STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 4, 1997
BY AND AMONG
INTERTAPE POLYMER GROUP INC.
IPG (US) ACQUISITION CORPORATION
AND
STC CORP.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . .1
1.2. Other Terms . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III
CONSIDERATION AND ALLOCATION. . . . . . . . . . . . . . . . . . . . . . . . . .8
3.1. Consideration . . . . . . . . . . . . . . . . . . . . . . .8
3.2. Allocation. . . . . . . . . . . . . . . . . . . . . . . . .8
3.3. Adjustment of Purchase Price. . . . . . . . . . . . . . . .8
ARTICLE IV
LETTER OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2. Documents to be Delivered by Seller to Buyer. . . . . . . 11
5.3. Documents to be Delivered by IPG and Buyer to Seller. . . 12
5.4. Other Actions at the Closing. . . . . . . . . . . . . . . 12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES RELATING TO SELLER . . . . . . . . . . . . . . 12
6.1. Corporate Organization. . . . . . . . . . . . . . . . . . 12
6.2. Stock Ownership . . . . . . . . . . . . . . . . . . . . . 12
6.3. Authorization of Agreement; No Violation. . . . . . . . . 13
6.4. Litigation. . . . . . . . . . . . . . . . . . . . . . . . 13
6.5. No Brokers and Finders. . . . . . . . . . . . . . . . . . 13
ARTICLE VII
REPRESENTATIONS AND WARRANTIES RELATING TO STC TAPE . . . . . . . . . . . . . 13
7.1. Corporate Organization. . . . . . . . . . . . . . . . . . 14
7.2. Stock Ownership . . . . . . . . . . . . . . . . . . . . . 14
7.3. Subsidiaries and Other Equity Investments . . . . . . . . 14
7.4. Financial Statements. . . . . . . . . . . . . . . . . . . 14
7.5. No Undisclosed Liabilities. . . . . . . . . . . . . . . . 14
7.6. Absence of Certain Changes. . . . . . . . . . . . . . . . 15
7.7. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY . . . . . . . . . . . 19
8.1. Corporate Organization. . . . . . . . . . . . . . . . . . 19
8.2. Capitalization; Stock Ownership . . . . . . . . . . . . . 19
8.3. Subsidiaries and Other Equity Investments . . . . . . . . 19
8.4. No Violation. . . . . . . . . . . . . . . . . . . . . . . 20
8.5. Financial Statements. . . . . . . . . . . . . . . . . . . 21
8.6. No Undisclosed Liabilities. . . . . . . . . . . . . . . . 21
8.7. Absence of Certain Changes. . . . . . . . . . . . . . . . 22
8.8. Title to and Condition of Properties and Assets . . . . . 24
8.9. Inventory . . . . . . . . . . . . . . . . . . . . . . . . 24
8.10. Real Property . . . . . . . . . . . . . . . . . . . . . . 25
8.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 27
8.12. Contracts . . . . . . . . . . . . . . . . . . . . . . . . 28
8.13. Litigation. . . . . . . . . . . . . . . . . . . . . . . . 29
8.14. Proprietary Rights. . . . . . . . . . . . . . . . . . . . 30
8.15. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 30
8.16. Compliance with Laws. . . . . . . . . . . . . . . . . . . 31
8.17. Environmental Matters . . . . . . . . . . . . . . . . . . 31
8.18. Governmental Authorizations and Regulations . . . . . . . 32
8.19. SEC Filings . . . . . . . . . . . . . . . . . . . . . . . 32
8.20. Employee Benefit Plans and Arrangements . . . . . . . . . 33
8.21. Labor Matters . . . . . . . . . . . . . . . . . . . . . . 34
8.22. Foreign Corrupt Practices Act . . . . . . . . . . . . . . 35
8.23. Accounting Practices. . . . . . . . . . . . . . . . . . . 35
8.24. Business Relationships; Receivables . . . . . . . . . . . 35
8.25. Affiliates' Relationships to and Transactions
with the Company . . . . . . . . . . . . . . . . . . . . 36
8.26. Corporate Name. . . . . . . . . . . . . . . . . . . . . . 36
8.27. Corporate Matters. . . . . . . . . . . . . . . . . . . . .36
8.28. [Intentionally omitted.] . . . . . . . . . . . . . . . . .36
8.29. Insurance. . . . . . . . . . . . . . . . . . . . . . . . .36
8.30. Product Warranties . . . . . . . . . . . . . . . . . . . .37
8.31. Barter Agreements. . . . . . . . . . . . . . . . . . . . .37
8.32. Certain Employee Matters . . . . . . . . . . . . . . . . .37
8.33. No Other Representations and Warranties. . . . . . . . . .37
ARTICLE IX
REPRESENTATIONS AND WARRANTIES BY IPG AND BUYER. . . . . . . . . . . . . . . .38
9.1. Corporate Organization . . . . . . . . . . . . . . . . . .38
9.2. Authorization of Agreement; No Violation . . . . . . . . .38
9.3. Corporate Authority. . . . . . . . . . . . . . . . . . . .38
9.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . .39
9.5. No Brokers and Finders . . . . . . . . . . . . . . . . . .39
9.6. Representations Concerning the Intertape Shares. . . . . .39
9.7. Purchase for Investment. . . . . . . . . . . . . . . . . .40
ARTICLE X
COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1. Access, Information and Documents. . . . . . . . . . . . .40
10.2. Conduct of Business Pending Closing. . . . . . . . . . . .41
10.3. Noncompetition; Confidentiality. . . . . . . . . . . . . .44
10.4. Exclusivity. . . . . . . . . . . . . . . . . . . . . . . .46
10.5. Transfer Pricing . . . . . . . . . . . . . . . . . . . . .46
10.6. Consents and Approvals . . . . . . . . . . . . . . . . . .46
10.7. Industrial Site Recovery Act . . . . . . . . . . . . . . .46
10.8. [Intentionally omitted.] . . . . . . . . . . . . . . . . .46
10.9. Resignation of Directors and Officers. . . . . . . . . . .46
10.10. Use of Name. . . . . . . . . . . . . . . . . . . . . . . .47
10.11. Lockup . . . . . . . . . . . . . . . . . . . . . . . . . .47
10.12. Restructuring. . . . . . . . . . . . . . . . . . . . . . .47
10.13. Notification . . . . . . . . . . . . . . . . . . . . . . .47
10.14. Letter of Credit . . . . . . . . . . . . . . . . . . . . .47
10.15. Availability of Funds Under Contingent Payment
Agreement. . . . . . . . . . . . . . . . . . . . . . . .47
10.16. Certain Environmental Compliance . . . . . . . . . . . . .47
10.17. Consent of Union . . . . . . . . . . . . . . . . . . . . .47
10.18. Forms 5500 . . . . . . . . . . . . . . . . . . . . . . . .48
10.19. Termination of Benefit Plans . . . . . . . . . . . . . . .48
ARTICLE XI
COVENANTS OF IPG AND BUYER . . . . . . . . . . . . . . . . . . . . . . . . . .48
11.1. Confidential Information . . . . . . . . . . . . . . . . .48
11.2. Consents and Approvals . . . . . . . . . . . . . . . . . .48
11.3. Environmental Audits . . . . . . . . . . . . . . . . . . .48
11.4. Board Seat . . . . . . . . . . . . . . . . . . . . . . . .48
11.5. Indemnification of Directors and Officers of the
Company. . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE XII
HSR COVENANT OF IPG, BUYER AND SELLER . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS TO SELL THE STOCK . . . . . . . .50
13.1. Accuracy of Representations and Warranties . . . . . . . .50
13.2. Compliance with Covenants. . . . . . . . . . . . . . . . .50
13.3. Consents and Approvals . . . . . . . . . . . . . . . . . .50
13.4. Officer's Certificates . . . . . . . . . . . . . . . . . .50
13.5. Opinion of Counsel . . . . . . . . . . . . . . . . . . . .50
13.6. Registration Rights. . . . . . . . . . . . . . . . . . . .50
13.7. [Intentionally omitted.] . . . . . . . . . . . . . . . . .50
13.8. Guarantees . . . . . . . . . . . . . . . . . . . . . . . .51
13.9. Company Restructuring. . . . . . . . . . . . . . . . . . .51
13.10. October Financial Statements . . . . . . . . . . . . . . .51
13.11. Transfer Pricing . . . . . . . . . . . . . . . . . . . . .51
ARTICLE XIV
CONDITIONS PRECEDENT TO IPG'S AND BUYER'S OBLIGATIONS TO PURCHASE THE STOCK. .51
14.1. Accuracy of Representations and Warranties . . . . . . . .51
14.2. Compliance with Covenants. . . . . . . . . . . . . . . . .51
14.3. Consents and Approvals . . . . . . . . . . . . . . . . . .51
14.4. Officer's Certificates . . . . . . . . . . . . . . . . . .51
14.5. [Intentionally omitted.] . . . . . . . . . . . . . . . . .52
14.6. Opinion of Counsel . . . . . . . . . . . . . . . . . . . .52
14.7. No Litigation. . . . . . . . . . . . . . . . . . . . . . .52
14.8. Employment Agreements. . . . . . . . . . . . . . . . . . .52
14.9. Resignations . . . . . . . . . . . . . . . . . . . . . . .52
14.10. Environmental and Safety Audits. . . . . . . . . . . . . .52
14.11. Physical Properties. . . . . . . . . . . . . . . . . . . .53
14.12. Due Diligence Investigation. . . . . . . . . . . . . . . .53
14.13. October Financial Statements . . . . . . . . . . . . . . .53
14.14. Transfer Pricing . . . . . . . . . . . . . . . . . . . . .53
14.15. Title Insurance. . . . . . . . . . . . . . . . . . . . . .53
14.16. Financing. . . . . . . . . . . . . . . . . . . . . . . . .53
14.17. Restructuring. . . . . . . . . . . . . . . . . . . . . . .53
14.18. Environmental Compliance . . . . . . . . . . . . . . . . .53
14.19. Contracts in Respect of Environmental Remediation. . . . .53
ARTICLE XV
CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE STOCK PURCHASE . . . . .54
15.1. No Injunction. . . . . . . . . . . . . . . . . . . . . . .54
15.2. HSR Act Waiting Period . . . . . . . . . . . . . . . . . .54
ARTICLE XVI
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
16.1. Termination by Buyer and IPG . . . . . . . . . . . . . . .54
16.2. Termination by Seller. . . . . . . . . . . . . . . . . . .54
16.3. Termination by Mutual Consent. . . . . . . . . . . . . . .55
16.4. Termination by IPG or Seller . . . . . . . . . . . . . . .55
16.5. Effect of Termination. . . . . . . . . . . . . . . . . . .55
ARTICLE XVII
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. . . . . . .56
ARTICLE XVIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
18.1. Seller's Obligation to Indemnify . . . . . . . . . . . . .57
18.2. Buyer's Obligations to Indemnify . . . . . . . . . . . . .59
18.2A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
18.3. Method of Asserting Claims . . . . . . . . . . . . . . . .60
18.4. Disputes . . . . . . . . . . . . . . . . . . . . . . . . .63
ARTICLE XIX
[Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
20.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .65
20.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . .67
20.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . .67
20.4. Public Announcements . . . . . . . . . . . . . . . . . . .67
20.5. Waiver; Remedies Cumulative. . . . . . . . . . . . . . . .67
20.6. Amendment. . . . . . . . . . . . . . . . . . . . . . . . .68
20.7. Third Party Beneficiaries. . . . . . . . . . . . . . . . .68
20.8. Definition of Knowledge. . . . . . . . . . . . . . . . . .68
20.9. No Assignment; Binding Effect. . . . . . . . . . . . . . .68
20.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . .68
20.11. Invalid Provisions . . . . . . . . . . . . . . . . . . . .68
20.12. Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .68
20.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . .69
20.14. Updating Disclosure Schedules. . . . . . . . . . . . . . .69
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
November 5, 1997, by and among INTERTAPE POLYMER GROUP INC., a Canadian
corporation ("IPG"), IPG (US) ACQUISITION CORPORATION, a Delaware corporation
and a subsidiary of IPG ("Buyer") and STC CORP., a Korean corporation
("Seller").
W I T N E S S E T H :
WHEREAS, Seller owns all of the outstanding shares of capital stock
of STC Tape Inc., a Delaware corporation ("STC Tape"); and
WHEREAS, STC Tape owns all of the outstanding shares of capital
stock of American Tape Co., a Delaware corporation (the "Company"); and
WHEREAS, IPG desires to cause Buyer, its wholly-owned subsidiary, to
purchase from Seller, and Seller desires to sell to Buyer, all of the
outstanding capital stock of STC Tape, all upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINED TERMS. When used in this Agreement, the following
terms shall have the meanings set forth in this Section 1.1. All Section
numbers used in this Agreement refer to sections of this Agreement unless
otherwise specifically described. All references to Schedules and Exhibits
in this Agreement are references to schedules and exhibits to this Agreement.
"Affiliate" means, with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
"Benefit Plan" means any written Plan under which any employee,
former employee or director of the Company or any Company Subsidiary or any
beneficiary thereof is covered, is eligible for coverage or has benefit
rights by virtue of such Person'S employment, engagement or other
relationship with the Company or any Company Subsidiary.
"Business Combination" means any (i) merger, consolidation, business
combination or similar transaction relating to the Company or any of its
subsidiaries or (ii) any sale or other disposition of capital stock of or
other equity interests (or securities convertible into, or exercisable or
exchangeable for capital stock or other equity interests) in the Company or
any of its subsidiaries
(whether by the Company, the Seller or any of its Affiliates thereof) or
(iii) any sale, dividend or other disposition of all or any material portion
of the assets and properties of the Company or any of its subsidiaries.
"Claim Notice" means written notification pursuant to Section
18.1(b) of a Third Party Claim as to which indemnity under Section 18.1 or
18.2 is sought by an Indemnified Party, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim against the Indemnifying Party
under Section 18.1 or 18.2, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such Third Party Claim.
"Closing" has the meaning given to it in Section 5.1.
"Closing Date" has the meaning given to it in Section 5.1.
"Code" means the Internal Revenue Service Code of 1986, as amended.
"Company Indebtedness" means the difference, at the Closing Date,
between (x) the aggregate amount of the Company's interest-bearing
indebtedness (excluding trade accounts payable) and (y) the amount of any
cash and cash equivalents, where the interest bearing indebtedness is
calculated in a manner consistent with Schedule 1 hereto.
"Company Restructuring" has the meaning given to it in Section 10.12.
"Company Subsidiary" means (i) any corporation that is an issuer of
any shares of capital stock owned beneficially or of record by the Company or
any Company Subsidiary or (ii) any other business entity of which the Company
or any Company Subsidiary owns any capital or profit interests.
"Contract" means any written note, bond, mortgage, indenture, lease,
license, franchise, contract, agreement or other binding understanding,
arrangement or commitment evidenced by an agreement in writing.
"Creditors" means the entities listed in Schedule 1 hereto.
"Dispute Notification" has the meaning given to it in Section
18.4(b)(iv).
"Dispute Period" means the period ending 90 calendar days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnifying
Notice.
"Dispute Resolution Consultant" has the meaning given to it in
Section 18.4(b)(v).
2
"Eight Key Employees" means InJin Xxxx, Xxxxxx Xxx, Koh-Hoon Xxx,
Xxxx X.X. Xxx, Xxxxx Xxxx, Xxxxxxxx Xxxxxx, Xxx Xxxxx Park and Xxxxx Xxxxx.
"Environment" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"Environmental Claim" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
written communication, whether criminal or civil, (collectively, "Claims")
pursuant to or relating to any applicable Environmental Law by any person
(including but not limited to any Governmental Entity, private person and
citizens' group) based upon, alleging, asserting, or claiming any (i)
violation of or liability under any Environmental Law, (ii) violation of any
Environmental Permit, or (iii) liability for investigatory costs, cleanup
costs, removal costs, remedial costs, response costs, natural resource
damages, property damage, personal injury, fines, or penalties arising out
of, based on, resulting from, or related to the presence, Release, or
threatened Release into the Environment, of any Hazardous Materials at any
location, including but not limited to any off-Site location to which
Hazardous Materials or materials containing Hazardous Materials were sent for
handling, storage, treatment, or disposal.
"Environmental Clean-up Site" means any location which is listed or
proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on
any similar state list of sites requiring investigation or cleanup, or which
is the subject of any pending or threatened action, suit, proceeding, or
investigation related to or arising from any alleged violation of any
Environmental Law, or at which there has been a Release, threatened or
suspected Release of a Hazardous Material.
"Environmental Costs and Liabilities" means any and all
out-of-pocket losses, liabilities, obligations, damages, fines, penalties,
judgment, actions, claims, costs and expenses (including, without limitation,
reasonable out-of-pocket costs, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the reasonable out-of-pocket
cost-effective expenses of investigation and feasibility studies and such
reasonable out-of-pocket cost-effective expenses to clean up, remove, treat,
or in any other way address any Hazardous Materials) arising from or under
any Environmental Law.
"Environmental Law" means any and all current and future, federal,
state, local, provincial and foreign, civil and criminal laws, statutes,
ordinances, orders, codes, rules, regulations, Environmental Permits,
policies, guidance documents, judgments, decrees, injunctions, or agreements
with any Governmental Entity, relating to the protection of health and the
Environment, and/or governing the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, or Release of Hazardous Materials, whether now existing
or subsequently amended or enacted, including but not limited to: the Clean
Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 ET
SEQ.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 ET
3
SEQ.; the Hazardous Material Transportation Act 49 U.S.C. Section 1801 ET
SEQ.; the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
Section 6901 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701
ET SEQ.; and the state analogies thereto, including but not limited to the
Michigan Natural Resources and Environmental Protection Act, M.C.L.A.
324.20101 ET SEQ., as amended or superseded from time to time; and any common
law doctrine, including but not limited to, negligence, nuisance, trespass,
personal injury, or property damage related to or arising out of the presence
of, Release of, or exposure to a Hazardous Material.
"Environmental Permit" means any federal, state, local, provincial,
or foreign permits, licenses, approvals, consents or authorizations required
by any Governmental Entity under or in connection with any Environmental Law
and includes any and all orders, consent orders or binding agreements issued
or entered into by a Governmental Entity under any applicable Environmental
Law.
"Environmental Response Action" has the meaning given to it in
Section 18.4(b).
"Environmental Response Action Notice" has the meaning given to it
in Section 18.4(b)(i).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is, or at any time was, a
member of a controlled group (within the meaning of Section 412(n)(6) of the
Code) that includes, or at any time included, the Company or any Company
Subsidiary, or any predecessor of any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Financial Statements" has the meaning given to it in Section 8.5.
"GAAP" means United States generally accepted accounting principles
as currently in effect.
"Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency, or any other instrumentality of the United
States, any foreign country, or any foreign or domestic state, province,
county, city or other political subdivision.
"Guarantees" means the guarantee agreements or other written
assurances listed in Schedule 2.
"Hazardous Material" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, underground
storage tanks, asbestos or
4
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls,
ionizing and non-ionizing radiation including radon and electromagnetic
frequency radiation; and any other chemicals, materials, substances or wastes
in any amount or concentration which are now or hereafter become defined as
or included in the definition of "HAZARDOUS SUBSTANCES," "HAZARDOUS
MATERIALS," "HAZARDOUS WASTES," "EXTREMELY HAZARDOUS WASTES," "RESTRICTED
HAZARDOUS WASTES," "TOXIC SUBSTANCES," or words of similar import, under any
Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Environmental Losses" has the meaning given to it in
Section 18.1(a)(ii).
"Indemnified Party" means any Person claiming indemnification under
any provision of Article XVIII.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XVIII.
"Indemnity Notice" means written notification pursuant to Section
18.3 of a claim for indemnity under Article XVIII by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined in
good faith, of such claim.
"Intellectual Property" means domestic and foreign patents, patent
applications, inventions, invention disclosures, trademark and service xxxx
applications, registered trademarks, registered service marks, computer
programs and software and related codes and applications, databases,
copyrights, trademarks, service marks, brand marks, brand names, trade names,
material trade secrets, know-how, proprietary information, formulae and
processes and all other similar items of intellectual property.
"IRS" means the Internal Revenue Service.
"Laws" has the meaning given to it in Section 8.16.
"Lien" means any adverse claim, restriction on voting or transfer or
pledge, lien, charge, mortgage, encumbrance or security interest of any kind.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation all removal,
remedial and response costs, interest, court costs, fees of attorneys,
accountants and other experts or other expenses of litigation or other
proceedings or of any claim, default or assessment).
