of
the Shareholder Group under Section 8.1 hereof shall terminate and be of no
further force or effect; PROVIDED FURTHER, HOWEVER, that the immediately
preceding proviso shall not apply to claims for indemnification made prior to
such date of redemption or extinguishment or with respect to rights of the
Buyer Group to be indemnified pursuant to those events described in the proviso
contained in Section 8.2(b).
8.4. NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. The obligations and
Liabilities of an Indemnifying Person with respect to Losses resulting from the
assertion of liability by third parties (each, a "Third Party Claim") shall be
subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice
to the Indemnifying Persons of any Third Party Claim which might give rise
to any Loss by the Indemnified Persons, stating the nature and basis of
such Third Party Claim, and the amount thereof to the extent known;
PROVIDED, HOWEVER, that no delay on the part of the Indemnified Persons in
notifying any Indemnifying Persons shall relieve the Indemnifying Persons
from any Liability or obligation hereunder unless (and then solely to the
extent) the Indemnifying Persons thereby are prejudiced by the delay.
Such notice shall be accompanied by copies of all relevant documentation
with respect to such Third Party Claim, including, without limitation, any
summons, complaint or other pleading which may have been served, any
written demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing
delivered to the Indemnified Persons that the Indemnifying Persons shall
be obligated under the terms of their indemnification obligations
hereunder in connection with such Third Party Claim, then the Indemnifying
Persons shall have the right to assume the defense of any Third Party
Claim at their own expense and by their own counsel, which counsel shall
be reasonably satisfactory to the Indemnified Persons; PROVIDED, HOWEVER,
that the Indemnifying Persons shall not have the right to assume the
defense of any Third Party Claim, notwithstanding the giving of such
written acknowledgement, if (i) the Indemnified Persons shall have been
advised by counsel that there are one or more legal or equitable defenses
available to them which are different from or in addition to those
available to the Indemnifying Persons, and, in the reasonable opinion of
the Indemnified Persons, counsel for the Indemnifying Persons could not
adequately represent the interests of the Indemnified Persons because such
interests could be in conflict with those of the Indemnifying Persons,
(ii) such action or Proceeding involves, or could have a material effect
on, any material matter beyond the scope of the indemnification obligation
of the Indemnifying Persons or (iii) the Indemnifying Persons shall not
have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a
Third Party Claim (under circumstances in which the proviso to the first
sentence of Section 8.4(b) is not applicable), the Indemnifying Persons
shall not be responsible for any legal or other defense costs subsequently
incurred by the Indemnified Persons in connection with the defense
thereof. If the Indemnifying Persons do not exercise their right to
assume the defense of a Third Party Claim by giving the written
acknowledgement referred to in Section 8.4(b), or are otherwise restricted
from so assuming by the proviso to the first sentence of Section 8.4(b),
the Indemnifying Persons shall nevertheless be entitled to participate in
such defense with their own counsel and at their own expense; and in any
such case, the Indemnified Persons may assume the defense of the Third
Party Claim, with counsel which shall be reasonably satisfactory to the
Indemnifying Persons, and shall act reasonably and in accordance with
their good faith business judgment and shall not effect any settlement
without the consent of the Indemnifying Persons, which consent shall not
unreasonably be withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume
the defense of a Third Party Claim, they shall not make any settlement of
any claims without the written consent of the Indemnified Persons, which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that if the
Indemnified Persons do not consent to such settlement of a Third Party
Claim (it being understood that such proposed settlement must involve the
payment of money only and be in writing and signed by such third party)
and the ultimate settlement of such claim involves the payment of money
only and is in excess of the amount initially proposed to be settled by
the Indemnifying Persons, the maximum amount of any Losses payable by the
Indemnifying Persons as a result of the Third Party Claim will not exceed
the amount of such initially proposed settlement.
