<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26178
BWAY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3624491
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
8607 ROBERTS DRIVE, SUITE 250
ATLANTA, GEORGIA 30350
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(770) 587-0888
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
__________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
----- -----
There were 5,758,576 shares of Common Stock ($.01 par value) outstanding as of
April 30, 1996.
1
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BWAY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1996 (Unaudited)
and October 1, 1995 (Audited) 3
Consolidated Statements of Income for the three and
six month periods ended March 31, 1996 and
April 2, 1995 (Unaudited) 4
Consolidated Statements of Cash Flows for the six
month periods ended March 31, 1996 and April
2, 1995 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
PART II. OTHER INFORMATION 10
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
- - ----------------------------------------------------------------------------------------
MARCH 31, OCTOBER 1,
ASSETS 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 14,609 $ 23,538
Accounts receivable, net of allowance of $716 at March 31,
1996 and $386 at October 1, 1995 32,415 29,782
Inventories 22,883 19,388
Other current assets 1,277 1,103
Deferred tax asset 389 389
-------- --------
Total Current Assets 71,573 74,200
-------- --------
PROPERTY, PLANT AND EQUIPMENT - Net 71,428 67,668
-------- --------
OTHER ASSETS:
Intangible assets, net 21,466 22,011
Deferred financing costs, net of accumulated amortization
$1,701 at March 31, 1996 and $1,400 at October 1, 1995 2,607 2,908
Other assets 1,386 1,171
-------- --------
Total Other Assets 25,459 26,090
-------- --------
$168,460 $167,958
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 24,080 $ 22,194
Accrued salaries & wages 3,002 3,134
Accrued income taxes 1,566 910
Other current liabilities 7,678 8,996
Current maturities of long-term debt 67 155
-------- --------
Total Current Liabilities 36,393 35,389
-------- --------
LONG-TERM DEBT 50,048 50,063
LONG-TERM LIABILITIES:
Deferred income taxes 14,632 14,632
Other long-term liabilities 2,165 2,037
-------- --------
16,797 16,669
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized 24,000,000 shares,
issued 6,409,750 (March 31, 1996) and (October 1, 1995) 64 64
Additional paid-in capital 31,734 31,734
Retained earnings 39,392 34,385
-------- --------
71,190 66,183
Less treasury stock, at cost, 451,174 (March 31, 1996) and
69,563 (October 1, 1995) (5,968) (346)
-------- --------
Total Stockholders' Equity 65,222 65,837
-------- --------
$168,460 $167,958
======== ========
See notes to consolidated financial statements
</TABLE>
3
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- --------------------
MARCH 31, APRIL 2, MARCH 31, APRIL 2,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $61,768 $65,069 $119,922 $120,280
COST OF SALES 51,227 55,314 101,263 102,927
------- ------- -------- --------
GROSS PROFIT 10,541 9,755 18,659 17,353
------- ------- -------- --------
EXPENSES:
Selling, general and administrative 4,742 3,099 8,049 5,916
Management fees and expenses -- 572 -- 951
Amortization of intangibles 272 268 543 540
------- ------- -------- --------
Total Expenses 5,014 3,939 8,592 7,407
------- ------- -------- --------
INCOME FROM OPERATIONS 5,527 5,816 10,067 9,946
------- ------- -------- --------
OTHER (INCOME) EXPENSE - Net:
Interest 1,009 1,444 1,856 2,764
Other (192) (1) (240) 65
------- ------- -------- --------
817 1,443 1,616 2,829
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 4,710 4,373 8,451 7,117
PROVISION FOR INCOME TAXES 1,922 1,764 3,444 2,920
------- ------- -------- --------
NET INCOME $ 2,788 $ 2,609 $ 5,007 $ 4,197
======= ======= ======== ========
EARNINGS PER COMMON SHARE:
Net Income $ 0.46 $ 0.63 $ 0.81 $ 1.01
======= ======= ======== ========
WEIGHTED AVERAGE COMMON SHARES 6,050 4,167 6,191 4,165
OUTSTANDING ======= ======= ======== ========
See notes to consolidated financial statements
</TABLE>
4
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
-------------------
MARCH 31, APRIL 2,
OPERATING ACTIVITIES: 1996 1995
<S> <C> <C>
Net Income $ 5,007 $ 4,197
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation 2,912 2,236
Amortization 846 849
Provisions for doubtful accounts 450 275
Loss on disposition of property, plant and equipment -- 64
Provision for deferred income taxes -- 525
Changes in assets and liabilities:
Accounts receivable (3,083) (7,745)
Inventories (3,495) (6,733)
Other assets (389) 386
Accounts payable 1,324 1,637
Accrued liabilities (1,322) 1,596
Income taxes, net 656 731
------- -------
Net cash provided by (used in) operating activities 2,906 (1,982)
------- -------
INVESTING ACTIVITIES:
Capital expenditures (6,672) (6,216)
Other -- (491)
------- -------
Net cash used in investing activities (6,672) (6,707)
------- -------
FINANCING ACTIVITIES:
Net borrowings under bank revolving
credit agreement -- 4,000
Proceeds from issuance of common stock -- 330
Repayments on long-term debt (103) (157)
Decrease in unpresented bank drafts 562 3,542
Purchases of treasury stock (5,622) (31)
Financing costs incurred -- (75)
------- -------
Net cash provided by (used in) financing activities (5,163) 7,609
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (8,929) (1,080)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,538 4,618
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $14,609 $ 3,538
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 2,124 $ 2,442
======= =======
Income taxes $ 2,973 $ 1,664
======= =======
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
BWAY CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
________________________________________________________________________________
1. GENERAL
The accompanying consolidated financial statements have been prepared by
the Company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The consolidated financial
statements as of March 31, 1996 and for the six months ended March 31, 1996
and April 2, 1995 include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for these periods. Operating results for
the six months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the entire year. It is suggested that
these unaudited consolidated financial statements and the accompanying
notes be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K
(File No. 0-26178).
The Company operates on a 52/53-week fiscal year ending on the Sunday
closest to September 30 of the applicable year. The first three quarterly
fiscal periods end on the Sunday closest to December 31, March 31 or June
30 of the applicable quarter.
2. INVENTORIES
Inventories are carried at the lower of cost or market, with cost
determined under the last-in, first-out (LIFO) method of inventory
valuation and are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, OCTOBER 1,
1996 1995
<S> <C> <C>
Inventories at FIFO Cost:
Raw materials $ 5,369 $ 4,183
Work-in-process 12,200 11,189
Finished goods 5,368 5,020
------- -------
$22,937 $20,392
======= =======
Reduction to LIFO valuation (54) (1,004)
------- -------
$22,883 $19,388
======= =======
</TABLE>
3. EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of
common shares outstanding during each period presented, including vested
and unvested shares issued under the Management Stock Purchase Plan. Common
stock sold during the twelve-month period prior to the initial filing of
the registration statement (filed in March 1995 in connection with the
public offering) have been included in the earnings per share calculation
for all periods presented in accordance with Staff Accounting Bulletin No.
83. Weighted average shares outstanding for the second quarter of fiscal
1996 and 1995 were 6.05 million and 4.17 million, respectively.
4. INITIAL PUBLIC OFFERING
On June 26, 1995, the Company completed its Initial Public Offering with
the sale of 1,657,866 shares of common stock and realized net proceeds of
approximately $20.3 million. On July 25, 1995, an additional 359,086 shares
of the Company's stock were sold to cover over-allotments providing
additional net proceeds of approximately $4.8 million.
Upon the completion of the Initial Public Offering, the Company's
Management Agreement with AB Leasing and Management, Inc. ("AB Leasing"),
an affiliate, was terminated. In connection with the termination, the
Company paid $1,995,000, through the issuance of 133,000 shares of Common
Stock to AB Leasing prior to the effectiveness of the Offering. The Company
recorded a non-recurring, non-cash, pre-tax charge to operations of
$1,995,000 in connection therewith in the third quarter of 1995.
Additionally, the Company also paid AB Leasing $1,398,000 in cash
representing the accrued management fee and expenses for the period from
October 1, 1994 to and including the date of termination. Management fees
of $359,000 were expensed in the quarter ended January 1, 1995 and are
included in selling, general and administrative expense for that period.
6
<PAGE>
Immediately prior to the Initial Public Offering in June 1995, the Company
adopted the Brockway Standard Holdings Corporation 1995 Long-Term Incentive
Plan and the Formula Plan for Non-Employee Directors (the "Plans") for its
directors, officers, and key employees. An aggregate of 590,000 shares of
common stock were authorized for issuance under these Plans.
5. CONTINGENCIES
Environmental
The Company is subject to a broad range of federal, state and local
environmental and workplace health and safety requirements, including those
governing discharges to air and water, the handling and disposal of solid
and hazardous wastes and the remediation of contamination associated with
the releases of hazardous substances.
Environmental investigations voluntarily conducted by the Company at its
Homerville, Georgia facility in 1993 and 1994 detected certain conditions
of soil and groundwater contamination, principally involving chlorinated
solvents, at the facility property. Environmental assessment work conducted
by the Company indicated that the subject contamination is the result of
operations prior to the Company's acquisition of the facility from Owens-
Illinois and is, therefore, subject to indemnification under the 1989
purchase agreement. As required under the Hazardous Sites Response Program
of The Georgia Department of Natural Resources ("DNR"), the Company has
reported the subject contamination to DNR. In 1994, DNR listed the facility
on CERCLIS and designated the facility as a Class II site, which means that
further evaluation must be completed before DNR decides whether corrective
action is needed. Pursuant to the 1989 indemnification agreement, the
Company and Owens-Illinois have entered into a supplemental agreement
affirming Owens-Illinois' responsibility for this matter including
establishing procedures for the related investigation and remediation work
to be conducted by Owens-Illinois. As a result, Owens-Illinois is managing
the remediation activities and paying for such work directly. Preliminary
consultant estimates indicated that the cost of clean-up could range from
$1 million to $6 million, depending on the extent of contamination. Since
Owens-Illinois is conducting the remediation work, management has no way of
determining the actual costs related to the clean-up efforts. Therefore,
management does not believe that the final resolution of this matter will
have a material adverse effect on the results of operations or financial
condition of the Company; and has not accrued a liability with respect to
this matter because it believes that a loss contingency is not probable and
the amount of any such loss can not be reasonably estimated.
The Company was identified as a potentially responsible party ("PRP") for
liability associated with off-site waste disposal at three sites pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"). The Company has entered into consent decrees to settle its
liabilities at these sites, has paid its share of site-related costs, and
has received a release from future liability subject to standard reopener
provisions found in consent decrees under CERCLA. The consent agreements
for two of the sites do not cover liability for natural resource damage
claims, if any, relating to these sites. No natural resource damage claims
have been asserted to date. Accordingly, BWAY has not recorded a loss
contingency.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales during the second quarter of fiscal 1996 decreased 5% to $61.8 million
compared to $65.1 million in the second quarter of fiscal 1995. Net sales for
the six months ended March 31, 1996 were $119.9 million; 0.3% lower than the
$120.3 million for the six months ended April 2, 1995. The decrease in sales
reflected unusually harsh weather which reduced sales for the products packaged
in the Company's cans during the second quarter of fiscal 1996. In comparison,
the second quarter of fiscal 1995 experienced unseasonably warm weather which
allowed for strong quarterly sales.
Gross profit increased 8.1% in the second quarter of fiscal 1996 to $10.5
million from $9.8 million in the same period of fiscal 1995. Gross profit
margins for the six month periods ended March 31, 1996 and April 2, 1995 were
15.6% and 14.4%, respectively. This increase is attributable to the Company's
continuing efforts to reduce costs and improve productivity. Gross profit as a
percentage of net sales increased 2% in the second quarter of fiscal 1996
compared to the same period of fiscal 1995.
Selling, general and administrative costs increased 53% for the second quarter
of fiscal 1996 compared to the same quarter of the previous year. SG&A costs for
the six month period ended March 31, 1996 increased 36% over the comparable
period of the prior year. The increase is primarily due to increased development
of the Company's administrative staff needed as a result of the termination of
the Company's management agreement with AB Leasing, the administrative and
compliance requirements of a newly public company and the Company's strategic
growth plan.
Net interest expense declined $0.4 million to $1.0 million in the second quarter
of fiscal 1996 as compared to $1.4 million in the same period of 1995. For the
six month period ended March 31, 1996, net interest expense declined 32.9% over
the same period during the first six months of fiscal 1995. The decrease
reflects a reduction of the outstanding loan balance under the Revolving Credit
Facility, through application of a portion of the proceeds received from the
Company's Initial Public Offering and interest income earned from the related
cash on hand.
Net income for the second quarter of fiscal 1996 increased 7% to $2.8 million
from $2.6 million for the same period of fiscal 1995. Net income for the six
months ended March 31, 1996 was $5.0 million, an increase of 19.3% compared to
the $4.2 million reported for the same period of fiscal 1995. Decreases in
costs, supported by the realization of economies of scale from past acquisitions
account for the majority of the increase in net income for the current period.
Despite an increase in net income, earnings per share decreased to $0.46 per
share in the second quarter of fiscal 1996 from $0.63 per share during the
comparable period of fiscal 1995; and from $1.01 per share for the first six
months of fiscal 1995 to $0.81 per share for the six month period ended March
31, 1996. The decrease is primarily attributable to an increase in weighted
average shares outstanding due to the Initial Public Offering. The weighted
average shares outstanding in the second quarter of fiscal 1996 and 1995 were
6.1 million and 4.2 million, respectively; and 6.2 million and 4.2 million for
the respective six month periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements for operations and capital expenditures during
the six month period ending March 31, 1996 were financed by cash on hand and
internally generated cash flows. To meet its liquidity needs for the next
quarter resulting from the acquisition agreements discussed below, the Company
must obtain additional sources of financing. Based on discussions with its
existing lenders and other potential lenders, the Company believes it will be
able to obtain the necessary financing, although there can be no assurances that
such financing will be obtained or of the terms of such financing.
The Company's working capital decreased $3.6 million to $35.2 million from $38.8
million in the comparable period of the
8
<PAGE>
previous year. The decrease is primarily attributable to the use of cash for the
Company's capital expenditure program as well as the purchase of common stock
under the Common Stock Repurchase Program (the "Repurchase Program") discussed
below.
During the first six months of fiscal 1996, the Company's operating activities
generated $2.9 million of cash. Operating activities for the same period during
the prior year reflected cash used of $2.0 million. A typical seasonal build-up
of inventory and accounts receivable represented a significant use of funds in
the first six months of fiscal 1996. The increase in inventory due to seasonal
build-up was partially off-set by the resulting increase in accounts payable.
Improvements in the Company's cash provided by operating activities are
primarily due to cost reductions and improved asset utilization.
Capital expenditures of $6.7 million in the first six months of fiscal 1996
represent an increase of $0.5 million over the first six months of fiscal 1995.
This increase is consistent with the Company's intention to accelerate the rate
of spending on its targeted capital investment program designed to increase
productivity and reduce operating costs. Total capital spending in fiscal 1996
is expected to be approximately $16 million.
Cash used for financing activities during the six month period ended March 31,
1996 was $5.2 million compared to $7.6 million provided during the six month
period ended April 2, 1995. The use of cash during the current period is
primarily attributable to the repurchase of common stock under the Company's
stock repurchase plan. On November 21, 1995, the Company announced Board
approval of a limited Common Stock Repurchase Program to accommodate employee
and open market transactions. As of March 31, 1996, the Company had repurchased
381,611 shares of common stock for approximately $5.6 million under these
programs. During April 1996, the Company repurchased 200,000 additional shares.
The Company expects to continue making periodic repurchases of stock. The cash
used for these activities will be provided by cash generated through operations
and cash on hand.
Recognizing the importance of acquisitions to the Company's historic growth, the
Company continues to actively pursue acquisition opportunities. As of April 30,
1996, the Company has entered into two purchase agreements: one with Milton Can
Company, Inc. to acquire all of the outstanding shares of the company; and the
other with Crown Cork & Seal Company, Inc. for the purchase of substantially all
of the assets of the Davies Can Company Division. These acquisitions will
require approximately $70 million in cash at closing. As of March 31, 1996, the
Company had approximately $15 million in cash and $25 million of availability
under its revolving credit facility, which amount is insufficient to consummate
these transactions and satisfy ongoing liquidity requirements. In order to
finance these acquisitions and satisfy its ongoing liquidity requirements, BWAY
will need to obtain additional financing. Based on discussions with its existing
lenders and other potential lenders, the Company believes that it will be able
to obtain the necessary financing, although there can be no assurances that such
financing will be obtained or of the terms of such financing. The Company
estimates that it will require in aggregate approximately $125 million to $175
million of financing to consummate these acquisitions and satisfy its liquidity
needs for the next 18 months. Certain aspects of the aforementioned acquisitions
and related financing are not permitted under the terms of the Company's
existing credit agreements. The Company is negotiating with its lenders for
appropriate waivers permitting the acquisitions and the additional borrowing.
The Company believes it will be able to obtain such waivers, but there can be no
such assurance.
The Company has historically financed its operations through cash provided by
operations and by borrowings under its credit agreements. In light of the
Company's growth plans, BWAY's principal uses of cash going forward will be for
payment of operating expenses, funding capital investments, repurchase of common
stock, servicing debt and payment for acquisitions.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
On February 12, 1996, the Board of Directors of the Company authorized and
approved an amendment to the Rights Agreement between the Company and the Rights
Agent (Harris Trust and Savings Bank). The amendment reflects the change in the
Company name to BWAY Corporation. The amendment also allows Geo Capital
Corporation to acquire up to but not including 17% of the outstanding common
stock of the Company.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its first annual shareholders meeting on February 23, 1996.
See Exhibit 22.1 for a report of the voting on the matters considered at the
meeting.
Item 5. Other Information
Effective January 1996, the Company entered into a Cooperation Agreement with
Ball Corporation pursuant to which the Companies formed a joint committee to
study their respective materials processing, transportation and procurement
practices and to exchange ideas and implement strategies for improving
efficiencies and lowering costs.
In conjunction with stated objectives, on March 22, 1996, the Company announced
the execution of a definitive Merger Agreement which provides for the
acquisition, by a newly formed subsidiary of BWAY, of all of the outstanding
shares of Milton Can Company, Inc. The Merger Agreement calls for a purchase
price of $29 million, in nearly equal portions of cash and BWAY stock. The
merger also requires the Company to assume approximately $13 million of existing
indebtedness. The Company expects that the Milton acquisition will allow BWAY to
expand in certain specialty markets and develop a presence in the Northeastern
United States with paint and varnish can products. The Company expects the
acquisition to close within the third quarter of fiscal 1996.
SUBSEQUENT EVENTS
On April 29, 1996, the Company entered into an agreement with Crown Cork & Seal
Company, Inc. for the purchase of substantially all of the assets of the Davies
Can Division of the Van Dorn Company, which is the U.S. based paint, oblong and
utility can business operated by Crown Cork & Seal Company, Inc. The purchase
price is approximately $41.6 million (based on working capital on December 31,
1995). The Company expects the acquisition to close within the next 60 days.
Item 6. Exhibits and Reports on Form 8-K
(a) See Index of Exhibits.
(b) No reports on Form 8-K were filed during the period covered by this
report.
10
<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 thereunto duly authorized.
Bway Corporation
(Registrant)
By: /s/ PERRY H. SCHWARTZ
----------------------
Perry H. Schwartz
Executive Vice President and
Chief Financial Officer
Date: May 13, 1996
11
<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 thereunto duly authorized.
Bway Corporation
(Registrant)
By: _______________________
Perry H. Schwartz
Executive Vice President and
Chief Financial Officer
Date: May 13, 1996
12
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<TABLE>
<CAPTION>
INDEX TO EXHIBITS
-------------------------------------------------------
LOCATION OF DOCUMENT
EXHIBIT IN SEQUENTIAL
NO. DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- - ------------ ------------------------------------------------------- --------------------
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of
the Company.
4.1 Amendment to Rights Agreement dated as of February
12, 1996 between the Company and Harris Trust and
Savings Bank, as Rights Agent.
10.1 Cooperation Agreement between Ball Corporation and
BWAY Corporation, dated January 4, 1996.
10.2 Merger Agreement with Milton Can Company, Inc.,
dated March 21, 1996.
10.3 Amendment #1 to the Merger Agreement with Milton
Can Company, Inc. dated April 30, 1996.
10.4 Asset Purchase Agreement dated April 29, 1996,
between Brockway Standard, Inc., BWAY
Corporation, Van Dorn Company and Crown Cork &
Seal Company, Inc.
22.1 Certificate and Report of Inspector of Elections for the
Annual Meeting of Stockholders of Brockway
Standard Holdings Corporation dated February 23,
1996.
</TABLE>
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF
---------------------------
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
-------------------------------------------------
OF
--
BROCKWAY STANDARD HOLDINGS CORPORATION
--------------------------------------
Brockway Standard Holdings Corporation, a corporation organized and
existing under and by virtue of the General Corpo ration Law of the State of
Delaware (the "Company"),
-------
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company adopted a resolution
amending Article One of the Amended and Restated Certificate of Incorporation of
the Company to read in its entirety as follows (the "Amendment"):
---------
ARTICLE ONE
-----------
The name of the corporation is BWAY Corporation.
SECOND: That thereafter, pursuant to said resolution, the Amendment was
submitted for approval to the holders of the outstanding shares of the Company
entitled to vote thereon, which approval was given pursuant to Section 216 of
the General Corporation Law of the State of Delaware.
THIRD: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, Brockway Standard Holdings Corporation has caused this
Certificate of Amendment to be signed by its Vice President, Treasurer and
Secretary this 23rd day of February, 1996.
BROCKWAY STANDARD HOLDINGS
CORPORATION
By: ______________________________
David P. Hayford
Vice President, Treasurer and
Secretary
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
--------------------
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
BROCKWAY STANDARD HOLDINGS CORPORATION
--------------------------------------
ARTICLE ONE
-----------
The name of the corporation is BROCKWAY STANDARD HOLDINGS CORPORATION.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of Delaware
is 1209 Orange Street, Wilmington, Delaware, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
CAPITAL STOCK
(a) The total number of shares of common stock that the corporation shall
have authority to issue is 24,000,000, par value $.01 per share (the "Common
Stock"). The total number of shares of preferred stock that the corporation
shall have authority to issue is 5,000,000, par value $.01 per share (the
"Preferred Stock").
<PAGE>
(b) The Common Stock shall rank junior to the Preferred Stock in right of
payment of dividends and upon liquidation and is subject to all the powers,
rights, privileges, preferences and priorities of the Preferred Stock as
provided herein or in any resolution or resolutions adopted by the board of
directors pursuant to authority expressly vested in it by the provisions of
Paragraph (c) of this ARTICLE FOUR.
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The Common Stock shall have voting rights for the election of directors and
for all other purposes, each holder of Common Stock being entitled to one vote
for each share thereof held by such holder, except as otherwise required by law.
(c) Authority is hereby expressly vested in the board of directors of
the corporation, subject to the provisions of this ARTICLE FOUR and to the
------------
limitations prescribed by law, to authorize the issuance from time to time of
one or more series of Preferred Stock. The authority of the board of directors
with respect to each series shall include, but not be limited to, the
determination or fixing of the following by resolution or resolutions adopted by
the affirmative vote of a majority of the total number of the directors then in
office:
(i) The designation of such series;
(ii) The dividend rate of such series, the conditions and dates upon which
such dividends shall be payable, the relation which such dividends shall bear to
the dividends payable on any other class or classes or series of the
corporation's capital stock, and whether such dividends shall be cumulative or
non-cumulative;
(iii) Whether the shares of such series shall be subject to redemption for
cash, property or rights, including securities of any other corporation, by the
corporation or upon the happening of a specified event, and, if made subject to
any such redemption, the times or events, prices, rates, adjustments and other
terms and conditions of such redemptions;
(iv) The terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such series;
(v) Whether or not the shares of such series shall be convertible into, or
exchangeable for, at the option of either the holder or the corporation or upon
the happening of a specified event, shares of any other class or classes or of
any other series of the same or any other class or classes of the corporation's
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capital stock, and, if provision be made for conversion or exchange, the times
or events, prices, rates, adjustments and other terms and conditions of such
conversions or exchanges;
(vi) The restrictions, if any, on the issue or reissue of any additional
Preferred Stock;
(vii) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
corporation; and
(viii) The provisions as to voting, optional and/or other special rights and
preferences, if any, including, without limitation, the right to elect one or
more directors.
ARTICLE FIVE
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The corporation is to have perpetual existence.
ARTICLE SIX
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In furtherance and not in limitation of the powers conferred by statute, the
board of directors of the corporation is expressly authorized to make, alter,
amend, change, add to or repeal the by-laws of the corporation. Any alteration
or repeal of the by-laws of the corporation by the stockholders of the
corporation shall require the affirmative vote of two-thirds of the outstanding
shares of the corporation entitled to vote on such alteration or repeal, subject
to ARTICLE TEN hereof.
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ARTICLE SEVEN
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Meetings of stockholders may be held within or without the State of Delaware,
as the by-laws of the corporation may provide. The books of the corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
corporation. Election of directors need not be by written ballot unless the by-
laws of the corporation so provide.
ARTICLE EIGHT
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(a) Subject to the rights of the holders of any series of Preferred Stock,
from and after the date on which the Common Stock of the corporation is
registered pursuant to the Securities Exchange Act of 1934, as amended, (A) any
action required or
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<PAGE>
permitted to be taken by the stockholders of the corporation must be effected at
an annual or special meeting of stockholders of the corporation and may not be
effected in lieu thereof by any consent in writing by such stockholders, and (B)
special meetings of stockholders of the corporation may be called only by the
chairman of the board, the president or the board of directors pursuant to a
resolution adopted by the affirmative vote of the majority of the total number
of directors then in office.
(b) A director of the corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall
any transaction or contract of the corporation be void or voidable or affected
by reason of the fact that any director, or any firm of which any director is a
member, or any corporation of which any director is an officer, director or
stockholder, is in any way interested in such transaction or contract; provided
that at the meeting of the board of directors or of a committee thereof having
authority in authorizing or affirming such contract or transaction, the
existence of the interest of such director, firm or corporation is disclosed or
made known and such contract or transaction shall be approved by a majority of
directors not so interested or connected. Nor shall any director be liable to
account to the corporation for any profit realized by him from or through any
such transaction or contact of the corporation ratified or approved as
aforesaid, by reason of the fact that he or any firm of which he is a member, or
any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract. Directors so interested may be
counted when present at meetings of the board of directors or such committee for
the purpose of determining the existence of a quorum. Any contact, transaction
or act of the corporation or of the board of directors or of any committee
thereof (whether or not approved or ratified as hereinabove in this paragraph
provided) which shall be ratified by a majority in interest of a quorum of the
stockholders having voting power at any annual meeting or any special meeting
called for such purpose, shall be as valid and as binding as though ratified by
every stockholder of the corporation.
(c) The number of directors which shall constitute the whole board shall be
such as from time to time shall be fixed by resolution adopted by affirmative
vote of a majority of the board of directors except that such number shall not
be less than one (1) nor more than fifteen (15), the exact number to be
determined by resolution adopted by affirmative vote of a majority of the board
of directors. Commencing with the election of directors by the stockholders of
the corporation in 1995, the directors of the corporation shall be divided into
three classes: Class I, Class II
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and Class III. Membership in such classes shall be as nearly equal in number as
possible. The term of office of the initial Class I directors shall expire at
the annual election of directors by the stockholders of the corporation in 1996,
the term of office of the initial Class II directors shall expire at the annual
election of directors by the stockholders of the corporation in 1997, and the
term of office of the initial Class III directors shall expire at the annual
election of directors by the stockholders of the corporation in 1998, or
thereafter when their respective successors in each case are elected by the
stockholders and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office for cause. At each
succeeding annual election of directors by the stockholders of the corporation
beginning in 1996, the directors chosen to succeed those whose terms then expire
shall be identified as being of the same class as the directors they succeed and
shall be elected for a term expiring at the third succeeding annual election of
directors by the stockholders of the corporation, or thereafter when their
respective successors in each case are elected by the stockholders and
qualified. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director.
Vacancies and newly created directorships resulting from any increase in
the number of directors may be filled only by (i) the stockholders at an annual
or special meeting of the corporation, as provided in the by-laws or (ii) the
affirmative vote of the majority of the board of directors then in office,
although less than quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filing of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Section
(c) of Article EIGHTH unless expressly provided by such terms.
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Subject to the rights of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect directors
under specified circumstances, no director may be removed from office without
cause.
(d) Except to the extent prohibited by law, the board of directors shall
have the right (which, to the extent exercised, shall be exclusive) to establish
the rights, powers, duties, rules and procedures that from time to time shall
govern the board of directors and each of its members, including without
limitation the vote required for any action by the board of directors, and that
from time to time shall affect the directors' power to manage the business and
affairs of the corporation; and no by-law shall be adopted by stockholders which
shall impair or impede the implementation of the foregoing.
(e) The board of directors shall have authority from time to time to set
apart out of any assets of the corporation otherwise available for dividends a
reserve or reserves as working capital or for any other purpose or purposes, and
to abolish or add to any such reserve or reserves from time to time as said
board may deem to be in the interest of the corporation; and said board shall
likewise have power to determine in its discretion, except as herein otherwise
provided, what part of the assets of the corporation available for dividends in
excess of such reserve or reserves shall be declared in dividends and paid to
the stockholders of the corporation.
(f) Any and all right, title, interest and claim in or to any dividends
declared by the corporation, whether in cash, stock or otherwise, which are
unclaimed by the stockholder entitled thereto for a period of six years after
the close of business on the payment date, shall be and shall be deemed to be
extinguished and abandoned; and such unclaimed dividends in the possession of
the corporation, its transfer agents or other agents or depositories, shall at
such time become the absolute property of the corporation, free and clear of any
and all claims of any persons whatsoever.
(g) The shares of all classes of stock of the corporation may be issued by
the corporation from time to time for such consideration as from time to time
may be fixed by the board of directors of the corporation, provided that shares
of stock having a par value shall not be issued for a consideration less than
such par value, as determined by the board. At any time, or from time to time,
the corporation may grant rights or options to purchase from the corporation any
shares of its stock of any class or classes to run for such period of time, for
such consideration, upon such terms and conditions, and in such form as the
board of
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<PAGE>
directors may determine. The board of directors shall have authority, as
provided by law, to determine that only a part of the consideration, which shall
be received by the corporation for the shares of its stock which it shall issue
from time to time, shall be capital, provided, however, that, if all the shares
issued shall be shares having a par value, the amount of the part of such
consideration so determined to be capital shall be equal to the aggregate par
value of such shares. The excess, if any, at any time, of the total net assets
of the corporation over the amount so determined to be capital, as aforesaid,
shall be surplus. All classes of stock of the corporation shall be and remain
at all times nonassessable.
(h) No holders of stock of the corporation of any class, as such, shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the corporation whether now or hereafter authorized, or to any
obligations convertible (directly or indirectly) into stock of the corporation
whether now or hereafter authorized, or any right of subscription to any thereof
other than such, if any, as the board of directors in its discretion may, from
time to time, determine with respect thereto; and any shares of stock or
convertible obligations which the board of directors may determine to offer for
subscription to the holders of stock of the corporation may, as the board shall
determine, be offered to the holders of any class or classes of stock
exclusively, or to the holders of all classes of stock, and, if offered to more
than one class of stock, in such proportion as between said classes of stock as
the board of directors in its discretion may determine. As used herein, the
expression "convertible obligations" shall include any notes, bonds or other
evidences of indebtedness to which are attached or with which are issued
warrants or other rights to purchase stock of the corporation of any class or
classes. The board of directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or stock of the
corporation (but without intending hereby to limit its general power so to do in
other cases), to grant rights or options to purchase stock of the corporation of
any class upon such terms and during such period as the board of directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.
(i) The board of directors shall have power from time to time to determine
to what extent and at what times and places and under what conditions and
regulations the accounts and books of the corporation, or any of them, shall be
open to the inspection of the stockholders; and no stockholder shall have any
right to inspect
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<PAGE>
any account or book or document of the corporation, except as conferred by the
laws of the State of Delaware, unless and until authorized so to do by
resolution of the board of directors or of the stockholders of the corporation.
(j) Except as otherwise provided in the by-laws, the stockholders of the
corporation and the board of directors may hold their meetings and have an
office or offices outside of the State of Delaware, and, subject to the
provisions of the laws of said State, may keep the books of the corporation
outside of said State at such places as may, from time to time, be designated by
the board of directors.
(k) The by-laws of the corporation may confer powers upon the directors in
addition to those granted in the Certificate of Incorporation, as amended, and
in addition to the powers expressly conferred upon them by the laws of the State
of Delaware.
ARTICLE NINE
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Section 1. Vote Required for Certain Business Combinations.
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(a) In addition to any affirmative vote required by law or this Certificate
of Incorporation, and except as otherwise expressly provided in Section 2 of
this Article NINE:
(i) any merger or consolidation of the corporation or any Subsidiary
(as hereinafter defined) with (a) any Interested Stockholder (as hereinafter
defined) or (b) any other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate of any Interested Stockholder of any
assets of the corporation or any Subsidiary having an aggregate Fair Market
Value of $25,000,000 or more; or
(iii) the issuance or transfer by the corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
corporation or any Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
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<PAGE>
other property (or a combination thereof) having an aggregate Fair Market Value
of $25,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the corporation, or any merger or consolidation
of the corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class (it being understood that for purposes of this
ARTICLE NINE, each share of the Voting Stock shall have the number of votes
granted to it pursuant to ARTICLE FOUR of this Certificate of Incorporation).
Such affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage may be specified, by law or any
agreement with any national securities exchange or otherwise.
(b) The term "Business Combination" as used in this ARTICLE NINE shall
mean any transaction which is referred to in any one or more of clauses (i)
through (v) of paragraph (a) of this Section 1.
Section 2. When Higher Vote is Not Required. The provisions of
--------------------------------
Section 1 of this ARTICLE NINE shall not be applicable to any particular
Business Combination involving an Interested Stockholder (or any Affiliate or
Associate of such Interested Stockholder), and such Business Combination shall
require only such affirmative vote as is required by law and any other provision
of this Certificate of Incorporation, if the Business Combination (a) shall have
been approved by a majority of the Disinterested Directors (as hereinafter
defined) either before or after the Interested Stockholder becomes such or (b)
involves an Interested Stockholder (or any Affiliate or an Associate of such
Interested Stockholder) who (i) was an Interested Stockholder as of
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<PAGE>
the date the Common Stock was initially registered pursuant to the Securities
Exchange Act of 1934 or (ii) became an Interested Stockholder as a result of a
gift or a bequest from an Interested Stockholder described in (i) above.
Section 3. Certain Definitions. For the purposes of this ARTICLE
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NINE:
(a) A "person" shall mean any individual, firm, corporation or other
entity.
(b) "Interested Stockholder" shall mean any person (other than the
corporation, any Subsidiary or any employee benefit plan of the corporation) who
or which is the beneficial owner, directly or indirectly, of more than 5% of the
voting power of the outstanding Voting Stock.
(c) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has (x)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (y) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(d) For the purposes of determining whether a person is an Interested
Stockholder pursuant to paragraph (b) of this Section 3, the number of shares of
Voting Stock deemed to be outstanding shall include any other shares of Voting
Stock which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
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(e) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, or any successor thereto.
(f) "Subsidiary" means any corporation, partnership, joint venture or
other enterprise, at least 50% of whose equity interests are owned directly or
indirectly, by the corporation and any other entity for which the board of
directors possesses the right to elect a majority of the board of directors or
other governing body of such entity; provided, however, that for the purposes of
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the definition of Interested Stockholder set forth in paragraph (b) of this
section 3, the term "Subsidiary" shall mean only a corporation, partnership,
joint venture or other enterprise of which a majority of each class of equity
security is owned, directly or indirectly, by the corporation.
(g) "Disinterested Director" means any member of the board of
directors of the corporation who is not an Affiliate or an Associate of the
Interested Stockholder that wishes to engage in a Business Combination.
Section 4. Powers of the Board of Directors. A majority of the
--------------------------------
directors of the corporation shall have the power and duty to determine for the
purposes of this ARTICLE NINE, on the basis of information known to them after
reasonable inquiry, (A) whether a person is an Interested Stockholder, (B) the
number of shares of Voting Stock beneficially owned by any person, (C) whether a
person is an Affiliate or Associate of another, (D) whether the assets which are
the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value of
$25,000,000 or more. A majority of the directors of the corporation shall have
the sole power to interpret all the terms and provisions of this ARTICLE NINE.
Section 5. No Effect on Fiduciary Obligations of Interested
------------------------------------------------
Stockholders. Nothing contained in this ARTICLE NINE shall be construed to
- - ------------
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
ARTICLE TEN
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Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, Section 10 of Article II and Sections 2, 3, 4 and
5 of Article III of the by-laws of the corporation and ARTICLE SIX, Sections
(a), (c) and (d) of ARTICLE
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EIGHT, ARTICLE NINE and this ARTICLE TEN of this Certificate of Incorporation
shall not be altered, amended or repealed and no provision inconsistent
therewith shall be adopted without the affirmative vote of the holders of at
least 80% of the Voting Stock, voting together as a single class.
ARTICLE ELEVEN
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Section 1. Limitation of Liability.
-----------------------
(a) To the fullest extent permitted by the General Corporation Law of
the State of Delaware (the "Delaware General Corporation Law") as it now exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than permitted prior thereto), no director of the
corporation shall be liable to the corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed to the corporation or its
stockholders.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
Section 2. Right to Indemnification. Each person who was or is
------------------------
made a party or is threatened to be made a party to or is otherwise involved
(including involvement as a witness) in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director or officer of the
corporation or, while a director or officer of the corporation, is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA exercise taxes or penalties and amounts paid in
settlement) reasonably incurred or
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suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
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Section 3 of ARTICLE ELEVEN with respect to proceedings to enforce rights to
indemnification, the corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the board of directors of
the corporation. The right to indemnification conferred in this Section 2 of
ARTICLE ELEVEN shall be a contract right and shall include the right to be paid
by the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advance of expenses");
provided, however, that, if and to the extent that the Delaware General
- - -------- -------
Corporation Law requires, an advance of expenses incurred by an indemnitee in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 2 of ARTICLE ELEVEN or otherwise. The corporation may, by action of its
board of directors, provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
Section 3. Procedure for Indemnification. Any indemnification of a
-----------------------------
director or officer of the corporation or advance of expenses under Section 2 of
this ARTICLE ELEVEN shall be made promptly, and in any event within forty-five
(45) days (or, in the case of an advance of expenses, twenty (20) days), upon
the written request of the director or officer. If a determination by the
corporation that the director or officer is entitled to indemnification pursuant
to this ARTICLE ELEVEN is required, and the corporation fails to respond within
sixty (60) days to a written request for indemnity, the corporation shall be
deemed to have approved the request. If the corporation denies a written
request for indemnification or advance of expenses, in whole or in part, or if
payment in full pursuant to such request is not made within forty-five (45) days
(or, in the case of an advance of expenses, twenty (20) days), the right to
indemnification or advances as granted by this ARTICLE ELEVEN shall be
enforceable by the director or officer in any court of competent jurisdiction.