5
"Material Adverse Effect" means a material adverse effect on the
business, results of operations or financial condition of a specified Person
and its subsidiaries taken as a whole, as the case may be.
"Net Operating Income" means the net operating income of the Company
computed as described in Section 3.3 hereof.
"Permit" means any license, franchise, permit, consent, concession,
order, approval, authorization or registration from, of or with a
Governmental Entity.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Entity.
"Plan" means any written bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, cafeteria,
life, health, accident, disability, workmen's compensation or other
insurance, severance, separation or other employee benefit plan or policy of
any kind, including, but not limited to, any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.
"Purchase Price" has the meaning given to in Section 3.1.
"Real Property" has the meaning given to it in Section 8.10(a).
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dispersing, dumping, or
disposing of a Hazardous Material into the Environment.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Closing Date between IPG and Seller substantially
in the form of Exhibit B.
"Resolution Period" means the period ending (30) calendar days
following receipt by an Indemnified Party of a Dispute Notice.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Site" means any of the real properties currently or previously
owned, leased or operated by the Company, any Company Subsidiaries or any
Affiliates thereof, or any entities previously owned by the Company,
including all soil, subsoil, surface waters and groundwater thereat.
"Stock" has the meaning given to it in Article II.
6
"Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means all forms of taxation, whenever created or imposed, whether
imposed by a local, municipal, state, foreign, federal or other governmental
body or authority, and, without limiting the generality of the foregoing,
shall include income, gross receipts, ad valorem, excise, value-added, sales,
use, transfer, franchise, license, stamp, occupation, withholding,
employment, payroll, property, environmental or other taxes, duties, fees,
levies, premiums, or other governmental charges, whether disputed or not,
together with any interest, penalty, additions to tax or additional amounts
with respect thereto imposed by any Taxing Authority.
"Taxing Authority" means any governmental agency, board, bureau,
body, department or authority of any federal, state, local or foreign
jurisdiction, having or purporting to exercise jurisdiction with respect to
any Tax.
"Tax Return" means any return, report, or statement of any nature,
including an information return, report or statement required to be filed
with any Taxing Authority.
"Third Party Claim" has the meaning given to it in Section 18.3(a).
"Trion-American Tape Agreements" means the following agreements by
and between Trion Capital Corporation and the Company, each dated as of
December 10, 1996: (i) the Equipment Lease; (ii) the Space License Agreement;
(iii) the Supply Contract; (iv) the Management Agreement and (v) the Shrink
Film Sublease.
"WARN Act" has the meaning given to it in Section 8.21(d).
1.2. OTHER TERMS. Other terms may be defined elsewhere in this
Agreement and, for the purposes of this Agreement, those other terms shall
have the meanings specified in those other portions unless the context
requires otherwise. Meanings specified in this Agreement shall be applicable
to both the singular and plural forms of such terms and to the masculine,
feminine and neuter genders, as the context requires. All amounts specified
herein are in U.S. dollars.
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1. Subject to the terms and conditions set forth in this
Agreement, at the Closing, Buyer agrees to purchase and accept delivery from
Seller of, and Seller agrees to sell, assign, transfer and deliver to Buyer,
free and clear of all Liens, subscriptions, options, warrants, calls,
proxies, rights, commitments, restrictions or agreements of any kind, 160
shares of the common stock of STC Tape (the "Stock"), representing all of the
issued and outstanding capital stock of STC Tape.
2.2. Notwithstanding the foregoing, Seller may elect, between
the date hereof and Closing, to transfer the Stock to STC International,
Inc., a Bahamian corporation and a
7
wholly-owned subsidiary of Seller ("STC International"). In such event, (x)
the representations and warranties contained in Section 6.2 hereof shall be
made directly by STC International, and the representations and warranties of
Seller in such Section 6.2 shall be deemed to be representations and
warranties relating to STC International's ownership of the Stock (y) all
other representations and warranties of Seller contained in this Agreement
shall be deemed to be made by each of Seller and STC International, and (z)
all the covenants and agreements of Seller to be performed in connection with
the transactions contemplated by this Agreement shall be performed by Seller
and/or STC International, as applicable, PROVIDED that any failure to perform
any covenant or agreement of Seller and/or STC International set forth in or
contemplated by this Agreement shall be deemed the nonperformance by Seller.
IPG and Buyer agree to pay the Purchase Price (as hereinafter defined), as
requested by Seller, to Seller, provided that Seller hereby agrees to
indemnify, defend and hold harmless each of IPG and Buyer from and against
any and all losses (including, without limitation, any tax liability)
suffered, incurred or sustained, or to which either of them become subject,
resulting from or arising out of the payment of all or any portion of the
Purchase Price to Seller rather than to STC International as hereinabove
contemplated.
ARTICLE III
CONSIDERATION AND ALLOCATION
3.1. CONSIDERATION. As consideration for the Stock, Buyer will
(A) at the Closing, (i) deliver to Seller certificates representing such
number of shares of the common stock of IPG, par value $.01 per share (the
"Intertape Shares"), as shall equal the dollar amount, which may be up to or
equal to $8 million, of the Purchase Price which Seller shall have elected to
receive pursuant to a written notice to such effect given by Seller to IPG at
least five days prior to Closing, and (ii) pay to Seller cash in an amount
equal to the difference between $43 million and the aggregate value of the
Intertape Shares delivered to Seller pursuant to the foregoing clause (A)(i)
hereof, by wire transfer or delivery of other available funds (the sum of (i)
and (ii) being the "Purchase Price"). In determining the number of Intertape
Shares to be delivered by IPG to Seller, the value of each Intertape Share
shall be deemed to be $22.920.
3.2. ALLOCATION. IPG, Buyer and Seller agree to allocate 100%
of the Purchase Price to the Stock.
3.3. ADJUSTMENT OF PURCHASE PRICE.
(a) Seller will cause each of STC Tape and the Company to
prepare, and Coopers & Xxxxxxx, the Company's certified public accountants,
to audit in respect of the Company (only), financial statements
(collectively, the "October Financial Statements") of each of STC Tape and
the Company as of October 25, 1997 (the October Financial Statements as they
relate to STC Tape, the "STC Tape October Financial Statements" and as such
October Financial Statements relate to the Company, the "Company October
Financial Statements"). Seller, IPG and Buyer agree, and Seller
8
agrees to instruct Coopers & Xxxxxxx that, the October Financial Statements
will be prepared in accordance with GAAP consistently applied, with the
following exceptions:
(i) The STC Tape October Financial Statements shall not
include any of its subsidiaries, but shall be done on a stand-alone basis;
(ii) The Company October Financial Statements shall not
include any Company Subsidiaries other than ATC International, Inc., a
Barbados foreign sale corporation; and
(iii) The Company October Financial Statements shall give
effect to the cancellation of the lease between the Company and Trion
Capital Corporation, a Delaware corporation ("Trion Capital"), relating
to the shrink film business, and the transfer of all tangible and
intangible assets from Trion Capital contemplated by step 4 of the
Restructuring set forth in Exhibit J hereto.
During the course of such audit, Seller shall instruct Coopers & Xxxxxxx to
keep Xxxxx Xxxxxxxx International ("Xxxxx Xxxxxxxx"), Buyer's certified
public accountants, and Ernst & Young LLP ("E&Y") regularly informed as
to its progress. Seller shall also instruct Coopers & Xxxxxxx to deliver to
Seller, IPG, Buyer, Xxxxx Xxxxxxxx and E&Y copies of the draft Company
October Financial Statements together with the draft opinion of Coopers &
Xxxxxxx with respect to such audit, and to make available to Xxxxx Xxxxxxxx
and E&Y the work papers of the Coopers & Xxxxxxx auditors, subject to
such customary requirements as Coopers & Xxxxxxx may impose on such access to
working papers. In addition, Seller shall instruct each of STC Tape and the
Company to provide Xxxxx Xxxxxxxx and E&Y access to all books and records
of STC Tape and the Company (respectively) as Xxxxx Xxxxxxxx and E&Y may
reasonably request. Buyer, within five days following delivery of the draft
October Financial Statements to it, may object in writing to such draft
October Financial Statements, with such objection specifying the reasons
therefor. If within five days following delivery of the draft October
Financial Statements, Buyer shall not have given Seller notice of Buyer's
objection to the draft October Financial Statements, such October Financial
Statements shall be deemed final and binding. Coopers & Xxxxxxx will then
deliver the audited financial statements together with their opinion thereon.
If Buyer gives notice of objection, IPG, Buyer and Seller shall cooperate in
good faith to resolve the dispute. Failing such resolution, the issues in
dispute will be submitted to Deloitte & Touche LLP, certified public
accountants (the "Accountants") for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to
the Accountants copies of such workpapers and other documents and information
relating to the disputed issues as the Accountants may request and as are
available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating
to the determination and to discuss the determination with the Accountants;
(ii) the determination by the Accountants, as set forth in a notice delivered
to both parties by the Accountants, will be binding and conclusive on the
parties; and (iii) IPG and Buyer, on the one hand, and Seller, on the other
hand, will each bear 50% of the fees of the Accountants for such
determination. After resolution Coopers & Xxxxxxx will then deliver copies
of the audited October
9
Financial Statements with their opinion to Seller, IPG, Buyer, Xxxxx Xxxxxxxx
and E&Y. Such October Financial Statements audited by Coopers & Xxxxxxx
shall be used for no other purpose. The STC Tape October Financial
Statements shall be delivered simultaneously with the Company October
Financial Statements.
(b) Following agreement by each of IPG and Buyer, on the one
hand, and Seller, on the other hand, in respect of the October Financial
Statements, IPG, Buyer and Seller shall compute Company Indebtedness and Net
Operating Income. Net Operating Income shall be calculated in accordance with
the methodology used to calculate net operating income shown on the unaudited
income statement of the Company for the period ended August 23, 1997,
attached as Exhibit A hereto. The parties agree that the net operating income
on Exhibit A is calculated excluding (i) loan agency fees, (ii) bank charges,
(iii) interest expenses, (iv) amortization, (v) provision for taxes, (vi)
bonus accruals, (vii) expenses associated with this transaction, and (viii)
income or expense allocations from ATC Tape Philippines Inc. or the
Trion-American Tape Agreements, but including prior period adjustments that
should have been included in net operating income if recorded in the prior
year except for the prior period inventory adjustment of $160,000. At
Closing, the Purchase Price shall be:
(i) adjusted, dollar for dollar, to the extent that the
Company Indebtedness as of the Closing Date is greater than $75,000,000
(resulting in a downward adjustment), or, correspondingly, is less than
$75,000,000 (resulting in an upward adjustment); and
(ii) decreased, dollar for dollar, to the extent that
the Net Operating Income for the ten month period ended October 25, 1997
is less than $4,500,000.
(c) At the Closing Buyer shall loan the funds necessary to
STC Tape which in turn will pay any remaining management fee (the "Management
Fee"), due from STC Tape to Seller, which amount is approximately $2,585,105.
STC Tape shall withhold from such amount and pay to the United States
Internal Revenue Service any amounts necessary to be withheld under
applicable provisions of the Code and as agreed among IPG, Buyer and Seller.
The loan to STC Tape by Buyer shall reduce the Purchase Price to the extent
of such loan.
ARTICLE IV
LETTER OF CREDIT
Seller shall cause to be issued one or more irrevocable letters of credit,
in form and substance reasonably acceptable to both IPG and Buyer, on the one
hand, and Seller, on the other hand, for the benefit of IPG and Buyer. The
letters of credit shall be issued by a bank chosen by Seller and reasonably
acceptable to Buyer (the "Letter of Credit Bank"), which shall be a Korean
bank with a New York City branch or New York City correspondent office. The
letters of credit shall initially be in face amounts equal to the maximum
potential liability of Seller to IPG or Buyer, as provided in Article XVIII
hereof, other than those indemnification provisions for which there is
10
no dollar limit (E.G., the letter of credit with respect to corporate income
taxes shall have an initial face amount of $750,000). The letters of credit
shall be delivered by Seller to Buyer at the Closing, shall be held by Buyer
for the benefit of Buyer and IPG, and may be drawn against only as provided
in Article XVIII hereof. The face amount of each Letter of Credit shall be
reduced from time to time as, and to the extent that, either (a) the Letter
of Credit is drawn upon, or (b) the relevant indemnification provision has
expired pursuant to Article XVIII and the amount of pending unresolved claims
made is less than the remaining amount of the Letter of Credit. For ease of
reference, the Letters of Credit referred to in this Article IV are sometimes
referred to singularly as the "Letter of Credit".
ARTICLE V
CLOSING
5.1. CLOSING. The closing of the purchase and sale of the Stock
(the "Closing") shall take place at the office of Xxxxxx, Xxxxx & Xxxxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. (New York time)
on November 21, 1997, or on such other date upon which the parties shall
mutually agree (the "Closing Date"), provided that all consents, approvals,
orders, authorizations, registrations, declarations and filings under all
Laws of any Governmental Entity required to be obtained in connection with
the transactions contemplated hereby, including, but not limited to, under
the HSR Act, shall have been so given, provided for or obtained.
5.2. DOCUMENTS TO BE DELIVERED BY SELLER TO BUYER. At the
Closing, Seller will deliver to Buyer:
(i) stock certificates for the Stock, free and clear
of all Liens, subscriptions, options, warrants, calls, proxies, rights,
commitments, restrictions or agreements of any kind, which certificates
shall be duly endorsed to Buyer or accompanied by duly executed stock
powers in form satisfactory to Buyer;
(ii) a certificate of Seller in the form of Exhibit F
certifying as to the accuracy of Seller's representations and
warranties at and as of the Closing and that Seller has performed and
complied with all of the terms, provisions and conditions to be
performed and complied with by Seller at or before the Closing;
(iii) a certificate of the Secretary of Seller in the
form of Exhibit G certifying as to certain corporate matters, together with
all of the attachments referred to therein; and
(iv) such other certificates and documents as Buyer or
its counsel may reasonably request.
11
5.3. DOCUMENTS TO BE DELIVERED BY IPG AND BUYER TO SELLER. At
the Closing, IPG and/or Buyer will deliver to Seller:
(i) the Purchase Price as set forth in Section 3.1;
(ii) if the Purchase Price includes more than $3,000,000
in Intertape Shares, a Registration Rights Agreement in the form
attached as Exhibit B hereto;
(iii) certificates of IPG and Buyer in the forms of
Exhibit H-1 and H-2 certifying as to the accuracy as of the Closing Date of
IPG's and Buyer's representations and warranties and that each of IPG
and Buyer has performed and complied with all of the terms, provisions
and conditions to be performed and complied with by it at or before the
Closing;
(iv) certificates of the Secretary of IPG and Buyer,
respectively, in the forms of Exhibit I-1 and I-2 certifying as to
certain corporate matters, together with all of the attachments referred
to therein; and
(v) such other certificates and documents as Seller or
its counsel may reasonably request.
5.4. OTHER ACTIONS AT THE CLOSING. Prior to, but effective at,
Closing, Buyer shall cause the Creditors to release and fully discharge
Seller (pursuant to a form of release and discharge acceptable to Seller) as
of the Closing Date from Seller's obligations under the Guarantees.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES RELATING TO SELLER
As an inducement to IPG and Buyer to enter into and deliver this
Agreement, Seller makes the following representations and warranties to IPG
and Buyer:
6.1. CORPORATE ORGANIZATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Korea and
has the corporate power and authority to carry on its business as now being
conducted and as proposed to be conducted and to sell the Stock.
6.2. STOCK OWNERSHIP. Except as set forth in Schedule 6.2,
Seller owns of record and beneficially all of the issued and outstanding
shares of capital stock of STC Tape, free and clear of all Liens,
subscriptions, options, warrants, calls, proxies, rights, commitments,
restrictions or agreements of any kind and has full power and legal right to
sell, assign, transfer and deliver the same. Except as set forth in Schedule
6.2, Seller is not a party to any voting trust, proxy or other agreement with
respect to any capital stock of the Company. Assuming Buyer has the requisite
power and authority to be the lawful owner of the Stock, upon delivery to
Buyer of certificates representing the
12
Stock, and upon Seller's receipt of the Purchase Price, good and valid title
to the Stock will pass to Buyer, free and clear of all Liens, subscriptions,
options, warrants, calls, proxies, rights, commitments, restrictions or
agreements of any kind other than those created by Buyer.
6.3. AUTHORIZATION OF AGREEMENT; NO VIOLATION. Seller has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby in
accordance with the terms of this Agreement. Seller has duly authorized the
execution, delivery and performance of this Agreement and the sale of the
Stock to Buyer and the consummation of the other transactions contemplated
hereby. No other corporate proceedings on the part of Seller are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and, assuming this
Agreement constitutes the legal, valid and binding obligation of Buyer,
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). Neither the execution,
delivery or performance of this Agreement nor the consummation of any of the
transactions contemplated hereby (i) will violate or conflict with the
Certificate of Incorporation or By-Laws of Seller, or (ii) is prohibited by
or, except for filings under the HSR Act, requires Seller to obtain any
consent, authorization or approval, or make any registration or filing with
or from any Person, except such consents, authorizations and approvals the
non-receipt of which, individually or in the aggregate, would result in a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
6.4. LITIGATION. Except as set forth in Schedule 6.4, there are
no actions, suits, proceedings or investigations, either at law or in equity,
or before any Governmental Entity in any United States or foreign
jurisdiction, of any kind now pending or, to the best of Seller's knowledge,
threatened or proposed in any manner involving Seller, STC Tape, the Company
or any Company Subsidiary or any of their respective properties or assets of
STC Tape, the Company or any Company Subsidiary that would in any manner
materially impair Seller's ability to perform its obligations hereunder.
6.5. NO BROKERS AND FINDERS. Except as set forth in Schedule
6.5, neither Seller, STC Tape nor the Company has incurred any liability for
brokerage or other commissions or finders' fees relative to this Agreement or
to the transactions herein contemplated.
ARTICLE VII
REPRESENTATIONS AND
WARRANTIES RELATING TO STC TAPE
As an inducement to Buyer to enter this Agreement, Seller and STC
Tape make the following representations and warranties to IPG and Buyer:
13
7.1. CORPORATE ORGANIZATION. STC Tape is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has the corporate power and authority to carry on its business as now being
conducted and as proposed to be conducted.
7.2. STOCK OWNERSHIP. Except as set forth in Schedule 7.2, Seller
owns of record and beneficially all of the issued and outstanding shares of
capital stock of the Company, free and clear of all Liens, subscriptions,
options, warrants, calls, proxies, rights, commitments, restrictions or
agreements of any kind and has full power and legal right to sell, assign,
transfer and deliver the same. Except as set forth in Schedule 7.2, Seller is
not a party to any voting trust, proxy or other agreement with respect to any
capital stock of the Company.
7.3. SUBSIDIARIES AND OTHER EQUITY INVESTMENTS. Except as set
forth in Schedule 7.3, STC Tape does not own, directly or indirectly, any shares
of capital stock of any corporation or any equity investment in any partnership,
association or other business organization.
7.4. FINANCIAL STATEMENTS.
(a) STC Tape has delivered (with respect to (i) below) and will
have delivered prior to Closing (with respect to (ii) below) to IPG and Buyer
copies of the following financial statements (the financial statements
referenced in (ii) below being included in the October Financial Statements and
(i) and (ii) together, the "STC Tape Unconsolidated Financial Statements"):
(i) The unaudited unconsolidated balance sheet of
STC Tape as of December 31, 1996 and related unconsolidated statements of
income and retained earnings for the fiscal year ended on that date; and
(ii) The unaudited unconsolidated balance sheet of
STC Tape as of October 25, 1997 and related unconsolidated statements of
income and retained earnings and changes in financial position for the ten
month period ended on that date, together with supporting notes, certified
by the President and the Chief Financial Officer of STC Tape.
(b) All of such STC Tape unconsolidated Financial Statements
referenced in (i) above are complete and correct and present fairly and
accurately the financial position of STC Tape as at the date of said balance
sheet. The STC Tape unconsolidated October Financial Statements referenced in
(ii) above are complete and correct and present fairly and accurately the
financial position of STC Tape as at the date of said balance sheet and the
results of the operations and changes in financial position of STC Tape for the
period then ended in conformity with GAAP applied as described in Section 3.3 of
this Agreement.
