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) JANUARY 21, 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)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 21, 1997, Berry Plastics Corporation ("Berry Plastics"),
a Delaware corporation and wholly-owned subsidiary of BPC Holding Corporation
(the "Registrant"), acquired PackerWare Corporation, a Kansas corporation
("PackerWare"). Pursuant to the Agreement and Plan of Reorganization dated as
of January 14, 1997 (the "Agreement"), among Berry Plastics, PackerWare
Acquisition Corporation, a Kansas corporation ("Merger Sub"), PackerWare and
the stockholders of PackerWare, Merger Sub was merged (the "Merger") with and
into PackerWare, with PackerWare surviving the Merger (the "Surviving
Corporation," under the name PackerWare Corporation) as a wholly-owned
subsidiary of Berry Plastics, on a basis whereby all outstanding capital stock
of PackerWare was converted into the right to receive an aggregate of
approximately $6.5 million in cash. An additional $1.5 million in cash is
being held in escrow for a two-year period (with one-third of the then-
remaining balance to be released in March 1998) to satisfy certain
indemnification obligations, the remaining balance of which, if any, at the end
of such period will be paid to the former stockholders of PackerWare. An
additional amount of approximately $18.3 million of indebtedness and expenses
of PackerWare was paid by Berry Plastics. A copy of the Agreement is filed as
Exhibit 2.1 hereto and a copy of an Amendment to the Agreement is filed as
Exhibit 2.2 hereto, and such documents are hereby incorporated by reference
herein.
Berry Plastics used the proceeds of term loans in the aggregate
principal amount of $27.0 million provided by NationsBank, N.A. 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 containers, drink cups, housewares and lawn and garden products.
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 April 7, 1997.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Document
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated as of
January 14, 1997 (the "Agreement and Plan of
Reorganization"), among Berry Plastics Corporation,
PackerWare Acquisition Corporation, PackerWare
Corporation and the Shareholders of PackerWare
Corporation.
2.2 Amendment dated January 20, 1997, to the Agreement
and Plan of Reorganization.
</TABLE>
<PAGE>
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: February 3, 1997
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Page No.
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated as of January
14, 1997 (the "Agreement and Plan of Reorganization"),
among Berry Plastics Corporation, PackerWare Acquisition
Corporation, PackerWare Corporation and the Shareholders
of PackerWare Corporation.
2.2 Amendment dated January 20, 1997, to the Agreement and
Plan of Reorganization.
</TABLE>
EXHIBIT 2.1
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
BERRY PLASTICS CORPORATION,
PACKERWARE ACQUISITION CORPORATION,
PACKERWARE CORPORATION
AND
THE SHAREHOLDERS OF
PACKERWARE CORPORATION
JANUARY 14, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL 1
1.1. The Merger 1
1.2. Effective Time of the Merger 1
1.3. Effect of the Merger 1
1.4. Charter, By-Laws, Officers and Directors of Surviving Corporation
2
1.5. Taking of Necessary Action; Further Assurances 2
1.6. Direction Statement; Voting Rights; Authorization of the Merger,
this Agreement and the Certificate of Merger......... 2
1.7. The Closing 3
SECTION 2. PAYMENT OF PURCHASE PRICE; EFFECT OF MERGER ON CAPITAL STOCK OF
CONSTITUENT CORPORATIONS............................. 3
2.1. Effect on Capital Stock 3
2.2. Delivery of Funds; Surrender of Certificates; Underpayment Escrow
6
2.3. Repayment of ESOP Loan 7
2.4. Escrow Agreement; Delivery of Funds 7
2.5. No Further Ownership Rights in Company Common Stock 7
SECTION 3. WORKING CAPITAL PURCHASE PRICE ADJUSTMENT 8
3.1. Preparation of Closing Balance Sheet and Final Working Capital
Statement............................................ 8
3.2. Review by the Shareholders' Representative 8
3.3. Adjustment 9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS 10
4.1. Title to the Shares 10
4.2. Authority; Noncontravention; Consents 10
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
INDEMNIFYING SHAREHOLDERS........................... 11
5.1. Organization; Good Standing; Qualification and Power 11
5.2. Equity Investments 11
5.3. Capital Stock 11
5.4. Authority; Noncontravention; Consents 11
5.5. Financial Statements 12
5.6. Absence of Undisclosed Liabilities 12
5.7. Absence of Changes 13
5.8. Tax Matters 13
5.9. Title to Assets, Properties and Rights and Related Matters 14
5.10. Real Property-Owned or Leased 14
5.11. Intellectual Property 15
5.12. Agreements, No Defaults, Etc. 16
5.13. Litigation, Etc. 17
5.14. Compliance; Governmental Authorizations 17
5.15. Insurance 18
5.16. Labor Relations; Employees 18
5.17. ERISA Compliance 18
5.18. Environmental Matters 20
5.19. Brokers 21
5.20. Related Transactions 21
5.21. Accounts and Notes Receivable 21
5.22. Accounts and Notes Payable 21
5.23. Inventories 21
5.24. Warranties of Products; Products Liability; Regulatory Compliance
22
5.25. Bank Accounts; Powers of Attorney 22
5.26. Suppliers and Vendors 22
5.27. Customers 22
5.28. Expenses 22
5.29. Disclosure 23
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB 23
6.1. Organization; Good Standing; Authority 23
6.2. Noncontravention; Consents 23
6.3. Brokers 24
6.4. Litigation 24
6.5. Parent's Investment Intent 24
SECTION 7. CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING; ADDITIONAL PRE-
CLOSING AGREEMENTS.................................. 24
7.1. Affirmative Covenants of the Company 24
7.2. Negative Covenants of the Company 25
7.3. Confidentiality 26
7.4. Consents 26
7.5. Efforts to Consummate 26
7.6. Notice of Prospective Breach 27
7.7. Public Announcements 27
7.8. Negotiation with Others; Disposition and Voting of Securities. 27
7.9. Release by Indemnifying Shareholders 28
7.10. Indemnifying Shareholders' Representative 29
(a) Appoint 29
(b) Reliance by Representative 29
(c) Expenses of Representative 30
(d) Indemnification 30
SECTION 8. CONDITIONS 30
8.1. Conditions to Each Party's Obligations to Effect the Merger 30
(a) Approvals 30
(b) No Injunctions or Restraints 30
(c) Statutes 31
(d) Hart-Scott-Rodino 31
(e) Legal Proceedings 31
8.2. Conditions to Obligations of Parent and Acquisition Sub 31
(a) Accuracy of Representations and Warranties 31
(b) Performance of Obligations of the Company and the
Shareholders.................................. 31
(c) Authorization 31
(d) Opinion of the Company's and the Indemnifying Shareholders'
Counsel....................................... 32
(e) Consents and Approvals 32
(f) Government Consents, Authorizations, Etc. 32
(g) Corporate Resolutions. 32
(h) Absence of Material Adverse Change 32
(i) Officer's Certificate. 32
(j) Financing 32
(k) Due Diligence 33
(l) Employment Agreement 33
(m) Noncompetition and Consulting Agreement. 33
(n) Escrow Agreement 33
(o) Shareholders' Expenses 33
(p) Real Estate and Equipment 33
(q) Environmental 33
(r) Industrial Revenue Bonds 33
(s) Sale of Capital Stock of Packer Plastics International, Inc.
34
(t) Termination of Capital Leases 34
(u) Amendment of Acc-U-Print Printing Press Lease Agreement. 34
(v) Employee Closing Bonuses. 34
(w) Payment and Cancellation of the Stipulated Debt 34
(x) Invention Assignment Agreement 35
(y) Resignations From 401(k) Trustee Positions 35
(z) Termination of the Company's 1995 Stock Option Plan;
Cancellation of Outstanding Stock Options..... 35
8.3. Conditions to Obligations of the Company and the Shareholders 35
(a) Accuracy of Representations and Warranties 35
(b) Performance of Obligations of Parent and Acquisition Sub 35
(c) Authorization 35
(d) Government Consents, Authorizations, Etc. 36
(e) Corporate Resolutions 36
(f) Officer's Certificate 36
(g) Employment Agreement 36
(h) Consulting and Noncompetition Agreement 36
(i) Escrow Agreement 36
(j) Fairness Opinion 36
SECTION 9. INDEMNIFICATION 36
9.1. Indemnification Generally; Etc. 36
(a) By the Shareholder Group in Favor of the Buyer Group 36
(b) By Each Shareholder in Favor of the Buyer Group 38
(c) By Parent and Acquisition Sub in Favor of the Company and the
Shareholders.................................. 38
9.2. Limitations on Indemnification 38
(a) Indemnity Baskets for the Shareholders 38
(b) Indemnity Limitations for the Shareholders 39
(c) Indemnity Baskets for the Buyer Group 39
(d) Indemnity Limitations for the Buyer Group 39
9.3. Assertion of Claims 39
9.4. Notice and Defense of Third Party Claims 40
9.5. Survival of Representations and Warranties 41
9.6. No Third Party Reliance 41
9.7. Remedies Exclusive 41
SECTION 10. ADDITIONAL AGREEMENTS 41
10.1. Expenses 41
10.2. Disclosure of Information; Noncompetition 42
10.3. Use of Name 43
10.4. Relationships with Vendors and Customers 43
10.5. Termination of Affiliate Transactions 43
10.6. Amendment and Termination of ESOP 44
10.7. 401(k) Plan Participation 44
10.8. Accrual of Closing Bonus Payments 44
10.9. ESOP Loan Interest Payments 44
10.10. Dissolution of Pakka Plastics S.A. de C.V. 44
10.11. Disclosure Covenant of the Company and the Indemnifying
Shareholders.................................. 45
10.12. Transfer of Life Insurance Policy 45
SECTION 11. TERMINATION; EFFECT OF TERMINATION 46
11.1. Termination 46
11.2. Effect of Termination 47
SECTION 12. MISCELLANEOUS PROVISIONS 47
12.1. Amendment 47
12.2. Extension; Waiver 47
12.3. Entire Agreement 47
12.4. Severability 47
12.5. No Third-Party Beneficiaries; Successors and Assigns 48
12.6. Headings 48
12.7. Notices 48
12.8. Counterparts 50
12.9. Governing Law 50
12.10. Jurisdiction; Venue 50
12.11. Incorporation of Exhibits and Schedules 50
12.12. Construction 50
12.13. Remedies 50
12.14. Waiver of Jury Trial 50
-i-
<PAGE>
SCHEDULES AND EXHIBITS
Annex I - Definitions
Schedule I - Shareholders; Capitalization
Schedule II - Assets To Be Transferred
Exhibit A - Form of Certificate of Merger
Exhibit B - Form of Amended and Restated Articles of Incorporation of
the Company
Exhibit C - Form of Employment Agreement
Exhibit D - Form of Noncompetition and Consulting Agreement
-ii-
<PAGE>
AGREEMENT AND PLAN OF
REORGANIZATION dated as of January 14, 1997,
among BERRY PLASTICS CORPORATION, a Delaware
corporation ("Parent"), PACKERWARE ACQUISITION
CORPORATION, a Kansas corporation and wholly-
owned subsidiary of Parent ("Acquisition
Sub"), PACKERWARE CORPORATION, a Kansas
corporation (the "Company"), and THE
SHAREHOLDERS OF THE COMPANY NAMED ON SCHEDULE
I attached hereto (each, a "Shareholder", and
collectively the "Shareholders").
The Company is engaged in the business (the "Subject Business") of
manufacturing, marketing and selling injection and blow-molded plastic open top
containers, drink cups, housewares and lawn and garden products. The
respective Boards of Directors of each of Parent, 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 Kansas General Corporation Code (the "Kansas
Statute") whereby, among other things, each issued and outstanding share of
common stock, $.10 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
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. THE MERGER. In accordance with, and subject to, the provisions
of this Agreement, the Certificate of Merger and the Kansas 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."
2. EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
on the Closing Date upon the filing by Acquisition Sub of the Certificate of
Merger with the Secretary of State of the State of Kansas. The Certificate of
Merger shall be executed and delivered in the manner provided under the Kansas
Statute. The time when the Merger shall become effective is referred to herein
as the "Effective Time."
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, 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.
4. CHARTER, BY-LAWS, OFFICERS AND DIRECTORS OF SURVIVING
CORPORATION. From and after the Effective Time, (a) the articles of
incorporation of the Company shall be amended and restated in their entirety to
read as set forth in EXHIBIT B hereto and, as so amended, such articles of
incorporation shall be the articles of incorporation of the Surviving
Corporation until altered, amended or repealed as provided in the Kansas
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 Kansas Statute, the Surviving Corporation's articles 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 Kansas Statute or the
Surviving Corporation's articles of incorporation or By-laws, as applicable.
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.
6. DIRECTION STATEMENT; VOTING RIGHTS; AUTHORIZATION OF THE MERGER,
THIS AGREEMENT AND THE CERTIFICATE OF MERGER. (a) In connection with the
transactions contemplated hereby, the Company, in its capacity as plan
administrator of the ESOP, shall have prepared a Direction Statement (as
defined below), together with a form of voting direction, with respect to the
meeting of the Shareholders (the "Special Meeting") at which the Shareholders
will be asked to approve and adopt the Merger, this Agreement and consummation
of the transactions contemplated hereby. At least 20 calendar days in advance
of the Special Meeting, the Company shall have distributed the Direction
Statement to all participants in the ESOP who, as of the Record Date for such
Special Meeting, have shares of Company Common Stock allocated to their
respective accounts (the "Directing Participants"). The term "Direction
Statement" means the Direction Statement at the time it is initially delivered
to the Directing Participants and all amendments or supplements thereto, if
any, similarly delivered. None of the information included by the Company in
the Direction Statement shall be false or misleading with respect to any
material fact or omit to state any material fact necessary in order to make the
statements made, in light of the circumstances in which they are made, not
misleading, and the Company agrees to correct any information included therein
that shall become false or misleading in any material respect at any time after
the date on which the Direction Statement is delivered to the Directing
Participants.
(b) The Company shall take all action necessary, in accordance with
the Kansas Statute and the Company's Charter and Bylaws, to convene the Special
Meeting. The Company shall use its best efforts to solicit from the Directing
Participants directions to vote shares of Company Common Stock allocated to
such Directing Participants' respective accounts as of October 31, 1996. At
the Special Meeting, the trustee of the ESOP (the "Trustee") shall vote all
allocated shares as to which directions are received from Directing
Participants in accordance with such directions. The Trustee also shall vote,
in accordance with the fiduciary duties of the Trustee as set forth under
ERISA, all shares of Company Common Stock that are not allocated to the
accounts of participants and all allocated shares as to which no direction is
received. Each of the Indemnifying Shareholders shall vote their respective
Shares in favor of approving and adopting the Merger, this Agreement, and
consummation of the transactions contemplated hereby.
(c) Prior to or simultaneously with the execution and delivery of
this Agreement, Parent, as the sole shareholder of Acquisition Sub, shall
execute a written consent in lieu of a meeting, which written consent shall
include resolutions approving and adopting the Merger, this Agreement, the
Certificate of Merger and consummation of the transactions contemplated hereby,
as required by the Kansas Statute.
(d) The Company shall take, and the Indemnifying Shareholders shall
cause the Company to take, as promptly as practicable, all such other actions
as may be necessary or advisable under the Kansas 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 By-laws, the Kansas Statute or any other Federal or state
law applicable to this Agreement, the Merger, the Certificate of Merger or such
shareholder action (collectively, the "Shareholder Materials"); PROVIDED,
HOWEVER, that Parent, 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 Parent, Acquisition
Sub and their respective counsel.
7. THE CLOSING. Unless this Agreement shall have been terminated
and the transactions contemplated by this Agreement shall have been abandoned
pursuant to the provisions of Section 11.1, and subject to the provisions of
Section 8, the closing of the transactions contemplated hereby (the "Closing")
will take place on January 21, 1997 or such other date (the "Closing Date") to
be mutually agreed upon by the parties, which date shall be no later than the
fifth Business Day after all of the conditions set forth in Section 8 (other
than those conditions which are intended to only be satisfied at Closing) shall
have been satisfied (or waived in accordance with Section 12.2). On the
Closing Date, the Surviving Corporation shall file the Certificate of Merger
with the Secretary of State of the State of Kansas pursuant to Section 1.2
hereof. The Closing shall take place at the offices of Spencer, Fane, Britt &
Browne, 1400 Commerce Bank Building, 1000 Walnut Street, Kansas City, Missouri
64106, unless another place is agreed to in writing by the parties.
SECTION 2. PAYMENT OF PURCHASE PRICE; EFFECT OF MERGER ON CAPITAL
STOCK OF CONSTITUENT CORPORATIONS
1. EFFECT ON CAPITAL STOCK. (a) The following terms used in this
Agreement shall have the following respective meanings:
"ADDITIONAL MERGER CONSIDERATION" means the sum of the Merger
Share Additional Amount and the Allocated Share Additional Amount, if any.
"ALLOCATED ESOP SHARE NUMBER" means the number of Allocated
Shares.
"ALLOCATED SHARE ADDITIONAL AMOUNT" means the amount, if any,
payable to the holders of Allocated Shares pursuant to Section 3.3(a)
hereof.
"CAPX AMOUNT" means $590,000.
