Exhibit 2.2
REORGANIZATION AGREEMENT
This Reorganization Agreement (the "Agreement"), dated as of April 30,
1998, by and among Sealright Co., Inc., a Delaware corporation ("Sealright"),
JPS Packaging Company, a Delaware corporation ("Flexible"), Sealright
Manufacturing - West, Inc., a Missouri corporation ("West") and Sealright
Packaging Company, a Kansas corporation ("Packaging").
RECITALS
A. Sealright holds all the issued and outstanding capital stock of West and
Packaging.
X. Xxxx holds all the issued and outstanding capital stock of Flexible and
Venture Packaging, Inc., a North Carolina corporation ("Venture").
C. Sealright, Huhtamaki Oy, a corporation organized under the laws of
Finland ("Huhtamaki") and Seal Acquisition Corporation, a Delaware corporation
("Acquisition Sub"). are parties to that certain Agreement and Plan of Merger
dated as of March 2, 1998 (as may be amended from time to time, the "Merger
Agreement"), pursuant to which Acquisition Sub will merge with and into
Sealright with Sealright being the surviving corporation and wholly-owned
indirectly by Huhtamaki (the "Merger").
D. Sealright, Flexible, West and Packaging each desire to agree to and
effectuate the transactions and actions herein described to create within
Sealright and its subsidiaries an organizational structure whereby certain
flexible packaging and other assets and certain related liabilities owned or
incurred, respectively, directly or indirectly by Sealright will be assigned to
and assumed by Flexible as permitted by Section 8.1(e) of the Merger Agreement
(the "Reorganization").
E. The Reorganization is permitted under the Merger Agreement as a
"Permitted Restructuring" as defined in the Merger Agreement, and Huhtamaki and
Acquisition Sub have indicated their consent and acknowledgment thereof.
F. The Reorganization is intended to qualify for non-recognition treatment
under Section 351 of the Code (hereinafter defined).
G. The parties hereto have determined that it is necessary and desirable to
set forth the principal corporate transactions required to effect the
Reorganization and the other transactions contemplated hereby and to set forth
other agreements that will govern certain other matters relating to the
Reorganization.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound thereby, the
parties agree as follows:
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DEFINITIONS
1.1 General. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Acquisition Sub: as defined in the recitals to this Agreement.
Action: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration or other tribunal.
Affiliate: with respect to any specified Person, an "affiliate" as
defined in Rule 405 promulgated pursuant to the Securities Act (as hereinafter
defined); provided, however, that for purposes of this Agreement (i) Affiliates
of the Flexible Group shall not be deemed to include the Sealright Rigid Group,
and (ii) Affiliates of the Sealright Rigid Group shall not be deemed to include
the Flexible Group.
Agreement: as defined in the preamble to this Agreement.
Ancillary Agreements: all the agreements, instruments, understandings,
assignments and other arrangements (excluding the Merger Agreement) entered into
in connection with the transactions contemplated hereby, including, without
limitation, the Letter Agreement.
Closing: as defined in the Merger Agreement.
Closing Date: as defined in the Merger Agreement.
Code: the Internal Revenue Code of 1986, as amended, or any successor
statute or law.
Collective Bargaining Agreement: any collective bargaining or other
labor agreement to which any member of either Group is a party.
Contract: any written or oral contract, agreement, lease, indenture or
evidence of indebtedness.
Delayed Asset: as defined in Section 3.3 of this Agreement.
Delayed Liability: as defined in Section 3.3 of this Agreement.
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DeSoto Facility: Sealright's facility (including manufacturing,
warehouse and office space) located at 0000 Xxxxxxxxx Xxxxx, XxXxxx, Xxxxxx.
Effective Time: The date and time at which the Certificate of Merger
has been duly filed with the Secretary of State of the State of Delaware or such
other time as is agreed upon by the parties to the Merger Agreement and
specified in the Certificate of Merger, as such terms are defined in the Merger
Agreement.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation.
Exchange Act: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
Flexible: as defined in the preamble to this Agreement.
Flexible Assets: The stock of Flexible and those assets of Sealright
and its subsidiaries used exclusively in the Flexible Business, and described on
Schedule 1.1 of the Merger Agreement.
Flexible Business: The business of manufacturing and selling flexible
packaging and labeling for the food, dairy and beverage market (excluding
Sealright's Australian operations), and machines for the application of sleeve
labels to plastic bottles, operated by Sealright, directly and through certain
of its subsidiaries.
Flexible Collective Bargaining Agreements: The following collective
bargaining agreements related to the Akron, Ohio facility and the San Leandro,
California facility:
A. Agreement between Flexible and International Chemical Workers Union
and its Local No. 1033 dated November 18, 1993 (Akron); and
B. Agreement between Sealright and Warehouse, Mail Order and Retail
Employees, Local Union 853, IBT dated February 1, 1998 (San Leandro).
Flexible Employee: any individual who on the Reorganization Date is an
officer or employee of Flexible or Venture.
Flexible Group: Flexible and Venture, after giving effect to the
Reorganization.
Flexible Liabilities: those liabilities directly and exclusively
related to the Flexible Assets and the Flexible Business described on Schedule
1.2 of the Merger Agreement.