7.5. NO UNDISCLOSED LIABILITIES.
(a) Except as set forth on Schedule 8.6, and except as and to
the extent reflected, disclosed or reserved against in the STC Tape's 1996
financial statements (including the notes
14
thereto), STC Tape does not have any liabilities, whether absolute, accrued,
contingent or otherwise, material to the business operations, assets or
financial condition of STC Tape which were required by GAAP (consistently
applied) to be disclosed in STC Tape's statement of condition as of December
31, 1996 or the notes thereto. Except as set forth on Schedule 8.6, and
except as and to the extent reflected, disclosed or reserved against in the
STC Tape October Financial Statements (including the notes thereto), STC Tape
does not have any liabilities, whether absolute, accrued, contingent or
otherwise, material to the business operations, assets or financial
conditions of STC Tape which were required by GAAP (consistently applied) to
be disclosed in STC Tape's statement of conditions as of October 25, 1997 or
in the notes thereto.
(b) Since October 25, 1997, except for the transactions specified on
Schedule J, STC Tape has not incurred any liabilities, whether absolute,
accrued, contingent or otherwise, other than liabilities and obligations
incurred in the ordinary course of business after October 25, 1997 and which do
not, or could not reasonably be expected to, individually or in the aggregate,
cause a Material Adverse Effect on the business of STC Tape and its subsidiaries
taken as a whole.
7.6. ABSENCE OF CERTAIN CHANGES. Since October 25, 1997 (except
(i) for the execution and delivery of this Agreement, and (ii) as set forth in
Schedule 8.7, neither STC Tape nor any of its subsidiaries has:
(i) had any change in its condition (financial or
otherwise), operations (present or prospective), business (present or
prospective), properties, assets, or liabilities, which has resulted in or
could reasonably be expected to result in a Material Adverse Effect on
STC Tape and its subsidiaries taken as a whole;
(ii) issued, sold or otherwise disposed of, or agreed to
issue, sell or otherwise dispose of, any capital stock or any other
security of STC Tape or any of its subsidiaries, or granted or agreed to
grant any option, warrant or other right to subscribe for or to purchase
any capital stock or any other security of STC Tape or any of its
subsidiaries;
(iii) declared, set aside or paid any dividend or made any
distribution (whether in cash, property or stock) with respect to any of
its capital stock or redeemed, purchased or otherwise acquired, or agreed
to redeem, purchase or otherwise acquire, any of its capital stock;
(iv) suffered any damage, destruction or loss of physical
property (not covered by insurance, except that all deductibles shall be
taken into account as an unreimbursed loss and recorded in liabilities)
materially or adversely affecting its condition (financial or otherwise) or
operations (present or prospective);
(v) (x) suffered any loss, which loss has resulted in or
could reasonably be expected to result in, a Material Adverse Effect to
STC Tape and its subsidiaries taken as a
15
whole, or (y) waived any right,which waiver has resulted in or could
reasonably be expected to result in, a Material Adverse Effect to STC
Tape and its subsidiaries taken as a whole;
(vi) other than in the ordinary course of business, sold,
transferred or otherwise disposed of, or agreed to sell, transfer or
otherwise dispose of, any assets (having a fair market value at the time of
sale, transfer or disposition of $25,000 or more in the aggregate), or
canceled, or agreed to cancel, any debts or claims;
(vii) mortgaged, pledged or subjected to any lien or
agreed to mortgage, pledge or subject to any lien any of its properties or
assets;
(viii) incurred or agreed to incur any indebtedness for
borrowed money;
(ix) paid or obligated itself to pay in excess of $25,000
in the aggregate for fixed assets;
(x) entered into, renewed, extended or terminated any
license or franchise Contracts or any distributor Contracts to which it is
a party, in each case where such action has resulted or could reasonably be
expected to result in a Material Adverse Effect on STC Tape and its
subsidiaries taken as a whole;
(xi) made or permitted any material amendment, renewal,
extension or termination of any material Contract or Permit to which it is
a party other than in the ordinary course of business;
(xii) made any material change, or announced any material
change, in the terms, including, but not limited to, price, payment terms
or off-invoice allowances and discounts, of the sale of any product (or
component thereof) or services; or made any change, or announcement of any
change, in the form or manner of distribution of any product (or component
thereof) other than changes which, singly or in the aggregate, have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect on the STC Tape and its subsidiaries taken as a whole;
(xiii) lost any major customer or had any material order
canceled or knows of any threatened cancellation of any material order (for
purposes of this clause (xiii), a major customer being any of the twenty
largest, by purchase order volume, of STC Tape's customers at the year
ended December 31, 1996 and at the ten month period ended October 25, 1997,
and a material order being a purchase order equal to or in excess of
$50,000);
(xiv) increased, or agreed to increase, the compensation
or bonuses or special compensation of any kind of any of its key employees
(which term shall be deemed to include all officers) over the rate being
paid to them on August 15, 1997 other than normal
16
merit and/or cost-of-living increases pursuant to customary arrangements
consistently followed, or adopted or increased any benefit under any
insurance, pension or other Benefit Plan, payment or arrangement made
to, for or with any such key employee;
(xv) had any resignation or termination of employment of
any of its key employees;
(xvi) experienced any lockouts, labor strikes or work
stoppages or knows of any impending or threatened lockouts, labor strikes
or work stoppages;
(xvii) experienced any shortage or difficulty in obtaining
any raw material such that STC Tape in respect of any of its products will
be required to terminate operations within four weeks' time or institute an
extraordinary price increase;
(xviii) made any change in its accounting methods or
practices;
(xix) made any charitable or political contribution or
pledge in excess of $5,000 in the aggregate; or
(xx) entered into any transaction not in the ordinary
course of its business which has resulted, or which reasonably could be
expected to result, in a Material Adverse Effect on STC Tape or its
subsidiaries taken as a whole.
7.7. TAX MATTERS. Except as set forth in Schedule 8.11:
(a) STC Tape and its subsidiaries have duly and timely
(including extensions) filed all Tax Returns required to be filed by each of
them through the date hereof, and each such Tax Return is complete and correct
in all respects. All Taxes, including estimated Taxes, due and payable by the
STC Tape and each of its subsidiaries (whether or not shown on any Tax Return)
have been paid. All monies required to be withheld by STC Tape and its
subsidiaries from Seller, Affiliates of Seller, employees, independent
contractors, creditors or other third parties for Taxes have been collected or
withheld, and either duly and timely paid to the appropriate Taxing Authorities
or (if not yet due for payment) set aside in accounts for such purposes.
Neither STC Tape nor any of its subsidiaries will have any liability for Taxes
for any taxable period ending on or before the Closing Date in excess of the sum
of (i) the provision for current Taxes set forth on the October Financial
Statements (including both the STC Tape October Financial Statement and the
Company Financial Statement), plus (ii) Taxes arising in the ordinary course of
business of STC Tape or any of its subsidiaries during the period beginning on
October 25, 1997 and ending at the close of business on the Closing Date. For
purposes of this Section 7.7(a), a taxable period beginning on or before and
ending after the Closing Date shall be considered to end at the close of
business on the Closing Date and the allocation of Taxes between the pre-Closing
period and the post-Closing period shall be made on the basis of an interim
closing of the books as of the end of the Closing Date. To avoid any doubt,
17
any Taxes resulting from or attributable to the Company Restructuring shall
be deemed to have occurred outside of the ordinary course of business in the
pre-Closing period.
(b) No Taxing Authority is now asserting, or to the best
knowledge of STC Tape, any of its subsidiaries or Seller, threatening to assert
against the STC Tape or any of its subsidiaries, any deficiency or claim for
Taxes. Schedule 7.7 lists all income Tax Returns filed by or with respect to
STC Tape and each of its subsidiaries for all taxable periods ending on or after
December 1991, indicates those Tax Returns, if any, that have been audited, and
indicates those Tax Returns that currently are the subject of audit. Seller has
delivered (or has caused STC Tape and each of its subsidiaries to deliver) to
Buyer complete and correct copies of all income Tax Returns filed by or with
respect to, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, STC Tape and each of its subsidiaries for all
taxable periods ending on or after December 1991.
(c) Neither STC Tape nor any of its subsidiaries is a party to
any agreement extending, or having the effect of extending, the time within
which to file any Tax Return or the period of assessment or collection of any
Taxes.
(d) Neither STC Tape nor any of its subsidiaries (i) is a party
to or is bound by any obligations under any Tax sharing, Tax indemnity or
similar agreement or arrangement, (ii) has made and is subject to any election
under Section 341(f) of the Code, (iii) has made and is subject to any election
or deemed election under Section 338 or Section 336(e) of the Code or the
regulations thereunder, (iv) has agreed to and is required to make, and
reasonably expects that it might have to make, any adjustment under Section 481
of the Code (or any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise, (v) has ever entered into
any agreement or arrangement that could result separately or in the aggregate in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code, (vi) is or has at any time been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code, (vii)
is a party to any joint venture, partnership or other arrangement that is
treated as a partnership for federal income Tax purposes, (viii) has liability
for Taxes of any other Person, whether as a transferee or successor, by contract
or otherwise, (ix) has or is projected to have any amounts includable in its
taxable income under section 951 of the Code, (x) is or has been a shareholder,
directly or indirectly, in any passive foreign investment company or (xi) has
any deferred gain or loss arising out of any deferred intercompany transaction
or any other income which will or might be reportable in a period ending after
the Closing Date which is attributable to a transaction or event occurring in a
period ending on or before the Closing Date.
18
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANY
As an inducement to Buyer to enter into this Agreement, Seller makes
the following representations and warranties to IPG and Buyer:
8.1. CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to carry on its business as
now being conducted and as proposed to be conducted (which is intended to be
consistent with past practice) and to own and operate the properties and assets
now owned and being operated by it. Seller has delivered to Buyer complete and
correct copies of the Company's Certificate of Incorporation and By-Laws as in
effect on the date hereof. The Company is duly qualified or licensed to do
business and is in good standing as a foreign corporation in each of the
jurisdictions set forth in Schedule 8.1. The Company is not required to be
qualified or licensed to do business as a foreign corporation in any other
jurisdiction, except where the failure to be so qualified or licensed would not
result in a Material Adverse Effect upon the Company. Schedule 8.1 sets forth a
true and complete list of the names and titles of the directors and officers of
the Company and each Company Subsidiary.
8.2. CAPITALIZATION; STOCK OWNERSHIP. The authorized capital
stock of the Company consists of 10,000 shares of common stock, without par
value, of which 160 shares are issued and outstanding and none are held in
treasury. All of the Stock has been duly authorized and validly issued and is
fully paid and non-assessable and none of the shares of Stock have been issued
in violation of, and are subject to, any purchase option, call, right of first
refusal, right of first offer, preemptive, subscription or similar rights under
any provision of applicable law, the charter or other constitutive or governing
documents of the Company, any Contract to which the Company is subject, bound or
a party or otherwise. Except as set forth in Schedule 8.2, the Company is not a
party to or bound by any Contract to issue, sell or otherwise dispose of or
redeem, purchase or otherwise acquire any capital stock or any other security of
the Company or any other security exercisable or exchangeable for or convertible
into any capital stock or any other security of the Company, and, except for
this Agreement, there is no outstanding option, warrant or other agreement or
right to subscribe for or purchase any capital stock or any other security of
the Company or any other security exercisable for or convertible into any
capital stock or any other security of the Company.
There are no outstanding notes, bonds, mortgages, debentures or other
indebtedness having the right to vote on any matters on which stockholders of
the Company may vote.
8.3. SUBSIDIARIES AND OTHER EQUITY INVESTMENTS. Except as set
forth in Schedule 8.3, neither the Company nor any Company Subsidiary owns,
directly or indirectly, any shares of capital stock of any corporation or any
equity investment in any partnership, association or other business
organization. With respect to each Company Subsidiary, Schedule 8.3 sets forth
a true and complete list of (i) its name and jurisdiction of incorporation or
organization, (ii) the jurisdictions in which it
19
is duly qualified or licensed to do business as a foreign corporation or
foreign business entity, (iii) if a corporation, its authorized capital
stock, (iv) if a corporation, the number of shares of each class of stock
thereof outstanding, (v) if a corporation, the number of shares of each such
class and percentage of outstanding voting stock owned by the Company or any
Company Subsidiary, (vi) if a business entity other than a corporation, the
profit or capital interests owned by the Company or any Company Subsidiary,
and (vii) the names and titles of its members, managers, partners, directors
and officers. Seller has delivered to Buyer complete and correct copies of
the constitutional documents of each Company Subsidiary as in effect on the
date hereof. Except as set forth in Schedule 8.3, no capital stock or any
other security (including any debt security) of any Company Subsidiary is
held by any Person other than the Company or a Company Subsidiary. Each
Company Subsidiary is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has the power and
authority to carry on its business as now being conducted and as proposed to
be conducted (which is intended to be consistent with past practice) and to
own and operate the properties and assets now owned and being operated by it.
Each Company Subsidiary is duly qualified or licensed to do business and is
in good standing in each of the respective jurisdictions listed in Schedule
8.3. Except as set forth in Schedule 8.3, no Company Subsidiary is required
to be qualified or licensed to do business as a foreign corporation or
foreign business entity in any other jurisdiction, except where the failure
to be so qualified or licensed would not result in a Material Adverse Effect
upon the Company. All outstanding securities or ownership interests of each
Company Subsidiary owned by the Company or a Company Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable,
subject to no Lien and are freely transferable and none of such securities or
ownership interests were issued in violation of any preemptive or other
right. Except as set forth in Schedule 8.3, neither the Company nor any
Company Subsidiary is a party to or bound by any Contract to issue, sell or
otherwise dispose of or redeem, purchase or otherwise acquire any capital
stock or any other security of any Company Subsidiary or any other security
exercisable or exchangeable for or convertible into any capital stock or any
other security of any Company Subsidiary, and there is no outstanding option,
warrant or other right to subscribe for or to purchase, or Contract with
respect to, any capital stock or any other security of any Company Subsidiary
or any other security exercisable or convertible into any capital stock or
any other security of any Company Subsidiary.
8.4. NO VIOLATION. Except as set forth in Schedule 8.4, neither
the execution, delivery or performance of this Agreement nor the consummation of
any of the transactions contemplated hereby (i) will violate or conflict with
the Certificate of Incorporation or By-Laws of the Company or any Company
Subsidiary, (ii) will result in any breach of or default under any provision of
any Contract to which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary is bound or to which any property or
asset of any of them is subject, (iii) is prohibited by or requires the Company
or any Company Subsidiary to obtain or make any consent, authorization,
approval, registration or filing with or from any Person, except any applicable
filings required under the HSR Act, (iv) will cause any acceleration of maturity
of any note, instrument or other obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary is bound
or with respect to which the Company or any Company Subsidiary is an obligor or
guarantor or (v) will result in the creation or imposition of
20
any Lien upon or give to any other Person any interest or right (including
any right of termination or cancellation) in or with respect to any of the
properties, assets, business or Contracts of the Company or any Company
Subsidiary, except for those violations and conflicts, breaches, defaults,
consents, authorizations, approvals, registrations, filings, accelerations
and Liens (as referenced in (i) through (v) above) which, singly or in the
aggregate, would not result in a Material Adverse Effect upon the Company.
8.5. FINANCIAL STATEMENTS.
(a) Seller has delivered (with respect to (i) below) and will
have delivered prior to Closing (with respect to (ii) below) to IPG and Buyer
copies of the following financial statements (the financial statements
referenced in (i) being the "Company's 1996 Financial Statements" and the
financial statements referenced in (ii) below being included in the October
Financial Statements:
(i) The audited consolidated balance sheets of the
Company and its Company Subsidiaries as of December 31, 1996 and related
consolidated statements of income and retained earnings and changes in
financial position for the fiscal year ended on that date, together with
supporting notes and schedules and the report thereon of Coopers & Xxxxxxx;
and
(ii) the audited balance sheet of the Company as at
October 25, 1997 and related statements of income and retained earnings and
changes in financial position for the ten month period ended on that date,
together with supporting notes and schedules, and the report thereon of
Coopers & Xxxxxxx.
(b) All of such Financial Statements referenced in (i) above are
complete and correct and present fairly and accurately the separate and
consolidated financial positions of the Company and each of its consolidated
Company Subsidiaries as at the date of said balance sheet and the separate and
consolidated results of the operations and changes in financial position of the
Company and each of its consolidated Company Subsidiaries for the period then
ended in conformity with GAAP consistently applied. The October Financial
Statements referenced in (ii) above are complete and correct and present fairly
and accurately the financial position of the Company as at the date of said
balance sheet and the results of the operations and changes in financial
position of the Company for the period then ended in conformity with GAAP
applied as described in Section 3.3 of this Agreement.
8.6. NO UNDISCLOSED LIABILITIES.
(a) Except as set forth on Schedule 8.6, and except as and to
the extent reflected, disclosed or reserved against in the Company's 1996
Financial Statements (including the notes thereto), neither the Company nor any
Company Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the business operations, assets or financial condition of
the Company and the Company Subsidiaries taken as a whole which were required by
GAAP
21
(consistently applied) to be disclosed in the Company's consolidated
statement of condition as of December 31, 1996 or the notes thereto. Except
as set forth on Schedule 8.6, and except as and to the extent reflected,
disclosed or reserved against in the October Financial Statements (including
the notes thereto), neither the Company nor any Company Subsidiary has any
liabilities, whether absolute, accrued, contingent or otherwise, material to
the business operations, assets or financial conditions of the Company and
the Company Subsidiaries taken as a whole which were required by GAAP
(consistently applied) to be disclosed in the Company's statement of
conditions as of October 25, 1997 or in the notes thereto.
(b) Since October 25, 1997, the Company has not incurred any
liabilities, whether absolute, accrued, contingent or otherwise, other than
liabilities and obligations incurred in the ordinary course of business after
October 25, 1997 and which do not, or could not reasonably be expected to,
individually or in the aggregate, cause a Material Adverse Effect on the
business of the Company and the Company Subsidiaries taken as a whole.
8.7. ABSENCE OF CERTAIN CHANGES. Since October 25, 1997 (except
(i) for the execution and delivery of this Agreement, and (ii) as set forth in
Schedule 8.7), neither the Company nor any Company Subsidiary has:
(i) had any change in its condition (financial or
otherwise), operations (present or prospective), business (present or
prospective), properties, assets, or liabilities, which has resulted in or
could reasonably be expected to result in a Material Adverse Effect on the
Company and the Company Subsidiaries taken as a whole;
(ii) issued, sold or otherwise disposed of, or agreed to
issue, sell or otherwise dispose of, any capital stock or any other
security of the Company or any Company Subsidiary, or granted or agreed to
grant any option, warrant or other right to subscribe for or to purchase
any capital stock or any other security of the Company or any Company
Subsidiary;
(iii) declared, set aside or paid any dividend or made any
distribution (whether in cash, property or stock) with respect to any of
its capital stock or redeemed, purchased or otherwise acquired, or agreed
to redeem, purchase or otherwise acquire, any of its capital stock;
(iv) suffered any damage, destruction or loss of physical
property (not covered by insurance, except that all deductibles shall be
taken into account as an unreimbursed loss and recorded in liabilities)
materially or adversely affecting its condition (financial or otherwise) or
operations (present or prospective);
(v) (x) suffered any loss, which loss has resulted in or
could reasonably be expected to result in, a Material Adverse Effect to the
Company and the Company Subsidiaries taken as a whole, or (y) waived any
right, which waiver has resulted in or could
22
reasonably be expected to result in, a Material Adverse Effect to the
Company and the Company Subsidiaries taken as a whole;
(vi) other than in the ordinary course of business, sold,
transferred or otherwise disposed of, or agreed to sell, transfer or
otherwise dispose of, any assets (having a fair market value at the time of
sale, transfer or disposition of $25,000 or more in the aggregate), or
canceled, or agreed to cancel, any debts or claims;
(vii) mortgaged, pledged or subjected to any lien or
agreed to mortgage, pledge or subject to any lien any of its properties or
assets;
(viii) incurred or agreed to incur any indebtedness for
borrowed money;
(ix) paid or obligated itself to pay in excess of $25,000
in the aggregate for fixed assets;
(x) entered into, renewed, extended or terminated any
license or franchise Contracts or any distributor Contracts to which it is
a party, in each case where such action has resulted or could reasonably be
expected to result in a Material Adverse Effect on the Company and the
Company Subsidiaries taken as a whole;
(xi) made or permitted any material amendment, renewal,
extension or termination of any material Contract or Permit to which it is
a party other than in the ordinary course of business;
(xii) made any material change, or announced any material
change, in the terms, including, but not limited to, price, payment terms
or off-invoice allowances and discounts, of the sale of any product (or
component thereof) or services; or made any change, or announcement of any
change, in the form or manner of distribution of any product (or component
thereof) other than changes which, singly or in the aggregate, have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect on the Company and the Company Subsidiaries taken as a
whole;
(xiii) lost any major customer or had any material order
canceled or knows of any threatened cancellation of any material order (for
purposes of this clause (xiii), a major customer being any of the twenty
largest, by purchase order volume, of the Company's customers at the year
ended December 31, 1996 and at the ten month period ended October 25, 1997,
and a material order being a purchase order equal to or in excess of
$50,000);
(xiv) increased, or agreed to increase, the compensation
or bonuses or special compensation of any kind of any of its key employees
(which term shall be deemed to include all officers) over the rate being
paid to them on August 15, 1997 other than normal
23
merit and/or cost-of-living increases pursuant to customary arrangements
consistently followed, or adopted or increased any benefit under any
insurance, pension or other Benefit Plan, payment or arrangement made
to, for or with any such key employee;
(xv) had any resignation or termination of employment of
any of its key employees (including without limitation those listed in
Exhibit K hereto);
(xvi) experienced any lockouts, labor strikes or work
stoppages or knows of any impending or threatened lockouts, labor strikes
or work stoppages;
(xvii) experienced any shortage or difficulty in obtaining
any raw material such that the Company in respect of any of its products
will be required to terminate operations within four weeks' time or
institute an extraordinary price increase;
(xviii) made any change in its accounting methods or
practices;
(xix) made any charitable or political contribution or
pledge in excess of $5,000 in the aggregate; or
(xx) entered into any transaction not in the ordinary
course of its business which has resulted, or which reasonably could be
expected to result, in a Material Adverse Effect on the Company.