8.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the
further provisions of this Section 8.5, the representations and warranties of
the Shareholders contained in Section 3 and the representations and warranties
of the Company contained in Section 4 and the representations and warranties of
Parent, Buyer and Acquisition Sub contained in Section 5 shall survive the
Closing Date until March 31, 1999; PROVIDED, HOWEVER, that the representations
and warranties contained in Sections 3.1, 3.2, 4.3, 4.4(a), 4.18, 4.19, 5.2,
5.3, and 5.6 shall survive the Closing Date without any time limit; the
representations and warranties contained in Section 4.17 shall survive the
Closing Date until March 1, 2001; and the representations and warranties set
forth in Sections 4.8 and 4.16 (with respect to 4.16, to the extent relating to
Taxes or the Code) shall survive the Closing Date until the date that is 90
days after the expiration of the statute of limitations, if any, applicable to
the matters set forth therein. The covenants and other agreements of the
parties contained in this Agreement shall survive the Closing Date until they
are otherwise terminated, whether by their terms or as a matter of applicable
law. For convenience of reference, the date upon which any representation,
warranty, covenant or other agreement contained herein shall terminate, if any,
is referred to herein as the "Survival Date".
8.6. NO THIRD PARTY RELIANCE. Anything contained herein to the
contrary notwithstanding, the representations and warranties of the Company and
the Shareholders contained in this Agreement (including, without limitation,
the Disclosure Letter) (i) are being given by the Company and the Shareholders
as an inducement to Parent, Buyer and Acquisition Sub to enter into this
Agreement (and the Company and the Shareholders acknowledge that Parent, Buyer
and Acquisition Sub has expressly relied thereon) and (ii) are solely for the
benefit of Parent, Buyer and Acquisition Sub and their Affiliates.
Accordingly, no third party or anyone acting on behalf of any thereof other
than the Indemnified Persons, and each of them, shall be a third party or other
beneficiary of such representations and warranties and no such third party
shall have any rights of contribution against the Company or the Subsidiaries
with respect to such representations or warranties or any matter subject to or
resulting in indemnification under this Section 8, or otherwise.
8.7. REMEDIES EXCLUSIVE. The remedies provided for in this Section 8
shall be the exclusive remedies of the Indemnified Persons in connection with
any claim, demand, loss, damage, liability or obligation arising under this
Agreement or in connection with the transactions contemplated hereby; PROVIDED,
HOWEVER, that nothing in this Section 8.7 shall be construed to limit in any
way the rights and benefits of, or the remedies available to, any party to this
Agreement under or in respect of any other instrument or agreement to which
such person may be a party or for fraud.
SECTION 9. ADDITIONAL AGREEMENTS.
9.1. EXPENSES. Except as otherwise provided herein, each of the
Company and the Shareholders, on one hand, and Parent, Buyer and Acquisition
Sub, on the other hand, shall bear their own expenses in connection with the
preparation for and consummation of the Merger and the other transactions
contemplated hereby (the "Transaction Expenses"); PROVIDED, HOWEVER, that in
the event the Merger is consummated, all Transaction Expenses incurred by the
Company, the Subsidiaries and the Shareholders shall be borne PRO RATA by the
Shareholders and deducted from the Cash Consideration to be received by the
Shareholders in the Merger (or, to the extent not determinable at the Closing,
the Shareholders shall pay such expenses after the Closing), and such expenses
shall not in any event be the responsibility of the Company, the Surviving
Corporation, Buyer or any Affiliate of Buyer; PROVIDED FURTHER, HOWEVER, that
Buyer shall pay (i) all fees and expenses of accountants and environmental
consultants for services performed pursuant to the written request of Buyer and
(ii) to the extent the legal fees and related legal expenses incurred by the
Company and the Shareholders in connection with the Merger exceed $25,000,
Buyer shall pay one-half of such excess but in no event greater than $37,500 in
the aggregate.
9.2. DISCLOSURE OF INFORMATION; NONCOMPETITION. (a) From and after
the Closing, the Company and the Shareholders who have knowledge of any
Confidential Information shall not use or disclose to any Person, except as
required by law or judicial process, any Confidential Information for any
reason or purpose whatsoever, nor shall they make use of any of the
Confidential Information for their own purposes or for the benefit of any
Person except the Surviving Corporation, Buyer or any Affiliate thereof.
(b) Reference is made (i) to Section 7 of the WJR Employment
and Noncompete Agreement which provides for a noncompetition covenant by WJR
and the payment by Buyer of consideration therefor and (ii) to Section 10 of
the DCR Employment and Noncompete Agreement which provides for a noncompetition
covenant by DCR and the payment by Buyer of consideration therefor. Such
noncompetition provisions are incorporated herein by reference as if set forth
herein in their entirety.