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Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for the
advance of expenses where the undertaking required pursuant to Section 2 of
this ARTICLE ELEVEN, if any, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its board of
directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Section 2 of this ARTICLE ELEVEN
shall be the same procedure set forth in this Section 3 for directors or
officers, unless otherwise set forth in the action of the board of directors
providing indemnification for such employee or agent.
Section 4. Service for Subsidiaries. Any person serving as a
------------------------
director, officer, employee or agent of a Subsidiary shall be conclusively
presumed to be serving in such capacity at the request of the corporation.
Section 5. Reliance. Persons who after the date of the adoption of
--------
this provision become or remain directors or officers of the corporation or who,
while a director or officer of the corporation, become or remain a director,
officer, employee or agent of a Subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE ELEVEN in entering into or continuing such service.
The rights to indemnification and to the advance of expenses conferred in this
ARTICLE ELEVEN shall apply to claims made against an indemnitee arising out of
acts or omissions which occurred or occur both prior and subsequent to the
adoption hereof.
Section 6. Non-Exclusivity of Rights. The rights to indemnification
-------------------------
and to the advance of expenses conferred in this
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ARTICLE ELEVEN shall not be exclusive of any other right which any person may
have or hereafter acquire under this Certificate of Incorporation or under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise.
Section 7. Insurance. The corporation may purchase and maintain
---------
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
ARTICLE TWELVE
--------------
The corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE THIRTEEN
----------------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
- 15 -
<PAGE>
EXHIBIT 4.1
- - --------------------------------------------------------------------------------
BROCKWAY STANDARD HOLDINGS CORPORATION
AND
HARRIS TRUST AND SAVINGS BANK
RIGHTS AGENT
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
DATED AS OF FEBRUARY 12, 1996
- - --------------------------------------------------------------------------------
<PAGE>
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
-----------------------------------
Amendment No. 1, dated as of February 12, 1996 ("Amendment No. 1"), to the
Rights Agreement, dated as of June 9, 1995 ("Agreement"), between Brockway
Standard Holdings Corporation, a Delaware corporation (the "Company") and Harris
Trust and Savings Bank, an Illinois banking corporation (the "Rights Agent").
Capitalized terms not otherwise defined herein have the meaning given to such
terms in the Agreement.
RECITALS
--------
Pursuant to its authority under Section 26(a) of the Agreement, the Board
of Directors of the Company has authorized and approved an amendment to the
Agreement to increase the amount of common stock GEO Capital Corporation, a
Delaware corporation, may beneficially own without becoming an Acquiring Person
and to reflect the expected change in the Company's name.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. Exempt Person. Section 1(q) of the Agreement is amended and
-------------
restated as follows:
(q) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) any Current Holder, so long as such Current Holder does not
become the Beneficial Owner of 35% or more of the Common Stock then outstanding,
(iv) any Person that acquires Common Stock pursuant to an event described in
clause (ii) of the definition of Exempt Event, (v) any employee benefit plan of
the Company or of any Subsidiary of the Company, (vi) any Person holding Common
Stock for any such employee benefit plan or for employees of the Company or of
any Subsidiary of the Company pursuant to the terms of any such employee benefit
plan, (vii) GEO Capital Corporation, a Delaware corporation, so long as it does
not become the Beneficial Owner of 17% or more of the Common Stock then
outstanding,
Section 2. Company Name. Effective as of March 1, 1996, the definition of
------------
Company set forth in the Agreement shall be deleted and replaced with the
following: BWAY Corporation, a Delaware corporation.
Section 3. Legend. Effective as of March 1, 1996, the legend to be
------
impressed, printed, or written on, or otherwise affixed to the Common Stock
pursuant to Section 3(b) of the Agreement shall be in substantially in the
following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between BWAY
Corporation and Harris Trust and Savings Bank, as Rights Agent, dated
as of June 9, 1995, as amended February 12, 1996 (the "Rights
-1-
<PAGE>
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of BWAY Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. BWAY Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights that were, are or become beneficially owned by Acquiring
Persons or their Associates or Affiliates (as such terms are defined
in the Rights Agreement) may become null and void and the holder of
any of such Rights (including any subsequent holder) shall not have
any right to exercise such Rights.
Section 4. Notices. Section 25 of the Agreement shall be amended
-------
and restated as follows:
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
BWAY Corporation
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe, 14th Fl.
Chicago, IL 60606
Attention: Account Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
-2-
<PAGE>
Section 5. Governing Law. This Amendment No.1, the Agreement and
-------------
each Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the internal laws of such state applicable
to contracts to be made and performed entirely within such State.
Section 6. Counterparts. This Amendment No. 1 may be executed in
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 7. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Amendment No. 1 are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
of this Amendment No. 1.
* * * * *
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to the Agreement to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
BROCKWAY STANDARD HOLDINGS CORPORATION
By_________________________________
Title:
HARRIS TRUST AND SAVINGS BANK
By_________________________________
Title:
-4-
<PAGE>
EXHIBIT 10.1
COOPERATION AGREEMENT
---------------------
This Cooperation Agreement ("Agreement") is made as of January 4, 1996
(the "Effective Date") by and between Brockway Standard, Inc., a Delaware
corporation ("Brockway") and Ball Corporation, an Indiana corporation, through
its North American Packaging Operations ("Ball").
PURPOSE
-------
The parties to this Agreement (the "Parties") each individually
purchase tin plate steel "coils" from both domestic and foreign steel mills and
make separate arrangements for the transportation of the product to their
respective plant locations. At those locations, each Party has invested, and
must reinvest, in the tools, equipment, personnel and know-how necessary to
manage the process of cutting the coiled tin plate into various shapes and
sizes.
Next, each Party decorates the cut pieces of steel as requested by
their respective customers by a variety of processes, which require further
investments and modernization. The cut pieces are then prepared for further
handling, either elsewhere in the same plant or at other plants.
The Parties recognize that they are not significant consumers in their
respective markets for the material management technologies, transportation
services and raw materials the Parties utilize in each step of the process.
Therefore, the Parties have a mutual interest in identifying ideas, actions and
strategies for minimizing the risks of their respective supply sources and to
minimize the deleterious impact of price increases on both their own businesses
and that of their respective customers.
Therefore, the Parties are agreeing to cooperate with each other as
they each deem appropriate to study steps of the materials processing,
transportation and procurement to exchange ideas for managing their respective
supply and material management risks and to identify and implement strategies
for minimizing those risks, either through separate and individual actions or
through cooperative activities.
The Parties recognize that this cooperative effort will not, in the
end, significantly enhance their market power. Even if the Parties' respective
requirements were pooled in a cooperative venture, the Parties would still not
be significant consumers in the respective markets for the raw materials,
transportation services and material management technologies that the Parties
utilize and, as a result, such a cooperative effort would not alone
significantly change their bargaining position regarding the amount or timing of
future price increases in those supply markets.
<PAGE>
Therefore, the focus of the Party's cooperation shall be on seeking
organizational strategies for managing the risks of being a relatively small
consumer in each of these respective supply markets. The Parties hope that,
through this cooperative effort, actions may be identified that the Parties can
take, either individually or by working together through new cooperative
arrangements, that may lessen the impact of future adverse price movements in
the respective markets for the raw materials, transportation services and
material management technologies.
The Parties intend to examine their respective purchasing practices to
learn new procurement practices and to implement joint procurement strategies
when appropriate and mutually beneficial. The Parties are also interested in
examining logistics practices to determine how transportation services can be
better scheduled and managed, including through joint scheduling, contracting or
management. Finally, the Parties may examine the potential of developing
material processing centers to pool the investment in new material handling
technology, thereby spreading the costs and risks associated with such
technology.
AGREEMENT
---------
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Exchange of Information. To the extent permitted by applicable law,
-----------------------
Brockway and Ball agree to provide information as they each determine in
their sole discretion to the JMC (as hereafter defined), which information
shall be treated in accordance with the Confidentiality Agreement
("Confidentiality Agreement"), dated as of November 29, 1995, between the
Parties, concerning each Parties' requirements for tin plate steel coil
("Materials"), the logistics of transporting the Materials ("Transportation
Services") and the handling of such Materials (including without limitation
the cutting and decorating of the Materials) ("Material Processing") and the
terms for purchasing such Materials, Transportation Services and Material
Processing (the "Procurement Information").
2. Cooperation With Regard To Suppliers and Materials Processing. If the
-------------------------------------------------------------
Parties' respective representatives on the JMC unanimously resolve to do so,
Brockway and Ball shall cooperate with each other through the JMC in
negotiating with suppliers for the procurement of the Materials,
Transportation Services and Material Processing in order to obtain more
favorable terms, including pricing, service and reliability, all in
accordance with JMC's resolution. If the Parties' respective representatives
on the JMC unanimously resolve to establish a Materials Processing center,
either jointly or at a Party's facility, the Parties shall cooperate with
each other through the JMC in establishing such a center and the terms and
conditions under which such a center would provide Materials Processing
services.
-2-
<PAGE>
3. Ordering Procedure. In the event that the JMC resolves to coordinate the
------------------
procurement of Transportation Services or Materials, the JMC shall establish
a procedure for placing orders for Materials and Transportation Services
using any method mutually agreeable to the Parties including, without
limitation, when reasonably feasible, by submitting orders jointly or by
having one Party order on behalf of both Parties, which procedure shall be
binding on the Parties hereto until modified by resolution of the JMC. A
similar process may also be established for Materials Processing services,
in the event a Materials Processing center is established.
4. Shipment Terms. The shipment terms applicable to any Materials purchased by
--------------
one Party from a supplier on behalf of the other Party and for the shipment
of inventory created through the provision of Materials Processing services,
including, without limitation, shipment destination, shipment method,
freight insurance, payment of duty fees risks of loss and payment of sales
and value added taxes shall be mutually agreed between the Parties and set
forth in writing prior to any order commitments by either Party.
5. JMC Committee Structure. Within thirty (30) days of the date hereof, each
-----------------------
Party shall designate at least two (2) manager level representatives to form
the Joint Materials Committee ("JMC"), in order to facilitate the Parties
cooperative efforts hereunder and which will determine by unanimous action
the terms and conditions governing any joint procurement of Materials or
Transportation Services and the establishment (if approved by the JMC) of a
Materials Processing center. However, if both representatives of a Party are
not available or in attendance at any meeting of the JMC, the representative
of such Party that is available or in attendance shall have, without further
action, the proxy to vote (and to execute consents and other documents) for
the representative of such Party that is not available or in attendance. The
manner and procedure in which JMC operates will be decided by mutual consent
of the Parties. The selection, replacement and substitution of particular
members of the JMC to represent each respective Party shall be at such
Party's sole discretion. In addition to the obligations of the
Confidentiality Agreement, each representative on the JMC (the "Receiving
Rep") shall take reasonable care to prevent the disclosure of the
Confidential Information (as defined in the Confidentiality Agreement)
provided by the other Party to any other employee of the Receiving Rep's
company, except to the extent that such Confidential Information is required
to be disclosed in order to implement the purposes of this Agreement.
6. Authority and Consensus. JMC shall have the needed authority concerning
-----------------------
joint procurement hereunder (excepting that purchase orders and other
procurement contracts to third parties may not be issued by the JMC, but may
be issued by Brockway or Ball only), and all details on such joint
procurement shall be negotiated and finally decided upon by a unanimous
consensus of the representatives of Brockway and Ball on the JMC.
-3-
<PAGE>
7. Project Coordinators. Brockway and Ball shall each designate, respectively,
--------------------
one of its representatives to the JMC as the overall coordinator for each
project contemplated by this Agreement (the "Project Coordinator").
(a) Information Exchange. Each Project Coordinator shall communicate
with its counterpart at the other Party as often as is necessary or
desirable by telephone or facsimile in order to review progress, track
schedules, resolve problems and arrange for the exchange of Confidential
Information necessary for the performance of this Agreement.
(b) Duties. Each Project Coordinator shall:
(i) review progress, track schedules and resolve problems with
respect to the project;
(ii) identify mutually beneficial joint procurement opportunities
within the confines of this Agreement and applicable law; and
(iii) take reasonable care to prevent the disclosure of the
Confidential Information provided by the other Party to any other
employee of the Receiving Rep's company, except to the extent
that such Confidential Information is required to be disclosed in
order to implement the purposes of this Agreement.
8. Dispute Resolution. If any dispute arises in connection with the activities
------------------
contemplated by this Agreement, the Project Coordinator for each Party shall
attempt to resolve the dispute promptly after either Party's notice to the
other of the existence of a dispute. If the Project Coordinators do not
resolve the dispute promptly, either Project Coordinator may call a meeting
of the JMC which will be held promptly after the Project Coordinator's
request therefore (in person or telephonically) to attempt to resolve the
dispute. If the JMC is unable to resolve the dispute promptly at the JMC
meeting called to resolve the dispute, either Project Coordinator may refer
the dispute to a senior manager of each Party, who shall meet once promptly
thereafter to resolve the dispute. If the senior managers do not agree upon
a decision within thirty (30) calendar days after reference of the matter to
them, either Party may seek arbitration for the dispute in accordance with
Section 9 below.
9. Arbitration. Except for disputes under the Confidentiality Agreement and
-----------
the confidentiality provisions of the last sentence of Section 5 and in
7(b)(iii), any controversy, dispute or claim arising out of or relating in
any way to this Agreement or the other agreements contemplated hereby or the
transactions arising hereunder or thereunder that cannot be resolved by
negotiation pursuant to Section 8, shall be settled exclusively by
arbitration in the City of Denver, Colorado. Such arbitration
-4-
<PAGE>
shall be administered in accordance with the prevailing Rules of the
American Arbitration Association , by one independent and impartial
arbitrator. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. (S)1 et seq. The fees and expenses of the
-- ---
arbitrator shall be shared equally by the Parties and advanced by them from
time to time as required; provided that at the conclusion of the
-------- ----
arbitration, the arbitrator shall award costs and expenses (including the
costs of the arbitration previously advanced and the fees and expenses of
attorneys, accountants and other experts) and interest to the prevailing
Party. Pre-arbitration discovery shall be limited to the scope permitted by
the arbitrator, except that the arbitrator shall permit pre-arbitration
examination of the witnesses and documents that the other Party intends to
introduce in its case-in-chief at the arbitration hearing. The arbitrator
shall render his/her award within 90 days of the conclusion of the
arbitration hearing. The arbitrator shall not be empowered to award to any
Party any consequential damages, lost profits or punitive damages in
connection with any dispute between or among them arising out of or relating
in any way to this Agreement, breach of fiduciary duty or the transactions
arising hereunder, and each Party hereby irrevocably waives any right to
recover such damages. Either Party may apply to any court of competent
jurisdiction for temporary injunctive or other provisional judicial relief
if such action is necessary to avoid irreparable damage or to preserve the
status quo until such time as the arbitration is convened and available to
hear such Party's request for temporary relief. The award rendered by the
arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.
10. No Third Party Beneficiaries. This Agreement shall not confer any rights or
----------------------------
remedies upon any person or entity other than the Parties and their
respective successors and permitted assigns.
11. Relationship of Parties. Nothing contained in this Agreement shall be
-----------------------
construed as creating a partnership, joint venture, agency, trust or other
association of any kind between the Parties. Except as specifically
provided herein or by unanimous resolution of the JMC, no Party shall act
or represent or hold itself out as having authority to act as an agent or
partner of the other Party, or in any way bind or commit the other Party to
any obligation. Rights, duties, obligations and liabilities of the Parties
shall be several and not joint or collective, each Party being individually
responsible only for its obligations as set forth in this Agreement or as
established by resolution of the JMC passed unanimously by the
representatives thereto.
12. Succession and Assignment. This Agreement shall be binding upon and inure
-------------------------
to the benefit of the parties named herein and their respective successors
and permitted assigns.
-5-
<PAGE>
13. Counterparts. This Agreement may be executed in one or more counterparts,
------------
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
14. Headings. The section headings contained in this Agreement are inserted for
--------
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Notices. All notices, requests, demands, claims, and other communications
-------
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient
as set forth below:
If to Brockway:
--------------
Brockway Standard, Inc.
8607 Roberts Drive
Suite 250
Atlanta, Georgia 30350
Attn: General Counsel
Copy to: William S. Kirsch, P.C.
------- Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
If to Ball:
----------
Ball Corporation
North American Packaging Operations
108th Circle
Broomfield, Colorado 80020
Attn: Vice President--Purchasing
Copy to: General Counsel
-------
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim,
-6-
<PAGE>
or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Colorado without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Colorado or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Colorado.
17. Amendments and Waivers. No amendment of any provision of this Agreement
----------------------
shall be valid unless the same shall be in writing and signed by authorized
officers of each of Ball and Brockway. No waiver by any Party of any
default or breach of covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, or breach of
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
18. Severability. Any term or provision of this Agreement that is invalid or
------------
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
19. Termination. This Agreement shall be terminated 90 days after either Party
-----------
delivers a written termination notice to the other Party, except that (i)
the rights and obligations created by any JMC resolution made prior to the
delivery of such notice shall survive as provided in such resolution and
(ii) this Agreement shall survive, and the JMC shall continue its
activities with respect to the matters subject to such continuing
resolution, until such time as the activities contemplated by such
continuing resolution are terminated pursuant to the terms thereof.
Notwithstanding the foregoing, the confidentiality provisions of the last
sentence of Section 5 and of Section 7(b)(iii) shall survive until the
Party's obligations with respect to Confidential Information expire under
the Confidentiality Agreement and Sections 8, 9, 10, 11 and 16 hereof shall
survive indefinitely.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement, on the dates below indicated.
BROCKWAY STANDARD, INC. BALL CORPORATION
By:____________________________ By:____________________________
Name: Name:
Title: Title:
Date: Date:
-8-
<PAGE>
EXHIBIT 10.2
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
by and among
THE MILTON CAN COMPANY,
JAMES W. MILTON, (IN HIS OWN CAPACITY AND
AS AGENT FOR ALL THE STOCKHOLDERS),
MILTON ACQUISITION CORP.
AND
BWAY CORPORATION
March 21, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
CERTAIN DEFINITIONS................................... 2
ARTICLE II
THE REORGANIZATION.................................... 8
2.1 Deposit......................................... 8
2.2 The Merger...................................... 8
2.3 The Surviving Corporation....................... 8
2.4 Conversion of Shares............................ 9
2.5 Delivery of Merger Consideration................ 9
2.6 Aggregate Merger Consideration................. 10
2.7 Merger Consideration Adjustment................ 10
ARTICLE III
THE CLOSING.......................................... 12
3.1 Time and Place of Closing...................... 12
3.2 Deliveries by the Company...................... 12
3.3 Deliveries by BWAY and Purchaser............... 13
ARTICLE IV
CONDITIONS TO THE COMPANY'S OBLIGATIONS.............. 14
4.1 Representations, Warranties and
Covenants....................................... 14
4.2 No Injunction................................... 14
4.3 Opinion of Counsel.............................. 14
4.4 Company Tax Opinion............................. 14
4.5 Certificates and Other Documents................ 15
4.6 Good Standing Certificates...................... 15
4.7 HSR Act......................................... 15
4.8 Employment Agreements........................... 15
ARTICLE V
CONDITIONS TO BWAY'S AND PURCHASER'S
OBLIGATIONS.......................................... 15
5.1 Representations, Warranties and
Covenants....................................... 15
5.2 Consents and Approvals.......................... 16
-i-
<PAGE>
5.3 No Injunction................................... 16
5.4 Opinion of Counsel.............................. 16
5.5 Purchaser Tax Opinion........................... 16
5.6 Good Standing Certificates...................... 16
5.7 HSR Act......................................... 17
5.8 Title to Real Property.......................... 17
5.9 Lien Searches................................... 18
5.10 Due Diligence................................... 18
5.11 Material Adverse Change......................... 19
5.12 Certificates and Other Documents................ 19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS......................................... 19
6.1 Authorization of Transaction.................... 20
6.2 No Conflicts.................................... 20
6.3 Broker's Fees................................... 20
6.4 Ownership....................................... 20
6.5 Investment...................................... 21
6.6 Continuity of Interest.......................... 21
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANY.............................................. 21
7.1 Capital Stock of the Company.................... 21
7.2 Due Incorporation, Etc.......................... 22
7.3 Subsidiaries.................................... 22
7.4 Authorization, No Conflicts, Etc................ 22
7.5 Consents and Approvals.......................... 23
7.6 Absence of Violations........................... 23
7.7 Licenses and Permits............................ 24
7.8 Inventories..................................... 24
7.9 Books and Records............................... 24
7.10 Accounts Receivable............................. 24
7.11 Financial Statements............................ 24
7.12 Absence of Undisclosed Liabilities.............. 25
7.13 No Material Adverse Change...................... 25
7.14 Absence of Certain Developments................. 26
7.15 Customers....................................... 27
7.16 Insurance....................................... 27
7.17 Assets.......................................... 28
7.18 Material Contracts.............................. 28
7.19 Real Properties................................. 30
7.20 Tangible Personal Property...................... 31
7.21 Proprietary Rights.............................. 32
7.22 Litigation...................................... 33
7.23 Product Warranty................................ 33
-ii-
<PAGE>
7.24 Labor and Employment Matters.................... 33
7.25 ERISA........................................... 34
7.26 Environmental and Safety Matters................ 36
7.27 Indebtedness.................................... 39
7.28 Taxes........................................... 39
7.29 Brokers......................................... 40
7.30 Disclosure...................................... 41
7.31 Closing Date.................................... 41
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BWAY AND
PURCHASER............................................. 41
8.1 Due Incorporation, Etc.......................... 41
8.2 Authorization, No Conflicts, Etc................ 42
8.3 Consents and Approvals.......................... 43
8.4 Absence of Violations........................... 43
8.5 Legal Proceedings............................... 43
8.6 Brokers......................................... 43
8.7 Continuity of Business Enterprise............... 43
8.8 Reports and Financial Statements................ 44
8.9 Disclosure...................................... 44
8.10 Closing Date.................................... 44
ARTICLE IX
COVENANTS PRIOR TO CLOSING............................ 45
9.1 Affirmative and Negative Covenants
Pending Closing.................................. 45
9.2 Investigation by Purchaser and
Confidentiality.................................. 47
9.3 Delivery of Schedule............................. 47
9.4 Stockholder Approval, Agency Agreement........... 48
9.5 Consents and Further Actions..................... 48
9.6 HSR Act.......................................... 48
ARTICLE X
COVENANTS AFTER CLOSING............................... 49
10.1 Books and Records............................... 49
10.2 Liability for Products and Other Claims......... 49
10.3 Liability for Medical Claims and Workers
Compensation.................................... 49
10.4 Liability for Other Welfare Benefits............ 50
10.5 Liability for Environmental Matters............. 50
10.6 Tax Matters..................................... 52
10.7 Indemnification................................. 53
10.8 Further Assurances.............................. 57
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<PAGE>
10.9 Retention of BWAY Stock......................... 57
ARTICLE XI
MISCELLANEOUS......................................... 58
11.1 Termination..................................... 58
11.2 Survival of Representations and
Warranties...................................... 60
11.3 Dispute Resolution.............................. 60
11.4 Assignment...................................... 62
11.5 Notices......................................... 62
11.6 Expenses........................................ 63
11.7 Public Announcements............................ 63
11.8 Entire Agreement................................ 64
11.9 Waiver.......................................... 64
11.10 Amendment...................................... 64
11.11 Counterparts................................... 64
11.12 Invalid Provisions ............................ 64
11.13 Headings, Gender, Etc.......................... 65
11.14 Choice of Law.................................. 65
-iv-
<PAGE>
Schedules
---------
Schedule 5.11 - Lien Searches
Schedule 7.1 - Capital Stock of the Company
Schedule 7.3 - Subsidiaries
Schedule 7.4 - Authorization, No Conflicts, Etc.
Schedule 7.5 - Consents and Approvals
Schedule 7.6 - Absence of Violations
Schedule 7.7 - Licenses and Permits
Schedule 7.9 - Books and Records
Schedule 7.11 - Financial Statements
Schedule 7.12 - Absence of Undisclosed Liabilities
Schedule 7.14 - Absence of Certain Developments
Schedule 7.15 - Customers
Schedule 7.16 - Insurance
Schedule 7.17 - Assets
Schedule 7.18 - Material Contracts
Schedule 7.19 - Real Properties
Schedule 7.20 - Tangible Personal Property
Schedule 7.21 - Proprietary Rights
Schedule 7.22 - Litigation
Schedule 7.23 - Returns
Schedule 7.24 - Labor and Employment Matters
Schedule 7.25 - ERISA
Schedule 7.26 - Environmental and Safety Matters
Schedule 7.27 - Indebtedness
Schedule 7.28 - Taxes
EXHIBITS
--------
Exhibit 1 - BWAY Notes
Exhibit 3.2(d) - Standstill Agreement
Exhibit 3.2(e) - Stock Escrow Agreement
Exhibit 4.3 - Opinion of Purchaser's Counsel
Exhibit 4.9 - Employment Agreements
Exhibit 5.4 - Opinion of Stockholder's Counsel
ATTACHMENTS
-----------
Attachment I - Stockholder Table
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AGREEMENT
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AND PLAN OF MERGER AND REORGANIZATION
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This Agreement and Plan of Merger and Reorganization (the "Agreement") is
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made and entered into as of March 21, 1996, by and among BWAY Corporation, a
Delaware corporation ("BWAY"); Milton Acquisition Corp., a Delaware corporation
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and a wholly-owned direct subsidiary of BWAY ("Purchaser"); The Milton Can
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Company, a Delaware corporation (the "Company"); (Purchaser and the Company are
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sometimes hereinafter collectively referred to as the "Constituent
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Corporations"); James W. Milton, the holder of a majority of the Company's
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common stock, par value of $.01 per share, (the "Company Shares"); and the
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undersigned holders (each a "Stockholder" and, collectively, the "Stockholders")
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of Company Shares that become parties hereto by the Schedule Delivery Date (as
defined below). The Stockholders that became party hereto shall enter into an
Agency Agreement, dated as of the Schedule Delivery Date ("Agency Agreement"),
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pursuant to which each such Stockholder appoints James W. Milton as the
Stockholders' Agent (the "Agent").
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RECITALS
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All of the parties to this Agreement desire to implement the plan of
merger and reorganization set forth in this Agreement (the "Reorganization"),
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pursuant to which the Company will be merged with and into Purchaser, with
Purchaser being the surviving corporation ("Surviving Corporation"), and the
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Company Shares held by the Stockholders will be converted solely into the right
to receive consideration valued at $710.80 per Company Share ("Merger
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Consideration"), payable in shares of BWAY common stock, par value $.01 (the
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"BWAY Stock"), the BWAY Notes and cash. The proportion of cash and BWAY Stock
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which each Stockholder will receive as Merger Consideration will be set forth in
Attachment I hereto, which shall be delivered to Purchaser on or prior to the
Schedule Delivery Date.
For federal income tax purposes, the parties intend that the
Reorganization qualify as a tax-free reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. The parties expect that the
Reorganization will further certain of their business objectives, such as
allowing BWAY and the Surviving Corporation to benefit from economies of scale
and the ability to offer services in more geographic areas.
In accordance with (S)251 of the General Corporation Law of the State of
Delaware ("GCL"), the respective Boards of
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Directors of Purchaser and the Company approved the Reorganization and
recommended its approval to their respective stockholders. In turn, the Board of
Directors of BWAY, the sole stockholder of Purchaser, and the holder of a
majority of the Company Shares has approved the Reorganization upon the terms
and subject to the conditions set forth in this Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the covenants, representations,
warranties and agreements herein contained, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
designated meanings:
"Accounting Firm" has the meaning set forth in Section 2.7 hereof.
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"Adjustment" has the meaning set forth in Section 2.6 hereof.
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"Affiliate" of another Person means any Person that directly, or
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indirectly through one or more intermediaries, controls or is controlled by or
is under common control with such other Person.
"Agency Agreement" has the meaning set forth in the forepart to this
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Agreement.
"Agent" has the meaning set forth in the forepart to this Agreement.
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"Agreement" means this Agreement and Plan of Merger and Reorganization,
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including the agreements, attachments, exhibits and schedules referred to
herein.
"Authorized Officer" means chairman of the board, president, any vice-
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president or secretary.
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"BWAY Notes" mean the promissory notes substantially in the form of
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Exhibit 1 hereto issued by BWAY in the aggregate principal amount of $1,000,000
which shall become due and payable on the second anniversary of the Closing
Date. The principal amount due under the BWAY Notes may be reduced by BWAY to
offset any amounts due the Surviving Corporation or BWAY pursuant to the
Adjustment and the Stockholders' indemnification obligations under Article X.
"BWAY Reports" has the meaning set forth in Section 8.8 hereof.
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"BWAY Stock" has the meaning set forth in the Recitals.
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"Cash Portion" has the meaning set forth in Section 2.6 hereof.
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"CERCLA" has the meaning set forth in Section 7.26(e) hereof.
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"Certificate of Merger" means the certificate of merger implementing the
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Reorganization, which shall be executed by the parties hereto, filed with the
Secretary of State of Delaware and recorded in the office of the recorder of
deeds in accordance with (S)103 and (S)251 of the GCL.
"Closing" has the meaning set forth in Section 3.1 hereof.
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"Closing Balance Sheet" has the meaning set forth in Section 2.7 hereof.
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"Closing Date" has the meaning set forth in Section 3.1 hereof.
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"Closing Tangible Net Worth" has the meaning set forth in Section 2.6.
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"COBRA" has the meaning set forth in Section 7.25(a) hereof.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Company's Accounting Principles" means the accounting valuations,
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principles, methods and policies the Company has used consistently in the
preparation of the Financial Statements.
"Company's Knowledge" means the knowledge of the officers and directors of
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the Company after reasonable investigation of Company files and consultation
with the managerial personnel responsible for the matters at issue.
"Company Shares" has the meaning in the forepart to the Agreement.
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"Confidentiality Agreement" means the Confidentiality Agreement, dated as
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of November 30, 1995, between Brockway Standard, Inc. and the Company.
"Constituent Corporations" has the meaning set forth in the forepart to
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this Agreement.
"Current Market Price" means the price per share of BWAY Stock, with
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respect to any specific date, as calculated by taking the average of the daily
closing prices per share of such BWAY Stock for the 10 consecutive Trading Days
immediately prior to such date; provided that, upon the request of the Agent
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(which shall be made no later than the Schedule Delivery Date), the average of
the daily closing prices shall be based on 20 consecutive Trading Days. The
closing price per share of BWAY Stock for each Trading Day shall be the last
sale price (or if there is no sale, the average bid price) on such day.
"Deposit" means the $100,000 paid upon execution of this Agreement by the
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Purchaser into the Deposit Escrow Account pursuant to the Deposit Escrow
Agreement. The Deposit shall be governed by the Deposit Escrow Agreement.
"Deposit Escrow Account" has the meaning set forth in the Deposit Escrow
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Agreement.
"Deposit Escrow Agent" has the meaning set forth in the Deposit Escrow
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Agreement.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement, dated as of
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the date hereof, by and among the Company, Purchaser and the Deposit Escrow
Agent.
"Deposit Escrow Amount" has the meaning set forth in the Deposit Escrow
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Agreement.
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"Discovered Liabilities" has the meaning set forth in Section 10.5 hereof.
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"DOJ" has the meaning set forth in Section 9.6 hereof.
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"ERISA" has the meaning set forth in Section 7.25(a) hereof.
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"Effective Time" has the meaning set forth in Section 2.2(c).
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"Employment Agreements" has the meaning set forth in Section 4.9 hereof.
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"Environmental Liability" has the meaning set forth in Section 10.5
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hereof.
"Exchange Act" has the meaning set forth in Section 8.8 hereof.
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"Financial Statements" means the audited balance sheets and related
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statements of operations for the Company as of and for each of the fiscal years
ended in December 31, 1993, 1994, and 1995, including in each case the notes
thereto.
"FTC" has the meaning set forth in Section 9.6 hereof.
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"GAAP" means generally accepted accounting principles, as promulgated by
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the Financial Accounting Standards Board.
"GCL" has the meaning set forth in the Recitals.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
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"Indemnitee" has the meaning set forth in Section 10.7(d) hereof.
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"Indemnitor" has the meaning set forth in Section 10.7(d) hereof.
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"ISRA" has the meaning set forth in Section 10.5 hereof.
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"Known Environmental Liability" has the meaning set forth in Section 10.5
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hereof.
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"Latest Balance Sheet" means the audited balance sheet of the Company as
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of December 31, 1995.
"Liens" has the meaning set forth in Section 7.19 hereof.
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"Material" has the meaning set forth in the Confidentiality Agreement.
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"Merger" has the meaning set forth in Section 2.2(a).
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"Notice of Disagreement" has the meaning set forth in Section 2.7(a)
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hereof.
"Person" means any natural person, corporation, general partnership,
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limited partnership, limited liability partnership, limited liability company,
trust, union, association, court, agency, government, tribunal, instrumentality,
or other entity or authority.
"Post-Closing Environmental Liability" has the meaning set forth in
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Section 10.5 hereof.
"Pre-Closing Period" has the meaning set forth in Section 10.7(a) hereof.
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"Preliminary Tangible Net Worth" has the meaning set forth in Section 2.6.
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"Proprietary Rights" has the meaning set forth in Section 7.21 hereof.
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"Schedule Delivery Date" has the meaning set forth in Section 9.3 hereof.
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"SEC" has the meaning set forth in Section 8.8 hereof.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Standstill Agreement" has the meaning set forth in Section 3.2(d) hereof.
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"Stock Escrow" has the meaning set forth in Section 2.5 hereof.
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"Stock Escrow Agent" has the meaning set forth in the Stock Escrow
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Agreement.
"Stock Escrow Agreement" means the Stock Escrow Agreement, dated as of the
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Closing Date, by and among BWAY, the Stockholders and the Stock Escrow Agent.
"Stock Portion" has the meaning set forth in Section 2.6 hereof.
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"Survey" has the meaning set forth in Section 5.8(b) hereof.
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"Surviving Corporation" has the meaning set forth in the Recitals.
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"SWDA" has the meaning set forth in Section 7.26(e) hereof.
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"Tangible Net Worth" of the Company means as of any date of determination,
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the excess of (a) the Company's assets as of such date over (b) the Company's
liabilities as of such date, all determined in accordance with the Company's
Accounting Principles and computed without taking into account goodwill.
"Tax" or "Taxes" means any federal, state, local or foreign income, gross
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receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall, profits, environmental, customs, capital stock,
franchise, employees' income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
similar tax, governmental fee, governmental assessment or governmental charge of
any kind whatsoever, including interest, penalty or addition thereto, whether
disputed or not imposed by any taxing authority.
"Title Insurer" has the meaning set forth in Section 5.8(a) hereof.
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"Trading Day" means a day for which the Nasdaq reports on transactions in
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the National Market System.
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ARTICLE II
THE REORGANIZATION
2.1 Deposit. Upon the execution of this Agreement, Purchaser shall pay
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the Deposit into the Deposit Escrow Account pursuant to the Deposit Escrow
Agreement. The Deposit shall be governed by the Deposit Escrow Agreement.
2.2 The Merger.
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(a) At the Effective Time and subject to the terms of this Agreement and
the Certificate of Merger, the Company shall be merged with and into Purchaser
and the separate existence of the Company shall thereupon cease, in accordance
with (S)251 of the GCL (the "Merger").
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(b) Purchaser shall be the Surviving Corporation and will continue to be
governed by the laws of the State of Delaware, and the separate corporate
existence of Purchaser and all of its rights, privileges, immunities and
franchises, public or private, and all of its duties and liabilities as a
corporation will continue, unaffected by the Merger, except as stated herein and
in the Certificate of Merger.
(c) At the Closing, the Constituent Corporations shall cause the
Certificate of Merger, duly executed and acknowledged, to be filed with the
Secretary of State of Delaware and shall take such other steps as may be
required to cause the filing to be accepted and become effective. The Merger
shall become effective at the date and time the Certificate of Merger is filed
with the Secretary of State of Delaware or such later time or date as may be
specified in the Certificate of Merger (the "Effective Time").
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2.3 The Surviving Corporation.
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(a) Certificate of Incorporation. The Certificate of Incorporation of
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Purchaser, as in effect immediately prior to the Effective Time (except as
modified by the Certificate of Merger to change the name of the Purchaser to
"The Milton Can Company"), shall be the Certificate of Incorporation of the
Surviving Corporation after the Effective Time.
(b) Bylaws. The Bylaws of Purchaser, as in effect immediately prior to
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the Effective Time, shall be the Bylaws of the Surviving Corporation after the
Effective Time.
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(c) Board of Directors. From and after the Effective Time, the directors
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of Purchaser shall be the initial directors of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or until their earlier death, resignation or removal.
(d) Officers. From and after the Effective Time, the officers of the
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Purchaser shall be the initial officers of the Surviving Corporation and shall
hold office until their respective successors are duly elected and qualified, or
until their earlier death, resignation or removal.
2.4 Conversion of Shares.
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(a) Company Shares. Pursuant to the Certificate of Merger, at the
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Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company, each of the 40,799 Company
Shares, constituting all of the issued and outstanding shares of capital stock
of the Company, shall be converted into the right to receive the Merger
Consideration, subject, however, to the delivery requirement of Section 2.5, the
adjustment provision of Section 2.7 and the Stockholders' indemnification
obligations under Article X. The Purchaser shall have offset rights under the
BWAY Notes pursuant to the terms thereof.
(b) Purchaser Shares. Each share of the Purchaser's common stock, par
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value $.01 per share, issued and outstanding as of the Effective Time will
remain issued and outstanding.
2.5 Delivery of Merger Consideration. At the Closing, against delivery of
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all stock certificates formerly representing Company Shares (and after the
Effective Time representing the right to receive the Merger Consideration),
Purchaser shall deliver to each Stockholder for each of his or her Company
Shares the Merger Consideration in the proportions of BWAY Stock and cash as set
forth on Attachment I hereto (subject to the delivery of certain shares of BWAY
Stock and the BWAY Notes into the Stock Escrow Account). At the Closing,
Purchaser shall deliver to the Stock Escrow Agent pursuant to the Stock Escrow
Agreement (i) the BWAY Notes and (ii) that number of shares of BWAY Stock equal
to the result of (A) $1,000,000 divided by (B) the Current Market Price of BWAY
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Stock as of the day immediately prior to the Closing Date (the "Stock Escrow").
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The Stock Escrow shall remain in escrow for two (2) years and the
BWAY Notes shall remain in escrow for one (1)
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year and each shall be released in accordance with the Stock Escrow Agreement.
The Stock Escrow shall reduce each Stockholder's pro rata share of the Stock
Portion.
2.6 Aggregate Merger Consideration. The aggregate Merger Consideration
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payable to the Stockholders for all of the Company Shares shall be $29,000,000,
$14,400,000 of which shall be paid in cash and by delivery of the BWAY Notes
(the "Cash Portion") and $14,600,000 of which shall be paid by delivery of that
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number of shares of BWAY Stock equal to the result of (i) $14,600,000 divided by
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(ii) the Current Market Price as of the day immediately prior to the Closing
Date (the "Stock Portion"). In accordance with Section 2.7, the Merger
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Consideration (and each Stockholder's pro rata share thereof) shall be increased
by (i) the amount, if any, by which the Tangible Net Worth of the Company as
shown on the Closing Balance Sheet ("Closing Tangible Net Worth") exceeds the
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Tangible Net Worth of the Company as shown on the Latest Balance Sheet
("Preliminary Tangible Net Worth") and decreased by (ii) the amount, if any, by
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which Preliminary Tangible Net Worth exceeds Closing Tangible Net Worth (in
either case, the "Adjustment"), and the Adjustment shall increase or decrease,
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as the case may be, pro rata that portion of each of the Cash Portion and the
Stock Portion of the Merger Consideration payable to each Stockholder.
2.7 Merger Consideration Adjustment.
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(a) Within 60 days after the Closing Date, BWAY shall deliver to the Agent
a balance sheet of the Company immediately prior to the Closing (the "Closing
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Balance Sheet") which shall be prepared in good faith by the Surviving
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Corporation under BWAY's direction and in accordance with the Company's
Accounting Principles, and which shall include all adjustments that would be
made and that are required in a year-end closing of the books (including without
limitations adjustments with respect to bonuses accrued as of the Closing Date),
together with BWAY's good faith determination of the Closing Balance Sheet and
Closing Tangible Net Worth (which shall be reduced by the amount of any
prepayment penalties incurred as a result of the prepayment of any funded
indebtedness to the extent such prepayment penalties have not already been
reflected on the Latest Balance Sheet) not accounted for at the Closing. During
the period immediately following the Agent's receipt of the Closing Balance
Sheet and until Closing Tangible Net Worth is finally determined pursuant to
this Section 2.7, the Agent shall be permitted to review the Surviving
Corporation's books and records and working papers related to its preparation of
the Closing Balance Sheet and determination of Closing Tangible Net Worth. The
Closing Balance Sheet and BWAY's determination of Closing Tangible Net Worth
shall
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become final and binding upon the parties 45 days after the Agent's receipt
thereof, unless Agent gives written notice of its disagreement ("Notice of
Disagreement") to BWAY prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If a
timely Notice of Disagreement is received by BWAY, then the Closing Balance
Sheet and the determination of Closing Tangible Net Worth (as revised in
accordance with clause (i) or (ii) below) shall become final and binding upon
the parties on the earlier of (i) the date the parties hereto resolve in writing
any differences they have with respect to the matters specified in the Notice of
Disagreement or (ii) the date all matters in dispute are finally resolved in
writing by the Accounting Firm (as defined below). During the 30 days following
delivery of a Notice of Disagreement, BWAY and the Agent shall seek in good
faith to resolve in writing any differences which they may have with respect to
the matters specified in the Notice of Disagreement. During such period, a
representative appointed by BWAY shall be permitted to review the Agent's
working papers relating to the Notice of Disagreement. If the aggregate of all
matters still in dispute at the end of such 30-day period exceeds $100,000, BWAY
and the Agent shall submit to Arthur Andersen (or to any other accounting firm
mutually agreeable to BWAY and the Agent) (the "Accounting Firm") for review and
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resolution of all matters which remain in dispute which were included in the
Notice of Disagreement, and the Accounting Firm shall make a final determination
of the Closing Balance Sheet and Closing Tangible Net Worth and the final Merger
Consideration in accordance with the guidelines and procedures set forth in this
Agreement. If the aggregate of all matters still in dispute at the end of such
30-day period is $100,000 or less, the Closing Balance Sheet and Closing Net
Worth shall nevertheless be deemed final and no Adjustment shall be made with
respect to such matters. The Closing Balance Sheet and the Closing Tangible Net
Worth as determined in accordance with this Section 2.7 shall become final and
binding on the parties on the date the Accounting Firm delivers its final
resolution in writing to the parties (which final resolution shall be delivered
not more than 45 days following submission of such disputed matters to the
Accounting Firm). The fees and expenses of the Accounting Firm shall be shared
equally by the Surviving Corporation and the Agent.
(b) For purposes of preparing the Closing Balance Sheet and determining
Closing Tangible Net Worth, the Surviving Corporation shall take a physical
count of all inventory held by the Company as of the Closing, conducted and
valued in accordance with the Company's Accounting Principles.
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(c) If there is an Adjustment and Closing Tangible Net Worth exceeds
Preliminary Tangible Net Worth, the Surviving Corporation shall, or if there is
an Adjustment and Preliminary Tangible Net Worth exceeds Closing Tangible Net
Worth, the Agent shall on behalf of all the Stockholders, within three business
days after the Closing Balance Sheet and the determination of Closing Tangible
Net Worth become final and binding on the parties, make payment by wire transfer
in immediately available funds of the amount of such difference. If the
Surviving Corporation is required to pay an Adjustment, it shall pay a pro rata
amount thereof to each Stockholder according to the relative proportion of the
Cash Portion received by such Stockholder at the Closing. If the Agent is
required to pay an Adjustment, BWAY shall reduce the principal amount payable by
BWAY pursuant to the BWAY Notes to offset such amount in lieu of the Agent
making such payment.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. The consummation of the transactions
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provided for in this Agreement ("Closing") shall take place at the offices of
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Kirkland & Ellis, 200 East Randolph, Chicago, Illinois 60601 at 10:00 a.m. local
time, on April 30, 1996 or, if the conditions to Closing set forth in Sections
4.7 and 5.7 have not been satisfied on or prior to such date, on the fifth
business day following satisfaction of such conditions (the "Closing Date"), or
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at such other place and time as the parties may agree.
3.2 Deliveries by the Company. At the Closing, the Company shall deliver
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to Purchaser stock certificates from each Stockholder representing the number of
Company Shares set forth opposite such Stockholder's name on Attachment I
hereto. In addition, the Company shall deliver to Purchaser the following:
(a) any third party or governmental consent required for the consummation
of the transactions contemplated hereby;
(b) the stock book, stock ledger, corporate seal and minute book of the
Company;
(c) payoff letters from the holders of the Company's funded indebtedness
indicating the amount required to pay in full all obligations for or relating to
borrowed money,
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including without limitation all liabilities and obligations under revolving and
term credit agreements, any capitalized leases and other similar funded
indebtedness, as well as accrued interest and prepayment premiums relating to
any of the foregoing;
(d) a standstill agreement restricting the ability of James W. Milton (and
his Associates and Affiliates) from buying shares of BWAY Stock in excess of the
total number of shares of BWAY Stock received at the Closing (the "Standstill
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Agreement") in substantially the form of Exhibit 3.2(d) hereof;
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(e) a Stock Escrow Agreement substantially in the form of Exhibit 3.2(e)
hereof and that complies with all requirements under the Code or of the Internal
Revenue Service such that (i) the Reorganization will qualify as a tax-free
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code and (ii) the receipt of the Stock Portion shall be tax-free to the
Stockholders;
(f) the opinion and certificate contemplated by Article V hereof; and
(g) all other documents, instruments and writings required to be delivered
by the Company or the Agent at or prior to the Closing Date pursuant to this
Agreement or otherwise required, or reasonably requested by Purchaser, in
connection herewith.
3.3 Deliveries by BWAY and Purchaser. At the Closing, BWAY and Purchaser
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shall deliver the following:
(a) the Cash Portion (less the BWAY Notes) and the Stock Portion (less the
Stock Escrow) to each Stockholder in the proportions set forth opposite such
Stockholder's name on Attach ment I hereto (cash will be paid by wire transfer
of immediately available funds at Closing to the account(s) designated by the
Agent at least three (3) business days prior to the Closing Date);
(b) the Stock Escrow and the BWAY Notes to the Stock Escrow Agent;
(c) an amended and restated registration rights agreement granting with
respect to the Stock Portion piggy-back registration rights to those
Stockholders who will be affiliates of the Company after the date hereof no less
favorable to such Stockholders than the piggy-back registration rights granted
by BWAY pursuant to the Registration Rights Agreement, dated as of January 30,
1989;
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(d) the opinion and certificate contemplated by Article IV hereof; and
(e) all other documents, instruments and writings required to be delivered
by BWAY and Purchaser, at or prior to the Closing Date pursuant to this
Agreement or otherwise required, or reasonably requested by the Company in
connection herewith.
ARTICLE IV
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The Company's obligation to consummate the Reorganization and other
transactions contemplated by this Agreement is subject to the satisfaction at or
prior to the Closing Date of each of the following conditions.
4.1 Representations, Warranties and Covenants. All representations and
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warranties of Purchaser and BWAY contained in Article VIII of this Agreement
shall be true and correct in all material respects at and as of the Closing Date
as if such representations and warranties were made at and as of the Closing
Date and Purchaser and BWAY shall have performed and complied with, in all
respects, all agreements and covenants required by this Agreement to be
performed by it prior to or at the Closing Date. On the Closing Date, there
shall be delivered to Agent two certificates (dated as of the Closing Date and
signed by an Authorized Officer of Purchaser and BWAY respectively) as to the
matters set forth in this Section 4.1.
4.2 No Injunction. No injunction, stay or restraining order shall be in
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effect prohibiting the consummation of the transactions contemplated by this
Agreement.
4.3 Opinion of Counsel. BWAY and Purchaser shall have delivered to the
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Company an opinion of Kirkland & Ellis, counsel to BWAY and Purchaser, dated the
Closing Date, in form and substance satisfactory to Agent, as to the matters set
forth in Exhibit 4.3 hereto.
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4.4 Company Tax Opinion. Company shall have received an opinion of its
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counsel, dated as of the Closing Date, to the effect that the merger, when
effected in accordance with this Agreement, will qualify as a reorganization
under Section 368(a) of the Code
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and BWAY, Purchaser, and the Company will constitute parties to such
reorganization.
4.5 Certificates and Other Documents. Each of BWAY and Purchaser shall
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have furnished the Company with (a) such certificates of one of its Authorized
Officer to evidence compliance with the conditions set forth in this Article IV
as may be reasonably requested by Agent, (b) each of the deliveries required
under Section 3.3 above and (c) all other documents and certificates reasonably
requested by Agent, including without limitation a certificate of its Secretary
certifying as to the requisite corporate transactions contemplated by this
Agreement and an executed Certificate of Merger.
4.6 Good Standing Certificates. Each of BWAY and Purchaser shall have
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delivered to the Company a certificate as to its legal existence, certified by
the Secretary of State of its jurisdiction of incorporation.
4.7 HSR Act. All filings required to be made under the HSR Act shall have
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been made, and any applicable waiting period thereunder shall have expired.
4.8 Employment Agreements. Purchaser shall have offered each of James W.
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Milton, Barry Treadwell and George Kostysgen employment agreements substantially
in the form set forth as Exhibit 4.9 attached hereto (the "Employment
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Agreements").
Each of the preceding conditions shall be satisfied in the sole discretion
of the Company (with respect to those matters about which discretion is
appropriate) and may be waived only if such waiver is set forth in a writing
executed by the Company.
ARTICLE V
CONDITIONS TO BWAY'S AND PURCHASER'S OBLIGATIONS
BWAY's and Purchaser's obligation to consummate the transactions
contemplated by this Agreement is subject, in the discretion of BWAY and
Purchaser, to the satisfaction at or prior to the Closing Date of each of the
following conditions.
5.1 Representations, Warranties and Covenants. All representations and
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warranties of the Stockholders and the Company contained in Articles VI and VII
of this Agreement shall be true
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and correct in all material respects at and as of the date hereof and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date and the Company, the Agent and the Stockholders shall have each
performed and complied with, in all respects, all agreements and covenants
required by this Agreement to be performed by it or him prior to or at the
Closing Date. On the Closing Date, there shall be delivered to Purchaser a
certificate (dated as of the Closing Date and signed by the Agent and an
Authorized Officer of the Company) as to the matters set forth in this Section
5.1.
5.2 Consents and Approvals. The Company shall have received, at its sole
----------------------
cost and expense, without any condition adverse to Surviving Corporation, all
third party and governmental consents to and approvals of the consummation of
the transactions contemplated hereby necessary under any law, statute, rule,
regulation, agreement, instrument, order, judgment or decree.
5.3 No Injunction. No suit, action or other proceeding, or injunction or
-------------
final judgment relating thereto, shall be threatened or pending before any court
or governmental or regulatory official, body or authority in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
the transactions contemplated hereby, or that would have an adverse effect on
the business, financial condition, operating results, assets, operations or
business prospects of the Company or the Surviving Corporation or adversely
affect the right of BWAY to own the Surviving Corporation or to operate or
control the Surviving Corporation, and no investigation that would result
in any such suit, action or proceeding shall be pending or threatened.
5.4 Opinion of Counsel. The Company shall have delivered to Purchaser an
------------------
opinion of its counsel, dated as of the Closing Date, in form and substance
satisfactory to Purchaser, as to the matters set forth in Exhibit 5.4 attached
hereto.
5.5 Purchaser Tax Opinion. Purchaser shall have received an opinion of
---------------------
Kirkland & Ellis, counsel to Purchaser, dated as of the Closing Date, to the
effect that the Merger, when effected in accordance with this Agreement, will
qualify as a reorganization under Section 368(a) of the Code and BWAY,
Purchaser, and the Company will constitute parties to such reorganization.
5.6 Good Standing Certificates. The Company shall have furnished to
--------------------------
Purchaser certificates as to the good standing of the Company in its
jurisdiction of incorporation and in each
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jurisdiction in which it conducts business, in each case certified by the
Secretary of State of the applicable jurisdiction.
5.7 HSR Act. All filings required to be made under the HSR Act shall have
-------
been made, and any applicable waiting period thereunder shall have expired.
5.8 Title to Real Property.
----------------------
(a) The Company shall have delivered to Purchaser, with respect to each
parcel of real property owned by the Company, an ALTA Form B - 1970 Owner's
Policy of Title Insurance (or equivalent policy reasonably acceptable to
Purchaser if the real property is located in a state in which an ALTA Form B -
1970 Owner's Policy of Title Insurance is not customarily issued), and if
reasonably requested by Purchaser or required by Purchaser's lender with respect
to each leasehold parcel, an ALTA Form B-1990 Leasehold Title Insurance Policy
(or equivalent policy reasonably acceptable to Purchaser or Purchaser's lender
if the real property is located in a state in which an ALTA Form B-1990 Lease
Title Insurance Policy is not customarily issued), issued by Commonwealth Land
Title Insurance Corporation (Chicago Office) or another title insurance company
reasonably acceptable to Purchaser (the "Title Insurer"), in an amount equal to
-------------
the fair market value of such real property (including all improvements located
thereon), insuring title to such real property to be in the Company as of the
Closing, subject only to the title exceptions agreed to by Purchaser. Each title
insurance policy shall insure title to such real property and all recorded
easements benefiting such real property, contain (i) an "extended coverage
endorsement" insuring over the general exceptions customarily contained in such
policy, (ii) an ALTA Zoning Endorsement 3.1 (or equivalent), (iii) an
endorsement insuring that the real property described in such title insurance
policy is the same real estate as shown on the Survey (as defined in Section
5.8(b) hereof) delivered with respect to such property, (iv) if the real
property consists of more than one record parcel, a "contiguity" endorsement
insuring that each of the record parcels are contiguous to one another, (v) a
"non-imputation" endorsement to the effect that title defects known to the
officers, directors and stockholders of the Company prior to the Closing shall
not be deemed to be "facts known to the insured" for the purposes of the policy,
(vi) an endorsement insuring that each street adjacent to such parcel is a
public street, and that there is direct and unencumbered pedestrian and
vehicular access to such street from such parcel, (vii) a tax parcel number
endorsement, and (viii) such other endorsements as Purchaser and Purchaser's
lender may reasonably request. The Company shall deliver a commitment for
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each such title insurance policy at least 30 days prior to Closing, and the
costs and expenses of each of the title insurance commitments and policies to be
delivered hereunder shall be borne by Stockholders.
(b) With respect to each parcel of real property as to which a title
insurance policy is to be issued at the Closing, Stockholders shall have
delivered to Purchaser a current survey of such real property, prepared by a
licensed surveyor and conforming to current 1992 ALTA/ACSM Minimum Detail
Requirements for Urban Land Title Surveys, including Table A Item Nos. 1-4 and
6-14, and such other standards as the Title Insurer may require to remove the
general survey exception from the title insurance policies, disclosing the
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines and other matters customarily shown on such surveys, and
affirmatively showing access to public streets and roads (the "Survey"). The
------
Survey shall not disclose any material survey defects or encroachments from or
onto such real property which have not been cured or insured over prior to the
Closing. The costs and expenses of each of the Surveys to be delivered hereunder
shall be borne by Stockholders.
(c) With respect to each real estate lease and sublease or other
agreements for the use or occupancy of space under which the Company holds
leasehold or subleasehold or similar interests in real estate, the Company shall
deliver to Purchaser such landlord consents, lender nondisturbance agreements
and estoppel certificates as Purchaser may reasonably request in form and
substance satisfactory to Purchaser.
(d) The Company shall furnish Title Insurer with all other documents or
instruments requested by Title Insurer to issue the title insurance policies
under this Section 5.8.
5.9 Lien Searches. The Company shall have furnished Purchaser with a
-------------
current lien search report indicating that as of the Closing Date there are no
security interests, judgments, tax or other liens outstanding against any
properties owned by the Company (whether real, personal, tangible or
intangible).
5.10 Due Diligence. BWAY and Purchaser shall be satisfied with the results
-------------
of its and its representatives' business, legal, environmental, accounting and
financial due diligence investigation and evaluation of the Company (provided
that this condition shall be deemed waived if, but only if, Purchaser has not
asserted by the
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60th day after the Schedule Delivery Date pursuant to Section 9.3, that the
disclosures made on the schedules delivered as of the Schedule Delivery Date
warrant an adjustment in the Merger Consideration).
5.11 Material Adverse Change. There shall have been no material adverse
-----------------------
change or development in the financial condition, operating results, assets,
operations, business prospects, employee relations or customer or supplier
relations of the Company.
5.12 Certificates and Other Documents. The Company shall have furnished
--------------------------------
Purchaser with (a) such certificates of the Agent and of the Company's officers
and directors to evidence compliance with the conditions set forth in this
Article V as may be reasonably requested by Purchaser, (b) each of the
deliveries required under Section 3.2 above, (c) a certification, dated not more
than 30 days prior to the Closing Date, issued by the Company pursuant to Treas.
Reg. Section 1.897-2(h) that the stock of the Company is not a "United States
real property interest" as defined in Section 897 of the Code shall be delivered
to Purchaser prior to the Closing; alternatively, if Company cannot certify that
it is not a U.S. real property holding corporation, Stockholders shall furnish
to Purchaser prior to the Closing a certification pursuant to Treas. Reg.
Section 1.1445-2(b)(2) that each Stockholder is not a foreign person; and (d)
all other documents and certificates rea sonably requested by Purchaser,
including without limitation, certified copies of the resolutions of the
Company's board of directors and its Stockholders approving the transactions
contem plated by this Agreement and an executed Certificate of Merger.
Each of the preceding conditions shall be satisfied in the sole discretion
of BWAY and Purchaser (with respect to those matters about which discretion is
appropriate) and may be waived only if such waiver is set forth in a writing
executed by Purchaser.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Effective as of the Schedule Delivery Date, the Agent, on his own behalf and
on behalf of each other Stockholder, represents and warrants to the Purchaser
that the statements contained in this Article VI shall be correct and complete
and will be correct and complete as of the Closing Date (as though made then and
as though
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the Closing Date were substituted for the date of this Agreement throughout this
Article VI) with respect to each such Stockholder.
6.1 Authorization of Transaction. The Stockholder has full power and
----------------------------
authority (including, if the Stockholder is a corporation, full corporate power
and authority) to execute and deliver this Agreement and to perform such
Stockholder's obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Stockholder, enforceable in accordance with
its terms and conditions. The Stockholder need not give any notice to, make any
filing with, or obtain any authori zation, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
6.2 No Conflicts. Neither the execution and the delivery of this
------------
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Stockholder is subject or, if the
Stockholder is a corporation, any provision of its charter or bylaws or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Stockholder is a party or by which
he or she is bound or to which any of his or her assets is subject.
6.3 Broker's Fees. The Stockholder has no liability or obligation to pay
-------------
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which BWAY or the Surviving
Corporation could become liable or obligated.
6.4 Ownership. The Stockholder holds of record and owns beneficially the
---------
number of Company Shares set forth next to such Stockholder's name in Attachment
I, free and clear of any restrictions on transfer (other than any restrictions
under the Securities Act any applicable and state securities laws), Taxes,
security interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. The Stockholder is not a party to any option,
warrant, purchase right, or other contract or commitment that could require the
Stockholder to sell, transfer, or otherwise dispose of any capital stock of the
Company (other than this Agreement). The Stockholder is not a party to any
voting
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<PAGE>
trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
6.5 Investment. The Stockholder (A) understands that the BWAY Stock
----------
issued in the Stock Portion of the Merger Consideration has not been, and will
not be, registered under the Securities Act of 1933 ("Securities Act"), or under
--------------
any state securities laws, and is being issued in reliance upon federal and
state exemptions for transactions not involving any public offering, (B) is
acquiring the BWAY Stock solely for his or her own account for investment
purposes, and not with a view to the distribution thereof, (C) is a
sophisticated investor with knowledge and experience in business and financial
matters or, if not, has consulted with an individual who has knowledge and
experience in business and financial matters, (D) has received certain
information concerning BWAY and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding BWAY Stock, and (E) is able to bear the economic risk and lack of
liquidity inherent in holding the BWAY Stock.
6.6 Continuity of Interest. The Stockholder does not have any present
----------------------
plan, intention, or arrangement to dispose of any of the BWAY Stock received in
the merger if such disposition would reduce the fair value of the BWAY Stock
(with such fair value measured as of the Effective Date) retained by the
Stockholders as a group to an amount less than 50 percent of the fair value of
the Company Shares held by such Stockholders immediately before the Effective
Time.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Effective as of the Schedule Delivery Date, the Company represents and
warrants to Purchaser that the statements contained in this Article VII shall be
correct and complete as of the date of this Agreement.
7.1 Capital Stock of the Company. The authorized capital stock of the
----------------------------
Company consists of 50,000 Company Shares, of which 40,799 Company Shares are
issued and outstanding, all of which are held as set forth on Attachment I
hereto. All of the issued and outstanding Company Shares are validly issued,
fully paid and nonassessable. There are no securities of the Company outstanding
which are convertible into or exchangeable or exercisable for any Company
Shares, and there are no outstanding or authorized
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<PAGE>
subscriptions, options, warrants, calls, rights (pre-emptive or otherwise),
commitments or any other agreements of any character obligating the Company to
issue, sell or transfer any additional shares of the Company's capital stock or
any securities convertible into or evidencing the right to subscribe for any
shares of the Company's capital stock, or to the Company's Knowledge, giving any
Person (other than Purchaser) any rights with respect to the capital stock of
the Company.
7.2 Due Incorporation, Etc. The Company is a corporation duly
-----------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company has all requisite corporate power and authority to own
and operate its business as it is presently being conducted and to own and lease
the properties and assets owned or leased by it. The Company is duly licensed
and qualified to do business and is in good standing in each jurisdiction in
which the properties owned or leased or the operation of its business makes such
licensing or qualification to do business necessary. Complete and correct
copies of the Certificate of Incorporation and Bylaws, as amended to date, of
the Company have been delivered to Purchaser.
7.3 Subsidiaries. Except as set forth on Schedule 7.3 hereto, the Company
------------
does not own any stock, partnership interest, joint venture interest or other
security or interest in any other Person.
7.4 Authorization, No Conflicts, Etc.
---------------------------------
(a) The Company has full power and authority to execute and deliver this
Agreement and all other agreements contemplated hereby, and to perform the
obligations and to consummate the transactions contemplated hereby and thereby.
This Agreement and the other agreements contemplated hereby have been duly
executed and delivered by the Company and (assuming the due authorization,
execution and delivery hereof by BWAY and the Purchaser) constitute the valid
and binding agreements of the Company, enforceable against the Company in
accordance with their terms, except as enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and limitations on the availability of equitable
remedies. Except as set forth in Schedule 7.4 hereto, neither the execution,
delivery or performance of this Agreement and the other documents contemplated
hereby, nor the consummation of the transactions contemplated hereby and
thereby, will (i) conflict with or result in a breach of any of the provisions
of, (ii) constitute a default under, (iii) result in the
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<PAGE>
violation of, (iv) give any third party the right to terminate or to accelerate
any obligation under, (v) result in the creation of any lien, security interest
or charge or encumbrance upon the Shares, or (vi) require any authorization,
consent, approval, execution or other action by or the giving of notice to any
court or other governmental body, under the provisions of the Company's
certificate of incorporation of bylaws or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which the Company is bound or
affected, or any statute, regulation, rule, judgment, order, decree or other
restriction of any government, governmental agency or court to which the Company
is subject.
(b) Except as set forth in Schedule 7.4 hereto, the execution, delivery
and performance of this Agreement and the other agreements contemplated hereby
and the consummation of the transactions contemplated hereby and thereby by the
Company will not: (i) violate any provisions of law applicable to the Company
(other than provisions of law that equally affect the parties hereto); (ii) with
or without the giving of notice and/or the passage of time, conflict with,
result in the breach of any provision of, give any third party the right to
terminate or to accelerate any obligation under, or result in the creation of
any lien, security interest or charge or encumbrance under, the Certificate of
Incorporation or Bylaws of the Company or any instrument, license, agreement,
arrangement, indenture, commitment or order to which the Company is a party or
by which any of its assets or properties are bound; or (iii) constitute a
violation of any order, judgment or decree to which the Company or any of its
Affiliates which is party thereto or by which any of the Company's assets or
properties are bound.
7.5 Consents and Approvals. The execution and delivery of this Agreement by
----------------------
the Company does not, and compliance by the Company with the terms hereof and
consummation of the transactions contemplated hereby will not, require the
Company or, to the Company's Knowledge, the Purchaser or the Surviving
Corporation to obtain any authorization, consent, approval, exemption or action
of, or make any filing with or give any notice to, any Person pursuant to the
Certificate of Incorporation or Bylaws of the Company or any law, statute, rule,
regulation, agreement, permit, license, instrument, order, judgment or decree to
which the Company is subject, except as disclosed in Schedule 7.5 hereto.
7.6 Absence of Violations. Except as disclosed in Schedule 7.6 hereto,
---------------------
the Company is not in violation of its Certificate of Incorporation or Bylaws,
or in material violation (or with or without notice or lapse of time or both
would be in
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<PAGE>
material violation), in any way of any term or provision of (a) any
law, statute, ordinance, rule, regulation, order, writ, judgment, injunction,
permit or decree applicable to the Company or any of its assets, operations or
properties or (b) any agreement, lease, or other document, by which it or any of
its assets or properties is bound.
7.7 Licenses and Permits. Except as disclosed in Schedule 7.7 hereto, (a)
--------------------
the Company has and is in compliance with all material licenses, franchises,
permits (including without limitation environmental and construction permits and
operating permits), approvals, authorizations, exemptions, classifications,
certificates, registrations, arrangements, commitments, and similar documents or
instruments required to conduct its business as presently conducted; and (b) all
such licenses, franchises, permits (including without limitation environmental
and construction permits and operating permits), approvals, authorizations,
exemptions, classifications, certificates, registrations, ar rangements,
commitments, and similar documents or instruments are valid, binding, and in
full force and effect.
7.8 Inventories. The inventories of the Company on hand as of the Closing
-----------
Date (a) are reflected on the Company's books and records in accordance with
GAAP, consistently applied, and (b) consist of a quality and quantity useable
and salable without discount in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written-off or written-down to net realizable value on the Latest Balance Sheet.
7.9 Books and Records. Except as set forth in Schedule 7.9 attached
-----------------
hereto, the books and records of the Company are accurate and complete in all
material respects, have been maintained in accordance with GAAP consistently
applied, and accurately reflect in all material respects the ownership, use, and
operations of the Company.
7.10 Accounts Receivable. All accounts receivable of the Company reflected
-------------------
on the Latest Balance Sheet are valid receivables and are current and
collectible, except for those the Company knows to be invalid, past due or
uncollectible for which the Company has created an applicable reserve for bad
debts shown on the Latest Balance Sheet.
7.11 Financial Statements. Attached hereto as Schedule 7.11 are the
--------------------
following:
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<PAGE>
(a) the Financial Statements (including without limitation the Latest
Balance Sheet), and the related statements of income and cash flows (or the
equivalent) for the respective twelve-month periods then ended; and
(b) the unaudited consolidated balance sheet of the Company as of February
29, 1996, and the related statements of income and cash flows (or the
equivalent) for the 2-month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of the Company (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with GAAP, consistently applied, except as specifically disclosed on
Schedule 7.11 attached hereto. Except as set forth on Schedule 7.11, the
Company's Accounting Principals are in accordance with GAAP.
7.12 Absence of Undisclosed Liabilities. Other than transactions entered
----------------------------------
into with BWAY or the Purchaser, the Company has no material obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company, whether due or to become due and regardless
of when or by whom asserted) (other than Unknown Environmental Liabilities)
relating to the Company's business arising out of transactions entered into at
or prior to the Closing Date, or any action or inaction at or prior to the
Closing Date, or any state of facts existing at or prior to the Closing Date,
including Taxes with respect to or based upon transactions or events occurring
on or before the Closing Date, except (i) obligations under contracts or
commitments described on Schedule 7.12 attached hereto or under contracts and
commitments entered into in the ordinary course of business which are not
required to be disclosed thereon (but not liabilities for material breaches
thereof occurring on or prior to the Closing Date), (ii) liabilities reflected
on the liability side of the Latest Balance Sheet, (iii) liabilities and
obligations which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a material liability for breach of
contract, tort, infringement, claim, lawsuit or material breach of warranty) and
(iv) other liabilities and obligations expressly disclosed in or contemplated by
this Agreement or the Schedules attached hereto.
7.13 No Material Adverse Change. There has been no material adverse change
--------------------------
in the financial condition or results of operations, or the business prospects,
assets, employee structure,
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<PAGE>
labor relations, profit margins or operations of the Company since the date of
the Latest Balance Sheet.
7.14 Absence of Certain Developments. Except as expressly contemplated by
-------------------------------
this Agreement or disclosed on Schedule 7.14 hereto, since the date of the
Latest Balance Sheet, the Company has not, nor has any person with authority to
act on behalf of the Company taken any action that binds the Company:
(a) issued any bonds, notes or other debt securities, or issued any equity
securities, any securities convertible into any equity securities, or any
warrants, options, or other rights to acquire any equity securities;
(b) borrowed any amount or incurred or become subject to any liabilities,
except current liabilities incurred in the ordinary course of business
consistent with past practice, and liabilities under contracts entered into in
the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any obligation
or liability, other than current liabilities paid in the ordinary course of
business;
(d) declared or made any payment or other distribution of cash or other
property to any stockholder or its other Affiliates with respect to its capital
stock or purchased or redeemed any shares of its capital stock or made any loans
or advances to Stockholders or any other Person;
(e) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any of its properties or assets, except liens for current property
taxes not yet due and payable;
(f) transferred or in any way depleted the overfunded balance of any
Company pension or multiemployer plan;
(g) sold, assigned or transferred any of its tangible assets or leases,
except in the ordinary course of business, or removed any such assets from their
customary location or cancelled any debts or claims;
(h) sold, assigned or transferred any patents, trademarks, trade names,
copyrights, trade secrets or other similar intangible assets, or disclosed any
proprietary confidential information to any person;
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<PAGE>
(i) suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with past
practice;
(j) made any commitments for capital expenditures or otherwise incurred
any expense in an amount in excess of $50,000 which will not be paid for in full
prior to Closing;
(k) entered into any transaction or agreement, except in the ordinary
course of business, entered into any other material transaction whether or not
in the ordinary course of business, or entered into any transaction with any of
its officers, directors, shareholders or other affiliates or insiders;
(l) made any charitable contributions or pledges;
(m) suffered any damage, destruction or casualty loss to any of its assets
or properties, whether or not covered by insurance;
(n) made or granted any bonus or any wage or salary increase to any
employee or group of employees, or made or granted any increase in its profit
sharing plan, employee compensation reimbursement program or any other employee
benefit plan, except in accordance with past custom and practice;
(o) amended or otherwise altered (whether by action or inaction) any
material contracts or other material agreements to which it is a party or waived
any material rights or obligations thereunder; or
(p) made any payments for political contributions, or made any bribes,
kickback payments or any other illegal or improper payments.
7.15 Customers. Schedule 7.15 hereto lists each customer or group of
---------
related customers who accounted for more than $6,000,000 of the revenues of the
business of the Company during the past twenty-four (24) months. Except as set
forth on the Schedule 7.15, the Company has not received any notice or has any
knowledge that any such customer intends to terminate or materially reduce its
business with the Company in the future and no such customer has terminated or
materially reduced its business with the Company during the past twelve (12)
months.
7.16 Insurance. Schedule 7.16 hereto contains a complete list of all
---------
liability, property, accident, casualty, fire, flood,
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<PAGE>
workers' compensation, key man, group life or health, and other insurance
policies and arrangements (including without limitation the names and addresses
of the insurers, the expiration dates thereof, and the estimated annual
premiums, costs and any related administrative charges) affecting or relating to
the ownership, use, or operations of any of the assets or properties of the
Company. Except as set forth on Schedule 7.16 hereto, to the Company's
Knowledge, all insurance policies which cover the Company prior to Closing Date
will continue to provide coverage after the Closing Date in amounts with
deductibles consistent with those currently in effect for all occurrences
(regardless of when the claim is made) prior to the Closing Date.
7.17 Assets. Except as disclosed in Schedule 7.17 hereto, the
------
improvements, buildings, machinery, equipment, furniture, vehicles, tools and
tangible personal property owned, leased, or held by the Company for use in its
business and operations are in good working condition, subject to ordinary wear
and tear resulting from continued operations in the ordinary course of business,
have been properly maintained, are suitable for their present and intended uses
and, in the case of any improvements, are structurally sound, and there is no
defect in any assets used in the business and operations of the Company which
individually or in the aggregate could have a material adverse effect on the
use, condition, value, or operations of its business.
7.18 Material Contracts.
------------------
(a) Except as set forth on Schedule 7.18 hereto, the Company is not a
party to any written or oral: (i) contract for the employment of any officer,
individual employee, or other person on a full-time or consulting basis, except
for such Persons who are employees at-will, (ii) agreement or indenture relating
to the borrowing of money or to mortgaging, pledging or otherwise placing a lien
on any of its real or personal properties (whether tangible or intangible);
(iii) guaranty of any obligation for borrowed money or otherwise other than
reimbursement of directors, officers and employees in the ordinary course and
endorsing checks in the ordinary course; (iv) license or royalty agreement; (v)
contract or group of related contracts with the same party for the purchase of
goods, products or services (including advertising, public relations, consulting
or management services) under which the undelivered balance of such goods,
products or services requires aggregate annual payments in excess of $10,000 or
continuing over a period of more than thirty (30) days from the date or dates
thereof and not terminable by the Company on thirty (30) days' or less notice
without penalties; (vi) any contract or group of
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<PAGE>
related contracts with the same party for the sale of goods, products or
services involving aggregate annual receipts in excess of $100,000; (vii)
agreements with respect to the lending or investing of funds; (viii) contract
with the Federal government of the United States or any branch or administrative
body thereof; (ix) contract which prohibits the Company from freely engaging in
business anywhere in the world; (x) contract relating to the distribution of the
Company's products or services; (xi) contract with Stockholders, any officer or
director of the Company, or any relative of any officer or director of the
Company to the extent not already (or not required to be) disclosed in Schedule
7.18, or (xii) other agreement material to the Company or not entered into in
the ordinary course of business.
(b) Except as set forth on Schedule 7.18, (i) to the Company's Knowledge,
no contract or commitment has been breached or cancelled by the other party
since the date of the Latest Balance Sheet; (ii) since the date of the Latest
Balance Sheet, no person or group of persons or other entity with whom the
Company does business has indicated that it will stop or decrease the rate of
business done with the Company, increase the price at which it supplies goods,
products or services to the Company or decrease the price it is willing to pay
for the Company's goods, products or services; (iii) the Company has in all
material respects performed all the obligations required to be performed in
connection with any contract or commitment and is not in default of any material
obligation (nor is it in receipt of any claim of default) under any contract or
commitment; (iv) the Company has no present expectation or intention of not
fully performing any obligation pursuant to any contract; (v) to the Company's
Knowledge, there is no breach or anticipated breach by any other party to any
contract; (vi) the Company is not party to any contract which, as of the date
entered into, is adverse to the operations, financial condition, operating
results or business prospects of the Company, including but not limited to
contracts obligating the Company to: (A) purchase any property or services at
a price greater than the prevailing market price, (B) sell any property or
services at a price less than the prevailing market price or at a price which
results in a loss, (C) pay rentals or royalties at a rate greater than
prevailing market price, or (D) act as lessor or licensor at a rate less than
the prevailing market price; and (vii) no consent of any other party is required
for the assumption by Purchaser of any contract described in Section
7.18(a)(vii) above.
(c) Purchaser has been supplied with a true and correct copy of all
written contracts to which the Company is a
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party together with all amendments, waivers or other changes thereto and all
correspondence delivered or received with respect thereto that modifies or
amends the material terms therein.
7.19 Real Properties.
---------------
(a) Schedule 7.19 hereto identifies all real properties owned, leased or
otherwise used or occupied by the Company.
(b) Except as set forth in Schedule 7.19, the Company has (i) (A) with
respect to such real properties owned by it, good and indefeasible fee simple
title to such properties, which properties shall not have been transferred,
assigned or hypothecated, and which are free and clear of all liens, leases,
security interests, charges (including, without limitation, brokerage
commissions), restrictions, covenants, conditions and encumbrances, including,
without limitation, encumbrances relating to financial arrangements (including,
without limitation, guarantees, pledges, collateral assignments and other
similar arrangements) (collectively "Liens"), except for Liens if any, for real
-----
property taxes not yet due and payable and Liens which, individually or in the
aggregate, do not materially detract from the value, or interfere with the
present or intended use, of the property subject thereto and (B) with respect to
such real properties leased by it, valid and subsisting leases for the term set
forth with respect to each such lease on Schedule 7.19, and (ii) all easements,
certificates of occupancy, permits, approvals, franchises, authorizations and
other such rights, including but not limited to easements for all utilities
(including without limitations all power lines, water lines and sewers) and
roadways, necessary to conduct the business conducted on such properties.
(c) Except as set forth in Schedule 7.19, all such real properties are in
good operating condition and repair, subject to ordinary wear and tear resulting
from continued operations in the ordinary course of business.
(d) Except as set forth in Schedule 7.19, to the Company's Knowledge there
are no pending condemnation proceedings, lawsuits, or administrative actions
relating to such real properties (including without limitations, all leases) or
other matters affecting adversely the current use or occupancy of such real
properties.
(e) Schedule 7.19 identifies all leases (including all amendments thereto)
and title insurance policies in effect with
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respect to such real properties to which the Company is a party or which affects
the property the Company has leased and of which the Company has knowledge.
Complete and correct copies of all leases and title insurance policies for all
real properties referred to in Schedule 7.19 have been delivered to or made
available for inspection by Purchaser, and none of the leases have been
modified, amended, supplemented or otherwise changed other than as shown in
Schedule 7.19.
(f) Except as otherwise disclosed in Schedule 7.19 hereto, (i) neither the
Company, nor to the Company's Knowledge, any other party thereto, is in default
or breach of any leases identified on Schedule 7.19, (ii) to the Company's
Knowledge, no fact or circumstance exists which, with the passage of time or the
giving of notice, could become a material default or breach of any such lease,
(iii) all such leases shall remain in full force and effect notwithstanding the
transactions contemplated hereby, and (iv) no disputes, oral agreements or
forbearance programs are in effect with respect to any such lease and the
Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or
otherwise encumbered any such lease.
(g) All such Company premises have unqualified access to public roads, and
none of the real properties or any of the buildings and improvements thereon are
dependent for its access, operation or utility on any land, building or
improvements not included in such real properties.
(h) Except as disclosed on Schedule 7.19, all real properties owned by the
Company, including buildings and improvements located thereon conform in all
material respects to all applicable subdivisions and other restrictive
covenants, building codes, health, safety and zoning ordinances (no real
properties have been grandfathered), and other laws, regulations and
requirements relating to the use and operation thereof.
7.20 Tangible Personal Property. Except as set forth on Schedule 7.20
--------------------------
hereto: (a) the Company has and as of the Closing will have good and marketable
title to all of the items of tangible personal property located on its premises
or used in its business and operations as presently conducted; (b) all such
tangible personal property is reflected on the Latest Balance Sheet (except for
such property acquired, sold or disposed of subsequent to the date thereof in
the ordinary course of business consistent with past practices); and (c) all
such tangible personal property is owned free and clear of any Liens.
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7.21 Proprietary Rights.
------------------
(a) Schedule 7.21 identifies all of the following owned by the Company and
used in the conduct of the business as presently conducted or as presently
proposed to be conducted; (i) all patents and pending patent applications; (ii)
all trademark, service mark and trade name registrations and applications
therefor; (iii) all unregistered trademarks, service marks and trade names; (iv)
all copyright registrations and applications therefor; (v) all material
unregistered copyrights and copyrightable works (other than commercially
available computer software and related documentation); (vi) all trade secrets
and confidential information (described in a nonconfidential manner); (vii) all
licenses and similar agreements for the use of any intellectual property
(including, without limitation, patents, unpatented inventions and technology;
trademarks, service marks and trade names; copyrights and copyrightable works;
know-how, trade secrets and confidential information, hereinafter collectively
referred to as "Proprietary Rights") to which the Company is a party, either as
------------------
licensee or licensor (other than licenses for the use of commercially available
computer software and related documentation), identifying in each case the
Proprietary Right that is the subject of the license or other agreement.
(b) Except as set forth in Schedule 7.21: (i) the Company owns, free and
clear of all Liens, all right, title and interest in, or has a valid and
enforceable license to use, all Proprietary Rights for the conduct of the
Company's business as currently conducted or as presently proposed to be
conducted, (ii) no claim by any other Person contesting the validity or
ownership of any of the Proprietary Rights has been made, is currently
outstanding or, to the Company's Knowledge, is threatened, and the Company has
not received any notices of, nor are they aware of any facts which indicate a
likelihood of, any infringement or misappropriation by or conflict with, any
other Person with respect to the Proprietary Rights; (iii) to the Company's
Knowledge, the use of the Proprietary Rights listed on Schedule 7.21 by the
Company does not conflict with, infringe upon or misappropriate any proprietary
rights of any other Person, nor is the Company aware of any conflict,
infringement or misappropriation which will occur as a result of the continued
operation of its business as now conducted or as presently proposed to be
conducted by the Company; (iv) the transactions contemplated by this Agreement
will have no adverse effect on the Company's right, title or interest in and to
any of the Proprietary Rights; and (v) the Company has taken all necessary or
desirable action to protect the Proprietary Rights.
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7.22 Litigation.
----------
(a) Except as disclosed in Schedule 7.22 hereto, (i) there are no (and
during the five years preceding the date hereof there have not been any) claims,
actions, proceedings (public or private), settlements, or, to the Company's
Knowledge, governmental investigations pending or, to the Company's Knowledge,
threatened against or affecting the Company or, to the Company's Knowledge, any
basis for any such claim, action, proceeding or governmental investigation, at
law or in equity, before or by any federal, state, or municipal court, agency or
other governmental entity, or by any private person or employee representative,
and (ii) there are no existing or, to the Company's Knowledge, threatened
orders, judgments or decrees of any court or governmental agency.
(b) Except as set forth on Schedule 7.22, there are no legal,
administrative, or other proceedings or, to the Company's Knowledge,
governmental investigations pending or, to the Company's Knowledge, threatened
against the Company which would give any third party the right to enjoin or
rescind the transactions contemplated hereby.
7.23 Product Warranty. All products manufactured, serviced, distributed,
----------------
leased, installed or sold by the Company in connection with its business at any
time prior to the Closing Date have been in conformity with all applicable
contractual commitments and all express or implied warranties. Except as set
forth on Schedule 7.23 hereto, the Company has no liability for replacement or
repair or other damages in connection with sales or deliveries of any of its
products manufactured, serviced, distributed, leased or sold at any time prior
to the Closing Date. No product sold or delivered by the Company is subject to
any guaranty, warranty or other indemnity beyond the applicable standard terms
and conditions with respect thereto. Prior to the date hereof, the Company has
delivered to Purchaser copies of the Company's standard terms and conditions of
sale for products delivered and services rendered by the Company (containing
applicable guaranty, warranty and indemnity provisions).
7.24 Labor and Employment Matters.
----------------------------
(a) Except as listed on Schedule 7.24, to the Company's Knowledge, no key
employee of the Company and no group of its employees has any plan to terminate
employment with the Company or the Surviving Corporation.
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(b) Except as set forth on Schedule 7.24, no employees related to the
business are represented by and the Company is not party to any collective
bargaining agreement or relationship with any labor organization.
(c) Except as set forth on Schedule 7.24, to the Company's Knowledge after
reasonable inquiry, (i) no labor organization or group of employees has filed
any representation petition or made any written or oral demand for recognition;
(ii) no union organizing campaigns are underway and no other question concerning
representation exists; (iii) no labor strike, work stoppage or slowdown, or
other material labor dispute is underway; (iv) there is no employment-related
charge, complaint, investigation, inquiry or obligation of any kind, pending or
threatened in any forum, relating to an alleged violation by the Company of any
law, regulation or contract; and (v) the Company has not committed or been
involved in the commission of any act or omission giving rise to material
liability for any violation iden tified in subsection (iv), above, or as a
result of any adverse employment-related experience. Any notice required under
any law or collective bargaining agreement has been given, and all bargaining
obligations with any employee representative have been satisfied. The Company
has not implemented any plant closing or mass layoff of employees as those terms
are defined in the Worker Adjustment Retraining and Notification ("WARN") Act of
----
1988, as amended, or any similar state or local law or regulation, and no
layoffs that could implicate such laws or regulations will be implemented before
Closing without advance notification to Purchaser.
7.25 ERISA. Except as set forth on Schedule 7.25 attached hereto:
-----
(a) With respect to current or former employees of the Company, the
Company does not maintain or contribute to or have any liability with respect to
any (i) nonqualified deferred compensation, bonus or retirement plans or
arrangements, (ii) qualified defined contribution or defined benefit plans or
arrangements which are employee pension benefit plans (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")), or (iii)
-----
employee welfare benefit plans (as defined in Section 3(1) of ERISA), stock
option or stock purchase plans, or material fringe benefit plans or programs.
The Company does not contribute to any multiemployer plan (as defined in Section
3(37) of ERISA), and does not maintain or contribute to any defined benefit plan
(as defined in Section 3(35) of ERISA), and
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the Company does not maintain or contribute to any employee welfare benefit plan
which provides health, accident or life insurance benefits to current or future
former employees, their spouses or dependents, other than in accordance with
Section 4980B of the Code ("COBRA").
-----
(b) To the Company's Knowledge, the employee pension benefit plans and
employee welfare benefit plans (and related trusts and insurance contracts)
maintained by the Company for its employees, comply in form and in operation
with all applicable laws and regulations, including ERISA and the Code; and the
employee pension benefit plans meet the requirements of "qualified plans" under
Section 401(a) of the Code. Each such employee pension benefit plan, and each
trust (if any) forming a part thereof, has received a favorable determination
letter from the Internal Revenue Service as to the qualification under the Code
of such plan and the tax-exempt status of such related trust, or is a new plan
which is made up of employee pension benefit plans which previously received
such a favorable determination letter. The Company has taken no action and, to
the Company's Knowledge nothing has occurred, since the date of such
determination letter that could adversely affect the qualification of such plan
or the tax exempt status of such related trust.
(c) All material required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and summary plan descriptions) with
respect to the employee pension benefit plans and employee welfare benefit plans
maintained by the Company for its employees have been properly and timely filed
with the appropriate government agency and distributed to participants as
required, and the Company has complied with the requirements of COBRA.
(d) With respect to each employee pension benefit plan maintained by the
Company for its employees, all contributions which are due (including all
employer contributions and employee salary reduction contributions) have been
paid to such employee pension benefit plan, all contributions for prior plan
years which are not yet due and with respect to the current plan year for the
period ending on the Closing Date have been made or accrued in accordance with
GAAP, and, with respect to the employee welfare benefit plans, all premiums or
other payments which are due have been paid; and the fair-market value of the
assets of the Milton Can Salaried Employees Pension Plan shall at the Closing
Date exceed the present value of all vested and nonvested liabilities thereunder
determined in accordance with applicable Pension Benefit
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<PAGE>
Guaranty Corporation methods, factors and assumptions applicable to a defined
benefit pension plan terminating on that date.
(e) The Company does not have any material liability or contingent
liability to the Pension Benefit Guaranty Corporation, the Internal Revenue
Service, any multiemployer plan, the Department of Labor or any participant or
beneficiary (other than routine claims for benefits) with respect to any
employee pension benefit plan currently or previously maintained by any company,
which together with the Company, would be deemed to be part of a "controlled
group" within the meaning of subsections (b), (c), (m) or (o) of Section 414 of
the Code.
(f) With respect to each employee pension benefit plan and each employee
welfare benefit plan maintained by the Company for its employees, (i) neither
the Company nor any of its officers or employees nor any Stockholder have
engaged in any prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code, which could result in any material liability to the
Company, (ii) neither the Company nor any of its officers or employees nor any
Stockholder have engaged in any breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment of the assets
of such plans, which could result in any material liability to the Company, and
(iii) no actions, investigations, suits or claims with respect to the assets
thereof (other than routine claims for benefits) are pending or threatened, and
to the Company's Knowledge there are no facts which would give rise to or could
reasonably be expected to give rise to any such actions, suits or claims.
(g) With respect to each employee pension benefit plan and each employee
welfare benefit plan maintained by the Company for its employees, the Company
has furnished to Purchaser true and complete copies of (i) the plan documents
and summary plan descriptions, (ii) the most recent determination letter
received from the Internal Revenue Service, (iii) the last Form 5500 Annual
Report (including all schedules and other attachments), and (iv) all related
trust agreements, insurance contracts or other funding agreements which
implement such plans.
7.26 Environmental and Safety Matters. Except as set forth in Schedule
--------------------------------
7.26 hereto:
(a) The Company and each of its Affiliates has complied and is in material
compliance with all Environmental and Safety Requirements (as defined below).
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(b) Without limiting the generality of the foregoing, the Company and each
of its Affiliates have obtained and complied with, and are in material
compliance with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation of
their respective facilities and the operation of their respective businesses and
such permits, licenses and other authorizations may be relied upon for continued
lawful operation of the businesses of the Company on and after the Closing Date
without transfer, reissuance, or other governmental approval or action.
(c) Neither the Company nor any of its Affiliates has received any oral or
written notice or other information regarding any actual or alleged violation of
Environmental and Safety Requirements or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, arising under
Environmental and Safety Requirements.
(d) None of the following exists at any property used, occupied or
operated by the Company or any of its Affiliates:
(i) underground storage tanks;
(ii) damaged and friable asbestos-containing material;
(iii) materials or equipment containing polychlorinated biphenyls; or
(iv) land fills, surface impoundments or disposal areas that are
regulated pursuant to Environmental and Safety Requirements.
(e) The Company has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or could give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
- - -------- ----
Environmental and Safety Requirements.
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<PAGE>
(f) To the Company's Knowledge no facts, events or conditions relating to
the past or present facilities, properties or operations of the Company, its
predecessors or its Affiliates will prevent, hinder or limit continued
compliance with Environmental and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to Environmental and
Safety Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental and
Safety Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous or otherwise regulated
materials, substances or wastes, personal injury, property damage or natural
resources damage. A schedule of all haulers used by the Company is set forth on
Schedule 7.26.
(g) Neither this Agreement nor the transaction that is the subject of this
Agreement will result in any obligations for site investigation or cleanup, or
notification to or consent of government agencies or third parties, pursuant to
any transaction-triggered Environmental and Safety Requirement other than
investigations triggered by the Reorganization.
(h) The Company has not, either expressly or by operation of law, assumed
or undertaken any liability or corrective or remedial obligation of any other
Person relating to Environmental and Safety Requirements.
(i) No Environmental Lien (as defined below) has attached to any property
owned, leased or operated by the Company or its Subsidiary.
(j) As used in this Section 7.26, the following terms shall have the
following respective meanings:
(i) "Environmental and Safety Requirements" shall mean all federal, state,
-------------------------------------
and local statutes, regulations, ordinances and similar provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
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chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
(ii) "Environmental Lien" shall mean a lien, either recorded or
------------------
unrecorded, in favor of any governmental entity, relating to any liability of
the Company arising under Environmental and Safety Requirements.
7.27 Indebtedness. As of the Closing Date, the Company shall have no
------------
outstanding letters of credit, indebtedness or other obligation or liability
for, resulting from or in connection with indebtedness for borrowed money of any
Person, including without limitation any industrial development revenue bond,
guarantee, pledge or other similar financial accommodation, the face value of
which is $10,000 or more (provided that the aggregate of each such funded
--------
indebtedness of under $10,000 is not in excess of $50,000 in the aggregate)
except as set forth on Schedule 7.27.
7.28 Taxes. Except as set forth on Schedule 7.28 hereto:
-----
(a) The Company has in all material respects timely filed all federal,
state, local and foreign income, information and other Tax returns which are
required to be filed with respect to its business, activities, properties or
employees;
(b) All such returns are true, complete and accurate in all material
respects and such filings accurately reflect the Tax liabilities of the Company;
(c) All Taxes, assessments and other governmental charges imposed upon the
Company, or upon any of the assets, income or franchises of the Company, have
been timely paid or, if not yet payable, will be timely paid (or are being
contested in good faith) before the Closing Date or are accrued on the Closing
Balance Sheet;
(d) The total amounts reserved for Tax liabilities (other than any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income) in the Closing Balance Sheet are adequate for the payment of all
Taxes accrued but not yet due and payable for periods ending on or before the
Closing Date;
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<PAGE>
(e) There are no actual or proposed Tax deficiencies, assessments or
adjustments with respect to the Company or any assets or operations of the
Company;
(f) The Company has not made any election under Section 341(f) of the Code
(or any corresponding provision of state, local or foreign income Tax law);
(g) The Company is not required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment in taxable income for any taxable period (or portion
thereof) ending after the Closing Date, (B) as a result of any "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law), to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date or (C) as a result of
any deferred intercompany gain described in Treas. Reg. Sections 1.1502-13 or,
to the extent applicable, former Treas. Reg. Section 1.1502-14 or any excess
loss account described in Treas. Reg. Sections 1.1502-19 and 1.1502-32 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in taxable
income for any taxable period (or portion thereof) ending after the Closing
Date;
(h) The Company has not been at any time during the past ten (10) years a
member of an affiliated group, as defined in Section 1504(a)(1) of the Code,
other than one of which the Company was the common parent, or filed or been
included in a combined, consolidated or unitary income Tax return, other than
one filed by the Company;
(i) The Company has not made any payments, and is not obligated (under any
contract entered into on or before the Closing Date) to make any payments, that
will be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law); and
(j) The Purchaser or BWAY will not be required to deduct and withhold any
amount pursuant to Section 1445(a) of the Code upon payment of the Merger
Consideration.
7.29 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by the Company directly
with Purchaser and the Purchaser's investment banker, Bear Stearns & Co., Inc.,
without the intervention of any
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Person on behalf of the Company in such manner as to give rise to any valid
claim by any Person against Purchaser or the Surviving Corporation for a
finder's fee, brokerage commission, or similar payment.
7.30 Disclosure. No representation or warranty of the Company contained in
----------
this Agreement nor any schedule, attachment or exhibit hereto, and no statement
contained herein or in any certificate or document furnished to Purchaser
pursuant to the transactions contemplated hereby, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading. There is no fact or
condition known to the Company which has not been disclosed to Purchaser and
which materially affects adversely, or could reasonably be expected to
materially affect adversely, the financial condition, operating results, assets,
supplier relations or business prospects of the Company.
7.31 Closing Date. The representations and warranties of the Company
------------
contained in this Article VII and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company to Purchaser will be true and
correct in all material respects on the Closing Date as though then made.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BWAY AND PURCHASER
Each of BWAY and Purchaser, jointly and severally, represents and warrants to
each Stockholder that the statements contained in this Article VIII are correct
and complete as of the date of this Agreement.
8.1 Due Incorporation, Etc. Each of BWAY and Purchaser is a corporation
-----------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Each of BWAY and Purchaser has all requisite corporate power
and authority to own and operate its business as it is presently being conducted
and to own and lease the properties and assets owned or leased by it. Complete
and correct copies of the Certificate of Incorporation and Bylaws, as amended to
date, of BWAY and Purchaser have been delivered to Purchaser. Each of BWAY and
Purchaser is duly licensed and qualified to do business and is in good standing
in each jurisdiction in which the properties owned or leased or the
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operation of its business makes such licensing or qualification to do business
necessary.
8.2 Authorization, No Conflicts, Etc.
---------------------------------
(a) Each of BWAY and Purchaser has full power and authority to execute and
deliver this Agreement and all other agreements contemplated hereby, and to
perform the obligations and to consummate the transactions contemplated hereby
and thereby. This Agreement and the other agreements contemplated hereby have
been duly executed and delivered by each of BWAY and Purchaser and (assuming the
due authorization, execution and delivery hereof by the Company) constitute the
valid and binding agreements of the BWAY and Purchaser, enforceable against each
in accordance with their terms, except as enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and limitations on the availability of equitable
remedies. Neither the execution, delivery or performance of this Agreement and
the other documents contemplated hereby, nor the consummation of the
transactions contemplated hereby and thereby, will (i) violate any provision of
law applicable to BWAY and Purchaser (other than provisions of law that equally
affect the parties hereto)(ii) conflict with or result in a breach of any of the
provisions of, (iii) constitute a default under, (iv) result in the violation
of, (v) give any third party the right to terminate or to accelerate any
obligation under, or (vi) require any authorization, consent, approval,
execution or other action by or notice of any court or other governmental body
under the provisions of BWAY's or Purchaser's certificate of incorporation or
bylaws or any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which BWAY, Purchaser or both are bound or affected, or any
statute, regulation, rule, judgment, order, decree or other restriction of any
government, governmental agency or court to which BWAY, Purchaser or both are
subject, or (vii) result in the creation of any lien, security interest or
charge or encumbrance upon the Company Shares.
(b) The execution, delivery and performance of this Agreement and the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby by BWAY, Purchaser or both will not: (i) with or
without the giving of notice and/or the passage of time, conflict with, result
in the breach of any provision of, give any third party the right to terminate
or to accelerate any obligation under, or result in the creation of any lien,
security interest or charge or encumbrance under, the certificate of
incorporation or bylaws of BWAY or Purchaser or any instrument, license,
agreement, arrangement,
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indenture, commitment or order to which BWAY, Purchaser or both are a party or
by which any of its assets or properties are bound or (ii) constitute a
violation of any order, judgment or decree to which BWAY or Purchaser or, to
BWAY's or Purchaser's knowledge, any of its Affiliates which is party hereto or
thereto is a party or by which any of its assets or properties are bound.
8.3 Consents and Approvals. The execution and delivery by Purchaser of
----------------------
this Agreement does not, and compliance by Purchaser with the terms hereof and
consummation by Purchaser of the transactions contemplated hereby will not,
require Purchaser to obtain any authorization, consent, approval, exemption or
action of, or make any filing with or give any notice to, any Person other than
as contemplated hereby or those which will be obtained, made or given prior to
the Closing Date.
8.4 Absence of Violations. The Purchaser is not in violation of its
---------------------
Certificate of Incorporation or Bylaws, or in violation (or with or without
notice or lapse of time or both would be in violation), in any way of any term
or provision of (a) any law, statute, ordinance, rule, regulation, order, writ,
judgment, injunction, permit, or decree applicable to it or any of its assets or
properties, or (b) any agreement, lease, or other document, commitment, or
instrument to which it is a party or by which it or any of its assets or
properties are bound.
8.5 Legal Proceedings. There are no legal, administrative, or other
-----------------
proceedings or governmental investigations pending or, to the best knowledge of
Purchaser, threatened, against Purchaser which would give any third party the
right to enjoin or rescind the transactions contemplated hereby.
8.6 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by Purchaser directly
with Stockholders, without the intervention of any Person on behalf of Purchaser
other than its investment banker, Bear Stearns & Co., Inc., in such manner as to
give rise to any valid claim by any Person against Stockholders or the Company,
for a finder's fee, brokerage commission, or similar payment. BWAY shall be
solely responsible for the fees and expenses payable to Bear Stearns & Co., Inc.
as a result of this transaction.
8.7 Continuity of Business Enterprise. It is the present intention of BWAY
---------------------------------
and Purchaser to continue the Company's historic business, or to use a
significant portion of the Company's historic business assets in a business, in
each case within the meaning of Treas. Reg. (S)1.368-1(d) under the Code.
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<PAGE>
8.8 Reports and Financial Statements. BWAY has previously furnished to
--------------------------------
the Stockholders complete and accurate copies, as amended or supplemented, of
(a) its Annual Report on Form 10-K for the fiscal year ended September 30, 1995,
as filed with the Securities and Exchange Commission (the "SEC"), (b) the proxy
---
statement relating to its 1996 Annual Meeting of Stockholders and (c) all other
reports or statements filed by BWAY with the SEC pursuant to the Securities
Exchange Act of 1934 (as amended, the "Exchange Act") since September 30, 1995
------------
(such reports and statements, together with any amendments or supplements
thereto, are collectively referred to herein as the "BWAY Reports"). The BWAY
------------
Reports constitute all of the documents required to be filed by BWAY with the
SEC pursuant to the Exchange Act since September 30, 1995. As of their
respective dates, the BWAY Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited interim financial statements of BWAY included in the BWAY Reports (i)
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except as may be indicated therein
or in the notes thereto, and in the case of quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act), (iii) fairly present the
consolidated financial condition, results of operations and cash flows of BWAY
as of the respective dates thereof and for the periods referred to therein, and
(iv) are consistent with the books and records of BWAY.
8.9 Disclosure. No representation or warranty of Purchaser contained in
----------
this Agreement nor any schedule, attachment, or exhibit hereto, and no statement
contained herein or in any certificate or document furnished to Stockholders
pursuant hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
not misleading. There is no fact or condition known to Purchaser which has not
been disclosed to the Company and which materially affects adversely, or could
reasonably be expected to materially affect adversely, Purchaser's ability to
consummate any of the transactions contemplated hereby.
8.10 Closing Date. The representations and warranties of Purchaser
------------
contained in this Article VIII and elsewhere in this Agreement and all
information contained in any exhibit, schedule or
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attachment hereto or in any writing delivered by, or on behalf of, BWAY and
Purchaser to Stockholders will be true and correct in all material respects on
the Closing Date as though then made.
ARTICLE IX
COVENANTS PRIOR TO CLOSING
9.1 Affirmative and Negative Covenants Pending Closing. During the period
--------------------------------------------------
from the date hereof to the Closing Date, the Company covenants and agrees to
observe the following covenants:
(a) Affirmative Covenants Pending Closing.
-------------------------------------
(i) Preservation of Personnel. Use best efforts to preserve intact and
-------------------------
keep available the services of the Company's present employees;
(ii) Insurance. Use best efforts to keep in effect all insurance policies
---------
set forth on Schedule 7.16 through the Closing Date, in coverage amounts not
less than those in effect at the date of this Agreement, as identified in
Schedule 7.16;
(iii) Preservation and Advancement of the Business; Maintenance of
------------------------------------------------------------
Properties, Contracts. Use best efforts to preserve and advance the Company's
- - ---------------------
business, keep its properties intact, preserve the goodwill of the Company's
business, perform its agreements and obligations, pay its payables promptly as
they become due (without extension) in accordance with the terms thereof,
maintain all of its physical properties in good repair and operating condition,
subject only to ordinary wear and tear, in each case in accordance with past
practices, continue capital improvement programs in accordance with original
plans in all material respects and perform and comply in all material respects
with the terms of such plans and the contracts set forth in Schedule 7.18; and
(iv) Ordinary Course of Business. Operate the business of the Company
---------------------------
solely in the ordinary course and in the normal, usual and customary manner.
(b) Negative Covenants Pending Closing. Stockholders shall not permit the
----------------------------------
Company to:
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(i) Disposition of Assets. Sell or transfer, or mortgage, pledge or
---------------------
create or permit to be created any security interest or other lien or
encumbrance on, any of the Company's assets (including without limitation, cash
and cash equivalents) other than the sale of finished goods in the ordinary
course of business pursuant to arm's-length transactions;
(ii) Liabilities. Incur any obligations or liabilities other than in the
-----------
ordinary course of business;
(iii) Contracts. Enter into any contract, lease or other agreement or
---------
instrument not in the ordinary course of business regularly conducted which
survives the Closing and involves payments in excess of $10,000 per annum
without the express consent of Purchaser, except contracts which are terminable
by the Company without penalty on no more than thirty (30) days' notice;
(iv) Compensation. Amend any plans or increase the rates of
------------
compensation payable or to become payable to any officer, employee, agent or
consultant of the Company, except in the ordinary course of business and in
accordance with existing compensation policies or the existing terms of
contracts entered into prior to the date of this Agreement;
(v) Capital Stock. Make any change in the number of shares of the
-------------
Company's capital stock authorized, issued or outstanding or grant any option,
warrant or other right to purchase, or to convert any obligation into, or impose
any restrictions on transfer of, shares of the Company's capital stock;
(vi) Charter and Bylaws. Amend the Certificate of Incorporation or
------------------
Bylaws of the Company without the prior written consent of Purchaser, which
shall not be unreasonably withheld;
(vii) Acquisitions. Except as disclosed on Schedule 7.14, make any
------------
acquisition or merge or consolidate with any Person; or
(viii) Disclosures. Take any action which would require disclosure under
-----------
Section 7.14 hereof.
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<PAGE>
9.2 Investigation by Purchaser and Confidentiality.
----------------------------------------------
(a) The Company shall allow Purchaser and its representatives, during
regular business hours, to make such investigation of the business, properties,
employees, auditors, books and records of the Company, and to conduct such
examination of the financial condition of the Company (including, without
limitation, Phase I, Phase II or other environmental due diligence assessments),
as Purchaser deems necessary or advisable to familiarize itself with such
business, properties, books, records, financial condition and other matters.
(b) All non-public information provided by Stockholders or the Company to
Purchaser, its Affiliates and representatives, in connection with the
transactions contemplated hereby shall be "Material" as defined in the
--------
Confidentiality Agreement. Notwithstanding any term of the Confidentiality
Agreement, for a period of two (2) years after the date hereof, Purchaser will
not (and will cause its representatives not to) disclose Material to others
without the prior written consent of the Company or the Agent, except that: (i)
Purchaser may provide such confidential information if it determines disclosure
is required in response to legal process or pursuant to applicable governmental
regulations, provided that Purchaser notifies the Company in advance of its
--------
obligation to provide such confidential information and reasonably cooperates
with the Company to protect the confidentiality of such information; and (ii)
Purchaser may provide such information to institutional financing sources (and
their representatives) in connection with the financing of the transactions
contemplated hereby, provided that such persons agree to hold such information
--------
confidential in the manner described above.
9.3 Delivery of Schedules. Not later than the thirtieth (30th) day after the
---------------------
date of this Agreement (the "Schedule Delivery Date"), the Agent shall deliver
----------------------
to Purchaser the schedules contemplated in Articles V, VI and VII herein and
which are to be attached hereto. Such Schedules shall be satisfactory to
Purchaser in its sole discretion. The Company shall negotiate in good faith an
adjustment to the Merger Consolidation if the schedules delivered on the
Schedule Delivery Date disclose any liability or obligation of the Company which
(i) was not reflected in the Latest Balance Sheet or (ii) was not incurred in
the ordinary course of business.
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<PAGE>
9.4 Stockholder Approval, Agency Agreement. No later than the Schedule
--------------------------------------
Delivery Date, the Agent shall deliver (i) the Agency Agreement, which shall
have been executed by each Stockholder, and (ii) evidence that holders of the
Company Shares have duly ratified, authorized and approved this Agreement in
accordance with the applicable provisions of the GCL. The Agent shall in good
faith strive to have all the Company's stockholders become party to this
Agreement and the Agency Agreement.
9.5 Consents and Further Actions. As soon as practicable, the Company will
----------------------------
commence to take all reasonable action required to obtain all governmental and
third party consents, approvals and agreements necessary or desirable to
authorize, approve or permit the full and complete consummation of the
transactions contemplated by this Agreement. In addition, subject to the terms
and conditions herein provided, Stockholders, the Company and Purchaser covenant
and agree to use their best efforts to take, or cause to be taken, all action,
or do, or cause to be done, all things, necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
9.6 HSR Act. The parties will as promptly as practicable, but in no event
-------
later than seven business days following the execution and delivery of this
Agreement, file with the United States Federal Trade Commission (the "FTC") and
---
the United States Department of Justice (the "DOJ") the notification and report
---
form, if any, required for the transactions contemplated hereby and any
supplemental information requested in connection therewith pursuant to the HSR
Act. Any such notification and report form and supplemental information will be
in substantial compliance with the requirements of the HSR Act. Each of Company
and Purchaser shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act.
Company and Purchaser shall keep each other apprised of the status of any
communications with, and inquiries or requests for additional information from,
the FTC and the DOJ and shall comply promptly with any such inquiry or request.
Company and Purchaser will use its best efforts to obtain as promptly as
possible any clearance required under the HSR Act for the Merger. Without
limiting the generality of the foregoing, Company and Purchaser agree to respond
promptly and fully to all inquiries from the FTC and/or the DOJ as soon as
practicable.
-48-
<PAGE>
ARTICLE X
COVENANTS AFTER CLOSING
10.1 Books and Records. Each of the parties hereto agrees that, so long as
-----------------
any of the books, records or files of the Company remain in existence and are
under its direct or indirect control, the other party shall have the right to
inspect and to make copies (at its expense and upon reasonable notice to the
other party) of the same at any time during business hours with respect to any
tax matters or other audits and any litigation to which it is a party and which
relates to its ownership of the Company, or for any similar proper purpose.
Neither of the parties hereto will destroy, without first having offered to
deliver to the other party, any of such books, records and files for a period of
seven (7) years after the Closing Date.
10.2 Liability for Products and Other Claims. Except to the extent
---------------------------------------
specifically accrued for on the Latest Balance Sheet and except for matters
which, had they arisen immediately prior to the Closing, would have been insured
under one or more of the insurance policies carried by the Company immediately
prior to Closing, the Agent shall assume on behalf of the Stockholders, and pay
on behalf of the Surviving Corporation, all liabilities, costs and expenses
resulting from or relating to (a) any claims, actions or proceedings relating to
products manufactured or sold by the Company at any time on or prior to the
Closing Date, and (b) any other claims, actions or proceedings of any nature
pending or threatened against the Company at any time prior to the Closing,
subject, in each case, to the limitations set forth in Section 10.7(c).
10.3 Liability for Medical Claims and Workers Compensation. Except to the
-----------------------------------------------------
extent specifically accrued for on the Latest Balance Sheet and except for
matters which, had they arisen immediately prior to the Closing, would have been
insured under one or more of the insurance policies carried by the Company
immediately prior to Closing, the Agent shall assume on behalf of the
Stockholders and pay on behalf of the Surviving Corporation, all obligations,
duties and liabilities relating to any claims by employees or former employees
(including dependents and spouses) of the Company for: (a) medical costs and
expenses incurred as a result of claims, injuries, facts or conditions existing
prior to the Closing and (b) costs, expenses and other liabilities under any
workers' compensation laws, regulations, requirements or programs to the extent
related to any claim arising from or alleged to arise from or in connection with
any fact, event, claim, injury or condition
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<PAGE>
existing prior to the Closing, subject, in each case, to the limitations set
forth in Section 10.7(c). Notwithstanding the foregoing, the Surviving
Corporation will continue to perform the administrative functions of processing
after the Closing such medical and workers' compensation claims contemplated
hereby. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person, firm or corporation, other than the parties
hereto and their respective permitted successors and assigns, any rights or
remedies under or by reason of this Agreement.
10.4 Liability for Other Welfare Benefits. Except to the extent specifically
------------------------------------
accrued for on the Latest Balance Sheet and except for matters which, had they
arisen immediately prior to the Closing, would have been insured under one or
more of the insurance policies carried by the Company immediately prior to
Closing, the Agent shall assume on behalf of the Stockholders, and pay on behalf
of the Surviving Corporation, all obligations, duties and liabilities relating
to any claims for severance pay, vacation pay, death, disability or other
welfare benefits payable as a result of facts, actions or conditions existing
prior to the Closing, or which are provided to any person who is not an active
employee (or a dependent thereof) of the Company immediately prior to the
Closing, subject to the limitations set forth in Section 10.7(c).
10.5 Liability for Environmental Matters.
-----------------------------------
(a) As of the Schedule Delivery Date, the Company shall prepare and
deliver to Purchaser Schedule 7.26, which shall include and describe in detail
all Known Environmental Liabilities, identifying in particular those
Environmental Liabilities that the Company has reason to believe may cause the
Surviving Corporation to incur out-of-pocket expenses. Within sixty (60) days
after the Schedule Delivery Date the Parties shall negotiate in good faith, and
document in a written agreement, an allocation of responsibility for all matters
set forth therein, which allocation may be accomplished by means of an
adjustment to the Merger Consideration, an indemnification agreement, or such
other mechanism satisfactory to the parties. In the event that such allocation
cannot be accomplished in a manner which is satisfactory to BWAY in its sole but
reasonable discretion, BWAY shall have no obligation to consummate the
transactions contemplated by this Agreement.
(b) The Surviving Corporation shall assume and be solely responsible for,
and shall unconditionally indemnify, protect and hold harmless the Stockholders
from any and all claims,
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<PAGE>
demands and causes of action arising from, all Post-Closing Environmental
Liabilities and, effective as of the third anniversary of the Closing Date, all
Unknown Environmental Liabilities of the Company that are not Discovered
Liabilities.
(c) The Agent, on behalf of the Stockholders, shall assume, and shall
unconditionally indemnify, protect and hold harmless BWAY and the Surviving
Corporation from any and all claims, demands and causes of action arising from,
any Discovered Liabilities except for matters which, had they arisen immediately
prior to the Closing, would have been insured under one or more of the insurance
policies carried by the Company immediately prior to Closing.
(d) The Agent, on behalf of the Stockholders shall assume and be
responsible for, and shall unconditionally indemnify, protect and hold harmless
BWAY and the Surviving Corporation from, any and all claims, demands and causes
of action arising from, any Undisclosed Environmental Liabilities except for
matters which, had they arisen immediately prior to the Closing, would have been
insured under one or more of the insurance policies carried by the Company
immediately prior to Closing.
(e) Without limiting the generality of the foregoing, the Agent agrees,
at no cost and expense to BWAY or the Surviving Corporation, to expeditiously
take all action required to comply with the New Jersey Industrial Site Recovery
Act ("ISRA"), to the extent applicable to the transactions contemplated by this
----
Agreement, which action shall include, as appropriate, posting and maintaining
any financial assurance required, or taking any other action required, to enable
the Closing of such transactions in advance of completing any environmental
investigation or response action required pursuant to ISRA, but in no event
shall Agent be required pursuant to the foregoing to expend more than $250,000
to comply with ISRA.
(f) As used in this Section 10.5, the following terms shall have the
following respective meanings:
(i) "Discovered Liabilities" means any Environmental Liability about
----------------------
which the Surviving Corporation becomes aware prior to the third anniversary of
the Closing Date that is neither a Known Environmental Liability nor a Post-
Closing Environmental Liability.
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<PAGE>
(ii) "Environmental Liability" means any obligation, duty, claim or
-----------------------
liability which at any time interferes with or prevents continued compliance
with, or gives rise to any common law, statutory or other liability under, any
Environmental and Safety Requirement.
(iii) "Known Environmental Liability" means an Environmental
-----------------------------
Liability relating to any fact, event or condition existing or threatened on or
prior to the Closing Date, the factual basis for which is known to the Company
as of the Closing Date and which is listed and described in reasonable detail on
the Schedule 7.26.
(iv) "Undisclosed Environmental Liability" means any Environmental
-----------------------------------
Liability relating to any fact, event or condition occurring, existing or
threatened on or prior to the Closing Date, the factual basis for which is known
to the Company as of the Closing Date but which is not listed and described on
the Schedule 7.26.