"CLOSING ESOP CONSIDERATION" means an amount equal to the
greater of (A) $18.20 times the ESOP Share Number and (B) the amount equal
to "X" as determined pursuant to the following formula:
X = ($18.20 x A) + ($2.48 x B) + (C x D)
Where:
A = Unallocated ESOP Share Number
B = Allocated ESOP Share Number
C = the remainder of the Maximum Closing Merger
Consideration minus the sum of
($18.20 x A)+($2.48 x B)
D = the ESOP's Proportionate Percentage
"ESCROW AMOUNT" means $1,500,000.
"ESOP SHARE NUMBER" means the number of ESOP Shares.
"ESOP SHARES" means the shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and owned
by the ESOP, including both Allocated Shares and Unallocated Shares.
"MAXIMUM CLOSING MERGER CONSIDERATION" means $25,750,000 plus
the CapX Amount less the aggregate amount of the Shareholders' Expenses
and Stipulated Debt.
"MAXIMUM MERGER CONSIDERATION" means an amount equal to the sum
of the Maximum Closing Merger Consideration and the Additional Merger
Consideration, if any.
"MERGER CONSIDERATION" means, with respect to any Share, the
consideration payable with respect to such Share pursuant to the terms of
this Section 2 and Section 3.3(a).
"MERGER SHARE ADDITIONAL AMOUNT" means the amount, if any,
payable to the holders of Merger Shares pursuant to Section 3.3(a) hereof.
"MERGER SHARE NUMBER" means the number of Merger Shares.
"MERGER SHARES" means the shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective Time that
are owned by any Person other than the Company and the ESOP.
"PER ALLOCATED SHARE ADDITIONAL AMOUNT" means an amount equal
to the quotient obtained by dividing the Allocated Share Additional Amount
by the Allocated ESOP Share Number, rounded to the nearest $.0001.
"PER ALLOCATED SHARE CLOSING AMOUNT" means an amount equal to
the quotient obtained by dividing (A) the remainder of the Closing ESOP
Consideration minus an amount equal to the product of $18.20 times the
Unallocated ESOP Share Number, by (B) the Allocated ESOP Share Number,
rounded to the nearest $.0001.
"PER MERGER SHARE ADDITIONAL AMOUNT" means an amount equal to
the quotient obtained by dividing the Merger Share Additional Amount by
the Merger Share Number, rounded to the nearest $.0001.
"PER MERGER SHARE CLOSING AMOUNT" means an amount equal to the
quotient obtained by dividing (A) the remainder of the Maximum Closing
Merger Consideration minus the sum of the Closing ESOP Consideration and
the Escrow Amount by (B) the Merger Share Number, rounded to the nearest
$.0001.
"PER UNALLOCATED SHARE CLOSING AMOUNT" means $18.20.
"SHAREHOLDERS' EXPENSES" means all fees and expenses that are
unpaid at the Effective Time that are incurred by the Company, the Trustee
and the Shareholders in connection with the preparation for, and
consummation of, the transactions contemplated hereby and by the other
agreements referred to herein.
"SHARES" means the ESOP Shares and the Merger Shares.
"STIPULATED DEBT" means all debt of the Company and the ESOP
(other than accounts payable, accrued liabilities and an amount equal to
the amount payable by the Trustee to Boatmen's pursuant to Section 2.3
below) that is paid off by the Surviving Corporation at Closing, and shall
also include any fees or penalties that arise out of the prepayment of
Stipulated Debt.
"UNALLOCATED ESOP SHARE NUMBER" means the number of Unallocated
Shares.
(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 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 (or the contingent right to receive cash) 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 (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) each Allocated 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 (A) the right to receive, at the
Effective Time, an amount in cash equal to the Per Allocated Share
Closing Amount; PROVIDED, HOWEVER, that if the Per Allocated Share
Closing Amount is greater than $18.20, the amount in excess of $18.20
shall be paid to the escrow agent (the "Overpayment Escrow Agent") under
that certain Escrow Agreement dated as of the Closing Date among the
Overpayment Escrow Agent, the Trustee and the Indemnifying Shareholders,
and shall be held and disbursed in accordance with the terms and
conditions set forth in such agreement, and (B) the right to receive,
subject to the terms and conditions of this Agreement, an amount in cash
equal to the Per Allocated Share Additional Amount, if any;
(iv) each Unallocated 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 an amount in cash
equal to the Per Unallocated Share Closing Amount;
(v) 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 (A) the right to receive, at the
Effective Time, an amount in cash equal to the Per Merger Share Closing
Amount, (B) the right to receive, subject to the terms and conditions of
this Agreement, an amount in cash equal to the Per Merger Share
Additional Amount, if any, and (C) the right to receive, subject to the
terms and conditions of this Agreement and the Escrow Agreement, an
amount in cash, if any, to be distributed under the Escrow Agreement;
and
(vi) each authorized but unissued share of Company Common
Stock immediately prior to the Effective Time shall be canceled.
2. DELIVERY OF FUNDS; SURRENDER OF CERTIFICATES; UNDERPAYMENT
ESCROW. (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 Shares, Parent shall pay, or cause the Surviving
Corporation to possess sufficient funds to enable it to pay and will cause it
to pay, each such Shareholder in exchange therefor an amount in immediately
available funds equal to the product obtained by multiplying the number of
Shares surrendered by such Shareholder by the Per Merger Share Closing Amount,
the Per Allocated Share Closing Amount (unless the Per Allocated Share Closing
Amount is greater than $18.20, in which case such amount in excess of $18.20
shall be paid in accordance with the terms of Section 2.1(c)(iii) above and
Section 2.2(b) below) or the Per Unallocated Share Closing Amount, as
applicable, such amount to be paid promptly, at such Shareholder's election, by
certified or cashier's check or wire transfer to an account designated by such
Shareholder to Acquisition Sub not later than three Business Days prior to the
Closing. No interest will be paid or will accrue on the Per Merger Share
Closing Amount, the Per Allocated Share Closing Amount or the Per Unallocated
Share Closing Amount payable upon the surrender of any certificates
representing Shares. Until surrendered as contemplated by this Section 2.2 and
the Certificate of Merger, each certificate representing Shares shall be
deemed, at and after the Effective Time, to represent only the right to receive
upon such surrender cash as contemplated by this Section 2, the Certificate of
Merger and the Kansas Statute.
(b) In the event that the Per Allocated Share Closing Amount is
greater than $18.20, at the Effective Time, Parent shall deposit, or cause
Acquisition Sub or the Surviving Corporation to possess sufficient funds to
enable either of them to deposit and will cause such entity to deposit, with
the Overpayment Escrow Agent an amount equal to the product of such excess and
the Allocated ESOP Share Number. The parties hereto acknowledge and agree that
upon payment to the Overpayment Escrow Agent of the amount, if any, of the Per
Allocated Share Closing Amount that is in excess of $18.20, Parent, Acquisition
Sub and the Surviving Corporation shall have no further responsibility with
respect to the distribution of such amount to any Shareholder. The parties
hereto further acknowledge and agree that, payment by Parent, Acquisition Sub
or the Surviving Corporation of the Per Allocated Share Closing Amount pursuant
to this Section 2.2 shall constitute full satisfaction of the obligation of
Parent, Acquisition Sub and the Surviving Corporation to pay any consideration
to the ESOP for the Allocated Shares surrendered by the ESOP in connection with
the Merger, except as provided in Section 3.3(a).
3. REPAYMENT OF ESOP LOAN. On the Closing Date, immediately after
receipt of the Closing ESOP Consideration, the Trustee, on behalf of the ESOP,
shall pay Boatmen's First National Bank of Kansas City, N.A. ("Boatmen's"), by
wire transfer to an account designated by Boatmen's, that portion of the
Closing ESOP Consideration attributable to the Unallocated Shares as partial
payment of the amounts owed by the ESOP under the ESOP Loan Agreement dated
December 17, 1986, as amended (the "ESOP Loan Agreement"), among Boatmen's (by
assignment from The Merchant's Bank), the Company and the ESOP.
4. ESCROW AGREEMENT; DELIVERY OF FUNDS. (a) On or prior to the
Closing Date, Acquisition Sub shall appoint a bank reasonably acceptable to the
Company to act as escrow agent (the "Escrow Agent") in connection with the
Merger pursuant to the Escrow Agreement.
(b) At the Effective Time, upon the terms and conditions contained
in this Agreement and the Escrow Agreement, Parent shall deposit, or cause
Acquisition Sub or the Surviving Corporation to possess sufficient funds to
enable either of them to deposit and will cause such entity to deposit, with
the Escrow Agent an amount equal to the Escrow Amount.
5. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
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.
SECTION 3. WORKING CAPITAL PURCHASE PRICE ADJUSTMENT.
1. PREPARATION OF CLOSING BALANCE SHEET AND FINAL WORKING CAPITAL
STATEMENT. As promptly as practicable following the Closing Date (but in no
event later than 60 days after the Closing Date), the Surviving Corporation, at
its cost and expense, shall prepare, and cause Ernst & Young LLP, the
accountants of the Surviving Corporation (the "Buyer's Accountants"), to
certify, a balance sheet (the "Closing Balance Sheet") reflecting the financial
position of the Company as of the Closing Date and a statement (the "Final
Working Capital Statement") setting forth the computation of the Final Working
Capital (as defined below) derived therefrom, which statement shall be prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied with the historical financial statements of the Company;
PROVIDED, HOWEVER, that in the event of a conflict between GAAP and the
historical financial statements of the Company, such item shall be determined
in accordance with GAAP. For purposes of preparing the Final Working Capital
Statement, "Final Working Capital" shall include cash, net accounts receivable,
inventory and prepaid expenses less accounts payable and accrued liabilities;
debt (other than accounts payable and accrued liabilities) shall be excluded
from Final Working Capital.
2. REVIEW BY THE SHAREHOLDERS' REPRESENTATIVE. (a) Upon
completion of the certified Final Working Capital Statement, the Surviving
Corporation shall promptly deliver the same to the Shareholders' Representative
with a notice ("Buyer's Notice of Adjustment") of the Surviving Corporation
setting forth its proposed adjustment, if any, of the Merger Consideration as
contemplated by Sections 2.1(c)(iii) and (v). During and after the preparation
of the Final Working Capital Statement until the Final Determination Date (as
defined below), the Surviving Corporation shall provide the Shareholders'
Representative and its advisors with timely access to the employees and records
of the Surviving Corporation, the Buyer's Accountants and the work papers,
trial balances and similar materials used in connection with the preparation of
the Final Working Capital Statement, including the work papers, trial balances
and similar materials prepared by Buyer's Accountants.
(b) Following receipt of the Buyer's Notice of Adjustment, the
Shareholders' Representative will be afforded a period of 20 Business Days (the
"First 20-Day Period") to review the Buyer's Notice of Adjustment. At or
before the end of the First 20-Day Period, the Shareholders' Representative
will either (A) accept the Final Working Capital (as set forth in the Buyer's
Notice of Adjustment) in its entirety, in which case the Final Working Capital
will be as set forth in the Buyer's Notice of Adjustment or (B) deliver to the
Surviving Corporation a written notice (the "Objection Notice") containing a
sufficiently detailed written explanation of those items in the Final Working
Capital Statement (as set forth in the Buyer's Notice of Adjustment) which the
Shareholders' Representative disputes, in which case the items identified by
the Shareholders' Representative shall be deemed to be in dispute. The failure
by the Shareholders' Representative to deliver the Objection Notice within the
First 20-Day Period shall constitute the Shareholders' Representative's
acceptance of the Final Working Capital as set forth in the Buyer's Notice of
Adjustment. If the Shareholders' Representative delivers the Objection Notice
in a timely manner, then, within a further period of 10 Business Days from the
end of the First 20-Day Period the parties and, if desired, their accountants
will attempt to resolve in good faith any disputed items and reach a written
agreement (the "Settlement Agreement") with respect thereto. Failing such
resolution, the unresolved disputed items will be referred for final binding
resolution to an independent nationally-recognized firm of certified public
accountants mutually acceptable to the Shareholders' Representative and the
Surviving Corporation (the "Arbitrating Accountants"), the fees and expenses of
which shall be borne equally by the Indemnifying Shareholders, on the one hand
in proportion to their respective Percentage Interests, and the Surviving
Corporation, on the other hand. The Final Working Capital will be deemed to be
as determined by the Arbitrating Accountants. Such determination (the
"Accountants' Determination") shall be (A) in writing, (B) furnished to the
Shareholders' Representative and the Surviving Corporation as soon as
practicable after the items in dispute have been referred to the Arbitrating
Accountants, (C) made in accordance with GAAP and (D) nonappealable and
incontestable by the Shareholders' Representative, any Shareholder, the
Surviving Corporation, Parent or any of their respective Affiliates and not
subject to collateral attack for any reason.
(c) For purposes of this Section 3, the "Final Determination Date"
shall mean the earliest to occur of (A) the 21st day following the receipt by
the Shareholders' Representative of the Buyer's Notice of Adjustment if the
Shareholders' Representative shall have failed to deliver the Objection Notice
to the Surviving Corporation within the First 20-Day Period, (B) the date on
which either the Shareholders' Representative or the Surviving Corporation
gives the other a written notice to the effect that such party has no objection
to the other party's determination of the Final Working Capital, (C) the date
on which the Shareholders' Representative and the Surviving Corporation execute
and deliver a Settlement Agreement and (D) the date as of which the
Shareholders' Representative and the Surviving Corporation shall have received
the Accountants' Determination.
3. ADJUSTMENT. (a) If the Final Working Capital is greater than
the sum of $7,000,000 and the amount of cash set forth on the Closing Balance
Sheet (the amount of such excess being referred to herein as the "Underpayment
Amount"), then, within five Business Days following the Final Determination
Date, Parent shall pay, or cause the Surviving Corporation to possess
sufficient funds to pay and cause it to pay, each Shareholder an amount in cash
equal to such Shareholder's Proportionate Percentage of the Underpayment
Amount; PROVIDED, HOWEVER, that in the event the Per Merger Share Closing
Amount is less than $15.72, such Underpayment Amount shall be payable as
follows: FIRST, to each Indemnifying Shareholder PRO RATA based on such
Indemnifying Shareholder's Percentage Interest of the Underpayment Amount in
amounts so that the sum of the Per Merger Share Closing Amount and the amount
payable with respect to each Merger Share pursuant to this sentence equals but
does not exceed $15.72, and SECOND, to the extent any portion of the
Underpayment Amount is remaining, to each Shareholder PRO RATA based on such
Shareholder's Proportionate Percentage of the remaining Underpayment Amount.
(b) If the Final Working Capital is less than the sum of $7,000,000
and the amount of cash set forth on the Closing Balance Sheet (the amount of
such shortfall being referred to herein as the "Overpayment Amount"), then the
amount of such shortfall shall be offset against the Escrow Amount in the
manner set forth in the Escrow Agreement. In addition, in the event the
Overpayment Amount exceeds the Escrow Amount, each Indemnifying Shareholder
shall, within five Business Days following the Final Determination Date, pay
the Surviving Corporation or a party designated by the Surviving Corporation in
cash such Indemnifying Shareholder's Percentage Interest of the amount by which
the Overpayment Amount exceeds the Escrow Amount. The Indemnifying
Shareholders shall be jointly and severally liable for the obligations of the
Indemnifying Shareholders in this Section 3.3(b).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each Shareholder severally represents and warrants to Parent and Acquisition
Sub as follows:
1. TITLE TO THE SHARES. Except as set forth in the Disclosure
Letter (as defined below), such Shareholder is the lawful owner, of record and
beneficially, of those shares of Company Common Stock set forth opposite his or
its name on SCHEDULE I hereto and has good and marketable title to such shares,
free and clear of any Encumbrances whatsoever and 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 in 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 or its shares of Company
Common Stock in one or more transactions exempt from registration under the
Securities Act of 1933, as amended, and in compliance with applicable state
securities laws.
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
or by general principles of equity. If such Shareholder is a trust, such
trust is a validly created and existing trust under applicable state law.
(b) Except as set forth in the Disclosure Letter, 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
or its properties may be bound or (ii) violate any Law applicable to such
Shareholder or any of his or its properties, which conflict or violation 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 business or assets of 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.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
INDEMNIFYING SHAREHOLDERS. The Company and the Indemnifying Shareholders
jointly and severally represent and warrant to Parent and Acquisition Sub as
follows:
1. ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its 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 in the
disclosure letter dated the date of this Agreement (the "Disclosure Letter")
certified by an authorized officer of the Company and each of the Indemnifying
Shareholders and delivered by the Company to Parent 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, each of which jurisdictions is set forth in
the Disclosure Letter. The Company has delivered to Acquisition Sub true and
complete copies of the Company's Charter and the Company's By-laws, in each
case as amended to the date hereof.
2. EQUITY INVESTMENTS. Except as set forth in the Disclosure
Letter, the Company has never had, nor does it 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.
3. CAPITAL STOCK. The authorized capital stock of the Company
consists of 2,000,000 shares of Company Common Stock, of which 700,494 shares
are outstanding; such shares of Company Common Stock being owned of record by
the Shareholders in the amounts set forth on SCHEDULE I. All of such shares
are validly issued, fully paid and non-assessable. Except as set forth in the
Disclosure Letter, there are no securities presently outstanding, and on the
Closing Date there will not be any outstanding securities, which are
convertible into, exchangeable for, or carrying the right to acquire, equity
securities of the Company, or subscriptions, warrants, options, calls, puts,
convertible securities, registration or other rights, arrangements or
commitments obligating the Company to issue, sell, register, purchase or redeem
any of its equity securities or any ownership interest or rights therein.