9.3. USE OF NAME. Neither the Company nor the Shareholders shall
allege or assert that the name "Venture," "Venture Packaging," "Venture
Packaging Midwest" or "Venture Packaging Southeast" (each a "Name") or any
variant thereof has not become distinctive and unique and neither the Company
nor any of the Shareholders shall allege or assert that such names have not
obtained secondary meaning, identifying any Name or any variant thereof as the
source of goods associated with such name. The Company and the Shareholders
undertake in this Agreement as a matter of contract to refrain from, (A) owning
any interest, directly or indirectly, in, or becoming associated with or
otherwise lending any aid or support to, any Person (other than the Surviving
Corporation, Buyer or any Affiliate thereof) using any Name or any variant
thereof or (B) performing any service or offering any goods identified with any
Name or any variant thereof in a manner that is likely to cause confusion in
the minds of ordinary purchasers, except on behalf of the Surviving
Corporation, Buyer or any Affiliate thereof. In connection therewith, it is
agreed that the undertaking under this Section 9.3 is of a special and unique
nature, the loss of which cannot be adequately compensated for in damages by an
action at law, and that the breach or threatened breach of the provisions of
this Section 9.3 would cause the Surviving Corporation, Buyer and their
Affiliates irreparable harm. In the event of any such breach, the Surviving
Corporation and Buyer shall be entitled, as a matter of right, to injunctive
and other equitable relief without waiving any other rights which they may have
to damages or otherwise.
9.4. RELATIONSHIPS WITH VENDORS AND CUSTOMERS. From and after the
date hereof, neither the Company nor any of the Shareholders shall take or fail
to take any action which could reasonably be expected to, directly or
indirectly, have an adverse effect on the Subject Business or the business or
operations of Buyer after the Closing, or on the business relationship between
the Company, the Surviving Corporation or Buyer and any vendor, supplier or
customer thereof.
9.5. TERMINATION OF AFFILIATE TRANSACTIONS. Each of the Shareholders
agrees that, effective as of the Effective Time and without any further action
by the Company, the Surviving Corporation or any Shareholder, the Company and
the Surviving Corporation shall be released from any and all obligations and
liabilities under (i) the agreements set forth in the Disclosure Letter in
response to Section 4.19 and (ii) any and all agreements that were not, but by
their terms should have been, set forth on Schedule 4.19 to the Disclosure
Letter, and all such agreements shall have no further force or effect as of the
Effective Time.
SECTION 10. [INTENTIONALLY OMITTED]
SECTION 11. MISCELLANEOUS PROVISIONS.
11.1. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Shareholders'
Representative, the Company and Buyer.
11.2. EXTENSION; WAIVER. At any time prior to the Closing, the
parties may (a) extend the time for the performance of any of the obligations
or other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement and (c) waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party, and any such
waiver shall not operate or be construed as a waiver of any subsequent breach
by the other party.
11.3. ENTIRE AGREEMENT. This Agreement and the other agreements and
documents referenced herein (including, but not limited to, the Disclosure
Letter, the Related Documents and the Exhibits (in their executed form)
attached hereto) contain all of the agreements among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto (including,
but not limited to, the letter of intent dated as of June 27, 1997, among
Parent, Buyer, the Company and certain of the Shareholders).
11.4. SEVERABILITY. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the Law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
11.5. NO THIRD PARTY BENEFICIARIES; SUCCESSORS AND ASSIGNS. Except as
expressly provided herein, this Agreement shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, representatives, heirs and estates, as the case may be.
This Agreement shall not be assignable by any party hereto without the consent
of the other parties hereto (it being understood that the Shareholders'
Representative may consent on behalf of all Shareholders); PROVIDED, HOWEVER,
that anything contained herein to the contrary notwithstanding, Parent, Buyer
and Acquisition Sub may, without the prior written consent of any other party,
assign any or all of its rights and interests hereunder to any lender or
lenders providing financing for the transactions contemplated hereby.
11.6. HEADINGS. Descriptive headings are for convenience only and
shall not control or affect in any way the meaning or construction of any
provision of this Agreement.
11.7. NOTICES. All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Company, the Shareholders' Representative or
the Shareholders, to:
118 South West Shore Blvd., #308
Tampa, Florida 33609
Attention: Willard J. Rathbun;
with a copy to:
Shumaker, Loop & Kendrick, LLP
1000 Jackson
Toledo, Ohio 43624
Attention: James White, Esq.
Telecopier: (419) 241-6894; and
(b) if to Parent, Buyer, the Surviving Corporation or
Acquisition Sub, to:
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47710
Attention: Martin R. Imbler
Telecopier: (812) 421-9604;
with copies to:
First Atlantic Capital, Ltd.