Group: the Flexible Group or the Sealright Rigid Group, as the context
requires.
Huhtamaki: as defined in the recitals to this Agreement.
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Information: as defined in Section 6.2 of this Agreement.
IRS: the Internal Revenue Service.
Letter Agreement: the letter agreement dated March 2, 1998 by and
between Huhtamaki and Sealright regarding unallocated expenses, unallocated
personnel and transfer pricing.
Merger Agreement: as defined in the recitals to this Agreement.
Other Flexible Assets: As held by Sealright or any of its Subsidiaries
(excluding Flexible or Venture), the following:
A. all interests in, and rights and benefits accruing under customer,
supplier, employee and other contracts and agreements relating directly and
exclusively to the Flexible Business, as listed on Appendix C to Schedule
1.1 of the Merger Agreement;
B. all personal property, including prints and drawings used directly
and exclusively in the Flexible Business;
C. all machinery and equipment used directly and exclusively in the
Flexible Business;
D. all accounts receivable relating directly and exclusively to the
Flexible Business outstanding;
E. all inventory (including finished goods and spare parts) relating
directly and exclusively to the Flexible Business;
F. all intellectual property relating directly and exclusively to the
Flexible Business, as listed on Appendix D to Schedule 1.1 of the Merger
Agreement;
G. all goodwill and other intangible assets relating directly and
exclusively to the Flexible Business;
H. all tax assets related directly and exclusively to the Flexible
Business, including but not limited to tax refunds or credits, to the
extent permitted under the United States Treasury Regulations and to the
extent not otherwise paid or allocated to the Flexible Business pursuant to
Section 2.3 of the Tax Procedures Agreement;
I. all idle manufacturing equipment previously used in the Flexible
Business and not currently used in the operations of Sealright's business
and previously identified for sale located at the DeSoto Facility, and any
after-tax proceeds received therefrom since December 31, 1997, with the
major items of such equipment being described on Appendix E to Schedule 1.1
of the Merger Agreement.
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J. all other assets, properties and rights relating directly and
exclusively to the Flexible Business, including but not limited to those
listed on Appendix F to Schedule 1.1 of the Merger Agreement.
Packaging: as defined in the preamble to this Agreement.
Packaging Flexible Contracts: The following contracts to which Packaging is a
party:
A. Transpeed Express & Distribution Co. Letter Agreement dated
February 16, 1997;
B. KBIB Pouch Purchase Order Contract with Xxxx Wesson, Inc. dated
September 20, 1994;
C. Sales Representative Agreement with Gamma Ingenieria S.A. dated
July 1, 1997;
D. Sales Representative Agreement with Policentro San Xxxx S.A. dated
July 1, 1997; and
E. Distributorship Agreement with General Labels & Labeling (M)
SDN.BHD dated April 1, 1997.
Person: an individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust or other entity, an unincorporated
organization or a government or any department or agency thereof.
Plan: any plan, policy, arrangement, contract or agreement providing
benefits (including salary, bonuses, deferred compensation, incentive
compensation, savings, stock purchases, pensions, profit sharing, welfare
benefits or retirement or other retiree benefits, including retiree medical
benefits) for any group of employees or former employees or individual employee
or former employee, or the beneficiary or beneficiaries of any such employee or
former employee, whether formal or informal or written or unwritten and whether
or not legally binding, and including any means, whether or not legally
required, pursuant to which any benefit is provided by an employer to any
employee or former employee or the beneficiary or beneficiaries of any such
employee or former employee.
Qualified Plan: a Plan which is an employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) and which constitutes or is
intended in good faith to constitute a qualified plan under Section 401(a) of
the Code.
Raleigh Office: the office facility located at 000 Xxxxxx Xxxxx,
Xxxxxxx, Xxxxx Xxxxxxxx and leased indirectly by West pursuant to the Raleigh
Office Lease.
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Raleigh Office Lease: the office lease dated July 1, 1997, between
Xxxxx Xxxxx Xxxxxxx, Jr. and Styrotech Machines, a division of Sealright
International, a division of West.
Reorganization: as defined in the recitals to this Agreement.
Reorganization Date: April 30, 1998 or such later date as may be
agreed in writing by the parties hereto, as of which the Reorganization shall be
effected.
Reorganization Time: the close of business on the Reorganization Date.
San Leandro Accounts: all accounts receivable or accounts payable
relating directly and exclusively to the operations conducted at the San Leandro
Facility outstanding as of the Reorganization Time.
San Leandro Assets: the San Leandro Facility, the San Leandro
Warehouse, the San Leandro Warehouse Lease, the San Leandro Property, the San
Leandro Inventory and the San Leandro Accounts.
San Leandro Facility: the manufacturing facility located at 0000
Xxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx, owned in fee simple by West.
San Leandro Inventory: all inventory (including finished goods, spare
parts and work in progress) related directly and exclusively to the operations
at the San Leandro Facility located at the San Leandro Facility, the San Leandro
Warehouse or elsewhere, as of the Reorganization Time.