Except as set forth in the Disclosure Letter, there are no voting trusts or
other agreements or understandings to which the Company is bound with respect
to the voting of the Company's capital stock. There are no stock appreciation
rights, phantom stock rights or similar rights or arrangements outstanding.
4. AUTHORITY; NONCONTRAVENTION; CONSENTS. (a) The Company 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 and to perform its 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 have been duly and validly authorized by all
necessary corporate action on the part of the Company; and this Agreement and
each Related Document to which it is a party has been duly and validly executed
and delivered by the Company and this Agreement and each Related Document to
which it is a party is the valid and binding obligation of the Company,
enforceable against the Company 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
or by general principles of equity.
(b) Neither the execution, delivery and performance of this
Agreement and the Related Documents 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 of the properties or assets
of the Company under any term, condition or provision of (x) the Company's
Charter or the Company's By-laws or (y) except as set forth in the Disclosure
Letter, any Contract to which the Company is a party or by which its properties
or assets are bound, or (ii) violate any Laws applicable to the Company or any
of its properties.
(c) Except as set forth in Section 10.6(b), the Disclosure Letter
and as required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, 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 or the
consummation of the transactions contemplated hereby or thereby.
5. FINANCIAL STATEMENTS. The Company has previously delivered to
Parent and Acquisition Sub the following financial statements (collectively,
the "Financial Statements"):
(a) the audited balance sheets of the Company as of October 31,
1995, 1994 and 1993 and the related statements of income, stockholders'
equity, cash flows and supplemental data for the fiscal periods then
ended; and
(b) the unaudited balance sheet of the Company as of June 30,
1996 (the "Latest Balance Sheet" and such date being the "Latest Balance
Sheet Date"), and the related unaudited statement of income for the eight-
month period then ended.
Except as set forth in the Disclosure Letter, the Financial Statements (i) are
in accordance with the books and records of the Company, (ii) fairly present
the financial condition of the Company as at the respective dates indicated and
the results of operations, stockholders' equity and cash flows of the Company
for the respective periods indicated and (iii) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods covered thereby except, with respect to the unaudited Financial
Statements, for normal year-end adjustments (none of which will be material)
and for the absence of footnotes.
6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Disclosure Letter, the Company has no material Liability, except for
(i) Liabilities reflected in the Liabilities section of the Latest Balance
Sheet, (ii) Liabilities under Contracts which have arisen in the ordinary
course of business (none of which relates to a breach of contract), and
(iii) Liabilities that have arisen since the date of the Latest Balance Sheet
in the ordinary course of business (none of which relates to breach of
contract, breach of warranty, tort, infringement, violation of Law, or any
action, suit or Proceeding (including any Liability under any Environmental,
Health and Safety Laws)). 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 on the Latest Balance Sheet. Except as set forth in the
Disclosure Letter, the Company has not, 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.
7. ABSENCE OF CHANGES. Except as set forth in the Disclosure
Letter, since June 30, 1996, there has not been any Material Adverse Change.
Since that date, except as set forth in the Disclosure Letter, the Company has
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 to any Shareholder or any Affiliate
of the Company or any Shareholder;
(b) no party (including the Company) has accelerated,
terminated, modified or canceled any Contract (or series of related
Contracts) involving more than $20,000 to which the Company is a party or
by which the Company is bound and, to the Best Knowledge of the Company
and the Indemnifying Shareholders, no party intends to take any such
action;
(c) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(d) there has not been any material action or failure to act by
the Company outside the ordinary course of business, or to the Best
Knowledge of the Company and the Indemnifying Shareholders, any other
material occurrence, event, incident or transaction outside the ordinary
course of business involving the Company;
(e) the Company has not taken any action that would violate any
of the negative covenants set forth in Section 7.2 of this Agreement; and
(f) there has been no agreement, understanding or
authorization, whether in writing or otherwise, for the Company to take
any of the actions specified in items (a) through (e) above.
8. TAX MATTERS. Except as set forth in the Disclosure Letter, the
Company and each other corporation included in any consolidated or combined Tax
Return and part of an affiliated group, within the meaning of Section 1504 of
the Code, of which the Company is or has been a member, (a) has paid all Taxes
required to be paid by it through the date hereof and (b) has 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. Except as set forth in the Disclosure Letter, the Company
is not, nor has it ever been, included in any consolidated or combined Tax
return for Federal, state or local Tax purposes or is it a member of an
affiliated group within the meaning of Section 1504 of the Code. All Taxes,
including those shown to be due on each of the Tax Returns, have been timely
paid in full. Except as set forth in the Disclosure Letter, no Tax liens have
been filed and the Company has not 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, and no waivers of statutes of
limitation have been given or requested with respect to the Company. There are
no pending Tax audits of any Tax Returns. No unresolved deficiencies or
additions to Taxes have been proposed, asserted or assessed against the Company
or any member of any affiliated or combined group of which the Company was or
is a member. The Company has made full and adequate provision (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. The Company has not incurred any Tax
Liability since the Latest Balance Sheet Date, except for Taxes incurred in the
ordinary course of business. The Company has not made an election to be
treated as a "consenting corporation" under Section 341(f) of the Code and the
Company is not, nor has it ever been, a "personal holding company" within the
meaning of Section 542 of the Code. The Company and each of its 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 the Company is not liable for any Taxes for failure to comply
with such Laws. The Company neither is nor has it 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 by reason of Section 280G of the Code.
9. TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS. The
Company has good title to the Intellectual Property Rights as provided in
Section 5.11 and to all other material 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 machinery and equipment
obtained through a capitalized lease, 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 in full
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 Permitted
Encumbrances, no conditions exist which materially interfere with the economic
value or use of such assets, taken as a whole. Except as set forth in the
Disclosure Letter and except 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.
10. REAL PROPERTY-OWNED OR LEASED. (a) The Disclosure Letter
contains a list and brief description of all of the owned real property of the
Company (the "Owned Property") and all real property in which the Company 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 Property and the Leased Property
(together, the "Real Property") constitute all real properties used or occupied
by the Company in connection with the Company's businesses reflected on the
Financial Statements.
(b) With respect to the Real Property, except as set forth in the
Disclosure Letter:
(i) no portion thereof is subject to any pending condemnation
Proceeding or Proceeding by any public or quasi-public authority and, to
the Best Knowledge of the Company and the Indemnifying Shareholders, there
is no threatened condemnation or Proceeding with respect thereto;
(ii) the physical condition of the Real Property is sufficient
to permit the continued conduct of the Subject Business as presently
conducted subject to the provision of usual and customary maintenance and
repair performed in the ordinary course with respect to similar properties
of like age and construction;
(iii) with respect to the Leased Property, the Company 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;
(iv) no notice of any increase in the assessed valuation of
the Real Property and no notice of any contemplated special assessment has
been received by the Company and to the Best Knowledge of the Company and
the Indemnifying Shareholders, there is no threatened special assessment
pertaining to any of the Real Property;
(v) there are no Contracts, written or oral, to which the
Company is a party, granting to any party or parties the right of use or
occupancy of any portion of the parcels of the Real Property;
(vi) there are no parties (other than the Company or its
lessees disclosed pursuant to paragraph (v) above) in possession of the
Owned 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.
11. INTELLECTUAL PROPERTY. Except in each case as set forth in the
Disclosure Letter:
(a) the Company owns, has the right to use, sell, license and
dispose of, and has the right to bring actions for the infringement of all
Intellectual Property Rights necessary or required for the conduct of the
Subject Business (collectively, the "Owned Requisite Rights"), other than
those Intellectual Property Rights for which the Company has a valid
license (collectively, the "Licensed Requisite Rights"; the Owned
Requisite Rights and Licensed Requisite Rights are collectively referred
to herein as the "Requisite Rights") and such rights to use, sell,
license, dispose of and bring actions are exclusive with respect to Owned
Requisite Rights;
(b) the Requisite Rights, all of which are set forth on the
Disclosure Letter, are sufficient for the conduct of the Subject Business
as presently conducted;
(c) the Company has made timely and proper application for
issuance of letters patent in the United States for all patentable
inventions included within the Owned Requisite Rights;
(d) there are no royalties, honoraria, fees or other payments
payable by the Company to any Person by reason of the ownership, use,
license, sale or disposition of Owned Requisite Rights or Licensed
Requisite Rights;
(e) no activity, service or procedure currently conducted by
the Company violates or will violate any Contract of the Company with any
third party or infringe any Intellectual Property Right of any other
party;
(f) the Company has taken reasonable and practicable steps
(including, without limitation, entering into confidentiality and
nondisclosure agreements with Persons with access to or knowledge of the
Confidential Information) designed to safeguard and maintain (i) the
secrecy and confidentiality of the Confidential Information and (ii) the
proprietary rights of the Company in all Owned Requisite Rights;
(g) the Company has not received from any third party (other
than Parent or any Affiliate thereof) in the past five years any notice,
charge, claim or other assertion that the Company is infringing any
Intellectual Property Right of any third party or committed any acts of
unfair competition, and no such claim is impliedly threatened by an offer
to license from a third party under a claim of use; and
(h) the Company (i) has no knowledge of and (ii) in the past
five years has not sent or otherwise communicated to another Person (other
than Parent or any Affiliate thereof) 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 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 to perfect or protect its interest in the
Requisite Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications, service marks and service
mark applications.
12. AGREEMENTS, NO DEFAULTS, ETC. Except as set forth in the
Disclosure Letter, the Company is not 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;
(b) Contract with any Affiliate of the Company;
(c) 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;
(d) Contract relating to any guarantee of any obligation for
borrowed money or otherwise;
(e) Contract with respect to the lending or investing of
funds;
(f) Contract or indemnification with respect to any form of
intangible property, including any Intellectual Property Rights or
confidential information;
(g) Contract or group of related Contracts with the same party
(excluding purchase orders entered into in the ordinary course of business
which 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 selling
price in excess of $10,000;
(h) Contract that prohibits it from freely engaging in
business anywhere in the world;
(i) other Contract (x) that is not terminable by either party
without penalty upon not more than 30 days' advance notice and involves
aggregate consideration in excess of $20,000 or (y) that involves
aggregate consideration in excess of $25,000 (excluding in the case of
clauses (x) and (y) above any purchase order entered into in the ordinary
course of business which is to be completed within three months of
entering into such purchase orders); or
(j) other Contract material to the Subject Business.
Except as set forth in the Disclosure Letter, there are no vehicles, boats,
aircraft, apartments or other residential or recreational properties or
facilities owned or operated by the Company for executive, administrative or
sales purposes or any social club memberships owned or paid for by it. Except
as set forth in the Disclosure Letter, the Company 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 of any of the foregoing. The Company has furnished to Acquisition Sub
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.
13. LITIGATION, ETC. Other than litigation relating to Parent or
any Affiliate thereof, except as set forth in the Disclosure Letter, there are
no (i) Proceedings pending or, to the Best Knowledge of the Company and the
Indemnifying Shareholders, threatened against the Company, 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 entered within the
five-year period immediately preceding the date hereof. The Company has
delivered to Acquisition Sub all material documents and correspondence relating
to such matters referred to in the Disclosure Letter.
14. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Except as set forth
in 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 in the Disclosure Letter, no investigation or review by any
Governmental Entity with respect to the Company is pending or, to the Best
Knowledge of the Company and the Indemnifying Shareholders, threatened, nor has
any Governmental Entity notified the Company of its intention to conduct the
same. The Company has all Permits necessary for the conduct of its business,
including those required under any Environmental, Health and Safety Laws, such
Permits are in full force and effect, no violations are or have been recorded
in respect of any thereof and no Proceeding is pending or, to the Best
Knowledge of the Company and the Indemnifying Shareholder, threatened to revoke
or limit any thereof. The Disclosure Letter contains a true and complete list
of all material Permits under which the Company is operating or bound, and the
Company has furnished to Acquisition Sub true and complete copies thereof.
15. INSURANCE. The Disclosure Letter lists and briefly describes
each insurance policy maintained by the Company with respect to the properties,
assets and business of the Company. All of such insurance policies are in full
force and effect, and the Company is not in default in any material respect
with respect to its obligations under any of such insurance policies and has
not received any notification of cancellation of any of such insurance policies
and has no claim outstanding which could be expected to cause a material
increase in the insurance rates. To the Best Knowledge of the Company and the
Indemnifying Shareholders, no facts or circumstances exist that would relieve
the insurer under any such policy of its obligation to satisfy in full any
claim of the Company thereunder. The Company has not received any notice that
(i) any of such policies has been or will be canceled or terminated or will not
be renewed on substantially the same terms as are now in effect or (ii) the
premium on any of such policies will be materially increased on the renewal
thereof.
16. LABOR RELATIONS; EMPLOYEES. Except as set forth in the
Disclosure Letter, (i) the Company is not 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, neither the Company nor Acquisition Sub will by reason of any
action taken or not taken prior to the Closing be liable to any of such
employees for severance pay or any other payments, (iii) the Company is in
compliance in all material respects with all 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
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 and the
Indemnifying Shareholders, threatened against or involving the Company, (vi) no
labor union currently represents the employees of the Company and, to the Best
Knowledge of the Company and the Indemnifying Shareholders, no labor union has
taken any action with respect to organizing the employees of the Company, and
(vii) no key employee has informed the Company, any Indemnifying Shareholder or
any senior executive of the Company that such employee will or may terminate
his or her employment or engagement with the Company. The Company is not a
party to or bound by any collective bargaining agreement, union Contract or
similar agreement.
17. ERISA COMPLIANCE. (a) Set forth in the Disclosure Letter is a
true and complete list of all Employee Plans. Except as set forth in 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 in 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 nor any of its ERISA Affiliates, 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 has breached the fiduciary rules of ERISA or
engaged in a prohibited transaction that could subject the Company or any
of its ERISA Affiliates 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 Company contributions (or
premium payments) to (or in respect of) all Employee Plans have been
properly made when due, and the Company has 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) none of the Employee Plans obligate the Company 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) 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 nor any of its 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 or any of its ERISA Affiliates that has
given rise to or could give rise to any fines, penalties or related
charges under ERISA or the Code for which the Company or any of its ERISA
Affiliates could be liable;
(ix) each Employee Plan has been established and operated for
the exclusive benefit of the participants and beneficiaries of such
Employee Plan; and
(x) each Employee Plan that holds employer securities has,
since its establishment, satisfied the requirements of Section 401(a)(28)
of the Code.
(c) The Company has provided Acquisition Sub 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), and the most recent valuation
(but in any case one that has been completed within the last calendar year) of
the present and future obligations under each Employee Plan that provides post-
retirement or post-employment health and life insurance, accident, or other
"welfare-type" benefits. 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 to make
any prospective amendments or terminate any Employee Plan).
18. ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Disclosure Letter, neither the Company nor any of its past property or
operations are subject to or the subject of, any Proceeding, Order, settlement,
or other Contract arising under Environmental, Health and Safety Laws, nor, to
the Best Knowledge of the Company and the Indemnifying Shareholders, has any
investigation been commenced or is any Proceeding threatened against the
Company under the Environmental, Health and Safety Laws with regard to the
Subject Business.
(b) Except as set forth in the Disclosure Letter, neither the
Company nor any Indemnifying 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 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 included on the National
Priorities List, as defined under CERCLA, or any location proposed for
inclusion on that List, or any location included on the CERCLIS database
prepared under CERCLA or on any analogous list prepared by any state.
(c) The Disclosure Letter sets forth a complete and accurate list
of all properties and facilities previously owned or operated by the Company or
any predecessor of the Company. Except as set forth in the Disclosure Letter,
there has not been a release on the Real Property of Hazardous Materials (i) in
an amount that exceeded a reportable quantity at the time of such release, as
defined under Environmental Health and Safety Laws, or (ii) that would, at the
time of such release or now, support an Order by a Governmental Entity under
the Environmental, Health and Safety Laws; there are no hazardous waste
treatment, storage or disposal facilities, as those terms are defined under the
Environmental, Health and Safety Laws, located at any of the Real Property;
neither is there now, nor to the Best Knowledge of the Company and the
Indemnifying Shareholders has there ever been, any asbestos-containing
material, underground storage tanks, aboveground storage tanks, landfill, waste
pile, surface impoundment, or article or equipment containing polychlorinated
biphenyls on or at any of the facilities used in the Subject Business; and no
facts, events or conditions relating to the past or present property,
operations or facilities of the Company (or any other Person for whom the
Company has assumed environmental-related Liabilities) could prevent compliance
by the Company with, or give rise to any Liability or corrective or remedial
obligation of the Company under, Environmental, Health and Safety Laws.
(d) The Company has provided Acquisition Sub with correct and
complete copies of all reports and studies within the possession or control of
the Company with respect to past or present environmental conditions or events
at any real property currently or formerly owned, leased or operated by the
Company or any predecessor of the Company and, to the Best Knowledge of the
Company and the Indemnifying Shareholders, there are no other environmental
reports or studies with respect thereto, other than as contemplated hereby.
19. BROKERS. Except as set forth in the Disclosure Letter, none of
the Company or any of its officers, directors, Indemnifying Shareholders 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.