135 East 57th Street
29th Floor
New York, New York 10022
Attention: Joseph S. Levy
Telecopier: (212) 750-0954;
and:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Michael Joseph O'Brien, Esq.
Telecopier: (212) 408-2420.
All such notices and other communications shall be deemed to have been given
and received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of delivery by telecopy, on the date of such
delivery, (iii) in the case of delivery by nationally-recognized, overnight
courier, on the Business Day following dispatch, and (iv) in the case of
mailing, on the third Business Day following such mailing.
11.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
11.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic Laws of the State of Ohio without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Ohio or any other jurisdiction) that would cause the application
of the Laws of any jurisdiction other than the State of Ohio.
11.10. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.11. CONSTRUCTION. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
11.12. REMEDIES. Subject to the provisions of Section 8.7, the
parties shall each have and retain all other rights and remedies existing in
their favor at law or equity, including, without limitation, any actions for
specific performance and/or injunctive or other equitable relief (including,
without limitation, the remedy of rescission) to enforce or prevent any
violations of the provisions of this Agreement.
11.13. WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives all right to trial by jury in any action, Proceeding or
counterclaim arising out of or relating to this Agreement.
11.14. INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a certain
action or condition constitutes a default under a certain covenant, the fact
that such action or condition is permitted by another covenant shall not affect
the occurrence of such default, unless expressly permitted under an exception
to such initial covenant. In addition, all representations and warranties
hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject
matter is correct or is not breached will not affect the incorrectness of or a
breach of a representation and warranty hereunder. Each representation,
warranty and covenant shall be given independent effect so that if a particular
representation, warranty or covenant is breached the fact that another
representation, warranty or covenant pertaining to the same or similar subject
matter is not breached will not affect the breach or enforceability of such
representation, warranty or covenant.
11.15. PARENT GUARANTY. Subject to and to the extent permitted by
covenants contained in any document to which Parent is a party relating to
indebtedness or capital stock of Parent, Parent hereby unconditionally and
irrevocably guarantees the prompt and complete performance of all of the
obligations of Buyer and Acquisition Sub contained in this Agreement and the
Related Documents.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Agreement and Plan of Reorganization as of the date first written above.
BPC HOLDING CORPORATION
By:/S/ MARTIN R. IMBLER
Name: Martin R. Imbler
Title: President and Chief Executive
Officer
BERRY PLASTICS CORPORATION
By:/S/ MARTIN R. IMBLER
Name: Martin R. Imbler
Title: President and Chief Executive
Officer
VABC ACQUISITION CORP.
By:/S/ MARTIN R. IMBLER
Name: Martin R. Imbler
Title: President and Chief Executive
Officer
VENTURE PACKAGING, INC.
By:/S/ TIMOTHY J. RATHBUN
Name: Timothy J. Rathbun
Title: Vice President
VENTURE PACKAGING SOUTHEAST, INC.
By:/S/ TIMOTHY J. RATHBUN
Name: Timothy J. Rathbun
Title: Vice President
VENTURE PACKAGING MIDWEST, INC.
By:/S/ TIMOTHY J. RATHBUN
Name: Timothy J. Rathbun
Title: Vice President
<PAGE>
THE SHAREHOLDERS:
/S/ WILLARD J. RATHBUN
Willard J. Rathbun
/S/ WILLARD J. RATHBUN
By: Willard J. Rathbun, attorney in
fact for Diane S. Rathbun
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for D. Craig Rathbun
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Jodi D. Conley
TIMOTHY JOHN RATHBUN 1993 TRUST
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, Trustee
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Lawrence L. Ballah
MARVIN L. KUNS REVOCABLE
INTERVIVOS TRUST
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Marvin L. Kuns, Trustee
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Mary Carol Kuns, Trustee
THE ROGERS FAMILY REVOCABLE
LIVING TRUST
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Wayne D. Rogers, Trustee
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Doris E. Rogers, Trustee
ANDREA M. HYDE TRUST NUMBER ONE
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Andrea M. Hyde, Trustee
ALFRED BERT HYDE REVOCABLE TRUST
NUMBER ONE
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Lynne Diane Hyde Schwaberow,
Trustee
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Shirley A. Schwanger
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Rollin G. Schwanger
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Gary Schuster
/S/ TIMOTHY J. RATHBUN
By: Timothy J. Rathbun, attorney in
fact for Susan Kay Shuster
<PAGE>
ANNEX I
DEFINITIONS
The following terms used in the Agreement and Plan of Reorganization
shall have the following respective meanings:
"ACQUISITION SUB" has the meaning set forth in the caption.
