-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WIwNeWXryLjQzQMoKd2l0ng/LHQIONJWx+GzWFRsAiP0sKrzGKTez3be4rh8OvH+ C0nps11YsjwRy1oRUj9uYg== 0000950152-96-006787.txt : 19961224 0000950152-96-006787.hdr.sgml : 19961224 ACCESSION NUMBER: 0000950152-96-006787 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961223 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PVC CONTAINER CORP CENTRAL INDEX KEY: 0000081288 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PLASTIC PRODUCTS [3080] IRS NUMBER: 132616435 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-16497 FILM NUMBER: 96684496 BUSINESS ADDRESS: STREET 1: 401 INDUSTRIAL WAY WEST CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 9085420060 MAIL ADDRESS: STREET 1: 401 INDUSTRIAL WAY WEST CITY: EATONTOWN STATE: NJ ZIP: 07724 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KIRTLAND CAPITAL CORP CENTRAL INDEX KEY: 0000758443 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2550 SOM CENTER ROAD SUITE 105 CITY: WILLOUGHBY HILLS STATE: OH ZIP: 44094 SC 13D 1 PVC CONTAINER CORP/KIRTLAND CAPITAL CORP. SC 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 (Amendment No. ) 1 ------- PVC Container Corporation - ------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value ---------------------------- (Title of Class of Securities) 693-651-101 ---------------------------- (CUSIP Numbers) Raymond A. Lancaster Kirtland Capital Corporation 2550 SOM Center Road Suite 105 Willoughby Hills, Ohio 44094 216-585-9010 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 12, 1996 ------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. - -------- (1.) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 2 CUSIP NOS. 693-651-101 13D page of pages - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Kirtland Capital Corporation 34-1748480 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Ohio - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER Common Stock 4,367,415 NUMBER OF -------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY Common Stock 0 OWNED BY -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING Common Stock 4,367,415 PERSON WITH -------------------------------------------------- SHARED DISPOSITIVE POWER Common Stock 0 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Common Stock 4,367,415 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Common Stock 62.35% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 2 3 ITEM 1. SECURITY AND ISSUER. The securities to which this statement relates are the Common Stock, $0.01 par value per share (the "Common Stock"), of PVC Container Corporation, a Delaware corporation (the "Company"). The principal offices of the Company are located at 401 Industrial Way West, Eatontown, New Jersey 07724. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c) This Schedule 13D is filed by Kirtland Capital Corporation, an Ohio corporation ("Kirtland"), whose principal business is searching for, negotiating, structuring, acquiring, holding, selling and refinancing equity interests in operating businesses on behalf of itself and its affiliates and performing all things incidental to or growing out of such activities. Kirtland's principal executive offices are located at 2550 SOM Center Road, Suite 105, Willoughby Hills, Ohio 44094. Pursuant to General Instruction "C" for Schedule 13D, set forth below is certain information concerning the executive officers and directors of Kirtland.
Present Principal Name Title Business Address Occupation - ---- ----- ---------------- ----------------- John F. Turben Chief Executive Officer 2550 SOM Center Road, Suite 105, Chief Executive Officer and Chairman of the Willoughby Hills, OH 44094 and Chairman of Board of Board of Directors Directors of Kirtland John G. Nestor President, Chief Operating 2550 SOM Center Road, Suite 105, President, Chief Operating Officer and Director Willoughby Hills, OH 44094 Officer and Director of Kirtland Raymond A. Lancaster Executive Vice President 2550 SOM Center Road, Suite 105, Executive Vice President and Director Willoughby Hills, OH 44094 and Director Michael T. DeGrandis Treasurer 2550 SOM Center Road, Suite 105, Treasurer of Willoughby Hills, OH 44094 Kirtland Thomas N. Littman Secretary 2550 SOM Center Road, Suite 105, Secretary of Willoughby Hills, OH 44094 Kirtland
(d) During the last five years, neither Kirtland nor, to the best of Kirtland's knowledge, any of the executive officers or directors of Kirtland has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, neither Kirtland nor, to the best of Kirtland's knowledge, any of the executive officers or directors of Kirtland has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) All of the individuals identified in this Item 2 are citizens of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The aggregate amount of funds required by Kirtland to purchase the Common Stock from the the previous holder, Rimer Anstalt, a Liechtenstein anstalt ("Rimer"), was $17,469,660. $16,074,656 of the funds used to purchase the Common Stock was obtained from Kirtland Capital Partners II L.P., an Ohio limited partnership ("KCPII"), and $1,395,004 of the funds used to purchase the Common Stock was obtained from Kirtland Capital Company II LLC, a Turks and Caicos Islands limited liability company ("KCC II"). Kirtland is the general partner of KCP II and has sole voting and investment power over all of the Common Stock held by Page 3 4 KCP II. Kirtland is the general partner of Evergreen Partners II L.P., an Ohio limited partnership ("Evergreen"), which is the managing member of KCC II. Kirtland has sole voting and investment power over all of the Common Stock held by KCC II. No part of the purchase price for the Common Stock consisted of borrowed funds. ITEM 4. PURPOSE OF TRANSACTION. Kirtland purchased the Common Stock for general investment purposes. Kirtland intends to review