8.8. TITLE TO AND CONDITION OF PROPERTIES AND ASSETS. (a) The
Company and the Company Subsidiaries have good and marketable title to all of
their respective properties and assets reflected as owned in the balance sheet
of the Company included in the October Financial Statements (except as
thereafter sold or otherwise disposed of in the ordinary course of business)
subject to no conditional sales contract, Lien, or right of possession in favor
of any third party, except for Permitted Liens (as defined in Section 8.10) and
except as set forth in Schedule 8.8. Subsequent to October 25, 1997, neither
the Company nor any Company Subsidiary has sold or disposed of any material
amount of their respective properties or assets or obligated themselves to do so
except in the ordinary course of business.
(b) The facilities, machinery, information systems and other
equipment of the Company and the Company Subsidiaries listed in Exhibit D hereto
are in good operating condition and repair, subject only to the ordinary wear
and tear of those businesses.
8.9. INVENTORY. A copy of Report No. AR4201 dated October 25,
1997 generated by the Company in the ordinary course of its business has been
delivered to Buyer and shall be deemed to be included within Schedule 8.9. All
inventory listed thereon consists of a quality and quantity useable and saleable
in the ordinary course of business and is valued in accordance with generally
accepted accounting principles at the lower of cost or market (consistently
applied) with provision (which management of the Company believes to be
adequate) for obsolescence, shrinkage,
24
excess quantities, defective materials and deterioration. Except as set
forth in Schedule 8.9, all inventory of the Company is located on premises
owned or leased by the Company as reflected in this Agreement. Neither the
Company nor any private label customer nor customer for which products of
unique sizes are manufactured by the Company is in material breach of the
terms of any obligation to the other, no valid grounds exist for any set-off
of amounts billable to such customers on the completion of orders to which
work-in-process for such customers relates, and, except as set forth in
Schedule 8.9, no such customer has 25% or more of its receivables outstanding
more than 30 days past due. All work-in-process (including without
limitation work-in-process for private label customers and customers for
which products of unique sizes are manufactured by the Company) is of a
quality ordinarily produced in accordance with the requirements of the orders
to which such work-in-process is identified, and will require no rework with
respect to services performed prior to Closing, except to the extent labor
attributable to such rework has been reasonably taken into consideration in
valuing the work-in-process in the balance sheet of the Company included in
the October Financial Statements.
8.10. REAL PROPERTY.
(a) Schedule 8.10(a) contains an accurate and complete list, as
of the date of this Agreement, of (i)(A) all fee interests in real property and
buildings, improvements and structures owned by the Company or any Company
Subsidiary and (B) all leasehold estates (the "Leasehold Estates") in real
property and buildings, improvements and structures owned by the Company or any
Company Subsidiary (all of such fee interests, Leasehold Estates, buildings,
improvements and structures, together with all easements, rights of way,
privileges, appurtenances and other rights pertaining thereto, being the "Real
Property"), (ii) the location of such Real Property, and (iii) all Liens which
pertain to such Real Property, except the following ("Permitted Liens"):
(1) those items that secure liabilities that are reflected on the balance sheet
of the Company included in the October Financial Statements or the notes thereto
or that secure liabilities incurred in the ordinary course of business after the
date of such balance sheet, (2) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (3) such encumbrances, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets, and financial condition of the
Company and the Company Subsidiaries taken as a whole, and (4) with respect to
owned real property, title imperfections noted in existing title insurance of
the Company. Schedule 8.10(a) also identifies each of the operative documents
creating a Leasehold Estate (the "Real Property Leases"). The applicable
Company or Company Subsidiary has good and indefeasible title in fee simple (or
as otherwise specified in Schedule 8.10(a)) to all of the Real Property set
forth in Schedule 8.10(a) and owns all Leasehold Estates set forth in
Schedule 8.10(a). Except as disclosed in Schedule 8.10(a), the consummation of
the transactions contemplated by this Agreement will not prevent the Company or
any Company Subsidiary, as the case may be, from using or possessing all Real
Property listed in Schedule 8.10(a) substantially in the same manner such Real
Property was used or possessed by the Company or any Company Subsidiary, as the
case may be, immediately prior to the Closing Date. The Company or a Company
Subsidiary, as the case may be, has such title or such Leasehold Estate in all
Real Property listed in Schedule 8.10(a) as is required for the conduct
25
of the business of the Company or the Company Subsidiary, as the case may be,
as presently conducted, in each case free and clear of all Liens.
(b) Except as set forth in Schedule 8.10(b), no party holding an
interest superior to any Leasehold Estate has given notice of or made a claim
with respect to any material breach or default by the Company or any Company
Subsidiary with respect to such superior interest, other than in respect of a
breach or default which has been cured.
(c) Except as set forth on Schedule 8.10(c), none of the rights
of the Company or any Company Subsidiary under any of the Real Property Leases
will be subject to termination or modification as the result of the consummation
of the transactions contemplated by this Agreement.
(d) Neither the Company nor any Company Subsidiary is obligated
under or a party to, any option, right of first refusal, right of first offer or
any other contractual right to offer, purchase, acquire, sell, assign or dispose
of any Real Property listed in Schedule 8.10(a).
(e) Except as set forth in Schedule 8.10(e), none of the Eight
Key Employees has received written notice (which shall not include constructive
notice) of any condemnation, zoning or other land-use regulation proceedings,
including, without limitation, resolutions of intent, which would materially
detrimentally affect the use and operation of all or any portion of any Real
Property for its present or intended purpose or the value of all or any material
portion of the Real Property and the business conducted thereon having been
instituted or threatened.
(f) Except as set forth in Schedule 8.10(f), to the knowledge of
the Company, there are no pending or threatened material interruptions (except
in the ordinary course) of any utility services to any portion of the Real
Property.
(g) Except as set forth in Schedule 8.10(g), none of the Eight
Key Employees has received written notice (which shall not include constructive
notice) from any Governmental Entity having jurisdiction over all or any portion
of the Real Property regarding any material adverse change in the specific
application to the Real Property of any applicable laws, regulations, statutes,
rules or restrictions relating to a change in the permitted use of all or any
portion of the Real Property or the business conducted thereon, or written
notice from adjacent landowners regarding unrecorded easements and/or agreements
or encroachments in respect of all or any portion of the Real Property that
would materially adversely affect the applicable Real Property or the use
thereof by the Company or any Company Subsidiary, or any tenant or other
occupant thereof or the business conducted thereon.
(h) Except as set forth in Schedule 8.10(h), the use being made
of each building that constitutes Real Property is in substantial conformity
with the certificate of occupancy issued for the facilities located on such Real
Property. Except as set forth in Schedule 8.10(h), all required certificates
and Permits of such type have been issued and are in full force and effect,
other than those certificates and Permits the nonissuance or noneffectiveness of
which would not, singly or in the
26
aggregate, result in a Material Adverse Effect upon the Company and the
Company Subsidiaries taken as a whole.
(i) Except as set forth in Schedule 8.10(i), none of the
Company, any Company Subsidiary, any Real Property or the present use thereof by
the Company or any Company Subsidiary is in material violation of any building,
fire, zoning or health code or any other Law that would result in a Material
Adverse Effect on the Company and the Company Subsidiaries taken as a whole.
(j) Except as set forth in Schedule 8.10(j), subsequent to
October 25, 1997, none of the Eight Key Employees has received actual written
notice from any Governmental Entity that Seller, STC Tape, the Company or any
Company Subsidiary is in violation of any applicable Law relating to any portion
of the Real Property requiring the performance of any work, repairs,
construction, alterations or installations on or in connection with any portion
of the Real Property, which notice has not been complied with and which would
have a Material Adverse Effect upon such Real Property.
8.11. TAX MATTERS. Except as set forth in Schedule 8.11:
(a) The Company and each Company Subsidiary have duly and timely
(including extensions) filed all Tax Returns required to be filed by each of
them through the date hereof, and each such Tax Return is complete and correct
in all respects. All Taxes, including estimated Taxes, due and payable by the
Company and each Company Subsidiary (whether or not shown on any Tax Return)
have been paid. All monies required to be withheld by the Company and each
Company Subsidiary from Seller, Affiliates of Seller, employees, independent
contractors, creditors or other third parties for Taxes have been collected or
withheld, and either duly and timely paid to the appropriate Taxing Authorities
or (if not yet due for payment) set aside in accounts for such purposes.
Neither the Company nor any Company Subsidiary will have any liability for Taxes
for any taxable period ending on or before the Closing Date in excess of the sum
of (i) the provision for current Taxes set forth on the unaudited consolidated
and consolidating balance sheets as of October 25, 1997 provided pursuant to
Section 8.5(a)(ii), plus (ii) Taxes arising in the ordinary course of business
of the Company or any Company Subsidiary during the period beginning on
October 25, 1997 and ending at the close of business on the Closing Date. For
purposes of this Section 8.11(a), a taxable period beginning on or before and
ending after the Closing Date shall be considered to end at the close of
business on the Closing Date and the allocation of Taxes between the pre-Closing
period and the post-Closing period shall be made on the basis of an interim
closing of the books as of the end of the Closing Date. To avoid any doubt, any
Taxes resulting from or attributable to the Company Restructuring shall be
deemed to have occurred outside of the ordinary course of business in the
pre-Closing period.
(b) No Taxing Authority is now asserting, or to the best
knowledge of the Company, any Company Subsidiary or Seller, threatening to
assert against the Company or any Company Subsidiary, any deficiency or claim
for Taxes. Schedule 8.11 lists all income Tax Returns filed by or with respect
to the Company and each Company Subsidiary for all taxable periods ending
27
on or after December 1991, indicates those Tax Returns, if any, that have
been audited, and indicates those Tax Returns that currently are the subject
of audit. Seller has delivered (or has caused the Company and each Company
Subsidiary to deliver) to Buyer complete and correct copies of all income Tax
Returns filed by or with respect to, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, the Company and
each Company Subsidiary for all taxable periods ending on or after December
1991.
(c) Neither the Company nor any Company Subsidiary is a party to
any agreement extending, or having the effect of extending, the time within
which to file any Tax Return or the period of assessment or collection of any
Taxes.
(d) Neither the Company nor any Company Subsidiary (i) is a
party to or is bound by any obligations under any Tax sharing, Tax indemnity or
similar agreement or arrangement, (ii) has made and is subject to any election
under Section 341(f) of the Code, (iii) has made and is subject to any election
or deemed election under Section 338 or Section 336(e) of the Code or the
regulations thereunder, (iv) has agreed to and is required to make, and
reasonably expects that it might have to make, any adjustment under Section 481
of the Code (or any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise, (v) has ever entered into
any agreement or arrangement that could result separately or in the aggregate in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code, (vi) is or has at any time been a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code, (vii)
is a party to any joint venture, partnership or other arrangement that is
treated as a partnership for federal income Tax purposes, (viii) has liability
for Taxes of any other Person, whether as a transferee or successor, by contract
or otherwise, (ix) has or is projected to have any amounts includable in its
taxable income under section 951 of the Code, (x) is or has been a shareholder,
directly or indirectly, in any passive foreign investment company or (xi) has
any deferred gain or loss arising out of any deferred intercompany transaction
or any other income which will or might be reportable in a period ending after
the Closing Date which is attributable to a transaction or event occurring in a
period ending on or before the Closing Date.
8.12. CONTRACTS.
(a) Except as set forth in Schedule 8.12(a), neither the Company
nor any Company Subsidiary is currently a party to any of the following written
Contracts:
(i) employment, severance, termination, consulting or
similar Contracts;
(ii) Contracts containing covenants obligating the
Company or such Company Subsidiary not to compete or other covenants
restricting the development, manufacture, marketing, distribution or sale
of any product or service of the Company (or any Company Subsidiary);
(iii) Affiliate Contracts;
28
(iv) Contracts other than with affiliates under which the
Company or any Company Subsidiary agrees to manage, or be managed by,
another entity, in whole or material part;
(v) Contracts pursuant to which the Company acquires
material rights or transfers to another Person material rights with respect
to Proprietary Rights (including any licenses or material agreements under
which the Company or any Company Subsidiary is licensee or licensor of any
such Proprietary Rights including the name "American Tape");
(vi) Contracts excluding operating leases under which the
Company or any Company Subsidiary has borrowed any money in excess of
$10,000 from, or issued any note, bond, debenture or other evidence of
indebtedness in excess of $10,000 to, any Person;
(vii) Contracts (including so-called take-or-pay or
keepwell agreements) under which the Company or any Company Subsidiary has
directly or indirectly guaranteed indebtedness, liabilities or obligations
of any Person (in each case other than in the ordinary course of business);
(viii) Contracts under which the Company or any Company
Subsidiary has, directly or indirectly, made any advance, loan, extension
of credit or capital contribution to, or other investment in, any Person,
where the amount involved exceeds $10,000;
(ix) Contracts containing a provision requiring the
consent of the other Person thereto upon a change in control of ownership
of the Company or any Company Subsidiary;
(x) powers of attorney;
(xi) Contracts to do business with any Governmental
Entity involving aggregate annual payments in excess of $50,000.
(b) Each Contract listed in Schedule 8.12(a) is in full force
and effect. Neither the Company nor any Company Subsidiary, nor to the best of
Seller's knowledge, any other party is in material default in the observance or
the performance of any material term or obligation to be performed by it under
any Contract listed in Schedule 8.12(a). Schedule 8.12(b) sets forth a list of
all requirements contracts to which the Company or any Company Subsidiary is a
party. Seller has delivered to IPG and Buyer true and complete copies (except
where certain confidential information has been redacted) of all Contracts
listed in Schedule 8.12(a) as in effect on the date hereof.
8.13. LITIGATION. Except as set forth in Schedule 8.13, there are
no actions, suits, proceedings or investigations, either at law or in equity, or
before any commission or other administrative authority in any United States or
foreign jurisdiction, of any kind now pending or, to
29
the best of Seller's knowledge, threatened involving the Company or any
Company Subsidiary or any of their respective properties or assets of the
Company or any Company Subsidiary that could, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect
on the Company and the Company Subsidiaries taken as a whole.
8.14. PROPRIETARY RIGHTS.
(a) Schedule 8.14 lists all Proprietary Rights in which the
Company now has any interest, specifying whether such Proprietary Rights are
owned, controlled, used or held (under license or otherwise) by the Company
or its Subsidiaries, and also indicating which of such Proprietary Rights are
registered or for which applications for registration have been filed. All
Proprietary Rights shown as registered by the Company or its Subsidiaries in
Schedule 8.14 have been properly registered, all pending applications have
been properly made and filed and all annuity, maintenance, renewal and other
fees relating to registrations or applications are current. The Company and
Subsidiaries are not infringing and have not infringed any Proprietary Rights
of another in the operation of the business of the Company, nor, to the
Company's knowledge, is any other person infringing the Proprietary Rights of
the Company. All Proprietary Rights of the Company and its Subsidiaries are
valid, enforceable and in good standing, and there are no equitable defenses
to enforcement based on any act or omission of Company or its Subsidiaries
except where the failure of such representation and warranty to be true would
not have a material adverse effect on the Business. The consummation of the
transactions contemplated hereby will not impair any Proprietary Rights owned
or used by the Company or its Subsidiaries. "Proprietary Rights" shall mean
(i) all trademarks, business identifiers, trade dress, service marks, trade
names and brand names, all registrations thereof and applications therefor
and all goodwill associated with the foregoing; (ii) all copyrights,
copyright registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of authorship; (iii)
all patents and patent applications, and all international proprietary rights
associated therewith; (iv) all contracts or agreements granting any right,
title, license or privilege to the Proprietary Rights of any third party; (v)
all inventions, mask works and mask work registrations, know-how,
discoveries, improvements, designs, trade secrets, shop and royalty rights;
and (vi) all claims for infringement brought by the Company for any of the
foregoing.
(b) Except as listed on Schedule 8.14, there is no Litigation
pending or, to the Company's knowledge, threatened to challenge the Company's or
the Company Subsidiaries' right, title and interest with respect to its
continued use and right to preclude others from using any Proprietary Rights
owned by the Company or the Company Subsidiaries. Since January 1, 1997, none
of the Eight Key Employees has received written notice from any Person which
alleges that the Company or any of the Company Subsidiaries is infringing the
rights of such Person with respect to a registered patent or a registered
trademark.
8.15. BANK ACCOUNTS. Schedule 8.15 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company or any of its Subsidiaries maintains
a safe deposit box, lock box or checking, savings, custodial or
30
other account of any nature, the type and number of each such account and the
signatories therefore, a description of any compensating balance
arrangements, and the names of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.
8.16. COMPLIANCE WITH LAWS. The Company and the Subsidiaries have
complied with and are in compliance in all material respects with all federal,
state, local and foreign statutes, laws, ordinances, regulations, rules,
Permits, judgments, orders and decrees (collectively, "Laws") applicable to any
of them or any of their respective properties, assets, operations and businesses
except such failures of compliance that individually or in the aggregate do not
and will not materially and adversely affect the property, operations, financial
condition or prospects of the Company and the Company Subsidiaries taken as a
whole. Except as set forth in Schedule 8.16, the respective businesses of the
Company and the Company Subsidiaries are not being conducted, and no properties
or assets of the Company or any Company Subsidiary relating thereto are owned or
are being used by the Company or any Company Subsidiary, in violation of any Law
or Permit of any Governmental Entity or any judgment, order or decree, except
for such violations which do not and cannot reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect on the Company and
the Company Subsidiaries, taken as a whole.
8.17. ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 8.17:
(i) the Company and each Company Subsidiary have
obtained and hold all necessary Environmental Permits and each of these are
fully and freely transferable to Purchaser;
(ii) the Company and each Company Subsidiary are in
compliance with all terms, conditions and provisions of (a) all applicable
Environmental Laws and (b) all Environmental Permits;
(iii) there are no past, pending or threatened
Environmental Claims against the Company or any Company Subsidiary and
neither the Seller nor the Company are aware of any facts or circumstances
which could reasonably be expected to form the basis for any Environmental
Claim against the Company;
(iv) no Releases of Hazardous Materials have occurred at,
from, in, to, on, adjacent to or under any Site and no Hazardous Materials
are present in, on, about or migrating to or from any Site that could give
rise to an Environmental Claim against the Company or any Company
Subsidiary;
(v) neither the Company, nor any Company Subsidiary, nor
any entity previously owned by the Company, has transported or arranged for
the treatment, storage, handling, disposal, or transportation of any
Hazardous Material to any off-site location which is an Environmental
Clean-up Site;
31
(vi) no Site other than the Marysville Site is a current
or proposed Environmental Clean-up Site;
(vii) there are no Liens arising under or pursuant to any
Environmental Law with respect to any Site and there are no facts,
circumstances, or conditions that could reasonably be expected to restrict,
encumber, or result in the imposition of special conditions under any
Environmental Law with respect to the ownership, occupancy, development,
use, or transferability of any Site;
(viii) there are no (a) underground storage tanks, active
or abandoned, (b) polychlorinated-biphenyl-containing equipment, (c)
lead-based-paint containing materials, or (d) asbestos-containing
material at any Site;
(ix) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses which relate to one or
more of the Sites and which were conducted by, on behalf of, or which are
in the possession of the Seller, the Company, any of the Company
Subsidiaries, affiliates, lenders, insurers or guarantors, which have not
been delivered to Buyer prior to execution of this Agreement;
(x) there are no claims or actions by the Company or any
Company "Affiliate against any insurance carrier with respect to
Environmental Costs and Liabilities at any of the Real Properties, any
currently or formerly utilized Site, or any off-Site location where
Hazardous Material was shipped for treatment, storage or disposal; and
(xi) the balance, as of November 3, 1997, and an itemized
accounting of the intended use (if any) of remaining available funds
balance under the Contingent Payment Agreement dated July 25, 1990 by STC
of America, Inc., STC Tape Co., the Company and NBD Bank, N.A. (the
"Contingent Payment Agreement"), for certain environmental remediation
expenses at the Marysville, Michigan facility, is set forth in Schedule
8.17.