"AFFILIATE" means, with respect to any Person, (i) a director,
officer or stockholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"AGREEMENT" has the meaning set forth in the preamble.
"AMENDED LICENSE AGREEMENT" has the meaning set forth in Section
1.7(b)(vii).
"BANK ONE" shall mean Bank One, Cleveland, N.A.
"BEST KNOWLEDGE" of any Person shall mean and include (i) actual
knowledge and (ii) that knowledge which a prudent businessperson could have
obtained in the management of his business affairs after making due inquiry and
exercising due diligence which a prudent businessperson should have made or
exercised, as applicable, with respect thereto. In connection therewith, the
Best Knowledge of WJR, DCR, TJR, Brett C. Bauer, Joseph Kelleher and John P.
Wilson shall be imputed to be the Best Knowledge of the Company.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are not required to be
open.
"BUYER" has the meaning set forth in the caption.
"BUYER GROUP" means Buyer, Parent, Acquisition Sub, the Surviving
Corporation, the Subsidiaries and each of their respective successors and
assigns, and each of their officers, directors, employees, representatives and
Affiliates, other than any Shareholder and any Person who is an officer or
employee of the Company or any Subsidiary prior to the Closing.
"CASH CONSIDERATION" has the meaning set forth in Section 2.1(a).
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation, and Liability Information System.
"CERTIFICATE OF DESIGNATION" has the meaning set forth in Section
1.7(c)(iii).
"CERTIFICATE OF MERGER" has the meaning set forth in the preamble.
"CLOSING" has the meaning set forth in Section 1.7(a).
"CLOSING DATE" has the meaning set forth in Section 1.7(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the caption.
"COMPANY COMMON STOCK" has the meaning set forth in the preamble.
"COMPANY'S BY-LAWS" means the by-laws of the Company.
"COMPANY'S CHARTER" means the certificate of incorporation of the
Company.
"CONFIDENTIAL INFORMATION" means Intellectual Property Rights of the
Company, the Subsidiaries and the Surviving Corporation and all information of
a proprietary or confidential nature relating to the Company, the Subsidiaries,
the Surviving Corporation or the Subject Business excluding any information
that (i) as of the Closing Date, is in the public domain, (ii) after the
Closing Date enters the public domain through no wrongful action or inaction on
the part of any Shareholder, and (iii) is communicated to a Shareholder by a
third party under no duty of secrecy or confidentiality to any Person.
"CONSTITUENT CORPORATIONS" has the meaning set forth in Section 1.1.
"CONTRACT" means any written or oral loan or credit agreement, note,
bond, mortgage, indenture, lease, sublease, purchase order or other agreement,
instrument, permit, concession, franchise or license.
"CONTROL" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"CORPORATE RIGHTS" has the meaning set forth in Section 1.3.
"COUNTY" shall mean Anderson County, South Carolina.
"DCR" has the meaning set forth in Section 1.7(b)(vi).
"DCR EMPLOYMENT AND NONCOMPETE AGREEMENT" has the meaning set forth
in Section 1.7(b)(vi).
"DELAWARE STATUTE" has the meaning set forth in the preamble.
"DESIGNATED SHAREHOLDER(S)" means WJR and DCR.
"DESIGNATED TAX LOSS" means any and all Losses arising from or in
connection with the assertion of any claim, demand, Liability or obligation
against any member of the Buyer Group arising from or in connection with any
Taxes, penalties or interest due to any state or local taxing entity or
authority, including, but not limited to, underpayment or deficiency of state
or local income Tax, state or local sales and use Tax, non-payment of
withholding of state or local Tax from employee wages, state franchise or gross
receipts Tax and assessments for property tax on equipment.
"DISCLOSURE LETTER" has the meaning set forth in Section 4.1.
"EFFECTIVE TIME" has the meaning set forth in Section 1.2.
"EMPLOYEE PLAN" means any "employee benefit plan" (as defined in
Section 3(3) of ERISA) as well as any other plan, program or arrangement
involving direct and indirect compensation, under which the Company, any
Subsidiary or any ERISA Affiliate of the Company or any Subsidiary has any
present or future obligations or Liability on behalf of its employees or former
employees, contractual employees or their dependents or beneficiaries.
