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Exhibit 2.1
Asset Purchase Agreement, dated as of April 10, 1996, by and between Xxxxx
River Corporation of Virginia and Printpack, Inc., as amended.
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EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXX RIVER CORPORATION OF VIRGINIA
AND
PRINTPACK, INC.
Dated as of April 10, 1996
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.1 Definitions 1
ARTICLE II PURCHASE AND SALE OF ASSETS 7
2.1 Purchase and Sale 7
2.2 Excluded Assets 8
2.3 Assumed Liabilities 9
2.4 Actions by Persons within the JR Group 11
ARTICLE III PURCHASE PRICE, WORKING CAPITAL ADJUSTMENT 11
3.1 Purchase Price 11
3.2 Balance Sheet Adjustment 11
3.3 Additional Payments 14
ARTICLE IV RELATED AGREEMENTS 15
4.1 Related Agreements 15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF XXXXX RIVER 16
5.1 Organization; Qualification 16
5.2 Organization of Stock Companies; Ownership and Validity of
Shares 16
5.3 Authority Relative to this Agreement and the Related Agreements 16
5.4 Consents and Approvals 17
5.5 Non-Contravention 17
5.6 Compliance with Laws 18
5.7 Environmental Matters 18
5.8 Licenses and Permits 18
5.9 Financial Statements 19
5.10 Litigation 19
5.11 Title to Properties. 20
5.12 Leases 20
5.13 Intellectual Property 21
5.14 Listed Contracts 21
5.15 Labor Matters 21
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5.16 Employee Benefit Plans 22
5.17 Conduct of Business and Management of Assets since Date of
December Balance Sheet 24
5.18 Finders 25
5.19 Sufficiency of Assets 25
5.20 Condition of Assets 25
5.21 Copies of Documents 25
5.22 Undisclosed Liabilities 25
5.23 Employment and Consulting Agreements 25
5.24 Absence of Proceedings 26
5.25 Accounts Receivable 26
5.26 Taxes 26
5.27 Insurance 26
5.28 Customers 27
5.29 Accuracy of Provided Materials 27
5.30 Completeness of Schedule 1.1 27
5.31 Economics of Related Agreements 27
5.32 Matters Relating to Title Commitment 28
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 28
6.1 Organization; Qualification 28
6.2 Authority Relative to this Agreement and the Related Agreements 28
6.3 Non-Contravention 28
6.4 Consents and Approvals 29
6.5 Litigation 29
ARTICLE VII ADDITIONAL AGREEMENTS 29
7.1 Conduct of Business and Management of Assets 29
7.2 Forbearances by Xxxxx River 29
7.3 Mail Received After Closing 31
7.4 Retention of Books and Records 31
7.5 Expenses 32
7.6 Confidentiality 32
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7.7 Public Announcements 32
7.8 Efforts to Consummate 33
7.9 Further Assurances 33
7.10 Use of Xxxxx River Name 33
7.11 Assignment of Contracts, Rights, etc. 34
7.12 No Solicitation of Employees. 34
7.13 Negotiations with Others 35
7.14 HSR Filings 35
7.15 Transfer Taxes and Recording Fees 35
7.16 Title Matters 35
7.17 Mexican Financing 37
7.18 Xxxxxxx IDB 37
7.19 Xxxxx River IDBs 38
7.20 Xxxxx River California Sub 38
7.21 Section 338(h)(10) Election 39
7.22 Tax Matters 39
7.23 Mexican Revolving Loan 40
7.24 Access to Assets and Business Employees 40
7.25 San Leandro Property 40
ARTICLE VIII BUSINESS EMPLOYEE AND EMPLOYEE BENEFIT MATTERS 41
8.1 Business Employees 41
8.2 Salaried Business Employee Employment and Employee Benefits 41
8.3 Hourly Business Employee Employment and Employee Benefits 42
8.4 Severance Benefits 42
8.5 Assumption of Liabilities 43
8.6 Collective Bargaining Agreements and Multiemployer Plans 43
8.7 Pension Plans for Hourly Business Employees 45
8.8 Pension Plan for Salaried Business Employees 45
8.9 401(k) Plan 45
8.10 Worker's Compensation 46
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8.11 Welfare Benefit Plans 46
8.12 Vacation Pay 47
8.13 Administration 47
ARTICLE IX CONDITIONS TO OBLIGATIONS OF BUYER 47
9.1 Representations and Warranties 47
9.2 Performance of this Agreement 47
9.3 Proceedings 47
9.4 Consents and Approvals 48
9.5 Injunction, Litigation, etc. 48
9.6 Legislation 48
9.7 Opinion of Counsel for Xxxxx River 48
9.8 Casualty Loss 48
9.9 Material Adverse Change 48
9.10 Related Agreements 48
ARTICLE X CONDITIONS TO OBLIGATIONS OF XXXXX RIVER 49
10.1 Representations and Warranties 49
10.2 Performance of this Agreement 49
10.3 Proceedings 49
10.4 Consents and Approvals 49
10.5 Injunction, Litigation, etc. 49
10.6 Legislation 49
10.7 Opinion of Counsel for Buyer 49
10.8 Related Agreements 49
ARTICLE XI DELIVERIES, ETC., IN CONNECTION WITH CLOSING 50
11.1 Time and Place of Closing 50
11.2 Deliveries by Xxxxx River 50
11.3 Deliveries by Buyer 51
11.4 Deliveries of Related Agreements 51
ARTICLE XII INDEMNIFICATION 52
12.1 Indemnification by Xxxxx River 52
12.2 Indemnification by Buyer 52
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12.3 Survival Date 52
12.4 Xxxxx River Indemnification for Certain Environmental Matters 53
12.5 Definition of Loss 54
12.6 Third Party Claims 55
12.7 Subrogation Rights; No Duplication 56
ARTICLE XIII TERMINATION, AMENDMENT AND WAIVER 56
13.1 Termination 56
13.2 Effect of Termination 57
13.3 Amendment 57
13.4 Extension; Waiver 57
ARTICLE XIV GENERAL PROVISIONS 58
14.1 Notices 58
14.2 Interpretation 59
14.3 Counterparts 59
14.4 Miscellaneous 59
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of April 9,
1996, is made between XXXXX RIVER CORPORATION OF VIRGINIA, a Virginia
corporation ("Xxxxx River"), and PRINTPACK, INC., a Georgia corporation
("Buyer").
RECITAL
Xxxxx River desires to sell, or cause its Subsidiaries to sell, the
assets and stock described herein and Buyer desires to purchase such assets and
stock, for the consideration hereinafter set forth, including the assumption of
certain liabilities.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have the
following meanings:
"Affiliate," with respect to any party, means a party, person or entity
that, directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such party, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
"Allocation Schedule" has the meaning set forth in Section 7.22(c).
"Assets" has the meaning set forth in Section 2.1.
"Assumed Liabilities" has the meaning set forth in Section.
"Authority" means any national, federal, state or local governmental,
judicial or regulatory agency or authority within or outside the United States.
"Business" means (i) the business customarily operated by the flexible
packaging business of Xxxxx River with respect to the products manufactured at
the Plant Sites, and (ii) the business customarily operated by the Stock
Companies.
"Business Employees" has the meaning set forth in Section 8.1.
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"Business Intellectual Property" has the meaning set forth in Section.
"Buyer" has the meaning set forth in the introductory paragraph hereof.
"Buyer's 401(k) Plan" has the meaning set forth in Section 8.9(a).
"California Assets" has the meaning set forth in Section 7.20.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act codified at 42 U.S.C. ss. 9601 et seq. (including the amendments
made by the Superfund Amendments and Reauthorization Act of 1986).
"Closing" has the meaning set forth in Section 11.1.
"Closing Date Balance Sheet" has the meaning set forth in Section
3.2(a).
"Closing Net Asset Value" has the meaning set forth in Section 3.2(c).
"Confidential Information" has the meaning set forth in Section .
"December Balance Sheet" means the unaudited balance sheet for the
Business for the fiscal year ended December 31, 1995, previously delivered by
Xxxxx River to Buyer.
"Disputed Items" has the meaning set forth in Section 3.2(d).
"Employee Plans" has the meaning set forth in Section .
"Environmental Condition" means any condition existing at any Plant
Site that relates to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, (ii) the
treatment, storage, recycling or other handling of any Hazardous Substance, or
(iii) the presence of any Hazardous Substance, including, but not limited to,
asbestos, in any building, structure or workplace or on any of the Real
Property or Leased Premises.
"Environmental Laws" means Environmental Statutes and any common law
governing the contamination, pollution or protection of the environment or
allocating liabilities in respect thereof.
"Environmental Statutes" means federal statutes and regulations
promulgated thereunder intended to provide protection for public health and the
environment, including, without limitation, the Clean Air Act, the Clean Water
Act, CERCLA, the Solid Waste Disposal Act (including the Resource Conservation
and Recovery Act), the Toxic Substances Control Act, their state statutory and
regulatory counterparts and other substantially similar foreign statutes and
regulations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any member of a controlled group of
corporations, any member of a group of trades or businesses under common
control, or any member of an affiliated service
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group with Xxxxx River within the meaning of Section 414(b), (c), (m), or (o)
of the Internal Revenue Code, or Section 4001(a)(14) of ERISA.
"Excluded Assets" has the meaning set forth in Section .
"Excluded Liabilities" has the meaning set forth in Section 2.3(b).
"Excluded Retiree Liabilities" means any liabilities or obligations of
any Person within the JR Group with respect to retiree medical or life insurance
benefits payable to any Business Employee or their beneficiaries or dependents,
regardless when the same arose, excluding, however, any such liabilities or
obligations arising under collective bargaining agreements to be assumed
pursuant to Section 8.6.
"Filed Business Intellectual Property" means trade names, trademarks
and service marks, together with the associated goodwill, letters patent,
copyrights, design registrations and inventor certificates as well as
applications, registrations, and certificates for any of the foregoing or any
other intellectual property which is used exclusively in, or applicable
exclusively to, the Business and embodied in a form which is filed or
registered with any Authority.
"Final Closing Audited Balance Sheet" has the meaning set forth in
Sections 3.2(d) and (f).
"Final Closing Net Asset Value" has the meaning set forth in Section
3.2(f).
"GAAP" means generally accepted accounting principles.
"Hazardous Substance" means (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, or Oil.
"Hourly Business Employees" has the meaning set forth in Section 8.1.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all regulations promulgated
thereunder.
"Indemnitee" has the meaning set forth in Section 12.3.
"Indemnitor" has the meaning set forth in Section 12.3.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Inventory" has the meaning set forth in Section .
"Xxxxxxx IDB" means the financial transaction with the Industrial
Development Board of the City of Jackson, Tennessee pursuant to the Master
Industrial Development Lease Agreement dated as of December 18, 1990 and related
agreements.
"Xxxxx River" has the meaning set forth in the introductory paragraph
hereof.
"Xxxxx River California Sub" has the meaning set forth in Section 7.20.
"Xxxxx River Corporate Designations" has the meaning set forth in
Section .
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"Xxxxx River IDBs" means (i) the Industrial Development Revenue Bonds
of the Delaware Department of Community Affairs and Economic Development (Crown
Zellerbach Corporation) Series A (New Castle, Delaware); (ii) City of Hazelwood,
Missouri Industrial Development Revenue Bonds, Series A (Crown Zellerbach
Corporation); and (iii) City of Greensburg, Indiana Industrial Development
Revenue Bonds (Crown Zellerbach Corporation) Series A.
"JR Group" means Xxxxx River and all of its Subsidiaries.
"Knowledge of Xxxxx River" means the actual knowledge of those
officers and employees of Xxxxx River listed on Schedule 1.1.
"Lessee Lease" and "Lessee Leases" have the respective meanings set
forth in Section .
"Leased Assets" means any real property, improvements, equipment or
other assets leased to a Person within the JR Group and used solely in
connection with the Business.
"Leased Premises" means that real property leased by Xxxxx River or
any of its Subsidiaries, as lessee, and listed on Schedule 1.1-A.
"Legal Action" has the meaning set forth in Section .
"Lessor Lease" and "Lessor Leases" have the meaning set forth in
Section 5.12.
"Listed Contract" has the meaning set forth in Section .
"Losses" has the meaning set forth in Section .
"LTIC" has the meaning set forth in Section 5.32.
"Major Leases" has the meaning set forth in Section 5.12(b).
"Mexican Financing" means the capitalization between Xxxxx River
International Holdings, Ltd. ("JRIH") and Xxxxx River de Mexico S.A. de C.V.
("JRMex") pursuant to the Advance of Funds Agreement dated as of March 29, 1995
between JRIH and JRMex in the stated amount of $1,007,689.
"Mexican Revolving Loan" means the revolving loan by Xxxxx River to
JRMex pursuant to the Revolving Note made by JRMex to Xxxxx River dated January
9, 1996 for a principal amount of up to $1,500,000.
"Net Asset Value" means, with respect to any balance sheet, the value
of the assets reflected therein, less the value of the liabilities reflected
therein.
"Non-Filed Business Intellectual Property" means unpatented technology,
inventions, trade secrets, processes, know-how, designs and formulae and
unfiled trade names, trademarks and service marks, together with the associated
goodwill, unregistered copyrights and other industrial or intellectual property
which is used exclusively in, or applicable exclusively to, the Business and
not filed or registered with an Authority.
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"Oil" means petroleum and petroleum products, including crude oil and
any fraction thereof.
"P&LS" has the meaning set forth in Section 5.9.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Exceptions" means (i) statutory liens for current taxes or
assessments not yet due and payable or being contested in good faith; (ii)
exceptions that would be shown by surveys or personal inspection of such
property that do not individually or in the aggregate materially affect the
value or current use of the particular property involved; (iii) terms and
conditions of any Lessor Leases; (iv) the current zoning and subdivision laws
and regulations applicable to any Real Property; (v) such liens, imperfections
in title, charges, easements, restrictions, encumbrances or other matters which
do not, individually or in the aggregate, adversely and materially, affect the
Assets, the value or the use to which they are currently put, or the Business,
each taken as a whole; (vi) such other liens, imperfections in title, charges,
easements, restrictions, encumbrances and other matters of a similar nature
which have been agreed to in writing by Buyer and (vii) liens or charges
securing indebtedness to be assumed hereunder by Buyer or contemplated
hereunder to become the obligation of the Buyer.
"Person" means an individual, partnership (general or limited),
corporation, association or other form of business organization (whether or not
regarded as a legal entity under applicable law), trust, estate or any other
entity.
"Plant Sites" means those portions of the Real Property and Leased
Premises locations listed on Schedule 1.1-B.
"Proposed Closing Audited Balance Sheet" has the meaning set forth in
Section 3.2(c).
"Purchase Price" has the meaning set forth in Section 3.1.
"Real Property" has the meaning set forth in Section 2.1(a).
"Related Agreements" has the meaning set forth in Section .
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment.
"Remedial Actions" means actions required under Environmental Laws to
clean up or to contain or otherwise to ameliorate or remedy any Environmental
Condition, including but not limited to preventing a Release or threatened
Release and performing studies, investigations and monitoring.
"Representative" has the meaning set forth in Section .
"Salaried Business Employees" has the meaning set forth in Section 8.1.
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"Section 338(h)(10) Election" means an election for federal income tax
purposes described in Section 338(h)(10) of the Internal Revenue Code with
respect to the stock purchase of the Xxxxx River California Sub described in
this Agreement, including any elections required under Section 338(g) of the
Internal Revenue Code that are required to be made under applicable law when
making the Section 338(h)(10) Election.
"Section 338 Forms" means all returns, documents, statements, and other
forms that are required to be submitted to any federal, state, county or other
governmental authority in connection with the Section 338(h)(10) Election,
including (i) U.S. Internal Revenue Service Form 8023-A (together with any
schedules or attachments thereto that are required pursuant to Treasury
Regulations, including Section 1.338(h)(10)-1), and (ii) any comparable or
similar state, local or other governmental submissions.
"Stock" means all of the issued and outstanding shares in the capital
stock of the Stock Companies.
"Stock Companies" means Xxxxx River California Sub (if formed pursuant
to Section 7.20), Xxxxx River Packaging de Mexico, S.A. de C.V., Servicios Xxxxx
River de Mexico, S.A. de C.V., and Xxxxx River de Mexico, S.A. de C.V. and any
Subsidiaries thereof.
"Stock Company Assets" means at any time, any assets then owned by the
Stock Companies.
"StockPlus Plan" has the meaning set forth in Section .
