SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 29, 1996
Tredegar Industries, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Virginia 1-10258 54-1497771
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(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation) Number) Identification No.)
1100 Boulders Parkway
Richmond, Virginia 23225
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (804) 330-1000
Item 2. Acquisition or Disposition of Assets.
On March 29, 1996, Tredegar Industries, Inc. ("Tredegar" or the
"Company") sold all of the outstanding capital stock of its injection molding
subsidiary, Tredegar Molded Products Company, including Polestar Plastics
Manufacturing Company (together "Molded Products"), to Precise Technology, Inc.
("Precise") for cash consideration of $57.5 million. In addition, Tredegar
received unregistered cumulative redeemable preferred stock with a face amount
of $2.5 million, which is not currently marketable. Dividends on the preferred
stock are payable quarterly at an annual rate of 7% beginning June 30, 1996. The
preferred stock is redeemable in full on March 29, 2007 or earlier upon the
occurrence of certain events. Both dividends and redemption are subordinated to
other outstanding debt of Precise.
Molded Products manufactures plastic packaging components for a variety
of personal care, industrial, pharmaceutical and medical markets. Precise is
headquartered in Pittsburgh, Pennsylvania.
Tredegar will record an after-tax gain related to the sale of Molded
Products in the first quarter of 1996. The gain will be partially offset by a
first-quarter charge related to an anticipated loss on the Company's divestiture
of Brudi, Inc. and its subsidiaries (together "Brudi"), which is expected to
occur during the second quarter of 1996. Brudi manufactures masts, carriages and
uprights for forklift trucks. The net gain related to these developments will be
disclosed in the Company's Quarterly Report on Form 10-Q for the three-months
ended March 31, 1996, to be filed by May 15, 1996.
Proceeds from the sale of Molded Products will be invested in cash
equivalents until other opportunities, in existing businesses or elsewhere, are
identified.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information.
Introduction to Pro Forma Consolidated Financial Information
Set forth below is pro forma consolidated financial information with
respect to Tredegar and its divestiture of Molded Products. Historical financial
information was excerpted or derived from the audited financial information
contained in Tredegar's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995. The historical information below is qualified in its entirety
by reference to such report and the financial information and related notes
contained therein.
The pro forma consolidated balance sheet presents the financial
position of Tredegar as of December 31, 1995, assuming that Tredegar on that
date sold Molded Products for cash consideration of $57.5 million and invested
related after-tax proceeds in cash equivalents. No value has been assigned by
Tredegar to the preferred stock received from Precise due to the uncertainty of
redemption. Consistent therewith, dividend income on such stock, which will not
be recognized by Tredegar until received, has not been reflected in the pro
forma consolidated statement of income.
The pro forma consolidated statement of income presents the operating
results for the Company for the year ended December 31, 1995, assuming that at
the beginning of the period Tredegar sold Molded Products for cash consideration
of $57.5 million. In accordance with Securities and Exchange Commission rules
and regulations, no pro forma interest income is recognized in the pro forma
consolidated statement of income for funds assumed invested in cash equivalents.
The pro forma financial information of the Company is unaudited and
does not purport to be indicative of the future results or financial position of
the Company or the net income and financial position that would actually have
been attained had the pro forma transactions occurred on the dates or for the
period indicated. See note (3) of the notes to pro forma financial statements
for net income and earnings per common and dilutive common equivalent share
adjusted for unusual items affecting the comparability of operating results and
pro forma interest income.
Tredegar Industries, Inc.
Pro Forma Consolidated Balance Sheet (1)
December 31, 1995
(In Thousands)
(Unaudited)
Pro Forma
Historical Adjust.(2) Pro Forma
Assets
Current assets:
Cash and cash equivalents $ 2,145 $ 48,130 $ 50,275
Accounts and notes receivable 71,673 (9,884) 61,789
Inventories 33,148 (6,927) 26,221
Income taxes recoverable 2,179 - 2,179
Deferred income taxes 14,882 (714) 14,168
Prepaid expenses and other 2,375 (57) 2,318
---------------- ---------------- ----------------
Total current assets 126,402 30,548 156,950
---------------- ---------------- ----------------
Property, plant and equipment, at cost 326,526 (66,764) 259,762
Less accumulated depreciation and amortization 204,074 (40,860) 163,214
---------------- ---------------- ----------------
Net property, plant and equipment 122,452 (25,904) 96,548
---------------- ---------------- ----------------
Other assets and deferred charges 35,186 1,796 36,982
Goodwill and other intangibles 30,012 (687) 29,325
================ ================ ================
Total assets $ 314,052 $ 5,753 $ 319,805
================ ================ ================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 31,105 $ (4,268) $ 26,837
Accrued expenses 38,648 (2,239) 36,409
---------------- ---------------- ----------------
Total current liabilities 69,753 (6,507) 63,246
Long-term debt 35,000 - 35,000
Deferred income taxes 22,218 (1,209) 21,009
Other noncurrent liabilities 16,560 (703) 15,857
---------------- ---------------- ----------------
Total liabilities 143,531 (8,419) 135,112
---------------- ---------------- ----------------
Shareholders' equity:
Common stock, no par value 112,908 - 112,908
Foreign currency translation adjustment 445 - 445
Retained earnings 57,168 14,172 71,340
---------------- ---------------- ----------------
Total shareholders' equity 170,521 14,172 184,693
---------------- ---------------- ----------------
================ ================ ================
Total liabilities and shareholders' equity $ 314,052 $ 5,753 $ 319,805
================ ================ ================
See accompanying notes to pro forma financial statements.
Tredegar Industries, Inc.
Pro Forma Consolidated Statement of Income (1)
For the Year Ended December 31, 1995
(In Thousands, Except Per-Share Amounts)
(Unaudited)
Pro Forma
Historical Adjust.(3) Pro Forma
Revenues:
Net sales $ 589,454 $ (84,911) $ 504,543
Other income (expenses), net (669) - (669)
---------------- ---------------- ----------------
Total 588,785 (84,911) 503,874
---------------- ---------------- ----------------
Costs and expenses:
Cost of goods sold 490,510 (77,973) 412,537
Selling, general and administrative 48,229 (5,090) 43,139
Research and development 8,763 - 8,763
Interest 3,039 - 3,039
Unusual items (3) (78) - (78)
---------------- ---------------- ----------------
Total 550,463 (83,063) 467,400
---------------- ---------------- ----------------
Income before income taxes 38,322 (1,848) 36,474
Income taxes 14,269 (721) 13,548
================ ================ ================
Net income $ 24,053 $ (1,127) $ 22,926
================ ================ ================
Earnings per common and dilutive common
equivalent share $ 1.80 $ (0.09) $ 1.71
================ ================ ================
Shares used to compute earnings per
common and dilutive common equivalent
share 13,370 13,370 13,370
================ ================ ================
See accompanying notes to pro forma financial statements.
Tredegar Industries, Inc.
Notes to Pro Forma Financial Statements
(Unaudited)
(1) The pro forma financial information presented does not purport to be
indicative of the future results or financial position of the Company
or the net income and financial position that would actually have been
attained had the pro forma transactions occurred on the dates or for
the period indicated. See note (3) for net income and earnings per
common and dilutive common equivalent share adjusted for unusual items
affecting the comparability of operating results and pro forma interest
income.
(2) Pro forma adjustments to the consolidated balance sheet as of December
31, 1995 reflect (i) the pro forma after-tax proceeds from the sale of
Molded Products ($48.1 million), (ii) the removal of the financial
reporting basis of Molded Products as of December 31, 1995 ($35.2
million), and (iii) the pro forma after-tax gain on the sale of Molded
Products computed using the financial reporting basis as of December
31, 1995 ($14.2 million, including an after-tax gain of $1.2 million on
the curtailment of participation by Molded Products employees in
Tredegar's benefit plans). Further details regarding the pro forma
adjustments are provided below:
(In
Thousands)
Cash consideration received on the sale of Molded Products $ 57,500
Estimated transaction costs 3,602
----------------
Proceeds from the sale of Molded Products after transaction
costs 53,898
Financial reporting basis of Molded Products
as of December 31, 1995 35,201
----------------
Pro forma pretax gain on the sale before curtailment of
benefit plans 18,697
Pretax gain recognized for the curtailment of participation by
Molded Products employees in Tredegar's:
Defined benefit plan 1,796
Postretirement health care and life insurance plans 243
----------------
Pro forma pretax gain on the sale of Molded Products 20,736
----------------
Pro forma income taxes:
Current (including an estimated tax benefit of $1,055 for
tax basis in excess of financial reporting basis) 5,768
Deferred (39% of curtailment gains) 796
----------------
Total income taxes 6,564
----------------
Pro forma after-tax gain on the sale of Molded Products $ 14,172
================
Pro forma after-tax proceeds on the sale of Molded Products $ 48,130
================
(3) Pro forma adjustments to the consolidated statement of income for the
year ended December 31, 1995 reflect (i) the removal of Molded Products
results of operations (net income of $1.7 million, including income
taxes computed on a stand-alone basis at an effective tax rate of 39%)
and (ii) a reduction of $870,000 ($531,000 after income taxes) to
Tredegar's periodic cost for its defined benefit plan and
postretirement health care and life insurance plans for the curtailment
of participation by Molded Products employees in such plans (80%
allocated to cost of goods sold and 20% allocated to selling, general
and administrative expenses). Historical and pro forma net income and
earnings per common and dilutive common equivalent share adjusted for
unusual items affecting the comparability of operating results and pro
forma interest income are presented below:
(In Thousands Except Per-Share Amounts)
1995
Historical net income as reported $ 24,053
After-tax effects of unusual items affecting the
comparability of operating results:
Gain on sale of Regal Cinema shares (451)
APPX Software restructuring charges 1,560
Recovery in connection with a Film Products product
liability lawsuit (1,068)
----------------
Historical net income as adjusted for unusual items 24,094
Pro forma and other adjustments:
Reflected in the statement of income (1,127)
After-tax interest income on the assumed investment
of after-tax divestiture proceeds in cash equivalents
at the Company's 1995 average rate earned of 5.9%
(3.6% after taxes) 1,732
----------------
Pro forma net income as adjusted for unusual items and pro
forma interest income $ 24,699
================
Earnings per common and dilutive common
equivalent share:
Historical:
As reported $ 1.80
As adjusted for unusual items 1.80
Pro forma:
As presented in the statement of income 1.71
As adjusted for unusual items and interest income 1.85
(c) Exhibits.
Exhibit No.
99.1 Stock Purchase Agreement by and between Tredegar Investments,
Inc. and Precise Technology, Inc. made as of March 11, 1996.
(Schedules and exhibits omitted; Registrant agrees to furnish a
copy of any schedule or exhibit to the Securities and Exchange
Commission upon request.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tredegar Industries, Inc.
(Registrant)
Date: April 11, 1996 /s/ N. A. Scher
--------------- ----------------------------
Norman A. Scher
Executive Vice President,
Treasurer and Chief Financial
Officer (Principal Financial
Officer)
EXHIBIT INDEX
Exhibit No. Description
99.1 Stock Purchase Agreement by and between Tredegar
Investments, Inc. and Precise Technology, Inc. made as of
March 11, 1996. (Schedules and exhibits omitted;
Registrant agrees to furnish a copy of any schedule or
exhibit to the Securities and Exchange Commission upon
request.)
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
TREDEGAR INVESTMENTS, INC.
AND
PRECISE TECHNOLOGY, INC.