8.18. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. The Company
and the Company Subsidiaries hold all Permits the absence of which, individually
or in the aggregate, could have a Material Adverse Effect on the business of the
Company and the Company Subsidiaries (the "Material Permits"). Such Material
Permits are valid and none of the Eight Key Employees has received any written
notice to the effect that any Governmental Entity intended to cancel, terminate
or not renew any Material Permit.
8.19. SEC FILINGS. Neither the Company nor any Company Subsidiary
has ever issued any security covered by a registration statement filed with the
SEC pursuant to the Securities Act or the Investment Company Act of 1940, as
amended, and no security issued by the Company or any Company Subsidiary has
ever been registered pursuant to the Exchange Act.
32
8.20. EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS. All Benefit Plans
are listed in Schedule 8.20 and copies of all documentation relating to such
Benefit Plans have been delivered or made available to Buyer (including copies
of Benefit Plans, summary plan descriptions, trust agreements, the three most
recent annual returns, representative employee communications, and IRS
determination letters, all where applicable). Except as disclosed in
Schedule 8.20:
(i) each Benefit Plan and the administration thereof
complies, and has at all times complied, in all material respects with the
requirements of all applicable law, including ERISA and the Code, and each
Benefit Plan intended to qualify under Section 401(a) of the Code has at
all times since its adoption been so qualified, and each trust which forms
a part of any such plan has at all times since its adoption been tax-exempt
under Section 501(a) of the Code;
(ii) no Benefit Plan has incurred any "accumulated
funding deficiency" within the meaning of Section 302 of ERISA or Section
412 of the Code;
(iii) no direct, contingent or secondary liability has
been incurred or is expected to be incurred by the Company or any Company
Subsidiary under Title IV of ERISA with respect to any Benefit Plan, or
with respect to any other Plan presently or heretofore maintained or
contributed to by any ERISA Affiliate;
(iv) all Benefit Plans subject to Title IV of ERISA have
been funded in accordance with the amount determined in each such Plan's
annual actuarial report;
(v) no "reportable event" (within the meaning of Section
4043 of ERISA) has occurred within the most recent five calendar years with
respect to any Benefit Plan or any Plan maintained by an ERISA Affiliate
which is subject to Title IV of ERISA;
(vi) no Benefit Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA;
(vii) neither the Company, and Company Subsidiary nor any
ERISA Affiliate has been assessed with any liability for any Tax imposed
under Section 4971 through 4980B of the Code or civil liability under
Section 502(i) or (l) of ERISA;
(viii) no benefit under any Benefit Plan, including,
without limitation, any severance or parachute payment plan or agreement,
will be established or become accelerated, vested or payable by reason of
any transaction contemplated under this Agreement;
(ix) no Tax has been incurred under Section 511 of the
Code with respect to any Benefit Plan (or trust or other funding vehicle
pursuant thereto) within the past three calendar years;
33
(x) no Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as
required by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of
the Code or any State Laws requiring continuation of benefits coverage
following termination of employment;
(xi) no suit, actions or other litigation (excluding
claims for benefits incurred in the ordinary course of plan activities)
have been brought or, to the knowledge of Seller, threatened against or
with respect to any Benefit Plan within the past three calendar years; and
(xii) all contributions to Benefit Plans that were
required to be made under such Benefit Plans have been made, and all
benefits accrued under any unfunded Benefit Plan have been paid, accrued
or otherwise adequately reserved in accordance with GAAP, all of which
accruals under unfunded Benefit Plans are as disclosed in Schedule 8.20, and
each of the Company and each Company Subsidiary has performed all
material obligations required to be performed under all Benefit Plans.
8.21. LABOR MATTERS. Except as set forth on Schedule 8.21:
(a) (i) Neither the Company nor any Company Subsidiary is a party
to any labor or collective bargaining agreement, and no employees of Company
or any Company Subsidiary are represented by any labor organization; (ii)
within the preceding three years, there have been no representation or
certification proceedings, or petitions seeking a representation proceeding,
pending or, to the knowledge of Seller, threatened in writing to be brought
or filed with the National Labor Relations Board or any other labor relations
tribunal or authority; and (iii) within the preceding three years, to the
knowledge of Seller, there have been no organizing activities involving the
Company or any Company Subsidiary with respect to any group of employees of
the Company or any Company Subsidiary.
(b) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or threatened in writing against the Company or any Company
Subsidiary. There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of Seller, threatened in writing by
or on behalf of any employee or group of employees of the Company or any
Company Subsidiary.
(c) Except as set forth in Schedule 8.21(c), there are no
complaints, charges or claims against the Company or any Company Subsidiary
pending or, to the knowledge of Seller threatened to be brought or filed with
any Governmental Entity based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment of any
individual by the Company or any Company Subsidiary.
(d) The Company and each Company Subsidiary are in material
compliance with all Laws relating to the employment of labor, including all
such Laws relating to wages, hours,
34
Worker Adjustment Retraining and Notification Act of 1988, as amended ("WARN
Act"), collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security Taxes and any similar Tax.
(e) Since December 31, 1996, there has been no "mass layoff"
or "plant closing" (as defined by the WARN Act) with respect to the Company
or any Company Subsidiary.
8.22. FOREIGN CORRUPT PRACTICES ACT. Neither the Company or any
Company Subsidiary nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any Company Subsidiary has violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or paid or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment which constitutes a violation of any U.S.
criminal statute.
8.23. ACCOUNTING PRACTICES. The Company and each Company
Subsidiary has kept books and records and has maintained internal accounting
controls sufficient to permit management to operate the business in a
reasonably prudent manner.
8.24. BUSINESS RELATIONSHIPS; RECEIVABLES.
(a) Schedule 8.24(a) lists (without identifying by name) the
twenty largest Persons whose purchases of goods or services (determined on an
accrual basis) from the Company and the Company Subsidiaries during the year
ended December 31, 1996, the twenty largest expected Persons during the year
ending December 31, 1997 and the sales volume and the accounts receivables
balances at December 31, 1996 and October 25, 1997. The Company will provide
IPG and Buyer with comments, specific as to the conduct of business and the
nature of the business relationship between each such customer and the
Company, two days before the Closing by providing the report from the
Company's system screen number 0016, which follows screen number 032002, for
the twenty largest customers.
(b) Except as set forth in Schedule 8.24(a), no Person listed
on Schedule 8.24 has terminated or substantially decreased the extent of, or
given written notice to Seller, the Company or any Company Subsidiary of the
termination or substantial reduction of, or of the intent to terminate or
substantially decrease the extent of such Person's business relationship with
the any of the Company or any Company Subsidiary.
(c) Except as set forth in Schedule 8.24(b), all accounts
receivable of the Company and each Company Subsidiary (i) arose from bona
fide transactions in the ordinary course of business and are payable on the
Company's normal trade terms, and (ii) are, to the knowledge of Seller,
legal, valid and binding obligations of the respective debtors enforceable in
accordance with their terms.
35
8.25. AFFILIATES' RELATIONSHIPS TO AND TRANSACTIONS WITH THE
COMPANY.
(a) NO ADVERSE INTERESTS. Except as disclosed in Schedule
8.25(a), no Affiliate has any material direct or indirect interest in (i) any
entity which does business with the Company or is competitive with the
Company's business or (ii) any property, asset or right which is used by the
Company in the conduct of its business.
(b) OBLIGATIONS. All material obligations of any Affiliate to
the Company, and all obligations of the Company to any Affiliate, are listed
on Schedule 8.25(b).
8.26. CORPORATE NAME. The Company and each Company Subsidiary
(i) have the right to use their respective names as the name of a corporation
in each jurisdiction in which the Company or any such Company Subsidiary does
business and (ii) have not received or given any written notice of conflict
during the past five years with respect to the rights of others regarding the
corporate names of the Company or any Company Subsidiary. To the knowledge of
Seller, no Person other than the Company and the Company Subsidiaries is
presently authorized to use the name of the Company or any Company Subsidiary.
8.27. CORPORATE MATTERS. Complete and correct copies of the
minute books and stock transfer books and ledgers of the Company and each
Company Subsidiary have been delivered to Buyer. Such minute books correctly
reflect all material corporate actions taken by the directors and
shareholders of such companies and such stock transfer books and ledgers
correctly reflect all issuances and transfers of capital stock of such
companies. The original minute books and stock transfer books and ledgers of
the Company and each Company Subsidiary and the corporate and business
records and books of such companies will be in the exclusive control and
custody of such companies at the Closing.
8.28. [Intentionally omitted.]
8.29. INSURANCE.
(a) Schedule 8.29(a) contains a list and description of all
insurance policies maintained by or on behalf of the Company and each Company
Subsidiary on the assets on their respective operations and personnel,
including those Comprehensive General Liability and environmental impairment
liability policies issued to former owners of the Real Property under which
the Company may assert claims. Such description includes the insurance
carrier, the amount of premiums thereunder, the type of coverage and the
expiration dates of the current premium periods thereunder. Such insurance is
of the kinds, covering such risks and in such amounts and with such
deductibles and exclusions, as are consistent with past business practice of
the Company and each Company Subsidiary and are reasonable for the business,
assets and properties of the Company and each Company Subsidiary. All such
policies are in full force and effect.
36
(b) Except as set forth in Schedule 8.29(b), neither Seller,
the Company nor any Company Subsidiary has received any notice of
cancellation or termination with respect to any material insurance policy
thereof and there are no pending disputes or controversies between the
Company or any Company Subsidiary, on the one hand, and the carrier of any
such insurance policy, on the other.
8.30. PRODUCT WARRANTIES. Except for warranties as to
conformance to specifications and product returns in the ordinary course of
business, and except as set forth in Schedule 8.30: (i) neither the Company
nor any Company Subsidiary has any unexpired, expressed, product warranty
with respect to any product that it manufactures or sells or that it has
heretofore manufactured or sold; (ii) neither the Company nor any Company
Subsidiary has received any written notice of any claim based on any product
warranty; and (iii) Seller does not know or have any reasonable ground to
know of any claim (actual or threatened) based on any product warranty of
which neither the Company nor any Company Subsidiary has received notice.
Neither the Company nor any Company Subsidiary makes any other warranties
expressed or implied, with respect to any of the products that any of them
manufactures or sells.
8.31. BARTER AGREEMENTS. Except as disclosed in Schedule 8.31,
there are no outstanding barter Contracts or arrangements with respect to the
business of the Company or any Company Subsidiary nor is the Company or any
Company Subsidiary liable for any outstanding barter obligations nor the
owner of any outstanding barter receivables.
8.32. CERTAIN EMPLOYEE MATTERS. No employee, agent, consultant
or contractor associated with any of the members of management or key
personnel of the Company or any Company Subsidiary who has contributed to or
participated in the conception and development of proprietary rights of any
of the Company or any Company Subsidiary has asserted or, to the knowledge of
Seller, threatened any claim against the Company or any Company Subsidiary in
connection with such Person's involvement in the conception and development
of such proprietary rights.
8.33. NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of Seller contained in this Agreement, Seller
makes no representation or warranty, express or implied, written or oral, and
Seller hereby disclaims any such representation or warranty (including
without limitation any warranty of merchantability or of fitness for a
particular purpose), whether made by Seller or the Company or any of their
officers, directors, employees, agents or representatives, with respect to
Seller, STC Tape or the Company or the execution and delivery of this
Agreement or the transactions contemplated hereby. Without limiting the
generality of the foregoing, neither Seller, STC Tape nor the Company makes
any representation or warranty to Buyer or IPG with respect to any
projections, estimates or budgets of future revenues or expenses or
expenditures, or future results of operations, or any other information or
documents, heretofore delivered to or made available to Buyer or IPG or their
respective counsel, accountants or advisors with respect to the Company,
except as expressly covered by a representation and warranty contained in
this Agreement.
37
ARTICLE IX
REPRESENTATIONS AND WARRANTIES BY IPG AND BUYER
As an inducement to Seller to enter into this Agreement, each of
IPG and Buyer makes the representations and warranties to Seller set forth
below in Sections 9.1 (as to IPG), 9.3, 9.4, 9.5, 9.6, 9.7 and 9.8, and Buyer
makes the representations and warranties set forth below in Sections 9.1 (as
to Buyer), 9.2, 9.4 (as to Buyer) 9.5 (as to Buyer), 9.7 (as to Buyer) and
9.8.
9.1. CORPORATE ORGANIZATION. IPG is a corporation duly
organized, validly existing and in good standing under the laws of Canada and
has the corporate power and authority to carry on its business as now being
conducted and as proposed to be conducted. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware
and has the corporate power and authority to carry on its business as now
being conducted and as proposed to be conducted and to acquire and own the
Stock.
9.2. AUTHORIZATION OF AGREEMENT; NO VIOLATION. Buyer has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby in
accordance with the terms of this Agreement. Buyer has duly authorized the
execution, delivery and performance of this Agreement and the purchase of the
Stock from Seller and the consummation of the other transactions contemplated
hereby. No other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and, assuming this
Agreement constitutes the legal, valid and binding obligation of Seller,
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). Neither the execution,
delivery or performance of this Agreement nor the consummation of any of the
transactions contemplated hereby (i) will violate or conflict with the
Certificate of Incorporation or By-Laws of Buyer, or (ii) is prohibited by
or, except for filings under the HSR Act requires Buyer to obtain or make any
consent, authorization, approval, registration or filing with or from any
Person. Buyer has delivered to Seller copies of its Certificate of
Incorporation and all amendments thereto and a copy of its By-laws, which are
true and complete copies of such instruments as in effect on the date of this
Agreement.
9.3. IPG has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms of this
Agreement. IPG has duly authorized the execution, delivery and performance of
this Agreement and the issuance of the Intertape Shares to Seller and the
consummation of the other transactions contemplated hereby. No other
corporate proceedings on the part of IPG are necessary to authorize this
Agreement, the issuance of the Intertape Shares to Seller or the other
transactions
38
contemplated hereby. This Agreement has been duly executed and delivered by
IPG and, assuming this Agreement constitutes the legal, valid and binding
obligation of Seller, it constitutes the legal, valid and binding obligation
of IPG, enforceable against IPG in accordance with its terms, except as may
be limited by any bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law). Neither the execution, delivery or performance of this Agreement nor
the consummation of any of the transactions contemplated hereby (i) will
violate or conflict with the Certificate of Incorporation or By-Laws of IPG,
or (ii) is prohibited by or, except for filings under the HSR Act requires
IPG to obtain or make any consent, authorization, approval, registration or
filing with or from any Person. IPG has delivered to Seller copies of its
Certificate of Incorporation and all amendments thereto and a copy of its
By-laws, which are true and complete copies of such instruments as in effect
on the date of this Agreement.
9.4. LITIGATION. Except as set forth in Schedule 9.4, there
are no actions, suits, proceedings or investigations, either at law or in
equity, or before any Governmental Entity in any United States or foreign
jurisdiction, of any kind now pending or, to the best of Buyer's and IPG's
knowledge, threatened or proposed in any manner involving Buyer or IPG or any
of their respective properties or assets that would in any manner impair
either Buyer's or IPG's ability to perform its obligations hereunder.
9.5. NO BROKERS AND FINDERS. Except as set forth in Schedule
9.5, neither IPG nor the Buyer has incurred any liability for brokerage or
other commissions or finders' fees relative to this Agreement or to the
transaction herein contemplated.
9.6. REPRESENTATIONS CONCERNING THE INTERTAPE SHARES.
(a) IPG has delivered to Seller copies of the audited balance
sheets of IPG and its consolidated subsidiaries as of December 31, 1996 and
the related consolidated statements of income and retained earnings and cash
flows for the year then ended. Except as set forth in the notes thereto, all
such financial statements were prepared in accordance with GAAP and fairly
present in all material respects the consolidated financial condition and
results of operations of IPG and its consolidated subsidiaries as of the date
thereof and for the period covered thereby. Except as disclosed in such
financial statements, the SEC Reports (as defined below) and/or in a document
incorporated therein by reference, IPG does not have any liabilities which
are, in the aggregate, material to the business, operations or financial
condition of IPG and its subsidiaries taken as a whole, except liabilities
incurred in the ordinary course of business consistent with past practice
since June 30, 1997.
(b) IPG has filed all forms, reports and documents required to
be filed with the Securities and Exchange Commission (the "SEC") since
December 31, 1996 and has made available to Seller in the form filed with the
SEC (i) its Annual Report on Form 20-F for the fiscal year ended December 31,
1996 and its Quarterly Reports on Form 6-K for the fiscal quarters ended
March 31, 1997 and June 30, 1997, (ii) all proxy statements relating to IPG's
meetings of stockholders held
39
since December 31, 1996, (iii) all reports on Form 6-K filed by IPG with the
SEC since December 31, 1996 and (iv) all amendments and supplements to all
such reports (collectively, the "SEC Reports"). The SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act of 1933,
as amended (the "Act") or the Securities Exchange Act of 1934, as amended, as
the case may be, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the
date of such amending or superseding filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Since June 30, 1997 there has not been (i) any material
adverse change in the business, financial condition or results of operations
of IPG and its subsidiaries taken as a whole, or (ii) any uninsured damage
to, destruction or loss of assets or property of IPG that could reasonably be
expected to have a Material Adverse Effect.
(d) Except as disclosed in the SEC Reports and/or in documents
incorporated therein by reference, there are no actions or proceedings or, to
the knowledge of IPG, any governmental or regulatory authority
investigations, pending or, to the knowledge of IPG, threatened, against IPG
or any of its assets and properties which could reasonably be expected to
result in the issuance of an order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated hereby, adversely affecting the ability of IPG or Buyer to
consummate the transactions or to perform their respective obligations
hereunder, or have a Material Adverse Effect on IPG and its subsidiaries
taken as a whole.
9.7. PURCHASE FOR INVESTMENT. Buyer is acquiring the Stock for
investment purposes and not with a view towards distribution. IPG
acknowledges that the shares of Stock have not been registered, and in
connection with the transactions contemplated hereby will not be registered,
under the Act or any state blue sky law and, therefore, cannot be resold
unless they are registered under the Act or unless an exemption from
registration is available.
ARTICLE X
COVENANTS OF SELLER
10.1. ACCESS, INFORMATION AND DOCUMENTS. Pending the Closing,
Seller will cause the Company and each Company Subsidiary to give to Buyer
and to its agents and representatives (including, but not limited to,
accountants, lawyers and appraisers) reasonable access during normal working
hours to any and all of the properties, assets, books, records and other
documents of the Company and each Company Subsidiary to enable Buyer to make
such examination of the business, properties, assets, books, records, and
other documents of the Company and each Company Subsidiary as Buyer may
determine, and Seller will furnish, and will cause the Company and each
Company Subsidiary to furnish, to Buyer such information and copies of such
documents and records as Buyer shall reasonably request.