continuously its equity position in the Company. Depending upon future evaluations of the business prospects of the Company and upon other developments, including, without limitation, general economic and business conditions and stock market conditions, Kirtland may determine to increase or decrease its equity interest in the Company by acquiring additional shares of the Common Stock or by disposing of all or a portion of its holdings of the Common Stock, subject to any applicable legal and contractual restrictions on its ability to do so. Kirtland has acquired its interest in the Common Stock as a result of the Stock Purchase Agreement, dated as of December 3, 1996, by and among KCP II, the Company and Rimer (the "Purchase Agreement"). Pursuant to the Purchase Agreement, the Company agreed to (i) increase the size of the Board of Directors of the Company to up to seven persons, (ii) subject to compliance with Section 14(f) of the Securities and Exchange Act of 1934, cause up to five persons designated by KCP II to be nominated to the Company's Board of Directors. Following the successful completion of the transactions contemplated by the Purchase Agreement on December 12, 1996, Kirtland acquired its equity interest in the Company. A copy of the Purchase Agreement is filed as an exhibit hereto and incorporated herein by reference. On December 12, 1996, Kirtland entered into a certain Stock Purchase Agreement with Phillip Friedman (the "Friedman Agreement"). Following the successful completion of the transactions contemplated by the Friedman Agreement, Kirtland will purchase 100,000 shares of Common Stock from Phillip Friedman, the current President of the Company. A copy of the Friedman Agreement is filed as an exhibit hereto and incorporated herein by reference. Except as set forth herein, Kirtland does not have any plans or proposals which would relate to or result in: (a) The acquisition of additional securities of the Company, or the disposition of securities of the Company; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Company or of any of its subsidiaries; (d) Any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Company; (f) Any other material change in the Company's business or corporate structure; (g) Changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; Page 4 5 (h) Causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) - (b) At the date hereof, Kirtland has the sole power to vote and dispose of 4,367,415 shares of the Common Stock. The Common Stock held by Kirtland represents approximately 62.35% of the 7,004,705 shares of Common Stock outstanding as of December 3, 1996, based on information provided by the Company. To the best of Kirtland's knowledge, none of the individuals named in Item 2 has the sole or shared power to vote or the sole or shared power to dispose of any shares of the Common Stock. (c) No transactions in shares of the Common Stock were effected during the past 60 days by Kirtland, or to the best of Kirtland's knowledge, by any of the individuals identified in Item 2. (d) Except as stated herein, to the best of Kirtland's knowledge, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities described in response to Item 5(c). (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. On December 12, 1996, KCP II and the Company entered into a Registration Rights Agreement (the "Registration Rights Agreement"). The following is a brief description of the Registration Rights Agreement and is qualified in its entirety by reference to such agreement, a copy of which is filed as an exhibit hereto and incorporated herein by reference. The Registration Rights Agreement provides Kirtland with certain demand and "piggy-back" registration rights with respect to each share of Common Stock purchased by Kirtland pursuant to the Purchase Agreement. Specifically, the Registration Agreement provides for Kirtland to (i) make up to three written demands that the Company effect a registration under the Securities Act of 1933, as amended (a "Registration"), of a specified number of shares of Common Stock, and (ii) be entitled to "piggyback" on any other Registrations that the Company intends to effect, so long as such "piggy-back" is done in accordance with the terms of the Registration Rights Agreement. In addition, the Registration Rights Agreement provides that the Company shall bear and pay all fees, costs, and expenses in connection with the Registrations described in the previous sentence in accordance with the terms of the Registration Rights Agreement. On December 12, 1996, Kirtland and the Company entered into a Consulting Agreement (the "Consulting Agreement"). The following is a brief description of the Consulting Agreement and is qualified in its entirety by reference to such agreement, a copy of which is filed as an exhibit hereto and incorporated herein by reference. The Consulting Agreement provides that Kirtland shall provide such consulting services to the Company as may be agreed upon by the Company and Kirtland. During the term of the Consulting Agreement, Kirtland shall receive an annual consulting fee from the Company equal to $250,000 in accordance with the terms of the Consulting Agreement. The term of the Consulting Agreement will end upon the later of (i) KCP II (or an affiliate) ceasing to own at least 40% of the issued and outstanding shares of Common Stock, and (ii) the Board of Directors of the Company adopting a resolution, approved by a majority of the Directors, approving the termination of the Consulting Agreement. Page 5 6 There are no other contracts, understandings or agreements with respect to the securities of the Company between Kirtland or the other persons identified in Item 2 and any other parties. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 99.1 -- Purchase Agreement Exhibit 99.2 -- Friedman Agreement Exhibit 99.3 -- Registration Rights Agreement Exhibit 99.4 -- Consulting Agreement Page 6 7 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 20, 1996 KIRTLAND CAPITAL CORPORATION By: /s/ Raymond A. Lancaster ------------------------ Name: Raymond A. Lancaster Title: Executive Vice President Page 7 EX-99.1 2 EXHIBIT 99.1 1 EXHIBIT 99.1 STOCK PURCHASE AGREEMENT ------------------------ THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of this 3rd day of December, 1996, by and among Kirtland Capital Partners II L.P., an Ohio limited partnership (the "Buyer"), PVC Container Corporation, a Delaware corporation (the "Company"), and Rimer Anstalt, a Liechtenstein anstalt (the "Seller"). RECITALS -------- A. The Company has 7,004,705 shares of common stock, par value $.01 per share (the "Shares"), issued and outstanding; and B. The Seller is the sole record and beneficial owner of 4,367,415 Shares (the "Purchase Shares"); and C. The Seller is willing to sell, and the Buyer is willing to purchase, all of the Purchase Shares on the terms set forth herein; OPERATIVE PROVISIONS -------------------- NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, conditions and agreements herein contained, and intending to be legally bound, the parties hereto hereby agree as follows: 2 ARTICLE I PURCHASE AND SALE OF THE PURCHASE SHARES ---------------------------------------- 1.1 SALE OF THE PURCHASE SHARES. At the Closing (as hereinafter defined), the Seller shall sell, convey, transfer and deliver to the Buyer and the Buyer shall purchase and acquire from the Seller, the Purchase Shares free and clear of any and all liens, pledges, charges, proxies, equities, encumbrances, contracts, commitments, title retention agreements, restrictions on transfer (except under applicable securities laws), security interests, warrants, options, rights or adverse claims of others of any nature with respect thereto (collectively, the "Liens"). 1.2 PURCHASE PRICE. At the Closing and in consideration for the Purchase Shares, the Buyer shall pay to the Seller the aggregate sum of U.S. $17,469,660 (the "Purchase Price") by wire transfer of immediately available funds to such account of the Seller as the Seller shall specify in writing to the Buyer. ARTICLE II CLOSING AND CLOSING DATE ------------------------ 2.1 THE CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York on December 12, 1996 subject to the satisfaction or waiver of each of the conditions set forth in Article IX hereof or such other time and place as the Buyer, the 2 3 Company and the Seller shall agree (such date is referred to in this Agreement as the "Closing Date"). 2.2 DELIVERIES AT THE CLOSING. At the Closing, (a) the Seller shall deliver to the Buyer the various certificates, instruments and documents referred to in Section 6.1 hereof, (b) the Company shall deliver to the Buyer the various certificates, instruments and documents referred to in Section 6.3 hereof, and (c) the Buyer shall deliver to the Seller the Purchase Price as provided in Section 6.2 hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER -------------------------------------------- The Seller hereby represents and warrants to the Buyer as follows: 3.1 CORPORATE STATUS. The Seller is an anstalt duly organized, validly existing and in good standing under the laws of Liechtenstein. The Seller has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Seller has heretofore made available to the Buyer true, correct and complete copy of its Statutes. 3.2 AUTHORITY AND CAPACITY FOR AGREEMENTS. The Seller has all requisite power, authority and capacity to execute and deliver this Agreement and to carry out and perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate 3 4 action on the part of the Seller. This Agreement has been duly executed and delivered by the Seller and constitutes the valid and legally binding obligation of the Seller enforceable in accordance with its terms except that the enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 3.3 NONCONTRAVENTION. Neither the execution, delivery and performance by the Seller of this Agreement and the consummation (in accordance with the terms hereof) of the transactions contemplated hereby, nor compliance by the Seller with any of the provisions hereof will violate, conflict with, or result in (with or without the giving of notice or the lapse of time or both) a default under or a breach or violation of, any provision of (a) the Statutes of the Seller, (b) any mortgage, indenture, lease, contract, deed, agreement or other instrument to which the Seller is a party or by which it is bound or to which any of its properties or assets is subject, (c) any law, rule or regulation of any governmental body (whether domestic or foreign), or (d) any order, judgment or decree of any court or other governmental body (whether domestic or foreign). Except as otherwise provided in SCHEDULE 3.3 attached hereto, no consent, approval, authorization, order, filing, registration, declaration or qualification of or with any court, governmental body (whether domestic or foreign) or third person is required to be obtained 4 5 by or on behalf of the Seller in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 3.4 TITLE TO THE PURCHASE SHARES. The Seller is the sole record and beneficial owner of the Purchase Shares, free and clear of any and all Liens. The Purchase Shares represent (a) all of the Shares owned, directly or indirectly, by the Seller or any of its Affiliates (as hereinafter defined), and (b) 63% of the issued and outstanding Shares. Each of the Purchase Shares has been duly and validly authorized and issued and is fully paid and non-assessable. Neither the Seller nor any of its Affiliates has, directly or indirectly, any outstanding rights, options, warrants, conversion rights, calls, puts or agreements of any nature to purchase or acquire any Shares from the Company or any other person or entity. The Seller is not a party to any (a) voting trust, proxy, or other agreement or understanding with respect to the voting of any of the Shares, or (b) option, warrant, purchase right or other contract or commitment that requires the Seller to sell, transfer or otherwise dispose of any of the Purchase Shares (other than pursuant to this Agreement). Upon the delivery of and payment for the Purchase Shares as provided in this Agreement, the Buyer shall acquire good, marketable and valid title to the Purchase Shares, free and clear of any and all Liens. For purposes of this Agreement, "Affiliate" of any person or entity means any person or entity directly or indirectly controlling, controlled by, or under common control with, any such person or entity. 