San Leandro Property: all equipment, machinery and personal property
located at the San Leandro Facility and the San Leandro Warehouse, as listed on
Appendix A to Schedule 1.1 of the Merger Agreement.
San Leandro Warehouse: the warehouse facility located at 000 Xxxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx leased by West pursuant to the San Leandro
Warehouse Lease.
San Leandro Warehouse Lease: the warehouse lease dated March 10, 1987,
as amended, between Xxxxxxx Xxxxx and Xxxx X. Xxxxx and Indopak d/b/a Packaging
Industries, Inc. (now known as Sealright Manufacturing-West, Inc.).
Sealright: as defined in the preamble to this Agreement.
Sealright Flexible Contracts: The contracts to which Sealright is a
party relating directly and exclusively to the Flexible Business, including but
not limited to those listed on Appendix C to Schedule 1.1 of the Merger
Agreement, and also the following:
A. Asceptic Lidding Requirements Contract with Kraft Foods dated
April 8, 1997;
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B. Sole Source Contract with Xxxxxx Foods dated March, 1997;
C. Sole Source Contract with Purity Dairies dated October, 1997; and
D. Sole Source Contract with Southern Foods Group dated March, 1997.
Sealright-Held Flexible Intellectual Property: the intellectual
property described in Appendix D to Schedule 1.1 of the Merger Agreement as
being owned by Sealright.
Sealright Rigid Group: Sealright and all other direct and indirect
subsidiaries of Sealright (other than Flexible and Venture), after giving effect
to the Reorganization.
Sealright Rigid Group Collective Bargaining Agreements: Any Collective
Bargaining Agreement except for the Flexible Collective Bargaining Agreements.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
Styrotech Accounts: all accounts receivable or accounts payable
relating directly and exclusively to the Styrotech Operations conducted at the
DeSoto Facility.
Styrotech Assets: the Styrotech Operations, the Raleigh Office Lease,
the Styrotech Property, the Styrotech Accounts and the Styrotech Inventory.
Styrotech Inventory: all inventory (including finished goods, spare
parts and work in progress) related directly and exclusively to the Styrotech
Operations located at the DeSoto Facility, or elsewhere.
Styrotech Operations: the business conducted by Sealright and its
Subsidiaries of manufacturing and selling machines for the application of sleeve
labels to plastic bottles.
Styrotech Property: all equipment, machinery and personal property
located at the Raleigh Office or elsewhere, used directly and exclusively in the
Company's Flexible Business, as listed on Appendix B to Schedule 1.1 of the
Merger Agreement.
Subsidiary: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body of such corporation or other legal entity.
Venture: as defined in the recitals to this Agreement.
Venture Stock: all the outstanding capital stock of Venture.
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West: as defined in the preamble to this Agreement.
West Flexible Contracts: Those contracts or agreements to which West
is a party, related directly and exclusively to the Flexible Business, including
but not limited to those contracts listed on Appendix C to Schedule 1.1 of the
Merger Agreement, and including the following:
A. Warehouse Storage and Services Agreement dated December 23, 1991
with Chicagoland - Quad Cities Express, Inc.
West-Held Flexible Intellectual Property: the intellectual property
described in Appendix D to Schedule 1.1 of the Merger Agreement as being owned
by West.
1.2 References to Time. All references to times of the day in this
Agreement shall refer to Kansas City, Missouri time.
ARTICLE II
REINCORPORATION OF EAST AS A DELAWARE CORPORATION
Prior to the date hereof and as permitted by Section 8.1(e) of the
Merger Agreement, Sealright has caused the merger of Sealright Manufacturing-
East, Inc., an Ohio corporation, into a new shell Delaware corporation
("Newco"), with Newco being the surviving corporation and taking the name "JPS
Packaging Company" and being referred to herein as "Flexible".
ARTICLE III
CONTRIBUTION AND ASSUMPTION OF ASSETS AND LIABILITIES
3.1 Contribution of the Flexible Assets. Upon the terms and subject
to the conditions of this Agreement:
(a) Packaging shall assign, transfer, convey and dividend to
Sealright, effective immediately prior to the Reorganization Time, all of
Packaging's right, title and interest in, to and under the Packaging
Flexible Contracts;
(b) Sealright shall assign, transfer, convey and contribute to
West, effective immediately prior to the Reorganization Time, all of
Sealright's right, title and interest in, to and under the Sealright-Held
Flexible Intellectual Property;
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(c) Sealright shall assign, transfer, convey and contribute to
West, effective immediately prior to the Reorganization Time, all of
Sealright's right, title and interest in, to and under the Sealright
Flexible Contracts;
(d) Sealright shall assign, transfer, convey and contribute to
West, effective immediately prior to the Reorganization Time, all of
Sealright's right, title and interest in and to the Other Flexible Assets
owned by Sealright;
(e) Sealright shall assign, transfer, convey and contribute to
West, effective immediately prior to the Reorganization Time, all of
Sealright's right, title and interest in, to and under the Packaging
Flexible Contracts which it receives pursuant to clause (a) above;
(f) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under (i) the Sealright-Held
Flexible Intellectual Property which it receives pursuant to clause (b)
above and (ii) the West-Held Flexible Intellectual Property;
(g) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under (i) the Sealright
Flexible Contracts which it receives pursuant to clause (c) above and (ii)
the West Flexible Contracts;
(h) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under (i) the Other Flexible
Assets which it receives pursuant to clause (d) above and (ii) the Other
Flexible Assets owned by West;
(i) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under the San Leandro Assets;
(j) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under the Styrotech Assets;
(k) West shall assign, transfer, convey and contribute to
Flexible, effective immediately prior to the Reorganization Time, all of
West's right, title and interest in, to and under the Venture Stock; and
(l) West shall assign, transfer, convey and contribute to
Flexible, immediately prior to the Reorganization Time, all of West's
right, title and interest in each and every environmental permit, license
and identification number at any time issued to West by any federal, state
or local authority or agency, in respect of the Flexible Business to
Flexible.