20. RELATED TRANSACTIONS. Except as set forth in the Disclosure
Letter, and except for compensation to regular employees of the Company, no
current or former Affiliate of the Company or any associate (as defined in the
rules promulgated under the Securities Exchange Act of 1934, as amended)
thereof, is now, or has been during the last three fiscal years, (i) a party to
any transaction or Contract with the Company, 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 (other than non-affiliated holdings in
publicly-held companies), nor does any such Person receive income from any
source other than the Company which relates to the business of, or should
properly accrue to, the Company.
21. ACCOUNTS AND NOTES RECEIVABLE. Except as set forth in the
Disclosure Letter, all the accounts receivable and notes receivable owing to
the Company 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 there are no known or asserted claims,
refusals to pay or other rights of set-off against any thereof. Except as set
forth in 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 and the Indemnifying Shareholders, threatened to refuse to pay its
obligations for any reason, (iii) to the Best Knowledge of the Company and the
Indemnifying Shareholders, 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.
22. ACCOUNTS AND NOTES PAYABLE. Except as set forth in the
Disclosure Letter, all accounts payable and notes payable by the Company 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 in the
Disclosure Letter, there is no such account payable or note payable delinquent
in its payment, except those contested in good faith and already disclosed in
the Disclosure Letter.
23. INVENTORIES. The inventories of the Company as of the date
hereof are of good, usable and merchantable quality. The Company's inventory
includes no items which are below customary quality control standards of the
plastics 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 and agreed that colored or decorated inventory that is in
excess of current customer orders or commitments and inventory relating to any
discontinued product is not usable or salable in the normal course of
business), the aggregate value of which has not been written down on the books
of account of the Company to realizable market value or with respect to which
adequate reserves have not been provided in accordance with GAAP and reasonable
and prudent commercial practices in the Company's industry.
24. WARRANTIES OF PRODUCTS; PRODUCTS LIABILITY; REGULATORY
COMPLIANCE. (a) Except to the extent written down on the books of account of
the Company or reserved against thereon, each group of products manufactured,
sold, distributed, used or held in inventory by the Company is, subject to
customary and reasonable tolerances, free from any significant defects in
workmanship and materials, and conforms in all material respects with all
customary and reasonable standards for products of such type.
(b) Neither the United States Food and Drug Administration nor any
other Governmental Entity regulating the marketing, testing or advertising of
any of the products currently manufactured, sold, distributed or used in
connection with the Subject Business has requested 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.
25. BANK ACCOUNTS; POWERS OF ATTORNEY. The Disclosure Letter sets
forth a true and complete list of (i) all bank accounts and safe deposit boxes
of the Company and all persons who are signatories thereunder or who have
access thereto and (ii) the names of all persons, firms, associations,
corporations or business organizations holding general or special powers of
attorney from the Company and a summary of the terms thereof.
26. SUPPLIERS AND VENDORS. Except in the ordinary course of
business, since June 30, 1996, no material supplier or vendor of the Company
has canceled or otherwise terminated, or threatened to cancel or otherwise
terminate, its relationship with the Company or has decreased, limited or
otherwise modified, or threatened to decrease, limit or otherwise modify in any
material respect, the services, supplies or materials it provides to the
Company, and, to the Best Knowledge of the Company and the Indemnifying
Shareholders, the Merger and related transactions will not affect the
relationship of the Company with any such supplier or vendor.
27. 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 and
the Indemnifying Shareholders, no material disagreement or problem exists
between the Company and any customer. No customer to which more than $50,000
of the Company's annual sales are attributable has threatened, or has notified
the Company that it intends, to terminate its relationship and dealings with
the Company, whether as a result of the transactions contemplated by this
Agreement or otherwise.
28. EXPENSES. The Disclosure Letter sets forth a true and correct
schedule of Shareholders' Expenses which have been paid or incurred on or prior
to the date hereof.
29. DISCLOSURE. To the Best Knowledge of the Company and the
Indemnifying Shareholders, neither this Agreement, any of the schedules,
attachments or exhibits hereto, nor any other written material delivered to
Parent or 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. There is no fact that has not been
disclosed to the parties referred to above of which the Company, any
Indemnifying Shareholder or any of the officers or directors of the Company is
aware and which constitutes or could reasonably be anticipated to result in a
Material Adverse Change.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
SUB. Parent and Acquisition Sub represent and warrant to the Company and the
Shareholders as follows:
1. ORGANIZATION; GOOD STANDING; AUTHORITY. Parent is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware and Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Kansas. Each of
Parent and Acquisition Sub has all requisite power and authority to enter into
this Agreement and the Related Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby; the execution, delivery and performance by
Parent and Acquisition Sub of this Agreement and the Related Documents to which
they are a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of
Parent or Acquisition Sub, as the case may be; and this Agreement and the
Related Documents to which Parent and Acquisition Sub are a party have been
duly executed and delivered by Parent or Acquisition Sub, as the case may be,
and constitute the valid and legally binding obligations of such party,
enforceable 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
or by general principles of equity.
2. NONCONTRAVENTION; CONSENTS. (a) Neither the execution and
delivery of this Agreement and the Related Documents to which Parent or
Acquisition Sub is a party nor the consummation of the transactions
contemplated hereby or thereby by Parent or Acquisition Sub will (i) violate
any Law, the result of which would prevent the consummation by Parent or
Acquisition Sub of the transactions contemplated hereby or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under (x) the certificate or articles of incorporation or
by-laws of Parent or Acquisition Sub or (y) any Contract to which either Parent
or Acquisition Sub is a party or by which Parent or Acquisition Sub is bound or
to which any of their respective properties is subject the result of which
would prevent the consummation by Parent or Acquisition Sub of the transactions
contemplated hereby.
(b) Other than shareholder and board of directors consents, and
except as contemplated by this Agreement or any Related Document, 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
and Acquisition Sub of this Agreement and the Related Documents to which they
are a party or the consummation by such parties of the transactions
contemplated hereby or thereby.
3. BROKERS. None of Parent, Acquisition Sub nor 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.
4. LITIGATION. There are no Proceedings involving Parent or
Acquisition Sub that are pending, or to the Best Knowledge of Parent and
Acquisition Sub threatened, that could prevent or delay the execution and
delivery of this Agreement and the Related Documents by Parent and Acquisition
Sub or the consummation by Parent and Acquisition Sub of the transactions
contemplated hereby or thereby.
5. PARENT'S INVESTMENT INTENT. By way of the Merger, Parent is
acquiring shares of capital stock of the Company for its own account, for
investment and not with a view to the distribution thereof within the meaning
of the Securities Act of 1933, as amended.
SECTION 7. CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING;
ADDITIONAL PRE-CLOSING AGREEMENTS.
1. AFFIRMATIVE COVENANTS OF THE COMPANY. From and after the date
of this Agreement until the Closing or the earlier termination of this
Agreement pursuant to Section 11.1 (the "Transition Period"), except as
otherwise consented to in writing by Parent and Acquisition Sub, the Company
shall, and the Shareholders' Representative shall cause the Company to:
(a) conduct the operations of the Company according to the
ordinary and usual course of business consistent with past custom and
practice (including the collection of receivables, the payment of payables
and the maintenance of supplies) and use best efforts to preserve intact
its business organization, keep available the services of officers and
employees, and maintain satisfactory relationships with suppliers,
customers and others having business relationships with them;
(b) maintain the assets of the Company in customary repair,
order and condition, maintain insurance reasonably comparable to that in
effect on the Latest Balance Sheet Date, replace in accordance with past
practice inoperable, worn out or obsolete assets with modern assets of
comparable quality and, in the event of a casualty, loss or damage to any
of such assets or properties prior to the Closing Date for which the
Company is insured or the condemnation of any assets or properties, either
repair or replace such assets or property or, if Parent and Acquisition
Sub agree, cause the Company to retain such insurance or condemnation
proceeds;
(c) promptly inform Parent and Acquisition Sub in writing of
any material variances from the representations and warranties contained
in Section 5; and
(d) permit representatives of Parent and Acquisition Sub to
have full access to the Company's books, records, property, facilities,
customers, suppliers, sales representatives, consultants, key employees
and independent accountants in connection with Parent's and Acquisition
Sub's due diligence review of the Company (it being understood that such
investigation shall in no way affect or otherwise obviate or diminish any
representations or warranties of the Company or the Shareholders, or
conditions to the obligations of Parent or Acquisition Sub, in each case
as set forth herein); PROVIDED, HOWEVER, that the Company shall not be
required under this Section 7.1(d) to provide Parent or Acquisition Sub
with any information regarding the Company's pricing structure or profit
margin with respect to any particular customer of the Company's
promotional beverage business.
2. NEGATIVE COVENANTS OF THE COMPANY. During the Transition
Period, without the prior written consent of Parent and Acquisition Sub, except
as expressly contemplated by this Agreement or the Related Documents, the
Company shall not, and the Shareholders' Representative shall cause the Company
not to:
(a) sell, lease, transfer or assign any of the assets of the
Company, tangible or intangible, other than inventory in the ordinary
course of business consistent with past custom and practice;
(b) enter into any Contract (or series of related Contracts)
other than in the ordinary course of business;
(c) delay or postpone the payment of accounts payable and
other obligations and Liabilities or accelerate the collection of accounts
receivable, other than in the ordinary course of business consistent with
past custom and practice;
(d) enter into any employment Contract or collective
bargaining agreement, written or oral, or modify the terms of any existing
such Contract or agreement;
(e) grant any increase in the base compensation of any of the
officers or employees of the Company other than in the ordinary course of
business consistent with past custom and practice;
(f) adopt, amend, modify or terminate any bonus, profit-
sharing, incentive, severance or other plan, Contract or commitment for
the benefit of any of the officers or employees of the Company;
(g) other than as contemplated by this Agreement or any
Related Document, enter into any transaction with any of the officers,
employees or Affiliates of the Company (or any directors, officers or
employees of such Affiliate), other than ordinary course employment
arrangements entered into in accordance with past custom or practice;
(h) in any manner take or cause to be taken any action which
is designed, intended or might reasonably be anticipated to have the
effect of discouraging customers, employees, suppliers, lessors and other
associates of the Company from maintaining the same business relationships
with the Company after the date of this Agreement as were maintained with
the Company prior to the date of this Agreement; or
(i) intentionally take any action which would require
disclosure under Section 7.1(c).
3. CONFIDENTIALITY. From and after the date hereof until the
Closing, Parent and Acquisition Sub shall not use, transfer, release, publish,
reveal or disclose, directly or indirectly, any trade secrets or other business
and/or technical information of the Company of a proprietary or confidential
nature, including, but not limited to, systems, processes, formulae, data,
functional specifications, computer programs, blueprints, know-how,
improvements, discoveries, developments, designs, inventions, techniques, new
products, marketing and advertising methods, supplier agreements, customer
lists, pricing policies, financial information, projections, forecasts,
strategies, budgets or other information related to its business or its
customers (the "Evaluation Material"), except (a) to the directors, officers,
employees, financial advisors, legal counsel, independent certified public
accountants or other agents, advisors or other representatives and potential
financing sources of Parent and Acquisition Sub as shall reasonably require
access thereto for the purpose of the transactions contemplated hereby, (b) to
persons other than those described in (a) above, with the prior written consent
of the Company, and (c) by Parent, Acquisition Sub or any Affiliate thereof as
required under public disclosure obligations imposed thereon by applicable law.
The restrictions on disclosure of information contained in this Section 7.3 do
not extend to any Evaluation Material that (i) is publicly known at the time of
its disclosure, (ii) is lawfully received from a third party not known by
Parent or Acquisition Sub to be bound in a confidential relationship to the
Company, (iii) was generated independently by Parent or Acquisition Sub or any
of the persons listed in (a) above solely from information not supplied by the
Company or its authorized representatives or (iv) is required to be disclosed
pursuant to a governmental order or decree or other legal requirement to
produce or disclose such item of information. In the event this Agreement is
terminated pursuant to Section 11.1, this covenant shall continue to be
effective as against Parent and Acquisition Sub, and Parent and Acquisition Sub
shall, upon the written request of the Company, return to the Company within 20
days after receipt of such request or destroy the Evaluation Material provided
to Parent or Acquisition Sub by the Company.
4. CONSENTS. Each party shall use its best efforts, and the other
party 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.
5. 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 and regulations, to consummate and make effective the
transactions contemplated hereby as soon as reasonably practicable.
6. NOTICE OF PROSPECTIVE BREACH; RIGHT TO TERMINATE OR WAIVER OF
SUCH RIGHT. (a) Each party shall immediately notify the other parties in
writing upon the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing as if such representation and warranty were made at such time or
(ii) any material failure of any party hereto or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
(b) Notwithstanding anything contained in this Agreement to the
contrary, if Parent and Acquisition Sub are notified in writing in accordance
with Section 7.6(a) above by the Company and the Shareholders' Representative
that any of the representations and warranties of the Shareholders set forth in
Section 4 or any of the representations and warranties of the Company and the
Indemnifying Shareholders set forth in Section 5 are untrue or incorrect in any
material respect, Parent or Acquisition Sub may, at its option and in its sole
discretion, (i) invoke as unsatisfied, the conditions set forth in Section
8.2(a) hereof, and terminate this Agreement pursuant to Section 11.1, in which
event the parties hereto shall have no rights hereunder other than those that
specifically survive pursuant to Section 11.2, or (ii) waive their rights with
respect to such breach and the failure to satisfy such condition and proceed
with the transaction contemplated hereby, in which event, neither Parent nor
Acquisition Sub shall have any claim (whether for indemnification or otherwise)
against the Indemnifying Shareholders for such breach. Any written notice
pursuant to this Section 7.6(b) must state that it is being given pursuant to
this Section 7.6(b) to be effective.
7. PUBLIC ANNOUNCEMENTS. Each party agrees that, except (i) as
otherwise required by Law or public disclosure obligations of any party 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, the Shareholders' Representative or Acquisition Sub, as
the case may be, which consent shall not unreasonably be withheld or delayed.
8. NEGOTIATION WITH OTHERS; DISPOSITION AND VOTING OF SECURITIES.
(a) During the Transition Period (the "Exclusive Period"), the Company and the
Shareholders shall deal exclusively with Parent and Acquisition Sub regarding
the acquisition of or investment in the Company, whether by way of merger,
purchase of capital stock, purchase of assets or otherwise (a "Potential
Transaction") and, without the prior written consent of Parent or Acquisition
Sub, neither the Company nor any Shareholder shall, and the Shareholders'
Representative and the Trustee shall cause the Company not to, directly or
indirectly, (i) solicit, initiate discussions with or engage in negotiations
with any Person (whether such negotiations are initiated by the Company or any
Shareholder or otherwise), other than Parent or Acquisition Sub or a party
designated by Parent or Acquisition Sub, relating to a Potential Transaction,
(ii) provide information or documentation with respect to the Company or the
Subject Business to any Person, other than Parent and Acquisition Sub or a
party designated by Parent or Acquisition Sub, relating to a Potential
Transaction or (iii) enter into an agreement with any Person, other than Parent
or Acquisition Sub, providing for any Potential Transaction. If the Company or
any Shareholder receives an unsolicited inquiry, offer or proposal relating to
any of the above, the Company or such Shareholder shall immediately notify
Parent and Acquisition Sub thereof. The Company and the Shareholders represent
to Parent and Acquisition Sub that they are not bound to negotiate a Potential
Transaction with any other Person and that their execution of this Agreement
does not violate any agreement to which any of them are bound or to which any
of the assets of the Company are subject.
(b) From and after the date hereof, each Shareholder shall, as to
himself or itself:
(i) without the prior written consent of Acquisition Sub,
refrain from transferring, selling or assigning to any Person, or
agreeing in any manner to transfer, sell or assign to any Person, or
pledge, encumber, deposit in a voting trust or grant a proxy with
respect to, any securities of the Company presently or hereafter owned
or controlled by him or it; PROVIDED, HOWEVER, that nothing contained in
this subparagraph (i) shall prohibit the Trustee from performing its
duties under the ESOP in the ordinary course of business and in
accordance with the ESOP plan and trust documents, the ESOP Loan
Agreement, the Pledge and Proxy Agreement, the Code and ERISA; and
(ii) vote the shares of capital stock of the Company presently
or hereafter owned or controlled by such Shareholder against any merger
(other than the Merger), consolidation, sale of assets, reorganization,
recapitalization, liquidation or winding up of the Company at every
meeting of shareholders of the Company called therefor and at every
adjournment thereof (or withhold consent in writing to any such action
proposed to be taken by written consent in lieu of a meeting); PROVIDED,
HOWEVER, that nothing contained in this subparagraph (ii) shall prevent
the Trustee from voting the ESOP Shares in the manner that the Trustee,
in its sole discretion, determines is necessary under the requirements
of ERISA and the Code.
(c) The parties recognize and acknowledge that a breach by the
Company or any Shareholder of this Section 7.8 will cause irreparable and
material loss and damage to Parent and Acquisition Sub as to which it will not
have an adequate remedy at law or in damages. Accordingly, each party
acknowledges and agrees that the issuance of an injunction or other equitable
remedy is an appropriate remedy for any such breach.
9. RELEASE BY INDEMNIFYING SHAREHOLDERS. (a) Anything contained
herein to the contrary notwithstanding, upon receipt by each Indemnifying
Shareholder of the consideration to be received by such Indemnifying
Shareholder pursuant to Section 2.2, each such Indemnifying Shareholder hereby
agrees that (without any further action on the part of such Indemnifying
Shareholder) the Company (for the benefit of the Company, Parent, Acquisition
Sub, the Surviving Corporation and their respective parents, subsidiaries,
Affiliates, divisions and predecessors and their past and present directors,
officers, employees and agents, and each of their respective successors, heirs,
assigns, executors and administrators (collectively, the "Released Persons"))
shall be irrevocably released and forever discharged 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 Indemnifying Shareholder ever had, now has or which
he or it 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
Time.