"Subsidiary", when used with respect to any Person, means any
corporation or other business entity, whether or not incorporated, of which
such Person holds, directly or indirectly, more than 50% of the securities or
interests having, by their terms, ordinary voting power to elect members of the
Board of Directors, or other persons performing similar functions with respect
to such entity.
"Tech Center" means Xxxxx River's business and technical center located
at Milford, Ohio.
"Title Commitment" has the meaning set forth in Section 7.16.
"Title Defect" has the meaning set forth in Section 7.16.
"Title Package" has the meaning set forth in Section 7.16.
"Transfer Fees" has the meaning set forth in Section 7.15.
"Underlying Assets" means the Assets, the Leased Premises and the
Stock Company Assets.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE. Xxxxx River agrees to sell, or cause its
Subsidiaries to sell, to Buyer and Buyer agrees to purchase from Xxxxx River or
its designated Subsidiaries at Closing all of the right, title and interest of
Xxxxx River or any Person within the JR Group in and to the following assets,
properties and rights other than the Excluded Assets and the Stock Company
Assets (collectively, the "Assets"):
(a) the real property listed in Schedule 2.1(a) together with
the buildings, fixtures and other improvements located thereon and the
appurtenances thereto (the "Real Property");
(b) the machinery, equipment, furniture, vehicles, tools,
supplies and other tangible personal property (other than the tangible personal
property and fixtures described in other clauses of this Section ) which (i) is
ordinarily located on the Real Property or the Leased Premises, (ii) is listed
on the attached Schedule 2.1(b) without an adjacent check xxxx, or (iii) is
located at the Tech Center, but not listed on Schedule 2.1(b), and relates
primarily to the Business;
(c) the raw materials, work-in-process, finished goods, stores,
supplies and spare parts which are located at the Plant Sites or are in transit
thereto or which are located elsewhere and relate solely to the Business (the
"Inventory");
(d) except to the extent specified in Schedule 5.13, the Filed
Business Intellectual Property listed in Schedule 5.13, the Non-Filed Business
Intellectual Property, and licenses to Filed Business Intellectual Property and
Non-Filed Business Intellectual Property listed in Schedule 5.13, used
exclusively in, or applicable exclusively to, the Business (such Filed Business
Intellectual Property, such Non-Filed Business Intellectual Property, and such
licenses thereto, collectively, the "Business Intellectual Property");
(e) all of the rights of every Person within the JR Group under
the Listed Contracts, the Lessee Leases and all other contracts and commitments
to the extent the same relate to the Business if the obligations thereunder of
every Person within the JR Group, to the extent they relate to the Business,
are assumed by Buyer except for Lessee Leases retained by a Person within the
JR Group pursuant to the Offices Sharing Agreement;
(f) to the extent assignable, all federal, state, local and
foreign governmental licenses, permits, approvals and authorizations held by
any Person within the JR Group to the extent the same relate to the Business;
(g) all of the Stock;
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(h) all accounts receivable and notes receivable arising
from the Business, including receivables from Business Employees;
(i) all property records, production records, engineering
records, purchasing and sales records, personnel and payroll records for
Business Employees, accounting records, customer and vendor lists and other
records and files (including, but not limited to, any such records maintained
in connection with any computer system, but subject to the provisions of any
applicable Related Agreement) used exclusively in the Business; a co-ownership
interest in any of the foregoing assets which are used only in part in the
Business, but only to the extent of such use; and copies of the information
relating to the Business contained in the computer files referred to in Section
2.2(d), but only to the extent such information relates to the Business;
provided, however, that the transfer of the assets and properties referred to
in this Section 2.1(i) that do not constitute indicia of title, may, at the
option of Xxxxx River, consist of transfer of true, correct and complete copies
thereof;
(j) subject to the provisions of Section 7.10, all purchase
orders, forms, labels, stationery, shipping materials, catalogues, brochures,
art work, photographs and advertising materials which relate solely to the
Business or which are located at any Plant Site;
(k) those categories of prepaid expenses and deferred
charges created in the ordinary course of the Business which are listed on
Schedule 2.1(k);
(l) the rights, as of Closing, of all Persons within the
JR Group, other than the Stock Companies, under the Mexican Revolving Loan and
the Mexican Financing; and
(m) all rights, choses in action and claims, known or
unknown, matured or unmatured, accrued or contingent, against third parties
arising solely out of the Business or the ownership or operation of the Assets.
2.2 EXCLUDED ASSETS. The following assets (the "Excluded Assets")
to the extent that, but for this sentence, they would constitute Assets, shall
not be included in the Assets:
(a) all cash and cash equivalents, including cash on hand
or in bank accounts, certificates of deposit, commercial paper and securities,
except xxxxx cash funds located at the Plant Sites or the Leased Premises;
(b) all prepaid expenses and deferred charges other than
those listed in Schedule 2.1(k);
(c) the real property, improvements, equipment and all
other assets to be leased from a member of the JR Group pursuant to any
Related Agreement, and any Leased Assets;
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(d) all computer files which contain any records or lists
relating to any business of the JR Group other than the Business;
(e) the excluded technology listed in Schedule 2.2(e);
(f) all assets listed in Schedule 2.2(f);
(g) all prepaid insurance premiums; and
(h) the machinery, equipment, furniture, vehicles, tools,
supplies and other tangible personal property which is listed on the attached
Schedule 2.1(b) with an adjacent check xxxx.
2.3 ASSUMED LIABILITIES. (a) Except to the extent set forth in
Section 2.3(b), Buyer shall assume, at the Closing, all liabilities and
obligations of any Person within the JR Group to the extent such liabilities
and obligations relate to the Business or to the Assets or the Stock
(collectively, the "Assumed Liabilities"), including, without limitation, the
following:
(i) the current liabilities related to the
Business or the Assets, including, but not limited to, all accounts
and trade payables, all liabilities and all obligations accruable as a
current liability on Xxxxx River's financial statements at Closing to
the extent such payables, liabilities and obligations are related to
the Business, the Assets or the Stock;
(ii) all liabilities and obligations of any Person
within the JR Group to deliver goods or services to customers of the
Business arising from orders placed in the normal course of business
of the Business;
(iii) all liabilities and obligations of any Person
within the JR Group under any contract, commitment, license, permit,
approval, authorization or other agreement or arrangement constituting
part of the Assets;
(iv) all liabilities and obligations of any Person
within the JR Group existing at Closing and relating to Business
Employees and employee benefits to the extent set forth in Article VIII;
(v) subject to any right to reimbursement by Xxxxx
River to the extent specifically set forth in Section 12.4 below, all
liabilities and obligations under Environmental Laws of any Person
within the JR Group, including, without limitation, any obligation to
conduct or to pay for any Remedial Action for any Environmental
Condition or any obligation to correct or to pay a penalty for failure
to comply with Environmental Statutes, to the extent that such
condition or failure exists on, or is specifically related to, any Real
Property, or real property constituting Leased Premises at the Plant
Sites, and
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including, without limitation, those liabilities listed on Schedule,
to the extent such liabilities or obligations relate to the Business or
Underlying Assets;
(vi) all other long-term liabilities or obligations
in respect of which an amount is reflected in the balance sheet
included in the December Balance Sheet;
(vii) all other liabilities described on Schedule
2.3(a)(vii);
(viii) to the extent Buyer is entitled to, and elects
to, assume the same pursuant to Sections 7.17, 7.18 and 7.19,
respectively, the obligations of any Person within the JR Group under
the Mexican Financing, the Xxxxxxx IDB and the Xxxxx River IDBs; and
(ix) the obligations of any Person within the JR
Group (other than the Stock Companies) under the Mexican Revolving Loan.
(b) Notwithstanding the provisions of Section 2.3(a), all
of the following liabilities and obligations (the "Excluded Liabilities") shall
be excluded from the Assumed Liabilities:
(i) liabilities for federal, state and local
income and franchise taxes and any other taxes incurred by any Persons,
other than Stock Companies, within the JR Group in the conduct of the
Business or with respect to the Assets or the Stock before Closing,
except as is otherwiseprovided in this Agreement;
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(ii) all liabilities and obligations relating to
any employee or any employee benefits which are not to be assumed by
Buyer pursuant to Article VIII;
(iii) all liabilities or obligations to the extent
relating to the acquisition, ownership or use of any of the Excluded
Assets;
(iv) any liabilities listed on Schedule 2.3(b)(iv);
(v) all liabilities or obligations arising under
Environmental Laws in connection with facts, events, conditions,
actions or omissions existing on or occurring prior to Closing at
locations other than the Plant Sites or the Leased Premises, excluding
from the liabilities described in this Section 2.3(b)(v), however,
liabilities arising under Environmental Laws with respect to hazardous
substances, contaminants, pollutants or petroleum products leaching or
physically migrating from Plant Sites to adjacent or nearby properties;
(vi) any Excluded Retiree Liabilities; and
(vii) any liability with respect to the litigation
and threatened litigation disclosed on Schedule 5.16.
2.4 ACTIONS BY PERSONS WITHIN THE JR GROUP. Xxxxx River shall ensure
that each Person within the JR Group takes all actions necessary to be taken by
such Person in order to fulfill Xxxxx River's obligations hereunder.
ARTICLE III
PURCHASE PRICE, WORKING CAPITAL ADJUSTMENT
3.1 PURCHASE PRICE. The consideration to be paid for the Assets
(the "Purchase Price") shall be $365,000,000.00, in cash, subject to adjustment
as provided in Section 3.2, together with any reimbursements of costs and
expenses payments required to be made pursuant to Sections 7.18 or 7.19.
3.2 BALANCE SHEET ADJUSTMENT. (a) At least five days prior to
Closing, Xxxxx River shall prepare and deliver to Buyer a balance sheet (the
"Closing Date Balance Sheet") of the Business, which shall reflect Xxxxx River's
estimate of the amount of the Closing Net Asset Value, as defined below, at
Closing and which shall be prepared in accordance with GAAP except as otherwise
set forth in the comments accompanying the December Balance Sheet applied on a
basis consistent with the basis on which the December Balance Sheet was
prepared.
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(b) If the total Closing Net Asset Value shown on the Closing
Date Balance Sheet is greater than $299,219,124 (the "Opening Net Asset
Value"), the Purchase Price shall be adjusted upward, dollar for dollar, for
the amount of the difference between the Opening Net Asset Value and the
Closing Net Asset Value. If the total Closing Net Asset Value shown on the
Closing Date Balance Sheet is less than the Opening Net Asset Value, the
Purchase Price shall be adjusted downward, dollar for dollar for the amount of
the difference.
(c) Immediately after the Closing, Buyer shall cause its
independent public accounting firm (for purposes of this Section 3.2 an
"accounting firm") to review those Assets and Assumed Liabilities, including an
observation of the physical count of Inventory, for the purpose of preparing
schedules (the "Proposed Closing Audited Balance Sheet") setting forth such
accounting firm's calculation as of the end of the last shift on the day next
preceding the date of the Closing, of the Closing Net Asset Value. "Closing Net
Asset Value" shall equal Assets less Assumed Liabilities as of the end of the
last shift on the day next preceding the date of the Closing. Xxxxx River shall
have the option of having its accounting firm participate in or observe the
physical count of Inventory and any other procedure used by Buyer's accounting
firm in computing the Proposed Closing Audited Balance Sheet. The Proposed
Closing Audited Balance Sheet shall be prepared in accordance with GAAP except
as otherwise set forth in the comments accompanying the December Balance Sheet
applied on a basis consistent with the preparation of the December Balance
Sheet. As promptly as practicable, but no later than 60 days after Closing,
Buyer's accounting firm shall cause copies of the Proposed Closing Audited
Balance Sheet to be delivered to Xxxxx River. Xxxxx River and its accounting
firm shall have, for a period of fifteen days thereafter, access to the working
papers of, and shall consult with, Buyer's accounting firm. All items the
amounts of which are not objected to or questioned by Xxxxx River in the
Proposed Closing Audited Balance Sheet by the expiration of such 15-day period
shall be deemed agreed upon by the parties and shall be deemed conclusive for
purposes of preparing the Final Closing Audited Balance Sheet, as defined
herein, and the calculation of Closing Net Asset Value.
(d) As promptly as practicable, but no later than 15 days
after the expiration of the 15-day period referred to in (c) above, the parties
shall attempt to resolve any items on the Proposed Closing Audited Balance
Sheet as to which the parties differ (the "Disputed Items"). If during such
15-day period the parties are able to resolve all Disputed Items, the balance
sheet so agreed upon shall be the "Final Closing Audited Balance Sheet."
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(e) If during such 15-day period any such Disputed Items
cannot be resolved, (i) those items to the extent of the amounts agreed upon by
the parties shall be deemed agreed upon, shall no longer constitute Disputed
Items and shall be conclusive for purposes of preparing the Final Closing
Audited Balance Sheet and calculation of the Closing Net Asset Value and (ii)
the respective accounting firms of each of Xxxxx River and Buyer shall promptly
thereafter but in no event more than 10 days thereafter cause an accounting
firm of internationally recognized standing reasonably satisfactory to them
promptly to review this Agreement and the remaining Disputed Items for purposes
of resolving the remaining Disputed Items and calculating the Closing Net Asset
Value. In making such calculation, such accounting firm shall make a
determination only of Disputed Items not resolved by the parties and in the
case of all other items shall use the amounts which are agreed upon by the
parties. Such accounting firm shall deliver to Xxxxx River and to Buyer, as
promptly as practicable, a report setting forth its resolution of the remaining
Disputed Items and its calculation of Closing Net Asset Value. Such report
shall be final and binding upon the parties hereto. The cost of such review and
report shall be borne by the party against whom the disagreement is in large
part resolved or, if the resolution does not substantially favor either party,
such costs shall be borne equally by Xxxxx River and Buyer. In all events, such
accounting firm will determine the assessment of such costs. Each party agrees
to direct its auditors not to select, and will not accept, an accounting firm
to review Disputed Items pursuant to this Section 3.2(e) if, at the time of
selection, either Buyer or Xxxxx River or their respective Affiliates
contemplates retaining such accounting firm, within one year after such date,
for any substantial engagement having a purpose other than the performance of
services pursuant to this Section 3.2(e).
(f) The Closing Net Asset Value agreed to by the parties or
as calculated by the accounting firm as set forth in Section 3.2(e) above, as
the case may be, shall be the "Final Closing Net Asset Value;" and the Proposed
Closing Audited Balance Sheet, adjusted to reflect the Final Closing Net Asset
Value, shall be the "Final Closing Audited Balance Sheet" which shall be
conclusive for all purposes of this Agreement. Without limiting the generality
of the foregoing, the Final Closing Audited Balance Sheet shall be conclusive
as to the valuation and amount of all items so valued therein.
(g) If the Final Closing Net Asset Value is greater than the
amount of Closing Net Asset Value shown in the Closing Date Balance Sheet,
Buyer shall promptly pay to (or as directed by) Xxxxx River, in the manner and
with interest as provided in Section 3.2(h), the amount of the difference. If
the Final Net Asset Value is less than the amount of Closing Net Asset Value
shown in the Closing Date Balance Sheet, Xxxxx
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River shall promptly pay to (or as directed by) Buyer, in the manner and with
interest as provided in Section 3.2(h), the amount of the difference. Any such
payment pursuant to this Section 3.2(g) shall be made at a mutually convenient
time and place (i) within 5 business days after Buyer and Xxxxx River agree
upon the Final Closing Net Asset Value pursuant to Section 3.2(d) or (ii) if
Disputed Items are referred to a firm of independent accountants pursuant to
Section 3.2(e), then within 10 business days after the delivery of the report
of such firm referred to in Section 3.2(e).
(h) Any payments pursuant to this Section 3.2(h) shall be
made by causing such payments to be credited in immediately available funds to
the account of Buyer or of Xxxxx River, as the case may be, as may be
designated by the party receiving payment. The amount of any payment to be made
pursuant to this Section 3.2(h) shall bear interest from and including the date
of Closing to but excluding the date of payment at a rate per annum equal to 5
percent. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of 365
days and the actual number of days for which interest is due.
