EXHIBIT 1(b)
AMENDMENT NO. 1 TO PURCHASE AGREEMENT
AMENDMENT NO. 1 dated as of October 11, 1996, to the PURCHASE
AGREEMENT (including the Exhibits and Schedules thereto), dated as of June 20,
1996 (the "AGREEMENT"), between XXXXXX, INC., a New Jersey corporation (the
"SELLER"), and AEP INDUSTRIES INC., a Delaware corporation (the "BUYER").
W I T N E S S E T H :
WHEREAS, in connection with the purchase by Buyer of Seller's Global
Packaging Business, Seller and Buyer have agreed that the Agreement be amended
as set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
Section 1. DEFINED TERMS. All capitalized terms used herein and not
otherwise defined shall have the meanings given them in the Agreement.
Section 2. AMENDMENT AND RESTATEMENT OF SECTION 1.2(H) OF THE
AGREEMENT. Section 1.2(h) of the Agreement is hereby amended and restated to
read in its entirety as follows:
(h) Accounts receivable and other receivables of the Asset
Sellers in existence on or prior to the Closing Date (whether or not
billed) to the extent attributable to Xxxxxx Global Packaging Products sold
prior to 11:59 P.M. on the Closing Date (the "EFFECTIVE TIME");
and thereafter in the Agreement, the term Effective Time shall be deemed to
refer to 11:59 P.M. on the Closing Date.
Section 3. AMENDMENT OF SECTION 1.2 OF THE AGREEMENT. Section 1.2 of
the Agreement is hereby amended by adding the following subsection at the end
thereof:
(l) The Transferred Subsidiary Payables (as defined in Section
4.4) to the extent being transferred by an Asset Seller.
Section 4. AMENDMENT OF SUBSECTION 1.3(C) OF THE AGREEMENT. Section
1.3(c) of the Agreement is hereby amended to read in its entirety as follows:
(c) Except as otherwise set forth in Section 2.4(a) of the Seller
Disclosure Schedule, cash and cash equivalents or similar type investments,
bank accounts, certificates of deposit, Treasury bills and other marketable
securities
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(excluding deposits and prepayments to be transferred pursuant to
Section 1.2(j) hereof);
Section 5. AMENDMENT OF SUBSECTION 1.7(I) OF THE AGREEMENT. The
Agreement is hereby amended to delete Subsection 1.7(i), and any reference
thereto, in its entirety.
Section 6. AMENDMENT OF SUBSECTION 2.2(A) OF THE AGREEMENT. The first
sentence of Subsection 2.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
(a) Subject to Section 2.4 hereof, regardless of whether the
transfer of any Assets or Subsidiary Stock have been deferred pursuant to
the provisions of Section 2.3 of this Agreement, in consideration for the
sale and transfer of the Assets and the Subsidiary Stock, and subject to
the terms and conditions of this Agreement, the Buyer shall on the Closing
Date assume the Assumed Liabilities as provided in Section 1.6 hereof and
shall transfer to or, in whole or in part, as directed by the Seller: (i)
certificates representing the greater of (A) 2,412,818 newly-issued shares
(the "FIXED SHARES") of common stock, par value $0.01 per share (the "BUYER
COMMON STOCK"), of the Buyer and (B) a number of newly-issued shares of
Buyer Common Stock (rounded up to the nearest whole share) equal to the
quotient obtained by dividing (x) $80.0 million by (y) the Buyer Stock
Price; PROVIDED, HOWEVER, that in the case of clause (B), in no event will
the Buyer be required to deliver in excess of 4.0 million newly-issued
shares of Buyer Common Stock (the "EQUITY CONSIDERATION"), all of which
newly-issued shares shall have been duly authorized, validly issued, fully
paid and nonassessable, (ii) a promissory note in the aggregate principal
amount of $11,400,000 containing such terms and provisions as the parties
may mutually agree (the "NOTE CONSIDERATION") and (iii) $249.5 million of
cash in immediately available funds (the "CASH CONSIDERATION"; and together
with the Equity Consideration and the Note Consideration, collectively
referred to as the "PURCHASE PRICE").
Section 7. PURCHASE PRICE ADJUSTMENT. Section 2.4 of the Agreement is
hereby amended and restated to read in its entirety as follows:
2.4 POST-CLOSING ADJUSTMENT. (a) Within 60 days following the
Closing, the Seller shall, at its expense, prepare, or cause to be
prepared, and deliver to the Buyer a balance sheet (the "CLOSING BALANCE
SHEET") which shall set forth those assets and liabilities of the Packaging
Business relevant to the adjustments contemplated by this Section 2.4 on
the basis set forth on Section 2.4(a) of the Seller Disclosure Schedule as
of the Effective Time. Subject to Section 2.4(a) of the Seller Disclosure
Schedule, the Closing Balance Sheet shall be prepared in accordance with
generally accepted accounting principles using the same accounting
principles, methods, practices and estimation methodologies as were
utilized in the preparation of the consolidated balance
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sheet of the Packaging Business as at December 31, 1995 (the "1995 BALANCE
SHEET") included as part of the Financial Information previously delivered
to the Buyer. The Seller shall also deliver within 60 days from the
Closing a calculation of (i) working capital derived from the Closing
Balance Sheet on the basis set forth on Section 2.4(a) of the Seller
Disclosure Schedule (the "CLOSING WORKING CAPITAL") and (ii) Closing Other
Non-Current Liabilities. The term "CLOSING OTHER NON-CURRENT LIABILITIES"
shall mean "Long-Term Liabilities", other than "Deferred income taxes", as
set forth on the Closing Balance Sheet, consistent with this Section 2.4(a)
and Section 2.4(a) of the Seller Disclosure Schedule. The term "CLOSING
FIGURES" shall mean, collectively, the Closing Working Capital and the
Closing Other Non-Current Liabilities.
(b) The Buyer and the Buyer's accountants shall, within 30 days
after the delivery by the Seller of the Closing Balance Sheet and
calculation of the Closing Figures, complete their review of the Closing
Figures, PROVIDED that the Seller has furnished to the Buyer all
information reasonably requested by the Buyer necessary for its review of
the Closing Figures. In the event that the Buyer determines that either of
the components of the Closing Figures has not been stated or determined in
accordance with this Section 2.4 and Section 2.4(a) of the Seller
Disclosure Schedule, the Buyer shall inform the Seller in writing (the
"BUYER'S OBJECTION"), setting forth the basis of the Buyer's Objection in
reasonable detail and to the extent practicable the adjustments to the
Closing Figures which the Buyer believes should be made, on or before the
last day of such 30-day period. The Seller shall then have 30 days to
review and respond to the Buyer's Objection. If the Seller and the Buyer
are unable to resolve all of their disagreements with respect to the
determination of the foregoing items within 30 days following the
completion of the Seller's review of the Buyer's Objection, they shall
refer their remaining differences to Ernst & Young LLP or another
internationally recognized firm of independent public accountants as to
which the Seller and the Buyer mutually agree (the "CPA FIRM"), which
shall, acting as experts in accounting and not as arbitrators, determine on
the basis of the standards set forth on Section 2.4(a) of the Seller
Disclosure Schedule, and only with respect to the specific remaining
accounting related differences so submitted, whether and to what extent, if
any, either of the components of the Closing Figures requires adjustment.
The Seller and the Buyer shall direct the CPA Firm to use its best efforts
to render its determination within 45 days. The CPA Firm's determination
shall be conclusive and binding upon the Buyer and the Seller. The fees
and disbursements of the CPA Firm shall be shared equally by the Buyer, on
the one hand, and the Seller, on the other hand. The Buyer and the Seller
shall make readily available to the CPA Firm all relevant books and records
and any work papers (including those of the parties' respective
accountants) relating to the 1995 Balance Sheet, the Closing Balance Sheet,
the Closing Working Capital, the Closing Other Non-Current Liabilities and
all other items
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reasonably requested by the CPA Firm. The "Adjusted Closing Working
Capital" shall be (i) the Closing Working Capital in the event that (x) no
Buyer's Objection is delivered to the Seller during the 30-day period
specified above, or (y) the Seller and the Buyer so agree, (ii) the Closing
Working Capital, adjusted in accordance with the Buyer's Objection in the
event that the Seller does not respond to the Buyer's Objection within the
30-day period following receipt by the Seller of the Buyer's Objection, or
(iii) the Closing Working Capital, as adjusted by either (x) the agreement
of the Seller and the Buyer or (y) the CPA Firm. The "Adjusted Closing
Other Non-Current Liabilities" shall be (i) the Closing Other Non-Current
Liabilities in the event that (x) no Buyer's Objection is delivered to the
Seller during the 30-day period specified above, or (y) the Seller and the
Buyer so agree, (ii) the Closing Other Non-Current Liabilities, adjusted in
accordance with the Buyer's Objection in the event that the Seller does not
respond to the Buyer's Objection within the 30-day period following receipt
by the Seller of the Buyer's Objection, or (iii) the Closing Other
Non-Current Liabilities, as adjusted by either (x) the agreement of the
Seller and the Buyer or (y) the CPA Firm. "Adjusted Closing Figures" shall
include the Adjusted Closing Working Capital and the Adjusted Closing Other
Non-Current Liabilities.
(c) The Buyer shall provide the Seller and its accountants full
access to the books and records of the Packaging Business, to any other
information, including work papers of their accountants, and to any
employees to the extent necessary for the Seller to prepare the Closing
Balance Sheet and determine the Closing Figures. The Buyer and its
accountants shall have the opportunity to observe the taking of the
Inventory (which may begin prior to the Closing Date on a date mutually
agreed to by the Buyer and the Seller and which shall be taken on a year-
end basis consistent with past practice) in connection with the preparation
of the Closing Balance Sheet and the Closing Figures and shall have full
access to all information used by the Seller in preparing the 1995 Balance
Sheet, the Closing Balance Sheet and the Closing Figures, including the
procedures, books, records and work papers of its accountants.
(d) Within 10 business days following determination of the
Adjusted Closing Figures, the Buyer or the Seller, as the case may be,
shall make an adjustment payment (the "ADJUSTMENT AMOUNT") equal to the
difference between the Buyer Adjustment Amount and the Seller Adjustment
Amount. The "Buyer Adjustment Amount" shall equal the sum of (i) the
amount, if any, by which (A) the Adjusted Closing Working Capital exceeds
(B) the Pre-Closing Working Capital, (ii) the amount, if any, by which
$7,450,000 exceeds the Adjusted Closing Other Non-Current Liabilities and
(iii) $17.0 million. The "Pre-Closing Working Capital" shall be equal to
the working capital of the Packaging Business at December 31, 1995 as set
forth on Section 2.4(d) of the Seller Disclosure Schedule. The "Seller
Adjustment Amount" shall equal the sum of (i) the amount, if any, by which
(A) the Pre-Closing
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Working Capital exceeds (B) the Adjusted Working Capital and (ii) the
amount, if any, by which the Adjusted Closing Other Non-Current
Liabilities exceeds $9,450,000. If any component of the calculation of
the Buyer Adjustment Amount or the Seller Adjustment Amount results in a
number which is less than zero, such component shall be deemed to be zero.
(e) The Adjustment Amount will be payable (x) by the Seller to
the Buyer to the extent that the Seller Adjustment Amount exceeds the Buyer
Adjustment Amount at the Seller's option (i) in U.S. dollars in the amount
of the Adjustment Amount or (ii) in such number of shares of the Buyer
Common Stock equal to the quotient obtained by dividing (a) the Adjustment
Amount by (b) the Average Buyer Common Stock Price (the "ADJUSTMENT
SHARES"), and (y) by the Buyer to the Seller to the extent that the Buyer
Adjustment Amount exceeds the Seller Adjustment Amount in the form of U.S.
dollars, plus, in either case, interest, payable in cash, on the Adjustment
Amount from the Closing Date through the date of payment at the "base rate"
of Citibank, N.A. or any successor thereto in New York, New York on the
Closing Date. The Adjustment Amount payable pursuant to this Section
2.4(e) shall be paid, in the case of clauses (x)(i) and (y) above, by wire
transfer of immediately available funds to an account designated by the
Buyer, on the one hand, or the Seller, on the other hand, as the case may
be, and, in the case of clause (x)(ii) above, by delivery to the Buyer of
stock certificates representing the Adjustment Shares, duly endorsed for
transfer to the Buyer or accompanied by stock powers duly executed in favor
of the Buyer, together with evidence of payment of any applicable transfer
and documentary stamp taxes and other fees.
Section 8. AMENDMENT AND RESTATEMENT OF SECTION 4.4 OF THE AGREEMENT.
Section 4.4 of the Agreement is hereby amended and restated to read in its
entirety as follows:
4.4 INTERCOMPANY TRANSACTIONS. Except as set forth in Section
4.4 of the Seller Disclosure Schedule (the "Transferred Subsidiary
Payables"), on or prior to the Closing, all intercompany receivables or
payables and loans then existing between the Seller, any Subsidiary (other
than a Transferred Subsidiary) or any other subsidiary or affiliate of the
Seller which is not a Subsidiary (the "NON-PACKAGING AFFILIATES") on the
one hand, and the Transferred Subsidiaries, on the other hand, shall be
settled by way of capital contribution (with respect to intercompany
payables or loans due to the Seller, any Subsidiary (other than a
Transferred Subsidiary) or any Non-Packaging Affiliate) or by way of
dividend in kind (with respect to receivables of the Transferred
Subsidiaries owed by the Seller, any Subsidiary or any Non-Packaging
Affiliate). Such settlement shall be accomplished without any violation of
any law or regulation or any incurrence of any tax, penalties, interest or
other charges (other than taxes with respect to which the Seller has agreed
to indemnify the Buyer). Effective as of the Closing, the Seller, on
behalf of itself and the Non-Packaging
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Affiliates, hereby assigns to the Buyer all right, title and interest in
the Transferred Subsidiary Payables and from and after such time the
Transferred Subsidiaries set forth on Section 4.4 of the Seller Disclosure
Schedule shall have no further liability to the Seller or the Non-Packaging
Affiliates with respect to the Transferred Subsidiary Payables; PROVIDED,
HOWEVER, that such assignment of the Transferred Subsidiary Payables will
have no affect on the purchase price pursuant to Section 2.4.
Section 9. AMENDMENT AND RESTATEMENT OF EXHIBIT A TO THE AGREEMENT.
Exhibit A to the Agreement is hereby amended and restated to read in its
entirety as set forth on Annex A to this Amendment.
Section 10. AMENDMENT AND RESTATEMENT OF EXHIBIT B-1 TO THE AGREEMENT.
Exhibit B-1 to the Agreement is hereby amended and restated to read in its
entirety as set forth on Annex B to this Amendment.
Section 11. AMENDMENT AND RESTATEMENT OF EXHIBIT F OF THE AGREEMENT.
The Transition License Agreement in the Form of Exhibit F to the Agreement is
hereby amended and restated to read in its entirety in the form of Annex C to
this Amendment.
Section 12. AMENDMENT AND RESTATEMENT OF SECTION 4.5 OF THE
AGREEMENT. Section 4.5 of the Agreement is hereby amended and restated to read
in its entirety as follows:
4.5 GUARANTEES. The Buyer shall use its best efforts (which
shall not include agreeing to any modifications of the terms of the
underlying obligations) to cause itself or one or more of its affiliates to
be substituted in all respects for the Seller or the Subsidiaries (other
than the Transferred Subsidiaries), effective as of the Closing, in respect
of all obligations of the Seller and any of the Subsidiaries (other than
the Transferred Subsidiaries) under each of the guarantees, indemnities,
surety bonds, letters of credit and letters of comfort set forth on Section
4.5 of the Seller Disclosure Schedule obtained by the Seller or the
Subsidiaries (other than the Transferred Subsidiaries) for the benefit of
the Packaging Business (the "GUARANTEES"); provided, however, to the extent
it is impracticable for Buyer to effect any such substitution effective as
of the Closing, the Buyer shall continue to use its best efforts to cause
such substitution as promptly as practicable after the Closing. Subsequent
to the Closing, with respect to any uncancelled Guaranty for which no
substitution is effected, the Buyer shall, pursuant to Section 9.4,
indemnify the Seller or any of its affiliates against any liability under
any such Guarantee.
Section 13. AMENDMENT AND RESTATEMENT OF SECTION 4.12 OF THE
AGREEMENT. Section 4.12 of the Agreement is hereby amended and restated to read
in its entirety as follows:
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4.12. FACILITIES AGREEMENTS. On the Closing Date, the Buyer
and the Seller shall execute and deliver an agreement (the "SHARED
FACILITIES AGREEMENT"), with respect to facilities shared by the Packaging
Business and the Seller's chemicals business at Xxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxxx, Xxxxxxx, Laval, Quebec and Xxxx Xxxx, Xxxxxxx in order
to coordinate the on-going operations at such facilities, coordinate the
"de-linking" of the operations of the Packaging Business from the
operations relating to the Seller's chemicals business at such facilities
and provide certain transitional services on the terms and subject to the
conditions set forth therein.
The Shared Facilities Agreement is attached hereto as Annex D.
Section 14. AMENDMENT AND RESTATEMENT OF SECTION 4.13 OF THE
AGREEMENT. Section 4.13 of the Agreement is hereby amended and restated to read
in its entirety as follows:
4.13. TRANSITION SERVICES AGREEMENT. On or before the Closing
Date, the Buyer and the Seller shall execute and deliver certain agreements
listed on Annex E hereto (the "TRANSITION SERVICES AGREEMENTS"), pursuant
to which the Seller agrees to provide certain transitional services on the
terms and subject to the conditions set forth therein. Except as
specifically agreed in writing in the Transition Services Agreements,
Seller is not obligated to provide any transition services to Buyer.
All references in the Agreement to "Transition Services Agreement" shall be
deemed to be references to the "Transition Services Agreements."
Section 15. AMENDMENT OF SECTION 5.1 OF THE AGREEMENT. Section 5.1 of
the Agreement is hereby amended by adding the following subsection at the end
thereof:
(e) Contemporaneously with the Closing, the transactions
contemplated by the Offer to Sell Property, dated as of October 10, 1996,
between Xxxxxx Australia Pty Limited and Xxxxxx Australia Pty Limited as
trustee of the Xxxxxx Australia Unit Trust, shall have been consummated.
Section 16. DELETION OF EXHIBITS G AND H. The Agreement is hereby
amended to delete any references to Exhibit G and Exhibit H.
Section 17. AMENDMENT AND RESTATEMENT OF SECTION 7.1 OF THE
AGREEMENT. Section 7.1 of the Agreement is hereby amended and restated to read
in its entirety as follows:
7.1 GENERAL. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, (a) by mutual consent of
the Buyer and the Seller; (b) by the Buyer or the Seller by notice to the
other party in the event that the Closing Date shall not have occurred on
or before January 31, 1997; provided, however, that if the Closing Date
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shall not have occurred on or before such date due to the act or omission
of the Buyer or the Seller, then that party may not terminate the
Agreement; (c) by the Seller, in its sole discretion, if the Buyer fails to
deliver Definitive Financing Agreements to the Seller on or before October
10, 1996 or if at any time thereafter any such Definitive Financing
Agreements shall cease to be in full force and effect and Seller shall not
have replaced such Definitive Financing Agreements prior to the earlier of
three weeks thereafter and January 31, 1997; or (d) the Seller, if any
required approval by the stockholders of the Buyer shall not have been
obtained by reason of the failure to obtain the required vote upon a vote
held at a duly held meeting of stockholders or at any adjournment thereof
except as a result of a material breach of this Agreement by the Seller or
an inability to satisfy Section 5.2(a).
Section 18. AMENDMENT AND RESTATEMENT OF SECTION 9.9 OF THE
AGREEMENT. Section 9.9 of the Agreement is hereby amended and restated to read
in its entirety as follows:
9.9 ASSIGNABILITY. This Agreement shall not be assignable by
the Seller without the prior written consent of the Buyer or by the Buyer
without the prior written consent of the Seller; PROVIDED, HOWEVER, that
the Buyer may assign its rights hereunder to one or more wholly-owned
subsidiaries of the Buyer, but no such assignment shall release the Buyer
from its obligations hereunder.
Section 19. AMENDMENT OF THE SELLER DISCLOSURE SCHEDULE. The Seller
Disclosure Schedule is hereby amended as set forth on Annex F.
Section 20. TERMINATION OF DELAWARE LEASE. The Buyer hereby agrees to
reimburse the Seller for any expenses incurred by the Seller in connection with
the termination of the lease pursuant to which the Seller leases office space at
2711 Centreville, Wilmington, Delaware.
Section 21. EMPLOYEE RELATIONS AND BENEFITS. The terms and provisions
of the documents listed on Annex G to this Amendment (the "Revised Terms and
Provisions") are hereby incorporated in their entirety into Section 6 of the
Agreement. To the extent that the Revised Terms and Provisions are inconsistent
with the existing terms and provisions of Section 6 of the Agreement, the
Revised Terms and Provisions shall control.
Section 22. FOREIGN CURRENCY. Seller and Buyer hereby confirm that
they have directed their respective foreign exchange banks set forth on Annex H
hereto to deliver the foreign currencies in the amounts and to the financial
institutions set forth on Annex H and that such amounts represent true value at
October 11, 1996.
Section 23. AMENDMENT AND RESTATEMENT OF SECTION 4.9(B) OF THE
AGREEMENT. Section 4.9(b) of the Agreement is hereby amended and restated to
read in its entirety as follows:
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(b) Effective at the Effective Time, the Buyer shall be responsible
for funding all disbursements of the Packaging Business. Any cash, cash
equivalents, similar investments, certificates of deposit, Treasury bills and
other marketable securities held by the Packaging Business at the Closing shall
be treated by the parties consistent with Section 2.4(a) of the Seller
Disclosure Schedule.
Section 24. LIMITATION OF AMENDMENT. Except as expressly provided
herein, in the Revised Terms and Provisions, in the Governance Agreement (as
amended) and the letter agreements and arrangements set forth on Annex I hereto
(the "Letter Agreements"), the Agreement shall continue to be, and shall remain,
in full force and effect. Except as expressly provided herein, in the Revised
Terms and Provisions, in the Governance Agreement (as amended) and the Letter
Agreements, this Amendment, the Revised Terms and Provisions, the Governance
Agreement (as amended) and the Letter Agreements shall not be deemed to be a
waiver of, or consent to, or a modification or amendment of, any other term or
condition of the Agreement.
Section 25. SEVERABILITY. If any provision of this Amendment shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Amendment shall not be affected and
shall remain in full force and effect.
Section 26. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
Section 27. APPLICABLE LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
XXXXXX, INC.
By: _________________________________
Name:
Title:
AEP INDUSTRIES INC.
By: _________________________________
Name:
Title:
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