5 6 3.5 NO BROKERS. Neither the Seller nor any Affiliate of the Seller has retained or been approached by any broker, finder or agent in connection with this Agreement or the transactions contemplated hereby. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company hereby represents and warrants to the Buyer as follows: 4.1 CORPORATE STATUS. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware. The Company is duly qualified to do business as a foreign corporation and is in good standing in the jurisdictions set forth on SCHEDULE 4.1 attached hereto, which are the only jurisdictions in which the Company is required to be so qualified. The Company has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company has heretofore made available to the Buyer true, correct and complete copies of its Certificate of Incorporation and By-Laws. 4.2 SUBSIDIARIES. SCHEDULE 4.2 attached hereto identifies each entity in which the Company owns, directly or indirectly, any shares of capital stock or other equity securities (collectively, the "Subsidiaries"). SCHEDULE 4.2 includes for each Subsidiary (a) the name of such Subsidiary, (b) the authorized capital stock of such Subsidiary and the number of shares of such stock owned, directly or indirectly, by 6 7 the Company, and (c) the jurisdiction of incorporation of such Subsidiary. All of the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid and nonassessable. No bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which stockholders of any Subsidiary may vote ("Subsidiary Voting Debt") are issued or outstanding. Except as set forth in SCHEDULE 4.2, there are outstanding: (a) no shares of capital stock, Subsidiary Voting Debt or other voting securities of any Subsidiary; (b) no securities of any Subsidiary convertible into, or exchangeable or exercisable for, shares of capital stock of any Subsidiary, Subsidiary Voting Debt or other voting securities of any Subsidiary, and (c) no options, warrants, calls, puts, rights (including, without limitation, preemptive rights), commitments or agreements to which any Subsidiary is a party or by which it is bound, in any case obligating any Subsidiary to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional shares of capital stock of any Subsidiary or other voting securities of any Subsidiary, or obligating any Subsidiary to grant, execute or enter into any such option, warrant, call, put, right, commitment or agreement. Except as otherwise disclosed on SCHEDULE 4.2 attached hereto, the Company, directly or indirectly, has good and marketable title to, and is the sole legal and beneficial owner of, all of the issued and outstanding 7 8 shares of capital stock of each Subsidiary, free and clear of any and all Liens. Each Subsidiary is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation as set forth on SCHEDULE 4.2 and is duly qualified to do business as a foreign corporation and is in good standing in the jurisdictions set forth on SCHEDULE 4.2 attached hereto, which are the only jurisdictions in which any such Subsidiary is required to be qualified. Each Subsidiary has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. 4.3 AUTHORITY AND CAPACITY FOR AGREEMENT. The Company has all requisite power, authority and capacity to execute and deliver this Agreement and to carry out and perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company enforceable in accordance with its terms except that the enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 4.4 NONCONTRAVENTION. Neither the execution, delivery and performance by the Company of this Agreement and the 8 9 consummation (in accordance with the terms hereof) of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof will violate, conflict with, or result in (with or without the giving of notice or the lapse of time or both) a default under or a breach or violation of, any provision of (a) the Certificate of Incorporation or By-Laws of the Company, (b) any mortgage, indenture, lease, contract, deed, agreement or other instrument to which the Company is a party or by which it is bound or to which any of its properties or assets is subject, (c) any law, rule or regulation of any governmental body (whether domestic or foreign), or (d) any order, judgment or decree of any court or other governmental body (whether domestic or foreign). Neither the Company nor any of its Subsidiaries is a party to or otherwise bound by any agreement or other instrument providing for the payment of any benefit as a result of the consummation of the transactions contemplated hereby. Except as otherwise provided in SCHEDULE 4.4 attached hereto, no consent, approval, authorization, order, filing, registration, declaration or qualification of or with any court, governmental body (whether domestic or foreign) or third person is required to be obtained by or on behalf of the Company in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 4.5 CAPITAL STRUCTURE. The authorized capital stock of the Company consists solely of (a) 10,000,000 shares of common stock, par value $.01 per share, of which 7,004,705 are issued and outstanding, and (b) 1,000,000 shares of preferred