"ENCORE" has the meaning set forth in Section 1.7(b)(iv).
"ENCORE SUPPLY AGREEMENT" has the meaning set forth in Section
1.7(b)(iv).
"ENCUMBRANCES" means and includes security interests, mortgages,
liens, pledges, charges, easements, reservations, restrictions, clouds,
equities, rights of way, options, rights of first refusal and all other
encumbrances, whether or not relating to the extension of credit or the
borrowing of money.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits and
Contracts with Governmental Entities relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including, but not limited to, the Solid Waste Disposal Act, as
amended, 42 U.S.C. <section><section>6901, ET SEQ., the Clean Air Act, as
amended, 42 U.S.C. <section><section>7401 ET SEQ., the Federal Water Pollution
Control Act, as amended, 33 U.S.C. <section><section>1251 ET SEQ., the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
<section><section>11001 ET SEQ., the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. <section><section>9601
ET SEQ., the Hazardous Materials Transportation Uniform Safety Act, as amended,
49 U.S.C. <section>1804 ET SEQ., the Occupational Safety and Health Act of
1970, the regulations promulgated thereunder, and any similar Laws and other
requirements having the force or effect of Law, and all Orders issued or
promulgated thereunder, and all related common law theories.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" means, with respect to any Person, any entity that
is a member of a "controlled group of corporations" with, or is under "common
control" with, or is a member of the same "affiliated service group" with such
Person as defined in Section 414(b), 414(c) or 414(m) of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILOT" shall mean the fee in lieu of taxes which Venture Southeast
is obligated to pay to the County under that certain First Amended Lease
Agreement dated as of January 1, 1996.
"FILOT DOCUMENTS" shall mean (i) the Lease Agreement dated as of
September 1, 1995 between JEDA and Venture Southeast, as amended by First
Amended Lease Agreement dated as of January 1, 1996; (ii) the Indenture dated
as of September 1, 1995 between the County and Venture Southeast; (iii) the
Inducement Agreement and Millage Rate Agreement dated May 2, 1995 between the
County and Venture; (iv) the Escrow Agreement dated as of September 1, 1995 by
and among the County, Venture Southeast, as purchaser, Venture Southeast, as
Tenant, and McNair Law Firm, P.A., as escrow agent; (v) the not exceeding
$45,000,000 Industrial Revenue Bonds, Series 1995 (Venture Packaging Southeast,
Inc. Project) issued by the County; and (vi) such other instruments, agreements
and documents relating to the transactions contemplated by the foregoing
documents as have been executed by, or as are binding upon, Venture, in each
case as amended through the date hereof.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.5.
"GAAP" means generally accepted accounting principles, consistently
applied with historical financial statements of the entity.
"GOVERNMENTAL ENTITY" means any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, Federal, state or local.
"HAZARDOUS MATERIALS" means any hazardous or toxic chemicals,
materials or substances; any pollutants or contaminants; or crude oil or any
fraction thereof (as such terms are defined under any Environmental, Health and
Safety Law).
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IDB DOCUMENTS" shall mean: (i) the Loan Agreement dated as of
April 1, 1995 between JEDA and Venture Southeast; (ii) the Trust Indenture
dated as of April 1, 1995 between JEDA and Bank One Trust Company, NA, as
Trustee; (iii) the Bond Placement Agreement dated as of April 1, 1995 between
JEDA, Venture Southeast and Bank One, Columbus, NA; (iv) the Remarketing
Agreement dated as of April 1, 1995 between Venture Southeast and Bank One,
Columbus, NA; (v) the Offering Memorandum with respect to the IDB's; (vi) the
IDB's; (vii) the Certificate of Tax Covenants and Representations dated the
date of issuance of the IDB's by JEDA and Venture Southeast; (viii) the Letter
of Credit issued by Bank One with respect to the IDB's; (ix) the Reimbursement
Agreement dated as of April 1, 1995 between Bank One and Venture Southeast (the
"Reimbursement Agreement"); (x) the "Borrower Documents" (as such term is
defined in the Reimbursement Agreement); and (xi) such other instruments,
agreements and documents relating to the transactions contemplated by the
foregoing documents as have been executed by, or as are binding upon, Venture
Southeast, in each case amended through the date hereof.