March 11, 1996
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
1.1 Agreement . . . . . . . . . . . . . . . . . . . . . 1
1.2 Assignment and Assumption Agreement . . . . . . . . 1
1.3 Buyer . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Buyer's Closing Certificate . . . . . . . . . . . . 2
1.5 Buyer's Financial Statements. . . . . . . . . . . . 2
1.6 Closing . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Closing Date. . . . . . . . . . . . . . . . . . . . 2
1.8 Code. . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Company . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Company Common Stock. . . . . . . . . . . . . . . . 3
1.11 Company Subsidiary. . . . . . . . . . . . . . . . . 3
1.12 Continuing Employee . . . . . . . . . . . . . . . . 3
1.13 Contracts . . . . . . . . . . . . . . . . . . . . . 3
1.14 Employee Benefit Plans. . . . . . . . . . . . . . . 3
1.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 ERISA Affiliate . . . . . . . . . . . . . . . . . . 4
1.17 Escrow Agent. . . . . . . . . . . . . . . . . . . . 4
1.18 Escrow Agreement. . . . . . . . . . . . . . . . . . 4
1.19 Financial Statements. . . . . . . . . . . . . . . . 4
1.20 HSR Act . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Knowledge of the Seller . . . . . . . . . . . . . . 4
1.22 Law . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 New Preferred . . . . . . . . . . . . . . . . . . . 5
1.24 Opinion of Buyer's Counsel. . . . . . . . . . . . . 5
1.25 Opinion of Seller's Counsel . . . . . . . . . . . . 5
1.26 Parent. . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Parent Guaranty . . . . . . . . . . . . . . . . . . 6
1.28 Permitted Liens . . . . . . . . . . . . . . . . . . 6
1.29 Permits . . . . . . . . . . . . . . . . . . . . . . 6
1.30 Plans . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Pro Forma Balance Sheet . . . . . . . . . . . . . . 7
1.32 Purchase Price. . . . . . . . . . . . . . . . . . . 8
1.33 Retained Liabilities. . . . . . . . . . . . . . . . 8
1.34 Seller. . . . . . . . . . . . . . . . . . . . . . . 11
1.35 Seller's Closing Certificate. . . . . . . . . . . . 11
1.36 Significant Subsidiary. . . . . . . . . . . . . . . 11
1.37 Transition Services Agreement . . . . . . . . . . . 11
ARTICLE II
PURCHASE AND SALE
2.1 Sale of the Company Common Stock. . . . . . . . . . 12
2.2 Purchase Price. . . . . . . . . . . . . . . . . . . 12
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1 Organization and Qualification. . . . . . . . . . . 13
3.2 Execution, Delivery and Performance . . . . . . . . 13
3.3 Authorization . . . . . . . . . . . . . . . . . . . 14
3.4 Status of the Company and the Significant
Subsidiary. . . . . . . . . . . . . . . . . . . . . 15
3.5 Capital Stock of the Company and the Significant
Subsidiary. . . . . . . . . . . . . . . . . . . . . 16
3.6 Financial Statements. . . . . . . . . . . . . . . . 18
3.7 Absence of Changes. . . . . . . . . . . . . . . . . 18
3.8 Real Property . . . . . . . . . . . . . . . . . . . 20
3.9 Personal Property . . . . . . . . . . . . . . . . . 21
3.10 Compliance with Law and Permits . . . . . . . . . . 22
3.11 Contracts, Agreements, etc. . . . . . . . . . . . . 23
3.12 Litigation. . . . . . . . . . . . . . . . . . . . . 26
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . 27
3.14 Employee Benefits . . . . . . . . . . . . . . . . . 27
3.15 Employment Matters. . . . . . . . . . . . . . . . . 31
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . 32
3.17 Transactions With Affiliates. . . . . . . . . . . . 33
3.18 No Broker . . . . . . . . . . . . . . . . . . . . . 34
3.19 Non-Operating Subsidiary. . . . . . . . . . . . . . 34
3.20 Accuracy of Information . . . . . . . . . . . . . . 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 Organization. . . . . . . . . . . . . . . . . . . . 35
4.2 Execution, Delivery and Performance . . . . . . . . 35
4.3 Authorization . . . . . . . . . . . . . . . . . . . 36
4.4 No Broker . . . . . . . . . . . . . . . . . . . . . 37
4.5 Purchase for Investment . . . . . . . . . . . . . . 37
ARTICLE V
CERTAIN MATTERS PENDING THE CLOSING
5.1 Carry on in Regular Course. . . . . . . . . . . . . 37
5.2 Distributions; Assignment of Retained Liabilities . 37
5.3 Indebtedness. . . . . . . . . . . . . . . . . . . . 38
5.4 Issuance of Stock . . . . . . . . . . . . . . . . . 38
5.5 Compensation. . . . . . . . . . . . . . . . . . . . 38
5.6 Changes . . . . . . . . . . . . . . . . . . . . . . 39
5.7 Compliance with Law . . . . . . . . . . . . . . . . 39
5.8 Access to Information . . . . . . . . . . . . . . . 39
5.9 Cooperation; Best Efforts . . . . . . . . . . . . . 40
5.10 Consents. . . . . . . . . . . . . . . . . . . . . . 40
5.11 Publicity . . . . . . . . . . . . . . . . . . . . . 41
5.12 Confidentiality . . . . . . . . . . . . . . . . . . 41
5.13 Articles and Bylaws . . . . . . . . . . . . . . . . 42
5.14 Standstill. . . . . . . . . . . . . . . . . . . . . 42
5.15 Environmental Obligations . . . . . . . . . . . . . 43
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE CLOSING
6.1 Conditions Precedent to Each Party's Obligations
to Closing. . . . . . . . . . . . . . . . . . . . . 45
6.2 Conditions Precedent to Obligations of the Buyer. . 46
6.3 Conditions Precedent to Obligations of the Seller . 48
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Employee Benefit Plan Matters . . . . . . . . . . . 49
7.2 Termination; Severance. . . . . . . . . . . . . . . 51
7.3 Income Tax Matters. . . . . . . . . . . . . . . . . 52
7.4 Use of the Name "Tredegar". . . . . . . . . . . . . 63
7.5 Access to Books and Records . . . . . . . . . . . . 65
7.6 Access to and Removal of Equipment. . . . . . . . . 65
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Limitation on and Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . 66
8.2 Indemnification by the Seller
8.3 Indemnification by Buyer. . . . . . . . . . . . . . 68
8.4 Limitation of Liability.. . . . . . . . . . . . . . 69
8.5 Notice of Indemnity Claims. . . . . . . . . . . . . 70
8.6 Application of Article VIII . . . . . . . . . . . . 71
8.7 Indemnity Amounts to be Computed on After-Tax
Basis . . . . . . . . . . . . . . . . . . . . . . . 71
8.8 Offset. . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
TERMINATION
9.1 Termination . . . . . . . . . . . . . . . . . . . . 72
9.2 Effect of Termination . . . . . . . . . . . . . . . 73
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . 74
9.4 Extension; Waiver . . . . . . . . . . . . . . . . . 74
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. . . . . . . . . . . . . . . . . . 74
10.2 Expenses. . . . . . . . . . . . . . . . . . . . . . 75
10.3 Governing Law . . . . . . . . . . . . . . . . . . . 75
10.4 Assignment. . . . . . . . . . . . . . . . . . . . . 75
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . 76
10.6 Counterparts; Headings. . . . . . . . . . . . . . . 77
10.7 Interpretation. . . . . . . . . . . . . . . . . . . 77
10.8 Severability. . . . . . . . . . . . . . . . . . . . 77
10.9 No Reliance . . . . . . . . . . . . . . . . . . . . 77
EXHIBITS
Exhibit 1.2 Assignment and Assumption Agreement
Exhibit 1.4 Buyer's Closing Certificate
Exhibit 1.18 Escrow Agreement
Exhibit 1.23 Terms of New Preferred
Exhibit 1.24 Opinion of Buyer's Counsel
Exhibit 1.25 Opinion of Company's Counsel
Exhibit 1.27 Parent Guaranty
Exhibit 1.35 Seller's Closing Certificate
Exhibit 1.37 Transition Services Agreement
SCHEDULES
Schedule 1.19 Company's Financial Statements
Schedule 1.28 Permitted Liens
Schedule 1.31 Pro Forma Balance Sheet
Schedule 1.33 Retained Employee Benefit Plans
Schedule 3.2 Conflicts, Violations, etc.
Schedule 3.4 Foreign Qualification, Subsidiaries
Schedule 3.7A Changes
Schedule 3.7B Employee Compensation
Schedule 3.7C Capital Budget
Schedule 3.8A Real Property
Schedule 3.8B Company Leased Real Property
Schedule 3.8C Third Party Leased Real Property
Schedule 3.9A Owned Equipment
Schedule 3.9B Leased Equipment
Schedule 3.9C Intellectual Property
Schedule 3.10A Permits
Schedule 3.10B Compliance with Laws
Schedule 3.11 Contracts
Schedule 3.12 Litigation
Schedule 3.13 Insurance
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Employment Matters
Schedule 3.16 Taxes
Schedule 3.17 Transactions with Affiliates
Schedule 4.2 Conflicts, Violations, etc.
Schedule 6.3 Commitments
Schedule 7.1 Buyer's Plans
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made as of the 11th day of March,
1996, by and between TREDEGAR INVESTMENTS, INC., a Virginia
corporation, and PRECISE TECHNOLOGY, INC., a Delaware
corporation.
RECITALS
WHEREAS, the Seller owns all of the issued and outstanding
shares of capital stock of the Company; and
WHEREAS, the Buyer desires to purchase, and the Seller
desires to sell, all of the issued and outstanding shares of
capital stock of the Company upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, covenants, conditions and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, it hereby is agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified:
1.1 Agreement. "Agreement" shall mean this Agreement,
together with the Exhibits and Schedules attached hereto, as the
same may be amended from time to time in accordance with the
terms hereof.
1.2 Assignment and Assumption Agreement. "Assignment and
Assumption Agreement" shall mean the assignment and assumption
agreement in the form of Exhibit 1.2 attached hereto, pursuant to
which the Company will assign to the Seller, and the Seller will
assume, the Retained Liabilities.
1.3 Buyer. "Buyer" shall mean Precise Technology, Inc., a
Delaware corporation.
1.4 Buyer's Closing Certificate. "Buyer's Closing Certifi-
cate" shall mean the certificate of the Buyer in the form of
Exhibit 1.4 attached hereto.
1.5 Buyer's Financial Statements. "Buyer's Financial
Statements" shall mean the audited balance sheet of the Buyer as
of December 31, 1994, and the notes thereto, and statements of
income and cash flows of the Buyer for the year ended December
31, 1994 and an unaudited internally prepared balance sheet of
the Buyer as of December 31, 1995, and the notes thereto, and
statements of income and cash flows of the Buyer for the year
ended December 31, 1995, all certified by the Chief Financial
Officer of the Buyer as being complete and accurate.
1.6 Closing. "Closing" shall mean the conference held at
10:00 a.m., local time, on the Closing Date, at the offices of
Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd
Street, Richmond, Virginia or such other place as the Buyer and
the Seller may mutually agree upon in writing.
1.7 Closing Date. "Closing Date" shall mean March 28,
1996, or such other date as the Seller and the Buyer may mutually
agree in writing.
1.8 Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.9 Company. The "Company" shall mean Tredegar Molded
Products Company, a Virginia corporation.
1.10 Company Common Stock. "Company Common Stock" shall
mean all of the issued and outstanding capital stock of the
Company, consisting of 1,000 shares of common stock, $1.00 par
value per share.
1.11 Company Subsidiary. "Company Subsidiary" shall mean
each subsidiary of the Company listed on Schedule 3.4.
1.12 Continuing Employee. "Continuing Employee" shall mean
an individual who was employed by either the Company or the
Significant Subsidiary immediately prior to the Closing and who
is employed by the Company or the Significant Subsidiary
immediately after the Closing.
1.13 Contracts. "Contracts" shall mean all contracts,
agreements, leases, commitments and arrangements, written or
oral, to which either the Company or the Significant Subsidiary
is a party or by which the Company or the Significant Subsidiary
is, or their properties or assets are, bound that are included in
Schedule 3.11.
1.14 Employee Benefit Plans. "Employee Benefit Plans" shall
mean the Plans currently maintained for the benefit of present or
former employees of the Company, the Significant Subsidiary or
any other Company Subsidiary or to which the Company, the
Significant Subsidiary or any other Company Subsidiary currently
contributes on behalf of its current or former employees,
independent contractors, officers or directors.
1.15 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.16 ERISA Affiliate. "ERISA Affiliate" shall mean any
trade or business, whether or not incorporated, which together
with the Seller and the Company would be deemed a "single
employer" within the meaning of Code Section 414 or a member of
the Seller's or the Company's "controlled group" within the
meaning of ERISA Section 4001(a)(14).
1.17 Escrow Agent. "Escrow Agent" means Signet Bank, the
escrow agent under the Escrow Agreement.
1.18 Escrow Agreement. "Escrow Agreement" means the escrow
agreement among the Buyer, the Seller and the Escrow Agent in the
form attached hereto as Exhibit 1.18.
1.19 Financial Statements. "Financial Statements" shall
mean the unaudited internally prepared consolidated balance
sheets of the Company as of December 31, 1995 and 1994, and the
notes thereto, and the related consolidated statements of income
and cash flows of the Company for the years ended December 31,
1995 and 1994, all of which are attached hereto as Schedule 1.19.
1.20 HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (15 U.S.C. Section 18a), as amended.
1.21 Knowledge of the Seller. "Knowledge of the Seller"
shall mean actual knowledge of Richard W. Goodrum, David D. Reed,
Susan Mullican or Janet Wynn and assumes that each such person
has conducted or caused to be conducted a reasonable inquiry into
the matter to which such knowledge qualifier relates with no
obligation to make any inquiry below the level of plant manager,
and as to Section 3.10 and Section 3.12, to the extent the
matters set forth therein relate to environmental matters,
"Knowledge of the Seller" shall also include actual knowledge of
William M. Street, Jr.
1.22 Law. "Law" shall mean any federal, state, local or
other law or governmental requirement of any kind, and the rules,
regulations and orders promulgated thereunder, all of the
foregoing as in effect on the date hereof and on the Closing
Date.
1.23 New Preferred. "New Preferred" shall mean the 25,000
shares of a new series of preferred stock, issued by the Buyer,
having an aggregate stated value of $2,500,000, being entitled to
cumulative dividends of $7 per share per annum, and having the
other rights, preferences and terms set forth on Exhibit 1.23
attached hereto and with the definitive form of the provisions of
such preferred stock to be in a form reasonably acceptable to the
Buyer and the Seller.
1.24 Opinion of Buyer's Counsel. "Opinion of Buyer's
Counsel" shall mean the opinion of Kelley, McCann & Livingstone,
counsel to the Buyer, in substantially the form of Exhibit 1.24
attached hereto.
1.25 Opinion of Seller's Counsel. "Opinion of Seller's
Counsel" shall mean the opinion of Hunton & Williams, counsel to
the Seller, in substantially the form of Exhibit 1.25 attached
hereto.
1.26 Parent. "Parent" shall mean Tredegar Industries, Inc.,
a Virginia corporation.
1.27 Parent Guaranty. "Parent Guaranty" shall mean the
Guaranty of the Parent, substantially in the form of Exhibit 1.27
attached hereto.
1.28 Permitted Liens. "Permitted Liens" shall mean (i)
liens for taxes not yet due and payable, (ii) covenants,
conditions and restrictions of record, (iii) title defects that
do not materially interfere with the existing use of the asset
and do not materially and adversely affect the marketability
thereof, and (iv) those liens, encumbrances, mortgages, charges,
claims, restrictions, pledges, security interests, impositions
and other matters affecting the assets of the Company that are
listed on Schedule 1.28 attached hereto.
1.29 Permits. "Permits" shall mean all written permits,
licenses and governmental authorizations, registrations and
approvals required, as of the date hereof, to be obtained in the
conduct of the business of the Company or the Significant
Subsidiary, except all such written permits, licenses and
governmental authorizations, registrations and approvals that the
failure to obtain would not have a material adverse effect on the
Company or the Significant Subsidiary. The Permits are listed on
Schedule 3.10A attached hereto.
1.30 Plans. "Plans" shall mean (i) each "employee benefit
plan," as defined in Section 3(3) of ERISA, at any time
contributed to, maintained or sponsored by or on behalf of the
Company or the Significant Subsidiary or any other Company
Subsidiary, for the benefit of any present or former employee,
independent contractor, officer or director of the Company, the
Significant Subsidiary or any other Company Subsidiary or with
respect to which the Company, the Significant Subsidiary or any
other Company Subsidiary has any liability or potential
liability, and (ii) each other retirement, savings, thrift,
deferred compensation, severance, stock ownership, stock
purchase, stock option, performance, bonus, incentive, travel,
hospitalization, medical, disability, life or other insurance,
and any other welfare benefit policy, trust, understanding or
arrangement of any kind, whether written or oral, contributed to,
maintained or sponsored by the Company, the Significant
Subsidiary or any other Company Subsidiary, for the benefit of
any present or former employee, independent contractor, officer
or director of the Company, the Significant Subsidiary or any
other Company Subsidiary, or with respect to which the Company,
the Significant Subsidiary or any other Company Subsidiary has
any liability or potential liability. The preceding sentence to
the contrary notwithstanding, the term "Plan" does not include
fringe benefits or payroll practices including, by way of example
and not of limitation, those payable on account of sick leave,
vacation, holiday, shift differential, jury duty; provided that
either (i) the liability for payments under such benefits and
payroll practices have been reflected in the Financial Statements
or (ii) that all of such benefits and practices are modifiable
with not more than 30 days written notice to the employees.
1.31 Pro Forma Balance Sheet. "Pro Forma Balance Sheet"
shall mean the unaudited internally prepared consolidated pro
forma balance sheet of the Company, as of December 31, 1995,
which is attached hereto as Schedule 1.31.
1.32 Purchase Price. "Purchase Price" shall mean the amount
specified in Section 2.2 hereof.
1.33 Retained Liabilities. "Retained Liabilities" shall
mean:
(a) All claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary arising out of,
or related to, the secondary liability of the Company to the
IUE AFL-CIO Pension Plan (in which certain former employees
of the Company participated) pursuant to the terms of
Section 8.7(b) of the Agreement for Purchase of Certain
Assets, dated as of April 28, 1992, between the Company and
Marland Mold, Inc., as amended;
(b) all fees and expenses of the Company to its
financial and legal advisors in connection with the
transactions contemplated by this Agreement incurred from
and after December 31, 1995;
(c) (i) federal income taxes for which the Seller is
responsible pursuant to Section 7.3 and (ii) state income
taxes for which the Seller is responsible pursuant to
Section 7.3;
(d) all claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary directly relating
to or resulting from the employees, property, plant and
equipment, leases, agreements, contracts or commitments,
oral or written, related to the Company's facility located
at Alsip, Illinois, except for those that have been
transferred or assigned to one of the Company's other
operating facilities in the ordinary course of business
prior to Closing (limited, in the case of such leases,
agreements, contracts or commitments, to those shown on
Schedule 3.11 and limited, in the case of employees, to
transfers that have been approved by the Buyer);
(e) all claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary arising out of or
related to (i) the Plans or (ii) the sponsorship,
maintenance, or contributions to any "employee benefit plan"
(as defined in ERISA Section 3(3)) or any "multiemployer
plan" (as defined in ERISA Sections 3(37) and 4001(a)(13))
by any ERISA Affiliate (other than the Company, the
Significant Subsidiary or any other Company Subsidiary);
provided, however, that Retained Liabilities do not include
(x) severance benefits payable by the Buyer under Section
7.2 or (y) claims, liabilities, losses or expenses arising
under or related to the Employee Benefit Plans listed on
Schedule 1.33;
(f) all claims, liabilities, losses and expenses of
the Company or the Significant Subsidiary related to the
complaint, Lloyd T. Whitaker, as Trustee of the Estate of
Olympia Holding Company, Debtor, v. Tredegar Molded Products
Company, filed on August 6, 1992 in United States Bankruptcy
Court, Middle District of Florida, Jacksonville Division
(Case No. 92-11454);
(g) all claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary arising out of,
or related to, (i) the Discharge of Mechanics Lien issued by
The Aetna Casualty & Surety Co. (Bond No: 585100911597BCA)
in the name of the Company and in the amount of $56,957.18,
(ii) the Self-Insurer's Surety Bond issued by Safety
National Casualty Corp. (Bond No. SIB 1280 IL) in the name
of the Company and in the amount of $200,000 and (iii)
General Contract of Indemnity among the Parent and its
subsidiaries with The Aetna Casualty and Surety Company that
relate to or arise from any bond issued for the Parent or
any of its subsidiaries or affiliates including the Company,
the Significant Subsidiary and the other Company Subsidiary;
(h) all claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary arising out of,
or related to, any workers' compensation claims of any
employee of the Company, the Significant Subsidiary or other
Company Subsidiary for which the incident giving rise
thereto occurred prior to the Closing Date; provided,
however, that, with respect to any such workers'
compensation claim, if any incident occurs after the Closing
that would increase Seller's liability for such claim, then
the Company shall be responsible for such incremental
increase in liability; and
(i) all claims, liabilities, losses and expenses
incurred or to be incurred by the Company, the Significant
Subsidiary or any other Company Subsidiary arising out of or
relating to (i) the Company's property located in Rockaway,
New Jersey and transferred to J.M.C. Realty Co. during 1984,
(ii) the Company's property located at 26241-26341 Cannon
Road, Bedford Heights, Ohio, or (iii) the Company's property
located in West Unity, Williams County, Ohio, and sold to
H.K.K. Machining Co. during 1986.
1.34 Seller. "Seller" shall mean Tredegar Investments,
Inc., a Virginia corporation and the owner of all of the Company
Common Stock.
1.35 Seller's Closing Certificate. "Seller's Closing
Certificate" shall mean the certificate of the Seller in the form
of Exhibit 1.35 attached hereto.
1.36 Significant Subsidiary. "Significant Subsidiary" shall
mean Polestar Plastics Manufacturing Company, a Virginia
corporation.
1.37 Transition Services Agreement. "Transition Services
Agreement" shall mean the transition services agreement in the
form of Exhibit 1.37 attached hereto pursuant to which the Seller
and the Buyer agree on the terms of the transition of the Company
and the Significant Subsidiary from the Seller to the Buyer and
such other matters reflected therein.
ARTICLE II
PURCHASE AND SALE
2.1 Sale of the Company Common Stock. Upon the terms and
subject to the conditions of this Agreement, and in consideration
of the Purchase Price to be paid by the Buyer to the Seller, the
Seller shall sell, and the Buyer shall purchase, all of the
Company Common Stock on the Closing Date.
2.2 Purchase Price. The aggregate purchase price to be
paid by the Buyer to the Seller for the Company Common Stock
shall be (i) $57,500,000, payable in cash, and (ii) the issuance
and delivery of the New Preferred (collectively, the "Purchase
Price"), the cash portion of which shall be payable as follows:
(a) $3,000,000 (the "Deposit") in immediately
available funds, which has been deposited on the date hereof
by or on behalf of the Buyer to the Escrow Agent and shall
be held by the Escrow Agent pursuant to the terms of the
Escrow Agreement. The Deposit shall be released by the
Escrow Agent pursuant to the terms of the Escrow Agreement
and shall either be (i) credited towards the Purchase Price
at Closing, or (ii) upon any termination of this Agreement,
shall be paid to the Seller or the Buyer in accordance with
Section 9.2(b) hereof and the Escrow Agreement;
(b) the balance of the cash portion of the Purchase
Price to be paid by wire transfer in immediately available
funds at the Closing.
2.3 Closing. At the Closing, in addition to the deliveries
required to be made at or prior to the Closing pursuant to
Article VI hereof, the Buyer shall deliver to the Seller the
Purchase Price as specified in Section 2.2 hereof and the Seller
shall deliver to the Buyer one or more stock certificates
representing the Company Common Stock, duly endorsed for transfer
or accompanied by duly executed stock powers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer that:
3.1 Organization and Qualification. The Seller is a
corporation, duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia, and has
all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein.
3.2 Execution, Delivery and Performance. Except as set
forth on Schedule 3.2, the execution, delivery and performance by
the Seller of this Agreement and each agreement or instrument
executed in connection herewith or delivered pursuant hereto and
the consummation of the transactions contemplated herein will
not, with or without the giving of notice or the passage of time,
or both, (i) materially conflict with, or result in a violation
or breach of, or a default, right to accelerate or loss of rights
under, or result in the creation of any lien, charge or
encumbrance under or pursuant to, any provision of the Seller's,
the Company's or the Significant Subsidiary's respective Articles
of Incorporation or Bylaws, any Law or any finding, order,
judgment, writ, injunction or decree to which the Seller, the
Company or the Significant Subsidiary is a party or by which the
Seller, the Company or the Significant Subsidiary may be bound or
affected or any contract, lease, mortgage, deed of trust,
indenture, permit, license, franchise, commitment, authorization
or concession, or other agreement or instrument applicable to the
Seller, the Company or the Significant Subsidiary; or (ii)
require the approval, consent or authorization of, or prior
notice to, filing with or registration with, any federal, state
or local governmental body or authority, regulatory agency,
court, or any other person or entity, except notices and
approvals required under the HSR Act.
3.3 Authorization. The Seller has full power and authority
to enter into, deliver and perform this Agreement, and each
agreement or instrument (to which it is a party) executed in
connection herewith or delivered pursuant hereto and to
consummate the transactions contemplated hereby. The Seller's
execution, delivery and performance of this Agreement and all
agreements and instruments executed in connection herewith or
delivered pursuant hereto and the transactions contemplated
hereby have been duly authorized by all requisite corporate
action. This Agreement and all agreements or instruments
executed by the Seller in connection herewith or delivered by the
Seller pursuant hereto have been duly executed and delivered by
the Seller, and constitute the Seller's legal, valid and binding
obligation, enforceable in accordance with their respective
terms.
3.4 Status of the Company and the Significant Subsidiary.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Virginia. The Company is duly qualified as a
foreign corporation in each jurisdiction in which the nature of
its business or the location of its assets requires such
qualification and in which failure to so qualify would have a
material adverse effect on the Company. The jurisdictions in
which it is qualified as a foreign corporation are identified on
Schedule 3.4. The copy of the Articles of Incorporation of the
Company and the copy of the Bylaws of the Company together with
all amendments and modifications thereto, in each case as
heretofore delivered to the Buyer, are true, complete and
correct. The Company has the corporate power and authority to
own those properties owned by it and to lease those properties
leased by it and to carry on its business as now being conducted.
Except as set forth in Schedule 3.4, the Company does not have
any subsidiaries and does not own shares of capital stock or
otherwise have any ownership interest or other investment in or
advance to any corporation, partnership, joint venture, entity,
enterprise or organization, and the Company is not a partner
(general or limited), joint venturer or other member or
participant in any partnership, joint venture or other
unincorporated association.
(b) The Significant Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia. The Significant Subsidiary is
duly qualified as a foreign corporation in each jurisdiction in
which the nature of its business or the location of its assets
requires such qualification and in which failure to so qualify
would have a material adverse effect on the Significant
Subsidiary. The jurisdictions in which it is qualified as a
foreign corporation are identified on Schedule 3.4. The copy of
the Articles of Incorporation of the Significant Subsidiary and
the copy of the Bylaws of the Significant Subsidiary together
with all amendments and modifications thereto, in each case as
heretofore delivered to the Buyer, are true, complete and
correct. The Significant Subsidiary has the corporate power and
authority to own those properties owned by it and to lease those
properties leased by it and to carry on its business as now being
conducted. The Significant Subsidiary does not have any
subsidiaries and does not own shares of capital stock or
otherwise have any ownership interest or other investment in or
advance to any corporation, partnership, joint venture, entity,
enterprise or organization, and the Significant Subsidiary is not
a partner (general or limited), joint venturer or other member or
participant in any partnership, joint venture or other
unincorporated association.
3.5 Capital Stock of the Company and the Significant
Subsidiary.
(a) The authorized capital stock of the Company
consists of 2,000 shares of the Company's common stock, $1.00 par
value per share, of which 1,000 shares are issued and outstanding
as of the date hereof, and 2,500 shares of the Company's Serial
Preferred Stock, no par value, none of which is issued and
outstanding. All of the shares of the Company Common Stock have
been duly and validly authorized and issued, are fully paid and
nonassessable, and were not issued in violation of the preemptive
rights of any stockholder. The Seller owns good, valid and
marketable title to the Company Common Stock, free and clear of
all liens, charges, security interests, encumbrances, and claims
of every kind, whether absolute, matured, contingent or
otherwise. There are no existing options, warrants, calls or
commitments relating to, or any securities or rights convertible
into, exercisable for or exchangeable for, any capital stock of
the Company.
(b) The authorized capital stock of the Significant
Subsidiary consists of 100 shares of the Significant Subsidiary's
common stock, no par value, of which 10 shares are issued and
outstanding as of the date hereof. All of the issued and
outstanding shares of the Significant Subsidiary's capital stock
have been duly and validly authorized and issued, are fully paid
and nonassessable, and were not issued in violation of the
preemptive rights of any stockholder. The Company owns good,
valid and marketable title to all of the issued and outstanding
shares of the Significant Subsidiary's capital stock, free and
clear of all liens, charges, security interests, encumbrances,
and claims of every kind, whether absolute, matured, contingent
or otherwise. There are no existing options, warrants, calls or
commitments relating to, or any securities or rights convertible
into, exercisable for or exchangeable for, any capital stock of
the Significant Subsidiary.
3.6 Financial Statements. The Seller has delivered to the
Buyer copies of the Financial Statements and the Pro Forma
Balance Sheet. The Financial Statements present fairly the
consolidated financial condition, results of operations and cash
flows of the Company, as of the dates, and for the periods
indicated, consistently applied. The Pro Forma Balance Sheet
fairly presents the financial condition of the Company as of the
date thereof, except that such statement has given effect to the
transactions contemplated by Section 5.2 hereof.
3.7 Absence of Changes. Except as set forth in Schedule
3.7A attached hereto or as contemplated by this Agreement,
including but not limited to Section 5.2 hereof, since December
31, 1995 (the "Balance Sheet Date"), neither the Company nor the
Significant Subsidiary has:
(a) borrowed or agreed to borrow any funds or
incurred, or become subject to, any obligation or liability
(absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business, none of which
are materially adverse;
(b) incurred or paid any obligation or liability
(absolute or contingent) other than current liabilities
reflected in or shown on the Pro Forma Balance Sheet as of
the date thereof and current liabilities incurred since the
date of the Pro Forma Balance Sheet in the ordinary course
of business, none of which are materially adverse;
(c) sold, transferred or otherwise disposed of, or
agreed to sell, transfer or otherwise dispose of any of its
assets, property or rights, or canceled or otherwise
terminated, or agreed to cancel or otherwise terminate, any
debts or claims, except in the ordinary course of business
and consistent with past practice;
(d) except in the ordinary course of business, and
consistent with past practice, made or permitted any
amendment or termination of any contract, agreement or
license, including but not limited to the Contracts and the
Permits, to which it is a party or to which it or any of its
properties are subject;
(e) except for customary increases or adjustments
granted to its employees in accordance with Schedule 3.7B,
increased the rate of compensation payable or to become
payable by it to any of its officers, directors or employees
or adopted any new, or made any increase in any, profit
sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, severance or other employee benefit
plan with any of its officers, directors or employees;
(f) made any capital expenditure in excess of $25,000
or any commitment therefor for any single item, but which in
the aggregate shall not exceed $200,000, other than capital
expenditures described in the capital budget set forth in
Schedule 3.7C attached hereto;
(g) merged or consolidated with any other corporation
or entity, or acquired or agreed to acquire any corporation,
association, partnership, joint venture or other entity;
(h) mortgaged, pledged or subjected to any pledge,
mortgage, security interest, conditional sales contract or
other similar encumbrance any of its assets or properties,
other than liens, if any, for current taxes not yet due and
payable;
(i) suffered any damage, destruction or loss, whether
or not covered by insurance, in excess of $50,000, or
suffered any repeated, recurring or prolonged shortage,
cessation or interruption of inventory shipments, supplies
or utility services required to conduct its business and
operations or suffered any change in its financial condition
or in the nature of its business or operations which has had
or might have a material adverse effect on its business,
operations, assets, properties or prospects;
(j) amended or modified, or granted any material
exception to, its credit criteria for new or existing
customers;
(k) changed any of the accounting principles followed
by it or the methods of applying such principles; or
(l) entered into any other transaction other than in
the ordinary course of business.
3.8 Real Property
(a) Schedule 3.8A attached hereto contains a complete
listing of the real estate owned by the Company. The Significant
Subsidiary does not own any real estate. Except as reflected on
Schedule 3.8A, the Company has good and marketable title to all
such real estate, free and clear of any mortgage, claim, security
interest, pledge, charge, lien or encumbrance, other than
Permitted Liens.
(b) Schedule 3.8B attached hereto contains a complete
listing of the real estate leased by either the Company or the
Significant Subsidiary. Such leased real estate is held by the
Company or the Significant Subsidiary, as the case may be, under
valid and enforceable leases.
(c) Schedule 3.8C attached hereto contains a complete
listing of (i) all real estate owned by the Company and leased to
a third party and (ii) all real estate leased by the Company or
the Significant Subsidiary and subleased to a third party. Each
such lease or sublease made by the Company or the Significant
Subsidiary, as the case may be, is valid and enforceable.
(d) The Seller has provided the Buyer with access to
true and complete copies of all deeds, leases, subleases,
documents of title, abstracts, surveys, plats, maps, data and
other material in the Seller's possession relating to all the
real estate being used by the Company or the Significant
Subsidiary or leased or subleased by the Company or the
Significant Subsidiary to a third party.
3.9 Personal Property. (a) Schedule 3.9A attached hereto
contains a complete listing of all the tangible personal property
owned by either the Company or the Significant Subsidiary.
Except for dispositions or losses in the ordinary course of
business since the date of such Schedule 3.9A, unless such
disposition or loss would render Section 3.7 incorrect at the
Closing, the Company and the Significant Subsidiary will have
good and marketable title to such of its tangible personal
property, free and clear of any mortgage, claim, security
interest, pledge, charge, agreement, option, lien or encumbrance,
other than Permitted Liens. Schedule 3.9B attached hereto
contains a complete list of all tangible personal property leased
by either the Company or the Significant Subsidiary. All of the
tangible personal property listed on Schedule 3.9B is held by the
Company or the Significant Subsidiary under a valid and
enforceable lease.
(b) Schedule 3.9C attached hereto contains a complete
list of the intellectual property owned or licensed to or by the
Company and the Significant Subsidiary and material to the
business of the Company or the Significant Subsidiary; provided,
however, that the Buyer acknowledges and agrees that any
tradenames or trademarks containing the name "Tredegar" shall be
conveyed by the Company to the Seller immediately prior to the
Closing and all rights of the Company and the Significant
Subsidiary to use such tradenames or trademarks shall terminate
effective as of the Closing.
3.10 Compliance with Law and Permits. Each of the Company
and the Significant Subsidiary has obtained all Permits set forth
on Schedule 3.10A attached hereto, and, to the Knowledge of the
Seller, except as reflected on Schedule 3.10B attached hereto, is
in compliance in all material respects with all applicable Laws
and Permits, including, without limitation, any such material
Laws relating to the protection of human health or the
environment, or relating to the emission, discharge, release,
threatened release, use, handling, storing, transportation or
disposal of any hazardous or toxic material, hazardous or toxic
substance or hazardous or toxic waste. To the Knowledge of the
Seller, except as reflected on Schedule 3.10B attached hereto,
neither the Company nor the Significant Subsidiary has received
any notice of any current or existing violation of any Laws or
Permits.
3.11 Contracts, Agreements, etc. Schedule 3.11 attached
hereto contains a correct and complete list of the following
contracts, agreements, leases, commitments and arrangements,
written or oral, to which either the Company or the Significant
Subsidiary is a party or by which the Company or the Significant
Subsidiary is or their properties or assets are bound:
(a) (i) notes, mortgages, indentures or loan or credit
agreements; (ii) equipment lease agreements having a term
not cancelable without penalty of not less than one year and
annual rental payments of not less than $50,000; (iii)
security agreements each of which secures indebtedness not
covered in (ii) above; and (iv) other agreements and
instruments not covered in (i) through (iii) above
reflecting obligations for borrowed money or other monetary
indebtedness or otherwise relating to the borrowing of money
by, or the extension of credit to the Company or the
Significant Subsidiary, in each case creating an actual or
potential obligation of the Company or the Significant
Subsidiary of not less than $25,000, or commitments to enter
into any such agreements or commitments;
(b) management consulting and employment agreements
and binding agreements or commitments to enter into the
same;
(c) option, purchase and sale or lease agreements
involving any real property, equipment, machinery, personal
property or other asset, tangible or intangible, involving
amounts payable by or to the Company or the Significant
Subsidiary of $50,000 or more;
(d) agreements and purchase orders entered into or
issued in the ordinary course of business for the purchase
or sale of goods, services, supplies or capital assets
requiring aggregate future payments by or to the Company or
the Significant Subsidiary of more than $50,000;
(e) joint venture, partnership or other agreements
involving the sharing of profits or losses;
(f) contracts or agreements with the Seller or any
subsidiary or Affiliate (as defined in Section 3.17) of the
Seller, or any director or officer of the Seller or any
subsidiary or Affiliate of the Seller, or any person who is
an immediate relative of any such person, or any combination
of such persons;
(g) outstanding powers of attorney empowering any
person, company or other organization to act on behalf of
the Company or the Significant Subsidiary;
(h) outstanding guarantees, subordination agreements,
indemnity agreements and other similar types of agreements,
whether or not entered into in the ordinary course of
business, which the Company or the Significant Subsidiary is
or may become liable for or obligated to discharge, or any
asset of the Company or the Significant Subsidiary is or may
become subject to the satisfaction of, any indebtedness,
obligation, performance or undertaking of any other person,
except for indemnification agreements contained in any of
the instruments listed in the Schedules hereto and except
for the foregoing in which the obligations of the Company or
the Significant Subsidiary thereunder are less than $100,000
in the aggregate;
(i) contracts, orders, decrees or judgments preventing
or restricting the Company or the Significant Subsidiary
from carrying on business in any location;
(j) agreements, contracts or commitments relating to
the acquisition by the Company or the Significant Subsidiary
of the outstanding capital stock or equity interest of any
business enterprise; and
(k) contracts, commitments or obligations whether or
not made in the ordinary course of business and having
unexpired terms in excess of one year or requiring aggregate
future payments or receipts in excess of $100,000 or
otherwise material to the business or operations of the
Company or the Significant Subsidiary.
The Seller has provided the Buyer with access to true and
complete copies of all Contracts, including all amendments,
modifications, waivers and elections applicable thereto.
Except as set forth in Schedule 3.11, as to the Company or
the Significant Subsidiary, as the case may be, such Contracts
are valid and binding, enforceable in accordance with their
respective terms (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting generally the enforcement of creditors' rights), and
are in full force and effect. Except as disclosed in Schedule
3.11, there is not under any such Contract, (i) any existing
material breach or material default (or event or condition, which
after notice or lapse of time, or both, would constitute a
material breach or material default), by the Company or the
Significant Subsidiary, as the case may be, with respect thereto
or (ii) to the Knowledge of the Seller, any existing material
breach or material default (or event or condition, which after
notice or lapse of time, or both, would constitute a material
breach or material default), by a third party with respect
thereto.
3.12 Litigation. Except as set forth on Schedule 3.12 or
Schedule 3.10B, there is no claim, legal action, suit,
litigation, arbitration, dispute or investigation, judicial,
administrative or otherwise, or any order, decree or judgment,
now pending or in effect, as to which the Parent, the Company or
the Significant Subsidiary has received service of process or to
the Knowledge of the Seller has received notice, or, to the
Knowledge of the Seller, threatened or contemplated, naming,
relating to or affecting the Company or the Significant
Subsidiary.
3.13 Insurance. Attached hereto as Schedule 3.13 is a list
of all insurance policies held by the Company or the Significant
Subsidiary now in force, showing for each the current premiums,
policy limits and coverages and the expiration dates of each such
policy; provided, however, that the Buyer acknowledges that all
policies set forth on Schedule 3.13 shall terminate with respect
to the Company and the Significant Subsidiary as of the Closing
Date. The premiums due thereon have been timely paid.
3.14 Employee Benefits. (a) Attached hereto as Schedule
3.14 is a true and complete list of each Employee Benefit Plan.
Schedule 3.14 identifies (i) each Employee Benefit Plan that is a
"pension plan" (as defined in Section 3(2) of ERISA but not
including a multiemployer plan within the meaning of Section
3(37) or 4001(a)(3) of ERISA) (the "Pension Plans"), and denotes
those Pension Plans intended to be qualified under Section 401(a)
of the Code (the "Qualified Plans"), (ii) each Employee Benefit
Plan that is a "multiemployer plan" (as defined in Sections 3(37)
and 4001(a)(3) of ERISA (the "Multiemployer Plans") and (iii)
each Employee Benefit Plan that is a "welfare plan" (as defined
in Section 3(1) of ERISA) (the "Welfare Plans"). True and
complete copies of each Employee Benefit Plan have been delivered
to the Buyer. To the knowledge of the Seller, each Employee
Benefit Plan is enforceable in accordance with its terms.
(b) To the Knowledge of the Seller, each Qualified
Plan complies in all material respects with applicable Law as of
the date hereof, and the Internal Revenue Service ("IRS") has
issued favorable determination letters to the effect that the
forms of Qualified Plans (or predecessor plans) satisfy the
requirements of Section 401(a) and related Sections of the Code
or an application for such a determination has been filed with
the IRS. To the Knowledge of the Seller, there are no facts or
circumstances that would jeopardize or adversely affect in any
material respect the qualification under Code Section 401(a) of
any Qualified Plan.
(c) As of the Closing Date, full payment will be made
to each Employee Benefit Plan of all contributions that are
required under the terms thereof and under ERISA or the Code to
be made on or prior to the Closing Date. No "accumulated funding
deficiency" (as defined in ERISA Section 302 or Code Section
412), whether or not waived, exists or will exist as of the
Closing Date with respect to any Pension Plan.
(d) To the Knowledge of the Seller, each Employee
Benefit Plan has been administered substantially in accordance
with its terms. In addition, to the Knowledge of the Seller,
each Employee Benefit Plan complies, and has been administered
substantially in accordance with, any applicable provisions of
ERISA and the Code and the rulings and regulations promulgated
thereunder (including the continuation coverage requirements of
group health plans under Code Section 4980(f) and ERISA Section
602), and all other applicable Laws, and all reports, returns and
other documentation that are required to have been filed with the
IRS, the Department of Labor, the PBGC or any other governmental
agency (federal, state or local) have been filed on a timely
basis, in each instance in which the failure to file such
reports, returns and other documents would result in any material
liability or obligation to the Company, the Significant
Subsidiary, or any other Company Subsidiary. No lawsuits or
complaints to or by any person or governmental authority have
been filed or, to the Knowledge of the Seller, are contemplated
or threatened, with respect to any Employee Benefit Plan.
(e) Neither the Parent, the Company nor the Seller nor
any affiliate of the Seller has received a notice of, or
incurred, any withdrawal liability with respect to any
"Multiemployer Plan." Neither the Company nor the Significant
Subsidiary nor any other Company Subsidiary has an obligation to
contribute to any "Multiemployer Plan."
(f) Neither the Company nor the Significant Subsidiary
nor any other Company Subsidiary has incurred any material
liability with respect to any Welfare Plan or for "welfare
benefits" (as defined in Code Section 419) including, without
limitation, any liability for tax under Code Section 5000 that
are not fully reflected in the Company's Financial Statements.
Except as set forth in Schedule 1.33 attached hereto, or as
required under Code Section 4980B(f) and ERISA Section 602,
neither the Company nor the Significant Subsidiary nor any other
Company Subsidiary is obligated on or after the Closing Date to
provide or to pay any benefits to former employees or to their
dependents or beneficiaries.
(g) The Seller has delivered to the Buyer true and
correct copies of the following with respect to each such
Employee Benefit plan and all amendments thereto to the date
hereof. In addition, the Seller will, during regular business
hours prior to the Closing date,cause the Company, the
Significant Subsidiary and any other Company Subsidiary to allow
the Buyer to review true and correct copies of the following with
respect to each Employee Benefit Plan:
(i) A copy of each trust agreement pertaining to
the Employee Benefit Plan (including a copy
of any applicable collective investment
trust) and all amendments to such documents
adopted prior to the date hereof.
(ii) The three most recent actuarial valuation
reports for the Employee Benefit Plan of for
which an actuarial valuation report is
required to be prepared.
(iii) Copies of any correspondence with the
Employee Benefit Plan's actuaries or
accountants regarding actuarial assumptions
or errors in connection with the preparation
of actuarial reports, materials filed with
the Internal Revenue Service or the
Department of Labor or the administration of
the Plan.
(iv) The three most recent Internal Revenue
Service Forms 5500 including all schedules
and related certificates or reports, filed
with respect to the Employee Benefit Plans.
(v) A copy of the most recent summary plan
description prepared with respect to the
Employee Benefit Plans and copies of any
employee handbooks or other descriptive
materials supplied to employees or retirees
concerning employee benefits.
(vi) A description of each Employee Benefit Plan
for which no Plan document exists.
(vii) A copy of each Pension Plan's most recently
issued IRS determination letter.
3.15 Employment Matters. Except as set forth on Schedule
3.15 attached hereto, neither the Company nor the Significant
Subsidiary is a party to, bound by, or negotiating in respect of
any collective bargaining agreement or any other agreement with
any labor union, association or other employee group, nor is any
employee of the Company or the Significant Subsidiary represented
by any labor union or similar association. No labor union or
employee organization has been certified or recognized as the
collective bargaining representative of any employees of the
Company or the Significant Subsidiary. Except as set forth on
Schedule 3.15 attached hereto, to the Knowledge of the Seller,
there are no formal union organizational campaigns or
representation proceedings underway or formally threatened with
respect to any employees of the Company or the Significant
Subsidiary nor are there any existing or threatened labor
strikes, work stoppages, slowdowns, disputes, grievances unfair
labor practice charges, labor arbitration proceedings or other
disturbances affecting any employee of the Company or the
Significant Subsidiary.
3.16 Taxes. Except as set forth in Schedule 3.16 attached
hereto or as otherwise provided in this Section 3.16:
(a) the Seller, the Company or the Significant
Subsidiary has filed or caused to be filed all tax returns
and reports required to have been filed with respect to
taxes, including without limitation, federal, state,
foreign, county, local and other income, franchise, property
(real or personal, tangible or intangible), payroll, excise,
sales, use and other taxes and governmental assessments
(collectively, "Taxes") by or for the Company or the
Significant Subsidiary on or before the Closing Date;
(b) each of the Company and the Significant Subsidiary
has paid or made adequate provision for all Taxes, additions
to Taxes, interest, and penalties that have become due
pursuant to those returns or reports or pursuant to any
assessment or adjustment made with respect thereto; and
(c) neither the Company nor the Significant Subsidiary
has granted (or is subject to) any waiver of the period of
limitations for the assessment of Taxes for any currently
open taxable period, and no unpaid Taxes deficiency has been
asserted against or with respect to the Company or the
Significant Subsidiary by a taxing authority, no notice of
assessment or audit has been received by the Company or the
Significant Subsidiary from a taxing authority and no audit
of the Company or the Significant Subsidiary by a taxing
authority is currently underway.
Notwithstanding the foregoing, the Company is under no
obligation to set forth in Schedule 3.16 any item for which
indemnity is provided by the Seller in Section 7.3 of this
Agreement, nor shall any provision of this Section 3.16 apply to
any matter for which indemnity is provided by the Seller in
Section 7.3.
3.17 Transactions With Affiliates. Except as set forth in
Schedule 3.17 attached hereto, or as contemplated by this
Agreement, since December 31, 1995, neither the Company nor the
Significant Subsidiary has, in the ordinary course of business or
otherwise, purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, or
sold, leased or otherwise disposed of any material property or
assets or provided any material services to (except with respect
to remuneration for services rendered as a director, officer or
employee of the Company), any director, officer or employee, or
to the Knowledge of the Seller, any of their relatives, of the
Company, the Significant Subsidiary, the Seller or any Affiliate
of the Company, the Significant Subsidiary or the Seller or any
of their directors, officers or employees or, to the Knowledge of
the Seller, any of their relatives. For purposes of this
Agreement, "Affiliate" shall mean any person, firm or corporation
that directly or indirectly controls, is controlled by or is
under common control with such person. Except as set forth in
Schedule 3.17, the Pro Forma Balance Sheet or the Financial
Statements, (a) the Contracts do not include any payable,
receivable, obligation or commitment between the Company and any
Affiliate (other than the Significant Subsidiary) or any of their
respective directors, officers or employees, or, to the Knowledge
of the Seller, any of their relatives, and (b) the assets of the
Company do not include any receivable or other obligation or
commitment from an Affiliate to the Company (other than the
Significant Subsidiary) or any of their respective directors,
officers or employees, or to the Knowledge of the Seller, any of
their relatives.
3.18 No Broker. Neither the Seller nor the Company (i) has
had any dealings, negotiations or communications with or retained
any broker or other intermediary in connection with the
transactions contemplated by this Agreement and (ii) is committed
to any liability for any brokers' or finders' fees or any similar
fees in connection with the transactions contemplated by this
Agreement, other than Bowles Hollowell Conner & Co., whose fees
and expenses shall be paid by the Seller.
3.19 Non-Operating Subsidiary. Massie Tool, Mold & Die,
Inc., a Florida corporation and wholly-owned subsidiary of the
Company, is a non-operating corporation whose only assets are the
rights to its corporate name and only liabilities are the costs
and expenses related to the maintenance of its corporate
existence.
3.20 Accuracy of Information. To the Knowledge of the
Seller, neither this Agreement nor any Schedule hereto, including
Note 12 to the Financial Statements set forth in Schedule 1.19,
contains an untrue statement of a material fact or omits to state
a material fact necessary to make statements contained herein or
therein not misleading (it being understood that any error or
omission will be deemed to be immaterial if such error or
omission is (i) corrected when viewed in the context of all other
provisions of this Agreement or such Schedules, or (ii) corrected
or updated by another representation or warranty made herein).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
4.1 Organization. The Buyer is a corporation, duly
organized, validly existing and in good standing under the laws
of Delaware and has all requisite power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated herein.
4.2 Execution, Delivery and Performance. Except as set
forth in Schedule 4.2, the execution, delivery and performance by
the Buyer of this Agreement and each agreement or instrument
executed in connection herewith or delivered pursuant hereto and
the consummation of the transactions contemplated herein will
not, with or without the giving of notice or the passage of time,
or both, (i) materially conflict with, or result in a violation
or breach of, or a default, right to accelerate or loss of rights
under, or result in the creation of any lien, charge or
encumbrance under or pursuant to, any provision of the Buyer's
Articles or Certificate of Incorporation or Bylaws, any Law, or
any finding, order, judgment, writ, injunction or decree to which
the Buyer is a party or by which the Buyer or its assets may be
bound or affected or any contract, lease, mortgage, deed of
trust, indenture, permit, license, franchise, commitment,
authorization or concession, or other agreement or instrument
applicable to the Buyer; or (ii) require the approval, consent or
authorization of, or prior notice to, filing with or registration
with, any federal, state or local governmental body or authority,
regulatory agency, court, or any other person or entity, except
notices and approvals required under the HSR Act.
4.3 Authorization. The Buyer has full power and authority
to enter into, deliver and perform this Agreement, and each
agreement or instrument (to which it is a party) executed in
connection herewith or delivered pursuant hereto and to
consummate the transactions contemplated hereby. The Buyer's
execution, delivery and performance of this Agreement and all
agreements and instruments executed in connection herewith or
delivered pursuant hereto and the transactions contemplated
hereby have been duly authorized by all requisite corporate
action. This Agreement and all agreements or instruments
executed by the Buyer in connection herewith or delivered by the
Buyer pursuant hereto have been duly executed and delivered by
the Buyer and this Agreement and all agreements and instruments
executed by the Buyer in connection herewith or delivered by the
Buyer pursuant hereto constitute the Buyer's legal, valid and
binding obligation, enforceable in accordance with their
respective terms.
4.4 No Broker. The Buyer has not had any dealings,
negotiations or communications with any broker or other
intermediary in connection with the transactions contemplated by
this Agreement and is not committed to any liability for any
brokers' or finders' fees or any similar fees in connection with
the transactions contemplated by this Agreement.
4.5 Purchase for Investment. The Buyer is acquiring the
Company Common Stock for its own account for the purpose of
investment and not with a view to or for sale in connection with
any distribution thereof, except in accordance with applicable
federal and state securities laws.
ARTICLE V
CERTAIN MATTERS PENDING THE CLOSING
5.1 Carry on in Regular Course. Except as provided in this
Agreement, the Seller shall cause each of the Company and the
Significant Subsidiary to carry on its business in the ordinary
course and substantially in the same manner as heretofore carried
on and use its reasonable efforts to preserve its properties,
business and relationships with its suppliers and customers. The
Seller will advise the Buyer promptly in writing of any material
adverse change in the Company's financial condition or business.
5.2 Distributions; Assignment of Retained Liabilities.
Notwithstanding the provisions of Section 5.1 hereof, between the
date hereof and the Closing Date, (i) the Company and the
Significant Subsidiary may pay such dividends or make such other
distributions to its shareholder of cash from operations of the
Company before the Closing Date (but excluding any proceeds of
sales of capital assets that are not replaced with assets of
comparable or greater value), and (ii) the Seller, the Company
and the Seller's Affiliates may take such actions as may be
necessary to give effect to the transactions contemplated in the
Pro Forma Balance Sheet including but not limited to the payment
or forgiveness of all intercompany accounts prior to the Closing
Date.
5.3 Indebtedness. Without the prior written consent of the
Buyer, the Seller shall not cause or permit either the Company or
the Significant Subsidiary to: (a) create, incur, assume or
increase any indebtedness for borrowed money, (b) mortgage,
pledge or otherwise encumber any of its properties or assets,
except for Permitted Liens or (c) create, assume or increase any
other indebtedness except accounts payable and other liabilities
incurred in the ordinary course of business.
5.4 Issuance of Stock. The Seller shall not cause or
permit either the Company or the Significant Subsidiary to
reclassify or issue any shares of capital stock of any class or
grant any warrants, options or rights to subscribe for any shares
of capital stock of any class or securities convertible into or
exchangeable for, or which otherwise confer on the holder any
right to acquire, any shares of capital stock of any class.
5.5 Compensation. The Seller shall not cause or permit
either the Company or the Significant Subsidiary to grant any
increases, except as set forth on Schedule 3.7B, in the rate of
pay of any of its officers, directors or employees. Except as
specifically noted in Schedule 3.14, the Seller shall not cause
or permit either the Company or the Significant Subsidiary to
institute any new employee benefit plan or program or increase
benefits under any existing employee benefits plan or program.
5.6 Changes. The Seller shall cause each of the Company
and the Significant Subsidiary not to take any action or omit to
take any action which would render Section 3.7 hereof incorrect
in any material respect, except Section 3.7(i) hereof.
5.7 Compliance with Law. The Seller shall cause each of
the Company and the Significant Subsidiary to comply in all
material respects with all applicable Laws and with all orders of
any court or of any federal, state, municipal or other governmen-
tal department, non-compliance with which could cause a material
adverse change in its assets or properties or a material
impairment to its business.
5.8 Access to Information. At the Buyer's expense, the
Buyer, the Buyer's Lenders and their respective authorized
agents, officers and representatives shall have reasonable access
to the properties, books, records, contracts, information,
documents and personnel of the Company and the Significant
Subsidiary to conduct such examinations and investigations of the
Company and the Significant Subsidiary as the Buyer or the
Buyer's Lenders deem necessary; provided, however, that such
examinations and investigations: (a) shall be conducted during
the normal business hours of the Company or the Significant
Subsidiary, as the case may be; and (b) shall not unreasonably
interfere with the operations and activities of the Company or
the Significant Subsidiary, as the case may be. The Seller shall
cause the Company and the Significant Subsidiary to cooperate in
all reasonable respects with such examinations and
investigations.
5.9 Cooperation; Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary,
proper and advisable under applicable Law, to consummate the
transactions contemplated by this Agreement, including, but not
limited to, all filings and other actions required under the HSR
Act. In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party
to this Agreement shall take all such necessary action. The
parties hereto will execute any additional instruments necessary
to consummate the transactions contemplated hereby. The Seller
will use its reasonable best efforts to obtain reliance letters
for the benefit of the Buyer and its lenders from the Seller's
environmental consultants relating to the Company's or the
Significant Subsidiary's, as the case may be, operating
facilities, other than the facility located at Alsip, Illinois.
5.10 Consents. (a) The Seller will use its reasonable best
efforts to obtain consents of all third parties and governmental
authorities necessary to Seller's consummation of the
transactions contemplated by this Agreement including but not
limited to all consents listed on Schedule 3.2.
(b) The Buyer will use its reasonable best efforts to
obtain consents of all third parties and governmental authorities
necessary to Buyer's consummation of the transactions
contemplated by this Agreement including but not limited to all
consents listed on Schedule 4.2.
5.11 Publicity. All general notices, releases, statements
and communications to employees, suppliers, distributors and
customers of the Company and the Significant Subsidiary and to
the general public and the press relating to the transactions
covered by this Agreement shall be made only at such times and in
such manner as may be mutually agreed upon by the Seller and the
Buyer; provided, however, that any party hereto shall be entitled
to make a public announcement of the foregoing if, in the opinion
of its legal counsel, such announcement is required to comply
with Law or any listing agreement with any national securities
exchange or inter-dealer quotation system and if it first gives
notice to the other parties hereto of its intention to make such
public announcement and a copy of such announcement.
5.12 Confidentiality. (a) Notwithstanding any other
provision of this Agreement to the contrary, the Buyer agrees
that unless and until the transactions contemplated herein are
consummated, the Buyer shall remain subject to all of the terms
and conditions of the Confidentiality Agreement, dated September
21, 1995, executed and delivered by Mentmore Holdings
Corporation, the terms of which Confidentiality Agreement are
incorporated herein by reference; provided, however, the
provisions of the Confidentiality Agreement shall be waived as
and to the extent necessary to permit public announcements to the
extent provided in Section 5.11 hereof.
(b) Notwithstanding any other provision of this Agreement
to the contrary, the Seller agrees that unless and until the
transactions contemplated herein are consummated, the Seller
shall remain subject to all of the terms and conditions of the
Confidentiality Agreement, dated January 24, 1996, executed and
delivered by the Seller, the terms of which Confidentiality
Agreement are incorporated herein by reference; provided,
however, the provisions of the Confidentiality Agreement shall be
waived as and to the extent necessary to permit public
announcements to the extent provided in Section 5.11 hereof.
5.13 Articles and Bylaws. The Seller shall not permit or
cause either the Company or the Significant Subsidiary to amend
its Articles of Incorporation or Bylaws or merge or consolidate
with or into any other corporation.
5.14 Standstill. Each of the Seller and the Parent
undertakes and agrees that it will not, after the date of the
execution of this Agreement, so long as the Buyer is proceeding
in good faith towards Closing of this Agreement, but in no event
beyond the termination of this Agreement, engage in any
discussions or negotiate with any prospective purchaser of any
assets or capital stock of the Company or the Significant
Subsidiary, and each will be responsible for compliance with such
undertaking by its respective directors, officers and agents and
the directors, officers and agents of the Company and the
Significant Subsidiary.
5.15 Environmental Obligations. (a) With respect to the
two reportable releases at the Company's facility located at 134
Ferry Street, South Grafton, MA (the "Company's South Grafton
Property"), identified as Area A - Boiler Room and Area B -
Facility Building (West) (the "Reportable Releases") in the Phase
I Initial Site Investigation Report dated January 1996 prepared
by O'Brien & Gere Engineers, Inc. for 134 Ferry Street, South
Grafton, MA (the "Phase I Report"), (i) the Seller shall cause a
Licensed Site Professional (a "LSP") to conduct such sampling as
may be necessary to determine the extent of the on-site and off-
site contamination resulting from such Reportable Releases; (ii)
the Seller shall take such actions as may be necessary to
remediate such on-site and off-site contamination to obtain from
an LSP a Response Action Outcome Completion Statement reflecting
a permanent as opposed to a temporary solution, as provided for
in the Massachusetts Contingency Plan, 310 CMR Chapter 40.00 (the
"Outcome Statement"); and (iii) the Seller shall conduct such
additional sampling or remediation activities required with
respect to the Reportable Releases by the Massachusetts
Department of Environmental Protection ("MADEP") as a result of
any audit by MADEP of the Outcome Statement to the extent such
additional sampling or remediation activities result from MADEP's
application of the provisions of the Massachusetts Contingency
Plan in effect on the date hereof. Notwithstanding the
foregoing, the Buyer and its lenders shall have the right to
approve any proposed activity or use limitation affecting the
present use of the property as a manufacturing facility prior to
its incorporation into any Response Action Outcome Completion
Statement. The Seller shall reasonably cooperate with the Buyer,
and after the Closing the Company, in the Buyer's efforts to
obtain a covenant not to sue and contribution protection for the
Buyer under the Massachusetts Contingency Plan; provided,
however, that such obligation of the Seller shall terminate on
the first anniversary of the Closing Date.
(b) the Buyer will cooperate with the Seller in the
discharge of the Seller's obligations under the foregoing Section
5.15(a), including, but not limited to:
(i) allowing and causing the Company to allow the
Seller and its consultants and contractors
access to and entry upon the Company's South
Grafton Property to conduct the activities
contemplated by Section 5.15(a) after the
Closing;
(ii) allowing and causing the Company to allow
connection to and use of all necessary
utilities to conduct the activities by the
Seller and its consultants and contractors
contemplated by Section 5.15(a) after the
Closing; provided that the Seller reimburses
the Company for any incremental increase in
utility charges resulting therefrom;
(iii) causing the Company to assist the Seller and
its consultants to obtain any permits
necessary for the performance by the Seller
of the activities contemplated by Section
5.15(a), provided that the Seller shall be
responsible for all costs and expenses for
obtaining such permits; and
(iv) coordinating and causing the Company to
coordinate the operations of the Company at
the Company's South Grafton Property with the
activities by the Seller and its consultants
and contractors contemplated under Section
5.15(a) to minimize interference with the
Seller's timely completion of its obligations
thereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE CLOSING
6.1 Conditions Precedent to Each Party's Obligations to
Closing. The respective obligations of each party to consummate
the transactions contemplated by this Agreement on the Closing
Date are subject to the satisfaction at or prior to the Closing
of the following conditions precedent:
(a) no order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any United
States court of competent jurisdiction or any United States
governmental authority which prohibits the consummation of
the transactions contemplated by this Agreement; provided,
however, that the parties hereto shall cooperate to use
their reasonable best efforts to have any such order, decree
or injunction vacated or reversed; and
(b) all applicable waiting periods under the HSR Act
shall have expired or terminated, and neither the Federal
Trade Commission nor the Department of Justice shall have
instituted, or threatened to institute, either before or
after the expiration of such waiting period, a proceeding
concerning this Agreement or the consummation of the
transactions contemplated hereby.
6.2 Conditions Precedent to Obligations of the Buyer. The
obligation of the Buyer to consummate the transactions
contemplated by this Agreement on the Closing Date is subject to
the satisfaction or waiver at or prior to the Closing of the
following conditions precedent:
(a) there shall have occurred no material adverse
change in the financial condition, results of operations,
business or assets of the Company or Significant Subsidiary
considered as a whole from December 31, 1995 to the Closing
Date, except for changes attributable to the Company's
manufacturing operations at its facility located in Graham,
North Carolina (other than any destruction or substantial
damage to such facility);
(b) the representations and warranties of the Seller
contained in Article III shall be true and correct in all
material respects at and as of the Closing Date with the
same force and effect as if those representations and
warranties had been made at and as of such time (with such
exceptions, if any, necessary to give effect to events or
transactions expressly permitted herein);
(c) the Seller shall, in all material respects, have
performed all obligations and complied with all covenants
contemplated herein that are necessary to be performed or
complied with by it on or before the Closing Date;
(d) the Buyer shall have received the Seller's Closing
Certificate;
(e) the Seller and the Company shall have executed and
delivered the Assignment and Assumption Agreement and
pursuant thereto the Retained Liabilities shall have been
assumed by the Seller;
(f) the Seller and the Company shall have executed and
delivered the Transition Services Agreement.
(g) the Buyer shall have received the resignations
(effective as of the Closing Date) of all of the officers
and directors of the Company and each Company Subsidiary;
(h) the Buyer shall have received all of the minute
books of the Company and each Company Subsidiary, including
all stock registers, corporate seals and related materials;
(i) all proceedings, corporate or other, to be taken
by the Seller in connection with the transactions
contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and
substance to the Buyer and the Buyer's counsel;
(j) the Buyer shall have received the Parent Guaranty;
and
(k) the Buyer shall have received the Opinion of
Seller's Counsel.
6.3 Conditions Precedent to Obligations of the Seller. The
obligation of the Seller to consummate the transactions
contemplated by this Agreement on the Closing Date is subject to
the satisfaction or waiver at or prior to the Closing of the
following conditions precedent:
(a) the representations and warranties of the Buyer
contained in Article IV shall be true and correct in all
material respects at and as of the Closing Date with the
same force and effect as if those representations and
warranties had been made at and as of such time (with such
exceptions, if any, necessary to give effect to events or
transactions expressly permitted herein);
(b) the Buyer shall, in all material respects, have
performed all obligations and complied with all covenants
contemplated herein that are necessary to be performed or
complied with by it on or before the Closing Date;
(c) the Seller shall have received the Buyer's Closing
Certificate;
(d) all proceedings, corporate or other, to be taken
by the Buyer in connection with the transactions
contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and
substance to the Seller and the Seller's counsel;
(e) the Seller shall be relieved, released, reimbursed
or held harmless by the Buyer, satisfactory to the Seller in
the Seller's reasonable discretion, for all financial
commitments, guaranties, collateral agreements, surety
bonds, or similar undertakings the Seller has provided to or
on behalf of the Company or the Significant Subsidiary (on a
direct or indirect basis) that remain outstanding as of the
Closing Date which are listed on Schedule 6.3 attached
hereto; and
(f) the Seller shall have received the Opinion of
Buyer's Counsel.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Employee Benefit Plan Matters. (a) The parties agree
that as of the Closing Date the Continuing Employees who
participated in the Employee Benefit Plans shall cease to
actively participate in those Employee Benefit Plans sponsored by
the Parent; that the Company, the Significant Subsidiary and each
Company Subsidiary shall cease to be participating employers in
the Employee Benefit Plans sponsored by the Parent and after the
Closing Date neither the Buyer nor the Company nor the
Significant Subsidiary nor any other Company Subsidiary shall
either sponsor or maintain or assume the sponsorship of, or the
responsibility for contributions to, or have or incur any cost or
liability in connection with, any Employee Benefit Plan sponsored
by the Parent. The preceding sentence shall not apply to
Employee Benefit Plans listed on Schedule 1.33 and shall not
affect Continuing Employees' right to severance benefits in
accordance with Section 7.22.
(b) Prior to the Closing Date the Parent will assume the
sponsorship of the Polestar Plastics Manufacturing Company 401(k)
Profit Sharing Plan (the "Polestar Plan") and the Massie Tool &
Mold, Inc. Frozen Profit sharing Plan (the "Massie Plan").
(c) Effective as of the Closing Date and for a period of
180 days thereafter, Continuing Employees shall be eligible to
participate in the employee benefit plans listed on Schedule 7.1
(the "Buyer's Plans") and during such period the Buyer's Plans
shall remain in effect with the same terms as in effect on the
date of this Agreement. Buyer will designate a defined
contribution plan that is qualified under Section 401(a) and
related sections of the Code that will accept transfers from the
Savings Plan for the Employees of Tredegar Industries, Inc., the
Polestar Plan and the Massie Plan as "direct rollovers" on behalf
of each Continuing Employee who directs such a transfer. With
respect to any Continuing Employee, each Buyer's Plan that is an
employee welfare plan (as defined in ERISA Section 3(1)) (the
"Buyer's Welfare Plans") shall not include a waiting or
eligibility period or a preexisting condition restriction or
limitation and to the extent that such Continuing Employees or
their dependents or beneficiaries have satisfied any internal
limits, deductibles or copayment requirements under the Employee
Benefit Plans that are welfare plans or fringe benefits, for the
year that includes the Closing Date, such amounts will be
credited toward the satisfaction of any such requirements under
the Buyer's Welfare Plans. Service recognized under the
applicable Pension Plan for Continuing Employees will be
recognized for all purposes under each of the Buyer's Plans that
is an employee pension plan (as defined in ERISA Section 3(2)
(the "Buyer's Pension Plans"), except that the benefits payable
to or on behalf of a Continuing Employee under the Buyer's
Pension Plans may be reduced by the benefits payable to or on
behalf of such Continuing Employee under the applicable Pension
Plan. Except as provided in the preceding sentences of this
Section 7.1(c), Buyer shall cause the Company, the Significant
Subsidiary and each Company Subsidiary to adopt and maintain such
"employee benefit plans" (as defined in Section 3(3) of ERISA) as
are appropriate in Buyer's sole discretion and judgment.
7.2 Termination; Severance. (a) Except as indicated in
separate letters from the Buyer to the Seller, received by the
Seller prior to February 29, 1996 with respect to plant
personnel, and received by the Seller not less than seven days
prior to the Closing Date with respect to staff personnel located
in Richmond, VA, the Buyer agrees that it shall cause the Company
or the Significant Subsidiary or each other Company Subsidiary,
as the case may be, to continue to employ, immediately after the
Closing, all of the individuals employed by it on the Closing
Date at salaries or wages, as applicable, that are not less than
the salaries or wages payable to such persons on the Closing
Date; provided, however, that the Buyer shall have the right to
modify such salaries or wages after the Closing in its sole
discretion. The preceding sentence shall not restrict or
otherwise limit the Company's or the Significant Subsidiary's or
a Company Subsidiary's, as the case may be, right to terminate
the service of any such employee after the Closing with or
without cause in its sole discretion.
(b) The Buyer shall pay severance pay to each Continuing
Employee, who is terminated without cause after the Closing Date,
at a rate of one week's pay for each year of service with the
Company, each Company Subsidiary or the predecessors or
successors of any of them. Severance pay shall be paid in a
single sum or in bi-weekly installments, as determined by the
Buyer in its sole discretion. For purposes of this Agreement,
the term "Year of Service" means the number of years of service
recognized for vesting purposes under the applicable Pension Plan
and the term "salary" means, in the case of a salaried employee,
his base annual salary divided by 52 and, in the case of an
hourly paid employee, his current hourly wage multiplied by 40.
The amount of severance pay shall be reduced for applicable
income and employment tax withholding and the cost of any
coverage under the Buyer's or the Seller's health benefit plan
payable by such Continuing Employee.
7.3 Income Tax Matters. (a) Federal Income Taxes in
General. The income and other tax items of the Company and the
Significant Subsidiary for periods ending on or before the
Closing Date shall be included in the consolidated federal income
tax return of the affiliated group, within the meaning of Section
1504(a) of the Code, of which the Seller is a member (the "Seller
Group"). Except as otherwise provided in this Section 7.3, the
Seller shall be responsible for and shall indemnify, defend and
hold harmless the Buyer, the Company, and each Company Subsidiary
from any federal income taxes of the Company or the Significant
Subsidiary not heretofore paid and shall be entitled to any
reductions in taxes or refunds (including interest) not
heretofore received for taxable periods of the Seller Group
ending before or including the Closing Date. If the Buyer, the
Company, or the Significant Subsidiary receives any such refund,
the Buyer shall promptly pay (or cause the Company or the
Significant Subsidiary to pay) the entire amount of the refund
(including interest) to the Seller.
The Buyer and the Company shall be jointly and
severally responsible for and shall indemnify, defend and hold
harmless the Seller and all other members of the Seller Group
from all federal income taxes of the Company and the Significant
Subsidiary for any taxable period beginning on or after the
Closing Date and for all federal income taxes resulting from any
action taken without the Seller's written consent by the Buyer,
the Company, or the Significant Subsidiary after the Closing
(including, without limitation, actions taken outside the
ordinary course of business and occurring on the Closing Date).
The Buyer shall be entitled to all refunds of taxes (including
interest) for such periods.
(b) State Income Taxes in General. For purposes of
this Agreement, the term "state income tax" means any tax or
governmental charge in lieu thereof, imposed by a state in the
United States, that is based on or measured by net income. The
Seller shall be responsible for preparing and filing the state
income tax returns of the Company and the Significant Subsidiary
for taxable periods ending on or before the Closing Date. Except
as otherwise provided in this Section 7.3, the Seller shall
indemnify, defend and hold harmless the Buyer, the Company, and
the Significant Subsidiary from any state income taxes not
heretofore paid and shall be entitled to any reductions in taxes
or refunds (including interest) not heretofore received for such
taxable periods. If the Buyer, the Company, or the Significant
Subsidiary receives any such refund, the Buyer shall promptly pay
(or cause the Company or the Significant Subsidiary to pay) the
entire amount of such refund (including interest) to the Seller.
The Buyer and the Company shall be jointly and
severally responsible for and shall indemnify, defend and hold
harmless the Seller and all other members of the Seller Group
from all state income taxes of the Company and the Significant
Subsidiary for any taxable period beginning on or after the
Closing Date and for all state income taxes resulting from any
action taken without the Seller's written consent by the Buyer,
the Company, or the Significant Subsidiary after the Closing
(including, without limitation, actions taken outside the
ordinary course of business and occurring on the Closing Date).
The Buyer and the Company shall be entitled to all refunds of
taxes (including interest) for such periods.
If the Company or the Significant Subsidiary is
required to file any state income tax return for a taxable period
covering days before and after the Closing Date, the Buyer shall
cause such return to be filed and shall be responsible for the
payment of any tax for such period. However, the Seller shall
pay to the Buyer, as an adjustment to the Purchase Price paid to
the Seller, the amount by which the state income tax attributable
to the period through the Closing Date (excluding any tax for
which the Buyer and the Company are responsible pursuant to the
preceding paragraph) exceeds the sum of the amount of such tax
paid on or before the Closing Date. The tax attributable to the
period through the Closing Date shall be determined (i) as if
that period were a separate taxable year and (ii) except as
otherwise required by Law, by using the tax accounting methods
and tax elections used by the Company or the Significant
Subsidiary (as appropriate) before the Closing Date. The Seller
shall compute the amount of the Company's or the Significant
Subsidiary's tax attributable to the period through the Closing
Date (excluding any tax for which the Buyer and the Company are
responsible pursuant to the preceding paragraph) and shall notify
the Buyer of such amount in writing no later than 90 days after
the Closing Date. At least 30 days before the due date
(excluding extensions) for the filing of the Company's or the
Significant Subsidiary's state income tax return for the entire
period, the Seller shall pay to the Buyer the excess of (a) the
amount of tax determined by the Seller as attributable to the
portion of the period through the Closing Date, over (b) the sum
of the amount of the tax for the taxable period paid on or before
the Closing Date. If the Buyer disagrees with the Seller's
computation of any such amount, the Seller and the Buyer shall
proceed in good faith to determine the correct amount, and the
Seller's payment to the Buyer shall be due on the later of (i)
the time specified in the immediately preceding sentence and (ii)
10 days after the Seller and the Buyer agree to the amount
payable. If the Seller and the Buyer do not reach an agreement
within 30 days after the due date (excluding extensions) of the
state income tax return in question, they shall select a "Big
Six" accounting firm to determine the correct amount of any and
all amounts in dispute, and such firm's determination of such
amount(s) shall be conclusive. Such accounting firm shall notify
both parties in writing of its determination(s), and the Seller's
payment to the Buyer under this paragraph shall be due 10 days
after the date the Seller receives such written notification from
the accounting firm. The Seller and the Buyer shall share
equally any fee and other costs charged by such accounting firm.
(c) Taxes Resulting From Section 338 Elections.
Notwithstanding any other provision of this Agreement, the
parties agree that, if the Buyer makes or is deemed to have made
an election under Section 338 (without an election being made
under Section 338(h)(10)) of the Code with respect to the Compa-
ny, the Buyer shall prepare and file the returns for, be respon-
sible for the payment of, defend, indemnify and hold harmless the
Seller from, and be entitled to any refund of any taxes resulting
from the election, any such election with respect to the
Significant Subsidiary, and any corresponding election(s) under
state law. If an election is made by the Buyer and the Seller
under Section 338(h)(10) of the Code with respect to the Company,
(i) the Seller shall prepare and file the returns for, be
responsible for the payment of, defend, indemnify and hold
harmless the Buyer and the Company from, and be entitled to any
refund of any federal and state income taxes resulting from that
election, any such election with respect to the Significant
Subsidiary, and any corresponding election(s) under state law,
but only up to the amount of such taxes that would be payable by
the Seller, if no Section 338(h)(10) election were made, with
respect to the sale of the stock of the Company, and (ii) the
Buyer shall defend, indemnify and hold harmless the Seller from,
and be entitled to any refund of, any federal and state income
taxes exceeding such amount and resulting from any such
election(s). For purposes of the immediately preceding sentence,
the amount of federal and state income taxes resulting from any
election under Section 338(h)(10) (and any corresponding election
under state law) shall be computed without regard to the use of
deductions, losses, or credits actually used in a consolidated,
unitary, or combined return including the Company or the
Significant Subsidiary and any member of the Seller's affiliated
group, except (i) any deductions, losses, and credits that,
absent such election, would be used to reduce income taxes with
respect to the sale of the stock of Company, (ii) any deductions
or losses recognized because of the deemed sale of assets
resulting from such election, and (iii) any deductions, losses
and credits that would be attributable to the Company (or to the
Significant Subsidiary, if a Section 338(h)(10) election is made
with respect to the Significant Subsidiary as well as the
Company) under Treasury Regulation Section 1.1502-79 for future use if
no such election were made. If a refund of tax described in this
paragraph is paid to a person other than the party entitled to
the refund under this paragraph, the Seller or the Buyer, as
appropriate, shall promptly pay (or, in the Buyer's case, cause
the Company or the Significant Subsidiary to pay) the amount of
such refund to the party so entitled to the refund.
If a Section 338(h)(10) election is to be made, the
Buyer and the Seller shall cooperate as provided herein in
determining the deemed sales prices of the assets of the Company
(and, if applicable, the assets of the Significant Subsidiary)
for purposes of Section 338(a)(1) of the Code in accordance with
all applicable Treasury Regulations promulgated under Section 338
of the Code. The Buyer initially shall determine such deemed
sales prices and shall notify the Seller in writing of the prices
so determined ("Buyer's Deemed Sales Price Notice") within 90
days after the Closing Date. The Seller shall be deemed to have
accepted such determination unless, within 60 days after the date
of the Buyer's Deemed Sales Price Notice, the Seller notifies the
Buyer in writing of (i) each proposed deemed sales price with
which the Seller disagrees, and (ii) for each such price, the
amount that the Seller proposes as the deemed sales price. If
the Seller provides such notice to the Buyer, the parties shall
proceed in good faith to determine mutually the deemed sales
prices in dispute. Neither the Buyer nor the Seller shall take,
nor shall they permit any affiliated corporation (including,
without limitation, the Company and the Significant Subsidiary)
to take, any position for income tax purposes that is
inconsistent with the deemed sales prices as finally determined
hereunder; provided, however, that the deemed purchase prices of
the assets shall differ from the deemed sales prices to the
extent necessary to reflect the inclusion in the total deemed
purchase price of items (for example, the Buyer's capitalized
acquisition costs in addition to the Purchase Price) not included
in the total deemed sales price.
(d) Cooperation. The Buyer agrees to cooperate and to
cause the Company and the Significant Subsidiary to cooperate
with the Seller to the extent reasonably required after the
Closing Date in connection with (i) the filing, amendment,
preparation, and execution of all federal and state income tax
returns and documents with respect to any taxable period of the
Company or the Significant Subsidiary ending on or before the
Closing Date, (ii) contests concerning the federal or state
income tax due for any such period, and (iii) audits and other
proceedings conducted by income tax authorities with respect to
any such period. Within a reasonable time (but not more than 10
days) after the Buyer, the Company, or the Significant Subsidiary
receives official notice of any such contest, audit, or other
proceeding, the Buyer shall notify or cause the Company or the
Significant Subsidiary to notify the Seller in writing of such
contest, audit, or other proceeding. In any case where the
Company or the Significant Subsidiary is responsible under
applicable law for the defense of such contest, audit, or other
proceeding, the Seller shall have the right to conduct the
defense at its expense, whether such contest, audit, or other
proceeding commenced before or commences after the Closing Date.
Notwithstanding the Seller's obligations under the other
provisions of this Section 7.3, the Seller shall have no
obligation to pay, defend, indemnify or hold harmless the Buyer,
the Company, or the Significant Subsidiary from any tax imposed
or assessed as a result of (i) the failure of the Buyer, the
Company, or the Significant Subsidiary to notify the Seller as
required by this Subsection 7.3(d), if such failure adversely
affects the Seller's ability to respond adequately in a timely
manner to the notice of contest, audit, or other proceeding, (ii)
any action taken by the Buyer, the Company, or the Significant
Subsidiary with respect to any contest, audit, or other
proceeding without the Seller's written consent, if and to the
extent such action would result in any liability on the part of
or adversely affect the Seller, including any increase in an
indemnification obligation under this Agreement, or (iii) any
failure of the Buyer or the Company to comply with Section 7.5
hereof, if and to the extent such failure would result in any
liability on the part of or adversely affect the Seller,
including any increase in an indemnification obligation under
this Agreement. The amount of any income tax indemnification
otherwise payable by the Seller under this Agreement shall be
reduced or increased (as appropriate) by the amount or, in the
case of a tax benefit or cost to be realized subsequently, the
then-present value of any federal or state income tax benefit or
cost to the Buyer, the Company, or the Significant Subsidiary
resulting from any adjustment to or change in any tax item
relating to the Company or the Significant Subsidiary for any
taxable period ending before or including the Closing Date. Such
present value shall be based on a discount rate of 5% per annum.
The Seller agrees to make available to the Buyer, the
Company, and the Significant Subsidiary records in the custody of
the Seller or of any member of the Seller Group, to furnish other
information, and otherwise to cooperate to the extent reasonably
required for the filing of federal and state income tax returns
and other documents relating to the Company or the Significant
Subsidiary for any taxable period ending after the Closing Date.
The Seller agrees to notify the Buyer in the event that after the
Closing Date the Seller makes any adjustment or change in any tax
item in respect of a taxable period ending before or including
the Closing Date that would increase the federal or state income
taxes payable by the Buyer, the Company or the Significant
Subsidiary for any taxable period ending after the Closing Date.
However, no loss, credit, or other item of the Company or the
Significant Subsidiary may be carried back without the Seller's
written consent, which the Seller may withhold in its absolute
discretion, to a taxable period for which the Company or the
Significant Subsidiary and the Seller or any other member of the
Seller Group filed a consolidated, unitary, or combined return.
The Seller agrees to cooperate with the Buyer, and the
Buyer agrees to cooperate (and cause the Company and the
Significant Subsidiary to cooperate) with the Seller, to the
extent necessary in connection with the filing of any information
return or similar document relating to the Buyer's acquisition of
the Company and (indirectly) the Significant Subsidiary.
(e) "Losses" with respect to Income Taxes. Any
indemnifiable claim made under this Section 7.3 shall include any
and all claims, demands, suits, proceedings, judgments, losses,
liabilities, damages, costs and expenses of every kind and nature
(including, but not limited to, reasonable attorneys' fees and
litigation costs) imposed upon or incurred by the Seller or the
Buyer as a result of or in connection with their respective
indemnifiable claims under this Section 7.3 (collectively,
"Claims"), provided, however, that no party seeking
indemnification under this Section 7.3 shall be entitled to
receive (i) any fees, costs or expenses incurred with respect to
defending any such Claims if the indemnifying party is providing
a defense to such Claims and has agreed in writing that it is
obligated with respect to such Claims to defend, indemnify and
hold harmless the party seeking indemnification or (ii) any
consequential damages. The statute of limitations with respect
to indemnification under this Section 7.3 shall extend until all
applicable periods of limitations for assessments of tax have
expired (taking into account any extension or waiver of any
statute of limitation).
(f) Taxes to Include Interest, Etc. For purposes of
this Section 7.3, the term "tax" or "taxes" includes any addition
to tax, interest, and penalty imposed with respect to the tax or
taxes. Thus, for example, any obligation to hold a party
harmless from federal income tax for a taxable period includes
the obligation to hold the party harmless from any addition to
tax, interest, or penalty imposed with respect to such federal
income tax.
(g) Termination of Tax-Sharing Agreement. After the
Closing, this Section 7.3 shall supersede any and all tax-sharing
or similar agreements to which (i) the Company or the Significant
Subsidiary and (ii) the Seller or any corporation affiliated with
the Seller are parties. Neither the Company or the Significant
Subsidiary, nor the Seller or any such affiliated corporation
shall have any obligation or rights with respect to each other
under any such prior agreement after the Closing.
7.4 Use of the Name "Tredegar". (a) The Buyer acknowledges
and agrees that, as between the Buyer and the Seller, the Seller
has the absolute and exclusive proprietary right to the name
"Tredegar" and all symbols and logos incorporating such name.
Subject to the provisions of Subsection 7.4(c) below, the Buyer
covenants and agrees that it shall not, and after the Closing,
shall not cause or permit the Company, the Significant Subsidiary
or any other Company Subsidiary to: (i) use the name "Tredegar"
or any other rights associated with the use of the name
"Tredegar" or (ii) use any printed materials, signs or graphics
that display or imply an affiliation or connection of the Buyer,
the Company, the Significant Subsidiary, any other Company
Subsidiary or any affiliate of the Buyer with the Seller or any
affiliate of the Seller.
(b) The Seller and the Buyer agree that, at the
Seller's option, simultaneously with the Closing, the Seller may
cause the Company to amend its Articles of Incorporation to
change the name of the Company, provided, that, such name shall
be reasonably acceptable to the Buyer. In the event that name of
the Company has not been so changed, the Buyer agrees, that
within 15 calendar days immediately following the Closing Date,
at the Buyer's sole cost and expense, the Buyer shall cause the
Company to amend its Articles of Incorporation to change the name
of the Company, and during such 15 calendar day period, the
Company shall be permitted to use the name "Tredegar Molded
Products Company"; provided, however, the Buyer shall not, and
shall not cause or permit the Company to, use such name for any
commercial purposes, except as expressly permitted under
Subsection 7.4(c) below.
(c) During the six-month period commencing upon the
Closing Date (the "License Period"), the Buyer shall have the
right to use the Company's and the Significant Subsidiary's
existing signs and pre-printed materials such as packaging
materials, invoices, acknowledgements, purchase orders, and
catalogs; provided, however, that with respect to the use of such
pre-printed materials, the Buyer shall, and shall cause the
Company and the Significant Subsidiary to, clearly and
prominently mark or label on such materials that the Company and
the Significant Subsidiary are no longer affiliated with the
Parent or any of the Parent's affiliates. Upon the expiration of
the License Period, the Buyer shall and shall cause the Company
and the Significant Subsidiary to cease using any and all signs
and preprinted materials that display or include the name
"Tredegar."
7.5 Access to Books and Records. At the Seller's expense,
the Seller and its authorized agents, officers and
representatives shall have reasonable access after the Closing
Date to the books, records, contracts, information and documents
of the Company and any Company Subsidiary for any reasonable
business purpose, including but not limited to matters relating
to federal or state income taxes, the Retained Liabilities or the
Seller's indemnity under Section 8.2 hereof; provided, however,
such access by the Seller (a) shall be conducted during the
Company's and the Significant Subsidiary's respective normal
business hours and (b) shall not unreasonably interfere with the
Company's and the Significant Subsidiary's respective operations
and activities. The Buyer shall and shall cause the Company and
the Significant Subsidiary to cooperate in all reasonable
respects with the Seller's review of such information, including,
without limitation, retaining all such information for each tax
year (including any portion of a tax year) prior to and including
the Closing Date until the Seller has notified the Buyer in
writing that a tax year has been closed. The Seller shall notify
the Buyer of the closing of tax years on an annual basis.
7.6 Access to and Removal of Equipment. Within 30 days
immediately following the Closing, the Parent shall cause the
Roboform 40(EDM) machine owned by the Parent's Film Products
division (the "Roboform") and located at the Company's St.
Petersburg, Florida tooling/technical plant to be removed from
such plant. The Buyer shall allow and cause the Company (i) to
allow the Parent access to and entry upon the Company's St.
Petersburg, Florida tooling/technical plant for the purpose of
removing the Roboform and (ii) to reasonably cooperate with such
removal.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Limitation on and Survival of Representations and
Warranties. (a) The Buyer acknowledges and agrees that no
representations or warranties have been made by the Seller in
connection with the transactions contemplated by this Agreement,
except for those representations and warranties made by the
Seller in Article III hereof and in the Seller's Closing
Certificate. Except for claims made with respect to the matters,
and to the extent provided in Section 8.2(a) hereof, the Buyer
agrees not to assert any claim that the Seller has made any false
representation, warranty or statement in connection with the
transaction contemplated by this Agreement or omitted to make any
statement necessary in order to make the representations,
warranties and statements so made not misleading and agrees to
waive any right or remedy available by Law in connection with the
foregoing, except to the extent that any such false
representation, warranty or statement or any such omission
constitutes intentional fraud on the part of the Seller.
(b) Subject to paragraph (a) of this Section 8.1, all
representations and warranties contained in this Agreement, or in
any agreements or instruments executed in connection herewith or
delivered pursuant hereto, shall survive for a period of one year
beginning on the Closing Date, but no longer, and shall only be
effective with respect to any breach or claim when notice of such
breach or claim shall have been given in writing to the other
party in breach or against whom indemnification is sought within
such period prescribed, provided, however, with respect to
Section 3.5, there shall be no expiration; with respect to
Sections 5.15(a)(i) and (ii), such obligations of the Seller
shall survive until the delivery to the Buyer of a copy of the
Outcome Statement referred to in Section 5.15(a) hereof; with
respect to Section 5.15(a)(iii), such obligations of the Seller
shall survive until the earlier of (i) the date on which any
additional sampling or remediation activities required to be
conducted by Seller pursuant to Section 5.15(a)(iii) hereof shall
have been completed by the Seller, and (ii) (x) with respect to
any random audit conducted by MADEP pursuant to 310 CMR Chapter
40.1110(2)(as in effect on the date hereof), the date that is
five years immediately following the date the Outcome Statement
referred to in Section 5.15(a) hereof has been filed with MADEP,
and (y) with respect to any targeted audit conducted by MADEP
pursuant to 310 CMR Chapter 40.1110(3)(a)-(e) or (g)-(i)(as in
effect on the date hereof), the date of expiration of such period
as MADEP shall be permitted to conduct a targeted audit pursuant
to 310 CMR Chapter 40.1110(3)(a)-(e) or (g)-(i)(as in effect on
the date hereof); and with respect to claims for intentional
fraud the statute of limitations for a federal securities law
claim pursuant to Rule 10b-5 under the Securities Exchange Act of
1934, as amended, shall apply. Any claim for indemnification for
which notice has been given within the prescribed period may be
prosecuted to conclusion notwithstanding the subsequent
expiration of such period. No party to this Agreement shall be
entitled to pursue any remedy for the breach of any
representation or warranty to the extent such party was informed
in writing of such breach prior to the Closing Date and such
party proceeds with the Closing.
8.2 Indemnification by the Seller. Subject to the
limitations set forth in Sections 8.1, 8.4 and 8.6 hereof, the
Seller hereby agrees to defend, indemnify and hold harmless the
Buyer from and against any and all claims, demands, suits,
proceedings, judgments, losses, liabilities, damages, costs and
expenses of every kind and nature (including, but not limited to,
reasonable attorneys' fees and litigation costs) (collectively,
"Losses") imposed upon or incurred by the Buyer ("Buyer's Claim")
as a result of or in connection with any of the following:
(a) Any misrepresentation or breach of warranty made
by the Seller under Article III of this Agreement; or
(b) The breach of or default in the performance by the
Seller of any covenant, agreement or obligation to be
performed by the Seller pursuant to this Agreement or any
agreement or instrument executed in connection herewith or
pursuant hereto.
8.3 Indemnification by Buyer. Subject to the limitations
set forth in Sections 8.1 and 8.4, the Buyer hereby agrees to
defend, indemnify and hold harmless the Seller from and against
any and all Losses imposed upon or incurred by the Seller (any of
such losses by the Seller, a "Seller's Claim"), as a result of or
in connection with any of the following:
(a) Any misrepresentation or breach of warranty made
by the Buyer under Article IV of this Agreement;
(b) The breach of or default in the performance by the
Buyer of any covenant, agreement or obligation to be
performed by the Buyer pursuant to this Agreement or any
agreement or instrument executed in connection herewith or
pursuant hereto;
(c) The conduct of the Company's and the Significant
Subsidiary's business after the Closing;
(d) The use by the Buyer, the Company or the
Significant Subsidiary of the name "Tredegar" or any symbol
or logo incorporating such name after the Closing Date; or
(e) any claims made on or after the Closing Date with
respect to matters set forth on Schedule 6.3.
8.4 Limitation of Liability. Neither the Buyer nor the
Seller shall have any liability to indemnify the other unless and
until the aggregate amount of its Losses exceeds $200,000
(excluding Losses in connection with the matters set forth in
Section 5.15), in which event the party seeking indemnity may
recover all of its Losses, other than the initial $200,000
(excluding Losses in connection with the matters set forth in
Section 5.15), and with respect to Losses incurred in connection
with the matters set forth in Section 5.15, the Buyer shall be
entitled to recover the entire amount of such Losses, subject to,
however, the limitations set forth in the following sentence.
Notwithstanding anything to the contrary in the foregoing,
recovery for Buyer's Claims shall be limited to $6,000,000 in the
aggregate.
8.5 Notice of Indemnity Claims. If a party intends to
assert a Buyer's Claim or a Seller's Claim (a Buyer's Claim or a
Seller's Claim being hereafter referred to as a "Indemnity Claim"
in this Section 8.5), the party intending to assert an Indemnity
Claim shall provide the party from whom indemnification is sought
with notice of such Indemnity Claim within thirty (30) days after
receiving notice of such Indemnity Claim. At the time the
Indemnity Claim is made and thereafter, any party asserting the
Indemnity Claim shall provide the party against which the
Indemnity Claim is asserted with copies of any materials in its
possession describing the facts or containing information
providing the basis for the Indemnity Claim. If the Indemnity
Claim involves a claim by a third party (a "Third Party Indemnity
Claim"), the party against which the Third Party Indemnity Claim
is asserted may assume at its expense the defense of the claim by
the third party, provided that such party against which the Third
Party Indemnity Claim is asserted agrees in writing with respect
to such Third Party Indemnity Claim that it is obligated
hereunder to defend, indemnify and hold harmless any party
asserting the Third Party Indemnity Claim with respect to such
Third Party Indemnity Claim; and provided, further, that the
party asserting the Third Party Indemnity Claim shall be entitled
to participate in the defense of such claim at its own expense.
The failure of any party against which the Third Party Indemnity
Claim is asserted to assume the defense of any such claim shall
not affect any indemnification obligation under this Agreement.
8.6 Application of Article VIII. No provision of Article
VIII, except Section 8.7, shall apply to any claim or liability
to which Section 7.3 applies. Article VIII shall apply to tax
claims and liabilities to which Section 7.3 does not apply.
Article VIII shall not apply to any claim for intentional fraud
or in respect of Retained Liabilities pursuant to the Assumption
and Assignment Agreement.
8.7 Indemnity Amounts to be Computed on After-Tax Basis.
The amount of any indemnification payable under Section 7.3 or
any of the preceding provisions of this Article VIII shall be (i)
net of any federal or state income tax benefit realized or the
then-present value (based on a discount rate of 5%) of any such
income tax benefit to be realized by the indemnified party (or,
where the Buyer is the indemnified party, the Company or the
Significant Subsidiary) by reason of the facts and circumstances
giving rise to the indemnification, and (ii) increased by the
amount of any federal or state income tax required to be paid by
the indemnified party on the accrual or receipt of the
indemnification payment. For purposes of the preceding sentence,
(1) the amount of any state income tax benefit or cost shall take
into account the federal income tax effect of such benefit or
cost, and (2) any deductible amount and any amount includible in
income each shall be deemed to produce, in the year of deduction
or inclusion, an income tax benefit or cost based on the highest
marginal federal and relevant state income tax rates generally
applicable to corporations, without regard to the actual taxable
income and actual effective tax rate of the indemnified party (or
any affiliated person).
8.8 Offset. Any amounts for which the Seller shall be
liable under Section 8.2 hereof may, at the option of the Seller,
first be satisfied through an offset by (i) the cancellation of
an aggregate amount of accrued but unpaid dividends, if any, on
the New Preferred, (ii) the surrender by the Seller for cancella-
tion of shares of the New Preferred or (iii) a combination of (i)
and (ii), in an aggregate amount of such dividends or the stated
value of the shares of the New Preferred so surrendered, or both,
equal to the required indemnity amount.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at
any time, but prior to the Closing Date only as follows:
(a) by mutual written consent of the Buyer and the
Seller;
(b) by the Buyer or the Seller, if the Closing Date
shall not have occurred on or before March 31, 1996
(provided that the right to terminate this Agreement under
this Section 9.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement
has been the cause of or has resulted in the failure of the
Closing Date to occur on or before such date); and
(c) by the Buyer or the Seller, if any court of
competent jurisdiction in the United States or other United
States governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the transactions contemplated
hereby and such order, decree, ruling or other action shall
have become final and nonappealable.
9.2 Effect of Termination. (a) If this Agreement is
terminated and the transactions contemplated by this Agreement
are not consummated pursuant to Section 9.1, all further
obligations of the parties under or pursuant to this Agreement
shall terminate without further liability of either party to the
other, except as otherwise provided in Section 9.2(b) below,
provided that the Buyer's obligations contained in this Section
9.2(a) and the Buyer's and the Seller's obligations under Section
5.12 of this Agreement shall survive any such termination.
Nothing contained in this Section 9.2 shall relieve any party
from liability for any breach of this Agreement.
(b) In the event that this Agreement is terminated as a
result of the failure to satisfy the conditions precedent to
Closing set forth in Sections 6.1, 6.2 or 6.3(e) of this
Agreement, then the Seller shall promptly repay the Deposit to
the Buyer. In the event that this Agreement is terminated for
any other reason, other than a breach of this Agreement by the
Seller, then the Seller shall be entitled to retain the Deposit
as partial damages (it being understood that the parties have
agreed that such amount shall not be deemed full or liquidated
damages, and the Seller shall retain any and all remedies it may
have for any breach of this Agreement by the Buyer).
9.3 Amendment. This Agreement may not be amended except by
an instrument in writing signed by all of the parties.
9.4 Extension; Waiver. At any time prior to the Closing
Date, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. Except as set forth in Section 5.12
hereof, this Agreement and the documents referred to herein and
to be delivered pursuant hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions of the parties,
whether oral or written, and there are no warranties,
representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically
set forth herein or therein.
10.2 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, each of the parties hereto
shall pay the fees and expenses of their respective counsel,
investment bankers, financial advisors, accountants and other
experts and the other expenses incident to the negotiation and
preparation of this Agreement and consummation of the
transactions contemplated hereby.
10.3 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the Commonwealth of
Virginia, without regard to the conflicts of law rules thereof.
Each of the Seller and the Buyer agrees that the non-exclusive
jurisdiction for any action, suit or proceeding relating to this
Agreement shall be in the United States District Court for the
Eastern District of Virginia or, if such courts shall not have
jurisdiction over the subject matter thereof, in the state courts
of the Commonwealth of Virginia, and each of the Seller and the
Buyer hereby irrevocably and unconditionally agrees to submit to
the jurisdiction of such courts for purposes of any such action,
suit or proceeding brought in such courts and not to object to
the convenience of the forum.
10.4 Assignment. This Agreement and each party's respective
rights hereunder may not be assigned at any time except as
expressly set forth herein without the prior written consent of
the other party, except that the Buyer may assign or grant a
security interest in its rights hereunder to any financial
institution providing senior credit financing to the Buyer to
purchase the Company Common Stock, provided that such assignment
or security interest shall be subject to all rights of the Seller
under this Agreement.
10.5 Notices. All communications, notices and disclosures
required or permitted by this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or
by messenger or by overnight delivery service, or when mailed by
registered or certified United States mail, postage prepaid,
return receipt requested, or when sent via telecopy with
confirming receipt, telex or other electronic transmission, in
all cases addressed to the person for whom it is intended at his
address set forth below or to such other address as a party shall
have designated by notice in writing to the other party in the
manner provided by this Section 10.5:
If to the Seller
or to the Parent: Tredegar Industries, Inc.
1100 Boulders Parkway
Richmond, Virginia 23225
Attention: Norman A. Scher
Telecopy Number: (804) 330-1010
With a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: C. Porter Vaughan, III, Esq.
Telecopy Number: (804) 788-8218
If to the Buyer: Precise Technology, Inc.
c/o Mentmore Holdings Corporation
1430 Broadway, 13th floor
New York, New York 10018-3309
Attention: William L. Remley
Telecopy Number: (212) 391-1393
With a copy to: Kelley, McCann & Livingstone
35th Floor, BP America Building
200 Public Square
Cleveland, Ohio 44114
Attention: Michael D. Schenker, Esq.
Telecopy Number: (216) 241-3707
10.6 Counterparts; Headings. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
and the same Agreement. The Table of Contents and Article and
Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
10.7 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall
extend to and include the plural, all words in the plural number
shall extend to and include the singular and all words in any
gender shall extend to and include all genders. All references
to contracts, Contracts, agreements, leases, Employee Benefit
Plans or other understandings or arrangements shall refer to oral
as well as written matters.
10.8 Severability. If any provision, clause or part of this
Agreement, or the application thereof under certain circum-
stances, is held invalid, the remainder of this Agreement, or the
application of such provision, clause or part under other circum-
stances, shall not be affected thereby.
10.9 No Reliance. No third party is entitled to rely on any
of the representations, warranties and agreements contained in
this Agreement and the Seller and the Buyer assume no liability
to any third party because of any reliance on the
representations, warranties and agreements of the Seller and the
Buyer contained in this Agreement.
IN WITNESS WHEREOF, the parties have caused this Stock
Purchase Agreement to be duly executed as of the day and year
first above written.
TREDEGAR INVESTMENTS, INC.
By: /s/ N. A. Scher
Name: N. A. Scher
Title: President
PRECISE TECHNOLOGY, INC.
By: /s/ William L. Remley
Name: William L. Remley
Title:
The Parent has executed and delivered this Stock Purchase
Agreement as of the day and year first above written solely to
evidence its agreement to its obligations under Sections 5.14 and
7.1(b) hereof.
TREDEGAR INDUSTRIES, INC.
By: /s/ N. A. Scher
Name: N. A. Scher
Title: Executive Vice President