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3.2 Assumption of the Flexible Liabilities. Upon the terms and
subject to the conditions of this Agreement, effective immediately prior to the
Reorganization Time, Flexible shall assume and agree to pay, perform and
discharge when due, the Flexible Liabilities, including the obligations to pay
stock option settlement amounts as set forth in Section 8.15 of the Merger
Agreement.
3.3 Delayed Assets and Liabilities.
(a) To the extent that any required consent or waiver with
respect to a Contract or other instrument included in the Flexible Assets
has not been obtained on or prior to the Reorganization Date, such Contract
or instrument (a "Delayed Asset") shall not be transferred hereunder, and
any related liability that constitutes a Flexible Liability (a "Delayed
Liability"), shall not be assumed hereunder by Flexible unless and until
such required consent or waiver has been obtained. Notwithstanding the
foregoing, if such a required consent or waiver is not obtained, the party
required to transfer such Delayed Asset will reasonably cooperate with the
party entitled to receive such Delayed Asset to attempt to provide such
party with the benefits under or of any such Delayed Asset as long as the
party entitled to receive such Delayed Asset shall assume, pay and perform
any corresponding Delayed Liabilities. Sealright, West, Packaging and
Flexible each agrees that, in any such event, they shall work in good faith
to cause such arrangement to reflect as nearly as possible the respective
benefits and obligations that would have been in effect had such consent or
waiver been obtained.
(b) At such time and on each occasion after the Reorganization
Date that a required consent or waiver shall be obtained with respect to a
Delayed Asset, such Delayed Asset shall forthwith be transferred and
assigned to the party entitled to receive it hereunder, and all related
Delayed Liabilities shall be simultaneously assumed by such party
hereunder, whereupon (i) such Delayed Asset shall constitute for all
purposes a Flexible Asset acquired hereunder and (ii) such Delayed
Liabilities shall constitute for all purposes a Flexible Liability assumed
hereunder.
3.4 Indemnification
(a) Flexible hereby indemnifies and holds the Sealright Rigid
Group harmless from and against any loss, liability, claim, action, cost
and expense (but specifically excluding incidental, indirect and
consequential damages and lost profits) that it may incur or suffer arising
out of any third party claim or demand (a "Loss") for payment or
satisfaction of any of the Flexible Liabilities.
(b) Sealright hereby indemnifies and holds the Flexible Group
harmless from and against any Loss for payment or satisfaction of any
liabilities of the Sealright Rigid Group (exclusive of any Flexible
Liabilities).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the parties to this Agreement represents and warrants to the
other parties as follows:
(a) Organization and Standing. Such party is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation.
(b) Authority; Execution; Enforceability. Such party has all
requisite power and authority to execute this Agreement and the Ancillary
Agreements to which it is or will be party (collectively, the Agreement and
such Ancillary Agreements are referred to herein as the "Reorganization
Documents") and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of the Reorganization
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Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of
such party and, to the extent required, by its stockholders. This Agreement
has been duly executed and delivered by such party and constitutes, and
each of the other Reorganization Documents will be duly executed and
delivered by such party on or prior to the Reorganization Date, and when so
executed and delivered will constitute, a legal, valid and binding
obligation of such party, enforceable against it in accordance with its
terms.
(c) No Conflict. The execution, delivery and performance by such
party of the Reorganization Documents will not contravene, violate, result
in a breach of or constitute a default under (x) any provision of
applicable law or of the organizational documents of such party (or its
Subsidiaries) or (y) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to such party (or its Subsidiaries) or any of
its properties or assets.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
All intercompany services provided prior to the Reorganization Date by
the Sealright Rigid Group to Flexible and/or Venture, and by the Flexible Group
to any member of the Sealright Rigid Group, respectively, shall terminate
(without cost) as of the Effective Time unless otherwise provided in any
Ancillary Agreement.