3.3 ADDITIONAL PAYMENTS. (a) If any Underlying Asset or the Business
shall suffer any damage, destruction or loss after the date hereof, but before
the date of Closing, and such Asset or the Business and the related casualty
are covered by any insurance policy maintained by any Person within the JR
Group: (i) Xxxxx River shall pay to Buyer, as soon as practicable after receipt
by Xxxxx River, in cash, the amount by which the proceeds from such policy in
respect of such damage, destruction or loss exceed the sum of (A) any amount
recorded on the Final Closing Audited Balance Sheet as a liability with respect
to repair, restoration or replacement related to such damage, destruction or
loss; (B) the amount by which the Assets included in the Final Closing Audited
Balance Sheet shall have been reduced from the Assets shown on the December
Balance Sheet by reason of such damage, destruction or loss, and (C) any amount
paid by any Person within the JR Group after the date hereof in cash for the
repair, restoration or replacement of the damaged or destroyed asset; and (ii)
Xxxxx River (A) shall allow Buyer, at its sole cost and expense, to pursue any
claim under such policy in respect to such damage, destruction or loss or (B)
shall pursue, upon reasonable written request of Buyer and at Buyer's sole cost
and expense, any such claim on behalf, and for the benefit, of Buyer.
(b) All proceeds of insurance which are applicable to insured
claims of third parties included in the Assumed Liabilities and are received by
any Person within the JR Group after Closing shall (i) be used to discharge, in
whole or in part, the applicable Assumed Liabilities, (ii) be paid to Buyer if,
and to the extent that, such Assumed Liabilities have been discharged by Buyer
or Buyer has made a reimbursement to Xxxxx
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River in respect of such claim or (iii) be retained by Xxxxx River if, and to
the extent that, such Assumed Liabilities have been discharged by any Person
within the JR Group and Buyer has not made a reimbursement to Xxxxx River in
respect of such claim. Xxxxx River shall use its reasonable best efforts to
pursue the collection of such insured claims.
ARTICLE IV
RELATED AGREEMENTS
4.1 RELATED AGREEMENTS. In connection with the consummation of the
transactions contemplated hereby, Xxxxx River (or the Subsidiary of Xxxxx River
named therein) and Buyer shall enter into each of the following agreements
(collectively, the "Related Agreements") at or before the Closing:
(a) a Wrap Supply Agreement in substantially the form
attached hereto as Exhibit A;
(b) an Ink Supply Agreement containing the terms set forth
in Exhibit B attached hereto unless, at Closing, the New Sun Agreement, as
defined on Exhibit B attached hereto, has been executed and delivered by Xxxxx
River, in which case, the New Sun Agreement shall be transferred to, and
assumed by, Buyer at Closing;
(c) a Cast Film Supply Agreement in substantially the form
attached hereto as Exhibit C;
(d) an Office Sharing Agreement in substantially the form
attached hereto as Exhibit D;
(e) a Transition Services Agreement in substantially the
form attached hereto as Exhibit E;
(f) a License Agreement in substantially the form attached
hereto as Exhibit F;
(g) a Xxxx Wrap Supply Agreement in substantially the form
attached hereto as Exhibit G;
(h) a JR Parent Roll Agreement in substantially the form
attached hereto as Exhibit H;
(i) a Buyer Non-Competition Agreement in substantially the
form attached hereto as Exhibit I; and
(j) a Xxxxx River Non-Competition Agreement in
substantially the form attached hereto as Exhibit J.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXX RIVER
Xxxxx River represents and warrants to Buyer that as of the date hereof
and as of the date of Closing:
5.1 ORGANIZATION; QUALIFICATION. Xxxxx River is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and has corporate power and authority to own all of
its properties and assets and to carry on its business as it is now being
conducted. Xxxxx River and each member of the JR Group engaged in the Business
are duly qualified and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary except in those
jurisdictions where the failure to be duly qualified and in good standing would
not have a material adverse effect on the Assets and the Business, taken as a
whole.
5.2 ORGANIZATION OF STOCK COMPANIES; OWNERSHIP AND VALIDITY OF
SHARES.
(a) Each of the Stock Companies is a corporation duly
organized and validly existing under the laws of Mexico or with respect to the
Xxxxx River California Sub, the State of California, and has corporate power and
authority to own all of its properties and assets and to carry on its business
as it is now being conducted.
(b) The ownership of all of the outstanding Stock (except
with respect to the Xxxxx River California Sub) is as set forth on Schedule
5.2(b), the Stock is free and clear of all liens, charges, pledges, security
interests or other encumbrances, and all of such capital stock is duly
authorized, validly issued, fully paid and non-assessable, and was not issued
in violation of any preemptive rights. Except that the Stock of the Xxxxx River
California Sub, if such subsidiary is formed, will be issued to Xxxxx River or a
Subsidiary of Xxxxx River, and except as is otherwise set forth on Schedule
5.2(b), none of the Stock Companies has made any commitment to issue or sell
any shares of its capital stock or any securities or obligations convertible or
exchangeable therefor, or given any person any right to acquire from the Stock
Companies any shares of its capital stock, and no such securities or
obligations are outstanding. Except for the Mexican Financing, none of the
Stock is subject to any agreement or other obligation regarding the transfer of
voting of such stock.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE RELATED AGREEMENTS.
Each Person within the JR Group has the corporate power and authority to
execute and
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deliver each agreement or other document to be executed by it in
connection with the transactions contemplated by this Agreement and to
consummate the transactions contemplated on its part thereby. The execution and
delivery by each Person within the JR Group of each agreement or other document
to be executed by it in connection with the transactions contemplated by this
Agreement, and the consummation by it of any transactions contemplated on its
part hereby and thereby, have been duly authorized by such Person's Board of
Directors and no other corporate proceedings on the part of such Person are
necessary with respect thereto except for the taking of any required action by
any wholly-owned Subsidiary of Xxxxx River, the taking of which will be ensured
by Xxxxx River before the Closing. This Agreement constitutes, and each
agreement or other document to be executed by a Person within the JR Group in
connection with the transactions contemplated by this Agreement (when executed
and delivered by Xxxxx River or that other Person within the JR Group) will
constitute, valid and binding obligations of Xxxxx River and/or such other
Person within the JR Group, as the case may be, enforceable in accordance with
their terms.
5.4 CONSENTS AND APPROVALS. Except as set forth in Schedule 5.4,
there is no requirement applicable to any Person within the JR Group to make any
filing with, or to obtain any permit, authorization, consent or approval from,
any third party (including any public body) as a condition to the consummation
of the transactions contemplated by this Agreement.
5.5 NON-CONTRAVENTION. The execution and delivery by each Person
within the JR Group of this Agreement and the other agreements and documents to
be executed in connection with the transactions contemplated by this Agreement
and the consummation of the transactions contemplated thereby will not, (i)
violate or result in a breach of any provision of the Articles of Incorporation
or Bylaws of Xxxxx River or such other Person within the JR Group, as the case
may be, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which Xxxxx River or such other Person within the JR Group, as
the case may be, is a party or by which Xxxxx River or other member of the JR
Group, as the case may be, or any of the Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been or shall be obtained by Xxxxx River
before the Closing or the obtaining of which has been or shall be waived by
Buyer before the Closing and which would not have an adverse effect on the
Assets or the Business, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to any Person within the JR Group or any
of the
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Assets or the Business (other than any applicable "bulk sales" laws),
excluding from the foregoing clause (iii) such violations that would not have a
material adverse effect on the Assets, in the aggregate, located at any Plant
Site or the business conducted with respect to products of any Plant Site.
5.6 COMPLIANCE WITH LAWS. Except as set forth in Schedules 5.6, 5.7
and 5.8, all Persons within the JR Group have operated the Business in
substantial compliance with all laws, regulations, policies, guidelines,
orders, judgments or decrees of any Authority applicable to, or having
jurisdiction over, Persons within the JR Group, the Assets or the Business. To
the Knowledge of Xxxxx River, no Person within the JR Group has received from
any governmental authority any notice of any failure to so comply, and no
Person within the JR Group is currently subject to any sanction for such
noncompliance.
5.7 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.7,
Persons within the JR Group have obtained all federal, state and local permits,
licenses and other authorizations which are required under applicable
Environmental Statutes other than licenses, permits, and other authorizations,
the failure to obtain which, individually or in the aggregate, would not have a
material adverse effect on the ownership or operation of the Assets, in the
aggregate, located at any Plant Site, or the conduct of the business conducted
with respect to the products of any Plant Site. Except as described in on
Schedule 5.7, the Assets and the Business are in substantial compliance with
all terms and conditions of such permits, licenses and authorizations, and are
also in substantial compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables of any Environmental Statute. Except as described on Schedule 5.7,
neither Xxxxx River nor any of its Subsidiaries has received notice from any
Authority or Person of any failure of the Assets or the Business to comply in
any material respect with, or of any material liability or any potential
liability under, any Environmental Statute, except for any such Statute the
failure to comply with which could reasonably be expected to affect, materially
and adversely, the ownership or operation of the Assets, in the aggregate,
located at any Plant Site, or the conduct of the business conducted with
respect to the products of any Plant Site, nor, to the Knowledge of Xxxxx
River, are there any facts or circumstances reasonably likely to result in such
condition.
5.8 LICENSES AND PERMITS. Schedule 5.8 contains a complete and
correct list of all material federal, state and local permits and licenses that
any Person within the JR Group is required to obtain that are related to the
Business or the ownership or operation of the Assets. Except as set forth on
Schedule 5.8, all of such permits and licenses have been obtained and are
currently in full force and effect. Except as set forth in Schedule 5.8, no
Person within the JR Group has violated the terms or conditions of any such
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license or permit, no notice of a violation of any such license or permit has
been received by any Person within the JR Group or recorded or published, and
no proceeding is pending or threatened, to revoke, prevent the renewal of, or
limit any such license or permit.
5.9 FINANCIAL STATEMENTS. (a) Xxxxx River has previously furnished
Buyer with the December Balance Sheet, a copy of which is set forth in Schedule
5.9(a). Such unaudited balance sheet has been prepared in conformity with GAAP,
except as otherwise set forth in the comments accompanying such balance sheet,
applied on a basis consistent with Xxxxx River's historical accounting policies
and procedures with respect to the Business used in the preparation of its
audited financial statements except that inventory balances reflect a
revaluation of the reserves for obsolete and slow moving inventory.
(b) Xxxxx River has previously furnished Buyer with unaudited
profit and loss statements for the Business for the fiscal years ended December
26, 1993, December 25, 1994 and December 31, 1995, copies of which are attached
as Schedule 5.9(b) (the "P&LS"). Such unaudited P&LS have been prepared in
conformity with XXXX, except that historical selling, general and
administrative costs have been restated to reflect proforma spending based on
assumed changes in the business operations, non-operating charges related to
restructure reserves (i.e. severance, fixed assets) have been excluded, and
footnotes have not been provided with the P&LS, applied on a basis consistent
with Xxxxx River's historical accounting policies and procedures with respect
to the Business used in the preparation of its audited financial statements.
5.10 LITIGATION. (a) Except as set forth in Schedule 5.10, there are
no actions, suits, claims, investigations or proceedings (legal,
administrative or arbitrative) pending or, to the Knowledge of Xxxxx River,
threatened against any Person within the JR Group, whether at law or in equity
and whether civil or criminal in nature, before any federal, state, municipal,
foreign country's or other court, arbitrator, governmental department,
commission, agency or instrumentality, nor are there any judgments, decrees or
orders of any such court, arbitrator, governmental department, commission,
agency or instrumentality outstanding against any Person within the JR Group
which have, or, if adversely determined, could reasonably be expected to have,
a material adverse effect on any significant product or group of products of
the Business, any Asset which is material to the conduct of any material
portion of the Business, or otherwise materially and adversely affect any
material portion of the Assets or the Business.
(b) Except as set forth on Schedule 5.10, to the Knowledge of
Xxxxx River there are no actions, suits, claims, investigations or proceedings
(legal, administrative or arbitrative) that are reasonably likely to be
asserted that, if adversely
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determined, would reasonably be expected to have a material adverse effect on
any significant product or group of products of the Business, any Asset which is
material to the conduct of any material portion of the Business, or would
otherwise materially and adversely affect any material portion of the Assets or
the Business.
5.11 TITLE TO PROPERTIES. (a) Except as set forth in Schedule 5.11
and except for Permitted Exceptions, Xxxxx River or another Person of the JR
Group has good and marketable fee simple title to the Real Property.
(b) Except as set forth in Schedules 5.6, 5.7, 5.8, 5.11 or
5.12 to the Knowledge of Xxxxx River (i) there are no violations of federal,
state or local laws, ordinances, rules or regulations with respect to the use
and occupancy of any of the Plant Sites which would have a material adverse
effect on the ability of the Buyer to operate such Plant Site in substantially
the same manner as such Plant Site has been historically operated, and (ii) all
governmental permits, licenses and certificates required for the occupancy and
use of such Plant Sites in substantially the same manner as such Plant Sites
have been historically operated have been issued and are in good standing.
(c) Xxxxx River or another member of the JR Group has good
title to all tangible personal property that is included in the Assets and will
convey title to such personal property to Buyer upon consummation of the
transactions contemplated by this Agreement.
5.12 LEASES. (a) Schedule 5.12 is a list that contains an entry for
all leases, agreements and commitments to lease (each, a "Lessee Lease" and,
collectively, the "Lessee Leases") under which any Person within the JR Group
is the lessee, and all leases, agreements and commitments to lease (each a
"Lessor Lease" and, collectively, the "Lessor Leases"), under which any Person
within the JR Group is the lessor that relate, in each case, principally to the
Business and to either real or personal property, other than leases of personal
property which may be cancelled without material penalty upon not more than 60
days' notice or which require the payment of not more than $10,000 per month.
Except as set forth in Schedule 5.12, there is not, with respect to any of the
Lessee Leases or the Lessor Leases, any existing material default or event of
default on the part of any Person within the JR Group or, to the Knowledge of
Xxxxx River, any existing material default or event of default on the part of
any other party to the Lessee Leases or the Lessor Leases.
(b) Except as set forth in Schedule 5.12, there is not, with
respect to either of the two plant sites which are the subject of the Orange,
Texas leases and the Williamsburg, Virginia lease (the "Major Leases"), any
mortgage, deed of trust or similar instrument securing indebtedness
constituting a lien on either such Plant Sites which has
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not been subordinated to such lease and with respect to which an appropriate
non-disturbance and attornment agreement has not been given. Except as set forth
in Schedule 5.12, no payments are required by any Person within the JR Group to
maintain the Major Leases other than as provided therein, all of such payments
that have come due have been made, no person has made any claim with respect to
the Major Leases that would materially interfere with the use of the premises by
the tenant in the conduct of its Business, and no consent is required for the
assignment of the Major Leases to Buyer.
5.13 INTELLECTUAL PROPERTY. Schedule 5.13 sets forth a complete and
correct list of the Filed Business Intellectual Property that is used
exclusively in, or applicable exclusively to, the Business. Except as set forth
in Schedule 5.13, Xxxxx River or another member of the JR Group owns the Filed
Business Intellectual Property and such Filed Business Intellectual Property is
subsisting on the record of the applicable Authority on the date hereof. Except
as set forth on Schedule 5.13, there are no licenses of Business Intellectual
Property to third parties. Except as set forth in Schedule 5.13, there is no
claim, suit, action or proceeding pending or, to the Knowledge of Xxxxx River,
threatened against any Person within the JR Group asserting that its use of any
Business Intellectual Property infringes upon the rights of any third parties.
Except as set forth on Schedule 5.13, to the Knowledge of Xxxxx River, there
are no third parties infringing upon the Business Intellectual Property.
5.14 LISTED CONTRACTS. Schedule 5.14 contains a complete and correct
list of every contract, agreement or commitment of the any Person within the JR
Group, other than Lessee Leases and the Lessor Leases (each, a "Listed
Contract"):
(a) which provides for aggregate future payments by the
Business of more than $250,000.00, except for purchase orders or sales orders
arising in the ordinary and usual course of business, in which case such
contract, agreement or commitment is listed only if any party thereto is
obligated to make payments during the term thereof which will exceed
$1,000,000.00 in the aggregate; or
(b) which provides for the sale or other disposition, after the
date hereof and other than in the ordinary course of business, of any of the
Assets. Except as set forth in Schedule 5.14, all of the Listed Contracts are
in full force and effect and there has not occurred, with respect to any Listed
Contract, any material default or event of default on the part of any Person
within the JR Group or, to the Knowledge of any Person within the JR Group, any
other party thereto.
5.15 LABOR MATTERS. Schedule 5.15 sets forth a complete and correct
list of every collective bargaining agreement covering Business Employees.
Xxxxx River has
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provided Buyer with true, complete and correct copies of each of such collective
bargaining agreements and all amendments and modifications thereto.