stock, par 9 10 value $1.00 per share, of which none are issued and outstanding. There are no employment, executive termination or similar agreements providing for the issuance of any shares of capital stock of the Company. No bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which the Company's stockholders may vote (the "Company Voting Debt") are issued or outstanding. Except as set forth in this Section 4.5, there are outstanding: (a) no Shares, Company Voting Debt or other voting securities of the Company; (b) no securities of the Company convertible into, or exchangeable or exercisable for, Shares, Company Voting Debt or other voting securities of the Company; and (c) no options, warrants, calls, puts, rights (including, without limitation, preemptive rights), commitments or agreements to which the Company is a party or by which it is bound, in any case obligating the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional shares of capital stock or any Company Voting Debt or other voting securities of the Company, or obligating the Company to grant, extend or enter into any such option, warrant, call, put, right, commitment or agreement. There are not any stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any Shares that will limit in any way the 10 11 solicitation of proxies by or on behalf of the Company from, or the casting of votes by, the stockholders of the Company. 4.6 SEC FILINGS. Each report, schedule, registration statement and definitive proxy statement filed by the Company (the "Company SEC Documents") with the Securities and Exchange Commission (the "SEC") complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents. None of the Company SEC Documents contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principals ("GAAP") applied on a consistent basis during the periods involved and present fairly, in all material respects, in accordance with applicable requirements of GAAP the consolidated financial position of the Company and its consolidated subsidiaries as of their respective dates and the consolidated results of operations and the consolidated cash flows of the Company and its consolidated subsidiaries for the periods presented therein. 11 12 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Company SEC Documents, since September 30, 1996, the business of the Company has been carried on only in the ordinary and usual course and there has not been any adverse change in its business, results of operations or financial condition. 4.8 COMPLIANCE WITH APPLICABLE LAWS. To the knowledge of the Company, the Company and its Subsidiaries hold all permits, licenses, variances, exemptions, orders, franchises and approvals of all governmental bodies necessary for the lawful conduct of their respective businesses (the "Company Permits"). To the knowledge of the Company and except as disclosed in the Company SEC Documents, the businesses of the Company and its Subsidiaries are not being conducted in violation of any law, ordinance or regulation of any governmental body. To the knowledge of the Company, no investigation or review by any governmental body with respect to the Company or any of its Subsidiaries is pending or threatened. 4.9 LITIGATION. To the knowledge of the Company and except as disclosed in the Company SEC Documents, there is no suit, action or proceeding pending or threatened against or affecting the Company or any Subsidiary of the Company, nor is there any written judgement, decree, injunction, rule or order of any governmental body or arbitrator outstanding against the Company or any Subsidiary of the Company, which is reasonably likely to result in a material adverse effect on the Company or its ability to consummate the transactions contemplated hereby. 12 13 4.10 TAXES. (a) To the knowledge of the Company, except as set forth in SCHEDULE 4.10(A), (i) all Tax (as hereinafter defined) returns, statements, reports and forms (including estimated tax or information returns and reports) required to be filed with any Taxing Authority (as hereinafter defined) with respect to any Pre-Closing Tax Period (as hereinafter defined) by or on behalf of the Company or any Subsidiary (collectively, the "Returns") have, to the extent required to be filed on or before the date hereof, been filed when due in accordance with all applicable laws; (ii) as of the time of filing, the Returns correctly reflected the facts regarding the income, business, assets, operations, activities and status of the Company and its Subsidiaries; (iii) all Taxes shown as due and payable on the Returns that have been filed have been timely paid, or withheld and remitted to the appropriate Taxing Authority; (iv) the reserves established for Taxes with respect to the Company and its Subsidiaries for any Pre-Closing Tax Period (including any Pre-Closing Tax Period for which no Return has yet been filed) reflected on the books of the Company and its Subsidiaries (excluding any provision for deferred income taxes) are adequate in accordance with GAAP; (v) neither the Company nor any Subsidiary is delinquent in the payment of any Tax or has requested any extension of time within which to file any Return except for extensions granted as a matter of right; (vi) neither the Company nor any Subsidiary (or any member of any affiliated, consolidated, combined or unitary group of which the Company or any Subsidiary is or has been a member) has granted 13 14 any extension or waiver of the statute of limitations period applicable to any Return, which period (after giving effect to such extension or waiver) has not yet expired; (vii) there is no action, suit or proceeding now pending and no claim, audit or investigation now pending or any action, suit, claim, audit or investigation threatened against or with respect to the Company or any Subsidiary in respect of any Tax; (viii) neither the Company nor any Subsidiary owns any interest