(b) Each Indemnifying Shareholder specifically represents and
warrants to the Released Persons that he 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
Indemnifying Shareholder and the Released Persons, which is the subject of this
Section 7.9.
10. INDEMNIFYING SHAREHOLDERS' REPRESENTATIVE. The Indemnifying
Shareholders agree among themselves (without prejudice to or affecting in any
way the rights provided in this Agreement or otherwise to Parent and
Acquisition Sub) as follows:
(a) APPOINT. The Indemnifying Shareholders, for themselves
and their personal representatives and other successors, hereby constitute
and appoint James H. Schwartzburg, as their agent (the "Shareholders'
Representative"), with full power and authority, except as otherwise
expressly provided in this Agreement, in the name of and for and on behalf
of the Indemnifying Shareholders, to take all action required or permitted
under this Agreement (including, without limitation, the giving and
receiving of all accounting, reports, notices, waivers and consents). In
the event of the death, physical or mental incapacity or resignation of
James H. Schwartzburg or any successor Shareholders' Representative, the
Indemnifying Shareholders shall promptly appoint a substitute or
substitutes and shall advise Parent and Acquisition Sub thereof. The
authority conferred under this Section 7.10 is an agency coupled with an
interest and all authority conferred hereby is irrevocable and not subject
to termination by the Indemnifying Shareholders or by operation of law,
whether by the death or incapacity of any Indemnifying Shareholder, the
termination of any trust or estate or the occurrence of any other event.
If any Indemnifying Shareholder should die or become incapacitated, if any
trust or estate should terminate or if any other such event should occur,
any action taken by the Shareholders' Representative pursuant to this
Section 7.10 shall be as valid as if such death or incapacity, termination
or other event had not occurred, regardless of whether or not the
Shareholders' Representative, Parent or Acquisition Sub shall have
received notice of such death, incapacity, termination or other event.
(b) RELIANCE BY REPRESENTATIVE. The Shareholders'
Representative shall be entitled to rely, and shall be fully protected in
relying, upon any statements furnished to it by any Indemnifying
Shareholder or the Company, or any other evidence deemed by the
Shareholders' Representative to be reliable, and the Shareholders'
Representative shall be entitled to act on the advice of counsel selected
by it. The Shareholders' Representative shall be fully justified in
failing or refusing to take any action under this Agreement unless it
shall have received such advice or concurrence of the Indemnifying
Shareholders as it deems appropriate or it shall have been expressly
indemnified to its satisfaction by the Indemnifying Shareholders severally
according to their respective Percentage Interests against any and all
Liability and expense that the Shareholders' Representative may incur by
reason of taking or continuing to take any such action. The Shareholders'
Representative shall in all cases be fully protected in acting, or
refraining from acting, under this Agreement in accordance with a request
of Indemnifying Shareholders whose aggregate Percentage Interests equal or
exceed 51%, and such request, and any action taken or failure to act
pursuant thereto, shall be binding upon all of the Indemnifying
Shareholders.
(c) EXPENSES OF REPRESENTATIVE. The Shareholders'
Representative shall be entitled to retain counsel and to incur such
expenses (including litigation expenses) as the Shareholders'
Representative deems to be necessary or appropriate in connection with its
performance of its obligations under this Agreement, and all such fees and
expenses (including reasonable attorneys' fees) incurred by the
Shareholders' Representative shall be borne by the Indemnifying
Shareholders severally according to their respective Percentage Interests.
(d) INDEMNIFICATION. The Indemnifying Shareholders hereby
agree severally to indemnify the Shareholders' Representative (in its
capacity as such) ratably according to their respective Percentage
Interests against, and to hold the Shareholders' Representative (in its
capacity as such) harmless from, any and all Liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of whatever kind which may at any time be imposed upon,
incurred by or asserted against the Shareholders' Representative in such
capacity in any way relating to or arising out of its action or failure to
take action pursuant to this Agreement or in connection herewith or
therewith in such capacity; PROVIDED, HOWEVER, that no Indemnifying
Shareholder shall be liable for the payment of any portion of such
Liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Shareholders' Representative. The
agreements in this paragraph shall survive termination of this Agreement.
SECTION 8. CONDITIONS.
1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction prior to the Closing Date of the following conditions unless
waived (to the extent such conditions can be waived) by Parent and Acquisition
Sub or the Company and the Shareholders' Representative, as applicable:
(a) APPROVALS. All authorizations, consents, Orders or
approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any Governmental Entity necessary for the consummation
of the transactions contemplated hereby shall have been obtained or made.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other Order issued by any
court or Governmental Entity of competent jurisdiction nor other legal
restraint or prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
(c) STATUTES. No action shall have been taken or threatened,
and no statute, rule, regulation or Order shall have been enacted,
promulgated or issued or deemed applicable to the transactions
contemplated hereby by any Governmental Entity that would (i) make the
consummation of the transactions contemplated hereby illegal or
substantially delay the consummation of any material aspect of the
transactions contemplated hereby, (ii) compel the Company, the Surviving
Corporation or Parent to dispose or hold separate all or a material
portion of the business or assets of the Company, the Surviving
Corporation or Parent as a result of the consummation of the transactions
contemplated hereby or (iii) render any party unable to consummate the
transactions contemplated hereby.
(d) HART-SCOTT-RODINO. The waiting period for consummation of
the transactions contemplated hereby prescribed by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have expired or
early termination thereof shall have been granted.
(e) LEGAL PROCEEDINGS. The Company and Berry Sterling
Corporation, a wholly-owned subsidiary of Parent, shall have executed a
Joint Stipulation of Discontinuance of Claims and Counterclaims With
Prejudice, which shall be filed by the parties thereto with the U.S.
District Court of the District of Kansas immediately upon consummation of
the transactions contemplated hereby.
2. CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUISITION SUB. The
obligations of Parent and Acquisition Sub to consummate the Merger and the
related transactions contemplated hereby are subject to the satisfaction of the
following conditions unless waived (to the extent such conditions can be
waived) by Parent and Acquisition Sub:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the Company, the Indemnifying
Shareholders and the Trustee, respectively, in this Agreement shall be
true and correct in all material respects (except for such representations
and warranties which are qualified by their terms by a reference to
materiality, which representations and warranties as so qualified shall be
true in all respects) at and as of the Effective Time with the same effect
as if such representations and warranties had been made at and as of the
Effective Time, and Parent and Acquisition Sub shall have received
certificates to that effect signed by the Chief Executive Officer of the
Company and the Shareholders' Representative and the Trustee,
respectively.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS. The Company, the Indemnifying Shareholders and the Trustee
shall have performed in all material respects all obligations and
covenants required to be performed by them, respectively, under this
Agreement as of the Effective Time, and Parent and Acquisition Sub shall
have received certificates to that effect signed by the Chief Executive
Officer of the Company and the Shareholders' Representative and the
Trustee, respectively.
(c) AUTHORIZATION. All action necessary to authorize the
execution, delivery and performance of this Agreement and the Related
Documents by the Company and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
requisite shareholder approvals, shall have been duly and validly taken by
the Company, and the Company shall have full power and right to consummate
the transactions contemplated hereby and thereby on the terms provided
herein.
(d) OPINION OF THE COMPANY'S AND THE INDEMNIFYING
SHAREHOLDERS' COUNSEL. Parent and Acquisition Sub shall have received an
opinion of Spencer Fane Britt & Browne, counsel for the Company and the
Indemnifying Shareholders, dated the Closing Date, in form and substance
reasonably satisfactory to counsel for Parent and Acquisition Sub.
(e) CONSENTS AND APPROVALS. Parent and Acquisition Sub shall
have received duly executed copies of all third-party consents and
approvals in form and substance satisfactory to Parent and Acquisition Sub
and their counsel, that are (i) required for consummation of the
transactions contemplated hereby or (ii) that are required in order to
prevent a breach of or a default under or a termination of any Contract to
which the Company is a party or to which any portion of property of the
Company is subject.
(f) GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, Orders or approvals of, and filings or registrations with,
any Governmental Entity which are required for or in connection with the
execution and delivery by the Company and the Shareholders of this
Agreement and the Related Documents and the consummation by the Company
and the Shareholders of the transactions contemplated hereby and thereby
shall have been obtained or made.
(g) CORPORATE RESOLUTIONS. Parent and Acquisition Sub shall
have received certified copies of the resolutions of the Company's board
of directors and the Shareholders, approving this Agreement, the Merger,
all other agreements and documents contemplated hereby and the
consummation of the transactions contemplated hereby.
(h) ABSENCE OF MATERIAL ADVERSE CHANGE. Since June 30, 1996,
and except as set forth in the Disclosure Letter, there shall have been no
Material Adverse Change.
(i) OFFICER'S CERTIFICATE. The Company shall have delivered
an Officer's Certificate dated as of the Closing Date to Parent and
Acquisition Sub certifying (i) that attached thereto is a true and
complete copy of the Company's Charter and all amendments thereto; (ii)
that attached thereto is a true and complete copy of the Company's By-laws
as in effect on the date of such certification; and (iii) as to the
incumbency and genuineness of the signature of each officer of the Company
executing this Agreement or any of the other documents contemplated
hereby.
(j) FINANCING. Parent and Acquisition Sub shall have obtained
on terms and conditions satisfactory to Parent and Acquisition Sub in
their sole discretion all of the financing needed in order to consummate
the transactions contemplated hereby.
(k) DUE DILIGENCE. Parent and Acquisition Sub shall be
satisfied in all respects with the results of their business, legal,
environmental and accounting due diligence investigation and review of the
Company which shall be performed by counsel for Parent and Acquisition
Sub, accountants and other representatives.
(l) EMPLOYMENT AGREEMENT. The Employment Agreement
substantially in the form of EXHIBIT C, shall have been duly and validly
executed by the employee named therein and shall be in full force and
effect.
(m) NONCOMPETITION AND CONSULTING AGREEMENT. The Surviving
Corporation and James H. Schwartzburg shall have entered into the
Noncompetition and Consulting Agreement, substantially in the form of
EXHIBIT D, and such agreement shall be in full force and effect.
(n) ESCROW AGREEMENT. Parent, the Shareholders' Representative
and the Escrow Agent shall have entered into the Escrow Agreement in form
and substance reasonably satisfactory to Parent, Acquisition Sub and their
counsel, pursuant to which funds shall be deposited into an escrow account
to secure (i) certain of the obligations of the Indemnifying Shareholders
under Sections 3.3(b) and 9.1(a) and (b) hereof and (ii) the payment of
the costs and expenses associated with certain environmental remediation
to be agreed upon relating to the plant leased by the Company in Reno,
Nevada.
(o) SHAREHOLDERS' EXPENSES. The Company and the Shareholders
(including the Trustee, on behalf of the ESOP) shall have delivered to
Acquisition Sub a correct and complete schedule of all Shareholders'
Expenses incurred by or on behalf of the Company and the Shareholders
through the Effective Time that are unpaid as of the Effective Time, and
Acquisition Sub shall have received a certificate signed by the Chief
Executive Officer of the Company, the Shareholders' Representative and the
Trustee certifying as to the accuracy thereof.
(p) REAL ESTATE AND EQUIPMENT. The Shareholders and the
Affiliates of such Shareholders who own the assets listed on SCHEDULE II
attached hereto shall have agreed to sell and transfer such assets to the
Surviving Corporation, for an aggregate purchase price of $802,000.00 in
cash, immediately following consummation of the transactions contemplated
hereby; and such sale shall be made in a form and manner satisfactory to
Parent and Acquisition Sub and their counsel.
(q) ENVIRONMENTAL. Acquisition Sub and its representatives
shall have satisfactorily completed the environmental audits and analyses
with respect to the Real Property located in Lawrence, Kansas and Reno,
Nevada, and the results of such audits shall be satisfactory to
Acquisition Sub and Parent in their sole discretion.
(r) INDUSTRIAL REVENUE BONDS. The Company, as tenant, shall
have delivered to the City of Lawrence, Kansas (the "City"), all of the
documentation necessary to redeem and pay the outstanding City of
Lawrence, Kansas, Taxable Industrial Revenue Bonds, Series 1992 maturing
on and after April 1, 1997 and the outstanding City of Lawrence, Kansas,
Taxable Industrial Revenue Bonds, Series A, 1993 maturing on and after
October 1, 1997, and the City shall have approved and authorized such
redemption and issued a notice thereof to the bondholders.
(s) SALE OF CAPITAL STOCK OF PACKER PLASTICS INTERNATIONAL,
INC. The Company shall have sold all of the capital stock of Packer
Plastics International, Inc., a Virgin Islands corporation, to James H.
Schwartzburg or his designee and such sale shall have been made in a form
and manner satisfactory to Parent and Acquisition Sub and their counsel,
each of which shall have received copies of all documentation related
thereto.
(t) TERMINATION OF CAPITAL LEASES. The Company shall have
delivered to Parent and Acquisition Sub duly executed letter agreements,
in form and substance reasonably satisfactory to Parent, Acquisition Sub
and their counsel, providing for the termination and payoff of each of the
following capital leases as of the Effective Time, and the removal of all
Encumbrances related thereto: (i) Security Agreement dated March 12,
1996, between the CIT Group/Equipment Financing, Inc. and the Company,
(ii) Note and Security Agreement between the Company and NationsBanc
Leasing Corporation and (iii) Lease Agreement Order No. OL-7148 dated
October 30, 1992, between the Company and The CIT Group/Equipment
Financing, Inc. (by assignment from Amplicon, Inc.).
(u) AMENDMENT OF ACC-U-PRINT PRINTING PRESS LEASE AGREEMENT.
The Lease Agreement dated September 23, 1996, between the Company and J.R.
Aero Leasing, Inc. (the "Lessor") shall have been amended by the parties
thereto to provide that (i) the Company will have the option, to be
exercised in its sole discretion, to terminate the agreement within 60
days after delivery of the equipment leased thereunder, (ii) in the event
of such termination, the Company shall have no further obligation to the
Lessor other than to return the equipment leased thereunder to the Lessor
and (iii) the Company will have an option to purchase the equipment within
60 days after delivery thereof for a purchase price equal to $450,000 less
the amount(s) of any monthly lease payments made thereon; and such
amendment shall be in form and substance satisfactory to Parent and
Acquisition Sub and their counsel, each of which shall have received
copies of all documentation related thereto.
(v) EMPLOYEE CLOSING BONUSES. For each employee with whom the
Company has an agreement (written or oral) that obligates the Company to
make payment of any consideration to such employee as a result of the
transactions contemplated by this Agreement, the Company shall have paid
in cash all amounts payable thereunder to such employee.
(w) PAYMENT AND CANCELLATION OF THE STIPULATED DEBT. The
Company shall have delivered to Parent and Acquisition Sub duly executed
letter agreements in form and substance reasonably satisfactory to Parent,
Acquisition Sub and their counsel, providing for (i) the payment and
cancellation of all of the Stipulated Debt as of the Closing Date and (ii)
the release of any Encumbrances on the assets of the Company relating
thereto.
(x) INVENTION ASSIGNMENT AGREEMENT. The Company shall have
entered into an invention assignment agreement with James Schwartzburg, in
form and substance reasonably satisfactory to Parent, Acquisition Sub and
their counsel, with respect to the ownership by the Company of all
patents, copyrights, inventions and other intellectual property
discovered, developed or improved by Mr. Schwartzburg in connection with
the Subject Business.
(y) RESIGNATIONS FROM 401(K) TRUSTEE POSITIONS. As of the
Effective Time, James Schwartzburg and Daniel Rebeck shall have resigned
as the trustees of the PackerWare Corporation 401(k) Profit Sharing Plan.
(z) TERMINATION OF THE COMPANY'S 1995 STOCK OPTION PLAN;
CANCELLATION OF OUTSTANDING STOCK OPTIONS. Prior to the Closing Date, the
Board of Directors of the Company shall have terminated, by resolution
thereof, the Company's 1995 Stock Option Plan, and such resolutions shall
be in form and substance satisfactory to Parent, Acquisition Sub and their
counsel. In addition thereto, Bruce Sims and the Company shall have
executed an option termination agreement, in form and substance
satisfactory to Parent, Acquisition Sub and their counsel, pursuant to
which Bruce Sims shall have agreed to cancel all of his outstanding
options to purchase shares of capital stock of the Company under that
certain Incentive Option Agreement dated as of March 24, 1995 between the
Company and Bruce Sims.
3. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS.
The obligations of the Company and the Shareholders to consummate the Merger
and the related transactions contemplated hereby are subject to the
satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Company and the Shareholders:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by Parent and Acquisition Sub in this
Agreement shall be true and correct in all material respects (except for
such representations and warranties which are qualified by their terms by
a reference to materiality, which representations and warranties as so
qualified shall be true in all respects) at and as of the Effective Time
with the same effect as if such representations and warranties had been
made at and as of the Effective Time, and the Company, the Shareholders'
Representative and the Trustee shall have received a certificate signed by
an authorized officer of each of Parent and Acquisition Sub to that
effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB.