ARTICLE VI
ACCESS TO INFORMATION
6.1 Provision of Corporate Records. Prior to or as promptly as
practicable after the Reorganization Date, the Sealright Rigid Group shall
deliver to Flexible all corporate books and records of the Flexible Group in its
possession or control as well as copies or originals of all books, records and
data relating exclusively to the Flexible Business, the Flexible Assets or the
Flexible Liabilities, including, but not limited to, all books, records and data
relating to the purchase of materials, supplies and services, financial results,
sale of products, records of the Flexible Employees, commercial data, research
done by or for the Flexible Group or the Flexible Business, catalogues,
brochures, training and other manuals, sales literature, advertising and other
sales and promotional materials, maintenance records and drawings, all active
agreements, active litigation files and government filings. All such documents
located at the San Leandro Facility, the San Leandro Warehouse or the Raleigh
Office shall be deemed delivered to Flexible as of the Reorganization Date. To
the extent that originals of such books, records and data are provided to
Flexible, Flexible shall provide Sealright copies thereof as reasonably
requested for a valid and legitimate business interest, in writing, by
Sealright. From and after the Reorganization Date, all books, records and copies
so delivered shall be the property of Flexible. Notwithstanding the above,
Sealright shall not be required to make copies, other than pursuant to Section
6.2 of this
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Agreement, of any portion of any books, records or data to the extent such
portion relates exclusively to the assets, business or liabilities not related
or derivative to the Flexible Assets, the Flexible Business or the Flexible
Liabilities.
6.2 Access to Information. From and after the Reorganization Date,
the Sealright Rigid Group and the Flexible Group shall each afford to the other
and to the other's agents, employees, accountants, counsel and other designated
representatives, reasonable access and duplicating rights during normal business
hours to all records, books, contracts, instruments, computer data and other
data and information ("Information") within such party's possession relating to
such other party's businesses, assets or liabilities, insofar as such access is
reasonably required by such other party. Without limiting the foregoing, such
Information may be requested under this Section for audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations.
6.3 Retention of Records. Except as otherwise required by law or
agreed in writing, or as otherwise provided in the Tax Procedures Agreement,
each of the Sealright Rigid Group and the Flexible Group shall retain, for a
period of at least seven years following the Reorganization Date, all
significant Information in such party's possession or under its control relating
to the business, assets or liabilities of the other party and, after the
expiration of such seven-year period, prior to destroying or disposing of any of
such Information, (a) the party proposing to dispose of or destroy any such
Information shall provide no less than 60 days prior written notice to the other
party, specifying the Information proposed to be destroyed or disposed of, and
(b) if, prior to the scheduled date for such destruction or disposal, the other
party requests in writing that any of the Information proposed to be destroyed
or disposed of be delivered to such other party, the party proposing to dispose
of or destroy such Information promptly shall arrange for the delivery of the
requested Information to a location specified by, and at the expense of, the
requesting party.
6.4 Confidentiality. From and after the Reorganization Date, the
Sealright Rigid Group, on one hand, and the Flexible Group, on the other hand,
shall hold, in strict confidence, all Information obtained from the other Group
prior to the Reorganization Date or furnished to it pursuant to this Agreement
or any other agreement referred to herein which solely relates to or concerns
solely the business conducted by such other Group, and such Information relating
solely to, or solely concerning said Group, shall not be used by it to the
detriment of the other Group, or disclosed by it or its agents, officers,
employees or directors without the prior written consent of such other Group
unless and to the extent that (a) disclosure is compelled by judicial or
administrative process or, in the opinion of such Group's counsel, by other
requirements of law, or (b) such Group can show that such Information was (i)
available to such Group on a nonconfidential basis prior to its disclosure by
the other Group, (ii) in the public domain through no fault of such Group, (iii)
lawfully acquired by such Group from other sources after the time that it was
furnished to such Group pursuant to this Agreement or any other agreement
referred to herein, or (iv) independently developed by such Group.
Notwithstanding the foregoing, each Group shall be deemed to have satisfied its
obligations of confidentiality under this Section with respect to any
Information concerning or supplied by the other Group if it exercises
substantially the same care with regard to such Information as it takes to
preserve confidentiality for its own similar Information.
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6.5 Reimbursement. Each member of either the Sealright Rigid Group or
the Flexible Group, respectively, providing Information pursuant to Sections 6.2
or 6.3 to any member of the other Group shall be entitled to receive from the
recipient, after the Merger and upon presentation of an invoice therefor,
payment of all out-of-pocket costs and expenses as may reasonably be incurred in
providing such Information.
ARTICLE VII
EMPLOYEE BENEFITS; LABOR MATTERS
7.1 Allocation of Employee Benefit Plan Responsibilities.
(a) Benefit Accruals Generally. Except to the extent provided to
the contrary elsewhere in this Article VII, as of the Closing Date, all
participation and continued accrual or provision of any benefits to any
Flexible Employee or any covered dependent or beneficiaries of any Flexible
Employee in any Plan sponsored by the Sealright Rigid Group shall cease.
Except to the extent provided to the contrary elsewhere in this Article
VII, in respect of Flexible Employees who terminate employment on or prior
to the Closing Date, the Sealright Rigid Group shall be solely responsible
for any and all benefits of all former Flexible Employees and/or any
covered dependents and/or beneficiaries of any Flexible Employees under any
Plan for which Sealright Rigid Group is the Plan sponsor on or after the
Closing Date.