"IDB'S" shall mean the $8,325,000 Adjustable Rate Economic
Development Revenue Bonds, Series 1995 (Venture Packaging, Inc. Project) issued
by JEDA on behalf of Venture.
"INDEMNIFIED PERSONS" means the Buyer Group or the Shareholders, as
the case may be.
"INDEMNIFYING PERSONS" means Parent, Buyer, Acquisition Sub, the
Shareholders or the Shareholder Group, as the case may be.
"INTELLECTUAL PROPERTY RIGHTS" means all industrial and intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service mark applications, copyrights, copyright applications, know-how, trade
secrets, proprietary processes and formulae, confidential information,
franchises, licenses, inventions, instructions, marketing materials, trade
dress, logos and designs and all documentation and media constituting,
describing or relating to the foregoing, including, without limitation,
manuals, memoranda and records.
"INVENTION ASSIGNMENT AGREEMENTS" has the meaning set forth in
Section 1.7(b)(xiii).
"JEDA" shall mean the South Carolina Jobs-Economic Development
Authority.
"JOINDER AGREEMENTS" has the meaning set forth in Section
1.7(b)(xiv).
"LATEST BALANCE SHEET" has the meaning set forth in Section 4.5.
"LATEST BALANCE SHEET DATE" has the meaning set forth in Section
4.5.
"LAW" means any law, statute, treaty, rule, directive or regulation
or Order of any Governmental Entity.
"LEASED PROPERTY" has the meaning set forth in Section 4.10(a).
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"LOSSES" means any and all losses, claims, shortages, damages,
liabilities, expenses (including reasonable attorneys' and accountants' and
other professionals' fees), assessments, Tax deficiencies and Taxes incurred in
connection with the receipt of indemnification payments (including interest or
penalties thereon) arising from or in connection with any such matter that is
the subject of indemnification under Section 8.1. In addition, "Losses" shall
be determined by deducting therefrom (i) the amount of the Tax benefit, if any,
which is realized by such Indemnified Person and (ii) the amount, if any,
recovered by the Indemnified Person under insurance policies (net of
deductibles and premium increases resulting therefrom), and in each case net of
all costs and expenses incurred in recovering such amount.
"MANAGEMENT STOCKHOLDER AGREEMENT" means the Amended and Restated
Stockholders Agreement dated as of June 18, 1996, among Parent, Atlantic Equity
Partners International II, L.P. and certain members of management of Buyer.
"MATERIAL ADVERSE CHANGE" means, with respect to any Person, any
material adverse change in the business, operations, assets (including levels
of working capital and components thereof), condition (financial or otherwise),
operating results, Liabilities, employee relations or business prospects of
such Person or any material casualty loss or damage to the assets of such
Person, whether or not covered by insurance.
"MATERIAL ADVERSE EFFECT" on any Person means a material adverse
effect on the business, operations, assets (including levels of working capital
and components thereof), condition (financial or otherwise), operating results,
Liabilities, employee relations or business prospects of such Person.
"MAXIMUM MERGER CONSIDERATION" has the meaning set forth in Section
2.1(a).
"MERGER" has the meaning set forth in the preamble.
"MERGER SHARES" has the meaning set forth in Section 2.1(a).
"NAME" has the meaning set forth in Section 9.3.
"ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or orders of any Governmental Entity or arbitrator.
"OWNED REAL PROPERTY" has the meaning set forth in Section 4.10(a).
"PARENT" has the meaning set forth in the caption.
"PER SHARE CASH AMOUNT" has the meaning set forth in Section 2.1(a).
"PERMITS" means all permits, licenses, authorizations,
registrations, franchises, approvals, certificates, variances and similar
rights obtained, or required to be obtained, from Governmental Entities.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not yet
due and payable or being contested in good faith by appropriate proceedings and
for which there are adequate reserves on the books, (ii) workers or
unemployment compensation liens arising in the ordinary course of business; and
(iii) mechanic's, materialman's, supplier's, vendor's or similar liens arising
in the ordinary course of business securing amounts that are not delinquent.
"PERSON" shall be construed broadly and shall include an individual,
a partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
or a governmental entity (or any department, agency or political subdivision
thereof).
"PREFERRED STOCK" has the meaning set forth in Section 1.7(c)(iii).
"PROCEEDINGS" means actions, suits, claims, investigations or legal
or administrative or arbitration proceedings.
"PROJECT" shall mean the land, and all buildings and improvements
thereon, and all machinery, equipment, fixtures and furniture installed
therein, constituting the manufacturing facilities in the County which are
currently operated by Venture Southeast.
"PROPORTIONATE PERCENTAGE" means, as to each Shareholder, the
percentage figure that expresses the ratio between the number of Merger Shares
(including fractional shares) owned by such Shareholder immediately prior to
the Effective Time and the aggregate number of Merger Shares.
"REAL PROPERTY" has the meaning set forth in Section 4.10(a).
"RELATED DOCUMENTS" means, collectively, the Certificate of Merger,
the Encore Supply Agreement, the WJR Employment and Noncompete Agreement, the
DCR Employment and Noncompete Agreement, the Amended License Agreement, the
Invention Assignment Agreements, the Joinder Agreements, the Certificate of
Designation, the Warrants and the Stock Forfeiture Agreement.
"RELEASED PERSONS" has the meaning set forth in Section 6.5.
"REQUISITE RIGHTS" has the meaning set forth in Section 4.11(a).
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Section 5.5.
"SSRB" shall mean that certain not exceeding $875,000 principal
amount special source revenue bond issued by the County pursuant to that
certain Inducement Agreement and Millage Rate Agreement dated May 2, 1995
between the County and Venture Southeast.
"SSRB DOCUMENTS" shall mean (i) Master Ordinance No. 95-016 enacted
by the County on August 15, 1995; (ii) Supplemental Ordinance No. 95-017
enacted by the County on August 15, 1995; (iii) the SSRB's; (iv) the Inducement
Agreement and Millage Rate Agreement dated May 2, 1995 between the County and
Venture Southeast; and (v) such other instruments, agreements and documents
relating to the transactions contemplated by the foregoing documents as have
been executed by, or as are binding upon, Venture Southeast, in each case as
amended through the date hereof.
"SECURITIES" has the meaning set forth in Section 3.3.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER GROUP" means each of the Shareholders and their
respective successors, assigns, representatives, heirs and estate, including
any Person established for the benefit of any of the foregoing.
"SHAREHOLDERS(S)" has the meaning set forth in the caption.
"SHAREHOLDER MATERIALS" has the meaning set forth in Section 1.6(b).
"SHAREHOLDERS' EXPENSES" has the meaning set forth in Section
2.1(a).
"SHAREHOLDERS' REPRESENTATIVE" means any of WJR, DCR or TJR, as a
representative of the Shareholders pursuant to a Special Power of Attorney
executed by each Shareholder on or about August 19, 1997.
"STOCK FORFEITURE AGREEMENT" means the Stock Forfeiture Agreement
dated as of the date hereof among Parent, WJR and DCR, and attached hereto as
EXHIBIT N.
"SUBJECT BUSINESS" has the meaning set forth in the preamble.
"SUBSIDIARY" and "SUBSIDIARIES" has the meaning set forth in the
Preamble.
"SURVIVAL DATE" has the meaning set forth in Section 8.5.
"SURVIVING CORPORATION" has the meaning set forth in Section 1.1.
"TAX" means any of the Taxes.
"TAX RETURNS" means Federal, state, local and foreign tax returns,
reports, statements, declarations of estimated tax and forms.
"TAXES" means, with respect to any entity, (i) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties and other taxes, fees, assessments or charges of
any kind whatsoever, together with all interest and penalties, additions to tax
and other additional amounts imposed by any taxing authority (domestic or
foreign) on such entity (if any) and (ii) any liability for the payment of any
amount of the type described in the immediately preceding clause (i) as a
result of (A) being a "transferee" (within the meaning of Section 6901 of the
Code or any other applicable law) of another entity, (B) being a member of an
affiliated or combined group or (C) any contractual obligation.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8.4.
"TJR" means Timothy J. Rathbun, a Shareholder.
"TRANSACTION EXPENSES" has the meaning set forth in Section 9.1.
"VENTURE SOUTHEAST" means Venture Packaging Southeast, Inc., a South
Carolina Corporation.
"WARRANTS" has the meaning set forth in Section 1.7(c) (v).
"WJR" has the meaning set forth in Section 1.7(b)(v).
"WJR EMPLOYMENT AND NONCOMPETE AGREEMENT" has the meaning set forth
in Section 1.7(b)(v).
"WORKERS UNION" has the meaning set forth in Section 4.15.