in real property in the State of New York or in any other jurisdiction in which a Tax is imposed on the transfer of a controlling interest in an entity that owns any interest in real property; (ix) none of the Company, any Subsidiary or any other person on behalf of the Company or any Subsidiary has entered into any agreement or consent pursuant to Section 341(f) of the Code; (x) there are no Liens for Taxes upon the assets of the Company or any Subsidiary except Liens for current Taxes not yet due; (xi) neither the Company nor any Subsidiary will be required to include any adjustment in taxable income for any Post-Closing Tax Period (as hereinafter defined) under Section 481(c) of the Code (or any similar provision of the Tax laws of any jurisdiction) as a result of a change in method of accounting for a Pre-Closing Tax Period or pursuant to the provisions of any agreement entered into with any Taxing Authority with regard to the Tax liability of the Company or any Subsidiary for any Pre-Closing Tax Period; and (xii) neither the Company nor any Subsidiary has been a member of an affiliated, consolidated, combined or unitary group or participated in any other arrangement whereby any income, 14 15 revenues, receipts, gain or loss of the Company or any Subsidiary was determined or taken into account for Tax purposes with reference to or in conjunction with any income, revenues, receipts, gain, loss, asset or liability of any other person or entity. To the knowledge of the Company, except as set forth on SCHEDULE 4.10(A), neither the Company nor any of its Subsidiaries is a party to or bound by any agreement providing for the allocation or sharing of Taxes with any entity which is not, either directly or indirectly, a Subsidiary of the Company (a "Tax Sharing Agreement"). (b) SCHEDULE 4.10(b) contains a list of all jurisdictions (whether foreign or domestic) to which any Tax imposed on overall net income is properly payable by the Company or any Subsidiary. The Company has previously delivered or made available to Buyer true, correct and complete copies of its federal income tax returns for each of the fiscal years ended December 31, 1990 through December 31, 1995. (c) For purposes of this Agreement, (i) "Tax" shall mean (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding on amounts paid to or by the Company or any Subsidiary, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any governmental authority 15 16 (domestic or foreign) responsible for the imposition of any such tax (a "Taxing Authority"), (b) any liability of the Company or any Subsidiary for the payment of any amounts of any of the types described in clause (a) above as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement or arrangement whereby liability of the Company or any Subsidiary for payment of such amounts was determined or taken into account with reference to the liability of any other person, and (c) liability of the Company or any Subsidiary for the payment of any amounts as a result of being party to any Tax Sharing Agreement or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other person; (ii) "Pre-Closing Tax Period" shall mean any Tax period (or portion thereof) ending on or before the close of business on the Closing Date; and (iii) "Post-Closing Tax Period" shall mean any Tax period (or portion thereof) ending after the close of business on the Closing Date. 4.11 PENSION AND BENEFIT PLANS; ERISA. To the knowledge of the Company, SCHEDULE 4.11 attached hereto contains a true and complete list of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries for the benefit of current, former and retired employees (the "Company ERISA Plans") and each other material plan, contract, program or arrangement 16 17 maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries for the benefit of current, former and retired employees and directors (the "Company Benefit Arrangements"). To the knowledge of the Company, each Company ERISA Plan and each Company Benefit Arrangement complies in all material respects with its terms and all applicable laws, including ERISA, and no "reportable event," "prohibited transaction" or breach of fiduciary duty (within the meaning of ERISA) or termination has occurred with respect to any Company ERISA Plan under circumstances which present a risk of any material liability to any governmental authority or other person. To the knowledge of the Company, none of the Company ERISA Plans or Company Benefit Arrangements is a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or a "multiple employee plan" within the meaning of Section 413(c) of the Code or Section 4063 of ERISA. To the knowledge of the Company, no event has occurred which would cause the Company to incur (i) any liability to the Pension Benefit Guaranty Corporation under Section 4069 of ERISA or (ii) any withdrawal liability to a "multiemployer plan." Copies or descriptions of each Company ERISA Plan and Company Benefit Arrangement (and, where applicable, the most recent summary plan description, actuarial report, determination letter, annual report (Form 5500) and trust agreement relating to such Company ERISA Plan and Company Benefit Arrangement), and such other information as has been reasonably requested by Buyer, have been made available to Buyer for review prior to the date hereof. To the knowledge of the Company, each Company ERISA Plan and each 17 18 Company Benefit Arrangement intended to qualify under section 401(a) of the Code, is so qualified, and each trust maintained in connection with each such plan is tax exempt under Code ss. 501(a). To the knowledge of the Company, the Internal Revenue Service ("IRS") has issued favorable determination letters with respect to the qualification of each qualified Company ERISA Plan and each qualified Company Benefit Arrangement and related trust, and the IRS has not taken any action to revoke any such letter. To the knowledge of the Company, if and to extent applicable, no Company ERISA Plan and no Company Benefit Arrangement has or has incurred an accumulated funding deficiency within the meaning of ERISA section 302 or Code section 412, nor has any waiver of the minimum funding standards of ERISA section 302 and Code section 412 been requested of or granted by the IRS with respect to any Company ERISA Plan or Company Benefit Arrangement, nor has any lien in favor of any such plan arisen under Code section 412(n) or ERISA section 302(f). To the knowledge of the Company, with respect to any insurance policy providing funding for benefits under any Company ERISA Plan or Company Benefit Arrangement, there is no liability of the Company in the nature of a retroactive rate adjustment, loss sharing arrangement, or other actual or contingent liability, there will be no such liability arising wholly or partially out of events occurring prior to the execution of this Agreement, nor would there be any such liability if the Company cancelled such policy as of the execution of this Agreement. 4.12 ENVIRONMENTAL MATTERS. (a) For purposes of this Agreement: 18 19 (i) "Environmental Law" means any applicable law regulating or prohibiting Releases into any part of the environment (indoor or outdoor), or pertaining to the protection of natural resources or the environment including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. section 9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. section 1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. section 6901, et seq.), the Clean Water Act (33 U.S.C. section 1251, et seq.), the Clean Air Act (33 U.S.C. section 7401, et seq.), the Toxic Substances Control Act (15 U.S.C. section 7401, et seq.) and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. section 136, et seq.), and the regulations promulgated pursuant thereto, and any such applicable state or local statutes, and the regulations promulgated pursuant thereto, as such laws are in effect on the date hereof; (ii) "Hazardous Material" means any substance, material or waste which is regulated by any public or governmental body in the jurisdictions in which the Company or any of its Subsidiaries conducts business, or the United States, including, without limitation, any material or substance which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste" or 19 20 "toxic substance" under any provision of any Environmental Law; (iii) "Release" means any release, spill, effluent, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, any property owned, operated or leased by the Company or any of its Subsidiaries; and (iv) "Remedial Action" means all actions, including, without limitation, any capital expenditures, required by a governmental body or required under any Environmental Law, or voluntarily undertaken to (a) clean up, remove, treat, or in any other way ameliorate or address any Hazardous Materials or other substance in the indoor or outdoor environment; (b) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not endanger or threaten to endanger the public health or welfare of the indoor or outdoor environment; (c) perform preremedial studies and investigations or post-remedial monitoring and care pertaining or relating to a Release; or (d) achieve or maintain compliance with any Environmental Law. (b) To the knowledge of the Company, the operations of the Company and its Subsidiaries have complied and currently comply with all Environmental Laws. Except as set forth in 20 21 SCHEDULE 4.12 attached hereto, neither the Company nor any of its Subsidiaries has received any notice with respect to any of its facilities of any alleged violation of any Environmental Law or any possible liability or remediation obligation arising under any Environmental Law. (c) To the knowledge of the Company, the Company and its Subsidiaries are not subject to any outstanding orders, judgments, agreements or contracts with or issued by any governmental body or other person respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened Release of a Hazardous Material except as described in SCHEDULE 4.12 attached hereto. 4.13 NO BROKERS. Neither the Company nor any Affiliate of the Company has retained or been approached by any broker, finder or agent in connection with this Agreement or the transactions contemplated hereby. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER ------------------------------------------- The Buyer hereby represents and warrants to the Seller and the Company as follows: 5.1 CORPORATE STATUS. The Buyer is a limited partnership duly formed and existing under the laws of the State of Ohio. 5.2 AUTHORITY AND CAPACITY FOR AGREEMENT. The Buyer has all requisite power, authority and capacity to execute and deliver this Agreement and to carry out and perform its 21 22 obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary partnership action on the part of the Buyer. This Agreement has been duly executed and delivered by the Buyer and constitutes the valid and legally binding obligation of the Buyer enforceable in accordance with its terms except that the enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 5.3 NONCONTRAVENTION. Neither the execution, delivery and performance by the Buyer of this Agreement and the consummation (in accordance with the terms hereof) of the transactions contemplated hereby, nor compliance by the Buyer with any of the provisions hereof will violate, conflict with, or result in (with or without the giving of notice or the lapse of time or both) a default under or a breach or violation of, any provision of (a) the Buyer's certificate of limited partnership or agreement of limited partnership, (b) any mortgage, indenture, lease, contract, deed, agreement or other instrument to which the Buyer is a party or by which it is bound or to which any of its properties or assets is