40
10.2. CONDUCT OF BUSINESS PENDING CLOSING. From the date hereof
until the Closing, except as set forth on Schedule 10.2 or as otherwise
specifically contemplated hereby or consented to by Buyer in writing:
(i) Seller will cause the Company and each Company
Subsidiary to maintain itself at all times as a corporation or other
business organization duly organized, validly existing and in good
standing under the laws of the jurisdiction under which it is
incorporated or organized;
(ii) Seller will cause the Company and each Company
Subsidiary to carry on their respective businesses and operations in a
businesslike manner consistent with past practice, and will not permit
the Company or any Company Subsidiary to engage in any activity or
transaction or make any commitment to purchase or spend other than in
the ordinary course of its business as heretofore conducted; PROVIDED,
HOWEVER, without the written consent of IPG and Buyer, Seller will not
permit the Company or any Company Subsidiary to make any commitment to
purchase or spend involving $25,000 or more other than for (a) the
purchase of raw materials, (b) approved capital expenditures as set
forth in Schedule 10.2(ii) and (c) transaction expenses as contemplated
by Section 10.5 and 20.3;
(iii) Seller will not permit the Company or any Company
Subsidiary to declare, set aside or pay any dividend or make any
distribution (whether in cash, property or stock) with respect to any of
its capital stock or redeem, purchase or otherwise acquire, or agree to
redeem, purchase or otherwise acquire, any of its capital stock;
(iv) Seller will not permit the Company or any Company
Subsidiary to increase, or agree to increase, the compensation or
bonuses or special compensation of any kind of any of its key employees
(which term shall be deemed to include all officers) over the rate being
paid to them on August 15, 1997 other than normal merit and/or
cost-of-living increases pursuant to customary arrangements consistently
followed, or adopt or increase any benefit under any insurance, pension
or other Benefit Plan, payment or arrangement made to, for or with such
key employee;
(v) Seller will cause the Company and each Company
Subsidiary to continue to carry all insurance policies listed in
Schedule 8.29(a) or suitable replacements therefor, in full force and
effect. After the Closing, Seller shall cooperate with Buyer, the
Company and the Company Subsidiaries to give them the benefit of any
rights which Seller or any of its Affiliates may have under such
insurance policies covering claims relating to the Company and the
Company Subsidiaries for the period ending at the close of business on
the Closing Date;
(vi) Seller will cause the Company and each Company
Subsidiary to use reasonable business efforts to preserve its business
organization intact, to keep available to
41
Buyer the services of its employees and independent contractors and to
preserve for Buyer its relationships with suppliers, licensees,
distributors and customers and others having business relationships with
it;
(vii) Seller will not permit the Company or any Company
Subsidiary to sell, transfer or otherwise dispose of, or agree to sell,
transfer or otherwise dispose of, any assets (having a fair market value
at the time of sale, transfer or disposition of $25,000 or more in the
aggregate), or cancel or agree to cancel any debts or claims, other than
in the ordinary course of business, or mortgage, pledge or subject to
any lien or agree to mortgage, pledge or subject to any lien any of its
properties or assets, or pay or obligate itself to pay in excess of
$25,000 in the aggregate for fixed assets;
(viii) Seller will not permit the Company or any Company
Subsidiary to amend its constitutional documents;
(ix) Except for the Company Restructuring, Seller will
not, and will not permit the Company or any Company Subsidiary to, take
any action that would, or that could reasonably be expected to, result
in any of the conditions precedent set forth in Articles XIII, XIV and
XV not being satisfied;
(x) Seller will not cause or permit the Company or any
Company Subsidiary to issue, sell or otherwise dispose of, or agree to
issue, sell or otherwise dispose of any capital stock or any other
security of the Company or any Company Subsidiary, or grant or agree to
grant any option, warrant or other right to subscribe for or to purchase
any capital stock or any other security of the Company or any Company
Subsidiary;
(xi) Except for the Company Restructuring, Seller will
not cause or permit the Company or any Company Subsidiary to acquire or
agree to acquire, by merging or consolidating with, or by purchasing any
equity interest in or a substantial portion of the assets of, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, in any such case, except in the ordinary course of
business;
(xii) Except as required by law or in the ordinary
course of business consistent with past practice except for [specify
employment agreements and Stay-Pay Plan], Seller will not cause
or permit the Company or any Company Subsidiary to adopt any plan,
arrangement or policy which would become a Benefit Plan or amend any
such plans to the extent such adoption or amendment would result in an
increase in the benefits payable to any current or former employee of
the Company or any Company Subsidiary without the prior consent of IPG
and Buyer, such consent not to be unreasonably withheld;
42
(xiii) Seller will not cause or permit the Company or any
Company Subsidiary to incur or agree to incur any indebtedness for
borrowed money outside of existing lines of credit;
(xiv) Seller will not cause or permit the Company or any
Company Subsidiary to make or permit any material amendment, renewal,
extension or termination of any material Contract or Permit to which it
is a party other than in the ordinary course of business;
(xv) Seller will not cause or permit the Company or any
Company Subsidiary to cancel or forgive any indebtedness other than
trade accounts receivable for an amount greater than $10,000
individually or in the aggregate or settle any outstanding material
litigation for an amount greater than $50,000 individually or in the
aggregate or waive, release or compromise any outstanding material claim
or right except in the ordinary course of business consistent with past
practice;
(xvi) Except for the Company Restructuring and except in
the ordinary course of business consistent with past practice, Seller
will not cause or permit the Company or any Company Subsidiary to engage
in any transaction or enter into any Contract or other commercial
arrangement with any Affiliate of Seller, the Company or any Company
Subsidiary;
(xvii) Seller will not cause or permit the Company or any
Company Subsidiary to permit, allow or suffer any of its assets to
become subjected to any Lien other than a Permitted Lien, except for
liens in ordinary course of business, right-of-way or other similar
restriction of any nature whatsoever except for liens pursuant to
existing, disclosed Contracts;
(xviii)Seller will not cause or permit the Company or
any Company Subsidiary to make any change in its accounting methods or
practices;
(xix) Seller will not cause or permit the Company or any
Company Subsidiary to make material changes in any method of marketing,
management or operation; collection or credit extension policies; or
cash management methods, practices or procedures;
(xx) Seller will not cause or permit the Company or any
Company Subsidiary to enter into or renew, extend or amend in any
material respect any lease or sublease of real property;
(xxi) Seller will not cause or permit the Company or any
Company Subsidiary to agree, whether in writing or otherwise, to do any of
the foregoing; and
43
(xxii) Without limiting the foregoing, Seller will cause
the Company to consult with IPG and Buyer regarding all significant
developments, transactions and proposals relating to the business or
operations or any of the assets or liabilities of the Company or any
Company Subsidiary.
10.3. NONCOMPETITION; CONFIDENTIALITY. Subject to the Closing,
and as an inducement to Buyer to execute this Agreement and complete this
transactions contemplated hereby, and in order to preserve the goodwill
associated with the business of Company being acquired pursuant to this
Agreement, Seller covenants and agrees as follows:
(a) COVENANT NOT TO COMPETE. For a period for five years from
the date of Closing (the "Period"), Seller will not directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the tape and shrink film business of the Company or
any of its Subsidiaries as conducted on the date hereof (the "Business")
or is substantially similar thereto, including owning or controlling any
financial interest in any corporation, partnership, firm or other
business organization which is so engaged;
(ii) consult with, advise or assist in any way, whether
or not for consideration, any corporation, partnership, firm or other
business organization which is now or becomes a competitor of the
Company or Buyer in any aspect with respect to the Business, including,
but not limited to, advertising or otherwise endorsing the products of
any such competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or rendering any
other form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with any such
competitor; or
(iii) offer employment to an employee of the Company,
without the prior written consent of Buyer;
provided, however, that the foregoing shall not prohibit (a) the ownership by
Seller of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in an
amount which shall not exceed 5% of the outstanding shares of any such
corporation or (b) any offer by Seller to employ a person in a business which
does not compete with the business of IPG or the Company or which is for a
position outside the United States, Mexico or Canada.
The parties agree that Buyer may sell, assign or otherwise transfer
this covenant not to compete, in whole or in part, to any person,
corporation, firm or entity that purchases all or part of the business of the
Company.
44
The parties agree that the geographic scope of this covenant not to
compete shall extend to any city, county or other political subdivision of
any country in North America, each of which is deemed to be separately named
herein. Recognizing the specialized nature of the business transferred to
Buyer and the scope of competition, Seller acknowledges the geographic scope
of this covenant not to compete to be reasonable. The parties intend that the
covenant contained in this Section 10.3 shall be construed as a series of
separate covenants, one for each city, county or political subdivision of
each country in North America, each of which is deemed to be separately named
herein, each for a series of one-year periods within the Period. Except for
geographic coverage and periods of effectiveness, each such separate covenant
shall be identical in terms. If in any judicial proceeding a court shall
refuse to enforce any of the separate covenants deemed included in this
Section 10.3(a), then such unenforceable covenant shall be deemed eliminated
for the purpose of that proceeding to the extent necessary to permit the
remaining separate covenants to be enforced.
In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
(b) COVENANT OF CONFIDENTIALITY. Except as necessary in
connection with its indemnification obligations hereunder, Seller shall not
at any time subsequent to the Closing, except as explicitly requested by
Buyer, (i) use for any purpose, (ii) disclose to any person, or (iii) keep or
make copies of documents, tapes, discs or programs containing, any
confidential information concerning the Company. For purposes hereof,
"confidential information" shall mean and include, without limitation, all
Trade Rights in which the Company has an interest, all customer lists and
customer information, and all other information concerning the Company's
processes, apparatus, equipment, packaging, products, marketing and
distribution methods, not previously disclosed to the public directly by the
Company. If at any time after Closing, the Seller should discover that it is
in possession of any records containing the confidential information of the
Company, then the Seller shall immediately turn such records over to the
Company, which shall upon request make available to the Seller any
information contained therein which is not confidential information. Seller
agrees that it will not assert a waiver or loss of confidential or privileged
status of the information based upon such possession or discovery.
(c) Seller agrees that the provisions and restrictions
contained in this Section 10.3 are necessary to protect the legitimate
continuing interests of IPG and Buyer in acquiring the Stock, and that any
violation or breach of these provisions will result in irreparable injury to
IPG and Buyer for which a remedy at law would be inadequate. Seller, IPG and
Buyer agree that in the event of a violation or breach and regardless of any
other provision contained in this Agreement, Buyer shall be entitled to
injunctive and other equitable relief as a court may grant after considering
the intent of this Section 10.3, and IPG and Buyer shall not be entitled to
any other form of relief from such violation or breach.
45
10.4. EXCLUSIVITY. Except for the Company Restructuring, prior
to the termination of this Agreement, Seller will not cause or permit the
Company to engage in any Business Combination other than the Acquisition
contemplated hereby, and will not authorize or permit any of its
subsidiaries, affiliates or representatives (including, without limitation,
directors, officers, legal, financial and other advisors) to take, directly
or indirectly, any action to initiate, assist, solicit, negotiate, encourage,
accept or otherwise pursue any offer or inquiry from any person or entity to
engage in any Business Combination other than the acquisition contemplated
hereby (and other than the merger of the Company and its subsidiaries) or
otherwise attempt to consummate any Business Combination other than the
acquisition contemplated hereby.
10.5. TRANSFER PRICING. Seller shall promptly engage Coopers &
Xxxxxxx, at Seller's sole expense to document the transfer pricing practices
of the Company, STC Tape and STC America Inc., an affiliate of the Company
and to prepare and deliver a report thereon, prior to the Closing, to each of
Seller, the Company, IPG and Buyer.
10.6. CONSENTS AND APPROVALS. Seller shall use its best efforts
to obtain prior to the Closing all consents, approvals, orders,
authorizations, registrations, declarations and filings under all Laws of any
Governmental Entity or of any other Person required to be obtained by Seller
in connection with the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby.
10.7. INDUSTRIAL SITE RECOVERY ACT. Seller shall cause the
Company to fully comply with and meet all obligations under the New Jersey
Industrial Site Recovery Act ("ISRA"), including but not limited to making
all filings with the New Jersey Department of Environmental Protection
("NJDEP"), conducting any and all investigation and remediation activities
required by the NJDEP, and satisfying any financial assurance requirements
thereunder. Prior to all such filings, investigations and/or remediation
activities, Seller shall provide Buyer with all reports (including but not
limited to draft and final consultant reports, workplans and sampling data),
consult with Buyer thereon and give reasonable consideration to Buyer's
comments regarding investigation, remediation and filings with NJDEP. Buyer
shall review such reports, workplans and data and provide comments to the
Company in a prompt manner. Seller shall notify Buyer and shall give Buyer
the opportunity to attend any meetings with NJDEP or inspections by NJDEP.
Seller shall conduct at its own sole cost and expense any and all
investigation, environmental testing and remediation required by the NJDEP
pursuant to ISRA, including but not limited to any additional sampling of
soil and groundwater at the Real Properties subject to ISRA.
10.8. [Intentionally omitted.]
10.9. RESIGNATION OF DIRECTORS AND OFFICERS. Prior to or at the
Closing, Seller will cause each of the directors and officers of the Company
and each Company Subsidiary to resign as a director and/or officer of the
Company or the Company Subsidiary effective at the Closing.
46
10.10. USE OF NAME. Seller will not use the name "American Tape"
or any protected logos associated therewith or any derivatives thereof in any
way whatsoever at any time after the Closing.
10.11. LOCKUP. Seller shall not, directly or indirectly, sell or
otherwise transfer any of the Intertape Shares during the 180-day period
following the Closing Date. Seller may pledge all or any portion of the
Intertape Shares during such period to secure borrowings, provided that
Seller requires the lender to agree, and the lender does agree not to sell
such Intertape Shares during the lockup period; and the Intertape Shares are
legended to restrict such sale.
10.12. RESTRUCTURING. Seller will cause each of the transactions
listed in Exhibit J (collectively, the "Restructuring") to occur prior to
Closing, on terms and conditions, and pursuant to documentation, reasonably
acceptable to Buyer. Seller shall furnish to Buyer, at least one week prior
to the date of the Closing, copies of the draft documentation pursuant to
which such transactions shall be consummated for Buyer's review.
10.13. NOTIFICATION. Between the date of this Agreement and the
Closing Date, Seller or the Company will promptly notify Buyer in writing if
Seller or the Company becomes aware of any fact or condition that causes or
constitutes a breach of any of the representations or warranties, or would
preclude Seller from performing any of the covenants contained herein as of
the date of this Agreement.
10.14. LETTER OF CREDIT. Seller shall arrange for the issuance
by the Letter of Credit Bank of the Letter of Credit.
10.15. AVAILABILITY OF FUNDS UNDER CONTINGENT PAYMENT AGREEMENT
Seller covenants and agrees that any and all funds available under and in
accordance with the Contingent Payment Agreement as of Closing will be for
the sole and exclusive benefit of the Company, no portion of the balance
reflected in Schedule 8.17 having been expended between the date of this
Agreement and Closing.
10.16. CERTAIN ENVIRONMENTAL COMPLIANCE. Prior to Closing,
Seller will (i) cause the Company to report to appropriate authorities the
July 1997 discovery of contamination at the Marysville, Michigan facility
during the repair of a city water main, and (ii) cause the Company to comply
with all requirements of "Stipulation for Entry of Final Order by Consent,
AQD No. 10-1997," entered on July 7, 1997 with the Michigan Department of
Environmental Quality ("MDEQ"), as amended by letter from Xxxxx Xxxxxxxxx
Xxxxxx, MDEQ, to Xxxxxxxxx X. Xxxxxxxxx, counsel for Company, dated October
20, 1997, including without limitation all recordkeeping, reporting and
testing requirements therein.
10.17. CONSENT OF UNION. Prior to Closing, Seller will cause the
Company to obtain the written consent of Local 1149, United Automobile
Aerospace and Agricultural Implement
47
Workers of America to the First Amendment to the American Tape Company Hourly
Employees' Pension Plan.
10.18. FORMS 5500. Prior to Closing, Seller shall cause the
Company to promptly file all Forms 5500 relating to the Company's Benefit
Plans and not timely filed herewith.
10.19. TERMINATION OF BENEFIT PLANS. Prior to Closing, Seller
shall cause each of the (x) American Tape Company Long Term Incentive Plan
and (y) American Tape Company Short Term Management Incentive Plan to be
terminated, effective as of the Closing Date.
ARTICLE XI
COVENANTS OF IPG AND BUYER
11.1. CONFIDENTIAL INFORMATION. Each of IPG and Buyer shall
preserve and maintain all confidential information, proprietary information
and trade secrets of the Company and the Company Subsidiaries received or
confirmed in documentary form by Buyer or IPG or their representatives from
Seller, the Company or any Company Subsidiary and shall not disclose to any
third Person or use any such confidential information, proprietary
information or trade secret, except that Buyer and IPG shall be free to use
and disclose all or any of such proprietary information and trade secrets
which: (i) were already in its possession at the time of disclosure to it;
(ii) are a matter of public knowledge; (iii) have been or are hereafter
published other than through Buyer or IPG; (iv) are required to be disclosed
by any Law; or (v) are lawfully obtained by Buyer or IPG from a third Person
without restrictions of confidentiality. The covenants of Buyer and IPG
contained in this Section 11.1 shall terminate at the Closing but shall
continue indefinitely if there is no Closing.
11.2. CONSENTS AND APPROVALS. Each of Buyer and IPG shall use
its best efforts to obtain prior to the Closing all consents, approvals,
orders, authorizations and filings under Laws of any Governmental Entity or
of any other Person required to be obtained by either Buyer or IPG in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
11.3. ENVIRONMENTAL AUDITS. Buyer and IPG will promptly retain
a firm engaged in the regular business of environmental engineering to
conduct (at Buyer's and IPG's expense) such environmental, engineering and
safety audits of Company's operations and the Real Estate occupied by Company
as Buyer and IPG in their discretion shall consider necessary or appropriate.
11.4. BOARD SEAT. Subject to his continued employment by the
Company or an affiliate thereof, IPG shall elect and appoint Xx. X. X. Xxxx
as a member of the Board of Directors of IPG for a term of two years. On and
after the Closing, IPG shall cause the Company (or an affiliate thereof) to
provide an office (which office shall be located in the State of New Jersey
and within reasonable proximity to New York) to Xx. Xxxx for the tenure of
his employment.
48
11.5. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY.
(a) Buyer shall not, and IPG agrees to preclude Buyer from
taking any action to, cause STC Tape to approve any amendment to the
Certificate of Incorporation or By-laws of the Company existing on the date
hereof (provided no amendment has been made to either thereof since August
15, 1997 altering the indemnification provisions contained therein) which
amendment would have the effect of reducing or limiting, in any manner
whatsoever, the indemnification rights (including without limitation, any
rights to advancement of expenses) of those individuals who are serving as
directors or officers of the Company on the date hereof, or who have served
in such capacities at any time during the preceding three years.
(b) In the event IPG, Buyer or any of their respective
successors or assigns (i) causes the Company to reorganize or consolidate
with or merge into or enter into another business combination transaction
with any other Person where the Company is not the resulting, continuing or
surviving corporation or entity of such consolidation, merger or transaction,
or (ii) causes the Company to liquidate, dissolve or transfer all or
substantially all of its properties and assets to any other Person, then, and
in each such case, proper provision shall be made so that the successors and
assigns of the Company continue, or cause to be continued, the
indemnification rights provided to the directors and officers of the Company
as described in (a) above.
(c) IPG shall cause the directors' and officers' insurance
coverage of IPG to be amended, immediately upon Closing, to include STC Tape
and the Company, thereby providing the same coverage to directors and
officers of STC Tape and the Company as is made available to the other U.S.
employees of subsidiary companies of IPG. A summary description of such
insurance coverage has been delivered by IPG to Seller.
(d) IPG agrees to promptly advance legal expenses (which
expenses shall be reasonable) to each of the Eight Key Employees in
connection with the defense of any action asserted against any of such Eight
Key Employees in his or her capacity as such for actions or inactions prior
to the Closing, provided the Company shall have declined to assume the
defense of any such action or shall have been precluded from assuming the
defense of any such action because of a conflict of interests, and further
provided that the Company shall have agreed to the officer's or director's
selection of counsel, which agreement shall not be unreasonably withheld.
ARTICLE XII
HSR COVENANT OF IPG, BUYER AND SELLER
To the extent such filings have not been completed prior to the
execution of this Agreement, each of IPG, Buyer and Seller shall, in
cooperation with the other, promptly file or cause to be filed any reports or
notifications that may be required to be filed by it under the HSR Act, with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the others all such information in its
possession as may be necessary for the completion of
49
the reports or notifications to be filed by the other. Prior to making any
communication, written or oral, with the Federal Trade Commission, the
Antitrust Division of the Department of Justice or any other governmental
agency or authority or members of their respective staffs with respect to
this Agreement or the transactions contemplated hereby, each of IPG, Buyer
and Seller shall consult with the other.
ARTICLE XIII
CONDITIONS PRECEDENT TO SELLER'S
OBLIGATIONS TO SELL THE STOCK
The obligation of Seller to sell the Stock is subject to the
fulfillment prior to or at the Closing of the following conditions, unless
waived in writing by Seller:
13.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by IPG and Buyer herein qualified as to
materiality shall be true and correct in all respects and those not so
qualified shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made
on and as of the Closing Date, except for changes permitted or contemplated
by this Agreement.