(a) Except as set forth on Schedule 5.15, and except for
grievances that have not ripened into arbitration or litigation, to the
Knowledge of Xxxxx River, there are no material controversies, disagreements or
disputes pending between Xxxxx River or any other member of the JR Group and
any of their respective employees.
(b) Except as set forth on Schedule 5.15, during the last three
years immediately preceding the date of this Agreement, with respect to the
Business Employees there have been no labor strikes or general employment
disputes at any of the Plant Sites.
(c) Except as set forth on Schedule 5.15, there have within the
past three years immediately preceding the date of this Agreement occurred no
events that have legally required any Person of the JR Group to hold a union
election with respect to any Plant Site.
(d) Except as set forth on Schedule 5.15, there have within the
past three years immediately preceding the date of this Agreement been no
unfair labor practice charges filed with the National Labor Relations Board
against any Person of the JR Group related to the Business or the Assets.
5.16 Employee Benefit Plans. (a) Schedule 5.16 lists all of the
employee benefit plans and programs, including, without limitation: (i) all
retirement, savings and other pension plans; (ii) all health, severance,
insurance, disability and other employee welfare plans; and (iii) all
employment, incentive, vacation and other similar plans, that are maintained by
Xxxxx River or any Person within the JR Group with respect to Business
Employees or to which Xxxxx River or any Person within the JR Group contribute
on behalf of the employees of the Business (collectively, the "Employee
Plans").
(b) To the Knowledge of Xxxxx River, the Employee Plans that
are maintained by Xxxxx River or a member of the JR Group are in compliance in
all material respects with applicable laws and regulations, and Xxxxx River and
any Person within the JR Group have administered the Employee Plans in
accordance with applicable laws and regulations in all material respects.
(c) No lien exists under Section 4068 of ERISA with respect to
any assets of Xxxxx River or of any ERISA Affiliate.
(d) Xxxxx River has made available to Buyer copies of all
Employee Plans and, where applicable, summary plan descriptions and annual
reports filed within the last three years pursuant to ERISA or the Internal
Revenue Code with respect to the Employee Plans.
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(e) To the Knowledge of Xxxxx River, neither Xxxxx River nor
any Person within the JR Group has engaged in any prohibited transactions, as
defined in Section 4975 of the Internal Revenue Code, with respect to any
Employee Plan that is a pension plan as defined in Section 3(2) of ERISA. No
defined benefit pension plan (as defined in 3(35) of ERISA) maintained or
contributed to by Xxxxx River or an ERISA Affiliate or any trust established
thereunder that is subject to Section 302 of ERISA and Section 412 of the
Internal Revenue Code has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code),
whether or not waived; and all contributions required to be made with respect
thereto on or prior to Closing have been timely made. No lien exists under
Section 412(n) of the Internal Revenue Code with respect to any assets of Xxxxx
River or of any ERISA Affiliate.
(f) With respect to the Xxxxx River Corporation of Virginia
StockPlus Investment Plan (the "StockPlus Plan"), except as disclosed on
Schedule 5.16: (i) the "knowledge" condition set forth in Section 5.16(b) of
this Agreement shall not apply; (ii) the Internal Revenue Service has
determined the StockPlus Plan to be qualified under the Tax Reform Act of 1986
and related laws ("TRA86"), or an application for such determination letter
under TRA86 was filed on a timely basis, and nothing has occurred from the date
of such letter or such filing that could reasonably be expected to affect the
qualified status of the StockPlus Plan; (iii) there are no pending or
threatened or anticipated actions, suits or claims by or on behalf of the
StockPlus Plan, by any employee or beneficiary covered under the StockPlus
Plan, or otherwise involving the StockPlus Plan (other than routine claims for
benefits); (iv) there are no pending or threatened audits or investigations
with respect to the StockPlus Plan; (v) there is no matter pending before any
governmental agency with respect to the StockPlus Plan, other than pending
requests for determination letters under clause (ii) above; (vi) Xxxxx River or
a member of the JR Group has made full and timely payment of all amounts which
are required under the terms of the StockPlus Plan and in accordance with
applicable laws which are required to be paid as a contribution to such Plan;
(vii) neither Xxxxx River nor any member of the JR Group nor the StockPlus Plan
itself nor any trustee or administrator of the StockPlus Plan who is an
employee or officer of Xxxxx River or of any Person within the JR Group, nor,
to the Knowledge of Xxxxx River, any trustee or administrator of the StockPlus
Plan who is not an employee or officer of Xxxxx River or the JR Group, has
engaged in a transaction in connection with Xxxxx River, or any member of the
JR Group, or the StockPlus Plan or its trust, or any trustee or administrator
thereof, or any party dealing with the StockPlus or its trust, which could
result in a civil penalty assessed pursuant to Sections 409 or 502(i)
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of ERISA or a tax imposed pursuant to Section 4975 of the Code; and (viii) Xxxxx
River, the members of the JR Group, and any fiduciary (as defined in Section
3(21) of ERISA) with respect to the StockPlus Plan who is an employee or officer
of Xxxxx River or the JR Group, and, to the Knowledge of Xxxxx River, any
fiduciary who is not an employee or officer of Xxxxx River or the JR Group, have
complied in all material respects with Section 404 of ERISA with respect to the
StockPlus Plan.
5.17 CONDUCT OF BUSINESS AND MANAGEMENT OF ASSETS SINCE DATE OF
DECEMBER BALANCE SHEET. (a) Between the date of the December Balance Sheet and
the date hereof, Persons within the JR Group have conducted the Business, and
have managed the Assets only in the usual, regular and ordinary manner
consistent with past practice.
(b) Between the date of the December Balance Sheet and the
date hereof, with respect to the Business and the Assets, no Person within the
JR Group has:
(i) made capital expenditures which in the
aggregate have exceeded the budgeted depreciation;
(ii) made a disposition of assets in excess of $1
million, other than inventory in the ordinary course of business;
(iii) made loans or advances to, or investments in,
other parties in excess of $500,000 in the aggregate;
(iv) entered into employment, severance,
compensation or similar agreements with Business Employees, except for
incentive programs that by their terms expire at or before Closing;
(v) made increases in compensation or benefits
payable to Business Employees other than in the ordinary course of
business; or
(vi) suffered or incurred any significant damage,
destruction of property or other loss, whether or not insured.
(c) Between the date of the December Balance Sheet and the
date hereof, with respect to the Business and the Assets, the Persons
within the JR Group have:
(i) maintained their books and records in
accordance with past accounting practices;
(ii) maintained the same level and types of
insurance as previously maintained; and
(iii) used commercially reasonable efforts to
preserve the Business and the Assets.
Between the Date of the December Balance Sheet and the date hereof, with
respect to the Business and the Assets, there has not occurred any other
material adverse change in the Assets or Business taken as a whole.
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5.18 FINDERS. Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, no broker, finder or investment banker is entitled to any fee or
commission from Xxxxx River for services rendered on behalf of Xxxxx River in
connection with the transactions contemplated by this Agreement.
5.19 SUFFICIENCY OF ASSETS. The Assets, and the rights granted to Buyer
under certain Related Agreements, include all of the assets and rights
necessary to conduct the Business in substantially the same manner as it is
presently being conducted. The financial results of the Business reflected on
the P&LS were produced by the Assets, except as the Assets may have undergone
additions and deletions in the ordinary course of business since the periods
covered by the P&LS. Except for the Excluded Assets located at the Tech Center
that are included in the December Balance Sheet, but will not be reflected in
the Closing Net Asset Value, the December Balance Sheet does not reflect, and
the Closing Net Asset Value will not reflect, any assets other than the Assets.
The December Balance Sheet does not reflect any liabilities other than Assumed
Liabilities.
5.20 CONDITION OF ASSETS. The condition of the Assets at each Plant
Site, taken in the aggregate and excepting normal wear and tear, is sufficient
to operate the portion of the Business conducted at such Plant Site in a manner
generally resulting in production and efficiency levels at least equal to
historical levels attained at such Plant Site.
5.21 COPIES OF DOCUMENTS. Xxxxx River has provided or will, prior to
Closing, provide to Buyer true, complete and accurate copies of all documents
and instruments listed on any of the Schedules to this Agreement.
5.22 UNDISCLOSED LIABILITIES. Except for obligations under contracts or
leases not required to be reflected on a balance sheet of the Business prepared
in accordance with GAAP applied consistently with Xxxxx River's accounting
policies as reflected in its audited financial statements, and with the
accounting policies of the Business, no Person within the JR Group has any
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent or otherwise, and whether due or to
become due) that are included in the Assumed Liabilities other than any such
liabilities or obligations which (i) were fully accrued or reserved against in
the December Balance Sheet in accordance with GAAP, except as otherwise set
forth therein, or (ii) have been incurred since the date of the December
Balance Sheet in the ordinary course of business and do not individually or in
the aggregate have a material adverse effect on the Business or the Assets
taken as a whole.
5.23 EMPLOYMENT AND CONSULTING AGREEMENTS. Schedule 5.23 contains a
true and correct list of all employment and consulting contracts with an
original term in excess of 60 days, providing for compensation on a yearly
basis in excess of $250,000,
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and not otherwise listed on Schedule 5.14 to which any Person within the JR
Group is a party in connection with the Business. Except as set forth on
Schedule 5.23, each of such contracts is in full force and effect and there has
not occurred, with respect to any such contract, any material default or event
of default on the part of any Person within the JR Group or, to the Knowledge of
Xxxxx River, any other party to such contracts. Except as set forth on Schedule
5.4 and 5.23, no consent of any Person is required for the assignment of any of
such contracts to Buyer.
5.24 ABSENCE OF PROCEEDINGS. No portion of any Plant Site is subject to
any proceeding for its sale, condemnation, expropriation or taking (by eminent
domain or otherwise) by any Authority nor to the Knowledge of Xxxxx River has
any such sale, condemnation, expropriation or taking been proposed or
threatened.
5.25 ACCOUNTS RECEIVABLE. All accounts receivable shown on the December
Balance Sheet represent, and all accounts receivable that will be reflected in
the Closing Net Asset Value will be, sales actually made or services actually
performed in the ordinary course of business on arm's-length terms. In the
aggregate, no material portion of the currently outstanding accounts receivable
shown on the December Balance Sheet is currently subject to material disputes
as to payment, defenses, counterclaims, or rights of setoff other than for
which adequate reserves have been established.
5.26 TAXES. No Person within the JR Group has failed to file a return
with respect to any federal, state or local income or franchise tax or any
other type of tax, or failed to pay any such tax, so as to cause Buyer, as the
purchaser of the Assets, to become liable for such taxes or to cause a lien to
exist or arise against the Assets with respect to taxes.
5.27 INSURANCE. All of the Assets and the operations of the Business of
an insurable nature and of a character usually insured by companies of similar
size to Xxxxx River and in similar businesses are insured by a Person within
the JR Group in such amounts and against such losses, casualties or risks as is
(i) usual in such companies and for such assets, operations and businesses,
(ii) required by any law applicable to any Person within the JR Group, or (iii)
required by any contract to which a Person within the JR Group is a party. All
such policies are in full force and effect and enforceable in accordance with
their terms. No Person within the JR Group is now in material default under the
provisions of any such policy, including, without limitation, for failure to
make timely payment of all premiums due thereon. No Person within the JR Group
has been refused, or denied renewal of, any insurance coverage with respect to
the Business or the ownership or operation of the Assets which coverage would
be customary in accordance with good industry practice.
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5.28 CUSTOMERS. (a) Schedule 5.28 sets forth: (i) a list of the forty
largest customers of the Business, determined by dollar volume of gross sales
for the most recently ended fiscal year (the "Large Customers"), and the dollar
volume of sales to each such customer during the most recently ended fiscal
year, and (ii) a list of the brokers and distributors of the Business that
accounted for at least $1,000,000 in sales by the Business during the most
recently ended fiscal year (the "Large Brokers"), and the dollar volume of the
sales of the Business to or through each Large Broker during the most recently
ended fiscal year. Except as described on Schedule 5.28, no Person within the
JR Group has received notice or has actual knowledge that any Large Customer or
Large Broker has terminated or intends to terminate its existing relationship
with any Person within the JR Group, to terminate a substantial portion of the
outstanding orders with any Person in the JR Group or materially to diminish
the amount of business conducted with Xxxxx River.
5.29 ACCURACY OF PROVIDED MATERIALS.
(a) The employee data by location and category attached as
Schedule 5.29(a) is true and correct in all material respects as of the date
shown therein.
(b) The information regarding the major items of equipment
included in the Assets and attached as Schedule 5.29(b) is true and correct in
all material respects. All such items of equipment are reflected in the
December Balance Sheet and none have been disposed of since the date of the
December Balance Sheet.
Based on actual 1995 volume purchases of resin and assuming that Xxxxx
River's purchases in 1995 of such volume were at prevailing market prices,
Xxxxx River reasonably believes that the purchase of the same volume in 1996 at
contract prices under the contracts listed in Schedule 5.14, will provide
annualized cost savings to the Business in the hands of Buyer of at least
$5,000,000 when compared to such volumes purchased at prevailing market prices.
5.30 COMPLETENESS OF SCHEDULE 1.1. Xxxxx River represents and
warrants that the list of officers and employees on Schedule 1.1 includes the
managers of each of the plants included in the Assets and that such persons are
reasonably expected by Xxxxx River to have knowledge concerning all significant
matters which are the subject of the representations and warranties hereunder
which are stated to be "to the Knowledge of Xxxxx River."
5.31 ECONOMICS OF RELATED AGREEMENTS. Each of the Wrap Supply
Agreement, Cast Film Supply Agreement, Xxxx Wrap Supply Agreement, Ink Supply
Agreement and JR Parent Roll Agreement contain economic terms that, with
respect to each such agreement, are, in the aggregate, substantially equivalent
to the economic terms
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of the intercompany sales within the JR Group during 1995 of the products
covered by such agreement, which sales are reflected in the P&LS.
5.32 MATTERS RELATING TO TITLE COMMITMENT. In obtaining the Title
Commitment, Xxxxx River has not offered or provided to Lawyers Title Insurance
Corporation ("LTIC") additional compensation or inducement for the purpose of
causing LTIC to insure over otherwise valid title objections.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants the following to Xxxxx River as of the
date hereof:
6.1 ORGANIZATION; QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Georgia and
has the corporate power and authority to own all of its properties and assets
and to carry on its business as it is now being conducted and as is contemplated
to be carried on hereunder. Buyer is duly qualified and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the Business makes such qualification necessary except in
those jurisdictions where the failure to be duly qualified and in good standing
would not have a material adverse effect on Buyer or the Assets and the
Business, taken as a whole.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE RELATED AGREEMENTS.
Buyer has the corporate power and authority to execute and deliver this
Agreement and the Related Agreements to which it is contemplated to be a party
and to consummate the transactions contemplated on its part hereby and thereby.
The execution and delivery by Buyer of this Agreement and the Related
Agreements to which it is a party and the consummation by Buyer of the
transactions contemplated on its part hereby and thereby, have been duly
authorized by its Board of Directors and no other corporate proceedings on its
part are necessary with respect thereto. This Agreement constitutes, and any
Related Agreement to which Buyer is a party when executed and delivered by it
will constitute, its valid and binding obligations, enforceable in accordance
with their terms.
6.3 NON-CONTRAVENTION. The execution and delivery by Buyer of this
Agreement does not, and its execution and delivery of any Related Agreements to
which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby will not (i) violate or result in a breach of any provision
of Buyer's Articles of Incorporation or Bylaws, (ii) result in a default (or
give rise to any right of termination,
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cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which Buyer is a party or by which Buyer may be bound, except
for such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been or shall be obtained by Buyer
before the Closing or the obtaining of which has been or shall be waived by
Xxxxx River before the Closing or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Buyer (other than any
applicable "bulk sales" laws).
6.4 CONSENTS AND APPROVALS. Except as set forth in Schedule 6.4,
there is no requirement applicable to Buyer to make any filing with, or to
obtain any permit, authorization, consent or approval from, any public body as
a condition to the lawful consummation of the transactions contemplated by this
Agreement.