Parent and Acquisition Sub shall have performed in all material respects
their respective obligations and covenants required to be performed by
them under this Agreement prior to or as of the Effective Time, and the
Company, the Shareholders' Representative and the Trustee shall have
received a certificate signed by an authorized officer of each of Parent
and Acquisition Sub to that effect.
(c) AUTHORIZATION. All action necessary to authorize the
execution, delivery and performance of this Agreement and the Related
Documents by Parent and Acquisition Sub and the consummation of the
transactions contemplated hereby and thereby shall have been duly and
validly taken by Parent and Acquisition Sub.
(d) GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, Orders or approvals of, and filings or registrations with,
any Governmental Entity which are required for or in connection with the
execution and delivery of this Agreement and the Related Documents by
Parent and Acquisition Sub and the consummation by Parent and Acquisition
Sub of the transactions contemplated hereby and thereby shall have been
obtained or made.
(e) CORPORATE RESOLUTIONS. The Company, the Shareholders'
Representative and the Trustee shall have received certified copies of the
resolutions of Acquisition Sub's and Parent's board of directors and the
sole shareholder of Acquisition Sub, approving this Agreement, the Merger,
all other agreements and documents contemplated hereby to which
Acquisition Sub or Parent is a party and the consummation of the
transactions contemplated hereby.
(f) OFFICER'S CERTIFICATE. Acquisition Sub and Parent shall
have each delivered an Officer's Certificate dated as of the Closing Date
to the Company, the Trustee and the Shareholders' Representative
certifying (i) that attached thereto is a true and complete copy of the
certificate of incorporation of each of Acquisition Sub and Parent and all
amendments thereto, if any; (ii) that attached thereto is a true and
complete copy of the By-laws of each of Acquisition Sub and Parent, as in
effect on the date of such certification; and (iii) as to the incumbency
and genuineness of the signature of each officer of Acquisition Sub and
Parent executing this Agreement or any of the other documents contemplated
hereby.
(g) EMPLOYMENT AGREEMENT. The Employment Agreement shall have
been duly and validly executed by the parties thereto and shall be in full
force and effect.
(h) CONSULTING AND NONCOMPETITION AGREEMENT. The Consulting
and Noncompetition Agreement shall have been duly and validly executed by
the parties thereto and shall be in full force and effect.
(i) ESCROW AGREEMENT. The Escrow Agreement shall have been
duly and validly executed by the parties thereto and shall be in full
force and effect.
(j) FAIRNESS OPINION. The Trustee shall have received opinions
of Stern Brothers Valuation Advisors that regard (i) the consummation of
the Merger and the transactions contemplated by this Agreement as fair to
the ESOP from a financial point of view and (ii) neither the Per Allocated
Share Closing Amount nor the Per Unallocated Share Closing Amount as being
less than the fair market value as of the Closing Date of a share of
Company Common Stock.
SECTION 9. INDEMNIFICATION.
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 and/or any Indemnifying
Shareholder contained in Section 5 or in the Disclosure Letter, any
Exhibit (in its executed form) hereto or any certificate delivered
in connection herewith at or before the Effective Time; or
(ii) the breach of any agreement or covenant of the Company
contained in this Agreement or the Escrow Agreement; or
(iii) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub or the
Surviving Corporation or any other member of the Buyer Group arising
from or in connection with (A) any action or inaction of the
Shareholders in connection with the action of the Shareholders of
the Company required to approve the transactions contemplated by
this Agreement and the Related Documents or (B) any assertion by any
current or former Shareholder of the Company of any impropriety with
respect to any actions or transactions of or involving the Company
prior to or at the Effective Time (including, without limitation,
the actions and transactions contemplated by this Agreement and the
Related Documents); or
(iv) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub, the
Surviving Corporation, any other member of the Buyer Group or any
Employee Plan arising from or in connection with any assertion by
any participant, former participant, beneficiary or former
beneficiary of any Employee Plan or any Governmental Entity with
respect to the establishment, operation, administration or
termination of any Employee Plan, which condition, facts or
circumstances being asserted existed at or before the Effective
Time; or
(v) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub, the
Surviving Corporation or any other member of the Buyer Group arising
from or in connection with (a) any environmental condition existing
at or before the Effective Time at any property currently or
formerly owned, leased, or used by the Company or any predecessor of
the Company or (b) any generation, storage, treatment, disposal,
transportation, shipment offsite, or other management of Hazardous
Materials by the Company or any predecessor of the Company at or
before the Effective Time; or
(vi) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub or the
Surviving Corporation or any other member of the Buyer Group arising
from or in connection with the operation, dissolution or liquidation
of Pakka Plastics S.A. de C.V. or Packer Plastics International,
Inc.; or
(vii) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub or the
Surviving Corporation or any other member of the Buyer Group arising
from or in connection with the claim against the Company by Boyd E.
Bushnell; or
(viii) the assertion of any claim, demand, Liability or
obligation against the Company, Parent, Acquisition Sub or the
Surviving Corporation or any other member of the Buyer Group arising
from or in connection with any of the following: (A) common area
maintenance charges assessed, if any, for the period prior to the
Effective Time under the Commercial Lease dated July 26, 1974, as
amended, between Equitable Life Assurance Society (by assignment
from Commercial Lease Associates, Inc.) and the Company and (B) the
Underground Fund Consent Agreement dated December 12, 1994, between
the Company and the Kansas Department of Health and Environment.
(b) BY EACH SHAREHOLDER IN FAVOR OF THE BUYER GROUP. Each of
the Shareholders and their respective heirs, estate and assigns (severally
as to himself, herself or itself and not jointly) 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 such Shareholder contained in Section
4 or any certificate delivered by such Shareholder in connection
herewith at or before the Effective Time; 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 Exhibit (in its executed form) hereto.
(c) BY PARENT AND ACQUISITION SUB IN FAVOR OF THE COMPANY AND
THE SHAREHOLDERS. Parent and Acquisition Sub jointly and severally agree
to indemnify and hold harmless the Company and 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 and Acquisition Sub contained
in Section 6 or in any Exhibit (in its executed form) hereto or any
certificate delivered in connection herewith or therewith at or
before the Effective Time; or
(ii) the breach of any agreement or covenant of Parent and
Acquisition Sub contained in this Agreement or the Escrow Agreement.
2. LIMITATIONS ON INDEMNIFICATION. Anything contained herein to
the contrary notwithstanding:
(a) INDEMNITY BASKETS FOR THE SHAREHOLDERS. The Buyer Group
shall not have the right to be indemnified pursuant to Section 9.1(a)
unless and until the Buyer Group shall have incurred on a cumulative basis
since the Closing Date aggregate Losses in an amount exceeding $150,000,
in which event the right to be indemnified shall apply only to the extent
such Losses exceed $150,000; PROVIDED, HOWEVER, that in no event shall the
limitations set forth in this Section 9.2(a) apply to the rights of the
Buyer Group to be indemnified pursuant to (i) Section 9.1(a)(i) with
respect to the representations and warranties set forth in Sections 5.3,
5.8, 5.19, 5.28 and willful breaches, (ii) Section 9.1(a)(ii), (iii)
Section 9.1(a)(iii) other than with respect to any such claim, demand,
Liability or obligation that arises out of the ESOP, and (iv) Sections
9.1(a)(vi), (vii) and (viii).
(b) INDEMNITY LIMITATIONS FOR THE SHAREHOLDERS. The sum of all
Losses pursuant to which indemnification is payable by the Shareholder
Group pursuant to Section 9.1(a) shall not exceed $2,500,000 in the
aggregate; PROVIDED, HOWEVER, that in no event shall the limitations set
forth in this Section 9.2(b) apply to the rights of the Buyer Group to be
indemnified pursuant to (i) Section 9.1(a)(i) with respect to the
representations and warranties set forth in Sections 5.3, 5.19 and willful
breaches, (ii) Section 9.1(a)(ii), and (iii) Section 9.1(a)(iii) other
than with respect to any such claim, demand, Liability or obligation that
arises out of the ESOP. In addition, the sum of all Losses pursuant to
which indemnification is payable by the Shareholders and their respective
heirs, estate and assigns pursuant to Section 9.1(b) shall not exceed
$2,500,000 in the aggregate; PROVIDED, HOWEVER, that in no event shall the
limitations set forth in this Section 9.2(b) apply to the rights of the
Buyer Group to be indemnified pursuant to (i) Section 9.1(b)(i) with
respect to representations and warranties set forth in Section 4.1 and
willful breaches and (ii) Section 9.1(b)(ii).
(c) INDEMNITY BASKETS FOR THE BUYER GROUP. The Shareholders
and the Company shall not have the right to be indemnified pursuant to
Section 9.1(c) unless and until the Shareholders and the Company shall
have incurred on a cumulative basis since the Closing Date aggregate
Losses in an amount exceeding $150,000, in which event the right to be
indemnified shall apply only to the extent such Losses exceed $150,000;
PROVIDED, HOWEVER, that in no event shall the limitations set forth in
this Section 9.2(c) apply to the rights of the Shareholders and the
Company to be indemnified pursuant to (i) Section 9.1(c)(i) with respect
to the representations and warranties set forth in Section 6.3 and willful
breaches and (ii) Section 9.1(c)(ii).
(d) INDEMNITY LIMITATIONS FOR THE BUYER GROUP. The sum of all
Losses pursuant to which indemnification is payable by Parent and
Acquisition Sub pursuant to Section 9.1(c) shall not exceed $2,500,000 in
the aggregate; PROVIDED, HOWEVER, that in no event shall the limitations
set forth in this Section 9.2(d) apply to the rights of the Shareholders
and the Company to be indemnified pursuant to (i) Section 9.1(c)(i) with
respect to the representations and warranties set forth in Section 6.3 and
willful breaches and (ii) Section 9.1(c)(ii).
3. ASSERTION OF CLAIMS. No claim shall be brought under
Section 9.1 hereof unless the Indemnified Persons, or any of them, at any time
prior to the applicable Survival Date, give the Indemnifying Persons (a)
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 (b) written
notice pursuant to Section 9.4 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 9.1 hereof.
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 actual or threatened 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 is
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 acknowledgment, 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 9.4(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 9.4(b), or are otherwise restricted
from so assuming by the proviso to the first sentence of Section 9.4(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.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the
further provisions of this Section 9.5, the representations and warranties of
the Shareholders contained in Section 4 and the representations and warranties
of the Company and the Indemnifying Shareholders contained in Section 5 and the
representations and warranties of Parent and Acquisition Sub contained in
Section 6 shall survive the Effective Time until the second anniversary of the
Effective Time; PROVIDED, HOWEVER, that (a) the representations and warranties
of the Indemnifying Shareholders and the Company contained in Section 5.18
shall survive the Effective Time until the fifth anniversary of the Effective
Time, (b) the representations and warranties of the Indemnifying Shareholders
and the Company contained in Sections 4.1, 4.2, 5.3, 5.4, 5.19 and 5.20 shall
survive the Effective Time without any time limit and (c) the representations
and warranties set forth in Sections 5.8 and 5.17 shall survive the Effective
Time until 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 Effective Time 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".
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 and Acquisition Sub to enter into this Agreement and
the Certificate of Merger and to approve the Merger (and the Company and each
Shareholder acknowledges that Parent and Acquisition Sub have expressly relied
thereon) and (ii) are solely for the benefit of Parent and Acquisition Sub.
Accordingly, no third party (including, without limitation, the Shareholders or
any other holder of capital stock of the Company) 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 Surviving Corporation with respect to such representations or warranties or
any matter subject to or resulting in indemnification under this Section 9, or
otherwise.
7. REMEDIES EXCLUSIVE. The remedies provided for in this Section 9
shall be the exclusive remedies of the Indemnified Persons in connection with
any claim, demand, loss, liability or obligation arising under this Agreement
or in connection with the transactions contemplated hereby; PROVIDED, HOWEVER,
that nothing in this Section 9.7 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 10. ADDITIONAL AGREEMENTS.
1. EXPENSES. Each of the Company and the Shareholders, on the one
hand, and Parent and Acquisition Sub, on the other hand, shall bear their own
fees and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and the Related Documents and the consummation of
the transactions contemplated hereby and thereby; PROVIDED, HOWEVER, that the
Indemnifying Shareholders shall bear all of the fees and expenses (including,
but not limited to, reasonable attorneys' fees) of the ESOP and the Trustee.
The Indemnifying Shareholders shall include the fees and expenses (including,
but not limited to, reasonable attorneys' fees) of the ESOP and the Trustee in
the Disclosure Letter pursuant to Section 5.28 and shall cause the Company to
pay such fees and expenses prior to the Effective Time; PROVIDED, HOWEVER, that
in the event the transactions contemplated hereby are not consummated, the
Indemnifying Shareholders shall cause the Company to pay such fees and expenses
upon receipt of the appropriate invoices therefor. Any fees and expenses of
the Company and the Shareholders that are intended to be paid with the funds of
the Company shall be deducted, to the extent such fees and expenses are not
actually paid as of the Closing Date or accrued on the Company's balance sheet,
from the Maximum Closing Merger Consideration pursuant to Section 2. Parent
shall be responsible for the filing fee required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
2. DISCLOSURE OF INFORMATION; NONCOMPETITION. (a) From and after
the Closing, the Shareholders 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 or any Affiliate thereof.
(b) Reference is made to Section 4 of the Noncompetition and
Consulting Agreement to be dated as of the Closing Date between the Surviving
Corporation and James H. Schwartzburg (the "Noncompetition and Consulting
Agreement"), which provides for a noncompetition covenant by Mr. Schwartzburg.
Such provision is incorporated herein by reference as if set forth herein in
its entirety.
(c) The Shareholders other than James H. Schwartzburg and the
Trustee (such Shareholders other than Mr. Schwartzburg and the Trustee being
hereinafter referred to as the "Designated Shareholders") acknowledge that the
Subject Business has been conducted by the Company, and substantial sales of
the Company's products have been made, in each State of the United States, and
acknowledge and recognize the highly competitive nature of the industry in
which the Subject Business is involved. Accordingly, in consideration of the
premises contained herein, the consideration to be received hereunder and in
consideration of and as an inducement to Acquisition Sub and Parent to
consummate the transactions contemplated hereby, the Designated Shareholders
shall not during the term of the applicable Shareholder Noncompetition Period
(as defined in paragraph (d) below) (i) directly or indirectly represent or
engage in any Competitive Business, whether such representation or engagement
shall be for profit or not or whether such engagement shall be as an officer,
director, partner, stockholder (other than ownership of up to 1% of the
outstanding securities of any public company with a market capitalization in
excess of $1 billion or investment in mutual funds), Affiliate or other
participant, (ii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Surviving Corporation (or
any Affiliate thereof) and any third party, including, without limitation, any
customer, supplier or employee of the Surviving Corporation, or (iii)
affirmatively assist or induce (including, by way of example but not in
limitation thereof, providing financing or advisory or consulting services) any
third party to engage in any Competitive Business in any manner described in
the foregoing clauses (i) and (ii).
(d) As used in paragraph (c) above, "Shareholder
Noncompetition Period" means (i) with respect to Sue S. Mills, the period of
time from and after the Closing Date until the first anniversary of the Closing
Date; and (ii) with respect to the Designated Shareholders (other than Sue S.
Mills) the period of time from and after the Closing Date until the fifth
anniversary of the Closing Date.
(e) The parties hereto recognize and acknowledge that a breach
by any Shareholder of this Section 10.2 will cause irreparable and material
loss and damage to the Surviving Corporation and Parent as to which they will
not have an adequate remedy at law or in damages. Accordingly, each party
acknowledges and agrees that the issuance of an injunction or other equitable
remedy is an appropriate remedy for any such breach.
3. USE OF NAME. No Shareholder shall allege or assert that the
name "PackerWare", "Packer Plastics" or "Packer" or any variant thereof has not
become distinctive and unique and no Shareholder shall allege or assert that
such names have not obtained secondary meaning, identifying "PackerWare",
"Packer Plastics" or "Packer" or any variant thereof as the source of goods
associated with such name. The Shareholders recognize and acknowledge that
they are proscribed by operation of law from, and 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 or any Affiliate
thereof) using the name "PackerWare", "Packer Plastics" or "Packer" or any
variant thereof or (B) performing any service or offering any goods identified
with the name "PackerWare", "Packer Plastics" or "Packer" 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 or any Affiliate
thereof. In connection therewith, it is agreed that the undertaking under this
Section 10.3 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 10.3 would cause the
Surviving Corporation and Parent irreparable harm. In the event of any such
breach, the Surviving Corporation and Parent 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.
4. RELATIONSHIPS WITH VENDORS AND CUSTOMERS. From and after the
date hereof, no Shareholder 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 the Surviving Corporation
prior to and after the Closing, or on the business relationship between the
Company and the Surviving Corporation and any vendor, supplier or customer
thereof.
5. TERMINATION OF AFFILIATE TRANSACTIONS. Each of the Indemnifying
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 5.20, other than the Lease dated
September 23, 1996, as amended, between the Company and J.R. Aero Leasing,
Inc., and (ii) any and all agreements that were not, but by their terms should
have been, set forth in the Disclosure Letter in response to Section 5.20
(other than those agreements pertaining to the establishment, operation,
maintenance and termination of the ESOP), and all such agreements shall have no
further force or effect as of the Effective Time.