13.2. COMPLIANCE WITH COVENANTS. Each of IPG and Buyer shall
have performed or complied in all material respects with all obligations and
agreements, and complied in all material respects with all covenants,
contained in this Agreement to be performed or complied with by it prior to
or at the Closing Date.
13.3. CONSENTS AND APPROVALS. All consents, approvals, orders,
authorizations, registrations, declarations and filings required to be
obtained or made prior to the Closing Date shall have been made or obtained.
13.4. OFFICER'S CERTIFICATES. Seller shall have received such
certificates of Buyer and of IPG, dated the Closing Date and signed by an
executive officer of Buyer and of IPG, to evidence satisfaction of the
conditions set forth in this Article XIII as may be reasonably requested by
Seller.
13.5. OPINION OF COUNSEL. Seller shall have received an
opinion, dated the Closing Date, of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for
Buyer and IPG, in form and substance reasonably satisfactory to Seller.
13.6. REGISTRATION RIGHTS. Buyer, IPG and Seller shall have
entered into the Registration Rights Agreement, provided the Purchase Price
shall include the delivery to Seller of $3,000,000 or more of Intertape
Shares.
13.7. [Intentionally omitted.]
50
13.8. GUARANTEES. The Seller shall have received from the
Creditors releases of the Guarantees, which releases shall be satisfactory in
form and substance to Seller, IPG and Buyer.
13.9. COMPANY RESTRUCTURING. The Company Restructuring shall
have been consummated.
13.10. OCTOBER FINANCIAL STATEMENTS. Seller shall have received
and been satisfied with, in its sole discretion, the October Financial
Statements and the accompanying opinion of Coopers & Xxxxxxx.
13.11. TRANSFER PRICING. Seller shall have received and been
satisfied with, in its sole discretion, the report of Coopers & Xxxxxxx
concerning, and the implications of, the transfer pricing practices of the
Company (as contemplated by Section 10.5 of this Agreement).
ARTICLE XIV
CONDITIONS PRECEDENT TO IPG'S AND BUYER'S
OBLIGATIONS TO PURCHASE THE STOCK
The obligation of Buyer to purchase the Stock is subject to the
fulfillment prior to or at the Closing of the following conditions, unless
waived in writing by Buyer:
14.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by Seller herein qualified as to
materiality shall be true and correct in all respects and those not so
qualified shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made
on and as of the Closing Date, except for changes permitted or contemplated
by this Agreement and except for representations and warranties that are made
as of a specific date or time, which, if qualified as to materiality shall be
true and correct in all respects, and if not so qualified shall be true and
correct in all material respects only as of such specific date or time.
14.2. COMPLIANCE WITH COVENANTS. Seller shall have performed or
complied in all material respects with all obligations and agreements, and
complied in all material respects with all covenants, contained in this
Agreement to be performed or complied with by it prior to or at the Closing
Date.
14.3. CONSENTS AND APPROVALS. All consents, approvals, orders,
authorizations, registrations, declarations and filings required to be
obtained or made prior to the Closing Date shall have been made or obtained.
14.4. OFFICER'S CERTIFICATES. IPG and Buyer shall have received
such certificates of Seller, dated the Closing Date and signed by an
executive officer of Seller to evidence satisfaction of the conditions set
forth in this Article XIV as may be reasonably requested by Buyer.
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14.5. [Intentionally omitted.]
14.6. OPINION OF COUNSEL. IPG and Buyer shall have received
opinions, dated the Closing Date, of (Korean) counsel for Seller, and of
Pitney Xxxxxx Xxxx & Xxxxx, United States counsel for the Company, in form
and substance reasonably satisfactory to IPG and Buyer.
14.7. NO LITIGATION. There shall not be pending or threatened
by any Governmental Entity any suit, action or proceeding (or by any other
Person any suit, action or proceeding which has a reasonable likelihood of
success), (i) challenging or seeking to restrain or prohibit the purchase of
the Stock contemplated by this Agreement or any of the other transactions
contemplated by this Agreement or seeking to obtain from Buyer in connection
with the purchase of the Stock contemplated by this Agreement any damages
that are material in relation to Buyer taken as a whole, (ii) seeking to
prohibit or limit the ownership or operation by Buyer, the Company or any of
their respective subsidiaries of any material portion of the business or
assets of Buyer, the Company or any of their respective subsidiaries, or to
compel Buyer, the Company or any of their respective subsidiaries to dispose
of or hold separate any material portion of the business or assets of Buyer,
the Company or any of their respective subsidiaries, in each case as a result
of the purchase of the Stock contemplated by this Agreement or any of the
other transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Buyer to acquire or hold, or exercise full
rights of ownership of, the Stock, including the right to vote the Stock on
all matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Buyer from effectively controlling in any material
respect the business or operations of the Company or any of the Company
Subsidiaries.
14.8. EMPLOYMENT AGREEMENTS. The Company shall (A) have entered
into (i) employment agreements with each of Messrs. X. X. Xxxx (three year
term), Xxxxxx Xxx (two year term), Alex X.X. Xxx (two-year term), Koh-Hoon
Lee (two year term) and Xxxxx Xxxx (two year term) in the forms of Exhibits
P, Q, R, S and T hereto, respectively, and (ii) noncompetition agreements
with [key employees not covered by clause (i) to be specified] in the form of
Exhibit U hereto and (B) have offered written "stay pay" plans to each of the
individuals listed in Schedule 14.8 in the form of Exhibit V hereto.
14.9. RESIGNATIONS. Buyer shall have received resignations,
effective as of the Closing, from each officer and director of the Company
and each Company Subsidiary.
14.10. ENVIRONMENTAL AND SAFETY AUDITS. The results of the
engineering, environmental and safety audits conducted by IPG and Buyer shall
not have disclosed any past or present condition, process or practice with
respect to the Company or any property owned by the Company which is not in
full compliance with all applicable environmental laws or laws related to
health and safety or which otherwise requires repair or remediation.
52
14.11. PHYSICAL PROPERTIES. There shall have occurred no
material damage to or destruction or loss (not covered by insurance) of any
of the Company's or any Company Subsidiary's facilities, machinery, equipment
or other assets.
14.12. DUE DILIGENCE INVESTIGATION. IPG and Buyer shall have
completed its due diligence investigation of the Company, the Company
Subsidiaries and the business, the results of which shall be reasonably
acceptable to Buyer in its sole discretion.
14.13. OCTOBER FINANCIAL STATEMENTS. IPG and Buyer shall have
received and been satisfied with, in their sole discretion, the October
Financial Statements and the accompanying opinion of Coopers & Xxxxxxx.
14.14. TRANSFER PRICING. IPG and Buyer shall have received and
been satisfied with, in their sole discretion, the report of Coopers &
Xxxxxxx concerning, and the implication of, the transfer pricing practices of
the Company and its subsidiaries, STC Tape and STC America, Inc. (as
contemplated by Section 10.5 of this Agreement).
14.15. TITLE INSURANCE. Buyer shall have obtained, at IPG's or
Buyer's expense, a policy or policies of title insurance in form satisfactory
to it and its special counsel, insuring in amounts deemed satisfactory by
Buyer, fee simple interests in each of the Real Properties.
14.16. FINANCING. IPG and/or Buyer shall have received financing
and consents from Buyer's lenders, on terms and conditions satisfactory to
Buyer in its sole discretion, to enable Buyer to consummate the transactions
contemplated hereby.
14.17. RESTRUCTURING. The Company Restructuring shall have been
consummated.
14.18. ENVIRONMENTAL COMPLIANCE. IPG and Buyer shall be
satisfied, in their sole discretion, after discussion with appropriate
authorities, if desired, that, as a result of the environmental compliance
actions taken by the Company as contemplated by Section 10.16 hereof, that no
material penalties will be issued to the Company for related past
non-compliance by the Company.
14.19. CONTRACTS IN RESPECT OF ENVIRONMENTAL REMEDIATION. IPG
and Buyer shall be satisfied, in their sole discretion, as to the amount of
funds needed to be expended in connection with the regenerative thermal
oxidizer.
53
ARTICLE XV
CONDITIONS TO OBLIGATIONS OF EACH
PARTY TO EFFECT THE STOCK PURCHASE
The respective obligations of each party hereto to effect the sale
and purchase of the Stock contemplated by this Agreement shall be subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any or all of which may be waived in writing by Buyer and IPG, on the one
hand, or Seller, on the other hand, in whole or in part, to the extent
permitted by applicable law.
15.1. NO INJUNCTION. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated or enforced any Law or
preliminary or permanent injunction which is in effect and which prohibits,
enjoins or otherwise restrains the consummation of the transactions
contemplated hereby; PROVIDED, that the parties shall use commercially
reasonable efforts to cause any such Law or preliminary or permanent
injunction or order to be vacated or lifted.
15.2. HSR ACT WAITING PERIOD. Any applicable waiting period
under the HSR Act relating to the transactions contemplated hereby shall have
expired or terminated and no action shall have been instituted by the
Department of Justice or the Federal Trade Commission challenging or seeking
to enjoin the consummation of the transactions contemplated hereby, other
than an action which shall have been withdrawn or terminated.
ARTICLE XVI
TERMINATION
16.1. TERMINATION BY BUYER AND IPG. Buyer and IPG may, without
liability to Seller, terminate this Agreement by notice to Seller (i) at any
time prior to the Closing if default shall be made by Seller in the
observance or in the due and timely performance of any of the terms hereof to
be performed by Seller and Seller does not cure the default within five
business days after Buyer and IPG deliver written notice thereof, (ii) at the
Closing if any of the conditions precedent to the performance of Buyer's and
IPG's obligations at the Closing shall not have been fulfilled, or (iii) if
at any time prior to Closing, Buyer and IPG, in their reasonable opinion,
determines that compliance with any request for additional information made
by the Federal Trade Commission or the Department of Justice pursuant to the
HSR Act would be unduly burdensome or expensive.
16.2. TERMINATION BY SELLER. Seller may, without liability to
either Buyer or IPG, terminate this Agreement by notice to IPG (i) at any
time prior to the Closing if default shall be made by either Buyer or IPG in
the observance or in the due and timely performance of any of the terms
hereof to be performed by it and Buyer and IPG do not cure the default within
five business days after Seller delivers written notice thereof to IPG, or
(ii) at the Closing if any of the conditions precedent to the performance of
Seller's obligations at the Closing shall not have been fulfilled.
54
16.3. TERMINATION BY MUTUAL CONSENT. The parties may terminate
this Agreement by mutual written consent.
16.4. TERMINATION BY IPG OR SELLER. Either IPG or Seller may
terminate this Agreement, without liability to the other parties hereto, if
(i) the sale and purchase of the Stock contemplated by this Agreement shall
not have been consummated by 5:00 p.m. Eastern time on November 30, 1997,
(ii) any Governmental Entity of competent jurisdiction shall have issued any
judgment, injunction, order or decree prohibiting, enjoining or otherwise
restraining the transactions contemplated by this Agreement and such
judgment, injunction, order or decree shall have become final and
nonappealable (PROVIDED, that the party seeking to terminate this Agreement
pursuant to this Section 16.4 shall have used commercially reasonable efforts
to remove such judgment, injunction, order or decree) or (iii) any Law
promulgated or enacted by any Governmental Entity after the date of this
Agreement which prohibits the consummation of the transactions contemplated
hereby shall be in effect.
16.5. EFFECT OF TERMINATION. If this Agreement is terminated,
this Agreement shall no longer be of any force or effect and there shall be
no liability on the part of any party or its respective directors, officers
or shareholders, except in any such case (i) in accordance with the expense
provisions of Section 20.3, the public announcement provisions of Section
20.4, the no brokers or finders provisions of Sections 6.5 and 9.5, the
provisions of this Section 16.5 and the confidentiality provisions of
Sections 10.3 and 11.1, which shall survive any such termination and (ii) to
the extent such termination results from the willful breach by such party of
any of its representations, warranties, covenants or agreements contained in
this Agreement. If this Agreement shall be terminated, each party will (i)
redeliver all documents, work papers and other materials of any other party
relating to the transactions contemplated hereby, whether so obtained before
or after the execution of this Agreement, to the party furnishing the same,
and (ii) destroy all documents, work papers and other materials developed by
its accountants, agents and employees in connection with the transactions
contemplated hereby which embody confidential information, proprietary
information or trade secrets furnished by any party hereto or deliver such
documents, work papers and other materials to the party furnishing the same
or excise such information or secrets therefrom and all information received
by any party hereto with respect to the business of any other party or any of
its subsidiaries (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
Governmental Entity) shall not at any time be used for personal advantage or
disclosed by such party to any third Person to the detriment of the party
furnishing such information or any of its subsidiaries.
55
ARTICLE XVII
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
(a) Notwithstanding any right of any party (whether or not
exercised) to invesitgate the accuracy of the representations and warranties
of the other party contained in this Agreement, Seller on the one hand, and
Buyer and IPG, on the other hand, have the right to rely fully upon the
representations, warranties, covenants and agreements of the other contained
in this Agreement as, and for the periods, set forth below.
(b) The representations and warranties contained in Sections
6.4, 7.4, 7.5(a), 8.5, 8.6(a), 8.8(a), 8.9, 8.10(a), 8.10(b), 8.10(f),
8.10(h), 8.10(i), 8.12(a)(viii), 8.14(a), 8.21, 8.24(b), 8.24(c), 8.25, 8.26,
8.27, 8.29, 8.30, 8.31, 8.32 and 9.4 do not survive the Closing.
(c) The representations and warranties contained in Sections
8.12(a)(i) and 8.12(a)(xi) do not survive the Closing except to the extent of
the nondisclosure in this Agreement of a Contract which involves an annual
aggregate payment of $100,000 or more.
(d) The representations and warranties contained in Section
8.12(a)(iv) do not survive the Closing except to the extent of the
nondisclosure in this Agreement of a Contract which involves an annual
aggregate payment of $50,000 or more.
(e) The representations, warranties, covenants and agreements
contained in Sections 7.6(i), 7.6(iv), 7.6(v)(x), 7.6(xiii), 7.6(xv),
7.6(xvi), 7.6(xvii), 8.7(i), 8.7(iv), 8.7(v)(x), 8.7(xiii), 8.7(xv),
8.7(xvi), 8.7(xvii), 8.10(g) and 8.10(j) survive the Closing until March 31,
1998, but only as to breaches thereof which have not been disclosed prior to
the Closing.
(f) The representations and warranties contained in Sections
8.8(b), 8.12(a)(ii), 8.12(a)(iii), 8.16 and 8.18 survive the Closing until
March 31, 1998, but only to the extent that a breach of such representations
and warranties results in a Material Adverse Effect on the Company and the
Company Subsidiaries taken as a whole.
(g) The representations, warranties, covenants and agreements
contained in Sections 8.12(a)(v), 8.12(a)(vii), 8.12(a)(ix), 8.12(a)(x) and
8.12(b) survive the Closing until March 31, 1998, but only to the extent that
the Contracts or other matters required to be disclosed thereby and not
disclosed have, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company and the Company
Subsidiaries taken as a whole.
(h) The representations, warranties, covenants and agreements
contained in Sections 6.1, 6.2, 6.3, 6.5, 7.1, 7.2, 7.3, 7.5(b), 7.6(ii),
7.6(iii), 7.6(v)(y), 7.6(vi), 7.6(vii), 7.6(viii), 7.6(ix), 7.6(x), 7.6(xi),
7.6(xii), 7.6(xiv), 7.6(xviii), 7.6(xix), 7.6(xx), 8.1, 8.2, 8.3, 8.4,
8.6(b), 8.7(ii), 8.7(iii), 8.7(v)(y), 8.7(vi), 8.7(vii), 8.7(viii), 8.7(ix),
8.7(x), 8.7(xi), 8.7(xii), 8.7(xiv), 8.7(xviii),
56
8.7(xix), 8.7(xx), 8.13, 8.14(b), 8.15, 8.19, 8.22, 8.24(a), 9.1, 9.2, 9.3,
9.5 and 9.6 survive the Closing until March 31, 1998.
(i) The representations and warranties contained in Sections
7.7, 8.11 and 8.33 survive the Closing until the fourth anniversary of the
Closing Date.
(j) The representations and warranties contained in Section
8.12(a)(vi) survive the Closing until March 31, 1998 to the extent not
reflected in the calculation of Company Indebtedness at the Closing.
(k) The representations and warranties contained in Section
8.17 survive the Closing until three and one half years following the Closing
Date.
(l) The representations and warranties contained in Section
8.20 survive the Closing until March 31, 1998 as they relate to penalties
(without regard to whether such penalties, individually or in the aggregate,
have a Material Adverse Effect on the Company and the Company Subsidiaries
taken as a whole), and as to all other matters only to the extent that a
breach of such representations and warranties results in a Material Adverse
Effect on the Company and the Company Subsidiaries taken as a whole.
(m) The representations and warranties contained in Sections
8.10(c), 8.10(d), 8.10(e) and 8.23 survive the Closing until March 31, 1998,
but only to the extent that such representations and warranties were breached
after October 25, 1997.
ARTICLE XVIII
INDEMNIFICATION
18.1. SELLER'S OBLIGATION TO INDEMNIFY.
(a) Subject to the limitations set forth in Section 18.1(b),
Seller shall indemnify IPG, Buyer, and each of their respective officers,
directors, employees, agents and Affiliates (each, an "Indemnified Party") in
respect of, and hold each of them harmless from and against the following,
without duplication:
(i) any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from,
arising out of or relating to liabilities for taxes (including all
penalties relating thereto) owing by the Company, STC Tape or any of
their respective subsidiaries (A) incurred in connection with the
Restructuring, or (B) imposed in connection with STC Tape's and the
Company's transfer pricing policies; provided however, that Seller shall
be notified of and have the right to defend (at Seller's expense), with
Buyer, any audit or assessment and appeal thereof;
57
(ii) 50% of the first $2,400,000 in Losses (i.e., a
maximum liability of $1,200,000), and 75% of any and all Losses in
excess of $2,400,000, suffered, incurred or sustained by any of them or
to which any of them becomes subject, resulting from, arising out of or
relating to noncompliance with any Environmental Law at Seller's
currently or formerly utilized Sites and off-Site locations to which
Hazardous Materials were shipped for treatment, storage, handling or
disposal arising, in whole or in part, from pre-Closing conditions or
actions, except and excluding any and all expenses and actions required
to be taken in connection with the July 7, 1997 Stipulation For Entry of
Final Order by Consent with the Michigan Department of Environmental
Quality, including without limitation installation of the regenerative
thermal oxidizer (all losses under this clause (ii), "Indemnified
Environmental Losses");
(iii) any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from,
arising out of or relating to liabilities for Taxes (including all
penalties relating thereto) which also constitute a breach of the
representations and warranties contained in the last two sentences of
Sections 7.7(a) and 8.11(a);
(iv) any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from,
arising out of or relating to penalties (which term is specifically
intended to exclude all non-penalty Losses) arising from any failure of
Seller, STC Tape, the Company or any Company Subsidiary to comply with
any legal or regulatory requirements relating to Benefit Plans,
Environmental matters and OSHA matters applicable to Seller, STC Tape,
the Company or any Company Subsidiary prior to Closing (all penalties
under this clause (iv), "Indemnified Penalties"); and
(v) any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, not covered by
any of the preceding four clauses, and resulting from, arising out of or
relating to any misrepresentation, breach of warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Seller
(or STC International) contained in this Agreement;
PROVIDED, HOWEVER, that the maximum aggregate amount payable by Seller as a
result of all claims asserted under clause (i) above shall have no dollar
limit; the maximum aggregate amount payable by Seller as a result of all
claims asserted under clause (ii) above shall be limited to the Environmental
Cap (as such term is defined below); the maximum aggregate amount payable by
Seller as a result of all claims asserted under clause (iii) above shall be
$750,000; the maximum aggregate amount payable by Seller as a result of all
claims asserted under clause (iv) above shall be $1,000,000; provided that
such limitation shall be reduced to $750,000 once Seller provides evidence to
IPG and Buyer's satisfaction that the Company has reported the water main
break in Michigan to Michigan regulatory authorities by mailing the letter on
such issue previously reviewed and approved by Buyer's counsel to the
addresses thereof; and the maximum aggregate amount payable by Seller as a
result of all claims asserted under clause (v) above shall be $1,000,000.