6.5 LITIGATION. Except as set forth in Schedule 6.5, there are no
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or threatened against Buyer, whether at law or in equity
and whether civil or criminal in nature before any federal, state, municipal or
other court, arbitrator, governmental department commission, agency or
instrumentality, nor are there any judgments, decrees or orders of any such
court, arbitrator, governmental department, commission, agency or
instrumentality outstanding against Buyer which have, or, if adversely
determined, could reasonably be expected to have, a material adverse effect on
Buyer, or which seeks specifically to prevent, restrict or delay the
consummation of the transaction as contemplated hereby or the fulfillment of
any of the conditions of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 CONDUCT OF BUSINESS AND MANAGEMENT OF ASSETS. (a) After the date
hereof and until the Closing, any Person within the JR Group (i) shall conduct
the Business only in the usual, regular and ordinary manner consistent with
past practice; and (ii) shall use reasonable efforts to preserve intact the
present business organization and operations of the Business, to keep available
the services of its employees and to preserve its relationships with licensors,
suppliers, dealers, customers and others having business relationships with the
Business.
7.2 FORBEARANCES BY XXXXX River. Except as specifically
contemplated by this Agreement:
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(a) Xxxxx River shall not, and shall cause each Person
within the JR Group, from the date hereof until the Closing, without the written
consent of Buyer, not to:
(i) sell, dispose of, transfer or encumber any of
the Underlying Assets except in the ordinary and usual course of
business (except for any transfers made to the Xxxxx River California
Sub in accordance with this Agreement);
(ii) make, or cause to be made, any dividend or
distribution relating to the Stock;
(iii) make any capital expenditures, series of capital
expenditures or commitments for capital expenditures related to the
Business except in the ordinary and usual course of business;
(iv) make any significant acquisition or
disposition of Assets other than in the ordinary course of business;
(v) amend, modify or cancel any Listed Contract,
Lessee Lease or Lessor Lease except in accordance with its terms;
(vi) make, with respect to the Business, any loans
or advances to, or investments in any Person other than in the
ordinary course of business;
(vii) enter into any employment, severance,
compensation or similar agreements with any Business Employee or
otherwise with respect to the Business;
(viii) increase the compensation of, or benefits
payable to, Business Employees other than in the ordinary course of
business;
(ix) incur any material obligations or liabilities
of any nature that would be required to be assumed hereunder by Buyer
other than items incurred in the regular and ordinary course of the
Business, consistent with past practice, or change the assumptions
underlying or the methods of calculating any bad debt, contingency, or
other reserve relating to the Business, other than in the ordinary
course of the Business consistent with past practice;
(x) permit, allow, or suffer any Assets to be
subjected to any mortgage, pledge, lien, encumbrance, restriction, or
charge of any kind, other than Permitted Encumbrances;
(xi) cancel any debts or waive any claims or rights
in excess of $10,000.00 individually or $100,000.00 in the aggregate
that constitute Assets, except to the extent such waiver or
cancellation results in a corresponding adjustment to the Purchase
Price pursuant to Article 3;
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(xii) dispose of or permit to lapse any right to the
use of any Business Intellectual Property or dispose of or disclose to
any person not authorized to have such information any Non Filed
Business Intellectual Property;
(xiii) incur any long term indebtedness that would be
required hereunder to be assumed by Buyer;
(xiv) enter into any collective bargaining or labor
agreement (oral and legally binding or written) with respect to the
Business;
(xv) make (except to the extent previously obligated
to do so) or agree to make any charitable contributions or incur or
agree to incur any non-business expenses in excess of $10,000 in the
aggregate, in each case in the name of the Business;
(xvi) make a significant change in the amount or
types of insurance maintained with respect to the Assets and the
Business; or
(xvii) agree, so as to legally bind Buyer whether in
writing or otherwise, to take any of the actions set forth in this
Section 7.2 and not otherwise permitted by this Agreement.
7.3 MAIL RECEIVED AFTER CLOSING. Following the Closing, Buyer may
receive and open all mail addressed to any Person within the JR Group and may
deal with the contents thereof in its discretion to the extent that such mail
and the contents thereof relate to the Business. Buyer shall deliver or cause
to be delivered to Xxxxx River, promptly after receipt by Buyer, all mail,
including, without limitation, payments of accounts or claims receivable,
addressed to any Person within the JR Group which does not relate to the
Business.
7.4 RETENTION OF BOOKS AND RECORDS. Buyer will retain and maintain,
in an organized and retrievable manner, all documents and records pertaining to
the periods before the Closing in accordance with Xxxxx River's Record
Management Policy dated September 1, 1992 as it may from time to time be
amended, including requesting authorization from Xxxxx River's Corporate Tax
Services Department prior to destruction of any items requiring such approval.
Buyer will retain and maintain all machinesensible records, such as computer
tapes, disks, diskettes, etc., which are considered books and records within
the meaning of Internal Revenue Code Section 6001, in accordance with Internal
Revenue Procedure 91-59 or such amending or superseding guidance as issued by
the Internal Revenue Service. Buyer will make available such documents and
records, machine sensible records, computer time, and assistance from Buyer's
personnel as may be reasonably requested by Xxxxx River in order to
expeditiously comply with all pertinent
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requests from the Internal Revenue Service and state taxing authorities which
relate to periods prior to the Closing.
7.5 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
7.6 CONFIDENTIALITY. Buyer shall hold, and shall cause its
respective officers, directors, employees, representatives, consultants and
advisors (each, a "Representative"), to hold, and Xxxxx River shall hold, and
shall cause its respective Representatives and the Representatives of any Person
within the JR Group to hold, in strict confidence, unless compelled to disclose
by judicial or administrative process or by other requirements of law, all
documents and information obtained by such parties, respectively, in connection
with the transactions contemplated hereby or otherwise obtained hereunder
("Confidential Information", which term shall, after Closing, with respect to
Xxxxx River's obligations hereunder, include documents and information
constituting Assets) except to the extent that such Confidential Information has
been or to have become (i) generally available to the public other than as a
result of disclosure by any party hereunder or a Representative of a party
hereunder if such source is not bound by a confidentiality agreement prohibiting
such disclosure or is not entitled to the protection offered hereby, (ii) made
available to the public on a nonconfidential basis from a source other than a
Representative of a party entitled to the protection offered hereby, or (iii)
known to the party receiving such Confidential Information before the date of
disclosure of such Confidential Information to such party. However, nothing
contained in this Section 7.6 shall preclude the disclosure of Confidential
Information, on the condition that it remain confidential, to auditors,
attorneys, lenders, financial advisors and other consultants and advisors in
connection with the performance of their duties in preparation for the
consummation of the transactions contemplated hereby nor shall it prevent
Buyer's disclosure after Closing of any document or information constituting an
Asset. Buyer acknowledges that following Closing, it may (subject to limitations
set forth in this Agreement) employ some or all of the persons listed on
Schedule 7.6, each of whom, prior to the Closing, had access to or were exposed
to technology relating to the products or processes listed opposite such
person's name on Schedule 7.6. Buyer agrees that it and its Affiliates will not
utilize the services of any such person in any manner in connection with
research relating to, or the development or improvement of, the type of product
or process listed opposite such person's name on Schedule 7.6.
7.7 PUBLIC ANNOUNCEMENTS. The parties shall consult with each other
before issuing any press releases or otherwise making any public statements
with respect to this
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Agreement and the transactions contemplated hereby and, subject to any
applicable disclosure requirements, shall not issue any such press release or
make any such public statement without providing reasonable notice to the other
parties hereto of the intent to do so.
7.8 EFFORTS TO CONSUMMATE. Subject to the terms and conditions of
this Agreement, each of the parties hereto shall use its reasonable best efforts
to take, or to cause to be taken, all action and to do, or to cause to be done,
all things necessary, proper or advisable to consummate, as promptly as
practicable, the transactions contemplated hereby, including, but not limited
to, the satisfaction of the conditions listed in Articles IX or X that are
within the control of such party and the obtaining of all consents, waivers,
authorizations, orders and approvals of third parties, whether private or
governmental, required of it by this Agreement. Each party shall cooperate fully
with the other parties hereto in assisting such parties to comply with this
Section . However, except as specifically provided herein, no party shall be
required to initiate any litigation, to make any payment or incur any economic
burden in connection with the obtaining of any consent, waiver, authorization,
order or approval.
7.9 FURTHER ASSURANCES. (a) Subject to the provisions of Section
7.11, Xxxxx River shall use its reasonable best efforts to implement the
provisions of this Agreement, and, for such purpose, at the request of Buyer,
will, at or after the Closing, promptly execute and deliver, or cause to be so
executed and delivered, such documents to Buyer and take such further action as
Buyer may deem reasonably necessary or desirable to facilitate or better
evidence the consummation of the transactions contemplated hereby.
(b) Buyer shall use its reasonable best efforts to implement
the provisions of this Agreement, and, for such purpose, at the request of
Xxxxx River, will, at or after the Closing, promptly execute and deliver, or
cause to be so executed and delivered, such documents to Xxxxx River and take
such further action as Xxxxx River may deem reasonably necessary or desirable
to facilitate or better evidence the consummation of the transactions
contemplated hereby.
7.10 USE OF XXXXX RIVER NAME. As soon as practicable after the
Closing, Buyer (i) shall remove all names, logos or marks which include the
words "Xxxxx River" or the letters "JR" ("Xxxxx River Corporate Designations")
from, or render the same illegible on, all Underlying Assets on which such
Designations are imprinted or legible or (ii) shall discontinue use of any asset
described in clause (i) bearing Xxxxx River Corporate Designations.
Notwithstanding the foregoing, Buyer shall be permitted to use the Xxxxx River
Corporate Designations with respect to Inventory constituting finished goods on
which a Xxxxx River Corporate Designation is imprinted or affixed at the Closing
until
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such Inventory is sold. After such Inventory has been sold Buyer shall have no
rights to use the Xxxxx River Corporate Designations. Buyer undertakes to use
reasonable best efforts to sell such Inventory within 12 months after the
Closing. At the end of such period referred to in the preceding sentence (or
upon completion of the removal, rendering illegible or discontinuance of the
Xxxxx River Corporate Designations and variations thereof described above,
whichever occurs sooner), an executive officer of Buyer shall notify Xxxxx River
that (i) all such Inventory has been sold or destroyed; or (ii) such removal,
rendering illegible or discontinuance has been completed. Except as expressly
permitted by this Section 7.10, neither Buyer nor any of its respective
Affiliates shall use the Xxxxx River Corporate Designations or any similar xxxx
or name.
7.11 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign the right, title or interest of any Person
within the JR Group in, to or under any contract, license, lease, commitment,
sales order, purchase order or other agreement or any claim or right of any
benefit arising thereunder or resulting therefrom if any attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or in any way adversely affect the rights of any Person within
the JR Group thereunder. Xxxxx River shall use its reasonable best efforts to
obtain, and Buyer agrees to cooperate with Xxxxx River in its efforts to
obtain, any required third party consent to the assignment or transfer thereof
to Buyer. If such consent is not obtained, Xxxxx River and Buyer shall
cooperate in any reasonable arrangements designed to provide Buyer with the
benefits thereunder, including enforcement for the benefit of Buyer of any and
all rights of any Person within the JR Group against such third party arising
out of the cancellation by such third party or otherwise. Notwithstanding the
foregoing, the obligations of any Person within the JR Group under this Section
7.11 shall not include any obligation to make any payment or to incur any
economic burden.
7.12 NO SOLICITATION OF EMPLOYEES. (a) For a period of one year after
the Closing, neither party nor any Representative of such party shall, in any
manner, directly or indirectly, (i) solicit any employee of the other party or
any Affiliate of the other party to terminate his or her employment with such
party or its Affiliate, or (ii) otherwise recruit or encourage any such
employee to become an employee of, or a consultant to, the party bound hereby.
(b) As promptly as practicable after the Closing, Buyer shall
use its best efforts to advise the appropriate Subsidiaries and Representatives
of Buyer (including the department heads and human resources personnel) of its
obligations set forth in this Section 7.12.
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(c) Notwithstanding clauses (a) and (b) of this Section 7.12,
no party hereto shall be restricted from soliciting for employment any employee
of any other party hereto who has left the employment of such other party other
than as a result of the breach of this Section 7.12 by any party hereto.
7.13 NEGOTIATIONS WITH OTHERS. Until Closing or the earlier
termination or expiration of this Agreement, Xxxxx River will not, directly or
indirectly, without the written consent of Buyer, initiate discussions or engage
in negotiations concerning, or discuss, with any Person other than Buyer, any
proposal regarding the acquisition, other than in the ordinary course of
business, of all or part of the Assets.
7.14 HSR FILINGS. Xxxxx River and Buyer will each file, or cause to
be filed, within 15 days of the date hereof, with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice, pursuant to the HSR Act, Notification and Report Forms with respect to
the transactions contemplated by this Agreement and respond as promptly as is
practicable to all inquiries received from other agencies for additional
information or documentation. Each party will bear the cost of any filing
required to be made by such party under the HSR Act, including the cost of
responding to second requests for information.
7.15 TRANSFER TAXES AND RECORDING FEES. All sales, use, transfer
taxes and other non-income taxes and any fees (including deed recordation fees,
filing fees, if any) incurred in connection with this Agreement and the
transactions contemplated hereby (the "Transfer Fees") will be borne equally by
Xxxxx River and Buyer. At Xxxxx River's direction, Buyer will file all
necessary tax returns and other documents required to be filed with respect to
all such Transfer Fees. Xxxxx River will cooperate with Buyer to the extent
reasonably necessary to enable Buyer to make such filings and join in the
execution of any tax returns or other documents as may be required in order for
Buyer to comply with the provisions of this Section.
7.16 TITLE MATTERS. (a) Xxxxx River has caused or, as soon as
practicable after the execution and delivery of this Agreement, Xxxxx River
shall cause, to be issued one or more title commitments (whether one or more,
the "Title Commitment") for policies of owner's title insurance with respect to
the Real Property (the "Real Property Title Commitment") and policies of
leasehold title insurance with respect to the Major Leases (the "Major Leases
Title Commitment"). At Buyer's request, Closing may be postponed until the date
that is 45 days after the later of the date hereof or the date of Xxxxx River's
delivery to Buyer of the Real Property Title Commitment together with copies of
all recorded documents listed as title exceptions in the Real Property Title
Commitment (collectively, the "Real Property Title Package"). Within 15 days of
the later of the date
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hereof or the date of Xxxxx River's delivery to Buyer of the Real Property Title
Package, Buyer shall notify Xxxxx River of any title matter reflected in the
Real Property Title Commitment that constitutes a breach of the representation
set forth in Section 5.11 (any such title matter being a "Title Defect").
(b) At Buyer's request, Closing may be postponed until the
date that is 45 days after Xxxxx River's delivery to Buyer of the Major Leases
Title Commitment, together with copies of all recorded documents listed as title
exceptions in the Major Leases Title Commitment (collectively, the "Major
Leases Title Package"). Within 15 days of Xxxxx River's delivery to Buyer of
the Major Leases Title Package, Buyer shall notify Xxxxx River of any title
matter reflected in the Major Leases Title Commitment that constitutes a breach
of the representation set forth in Section 5.11 (any such title matter being a
"Title Defect").
(c) Within 15 days of receiving notice from Buyer of any Title
Defect, Xxxxx River shall notify Buyer, with respect to each such Title Defect,
whether Xxxxx River has elected to (i) cure such matter or otherwise cause the
same to be deleted from, or insured over in, the Title Commitment, (ii) pay to
Buyer the amount by which the value of the Real Property is diminished as a
result of the existence of such Title Defect at Closing (or as soon thereafter
as the amount can be established, the parties hereby agreeing to enter into an
appropriate agreement at Closing relating to the establishment of such amount
by reference to the conclusion of qualified real estate appraisers if Xxxxx
River elects to make such payment in respect of any Title Defect and the
parties cannot agree by Closing as to the amount of such diminution in value);
or (iii) take no action with respect to such Title Defect; provided Xxxxx River
shall be required to remove any lien which is not a Permitted Encumbrance
securing a monetary obligation which can be removed by the payment of money the
amount of which is ascertainable from the face of the document or which has
been determined in writing from the holder of such obligation. If Buyer does
not deliver written notice of its objections to any Title Defect within the
time specified above for such notice, Buyer shall be deemed to have waived all
rights it may have against Xxxxx River (including the right to refuse to
consummate the transactions called for in this Agreement or the right otherwise
to claim breach of the representation set forth in Section 5.11) with respect
to such Title Defect. If Xxxxx River fails to respond, within the time set
forth above, to any objection to Title Defects timely delivered by Buyer as set
forth above, Xxxxx River shall be deemed to have elected to respond as set
forth in subsection (ii) above with respect to such Title Defect. If Xxxxx
River elects to respond as set forth in (iii) above with respect to one or more
Title Defects, Buyer may terminate this Agreement by delivering notice of its
election to do so
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within seven days of Xxxxx River's delivery of its notice to Buyer that Xxxxx
River has elected to take no action with respect to the Title Defect(s) at
issue. If Buyer does not deliver written notice of its election to terminate
this Agreement within the time specified above for such notice, Buyer shall be
deemed to have waived all rights it may have against Xxxxx River with respect to
Title Defects disclosed in the Title Commitment (including the right to refuse
to consummate the transactions called for in this Agreement or the right
otherwise to claim breach of the representations set forth in Section 5.11 or
breach of this Section). Xxxxx River shall have no obligation to procure or pay
premiums for any title insurance; Buyer shall purchase any title insurance it
requires in connection with the transactions contemplated hereby.