(b) Change of Plan Sponsor and Named Fiduciary; Transfer and
Assumption of Liabilities. Except to the extent provided to the contrary
elsewhere in this Article VII, as of the Closing Date, Flexible and Venture
shall transfer to the Sealright Rigid Group and the Sealright Rigid Group
shall assume all of the liabilities and obligations (except for any breach
of any duty or obligation occurring prior to the Closing Date) of Flexible
and Venture in respect of the Retirement Income Plan of Sealright Co.,
Inc., the Sealright Co., Inc. Long Term Savings Plan, the Sealright Co.
Inc. Deferred Compensation Plan, the Stock Purchase Plan and all retiree
medical plans including, but not limited to, all liabilities and
obligations thereunder with respect to Flexible Employees and their
beneficiaries and former Flexible Employees and their beneficiaries whether
vested or unvested. As of the Closing Date, Flexible and Venture shall be
relieved of all liabilities and obligations arising out of or relating to
the Plans except for any breach of duty or obligation occurring prior to
the Closing Date.
(c) Necessary Acts. Each Plan sponsor shall take or cause to be
taken such actions in respect of each Plan as are reasonably necessary to
accomplish the requirements of this Article VII.
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7.2 Retirement Benefit Plans.
(a) Retirement Income Plan of Sealright Co., Inc. ("RIP"). As of
the Closing Date, each Flexible Employee shall be fully vested in his
accrued benefit in the RIP and, in addition to all other distribution
options available under the RIP, shall be permitted either to receive a
lump sum distribution or to direct a rollover distribution of his accrued
benefit.
(b) Sealright Co., Inc. Long Term Savings Plan ("401(k) Plan").
Effective as of the Closing Date, with respect to each 401(k) Plan
participant who is or becomes a Flexible Employee on the next business day
following the Closing Date, the Sealright Rigid Group shall transfer each
such participant's 401(k) Plan account balances including both vested and
unvested balances, increased by any contributions due for periods prior to
the Closing Date but not made as of the Closing Date and reduced by any
benefits paid after the Closing Date and prior to the transfer date, to the
new Qualified Plan established and designated by Flexible in which each
such participant participates provided that Flexible has submitted to
Sealright Rigid Group satisfactory evidence that such new Qualified Plan is
qualified under Code (S) 401(a) and will not violate Code (S) 411(d)(6).
Such Qualified Plan shall provide service credit to each such participant
equal to each such participant's service credit under the 401(k) Plan and
shall utilize the same vesting schedule as the 401(k) Plan with respect to
transferred account balances.
Effective as of the Closing Date, the Sealright Rigid Group shall
amend the 401(k) Plan to provide that any participant whose employment is
terminated as a result of the Merger or the distribution of the Flexible
Business and is not hired by the Sealright Rigid Group, Flexible or Venture
shall be fully vested in his 401(k) Plan account balances.
(c) Sealright Co., Inc. Deferred Compensation Plan ("Deferred
Compensation Plan"). As of the Reorganization Date, the Sealright Rigid
Group shall cause each Flexible Employee who participates in the Deferred
Compensation Plan to be fully vested in his accrued benefit and shall
freeze the Deferred Compensation Plan with respect to any further accrual
of benefits with respect to, and deferrals of compensation by, each
Flexible Employee who participates in the Deferred Compensation Plan.
(d) Jaite Union Pension Plan ("Jaite Plan"). As of the Closing
Date, the Sealright Rigid Group shall transfer to Flexible and Flexible
shall assume (i) the sponsorship of the Jaite Plan, (ii) the status of the
"named fiduciary" with respect to the Jaite Plan, and (iii) all of the
liabilities and obligations (except for any breach of any duty or
obligation occurring prior to the Closing Date) of the Sealright Rigid
Group in respect of the Jaite Plan including, but not limited to, all
liabilities and obligations thereunder with respect to Flexible Employees
and their beneficiaries and former Flexible Employees and their
beneficiaries whether vested or unvested. As of the Closing Date, the
Sealright Rigid Group shall be relieved of all liabilities and obligations
arising out of or relating to the Jaite Plan except for any breach of duty
or obligation occurring prior to the Closing Date.
14
(e) The Western Conference of Teamsters Pension Trust Fund
("Teamsters Pension Fund") and The Western Conference of Teamsters
Supplemental Income Trust Fund ("Teamsters 401(k) Plan"). As of the
Closing Date, the Sealright Rigid Group shall transfer to Flexible and
Flexible shall assume all of the liabilities and obligations (except for
any breach of any duty or obligation occurring prior to the Closing Date)
of the Sealright Rigid Group in respect of the Teamsters Pension Fund and
the Teamsters 401(k) Plan including, but not limited to, all liabilities
and obligations thereunder with respect to Flexible Employees and their
beneficiaries and former Flexible Employees and their beneficiaries. As of
the Closing Date, the Sealright Rigid Group shall be relieved of all
liabilities and obligations arising out of or relating to the Teamsters
Pension Fund and Teamsters 401(k) Plan except for any breach of duty or
obligation occurring prior to the Closing Date.