6. AMENDMENT AND TERMINATION OF ESOP. (a) Prior to the Closing
Date, the Company shall amend the ESOP to provide that (i) Company Common Stock
shall be allocated to the accounts of ESOP participants for those contributions
made by the Company to the ESOP during the period beginning November 1, 1996
and ending on the Closing Date and (ii) upon termination of the ESOP as of the
Effective Time, any distributions to ESOP participants shall be made solely in
cash. The Company shall take all steps necessary to terminate the ESOP as of
the Closing Date.
(b) As soon as reasonably practicable after the Closing Date,
Parent shall cause the Surviving Corporation to take all steps necessary to
liquidate the ESOP and distribute the account balances of each ESOP participant
therein, all in accordance with the applicable provisions of ERISA and the
Code. Parent shall cause the Surviving Corporation to take all actions,
including, without limitation, the filing with the Internal Revenue Service
(the "IRS") of Form 5310, the giving of notices to ESOP participants and the
adoption of any amendments to the ESOP that may be necessary to effect its
liquidation. Parent and the Surviving Corporation shall cause the Trustee to
make final distributions of the assets of the ESOP as soon as reasonably
practicable after approval of the termination of the ESOP from the requisite
Governmental Entities, including the IRS, has been received by the Surviving
Corporation. The Surviving Corporation shall pay all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by the ESOP and the Trustee in connection with the termination and
liquidation of the ESOP; PROVIDED, HOWEVER, that the Trustee shall notify the
Surviving Corporation of any such costs and expenses prior to the incurrence
thereof and the Surviving Corporation shall approve such costs and expenses.
7. 401(K) PLAN PARTICIPATION. In the event that Parent shall
terminate the 401(k) plan of the Company in which the employees of the Company
currently participate, such employees, as employees of the Surviving
Corporation, shall be permitted to participate in the 401(k) plan of Parent.
In determining the eligibility of such employees to participate in, and the
vesting schedule of the benefits they receive under, the 401(k) plan of Parent,
the years of service such employees had with the Company prior to the Merger
shall be considered as if such years of service had been with the Surviving
Corporation.
8. ACCRUAL OF CLOSING BONUS PAYMENTS. Prior to the Closing Date,
the Company shall, and the Shareholders' Representative shall cause the Company
to, accrue on its financial books and records any and all payments that are
payable by the Company to any of its employees as a result of the transactions
contemplated by this Agreement. Such amounts shall be accrued as contingent
liabilities and such accrual shall have been made in accordance with GAAP.
9. ESOP LOAN INTEREST PAYMENTS. Prior to the Closing Date, the
Company shall have made contributions to the ESOP in amounts necessary to
permit the ESOP to pay to Boatmen's all interest accrued under the ESOP Loan
Agreement through the Closing Date.
10. DISSOLUTION OF PAKKA PLASTICS S.A. DE C.V. The Company and the
Indemnifying Shareholders acknowledge that the Company owns fifty percent of
the outstanding capital stock of Pakka Plastics S.A. de C.V., a Mexican
corporation ("Pakka"), and that Pakka is in the process of being dissolved by
the shareholders thereof. As a result of the Merger, the Surviving Corporation
will own such capital stock and in connection therewith, the Indemnifying
Shareholders agree to cooperate and use their respective best efforts
(including causing Pakka to retain Mexican counsel) to assist Parent and the
Surviving Corporation in causing such dissolution to be completed in a form and
manner satisfactory to Parent and the Surviving Corporation and their counsel
as soon as practicable, but in no event more than 60 days, after the Effective
Time.
11. DISCLOSURE COVENANT OF THE COMPANY AND THE INDEMNIFYING
SHAREHOLDERS. (a) The Company and the Indemnifying Shareholders represent and
warrant to the ESOP and the Trustee that except as set forth in the next
sentence and except for (i) this Agreement, (ii) the Escrow Agreement, (iii)
the Noncompetition and Consulting Agreement, (iv) the Real Estate and Equipment
Sale Agreement, (v) the Lease Agreement dated as of September 23, 1996 between
the Company and J.R. Aero Leasing, Inc., which lease will be amended in
accordance with Section 8.2(u) hereof, and (vi) the oral agreement for
employment between the Company and Sue S. Mills, the terms of which are not
being changed in connection with the Merger, there are no other agreements,
understandings, arrangements or obligations entered into or to be entered into
between Parent, Acquisition Sub, the Company or the Surviving Corporation, on
the one hand, and any Indemnifying Shareholder, any family member of any
Indemnifying Shareholder or any entity in which any Indemnifying Shareholder
has an interest, on the other hand, by which any Indemnifying Shareholder, any
family member of any Indemnifying Shareholder or any entity in which any
Indemnifying Shareholder has an interest will (directly or indirectly) receive
any consideration in connection with the transactions relating to the Merger.
Except for payments to Sue S. Mills and John Wright (the spouse of Amy S.
Wright), which payments, if any, shall not exceed $20,000 in the aggregate,
none of the Indemnifying Shareholders shall receive any consideration pursuant
to Section 8.2(v) or 10.8 hereof. Prior to the Closing, the Company and the
Indemnifying Shareholders shall deliver to the Trustee drafts of the
aforementioned agreements and shall deliver at the Effective Time executed
copies of each of such agreements.
(b) The parties hereto recognize and acknowledge that a breach of
Section 10.11(a) will cause irreparable and material loss and damage to the
ESOP. Accordingly, any agreement, understanding, arrangement or obligation
that is in violation of Section 10.11(a) shall be null and void and of no
further force or effect as to the provision that requires that compensation be
paid to such Indemnifying Shareholder, but shall not affect the validity or
enforceability of the remaining provisions of such agreement, understanding,
arrangement or obligation. Parent, Acquisition Sub, the Company and the
Indemnifying Shareholders agree that, in the event any such provision is deemed
ineffective pursuant to the previous sentence of this Section 10.11(b), the
parties to the agreement containing such provision shall use their respective
reasonable best efforts to revise the terms of such provision so as to provide
the mutual benefits intended by the parties thereto, which revised provision
shall be reasonably acceptable to the Trustee.
12. TRANSFER OF LIFE INSURANCE POLICY. The parties hereto
acknowledge and agree that, prior to the Closing, the Company shall transfer to
James Schwartzburg all of the insurance policies covering his life that are
maintained by the Company, subject to the debt thereon and for no additional
consideration, and such transfer shall be made in form and substance
satisfactory to Parent and Acquisition Sub and their counsel, each of which
shall have received copies of all documentation related thereto.
SECTION 11. TERMINATION; EFFECT OF TERMINATION.
1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing by:
(a) the mutual consent of Acquisition Sub, the Company and the
Shareholders' Representative; or
(b) Acquisition Sub, if there has been a breach by the Company
or any Shareholder of any representation, warranty, covenant or agreement
set forth in this Agreement on the part of the Company or any Shareholder
which is material and which the Company or such Shareholder fails to cure
within 10 Business Days after notice thereof is given by Acquisition Sub
(except no cure period shall be provided for a breach by the Company or
any Shareholder which by its nature cannot be cured); or
(c) the Company, if there has been a breach by Parent or
Acquisition Sub of any representation, warranty, covenant or agreement set
forth in this Agreement on the part of Parent or Acquisition Sub which is
material and which Parent or Acquisition Sub fails to cure within 10
Business Days after notice thereof is given by the Company (except no cure
period shall be provided for a breach by Parent or Acquisition Sub which
by its nature cannot be cured); or
(d) Acquisition Sub, the Company or the Shareholders'
Representative, if the conditions set forth in Section 8.1 shall not have
been satisfied or waived (to the extent they may be waived) by January 31,
1997; or
(e) Acquisition Sub, if the conditions set forth in Section
8.2 shall not have been satisfied or waived (to the extent they may be
waived) by January 31, 1997; or
(f) the Company, if the conditions set forth in Section 8.3
shall not have been satisfied or waived (to the extent they may be waived)
by January 31, 1997; or
(g) Acquisition Sub, the Company or the Shareholders'
Representative, if any permanent injunction or other Order of a court or
other competent authority preventing the Closing shall have become final
and nonappealable;
PROVIDED, HOWEVER, that none of the Company, the Shareholders' Representative,
Parent nor Acquisition Sub shall be entitled to terminate this Agreement
pursuant to Section 11.1(d), (e) or (f) if such party's intentional breach (or,
with respect to the Shareholders' Representative, any Shareholder's intentional
breach) of this Agreement has prevented the satisfaction of a condition. Any
termination pursuant to Section 11.1(a) shall be effected by a written
instrument signed by Acquisition Sub, the Shareholders' Representative and the
Company, and any termination pursuant to this Section 11.1 (other than a
termination pursuant to Section 11.1(a)) shall be effected by written notice
from the party or parties so terminating to the other parties hereto, which
notice shall specify the Section hereof pursuant to which this Agreement is
being terminated.
2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 11.1, this Agreement shall be of no further
force or effect, except for Sections 7.3, 7.7, Section 10.1, this Section 11.2
and Section 12, each of which shall survive the termination of this Agreement;
PROVIDED, HOWEVER, that the Liability of any party for any breach by such party
of the representations, warranties, covenants or agreements of such party set
forth in this Agreement occurring prior to the termination of this Agreement
shall survive the termination of this Agreement and, in addition, in the event
of any action for breach of contract in the event of a termination of this
Agreement, the prevailing party shall be reimbursed by the other party to the
action for reasonable attorneys' fees and expenses relating to such action.
SECTION 12. MISCELLANEOUS PROVISIONS.
1. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of Acquisition Sub, the Company
and the Shareholders' Representative; PROVIDED, HOWEVER, that any amendment
that would be adverse to the interests of the ESOP or the Trustee shall not be
effective unless such amendment is signed by the Trustee.
2. EXTENSION; WAIVER. At any time prior to the Closing, the
parties (with the Shareholders' Representative acting on behalf of the
Shareholders) 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. Notwithstanding anything to the contrary contained in this
Section 12.2, no waiver or extension that is adverse to the interests of the
ESOP or the Trustee shall be valid unless signed by the Trustee.
3. ENTIRE AGREEMENT. This Agreement and the other agreements and
documents referenced herein (including, but not limited to, the Disclosure
Letter 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 July 11, 1996, among Berry Plastics Corporation, the Company
and James H. Schwartzburg).
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.
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; PROVIDED, HOWEVER, that anything contained herein
to the contrary notwithstanding, the Surviving Corporation, Parent and/or
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 providing
financing for the transactions contemplated hereby.
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.
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, to:
PackerWare Corporation
2330 Packer Road
Lawrence, Kansas 66044-0219
Attention: James H. Schwartzburg
Telecopier: (913) 842-3432;
with a copy to:
Spencer Fane Britt & Browne
1400 Commerce Bank Building
1000 Walnut Street
Kansas City, Missouri 64106-2140
Attention: Gad Smith, Esq.
Telecopier: (816) 474-3216;
(b) if to the Indemnifying Shareholders, to the Shareholders'
Representative at:
James H. Schwartzburg
1535 Alvamar Drive
Lawrence, Kansas 66047;
with a copy to:
Spencer Fane Britt & Browne
1400 Commerce Bank Building
1000 Walnut Street
Kansas City, Missouri 64106-2140
Attention: Gad Smith, Esq.
Telecopier: (816) 474-3216;
(c) if to Parent, Acquisition Sub or the Surviving
Corporation, to:
Berry Plastics Corporation
101 Oakley Street
Evansville, Indiana 47706
Attention: Martin R. Imbler
Telecopier: (812) 421-9604;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Michael Joseph O'Brien, Esq.
Telecopier: (212) 408-2420; and
(d) if to the ESOP or the Trustee, to:
The Investor Services Trust Company
7007 College Boulevard, Suite 315
Overland Park, KS 66211
Attention: Clifford Shinski
Telecopier: (913) 338-1665;
with a copy to:
Shook, Hardy & Bacon, L.L.P.
40 Corporate Woods, 6th Floor
9401 Indian Creek Parkway
Overland Park, KS 66225-5128
Attention: Robert D. Grossman, Esq.
Telecopier: (913) 451-8879.
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.
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.
9. GOVERNING LAW. All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and
construed and enforced in accordance with the domestic law of the State of
Kansas, without giving effect to any choice or conflict of law provision or
rule (whether in the State of Kansas or any other jurisdiction) that would
cause the application of the law of any jurisdiction other than the State of
Kansas.
10. JURISDICTION; VENUE. The parties to this Agreement agree that
jurisdiction and venue in any action brought by any party hereto pursuant to
this Agreement shall properly (but not exclusively) lie in any Federal or state
court located in the State of Kansas.
11. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12. 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.
13. REMEDIES. Subject to the provisions of Sections 9.7 and 11.2,
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.
14. 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.
* * *
-1-
<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.
PARENT:
BERRY PLASTICS CORPORATION
By: /S/ MARTIN R. IMBLER
Name: Martin R. Imbler
Title: President and CEO
ACQUISITION SUB:
PACKERWARE ACQUISITION CORPORATION
By: /S/ MARTIN R. IMBLER
Name: Martin R. Imbler
Title: President and CEO
COMPANY:
PACKERWARE CORPORATION
By: /S/ JAMES H. SCHWARTZBURG
Name: James H. Schwartzburg
Title: Chairman of the Board
SHAREHOLDERS:
PACKERWARE CORPORATION EMPLOYEE
STOCK OWNERSHIP PLAN AND TRUST
By: /S/ CLIFFORD SHINSKI, PRESIDENT
The Investors Services Trust
Company, not in its individual
capacity, but solely as Trustee
/S/ JAMES H. SCHWARTZBURG
James H. Schwartzburg
<PAGE>
/S/ BONNIE C. SCHWARTZBURG
Bonnie C. Schwartzburg, as trustee
for James R. Schwartzburg under
Agreement dated April 3, 1996,
with James H. Schwartzburg, grantor
/S/ SUE S. MILLS
Sue S. Mills
/S/ AMY S. WRIGHT
Amy S. Wright
/S/ DAVID C. SCHWARTZBURG
David C. Schwartzburg
/S/ F.D. SCHWARTZBURG
F.D. Schwartzburg
<PAGE>
ANNEX I
DEFINITIONS
The following terms used in the Stock Purchase Agreement shall have
the following respective meanings:
"ACCOUNTANTS' DETERMINATION" has the meaning set forth in Section
3.2(b).
"ACQUISITION SUB" has the meaning set forth in the caption.
"ADDITIONAL MERGER CONSIDERATION" has the meaning set forth in
Section 2.1(a).
"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.
"ALLOCATED ESOP SHARE NUMBER" has the meaning set forth in Section
2.1(a).
"ALLOCATED SHARE ADDITIONAL AMOUNT" has the meaning set forth in
Section 2.1(a).
"ALLOCATED SHARES" means the shares of Company Common Stock
allocated to the accounts of participants in the ESOP as of the Effective Time.
"ARBITRATING ACCOUNTANTS" has the meaning set forth in Section
3.2(b).
"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
knowledge (both actual and constructive) of any Shareholder or any managerial
employee of the Company shall be imputed to be the knowledge of the Company.
"BOATMEN'S" has the meaning set forth in Section 2.3.
"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 GROUP" means Acquisition Sub, Parent, the Surviving
Corporation and each of their respective successors and assigns, officers,
directors, employees, representatives and Affiliates, other than any
Shareholder.
"BUYER'S ACCOUNTANTS" has the meaning set forth in Section 3.1.
"BUYER'S NOTICE OF ADJUSTMENT" has the meaning set forth in Section
3.2.
"CAPX AMOUNT" 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 MERGER" has the meaning set forth in the preamble.
"CLOSING" has the meaning set forth in Section 1.7.
"CLOSING BALANCE SHEET" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 1.7.
"CLOSING ESOP CONSIDERATION" has the meaning set forth in Section
2.1(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 articles of incorporation of the
Company.
"COMPETITIVE BUSINESS" means any business involving the sale of
products or provision of services in any city or county in any State of the
United States if such business or the products sold or services provided by it
are competitive, directly or indirectly, with the Subject Business or any
product sold by the Company or the Surviving Corporation.
"CONFIDENTIAL INFORMATION" means all trade secrets of the Company
and the Surviving Corporation and all information of a proprietary or
confidential nature relating to the Company, 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.
"DESIGNATED SHAREHOLDERS" has the meaning set forth in Section
10.2(c).
"DIRECTING PARTICIPANTS" has the meaning set forth in Section
1.6(a).
"DIRECTION STATEMENT" has the meaning set forth in Section 1.6(a)
"DISCLOSURE LETTER" has the meaning set forth in Section 5.1.
"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 or any
ERISA Affiliate of the Company has any present or future obligations or
Liability on behalf of its employees or former employees, contractual employees
or their dependents or beneficiaries.
"EMPLOYMENT AGREEMENT" means the Employment Agreement to be entered
into between the Surviving Corporation and Bruce Sims.
"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.
"ESCROW AGENT" has the meaning set forth in Section 2.4(a).
"ESCROW AGREEMENT" means the Escrow Agreement among Parent, the
Stockholders' Representative and the Escrow Agent.
"ESCROW AMOUNT" has the meaning set forth in Section 2.1(a).
"ESOP" means the PackerWare Corporation Employee Stock Ownership
Plan and Trust.
"ESOP LOAN AGREEMENT" has the meaning set forth in Section 2.3.
"ESOP SHARE NUMBER" has the meaning set forth in Section 2.1(a).
"ESOP SHARES" has the meaning set forth in Section 2.1(a).
"EVALUATION MATERIAL" has the meaning set forth in Section 7.3.
"EXCLUSIVE PERIOD" has the meaning set forth in Section 7.8(a).
"FINAL DETERMINATION DATE" has the meaning set forth in Section
3.2(c).
"FINAL WORKING CAPITAL" has the meaning set forth in Section 3.1.
"FINAL WORKING CAPITAL STATEMENT" has the meaning set forth in
Section 3.1.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 5.5.
"FIRST 20-DAY PERIOD" has the meaning set forth in Section 3.2(b).
"GAAP" has the meaning set forth in Section 3.1.
"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).
"INDEMNIFIED PERSONS" means the Buyer Group, the Company or the
Shareholders, as the case may be.
"INDEMNIFYING PERSONS" means the Shareholder Group, Parent or
Acquisition Sub, as the case may be.
"INDEMNIFYING SHAREHOLDERS" means all Shareholders other than the
Trustee.
"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.
"KANSAS STATUTE" has the meaning set forth in the preamble.
"LATEST BALANCE SHEET" has the meaning set forth in Section 5.5(b).
"LATEST BALANCE SHEET DATE" has the meaning set forth in Section
5.5(b).
"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 5.10(a).
"LESSOR" has the meaning set forth in Section 8.2(v).
"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.
"LICENSED REQUISITE RIGHTS" has the meaning set forth in Section
5.11(a).
"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 9.1. 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.
"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 CLOSING MERGER CONSIDERATION" has the meaning set forth in
Section 1.2(a).
"MAXIMUM MERGER CONSIDERATION" has the meaning set forth in Section
2.1(a).
"MERGER" has the meaning set forth in the preamble.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.1(a).
"MERGER SHARE ADDITIONAL AMOUNT(S)" has the meaning set forth in
Section 1.2(a).
"MERGER SHARE NUMBER" has the meaning set forth in Section 1.2(a).
"MERGER SHARES" has the meaning set forth in Section 2.1(a).
"NONCOMPETITION AND CONSULTING AGREEMENT" has the meaning set forth
in Section 10.2(b).
"OBJECTION NOTICE" has the meaning set forth in Section 3.2(a).
"ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or orders of any Governmental Entity or arbitrator.
"OVERPAYMENT AMOUNT" has the meaning set forth in Section 3.3(b).
"OVERPAYMENT ESCROW AGENT" has the meaning set forth in Section
2.1(c)(iii).
"OWNED PROPERTY" has the meaning set forth in Section 5.10(a).
"OWNED REQUISITE RIGHTS" has the meaning set forth in Section
5.11(a).
"PAKKA" has the meaning set forth in Section 10.9.
"PARENT" has the meaning set forth in the caption.
"PER ALLOCATED SHARE ADDITIONAL AMOUNT" has the meaning set forth in
Section 1.2(a).
"PER ALLOCATED SHARE CLOSING AMOUNT" has the meaning set forth in
Section 1.2(a).
"PER MERGER SHARE ADDITIONAL AMOUNT" has the meaning set forth in
Section 1.2(a).
"PER MERGER SHARE CLOSING AMOUNT" has the meaning set forth in
Section 1.2(a).
"PER UNALLOCATED SHARE CLOSING AMOUNT" has the meaning set forth in
Section 1.2(a).
"PERCENTAGE INTEREST" means, as to each Indemnifying Shareholder,
the percentage figure that expresses the ratio between the number of shares of
Company Common Stock owned by such Indemnifying Shareholder immediately prior
to Closing, as set forth on SCHEDULE I attached hereto, and the Merger Share
Number, rounded to the nearest .0001.
"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,
(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,
(iv) easements, covenants, conditions and restrictions of record as to which no
violation or encroachment exists, (v) any zoning or other governmentally
established restrictions or Encumbrances which do not materially interfere with
the conduct of the Subject Business as presently conducted and are not violated
by existing improvements, and (vi) railroad trackage agreements, utility, slope
and drainage easements, right-of-way easements and leases regarding signs, all
whether or not of record and which do not interfere with the conduct of the
Subject Business as presently conducted and are not violated by existing
improvements.
"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).
"PLEDGE AND PROXY AGREEMENT" means the Pledge and Proxy Agreement
dated December 17, 1986, between Boatman's (by assignment from The Merchant
Bank) and the ESOP.
"POTENTIAL TRANSACTION" has the meaning set forth in Section 7.8(a).
"PROCEEDINGS" means actions, suits, claims, investigations or legal
or administrative or arbitration proceedings.
"PROPORTIONATE PERCENTAGE" means, (i) as to each Indemnifying
Shareholder, the percentage figure that expresses the ratio between (x) the
number of shares of Company Common Stock owned by such Indemnifying Shareholder
immediately prior to the Closing, as set forth on SCHEDULE I attached hereto,
and (y) the sum of the Merger Share Number and the Allocated ESOP Share Number,
rounded to the nearest .0001 and (ii) as to the ESOP, the percentage figure
that expresses the ratio between (x) the Allocated ESOP Share Number and (y)
the sum of the Merger Share Number and the Allocated ESOP Share Number, rounded
to the nearest .0001.
"REAL PROPERTY" has the meaning set forth in Section 5.10(a).
"RELATED DOCUMENTS" means, collectively, the Certificate of Merger,
the Escrow Agreement, the Noncompetition and Consulting Agreement and the
Employment Agreement.
"RELEASED PERSONS" has the meaning set forth in Section 7.9.
"REQUISITE RIGHTS" has the meaning set forth in Section 5.11(a).
"SETTLEMENT AGREEMENT" has the meaning set forth in Section 3.2(b).
"SHAREHOLDER(S)" has the meaning set forth in the caption.
"SHAREHOLDER GROUP" means each of the Indemnifying Shareholders and
their respective representatives, heirs and estate.
"SHAREHOLDER MATERIALS" has the meaning set forth in Section 1.6(d).
"SHAREHOLDER NONCOMPETITION PERIOD" has the meaning set forth in
Section 10.2(d).
"SHAREHOLDERS' EXPENSES" has the meaning set forth in Section
2.1(a).
"SHAREHOLDERS' REPRESENTATIVE" has the meaning set forth in Section
7.10(a).
"SHARES" has the meaning set forth in Section 2.1(a).
"SPECIAL MEETING" has the meaning set forth in Section 1.6(a).
"STIPULATED DEBT" has the meaning set forth in Section 2.1(a).
"SUBJECT BUSINESS" has the meaning set forth in the preamble.
"SURVIVAL DATE" has the meaning set forth in Section 9.5.
"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 9.4.
"TRANSITION PERIOD" has the meaning set forth in Section 7.1.
"TRUSTEE" has the meaning set forth in Section 1.6(b).
"UNALLOCATED SHARES" means the shares of Company Common Stock that
have not been allocated to the account of any participant in the ESOP as of the
Effective Time.
"UNDERPAYMENT AMOUNT" has the meaning set forth in Section 3.3(b).
A-1
<PAGE>
SCHEDULE I
SHAREHOLDERS; CAPITALIZATION
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
<S> <C>
James H. Schwartzburg 354,968
Bonnie Schwartzburg, trustee for21,000
James R. Schwartzburg under
agreement dated April 3, 1996,
with James H. Schwartzburg, grantor
Sue S. Mills 21,000
Amy S. Wright 21,000
David C. Schwartzburg 43,690
F.D. Schwartzburg 27,862
The Investors Services Trust Company,
Trustee of the PackerWare Corporation
Employee Stock Ownership Plan and Trust 210,729
Total outstanding shares of Company Common 700,249
Stock
</TABLE>
<PAGE>
SCHEDULE II
ASSETS TO BE TRANSFERRED
1. Elox 12.3816 CNC EDM Machine (serial number 004657)
2. 15" Normandy Planter Mold (single cavity)
3. 8" Cavity Stadium Cup Mold
4. 4.5" Square Flower Pot Mold
5. The real property legally described as follows:
All that part of the Northeast Quarter of Section 23, Township 12
South, Range 19 East of the 6th P.M., Douglas County, Kansas,
described as follows:
Tract I:
Commencing at the Northeast corner of the Northeast Quarter of
Section 23; thence southerly along the east line of said Section
933.4 feet; thence Westerly 90<circle> 14' to the right from last
described course along a line parallel to and 933.4 feet normally
distant from the North line of Section 23, 700 feet, said point
being on the Westerly property line of the Atchison, Topeka and
Santa Fe Railway Company (hereinafter "Railway") 50 feet Westerly
of and normally distant from the center line of Railway's Track
No. 105 at Mile Post 0+4837.7 feet; thence Westerly along a line
parallel to and 933.4 feet normally distant from the North line
of Section 23, 400 feet; thence Northerly 89<circle> 46' to the
right from last described course along a line parallel with and
1100 feet normally distant from the east line of Section 23,
75.00 feet to the point of beginning; thence 384.20 feet, more or
less, to a point on the Southerly property line of Railway, said
point being 30 feet southerly of and normally distant from the
centerline of Railway's Tract No. 80 at Mile Post 0+4723.2 feet;
thence Easterly along said Southerly property line parallel with
and 30 feet normally distant from the centerline of said Tract
No. 80, 27.2 feet; thence Northeasterly on a curve concave to the
left, having a radius of 633.8 feet, 399.6 feet, more or less;
thence northeasterly parallel to and 30 feet normally distant
from the centerline of said Tract No. 80, 80 feet to a point of
intersection with the Northwesterly property line of Railway,
said point being 30 feet normally distant from the centerline of
said Tract No. 80 at Mile Post 0+4235 feet and 50 feet
Northwesterly of measured normally distant from the centerline of
Railway's Tract No. 105 at Mile Post 0+4225 feet; thence
Southwesterly along said property line on a curve concave to the
left having a radius of 653.8 feet 297.0 feet, more or less, to
point of tangent; thence continuing Southerly along said property
line parallel with and 50 feet normally distant from the
centerline of said Tract No. 105, 211.90 feet, more or less;
thence Westerly 36.50 feet to the Northeast corner of existing
building; thence Westerly along the North side of the existing
building 240.15 feet, more or less to the Northwest corner of the
existing building; thence Southerly along the West side of the
existing building 55.35 feet to an "x" chiseled in the concrete;
thence Westerly 124.00 feet to the point of beginning, all in
Douglas County, Kansas.
Tract II:
Commencing at the Northeast corner of the Northeast Quarter of
Section 23; thence Southerly along the East line of said Section,
933.4 feet; thence Westerly 90<circle> 14' to the right from last
described course along a line parallel to and 933.4 feet normally
distant from the North line of Section 23, 700 feet, said point
being on the Westerly property line of the Atchison, Topeka and
Santa Fe Railway Company (hereinafter "Railway") 50 feet Westerly
of and normally distant from the center line of Railway's Track
No. 105 at Mile Post 0+4837.7 feet; thence Westerly along a line
parallel to and 933.4 feet normally distant from the North line
of Section 23, 276 feet; thence North at an included angle of
90<circle> 14', 12 feet to a point of beginning; thence North to
the South side of existing building 48.00 feet; thence East along
the South side of existing building 60.00 feet; thence South
along the West side of building 28.33 feet; thence East along the
South side of existing building 12.00 feet; thence South on a
line parallel to the West property line of heretofore described
Tract One 19.67 feet; thence West on the line parallel to the
South property line of heretofore described Tract One 72.00 feet
to the point of beginning, all in Douglas County, Kansas.
Both tracts now being a portion of Lot 2, Packer Plastics No. 2,
an Addition to the City of Lawrence, as shown by the recorded
plat thereof, in Douglas County, Kansas.
EXHIBIT 2.2
<PAGE>
EXHIBIT 2.2
AMENDMENT dated as of January 20, 1997,
to the AGREEMENT AND PLAN OF REORGANIZATION
dated as of January 14, 1997 (the "Merger
Agreement"), among BERRY PLASTICS CORPORATION,
a Delaware corporation, PACKERWARE ACQUISITION
CORPORATION, a Kansas corporation, PACKERWARE
CORPORATION, a Kansas corporation, and the
SHAREHOLDERS (as defined therein).
The parties desire to amend the Merger Agreement to accomplish the
following: (i) to correctly reflect the minimum per share consideration for
each Merger Share prior to participation of the Allocated Shares in the
Underpayment Amount, if any, (ii) to revise the description of the Stipulated
Debt, (iii) to clarify that the full amount of consideration payable to the
Unallocated Shares will be paid to Boatmen's under Section 2.3, and (iv) to
correct certain cross-references for definitions set forth in ANNEX I to the
Merger Agreement.
ACCORDINGLY, in consideration of the mutual agreements contained in
this Amendment and in the Subscription Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(i) All capitalized terms used herein and not otherwise defined
herein shall have the meaning ascribed to them in the Merger Agreement.
(ii) Section 2.1 of the Merger Agreement is hereby amended as
follows:
(A) by inserting the following at the end of the definition of
Shareholders' Expenses:
"; it being understood and agreed that the amount of $600,000
payable by the Surviving Corporation pursuant to Section 10.8
constitutes Shareholders Expenses"; and
(B) by inserting the following at the end of the definition of
Stipulated Debt:
"; it being understood and agreed that the first 750,000 of the
aggregate amount of debt-in-transit and checks-in-float shall
constitute accounts payable and the remainder shall constitute
Stipulated Debt as defined herein".
(iii) Section 2.3 of the Merger Agreement is hereby amended by
inserting "(which portion equals the product of $18.20 and the Unallocated ESOP
Share Number)" immediately after "that portion of the Closing ESOP
Consideration attributable to the Unallocated Shares".
(iv) Section 3.1 of the Merger Agreement is hereby amended by
inserting the following phrase at the end thereof "(it being understood and
agreed that the first 750,000 of the aggregate amount of debt-in-transit and
checks-in-float shall constitute accounts payable, and the remainder shall
constitute debt)".
(v) Section 3.3(a) of the Merger Agreement is hereby amended as
follows:
(A) by inserting ", together with interest that shall accrue
thereon at a rate of five percent (5%) per annum from the Closing Date
until the date of payment," within the parenthetical after "the amount of
such excess"; and
(B) by deleting "$15.72" in each of the two places it appears in
the proviso of that subsection and inserting in lieu thereof "the
remainder of $15.72 minus the quotient of the Escrow Amount divided by the
Merger Share Number".
(vi) Section 10.8 of the Merger Agreement is hereby amended and
deleted in its entirety to read as follows:
"10.8 CLOSING BONUS PAYMENTS. As soon as practicable after the
Closing Date, the Surviving Corporation shall pay all payments that are
payable by the Company to any of its employees as a result of the
transactions contemplated by this Agreement, which payments shall be made
by check and shall be net of applicable Federal and state withholding
taxes. In connection with the payments described in the preceding
sentence, the Surviving Corporation will incur additional expenses,
including, without limitation, payroll taxes payable by the Company with
respect to such payments. Notwithstanding anything contained herein to
the contrary, the aggregate amount of payments made to employees and
expenses incurred by the Surviving Corporation pursuant to this Section
10.8 shall not exceed $600,000 in the aggregate."
(vii) ANNEX I to the Merger Agreement is hereby amended by
deleting "Section 1.2(a)" and inserting in lieu thereof "Section 2.1(a)" at the
end of each of the following definitions: (A) Maximum Closing Merger
Consideration; (B) Merger Share Additional Amount(s); (C) Merger Share Number;
(D) Per Allocated Share Additional Amount; (E) Per Allocated Share Closing
Amount; (F) Per Merger Share Additional Amount; (G) Per Merger Share Closing
Amount; and (H) Per Unallocated Share Closing Amount.
(viii) Except as expressly provided in this Amendment, the
Merger Agreement remains in full force and effect in accordance with its terms.
(ix) This Amendment may be executed in more than one counterpart,
and by the parties hereto in separate counterparts, and each such counterpart
shall constitute an original instrument, but all such counterparts taken
together shall constitute one and the same Amendment.
(x) This Amendment shall be governed by, construed and interpreted
in accordance with the laws of the State of Kansas.
* * * *
-1-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed as of the date and year first above written.
BERRY PLASTICS CORPORATION
By: /S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Vice President, Chief Financial
Officer, Secretary and Treasurer
PACKERWARE ACQUISITION CORPORATION
By: /S/ JAMES M. KRATOCHVIL
James M. Kratochvil
Vice President, Chief Financial
Officer, Secretary and Treasurer
PACKERWARE CORPORATION
By: /S/ JAMES H. SCHWARTZBURG
James H. Schwartzburg Chairman of the Board
SHAREHOLDERS:
PACKERWARE CORPORATION EMPLOYEE
STOCK OWNERSHIP PLAN AND TRUST
By: /S/ CLIFFORD SHINKSI, PRESIDENT
The Investors Services Trust Company,
not in its individual capacity, but
solely as Trustee
/S/ JAMES H. SCHWARTZBURG
James H. Schwartzburg
/S/ BONNIE C. SCHWARTZBURG
Bonnie C. Schwartzburg, as trustee
for James R. Schwartzburg under the
Agreement dated April 3, 1996, with
James H. Schwartzburg, grantor
-2-
<PAGE>
/S/ SUE S. MILLS
Sue S. Mills
/S/ AMY S. WRIGHT
Amy S. Wright
/S/ DAVID C. SCHWARTZBURG
David C. Schwartzburg
/S/ F.D. SCHWARTZBURG
F.D. Schwartzburg
-3-