7.17 MEXICAN FINANCING. (a) Buyer shall have the option to either (i)
keep in place the Mexican Financing, or (ii) require Xxxxx River to convert the
Mexican Financing to equity prior to or at Closing. Buyer shall give Xxxxx
River written notice at least twenty business days prior to Closing of its
election pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above, it
shall ensure that Xxxxx River and its Affiliates (other than the Stock
Companies) are released from any liability or obligation with respect thereto
prior to or at Closing and the interests of all Persons (other than the Stock
Companies) within the JR Group in and to the obligations of JRMex under the
Mexican Financing shall be deemed included within the Assets at Closing and the
liabilities and obligations of any Person within the JR Group (other than the
Stock Companies) with respect to the Mexican Financing shall be deemed included
in Assumed Liabilities. If Buyer makes no election or makes the election in
paragraph (a)(ii) above, then Xxxxx River shall cause the conversion of the
Mexican Financing to equity prior to or at Closing, and such equity shall be
included within the Assets.
7.18 XXXXXXX IDB. (a) Subject to the provisions of Subsections (b),
(c) and (d) below, Buyer shall either (i) assume the Xxxxxxx IDB; or (ii)
require Xxxxx River to cause the termination of the Xxxxxxx IDB. Buyer shall
give Xxxxx River written notice at least twenty business days prior to Closing
of its election pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above,
Xxxxx River's rights with respect to the Xxxxxxx IDB shall be deemed included
within the Assets, and Xxxxx River's liabilities with respect to the Xxxxxxx
IDB shall be deemed included within the Assumed Liabilities, Buyer shall ensure
that Xxxxx River and its Affiliates are released from all liability and
obligation with respect to the Xxxxxxx IDB prior to or at Closing and no Person
within the JR Group shall have any further liability with respect thereto.
(c) If Buyer makes no election in a timely fashion; makes the
election set forth in paragraph (a)(i) above, but fails to fulfill its
obligations under paragraph (b)
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above; or makes the election in paragraph (a)(ii) above, Xxxxx River shall prior
to or at Closing, exercise its purchase option under the Xxxxxxx IDB and cause
the reconveyance to Xxxxx River or its Subsidiary of the real property currently
leased by Xxxxx River's Subsidiary secured by the Xxxxxxx IDB, which shall
become an Asset transferred to Buyer. In addition, Buyer agrees to pay all
transaction costs and expenses incurred by Xxxxx River in connection with its
exercise of the purchase option.
7.19 XXXXX RIVER IDBS. (a) Subject to the provisions of subsections
(b) and (c) below, Buyer shall, with respect to each of the Xxxxx River IDBs,
either (i) assume one or more of the Xxxxx River IDBs; or (ii) require Xxxxx
River to cause the repayment in full of such Xxxxx River IDB. Buyer shall give
Xxxxx River written notice at least 45 days prior to Closing of its election
pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above for
any of the Xxxxx River IDBs, such Xxxxx River IDB shall be deemed included
within the Assumed Liabilities, Buyer shall ensure that Xxxxx River and its
Affiliates are released from all liability and obligation with respect to such
Xxxxx River IDB prior to or at Closing and no Person within the JR Group shall
have any further liability with respect thereto.
(c) If Buyer makes no election; makes the election set forth
in paragraph (a)(i) above, but fails to perform its obligations under paragraph
(b) above; or makes the election in paragraph (a)(ii) above for any of the
Xxxxx River IDBs, the liability with respect to such Xxxxx River IDB shall be
omitted from the Final Closing Audited Balance Sheet, Buyer shall repay to
Xxxxx River at Closing all transaction costs and expenses in connection with
the repayment of such Xxxxx River IDB to the extent not reflected in the Final
Closing Audited Balance Sheet, (but not the repayment of principal or other
amounts that would have to be reflected as a liability on the Final Closing
Audited Balance Sheet), and such Xxxxx River IDB shall not be included within
the Assumed Liabilities.
7.20 XXXXX RIVER CALIFORNIA SUB. Prior to Closing, Xxxxx River may,
at its sole discretion, directly or indirectly, establish a newly-formed
wholly-owned Subsidiary (the "Xxxxx River California Sub") and contribute to
the Xxxxx River California Sub any or all of the tangible personal property
owned by Xxxxx River and used exclusively in connection with the Business and
located in the State of California (the "California Assets"). Xxxxx River shall
not transfer to the Xxxxx River California Sub, or permit the Xxxxx River
California Sub to incur or assume, any liabilities except for liabilities that
would be Assumed Liabilities hereunder had the Xxxxx River California Sub not
been created. If Xxxxx River determines to establish the Xxxxx River California
Sub under this
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Section, Xxxxx River shall cause the contribution of the California Assets to
the Xxxxx River California Sub immediately prior to Closing.
7.21 SECTION 338(H)(10) ELECTION. The provisions of this Section
shall only apply if Xxxxx River determines to form the Xxxxx River California
Sub.
(a) Buyer and Xxxxx River agree to make timely, effective and
irrevocable Section 338(h)(10) Elections with respect to the Xxxxx River
California Sub as set forth in this Agreement, as well as any Section
338(h)(10) Elections (or corresponding or similar elections) for state or local
purposes, and to file such elections in accordance with applicable regulations.
The provisions of this Agreement shall apply to any such elections that Buyer
makes for state or local tax purposes.
(b) Xxxxx River shall file a consolidated federal income tax
return with the Xxxxx River California Sub for the tax year beginning on
January 1, 1996 and ending on and including the date of Closing. Xxxxx River is
eligible to make an election under Section 338(h)(10) of the Internal Revenue
Code (and any comparable election under state or local tax law) with respect to
the Xxxxx River California Sub. Buyer and Xxxxx River shall make or cause to be
made the Section 338(h)(10) Elections (and any comparable election under state
or local tax law) and shall take no position contrary thereto unless required
to do so pursuant to a final determination by any taxing authority or judicial
proceeding.
(c) Xxxxx River shall be responsible for preparing and filing
all Section 338 Forms in accordance with the terms of this Agreement. Xxxxx
River shall furnish copies of the Section 338 Forms to Buyer for Buyer's
approval at least 25 business days before the date such Section 338 Forms are
required to be filed. Buyer shall execute and deliver to Xxxxx River such
documents or forms as Xxxxx River reasonably request to complete the Section
338 Forms, properly and in a timely fashion.
(d) Buyer and Xxxxx River agree that the deemed sale price of
the Assets determined in accordance with Treasury Regulation Section
1.338(h)(10)-1(f) will be determined within 120 days after Closing or such
other time period as determined pursuant to Section 7.22(c) and the parties
will file the forms required under the Internal Revenue Code and the
regulations thereunder in a manner substantially consistent with the allocation
of values pursuant to such Section.
7.22 TAX MATTERS. (a) Any agreement between Xxxxx River and the
Stock Companies regarding the allocation or payment of taxes or amounts in
lieu of taxes shall be deemed terminated at and as of the Closing.
(b) Buyer will be responsible for the preparation and filing of
all federal, state and local franchise, property, payroll, and other non-income
tax returns, and
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all income tax returns of the Stock Companies (other than the Xxxxx River
California Sub), arising with respect to the operation of the Business and the
ownership of the Assets and the Stock Companies (other than the Xxxxx River
California Sub), for all periods as to which such tax returns are due after the
date of Closing. Buyer will make all payments required with respect to any such
tax returns.
(c) Xxxxx River and Buyer shall cooperate in the preparation of
a joint schedule (the "Allocation Schedule"), allocating the Purchase Price
(including, for purposes of this Section, any other consideration paid by Buyer
and any Assumed Liabilities), among the Assets. Xxxxx River and Buyer each
agrees to file Internal Revenue Service Form 8594 and any required attachments
thereto, together with all federal, state, local, and foreign tax returns, in
accordance with the Allocation Schedule. Xxxxx River and Buyer each agrees to
provide the other promptly with any other information required to complete the
Allocation Schedule. If, however, Xxxxx River and Buyer are unable to complete
such schedule within 120 days following the Closing, or by such later date as
agreed to in writing by the parties, each of Xxxxx River and Buyer may file
Form 8594, and any federal, state, local, and foreign tax returns, allocating
the Purchase Price in the manner each believes appropriate, provided such
allocation is reasonable and in accordance with Section 1060 of the Internal
Revenue Code and the regulations thereunder.
7.23 MEXICAN REVOLVING LOAN. At Closing, Buyer shall assume all
rights, interests, liabilities and obligations of any Person within the JR
Group (other than the Stock Companies) with respect to the Mexican Revolving
Loan.
7.24 ACCESS TO ASSETS AND BUSINESS EMPLOYEES. From the date hereof
until Closing or the earlier termination or expiration of this Agreement, Xxxxx
River shall provide Buyer, Buyer's accountants, representatives, and
prospective lenders, with reasonable opportunities to further investigate the
Underlying Assets and interview Business Employees during normal business hours
upon reasonable prior notice from Buyer, for purposes, including the
preparation of audited financial statements of the Business and lenders' due
diligence, provided that no such investigations or interviews shall
unreasonably interfere with the operation of the Business or Xxxxx River's
other business.
7.25 SAN LEANDRO PROPERTY. Xxxxx River will grant at Closing to
Buyer a perpetual non-exclusive easement for ingress and egress to the San
Leandro Plant Site approximately over the road leading to the gate as currently
used across the 1.8 acre tract listed as an Excluded Asset pursuant to Schedule
2.2, the terms of which shall be reasonably satisfactory to Buyer.
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ARTICLE VIII
BUSINESS EMPLOYEE AND EMPLOYEE BENEFIT MATTERS
8.1 BUSINESS EMPLOYEES. For purposes of this Article VIII,
"Business Employees" are hereby defined as follows:
(a) all persons employed by Xxxxx River or any of its
Affiliates in the Business immediately before Closing;
(b) all employees of Xxxxx River or any of its Affiliates
who are absent from work with the Business on account of sickness or leave of
absence at Closing and who are reasonably expected to return to active
employment within 90 days following the date such employee was first absent
from employment, or for whom an obligation to rehire exists under a collective
bargaining agreement assumed by the Buyer (as described in Section 8.6(a)); and
(c) all employees of Xxxxx River or any of its Affiliates
who are not employed in the Business immediately before the Closing but who,
in the ordinary course of business, or if not in the ordinary course of
business, with the consent of Buyer and subject to any restrictions on
solicitation of employees specified herein or in the Related Agreements,
become employees of Buyer at or before the Closing or who become employees of
Buyer within 60 days after the Closing.
After the Closing, Xxxxx River shall not be responsible for wages,
salaries and other employee benefits for Business Employees for service of such
Business Employees with the Buyer after the Closing. For purposes of this
Article VIII, all persons described above who have been or will be compensated
on an hourly basis or who have been or are subject to a collective bargaining
agreement shall be referred to as "Hourly Business Employees," and all persons
described above who have been or will be compensated on a salaried basis shall
be referred to as "Salaried Business Employees." Before the Closing, Xxxxx
River will provide Buyer with a preliminary list of Business Employees, and
Xxxxx River and Buyer will agree on a final list of Business Employees within
90 days after the Closing.
8.2 SALARIED BUSINESS EMPLOYEE EMPLOYMENT AND EMPLOYEE BENEFITS. (a)
Buyer shall offer employment, effective at Closing (or, in the case of any
Salaried Business Employee specified in Section 8.1(c), effective as of the
date of hiring), to each of the Salaried Business Employees described in
Sections 8.1(a), 8.1(b) and 8.1(c) at compensation rates that are initially
equal to those provided by Xxxxx River and its Affiliates immediately before
the Closing.
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(b) Buyer shall treat service of each Salaried Business
Employee with Xxxxx River, its Affiliates and its predecessor companies before
the Closing as if such service had been with Buyer for purposes of determining
eligibility to participate, eligibility for benefits, benefit calculations,
benefit forms and vesting under Buyer's employee benefit plans (within the
meaning of Section 3(3) of ERISA) other than Buyer's retiree medical plan and
Buyer's retiree group life insurance plan.
8.3 HOURLY BUSINESS EMPLOYEE EMPLOYMENT AND EMPLOYEE BENEFITS. (a)
Buyer shall offer employment, effective at Closing (or, in the case of any
Hourly Business Employee specified in Section 8.1(c), effective as of the date
of hiring), to each of the Hourly Business Employees described in Sections
8.1(a), 8.1(b) and 8.1(c) at compensation rates that initially are the same as
those provided by Xxxxx River and its Affiliates immediately before the
Closing.
(b) Buyer shall provide to Hourly Business Employees who are
covered under the Assumed Collective Bargaining Agreements (as hereinafter
defined) in effect as of the date of Closing and set forth on Schedule 8.6(a),
such compensation and benefits as are from time to time required by such
collective bargaining agreements.
(c) Buyer shall treat service of each Hourly Business Employee
with Xxxxx River, its Affiliates and predecessor companies before the Closing
as if such service had been with Buyer for purposes of determining eligibility
to participate, eligibility for benefits, benefit calculations, benefit forms
and vesting under Buyer's employee benefit plans (within the meaning of Section
3(3) of ERISA) other than Buyer's retiree medical plan and Buyer's retiree
group life insurance plan.
8.4 SEVERANCE BENEFITS. (a) As of Closing, Buyer shall establish a
severance plan or amend an existing severance plan (the "Buyer's Severance
Plan") which shall provide fifteen weeks of severance benefits to any Business
Employee who is terminated by Buyer at any time during the twelve-month period
ending on the first anniversary of the Closing. Buyer shall maintain the
Buyer's Severance Plan for the twelve-month period ending on the first
anniversary of the Closing. In the case of a Salaried Business Employee,
severance benefits under Buyer's Severance Plan shall be computed based on the
greater of (i) the Salaried Business Employee's weekly salary as of the date on
which he was hired by Buyer, or (ii) his weekly salary immediately preceding
his termination of employment. In the case of an Hourly Business Employee,
benefits under the Buyer's Severance Plan shall be computed based on the
greater of (i) the Hourly Business Employee's regular weekly compensation as of
the date on which he was hired by Buyer, or (ii) his regular weekly
compensation immediately preceding his termination of employment.
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(b) If Xxxxx River or any Person within the JR Group is
required to pay severance benefits or similar payments to a Business Employee
as a result of the Business Employee's failure to accept employment with the
Buyer where the employment offered by Buyer requires relocation within the
meaning of Xxxxx River's applicable salary or other compensation continuation
plan or, as a result of the Buyer's failure to offer employment to such
Business Employee in accordance with the requirements of Section 8.2 or 8.3 (as
applicable), Buyer shall reimburse Xxxxx River for up to fifteen times the
weekly salary or regular weekly compensation of such Business Employee
immediately prior to Closing of the severance benefits or similar payments that
are payable to such Business Employee and if such Business Employee is hired by
Buyer during the twelve-month period ending on the first anniversary of the
Closing, Buyer shall reimburse Xxxxx River for the entire amount of the
severance benefits or similar payments that are payable by Xxxxx River to such
Business Employee. Buyer shall make such reimbursement within 10 days of
receipt of notice of payment by Xxxxx River.
8.5 ASSUMPTION OF LIABILITIES. Except as specifically provided
otherwise in this Article VIII and Section 2.3(b), at Closing, Buyer shall
assume all employee-related liabilities and obligations that are payable at or
after the Closing with respect to Business Employees and their beneficiaries
and dependents, without regard to when such liabilities and obligations arose;
provided, however, that Buyer, except as specifically provided otherwise to
this Article VIII, shall not assume any liabilities or obligations that are
payable prior to, at or after Closing with respect to any Employee Plan
identified in Section 5.16(a) or with respect to any employee benefit plans
that are maintained by Xxxxx River or its Affiliates.
8.6 COLLECTIVE BARGAINING AGREEMENTS AND MULTIEMPLOYER PLANS. (a) At
Closing, Buyer shall adopt and assume the collective bargaining agreements
listed on Schedule 8.6(a) (the "Assumed Collective Bargaining Agreements"). At
and after the Closing, any obligations that may be payable under the Assumed
Collective Bargaining Agreements, with respect to Hourly Business Employees,
regardless of whether such obligations relate to services performed before or
after the Closing, shall be the sole responsibility of Buyer.
(b) The Buyer shall bargain in good faith with respect to
Hourly Business Employees who are covered at Closing under the collective
bargaining agreements listed on Schedule 8.6(b) (the "Unassumed Collective
Bargaining Agreements").
(c) With respect to each multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) that is listed on Schedule 8.6(c) and that covers
Hourly Business
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Employees covered under an Unassumed Collective Bargaining Agreement, Xxxxx
River and Buyer agree as follows, in accordance with the provisions of Section
4204 of ERISA:
(i) Buyer hereby assumes, effective at Closing,
the obligation of Xxxxx River and its Affiliates to contribute to each such
multiemployer plan for such Hourly Business Employees.
(ii) Buyer shall provide to each such multiemployer
plan the bond or escrow amount described in Section 4204(a)(1)(B) of ERISA,
unless the bond or escrow amount is waived by the PBGC.
(iii) The parties agree that, unless the PBGC waives
the requirements of Section 4204(a)(1)(C) of ERISA, if Buyer withdraws from any
such multiemployer plan in a withdrawal described in Section 4204(a)(1)(C) of
ERISA with respect to the Business during the first five plan years beginning
after Closing and does not pay its liability to the multiemployer plan on
account of such withdrawal, Xxxxx River shall be secondarily liable to the
multiemployer plan for any withdrawal liability that Xxxxx River or its
Affiliates would have had to the plan with respect to the Hourly Business
Employees in the absence of Section 4204(a) of ERISA, to the extent required by
Section 4204 of ERISA. Notwithstanding the provisions of the preceding sentence
and Section 4204 of ERISA, it is hereby expressly agreed that if Xxxxx River or
an Affiliate incurs any secondary withdrawal liability under the preceding
sentence, Buyer shall indemnify Xxxxx River and its Affiliates and hold them
harmless from any and all Losses incurred by Xxxxx or its Affiliate by reason
of such secondary liability, except as provided in Section 8.6(e).
(d) As soon as is practicable after Closing, Xxxxx River and
Buyer shall request from the PBGC an exemption from the requirements of Section
4204(a)(1)(B) and 4204(a)(1)(C) of ERISA.
(e) With respect to all multiemployer plans listed in Schedule
8.6(c) for which a withdrawal liability under Title IV of ERISA is incurred
with respect to the Hourly Business Employees before Buyer becomes formally a
party to or otherwise formally becomes bound by a collective bargaining
agreement between Buyer and the Hourly Business Employees covered by such
multiemployer plan requiring Buyer to contribute to such multiemployer plan,
Xxxxx River and Buyer each shall be liable for 50 percent of the total amount
of such withdrawal liability up to $2,000,000 of withdrawal liability
(collectively for all such multiemployer plans) and Xxxxx River shall be liable
for 100 percent of such withdrawal liability in excess of $2,000,000
(collectively for all such multiemployer plans). With respect to any
multiemployer plan listed in Schedule 8.6(c)
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for which a withdrawal liability under Title IV of ERISA is incurred with
respect to the Hourly Business Employees after Buyer becomes formally a party to
or otherwise formally becomes bound by a collective bargaining agreement between
Buyer and the Hourly Business Employees covered by such multiemployer plan that
requires Buyer to contribute to such multiemployer plan, Buyer shall be liable
for the total amount of such withdrawal liability. To the extent that either
party shall make a payment of withdrawal liability in excess of its liability
under the provisions of this Section 8.6(e), the responsible party shall make
reimbursement to the paying party within 10 days of receipt of notice of payment
of such withdrawal liability.
8.7 PENSION PLANS FOR HOURLY BUSINESS EMPLOYEES. Buyer shall not
assume any of Xxxxx River's rights and obligations with respect to each plan
listed on Schedule 8.7(a).
8.8 PENSION PLAN FOR SALARIED BUSINESS EMPLOYEES. Buyer shall not
assume any of Xxxxx River's rights and obligations with respect to the Xxxxx
River Corporation of Virginia Retirement Plan for Salaried and Other
Non-Bargaining Unit Employees.
8.9 401(K) PLAN. (a) As soon as practicable before the Closing,
Buyer shall establish a defined contribution plan and trust (or amend an
existing defined contribution plan) for Business Employees, which shall be
generally comparable to Xxxxx River's StockPlus Plan (as defined below) and
shall be qualified under Sections 401 and 501 of the Internal Revenue Code and
which shall provide for salary reduction contributions pursuant to Section
401(k) of the Internal Revenue Code ("Buyer's 401(k) Plan"). Buyer's 401(k) Plan
shall provide that each Business Employee shall be given credit under Buyer's
401(k) Plan, for purposes of determining eligibility to participate, eligibility
for benefits, benefit calculations, benefit forms and vesting, for the
Employee's service with Xxxxx River, its Affiliates and its predecessor
companies, to the extent that Xxxxx River's StockPlus Plan (as defined below)
gave credit for such service. If the Buyer amends one or more existing defined
contribution plans, the Buyer shall ensure that all "section 411(d)(6) protected
benefits" (as defined in Treasury Regulation 1.411(d)-4) provided by the Xxxxx
River StockPlus Plan are preserved in the amended existing defined contribution
plan. Business Employees shall not accrue additional benefits after the Closing
under defined contribution plans maintained by Xxxxx River or its Affiliates.
(b) Assets of the Xxxxx River Corporation of Virginia StockPlus
Investment Plan (the "StockPlus Plan") equal to the account balances of the
Business Employees under the StockPlus Plan shall be transferred to Buyer's
401(k) Plan as soon as practicable after the Closing. If practicable, the
transfer shall be made as of the last day of the first calendar quarter ending
after the Closing. The transfer shall be made in cash.
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Any outstanding plan loans to Business Employees shall be transferred with the
underlying accounts. The account balances of the Business Employees shall be
valued as of the date on which the transfer is made. The account balances of
Business Employees in the StockPlus Plan shall share in the earnings,
appreciation and depreciation of the investment funds in which the accounts are
invested for the period between the Closing and the date on which the transfer
is made.
(c) Any benefits that are payable to Business Employees from
the StockPlus Plan after the Closing and before assets are transferred shall be
paid from the StockPlus Plan in the ordinary course. The amount to be
transferred to Buyer's 401(k) Plan shall be reduced by the amount of such
payments.
(d) The account balances to be credited under Buyer's 401(k)
Plan for Business Employees shall not be less than the account balances of the
Business Employees under the StockPlus Plan as of the date on which the
transfer is made. Effective on the date of the transfer of StockPlus Plan
assets, (i) Buyer's 401(k) Plan shall assume all liabilities in connection with
the account balances of Business Employees under the StockPlus Plan, and (ii)
Xxxxx River, its Affiliates and the StockPlus Plan shall have no further
liability with respect to the account balances of Business Employees. Xxxxx
River and its Affiliates shall have no liability with respect to Buyer's 401(k)
Plan.
(e) Buyer shall request that the Internal Revenue Service issue
a favorable determination letter with respect to the qualification under
Sections 401 and 501 of the Internal Revenue Code of Buyer's 401(k) Plan and
the related trust. Buyer shall make such changes to Buyer's 401(k) Plan as may
be required by the Internal Revenue Service in order for the Internal Revenue
Service to issue a favorable determination letter. Buyer shall provide Xxxxx
River with a copy of the determination letter received from the Internal
Revenue Service with respect to Buyer's 401(k) Plan as soon as the
determination letter is received.
8.10 WORKER'S COMPENSATION. At Closing, Buyer shall assume liability
for all claims under worker's compensation laws that are payable at or after
the Closing with respect to Business Employees, without regard to when the
liabilities arose.
8.11 WELFARE BENEFIT PLANS. (a) Buyer shall provide Business
Employees with credit during the current plan year under Buyer's health
benefit plans for payments made by Business Employees under Xxxxx River's
health benefit plans for purposes of determining deductibles and out-of-pocket
expenses under Buyer's health benefit plans.
(b) Buyer shall not impose on Business Employees pre-existing
condition provisions, proof of insurability requirements, or any similar
conditions or requirements that would delay commencement of Business Employees'
participation in, or
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limit Business Employees' level of coverage under, any of Buyer's welfare
benefit plans (within the meaning of Section 3(1) of ERISA).
(c) Buyer shall be responsible for health care continuation
obligations under Section 4980B of the Internal Revenue Code and Section 601
through 608 of ERISA ("COBRA") for those Business Employees identified in
Section 8.1(a), 8.1(b), and 8.1(c) who actually become employees of Buyer.
Xxxxx River shall remain responsible for health care continuation obligations
under COBRA for all other Business Employees.
8.12 VACATION PAY. Buyer shall assume liability for all unpaid
vacation pay banked or accrued by Business Employees prior to the Closing.
After the Closing, Xxxxx River shall have no liability for vacation pay for
Business Employees.
8.13 ADMINISTRATION. Xxxxx River shall provide Buyer with transition
services to administer the various Buyer plans, as provided in the Transition
Services Agreement referred to in Section 4.1. Buyer and Xxxxx River shall each
make its appropriate employees and data regarding employee benefit coverage
available to the other at such reasonable times as may be necessary for the
proper administration by the other of any and all matters relating to employee
benefits and worker's compensation claims affecting its employees.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject, to the extent not waived, to the satisfaction
of each of the following conditions before or at the Closing:
9.1 REPRESENTATIONS AND WARRANTIES. Except for changes contemplated
by this Agreement, the representations and warranties of Xxxxx River contained
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing, subject to changes made to the
Schedules attached hereto as permitted by this Agreement.
9.2 PERFORMANCE OF THIS AGREEMENT. Xxxxx River shall have performed
all obligations and complied with all conditions required by this Agreement to
be performed or complied with by it before or at the Closing, to the extent not
waived.
9.3 PROCEEDINGS. All corporate and other proceedings to be taken by
Xxxxx River in connection with the transactions contemplated hereby shall have
been completed, all such proceedings and all documents incident thereto shall
be reasonably satisfactory in
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substance and form to Buyer and Buyer shall have received all such counterpart
originals or certified or other copies of such documents as Buyer may
reasonably request.
9.4 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of any Authority, consents of third parties necessary to assign to
Buyer the Listed Contracts and Lessee Leases on Schedule 9.4, and subject to
the provisions of Section 7.11, all consents, authorizations, orders or
approvals of other individuals or business entities which Xxxxx River is
required to obtain in order for Xxxxx River to be able to transfer the Assets
to Buyer and for Buyer to conduct the Business as it is presently conducted
shall have been obtained by Xxxxx River and Buyer and all waiting periods
specified by law with respect thereto shall have passed.
9.5 INJUNCTION, LITIGATION, ETC. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated hereby, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Authority which is likely to prohibit, delay or successfully
challenge the validity of any of the transactions contemplated by this
Agreement.
9.6 LEGISLATION. No statute, rule or regulation shall have been
enacted which prohibits or restricts the consummation of the transactions
contemplated hereby.
9.7 OPINION OF COUNSEL FOR XXXXX RIVER. Buyer shall have received an
opinion from McGuire, Woods, Battle & Xxxxxx, L.L.P., in form and substance
reasonably satisfactory to Buyer and its counsel.
9.8 CASUALTY LOSS. There shall not have occurred since the date of
this Agreement with respect to a Plant Site a casualty loss that is reasonably
expected to result in the loss of revenues of the Business, taken as a whole,
of $10,000,000 or more per year.
9.9 MATERIAL ADVERSE CHANGE. There shall not have occurred since
December 31, 1995, any event which has caused or which could reasonably be
expected to cause in the future a material adverse change in the Assets or the
Business.
9.10 RELATED AGREEMENTS. Each Person of the JR Group shall have
executed and delivered each of the Related Agreements to which it is a party.
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF XXXXX RIVER
The obligations of Xxxxx River to consummate the transactions
contemplated by this Agreement shall be subject, to the extent not waived, to
the satisfaction of each of the following conditions before or at Closing:
10.1 REPRESENTATIONS AND WARRANTIES. Except for changes contemplated
by this Agreement, the representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement, and as of the Closing, subject to changes made to the Schedules
attached hereto as permitted by this Agreement.
10.2 PERFORMANCE OF THIS AGREEMENT. Buyer shall have performed all
obligations and complied with all conditions required by this Agreement to be
performed or complied with by it before or at the Closing, to the extent not
waived.
10.3 PROCEEDINGS. All corporate and other proceedings to be taken by
Buyer in connection with the transactions contemplated hereby shall have been
completed, all such proceedings and all documents incident thereto shall be
reasonably satisfactory in substance and form to Xxxxx River, and Xxxxx River
shall have received all such counterpart originals or other copies of such
documents as Xxxxx River may reasonably request.
10.4 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of any Authority and of individuals or business entities which Buyer
is required to obtain in order to consummate the transactions contemplated by
this Agreement shall have been obtained by Buyer and all waiting periods
specified by law with respect thereto shall have passed.
10.5 INJUNCTION, LITIGATION, ETC. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated hereby or which would limit or
affect Xxxxx River's right to transfer the Assets to Buyer or Buyer's ability
to consummate the transactions contemplated hereunder and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Authority which is likely to prohibit, delay or successfully
challenge the validity of any of the transactions contemplated by this
Agreement.
10.6 LEGISLATION. No statute, rule or regulation shall have been
enacted which prohibits or restricts the consummation of the transactions
contemplated hereby.
10.7 OPINION OF COUNSEL FOR BUYER. Xxxxx River shall have received an
opinion in form and substance reasonably satisfactory to Xxxxx River and its
counsel.
10.8 RELATED AGREEMENTS. Buyer shall have executed and delivered
each of the Related Agreements to which it is to be a named party.
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ARTICLE XI
DELIVERIES, ETC., IN CONNECTION WITH CLOSING
11.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall
occur on July 10, 1996 at the offices of McGuire, Woods, Battle & Xxxxxx,
L.L.P. in Richmond, Virginia or at the request of either party, such other
date and place as the parties shall agree. If the Closing takes place, the
Closing and all of the transactions contemplated by this Agreement shall be
deemed to have occurred simultaneously and become effective as of 12:01 a.m.
on the date of Closing.
11.2 DELIVERIES BY XXXXX RIVER. At or before the Closing, Xxxxx
River shall deliver to Buyer, as applicable, the following:
(a) duly executed deeds (which shall provide a warranty against
grantor's acts and the claims of all persons claiming by, through or under the
grantor) from the applicable member of the JR Group in recordable form which
convey to Buyer title to the Real Property, subject to Permitted Exceptions and
subject to the exceptions and exclusions contained in the Title Commitment as
of the Closing, other than any Title Defect which Xxxxx River has elected to
cure or otherwise delete pursuant to Section 7.16(c)(i). Seller will provide to
LTIC (i) customary good standing certificates and corporate authorizations,
(ii) owner's affidavits acceptable to LTIC to remove any exception for (A)
mechanics' or materialmens' liens and (B) rights of parties in possession, and
(iii) a gap indemnity acceptable to LTIC for insuring over the "gap" (i.e. the
time period since the effective date of the title company's last checkdown of
title);
(b) a xxxx of sale in the form attached hereto as Exhibit "K"
and such other document or documents (suitable for filing, registration or
recording, if applicable) as are necessary to transfer to Buyer the Assets
other than the Real Property, which transfer documents shall be without
recourse and shall contain no representations or warranties;
(c) evidence that all of the proceedings contemplated by
Section 9.3 have been completed;
(d) copies of any consents obtained as contemplated by
Section 9.4;
(e) certificates from the State Corporation Commission of
Virginia evidencing the good standing of Xxxxx River in the Commonwealth of
Virginia as of a recent date;
(f) certificates from the secretary of state of (i) each state
in which any of the Real Property or Leased Premises is located and (ii) the
state of incorporation of the
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Person of the JR Group conveying such Real Property or Leased Premises, with
respect to the good standing of the Person of the JR Group conveying such Real
Property or Leased Premises;
(g) customary assurances with respect to the corporate
existence of the Stock Companies;
(h) the certificates representing all of the issued and
outstanding shares of common stock of the Stock Companies, duly registered in
the name of Buyer or duly endorsed or with stock powers attached thereto duly
signed for transfer;
(i) each of the Related Agreements executed by the Person
of the JR Group that is a party thereto;
(j) the opinion of counsel required by Section 9.7; and
(k) such additional documents as Buyer may reasonably
request.