7.3 Welfare Benefit Plans and Trusts.
(a) Medical, Dental and Vision Insurance; Medical Spending
Accounts; Employee Assistance Program. The Sealright Rigid Group shall be
responsible for (i) all claims incurred, both reported and unreported, with
respect to all medical, dental and vision plans, all health care spending
accounts, and employee assistance programs on or prior to the Closing Date,
(ii) all obligations with respect to continuation coverage which arise on
or prior to the Closing Date, and (iii) any Health Insurance Portability
and Accountability Act of 1996 notice and reporting obligations.
As of the Closing Date, the Sealright Rigid Group shall transfer
to Flexible and Flexible shall assume all of the liabilities and
obligations (except for any breach of any duty or obligation occurring
prior to the Closing Date) of the Sealright Rigid Group in respect of the
Teamsters Managed Health Care Fund including, but not limited to, all
liabilities and obligations thereunder with respect to Flexible Employees
and their beneficiaries and former Flexible Employees and their
beneficiaries. As of the Closing Date, the Sealright Rigid Group shall be
relieved of all liabilities and obligation arising out of or relating to
the Teamsters Managed Care Trust Fund except for any breach of duty or
obligation occurring prior to the Closing Date.
(b) Life Insurance; Accidental Death and Dismemberment; Business
Travel Accident. The Sealright Rigid Group shall be responsible for all
claims incurred, both reported and unreported, with respect to all life
insurance, accidental death and dismemberment and business travel accident
plans on or prior to the Closing Date. The Sealright Rigid Group shall
inform each Flexible Employee who terminates employment of any individual
right available under any applicable life insurance, accidental death and
dismemberment and business travel accident plans to convert to an
individual policy.
(c) Disability.
(1) Short-term disability: Sealright Rigid Group shall be
responsible for its employees (and unallocated employees who become
Sealright Rigid
15
Group employees) who are disabled and/or on a short-term disability leave
of absence. Flexible shall be responsible for its employees (and
unallocated employees who become Flexible employees) who are disabled
and/or on a short-term disability leave of absence. In the event that any
of certain unallocated personnel is disabled and/or on a short-term
disability leave of absence and does not become an employee of either
Sealright Rigid Group or Flexible, Sealright Rigid Group and Flexible shall
respectively assume and bear the short-term disability costs associated
with such unallocated personnel pursuant to the terms of the Letter
Agreement.
(2) Long-term disability: Sealright Rigid Group shall be
responsible for (i) employees who are disabled and/or on a long-term
disability leave of absence on or before the Closing Date, and (ii)
employees who are disabled and/or on a short-term disability leave of
absence on or before the Closing Date and go on a long-term disability
leave of absence after the Closing Date without first returning to full-
time, active work.
(d) Refunds and Rebates. In the event that the Sealright Rigid
Group receives any refund, rebate or similar premium or fee adjustment from
any insurer or third party administrator, Sealright Rigid Group shall pay
Flexible a portion of such refund, rebate or similar premium or fee
adjustment which is in the same proportion to the total refund, rebate or
similar premium or fee adjustment as the Flexible Employee participants and
their dependents and beneficiaries bear to the total number of
participants, dependents and beneficiaries in such insured plan, minimum
premium arrangement or other similar arrangement during the period of time
for which such refund, rebate or similar premium or fee adjustment is made.
In the event that Flexible or Venture receives any refund, rebate
or similar premium or fee adjustment from any insurer or third party
administrator, Flexible or Venture respectively shall pay Sealright Rigid
Group a portion of such refund, rebate or similar premium or fee adjustment
which is in the same proportion to the total refund, rebate or similar
premium or fee adjustment as the Sealright Rigid Group Employee
participants and their dependents and beneficiaries bear to the total
number of participants, dependents and beneficiaries in such insured plan,
minimum premium arrangement or other similar arrangement during the period
of time for which such refund, rebate or similar premium or fee adjustment
is made.
7.4 Vacation Pay. Each party shall assume all liability for all
unpaid vacation pay accrued by its employees. Sealright and Flexible shall
respectively assume and bear vacation pay costs associated with certain
unallocated personnel pursuant to the terms of the Letter Agreement.
16
7.5 Severance Pay.
(a) Except as provided in 7.5(b) below, each party shall assume and
be solely responsible for all severance pay liabilities and obligations
whatsoever in connection with claims made by or on behalf of its employees.
(b) Sealright and Flexible shall respectively assume and bear
severance costs associated with certain unallocated personnel pursuant to the
terms of the Letter Agreement.
7.6 Collective Bargaining Agreements. As of the Reorganization Date,
(i) the Flexible Group shall have all (and the Sealright Rigid Group shall cease
to have any) liability or obligation whatsoever with respect to any employee or
former employee under the Flexible Collective Bargaining Agreements and (ii) the
Flexible Group shall cease to have any liability or obligation whatsoever with
respect to any employee or former employees under any of the Sealright Rigid
Group Collective Bargaining Agreements.
7.7 Other Balance Sheet Adjustments. To the extent not otherwise
provided in this Agreement, Sealright and Flexible shall take such action as is
necessary to effect an adjustment to the books of Sealright and Flexible so
that, as of January 1, 1998, the prepaid expense balances and accrued employee
liabilities with respect to any employee liability or obligation assumed or
retained as of such date by the Sealright Rigid Group or the Flexible Group are
appropriately reflected on the consolidated balance sheets of Sealright and
Flexible as of January 1, 1998, respectively.
7.8 Refunds and Rebates of Expensed Items. In the event that
subsequent to January 1, 1998, Sealright Rigid Group receives any refund, rebate
or similar premium or fee adjustment for or relating to any prepaid expense
items (including but not limited to insurance, and for which adjustments
pursuant to Section 7.7 hereof have not been appropriately made) relating to
employee benefits or arrangements not described in Section 7.3(d) hereof,
Sealright Rigid Group shall pay Flexible a portion of such refund, rebate or
similar premium or fee adjustment which is in the same proportion to the total
refund, rebate or similar premium or fee adjustment as the Flexible Employee
participants and their dependents and beneficiaries bear to the total number of
participants, dependents and beneficiaries in such employee benefits or
arrangements.
In the event that subsequent to January 1, 1998, Flexible receives any
refund, rebate or similar premium or fee adjustment for or relating to any
prepaid expense items (including but not limited to insurance, and for which
adjustments pursuant to Section 7.7 hereof have not been appropriately made)
relating to employee benefits or arrangements not described in Section 7.3(d)
hereof, Flexible shall pay Sealright Rigid Group a portion of such refund,
rebate or similar premium or fee adjustment which is in the same proportion to
the total refund, rebate or similar premium or fee adjustment as the Sealright
Rigid Group Employee participants and their dependents and beneficiaries bear to
the total number of participants, dependents and beneficiaries in such employee
benefits or arrangements.
17
ARTICLE VIII
MISCELLANEOUS
8.1 Further Assurances. Each party hereto shall cooperate reasonably
with the other parties, and execute and deliver, or use its reasonable best
efforts to cause to be executed and delivered, all instruments, including
instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement, in order
to effectuate the provisions and purposes of this Agreement and the transfers of
Flexible Assets and Flexible Liabilities and the other transactions contemplated
hereby or in any of the Ancillary Agreements.
8.2 Survival of Agreements. All covenants and agreements of the
parties hereto contained in this Agreement shall survive the Reorganization
Date.
8.3 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto (if any), and the Ancillary Agreements shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof,
superseding all previous negotiations, commitments and writings with respect to
such subject matter.
8.4 Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Kansas, without
regard to its conflicts of law principles, as to all matters, including matters
of validity, construction, effect, performance and remedies.
8.5 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and shall
be given (and shall be deemed to have been duly given upon receipt) by delivery
in person, by cable, telegram, telex, facsimile or other standard form of
telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
18
If to a member of the Sealright Rigid Group:
c/o Huhtamaki Oy Sealright Co., Inc.
Lansituulentie 7 9201 Packaging Drive
02100 ESP00 XxXxxx, XX 00000
FINLAND Attention: Xxxx Xxxxxx
Attention: Xxxx Xxx (000) 000-0000 (telephone)
(000) 000-0-0000-00 (telephone) (000) 000-0000 (telecopier)
(000) 000-0-0000-0000 (telecopier)
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
If to a member of the Flexible Group:
G. Xxxxxxx Xxxx
c/o Xxxxxx X. Xxxx & Company
Twelve Wyandotte Plaza
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
with a copy to:
Xxxxx Xxxx LLP
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx Xxxx, Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
or to such other address as either Group may have furnished to the other Group
by a notice in writing in accordance with this Section.
8.6 Amendment and Modification; No Waiver. This Agreement may be
amended, modified or supplemented, and rights hereunder may be waived, only by a
written agreement signed by the parties hereto. No waiver of any term, provision
or condition of or
19
failure to exercise or delay in exercising any rights or remedies under this
Agreement, in one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of such term, provision, condition, right or remedy
or as a waiver of any other term, provision or condition of, or right or remedy
under, this Agreement.
8.7 Successors and Assigns; No Third-Party Beneficiaries. This
Agreement and all the provisions hereof shall be binding upon and inure to the
benefit of each party hereto and each of their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
and obligations hereunder shall be assigned by any party with the consent of the
other parties.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.9 Interpretation.
(a) The Article and Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of
the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) The parties hereto intend that, for federal income tax
purposes, the contributions, transfers, assumptions, and the Reorganization
contemplated hereby shall each qualify for non-recognition treatment under
the applicable provisions of Section 351 of the Code.
8.10 Legal Enforceability. Any provision of this Agreement or any of
the Ancillary Agreements which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Each party acknowledges that money damages would be an inadequate
remedy for any breach of the provisions of this Agreement or any of the
Ancillary Agreements and agrees that the obligations of the parties hereunder
and thereunder shall be specifically enforceable.
8.11 References; Construction. References to any "Article,"
"Exhibit," "Schedule" or "Section," without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement, as applicable. Unless otherwise
expressly stated, clauses beginning with the term "including" set forth examples
only and in no way limit the generality of the matters thus exemplified.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SEALRIGHT CO., INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
JPS PACKAGING COMPANY
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: President
SEALRIGHT MANUFACTURING-WEST, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
SEALRIGHT PACKAGING COMPANY
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
21