58
The Environmental Cap shall initially be $1,200,000, but shall be
increased prior to Closing if, and to the extent, appropriate to cover
Indemnified Environmental Losses as identified in the XxXxxxx-Xxxx Phase II
Report. The Environmental Cap shall be adjusted upward only by mutual
agreement of Buyer and Seller prior to Closing, provided the parties shall
negotiate in good faith to agree upon the amount (if any) of such upward
adjustment. The Environmental Cap shall further be adjusted, downward by
one-half of the amount, if any, that the Company shall recover (after the
date hereof and whether before or after the Closing) from the escrow under
the Contingent Payment Agreement.
(b) Any claims under (a)(i) and (iii) above for Losses shall
be made by written notice by the Indemnified Party to Seller (a "Claim
Notice"), delivered in accordance with Section 20.1 hereunder prior to the
fourth anniversary of the Closing. Any claims under (a)(ii) above shall be
made by delivery by IPG or Buyer of a Claim Notice to Seller (in accordance
with Section 20.1 hereof) prior to the date which is three and one-half years
following the Closing Date. Any claims under (a)(iv) and (v) shall be made
by delivery by IPG and Buyer of a Claim Notice to Seller (in accordance with
Section 20.1 hereof) prior to the first anniversary of the Closing Date. Any
claims under (a)(ii) above for Indemnified Environmental Losses shall be
resolved pursuant to Section 18.4(b). In each such instance the Claim Notice
shall contain a description and a statement of the amount of the Loss in
respect of which the claim is asserted.
(c) In determining claims for indemnification by any
Indemnified Party pursuant to any of clauses (i), (iii), (iv) and (v) of
paragraph (a) above, no claim shall be payable (x) unless with respect to any
individual claim, such claim involves a Loss (excluding legal fees) in excess
of $25,000; and (y) until, and then only to the extent that, the Indemnified
Party has suffered, incurred, sustained or become subject to Losses pursuant
to clauses (i), (iii), (iv) or (v) of paragraph (a) above taken together, in
excess of $200,000 in the aggregate.
18.2. BUYER'S OBLIGATIONS TO INDEMNIFY. Buyer shall indemnify
Seller, its officers and directors in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from,
arising out of or relating to the breach of any representation or warranty of
IPG or Buyer contained in this Agreement or the nonfulfillment of or failure
to perform any of the covenants or agreements on the part of IPG or Buyer
contained in this Agreement, provided, however, in no event shall IPG's or
Buyer's aggregate liability under this Section 18.2 exceed $1,000,000.
18.2A (a) MITIGATION. Notwithstanding anything to the
contrary contained in this Agreement, the amounts of indemnity otherwise
payable as a result of any claim under Section 18.1 with respect to any Loss
shall be offset, and reduced, to the extent of any amount of any recoveries
made by an Indemnified Party under any policy of insurance and to the extent
of any specific reserves on the October Financial Statements to which the
Loss relates. To the extent the Indemnified Party has an opportunity to
recover from a third party and elects to do so, any recoveries realized from
such action, less the cost (including legal fees) of obtaining such
recoveries, also shall be an offset to the amount of indemnity otherwise
payable hereunder, it being understood and agreed, however, that the
59
Indemnified Party shall not be obligated by the provisions of this Section or
otherwise to institute any action against a third party. To the extent that
IPG, Buyer, the Company or STC Tape has a right to proceed against third
parties to recover any amounts which a Buyer Indemnified Party claims as an
indemnified Loss against Seller or STC International and does not so proceed
against such third party, Seller shall be subrogated to the rights of Buyer,
the Company and STC Tape and may proceed, at its own expense, against such
third party or parties.
(b) CONSEQUENTIAL DAMAGES. No amounts of indemnity otherwise
payable hereunder shall be so paid to the extent such amounts constitute
consequential damages.
(c) NO OTHER CLAIMS. Except to the extent provided for in
Section 18.1, the rights of IPG and Buyer to injunctive relief under Section
10.3 shall be the exclusive remedy of IPG and Buyer with respect to the
nonperformance by Seller of any covenant or agreement contained in this
Agreement. The rights of IPG and Buyer under Section 18.1(a) shall be the
exclusive remedy of IPG and Buyer and each other Buyer Indemnified Party with
respect to the monetary remedies provided for IPG or Buyer against Seller or
STC International contained in this Agreement. IPG and Buyer, on behalf of
themselves and each other Buyer Indemnified Party, hereby waive and release
Seller and each Seller Indemnified Party from any statutory or other rights
of contribution or indemnity (except as set forth in Section 18.1) relating
to the transactions contemplated by this Agreement.
Except to the extent provided for in Section 18.2, the exclusive
remedy of Seller with respect to the nonperformance by IPG or Buyer of any
covenant or agreement contained in this Agreement shall be injunctive relief.
The rights of Seller under Section 18.2 shall be the exclusive remedy of
Seller or STC International and each other Seller Indemnified Party with
respect to the monetary remedies provided for Seller against IPG or Buyer
contained in this Agreement (excluding, however, the Registration Rights
Agreement). Seller, on behalf of itself and each other Seller Indemnified
Party (excluding, however, those employees referenced in Section 10.2, to the
extent of such employees' rights thereunder) hereby waives and releases IPG,
Buyer and each other Buyer Indemnified Party from any statutory or other
rights of contribution or indemnity (except as set forth in Section 18.2)
relating to the transactions contemplated by this Agreement.
18.3. METHOD OF ASSERTING CLAIMS.
(a) In the event any claim or demand in respect of which any
Indemnified Party might seek indemnity under Section 18.1 or Section 18.2 is
asserted against or sought to be collected from such Indemnified Party by a
Person other than Buyer, IPG or any Affiliate of Seller, Buyer or IPG (a
"Third Party Claim"), the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party will not be obligated to indemnify the Indemnified Party with respect
to such Third Party Claim to the extent that the Indemnifying Party's ability
to defend has been materially prejudiced by such failure of the Indemnified
Party. The Indemnifying Party will notify the Indemnified Party as soon as
practicable within the Dispute Period whether the Indemnifying Party
60
disputes its liability to the Indemnified Party hereunder and whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to
defend the Indemnified Party with respect to the Third Party Claim
pursuant to this Section 18.3, then the Indemnifying Party will have the
right to defend, with counsel reasonably satisfactory to the Indemnified
Party, at the sole cost and expense of the Indemnifying Party, such
Third Party Claim by all appropriate proceedings, which proceedings will
be vigorously and diligently prosecuted by the Indemnifying Party to a
final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party
in the case of any settlement that provides for any relief other than
the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party will not be
indemnified in full pursuant to Section 18.1 or Section 18.2). The
Indemnifying Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; PROVIDED,
HOWEVER, that the Indemnified Party may, at the sole cost and expense of
the Indemnified Party, at any time prior to the Indemnifying Party's
delivery of the notice referred to in the first sentence of this Section
18.3(a)(i) file any motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests; and PROVIDED FURTHER, that if
requested by the Indemnifying Party, the Indemnified Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest. The Indemnified
Party may participate in, but not control, any defense or settlement of
any Third Party Claim controlled by the Indemnifying Party pursuant to
this Section 18.3, and except as provided in the preceding sentence, the
Indemnified Party will bear its own costs and expenses with respect to
such participation. Notwithstanding the foregoing, the Indemnified
Party may take over the control of the defense or settlement of a Third
Party Claim at any time if it irrevocably waives its right to indemnity
under Section 18.3 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to this Section 18.3,
or if the Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently or settle the Third Party Claim, or if the
Indemnifying Party fails to give any notice whatsoever within the
Dispute Period, then the Indemnified Party will have the right to
defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will
be prosecuted by the Indemnified Party in good faith or will be settled
at the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld).
The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; PROVIDED,
HOWEVER, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the
61
Indemnifying Party, provide reasonable cooperation to the Indemnified
Party and its counsel in contesting any Third Party Claim which the
Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this Section 18.3, if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability hereunder to the Indemnified Party with
respect to such Third Party Claim and if such dispute is resolved in
favor of the Indemnifying Party in the manner provided in clause (iii)
below, the Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this Section
18.3 or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will reimburse
the Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such litigation.
The Indemnifying Party may participate in, but not control, any defense
or settlement controlled by the Indemnified Party pursuant to this
Section 18.3, and the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified
Party that it does not dispute its liability to the Indemnified Party
with respect to a Third Party Claim or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes
its liability to the Indemnified Party with respect to such Third Party
Claim, the Loss in the amount specified in the Claim Notice will be
conclusively deemed a liability of the Indemnifying Party, and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its
liability with respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution
of such dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by arbitration as
provided for in Section 18.4.
(b) In the event any Indemnified Party should have a claim not
involving a Third Party Claim, the Indemnified Party shall deliver an
Indemnity Notice with reasonable promptness to the Indemnifying Party. The
failure by any Indemnified Party to give the Indemnity Notice shall not
impair such party's rights hereunder except to the extent that an
Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. If the Indemnifying Party notifies the Indemnified Party that it
does not dispute the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss in the amount specified in the Indemnity Notice will be conclusively
deemed a liability of the Indemnifying Party hereunder and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such dispute shall be
resolved by litigation in a court of competent jurisdiction.
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(c) LETTER OF CREDIT. At any time and from time to time that
IPG or Buyer shall assert a claim for indemnification hereunder and there
remain amounts available under the letter of credit relating to such claim:
(i) the remaining face amount of such letter of credit shall not thereafter
be reduced below an amount equal to the aggregate amount of the pending
unresolved claims to which such letter of credit relates, and (ii) upon final
resolution, pursuant to Section 18.4(a) or (b), as applicable, of any such
claim in favor of Buyer, Buyer may draw against the letter of credit in an
amount equal to the amount of the claim by delivering a drawing certificate
executed by each of IPG and Buyer, on the one hand, and by Seller, on the
other hand, to the Letter of Credit Bank.
(d) ADJUSTMENT OF PURCHASE PRICE. Any reimbursement by Seller
in connection with a claim made by Buyer or IPG pursuant to this Agreement
will be deemed a reduction in the Purchase Price and shall occur by IPG or
Buyer obtaining such reimbursement in accordance with the provisions of this
Agreement.
18.4. DISPUTES.
(a) RESOLUTION OF DISPUTES BETWEEN THE PARTIES.
Any controversy or claim arising out of or relating to this
Agreement shall be determined by arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association, and
(i) the number of arbitrators shall be three;
(ii) the place of arbitration shall be Honolulu, Hawaii;
and
(iii) the language of the arbitration shall be English.
(b) ENVIRONMENTAL CLAIMS. Notwithstanding anything to the
contrary elsewhere in this Agreement, Buyer shall determine the manner of
resolution of, and shall otherwise control the management and implementation
of any part of the defense, response, proceedings or settlement relating to
any Losses for which Seller has an indemnity obligation under Section
18.1(a)(ii), which involves or relates to the investigation, study, sampling,
testing, abatement, monitoring, cleanup, removal, remediation, or other
response action relating to noncompliance with Environmental Law at any Site
or off-Site ("Environmental Response Action"); provided, however, that such
defense, response, proceeding or settlement in accordance with the following
procedures:
(i) Buyer shall provide written notice to Seller (each
such notice an "Environmental Response Action Notice") setting forth
with reasonable particularity the nature of the condition or event
giving rise to the related Environmental Response Action Notice, the
nature of the activities undertaken or to be undertaken by Buyer with
respect thereto (to the extent then determinable), and the estimated
cost associated with such activities (to the extent then estimable). In
circumstances where Buyer must take immediate
63
Environmental Response Action to address an imminent threat to human
health or the Environment, or to satisfy requirements under any
Environmental Law or requirements established by a Governmental Entity,
Buyer shall provide in advance, if practicable, an Environmental
Response Action Notice to Seller that describes the time period within
which such immediate action must be taken by Buyer and the necessity and
basis for taking such immediate action ("Immediate Environmental
Response Action Notice"). If Seller does not or is unable to respond
within the time period described in such Immediate Environmental
Response Action Notice, Buyer, in its best judgment, may take
appropriate Environmental Response Action ("Immediate Environmental
Response Action"), provided, however, that Seller, by not responding
within such time period, does not waive its right to the proceeding in
(ii)-(vi) below.
(ii) Seller shall within ninety (90) days after receipt
of an Environmental Response Action Notice, notify Buyer in writing that
Seller, in whole or in part, approves or objects to the Environmental
Response Action set forth in the Environmental Response Action Notice.
Seller agrees that its approval of the activities undertaken or to be
undertaken pursuant to the Environmental Response Action Notices will
not be unreasonably withheld.
(iii) If Seller notifies Buyer that it approves of all
or part of the Environmental Response Action set forth in the related
Environmental Response Action Notice, the Losses (or the part thereof so
approved by Seller) associated with the Environmental Response Action
shall be conclusively deemed Losses for which Seller has an indemnity
obligation and Seller shall pay the amount of such Losses to Buyer on
demand and in accordance with the provisions of Section 18.3 of this
Agreement.
(iv) In the event Seller objects to all or any part of
an Environmental Response Action Notice or an Immediate Environmental
Response Action Notice on a timely basis, in accordance with Section
18.3(b)(ii), Seller shall notify Buyer in writing of their specific
disagreement (and the basis therefor) regarding such Environmental
Response Action or Immediate Environmental Response Action. If Seller's
objection relates to the nature of Buyer's proposed activities or
response to the relevant condition or event, Seller shall provide an
alternative proposal describing in reasonable detail the proposed
activities or response, including estimated costs associated therewith
("Dispute Notification"), within ninety (90) days of its receipt of the
related Environmental Response Action Notice or Immediate Environmental
Response Action Notice. Buyer and Seller shall thereafter negotiate in
good faith in an attempt to reach agreement as to the disputed
Environmental Response Action Notice or Immediate Environmental Response
Action Notice.
(v) In the event that Buyer and Seller are unable to
resolve the dispute within 30 days after commencing negotiations
pursuant to (iv) above, Buyer and Seller shall immediately refer the
dispute for compromise or resolution to an independent environmental
consulting firm that is (A) mutually acceptable to the Buyer and Seller;
(B) does business in the region where the Site at issue is located, (C)
is qualified in environmental matters relating
64
to the operations conducted at the Site, but (D) who will not be engaged
or has not been engaged to perform such Environmental Response Action or
Immediate Environmental Response Action (the "Dispute Resolution
Consultant"), it being understood that the decision of such Dispute
Resolution Consultant shall be binding on both Buyer and Seller. In the
event that Buyer and Seller are unable to agree upon a Dispute
Resolution Consultant by the 25th day of such 30-day period, the Dispute
Resolution Consultant shall be chosen by the thirtieth (30th) day by the
American Arbitration Association ("AAA") pursuant to the criteria in
Section 18.4(b)(v)(B)-(D).
(vi) The Dispute Resolution Consultant shall render its
decision no later than 90 days after being selected by Buyer and Seller
or by the AAA, provided that the decision date may be extended by mutual
agreement of Buyer and Seller. The party against whom the Dispute
Resolution Consultant finds shall pay the fees and expenses of the
Dispute Resolution Consultant, except if there is no clear losing
position, Buyer and Seller shall each pay one-half of such costs.
ARTICLE XIX
[INTENTIONALLY OMITTED]
ARTICLE XX
MISCELLANEOUS
20.1. NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only
if delivered Personally or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the following addresses or facsimile
numbers:
If to Buyer and/or IPG to:
Intertape Polymer Group Inc.
000X Xxxxxx xx Xxxxxx
Xx.-Xxxxxxx, Xxxxxx X0X XX0
Xxxxxx
Attn.: Xx. Xxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
65
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn.: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Seller to:
STC Corp.
STC Xxxxxxxx
00 Xxxxxx-xxxx 0-xx
Xxxxxxxxxx-xx, Xxxxx
Xxxxx Xxxxx
Attn: Mr. Injin Xxxx
Facsimile No.: 011-82-2-675-1595
with a copy to:
Xx. X.X. Xxxx
000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
and a copy to:
Xxxxxx X. Xxxxx, Esq.
Pitney, Xxxxxx, Xxxx & Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 20.1, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section 20.1, be deemed given upon confirmed
receipt, and (iii) if delivered by mail in the manner described above to the
address as provided in this Section 20.1, be deemed given upon receipt (in
each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be
delivered pursuant to this Section 20.1). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
party hereto.
66
20.2. ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
20.3. EXPENSES.
(a) Except as otherwise expressly provided below, Buyer and
IPG on the one hand, and Seller, the Company and STC Tape and affiliates
thereof on the other hand, shall bear and pay their own costs and expenses
incurred in connection with the negotiation, execution, and closing of this
Agreement and the transactions contemplated hereby.
(b) To the extent that STC Tape or the Company incurs prior to
Closing and pays after Closing costs or expenses in connection with this
transaction for attorneys, investment advisors, accountants (other than
Coopers & Xxxxxxx for its audit work on the October Financial Statements) or
filing fees, in connection with this transaction collectively greater than
$350,000, Seller will reimburse IPG or Buyer for such expenses. To the extent
that STC Tape and/or the Company incur and pay such expenses in an amount up
to $350,000 prior to the Closing, the expenses paid on or before the Closing
shall be deemed cash and cash equivalents in the calculation of Company
Indebtedness.
(c) With respect to the costs incurred by the Company or STC
Tape for engaging Coopers & Xxxxxxx to perform the audit of the October
Financial Statements, all expenses in excess of $25,000 shall be borne and
paid by Buyer and IPG. The costs of Coopers & Xxxxxxx for such audit work in
excess of $25,000 shall be excluded from the calculation of Net Operating
Income. To the extent that such fees of Coopers & Xxxxxxx are paid on or
prior to the Closing and exceed $25,000, the excess over $25,000 shall be
deemed to be cash or cash equivalents for purposes of the calculation of
Company Indebtedness.
(d) In the event that the transaction does not close for any
reason whatsoever, the costs incurred by the Company and STC Tape for
engaging Coopers & Xxxxxxx to perform the audit of the October Financial
Statements to the extent that such costs exceeds $25,000 will be reimbursed
to the Company by IPG and Buyer and IPG and Buyer agree, on demand, to
reimburse the Company in cash for the documented amount in excess of $25,000,
paid by the Company and STC Tape to Coopers & Xxxxxxx for such audit.
20.4. PUBLIC ANNOUNCEMENTS. The form of press release to be
issued immediately upon execution of this Agreement is attached as Exhibit W.
The text of any other press release in respect of the transactions herein
contemplated shall be agreed upon collectively by Seller, IPG and Buyer.
20.5. WAIVER; REMEDIES CUMULATIVE. Any term or condition of
this Agreement may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving
67
such term or condition. No waiver by any party of any term or condition of
this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement
or by law or otherwise afforded, will be cumulative and not alternative.
20.6. AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
20.7. THIRD PARTY BENEFICIARIES. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention
of the parties to confer third-party beneficiary rights upon any other Person
other than any Person entitled to indemnification under Section 11.5 or
Article XVIII.
20.8. DEFINITION OF KNOWLEDGE. As used in this Agreement, the
expression "to the knowledge" of Seller means the actual knowledge of one or
more of the Eight Key Employees.
20.9. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and any
attempt to do so will be void, except (i) for assignments and transfers by
operation of law and (ii) that Buyer may assign any or all of its rights,
interests and obligations hereunder (including, without limitation, its
rights under Article II) to a wholly-owned subsidiary or an Affiliate of
Buyer, PROVIDED that any such subsidiary or Affiliate agrees in writing to be
bound by all of the terms, conditions and provisions contained herein.
Subject to the preceding sentence, this Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
20.10. HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
20.11. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision
will be fully severable, (ii) this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision had never comprised a
part hereof, (iii) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
20.12. LAW. The governing law of this Agreement shall be the
substantive law of the State of New York.
68
20.13. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
20.14. UPDATING DISCLOSURE SCHEDULES. Each party hereto has
endeavored in good faith to provide disclosure schedules which are complete
and correct as of the date hereof. Each party shall have the right, until
November 14, 1997, to amend or supplement its disclosure schedules in order
to provide corrected or additional information. Such amended or supplemental
disclosure schedules shall be treated for all purposes as though they were
delivered contemporaneously herewith. Thereafter, the parties shall continue
to update the disclosure schedules for new and additional information so that
the representations and warranties are true and correct as of the date of
Closing.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each of IPG, Buyer and Seller as
of the date first above written.
IPG:
INTERTAPE POLYMER GROUP INC.
By: [Illegible]
-----------------------------
Name:
Title:
BUYER:
IPG (US) ACQUISITION CORPORATION
By: [Illegible]
-----------------------------
Name:
Title:
SELLER:
STC CORP.
By: [Illegible]
-----------------------------
Name:
Title:
