EXHIBIT 10.73
AGREEMENT AND PLAN OF MERGER
by and among
SOLO CUP COMPANY
SOLO ACQUISITION CORP.
and
SF HOLDINGS GROUP, INC.
dated
December 22, 2003
TABLE OF CONTENTS
Page
Index of Defined Terms............................................................................iv
ARTICLE I THE MERGER; EFFECTIVE TIME; CLOSING..............................................2
Section 1.1 The Merger.....................................................2
Section 1.2 Effective Time.................................................2
Section 1.3 Closing........................................................2
Section 1.4 Right to Revise Structure of Merger............................2
ARTICLE II THE SURVIVING CORPORATION........................................................3
Section 2.1 Certificate of Incorporation...................................3
Section 2.2 By-laws........................................................3
Section 2.3 Directors and Officers of the Surviving Corporation............3
ARTICLE III CONVERSION OF SECURITIES.........................................................3
Section 3.1 Conversion of Shares...........................................3
Section 3.2 Appraisal Rights...............................................5
Section 3.3 Exchange of Certificates.......................................6
Section 3.4 Stock Options..................................................8
Section 3.5 Warrants......................................................11
Section 3.6 Withholding Rights............................................11
Section 3.7 Per Share Closing Consideration...............................11
Section 3.8 Closing Consideration Amount..................................12
Section 3.9 Determination of Effective Time Working Capital...............14
Section 3.10 Payment of the Merger Consideration...........................16
Section 3.11 Working Capital Adjustment....................................17
Section 3.12 Deferred Payment Rights.......................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE COMPANY..................................................................22
Section 4.1 Organization..................................................22
Section 4.2 Subsidiaries and Affiliates...................................23
Section 4.3 Capitalization................................................24
Section 4.4 Authorization; Validity of Agreement;
Company Action................................................27
Section 4.5 Special Committee and Board Approvals.........................27
i
Section 4.6 Consents and Approvals; No Violations.........................28
Section 4.7 SEC Documents and Financial Statements........................29
Section 4.8 Absence of Certain Changes....................................30
Section 4.9 No Undisclosed Liabilities; Indebtedness......................30
Section 4.10 Litigation....................................................32
Section 4.11 Employee Benefit Plans; ERISA.................................33
Section 4.12 Taxes.........................................................38
Section 4.13 Contracts.....................................................41
Section 4.14 Real and Personal Property....................................43
Section 4.15 Intellectual Property.........................................45
Section 4.16 Related Party Transactions....................................49
Section 4.17 Labor Matters.................................................50
Section 4.18 Compliance with Laws; Permits.................................51
Section 4.19 Assets........................................................52
Section 4.20 Customers and Suppliers.......................................52
Section 4.21 Environmental Matters.........................................52
Section 4.22 Insurance.....................................................56
Section 4.23 Information Statement.........................................57
Section 4.24 Brokers.......................................................57
Section 4.25 Full Disclosure...............................................57
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................58
Section 5.1 Organization..................................................58
Section 5.2 Authorization; Validity of Agreement;
Necessary Action..............................................58
Section 5.3 Consents and Approvals; No Violations.........................59
Section 5.4 Brokers.......................................................59
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS.......................................59
Section 6.1 Conduct of Business of the Company............................59
Section 6.2 No Solicitation...............................................64
ARTICLE VII ADDITIONAL AGREEMENTS.................................................................65
Section 7.1 Information Statement.........................................65
Section 7.2 All Reasonable Efforts; Consents and Approvals................65
Section 7.3 Notification of Certain Matters...............................67
Section 7.4 Access; Confidentiality.......................................67
ii
Section 7.5 Publicity.....................................................68
Section 7.6 Indemnification...............................................68
Section 7.7 Takeover Laws.................................................69
Section 7.8 Exchangeable Preferred Stock..................................69
Section 7.9 Notes.........................................................70
Section 7.10 Newcup Notes..................................................71
Section 7.11 Subordinated Note.............................................72
Section 7.12 Financial Statements; Financing...............................72
Section 7.13 Certain Other Agreements......................................73
ARTICLE VIII CONDITIONS...........................................................................75
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger....................................................75
Section 8.2 Conditions to the Company's Obligation to Effect
the Merger....................................................75
Section 8.3 Conditions to Parent's and Merger Sub's Obligations
to Effect the Merger..........................................76
ARTICLE IX TERMINATION.....................................................................80
Section 9.1 Termination...................................................80
Section 9.2 Effect of Termination.........................................82
ARTICLE X INDEMNIFICATION.................................................................83
Section 10.1 Indemnification...............................................83
Section 10.2 Adjustment to Deferred Payment Retention......................85
ARTICLE XI MISCELLANEOUS...................................................................87
Section 11.1 Stockholders' Representative..................................87
Section 11.2 Amendment and Modification....................................88
Section 11.3 Expenses......................................................88
Section 11.4 Notices.......................................................88
Section 11.5 Interpretation................................................90
Section 11.6 Jurisdiction..................................................90
Section 11.7 Service of Process............................................91
Section 11.8 Specific Performance..........................................91
Section 11.9 Counterparts..................................................91
Section 11.10 Entire Agreement; No Third-Party Beneficiaries................91
Section 11.11 Severability..................................................91
iii
Section 11.12 Governing Law.................................................92
Section 11.13 Headings......................................................92
Section 11.14 Waivers.......................................................92
Section 11.15 Assignment....................................................92
iv
Index of Defined Terms
Not Part of this Agreement
Defined Term Section No.
2007 Notes....................................................................................7.9(b)
2007 Notes Indenture..........................................................................7.9(b)
2008 Notes......................................................................................7.10
AAA..........................................................................................10.2(d)
Acquisition Proposal..........................................................................6.2(a)
Adjusted Aggregate Merger Consideration 3.8(b)
Adjusted Option Shares 3.4(e)
Aggregate Merger Consideration 3.8(b)
Agreed Rate 3.11(a)
Agreement Recitals
Aircraft.4.9(c)
Arbitrator 10.2(d)
Business Intellectual Property 4.15(a)(vi)
CERCLA...4.21(b)(vi)
CERCLIS..4.21(b)(ix)
Certificate of Merger 1.2
Certificates 3.3(b)
Claim Notice 10.2(a)
Class A Common Stock 3.1(a)
Class B Common Stock 3.1(a)
Class B Preferred Stock 4.3(a)
Class B Series 1 Preferred Stock 4.3(a)
Class B Series 2 Preferred Stock 4.3(a)
Class B Series 2 Preferred Stock Merger Consideration 3.1(b)
Class B Series 3 Preferred Stock 4.3(a)
Class B Series 3 Preferred Stock Merger Consideration 3.1(c)
Class C Common Stock 3.1(a)
Class D Common Stock 3.1(a)
Closing..1.3
Closing Adjustment Deferred Payment 3.12(g)(ii)
Closing Adjustment Deferred Payment Amount 3.12(g)(i)
Closing Adjustment Deferred Payment Date 3.12(b)
v
Closing Consideration Amount 3.8(b)
Closing Working Capital Statement 3.9(a)
Code.....4.11(b)(v)
Collective Bargaining Agreement 4.13(b)
Commercial Rules 10.2(d)
Common Stock 3.1(a)
Company..Recitals
Company Agreements 4.6
Company Board of Directors Recitals
Company Disclosure Schedule Article IV
Company Material Adverse Change 4.8
Company Material Adverse Effect 4.8
Company Permits 4.18(b)
Company Subsidiary 4.2(a)
Confidentiality Agreement 7.4
Converted Share Number 3.7(a)
Copyrights 4.15(a)(iii)
D&O Insurance 7.6(b)
Delaware Courts 11.6
Deferred Payment Retention 3.8(b)
Deferred Payment Right 3.12(a)
Deposit..Recitals
Deposit Escrow Agreement Recitals
DGCL.....Recitals
Dissenting Shares 3.2(a)
Effective Time 1.2
Emerald Lady 4.9(c)
Emerald Lady Loan Agreement 4.9(c)
Encumbrances 4.2(a)
Environmental Claim 4.21(a)(ii)
Environmental Laws 4.21(a)(i)
ERISA....4.11(a) ERISA Affiliate 4.11(a)
Estimated Working Capital 3.8(c)(i)
Estimated Working Capital Statement 3.8(a)
Exchange Act 4.7(a)
Exchangeable Preferred Stock 4.3(a)
Exchangeable Preferred Stock Merger Consideration....3.1(d)
Exchangeable Preferred Stock Offer 7.8(a)
Exchangeable Preferred Stock Purchase Price 7.8(a)
vi
Final Closing Working Capital Statement 3.9(c)
Final Deferred Payment 3.12(g)(ix)
Final Working Capital 3.11(a)
Financial Statements 4.7(b)
FIRPTA Certificate 8.3(o)
First Deferred Payment 3.12(g)(iv)
First Deferred Payment Amount 3.12(g)(iii)
First Deferred Payment Date 3.12(c)
Foreign Plan 4.11(q)
GAAP.....3.8(a)
Guaranty Agreement 7.10
Guaranty Fee Agreement 4.9(b)
GUST.....4.11(b)(v)
Governmental Entity 4.6
Hazardous Substances 4.21(a)(iii)
HSR Act..4.6
Indebtedness 4.9(a)
Indemnified Party 10.2(a)
Indemnity Termination Date 10.1(d)
Information Statement 7.1
Intellectual Property 4.15(a)
In-the-Money Option 3.4(a)
Inventory Date 3.8(a)
IP License Agreements 4.15(d)
Leases...4.13(o)
Leased Real Property 4.14(c)
Listed Company Agreements 4.13
Losses...10.1(a)
Merger...1.1
Merger Sub Recitals
Multiemployer Plan 4.11(a)
Neutral Auditor 3.9(c)
Newcup Arrangements 7.10
Newcup Notes 7.10
Newcup Option Agreement 7.10
Notes....7.9(b)
Note Purchase Agreement 7.10
NPL......4.21(b)(ix)
vii
Option...3.4(a)
Option Consideration 3.4(a)
Owned Real Property 4.14(c)
Parent...Recitals
Patents..4.15(a)(ii)
Paying Agent 3.3(a)
PBGC.....4.11(c)
Per Share Closing Consideration 3.7(a)
Person...4.2(a)
Plans....4.11(a)
Preferred Stock 4.3(a)
Proprietary Software 4.15(c)
Real Property 4.14(c)
Real Property Lease 4.13(o)
Reference Price 3.4(d)
Remaining Deferred Payment Retention Amount 3.12(f)
Resolution Period 3.9(b)
Retention Escrow Agreement 3.10(a)
SEC......4.7(a)
SEC Documents 4.7(a)
Second Deferred Payment 3.12(g)(vi)
Second Deferred Payment Amount 3.12(g)(v)
Second Deferred Payment Date 3.12(d)
Securities Act 4.7(a)
Senior Secured Notes 7.9(a)
Senior Secured Notes Indenture 7.9(a)
Shares...3.3(a) Sherwood Facility 7.13(d)
SIP......3.4(a)
Software.4.15(a)(iv)
Special Committee Recitals
Stockholders' Representative 11.1(a)
Subordinated Note 7.11
Subordinated Note Purchase Agreement 7.11
Subsidiary 4.2(a)
Surviving Corporation 1.1
Target Working Capital 3.8(c)(i)
Tax......4.12
Taxes....4.12
viii
Tax Return 4.12
Termination Date 9.1(b)(ii)
Title IV Plans 4.11(a)
Third Deferred Payment 3.12(g)(viii)
Third Deferred Payment Amount 3.12(g)(vii)
Third Deferred Payment Date 3.12(e)
Trade Secrets 4.15(a)(v)
Trademarks 4.15(a)(i)
Voting Debt 4.3(b)
WARN Act.4.17(g)
Warrant Agreement 3.5
Warrants.3.5
Working Capital 3.11(b)
Working Capital Payment......................................................................3.11(a)
ix
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated December 22,
2003, by and among Solo Cup Company, an Illinois corporation ("Parent"), Solo
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), and SF Holdings Group, Inc., a Delaware corporation (the
"Company").
WHEREAS, each of the board of directors of the Company (the "Company
Board of Directors") and a special committee of the Company Board of Directors
composed entirely of independent directors (the "Special Committee") has
unanimously declared and determined that the Merger is advisable, fair to and in
the best interests of the stockholders of the Company, and the Company Board of
Directors has approved this Agreement and the transactions contemplated hereby;
and
WHEREAS, this Agreement has been adopted by the stockholders of the
Company in accordance with ss. 251 and ss. 228 of the General Corporation Law of
the State of Delaware ("DGCL"); and
WHEREAS, the board of directors of Merger Sub has approved this
Agreement and the transactions contemplated hereby, and this Agreement has been
adopted by the sole stockholder of Merger Sub; and
WHEREAS, the Company and Parent have entered into that certain Deposit
Escrow Agreement of an even date herewith (the "Deposit Escrow Agreement"), and
Parent has deposited with the Escrow Agent $10 million (the "Deposit") pursuant
thereto.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
1
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
Section I.1 The Merger. Subject to the terms and conditions of
this Agreement and in accordance with the DGCL, at the Effective Time, the
Company and Merger Sub shall consummate a merger (the "Merger") pursuant to
which (i) Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease and (ii) the Company
shall be the surviving corporation in the Merger. The Merger shall have the
effects set forth in the DGCL. The corporation surviving the Merger is sometimes
hereinafter referred to as the "Surviving Corporation."
Section I.2 Effective Time. Subject to the terms and
conditions of this Agreement, Parent, Merger Sub and the Company shall cause an
appropriate certificate of merger (the "Certificate of Merger") to be executed
and filed on the date of the Closing with the Secretary of State of the State of
Delaware as provided in the DGCL. The Merger shall become effective on the date
and time on which the Certificate of Merger has been filed with the Secretary of
State of the State of Delaware, or such later date as agreed upon by the parties
and specified in the Certificate of Merger, such time being hereinafter referred
to as the "Effective Time."
Section I.3 Closing. The closing of the Merger (the "Closing")
will take place (a) at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
(Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m., Chicago
time, as soon as reasonably practicable after the satisfaction or waiver of all
of the conditions set forth in Article VIII or (b) at such other place, time and
date as Parent and the Company may agree.
Section I.4 Right to Revise Structure of Merger. At Parent's
election, the Merger may alternatively be structured so that another direct or
indirect wholly-owned Subsidiary of Parent is merged with and into the Company.
In the event of such an election by Parent, the Company agrees to execute such
documentation as may be reasonably requested by Parent to reflect such election.
2
ARTICLE II
THE SURVIVING CORPORATION
Section II.1 Certificate of Incorporation. The certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall upon the Effective Time be amended and restated in full to read as
set forth in Exhibit 2.1 and as so amended and restated shall be the certificate
of incorporation of the Surviving Corporation.
Section II.2 By-laws. The by-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Corporation, except as to the name of the Surviving Corporation, which shall be
SF Holdings Group, Inc.
Section II.3 Directors and Officers of the Surviving
Corporation. The directors of Merger Sub immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation, and the officers of Merger Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation, in each case until their respective successors shall have been duly
elected, designated and qualified, or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws.
ARTICLE III
CONVERSION OF SECURITIES
Section III.1 Conversion of Shares. At the Effective
Time, by virtue of the Merger and without any action on the part of stockholders
of the Company or Merger Sub:
(a) Each share of (i) Class A Common Stock, par value
$.001 per share, of the Company (the "Class A Common Stock"),(ii) Class B Common
Stock, par value $.001 per share, of the Company (the "Class B Common Stock"),
(iii) Class C Common Stock, par value $.001 per share, of the Company (the
3
"Class C Common Stock") and (iv) Class D Common Stock, par value $.001 per
share, of the Company (the "Class D Common Stock" and collectively with the
Class A Common Stock, the Class B Common Stock, and the Class C Common Stock,
the "Common Stock")) issued and outstanding immediately prior to the Effective
Time (other than any Dissenting Shares) shall be canceled and shall be converted
automatically into the right to receive the Per Share Closing Consideration and
the Deferred Payment Right upon surrender, in the manner provided in Section
3.3, of the certificate thatformerly evidenced such share of Common Stock.
(b) Each share of Class B Series 2 Preferred Stock
issued and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares) shall be canceled and shall be converted automatically into
the right to receive (i) a cash payment, without interest, equal to the product
of (A) the number of shares of Common Stock into which such share of Class B
Series 2 Preferred Stock is convertible immediately prior to the Effective Time
and (B) the Per Share Closing Consideration and (ii) the number of Deferred
Payment Rights equal to the number of shares of Common Stock into which such
share of Class B Series 2 Preferred Stock is convertible immediately prior to
the Effective Time (collectively, the "Class B Series 2 Preferred Stock Merger
Consideration") upon surrender, in the manner provided in Section 3.3, of the
certificate that formerly evidenced such share of Class B Series 2 Preferred
Stock.
(c) Each share of Class B Series 3 Preferred Stock
issued and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares) shall be canceled and shall be converted automatically into
the right to receive an amount in cash equal to the sum of (i) the liquidation
preference associated with such share of Class B Series 3 Preferred Stock (i.e.,
$5,000,000) plus (ii) accrued and unpaid dividends on such share of Class B
Series 3 Preferred Stock (the "Class B Series 3 Preferred Stock Merger
Consideration"), payable, without interest, to the holder of such share of Class
B Series 3 Preferred Stock, upon surrender, in the manner provided in Section
3.3, of the certificate that formerly evidenced such share of Class B Series 3
Preferred Stock.
(d) Each share of Exchangeable Preferred Stock issued
and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares) shall be canceled and shall be converted automatically into
the right to receive an amount in cash equal to the Exchangeable Preferred Stock
Purchase Price (the "Exchangeable Preferred Stock Merger Consideration"),
4
payable, without interest, to the holder of such share of Exchangeable Preferred
Stock, upon surrender, in the manner provided in Section 3.3, of the certificate
that formerly evidenced such share of Exchangeable Preferred Stock.
(e) Each share of Common Stock and Preferred Stock
held in the treasury of the Company immediately prior to the Effective Time and
each share of Common Stock and Preferred Stock owned by Parent or any of its
Subsidiaries or any Company Subsidiary immediately prior to the Effective Time
shall be canceled without any conversion thereof, and no payment or distribution
shall be made with respect thereto.
(f) Each share of common stock of Merger Sub that is
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock of the Surviving Corporation, and all such shares of Surviving
Corporation common stock shall constitute the only outstanding shares of the
Surviving Corporation immediately after the Effective Time.
Section III.2 Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of Common Stock, Class B Series 2 Preferred Stock, Class B
Series 3 Preferred Stock and Exchangeable Preferred Stock outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has complied with
ss. 262 of the DGCL ("Dissenting Shares") shall not, in the case of shares of
Common Stock, be converted into a right to receive the Per Share Closing
Consideration and the Deferred Payment Right, or in the case of shares of Class
B Series 2 Preferred Stock, be converted into the right to receive the Class B
Series 2 Preferred Stock Merger Consideration, or in the case of shares of Class
B Series 3 Preferred Stock, be converted into a right to receive the Class B
Series 3 Preferred Stock Merger Consideration, or in the case of the
Exchangeable Preferred Stock, be converted into the right to receive the
Exchangeable Preferred Stock Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses his or her right to appraisal. A holder
of Dissenting Shares shall be entitled to receive payment from the Surviving
Corporation of the appraised value of such shares held by him or her in
accordance with ss. 262 of the DGCL, unless, after the Effective Time, such
holder fails to perfect or withdraws or loses his or her right to appraisal, in
which case shares of Common Stock shall be converted into and represent only the
5
right to receive the Per Share Closing Consideration and the Deferred Payment
Right, without interest thereon, upon surrender of the certificate or
certificates representing such shares pursuant to Section 3.3, shares of Class B
Series 2 Preferred Stock shall be converted into and represent only the right to
receive the Class B Series 2 Preferred Stock Merger Consideration, without
interest thereon, upon surrender of the certificate or certificates representing
such shares pursuant to Section 3.3, shares of Class B Series 3 Preferred Stock
shall be converted into and represent only the right to receive the Class B
Series 3 Preferred Stock Merger Consideration, without interest thereon, upon
surrender of the certificate or certificates representing such shares pursuant
to Section 3.3, and shares of Exchangeable Preferred Stock shall be converted
into and represent only the right to receive the Exchangeable Preferred Stock
Merger Consideration, without interest thereon, upon surrender of the
certificate or certificates representing such shares pursuant to Section 3.3.
(b) The Company shall give Parent prompt notice of
any written demands for appraisal, attempted withdrawals of such demands and any
other instruments served pursuant to the DGCL and received by the Company
relating to rights of appraisal. Parent shall have the right to participate in
and to control all negotiations and proceedings with respect to demands for
appraisal under the DGCL. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any demands for appraisal.
Section III.3 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall
designate The Bank of New York (or another entity reasonably acceptable to the
Company) as paying agent (the "Paying Agent") for the holders of shares of
Common Stock and Preferred Stock (collectively, the "Shares") in connection with
the Merger and to receive the funds to which holders of Shares shall become
entitled pursuant to Section 3.1. The Paying Agent shall also make all payments
with respect to the Deferred Payment Rights in accordance with the terms of this
Agreement.
(b) On or after the Effective Time, the Parent shall
instruct the Paying Agent to mail or deliver to each holder of record of Shares
whose Shares were converted pursuant to Section 3.1 into the right to receive
the Per Share Closing Consideration and the Deferred Payment Right, the Class B
Series 2 Preferred Stock Merger Consideration, the Class B Series 3 Preferred
6
Stock Merger Consideration, or the Exchangeable Preferred Stock Merger
Consideration, as applicable, (i) a letter of transmittal, which shall specify
that delivery shall be effected, and risk of loss and title to the Shares shall
pass, only upon delivery to the Paying Agent of the certificates evidencing
ownership thereof (the "Certificates") and which, with respect to holders of
shares of Common Stock and Class B Series 2 Preferred Stock, shall contain the
agreement and acknowledgment of the holder of such Certificates that such holder
approves (A) the Escrow Agreement and all of the arrangements relating thereto
and (B) the appointment of the Stockholders' Representative in accordance with
the terms of this Agreement and (ii) instructions for effecting the surrender of
the Certificates in exchange for the Per Share Closing Consideration and the
Deferred Payment Right, the Class B Series 2 Preferred Stock Merger
Consideration, the Class B Series 3 Preferred Stock Merger Consideration or the
Exchangeable Preferred Stock Merger Consideration, as applicable. Upon surrender
of a Certificate for cancellation to the Paying Agent together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor the Per Share Closing Consideration and the
Deferred Payment Right for each share of Common Stock formerly represented by
such Certificate, the Class B Series 2 Preferred Stock Merger Consideration for
each share of Class B Series 2 Preferred Stock formerly represented by such
Certificate, the Class B Series 3 Preferred Stock Merger Consideration for each
share of Class B Series 3 Preferred Stock formerly represented by such
Certificate, and the Exchangeable Preferred Stock Merger Consideration for each
share of Exchangeable Preferred Stock formerly represented by such Certificate,
as applicable, and the Certificate so surrendered shall forthwith be cancelled.
Until surrendered as contemplated by this Section 3.3, each Certificate shall be
deemed from and after the Effective Time to represent only the right to receive
the Per Share Closing Consideration and the Deferred Payment Right, the Class B
Series 2 Preferred Stock Merger Consideration, the Class B Series 3 Preferred
Stock Merger Consideration, or the Exchangeable Preferred Stock Merger
Consideration, as applicable.
(c) Transfer Books; No Further Ownership Rights in
Shares. At the Effective Time, the share records of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of
Common Stock or Preferred Stock on the records of the Company. From and after
the Effective Time, the holders of certificates evidencing ownership of shares
of Common Stock or Preferred Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares,
except as otherwise provided for in this Agreement or by applicable law. If,
after the Effective Time, any certificates are presented to the Surviving
7
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article III.
(d) Lost or Stolen Shares. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in such amount as Parent may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Per Share Closing
Consideration and the Deferred Payment Right, the Class B Series 2 Preferred
Stock Merger Consideration, the Class B Series 3 Preferred Stock Merger
Consideration, or the Exchangeable Preferred Stock Merger Consideration, as
applicable, in respect thereof pursuant to this Agreement.
(e) Termination of Fund; No Liability. At any time
following six months after such funds were deposited or made available to the
Paying Agent, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any such funds (including any interest received with
respect thereto) that have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to applicable abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Per Share Closing
Consideration or any payment with respect to the Deferred Payment Right, the
Class B Series 2 Preferred Stock Merger Consideration, the Class B Series 3
Preferred Stock Merger Consideration, the Exchangeable Preferred Stock Merger
Consideration, as applicable, with respect to their Certificates, without any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Certificate
for the Per Share Closing Consideration or any payment with respect to the
Deferred Payment Right, the Class B Series 2 Preferred Stock Merger
Consideration, the Class B Series 3 Preferred Stock Merger Consideration, or the
Exchangeable Preferred Stock Merger Consideration, as applicable, delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section III.4 Stock Options.
(a) Each option to purchase Common Stock under the
Company Share Incentive Plan (the "SIP") or otherwise granted by the Company
outside of the SIP (each, an "Option") that is outstanding immediately prior to
8
the Effective Time, whether or not then vested or exercisable, shall, effective
as of the Effective Time, (i) in the case of an Option whose exercise price per
share is equal to or greater than the Reference Price, be cancelled and no
payment or distribution shall be made with respect thereto or (ii) in the case
of an Option whose exercise price per share is less than the Reference Price
(each, an "In-the-Money Option"), be cancelled in exchange for (A) a cash
payment to be paid by the Company, without interest, as soon as practicable
following the Effective Time equal to the product of (1) the Adjusted Option
Shares subject to such In-the-Money Option and (2) the Per Share Closing
Consideration and (B) the number of Deferred Payment Rights equal to the
Adjusted Option Shares subject to such In-the-Money Option (collectively, the
"Option Consideration"). As a condition to the receipt of the Option
Consideration, the holder of the applicable Option shall execute the consent
referred to in Section 3.4(b).
(b) Prior to the Effective Time, the Company shall
(i) obtain written consents from holders of Options to the treatment of such
Options as set forth in Section 3.4(a) (which consent shall include a release
reasonably satisfactory to Parent and, in the case of holders of In-the-Money
Options, an agreement and acknowledgment that the holder of such In-the-Money
Option approves (A) the Escrow Agreement and all of the arrangements relating
thereto and (B) the appointment of the Stockholders' Representative in
accordance with the terms of this Agreement) and (ii) terminate and/or amend, in
a manner reasonably acceptable to Parent, the terms of the SIP or any
arrangements or other agreements entered into thereunder, in each case as is
necessary to give effect to the provisions of Section 3.4(a).
(c) Prior to the Effective Time, (i) the Company
shall cause the SIP to be terminated as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of or any equity securities in the Company or any
Company Subsidiary to be deleted as of the Effective Time, and (ii) the Company
shall take all action necessary to ensure that the treatment of Options as
provided in Section 3.4(a) extinguishes all rights of participants under the SIP
and such plans, programs and arrangements to receive equity securities of the
Company or any Company Subsidiary and that following the Effective Time no such
participant shall have any right thereunder to acquire equity securities of the
Surviving Corporation, Parent or any of their respective Subsidiaries.
9
(d) "Reference Price" shall be calculated as follows:
(i) If there are no Options whose exercise
price per share is less than Reference Price1 (as defined on Exhibit
3.4(d)), the Reference Price shall be an amount in cash equal to
Reference Price1.
(ii) If there are Options whose exercise
price per share is less than Reference Price1, the Reference Price
shall be an amount in cash equal to Reference Price2 (as defined on
Exhibit 3.4(d)) unless there are Options that were included in the
calculation of Reference Price2 whose exercise price is greater than
Reference Price2.
(iii) If there are Options that were
included in the calculation of Reference Price2 whose exercise price
per share is greater than Reference Price2, the Reference Price shall
be an amount in cash equal to Reference Price3 (as defined on Exhibit
3.4(d)) unless there are Options that were included in the calculation
of Reference Price3 whose exercise price is greater than Reference
Price3.
(iv) If there are Options that were included
in the calculation of Reference Price3 whose exercise price per share
is greater than Reference Price3, the Reference Price shall be an
amount in cash equal to Reference Price4 (as defined on Exhibit
3.4(d)) unless there are Options that were included in the calculation
of Reference Price3 whose exercise price is greater than Reference
Price4.
(v) If there are Options that were included
in the calculation of Reference Price4 whose exercise price per share
is greater than Reference Price4, the Reference Price shall be an
amount in cash equal to Reference Price5 (as defined on Exhibit
3.4(d)).
(e) With respect to each In-the-Money Option, the
term "Adjusted Option Shares" shall mean the number of shares of Common Stock
equal to the product of (1) the number of shares of Common Stock subject to such
In-the-Money Option immediately prior to the Effective Time and (2) (a) the
excess of the Reference Price over the exercise price per share of such
In-the-Money Option divided by (b) the Reference Price.
10
Section III.5 Warrants. At and after the Effective Time, each
of the warrants of the Company to purchase Class C Common Stock (the "Warrants")
governed by the Warrant Agreement, dated as of January 26, 2002 between the
Company and ▇▇▇▇▇▇▇▇▇ & Company, Inc., as amended (the "Warrant Agreement"),
that are issued and outstanding shall, pursuant to the terms of the Warrant
Agreement, represent the right, upon exercise thereof in accordance with the
terms of the Warrant Agreement and Warrant (including payment of the applicable
exercise price), to receive (i) a cash payment, without interest, equal to the
product of (A) the number of shares of Class C Common Stock subject to such
Warrant immediately prior to the Effective Time and (B) the Per Share Closing
Consideration and (ii) the number of Deferred Payment Rights equal to the number
of shares of Class C Common Stock subject to such Warrant immediately prior to
the Effective Time. The cash payment shall be reduced, as appropriate, if the
holder of the Warrant elects to make a "Net Exercise" (as defined in the Warrant
Agreement) or if in lieu of exercise, surrenders such Warrant to the Company for
cancellation (and releases the Company from any further obligations with respect
to such Warrant) for the foregoing consideration. As a condition to the receipt
of any consideration provided in this Section 3.5, each holder of a Warrant
shall agree and acknowledge in writing that such holder approves (A) the Escrow
Agreement and all of the arrangements relating thereto and (B) the appointment
of the Stockholders' Representative in accordance with the terms of this
Agreement.
Section III.6 Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person pursuant to this Article III such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign tax law. If
the Surviving Corporation or Parent, as the case may be, so withholds amounts,
such amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares in respect of which the Surviving Corporation
or Parent, as the case may be, made such deduction and withholding.
Section III.7 Per Share Closing Consideration.
(a) "Per Share Closing Consideration" shall mean an
amount in cash equal to (i) the sum of Closing Consideration Amount plus the
aggregate exercise price of all Warrants divided by (ii) the sum of (A) number
of shares of Common Stock outstanding immediately prior to the Effective Time,
(B) the aggregate number of shares of Common Stock issuable upon conversion of
11
all the shares of Class B Series 2 Preferred Stock outstanding immediately prior
to the Effective Time, (C) the aggregate Adjusted Option Shares subject to all
In-the-Money Options immediately prior to the Effective Time and (D) the
aggregate number of shares of Class C Common Stock subject to all the Warrants
immediately prior to the Effective Time (such sum, the "Converted Share
Number").
(b) The Company understands and agrees that the
Reference Price and the Per Share Closing Consideration is calculated based upon
the accuracy of the representations and warranties set forth in Section 4.3 and
that, in the event the number of outstanding Company shares or Company shares
issuable upon the conversion of securities or the exercise of Options, Warrants
or other agreements exceeds the amounts specifically set forth in Section 4.3
(including as a result of any stock split, reverse stock split, stock dividend,
including any dividend or distribution of securities convertible into stock or
stock equivalent of the Company, recapitalization, or other like change
occurring after the date of this Agreement) or if the exercise price of any
Option is in any way different from the amount specifically set forth in Section
4.3(c) of the Company Disclosure Schedule, the Reference Price and Per Share
Closing Consideration shall be appropriately adjusted. Notwithstanding anything
to the contrary contained herein, the aggregate amount of consideration payable
in respect of Common Stock, Class B Series 2 Preferred Stock, Options, Warrants
or other equity equivalents (other than the Class B Series 3 Preferred Stock and
Exchangeable Preferred Stock) under the terms of this Agreement shall in all
events equal the Adjusted Aggregate Merger Consideration, plus or minus, as
appropriate, any adjustments pursuant to Section 3.11(a). The provisions of this
Section 3.7(b) shall not, however, affect the representations and warranties set
forth in Section 4.3.
Section III.8 Closing Consideration Amount.
(a) The Company will cause to be delivered to Parent,
two business days prior to Closing, (i) an estimated statement of the
consolidated Working Capital of the Company (calculated in a manner consistent
with Exhibit 3.8(c)(i)) as of the Effective Time (the "Estimated Working Capital
Statement") to be prepared in good faith in conformity with United States
generally accepted accounting principles ("GAAP") applied on a basis consistent
with the Target Working Capital and (ii) a certificate as to the preparation of
the Estimated Working Capital Statement executed by the chief financial officer
and chief executive officer of the Company. Parent and its representatives shall
12
have full access to all relevant books and records and employees of the Company
in connection with the Company's preparation of the Estimated Working Capital
Statement. On the second business day immediately prior to the Effective Time
(the "Inventory Date"), the Company, Parent and/or their respective
representatives will complete a physical inventory, observed by the
Stockholders' Representative. The inventory shall include only items which (i)
meet the Company's specifications and industry standards applicable to such
inventory and (ii) are usable and saleable in the ordinary course of the
Company's business, as presently conducted by the Company. Said physical
inventory shall list the type and quantity of the inventory as of the Inventory
Date. Inventory shall be valued in accordance with GAAP consistently applied.
The value so attributed to inventory, as adjusted to reflect changes in quantity
from the Inventory Date to the Effective Time, shall be final, binding and
conclusive for purposes of Section 3.8(c), 3.9 and Section 3.11.
(b) "Adjusted Aggregate Merger Consideration" shall
mean an amount in cash equal to the Aggregate Merger Consideration as adjusted
pursuant to 3.8(c). "Closing Consideration Amount" shall mean an amount in cash
equal to (i) the Adjusted Aggregate Merger Consideration less (ii) $15,000,000
(the "Deferred Payment Retention"). "Aggregate Merger Consideration" shall mean
the amount equal to $670.9 million less, without duplication, (i) the amount of
all Indebtedness of the Company or any Company Subsidiary outstanding as of the
Effective Time, (ii) the amount of all principal, interest and premiums paid or
payable with respect to the repayment, repurchase, defeasance, satisfaction and
discharge or redemption of any Indebtedness of the Company or any Company
Subsidiary in connection with the consummation of the transactions contemplated
hereby, including in accordance with Sections 7.9, 7.10 and 7.11, (iii) with
respect to any Indebtedness of the Company or any Company Subsidiary outstanding
as of the Effective Time, the amount of (A) all premiums payable upon redemption
or repayment of such Indebtedness and (B) all interest payable on such
Indebtedness through the date of redemption or repayment, in each case assuming
that such Indebtedness is called for redemption or notice of repayment or
prepayment is given, in each case, as of the Effective Time in accordance with
the terms of such Indebtedness, (iv) the amount of all principal, interest and
premiums paid or payable by the Company or any Company Subsidiary in connection
with the redemption of the Newcup Notes, including (A) all amounts paid or
payable by the Company as guarantor under the Guaranty Agreement, (B) the amount
of all principal, interest and premiums paid or payable by the Company or a
13
Company Subsidiary in connection with the redemption or purchase of the 2008
Notes and (C) all amounts paid or payable to acquire Newcup pursuant to the
Newcup Option Agreement, and (v) the aggregate Class B Series 3 Preferred Stock
Merger Consideration, the aggregate Exchangeable Preferred Stock Merger
Consideration and all other amounts paid or payable to redeem or repurchase any
Preferred Stock (including all outstanding Exchangeable Preferred Stock) after
the date hereof (and, for the avoidance of doubt, for each share of Class B
Series 3 Preferred Stock or Exchangeable Preferred Stock that is a Dissenting
Share, the Class B Series 3 Preferred Stock Merger Consideration or Exchangeable
Preferred Stock Merger Consideration, as applicable, otherwise payable with
respect to such share of Preferred Stock if such share of Preferred Stock were
not a Dissenting Share).
(c) The Aggregate Merger Consideration shall be
adjusted as follows:
(i) If the Working Capital as reflected on
the Estimated Working Capital Statement (the "Estimated Working
Capital") is less than the consolidated Working Capital of the Company
as of March 30, 2003 of $242,897,000 (which is calculated in
accordance with GAAP as set forth on Exhibit 3.8(c)(i))(such amount,
the "Target Working Capital"), the Aggregate Merger Consideration
shall be reduced by an amount equal to the amount by which the
Estimated Working Capital is less than the Target Working Capital; and
(ii) If the Estimated Working Capital is
greater than the Target Working Capital, the Aggregate Merger
Consideration shall be increased by an amount equal to the amount by
which the Estimated Working Capital exceeds the Target Working
Capital; and
(iii) If the Merger has not been consummated
by February 1, 2004, the Aggregate Merger Consideration shall be
increased by $ 40,000 per day for each full day from and after
February 1, 2004 through the Effective Time.
Section III.9 Determination of Effective Time Working
Capital
(a) As soon as practicable, but in no event later
than 60 days following the Effective Time, Parent shall prepare and deliver to
14
the Stockholders' Representative a statement of the consolidated Working Capital
of the Company (calculated in the manner consistent with Exhibit 3.8(c)(i)) as
of the Effective Time (the "Closing Working Capital Statement"). The Closing
Working Capital Statement shall be prepared in good faith in conformity with
GAAP applied on a basis consistent with the Target Working Capital. The Closing
Working Capital Statement shall be accompanied by a certificate as to the
preparation of the Closing Working Capital Statement executed by the chief
financial officer and chief executive officer of Parent. The Stockholders'
Representative and its representatives shall have full access to all relevant
books and records and employees of the Company in connection with Parent's
preparation of the Closing Working Capital Statement.
(b) After receipt of the Closing Working Capital
Statement, the Stockholders' Representative shall have 30 days to review the
Closing Working Capital Statement. The Stockholders' Representative and its
representatives shall have full access to all relevant books and records and
employees of the Company to the extent required to complete its review of the
Closing Working Capital Statement. Unless the Stockholders' Representative
delivers written notice to Parent on or prior to the 30th day after the
Stockholders' Representative's receipt of the Closing Working Capital Statement
specifying in reasonable detail all disputed items and the basis therefor, the
Stockholders' Representative shall be deemed to have accepted and agreed to the
Closing Working Capital Statement. If the Stockholders' Representative so
notifies Parent of the Stockholders' Representative's objection to the Closing
Working Capital Statement, Parent and the Stockholders' Representative shall,
within 30 days following the date of such notice (the "Resolution Period"),
attempt to resolve their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive.
(c) If at the conclusion of the Resolution Period
there are amounts still remaining in dispute, then all amounts remaining in
dispute shall be submitted to PricewaterhouseCoopers, LLP or another firm of
nationally recognized independent public accountants reasonably acceptable to
Parent and the Stockholders' Representative (the "Neutral Auditor"). Parent and
the Stockholders' Representative agree to execute, if requested by the Neutral
Auditor, a reasonable engagement letter. All fees and expenses relating to the
work, if any, to be performed by the Neutral Auditor shall be paid as follows:
50% of such fees and expenses shall be paid by Parent and the remaining 50% of
such fees and expenses shall be deducted from the Deferred Payment Retention.
The Neutral Auditor shall act as an arbitrator to determine, based solely on
presentations by Parent and the Stockholders' Representative, and not by
15
independent review, only those items still in dispute. The Neutral Auditor's
determination shall be made within 30 days of its engagement, shall be set forth
in a written statement delivered to Parent and the Stockholders' Representative
and shall be final, binding and conclusive. The term "Final Closing Working
Capital Statement," as used in this Agreement, shall mean the definitive Closing
Working Capital Statement agreed to by the Stockholders' Representative and
Parent in accordance with Section 3.9(b) hereof or the definitive Closing
Working Capital Statement resulting from the determinations made by the Neutral
Auditor in accordance with this Section 3.9(c) (in addition to those items
theretofore agreed to by Parent and the Stockholders' Representative), in each
case prepared in conformity with GAAP applied on a basis consistent with the
Target Working Capital. For the period from and after the Effective Time until
the determination of the Final Closing Working Capital Statement, the Parent
shall cause the Company to make available to the Stockholders' Representative or
his assistant an office at the Company's Owings Mills, Maryland facility.
Section III.10 Payment of the Merger Consideration.
(a) At or prior to the Effective Time, Parent shall
(i) deposit with the Paying Agent (A) the aggregate Per Share Closing
Consideration payable with respect to shares of Common Stock outstanding
immediately prior to the Effective Time, (B) the aggregate cash payment payable
with respect to all shares of Class B Series 2 Preferred Stock outstanding
immediately prior to the Effective Time in accordance with Section 3.1(b)(i),
(C) the aggregate Class B Series 3 Preferred Stock Merger Consideration and (D)
the aggregate Exchangeable Preferred Stock Merger Consideration, in each case,
payable with respect to Shares to be converted pursuant to Section 3.1 and (ii)
deposit the Deferred Payment Retention with the Escrow Agent pursuant to an
escrow agreement between the Parent, the Stockholder Representative and the
Escrow Agent, such agreement to be in a form and substance reasonably acceptable
to the Parent and the Company (the "Retention Escrow Agreement"). All fees and
expenses of the Escrow Agent under the Retention Escrow Agreement shall be
deducted from the Deferred Payment Retention.
(b) The aggregate Per Share Closing Consideration,
the amount specified in Section 3.10(a)(i)(B), the aggregate Class B Series 3
Preferred Stock Merger Consideration and the aggregate Exchangeable Preferred
Stock Merger Consideration shall be invested by the Paying Agent as directed by
Parent or the Surviving Corporation, in its sole discretion, pending payment
16
thereof by the Paying Agent to the holders of the Shares. Earnings on the
aggregate Per Share Closing Consideration, the amount specified in Section
3.10(a)(i)(B), the aggregate Class B Series 3 Preferred Stock Merger
Consideration and the aggregate Exchangeable Preferred Stock Merger
Consideration shall be the sole and exclusive property of Parent and the
Surviving Corporation, and no part of such earnings shall accrue to the benefit
of holders of Shares. Earnings on amounts held by the Escrow Agent with respect
to the Deferred Payment Retention shall increase the Deferred Payment Retention;
provided, however, that any earnings in excess of an amount equal to 10% per
annum on the Deferred Payment Retention shall not increase the Deferred Payment
Retention and any such excess earnings and any earnings on amounts made
available to the Paying Agent by the Escrow Agent from the Deferred Payment
Retention for distribution in accordance with the terms of this Agreement shall
be the sole and exclusive property of the Parent and the Surviving Corporation
after such amounts are made available to the Paying Agent, and no part of such
earnings shall accrue to the benefit of holders of Shares.
Section III.11 Working Capital Adjustment.
(a) If the Working Capital set forth on the Final
Closing Working Capital Statement (the "Final Working Capital") is greater than
the Estimated Working Capital, Parent shall deposit within two business days
after the determination of the Final Closing Working Capital Statement with the
Escrow Agent as an addition to the Deferred Payment Retention an amount (the
"Working Capital Payment") equal to the amount by which the Final Working
Capital exceeds the Estimated Working Capital, plus a notional amount equal to
interest on the amount of such difference from the Effective Date to the date of
deposit at the prime rate published by The Wall Street Journal (Central
Edition), as that rate may vary from time to time (the "Agreed Rate"). If the
Final Working Capital is less than the Estimated Working Capital, the Parent
shall be entitled to withdraw from the Deferred Payment Retention an amount
equal to the amount by which the Final Working Capital is less than the
Estimated Working Capital, plus a notional amount equal to interest on the
amount of such difference from the Effective Date to the date of payment at the
Agreed Rate. With respect to any payments to Parent in connection with
adjustments to the Deferred Payment Retention pursuant to this Section 3.11(a),
the Stockholders' Representative and Parent shall deliver to the Escrow Agent,
within two business days following the determination of the Final Closing
Working Capital Statement, a written notice executed by both parties instructing
17
the Escrow Agent to make such payments to Parent from the Deferred Payment
Retention.
(b) For purposes of this Agreement "Working Capital"
shall mean current assets determined in accordance with GAAP consistently
applied (including cash and assets held for sale) less current liabilities
determined in accordance with GAAP consistently applied (excluding current
maturities of long term debt).
Section III.12 Deferred Payment Rights.
(a) "Deferred Payment Right" shall mean the right to
receive the Closing Adjustment Deferred Payment, First Deferred Payment, the
Second Deferred Payment, the Third Deferred Payment and the Final Deferred
Payment, if any. The Deferred Payment Rights shall not be evidenced by a
certificate or other instrument and shall not be assignable or otherwise
transferable by holders thereof (except by will or by the operation of the laws
of descent after the death of a natural holder thereof). Any payments by the
Paying Agent with respect to the Deferred Payment Rights shall be made only (i)
to each holder of shares of Common Stock that surrendered its Certificates with
respect to such shares in accordance with Section 3.3 by check to the address
for delivery set forth on the letter of transmittal provided by such holder in
connection with the surrender of its Certificates (or to such other address as
such holder may subsequently designate in writing), (ii) to each holder of
shares of Class B Series 2 Preferred Stock that surrendered its Certificates
with respect to such shares in accordance with Section 3.3 by check to the
address for delivery set forth on the letter of transmittal provided by such
holder in connection with the surrender of its Certificates (or to such other
address as such holder may subsequently designate in writing), (iii) to each
holder of a Warrant by check to the address for delivery set forth in the
written agreement and acknowledgment of such Warrant holder referred to in
Section 3.5 (or to such other address as such holder may subsequently designate
in writing), and (iv) to each holder of an In-the-Money Option by check to the
address for delivery set forth in the consent executed by such In-the-Money
Option holder referred to in Section 3.4(b) (or to such other address as such
holder may subsequently designate in writing).
(b) On the tenth business day after the determination
of the Final Closing Working Capital Statement, (the "Closing Adjustment
18
Deferred Payment Date"), (i) the Stockholders' Representative and Parent shall
deliver to the Escrow Agent, a written notice executed by both parties
instructing the Escrow Agent to make available to the Paying Agent, in
accordance with the Retention Escrow Agreement, the Closing Adjustment Deferred
Payment Amount, and (ii) the Deferred Payment Retention shall be reduced by the
amount of the Closing Adjustment Deferred Payment Amount. After receipt of the
Closing Adjustment Deferred Payment Amount, the Paying Agent shall pay the
Closing Adjustment Deferred Payment, without interest, to holders of shares of
Common Stock, shares of Class B Series 2 Preferred Stock, In-the-Money Options
and Warrants in accordance with Section 3.12(a).
(c) On the first business day after the date that is
6 months after the Effective Time (the "First Deferred Payment Date"), (i) the
Stockholders' Representative and Parent shall deliver to the Escrow Agent, a
written notice executed by both parties instructing the Escrow Agent to make
available to the Paying Agent, in accordance with the Retention Escrow
Agreement, the First Deferred Payment Amount, and (ii) the Deferred Payment
Retention shall be reduced by the amount of the First Deferred Payment Amount.
After receipt of the First Deferred Payment Amount, the Paying Agent shall pay
the First Deferred Payment, without interest, to holders of shares of Common
Stock, shares of Class B Series 2 Preferred Stock, In-the-Money Options and
Warrants in accordance with Section 3.12(a).
(d) On the first business day after the date that is
12 months after the Effective Time (the "Second Deferred Payment Date"), (i) the
Stockholders' Representative and Parent shall deliver to the Escrow Agent, a
written notice executed by both parties instructing the Escrow Agent to make
available to the Paying Agent, in accordance with the Retention Escrow
Agreement, the Second Deferred Payment Amount, and (ii) the Deferred Payment
Retention shall be reduced by the amount of the Second Deferred Payment Amount.
After receipt of the Second Deferred Payment Amount, the Paying Agent shall pay
the Second Deferred Payment, without interest, to holders of shares of Common
Stock, shares of Class B Series 2 Preferred Stock, In-the-Money Options and
Warrants in accordance with Section 3.12(a).
(e) On the first business day after the date that is
24 months after the Effective Time (the "Third Deferred Payment Date"), (i) the
Stockholders' Representative and Parent shall deliver to the Escrow Agent, a
19
written notice executed by both parties instructing the Escrow Agent to make
available to the Paying Agent, in accordance with the Retention Escrow
Agreement, the Third Deferred Payment Amount, and (ii) the Deferred Payment
Retention shall be reduced by the amount of the Third Deferred Payment Amount.
After receipt of the Third Deferred Payment Amount, the Paying Agent shall pay
the Third Deferred Payment, without interest, to holders of shares of Common
Stock, shares of Class B Series 2 Preferred Stock, In-the-Money Options and
Warrants in accordance with Section 3.12(a).
(f) On the Indemnity Termination Date, the
Stockholders' Representative and Parent shall deliver to the Escrow Agent, a
written notice executed by both parties instructing the Escrow Agent to make
available to the Paying Agent, in accordance with the Retention Escrow
Agreement, all remaining funds held by the Escrow Agent with respect to the
Deferred Payment Retention (the "Remaining Deferred Payment Retention Amount").
After receipt of such funds, the Paying Agent shall pay the Final Deferred
Payment, without interest, to holders of shares of Common Stock, shares of Class
B Series 2 Preferred Stock, In-the-Money Options and Warrants in accordance with
Section 3.12(a).
(g) As used herein:
(i) "Closing Adjustment Deferred Payment
Amount" shall mean an amount equal to the Working Capital Payment.
(ii) "Closing Adjustment Deferred Payment"
shall mean the amount, if any, in cash equal to (A) the Closing
Adjustment Deferred Payment Amount divided by (B) the Converted Share
Number.
(iii) "First Deferred Payment Amount" shall
mean an amount, if any, equal to (A) the excess, if any, of (1) the
Deferred Payment Retention as adjusted pursuant to Sections 3.9(c),
3.10, 3.11, 3.12(b),10.2 and 11.1(b) as of the First Deferred Payment
Date over (2) $12.5 million less (B) the sum of (1) the aggregate
amount of all Losses, if any, asserted pursuant to Section 10.2 and
set forth in Claim Notices to which the Stockholders' Representative
has not responded pursuant to Section 10.2(b) as of the First Deferred
Payment Date, (2) the aggregate amount of all Losses, if any, asserted
pursuant to Section 10.2 which the Stockholders' Representative is
disputing as of the First Deferred Payment Date, (3) the aggregate
20
amount of all Losses, if any, asserted pursuant to Section 10.2 which
are payable to an Indemnified Party pursuant to Section 10.2 (either
by agreement or arbitration) and for which the Indemnified Party has
not received the required payment from the Deferred Payment Retention
as of the First Deferred Payment Date and (4) an amount equal to 83%
of the interest, if any, added to the Deferred Payment Retention
pursuant to Section 3.10(b) through the First Payment Date.
(iv) "First Deferred Payment" shall mean the
amount, if any, in cash equal to (A) the First Deferred Payment Amount
divided by (B) the Converted Share Number.
(v) "Second Deferred Payment Amount" shall
mean an amount, if any, equal to (A) the excess, if any, of (1) the
Deferred Payment Retention as adjusted pursuant to Sections 3.9(c),
3.10, 3.11, 3.12(b), 3.12(c), 10.2 and 11.1(b) as of the Second
Deferred Payment Date over (2) $6.25 million less (B) the sum of (1)
the aggregate amount of all Losses, if any, asserted pursuant to
Section 10.2 and set forth in Claim Notices to which the Stockholders'
Representative has not responded pursuant to Section 10.2(b) as of the
Second Deferred Payment Date, (2) the aggregate amount of all Losses,
if any, asserted pursuant to Section 10.2 which the Stockholders'
Representative is disputing as of the Second Deferred Payment Date,
(3) the aggregate amount of all Losses, if any, asserted pursuant to
Section 10.2 which are payable to an Indemnified Party pursuant to
Section 10.2 (either by agreement or arbitration) and for which the
Indemnified Party has not received the required payment from the
Deferred Payment Retention as of the Second Deferred Payment Date and
(4) an amount equal to 50% of the interest, if any, added to the
Deferred Payment Retention pursuant to Section 3.10(b) from the First
Payment Date through the Second Payment Date.
(vi) "Second Deferred Payment" shall mean
the amount, if any, in cash equal to (A) the Second Deferred Payment
Amount divided by (B) the Converted Share Number.
(vii) "Third Deferred Payment Amount" shall
mean an amount, if any, equal to(A) the Deferred Payment Retention as
adjusted pursuant to Sections 3.9(c), 3.10, 3.11, 3.12(b), 3.12(c),
3.12(d),10.2 and 11.1(b) as of the Third Deferred Payment Date less
21
(B) the sum of (1) the aggregate amount of all Losses, if any,
asserted pursuant to Section 10.2 and set forth in Claim Notices to
which the Stockholders' Representative has not responded pursuant to
Section 10.2(b) as of the Third Deferred Payment Date, (2) the
aggregate amount of all Losses, if any, asserted pursuant to Section
10.2 which the Stockholders' Representative is disputing as of the
Third Deferred Payment Date, and (3) the aggregate amount of all
Losses, if any, asserted pursuant to Section 10.2 which are payable to
an Indemnified Party pursuant to Section 10.2 (either by agreement or
arbitration) and for which the Indemnified Party has not received the
required payment from the Deferred Payment Retention as of the Third
Deferred Payment Date.
(viii) "Third Deferred Payment" shall mean
the amount, if any, in cash equal to (A) the Third Deferred Payment
Amount divided by (B) the Converted Share Number.
(ix) "Final Deferred Payment" shall mean the
amount, if any, in cash equal to (A) the Remaining Deferred Payment
Retention Amount divided by (B) the Converted Share Number.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in a schedule prepared and signed by the
Company and delivered to Parent prior to the execution of this Agreement (the
"Company Disclosure Schedule"), the Company represents and warrants to Parent
and Merger Sub as set forth below. Each exception set forth in the Company
Disclosure Schedule and each other response to this Agreement set forth in the
Company Disclosure Schedule shall be identified by reference to, or be grouped
under a heading referring to, a specific individual section, subsection,
paragraph or subparagraph of this Agreement and shall relate only to such
section, subsection, paragraph or subparagraph, as applicable, except to the
extent that one portion of the Company Disclosure Schedule specifically refers
to another portion thereof by cross reference.
Section IV.1 Organization. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own, lease and
22
operate its properties and to carry on its business as it is now being
conducted. The Company is duly qualified or licensed to do business and in good
standing in each jurisdiction where the Company's ownership or leasing of
property or the conduct of its business makes such qualification or licensing
necessary. Each such jurisdiction is listed in Section 4.1 of the Company
Disclosure Schedule.
(b) True and complete copies of the certificate of
incorporation and by-laws of the Company, as amended to date, have been
delivered to Parent. The Company is not in violation of any provision of its
certificate of incorporation or by-laws. The minute books of the Company contain
accurate and complete records of all meetings of, and corporate actions taken
by, the stockholders and directors of the Company and no meeting of the
stockholders or boards of directors of the Company has been held for which
minutes have not been prepared and are not contained in such minute books. True
and complete copies of all minute books and all stock record books of the
Company have been delivered to Parent.
Section IV.2 Subsidiaries and Affiliates. (a) Section 4.2(a)
of the Company Disclosure Schedule sets forth the name, jurisdiction of
incorporation or organization and authorized and outstanding capital of each
Company Subsidiary. Other than with respect to the Company Subsidiaries, the
Company does not own, directly or indirectly, any capital stock or other equity
securities of any Person or have any direct or indirect ownership interest in
any business. Except as set forth in Section 4.2(a) of the Company Disclosure
Schedule, all of the outstanding capital stock (or similar equity interests) of
each Company Subsidiary is (or are) owned directly or indirectly by the Company
free and clear of all liens, charges, security interests, options, claims,
mortgages, pledges, or other encumbrances and restrictions of any nature
whatsoever ("Encumbrances"), and is (or are) validly issued, fully paid and
nonassessable, and there are no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of any capital stock (or similar
equity interests) of any such Company Subsidiary. As used in this Agreement, the
term "Company Subsidiary" means each Person which is a Subsidiary of the
Company; the term "Person" means a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization; and the term "Subsidiary" means, with respect to any party, any
Person, of which (i) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
23
organization or entity is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries or (ii) such party or any other Subsidiary of such
party is a general partner (excluding any such partnership where such party or
any Subsidiary of such party does not have a majority of the voting interest in
such partnership).
(b) Each Company Subsidiary (i) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (ii) has full power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, and (iii) is duly qualified or licensed to do business as a foreign
Person and in good standing in each jurisdiction where such Company Subsidiary's
ownership or leasing of property or the conduct of its business makes such
qualification or license necessary, except for such jurisdictions, if any, in
which the failure to be so qualified or in good standing could not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Each such jurisdiction is listed in Section 4.2(b) of the Company
Disclosure Schedule.
(c) True and complete copies of the certificate of
incorporation and by-laws or similar organizational documents of each Company
Subsidiary, as amended to date, have been delivered to Parent. No Company
Subsidiary is in violation of any provision of its certificate of incorporation,
by-laws or similar organizational documents. The minute books of each Company
Subsidiary contain accurate and complete records of all meetings of, and
corporate actions taken by, the stockholders and directors (or equivalent) of
such Company Subsidiary and no meeting of the stockholders or boards of
directors (or equivalent) of such Company Subsidiary has been held for which
minutes have not been prepared and are not contained in such minute books. True
and complete copies of all minute books and all stock record books of each
Company Subsidiary have been delivered to Parent.
Section IV.3 Capitalization.
(a) The authorized capital stock of the Company
consists of 1,400,000 shares of Class A Common Stock, 200,000 shares of Class B
Common Stock, 300,000 shares of Class C Common Stock, 200,000 shares of Class D
Common Stock, 20,000 shares of Exchangeable Preferred Stock, par value $.001 per
share (the "Exchangeable Preferred Stock"), and 100,000 shares of Class B
24
Preferred Stock, par value $.001 per share (the "Class B Preferred Stock" and
together with the Exchangeable Preferred Stock, the "Preferred Stock") of which
(i) 562,583 shares of Class A Common Stock are issued and outstanding, (ii)
56,459 shares of Class B Common Stock are issued and outstanding, (iii) 135,432
shares of Class C Common Stock are issued and outstanding, (iv) no shares of
Class D Common Stock are issued and outstanding (v) no shares of Common Stock
are held in the treasury of the Company, (vi) 1,592.1606 shares of Exchangeable
Preferred Stock are issued and outstanding, (vii) no shares of Class B Preferred
Stock are issued and outstanding and designated as Class B Preferred Series 1
Preferred Stock (the "Class B Series 1 Preferred Stock"), (viii) 15,000 shares
of Class B Preferred Stock are issued and outstanding and designated as Class B
Series 2 Preferred Stock (the "Class B Series 2 Preferred Stock"), (ix) 3 shares
of Class B Preferred Stock are designated as Class B Series 3 Preferred Stock
(the "Class B Series 3 Preferred Stock") and 1.0341 shares of Class B Preferred
Class B Series 3 Preferred Stock is issued and outstanding, (x) no shares of
Preferred Stock are held in the treasury of the Company, (xi) an aggregate of
46,878 shares of Class D Common Stock are reserved for issuance upon exercise of
outstanding Options issued under the SIP, (xii) an aggregate of 60,931 shares of
Class A Common Stock are reserved for issuance upon exercise of the Option
issued under the option agreement set forth Section 4.3(b) of the Company
Disclosure Schedule, (xiii) an aggregate of 133,494.5 shares of Class A Common
Stock are reserved for issuance upon conversion of the Class B Series 2
Preferred Stock and, (xiv) an aggregate of 115,931 shares of Class C Common
Stock are reserved for issuance upon exercise of the Warrants, and (xv) an
aggregate of 49,117 shares of Class D Common Stock are reserved for future
issuance under the SIP. Schedule 4.3(a) of the Company Disclosure Schedule sets
forth (A) for each of the Class A Common Stock and the Class B Common Stock, the
name and address of each record holder of such shares and the number of shares
owned of record by each such holder, (B) for the Class B Series 2 Preferred
Stock, (x) the number and class of shares of Common Stock into which such shares
are convertible and (y) the name and address of each record holder of such
shares and the number of shares owned of record by each such holder, (C) for the
Class B Series 3 Preferred Stock, the name and address of each record holder of
such shares and the number of shares owned of record by each such holder, and
(D) the number and class of shares of Common Stock issuable upon exercise of the
Warrants and the name and address of each record holder of the Warrants.
(b) All of the outstanding shares of the Company's
capital stock are, and all shares which may be issued pursuant to conversion of
Common Stock or Preferred Stock or the exercise of the Warrants or Options, when
25
issued in accordance with the terms of the applicable security, will be, duly
authorized, validly issued, fully paid and non-assessable. No indebtedness of
the Company or any Company Subsidiary having general voting rights (or
convertible into securities having such rights) ("Voting Debt") has been issued
or is outstanding. Except as disclosed in this Section 4.3 or as set forth in
Section 4.3(b) of the Company Disclosure Schedule, (i) there are no existing
options, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements, understandings or commitments of any kind relating to
the issued or unissued capital stock of, or other equity interests in, the
Company or any Company Subsidiary obligating the Company or any Company
Subsidiary to issue, transfer, register or sell or cause to be issued,
transferred, registered or sold any shares of capital stock or Voting Debt of,
or other equity interest in, the Company or any Company Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any Company Subsidiary to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (ii) there are no agreements, arrangements,
understandings or commitments of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of Common Stock or Preferred
Stock or any of the capital stock of or other equity interests in any Company
Subsidiary or any other entity or to provide funds to make any investment (in
the form of a loan, capital contribution or otherwise) in any Company Subsidiary
or any other entity.
(c) Section 4.3(c) of the Company Disclosure Schedule
sets forth, with respect to each existing Option, the name of the holder and the
number of and class of shares issuable therefor, and the per-share purchase
price payable therefor upon the exercise of such Option. Each such Option has
been granted in the ordinary course of business consistent with past practice
and has been granted under the SIP pursuant to either (i) an option award
agreement substantially in the form attached to Section 4.3(c) of the Company
Disclosure Schedule or (ii) an option agreement listed in Section 4.3(b) of the
Company Disclosure Schedule, a true and correct copy of which agreement the
Company has heretofore delivered to Parent.
(d) Except as set forth in Section 4.3(d) of the
Company Disclosure Schedule, there are no voting trusts or other agreements,
arrangements or understandings to which the Company or any Company Subsidiary is
a party, or of which the Company is otherwise aware, with respect to the voting
26
of the capital stock of or other equity interests in the Company or any of the
Company Subsidiaries.
(e) Except as set forth in Section 4.3(e) of the
Company Disclosure Schedule, all dividends or distributions on securities of the
Company or any Company Subsidiary that have been declared or authorized have
been paid in full.
Section IV.4 Authorization; Validity of Agreement; Company
Action. The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this Agreement
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by the Company Board of Directors; the
stockholders of the Company have approved the Merger and adopted this Agreement;
and no other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due and valid authorization, execution and delivery hereof by Parent and Merger
Sub, is a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section IV.5 Special Committee and Board Approvals. The
Special Committee, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable, fair to and in the best interests of the
stockholders of the Company and (ii) voted to recommend to the Company Board of
Directors that the Company Board of Directors approve this Agreement, the Merger
and the other transactions contemplated hereby, including the Merger, and submit
this Agreement to stockholders of the Company, and none of the aforesaid actions
by the Special Committee has been amended, rescinded or modified. The Company
Board of Directors, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
27
including the Merger, are advisable, fair to and in the best interests of the
stockholders of the Company, (ii) duly and validly approved this Agreement, the
Merger and the other transactions contemplated hereby and taken all corporate
action required to be taken by the Company Board of Directors to authorize the
consummation of the transactions contemplated hereby and (iii) resolved to
submit this Agreement to stockholders of the Company and recommend that the
stockholders of the Company adopt this Agreement and approve the Merger and the
other transactions contemplated hereby, and none of the aforesaid actions by the
Company Board of Directors has been amended, rescinded or modified. Neither
ss.203 of the DGCL nor any other state takeover statute or similar statute or
regulation in any jurisdiction in which the Company or any Company Subsidiary
does business is applicable to the transactions contemplated hereby.
Section IV.6 Consents and Approvals; No Violations. None of
the execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions of this Agreement will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation, the by-laws or similar organizational documents of the Company or
any Company Subsidiary, (ii) require any material filing by the Company or any
Company Subsidiary with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, foreign or domestic (a
"Governmental Entity") (except for (A) the filing of the Certificate of Merger
pursuant to the DGCL and (B) any filings as may be required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act")), (iii) except as set forth in Section 4.6(iii) of the Company Disclosure
Schedule, result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, or result in the
creation of any Encumbrance on the assets and properties of the Company or any
Company Subsidiary under, any of the terms, conditions or provisions of any
material note, bond, mortgage, lien, indenture, lease, license, contract,
agreement, arrangement or understanding or other instrument or obligation to
which the Company or any Company Subsidiary is a party or by which any of them
or any of their respective properties or assets may be bound (the "Company
Agreements") or (iv) violate any material order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any Company Subsidiary or
any of their respective properties or assets.
28
Section IV.7 SEC Documents and Financial Statements.
(a) The Company and each Company Subsidiary have
filed with the Securities and Exchange Commission (the "SEC") all forms,
reports, schedules, statements, exhibits and other documents required to be
filed under the Exchange Act of 1934, as amended (the "Exchange Act"), or the
Securities Act of 1933, as amended (the "Securities Act"), (collectively, the
"SEC Documents"). As of its filing date or, if amended, as of the date of the
last such amendment, each SEC Document fully complied with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. As of its filing
date or, if amended, as of the date of the last such amendment, each SEC
Document filed pursuant to the Exchange Act did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. Each SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act, as
of the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. Except for Sweetheart Holdings Inc. and Sweetheart Cup Company
Inc., none of the Company Subsidiaries is required to file any forms, reports or
other documents with the SEC. All of the audited consolidated financial
statements and unaudited consolidated interim financial statements included in
the SEC Documents (i) have been prepared from, are in accordance with and
accurately reflect the books and records of the Company and its consolidated
Subsidiaries or a Company Subsidiary and its consolidated Subsidiaries, as
applicable, (ii) fully comply with the applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, (iii)
were prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto and except, in
the case of the unaudited interim statements, as may be permitted under Form
10-Q of the Exchange Act) and (iv) fairly present, in all material respects, the
consolidated financial position and the consolidated results of operations and
cash flows (subject, in the case of unaudited interim financial statements, to
normal year-end adjustments) of the Company and its consolidated Subsidiaries or
a Company Subsidiary and its consolidated Subsidiaries, as applicable, as of the
times and for the periods referred to therein.
29
(b) The Company has delivered to Parent the audited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
of September 28, 2003 and the related statements of operations and cash flows
for the fiscal year ended September 28, 2003 (including the related notes and
independent auditors report thereon) (collectively, the "Financial Statements").
The Financial Statements (i) have been prepared from, are in accordance with and
accurately reflect the books and records of the Company and its consolidated
Subsidiaries, (ii) were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and (iii) fairly present, in all material respects, the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated Subsidiaries, as of the times and for the
periods referred to therein.
Section IV.8 Absence of Certain Changes. Except as set forth
in Section 4.8 of the Company Disclosure Schedule, since September 29, 2002, (i)
each of the Company and each Company Subsidiary has conducted its respective
business only in the ordinary course of business consistent with past practice,
(ii) neither the Company nor any Company Subsidiary has suffered any Company
Material Adverse Change or become aware of any circumstances that may,
individually or in the aggregate, cause the Company or any Company Subsidiary to
suffer any Company Material Adverse Change in the foreseeable future, and (iii)
neither the Company nor any Company Subsidiary has taken any action, which if
taken after the date hereof, would violate the provisions of Section 6.1. As
used in this Agreement, "Company Material Adverse Change" or "Company Material
Adverse Effect" means any change, event, effect or circumstance, as the case may
be, that, individually or together with any other change, event, effect or
circumstance, is or could reasonably be expected to be materially adverse to (y)
the business, operations, properties, condition (financial or otherwise),
results of operations, prospects, assets or liabilities of the Company and the
Company Subsidiaries, taken as a whole, or (z) the Company's ability to
consummate each of the transactions contemplated hereby.
Section IV.9 No Undisclosed Liabilities; Indebtedness.
(a) Except (i) as disclosed in the Financial
Statements as of September 28, 2003 and (ii) for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
September 28, 2003 or disclosed in Section 4.9(a)(i) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has incurred any
30
material liabilities or obligations of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise. Section 4.9(a)(ii)
of the Company Disclosure Schedule sets forth, as of November 23, 2003, the
amount of the principal and unpaid interest outstanding under each instrument
evidencing any Indebtedness of the Company or any Company Subsidiary,
identifying each such instrument under which any such Indebtedness will
accelerate or become due or which provides for a right of redemption, repayment
or repurchase on the part of the holder of such Indebtedness (with or without
due notice or lapse of time) as a result of this Agreement or the transactions
contemplated hereby. The term "Indebtedness" shall mean any indebtedness for
borrowed money; indebtedness evidenced by notes, bonds, debentures or similar
instruments; capital lease obligations; and indebtedness secured by liens on
assets; and any obligations with respect to the guarantee of any indebtedness of
any Person.
(b) (i) Newcup, LLC is in full compliance with the
terms of the Guaranty Fee Agreement between the Company and Newcup, LLC, dated
as of January 26, 2002, as amended (the "Guaranty Fee Agreement"), (ii) the
Company has not consented to Newcup LLC taking any action otherwise prohibited
by Section 1 of the Guaranty Fee Agreement, and (iii) other than any obligations
under Section 11 of the Note Purchase Agreement, upon repurchase or redemption
of the Newcup Notes, Newcup LLC will have no liabilities or obligations of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise.
(c) Except for the loan and security agreement (the
"Emerald Lady Loan Agreement")set forth on Section 4.9(c)(i) of the Company
Disclosure Schedule, Emerald Lady, Inc. ("Emerald Lady") has good and marketable
title to all its properties and assets (including each of the items set forth on
Section 4.9(c)(ii) of the Company Disclosure Schedule (such assets,
collectively, the "Aircraft")), free and clear of all Encumbrances. Except for
payment obligations in the amounts and with respect to the agreements set forth
on Section 4.9(c)(iii) of the Company Disclosure Schedule, as of the Effective
Time, Emerald Lady will have no liabilities or obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise. As of the Effective Time, the only asset of Emerald Lady will be the
Aircraft. Since the date of this Agreement, the Aircraft has not been destroyed
or suffered any material damage.
(d) Sweetheart Cup Company, Inc. has called for
redemption all of the 12% Senior Subordinated Notes issued pursuant to the
31
Indenture between Sweetheart Cup Company Inc., Sweetheart Holdings, Inc. and
▇▇▇▇▇ Fargo Bank Minnesota, NA, as Trustee, dated as of April 8, 2003, and none
of such notes will be outstanding as of the Effective Time.
Section IV.10 Litigation. Except as set forth in Section
4.10 of the Company Disclosure Schedule:
(a) (i) there is no material action, suit, claim
(including, any worker's compensation claim), litigation or other proceeding
(including, arbitration proceeding or alternative dispute resolution proceeding)
or investigation pending or, to the knowledge of the Company or any Company
Subsidiary, threatened, against, affecting or naming as a party thereto (A) the
Company or any Company Subsidiary or (B) to the knowledge of the Company or any
Company Subsidiary, any of the Company's or any Company Subsidiary's current or
former directors or officers or any other Person who may be entitled to
indemnification by the Company or any Company Subsidiary in connection
therewith, and (ii) the Company or any Company Subsidiary does not know or have
any reason to know of any valid basis for any such suit, claim, action or
proceeding; and
(b) there is no outstanding or, to the knowledge of
the Company or any Company Subsidiary, threatened, order, judgment, injunction,
award or decree of any Governmental Entity against (i) the Company, any Company
Subsidiary or any of their respective properties, assets or businesses or (ii)
to the knowledge of the Company or any Company Subsidiary, any of the Company's
or any Company Subsidiary's current or former directors or officers or any other
Person who may be entitled to indemnification by the Company or any Company
Subsidiary in connection therewith.
32
Section IV.11 Employee Benefit Plans; ERISA.
(a) Section 4.11(a) of the Company Disclosure
Schedule contains a true and complete list of each (i) deferred compensation,
bonus or other incentive compensation, stock purchase, stock option and other
equity compensation plan, program, agreement or arrangement; (ii) severance or
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); (iii)
profit-sharing, stock bonus or other "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA); (iv) employment, termination or severance
agreement; and (v) other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of section
4001(b) of ERISA, or to which the Company or an ERISA Affiliate is party,
whether written or oral, for the benefit of any employee or former employee of
the Company or any Company Subsidiary (the "Plans"). Section 4.11(a) of the
Company Disclosure Schedule identifies each of the Plans that is subject to
section 302 or Title IV of ERISA or section 412 of the Code (the "Title IV
Plans"). Neither the Company, any Company Subsidiary nor any ERISA Affiliate has
any commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plan or modify or change any existing Plan that
would affect any employee or former employee of the Company or any Company
Subsidiary. Except with respect to the representations and warranties contained
in subsections (a) and (h) of this Section 4.11, the representations contained
in this Section 4.11 shall not apply to any Plan that is a "multiemployer
pension plan," as defined in section 4063(a) of ERISA (a "Multiemployer Plan").
(b) With respect to each Plan, the Company has
heretofore delivered or made available to Buyer true and complete copies of each
of the following documents:
(i) a copy of the Plan and any amendments
thereto (or if the Plan is not a written Plan, a description thereof);
33
(ii) a copy of the two most recent annual
reports or Form 5500 and actuarial reports, if required under ERISA,
and the most recent report prepared with respect thereto in accordance
with Statements of Financial Accounting Standards Nos. 87 and 106;
(iii) a copy of the most recent summary,
including but not limited to, any summary plan description required
under ERISA with respect thereto as well as any formal or informal
communication to employees under or in respect of any Plan;
(iv) if the Plan is funded through a trust
or any third party funding vehicle, a copy of the trust or other
funding agreement and the latest financial statements thereof; and
(v) the most recent determination letter as
well as any other material correspondence received from the Internal
Revenue Service with respect to each Plan intended to qualify under
section 401 of the Internal Revenue Code of 1986, as amended (the
"Code") and, if such letter does not consider changes in qualification
requirements made by the Uruguay Round Agreements Act, the Small
Business Job Protection Act of 1996, the Uniformed Services Employment
and Reemployment Rights Act of 1994, the Taxpayer Relief Act of 1997,
the Internal Revenue Service Restructuring and Reform Act of 1988 and
the Community Renewal Tax Relief Act of 2000 (collectively, "GUST"),
the complete GUST determination letter application, including the
latest determination letters for any merged-in qualified plans, the
Internal Revenue Service letter acknowledging receipt of such GUST
application, and any subsequent correspondence with or from the IRS in
connection with the GUST application.
(c) Except as set forth in Section 4.11(c) of the
Company Disclosure Schedule, no liability under Title IV or section 302 of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation ("PBGC")
(which premiums have been paid when due). Insofar as the representation made in
this Section 4.11(c) applies to sections 4064, 4069 or 4204 of Title IV of
ERISA, it is made with respect to any employee benefit plan, program, agreement
or arrangement subject to Title IV of ERISA to which the Company or any ERISA
34
Affiliate made, or was required to make, contributions during the five (5) year
period ending on the last day of the most recent plan year ended prior to the
Closing.
(d) The PBGC has not instituted proceedings to
terminate any Title IV Plan and no condition exists that presents a material
risk that such proceedings will be instituted.
(e) Except as set forth in Section 4.11(e) of the
Company Disclosure Schedule, with respect to each Title IV Plan, the present
value of accrued benefits under such plan, based upon the actuarial assumptions
used for accounting purposes measured in accordance with Statement of Financial
Accounting Standards No. 87 in the most recent actuarial report prepared by such
plan's actuary with respect to such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan allocable to
such accrued benefits.
(f) Except as set forth in Section 4.11(f) of the
Company Disclosure Schedule, no Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Title IV Plan ended prior to
the Closing.
(g) All contributions required to be made with
respect to any Plan on or prior to the Closing have been timely made or are
reflected in the Financial Statements of the Company as of September 28, 2003.
Except as set forth in Section 4.11(g) of the Company Disclosure Schedule, there
has been no amendment to, written interpretation of or announcement (whether or
not written) by the Company or any Company Subsidiary relating to, or change in
employee participation or coverage under, any Plan that would increase
materially the expense of maintaining such Plan above the level or expense
incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof.
(h) Except as set forth in Section 4.11(h) of the
Company Disclosure Schedule, no Title IV Plan is a Multiemployer Plan, nor is
any Title IV Plan a plan described in section 4063(a) of ERISA. With respect to
any Title IV Plan that is a "multiemployer pension plan," (i) neither the
Company nor any ERISA Affiliate has made or suffered a "complete withdrawal" or
a "partial withdrawal," as such terms are respectively defined in sections 4203
35
and 4205 of ERISA (or any liability resulting therefrom has been satisfied in
full), (ii) no event has occurred that presents a material risk of a partial
withdrawal, (iii) neither the Company nor any ERISA Affiliate has any contingent
liability under section 4204 of ERISA, and (iv) to the knowledge of the Company
or any Company Subsidiary, no circumstances exist that present a material risk
that any such plan will go into reorganization. With respect to any Title IV
Plan that is a "multiemployer pension plan," the aggregate withdrawal liability
of the Company and its ERISA Affiliates, computed as if a complete withdrawal by
the Company and the ERISA Affiliates had occurred under each such Plan on the
date hereof, would not exceed $33,432,589.
(i) Neither the Company or any Company Subsidiary,
any Plan, any trust created thereunder, nor any trustee or administrator thereof
has engaged in a transaction in connection with which the Company or any Company
Subsidiary, any Plan, any such trust, or any trustee or administrator thereof,
or any party dealing with any Plan or any such trust could reasonably be
expected to be subject to either a civil penalty assessed pursuant to section
409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the
Code.
(j) Each Plan has been operated and administered in
all material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code.
(k) Each Plan intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code. Each Plan
intended to satisfy the requirements of section 501(c)(9) of the Code has
satisfied such requirements.
(l) Except as set forth in Section 4.11(l) of the
Company Disclosure Schedule, no Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Company Subsidiary for
periods extending beyond their retirement or other termination of service, other
than (i) coverage mandated by applicable law, (ii) death benefits under any
"pension plan," or (iii) benefits the full cost of which is borne by the current
or former employee (or his beneficiary). No condition exists that would prevent
the Company or any Company Subsidiary from amending or terminating any Plan
providing health or medical benefits in respect of any active or retired
36
employee of the Company or any Company Subsidiary other than limitations imposed
under the terms of any applicable Collective Bargaining Agreement.
(m) Except as set forth in Section 4.11(m) of the
Company Disclosure Schedule, which Schedule shall specifically indicate any
amount that will not so be deductible, no amounts payable under the Plans will
fail to be deductible for federal income tax purposes by virtue of sections
162(a)(1), 162(m) or 280G of the Code.
(n) Except as set forth in Section 4.11(n) of the
Company Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement will not, either alone or contingent upon such consummation
and another event, (i) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(o) There has been no material failure of a Plan that
is a group health plan (as defined in section 5000(b)(1) of the Code) to meet
the requirements of section 4980B(f) of the Code with respect to a qualified
beneficiary (as defined in section 4980B(g) of the Code). Neither the Company
nor any Company Subsidiary has contributed to a nonconforming group health plan
(as defined in section 5000(c) of the Code) and no ERISA Affiliate of the
Company or any Company Subsidiary has incurred a tax under section 5000(e) of
the Code which is or could become a liability of the Company or a Company
Subsidiary.
(p) There are no material, pending, threatened or, to
the knowledge of the Company or any Company Subsidiary, anticipated claims by or
on behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
(q) Except as set forth in Section 4.11(q) of the
Company Disclosure Schedule, all contributions required to be made by the
Company or any Company Subsidiary with respect to all Foreign Plans have been
timely made. Each Foreign Plan has been maintained in substantial compliance
with its terms and with the requirements of any and all applicable laws and has
been maintained, where required, in good standing with the applicable
governmental authority. The fair market value of the assets of each funded
Foreign Plan, the liability of each insurer for any Foreign Plan funded through
37
insurance or the book reserve established for any plan, together with any
accrued contributions, is sufficient to procure or provide for the accrued
benefit obligations, as of the Closing, with respect to all current and former
participants in such Foreign Plan. Neither the Company nor any Company
Subsidiary has incurred any obligation in connection with the termination of or
withdrawal from any Foreign Plan. For purposes hereof, the term "Foreign Plan"
shall mean any plan, program, policy, arrangement or agreement maintained or
contributed to or by, or entered into with the Company or any Company Subsidiary
with respect to employees (or former employees) employed outside the United
States.
Section IV.12 Taxes. Except as set forth in Section 4.12
of the Company Disclosure Schedule:
(a) the Company and each Company Subsidiary has duly
and timely filed (or there has been duly and timely filed on its behalf), or a
valid extension of time to file has been obtained, with the appropriate
governmental authorities all Tax Returns required to be filed by it and all such
Tax Returns are true, correct and complete in all material respects, and all
Taxes for which the Company or any Company Subsidiary is or may be liable
(whether or not shown on any Tax Return) in respect of periods (or portions
thereof) ending on or before the Effective Time have been timely paid, or will
be timely paid, or have been provided for on the Financial Statements in
accordance with GAAP. With respect to any period (or portion thereof) through
the Effective Time for which Taxes are not yet due or owing, the Company and
each Company Subsidiary has established due and sufficient reserves for the
payments of such Taxes in accordance with GAAP, and such current reserves
through the Effective Time are duly and fully provided for in the Financial
Statements;
(b) no material deficiencies or adjustments for Taxes
have been claimed, proposed or assessed by any taxing or other governmental
authority against the Company or any Company Subsidiary, and none of the Company
or any Company Subsidiary has received any notice, or otherwise has any
knowledge, of any potential claim, proposal or assessment against the Company or
any Company Subsidiary for any such material deficiency or adjustment for Taxes.
There are no pending, or, to the best of the Company's or any Company
Subsidiary's knowledge, threatened, audits, investigations or claims for or
relating to any liability of the Company or any Company Subsidiary in respect of
Taxes, and there are no matters under discussion with respect to Taxes between
38
the Company or any Company Subsidiary on the one hand, and any governmental
authority on the other hand, that are likely to result in a material additional
liability of the Company or any Company Subsidiary for Taxes;
(c) there are no liens for Taxes upon any property or
assets of the Company or any Company Subsidiary, except for liens for Taxes not
yet due and payable and for which adequate reserves have been provided for on
the Financial Statements in accordance with GAAP;
(d) the Company and each Company Subsidiary has
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to sections 1441 and 1442 of the Code or similar
provisions under any foreign laws) and has duly and timely withheld, collected,
deposited and paid to the proper governmental authority all Taxes required to
have been withheld, collected, deposited or paid under such applicable laws,
rules and regulations;
(e) no claim has ever been made to the Company or any
Company Subsidiary by an authority in a jurisdiction where the Company or
Company Subsidiary has not filed Tax Returns that the Company or such Company
Subsidiary is or may be subject to taxation by that jurisdiction;
(f) there are no outstanding consents, agreements,
grants or requests for the extension or waiver of any statutes of limitations
applicable to any Taxes for which the Company or any Company Subsidiary is or
may be liable;
(g) the Company, as the common parent of an
affiliated group of corporations (as defined in section 1504 of the Code)
consisting solely of the Company and the current Company Subsidiaries, has filed
since September 26, 1999 or earlier a consolidated return for United States
federal income Tax purposes on behalf of itself and all Company Subsidiaries
that are "includable corporations" (within the meaning of section 1504(b) of the
Code), and neither the Company nor any Company Subsidiary (i) has been a member
of an affiliated group filing a consolidated federal Tax Return (or similar
state or local filing group) other than the affiliated group in which they are
currently members and of which the Company is the common parent or (ii) has any
liability for Taxes of any person (other than the Company or a Company
39
Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract or
otherwise;
(h) no power of attorney that is currently in force
has been granted with respect to the Company or any Company Subsidiary with
respect to any matters relating to Taxes;
(i) there are no written or oral tax sharing
agreements, contracts or other similar arrangements by which the Company or any
Company Subsidiary is bound;
(j) there are no deferred "intercompany items"
(within the meaning of Treasury Regulation Section 1.1502-13) with respect to
transactions among members of the affiliated group of corporations of which
Company is the parent, and no member of such affiliated group has an "excess
loss account" within the meaning of Treasury Regulation Section 1.1502-19 with
respect to the stock of another member of such affiliated group;
(k) neither the Company nor any Company Subsidiary
has made any change in accounting methods, received a ruling from any taxing
authority or signed an agreement with respect thereto or signed any closing
agreement with respect to any Tax year; and
(l) Any related party transactions conducted by the
Company or any Company Subsidiary have been on an arms-length basis in
accordance with section 482 of the Code and related Treasury Regulations.
"Tax" or "Taxes" shall mean any and all taxes, charges, fees,
duties, levies or other assessments, including all net income, gross income,
gross receipts, excise, stamp, real or personal property, ad valorem, sales,
withholding, estimated, social security, employment, unemployment, occupation,
use, service, service use, license, net worth, payroll, franchise,
environmental, severance, transfer, recording, escheat, or other taxes, duties,
assessments, or charges, whether computed on a separate, consolidated, unitary,
combined or any other basis, imposed by any governmental authority and any
interest, penalties, or additions to tax attributable thereto. "Tax Return"
shall mean any report, return, document, declaration, information, return or
filing (including any related or supporting information and any amendments to
40
any of the foregoing) filed or required to be filed with respect to Taxes.
The representations and warranties set forth in this Section 4.12 shall
constitute the Company's only representations and warranties with respect to tax
matters; provided that the foregoing shall not limit in any way the
representations and warranties set forth in Sections 4.9(b) or (c).
Section IV.13 Contracts. Section 4.13 of the Company
Disclosure Schedule lists (i) all material Company Agreements and (ii) each of
the Company Agreements (whether or not material) of the following types which
are currently in effect (the Company Agreements described by the immediately
foregoing clauses (i) and (ii), whether or not listed on Section 4.13 of the
Company Disclosure Schedule, being referred to hereinafter as the "Listed
Company Agreements"):
(a) any lease of, or agreement to purchase or sell,
any capital assets accounted for as such by the Company or any Company
Subsidiary;
(b) any collective bargaining agreement or other
agreement with any union or other labor organization (each a "Collective
Bargaining Agreement");
(c) any management, consulting, employment, personal
service, agency or other contracts or contracts providing for employment or
rendition of personal services and which (i) are in writing or oral and create
other than an at will employment relationship; or (ii) provide for any
commission, bonus, profit sharing, incentive, severance, retirement or similar
compensation for personal services;
(d) any agreement or note evidencing any Indebtedness
or any guaranty of Indebtedness of another Person or creating any Encumbrance;
(e) any material agreement with a dealer,
distributor, sales agent, or representative or franchisee;
(f) any agreement for the storage, transportation,
treatment or disposal of any Hazardous Substances;
41
(g) any power of attorney (whether revocable or
irrevocable) given to any Person by the Company or any Company Subsidiary, other
than powers of attorney with respect to customs and transportation matters that
have been granted to agents of a Company Subsidiary in the ordinary course of
business consistent with past practice;
(h) any agreement which purports to limit in any
respect the manner in which, or the localities in which, the Company, any
Company Subsidiary or any other entity is entitled to conduct all or any portion
of its business;
(i) any agreement restricting the right of the
Company or any Company Subsidiary to use or disclose any information in its
possession other than immaterial agreements entered into in the ordinary course
of business consistent with past practice;
(j) any partnership, joint venture or similar
arrangement;
(k) any agreement or arrangement with any affiliate
or associate of the Company or any Company Subsidiary;
(l) any agreement by which the Company or any Company
Subsidiary indemnifies or holds harmless any other Person other than agreements
entered into in the ordinary course of business consistent with past practice;
(m) any agreement pursuant to which a rebate,
discount, bonus, commission or other payment with respect to the sale of any
product of the Company or any Company Subsidiary will be payable after the
Effective Time, other than agreements entered into in the ordinary course of
business consistent with past practice that do not provide for rebates,
discounts, bonuses, commissions or other payments that are materially greater,
individually or in the aggregate, than the rebates, discounts, bonuses,
commissions and other payments payable by the Company or any Company Subsidiary
during the Company's fiscal year ended September 28, 2003;
(n) any agreement containing "change in control,"
"antitakeover" or similar provisions that could reasonably be expected to be
triggered by the consummation of the transactions contemplated hereby;
42
(o) any lease of real property (a "Real Property
Lease") to which the Company or any Company Subsidiary is a party (collectively,
"Leases");
(p) any agreement involving the acquisition, merger
or purchase of the assets or business of a third party;
(q) any agreement with a supplier or a group of
affiliated suppliers (other than purchase orders in the ordinary course of
business in accordance with past practice) which involves annual payments from
the Company and the Company Subsidiaries of an amount in excess of $50,000; and
(r) any agreement with the twenty five largest
customers or groups of affiliated customers of the Company and the Company
Subsidiaries (based on 2003 annual consolidated revenues).
True and complete copies of the written Listed Company Agreements and
descriptions of oral Listed Company Agreements, if any, including in each case
any amendment or supplement thereto, have been delivered to Parent. Each of the
Listed Company Agreements is in full force and effect and constitutes the legal
and binding obligation of the Company and/or the Company Subsidiaries party
thereto and, to the knowledge of the Company and the Company Subsidiaries,
constitutes the legal and binding obligation of the other parties thereto. There
are no existing breaches or defaults by the Company or any Company Subsidiary
or, to the knowledge of the Company or any Company Subsidiary, any other party
to a Listed Company Agreement under any Listed Company Agreement and, to the
knowledge of the Company or any Company Subsidiary, no event has occurred which,
with the passage of time or the giving of notice or both, could reasonably be
expected to constitute such a breach or default. The agreement referenced in
Section 4.13(z) of the Company Disclosure Schedule is terminable without penalty
by the Company Subsidiary party thereto effective as of September 30, 2004 in
accordance with its terms.
Section IV.14 Real and Personal Property. (a) Except as
disclosed in Section 4.14(a) of the Company Disclosure Schedule, each of the
Company and the Company Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its properties and assets, free and clear of all
Encumbrances.
(b) Each of the Company and the Company Subsidiaries
is in compliance in all material respects with the terms of all Leases. Each of
43
the Company and the Company Subsidiaries enjoys peaceful and undisturbed
possession under all Real Property Leases.
(c) Section 4.14(c) of the Company Disclosure
Schedule sets forth (i) a true and complete list of all real property owned by
the Company or any Company Subsidiary (collectively, "Owned Real Property") and
(ii) a true and complete list of all real property leased by the Company or any
Company Subsidiary pursuant to a Real Property Lease (collectively, the "Leased
Real Property," and together with the Owned Real Property, the "Real Property").
Except as disclosed in Section 4.14(c) of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary is a party to any lease,
assignment or similar arrangement under which the Company or any Company
Subsidiary is a lessor, sublessor, assignor or otherwise makes available for use
by any third party any portion of the Real Property.
(d) To the knowledge of the Company or any Company
Subsidiary, the obligations of the Company or the Company Subsidiaries, as
applicable, with regard to all applicable covenants, easements and restrictions
encumbering the Real Property are being performed in a proper and timely manner
by the Company and the Company Subsidiaries. Neither the Company nor the Company
Subsidiaries are currently in default under any agreement, order, judgment or
decree relating to the Real Property, and no conditions or circumstances exist
which, with the giving of notice or passage of time, could constitute a default
or breach with respect to the foregoing except for such defaults and conditions,
if any, which could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(e) Except as disclosed in Section 4.14(e) of the
Company Disclosure Schedule, (i) neither the Company nor any Company Subsidiary
has received notice of any proceedings, claims or disputes, whether pending or
threatened, affecting any Real Property, and (ii) neither the Company nor any
Company Subsidiary has received notice in the past three years, or any notice
which is currently unresolved, from any Governmental Entity having jurisdiction
over any Real Property of any threatened suspension, modification or
cancellation of certificates of occupancy or permits required under applicable
law to occupy and use any Real Property as presently occupied or used. Neither
the Company nor any Company Subsidiary has received notice of or become aware of
44
any proposed special assessment which would affect the Real Property nor any
notice of increased taxes, assessments or insurance premiums relating to the
Real Property.
(f) To the knowledge of the Company or any Company
Subsidiary, the Real Property is zoned so as to permit the current use thereof,
and the Company's and/or the Company Subsidiaries' use and operation of the Real
Property as presently conducted is not dependent on a nonconforming use or other
waiver from a Governmental Entity, the absence of which would materially limit
the use of the Real Property or the operations thereon as presently conducted.
The Company and the Company Subsidiaries have obtained all appropriate
certificates of occupancy, licenses, permits, approvals, easements and rights of
way, including proofs of dedication, required to use and operate the Real
Property in the manner in which the Real Property is currently being used and
operated.
(g) There is free and uninterrupted ingress and
egress to each parcel of Real Property from a public street, road or highway
(which ingress and egress may in some cases be via an easement which is
perpetual or, in the case of Leased Real Property, at least of a duration equal
to the term of the applicable lease) suitable for the operation of business as
presently conducted upon each parcel of such Real Property.
Section IV.15 Intellectual Property. (a) As used herein, the
term "Intellectual Property" means all: (i) U.S. or foreign trademarks, service
marks, trade names, trade dress, Internet domain names, designs, logos, slogans
and general intangibles of like nature, together with goodwill, registrations
and applications for any of the foregoing (collectively, "Trademarks"); (ii)
issued patents, pending patent applications and patent disclosures and any
divisions, continuations, continuations-in-part, reissues, re-examinations and
extensions thereof, and any U.S. or foreign counterparts claiming priority
therefrom or related thereto (collectively, "Patents"); (iii) U.S. or foreign
copyrights and mask works, including registrations and applications for any of
the foregoing (collectively, "Copyrights"); (iv) computer programs, including
any and all software implementations of algorithms, models and methodologies
whether in source code or object code form, databases and compilations,
including any and all data and collections of data, all documentation, including
user manuals and training materials, related to any of the foregoing and the
content and information contained on any Internet web site (collectively,
"Software"); (v) trade secrets, confidential information, technology, know-how,
research and development, data, drawings, plans, specifications, designs,
inventions, processes, formulae, algorithms, models and methodologies (such
45
proprietary items, collectively "Trade Secrets"); and (vi) any licenses granted
to the Company or a Company Subsidiary to use any of the foregoing. "Business
Intellectual Property" means the Intellectual Property used, or held for use, in
the business of the Company or any Company Subsidiary as currently conducted, or
as presently contemplated to be conducted.
(b) Section 4.15(b) of the Company Disclosure
Schedule sets forth, for all Intellectual Property owned by the Company or any
Company Subsidiary, a complete and accurate list of all U.S., state and foreign:
(i) Patents; (ii) registered or pending Trademarks and material unregistered
trademarks and service marks; and (iii) registered or pending Copyrights and
material unregistered Copyrights. The Company or a Company Subsidiary currently
is listed in the records of the appropriate U.S., state or foreign agency as the
sole owner of record for each application and registration listed on Section
4.15(b) of the Company Disclosure Schedule.
(c) Section 4.15(c) of the Company Disclosure
Schedule sets forth a complete and accurate list of all Software which is owned
by the Company or any Company Subsidiary ("Proprietary Software") and all
material Software which is licensed, leased or otherwise used by the Company or
any Company Subsidiary, and identifies which Software is owned, licensed,
leased, or otherwise used, as the case may be.
(d) Section 4.15(d) of the Company Disclosure
Schedule sets forth a complete and accurate list of all material agreements
granting or obtaining any right to use or practice any rights under any Business
Intellectual Property, to which the Company or any Company Subsidiary is a party
or otherwise bound, as licensee or licensor thereunder, including license
agreements, settlement agreements, orders, judgments and covenants not to ▇▇▇
(collectively, the "IP License Agreements").
(e) Except as set forth in Section 4.15(e) of the
Company Disclosure Schedule:
(i) the Company or a Company Subsidiary
owns, or possesses adequate licenses or other legally enforceable
rights to use for each of the Company and the Company Subsidiaries,
all Business Intellectual Property, free and clear of all
Encumbrances;
46
(ii) the Business Intellectual Property
constitutes all Intellectual Property necessary to conduct the
business of the Company and the Company Subsidiaries as currently
conducted or as presently contemplated to be conducted, including any
research and development work on products or Software started prior to
the date hereof;
(iii) any Trademarks, Patents and Copyrights
(x) owned by the Company or any Company Subsidiary, other than
unregistered Trademarks which have not been used within the last two
(2) years and are not planned to be used in the conduct of the
business of the Company and the Company Subsidiaries as currently
conducted or as presently contemplated to be conducted, or (y) set
forth in Section 4.15(b) of the Company Disclosure Schedule, have been
duly maintained, are valid and subsisting, in full force and effect
and have not been cancelled, expired or abandoned;
(iv) no claims have been asserted, or, to
the knowledge of the Company or any Company Subsidiary, threatened, by
any Person against the Company or any Company Subsidiary related to
the use of any Intellectual Property or challenging or questioning the
ownership, validity or enforceability of any Business Intellectual
Property, and neither the Company nor any Company Subsidiary has any
knowledge of any basis for such a claim or challenge;
(v) to the knowledge of the Company or any
Company Subsidiary, the use of the Business Intellectual Property in
the conduct of the business of Company and the Company Subsidiaries,
as currently conducted, or as presently contemplated to be conducted
by the Company, does not infringe, misappropriate or otherwise violate
any Intellectual Property rights of any Person;
(vi) to the knowledge of the Company or any
Company Subsidiary, no third party is infringing, misappropriating or
otherwise violating any Business Intellectual Property owned by the
47
Company or any Company Subsidiary;
(vii) neither the Company nor any Company
Subsidiary has licensed or sublicensed its rights in any Business
Intellectual Property, or received or been granted any such rights,
other than pursuant to the IP License Agreements;
(viii) the IP License Agreements are valid
and binding obligations of the Company or a Company Subsidiary,
enforceable in accordance with their terms, and there exists no event
or condition which will result in a violation or breach thereof, or
constitute a default by the Company or any Company Subsidiary or, to
the knowledge of the Company or any Company Subsidiary, the other
party thereto, under any such IP License Agreement;
(ix) the Company and the Company
Subsidiaries take reasonable measures to protect the confidentiality
of their respective Trade Secrets, including requiring employees,
consultants and third parties having access thereto to execute written
nondisclosure agreements. No Trade Secret of the Company or any
Company Subsidiary has been disclosed or authorized to be disclosed to
any third party other than pursuant to a written nondisclosure
agreement that adequately protects the Company's and the Company
Subsidiaries' proprietary interests in and to such Trade Secret;
(x) the consummation of the transactions
contemplated hereby will not result in the loss or impairment of the
Company's or any Company Subsidiary's rights to own or use any of the
Business Intellectual Property, nor will such consummation require the
consent of any third party in respect of any Intellectual Property;
(xi) all Proprietary Software set forth in
Section 4.15(c) of the Company Disclosure Schedule, was either
developed (a) by employees of the Company or a Company Subsidiary
within the scope of their employment; (b) by independent contractors
as "works-made-for-hire," as that term is defined under section 101 of
the United States Copyright Act, 17 U.S.C. ss. 101, pursuant to
written agreement; or (c) by third parties who have assigned all of
their rights therein to the Company pursuant to written agreement. No
former or present employees, officers or directors of the Company or
any Company Subsidiary retain any rights of ownership or use of the
Proprietary Software, and no employees, consultants or third parties
who have developed or participated in the development of the
Proprietary Software have any claims to any moral rights therein;
48
(xii) the Software is free from any
significant defect or programming or documentation error, operates and
runs in a reasonable and efficient business manner, conforms to the
stated specifications thereof, and, with respect to Proprietary
Software, the applications can be recreated from their associated
source codes; and
(xiii) neither the Company nor any Company
Subsidiary has knowingly altered its data or any Software or
supporting software which may, in turn, damage the integrity of the
data stored in electronic, optical or magnetic or other form, and, to
the knowledge of the Company or any Company Subsidiary, there are no
worms, bugs, viruses or other disabling devices with respect to the
Software.
Section IV.16 Related Party Transactions. Except as set forth
in Section 4.16(a) of the Company Disclosure Schedule, since September 30, 2001,
there have been no transactions, agreements, arrangements or understandings
between the Company or any Company Subsidiary, on the one hand, and their
respective affiliates, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act. Except as set forth
in Section 4.16(b) of the Company Disclosure Schedule, no officer or director of
the Company or of any Company Subsidiary or, to the knowledge of the Company or
any Company Subsidiary, any relative of any of the foregoing, owns, directly or
indirectly, any interest in (excepting not more than one percent (1%) stock
holdings for investment purposes in securities of publicly-held and traded
companies) or is an officer, director, employee or consultant of any Person that
is a competitor, lessor, lessee, customer or supplier of the Company or any
Company Subsidiary; and no officer or director of the Company or of any Company
Subsidiary or, to the knowledge of the Company or any Company Subsidiary, any
relative of any of the foregoing (i) owns, directly or indirectly, in whole or
in part, any Business Intellectual Property, (ii) has asserted any claim,
charge, action or cause of action against the Company or any Company Subsidiary,
except for immaterial claims for accrued vacation pay and accrued benefits under
any Plans and, to the Company's or any Company Subsidiary's knowledge, there is
no basis for any such claims, charges, actions or causes of action, (iii) has
made, on behalf of the Company or any Company Subsidiary, any payment or
commitment to pay any commission, fee or other amount to, or to purchase or
obtain or otherwise contract to purchase or obtain any goods or services from,
any other Person of which any officer or director of the Company or any Company
49
Subsidiary, or, to the Company's or any Company Subsidiary's knowledge, any
relative of any of the foregoing, is a partner or stockholder (except stock
holdings solely for investment purposes in securities of publicly held and
traded companies), (iv) owes any money to the Company or any Company Subsidiary
(except for reimbursement of advances in the ordinary course of business
consistent with past practice) or (v) has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of the Company or any Company Subsidiary.
Section IV.17 Labor Matters. Except as set forth in
Section 4.17 of the Company Disclosure Schedule:
(a) There are no material controversies, grievances,
or arbitrations pending, or, to the knowledge of the Company or any Company
Subsidiary, threatened, between the Company or any Company Subsidiary, on the
one hand, and any of their respective employees or labor organizations
representing such employees, on the other hand. Since September 30, 2001, no
union or other labor organization has conducted an organizing campaign or made a
demand for recognition upon the Company or any Company Subsidiary or filed a
representation petition with the National Labor Relations Board seeking to
represent employees of the Company or any Company Subsidiary. Neither the
Company nor any Company Subsidiary is a party to or bound by any Collective
Bargaining Agreements, memoranda of understanding, or any other agreements with
a union or other labor organization.
(b) There are no material written personnel policies,
rules or procedures applicable to the terms and conditions of employment of
employees of the Company or any Company Subsidiary other than those listed on
Section 4.17(b) of the Disclosure Schedule, true and correct copies of which
have been previously made available to the Parent.
(c) The Company and all Company Subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment, health
and safety, and wages and hours, and are not engaged in any unfair labor
practice.
(d) There is no unfair labor practice charge,
complaint or other allegation of labor law violation against the Company or any
50
Company Subsidiary pending before the National Labor Relations Board or any
other Governmental Entity.
(e) Since September 30, 2001, there has been no
strike, slowdown, work stoppage or lockout at any facility of the Company or any
Company Subsidiary and, to the knowledge of the Company or any Company
Subsidiary, no such action is threatened against or affecting the Company or any
Company Subsidiary.
(f) Neither the Company nor any Company Subsidiary
has received written notice of any actual or threatened investigation, charge,
suit, complaint or other proceeding against the Company or any Company
Subsidiary with respect to current or former employees, applicants for
employment, or classes of the foregoing pending before the Equal Employment
Opportunity Commission or any other Governmental Entity regarding an unlawful
employment practice, breach of any express or implied contract of employment,
any law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
(g) During the past six (6) months, (i) neither the
Company nor any Company Subsidiary has effectuated a "plant closing" (as defined
in the Worker Adjustment and Retraining Notification Act (the "WARN Act"))
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility, (ii) there has not occurred a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of either the Company or any Company Subsidiary, and (iii) neither the
Company nor any Company Subsidiary has engaged in layoffs or employment
terminations sufficient in number to trigger application of the WARN Act or any
similar state, local or foreign law or regulation. No employee of the Company or
any Company Subsidiary has suffered an "employment loss" (as defined in the WARN
Act) during the past ninety (90) days.
Section IV.18 Compliance with Laws; Permits.
(a) Except as set forth in Section 4.18(a) of the
Company Disclosure Schedule, (i) the Company and the Company Subsidiaries have
complied in a timely manner and in all material respects with all laws, rules
and regulations, ordinances, judgments, decrees, orders, writs and injunctions
of all Governmental Entities which affect the business, properties or assets of
51
the Company and the Company Subsidiaries and (ii) no notice, charge, claim,
action or assertion has been received by the Company or any Company Subsidiary
or has been filed, commenced or, to the knowledge of the Company or any Company
Subsidiary, threatened against the Company or any Company Subsidiary alleging
any violation of any of the foregoing.
(b) The Company and each Company Subsidiary is in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders from Governmental Entities (collectively, the "Company Permits"), that
are necessary to own, lease and operate its properties and to carry on its
business as owned, leased, operated or carried on as of the date of this
Agreement. The Company Permits are in full force and effect, and there is no
action, proceeding or investigation pending or, to the knowledge of the Company
or any Company Subsidiary, threatened regarding suspension or cancellation of
the Company Permits.
Section IV.19 Assets. The assets and properties of the Company
and the Company Subsidiaries, considered as a whole, constitute all of the
assets and properties which are utilized to conduct the business and operations
of the Company and the Company Subsidiaries as presently conducted.
Section IV.20 Customers and Suppliers. Section 4.20 of the
Company Disclosure Schedule sets forth a list of the ten largest customers and
suppliers or groups of affiliated customers or suppliers of the Company and the
Company Subsidiaries (based on 2003 annual consolidated revenues). Except as
described in Section 4.20 of the Company Disclosure Schedule, since September
29, 2002, there has been no termination, cancellation or material curtailment of
the business relationship of the Company or any Company Subsidiary with any such
customer or supplier or group of affiliated customers or suppliers nor has any
such customer or supplier or group of affiliated customers or suppliers
threatened to so terminate, cancel or materially curtail such business
relationships.
Section IV.21 Environmental Matters. (a) The following
terms shall have the following meanings for the purposes of this Agreement:
(i) "Environmental Laws" shall mean all
foreign, federal, state and local laws, regulations, rules and
52
ordinances relating to pollution or protection of the environment or
human health and safety, including laws, regulations, rules and
ordinances relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, release, transport or handling of Hazardous Substances; all
laws and regulations with regard to record-keeping, notification,
disclosure and reporting requirements respecting Hazardous Substances;
all laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural resources;
and common law to the extent it relates to or applies to exposure to
or impact of Hazardous Substances on persons or property.
(ii) "Environmental Claim" shall mean any
claim, action, cause of action, investigation or written notice by any
person or entity alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damages, personal
injuries or penalties) arising out of, based on or resulting from (a)
the presence, or release into the environment, of any Hazardous
Substance at any location, whether or not owned or operated by the
Company or any Company Subsidiary or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental
Law.
(iii) "Hazardous Substances" shall mean
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, radioactive materials, asbestos, petroleum and
petroleum products that are subject to regulatory action in connection
with any Environmental Law.
(b) Except as set forth in Section 4.21 of the Company
Disclosure Schedule:
(i) To the knowledge of the Company or any
Company Subsidiary, the Company and each Company Subsidiary is in full
compliance with all applicable Environmental Laws, which compliance
includes, but is not limited to, the possession by the Company and
each Company Subsidiary of all permits and governmental authorizations
required under applicable Environmental Laws, and compliance with the
terms and conditions thereof. Neither the Company nor any Company
Subsidiary has received any written communication or, to the knowledge
of the Company or any Company Subsidiary, oral communication whether
53
from a governmental authority, citizens group, employee or otherwise,
that alleges that the Company or any Company Subsidiary is not in such
full compliance, and, to the knowledge of the Company or any Company
Subsidiary there are no circumstances that may prevent or interfere
with such full compliance in the future. All permits and other
governmental authorizations currently held by the Company or any
Company Subsidiary pursuant to the Environmental Laws are identified
in Section 4.21(i) of the Company Disclosure Schedule. The Company has
delivered to Parent all reports, assessments, investigations, studies,
analytical results, audits, tests, sampling results and monitoring
data relating to (1) the discharge, release or threatened release of
Hazardous Substances by the Company or any Company Subsidiary or
affecting any current or former properties of the Company or any
Company Subsidiary, (2) relating to any Environmental Claim against
the Company or any Company Subsidiary; or (3) otherwise relating to
the Company's or any Company Subsidiaries' liability under or
compliance with Environmental Laws, in each case, that are material
and in the Company's or a Company Subsidiaries' possession or control.
(ii) There is no Environmental Claim pending
or, to the knowledge of the Company or any Company Subsidiary,
threatened against the Company or any of the Company Subsidiaries or,
to the knowledge of the Company or any Company Subsidiary, against any
person or entity whose liability for any Environmental Claim the
Company or any of the Company Subsidiaries has or may have retained or
assumed either contractually or by operation of law.
(iii) To the knowledge of the Company or any
Company Subsidiary, there are no, past or present actions, activities,
circumstances, conditions, events or incidents, including the release,
emission, discharge, presence or disposal of any Hazardous Substance
that could form the basis of any Environmental Claim against the
Company or any of the Company Subsidiaries or, to the knowledge of the
Company or any Company Subsidiary, against any person or entity whose
liability for any Environmental Claim the Company or any of the
Company Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
54
(iv) Without in any way limiting the
generality of the foregoing, to the knowledge of the Company or any
Company Subsidiary, (A) all on-site and off-site locations where the
Company or any of the Company Subsidiaries has stored, disposed or
arranged for the disposal of Hazardous Substances are identified in
Section 4.21 of the Company Disclosure Schedule, (B) all underground
storage tanks located on property owned, operated, or leased by the
Company or any of the Company Subsidiaries are identified in Section
4.21 of the Company Disclosure Schedule, (C) except as set forth in
Section 4.21 of the Company Disclosure Schedule, there is no asbestos
contained in or forming part of any building, building component,
structure or office space owned or leased by the Company or any of the
Company Subsidiaries, and (D) except as set forth in Section 4.21 of
the Company Disclosure Schedule, no polychlorinated biphenyls (PCB's)
are used or stored at any property owned or leased by the Company or
any of the Company Subsidiaries, (E) except as set forth in Section
4.21 of the Company Disclosure Schedule, all underground storage tanks
owned, operated, or leased by the Company or any of the Company
Subsidiaries and which are subject to regulation under the federal
Resource Conservation and Recovery Act (or equivalent state or local
law regulating underground storage tanks) meet the technical standards
prescribed at Title 40 Code of Federal Regulations Part 280 which
became effective December 22, 1998 (or any applicable state or local
law requirements which are more stringent than such technical
standards or which became effective before such date).
(v) Neither the Company nor any Company
Subsidiary has received any written request for information from any
Person, including but not limited to any Governmental Entity, related
to liability under or compliance with any applicable Environmental
Law.
(vi) With respect to the real property that
is currently owned, leased or operated by the Company or any Company
Subsidiary, to the knowledge of the Company or any Company Subsidiary,
there have been no spills, discharges or releases (as such term is
defined by the Comprehensive Environmental Response, Compensation and
Liability Act, 42, U.S.C. 9601, et seq. ("CERCLA")) of Hazardous
Substances or any other contaminant or pollutant on or underneath any
of such real property that would require investigation or clean-up.
55
(vii) With respect to real property that was
formerly owned, leased or operated by the Company or any Company
Subsidiary, to the knowledge of the Company or any Company Subsidiary,
there were no spills, discharges or releases (as such terms are
defined by CERCLA) of Hazardous Substances or any other contaminant or
pollutant on or underneath any of such real property by the Company or
any Company Subsidiary during the Company's or any Company
Subsidiary's ownership or operation of such real property that would
require investigation or clean-up.
(viii) Neither the Company nor any Company
Subsidiary has entered into any written agreement or incurred any
material legal or monetary obligation to pay to, reimburse, guarantee,
pledge, defend, indemnify or hold harmless any Person from or against
any liabilities or costs arising out of or related to the generation,
manufacture, use, transportation or disposal of Hazardous Substances,
or otherwise arising in connection with or under Environmental Laws.
(ix) To the knowledge of the Company or any
Company Subsidiary, neither the Company nor any Company Subsidiary has
disposed or arranged for the disposal of Hazardous Substances (or any
waste or substance containing Hazardous Substances) at any location
that is: (i) listed on the Federal National Priorities List ("NPL") or
identified on the Comprehensive Environmental Response, Compensation,
and Liability Information System ("CERCLIS"), each established
pursuant to CERCLA; (ii) listed on any state or foreign list of
hazardous waste sites that is analogous to the NPL or CERCLIS; or
(iii) has been subject to environmental investigation or remediation.
The representations and warranties set forth in this Section 4.21 shall
constitute the Company's only representations and warranties with respect to
environmental matters; provided that the foregoing shall not limit in any way
the representations and warranties set forth in Sections 4.9(b) or (c).
Section IV.22 Insurance. Section 4.22 of the Company
Disclosure Schedule contains an accurate and complete list of all material
policies of fire, liability, workmen's compensation and other forms of insurance
owned or held by the Company and each Company Subsidiary. All such policies are
in full force and effect, all premiums payable under such policies have been
timely paid, the Company and the Company Subsidiaries are otherwise in full
56
compliance with the terms and conditions of all such policies and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which the Company or any Company Subsidiary is a party; are
valid, outstanding and enforceable policies; will remain in full force and
effect through the respective dates set forth in Section 4.22 of the Company
Disclosure Schedule without the payment of additional premiums; and will not in
any way be affected by, or terminate or lapse by reason of, the transactions
contemplated hereby. To the knowledge of the Company or any Company Subsidiary,
there has been no threatened termination of, premium increase with respect to or
material alteration of coverage under, any such policy. Section 4.22 of the
Company Disclosure Schedule identifies all risks which the Company, the Company
Board of Directors or the Company's officers have designated as being
self-insured.
Section IV.23 Information Statement. The Information Statement
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
Section IV.24 Brokers. Except as set forth in Section 4.24 of
the Company Disclosure Schedule, no broker, investment banker, financial advisor
or other Person, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Company. True and correct
copies of all agreements between the Company and any Person listed in Section
4.24 of the Company Disclosure Schedule, including any fee arrangements, have
been delivered to Parent.
Section IV.25 Full Disclosure. The Company has not failed to
disclose to Parent or Merger Sub any facts material to the business, results of
operations, assets, liabilities, financial condition or prospects of the Company
or any Company Subsidiary. No representation or warranty by the Company
contained in this Agreement and no statement contained in any document
(including the Company Disclosure Schedule), certificate, or other writing
furnished or to be furnished by the Company to Parent or Merger Sub or any of
its representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
57
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
Section V.1 Organization. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power to
own, lease and operate its properties and to carry on its business as is now
being conducted, except where the failure to be so organized and existing or to
have such power, authority, and governmental approvals would not, individually
or in the aggregate, impair in any material respect the ability of each of
Parent and Merger Sub, as the case may be, to perform its obligations under this
Agreement, or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
Section V.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and
Merger Sub of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the boards of directors of each
of Parent and Merger Sub; as the sole stockholder of Merger Sub, Parent has
approved the Merger and adopted this Agreement; and no other corporate authority
or approval on the part of Parent or Merger Sub is necessary to authorize the
execution and delivery by Parent and Merger Sub of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming due and valid
authorization, execution and delivery hereof by the Company, is the valid and
binding obligation of each of Parent and Merger Sub enforceable against each of
them in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
58
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section V.3 Consents and Approvals; No Violations. None of the
execution, delivery or performance of this Agreement by Parent or Merger Sub,
the consummation by Parent or Merger Sub of the transactions contemplated
hereby, or compliance by Parent or Merger Sub with any of the provisions hereof
will (a) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of Parent or Merger Sub, (b) require any
material filing by Parent or Merger Sub with, or permit, authorization, consent
or approval of, any Governmental Entity (except for (A) the filing of the
Certificate of Merger pursuant to the DGCL and (B) any filings as may be
required under the HSR Act), or (c) violate any material order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries, or any of their properties or assets, except in the case of clause
(b) or (c) such violations, breaches or defaults which would not, individually
or in the aggregate, impair in any material respect the ability of each of
Parent and Merger Sub to perform its obligations under this Agreement, as the
case may be, or prevent or materially delay the consummation of any the
transactions contemplated hereby.
Section V.4 Brokers. No broker, investment banker, financial
advisor or other Person (other than any such Person whose fees and expenses will
be paid by Parent), is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent or
Merger Sub.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section VI.1 Conduct of Business of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement or (ii) as Parent may consent in writing, during the period from the
date of this Agreement to the Effective Time:
(a) the business of the Company and the Company
Subsidiaries shall be conducted only in the ordinary course of business
consistent with past practice, and each of the Company and the Company
59
Subsidiaries shall use its reasonable best efforts to preserve its present
business organization intact and maintain good relations with customers,
suppliers, employees, contractors, distributors and others having business
dealings with it;
(b) neither the Company nor any Company Subsidiary
shall, directly or indirectly, (i) except, with respect to the Company, (A) for
the issuance of Class D Common Stock or Class A Common Stock, as applicable,
upon exercise of the Options outstanding on the date hereof pursuant to the
terms of such Options, (B) for the issuance of shares of Class C Common Stock
upon exercise of any Warrant outstanding on the date hereof pursuant to the
terms of such Warrant, (C) for the issuance of shares of Class A Common Stock
upon conversion of Class B Common Stock outstanding on the date hereof pursuant
to the Company's certificate of incorporation, and (D) for the issuance of
shares of Class A Common Stock upon conversion of Class B Series 2 Preferred
Stock outstanding on the date hereof pursuant to the Company's certificate of
incorporation, issue, sell, transfer, dispose of, encumber or pledge any shares
of capital stock of the Company or any capital stock of any Company Subsidiary,
(ii) amend its certificate of incorporation or by-laws or similar organizational
documents or (iii) split, combine, sub-divide or reclassify any outstanding
shares of its capital stock;
(c) neither the Company nor any Company Subsidiary
shall: (i) declare, set aside or pay any dividend or other distribution payable
in cash, stock or property with respect to its capital stock, except (A) in the
case of the Company, for quarterly dividends to the extent provided for in, and
in an amount not to exceed that required by, the Company's certificate of
incorporation with respect to the Exchangeable Preferred Stock; provided,
however, that the record date for any such dividend shall in no event be earlier
than 10 days prior to the date on which such dividend is payable and (B) in the
case of any direct or indirect wholly-owned Company Subsidiary, for the payment
of cash dividends or other cash distributions to the Company or another
wholly-owned Company Subsidiary in the ordinary course of business consistent
with the Company's current cash management procedures; (ii) issue, sell,
transfer, dispose of, encumber or pledge any securities convertible into or
exchangeable for, or options, warrants or rights of any kind to acquire, any
shares of capital stock of the Company or any Company Subsidiary; or (iii)
except, in the case of the Company to the extent required by Section 7.8 with
respect to the Exchangeable Preferred Stock, redeem, purchase or otherwise
acquire any shares of its capital stock;
60
(d) neither the Company nor any Company Subsidiary,
shall (i) acquire, sell, lease or dispose of any assets except (A) in the
ordinary course of business consistent with past practice or (B) with respect to
the sale of the assets set forth on Section 6.1(d) of the Company Disclosure
Schedule in accordance with the terms of the purchase and sale agreements with
respect to such assets as in effect on the date hereof or otherwise pursuant to
purchase and sale agreements on terms and conditions (other than price) no less
favorable to the Company than any purchase and sale agreement currently in
effect on the date hereof with respect to any such assets; (ii) acquire (by
merger, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division thereof or
any equity interest therein; or (iii) enter into any material commitment or
transaction;
(e) except as required by law or by a Collective
Bargaining Agreement, neither the Company nor any Company Subsidiary shall (i)
change the compensation or benefits payable or to become payable to any of its
officers, directors or employees (other than increases in wages in the ordinary
course of business consistent with past practice to employees who are not
officers, directors or affiliates); (ii) enter into or amend any employment,
severance, consulting, termination or other agreement or employee benefit plan;
or (iii) make any loans to any of its officers, directors, employees or
affiliates or change its existing borrowing or lending arrangements for or on
behalf of any of such persons pursuant to an employee benefit plan or otherwise;
(f) except as required by law or by a Collective
Bargaining Agreement, neither the Company nor any Company Subsidiary shall (i)
pay or arrange for payment of any pension, retirement allowance or other
employee benefit pursuant to any existing plan, agreement or arrangement to any
officer, director, employee or affiliate or pay or make any arrangement for
payment to any officers, directors, employees or affiliates of the Company of
any amount relating to unused vacation days, except payments and accruals made
in the ordinary course of business consistent with past practice; (ii) except as
may be required pursuant to the terms of a plan, agreement or arrangement as in
effect on the date hereof, adopt or pay, grant, issue, accelerate or accrue
salary or other payments or benefits pursuant to any pension, profit-sharing,
bonus, extra compensation, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance, severance pay,
retirement or other employee benefit plan, agreement or arrangement, or any
61
employment or consulting agreement with or for the benefit of any director,
officer or employee, whether past or present; or (iii) amend in any material
respect any such existing plan, agreement or arrangement in a manner
inconsistent with the foregoing;
(g) neither the Company nor any Company Subsidiary
will (i) in any material respect, modify, amend or terminate any of the Listed
Company Agreements; (ii) waive, release or assign any material rights or claims
under any of the Listed Company Agreements; or (iii) enter into any contracts,
agreements, arrangements or understandings that would be required to be set
forth in Section 4.13 of the Company Disclosure Schedule except for those
contracts, agreements, arrangements or understandings which are (x) not material
to the Company and (y) entered into in the ordinary course of business
consistent with past practice;
(h) neither the Company nor any Company Subsidiary
will permit any material insurance policy naming it as a beneficiary or a loss
payee to be cancelled or terminated without prior notice to Parent;
(i) neither the Company nor any Company Subsidiary
will (i) incur or assume any long-term indebtedness or any short-term
indebtedness (except for indebtedness under Sweetheart Cup Company Inc.'s
existing revolving credit agreement for working capital in the ordinary course
of business consistent with past practice); (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person except endorsements of
negotiable instruments in the ordinary course of business consistent with past
practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other Person (excluding advances to employees for expenses
in the ordinary course of business consistent with past practice); or (iv)
mortgage or pledge any of its assets, tangible or intangible, or create any
Encumbrance of any kind with respect to any such assets;
(j) neither the Company nor any Company Subsidiary
shall enter into or modify any Collective Bargaining Agreement or similar
agreement or any successor Collective Bargaining Agreement to any Collective
Bargaining Agreement;
(k) the Company and each Company Subsidiary shall
timely and properly file, or timely and properly file requests for extensions to
62
file, all federal, state, local and foreign Tax Returns which are required to be
filed, and pay or make provision for the payment of all Taxes owed by them;
(l) neither the Company nor any Company Subsidiary
will (i) change any of the accounting methods used by it except for such changes
required by GAAP or (ii) make any material Tax election or change any Tax
election already made, adopt any Tax accounting method, change any Tax
accounting method, amend any Tax Return, enter into any closing agreement or
settle any material claim or material assessment relating to Taxes or consent to
any claim or assessment relating to Taxes or any waiver of the statute of
limitations for any such claim or assessment;
(m) except as provided in Section 6.1(o), neither the
Company nor any Company Subsidiary will pay, discharge or satisfy any claims,
liabilities or obligations (whether absolute, accrued, contingent or otherwise),
other than the payment, discharge or satisfaction of any such claims,
liabilities or obligations reflected or reserved against in the Financial
Statements as of September 28, 2003 or incurred in the ordinary course of
business consistent with past practice since September 28, 2003;
(n) neither the Company nor any Company Subsidiary
will adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary (other than, with respect to the Company, the
Merger);
(o) neither the Company nor any Company Subsidiary
will (i) settle any action, suit, claim, litigation or other proceeding unless
such settlement involves solely the payment of money, includes a full release of
the Company and each Company Subsidiary from all liability in respect to such
matter, and would not otherwise adversely affect the business, operations or
assets of the Company or any Company Subsidiary, or (ii) enter into any consent
decree, injunction or other similar restraint or form of equitable relief in
settlement of any action, suit, claim, litigation or other proceeding;
(p) neither the Company nor any Company Subsidiary
will take, or agree in writing or otherwise to take, any action that would or is
reasonably likely to result in any of the conditions set forth in Article VIII
not being satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any material respect at or prior to the Effective
63
Time, or that would impair the ability of the Company to consummate the Merger
in accordance with the terms hereof or delay such consummation;
(q) neither the Company nor any Company Subsidiary
shall make any capital expenditure which is not in all material respects in
accordance with the annual budget for the fiscal year 2004, a true and correct
copy of which has been delivered to Parent, provided, however, that the
foregoing shall not prohibit the Company or any Company Subsidiary from
responding to an emergency situation in a manner and to the extent necessary to
stabilize such emergency situation to allow sufficient time to consult with
Parent as to any required additional expenditures;
(r) neither the Company nor any Company Subsidiary
(i) shall allow any Intellectual Property owned or possessed by the Company or
any Company Subsidiary to lapse, become abandoned, dedicated to the public or
unenforceable except in the ordinary course of business consistent with past
practice, or (ii) cease the use of any Trademarks included in the Business
Intellectual Property or fail to maintain the level of quality associated with
such Trademarks; and
(s) neither the Company nor any Company Subsidiary
will enter into any agreement, contract, commitment or arrangement to do any of
the foregoing, or authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section VI.2 No Solicitation. The Company agrees that it shall
immediately cease and cause to be terminated all existing discussions,
negotiations and communications with any Persons with respect to any Acquisition
Proposal and request the return of all information provided to any third party
pursuant to a confidentiality agreement or otherwise in connection with such
discussions, negotiations or communications. From the date of this Agreement
until the earlier of termination of this Agreement or the Effective Time, the
Company shall not and shall not authorize or permit its officers, directors,
employees, investment bankers, attorneys, accountants, affiliates or other
agents to directly or indirectly (i) initiate, solicit, encourage, or take any
action to facilitate the making of, any offer or proposal which constitutes or
which may be reasonably likely to lead to an Acquisition Proposal or (ii) enter
into any agreement with respect to any Acquisition Proposal, or (iii) in the
event of an unsolicited Acquisition Proposal for the Company, engage in any
negotiations or discussions with, or provide any information or data to, any
Person (other than Parent or any of its affiliates or representatives) relating
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to any Acquisition Proposal. As used in this Agreement, "Acquisition Proposal"
means any tender or exchange offer involving the Company, any proposal for a
merger, consolidation or other business combination involving the Company, or
any proposal or offer to acquire in any manner an equity interest in, or a
portion of the business or assets (other than sales of (A) inventory in ordinary
course of business or (B) the assets set forth on Section 6.1(d) of the Company
Disclosure Schedule in accordance with the terms of the purchase and sale
agreements with respect to such assets as in effect on the date hereof or
otherwise pursuant to purchase and sale agreements on terms and conditions
(other than price) no less favorable to the Company than any purchase and sale
agreement currently in effect on the date hereof with respect to any such
assets) of, the Company or any Company Subsidiary, any proposal or offer with
respect to any recapitalization or restructuring with respect to the Company or
any Company Subsidiary or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to the Company or any
Company Subsidiary, other than the Merger and the other transactions
contemplated by this Agreement. The Company shall promptly notify Parent after
receipt by the Company of any Acquisition Proposal or any inquiries indicating
that any Person is considering making or wishes to make an Acquisition Proposal,
identifying such Person and the terms thereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section VII.1 Information Statement As promptly as practicable
after the date hereof, in consultation with Parent, the Company shall prepare an
information statement (together with any supplements or amendments thereto, the
"Information Statement") relating to the Merger, which shall contain the notices
required pursuant to the DGCL in connection with the Merger and otherwise comply
with all applicable laws, and cause the Information Statement to be mailed to
its stockholders.
Section VII.2 All Reasonable Efforts; Consents and
Approvals.
(a) Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all other actions and to do, or cause to be done,
all other things necessary, proper or advisable to consummate and make effective
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as promptly as practicable the transactions contemplated hereby. Each party
agrees to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be reasonably necessary or
desirable to consummate the transactions contemplated by this Agreement.
(b) Each of Parent, Merger Sub and the Company shall
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include, furnishing all
information required under the HSR Act or any comparable laws of foreign
jurisdictions and in connection with approvals of, filings with, and inquiries
or requests from, any Governmental Entity); shall promptly cooperate with and
furnish information to each other or their counsel in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with this Agreement and the transactions contemplated hereby; and shall not take
any action that would reasonably be expected to materially delay the obtaining
of, or result in not obtaining, any permission, approval or consent from any
Governmental Entity necessary to be obtained prior to Closing. Each of the
Company, Parent and Merger Sub shall, and shall cause its respective
Subsidiaries to, take all reasonable actions necessary to obtain (and shall
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, Merger Sub, the
Company or any of their respective Subsidiaries in connection with the
transactions contemplated hereby or the taking of any action contemplated
thereby or by this Agreement. Notwithstanding the foregoing, or any other
covenant herein contained, in connection with the receipt of any necessary
approvals under the HSR Act or any comparable laws of foreign jurisdictions,
neither Parent nor the Company shall be required to divest or hold separate or
otherwise take or commit to take any action that limits Parent's or the
Company's freedom of action with respect to, or their ability to retain, the
Company or any portions thereof or any of the businesses, product lines,
properties or assets of the Company or Parent.
(c) Prior to the Closing, each party shall promptly
consult with the other parties hereto with respect to, provide any necessary
information with respect to, and provide the other (or its counsel) copies of,
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated hereby. Each party hereto shall
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promptly inform the other of any communication from any Governmental Entity
regarding any of the transactions contemplated hereby unless otherwise
prohibited by law. If any party hereto or affiliate thereof receives a request
for additional information or documentary material from any such Government
Entity with respect to the transactions contemplated hereby, then such party
shall endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. To the extent that transfers, amendments or
modifications of permits (including environmental permits) are required as a
result of the execution of this Agreement or consummation of the transactions
contemplated hereby, the Company shall use all reasonable efforts to effect such
transfers, amendments or modifications.
Section VII.3 Notification of Certain Matters. The Company
shall give prompt notice to Parent and Parent shall give prompt notice to the
Company of any failure of the Company, Merger Sub or Parent, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.3 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice or the
representations or warranties of the parties or the conditions to the
obligations of the parties hereto.
Section VII.4 Access; Confidentiality. From the date hereof
until the Effective Time, upon reasonable notice and subject to the terms of the
Confidentiality Agreement, dated as of September 20, 2002, between Parent and
the Company, as amended (the "Confidentiality Agreement"), the Company shall
(and shall cause each Company Subsidiary to), upon reasonable prior notice,
afford the officers, employees, accountants, counsel, financing sources and
other representatives of Parent and Merger Sub, reasonable access during normal
business hours to all of its employees, properties, books, contracts,
commitments and records (including but not limited to Tax Returns). Without
limitation as to the foregoing, until the Effective Time, the Company shall (and
shall cause each Company Subsidiary to) afford Parent, Merger Sub and their
respective representatives such access to any site located on Real Property as
may be requested by Parent or Merger Sub for the purpose of conducting Phase I
and/or Phase II environmental assessments. Parent shall indemnify and hold
harmless the Company, the Company Subsidiaries and their respective officers,
directors, employees and agents from and against any damage to persons or
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property occurring in the course of performing any such Phase I and/or Phase II
environmental assessment and shall return the Real Property to the same
condition as it was in prior to the commencement of the Phase I and/or Phase II
environmental assessment. During the period from the date hereof until the
Effective Time, the Company shall (and shall cause each of the Company
Subsidiaries to) furnish promptly to Parent and Merger Sub (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws or
provided to or received from any security holders of the Company and (b) all
other information concerning its business, properties and personnel as Parent or
Merger Sub may reasonably request. All obligations of Parent and its
representatives under the Confidentiality Agreement shall terminate at the
Effective Time. Notwithstanding the foregoing, the parties (and each employee,
representative, or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment
and any facts that may be relevant to understanding the tax treatment of the
transactions contemplated by this Agreement beginning on the earliest of (i) the
date of the public announcement of discussions relating to the transaction, (ii)
the date of public announcement of the transaction, or (iii) the date of the
execution of this Agreement, provided, however, that no party (nor any employee,
representative or other agent thereof) may disclose any other information that
is not relevant to understanding the tax treatment and tax structure of the
transaction (including the identity of any party and any information that could
lead another to determine the identity of any party), or any other information
to the extent that such disclosure could reasonably result in a violation of any
applicable securities law.
Section VII.5 Publicity. Parent and the Company shall consult
with the other and agree upon the initial press release with respect to the
execution of this Agreement. Thereafter, except as may be required by law,
neither the Company nor Parent, nor any of their respective affiliates, shall
issue any press release or make any public statement with respect to the
transactions contemplated by this Agreement without the prior approval of the
other party.
Section VII.6 Indemnification. (a) Parent agrees that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time now existing in favor of the current or former directors or officers of the
Company as provided in its certificate of incorporation or bylaws shall survive
the Merger and shall continue in full force and effect in accordance with their
terms for a period of six years following the Effective Time.
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(b) The Surviving Corporation shall use its
reasonable best efforts to maintain the Company's existing officers' and
directors' liability insurance ("D&O Insurance") for a period of not less than
three years after the Effective Time; provided, however, that the Surviving
Corporation may substitute therefor policies of substantially equivalent
coverage and amounts containing terms no less favorable to such former directors
or officers; provided, further, that if the existing D&O Insurance expires or is
terminated or cancelled during such period, then the Surviving Corporation shall
use its reasonable best efforts to obtain substantially similar D&O Insurance.
Section VII.7 Takeover Laws. If any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
or regulation shall become applicable to any of the transactions contemplated
hereby or to the Company, then the Company and the Company Board of Directors
shall take all action necessary to ensure that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
by this Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated hereby.
Section VII.8 Exchangeable Preferred Stock.
(a) In the event that the Merger has not been
approved by the holders of the Exchangeable Preferred Stock in accordance with
the Company's certificate of incorporation and the DGCL on or before January 9,
2004, then promptly after such date, the Company shall commence an offer (the
"Exchangeable Preferred Stock Offer") to purchase for cash immediately prior to
the Effective Time all of the Exchangeable Preferred Stock at a price equal to
not less than the then applicable optional redemption price specified in the
Company's certificate of incorporation as currently in effect, plus an amount
equal to the dividends, whether or not earned or declared, accrued and unpaid
thereon to the Effective Time (the "Exchangeable Preferred Stock Purchase
Price").
(b) The Exchangeable Preferred Stock Offer (including
the applicable amendments) shall be conducted in accordance with all applicable
rules and regulations of the SEC and other applicable laws and shall be on terms
reasonably determined by Parent (including the appointment of a dealer manager
selected by Parent and reasonably acceptable to the Company), provided that the
Company shall not be required to purchase the Exchangeable Preferred Stock
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pursuant to the Exchangeable Preferred Stock Offer unless all conditions to the
consummation of the Merger have been satisfied or waived. From time to time
after the date hereof, unless this Agreement shall have been terminated in
accordance with its terms, the Company shall extend the Exchangeable Preferred
Stock Offer until all conditions thereto have been satisfied or waived.
(c) Each of Parent and the Company agrees to
cooperate, and to cause its officers, employees, counsel and accountants to
cooperate, and use all reasonable efforts to consummate the Exchangeable
Preferred Stock Offer as soon as reasonably practicable following the date
hereof, to comply in all material respects with all laws and regulations
applicable thereto, to participate in solicitation activities relating to the
foregoing and to prepare and, if necessary, execute all other documents in form
and substance reasonably satisfactory to Parent, as may be necessary to
consummate the Exchangeable Preferred Stock Offer. If at any time prior to the
Effective Time any information relating to Parent or the Company, or any of
their respective affiliates, officers or directors, should be discovered by
Parent or the Company which should be set forth in an amendment or supplement to
the documents mailed to holders in respect of the Exchangeable Preferred Stock
Offer so that such document would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the
other party hereto and, to the extent required by law, rules or regulations, an
appropriate amendment or supplement describing such information shall promptly
be prepared and disseminated to the holders of Exchangeable Preferred Stock.
Section VII.9 Notes.
(a) The Company shall promptly take all action
required to permit (i) a notice of redemption to be mailed to the holders of the
9 1/2% Senior Secured Notes (the "Senior Secured Notes") issued pursuant to the
Indenture between Sweetheart Cup Company Inc., Sweetheart Holdings, Inc. and
▇▇▇▇▇ Fargo Bank Minnesota, NA, as Trustee, dated as of December 16, 2003 (the
"Senior Secured Notes Indenture") and (ii) the Senior Secured Notes Indenture to
be satisfied and discharged in accordance with Article 12 thereof, in each case
immediately prior to the Effective Time.
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(b) The Company shall promptly take all action
required to permit (i) a notice of redemption to be mailed to the holders all of
the 9 1/2% Senior Subordinated Notes (the "2007 Notes" and together with the
Senior Secured Notes, the "Notes") issued pursuant to the Indenture, dated as of
February 27, 1997, between Sweetheart Cup Company Inc., as successor to The
▇▇▇▇▇ Group, Inc. and The Bank of New York, as trustee, as amended (the "2007
Notes Indenture") (the redemption date for such notes to be no earlier than
March 1, 2004) and (ii) the 2007 Notes to be defeased in accordance with the
requirements for "Covenant Defeasance" (as defined in the 2007 Notes Indenture)
or the 2007 Notes Indenture to be satisfied and discharged, in each case
immediately prior to the Effective Time.
(c) The Company shall consult with Parent with
respect to each of the actions contemplated by this Section 7.9, and all such
actions shall be undertaken in a manner and on such terms as may be reasonably
requested by Parent; provided, however, that any satisfaction or discharge of
the 2007 Notes Indenture shall be on terms and conditions satisfactory to Parent
in its sole and absolute discretion.
Section VII.10 Newcup Notes. The Company shall promptly take
all action required to cause (a) all of the notes (the "Newcup Notes") issued
pursuant to the Note Purchase Agreement among Newcup, LLC, the Company,
▇▇▇▇▇▇▇▇▇ & Company, Inc. and TCW/Crescent Mezzanine, L.L.C., dated as of
January 25, 2002, as amended (the "Note Purchase Agreement"), to be repurchased
or redeemed by Newcup, LLC immediately prior to the Effective Time in accordance
with the terms of the Note Purchase Agreement (the funds necessary to effect
such redemption or repurchase to be obtained by the repurchase by the Company of
the notes due 2008 (the "2008 Notes") issued pursuant to the Indenture, dated as
of March 13, 1998, between the Company and The Bank of New York, as trustee, as
amended, held by Newcup LLC), (b) the Company and Cupcorp, Inc. to consummate
the purchase of Newcup LLC pursuant to the Option Agreement between Cupcorp,
Inc. and the Company, dated as of January 26, 2002 (the "Newcup Option
Agreement") immediately prior to the Effective Time such that as of the
Effective Time, Newcup LLC shall be a wholly-owned subsidiary of the Company and
(c) the Company and each Company Subsidiary to be released from any and all
obligations under any agreement, arrangement or understanding related to the
Newcup Notes or the Note Purchase Agreement, including the Guaranty Agreement
between the Company, ▇▇▇▇▇▇▇▇▇ & Company, Inc. and TCW/Crescent Mezzanine,
L.L.C., dated as of January 25, 2002, as amended (the "Guaranty Agreement" and
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together with all such other agreements, arrangements and understandings, the
"Newcup Arrangements"), other than any obligations pursuant to Section 11 of the
Note Purchase Agreement or Article 8 of the Guaranty Agreement. The Company
shall consult with Parent with respect to each of the actions contemplated by
this Section 7.10, and all such actions shall be undertaken in a manner and on
such terms as may be reasonably requested by Parent.
Section VII.11 Subordinated Note. The Company shall promptly
take all action required to cause the 9 1/2% Subordinated Note (the
"Subordinated Note") issued pursuant to that certain Note Purchase Agreement
between Sweetheart Cup Company Inc. and International Paper Company, dated as of
December 8, 2003 (the "Subordinated Note Purchase Agreement"), to be repurchased
or redeemed by Sweetheart Cup Company Inc. immediately prior to the Effective
Time at an aggregate price equal to not less than 100% of the aggregate
principal amount of the Subordinated Note plus accrued and unpaid interest
thereon to the date of payment. The Company shall consult with Parent with
respect to each of the actions contemplated by this Section 7.11, and all such
actions shall be undertaken in a manner and on such terms as may be reasonably
requested by Parent.
Section VII.12 Financial Statements; Financing. During the
period prior to the Effective Time, the Company shall provide to Parent
consolidated monthly financial statements within 15 calendar days following the
end of each fiscal month. Further, the Company shall provide, and shall cause
the Company Subsidiaries and their respective representatives to provide all
reasonable cooperation in connection with the arrangement of Parent's financing
in connection with the transaction contemplated hereby, including (a) promptly
providing to Parent's financing sources all material financial information in
their possession with respect to the Company and the Company Subsidiaries
reasonably requested by Parent, (b) causing the Company's senior officers and
other representatives to be reasonably available to Parent's financing sources
in connection with such financing, to reasonably participate in due diligence
sessions and to reasonably participate in presentations related to the
financing, including presentations to rating agencies, potential lenders and
other investors, (c) reasonably assisting in the preparation of one or more
appropriate offering documents, including, without limitation, delivering
comfort letters, and reasonably assisting Parent's financing sources in
preparing other appropriate marketing materials, in each case to be used in
connection with Parent's financing and (d) cooperating in good faith with
Parent's efforts to obtain, at its own costs and expense, (i) a title insurance
policy (ALTA Owner's Title Insurance Policy - Form B), and a corresponding
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lender's title insurance policy, and all reasonably necessary endorsements with
respect to the Real Property and (ii) such landlord and/or tenant estoppel
certificates as Parent or Parent's potential lenders and other investors may
reasonably request.
Section VII.13 Certain Other Agreements.
(a) At or prior to the Effective Time, the Company
shall pay in full all amounts to be paid by the Company pursuant to the letter
agreements described in Section 7.13(a) of the Company Disclosure Schedule.
Notwithstanding anything to the contrary in such letter agreements, all amounts
to be paid by the Company under such letter agreements shall be paid by the
Company at or prior to the Effective Time, and as of the Effective Time, none of
the Company or any of the Company Subsidiaries shall have any further
obligations under such letter agreements.
(b) The Company shall take all actions required such
that all tax sharing, tax allocation and similar agreements, arrangements or
understandings between or among the Company and/or any Company Subsidiaries
shall be terminated prior to the Effective Time, and as of the Effective Time,
none of the Company or any of the Company Subsidiaries shall have any further
rights or obligations thereunder, including, without limitation, with respect to
any periods prior to the Effective Time.
(c) At or prior to the Effective Time, the Company
shall pay in full all amounts to be paid by the Company or any Company
Subsidiary pursuant to any charitable pledges made by or on behalf of the
Company or any Company Subsidiary. The Company shall take all actions required
such that at the Effective Time neither the Company nor any Company Subsidiary
shall have any obligation under any charitable pledge or similar arrangement.
(d) Promptly upon Parent's request, the Company shall
take all actions necessary to permit Parent and its representatives to conduct a
Phase II environmental assessment of the facility or facilities listed on
Section 7.13(d) of the Company Disclosure Schedule (each, a "Sherwood
Facility"); provided, however, that if Parent undertakes such a Phase II
environmental assessment of a Sherwood Facility, (i) neither the Company nor any
Company Subsidiary shall be deemed to have knowledge of any findings set forth
in any such definitive Phase II assessment for purposes of the representations
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and warranties set forth in Section 4.21 as they relate to such Sherwood
Facility and (ii) Parent may not assert the findings set forth in any such
definitive Phase II assessment as the basis for a failure of the condition set
forth in Section 8.3. Promptly upon Parent's request, the Company shall take
such actions as Parent may request to assert any claims with respect to any
environmental matters at the Sherwood Facility under that certain Stock Purchase
Agreement, dated as of December 20, 1999, as amended, including setting off
amounts otherwise owed by Sweetheart Cup Company pursuant to those certain
Subordinated Convertible Notes, dated May 15, 2000.
(e) If requested by Parent, the Company shall take
all actions necessary to terminate the agreement set forth in Section 4.13(z) of
the Company Disclosure Schedule in accordance with its terms.
(f) Prior to the Effective Time, the Company shall
take all necessary action to terminate in accordance with their terms the
agreements set forth in Section 4.24 of the Company Disclosure Schedule as of
the Effective Time, and all amounts payable by the Company under such agreements
shall be paid in full by the Company at or prior to the Effective Time
(including any fees due and payable upon termination of such agreements or
payable as a result of this Agreement or the consummation of the Merger).
(g) Within five business days after the date hereof,
the Company shall deliver to Parent the audited consolidated balance sheets of
the Company and its consolidated Subsidiaries as of September 28, 2003 and the
related statements of operations and cash flows for the fiscal year ended
September 28, 2003 (including the related notes) together with an unqualified
report of the Company's independent auditors thereon.
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ARTICLE VIII
CONDITIONS
Section VIII.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction or waiver, where permissible, at or prior to the
Effective Time, of each of the following conditions:
(a) No statute, law, rule or regulation shall be in
effect or have been enacted or promulgated by any Governmental Entity which
prohibits the consummation of the Merger, and there shall be no order or
injunction of a court of competent jurisdiction in effect prohibiting
consummation of the Merger; and
(b) The applicable waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated.
Section VIII.2 Conditions to the Company's Obligation to
Effect the Merger. The obligation of the Company to effect the Merger is subject
to satisfaction or waiver (to the extent permitted by applicable law) at or
prior to the Effective Time of each of the following conditions:
(a) The representations and warranties of Parent and
Merger Sub set forth herein (i) that are qualified as to materiality shall be
true and correct both when made and at and as of the Effective Time, as if made
at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such date), and (ii) that are not qualified as to
materiality shall be true and correct both when made and at and as of the
Effective Time, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date) in all
material respects.
(b) Parent and Merger Sub shall have performed in all
material respects all obligations required to be performed by them at or prior
to the Effective Time under this Agreement.
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(c) The Company shall have received a certificate,
dated as of the Effective Time, signed by the president of Parent, to the effect
that the conditions set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied.
(d) Parent shall have executed and delivered the
Retention Escrow Agreement.
Section VIII.3 Conditions to Parent's and Merger Sub's
Obligations to Effect the Merger. The obligation of each of Parent and Merger
Sub to effect the Merger is subject to satisfaction or waiver (to the extent
permitted by applicable law) at or prior to the Effective Time of each of the
following conditions:
(a) The representations and warranties of the Company
set forth herein (i) that are qualified as to materiality shall be true and
correct both when made and at and as of the Effective Time, as if made at and as
of such time (except to the extent expressly made as of an earlier date, in
which case as of such date), and (ii) that are not qualified as to materiality
shall be true and correct both when made and at and as of the Effective Time, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date) in all material respects; provided,
however, that, for purposes of this Section 8.3 as it relates to the
representations and warranties set forth in Section 4.21, (A) neither the
Company nor any Company subsidiary shall be deemed to have knowledge of any
matter to the extent identified in any environmental site assessment of any
facility of the Company or Company Subsidiary conducted by Parent's
representatives prior to the Effective Time unless such matter was known to the
Company or any Company Subsidiary as of the date of this Agreement and (B) any
events occurring after the date of this Agreement and prior to the Effective
Time of which the Company or any Company Subsidiary has knowledge shall not
constitute a breach or inaccuracy of such representations and warranties unless
the aggregate amount of all costs of remediation associated with all such events
could reasonably be expected to exceed $1 million, in which case, this condition
shall be deemed to have not been satisfied. If this condition is deemed to have
not been satisfied as a result of the foregoing clause (B), Parent's sole remedy
shall be as provided in this Section 8.3.
(b) The Company shall have performed in all material
respects all obligations required to be performed by it at or prior to the
Effective Time under this Agreement.
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(c) Parent shall have received a certificate, dated
as of the Effective Time, signed by the chief executive officer or chief
financial officer of the Company, to the effect that the conditions set forth in
Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) There shall not be pending any action or
proceeding by any Governmental Entity or any action or proceeding by any other
Person before any court or Governmental Entity seeking (i) to make illegal, to
delay materially or otherwise directly or indirectly to restrain or prohibit the
consummation of the Merger or the other transactions contemplated by this
Agreement or to obtain any damages or other remedy in connection with the Merger
or the transactions contemplated by this Agreement, (ii) to restrain or prohibit
Parent's (including its affiliates') ownership or operation of all or any
portion of the business or assets of the Surviving Corporation or the Company,
or to compel Parent or any of its affiliates to dispose of or hold separate all
or any portion of the business or assets of the Surviving Corporation or the
Company or (iii) to impose or confirm limitations on the ability of Parent or
any of its affiliates to effectively control the business or operations of the
Surviving Corporation or the Company, and no court, arbitrator or Governmental
Entity shall have issued any judgment, order, decree or injunction, and there
shall not be any statute, rule or regulation, that is likely, directly or
indirectly, to result in any of the consequences referred to in the preceding
clauses (i) through (iii); provided, however, that Parent and the Company shall
use their reasonable best efforts to have any such judgment, order, decree or
injunction vacated.
(e) (i) the Company shall have mailed or caused to be
mailed, in accordance with the requirements of the Senior Secured Notes
Indenture, a notice of redemption to the holders of the Senior Secured Notes
stating that the Senior Secured Notes are being redeemed pursuant to Section
3.07(a) of the Senior Secured Notes Indenture, the Senior Secured Notes
Indenture shall have been satisfied and discharged in accordance with the
requirements of Article 12 of the Senior Secured Notes Indenture (including the
deposit with the trustee under the Senior Secured Notes Indenture of cash in
U.S. dollars and/or noncallable government securities in an amount sufficient to
pay the redemption price and interest on the Senior Secured Notes through the
redemption date provided by Parent), and the Senior Secured Notes shall not have
been revived or reinstated, and (ii) the Company shall have mailed or caused to
be mailed, in accordance with the requirements of the 2007 Notes Indenture, a
notice of redemption to the holders of the 2007 Notes stating that the 2007
Notes are being redeemed pursuant to Section 3.07(a) of the 2007 Notes
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Indenture, the 2007 Notes shall have been defeased in accordance with the
requirements for "Covenant Defeasance" (as defined in the 2007 Notes Indenture)
set forth in Section 8.03 and Article VIII of the 2007 Notes Indenture or the
2007 Notes Indenture shall have been satisfied and discharged on terms and
conditions satisfactory to Parent in its sole and absolute discretion (including
the deposit with the trustee under the 2007 Notes Indenture of cash in U.S.
dollars and/or noncallable government securities in an amount sufficient to pay
the redemption price and interest on the 2007 Notes through the redemption date
provided by Parent), and the 2007 Notes shall not have been revived or
reinstated.
(f) All the Newcup Notes shall have been repurchased
or redeemed by Newcup with funds provided to the Company by Parent, Newcup shall
not own any 2008 Notes, Newcup and Sweetheart Holdings, Inc. shall each be
wholly-owned subsidiaries of the Company, and the Company and each Company
Subsidiary shall have been released from their obligations under the Newcup
Arrangements as provided in Section 7.10.
(g) The Subordinated Note shall have been repurchased
or redeemed by the Company with funds provided by Parent, and the Subordinated
Note shall not be outstanding.
(h) Since the date of this Agreement, there shall not
have occurred any change, event, occurrence, development or circumstance which,
individually or in the aggregate, has had, or could reasonably be expected to
have, a Company Material Adverse Effect; provided, however, that the loss of, or
decrease in business with, any vendors or customers of the Company or any
Company Subsidiary resulting from the public announcement of the transactions
contemplated hereby shall be excluded from the determination of Company Material
Adverse Effect for purposes of this Section 8.3(h).
(i) The time period for exercising appraisal rights
under the DGCL shall have expired, and the Dissenting Shares shall not represent
more than 3% of the total number of outstanding shares of Common Stock.
(j) Parent shall have obtained on terms and
conditions satisfactory to Parent in its sole and absolute discretion all debt
and equity financing necessary in order to consummate the transactions
contemplated hereby and to refinance all of the Indebtedness of Parent and its
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Subsidiaries and all of the Indebtedness of the Company and the Company
Subsidiaries.
(k) All authorizations, consents, notifications and
approvals required to be made or obtained prior to the Effective Time by each
party hereto from any Governmental Entity or other Person in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been made or obtained except for
those, the failure of which to obtain could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(l) All loans or other financing arrangements set
forth on Section 8.3(l) of the Company Disclosure Schedule shall have been
repaid in full (or shall be repaid concurrently with the Closing), all
agreements and arrangements set forth on Section 8.3(l) of the Company
Disclosure Schedule shall have been terminated, and the Company and Company
Subsidiaries shall have been released in full from any further obligations under
any such loans, agreements or arrangements.
(m) The Company shall have delivered to Parent (i)
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel to Seller
and (ii) the opinion of the Company's general counsel, in each case, dated as of
the Closing Date, in a form and substance reasonably satisfactory to Parent and
its counsel and Parent's financing sources and setting forth such matters as
Parent and Parent's financing sources may reasonably request (such opinions to
provide that Parent's financing sources may rely on such opinions as if the
opinions were addressed to them).
(n) The Stockholders' Representative shall have
executed and delivered the Retention Escrow Agreement.
(o) The Company shall have provided (or caused to be
provided) to Parent a duly executed certificate, substantially in the form of
Exhibit 8.3 (o) attached hereto, to the effect that Parent and Merger Sub are
not required to withhold under Section 1445 of the Code from any of the
consideration to be paid hereunder (a "FIRPTA Certificate"). Notwithstanding any
provision of this Agreement to the contrary, if the Parent does not receive a
FIRPTA Certificate prior to Closing, Parent may waive the condition to Closing
79
set forth in this Section 8.3(o) and withhold from consideration payable
hereunder in accordance with the requirements of Section 1445 of the Code.
(p) No registration statement filed by the Company or
any Company Subsidiary under the Securities Act shall have been declared
effective after the date hereof.
(q) The Company shall have delivered to Parent the
audited financial statements contemplated in Section 7.13(g) together with an
unqualified report of the Company's independent auditors thereon, and such
financial statements shall not differ in any material respect from the Financial
Statements.
(r) All of the equity interests in Emerald Lady shall
have been transferred to Parent or a Subsidiary of Parent free and clear of all
Encumbrances, any third-party guarantor of the Emerald Loan Agreement shall have
been fully released from any such obligations, the representations and
warranties set forth in Section 4.9(c) shall be true and correct in all respects
both when made and at and as of the Effective Time, evidence that Emerald Lady
has been fully released from all obligations except for those set forth on
Section 4.9(c)(iii) of the Company Disclosure Schedule shall have been delivered
to Parent, and none of Parent, any Subsidiary of Parent, the Company or any
Company Subsidiary shall have incurred any liability or obligation in connection
with such transfer (other than Parent's or a Subsidiary of Parent's assumption
of any third party guarantee of the Emerald Lady Loan Agreement), in each case,
on terms and conditions satisfactory to Parent.
ARTICLE IX
TERMINATION
Section IX.1 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding the adoption of this Agreement by the stockholders of the
Company):
(a) by the mutual written consent of Parent and the
Company;
(b) by either Parent or the Company if:
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(i) a statute, law, rule or regulation shall
have been enacted or promulgated by any Governmental Entity which
prohibits the consummation of the Merger, or there shall be an order
or injunction of a court of competent jurisdiction in effect
prohibiting consummation of the Merger, and such order or injunction
shall have become final and nonappealable; or
(ii) the Merger shall not have been
consummated by March 14, 2004 (the "Termination Date"), provided that
the right to terminate this Agreement pursuant to this Section
9.1(b)(ii) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in the
failure of the Merger to occur on or before such date;
(c) by Parent if:
(i) any representation or warranty of the
Company set forth herein (i) that is qualified as to materiality shall
not be true and correct both when made and at and as of the date of
termination, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date),
or (ii) that is not qualified as to materiality shall not be true and
correct both when made and at and as of the date of termination, as if
made at and as of such time (except to the extent expressly made as of
an earlier date, in which case as of such date), in each case, in any
material respect; provided that such failure to be true and correct is
not cured, or is incapable of being cured, within 30 days after the
receipt by the Company of written notice of such failure; or
(ii) the Company shall have failed to
perform in any material respect any obligation required to be
performed by it at or prior to the Effective Time under this
Agreement, which failure to perform has not been cured within 30 days
following receipt by the Company of notice of such failure to perform
from Parent or Merger Sub;
(d) by the Company if:
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(i) any representation or warranty of Parent
or Merger Sub set forth herein (i) that is qualified as to materiality
shall not be true and correct both when made and at and as of the date
of termination, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such
date), or (ii) that is not qualified as to materiality shall not be
true and correct both when made and at and as of the date of
termination, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date),
in each case, in any material respect; provided that such failure to
be true and correct is not cured, or is incapable of being cured,
within 30 days after the receipt by the Parent of written notice of
such failure; or
(ii) Parent or Merger Sub shall have failed
to perform in any material respect any obligation required to be
performed by it at or prior to the Effective Time under this
Agreement, which failure to perform has not been cured within 30 days
following receipt by Parent of notice of such failure to perform from
the Company.
Section IX.2 Effect of Termination.
(a) In the event of the termination of this Agreement
as provided in Section 9.1, written notice thereof shall forthwith be given to
the other party or parties, and this Agreement shall forthwith become null and
void (except for this Section 9.2 and Sections 11.4, 11.6, 11.7, 11.9 and 11.12
which shall survive such termination) and there shall be no liability on the
part of Parent, Merger Sub or the Company, except (i) as set forth in this
Section 9.2, and (ii) nothing herein shall relieve any party from liability for
any breach of this Agreement. The Confidentiality Agreement shall survive any
termination of this Agreement.
(b) If (i) this Agreement is terminated by the
Company pursuant to Section 9.1(b)(ii) and (ii) all of the conditions to Closing
set forth in Article VIII (other than (A) the condition set forth in Section
8.3(j) and (B) the conditions set forth in Sections 8.3(e), 8.3(f), 8.3(g),
8.3(l) and 8.3(m) but only to the extent that each such condition would
otherwise have been satisfied as of the Termination Date assuming that funds
sufficient to consummate the transactions contemplated by such condition were
available to the Company) were satisfied or waived prior to the Termination
Date, then as liquidated damages and in full and complete satisfaction of any
and all claims by the Company or any of its affiliates arising out of, or in
connection with, this Agreement or the transactions contemplated hereby, the
Company shall be entitled to receive the Deposit. Upon termination of this
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Agreement in circumstances that entitle the Company to receive the Deposit
pursuant to the first sentence of this Section 9.2(b), the Company and Parent
shall promptly deliver to the Escrow Agent a written notice executed by both
parties instructing the Escrow Agent to deliver the Deposit to the Company in
accordance with the terms of the Deposit Escrow. Upon any other termination of
this Agreement, the Company and Parent shall promptly deliver to the Escrow
Agent a written notice executed by both parties instructing the Escrow Agent to
return the Deposit to Parent in accordance with the terms of the Deposit Escrow,
ARTICLE X
INDEMNIFICATION
Section X.1 Indemnification.
(a) Parent and the Surviving Corporation and their
respective officers, directors, agents and affiliates shall be entitled to
indemnification (but only to the extent of the Deferred Payment Retention)
against any and all losses, liabilities, damages, deficiencies, claims, Taxes,
costs and expenses after taking into account on a net, after tax basis, any tax
benefits relating thereto that are actually utilized by them in the year,
suffered, sustained, or incurred (collectively, "Losses") that they may suffer,
sustain, incur or become subject to arising out of, in connection with or due to
(i) any inaccuracy of any representation or breach of any warranty of the
Company contained in this Agreement (other than an inaccuracy of any
representation or a breach of any warranty set forth in Section 4.12 solely as
such inaccuracy or breach relates to federal income tax matters) without giving
effect to any "materiality," "Company Material Adverse Effect," "Company
Material Adverse Change" or similar qualifier contained therein and (ii) any
breach by the Company of any of its covenants and agreements contained in this
Agreement. The term "Losses" shall include interest, penalties, fees and
reasonable professional fees and expenses incurred in connection with any of the
foregoing and in investigating (in response to a claim) and seeking
indemnification pursuant to this Article X. Except in the case of claims for
fraud, from and after the Closing, the sole remedy with respect to claims for
indemnification under this Article X shall be against the Deferred Payment
Retention.
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(b) No indemnification shall be available under
Section 10.1(a)(i) unless and until the aggregate amount of all Losses under
Section 10.1(a)(i) exceeds $2 million, in which case, indemnification shall be
available for all Losses arising thereafter; provided that such limitation shall
not apply to any breach of the representations and warranties contained in
Sections 4.1, 4.3, 4.4, 4.6, 4.9(b), 4.9(c), 4.14(a), 4.16 or 4.25 hereof or any
fraudulent breach of any representation or warranty.
(c) The right to indemnification based on
representations, warranties, covenants and obligations in this Agreement will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Effective Time, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification based on such representations, warranties, covenants and
obligations. Notwithstanding the foregoing, no indemnification shall be
available hereunder for (i) any Losses arising out of, or relating to, any
matter first identified in any environmental site assessment of any facility of
the Company or Company Subsidiary conducted by Parent's representatives after
the date of this Agreement unless such matter was known to the Company or any
Company Subsidiary as of the date of this Agreement or (ii) if the condition in
Section 8.3(a) is deemed to have not been satisfied as a result of clause (B) of
the proviso to such Section 8.3(a) and such condition is waived by Parent, any
remediation costs arising out of, or relating to, any events occurring after the
date of this Agreement and prior to the Effective Time that would otherwise
constitute a breach of the representations and warranties set forth in Section
4.21 but for clause (B) of the proviso to Section 8.3(a).
(d) The representations and warranties of the Company
contained in this Agreement shall survive the Effective Time and shall expire on
the date that is two years after the Effective Time; provided, however, that if,
at any time prior to expiration of the applicable representation and warranty,
any Indemnified Party delivers to the Stockholders' Representative and the
Escrow Agent a written notice as provided in Section 10.2(a) alleging the
existence of an inaccuracy in or a breach of such representation and warranty
and asserting a claim for recovery under Section 10.1 based on such alleged
inaccuracy or breach, then the representation or warranty underlying the claim
84
asserted in such notice shall survive until such time as such claim is fully and
finally resolved. The date on which the last representation and warranty of the
Company expires in accordance with the preceding sentence and all adjustments to
the Deferred Payment Retention with respect to any claims related to such
representation and warranty are completed in accordance with Section 10.2 is
referred to herein as the "Indemnity Termination Date." All representations and
warranties made by Parent and Merger Sub shall terminate and expire at the
Effective Time.
Section X.2 Adjustment to Deferred Payment Retention
(a) In order to seek indemnification under Section
10.1, the Person seeking indemnification hereunder (the "Indemnified Party")
shall deliver to the Stockholders' Representative and the Escrow Agent a claim
notice (a "Claim Notice") stating in reasonable detail the basis for such claim
and the calculation of the Losses with respect to such claim.
(b) Within 30 days after delivery of a Claim Notice,
the Stockholders' Representative shall deliver to the Indemnified Party a
response, in which the Stockholders' Representative shall: (i) agree that the
Indemnified Party is entitled to receive all of the amount claimed in the Claim
Notice (in which case, the Stockholders' Representative and Parent shall deliver
to the Escrow Agent, within two days following the delivery of the response, a
written notice executed by both parties instructing the Escrow Agent to pay such
full amount to the Indemnified Party from the Deferred Payment Retention), (ii)
agree that the Indemnified Party is entitled to receive a portion of the amount
claimed in the Claim Notice (in which case, the Stockholders' Representative and
Parent shall deliver to the Escrow Agent, within two days following the delivery
of the response, a written notice executed by both parties instructing the
Escrow Agent to pay such amount to the Indemnified Party from the Deferred
Payment Retention), or (iii) dispute that the Indemnified Party is entitled to
receive any of the amount claimed in the Claim Notice.
(c) During the 30-day period following the delivery
of a response under sections 10.2(b)(ii) or 10.2(b)(iii) above, the
Stockholders' Representative and the Indemnified Party shall attempt to resolve
the dispute. If the dispute is not resolved within such 30-day period, at the
request of either the Stockholders' Representative or the Indemnified Party the
dispute shall be submitted to binding arbitration as the sole method of
resolution of such dispute. Within two days of the resolution of the dispute
85
(whether by mutual agreement or arbitration), a written notice executed by the
Stockholders' Representative and Parent (or the final decision and award of the
Arbitral Tribunal) shall be delivered to the Escrow Agent instructing the Escrow
Agent as to what (if any) payment is to be made to Parent from the Deferred
Payment Retention (which notice shall be consistent with the terms of the
resolution of the dispute).
(d) If, as set forth in Section 10.2(c), any dispute
is submitted to binding arbitration, the arbitration shall be conducted (i) by a
single arbitrator agreed on by the Stockholders' Representative and the
Indemnified party within fifteen days of the commencement of the arbitration, or
(ii) in the absence of such agreement, by three arbitrators one appointed by
each of Stockholders' Representative and the Indemnified Party within thirty
days of the commencement of the arbitration and the third appointed by the two
party appointed arbitrators within fifteen days of the appointment of the second
arbitrator (or in default of such timely appointment, by the American
Arbitration Association ("AAA")) (the arbitrator agreed on in accordance with
clause (i) or the three arbitrators appointed in accordance with clause (ii)
being referred to herein as the "Arbitral Tribunal") in accordance with the
Commercial Arbitration Rules ("Commercial Rules") of the AAA then in effect and
the following provisions:
(i) In the event of any conflict between the
Commercial Rules and the provisions of this Agreement, the provisions of this
Agreement shall prevail and be controlling.
(ii) The arbitration shall be held and the
award shall be rendered in Chicago, Illinois.
(iii) Not later than 30 days after the
conclusion of the arbitration hearing, the Arbitral Tribunal shall
prepare and distribute to the parties a writing setting forth the
arbitral award and the Arbitral Tribunal's reasons therefor. Any award
rendered by the Arbitral Tribunal shall be final, conclusive and
binding upon the parties, and judgment thereon may be entered and
enforced in any court of competent jurisdiction.
(iv) The Arbitral Tribunal shall have no
power or authority, under the Commercial Rules or otherwise, to (x)
86
modify or disregard any provision of this Agreement, including the
provisions of this Section 10.2, or (y) address or resolve any issue
not submitted by the parties.
(v) In connection with any arbitration
proceeding pursuant to this Agreement, each party shall bear its own
costs and expenses, without any right to indemnification with respect
thereto, except that the fees and costs of the AAA and the Arbitral
Tribunal, the costs and expenses of obtaining the facility where the
arbitration hearing is held, and such other costs and expenses as the
Arbitral Tribunal may determine to be directly related to the conduct
of the arbitration and appropriately borne jointly by the parties
(which shall not include any party's attorneys' fees or costs, witness
fees (if any), costs of investigation and similar expenses) shall be
paid as follows, without any right to indemnification with respect
thereto: 50% of such fees and expenses shall be paid by Parent and the
remaining 50% of such fees and expenses shall be deducted from the
Deferred Payment Retention; provided, that the Arbitral Tribunal, in
its sole discretion, shall have the right to assess costs and expenses
against either the Indemnifying Party or the Indemnified Party if it
determines that such party has acted frivolously.
ARTICLE XI
MISCELLANEOUS
Section XI.1 Stockholders' Representative.
(a) The stockholders of the Company, by adopting this
Agreement and the transactions contemplated hereby, hereby irrevocably appoint
▇▇▇▇▇▇ ▇▇▇▇▇▇ as their agent and attorney-in-fact for purposes of Article X,
Sections 3.9 and 3.10 and the Retention Escrow Agreement (the "Stockholders'
Representative"), and consent to the taking by the Stockholders' Representative
of any and all actions and the making of any decisions required or permitted to
be taken by him under this Agreement and the Retention Escrow Agreement. Parent
shall be entitled to deal exclusively with the Stockholders' Representative on
all matters relating to Article X, Sections 3.9 and 3.10 and the Retention
87
Escrow Agreement. If the Stockholders' Representative shall die, become disabled
or otherwise be unable to fulfill his responsibilities as agent of the Company
stockholders, then ▇▇▇ ▇▇▇▇▇ shall, within ten days after a request by the
Parent, appoint a successor representative reasonably satisfactory to Parent.
Any such successor shall become the "Stockholders' Representative" for purposes
of this Section 11.1, Sections 3.9 and 3.10, Article X and the Retention Escrow
Agreement. If for any reason there is no Stockholders' Representative at any
time, all references herein to the Stockholders' Representative shall be deemed
to refer to ▇▇▇ ▇▇▇▇▇.
(b) The reasonable expenses incurred by the
Stockholders' Representative while acting on behalf of the Company stockholders
under the authorization granted in this Section 11.1 (including up to $5,000 per
month for up to six months for fees payable to an assistant selected by the
Stockholders' Representative) shall be payable out of the Deferred Payment
Retention; provided, however, that the aggregate amount of all such payments to
the Stockholders' Representative pursuant to this Section 11.1(b) shall not
exceed $100,000.
Section XI.2 Amendment and Modification. Subject to applicable
law and as otherwise provided in the Agreement, this Agreement may be amended,
modified and supplemented in any and all respects by written agreement of the
parties hereto, by action taken by their respective boards of directors, but, no
amendment shall be made which by law requires further approval by the
stockholders of the Company without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section XI.3 Expenses. All fees, costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees, costs and expenses (with all such
fees, costs and expenses incurred by the Company to be paid in full by the
Company at or prior to the Effective Time or to be fully accrued on the
Estimated Working Capital Statement).
Section XI.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express (providing proof of delivery), to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
88
Solo Cup Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Operating Officer
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
and
(b) if to the Company, to:
SF Holdings Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(c) if to the Stockholders' Representative, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section XI.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term "affiliates"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act. The words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa. The parties
have participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section XI.6 Jurisdiction. Except as provided in Section 10.2,
each of Parent, Merger Sub and the Company hereby expressly and irrevocably
submits to the exclusive personal jurisdiction of the United States District
Court for Delaware and to the jurisdiction of any other competent court of the
State of Delaware (collectively, the "Delaware Courts"), preserving, however,
all rights of removal to such federal court under 28 U.S.C. Section 1441, in
connection with all disputes arising out of or in connection with this Agreement
or the transactions contemplated hereby and agrees not to commence any
litigation relating thereto except in such courts. Each such party hereby waives
the right to any other jurisdiction or venue for any litigation arising out of
or in connection with this Agreement or the transactions contemplated hereby to
which any of them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each such party agrees that each of the other
parties shall have the right to bring any action or proceeding for enforcement
90
of a judgment entered by the Delaware Courts in any other court or jurisdiction.
Section XI.7 Service of Process. Each of Parent, Merger Sub
and the Company irrevocably consents to the service of process outside the
territorial jurisdiction of the courts referred to in Section 11.6 in any such
action or proceeding by mailing copies thereof by registered United States mail,
postage prepaid, return receipt requested, to its address as specified in or
pursuant to Section 11.4. However, the foregoing shall not limit the right of a
party to effect service of process on the other party by any other legally
available method.
Section XI.8 Specific Performance. Each of Parent, Merger Sub
and the Company acknowledges and agrees that in the event of any breach of this
Agreement, each non-breaching party would be irreparably and immediately harmed
and could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto (a) will waive, in any action for specific performance, the
defense of adequacy of a remedy at law and (b) shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement.
Section XI.9 Counterparts. This Agreement may be executed
manually or by facsimile by the parties hereto, in any number of counterparts,
each of which shall be considered one and the same agreement and shall become
effective when a counterpart hereof shall have been signed by each of the
parties and delivered to the other parties.
Section XI.10 Entire Agreement; No Third-Party
Beneficiaries. This Agreement, the Confidentiality Agreement and the Deposit
Escrow Agreement:
(a) constitute the entire agreement among the parties
with respect to the subject matter hereof and thereof and supersede all other
prior agreements and understandings, both written and oral, including, without
limitation, that certain Letter of Intent, by and between Parent and the
Company, dated as of September, 9, 2003, among the parties or any of them with
respect to the subject matter hereof and thereof (provided that the provisions
of this Agreement shall supersede any conflicting provisions of the
Confidentiality Agreement), and
91
(b) except as provided in Section 7.6 and Article X,
are not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section XI.11 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section XI.12 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section XI.13 Headings. Headings of the Articles and Sections
of this Agreement, the Table of Contents and the Index of Defined Terms are for
the convenience of the parties only, and shall be given no substantive or
interpretative effect whatsoever.
Section XI.14 Waivers. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section XI.15 Assignment. This Agreement shall not be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, except that (i) Merger Sub may
assign any or all of its rights, interests and obligations hereunder to one or
more direct or indirect wholly-owned Subsidiaries of Parent, or a combination
thereof and (ii) Parent and Merger Sub may assign any or all of its rights,
92
interests and obligations hereunder to any of its financing sources. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and permitted assigns.
93
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SOLO CUP COMPANY
By
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Name:
Title:
SOLO ACQUISITION CORP.
By
----------------------------------
Name:
Title:
SF HOLDINGS GROUP, INC.
By
----------------------------------
Name:
Title:
94
Exhibit 2.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SF HOLDINGS GROUP, INC.
FIRST: The name of the Corporation is SF Holdings Group, Inc.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, in the
City of Wilmington, County of New Castle. The name of its registered agent at
that address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 100 shares of Common Stock, each
having a par value of one ▇▇▇▇▇ ($.01).
FIFTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
2.1-1
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide.
(4) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this Article FIFTH by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Certificate of Incorporation, and any By-Laws adopted by the stockholders;
provided, however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if such
By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without
the State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
2.1-2
Exhibit 3.4(d)
Certain Definitions
(Capitalized terms used but not defined on this
Exhibit 3.4(d) shall have the meanings ascribed to them
in the Merger Agreement)
C = The number of shares of Common Stock outstanding
immediately prior to the Effective Time
CP= The aggregate number of shares of Common Stock
issuable upon conversion of all shares of Class B
Series 2 Preferred Stock outstanding immediately
prior to the Effective Time
CW = The aggregate number of shares of Common Stock
issuable upon exercise of W
W = All Warrants outstanding immediately prior to the
Effective Time
EW = The aggregate exercise price of W
AAMC = The Adjusted Aggregate Merger Consideration
CO1 = The aggregate number of shares of Common Stock
issuable upon exercise of O1
O1 = All Options, if any, whether vested or exercisable,
whose exercise price is less than Reference Price1
EO1 = The aggregate exercise price of O1
CO2 = The aggregate number of shares of Common Stock
issuable upon exercise of O2
O2 = All Options, if any, whether vested or exercisable,
whose exercise price is less than Reference Price2
EO2 = The aggregate exercise price of O2
3.4(d)-1
CO3 = The aggregate number of shares of Common Stock
issuable upon exercise of O3
O3 = All Options, if any, whether vested or exercisable,
whose exercise price is less than Reference Price3
EO3 = The aggregate exercise price of O3
CO4 = The aggregate number of shares of Common Stock
issuable upon exercise of O4
O4 = All Options, if any, whether vested or exercisable,
whose exercise price is less than Reference Price4
EO4 = The aggregate exercise price of O4
AAMC+EW
-------
Reference Price1 = C+CP+CW
AAMC + EW + E01
---------------
Reference Price2 = C+CP+CW+CO1
AAMC + EW + E02
---------------
Reference Price3 = C+CP+CW+CO2
AAMC + EW + E03
---------------
Reference Price4 = C+CP+CW+CO3
AAMC + EW + E04
---------------
Reference Price5 = C+CP+CW+CO4
3.4(d)-2
Exhibit 8.3(o)
(FIRPTA Certificate)
SF HOLDINGS GROUP, INC.
Affidavit
In connection with the acquisition by Solo Cup Company
("Parent") of all of stock of SF Holdings Group, Inc. (the "Company"), the
undersigned hereby certifies the following on behalf of the Company:
The Company's address is .
--------------------------------
The Company's U.S. Employer Identification Number is
-------------------------------------.
At present and during the five-year period ending on the date
of the acquisition by Parent of the common stock of the Company, the fair market
value of the Company's United States real property interests has always equaled
less than fifty percent of the sum of the fair market values of (i) the
Company's United States real property interests, (ii) the Company's interests in
real property located outside the United States, and (iii) any of the Company's
other assets that have been used or held for use in a trade or business.
Therefore, the Company is not and has not been a United States real property
holding corporation (as defined in Section 897(c)(2) of the Internal Revenue
Code of 1986, as amended) during the five-year period ending on the date of the
acquisition by Parent of the common stock of the Company.
The Company understands that this certification may be
disclosed to the Internal Revenue Service by Parent, as transferee, and that any
false statement contained herein could be punished by fine, imprisonment, or
both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief it is true,
correct and complete, and I further declare that I have authority to sign this
document on behalf of the Company.
Dated as of
---------------
--------------------------------
Name:
Title:
8.3(o)-1