(v) "Unknown Environmental Liability" means an Environmental Liability
-------------------------------
relating to any fact, event or condition occurring, existing or threatened on or
prior to the Closing Date, the factual basis for which is not known to the
Company as of the Closing Date.
(vi) "Post-Closing Environmental Liability" means any Environmental
------------------------------------
Liability pertaining to a facility or property owned or operated by the
Surviving Corporation after the Closing Date and relating to any fact, event or
condition first caused or first occurring as a result of the operation of the
business of the Company by the Surviving Corporation after the Closing
Date.
10.6 Tax Matters.
-----------
(a) The Agent shall have exclusive control and responsibility to file all
federal, state or local tax returns or reports required to be filed by or on
behalf of the Company for all taxable periods ending on or prior to the Closing
Date. The Surviving Corporation shall have responsibility for filing all
federal, state or local tax returns or reports required to be filed by or on
behalf of the Company for all taxable periods ending after the Closing Date.
The parties shall cooperate fully in connection with the filing of such returns.
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<PAGE>
(b) Agreements. Any agreement between Stockholders and the Company
----------
regarding allocation or payment of Taxes or amounts in lieu of Taxes shall be
deemed terminated on and as of the Closing Date and after the Closing Date, the
Surviving Corporation shall not be bound thereby or have any liability
thereunder.
10.7 Indemnification.
---------------
(a) By Agent on behalf of Stockholders. Subject to the limitations set
----------------------------------
forth in Section 10.7(c), Agent, on behalf of the Stockholders, shall indemnify,
save and hold harmless BWAY and the Surviving Corporation and their respective
employees, representatives, officers, directors and agents from and against any
and all costs, losses (but not including consequential damages), liabilities,
damages, lawsuits, deficiencies, claims and expenses (whether or not arising out
of third-party claims), including without limitation, interest, penalties,
reasonable attorneys' fees and all amounts paid in investigation, defense or
settlement of any of the foregoing, which any such party may suffer, sustain or
become subject to in connection with or arising out of or resulting from or
incident to (i) any breach of any warranty, or the inaccuracy of any
representation, or any breach of any covenant or agreement in Article VI or VII
or in Section 9.1, made by Stockholders or the Company in or pursuant to this
Agreement, (ii) any breach of any other covenant or agreement made by
Stockholders or the Company in or pursuant to this Agreement, or (iii) any Tax
relating to the conduct of the Company's business during the Pre-Closing Period,
provided that the Stockholders shall not be liable for any amount of Taxes paid
- - --------
by the Company on or prior to the Closing Date or for any Tax to the extent a
reserve (excluding any provisions for deferred income taxes)
or a payable for such Tax is reflected on the Closing Balance Sheet. "Pre-
---
Closing Period" means any Tax period (or a portion thereof) of the Company
- - --------------
ending on or before the Closing Date.
(b) By BWAY and Purchaser. BWAY and Purchaser shall indemnify and save
---------------------
and hold harmless the Stockholders from and against any and all costs, losses
(but not including consequential damages), liabilities, damages, lawsuits,
deficiencies, claims and expenses (whether or not arising out of third party
claims), including without limitation, interest, penalties, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing, incurred in connection with or arising out of or resulting
from or incident to (i) any breach of any or warranty, or the inaccuracy of any
representation, made by BWAY or Purchaser in or pursuant to this Agreement, or
(ii) the breach of any other covenant or agreement made by Purchaser in or
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<PAGE>
pursuant to this Agreement. Indemnification payments due under this Section
10.7(b) shall be payable in cash and BWAY stock, pro rata according to the
relative proportion of each in the Merger Consideration; provided that if in the
--------
reasonable judgement of BWAY a material risk exists that a cash indemnity
payment would cause the Reorganization to violate the continuity of shareholder
interest requirement set forth in Treas. Reg. 1.368-1, then such payment will be
made solely in the form of BWAY Stock having a Current Market Price at the date
of such payment equivalent to the amount of cash that otherwise would have been
due.
(c) Limitations on Indemnification.
------------------------------
(i) Subject to the last sentence of this Section 10.7(c)(i), the parties
hereto agree that none of them shall be liable to the other pursuant to the
indemnification provisions of Sections 10.7(a)(i) or (b)(i) or relating to the
covenants set forth in Sections 10.2, 10.3, 10.4 and 10.5 unless it receives
notice from the other party of its claim for indemnification hereunder within
three (3) years after the Closing Date. The representations and warranties set
forth in Sections 6.4 and 7.1 hereof shall survive the Closing indefinitely and
the representations and warranties set forth in Section 7.28 hereof shall
survive until the expiration of the applicable statute of limitations (as such
may be tolled). Notwithstanding anything contained herein to the contrary, the
above limitations on indemnification set forth in this Section 10.7(c)(i) will
not be applicable to (A) any willful breach of any representation or warranty
contained in or made pursuant to this Agreement, or (B) any breach of any
covenant (other than the covenants set forth in Articles VI and VII and in
Sections 9.1, 10.2, 10.3, 10.4 and 10.5 (other than 10.5(d), which shall survive
indefinitely)) or other agreement contained in or made pursuant to this
Agreement, each of such covenants and other agreements will survive the Closing
indefinitely.
(ii) The parties hereto further agree that, pursuant to claims for
indemnification of the type referred to in Section 10.7(a)(i) or Section
10.7(b)(i) hereof, each of the parties shall only be liable to the other to the
extent that the aggregate amount of such claims by such party for
indemnification exceeds $100,000 in the aggregate.
(iii) The parties hereto further agree that the aggregate liability of
Agent on behalf of the Stockholders for any and all losses arising from
indemnification claims under
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<PAGE>
Sections 10.2, 10.3, 10.4, 10.5 (other than 10.5(d), for which there is no
limit), 10.7(a)(i) and (ii), and the aggregate liability of BWAY and Purchaser
for any and all losses arising from indemnification claims under Sections
10.7(b)(i) and (ii) hereof, shall not exceed $5,000,000.
(iv) The limitations on indemnification set forth in this Section
10.7(c)(ii) and (iii) will not be applicable to (A) any matter referred to in
Section 10.7(a)(iii), or (B) any willful breach of any representation or
warranty contained in or made pursuant to this Agreement.
(d) Defense of Claims. Any party making a claim for indemnification
-----------------
hereunder (an "Indemnitee") shall notify the indemnifying party (an
----------
"Indemnitor") of the claim in writing promptly after receiving written notice of
----------
any action, lawsuit, proceeding, investigation or other claim against it (if by
a third party) or discovering the liability, obligation or facts giving rise to
such claim for indemnification, describing the claim, the amount thereof (if
known and quantifiable), and the basis thereof, provided that the failure to so
--------
notify an Indemnitor shall not relieve the Indemnitor of its obligations
hereunder except to the extent such failure shall have harmed the Indemnitor.
Any Indem nitor shall be entitled to participate in the defense of such action,
lawsuit, proceeding, investigation or other claim giving rise to Indemnitee's
claim for indemnification at its expense, and at its option (subject to the
limitations set forth below) shall be entitled to appoint lead counsel of such
defense with reputable counsel; provided, however, that prior to Indemnitor
--------
assuming control of such defense it shall first (i) verify to the Indemnitee in
writing that such Indemnitor shall be fully responsible (with no reservation of
any rights) for all liabilities and obligations relating to such claim and that
it will provide the full indemnification required hereunder to Indemnitee with
respect to such action, lawsuit, proceeding, investigation or other claim giving
rise to such claim for indemnification hereunder, (ii) enter into an agreement
with Indemnitee in form and substance satisfactory to the Indemnitee which
agreement unconditionally guarantees the payment and performance of any
liability which may arise with respect to such action, lawsuit, proceeding,
investigation or other claim giving rise to such claim for indemnification
hereunder, and (iii) furnish the Indemnitee with evidence which demonstrates
that the Indemnitor shall satisfy any such liability; provided further, that:
----------------
(A) The Indemnitee shall be entitled to participate in the
defense of such
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<PAGE>
claim and to employ counsel of its choice for such purpose,
but the fees and expenses of such separate counsel shall be
borne by Indemnitee. Notwithstanding the foregoing, the
fees and expenses of such separate counsel incurred prior
to the date the Indemnitor effectively assumes control of
such defense shall be borne by the Indemnitor (but only to
the extent that such fees and expenses are not attributable
to Indemnitee's inexcusable delay in providing notice to
Indemnitor);
(B) The Indemnitor shall not be entitled to assume control of
such defense and shall pay the fees and expenses of counsel
retained by the Indemnitee if, (A) the claim for
indemnification relates to or arises in connection with any
criminal proceeding, action, indictment, allegation or
investigation; (B) Indemnitee reason ably believes an
adverse determination with respect to the action lawsuit,
investigation, proceeding or other claim giving rise to
such claim for indemnification would be substantially
detrimental or injurious to Indemnitee's reputation or
future business prospects, (C) the claim seeks an
injunction or equitable relief against Indemnitee or (D)
upon petition by Indemnitee, the appropriate court rules
that the Indemnitor failed or is failing to vigorously
prosecute or defend such claim; and
(C) if the Indemnitor, with the consent of the Indemnitee,
shall control the defense of any such claim, the Indemnitor
shall obtain the prior written consent of the Indemnitee
(which shall not be unreasonably withheld) before entering
into any
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<PAGE>
settlement of a claim or ceasing to defend such claim, if
pursuant to or as a result of such settlement or cessation,
injunction or other equitable relief will be imposed
against the Indemnitee or if such settlement does not
expressly unconditionally release Indemnitee from all
liabilities and obligations with respect to such claim,
without prejudice.
10.8 Further Assurances. After the Closing Date, the parties will take all
------------------
appropriate action and execute any documents, instruments or conveyances of any
kind which may be reasonably necessary to further carry out any of the
provisions of this Agreement.
10.9 Retention of BWAY Stock. No Stockholder may dispose of any of the BWAY
-----------------------
Stock received in the Reorganization within [2] years of the Closing Date if
such disposition would reduce the fair value of the BWAY Stock (with such fair
value measured as of the Effective Time) retained by the Stockholders to an
amount less than 50 percent of the fair value of the Company Shares held by such
Stockholder immediately before the Effective Time, unless such Stockholder
obtains an opinion of counsel reasonably satisfactory to BWAY that such transfer
will not violate the continuity of shareholder interest requirement set forth in
Treas. Reg. (S)1.368-1 under the Code. Any Stockholder wishing to dispose of
any shares of BWAY Stock received in the Reorganization shall provide written
notice to BWAY, not less than 20 business days prior to the intended date of
disposition, specifying the number of shares of which such Stockholder proposes
to dispose.
10.10 Non-Competition and Non-Solicitation.
------------------------------------
(a) If the transactions contemplated by this Agreement are consummated,
Stockholders agree that, for a period of two (2) years after the Closing Date,
neither they nor any of their Affiliates will directly or indirectly engage in,
render services to, manage, control or participate in (as an officer, director,
employee, security holder, consultant, proprietor, partner, agent or advisor)
any business that provides or offers products or services that are competitive
with, are similar to, or that may be used as substitutes for the products or
services offered by the business of the Surviving Corporation as conducted by
the Company immediately prior to the Closing Date, or have any interest,
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<PAGE>
directly or indirectly, in any such business in the states of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island and Vermont; provided that nothing herein will
--------
prevent any Stockholder from owning in the aggregate not more than 5% of the
outstanding stock of any class of a corporation which is publicly held, so long
as such Stockholder has no participation in the management of such corporation.
(b) Each Stockholder agrees that, for a period of two (2) years from the
Closing Date, such Stockholder, (i) will not, and will use his best efforts not
to permit such Stockholder's Affiliates, directly or indirectly, to contact,
hire or solicit for the purpose of offering employment to (whether as an
employee, consultant, agent, independent contractor or otherwise) any person
employed by the Company at any time during the one year period preceding the
Closing Date, without the prior written consent of the Surviving Corporation and
(ii) will not, directly or indirectly, induce or attempt to induce any customer
or other business relation of the Surviving Corporation to cease or refrain from
doing business with the Surviving Corporation or to purchase, lease or utilize
products or services that are competitive with, are similar to, or that may be
used as substitutes for any product or service offered by the Surviving
Corporation. The term "indirectly" as used in this Section 5.16 is intended to
----------
mean any acts authorized or directed by or on behalf of any Stockholder.
ARTICLE XI
MISCELLANEOUS
11.1 Termination.
-----------
(a) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time, but not later than the Closing Date:
(i) by mutual consent of the Company and Purchaser;
(ii) by the Company if the conditions precedent to Purchaser's obligations
set forth in Article V (other than the condition set forth in Section 5.10) have
been satisfied, if the Company is not in breach of any of its obligations
hereunder and otherwise through no material fault of the Company or the
Stockholders, the Closing shall not have occurred within 180 days after the date
of this Agreement;
-58-
<PAGE>
(iii) by Purchaser if the conditions precedent to Company's obligations
set forth in Article IV have been satisfied, if the Purchaser is not in breach
of any of its obligations hereunder and, if through no material fault of
Purchaser, the Closing shall not have occurred within 180 days after the date of
this Agreement;
(iv) by Purchaser if Purchaser is not satisfied with the results of its
and its representative's business, legal, environmental, accounting and
financial due diligence investigation and evaluation of the Company as set forth
in Section 5.10 above;
(v) by either party if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree, ruling
or other action shall have become final and nonappealable; or
(vi) by either party hereto if, within 60 days following the Schedule
Delivery Date, the parties hereto have not reached agreement with respect to the
materiality of disclosures made in the Schedules hereto or have been unable to
reach agreement with respect to an adjustment to the Merger Consideration
pursuant to Section 9.3 hereof.
(b) In the event of the termination of this Agreement by any party as
above provided, this Agreement shall forthwith become void and no party shall
have any liability hereunder, including any liability for damages, except
pursuant to Sections 9.2 (with respect to confidentiality), 11.1(c) and (d)
(with respect to expense reimbursement), 11.3 (with respect to dispute
resolution) 11.7 (with respect to public announcements) and 11.6 (with respect
to each party bearing its own expenses), the provisions of which shall survive
any termination of this Agreement, and except for any willful breach by any
party hereto of such party's representations, warranties or covenants which
shall also survive the termination of this Agreement. In the event that a
condition precedent to its obligation is not met, nothing contained herein shall
be deemed to require any party to terminate this Agreement, rather than to waive
such condition precedent and proceed with the Closing.
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<PAGE>
(c) If the Agreement is terminated by the Company pursuant to Section
11.1(a)(ii), (iv) or (vi) hereof and neither the Company nor the Agent are
otherwise in breach of any obligation hereunder, (i) the Deposit (together with
all interest accrued thereon) shall be released from the Deposit Escrow Account
pursuant to the Deposit Escrow Agreement and delivered to the Company and (ii)
Purchaser shall promptly pay an additional $275,000 to the Company to compensate
it for the costs and expenses it has incurred in connection with pursuing the
transactions contemplated hereby. Such payment shall constitute Stockholders'
and Company's sole and exclusive remedy with respect to the termination of this
Agreement pursuant to this Article XI unless Purchaser shall have made any
material or willful breach of any of its representations, warranties or
covenants set forth herein.
(d) If the Agreement is terminated by Purchaser pursuant to Section
11.1(a)(iii) hereof and the Purchaser is not otherwise in breach of any
obligation hereunder, (i) the Deposit (together with all interest accrued
thereon) shall be released from the Deposit Escrow Account pursuant to the
Deposit Escrow Agreement and delivered to the Purchaser and (ii) the Company
shall promptly (upon receipt of a written detailed statement from Purchaser)
deliver to Purchaser immediately available funds in an amount equal to
Purchaser's out-of-pocket costs and expenses incurred in connec tion with
pursuing the transactions contemplated hereby. Such expense reimbursement shall
constitute Purchaser's sole and exclusive remedy with respect to the termination
of this Agreement unless Stockholders shall have made any material or willful
breach of any of its representations, warranties or covenants set forth herein.
11.2 Survival of Representations and Warranties. Each and every
------------------------------------------
representation, warranty, covenant and agreement contained in this Agreement or
any Schedule hereto, or any certificate, document or other instrument delivered
by the parties in connection herewith, shall, subject to the limitations set
forth in Section 10.7(c) hereof, survive the Closing Date and the consummation
of the transactions contemplated hereby notwithstanding any investigation or
inquiries made by or conducted on behalf of any party hereto.
11.3 Dispute Resolution.
------------------
(a) Negotiation. In the event of any dispute or disagreement between the
-----------
Company, Agent or any other Stockholder and BWAY or Purchaser as to the
interpretation of any provision of this Agreement (or the performance of
obligations hereunder), the
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<PAGE>
matter, upon written request of either party, shall be referred to
representatives of the parties for decision, each of whom has no direct
operational responsibility for the matters contemplated by this Agreement
(the "Representatives"). The Representatives shall promptly meet in a good
---------------
faith effort to resolve the dispute. If the Representatives do not agree upon a
decision within thirty (30) calendar days after reference of the matter to them,
each of Purchaser and Agent (on its own behalf and on behalf of any other
Stockholder) may exercise the remedies available to it under Section 11.3(b).
(b) Arbitration. Any controversy, dispute or claim arising out of or
-----------
relating in any way to this Agreement or the other agreements contemplated
hereby or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation pursuant to Section 11.3(a), shall be settled
exclusively by arbitration in the City of Chicago, Illinois. Such arbitration
shall be administered by the Center for Public Resources (the "Institute") in
---------
accordance with its then prevailing Rules for Non-Administered Arbitration of
Business Disputes (except as otherwise provided herein), by one independent and
impartial arbitrator, mutually satisfactory to both Agent and Purchaser. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. (S)
1 et seq. The fees and expenses of the Institute and the arbitrator shall be
-- ---
shared equally by the Purchaser and the Agent and advanced by them from time to
time as required; provided that at the conclusion of the arbitration, the
-------- ----
arbitrator shall award costs and expenses (including the costs of the
arbitration previously advanced and the fees and expenses of attorneys,
accountants and other experts) and interest to the prevailing party. The
arbitrator shall determine the scope of permitted discovery. The arbitrator
shall render its award within 90 days of the conclusion of the arbitration
hearing. Notwithstanding anything to the contrary provided in this Section
11.3(b) and without prejudice to the above procedures, either party may
apply to any court of competent jurisdiction for temporary injunctive or other
provisional judicial relief if such action is necessary to avoid irreparable
damage or to preserve the status quo until such time as the arbitration panel is
convened and available to hear such party's request for temporary relief. The
award rendered by the arbitrator shall be final and not subject to judicial
review and judgment thereon may be entered in any court of competent
jurisdiction.
-61-
<PAGE>
11.4 Assignment.
----------
(a) This Agreement will inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto and their respective
successors and assigns, except as provided in subsections (b) and (c) below.
(b) Neither the Company nor the Agent nor any Stockholder may assign any
of its duties or obligations hereunder without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld.
(c) Purchaser may assign its rights, duties and/or obligations hereunder
in whole or in part (without the Company's, Agent's or any other Stockholder's
consent); provided that prior to the Closing Date, Purchaser may not assign any
--------
of its rights, duties or obligations hereunder in whole or in part without
Agent's consent (which consent shall not be unreasonably withheld) except to its
Affiliates or wholly-owned subsidiaries; further provided that any assignment
----------------
pursuant to this Section 11.4(c) shall not relieve the assignee of delivering to
the Stockholders shares of BWAY Stock as the Stock Portion; and further provided
----------------
that any assignment pursuant to this Section 11.4(c) shall be to a Person that
is able to fulfill the obligations of BWAY and Purchaser as provided under this
Agreement.
11.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered personally or
mailed, by certified or registered mail, return receipt requested, first class
postage prepaid, or by Federal Express or some other reputable overnight
carrier, to the parties at the following addresses:
If to the Company, addressed to:
The Milton Can Company
580 Division Street
Elizabeth, New Jersey 07201
Attention: James W. Milton
-62-
<PAGE>
If to Stockholders and Agent, addressed to:
James W. Milton
as Agent
c/o The Milton Can Company
580 Division Street
Elizabeth, New Jersey 07201
With a copy (which shall not
constitute notice hereunder) to:
Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02210
Attention: Mr. Gene A. Blumenreich
If to Purchaser or BWAY, addressed to:
BWAY Corporation
8607 Roberts Drive
Suite 250
Atlanta, Georgia 30350
Attention: Mr. Warren J. Hayford
With a copy (which shall not
constitute notice hereunder) to:
Kirkland & Ellis
200 East Randolph Drive Suite 5700
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C.
or to such other place and with such other copies as any party may designate by
written notice to the other party.
11.6 Expenses. Except as otherwise provided in this Agreement, each party
--------
hereto shall pay its own expenses, including attorneys', accountants' and
brokerage fees, in connection with this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby, provided that, no expenses incurred in connection with this Agreement,
--------
the performance by any party hereunder or the transactions contemplated hereby
shall be paid by the Company.
11.7 Public Announcements. No announcement, press release or disclosure of
--------------------
the transactions contemplated by this Agreement
-63-
<PAGE>
will be made by either party without the consent of the other party, which
consent may not be unreasonably withheld; provided that BWAY may make an
announcement if, on advice of counsel and after notice to the Company, it is
required to do so under relevant securities laws or NASDAQ rules. The parties
understand that BWAY intends to make a public announcement after all parties
hereto have executed this Agreement. Subject to the foregoing, the parties shall
keep the subject matter of the transactions confidential until such time. The
Company shall have a reasonable opportunity to comment upon any such release or
announcement by BWAY in advance of its issuance.
11.8 Entire Agreement. This Agreement and the agreements referred to herein
----------------
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof (including, without limitation, the Letter of
Intent dated March 7, 1996 between BWAY and the Company), and this Agreement,
including the schedules and exhibits hereto and other documents required to be
delivered in connection herewith, contains the sole and entire agreement between
the parties hereto with respect to the subject matter hereof.
11.9 Waiver. Any term or condition of this Agreement may be waived at any
------
time by the party which is entitled to the benefit thereof. To be effective,
each such waiver shall be in writing, shall specifically refer to this Agreement
and the term or condition being waived, and shall be executed by the President
or any Vice President of such party. A waiver on one occasion shall not be
deemed to be a waiver of the same or any other breach on a future occasion.
11.10 Amendment. This Agreement may be modified or amended only in a writing
---------
duly executed by or on behalf of each of the parties hereto.
11.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.12 Invalid Provisions. If any provision of this Agreement is held to
------------------
be illegal, invalid, or unenforceable under any present or future law, rule, or
regulation,, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be
-64-
<PAGE>
affected by the illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
legal, valid, and enforceable provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible.
11.13 Headings, Gender, Etc. The headings used in this Agreement have
----------------------
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender shall be deemed to include
each other gender, (b) words using the singular or plural number shall also
include the plural or singular number, respectively, (c) references to "hereof,"
"herein," "hereby" and similar terms shall refer to this entire Agreement, and
(d) each reference to the Company shall be a reference to any of its Affiliates
and each representation, warranty, covenant and other agreement made herein
shall be made by the Company and such Affiliates on a joint and several basis.
11.14 Choice of Law. This Agreement shall be construed, interpreted and
-------------
the rights of the parties determined in accordance with the laws of the State of
Illinois except with respect to matters of law concerning the internal corporate
affairs of any corporation which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction of incorporation of such
corporation shall govern.
* * * * *
-65-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the day and year first above written.
BWAY CORPORATION
/s/ Warren Hayford
------------------------
By: Warren Hayford
Title: Chairman and Chief
Executive Officer
MILTON ACQUISITION CORP.
/s/ Warren Hayford
------------------------
By: Warren Hayford
Title: President
THE MILTON CAN COMPANY
/s/ James W. Milton
------------------------
By: James W. Milton
Title: President and Director
/s/ James W. Milton
------------------------
James W. Milton
<PAGE>
The Registrant hereby undertakes to furnish supplementally a copy of any
omitted schedules to the Merger Agreement to the Commission upon request
(subject to any confidentiality request the Registrant may make at such time).
67
<PAGE>
EXHIBIT 10.3
AMENDMENT NO.1
TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Amendment No.1 (the "Amendment") to the Agreement and Plan of Merger
---------
and Reorganization, dated as of April 30, 1996, is by and among BWAY
Corporation, a Delaware corporation ("BWAY"), Milton Acquisition Corp., a
----
Delaware corporation (the "Purchaser"), Milton Can Company, Inc., a Delaware
---------
corporation (the "Company") and James W. Milton.
-------
WHEREAS, BWAY, Purchaser, Company and James W. Milton entered into an
Agreement and Plan of Merger and Reorganization, dated as of March 21, 1996 (the
"Agreement"), pursuant to which the Company will be merged with and into
---------
Purchaser, with Purchaser being the surviving corporation. BWAY, Purchaser,
Company and James W. Milton desire to make certain changes to the terms of the
Agreement, as set forth below.
1. Milton Can Company, Inc. All references to "The Milton Can Company" in
------------------------
the Agreement shall be replaced with "Milton Can Company, Inc."
2. Current Market Price. The definition of "Current Market Price" in
--------------------
Article I is hereby amended and restated in its entirety to read as follows:
"Current Market Price" means the price per share of BWAY Stock, with
--------------------
respect to any specific date, as calculated by taking the average of
the daily closing prices per share of such BWAY Stock for the 20
consecutive Trading Days immediately prior to and including such date.
The closing price per share of BWAY Stock for each Trading Day shall
be the last sale price (or if there is no sale, the average bid price)
on such day.
3. Delivery of Merger Consideration. Section 2.5 of the Agreement
--------------------------------
is hereby amended and restated in its entirety to read as follows:
At the Closing, against delivery of all stock certificates formerly
representing Company Shares (and after the Effective Time representing
the right to receive the Merger Consideration), Purchaser shall
deliver to each Stockholder for each of his or her
<PAGE>
Company Shares the Merger Consideration in the proportions of BWAY
Stock and cash as set forth on Attachment I hereto (subject to the
delivery of certain shares of BWAY Stock and the BWAY Notes into the
Stock Escrow Account). At the Closing, Purchaser shall deliver to the
Stock Escrow Agent pursuant to the Stock Escrow Agreement (i) the BWAY
Notes and (ii) that number of shares of BWAY Stock equal to the result
of (A) $1,000,000 divided by (B) the Current Market Price of BWAY
----------
Stock as of the day immediately prior to the Closing Date (the "Stock
-----
Escrow"). The Stock Escrow shall remain in escrow for one (1) year and
------
the BWAY Notes shall remain in escrow for two (2) years and each shall
be released in accordance with the Stock Escrow Agreement. The Stock
Escrow shall reduce each Stockholder's pro rata share of the Stock
Portion.
4. Time and Place of Closing. Section 3.1 of the Agreement is
-------------------------
hereby amended and restated in its entirety to read as follows:
The consummation of the transactions provided for in this Agreement
("Closing") shall take place at the offices of Kirkland & Ellis, 200
---------
East Randolph, Chicago, Illinois 60601 at 10:00 a.m. local time, on
May 28, 1996 or, if the conditions to Closing set forth in Article IV
and Article V have not been satisfied on or prior to such date, on the
fifth business day following satisfaction or appropriate waiver of
such conditions (the "Closing Date"), or at such other place and time
------------
as the parties may agree.
5. Conditions to BWAY's and Purchaser's Obligations. New Section 5.13
------------------------------------------------
is added to Article V of the Agreement to read as follows:
BWAY, Purchaser and James W. Milton shall have entered into on or
before the Closing Date a non-competition and non-solicitation
agreement providing that James W. Milton may not compete with BWAY or
Purchaser anywhere in North America for five years after the Closing
Date
2
<PAGE>
and containing such other terms mutually acceptable to the
parties thereto.
6. Delivery of Schedules. The reference to the "thirtieth (30th)
---------------------
day" in Section 9.3 of the Agreement shall be replaced with the "forty-third
(43rd) day."
7. Non-Competition and Non-Solicitation. Section 10.10 of the
------------------------------------
Agreement is hereby amended and restated in its entirety to read as follows:
(a) If the transactions contemplated by this Agreement are
consummated, Stockholders (other than James W. Milton, who shall be
bound by a separate agreement as described in Section 5.13 of this
Agreement) agree that, for a period of two (2) years after the Closing
Date, neither they nor any of their Affiliates will directly or
indirectly engage in, render services to, manage, control or
participate in (as an officer, director, employee, security holder,
consultant, proprietor, partner, agent or advisor) any business that
provides or offers products or services in the Territory (as defined
below) that are competitive with, are similar to, or that may be used
as substitutes for the products or services offered by the business of
the Surviving Corporation as conducted by the Company immediately
prior to the Closing Date, or have any interest, directly or
indirectly, in any such business in the states of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island and Vermont (the "Territory");
---------
provided that nothing herein will prevent any Stockholder (other than
--------
James W. Milton) from owning in the aggregate not more than 5% of the
outstanding stock of any class of a corporation which is publicly
held, so long as such Stockholder has no participation in the
management of such corporation.
(b) Each Stockholder (other than James W. Milton, who shall be bound
by a separate agreement as described in Section 5.13 of this
Agreement) agrees that, for a period of two
3
<PAGE>
(2) years from the Closing Date, such Stockholder, (i) will not, and
will use his best efforts not to permit such Stockholder's Affiliates,
directly or indirectly, to contact, hire or solicit for the purpose of
offering employment to (whether as an employee, consultant, agent,
independent contractor or otherwise) any person employed by the
Company at any time during the one-year period preceding the Closing
Date, without the prior written consent of the Surviving Corporation
and (ii) will not, directly or indirectly, induce or attempt to induce
any customer or other business relation of the Surviving Corporation
to cease or refrain from doing business with the Surviving Corporation
or to purchase, lease or utilize products or services that are
competitive with, are similar to, or that may be used as substitutes
for any product or service offered by the Surviving Corporation. The
term "indirectly" as used in this Section 10.10 is intended to mean
----------
any acts authorized or directed by or on behalf of any Stockholder.
8. Termination. Subsections (ii) and (iii) of Section 11.1(a) of
-----------
the Agreement are hereby amended and restated in their entirety to read as
follows:
(ii) by the Company if the conditions precedent to Purchaser's
obligations set forth in Article V (other than the conditions set
forth in Sections 5.5 and 5.10) have been satisfied, if the Company is
not in breach of any of its obligations hereunder and otherwise
through no material fault of the Company or the Stockholders, and the
Closing shall not have occurred within 180 days after the date of this
Agreement;
(iii) by Purchaser if the conditions precedent to Company's
obligations set forth in Article IV (other than the condition set
forth in Section 4.4) have been satisfied, if the Purchaser is not in
breach of any of its obligations hereunder and, if through no material
fault of Purchaser, and the Closing
4
<PAGE>
shall not have occurred within 180 days after the date of this
Agreement;
9. Expenses. The following sentence is hereby added to the end of
--------
Section 11.6 of the Agreement:
BWAY and the Surviving Corporation shall be responsible for any and
all costs, expenses, losses, liabilities, damages or deficiencies
(including attorney's fees and other defense costs) that are
specifically for responding to the exercise of appraisal rights by any
Stockholder with respect to the Reorganization as provided by Section
262 of the Delaware General Corporate Law. Except as specified in the
foregoing sentence, Agent shall indemnify BWAY and the Surviving
Corporation and their respective officers, directors and agents,
against any and all other costs, expenses, losses, liabilities,
damages or deficiencies (including attorney's fees and other defense
costs), arising out of any claim or lawsuit made or brought by the
Stockholders in connection with the Company's performance of the
transactions contemplated hereby, including without limitation any
claim relating to a breach of fiduciary duty or inadequate disclosure,
other than a lawsuit specifically claiming a breach by BWAY or the
Surviving Corporation of this Agreement or the BWAY Notes.
10. No Modification. Except as set forth in this Amendment, all
---------------
other terms and provisions of the Agreement shall remain in full force and
effect.
11. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same instrument.
12. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
* * * * *
5
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed as of the day and year first above written.
BWAY CORPORATION
/s/ Warren Hayford
------------------------
By: Warren Hayford
Title: Chairman and Chief
Executive Officer
MILTON ACQUISITION CORP.
/s/ Warren Hayford
------------------------
By: Warren Hayford
Title: President
MILTON CAN COMPANY, INC.
/s/ James W. Milton
------------------------
By: James W. Milton
Title: President and Director
/s/ James W. Milton
------------------------
James W. Milton
6
<PAGE>
EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
<PAGE>
ASSET PURCHASE AGREEMENT
CONTENTS
--------
Page
----
ARTICLE I. ASSETS TO BE PURCHASED...................................... 2
Section 1.1. Description of Assets................................... 2
Section 1.2. Excluded Assets......................................... 4
Section 1.3. Non-Assignment of Certain Property...................... 5
ARTICLE II. ASSUMPTION OF CERTAIN OBLIGATIONS........................... 6
Section 2.1. Assumed Liabilities..................................... 6
Section 2.2. Retained Liabilities.................................... 6
ARTICLE III. PURCHASE PRICE.............................................. 8
Section 3.1. Consideration........................................... 8
Section 3.2. Adjustment to Purchase Price Payments................... 8
Section 3.3. Proration; Additional Purchase Price
Adjustment............................................. 10
Section 3.4. Purchase Price Allocation............................... 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.............................. 11
Section 4.1........................................................... 11
(a) Corporate Existence......................................... 11
(b) Authorization; Validity..................................... 11
(c) Litigation.................................................. 12
(d) No Breach of Statute or Contract............................ 12
(e) Brokers..................................................... 12
(f) No Material Adverse Change.................................. 12
Section 4.2........................................................... 13
(a) Corporate Organization...................................... 13
(b) Authorization; Validity..................................... 13
(c) Litigation.................................................. 13
(d) No Breach of Statute or Contract............................ 13
(e) Financial Statements........................................ 14
(f) Absence of Certain Changes and Events....................... 14
(g) Taxes....................................................... 16
(h) Proprietary Rights.......................................... 17
(i) Insurance................................................... 17
(j) Compliance with Laws........................................ 18
(k) Environmental and Safety Laws............................... 18
(l) Permits..................................................... 19
(m) Brokers..................................................... 20
(n) Employee Benefit Plans...................................... 20
(o) Labor and Employment Matters................................ 21
(p) Title to Property........................................... 21
(q) Title to Real Property...................................... 21
(r) Real Property............................................... 21
(s) Personal Property........................................... 23
(t) Contracts and Commitments................................... 23
(u) Accounts Receivable......................................... 24
(v) Inventories................................................. 24
(w) Intentionally Omitted....................................... 24
(x) Sufficiency of Property..................................... 24
-i-
<PAGE>
(y) Working Capital............................................. 24
(z) Disclosure.................................................. 24
(aa) Product Warranty............................................ 25
(bb) Customers................................................... 25
(cc) Product Liability........................................... 25
(dd) Absence of Undisclosed Liabilities.......................... 25
(ee) Real Property Leases........................................ 25
(ff) Renewal of Representations and Warranties................... 26
ARTICLE V. COVENANTS................................................... 26
Section 5.1. Employees............................................... 26
Section 5.2. Access to Property; Environmental
Inspection............................................. 26
Section 5.3. Conduct of Business Prior to Closing.................... 27
Section 5.4. Further Assurances...................................... 28
Section 5.5. Announcements........................................... 28
Section 5.6. Consents................................................ 29
Section 5.7. Additional Agreements................................... 29
Section 5.8. HSR Act................................................. 29
Section 5.9. Real Property........................................... 30
Section 5.10. Best Efforts........................................... 31
Section 5.11. Covington Facility Employees........................... 31
Section 5.12. Audited Financial Statements........................... 31
Section 5.13. Certain Solon Facility Equipment....................... 32
Section 5.14. Collection of Accounts Receivable...................... 32
Section 5.15. Seller's Purchase Orders and
Commitments........................................... 32
Section 5.16. COBRA Benefits......................................... 32
Section 5.17. Labor Matters.......................................... 32
Section 5.18. Welfare Plans.......................................... 33
Section 5.20. Employees and Compensation............................. 33
ARTICLE VI. CLOSING..................................................... 33
Section 6.1. Closing................................................. 33
Section 6.2. Deliveries by Seller.................................... 34
Section 6.3. Deliveries by Buyer..................................... 35
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS......................... 36
Section 7.1. Conditions to Obligations of Buyer and
BWAY................................................... 36
(a) Representations and Warranties.............................. 36
(b) Performance of Agreement.................................... 36
(c) Certificate................................................. 36
(d) Hart-Scott-Rodino Compliance................................ 37
(e) Title Policies.............................................. 37
(f) Employees................................................... 37
(g) No Injunction............................................... 37
(h) Material Adverse Change..................................... 37
(i) Consents and Approvals...................................... 37
(j) Interviews.................................................. 37
(k) Flood Plain................................................. 37
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<PAGE>
Section 7.2. Conditions to Obligations of Seller and
Crown.................................................. 37
(a) Representations and Warranties.............................. 38
(b) Performance of Agreement.................................... 38
(c) Certificate................................................. 38
(d) Hart-Scott-Rodino Compliance................................ 38
(e) Labor Matters............................................... 38
ARTICLE VIII. INDEMNIFICATION............................................. 38
Section 8.1. Survival of Representations, Warranties
and Agreements......................................... 38
Section 8.2. Indemnification......................................... 39
Section 8.3. Limitations on Indemnification by Seller
and Crown.............................................. 40
Section 8.4. Limitations on Indemnification by Buyer
and BWAY............................................... 41
Section 8.5. Exclusive Remedy of Buyer............................... 41
Section 8.6. Procedure for Indemnification with
Respect to Third-Party Claims.......................... 42
Section 8.7. Procedure For Indemnification with
Respect to Non-Third-Party Claims...................... 43
ARTICLE IX. TERMINATION................................................. 44
Section 9.1. Termination by Either Party............................. 44
Section 9.2. Effect of Termination................................... 44
ARTICLE X. MISCELLANEOUS PROVISIONS.................................... 44
Section 10.1. Definitions............................................ 44
Section 10.2. Cooperation............................................ 49
Section 10.3. Certain Taxes.......................................... 49
Section 10.4. Cooperation on Tax Matters............................. 49
Section 10.5. Notice................................................. 50
Section 10.6. Entire Agreement....................................... 51
Section 10.7. Binding Effect; Assignment............................. 51
Section 10.8. Captions............................................... 51
Section 10.9. Expenses of Transaction................................ 51
Section 10.10. Waiver; Consent....................................... 51
Section 10.11. No Third-Party Beneficiaries.......................... 52
Section 10.12. Counterparts.......................................... 52
Section 10.13. Gender................................................ 52
Section 10.14. Severability.......................................... 52
Section 10.15. Governing Law......................................... 52
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<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April
29, 1996, is among BROCKWAY STANDARD, INC., a Delaware corporation ("Buyer")
and/or its designee(s), BWAY CORPORATION, a Delaware corporation ("BWAY"), VAN
DORN COMPANY, an Ohio corporation ("Seller"), and CROWN CORK & SEAL COMPANY,
INC., a Pennsylvania corporation ("Crown").
PRELIMINARY STATEMENT
---------------------
Seller operates an unincorporated division known as the "Davies Can
Division," which division is engaged in the business of manufacturing metal
paint, oblong and certain other cans or containers (and components thereto), the
income relating to which is reflected in the Unaudited Financial Statements (as
defined in Section 4.2(e)) (the "Business"); provided, however, that the
Business shall not include certain Excluded Assets (as defined in Section 1.1).
Buyer desires to purchase and Seller desires to sell all of the assets and
certain of the liabilities of the Business on the terms and subject to the
conditions set forth in this Agreement.
In connection with the sale and purchase of the Property, Buyer and
Seller also desire to enter into (a) a sales agency agreement pursuant to which
Buyer will appoint Seller's Canadian affiliate, Crown Cork & Seal Canada, Inc.
("Crown Canada"), as Buyer's exclusive agent to market certain products in
Canada, (b) a sales agency agreement pursuant to which Seller will appoint Buyer
as Seller's exclusive agent to market certain products in the United States; (c)
a supply agreement, pursuant to which Buyer will supply certain component
products to Crown Canada; (d) a short term lease agreement, pursuant to which
Buyer will lease Seller's facility located in Covington, Georgia (the "Covington
Facility"); (e) a transitional services agreement, pursuant to which Seller will
provide to Buyer certain transitional operational services; and (f) a noncompete
agreement relating to the activities in Canada and the United States of Crown
Canada and Buyer and their respective affiliates.
An index of defined terms is set forth in Section 10.1 of this
Agreement.
In consideration of the foregoing statements and recitals and the
representations, warranties, agreements and covenants contained in this
Agreement, Buyer and Seller hereby agree as follows:
<PAGE>
ARTICLE I. ASSETS TO BE PURCHASED
--------- ----------------------
Section 1.1. Description of Assets. Upon the terms and subject to
----------- ---------------------
the conditions set forth in this Agreement, Seller and Crown shall convey, sell,
transfer, assign and deliver to Buyer, and Buyer shall purchase from Seller and
Crown, all right, title and interest of Seller and/or Crown in and to all
properties, assets and rights of any kind, whether tangible or intangible, real
or personal (in each case except for the Excluded Assets, as defined in Section
1.2) (i) owned, held or leased by Seller and used in or held for use in the
Business from and after March 31, 1995, (ii) owned, held or leased by Crown and
used primarily in or held for use in the Business from and after March 31, 1995,
or (iii) owned, held or leased by Seller or Crown and located on the premises
(including, without limitation, the leased warehouse facilities in Solon and
Louisville) of the Business (which assets will include but not be limited to all
assets located on the premises of the Business on the date of Buyer's plant
visits during the week ended February 16, 1996 (the "Walk Through Date")), in
each case free and clear of all liens, charges, encumbrances and restriction of
whatever nature (other than Permitted Liens and Permitted Encumbrances (each as
hereinafter defined), as applicable) (the "Property"), including, without
limitation, the following:
(a) The real property located in Solon, Ohio (the "Solon Facility")
and in York, Pennsylvania (the "York Facility"), in each case as more
particularly described on SCHEDULE 1.1(a), along with all appurtenant easements,
---------------
rights, rights-of-way, hereditament and other privileges appertaining or
relating thereto and all buildings, fixtures, installations, wiring, cable and
improvements located thereon and therein (collectively, the "Real Property");
(b) The leases, subleases, licenses, concessions or other agreements
for the use or occupation of real property and improvements listed on SCHEDULE
--------
1.1(b), along with all appurtenant rights, easements and privileges appertaining
- - ------
or relating thereto and all buildings, leasehold improvements, property, plant
and fixtures (the "Real Property Leases");
(c) All machinery, equipment, tooling, parts, molds, dies, furniture,
stores, office supplies, testing or office equipment, production or other
supplies, computer equipment (including all owned hardware, software and
terminals) spare parts and other tangible personal property of any kind (the
"Personal Property");
(d) All raw materials, component parts, packaging materials, work-in-
process and finished goods inventory and other inventory located on the Real
Property or the premises covered by the Real Property Leases or held on
consignment by a third party (the "Inventory");
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<PAGE>
(e) The permits, franchises, licenses, consents, authorizations,
approvals and certificates of any regulatory, administrative or other
governmental agency or body (to the extent the same are transferable) listed on
SCHEDULE 1.1(e) (the "Permits");
- - ---------------
(f) All patents and pending patent applications, inventions,
processes, trade secrets, confidential information, proprietary knowledge, know-
how, trademarks, service marks, trade names (including without limitation all of
Seller's interest in and right to the "Davies" name and mark), copyrights, owned
computer software, copyrightable works and other proprietary rights, whether or
not patented or registered;
(g) The leases or licenses of equipment (including computer
equipment), computer software, machinery, vehicles or other tangible or
intangible personal property listed on SCHEDULE 1.1(g) (the "Personal Property
---------------
Leases"), including, without limitation, any warranties or guaranties relating
to the personal property leased or licensed pursuant thereto;
(h) The contracts, agreements, executory commitments, instruments,
arrangements and understandings, whether oral or written, listed or described on
SCHEDULE 1.1(h), all warranties and guarantees for the Personal Property and all
- - ---------------
outstanding purchase and sales orders entered into in the ordinary course of the
Business pursuant to arm's length negotiations (provided that purchase and sale
orders with affiliates of Seller will only be included to the extent described
on SCHEDULE 1.1(h)) (collectively, the "Contracts"), and the proceeds received
---------------
under any insurance policies held by Crown or Seller for casualty losses to the
extent relating to the Property incurred on or prior to the Closing Date;
(i) All accounts receivable and notes receivable, deposits and
prepaid expenses of Seller relating to the Business, other than receivables
owing to Seller from Seller's parent company, Crown, or any of Crown's
affiliates;
(j) All of the automobiles and other vehicles listed on SCHEDULE
--------
1.1(j) (the "Vehicles"), together with all related certificates of title
- - ------
properly endorsed by Seller to Buyer;
(k) All lists, records and other information pertaining to accounts
and referral sources; all advertising and marketing materials; all lists and
records pertaining to suppliers and customers; and all studies, plans, books,
ledgers, files and business records of every kind relating to the Business
(including all financial, business and marketing plans and information), in each
case whether evidenced in writing or stored electronically;
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<PAGE>
(l) The United Coatings Contract (as defined in Section 10.1), but
only to the extent described in SCHEDULE 1.1(l);
---------------
(m) The contracts, agreements, execution commitments, instruments,
arrangements and understandings, whether oral or written (other than the
Contracts), the terms of which are disclosed by Seller to Buyer or discovered by
Buyer after the date of this Agreement ("Discovered Contract"), but only to the
extent that Buyer agrees to assume any such Discovered Contract in writing
within thirty (30) days following receipt by Buyer from Seller of a copy of any
such Discovered Contract or a description of such terms (the "Designated
Contracts");
(n) All of Seller's right, title and interest in and to indemnity
claims and causes of action of the Business against any party which relate
specifically to the Property but not the Retained Liabilities (as defined in
Section 2.2), including, without limitation, claims against suppliers of the
Business for defective merchandise;
(o) All telephone, telex and telecopy numbers for the Solon Facility,
the York Facility and the Covington Facility; and
(p) All goodwill as a going concern.
Each reference in this Agreement to an Exhibit or Schedule shall mean
an Exhibit or Schedule attached to this Agreement and incorporated into this
Agreement by such reference.
Section 1.2. Excluded Assets. Notwithstanding the foregoing, the
----------- ---------------
following properties, assets and rights (the "Excluded Assets") are expressly
excluded from the purchase and sale contemplated hereby and, as such, are not
included in the Property:
(a) all cash and cash equivalents;
(b) Tax (as defined in Section 10.1) returns and supporting
schedules, documents and records;
(c) Inventory sold or scrapped by Seller from and after March 31,
1995 through the Closing Date in the ordinary course of business and any
inventory consisting of "buff-plate" steel (all of which shall be removed from
the premises of the Business prior to the Closing Date);
(d) any asset, the fair market value of which was $5,000 or less and
that was scrapped, transferred or sold in the ordinary course of business from
March 31, 1995 through the Walk-Through Date and assets scrapped, transferred or
sold since the Walk-Through Date, the fair market value of which in the
aggregate does not exceed $5,000;
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<PAGE>
(e) any asset, the fair market value of which was greater than $5,000
that was scrapped, transferred or sold in the ordinary course of the Business
from March 31, 1995 until the Walk-Through Date, as set forth on SCHEDULE
--------
1.2(e);
- - ------
(f) Seller's rights under or pursuant to this Agreement and the
Schedules and Exhibits attached hereto;
(g) all assets, rights or properties relating exclusively to (i)
Seller's aerosol can business and (ii) the Adcraft graphics services business;
(h) the patents, technology and know-how for the "Trim-Rim" paint
business and the equipment relating exclusively to the "Trim Rim" paint
business;
(i) leases for trucks and trailers used by Seller or Crown in the
Business;
(j) all other assets and properties of Seller specifically listed or
described on SCHEDULE 1.2(j);
---------------
(k) all insurance policies naming Seller as either beneficiary or
owner, except as described in Section 1.1(h); and
(l) all Discovered Contracts that do not become Designated Contracts.
Section 1.3. Non-Assignment of Certain Property. To the extent that
----------- ----------------------------------
the assignment hereunder of any of the Assumed Contracts (as defined in Section
10.1), Real Property Leases, Personal Property Leases or Permits shall require
the consent of any other party (or in the event that any of the same shall be
non-assignable), neither this Agreement nor any action taken pursuant to its
provisions shall constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach thereof or result
in the loss or diminution thereof; provided, however, that in each such case,
Seller shall use its reasonable efforts to obtain the consent of such other
party to an assignment to Buyer. If such consent is not obtained, Seller shall
notify Buyer in writing and cooperate with Buyer (except with respect to the PPG
Contract (as defined in Section 10.1) and the United Coatings Contract) in any
reasonable arrangement designed to provide for Buyer the benefits of any such
Assumed Contract, Real Property Lease, Personal Property Lease or Permit
including, without limitation, enforcement, for the account and benefit of
Buyer, of any and all rights of Seller against any other person with respect to
any such Assumed Contract, Real Property Lease, Personal Property Lease or
Permit; provided, however, that Seller shall not be obligated to participate in
any such arrangement that would involve the payment of money by Seller to Buyer,
BWAY or any third party.
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<PAGE>
ARTICLE II. ASSUMPTION OF CERTAIN OBLIGATIONS
---------- ---------------------------------
Section 2.1. Assumed Liabilities. Buyer will not assume any
----------- -------------------
liabilities of Seller, Crown or the Business except to the extent specifically
set forth below. Subject to the conditions set forth in this Agreement and as
additional consideration for the Property, Buyer shall assume on the Closing
Date only the following liabilities and obligations of Seller and/or Crown
(collectively, the "Assumed Liabilities");
(a) all liabilities and obligations arising under the Assumed
Contracts, Real Property Leases, Personal Property Leases or Permits transferred
by Seller to Buyer (or the benefits of which are provided to Buyer in accordance
with Section 1.3) to the extent that such liabilities and obligations arise or
are required to be performed after the Closing Date; provided that Buyer shall
not assume any obligations or liabilities for any breach, violation or
noncompliance thereunder existing on or relating to the period on or prior to
the Closing Date;
(b) all accounts payable of Seller relating to, and incurred in the
ordinary course of, the Business that are reflected on the books and records of
Seller as of the Closing Date, but only to the extent included in the
calculation of Closing Date Working Capital (the "Accounts Payable"); and
(c) all liabilities and obligations of the Business but only to the
extent caused by or resulting from Buyer's operation of the Business after the
Closing Date, including, without limitation, any product liability, product
warranty or infringement claim and any related claim or litigation with respect
to any products of the Business that are finally assembled after the Closing
Date, provided that Buyer shall not assume any tort violation or non-compliance
with any law, permit or regulation relating to or caused by the operation or
condition of the Business on or prior to the Closing Date.
Section 2.2. Retained Liabilities. Notwithstanding anything to the
----------- --------------------
contrary in this Agreement, Buyer shall not assume or in any way become liable
for any of Seller's or Crown's, and Seller and Crown shall remain solely
responsible for all of Seller's and Crown's (or any of their respective
affiliates') debts, liabilities or obligations of any nature whatsoever other
than the Assumed Liabilities, whether accrued, absolute, contingent or
otherwise, whether known or unknown, whether due or to become due after the
Closing Date, whether related to the Business or the Property and whether
disclosed on the Schedules attached hereto, and regardless of when or by whom
asserted, to the extent relating to, caused by or resulting from Seller's,
Crown's or any of their respective predecessors' ownership or operation of the
Business including, without limitation (collectively, the "Retained
Liabilities"):
-6-
<PAGE>
(a) any and all of Seller's or Crown's liabilities or obligations
under this Agreement and the Schedules and Exhibits attached hereto;
(b) any and all of Seller's or Crown's liabilities or obligations for
expenses or fees incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement or the consummation (or preparation
for the consummation) of the transactions contemplated hereby (including all
attorneys' and brokerage fees), other than the Accounting Fees;
(c) any and all liability or obligation of Seller or Crown for Taxes
(as defined in Section 4.2(g)), including any liability or obligation of Seller
or Crown in respect of any Taxes (including all liabilities relating to Taxes
arising as a result of Seller or Crown at any time being a member of an
affiliated group (as defined in Section 1504(a) of the Code)) or which are
imposed on or measured by the income or operations of Seller or Crown for any
period;
(d) any and all liability or obligation under or with respect to any
Employee Benefit Plan or any other employee benefit plan (including, without
limitation, any multi-employer plan), program, policy or arrangement presently
or formerly maintained or contributed to by any member of the controlled group
of companies (as such term is defined in Section 414 of the Code) of which
Seller or Crown is or was a member, or with respect to which Seller, Crown or
such controlled group member has any liability (specifically including without
limitation, any such plan, program policy or arrangement contained in the
Collective Bargaining Agreement (as defined in Schedule 10.1));
(e) any and all liabilities or obligations with respect to any
products that were finally assembled on or prior to the Closing Date, including
product liability, product warranties, and/or infringement claims and any
related claims and litigation arising prior to, on or after the Closing Date;
(f) any and all liabilities or obligations, whenever arising, relating
to any legal action, investigation, proceeding or claim arising out of or in
connection with the condition or status of the Business or the Properties on or
prior to the Closing or the ownership or operation of the Business or the
Properties by Seller, Crown or their respective predecessors on or prior to the
Closing (other than any product liability, product warranty or infringement
claim or litigation with respect to any products of the Business finally
assembled after the Closing Date) or any other conduct or omission of Seller,
Seller's officers, directors, employees, consultants, agents or advisors on or
prior to the Closing Date, including, without limitation, tort violations or
noncompliance with any law, permit or regulation;
-7-
<PAGE>
(g) any and all of Seller's or Crown's liabilities or obligations for
indebtedness for borrowed money or indebtedness secured by liens on its assets
or guarantees of any of the foregoing;
(h) any and all payments, obligations and liabilities relating to
present and former employees (including their spouses and other dependents) of
Seller and/or the Business to the extent relating to or arising with respect to
the Property, the condition or operation of the Business or employment by Seller
or its predecessors at any time on or prior to Closing, including without
limitation any and all liabilities or obligations for vacation pay, sick pay,
workers compensation, salary, bonus, severance, insurance or disability and
medical benefits for employees of Seller that have retired or resigned as of the
Closing Date (including all such medical benefits afforded to former employees
pursuant to the Collective Bargaining Agreement);
(i) any and all liabilities or obligations in respect of any of the
Excluded Assets (including under any contracts, leases, commitments or
understandings related thereto); and
(j) any and all other liabilities or obligations of Seller or Crown
not expressly assumed by Buyer pursuant to Section 2.1 above.
ARTICLE III. PURCHASE PRICE
----------------------------
Section 3.1. Consideration. Upon the terms and subject to the
----------- -------------
conditions set forth in this Agreement, as of the Closing Date and in
consideration for the Property:
(a) Buyer shall assume the Assumed Liabilities; and
(b) Subject to Sections 3.2 and 3.3, Buyer shall pay to Seller the sum
of $41,800,000 (the "Purchase Price"), payable by wire transfer of immediately
available funds to a bank account designated by Seller on or prior to the
Closing Date.
Section 3.2. Adjustment to Purchase Price Payments.
----------- -------------------------------------
(a) Within 60 calendar days after the Closing Date, Seller shall
prepare and deliver to Buyer a statement relating to the Business as of the
Closing Date (the "Closing Date Statement") which shall be prepared from and in
accordance with the books and records of Seller relating to the Business in
conformity with Seller's past practices, as described on SCHEDULE 3.2(a)
---------------
("Seller's Accounting Practices"). The Closing Date Statement shall include a
calculation of the Working Capital of Seller relating to the Business as of the
Closing Date (the "Closing Date Working Capital"). Seller and Buyer acknowledge
that no valuation method other than Seller's Accounting Practices
-8-
<PAGE>
shall be used to calculate Working Capital, provided, however, that no value
whatsoever shall be ascribed to any welded ears remaining in the Inventory and
that the value ascribed to the Inventory in the Closing Date Statement shall not
exceed $12,500,000. During the 30-day period following delivery of the Closing
Date Statement to Buyer, Seller shall provide Buyer with access during normal
business hours to any books, records, working papers or other information
reasonably necessary or useful in the preparation of the Closing Date Statement
to enable Buyer to verify the accuracy of the Closing Date Statement. The
Closing Date Statement shall become final and binding upon Buyer and Seller on
the 30th day following delivery thereof to Buyer unless Buyer gives written
notice of disagreement with the Closing Date Statement (a "Notice of
Disagreement") to Seller prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted.
(b) If a Notice of Disagreement is received by Seller in a timely
manner, then the Closing Date Statement (as revised in accordance with either
clause (i) or (ii) below) shall become final and binding upon Buyer and Seller
on the earlier of (i) the date Buyer and Seller resolve in writing any
differences they may have with respect to any matter specified in the Notice of
Disagreement or (ii) the date any disputed matters are finally resolved in
writing by the Arbitrator (as defined below). During the 30-day period
following the delivery of a Notice of Disagreement, Buyer and Seller shall seek
in good faith to resolve in writing any differences which they may have with
respect to any matter specified in the Notice of Disagreement and each shall
provide the other with reasonable access to any books, records, working papers
or other information reasonably necessary or useful in the preparation of the
Closing Date Statement. At the end of such 30-day period, if there has been no
resolution of the matters specified in the Notice of Disagreement, Seller and
Buyer shall submit to an arbitrator (the "Arbitrator") for review and resolution
any and all matters arising under this Section which remain in dispute. The
Arbitrator shall be Ernst & Young, Cleveland, Ohio, or if such firm is unable or
unwilling to act, such other nationally recognized independent public accounting
firm as shall be agreed upon by Buyer and Seller in writing. The Arbitrator
shall render a written decision resolving the matters submitted to the
Arbitrator within 30 days following submission thereto. The cost of any
arbitration (including the fees of the Arbitrator) pursuant to this Section
shall be borne 50% by Seller and 50% by Buyer.
(c) Within 15 days after the Closing Date Statement becomes final and
binding upon Buyer and Seller, (i) if the Closing Date Working Capital exceeds
$16,000,000 (the "December 31 Working Capital"), Buyer shall pay to Seller an
amount equal to the difference between the Closing Date Working Capital and the
December 31 Working Capital, and (ii) if the Closing Date Working Capital is
less than the December 31 Working Capital, Seller shall pay to Buyer an amount
equal to the difference
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<PAGE>
between the Closing Date Working Capital and the December 31 Working Capital.
Any such payment shall be deemed to be an adjustment to the Purchase Price, and
shall be allocated among the items comprising Working Capital as mutually agreed
by Buyer and Seller or as determined by the Arbitrator, as the case may be. The
calculation of the December 31 Working Capital is attached hereto as EXHIBIT
-------
3.2(e).
- - ------
(d) For purposes of this Agreement, "Working Capital" shall mean the
sum of Accounts Receivable, Inventory, prepaid expenses, deposits and other
current assets (exclusive of cash) minus Accounts Payable.
(e) In connection with the calculation of Closing Date Working
Capital, on a date or dates prior to the Closing Date to be mutually agreed upon
by Buyer and Seller, Seller shall conduct a physical count of the Inventory and
value the Inventory. Buyer shall have the right to have its representatives
present during, and to observe and participate in, the physical inventory count
and valuation process. All Inventory shall be valued in accordance with
Seller's past practice pursuant to Seller's Accounting Practices.
Section 3.3. Proration; Additional Purchase Price Adjustment. To the
----------- -----------------------------------------------
extent not taken into account in the calculation of Working Capital, the
following shall be prorated and adjusted as hereinafter set forth, in each case
to the extent reflected in, and in accordance with, Seller's books and records
kept in the ordinary course with respect to the operation of the Business and
Seller's Accounting Practices, consistently applied:
(a) All current property and payroll taxes and assessments, utility
charges and any other prepaid or deferred expense pertaining to the operation of
the Business not incorporated in the adjustment provided in Section 3.2, other
than Assumed Liabilities, shall be prorated or reimbursed, as the case may be,
as of the close of business on the Closing Date. With respect to the Business,
Seller shall receive all revenues and shall be responsible for all expenses and
liabilities allocable to the period ending as of the close of business on the
Closing Date, and Buyer shall receive all revenues and shall be responsible for
all expenses and liabilities allocable to the period beginning on the day after
the Closing Date, other than the Assumed Liabilities and Accounts Receivable and
Accounts Payable taken into account in calculating Closing Date Working Capital.
(b) The prorations and adjustments contemplated by this Section 3.3,
to the extent practicable, shall be made on the Closing Date and shall be
reflected as an adjustment to the Purchase Price, except that Seller will pay
when due to Seller's employees all accrued and unpaid salary, wages, bonuses,
sick time, vacation and holiday pay and other payments and benefits to which
Seller's employees are entitled as a result of their
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<PAGE>
employment by Seller on or prior to the Closing Date. As to those prorations
and adjustments not capable of being ascertained on the Closing Date, an
adjustment and proration shall be made as soon as practicable, but no later than
90 days after the Closing Date.
(c) In the event of any dispute between the parties as to such
adjustments, the amounts not in dispute shall nonetheless be paid at the time
provided in Section 3.3(b), and such dispute shall be determined by the
Arbitrator, and the fees and expenses of the Arbitrator shall be paid 50% by
Seller and 50% by Buyer.
(d) At Closing, Seller shall pay Buyer $20,000 toward the construction
cost of a storage facility for hazardous waste at the Solon Facility. Buyer
shall pay the reasonable fees and expenses payable to Price Waterhouse (the
"Accounting Fees") in connection with its audit of the Audited Financial
Statements (as defined in Section 5.12).
Section 3.4. Purchase Price Allocation. The parties hereby agree
----------- -------------------------
that the aggregate purchase price for the Property shall be allocated for
purposes of this Agreement and for federal, state and local tax purposes as set
forth on SCHEDULE 3.4, which Schedule shall be mutually prepared and agreed to
------------
by Buyer and Seller prior to the Closing Date. The parties shall file all
federal, state, local and foreign tax returns, including Internal Revenue Form
8594, in accordance with the allocation set forth on SCHEDULE 3.4.
------------
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
---------- ------------------------------
Section 4.1. Buyer and BWAY represent and warrant to Seller and Crown
-----------
that:
(a) Corporate Existence. Buyer is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in each jurisdiction in which it is required to
be qualified to do business as a result of the conduct of its business or the
ownership of its properties. BWAY is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in each jurisdiction in which it is required to be
qualified to do business as a result of the conduct of its business or the
ownership of its properties.
(b) Authorization; Validity. Buyer and BWAY each have all requisite
-----------------------
corporate power and authority to enter into this Agreement and the Additional
Agreements (as defined in Section 5.7), to perform their respective obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. All necessary corporate action has been taken by Buyer with
respect to the execution, delivery and performance by
-11-
<PAGE>
Buyer of this Agreement and the Additional Agreements and the consummation of
the transactions contemplated hereby and thereby without the approval of any
third party. Assuming the due execution and delivery of this Agreement by
Seller and Crown, this Agreement is a legal, valid and binding obligation of
Buyer, enforceable against Buyer and BWAY in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws of general application affecting the enforcement of creditors' rights
generally.
(c) Litigation. There is no claim, litigation, action, suit,
----------
proceeding, investigation or inquiry, administrative or judicial, pending or, to
the knowledge of Buyer or BWAY, threatened against Buyer or BWAY, at law or in
equity, before any federal, state or local court or regulatory agency, or other
governmental authority, which could reasonably be expected to have a material
adverse effect on the ability of Buyer or BWAY to perform any of its obligations
under this Agreement or the consummation of the transactions contemplated by
this Agreement.
(d) No Breach of Statute or Contract. Except as set forth on SCHEDULE
-------------------------------- --------
4.1(d), neither the execution and delivery of this Agreement, nor the
- - ------
consummation by Buyer or BWAY of the transactions contemplated hereby nor the
compliance by Buyer with any of the provisions hereof will (i) violate or cause
a default under any statute (domestic or foreign), judgment, order, writ,
decree, rule or regulation of any court or governmental authority applicable to
Buyer or BWAY or any of their properties; (ii) breach or violate any of the
terms, provisions or conditions of the organizational documents of Buyer or
BWAY; (iii) breach or violate any agreement, contract, mortgage, instrument,
indenture or license to which Buyer or BWAY is a party or by which Buyer, BWAY
or any of their respective properties is bound, or constitute a default (in and
of itself or with the giving of notice, passage of time or both) thereunder, or
(iv) result in the creation or imposition of any encumbrance upon, or give to
any other party or parties any claim, interest or right, including rights of
termination or cancellation in, or with respect to any of Buyer's or BWAY's
material properties.
(e) Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried on by or on behalf of Buyer
or BWAY in such a manner as not to give rise to any claim against Buyer, BWAY,
Seller or Crown, any of their respective affiliates or the Property for a
finder's fee, brokerage commission, advisory fee or other similar payment.
(f) No Material Adverse Change. Since the date of filing of with the
--------------------------
Securities and Exchange Commission of the most recent Report on Form 10-Q of
Brockway Standard Holdings Corporation ("BWAY"), there has not been any material
adverse
-12-
<PAGE>
change in Buyer's or BWAY's business, financial position or results of
operations.
Section 4.2. Seller and Crown represent and warrant to Buyer and BWAY
-----------
that:
(a) Corporate Organization. Seller is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Ohio and is
qualified to do business in each jurisdiction in which it is required to be
qualified to do business as a result of the conduct of the Business or the
ownership of its properties. Crown is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Pennsylvania
and is qualified to do business in each jurisdiction in which it is required to
be qualified to do business as a result of the conduct of its business or the
ownership of its properties.
(b) Authorization; Validity. Seller and Crown each have all requisite
-----------------------
corporate power and authority to enter into this Agreement and the Additional
Agreements, to perform their respective obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. All necessary
corporate action has been taken by Seller and Crown with respect to the
execution, delivery and performance by them of this Agreement and the Additional
Agreements and the consummation of the transactions contemplated hereby and
thereby without the approval of any third party. Assuming the due execution and
delivery of this Agreement by Buyer and BWAY, this Agreement is a legal, valid
and binding obligation of Seller and Crown, enforceable against Seller and Crown
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application
affecting the enforcement of creditors' rights generally.
(c) Litigation. Except as set forth on SCHEDULE 4.2(c), there are no
---------- ---------------
claims, actions, suits or proceedings pending or, to the knowledge of Seller or
Crown, threatened against or affecting Seller or the Business, at law or in
equity, before any federal, state, local or foreign court or other governmental
body. There is no claim, litigation, action, suit, proceeding, investigation or
inquiry, administrative or judicial, pending or, to the knowledge of Crown,
threatened against Crown, at law or in equity, before any federal, state or
local court or regulatory agency, or other governmental authority, which could
reasonably be expected to have a material adverse effect on the ability of Crown
to perform any of its obligations under this Agreement or the consummation of
the transactions contemplated by this Agreement.
(d) No Breach of Statute or Contract. Neither the execution and
--------------------------------
delivery of this Agreement nor the consummation by Seller or Crown of the
transactions contemplated hereby nor the
-13-
<PAGE>
compliance by Seller or Crown with any of the provisions hereof will (i) violate
or cause a default under any statute (domestic or foreign), judgment, order,
writ, decree, rule or regulation of any court or governmental authority
applicable to Seller, Crown or the Property; (ii) breach or violate any of the
organizational documents of Seller or Crown; (iii) except as set forth on
SCHEDULE 4.2(d), breach or violate any Real Property Lease, agreement, contract,
- - ---------------
mortgage, instrument, indenture or license to which Seller is a party or by
which Seller, Crown or the Property is bound, or constitute a default (in and of
itself or with the giving of notice, passage of time or both) thereunder, or
(iv) result in the creation or imposition of any encumbrance upon, or give to
any other party or parties any claim, interest or right, including rights of
termination or cancellation in, or with respect to the Property or the Business.
(e) Financial Statements. Seller shall have delivered to Buyer prior
--------------------
to Closing copies of the following unaudited financial statements of Seller at
and for the periods ended December 31, 1995 and 1994 and March 31, 1995: (i)
balance sheet and (ii) statement of operations (collectively, the "Unaudited
Financial Statements"). The Unaudited Financial Statements will have been
prepared in conformity with Seller's accounting policies applied on a consistent
basis throughout the periods reflected and in accordance with the books and
records of Seller, adjusted for certain corporate allocations applied on a
consistent basis throughout the periods reflected, and will fairly present the
financial condition and results of operations of Seller at the date and for the
period stated or covered thereby. Buyer acknowledges that the Unaudited
Financial Statement will include allocations and estimates which are based on
assumption which Crown believes are reasonable under the circumstances. Buyer
further acknowledges, however, that these allocations and estimates are not
necessarily indicative of the costs that would have resulted if the Business had
been operated as a separate entity.
(f) Absence of Certain Changes and Events. Except as set forth on
-------------------------------------
SCHEDULE 4.2(f), since December 31, 1995:
- - ---------------
(i) There has not been any material adverse change in the
Business or the financial condition or results of operations of Seller
or Crown; provided, however, that neither Seller nor Crown makes any
representation or warranty with respect to the matters covered by this
clause (i) to the extent that it is attributable to Buyer's or BWAY's
discussions with representatives of the Union (as defined in Section
10.1);
(ii) There has not been any material increase in the amounts
payable by Seller to or for the benefit of, or committed to be paid by
Seller to or for the benefit of, its employees engaged in the
operation of the
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<PAGE>
Business, or in any benefits granted under any bonus, profit-sharing,
pension, retirement, deferred compensation, insurance, or other direct
or indirect benefit plan with respect to any such employee;
(iii) With respect to the Business, neither Seller nor Crown has
entered into or carried out any transaction other than in the ordinary
course of business of Seller or Crown or as otherwise contemplated by
this Agreement;
(iv) With respect to the Business, neither Seller nor Crown has
made any change in the methods of doing business or any change in
Seller's Accounting Practices or the method of application of such
practices;
(v) Except with respect to purchase money security interests, no
mortgage, pledge, lien, security interest, hypothecation, charge or
other encumbrance has been imposed or agreed to be imposed on or with
respect to any of the Property other than (i) those that will be
discharged prior to the Closing Date or (ii) current real estate and
personal property taxes or assessments not yet due and payable;
(vi) There has not been any modification, waiver, change,
amendment, release, rescission, default or termination of, or accord
and satisfaction with respect to, any material term, condition or
provision of any Assumed Contract, Real Property Lease or Personal
Property Lease, other than (i) any satisfaction by performance in
accordance with the terms thereof in the ordinary course of Seller's
or Crown's business and (ii) any such waiver, release, rescission,
default or termination by any party thereto other than Seller or Crown
of which neither Seller nor Crown has received any notice;
(vii) There has not been any sale, lease or other disposition of,
or any agreement (except for this Agreement, any of the Additional
Agreements or any other agreement to be entered into in connection
herewith), to sell, lease or otherwise dispose of, any of the Property
other than sales, leases or other dispositions in the usual and
ordinary course of business on an arm's length basis;
(viii) There has not been any purchase by Seller or Crown of, or
any agreement or commitment by Seller or Crown, absolute or
contingent, to purchase, capital assets having a value singly or in
the aggregate in excess of $100,000 with respect to the Business;
-15-
<PAGE>
(ix) Neither Crown nor Seller has, nor has any party on behalf of
Seller or Crown, issued any bonds, notes or other debt securities, or
issued any equity securities, any securities convertible into any
equity securities, or any warrants, options, or other rights to
acquire any equity securities of Seller;
(x) Neither Seller nor Crown has, nor has any party on behalf of
Seller or Crown, borrowed any amount or incurred or become subject to
any liabilities relating to the Business, except current liabilities
incurred in the ordinary course of business consistent with past
practice, and liabilities under contracts entered into in the ordinary
course of business;
(xi) Neither Seller nor Crown has, nor has any party on behalf of
Seller or Crown, discharged or satisfied any lien or encumbrance or
paid any obligation or liability relating to the Business, other than
current liabilities paid in the ordinary course of business;
(xii) Neither Seller nor Crown has, nor has any party on behalf of
Seller or Crown, suffered any extraordinary losses or waived any
rights of material value relating to the Business, whether or not in
the ordinary course of business or consistent with past practice; or
(xiii) Neither Seller nor Crown has, nor has any party on behalf of
Seller or Crown, suffered any damage, destruction or casualty loss to
any of the Property, whether or not covered by insurance.
(g) Taxes. Except as set forth on SCHEDULE 4.2(g), (i) Seller and
----- ---------------
Crown have duly filed all federal, state, local and foreign Tax returns
pertaining to the Business or the Property required to be filed by Seller or
Crown, except to the extent that any failure to so file would not have a
Material Adverse Effect on Seller, Crown or the Business; (ii) all Taxes,
assessments, fees and other governmental charges shown on such returns to be due
have been or will be fully and timely paid; (iii) no Tax liens have been filed
and no claims are being asserted in a writing received by Seller or Crown with
respect to any taxes relating to the Business or the Property; (iv) there are no
outstanding agreements or waivers extending the statutory period of limitation
to any Tax returns required to be filed by or on behalf of Seller or Crown with
respect to the Business or the Property; (v) neither Seller nor Crown is a
"foreign person" for purposes of Section 1445 of the Internal Revenue Code (vi)
Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party; and (vii) neither Seller
nor Crown has received any
-16-
<PAGE>
notice of a claim by a taxing authority in any jurisdiction where Seller does
not file Tax returns that Seller is or may be subject to Taxes assessed by such
jurisdiction with respect to the Business. SCHEDULE 4.2(g) contains a list of
---------------
states, territories and jurisdictions (whether foreign or domestic) in which
Seller is required to file tax returns with respect to the Business.
(h) Proprietary Rights. SCHEDULE 1.1(f) identifies all of the
------------------ ---------------
following, whether (i) owned by the Seller and used in the conduct of the
Business as conducted since March 31, 1995, or as presently proposed to be
conducted by Seller or (ii) owned by Crown and used primarily in the conduct of
the Business as conducted since March 31, 1995, or as presently proposed to be
conducted by Seller: (a) all patents and pending patent applications; (b) all
trademark, service mark and trade name registrations and applications therefor;
(c) all unregistered trademarks, service marks and trade names; (d) all
copyright registrations and applications therefor; (e) all material unregistered
copyrights and copyrightable works (other than commercially available computer
software and related documentation); and (f) all licenses and similar agreements
for the use of any intellectual property (including, without limitation,
patents, unpatented inventions and technology; trademarks, services marks and
trade names; copyrights and copyrightable works; know-how, trade secrets and
confidential information), to which the Seller or Crown is a party, either as
licensee or licensor (other than licenses for the use of commercially available
computer software and related documentation), identifying in each case the
intellectual property that is the subject of the license or other agreement (all
of the foregoing being hereinafter collectively referred to as "Intellectual
Property").
Except as set forth in SCHEDULE 1.1(f): (a) Seller or Crown owns and
---------------
possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Intellectual Property used in the operation of
the Business (including the Proprietary Rights identified on SCHEDULE 1.1(f) as
---------------
well as other Intellectual Property); (b) no claim by any third party contesting
the validity, enforceability, use or ownership of any of the Intellectual
Property has been made, is currently outstanding or, to the knowledge of the
Seller or Crown, is threatened; (c) to the knowledge of Seller and Crown,
neither Seller nor Crown has infringed, misappropriated or otherwise conflicted
with any Intellectual Property rights or other rights of any third parties in
the operation of the Business; and (d) the transactions contemplated by this
Agreement will not conflict with, violate, terminate or create a right to
terminate any license or other agreement with any third party relating to any of
the Intellectual Property.
(i) Insurance. SCHEDULE 4.2(i) lists all policies of life, casualty,
--------- ---------------
liability and other forms of insurance owned or held by Seller or Crown with
respect to the Business and all such
-17-
<PAGE>
policies are currently in full force and effect. Neither Seller nor Crown has
received any notice from any such insurer with respect to the cancellation of
any such insurance. All premiums due and payable on such policies have been
paid. Seller and Crown will keep such policies in force through the Closing
Date.
(j) Compliance with Laws. Seller and the Business are in material
--------------------
compliance with all laws, ordinances, regulations, rules, codes, ordinances,
decrees and orders applicable thereto.
(k) Environmental and Safety Laws. Except as set forth in SCHEDULE
----------------------------- --------
4.2(k):
- - ------
(i) With respect to the Business, Seller and Crown are each in
material compliance with all Environmental and Safety Requirements (as
defined in Section 10.1).
(ii) Without limiting the generality of the foregoing, Seller has
obtained and is in substantial compliance with all material permits,
licenses and other authorizations that may be required pursuant to
Environmental and Safety Requirements for the occupation of the Real
Property and the operation of the Business. Seller and Crown shall
make all reasonable efforts to have such permits, licenses and other
authorizations transferred or reissued to the Buyer. A list of such
permits, licenses and other authorizations is found on SCHEDULE
--------
1.1(e).
------
(iii) Neither Seller nor Crown has received any written notice,
report or other information regarding any actual or alleged material
violation of Environmental and Safety Requirements, or any material
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to the Business or the
Real Property and arising under Environmental and Safety Requirements.
(iv) To Seller's and Crown's knowledge, none of the following
exists at any property or facility owned or operated by Seller in
connection with the Business: (1) underground storage tanks; (2)
material amounts of asbestos-containing material in friable or damaged
condition; (3) materials or equipment containing regulated
concentrations of polychlorinated biphenyls; or (4) landfills, surface
impoundments or regulated disposal areas.
(v) With respect to the Business, neither Seller nor Crown has
treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled,
-18-
<PAGE>
or released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility, and no such
property is contaminated by any such substance, (a) in material
violation of Environmental and Safety Requirements or (b) in a manner
that has given rise or which could reasonably be expected to give rise
to material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including material liabilities for
personal injury, property damage, natural resource damages, attorneys'
fees, investigative costs, response costs, corrective action costs,
investigation, corrective or remedial obligations pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as
amended ("SWDA") or any other Environmental and Safety Requirements.
(vi) To Seller's and Crown's knowledge, there are no facts,
events or conditions relating to the Business or past or present
operations of Seller which will prevent, hinder or limit material
compliance by the Business with Environmental and Safety Requirements,
give rise to any material investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements, or give
rise to any other material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental and
Safety Requirements, including, without limitation, any of the
foregoing relating to on-site or off-site releases or threatened
releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
(vii) Neither this Agreement nor the consummation of any
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup or notification to or
consent of government agencies or third parties, pursuant to any
Environmental and Safety Requirements, including without limitation
any so-called "transaction-triggered" or "responsible property
transfer" laws.
(viii) With respect to the Business, neither Seller nor Crown
has, either expressly or by operation of law, assumed or undertaken
any material liability, including without limitation any obligation
for corrective or remedial action, of any other person relating to
Environmental and Safety Requirements.
(l) Permits. SCHEDULE 1.1(e) lists all permits, franchises, licenses,
------- ---------------
consents, authorizations, approvals and certificates (collectively, the
"Permits") of any regulatory,
-19-
<PAGE>
administrative or other governmental agency or body material to, and used
primarily in conducting, the Business, which Permits include all Permits
required to own the Property and to operate the Business in material compliance
with applicable law. Each of the Permits is currently valid and in full force
and effect. During the period commencing 36 months prior to the date of this
Agreement, Seller has been in material compliance with the Permits. Seller, to
its and Crown's knowledge, during the period prior to such 36-month period, has
been in material compliance with the Permits. There is no pending or, to
Seller's or Crown's knowledge, threatened proceeding or change in law or
regulation which could result in the revocation or cancellation of, or inability
of Seller or Crown to renew, or comply with any Permit. True and complete
copies of all documents referred to in SCHEDULE 1.1(e), have been delivered to
---------------
or made available for review by Buyer.
(m) Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried on by or on behalf of Seller
and Crown in such a manner as not to give rise to any claim against Seller,
Crown, Buyer, BWAY or the Property for a finder's fee, brokerage commission,
advisory fee or other similar payment.
(n) Employee Benefit Plans. Except as set forth on SCHEDULE 4.2(n),
---------------------- ---------------
with respect to the Business, there are no employee benefit plans ("Employee
Benefit Plans") of any type, including but not limited to plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by Seller or Crown, or with respect to which Seller or
Crown has a liability, whether direct or indirect, actual or contingent. All
Employee Benefit Plans maintained by Seller or Crown with respect to the
Business or to which Seller or Crown is obligated to contribute, are, in all
material respects maintained, funded and administered in compliance with ERISA
and other applicable law. During the period subsequent to December 31, 1995: no
such Employee Benefit Plan subject to Title IV of ERISA has been terminated; no
proceedings to terminate any such Employee Benefit Plan have been instituted
under Subtitle C of Title IV of ERISA; no reportable event within the meaning of
Section 4043 of Subtitle C of ERISA has occurred for any such Employee Benefit
Plan maintained by Seller or Crown; and neither Seller nor Crown has withdrawn
from a multiemployer plan (as defined in Section 4001(a) of ERISA). The
consummation of the transactions contemplated hereby will not result in any
withdrawal liability on the part of Seller under a multiemployer plan with
respect to the Business; no such Employee Benefit Plan established or maintained
by Seller or Crown or to which Seller or Crown is obligated to contribute has
any "accumulated funding deficiency," as defined in ERISA; and neither Seller
nor Crown has incurred any liability to the Pension Benefit Guaranty Corporation
with respect to any such Employee Benefit Plan. Neither Seller nor Crown, to
the knowledge of Seller or Crown any plan fiduciary, has engaged in
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<PAGE>
any "prohibited transaction," as defined in Section 406 of ERISA, or in Section
4975 of the Code with respect to any such Employee Benefit Plan of Seller for
which no statutory or regulatory exemption is available.
(o) Labor and Employment Matters. Except as set forth on SCHEDULE
---------------------------- --------
4.2(o), no employees related to the Business are represented by, and neither
- - ------
Seller nor Crown is party to, any collective bargaining agreement or
relationship with any labor organization. Except as set forth on SCHEDULE
--------
4.2(o), with respect to the Business, to Seller's and Crown's knowledge (i) no
- - ------
labor organization or group of employees has filed any representation petition
or made any written or oral demand for recognition; (ii) no union organizing
campaigns are underway and no other question concerning representation exists,
(iii) no labor strike, work stoppage or slowdown, or other material labor
dispute is underway; provided, however, that neither Seller nor Crown makes any
representation or warranty with respect to the matters covered by this clause
(iii) to the extent that is it attributable to Buyer's or BWAY's discussions
with representatives of the Union; (iv) there is no employment-related charge,
complaint, investigation, inquiry or obligation of any kind, pending, or to
Seller's or Crown's knowledge threatened, in any forum, relating to an alleged
violation by Seller or Crown of any law, regulation or contract; and, (v)
neither Seller nor Crown has committed or been involved in the commission of any
act or omission giving rise to material liability for any violation identified
in subsection (iv), above, or as a result of adverse workman's compensation
experience. Neither Seller nor Crown has implemented any plant closing or mass
layoff of employees as those terms are defined in the Worker Adjustment
Retraining and Notification ("WARN") Act of 1988, as amended, or any similar
state or local law or regulation, and no layoffs that could implicate such laws
or regulations will be implemented before the Closing Date without advance
notification to Buyer.
(p) Title to Property. Seller or Crown, as the case may be, has good,
-----------------
exclusive and marketable fee simple title to the Property (other than the Real
Property) free and clear of all liens and encumbrances whatsoever except (i)
purchase money security interests reflected in Accounts Payable, (ii) liens and
encumbrances approved by Buyer in writing, (iii) liens and encumbrances created
under any Assumed Contract, Real Property Lease, Personal Property Lease or
Permit, and (iv) such other liens and encumbrances set forth on SCHEDULE 4.2(p)
---------------
(collectively, "Permitted Liens").
(q) Title to Real Property. Seller has good and marketable fee simple
----------------------
title to the Real Property free and clear of all liens and encumbrances
whatsoever except Permitted Encumbrances (as defined in Section 5.9).
(r) Real Property. Except as set forth on SCHEDULE 4.2(r):
------------- ---------------
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<PAGE>
(i) There is no pending condemnation or similar proceeding
affecting the Real Property or any portion thereof, and to Seller's or
Crown's knowledge, no such action is presently contemplated or
threatened;
(ii) Neither Seller nor Crown has received any notices from any
insurance company of any defects or inadequacies in the Real Property
or any part thereof which would materially adversely affect the
insurability of the Real Property or the premiums for the insurance
thereof. Neither Seller nor Crown has received any notice from any
insurance company which has issued or refused to issue a policy with
respect to any portion of the Real Property or by any board of fire
underwriters (or other body exercising similar functions) requesting
the performance of any repairs, alterations or other work with which
compliance has not been made;
(iii) There are no parties in possession of any portion of the
Real Property other than Seller, whether as lessees, tenants at will,
trespassers or otherwise and there is no litigation, pending or to
Seller's or Crown's knowledge, threatened, and neither Seller nor
Crown has received any notice of any claims with respect to the
ownership, lease, use, occupancy or operation by any person of the
Real Property;
(iv) There are no leases, subleases, licenses, concessions or
other agreements granting to any person the right of use or occupancy
of the Real Property or any part thereof, and other than the right of
Buyer under this Agreement, there are no outstanding options,
agreements, rights of first refusal to purchase the Real Property or
any part thereof.
(vi) The current use of the Real Property does not violate in
any material respect any instrument of record or agreement affecting
such Real Property. No damage or destruction has occurred with
respect to any of the Real Property that, individually or in the
aggregate, has had or resulted in, or will have or result in, a
material adverse effect on the current use or value of any of the Real
Property;
(vii) All buildings and all fixtures (other than Personal
Property), components of all buildings, structures and other
improvements included within the Real Property (collectively the
"Improvements") are in good condition and repair and adequate to
operate such facilities as currently used, and to Seller's and Crown's
knowledge, there are no facts or conditions affecting any of the
Improvements which would, individually or in the aggregate, interfere
in any
-22-
<PAGE>
significant respect with the current use, occupancy or operation
thereof; and
(viii) The Real Property is in material compliance with all
applicable building, zoning and other land use and similar laws
affecting the Real Property and the use, occupancy or operation
thereof (collectively, the "Real Property Laws"), and neither Seller
nor Crown has received any notice of violation or claimed violation of
any Real Property Laws. To the knowledge of Seller and Crown, there
is no pending or proposed change in any Real Property Law that will
have or result in a material adverse effect upon the ownership,
alteration, use, occupancy or operation of the Real Property or any
portion thereof.
(s) Personal Property. The improvements, buildings, machinery,
-----------------
equipment, furniture, vehicles, tools and tangible personal property included in
the Property are in good working order and repair, subject to ordinary wear and
tear resulting from continued operations in the ordinary course of business,
have been properly maintained in accordance with past practices, are suitable
for the conduct of the Business, as presently conducted by Seller and, in the
case of any Improvements, are to Seller's knowledge structurally sound, and
there is no defect in any assets used in the Business which individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
(t) Contracts and Commitments. SCHEDULES 1.1(g) and 1.1(h) list all
------------------------- ---------------- ------
Personal Property Leases and Contracts to which Seller or Crown is a party
(whether or not legally bound thereby) and used in conducting the Business,
other than purchase and sale orders entered into in the ordinary course of
business of Seller. With respect to any of the foregoing that are material and
are not set forth in writing, such applicable Schedule contains an accurate
summary of the material terms thereof. All of the Real Property Leases, the
Personal Property Leases and the Assumed Contracts are in full force and effect
and valid and binding upon Seller. Seller is not in default in any material
respect under any Real Property Lease, Personal Property Lease or Assumed
Contract, nor, to Seller's knowledge (i) is any other party to any such Personal
Real Property Lease, Property Lease or Contract in default thereunder in any
material respect or (ii) does any condition exist that with notice or lapse of
time or both would constitute a material default thereunder. True and complete
copies of all documents referred to in SCHEDULE 1.1(g) or 1.1(h) have been
--------------- ------
delivered to Buyer, except with respect to the information deleted from the
copies of the PPG Contract and the United Coatings Contract delivered by Seller
to Buyer.
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<PAGE>
(u) Accounts Receivable.
-------------------
(a) All of the notes and accounts receivable included in the
calculation of the December 31 Working Capital were, and all Accounts
Receivables included in the calculation of the Closing Date Working Capital will
be, to the extent not collected between the date hereof and the Closing Date,
good, valid and subsisting receivables (and to Seller's and Crown's knowledge,
subject to no counterclaims or offset), and other than as reflected in the
calculation of the December 31 Working Capital or the Closing Date Working
Capital, neither Seller nor Crown has any knowledge of any fact or condition
that would render any Account Receivable uncollectible. The Accounts Receivable
represent sales actually made to third parties in the ordinary course of the
Business.
(b) Except as disclosed on SCHEDULE 4.2(u), no person or entity will
---------------
have any Lien on the Account Receivables or any part thereof, and no agreement
for deduction, free goods, discount or other deferred price or quantity
adjustment will have been made by Seller or any of its affiliates with respect
to any such receivables.
(v) Inventories. All of the Inventory has been valued in accordance
-----------
with Seller's past practice using Seller's Accounting Practices and is usable
and saleable in the ordinary course of the Business, and none of the Inventory
is obsolete. Since December 31, 1995, there has been no change in the Inventory,
other than sales thereof in the ordinary course of the Business.
(w) Intentionally Omitted.
---------------------
(x) Sufficiency of Property. With the exception of the Excluded
-----------------------
Assets, the Property constitutes all of the assets, properties and rights of
Seller or Crown that are necessary for, or used by Seller in, the conduct of the
Business in the manner in which it is currently conducted.
(y) Working Capital. The December 31 Working Capital was determined
---------------
in accordance with Seller's Accounting Practices.
(z) Disclosure. To the knowledge of Seller and Crown, no
----------
representation or warranty of Seller contained in this Agreement nor any
schedule, attachment or exhibit hereto, and no statement contained herein or in
any certificate or document furnished to Buyer pursuant to the transactions
contemplated hereby, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading. To Seller's or Crown's knowledge, there is no
fact or condition which has not been disclosed to Buyer which could reasonably
be expected to have a Material Adverse Effect.
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<PAGE>
(aa) Product Warranty. To Seller's and Crown's knowledge, all
----------------
products manufactured, serviced, distributed, leased, installed or sold by
Seller in connection with the Business since the date of Seller's acquisition
thereof have been in conformity with all applicable contractual commitments and
all express warranties made by Seller. Except as set forth on SCHEDULE 4.2(z)
---------------
hereto, to Seller's and Crown's knowledge, neither Seller nor Crown (with
respect to the Business) has any material liability for replacement or repair or
other damages in connection with sales or deliveries of any products of the
Business sold since the date of Seller's acquisition thereof. Prior to the date
hereof, Seller has delivered to Buyer copies of Seller's standard terms and
conditions of sale for products delivered and services rendered by Seller.
(bb) Customers. SCHEDULE 4.2(bb) hereto lists the 20 largest
--------- ----------------
customers or groups of related customers for each of the last two years.
Neither Seller nor Crown has received any written notice or, to Seller's
knowledge, oral notice, that any such customer intends to terminate or
materially reduce its business with Seller since April 1, 1996.
(cc) Product Liability. Except as disclosed on SCHEDULE 4.2(cc)
----------------- ----------------
hereto, no party has made any written, or to Seller's or Crown's knowledge, oral
product liability claim with respect to any actual or alleged injury to person
or property as a result of the ownership, possession or use of any product sold
by Seller.
(dd) Absence of Undisclosed Liabilities. Except as disclosed pursuant
----------------------------------
to this Agreement, neither Seller nor Crown has any knowledge of any material
liabilities or obligations of any kind with respect to the Business, whether
accrued, absolute, contingent or otherwise, which are not reflected in Seller's
December 31, 1995 balance sheet included in the Audited Financial Statements or
which has arisen since such date in the ordinary course of business.
(ee) Real Property Leases. SCHEDULE 1.1(b) lists all Real Property
-------------------- ---------------
Leases which are used in conducting the Business. Each of the Real Property
Leases is in full force and effect and valid and binding upon Seller. With
respect to each of the Real Property Leases: (i) neither Seller, nor to
Seller's or Crown's knowledge, any other party to the Real Property Leases is in
breach or default, and to Seller's and Crown's knowledge, no event has occurred
which, with notice or lapse of time, would constitute such a breach or default
or permit termination, modification or acceleration under the Real Property
Leases; (ii) neither Seller, nor to Seller's and Crown's knowledge, any other
party to the Real Property Leases has repudiated any provision thereof, (iii) to
Seller's and Crown's knowledge, there are no disputes, oral agreements or
forbearance programs in effect as to the Real Property Leases; (iv) such lease
has not been modified in any respect, other and as disclosed by the documents
delivered
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<PAGE>
to Buyer, (vii) neither Seller nor Crown has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the Real Property
Lease. True, accurate and complete copies of each of the Real Property Leases
in SCHEDULE 1.1(b) have been delivered to or made available for review by Buyer.
---------------
(ff) Renewal of Representations and Warranties. All of the
-----------------------------------------
representations and warranties of Seller or Crown and contained in this Section
4.2 and elsewhere in the Agreement and all information delivered in any
Schedule, attachment or Exhibit hereto shall be true and correct in all material
respects on the Closing Date as though then made.
ARTICLE V. COVENANTS
--------- ---------
Section 5.1. Employees. Except as set forth on SCHEDULE 5.1, neither
----------- --------- ------------
Seller nor Crown shall take any action which is intended to cause any employee
of Seller used exclusively in conducting the Business not to become or continue
as an employee of Buyer. Buyer shall offer employment to a minimum of 75% of
Seller's employees at each of the Solon Facility and the York Facility.
Section 5.2. Access to Property; Environmental Inspection. Between
----------- --------------------------------------------
the date hereof and the Closing Date and subject to the limitations described
below, Seller shall provide Buyer and its agents with reasonable access to the
records, properties and employees of Seller relating to the Business and of
Crown relating primarily to the Business during normal business hours upon
receipt by Seller from Buyer of reasonable notice and shall allow Buyer and its
agents to make copies of such documents, records and other information of Seller
relating to the Business and of Crown relating primarily to the Business as
Buyer or such agents may reasonably request; provided however, that (i) Buyer
shall not have access to any of Seller's customer pricing information (other
than as provided below) and (ii) Buyer shall not make any proposal to the Union
or any employee of the Business covered by a collective bargaining agreement
with respect to a proposal to amend any such collective bargaining agreement or
the terms and conditions of employment of any such covered individuals without
Seller's prior written consent, and (iii) such access or proposal shall not be
disruptive to the Business or any of the operations of Crown or any of its
affiliates. Seller shall provide Buyer and its agents with reasonable access to
(i) the Real Property and the real property subject to the Real Property Leases
solely to allow Buyer and its agents, at Buyer's expense, to inspect such real
property in connection with the completion of the Surveys (as defined in Section
5.9(b)), (ii) the Property solely in connection with the completion of
appraisals of the Property, and (iii) the bargaining representatives of the
Union solely for the purpose of engaging in discussions as permitted in Section
5.17.
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<PAGE>
For a period of 15 days commencing on a day selected by Seller, Buyer shall
be permitted to interview Seller's employees, at times during or after normal
business hours, for the purposes of determining whether to offer employment to
any such persons; provided, however, that Buyer shall use its best efforts to
minimize any disruption to Seller's operations that may be caused as a result of
such interviews. For a period of five (5) days commencing on a day selected by
Seller, Buyer shall be permitted to speak with Seller's sales managers, at times
during or after normal business hours, in order to ascertain Seller's pricing
policies and other material terms of Seller's arrangements with respect to its
customers; provided, however, that Buyer shall use its best efforts to minimize
any disruption to Seller's operations that may be caused as a result of such
discussions. Seller shall select an alternative five (5)-day period if any such
sales manager is on vacation or otherwise not available during the previously
selected period.
Section 5.3. Conduct of Business Prior to Closing. Except as
----------- ------------------------------------
otherwise contemplated by this Agreement or any of the Additional Agreements,
Seller and Crown agree that after execution of this Agreement and until the
Closing Date, Seller and Crown shall operate the Business in the ordinary course
in substantially the same manner as heretofore conducted and shall use all
reasonable efforts to preserve intact its current business organization, keep
available the services of Seller's employees and preserve its relationships
with customers, suppliers and others having business dealings with Seller.
Without limiting the generality of the foregoing, Seller shall not without the
consent of Buyer:
(a) incur or become subject to, or agree to incur or become subject
to, any material obligation or liability (absolute or contingent) except current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business, or amend, modify, supplement, or permit other
changes to any of the Real Property Leases;
(b) mortgage, pledge or subject to lien, charge or any other
encumbrance, any of the Property, except with respect to purchase money security
interests;
(c) make or agree to make any accrual or arrangement for or payment of
bonuses or special compensation of any kind to any employee or agent, other than
in the ordinary course of business;
(d) introduce any new method of accounting with respect to the
Business or any of the assets, properties or rights applicable thereto, except
as required by generally accepted accounting principles;
(e) offer or extend more favorable prices, discounts or allowances
than were offered or extended regularly on and
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<PAGE>
prior to December 31, 1995, other than in the ordinary course of business or as
reasonably required by competitive conditions; or
(f) directly or indirectly, solicit or encourage (including by way of
furnishing any nonpublic information concerning the business, properties or
assets of Seller), or enter into any negotiations or discussions concerning, any
Acquisition Proposal (as defined below). Seller shall notify Buyer promptly by
telephone, and thereafter promptly confirm in writing, if any such information
is requested from, or any Acquisition Proposal is received by, Seller or Crown.
As used in this Agreement, "Acquisition Proposal" shall mean any proposal
received by Seller prior to the Closing Date for a merger or other business
combination involving Seller, or for the acquisition of, or the acquisition of a
substantial equity interest in, or a substantial portion of the assets of
Seller, other than the one contemplated by this Agreement. Notwithstanding the
foregoing, if Seller or Crown shall receive an Acquisition Proposal which in the
opinion of counsel to Crown the Board of Directors of Crown is obligated by
principles of fiduciary duty to consider, Seller and Crown may, without
violating this Agreement, thereafter furnish information to, and may enter into
negotiations with, the party making such Acquisition Proposal and may, if
Seller's or Crown's Board of Directors determines that such Acquisition Proposal
is in the best interests of the Stockholders of Crown, terminate this Agreement
and enter into an agreement with respect to such Acquisition Proposal; provided,
however that if Crown or Seller enter into a letter of intent or definitive
agreement to sell the Business or a substantial portion of the Property with
respect to an Acquisition Proposal, Seller or Crown shall pay to Buyer the sum
of $5,000,000 in cash.
Section 5.4. Further Assurances. On and after the Closing Date,
----------- ------------------
Seller and Crown shall prepare, execute and deliver, at their respective
expense, such further instruments of conveyance, sale, assignment or transfer,
and shall take or cause to be taken such other or further action as Buyer or its
counsel shall reasonably request at any time or from time to time in order to
perfect, confirm or evidence in Buyer title to all or any part of the Property
or to consummate, in any other manner, the terms and conditions of this
Agreement or to facilitate the transactions contemplated hereby and Buyer's
ownership of the Property and the Business. Seller shall reasonably cooperate
with Buyer to make insurance claims for casualty losses as contemplated by
Section 1.1(h). On and after the Closing Date, Buyer and BWAY shall prepare,
execute and deliver, at Buyer's expense, such further instruments, and shall
take or cause to be taken such other or further action as Seller's counsel shall
reasonably request at any time or from time to time in order to confirm or
evidence Buyer's assumption of the Assumed Liabilities or to consummate, in any
other manner, the terms and conditions of this Agreement.
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<PAGE>
Section 5.5. Announcements. Neither party to this Agreement shall
----------- -------------
make any public announcements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party hereto,
except as required to comply with any applicable law based on advice of counsel.
Section 5.6. Consents. Notwithstanding any provision in this
----------- --------
Agreement to the Contrary, Seller and Crown shall obtain the consent of United
Coatings, Inc. to the full transfer to Buyer and BWAY of those portions of the
United Coatings Contract (described on SCHEDULE 1.1(l)) relating to all of
----------------
Seller's and Crown's rights to supply paint cans to United Coatings, Inc.
without any condition or modification thereto adverse to Buyer or BWAY. During
the remaining term of the United Coatings Contract, Buyer and/or BWAY shall
issue Crown an invoice for the amount of the quarterly credits Buyer or BWAY has
issued to United Coatings, Inc. with respect to Buyer's and BWAY's paint can
sales in accordance with Section 5 of the United Coatings Contract and Crown
shall reimburse to Buyer and/or BWAY (as the case may be) the full amount of
such credits promptly upon receipt of such invoice (and, in any case, within 10
business days of receiving such invoice). Seller and Crown, at their expense,
shall use all commercially reasonable efforts to obtain all other permits,
approvals, authorizations and consents of third parties required in connection
with the consummation of the transactions contemplated hereby. Seller and
Crown, at their expense, shall use their best efforts to obtain the consent of
PPG Industries, Inc. to the assignment by Seller of the PPG Contract to Buyer.
Section 5.7. Additional Agreements. On the Closing Date, Buyer and
----------- ---------------------
Seller shall enter into or cause their respective affiliates, as indicated
below, to enter into the following agreements (the "Additional Agreements"):
(a) A Supply Agreement among BWAY, Buyer and Crown Canada in the form
of EXHIBIT 5.7(a);
--------------
(b) A Lease Agreement between Buyer and Seller with respect to the
Covington Facility in the form of EXHIBIT 5.7(b);
--------------
(c) A Strategic Alliance Agreement among Buyer, BWAY, Seller, Crown
and Crown Canada in the form of EXHIBIT 5.7(c);
--------------
(d) A Noncompetition Agreement among Buyer, Seller, Crown, Crown
Canada and BWAY in the form of EXHIBIT 5.7(d);
--------------
(e) A Transitional Services Agreement among Buyer, Seller and Crown in
form reasonably satisfactory to the parties thereto pursuant to which Seller and
Crown will provide to Buyer the services described on EXHIBIT 5.7(e);
--------------
(f) A Sales Agency Agreement between Crown Canada and BWAY in the
form of EXHIBIT 5.7(f); and
--------------
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<PAGE>
(g) A Sales Agency Agreement between Crown Canada and Buyer in the
form of EXHIBIT 5.7(g).
--------------
Section 5.8. HSR Act. The parties shall as promptly as practicable,
----------- -------
but in no event later than seven business days following the execution and
delivery of this Agreement, file with the United States Federal Trade Commission
(the "FTC") and the United States Department of Justice (the "DOJ") the
--- ---
notification and report form, if any, required for the transactions contemplated
hereby and any supplemental information requested in connection therewith
pursuant to the HSR Act. Any such notification and report form and supplemental
information shall be in substantial compliance with the requirements of the HSR
Act. Each party shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act.
The parties shall keep each other apprised of the status of any communications
with, and inquiries or requests for additional information from, the FTC and the
DOJ and shall comply promptly with any such inquiry or request. The parties
shall use their respective best efforts to obtain as promptly as possible any
clearance required under the HSR Act for the purchase and sale of the Property.
Without limiting the generality of the foregoing, Seller and Buyer agree to
respond promptly and fully to all inquiries from the FTC and/or the DOJ as soon
as practicable.
Section 5.9. Real Property.
----------- -------------
(a) Within 15 days after the date of this Agreement, Seller, at
Seller's cost and expense, shall obtain and deliver to Buyer, with respect to
the Solon Facility and the York Facility owner's preliminary reports on title
covering a date subsequent to the date of this Agreement, issued by Lawyer's
Title Insurance Corporation (the "Title Company"), which preliminary reports
shall contain a commitment of the Title Company to issue owner's title insurance
policies on ALTA 1970 Owner's Form B (Amended) insuring the fee simple title of
Buyer in such Real Property and all easement parcels benefitting the Real
Property in the amounts allocated to each property on SCHEDULE 3.4 (the "Title
------------
Commitments"). Seller shall, at Seller's cost and expense, cause the Title
Company to issue the title insurance policies (which may be in the form of a
marked up Title Commitment) at the Closing, based upon the Title Commitment,
(the "Title Policies") dated as of the Closing Date, subject only to (i) the
standard exception to title based upon matters which would be disclosed by an
accurate survey; (ii) zoning ordinances and regulations which do not prohibit or
materially and adversely restrict the present use or occupation of the Real
Property; (iii) real estate taxes and assessments, both general and special,
which are a lien but not yet due and payable as of the Closing Date; (iv) liens
and encumbrances of record that would not materially and adversely affect the
current use or value of such Real Property (other than any lien or encumbrance
of record specifically relating to the
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<PAGE>
Industrial Revenue Bond financing at the Solon Facility); and (v) any matters
which would be disclosed by an accurate survey of such parcel of Real Property
that would not materially and adversely affect the current use or value of such
Real Property (collectively, "Permitted Encumbrances"). Buyer, at its expense,
may request any special endorsements to the Title Policies; provided, however,
that the obtaining of any such endorsement shall not be a condition to Closing.
Seller shall reasonably cooperate with Buyer in connection with obtaining such
endorsements.
(b) Buyer, at its expense, may obtain, in preparation for the Closing,
current surveys of each parcel of the Real Property, prepared by a Bock & Clark
National Surveyor's Network, and conforming to 1992 ALTA/ACSM Minimum Detail
Requirements for Urban Land Title Surveys ("Surveys"), including Table A Items
1-4 and 6-14, and such standards as the Title Company may require as a condition
to the removal of any survey exceptions from the Title Policies, and certified
by Buyer, Buyer's lender and the Title Company, within 15 days of the Closing
Date, in a form satisfactory to such parties. Buyer shall instruct the surveyor
preparing the Surveys to certify to Buyer in writing within 30 days following
the date hereof as to whether any of the Real Property is located in a flood
plain. No Survey shall disclose any material survey defect or encroachment from
or onto any of the Real Property which has not been cured or insured over prior
to the Closing.
(c) Seller and Crown shall use all commercially reasonable efforts to
obtain and deliver to Buyer prior to Closing an estoppel letter (the "Estoppel
Letter") with respect to the Material Real Property Lease from the landlord for
such property in form and content reasonably satisfactory to Buyer.
Section 5.10. Best Efforts. Each of the parties hereto shall use its
------------ ------------
best efforts to cause the Closing to occur.
Section 5.11. Covington Facility Employees. Prior to the Closing
------------ ----------------------------
Date, Seller shall amend its severance policy applicable to all non-union
employees engaged in conducting the Business to provide that if such employee's
employment with Seller is terminated as result of the sale of all or
substantially all of the assets or stock of Seller and the buyer thereof offers
to such employee employment effective on or before the next business day
following such termination by Seller, such employee shall not be entitled to
severance compensation as a result of such termination by Seller. Buyer shall
offer employment to substantially all of the employees of Seller employed at the
Covington Facility on the Closing Date upon terms substantially similar in the
aggregate to the terms of each such employee's employment with Seller. Buyer
shall pay to each such employee that elects to become employed by Buyer, upon
Buyer's termination of their employment with Buyer (other than a voluntary
termination by the employee or a termination by Buyer
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<PAGE>
for cause) severance pay that is substantially equivalent to that offered by
Seller if those employees satisfy certain reasonably achievable conditions set
forth in the severance plan that Buyer will set up as of the Closing Date.
Section 5.12. Audited Financial Statements. The parties acknowledge
------------ ----------------------------
that Buyer has requested that Seller obtain the following audited financial
statements of Seller at and for the periods ended December 31, 1994, December
31, 1995 and the Closing Date: (i) balance sheet, and (ii) statement of
operations (collectively, the "Audited Financial Statements"). Seller shall
deliver to Buyer true and complete copies of the Audited Financial Statements
within forty-five (45) days after the Closing Date.
Section 5.13. Certain Solon Facility Equipment. Prior to the Closing
------------ --------------------------------
Date, Seller shall modify the cone top manufacturing equipment located at the
Solon Facility solely to eliminate its capacity to produce aerosol cans.
Section 5.14. Collection of Accounts Receivable. Buyer shall be
------------ ---------------------------------
responsible for collection of all Accounts Receivable. Upon receipt of any
funds remitted to Seller in respect of any Accounts Receivable taken into
account in calculating Closing Date Working Capital, Seller shall promptly remit
such funds to Buyer.
Section 5.15. Seller's Purchase Orders and Commitments. Consistent
------------ ----------------------------------------
with good operational practice, Seller shall use its best efforts to minimize
the volume of its tin plate steel being processed under outstanding purchase
orders and commitments with respect to the Business as of the Closing Date.
Seller shall consult with Buyer and shall use its best efforts to take Buyer's
desires into account in connection with such minimization.
Section 5.16. COBRA Benefits. For a period of 18 months from and
------------ --------------
after the Closing Date (the "COBRA Period"), Seller and Crown shall offer to all
of their employees employed in the Business as of the Closing Date "health care
continuation coverage" as described under Section 4980(B) of the Code or
Sections 601-608 of ERISA and Buyer and/or BWAY shall promptly pay to Seller
when due amounts equal to the premiums for such coverage. Notwithstanding any
provision on this Agreement to the contrary, neither Seller nor Crown shall have
any obligation or liability to any Transferred Employee (as defined in Section
10.1) or to Buyer or BWAY with respect to costs or expenses resulting from or
associated with any medical condition of such Transferred Employee or his or her
spouse or dependents, regardless of whether any such medical condition arose
prior to, on or after the Closing Date; except that after the Closing Date
Seller and/or Crown (i) shall provide the benefits described in the foregoing
sentence during the COBRA Period, (ii) shall retain all obligations or
liabilities under any applicable workers
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<PAGE>
compensation or other employment law or regulation with respect to the
employment of the Transferred Employees on or prior to the Closing Date, (iii)
shall honor their respective obligations under the Employee Benefit Plans with
respect to services received by the Transferred Employees on or prior to the
Closing Date and (iv) shall retain liability for any medical expenses resulting
from any non-compliance with law or tort violation that occured on or prior to
the Closing Date in connection with Seller's operation of the Business.
Section 5.17. Labor Matters. After execution of this Agreement,
------------ -------------
Buyer, Seller, and/or Crown, as may be applicable, agree to take the following
actions, at the times specified herein, with regard to the employees who are
covered by the Collective Bargaining Agreement;
(a) Effective as of the Closing Date, Crown shall grant vesting and
benefit accrual service in the Crown Cork & Seal Company, Inc. Hourly Pension
Plan for International Association of Machinists Local 233 at Solon Plant No. 55
(the "Hourly Pension Plan") for all eligible employees, thereunder, through
September 1, 1998. Crown also shall provide that the Hourly Pension Plan will
be frozen as of, and no further accruals will be earned after September 1, 1998.
The service credit described above will be given to all hourly employees
employed by the Business who are eligible for or covered by the Hourly Pension
Plan on the Closing Date. Crown shall continue to operate and administer the
Hourly Pension Plan, at its expense, for all participants in the plan.
(b) On the Closing Date, Buyer will pay to Seller, as an adjustment to
the Purchase Price, the estimated cost of the additional vesting and benefit
accrual service from the day after the Closing Date through September 1, 1998.
This amount will be determined by Crown, prior to the Closing Date, based upon
calculations prepared by the actuary currently utilized by the Hourly Pension
Plan, using the plan's present actuarial assumptions.
(c) Effective as of the Closing Date, Buyer agrees to assume the
Collective Bargaining Agreement pursuant to the terms and conditions of this
Agreement.
Section 5.18. Welfare Plans. Effective as of the Closing Date, with
------------ -------------
respect to the employees covered by the Collective Bargaining Agreement, Buyer
shall establish mirror-image welfare benefit plans so as to comply with the
obligation to provide such coverages as required under the Collective Bargaining
Agreement; provided, however, that Seller shall make available health plan
coverage during the COBRA Period as described in Section 5.16.
Section 5.19. Lien Searches. Seller has delivered to Buyer copies of
------------ -------------
all lien searches ordered by Seller with respect
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to the transactions contemplated by this Agreement. Seller shall use reasonable
efforts to deliver to Buyer prior to the Closing copies of updates of all such
lien searches.
Section 5.20. Employees and Compensation. Prior to Closing, Seller
------------ --------------------------
shall deliver to Buyer a true and correct listing of the following information:
(a) a list of all individuals currently employed by Seller in the Business and
the respective salary and wage rates for each such employee for Seller's current
fiscal year and (b) a list of all plant managers and sales managers currently
employed by Seller in the Business and their respective annual salary, hourly
wage and bonuses paid to each such person during Seller's most recently
completed fiscal year.
ARTICLE VI. CLOSING
---------- -------
Section 6.1. Closing. This transaction shall close (the "Closing")
----------- -------
and all deliveries to be made at the time of closing shall take place at the
later of (a) 11:00 a.m., on June 3, 1996 or (b) five days following the
satisfaction of each of the conditions to Closing set forth in Article VII (the
"Closing Date"), at the offices of Baker & Hostetler, 3200 National City Center,
1900 East 9th Street, Cleveland, Ohio 44114-3485, or at such other place or date
as may be agreed upon from time to time in writing by the parties. Unless
otherwise agreed to in writing by the parties, the Closing Date shall take place
no later than September 9, 1996.
Section 6.2. Deliveries by Seller. On or prior to the Closing Date,
----------- --------------------
Seller and/or Crown, as applicable, shall deliver to Buyer, duly and properly
executed, the following:
(a) Good and sufficient General Warranty Deeds, which shall be in form
and substance reasonably satisfactory to Buyer, conveying good and marketable
fee simple title to the Real Property to Buyer, free and clear of all liens and
encumbrances whatsoever except the Permitted Encumbrances;
(b) A good and sufficient General Conveyance, Assignment and Bill of
Sale, which shall be in form reasonably acceptable to Buyer and Seller,
conveying, selling, transferring and assigning to Buyer title to all of the
Property free and clear of all liens and encumbrances whatsoever except the
Permitted Liens;
(c) An Assignment and Assumption of the Assumed Contracts and Personal
Property Leases, which shall be in form reasonably acceptable to Buyer and
Seller (the "Assignment and Assumption of Assumed Contracts and Personal
Property Leases");
(d) An Assignment and Assumption of the Real Property Leases, which
shall be in form reasonably acceptable to Buyer and Seller (the "Assignment and
Assumption of Real Property Leases")
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<PAGE>
and a copy of the consent required with respect to the Material Real Property
Lease (which shall not contain any condition or modification adverse to Buyer);
(e) A certificate of Seller and Crown in accordance with Section
7.1(c);
(f) An Assignment of Trademarks and Servicemarks, which shall be in
form reasonably acceptable to Buyer and Seller;
(g) The Additional Agreements;
(h) An opinion of Baker & Hostetler, counsel for Seller and Crown,
addressed to Buyer and BWAY and dated the Closing Date, in form reasonably
acceptable to Buyer and Seller;
(i) Resolutions of the respective Boards of Directors of Seller and
Crown Canada authorizing the execution and delivery of this Agreement and the
Additional Agreements to the extent that it is a party thereto and the
performance of its respective obligations hereunder and thereunder, to the
extent applicable, certified by the respective Secretary of such company;
(j) The Articles of Incorporation of Seller and Crown, each certified
as of a recent date by the Secretary of State of Ohio and the Secretary of the
Commonwealth of Pennsylvania, respectively;
(k) A certificate of the Secretary of State of Ohio and the Secretary
of the Commonwealth of Pennsylvania, each dated as of a recent date as to the
good standing of Seller and Crown, respectively, in such State or Commonwealth;
(l) Such other separate instruments of sale, assignment or transfer
that Buyer may reasonably deem necessary or appropriate in order to perfect,
confirm or evidence title to all or any part of the Property;
(m) A certification pursuant to Treasury Regulation Section 1.1445-
2(b)(2) that Seller is not a foreign person;
(n) Certificates of title for the Vehicles, duly endorsed for
transfer to the Buyer;
(o) The Title Policies; and
(p) The Estoppel Letter.
Section 6.3. Deliveries by Buyer. On or prior to the Closing Date,
----------- -------------------
Buyer or BWAY shall deliver to or for the account of Seller the Purchase Price
in accordance with Section 3.1, and shall deliver to Seller, all duly and
properly executed, the following:
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<PAGE>
(a) An Assumption Agreement pursuant to which Buyer shall assume the
Assumed Liabilities but not the Retained Liabilities, in form reasonably
acceptable to Buyer and Seller;
(b) The Assignment and Assumption of Assumed Contracts and Personal
Property Leases;
(c) The Assignment and Assumption of United Coatings Contract;
(d) The Assignment and Assumption of Real Property Leases;
(e) A certificate of Buyer and BWAY in accordance with Section 7.2(c);
(f) The Additional Agreements;
(g) An opinion of Kirkland & Ellis, counsel to Buyer and BWAY,
addressed to Seller and Crown and dated the Closing Date, in form reasonably
acceptable to Seller and Buyer;
(h) Resolutions of the respective Boards of Directors of Buyer and
BWAY authorizing the execution and delivery of this Agreement and the Additional
Agreements by Buyer and BWAY and the performance of their respective obligations
hereunder and thereunder, certified by the respective Secretaries of Buyer and
BWAY;
(i) The Articles of Incorporation of Buyer and BWAY, each certified as
of a recent date by the Secretary of State of Delaware; and
(j) A certificate of the Secretary of State of Delaware, each dated as
of a recent date as to the good standing of Buyer and BWAY, respectively, in
such State.
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS
----------- -----------------------------------
Section 7.1. Conditions to Obligations of Buyer and BWAY. Each and
----------- -------------------------------------------
every obligation of Buyer and BWAY to be performed at the Closing shall be
subject to the satisfaction as of or before the Closing of the following
conditions (unless waived in writing by Buyer and BWAY):
(a) Representations and Warranties. Seller's and Crown's
------------------------------
representations and warranties set forth in Section 4.2 of this Agreement that
are not qualified as to materiality shall be true and correct in all material
respects at and as of the Closing Date as if such representations and warranties
were made as of the Closing Date, and Seller's and Crown's representations and
warranties set forth in Section 4.2 of this Agreement that are qualified as to
materiality shall be true and correct in all
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<PAGE>
respects, and as of the Closing Date as if such representations and warranties
were made at and as of the Closing Date.
(b) Performance of Agreement. All covenants, conditions and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Seller or Crown shall have been fully performed and complied with in all
material respects on or prior to the Closing Date, including the delivery of the
fully executed instruments and documents in accordance with Section 6.2;
(c) Certificate. Seller and Crown shall have delivered to Buyer a
-----------
certificate executed by Seller and Crown, dated the Closing Date, to the effect
that the conditions set forth in subsections (a) and (b) of this Section 7.1
have been satisfied;
(d) Hart-Scott-Rodino Compliance. All applicable waiting periods,
----------------------------
including extensions thereof, under the HSR Act shall have either expired or
been terminated;
(e) Title Policies. The Title Company shall be ready, willing and
--------------
able on the Closing Date to issue the Title Policies in the form required under
Section 5.9; and
(f) Employees. Seller shall have terminated all of its employees
---------
employed in the Business and made adequate arrangements to pay all amounts
payable to such employees as a result of such termination.
(g) No Injunction. No suit, action or other proceeding, or injunction
-------------
or final judgment relating thereto, shall be threatened or pending before any
court or governmental or regulatory official, body or authority in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with the transactions contemplated hereby, or that would have an
adverse effect on the Business, financial condition, operating results, assets,
operations or business prospects of Buyer, and no investigation that would
result in any such suit, action or proceeding shall be pending or threatened.
(h) Material Adverse Change. There shall have been no material
-----------------------
adverse change or development in the financial condition, operating results,
assets, operations, business prospects, employee relations or customer or
supplier relations of Seller or the Business since December 31, 1995.
(i) Consents and Approvals. Seller shall have received, at its sole
----------------------
cost and expense, without any condition or modification adverse to Buyer, (i)
all consents required under any law, statute, rule, regulation, order or decree,
except where the failure to obtain any such consent would not have a Material
Adverse Effect on Buyer or the Business and (ii) the consent for the transfer of
that portion of the United Coatings Contract
-37-
<PAGE>
described in SCHEDULE 1.1(l). If the consents required in connection with the
---------------
transfer to Buyer of the Permits listed on SCHEDULE 7.1(i) have not been
---------------
received by Buyer on or prior to the Closing Date, Buyer and BWAY shall have
determined in their reasonable discretion that Buyer will be able to receive
such consents within a reasonable period of time following the Closing Date,
without any condition or modification adverse to Buyer.
(j) Interviews. Buyer shall have been given the opportunity to
----------
interview employees and conduct discussions with sales managers for the time
periods specified in Section 5.2.
(k) Flood Plain. If Buyer has received from the surveyor preparing
-----------
the Surveys a written certification that any of the Real Property is located in
a flood plain and has delivered such certification to Seller within 30 days
following the date of this Agreement, Buyer may elect by written notice to
Seller prior to the end of such 30-day period not to proceed to Closing. This
condition shall expire at the end of such 30-day period.
Section 7.2. Conditions to Obligations of Seller and Crown. Each and
----------- ---------------------------------------------
every obligation of Seller and Crown to be performed at the Closing shall be
subject to the satisfaction as of or before such time of the following
conditions (unless waived in writing by Seller):
(a) Representations and Warranties. Buyer's and BWAY's
------------------------------
representations and warranties set forth in Section 4.1 of this Agreement that
are not qualified as to materiality shall be true and correct in all material
respects at and as of the Closing Date as if such representations and warranties
were made as of the Closing Date, and Buyer's and BWAY's representations and
warranties set forth in Section 4.1 of this Agreement that are qualified as to
materiality shall be true and correct in all respects at and as of the Closing
Date as if such representations and warranties were made as of the Closing Date;
(b) Performance of Agreement. All covenants, conditions and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Buyer or BWAY shall have been fully performed and complied with in all material
respects on or prior to the Closing Date, including the delivery of the funds
and the fully executed instruments and documents in accordance with Section 6.3;
(c) Certificate. Buyer and BWAY shall have delivered to Seller at the
-----------
Closing a certificate, dated the Closing Date, to the effect that the conditions
set forth in subsections (a) and (b) of this Section 7.2 have been satisfied;
and
(d) Hart-Scott-Rodino Compliance. All applicable waiting periods,
----------------------------
including extensions thereof, under the HSR Act shall have either expired or
been terminated.
-38-
<PAGE>
(e) Labor Matters. Seller and Crown shall have determined in their
-------------
sole discretion that the Union will formally approve the entire arrangement
described in Section 5.17.
ARTICLE VIII. INDEMNIFICATION
------------ ---------------
Section 8.1. Survival of Representations, Warranties and Agreements.
----------- ------------------------------------------------------
Subject to the limitations set forth in this Article VIII, the representations
and warranties of each party hereto shall survive the execution, delivery and
performance of this Agreement for a period of one year, other than the those set
forth in Section 4.2(m),(p), (q), and the second sentence of Section 4.2(h),
which shall survive without limit as to time, and those set forth in Section
4.2(g), which shall survive until the expiration of the applicable statute of
limitations with respect thereto. All covenants and agreements in this
Agreement of each party hereto shall survive until complied with by such party
without limit as to time.
Section 8.2. Indemnification.
----------- ---------------
(a) Subject to the limitations set forth in this Article VIII, Crown
and/or Seller shall pay on behalf of, indemnify and hold harmless BWAY and
Buyer, their respective affiliates and their respective shareholders, officers,
directors, agents and employees (on an as incurred basis) from and against any
and all losses, liabilities, damages, demands, claims, suits, actions, judgments
or causes of action, assessments, costs and expenses including, without
limitation, interest, penalties, reasonable attorneys' fees, any and all
reasonable expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation excluding, however,
recoveries in respect of lost profits or consequential damages (collectively,
"Damages"), asserted against, resulting to, imposed upon, or incurred or
suffered by Buyer, BWAY or any of their respective affiliates, directly or
indirectly, as a result of or arising from the following (individually an
"Indemnifiable Claim" and collectively "Indemnifiable Claims" when used in the
context of Buyer or BWAY as the Indemnified Party (as defined below)):
(i) Any inaccuracy in or breach of any of the representations or
warranties made by Seller or Crown in this Agreement (in the case of
any such representation or warranty, without taking into account any
qualification as to the materiality contained in such representation
or warranty for purposes of determining the inaccuracy or breach
thereof and the amount of Damages);
-39-
<PAGE>
(ii) Any breach or non performance of any covenant, agreement or
obligation to be performed by Seller or Crown under this Agreement;
(iii) Any liability imposed upon Buyer or BWAY or any of its
affiliates as a transferee of the Business or the Property, or
otherwise relating to the conduct of the Business on or prior to the
Closing Date, except to the extent such liability is an Assumed
Liability; or
(iv) Any liability or obligation imposed on Buyer or BWAY or any
of its affiliates as a transferee of the Business or any portion of
the Property with respect to the Retained Liabilities.
(b) Subject to the limitations set forth in this Article VIII, Buyer
and/or BWAY shall pay on behalf of, indemnify and hold harmless Seller, Crown
and their respective affiliates (on an as incurred basis) from and against any
and all Damages asserted against, resulting to, imposed upon, or incurred or
suffered by Seller, Crown or any of their respective affiliates, directly or
indirectly, as a result of or arising from the following (individually an
"Indemnifiable Claim" and collectively "Indemnifiable Claims" when used in the
context of Seller or Crown as the Indemnified Party):
(i) Any inaccuracy in or breach of any of the representations or
warranties made by Buyer or BWAY in this Agreement (in the case of any
such representation or warranty, without taking into account any
qualification as to the materiality contained in such representation
or warranty for purposes of determining the inaccuracy or breach
thereof and the amount of Damages);
(ii) Any breach of nonperformance of any covenant, agreement or
obligation to be performed by Buyer or BWAY under this Agreement; or
(iii) Any liability imposed upon Seller or Crown as a result of
Buyer's conduct of the Business after the Closing Date; or
(iv) Any liability or obligation of Buyer, BWAY or their
respective affiliates with respect to the Assumed Liabilities.
(c) For purposes of this Article VIII, all Damages shall be (i)
computed net of any insurance proceeds actually received from a third party by
the Indemnified Party (net of the net present value of any increased premiums
paid by the Indemnified Party as a result of having made an insurance claim);
(ii) computed net of any tax benefit realized by the Indemnified
-40-
<PAGE>
Party as a result thereof, and (iii) increased by the amount of any taxable
income to be realized by the Indemnified Party as a result of the indemnity
payment; provided, however, that in all cases, the timing of the availability,
realization or receipt of any such insurance benefits, tax benefit or tax cost
shall be taken into account in determining the amount of reduction of Damages.
Section 8.3. Limitations on Indemnification by Seller and Crown.
----------- --------------------------------------------------
Buyer's and BWAY's rights to indemnification hereunder are subject to the
following limitations:
(a) Neither Buyer nor BWAY shall be entitled to indemnification under
Section 8.2 (a)(i) with respect to any of Buyer's or BWAY's Indemnifiable Claims
unless the aggregate amount of Buyer's and BWAY's Damages with respect to
Buyer's and BWAY's Indemnifiable Claims under Section 8.2(a)(i) exceeds
$500,000, in which event the indemnity provided for in Section 8.2(a)(i) hereof
shall be effective with respect to the first dollar of such Damages and not just
the amount that exceeds the limitation set forth above in this subsection (a),
except that Buyer and BWAY collectively may only make five (5) Indemnifiable
Claims (or groups of related Indemnifiable Claims arising from the same
inaccuracy in or breach of a representation or warranty) with respect to the
first $500,000 of Damages for which it seeks indemnification pursuant to Section
8.2(a)(i);
(b) The obligation of indemnity provided in Section 8.2(a)(i) shall
not be applicable with respect to any claim for indemnity made by Buyer or BWAY
with respect to which written notice is delivered to Seller or Crown after the
expiration of the applicable survival period set forth in Section 8.1.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the maximum liability of Seller and Crown for Buyer's and BWAY's
Indemnifiable Claims under Section 8.2(a)(i) shall be $15,000,000.
Section 8.4. Limitations on Indemnification by Buyer and BWAY.
----------- ------------------------------------------------
Seller's and Crown's rights to indemnification hereunder are subject to the
following limitations:
(a) Neither Seller nor Crown shall be entitled to indemnification
under Section 8.2 (b)(i) with respect to any of Seller's or Crown's
Indemnifiable Claims unless the aggregate amount of Seller's and Crown's Damages
with respect to Seller's and Crown's Indemnifiable Claims under Section
8.2(b)(i) exceeds $500,000, in which event the indemnity provided for in Section
8.2(b)(i) hereof shall be effective with respect to the first dollar of such
Damages and not just the amount that exceeds the limitation set forth above in
this subsection (a), except that Seller and Crown collectively may only make
five (5) Indemnifiable Claims (or groups of related Indemnifiable Claims arising
from the same inaccuracy in or breach of a representation
-41-
<PAGE>
or warranty) with respect to the first $500,000 of Damages for which it seeks
indemnification pursuant to Section 8.2(b)(i);
(b) The obligation of indemnity provided in Section 8.2(b)(i) shall
not be applicable with respect to any claim for indemnity made by Seller or
Crown with respect to which written notice is delivered to Buyer or BWAY after
the expiration of the applicable survival period set forth in Section 8.1.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the maximum liability of Buyer and BWAY for Seller's and Crown's
Indemnifiable Claims under Section 8.2(b)(i) shall be $15,000,000.
Section 8.5. Exclusive Remedy of Buyer. On and after the Closing
----------- -------------------------
Date, the remedies provided for in Section 8.2 shall be the exclusive remedy of
Buyer and BWAY for any breach by Seller or Crown of this Agreement, other than
any such breach for which criminal charges are brought against Buyer, BWAY or
any of their respective affiliates, officers and directors. Notwithstanding
anything to the contrary herein, fraud claims brought by Buyer, BWAY or their
respective affiliates are not subject to, and shall not be limited by, the terms
of this Agreement.
Section 8.6. Procedure for Indemnification with Respect to Third-
----------- ---------------------------------------------------
Party Claims.
- - ------------
(a) If the party seeking indemnification (the "Indemnified Party")
determines to seek indemnification under this Article with respect to
Indemnifiable Claims resulting from the assertion of liability by third parties,
it will give notice to the party from whom indemnification is sought (the
"Indemnifying Party") within 30 days of the Indemnified Party's becomes aware of
any such Indemnifiable Claim and the basis therefore; provided that the failure
to so notify the Indemnifying Party shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent such failure shall have
materially harmed the Indemnifying party. If any such liability is asserted
against the Indemnified Party, and the Indemnified Party notifies the
Indemnifying Party thereof, the Indemnifying Party will be entitled, if it so
elects at any time by written notice delivered to the Indemnified Party to
assume the defense thereof if it acknowledges in writing that is fully
responsible for all Damages relating to such Indemnifiable Claim, without
reservation of rights, and pays all Damages incurred as of such date (including
the attorneys' fees and expenses through such date), and provided that until the
Indemnifying Party makes such acknowledgement, it shall be entitled to fully
participate in the defense of such Indemnifiable Claim by the Indemnified Party.
Notwithstanding the foregoing, the Indemnified Party shall also have the right
to employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party. With respect to any
assertion
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<PAGE>
of liability by a third party that results in an Indemnifiable Claim, the
parties hereto shall make available to each other all relevant information in
their possession material to any such assertion, other than any such information
that any party determines in good faith to be confidential. The Indemnifying
Party shall not be entitled to assume control of such defense and shall pay the
fees and expenses of counsel retained by the Indemnified Party if, (A) the claim
for indemnification relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation; (B) there is a
reasonable probability that an Indemnifiable Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, including by having a detrimental impact on the Indemnified
Party's reputation or future business prospects, (C) the claim seeks an
injunction or equitable relief against the Indemnified Party or (D) upon
petition by the Indemnified Party, the appropriate court rules that the
Indemnifying Party failed or is failing to vigorously prosecute or defend such
claim.
(b) In the event that the Indemnifying Party, within 20 days after
receipt of notice of an Indemnifiable Claim, fails to assume the defense of the
Indemnified Party against such Indemnifiable Claim, the Indemnified Party shall
have the right to undertake the defense, compromise or settlement of such action
on behalf of and for the account and risk of the Indemnifying Party.
(c) Notwithstanding anything in this Section to the contrary, the
Indemnifying Party shall use reasonable efforts to include in any settlement or
compromise of any Indemnifiable Claim or consent to entry of any judgment in
respect thereof a release of the Indemnified Party from all liability in respect
of such Indemnifiable Claim. If the Indemnifying Party can settle such
Indemnifiable Claim with a complete release of the Indemnified Party and all
affiliates of the Indemnified Party for monetary damages only (all of which are
to be paid by the Indemnifying Party), but the Indemnified Party refuses such
settlement, the Indemnifying Party shall not be liable for Damages in excess of
the monetary damages of such proposed settlement.
Section 8.7. Procedure For Indemnification with Respect to Non-Third-
----------- -------------------------------------------------------
Party Claims. In the event that the Indemnified Party asserts the existence of
- - ------------
an Indemnifiable Claim (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Indemnifying
Party specifying the nature and amount of the claim asserted. If the
Indemnifying Party, within 30 days after receiving notice from the Indemnified
Party or such greater time (not to exceed 90 days) as may be necessary for the
Indemnifying Party to investigate such Indemnifiable Claim, shall not give
written notice to the Indemnified Party announcing its intent to contest such
assertion of the Indemnified Party, such assertion
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<PAGE>
shall be deemed accepted and the Indemnifying Party shall pay the amount of the
claim within five (5) business days thereafter. During the time period set
forth in the preceding sentence, the Indemnified Party shall cooperate fully
with the Indemnifying Party in respect of such Indemnifiable Claim. In the
event, however, that the Indemnifying Party contests the assertion of a claim by
giving such written notice to the Indemnified Party within such period, the
parties intend to use their best efforts to resolve their dispute with respect
to such claim.
ARTICLE IX. TERMINATION
---------- -----------
Section 9.1. Termination by Either Party. In addition to the right
----------- ---------------------------
of termination described in Section 7.1(f), this Agreement may be terminated and
cancelled at any time prior to the Closing by BWAY and Buyer or Crown and Seller
(the "Terminating Parties") upon written notice to the other party if: (i) any
of the representations or warranties of the other parties, as the case may be,
contained herein or in any Schedule attached hereto is or becomes inaccurate or
untrue in any material respect and is not cured in all respects (including, but
not limited to, by the payment of money) by such other party prior to the
earlier of the Closing Date or 15 days following receipt of written notice from
the Terminating Parties of any such inaccuracy; (ii) any obligation, term or
condition to be performed, kept or observed by such other party, as the case may
be, hereunder has not been performed, kept or observed in any material respect
at or prior to the time specified in this Agreement and is not cured in all
respects (including, but not limited to, by the payment of money) within five
(5) days of receipt of written notice from the Terminating Party of any such
nonperformance or (iii) the Closing has not occurred on or prior to September 9,
1996; provided that neither BWAY and Buyer nor Crown and Seller will be entitled
to terminate pursuant to this Section 9.1(iii) if such parties' willful breach
of this Agreement has prevented the consummation of the transactions
contemplated hereby.
Section 9.2. Effect of Termination. In the event of termination of
----------- ---------------------
this Agreement by either BWAY and Buyer or Crown and Seller as provided in
Section 9.1(i) or (ii) above, this Agreement will forthwith become void and
there will be no liability on the part of either Buyer or Seller, except for any
material breaches of this Agreement prior to the time of such termination for
which the party who is not in breach hereof shall be entitled to recover damages
(including legal and accounting fees and expenses incurred in connection with
the transactions contemplated hereby) and to pursue any other remedies available
at law or in equity.
ARTICLE X. MISCELLANEOUS PROVISIONS
--------- ------------------------
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<PAGE>
Section 10.1. Definitions. The following terms, when capitalized
------------ -----------
(except with respect to "knowledge"), shall have the meanings assigned to them
herein:
The term "Accounts Payable" is defined in Section 2.1(b).
----------------
The term "Accounts Receivable" is defined in Section 1.1(i).
-------------------
The term "Acquisition Proposal" is defined in Section 5.3(f).
--------------------
The term "Additional Agreements" is defined in Section 5.7.
---------------------
The term "Arbitrator" is defined in Section 3.2(b).
----------
The term "Assignment and Assumption of Real Property Leases" is
-------------------------------------------------
defined in Section 6.2(d).
The term "Assignment and Assumption of Contracts and Personal Property
------------------------------------------------------------
Leases" is defined in Section 6.2(c).
- - ------
The term "Assumed Contracts" shall include the Contracts, that portion
-----------------
of the the United Coatings Contract described on SCHEDULE 1.1(l) and the
---------------
Designated Contracts, but excludes Discovered Contracts that are not Designated
Contracts.
The term "Assumed Liabilities" is defined in Section 2.1.
-------------------
The term "Audited Financial Statements" is defined in Section 5.12.
----------------------------
The term "Business" is defined in the Preliminary Statement.
--------
The term "Buyer" means Brockway Standard, Inc., a Delaware
-----
corporation.
The terms "Buyer's knowledge", "knowledge of Buyer", "BWAY's
----------------- ------------------ ------
knowledge", "knowledge of BWAY", and any similar terms means the knowledge
- - --------- -----------------
(after reasonable inquiry of the appropriate employees and counsel of Seller and
Crown) of any employee of Buyer or BWAY giving substantive attention to the
transactions contemplated by this Agreement, which shall be deemed to include
any such employee with whom Seller, Crown or any of their respective
representatives has corresponded in connection with such transactions.
The term "BWAY" means BWAY Corporation, a Delaware corporation.
----
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<PAGE>
The term "CERCLA" is defined in Section 4.2(k)(v).
------
The term "Closing Date" is defined in Section 6.1.
------------
The term "Closing Date Working Capital" is defined in Section 3.2(a).
----------------------------
The term "Closing Date Statement" is defined in Section 3.2(a).
----------------------
The term "Closing" is defined in Section 6.1.
-------
The term "COBRA Period" is defined in Section 5.16.
------------
The term "Collective Bargaining Agreement" shall mean the collective
-------------------------------
bargaining agreement with the Union described on SCHEDULE 4.2(o).
---------------
The term "Contracts" is defined in Section 1.1(h).
---------
The term "Covington Facility" is defined in the Preliminary Statement.
------------------
The term "Crown" means Crown Cork & Seal Company, Inc., a Pennsylvania
-----
corporation.
The term "Damages" is defined in Section 8.2(a).
-------
The term "December 31 Working Capital" is defined in Section 3.2(b).
---------------------------
The term "Designated Contracts" is defined in Section 1.1.
--------------------
The term "Discovered Contracts" is defined in Section 1.1.
--------------------
The term "DOJ" is defined in Section 5.8.
---
The term "Employee Benefit Plans" is defined in Section 4.2(n).
----------------------
The term "Environmental and Safety Requirements" shall mean all
-------------------------------------
federal, state, and local statutes, regulations, ordinances and similar
provisions having the force or effect of law; all judicial and administrative
orders and determinations; all contractual obligations, and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation those relating to
the presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
hazardous substances, hazardous wastes, chemicals, substances,
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<PAGE>
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products, petroleum byproducts, asbestos, polychlorinated biphenyls, noise or
radiation.
The term "ERISA" is defined in Section 4.2(n).
-----
The term "Estoppel Letter" is defined in Section 5.9(c).
---------------
The term "Excluded Assets" is defined in Section 1.2.
---------------
The term "FTC" is defined in Section 5.8.
---
The term "Hourly Pension Plan" is defined in Section 5.17.
-------------------
The term "Improvements" is defined in Section 4.2(r)(vii).
------------
The terms "Indemnifiable Claim" or "Indemnifiable Claims" are defined
-------------------
in Section 8.2(a).
The term "Indemnified Party" is defined in Section 8.6(a).
-----------------
The term "Indemnifying Party" is defined in Section 8.6(a).
------------------
The term "Intellectual Property" is defined in Section 4.2(h).
---------------------
The term "Inventory" is defined in Section 1.1(d).
---------
The term "Material Adverse Effect" means any effect that is or could
-----------------------
reasonably be expected to be materially adverse to the value of the Property
(taken as a whole) to Buyer or BWAY or the financial position or results of
operations of Seller, Buyer, BWAY or the Business.
The term "Material Real Property Lease" is defined in Section 5.6.
----------------------------
The term "Non-Disturbance Agreements" is defined in Section 5.9(c).
--------------------------
The term "Notice of Disagreement" is defined in Section 3.2(a).
----------------------
The term "Permits" is defined in Section 1.1(e).
-------
The term "Permitted Liens" is defined in Section 4.2(p).
---------------
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<PAGE>
The term "Permitted Encumbrances" is defined in Section 5.9(a).
----------------------
The term "Personal Property" is defined in Section 1.1(c).
-----------------
The term "Personal Property Leases" is defined in Section 1.1(g).
------------------------
The term "PPG Contract" means the agreement between Davies Can Company
------------
and PPG Industries, Inc., dated February 24, 1995, as amended as of January 29,
1996.
The term "Property" is defined in Section 1.1.
--------
The term "Purchase Price" is defined in Section 3.1(b).
--------------
The term "Real Property Laws" is defined in Section 4.2(r)(viii).
------------------
The term "Real Property Leases" is defined in Section 1.1(b).
--------------------
The term "Retained Liabilities" is defined in Section 2.2.
--------------------
The term "Seller" means Van Dorn Company, an Ohio corporation.
------
The term "Seller's Accounting Practices" is defined in Section 3.2.
-----------------------------
The terms "Seller's knowledge", "knowledge of Seller", "Crown's
------------------ ------------------- -------
knowledge", "knowledge of Crown" and any similar terms means the knowledge of
- - --------- ------------------
any of the following persons (after reasonable inquiry of the appropriate
employees and counsel of Seller or Crown): (i) the plant manager at each of the
Solon Facility, the York Facility, the Covington Facility, and (ii) the Crown
sales manager for Davies, and (iii) any employee of Crown giving substantive
attention to the transactions contemplated by this Agreement, which shall be
deemed to include (without limitation) any such employee with whom Buyer or any
of its representatives has communicated in connection with such transactions.
The term "Solon Facility" is defined in Section 1.1(a).
--------------
The term "Surveys" is defined in Section 5.9(b).
-------
The term "SWDA" is defined in Section 4.2(k)(v).
----
The term "Tax" or "Taxes" shall mean any federal, state, local or
--- -----
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium,
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<PAGE>
property, windfall, profits, environmental, customs, capital stock, franchise,
employees' income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative or add-on minimum or other similar tax,
governmental fee, governmental assessment or governmental charge of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
The term "Terminating Party" is defined in Section 9.1.
-----------------
The term "Title Company" is defined in Section 5.9(a).
-------------
The term "Title Policies" is defined in Section 5.9(a).
--------------
The term "Transferred Employee" means any employee of the Business who
--------------------
is offered and accepts employment by Buyer after the Closing Date.
The term "Unaudited Financial Statements" is defined in Section
------------------------------
4.2(e).
The term "Union" means the International Association of Machinists and
-----
Aerospace Workers, Local 233, District No. 54.
The term "United Coatings Contract" means the agreement between Crown
------------------------
and United Coatings, Inc., dated January 19, 1996.
The term "Vehicles" is defined in Section 1.1(j).
--------
The term "Walk Through Date" is defined in Section 1.1.
-----------------
The term "WARN" is defined in Section 4.2(o).
----
The term "Working Capital" is defined in Section 3.2(d).
---------------
The term "York Facility" is defined in Section 1.1.
-------------
Section 10.2. Cooperation. Buyer and Seller shall cooperate with
------------ -----------
each other and shall cause their officers, employees, agents and representatives
to cooperate with each other after Closing to ensure the orderly transition of
the Property and Assumed Liabilities to Buyer and to minimize the disruption to
the respective businesses of the parties hereto resulting from the transactions
contemplated hereby.
Section 10.3. Certain Taxes. Each of Buyer and Seller shall pay when
------------ -------------
due fifty percent (50%) of all transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and Buyer and BWAY will, at
their own expense, file all necessary tax returns and other documentation with
respect to all such transfer, documentary,
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<PAGE>
sales, use, stamp, registration and other taxes and fees. If required by law,
Seller and Crown will (and will cause their affiliates to) join in the execution
of any such tax returns or other documents.
Section 10.4. Cooperation on Tax Matters. Buyer and Seller shall
------------ --------------------------
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with any audit, litigation or other proceeding with respect to
Taxes and shall provide access to and copies of documents and records (other
than Seller's Tax returns) reasonably requested by the other party in connection
with preparing any Tax return. Such cooperation shall include the retention and
(upon the other party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Buyer and
Seller agree (A) to retain all books and records with respect to tax matters
pertinent to the Business relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer or Seller, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Buyer or Seller, as the case
may be, shall allow the other party to take possession of such books and
records.
Section 10.5. Notice. All notices and other communications required
------------ ------
or permitted under this Agreement shall be deemed to have been duly given and
made if in writing and, (i) if served by personal delivery, when delivered, (ii)
if sent by a nationally recognized overnight delivery service, on the next
business day, (iii) if sent by facsimile, as of the next business day; provided,
that a copy thereof is also sent by another permitted means promptly thereafter,
or (iv) if sent by United States certified or registered mail, postage prepaid,
return receipt requested, three (3) business days after being sent, in each case
bearing the address or facsimile number shown in this Agreement for, or such
other address as may be designated in writing hereafter by, such party:
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<PAGE>
If to Seller or Crown: Van Dorn Company
c/o Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
Attn: Craig R. L. Calle, Senior
Vice President-Finance and
Treasurer
Facsimile No. (215) 676-6011
with a copy to: Baker & Hostetler
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
Attn: Robert G. Markey, Esq.
Facsimile No. (216) 696-0740
If to Buyer or BWAY: Brockway Standard, Inc.
8607 Roberts Drive, Suite 250
Atlanta, Georgia 30350
Attn: David P. Hayford
Facsimile No. (770) 587-0186
with a copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: William S. Kirsch, P.C.
Facsimile No. (312) 861-2200
Section 10.6. Entire Agreement. This Agreement, the Additional
------------ ----------------
Agreements, the Exhibits and Schedules hereto and thereto and the documents
referred to herein and therein embody the entire agreement and understanding of
the parties hereto and thereto with respect to the subject matter hereof and
thereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to such subject matter.
Section 10.7. Binding Effect; Assignment. This Agreement and the
------------ --------------------------
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Seller, its successors and permitted assigns, and Buyer, its
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be transferred or assigned (by
operation of law or otherwise) by any of the parties hereto without the prior
written consent of the other party; provided, however, that BWAY or Buyer may
assign any or all of their rights hereunder to a wholly-owned subsidiary of it
without Seller's or Crown's prior written consent, provided further than no such
assignment shall relieve Buyer or BWAY of any of their respective obligations or
liabilities hereunder. Any transfer or assignment of any of the rights,
interests or obligations hereunder in violation of the terms hereof shall be
void and of no force or effect.
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<PAGE>
Section 10.8. Captions. The Article and Section headings of this
------------ --------
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.
Section 10.9. Expenses of Transaction. Except as otherwise provided,
------------ -----------------------
each party shall pay all costs and expenses incurred by it in connection with
this Agreement and the transactions contemplated hereby. Buyer shall pay the
Accounting Fees, all fees and costs associated with Surveys and environmental
reports and all amounts payable to Bear Stearns & Co. Inc., and Seller shall pay
all fees and costs incurred in connection with the Title Policies, except as
provided in Section 5.9.
Section 10.10. Waiver; Consent. This Agreement and the Schedules and
------------- ---------------
Exhibits hereto may not be changed, amended, terminated, augmented, rescinded or
discharged (other than by performance), in whole or in part, except by a writing
executed by the parties hereto, and no waiver of any of the provisions or
conditions of this Agreement or any of the rights of a party hereto shall be
effective or binding unless such waiver shall be in writing and signed by the
party claimed to have given or consented thereto. Except to the extent that a
party hereto may have otherwise agreed in writing, no waiver by that party of
any condition of this Agreement or breach by the other party of any of its
obligations or representations hereunder or thereunder shall be deemed to be a
waiver of any other condition or subsequent or prior breach of the same or any
other obligation or representation by the other party, nor shall any forbearance
by the first party to seek a remedy for any noncompliance or breach by the other
party be deemed to be a waiver by the first party of its rights and remedies
with respect to such noncompliance or breach.
Section 10.11. No Third-Party Beneficiaries. Subject to Section 10.4
------------- ----------------------------
hereof, nothing herein, express or implied, is intended or shall be construed to
confer upon or give to any person, firm, corporation or legal entity, other than
the parties hereto, any rights, remedies or other benefits under or by reason of
this Agreement.
Section 10.12. Counterparts. This Agreement may be executed
------------- ------------
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 10.13. Gender. Whenever the context requires, words used in
------------- ------
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be deemed to include and designate the
masculine, feminine or neuter gender.
Section 10.14. Severability. With respect to any provision of this
------------- ------------
Agreement finally determined by a court of
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<PAGE>
competent jurisdiction to be unenforceable, Seller and Buyer hereby agree that
such court shall have jurisdiction to reform such provision so that it is
enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court's determination. In the event that any provision of this
Agreement cannot be reformed, such provision shall be deemed to be severed from
this Agreement, but every other provision of this Agreement shall remain in full
force and effect.
Section 10.15. Governing Law. This Agreement shall in all respects
------------- -------------
be construed in accordance with and governed by the laws of the State of
Delaware. The parties agree that any action arising out of this Agreement shall
be venued in the federal, state or local courts located in, or otherwise, having
jurisdiction over Delaware, and the parties hereby consent to personal
jurisdiction in such courts and waive any objection based on the defense of an
inconvenienced forum and any objection to jurisdiction or venue of any action
instituted hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
BUYER:
BROCKWAY STANDARD, INC., a Delaware corporation
By:________________________________
Warren J. Hayford, Chairman
BWAY:
BWAY CORPORATION, a Delaware corporation
By:________________________________
Warren J. Hayford, Chairman
SELLER:
VAN DORN COMPANY, an Ohio corporation
By:________________________________
Name:___________________________
Title:__________________________
CROWN:
CROWN CORK & SEAL COMPANY, INC., a
Pennsylvania corporation
By:________________________________
Name:___________________________
Title:__________________________
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<PAGE>
The Registrant hereby undertakes to furnish supplementally a copy of any
omitted schedules to the Asset Purchase Agreement to the Commission upon request
(subject to any confidentiality request the Registrant may make at such time).
55
<PAGE>
EXHIBIT 22.1
BROCKWAY STANDARD HOLDINGS CORPORATION
1996 ANNUAL MEETING OF STOCKHOLDERS
CERTIFICATE AND REPORT OF INSPECTOR OF ELECTION
-----------------------------------------------
The undersigned, the duly appointed Inspector of Election at the Annual
Meeting of Stockholders (the "Annual Meeting") of Brockway Standard Holdings
Corporation, a Delaware corporation (the "Company"), held on February 23, 1996,
pursuant to Section 231 of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY that the following is an accurate report of the votes of the
stockholders of the Company at the Annual Meeting:
(1) The number of shares of Common Stock of the Company issued and
outstanding and entitled to vote on matters submitted at the Annual Meeting to
the holders of Common Stock was 6,318,310.
(2) There were present at the Annual Meeting, in person or by proxy,
holders of 4,027,970 shares of Common Stock, which is 63.8% of the total number
of shares of Common Stock outstanding and entitled to vote at the Annual Meeting
and which constituted a quorum for purposes of voting on each of the matters
submitted to the stockholders for their vote.
(3) I tabulated the votes with respect to the election of the director, and
John W. Puth received 4,026,220 votes.
(4) John W. Puth received a plurality of the votes cast by the holders of
the Common Stock and I hereby declare and certify to the Secretary of the
Company that John W. Puth has been duly elected as a director of the Company.
<PAGE>
(5) I tabulated the votes with respect to the resolution regarding adoption
of the Restated Certificate of Incorporation of Brockway Standard Holdings
Corporation and such proposal received the number of votes set forth below:
Number of Votes
---------------
For 3,987,220
Against 4,750
Abstain 36,000
Since a majority of the outstanding shares of the Common Stock were voted for
adoption, I hereby declare and certify to the Secretary of the Company that such
resolution has been adopted by the stockholders of the Company.
(6) I tabulated the votes with respect to the resolution regarding
ratification of the appointment of Deloitte & Touche LLP as independent public
accountants for the fiscal year ending September 29, 1996 and such proposal
received the number of votes set forth below:
Number of Votes
---------------
For 4,026,125
Against 845
Abstain 1,000
Since a majority of the votes cast by the holders of the Common Stock present
and voting at the meeting were votes for approval, I hereby declare and certify
to the Secretary of the Company that such resolution has been approved by the
stockholders of the Company.
* * * * *
- 2 -
<PAGE>
IN WITNESS WHEREOF, I have executed this Certificate the 23d day of February,
1996.
By: /s/ Wendy Ryter Gimbel
------------------------------
Print: Wendy Ryter Gimbel
on behalf of Harris Trust and
Savings Bank
- 3 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Consolidated Balance Sheet at March 31, 1996 and the Consolidated Statement of
Income for the six months ended March 31, 1996 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> OCT-01-1995 SEP-29-1996
<PERIOD-START> JAN-01-1996 OCT-02-1995
<PERIOD-END> MAR-31-1996 MAR-31-1996
<CASH> 14,609 14,609
<SECURITIES> 0 0
<RECEIVABLES> 31,131 33,131
<ALLOWANCES> 716 716
<INVENTORY> 22,883 22,883
<CURRENT-ASSETS> 71,573 71,573
<PP&E> 71,428 71,428
<DEPRECIATION> 0 2,912
<TOTAL-ASSETS> 168,460 168,460
<CURRENT-LIABILITIES> 36,393 36,393
<BONDS> 0 0
<COMMON> 64 64
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 168,460 168,460
<SALES> 61,768 119,922
<TOTAL-REVENUES> 61,768 119,922
<CGS> 51,227 101,263
<TOTAL-COSTS> 51,227 101,263
<OTHER-EXPENSES> (192) (240)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,009 1,856
<INCOME-PRETAX> 4,710 8,451
<INCOME-TAX> 1,922 3,444
<INCOME-CONTINUING> 2,788 5,007
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,788 5,007
<EPS-PRIMARY> .46 .81
<EPS-DILUTED> .46 .81
</TABLE>