11.3 Deliveries by Buyer. At or before the Closing, Buyer shall
deliver to Xxxxx River, as applicable, the following:
(a) the Purchase Price as adjusted pursuant to Section
3.2(b);
(b) the payments, if any, pursuant to Sections 7.18 and
7.19;
(c) the duly executed assumption of the Assumed Liabilities
in the form of the Instrument of Assumption of Liabilities attached hereto as
Exhibit "L";
(d) evidence that all of the proceedings contemplated by
Section 10.3 have been completed;
(e) copies of any consents obtained as contemplated by
Section 10.4;
(f) certificates from the Secretary of State of the State
of Georgia as to the good standing of Buyer in Georgia as of the most recent
date obtainable;
(g) each of the Related Agreements duly executed by the Buyer;
(h) the opinion of counsel required by Section 10.7; and
(i) such additional documents as Xxxxx River may reasonably
request.
11.4 DELIVERIES OF RELATED AGREEMENTS. At or before the Closing, each
of the parties to each Related Agreement shall deliver an executed copy of such
Agreement to the other parties thereto.
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ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY XXXXX RIVER. (a) Subject to the limitations
contained in this Article XII, Xxxxx River shall indemnify and hold Buyer
harmless against all Losses arising out of:
(i) any breach of a representation or warranty
made by Xxxxx River in this Agreement, other than the representations and
warranties contained in Section 5.11(a), which representations and warranties
shall not survive Closing and shall be merged into the deeds delivered by Xxxxx
River at Closing;
(ii) the breach of any agreement of Xxxxx River
contained in this Agreement (but not the Related Agreements, each of which
shall stand on its own); or
(iii) any liability or obligation of any Person
within the JR Group relating to the Business, or the Assets, and not expressly
assumed by Buyer pursuant to this Agreement;
(b) Notwithstanding the foregoing, in the case of Losses
incurred as a result of the events described in Section 12.1(a)(i), Xxxxx River
shall not be liable for indemnification hereunder unless and until the
aggregate amount of such Losses exceeds $4,500,000 and thereafter its liability
for such Losses shall be limited to the amount thereof in excess of $4,500,000.
12.2 INDEMNIFICATION BY BUYER. (a) Subject to the limitations
contained in this Article XII, Buyer shall indemnify and hold Xxxxx River
harmless against all Losses arising out of:
(i) any breach of a representation or warranty
made by Buyer in this Agreement;
(ii) the breach of any agreement of Buyer contained
in this Agreement (but not the Related Agreements, each of which shall stand
on its own); or
(iii) any Assumed Liability or the failure by Buyer
to discharge any Assumed Liability.
(b) Notwithstanding the foregoing, in the case of Losses
incurred as a result of the events described in Section 12.2(a)(i), Buyer shall
not be liable for indemnification hereunder unless and until the aggregate
amount of such Losses exceeds $4,500,000, and thereafter its liability for such
Losses shall be limited to the amount thereof in excess of $4,500,000.
12.3 SURVIVAL DATE. (a) The indemnification obligations of each party
(the "Indemnitor") obligated to provide indemnification to the other (the
"Indemnitee") under Section 12.1(a)(i) or Section 12.2(a)(i) shall lapse and
become of no further force and
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effect with respect to all claims not made by Indemnitee's delivery to the
Indemnitor of written notice containing details reasonably sufficient to
disclose to Indemnitor the nature and scope of the claim by 12:01 a.m. on
January 1, 1998; provided, however, that (i) claims with respect to the
representations and warranties contained in Section 5.11(c), such claim shall
have been made on or prior to the third anniversary date of this Agreement;
(ii) with respect to the representations and warranties related to tax matters
and contained in Section 5.26, such claim shall have been made prior to the
running of the applicable statutes of limitations; and (iii) with respect to
the representations and warranties related to environmental matters and
contained in Section 5.7, such claim shall have been made on or prior to the
fifth anniversary date of this Agreement. Notwithstanding anything contained
herein to the contrary, no indemnified party shall be entitled to
indemnification with respect to any claim under Section 12.1(a)(i) or
12.2(a)(i), if such indemnified party has actual knowledge prior to Closing of
any circumstance constituting a breach or failure of any such representation or
warranty resulting in such claim.
(b) Any indemnification obligations arising under Section
12.1(a)(ii) or Section 12.2(a)(ii) shall lapse and become of no further force
and effect with respect to all claims not made by Indemnitee's delivery of
written notice containing details reasonably sufficient to disclose to
Indemnitor the nature and scope of the claim on or prior to the third
anniversary date of this Agreement.
12.4 XXXXX RIVER INDEMNIFICATION FOR CERTAIN ENVIRONMENTAL MATTERS.
Any Loss to the extent attributable to conditions existing at or acts or
omissions on or before the Closing with respect to any Environmental Condition
of any Plant Site (including Losses arising as a result of any contamination or
pollution of property near a Plant Site that results from contamination or
pollution of a Plant Site), that, as of Closing, constitutes a violation of, or
otherwise gives rise to any liability under, any Environmental Law, but
excluding any such Loss to the extent arising from any change in law after the
Closing, is an "Environmental Loss." The date that a requirement of remediation
or other action, or a claim for damages, penalties, fines or other similar
costs or expenses or for equitable relief is first made by an Authority, or
demanded by a potential plaintiff with respect to any such Environmental
Condition, or the earlier date on which Buyer shall reasonably determine that
any such requirement or claim is reasonably likely at any time with respect to
such Environmental Condition, or with respect to matters disclosed on Schedule
5.7, the date of Closing, is the "Environmental Accrual Date" with respect to
such Environmental Condition. Notwithstanding any provision of this Agreement
to the contrary, (i) Buyer shall not be entitled to any indemnification or
reimbursement from
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Xxxxx River with respect to any Environmental Loss except to the extent that
such Environmental Loss arises out of an Environmental Condition having an
Environmental Accrual Date before the fifth anniversary of Closing and such
Environmental Losses, in the aggregate, exceed the amount reflected as a
reserve or an accrual in respect of environmental remediation, monitoring, or
investigation costs and expenses on the Final Audited Closing Balance Sheet
(the "Environmental Reserve"); (ii) Xxxxx River shall indemnify Buyer for
Environmental Losses arising from items having an Environmental Accrual Date
before the fifth anniversary of Closing in an amount equal to 75% of the excess
of (A) the lesser of the amount of such Environmental Losses and the amount of
$3,000,000, over (B) the amount of the Environmental Reserve; (iii) Xxxxx River
shall indemnify Buyer for Environmental Losses arising from items having an
Environmental Accrual Date before the fifth anniversary of Closing in an amount
equal to 50% of the excess of (C) the lesser of the amount of such
Environmental Losses and the amount of $10,000,000, over (D) the amount of
$3,000,000; and (iv) Xxxxx River shall indemnify Buyer for Environmental Losses
arising from items having an Environmental Accrual Date before the fifth
anniversary of Closing in an amount equal to (E) the excess of the amount of
such Environmental Losses over the amount of $10,000,000, multiplied by (F) the
Applicable Fraction, as defined below relating to any event or condition giving
rise to the Environmental Loss in effect as of the date Buyer first becomes
entitled to indemnification hereunder from Xxxxx River with respect to such
event or condition. The "Applicable Fraction" shall be 90% for the period
between Closing and the first anniversary of Closing, 80% for events or
conditions with an Environmental Accrual Date during the period between the
first anniversary of Closing and the second anniversary of Closing, 70% for
events or conditions with an Environmental Accrual Date during the period
between the second anniversary of Closing and the third anniversary of Closing,
60% for events or conditions with an Environmental Accrual Date during the
period between the third anniversary of Closing and the fourth anniversary of
Closing, and 50% for events or conditions with an Environmental Accrual Date
during the period between the fourth anniversary of Closing and the fifth
anniversary of Closing. The limitations of Section 12.1(b) shall not apply to
any indemnification obligation of Xxxxx River arising under this Section 12.4,
and any indemnification obligation arising under this Section 12.4 shall be
excluded for all purposes, including the aggregation of Losses, from the
operation of Section 12.1(b).
12.5 DEFINITION OF LOSS. For purposes of this Article XII and Article
VIII, "Losses" shall mean losses, damages, penalties and expenses incurred by
an Indemnitee entitled to indemnification hereunder as a result of a matter
giving rise to a claim for
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indemnification hereunder, including, without limitation, reasonable expenses
of investigation and reasonable attorneys' fees and expenses incurred in
connection with any action, suit or proceeding ("Legal Action") instituted
against the Indemnitee determined, net of the:
(a) tax savings realized by the Indemnitee in respect of
such matter net of any tax consequences of the indemnity payment;
(b) insurance proceeds to which the Indemnitee is entitled
in respect of such matter; and
(c) indemnity payments to which the Indemnitee is entitled
from parties other than the indemnifying party hereunder in respect of such
matter.
Notwithstanding any provision of this Article XII, any damages
to the extent attributable to a failure to mitigate damages shall not
constitute Losses.
12.6 THIRD PARTY CLAIMS. (a) Each of the parties must follow the
procedures set forth in the following paragraphs of this Section 12.6 in order
to be entitled to indemnification with respect to claims resulting from the
assertion of liability by persons or entities not parties to this Agreement,
including claims by any Authority for penalties, fines and assessments.
(b) The party seeking indemnification shall give prompt
written notice to the party from whom indemnification is sought of any
assertion of liability by a third party which might give rise to a claim by
the indemnified party against the indemnifying party based on the indemnity
agreements contained in this Agreement, stating the nature and basis of the
assertion and the amount thereof, to the extent known.
(c) In the event that any Legal Action is brought against an
indemnified party with respect to which the indemnifying party may have
liability under an indemnity agreement contained in this Agreement, the Legal
Action shall, upon the written agreement of the indemnifying party that it is
obligated to indemnify under such an indemnity agreement, be defended by the
indemnifying party and such defense shall include all appeals or reviews which
counsel for the indemnifying party shall deem appropriate. In any such Legal
Action the indemnified party shall have the right to be represented by advisory
counsel and accountants, at its own expense, and the indemnifying party shall
keep the indemnified party fully informed as to such proceeding at all stages
thereof, whether or not the indemnified party is represented by its own
counsel.
(d) Until the indemnifying party shall have assumed the
defense of any Legal Action, or if the indemnified and indemnifying parties are
both named parties in such Legal Action and the indemnified party shall have
reasonably concluded that there may be defenses available to it that are
materially different from or in addition to the defenses
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available to the indemnifying party (in which case the indemnifying party shall
not be entitled to assume the defense of such Legal Action, but shall remain
responsible for its obligation as an indemnitor), all legal and other
reasonable expenses incurred by the indemnified party as a result of such Legal
Action shall be borne by the indemnifying party. In such event, the indemnified
party shall make available to the indemnifying party and its attorneys and
accountants, for review and copying, its books and records relating to such
Legal Action and the parties shall render to each other such assistance as may
reasonably be requested to facilitate the proper and adequate defense of any
such Legal Action.
(e) The indemnifying party shall not make any settlement of
any claim without the written consent of the indemnified party, which consent
shall not be unreasonably withheld. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement involving injunctive or other equitable relief against the
indemnified party or its assets, employees, business or methods of doing
business.
(f) The indemnifying party shall be relieved of its obligation
to indemnify the indemnified party to the extent that any failure to give or
delay in giving timely notice as required by this Section 12.6 prejudices the
indemnifying party.
12.7 SUBROGATION RIGHTS; NO DUPLICATION. (a) Any Indemnitor required
to make a payment under this Article XII shall be subrogated, to the extent of
such payment, to the rights of the entity to which such payment has been made
for reimbursement or indemnification against third parties relating to the
claim on which such payment has been based.
(b) Notwithstanding anything in this Article XII to the
contrary, the obligations of each Indemnitor and its Affiliates pursuant to
this Article XII shall be without duplication as between entities to which such
Indemnitor and its Affiliates are required to make payments.
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 TERMINATION. (a) This Agreement may be terminated at any
time before the Closing.
(i) by mutual written consent of the parties hereto;
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(ii) by either Xxxxx River on the one hand, or
Buyer on the other, if there has been a material breach on the part of
the other of a representation, warranty or agreement contained herein,
or in any writing delivered pursuant to the provisions of this
Agreement, which remains uncured; provided, however, that no breach of
representation or warranty shall form the basis of a right to terminate
this Agreement if the party to whom such representation or warranty was
made or its officers, directors or representatives had notice of the
existence of such breach on or before the date of this Agreement;
(iii) by Xxxxx River or Buyer if the Closing has not
occurred by August 9, 1996, 11:59 p.m. Richmond time; or
(iv) by Buyer pursuant to Section 13.3 below.
13.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 13.1, this Agreement shall become wholly void and of no
further force and effect and there shall be no further liability or obligation
on the part of any party hereto except to pay such expenses as are required of
it and to comply with the confidentiality provisions of Section , and no such
termination shall relieve either party of any liability to the other for any
breach of this Agreement prior to the date of termination.
13.3 AMENDMENT. This Agreement may be amended at any time only by
writing executed by each of the parties hereto. Notwithstanding the foregoing,
Xxxxx River may unilaterally amend any of the Schedules attached hereto by
giving Buyer written notice thereof, which notice shall refer specifically to
this Section, at any time, but in no event later than five business days prior
to Closing. If Buyer does not approve of any such Schedule amendment, then
Buyer may terminate this Agreement by delivering to Xxxxx River written notice
of its election to do so within five business days from the date Buyer receives
the notice from Xxxxx River as provided in this Section, or if such Schedule
amendment is made within five business days prior to Closing, then Buyer may
terminate this Agreement prior to Closing. If Buyer does not terminate this
Agreement within the time specified in this Section, then Buyer shall be deemed
to have accepted each applicable Schedule amendment and waived all rights Buyer
may have against Xxxxx River (including the rights to claim any breach of any
representation or warranty in this Agreement or to terminate this Agreement)
with respect to all matters that shall have been cured by the Schedule
Amendment. All representations and warranties which are true and correct as
modified shall be deemed true and correct as of the date of this Agreement for
the purposes of Section 9.1 and Section 10.1.
13.4 EXTENSION; WAIVER. At any time before the Closing, any party to
this Agreement which is entitled to the benefits thereof may (i) extend the
time for the
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performance of any of the obligations of another party hereto, (ii) waive any
misrepresentation (including an omission) or breach of a representation or
warranty of another party hereto, whether contained herein or in any exhibit,
schedule or document delivered pursuant hereto, or (iii) waive compliance of
another party hereto with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in a written
instrument signed by the party or parties giving the extension or waiver.
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (including telefax or similar writing)
and shall be given,
(a) if to Xxxxx River, to:
Xxxxx River Corporation of Virginia
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telefax: (000) 000-0000
with copies to:
Xxxxx River Corporation of Virginia
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx XX, Esquire
Telefax: (000) 000-0000
and:
McGuire, Woods, Battle & Xxxxxx, L.L.P.
One Xxxxx Center
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx, Xx., Esquire
Telefax: (000) 000-0000
(b) if to Buyer, to:
Printpack, Inc.
0000 Xxxxxxx Xxxxx X.X.
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Atlanta, Georgia 30336-1622
Attention: Xxxxxx X. Love, President
Telefax: __________________
with a copy to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Telefax: (000) 000-0000
or (c) in either case, to such other person or to such other address or telefax
number as the party to whom notice is to be given may have furnished the other
parties in writing by like notice. If mailed, any such communication shall be
deemed to have been given on the third business day following the day on which
the communication is posted by registered or certified mail (return receipt
requested). If given by any other means it shall be deemed to have been given
when delivered to the address specified in this Section 14.1.
14.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Unless the context otherwise requires, terms (including defined
terms) used in the plural include the singular, and vice versa.
14.3 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.
14.4 MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof; (ii) is not intended to and shall not confer upon any person,
association or entity, other than the parties hereto, any rights or remedies
with respect to the subject matter or any provision hereof; (iii) shall not be
assigned by operation of law or otherwise; and (iv) shall be governed in all
respects by the laws of the Commonwealth of Virginia without regard to its laws
or regulations relating to choice of law.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
XXXXX RIVER CORPORATION OF
VIRGINIA
By: /s/
----------------------------
Title: Senior Vice President,
Corporate Finance, Chief
Financial Officer
PRINTPACK, INC.
By: /s/
----------------------------
Title: President
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