subject, (c) any law, rule or regulation of any governmental body (whether domestic or foreign), or (d) any order, judgment or decree of any court or other governmental body (whether domestic or foreign). Except as otherwise provided 22 23 in SCHEDULE 5.3 attached hereto, no consent, approval, authorization, order, filing, registration, declaration or qualification of or with any court, governmental body or third person is required to be obtained by or on behalf of the Buyer in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 5.4 NO BROKERS. Except for George R. Begley, neither the Buyer nor any Affiliate of the Buyer has retained or been approached by any broker, finder or agent in connection with this Agreement or the transactions contemplated hereby. All of the fees and expenses of George R. Begley due and payable on account of this Agreement and the transactions contemplated hereby shall be borne by the Buyer. 5.5 INVESTMENT. The Buyer is purchasing the Purchase Shares for its own account and not with a view to the distribution thereof in violation of the Securities Act or the rules and regulations promulgated thereunder. ARTICLE VI CLOSING DELIVERIES ------------------ 6.1 DELIVERIES BY THE SELLER. At the Closing, the Seller shall deliver to the Buyer the following documents: (a) One or more certificates representing the Purchase Shares, duly endorsed (or with duly executed stock powers attached) for transfer to the Buyer with all transfer taxes, if any, paid, and free of any restrictive legends except legends, if any, reflecting the limitations on the transferability of the 23 24 securities represented thereby which result from the fact that such securities have not been registered under the Securities Act; (b) A receipt for payment of the Purchase Price duly executed by the Seller; (c) A certified copy of the resolutions of a Director of the Seller authorizing the execution, delivery and performance of this Agreement; and (d) An opinion of counsel to the Seller and the Company in a form mutually acceptable to the Buyer and such counsel. 6.2 DELIVERIES BY THE BUYER. At the Closing, the Buyer shall deliver to the Seller the Purchase Price in the manner contemplated by Section 1.2 hereof. 6.3 DELIVERIES BY THE COMPANY. At the Closing, the Company shall deliver to the Buyer the following documents: (a) Counterpart signature pages to (i) a Registration Rights Agreement by and between the Buyer and the Company in a form to be agreed upon between the Buyer and the Company on or prior to the Closing Date (the "Registration Rights Agreement") and (ii) a Consulting Agreement by and between Kirtland Capital Corporation, an Affiliate of the Buyer ("KCC"), and the Company in a form to be agreed upon between the Buyer and the Company on or prior to the Closing Date (the "Consulting Agreement"), each duly executed by the Company; (b) A certified copy of the resolutions of the Board of Directors of the Company authorizing the execution, delivery 24 25 and performance of this Agreement, the Registration Rights Agreement and the Consulting Agreement; and (c) A certificate, in form and substance satisfactory to Buyer, pursuant to Treas. Reg. Section 1.897-2(g)(1)(i)(A) providing that the Purchase Shares do not constitute equity interests of a United States real property holding corporation. ARTICLE VII PRE-CLOSING COVENANTS --------------------- Between the date of this Agreement and the Closing Date, the Buyer, the Seller and the Company shall, as applicable, perform the following: 7.1 GENERAL. Each of the Buyer, the Seller and the Company shall use their respective reasonable best efforts to take all actions and to do all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement (including satisfying the closing conditions set forth in Article IX hereof). 7.2 BUSINESS IN ORDINARY COURSE. The Company shall carry on its operations (and those of its Subsidiaries) substantially in the same manner as heretofore conducted. The Company shall not make or institute any material change in the methods of manufacture, management, accounting or operation of the Company or its Subsidiaries. 7.3 CONTRACTS AND COMMITMENTS. The Company shall not (and shall not permit any of its Subsidiaries to) enter into any contract or commitment or engage in any transaction, not in the 25 26 usual and ordinary course of business and consistent with the past operation of the Company. 7.4 SALE OF CAPITAL ASSETS. Except for the sale or other disposition of excess or obsolete equipment in the usual and ordinary course of business consistent with the past operation of the Company and its Subsidiaries, the Company and its Subsidiaries will not sell or otherwise dispose of any capital asset relating to the Company and its Subsidiaries. 7.5 NO GENERAL INCREASES. The Company will not (and will cause each of its Subsidiaries not to) grant any general or uniform increase in the rates of pay of employees of the Company or any Subsidiary, nor grant any general or uniform increase in the benefits under any bonus or pension plan or other employee-related contract or commitment. The Company shall not increase the compensation payable or to become payable to any officer or other salaried employee with a base salary in excess of $50,000 per year or increase any bonus, insurance, pension or other benefit plan, payment or arrangement made to, for or with any such officer or salaried employee. 7.6 PRESERVATION OF ORGANIZATION. The Company shall (and shall cause each of its Subsidiaries to) use its reasonable best efforts to preserve the business organization of the Company and each of its Subsidiaries, to keep available the present key officers and employees of the Company and its Subsidiaries and to preserve the present relationships of the Company and its Subsidiaries with its suppliers and customers and others having business relations with the Company and its Subsidiaries. 26 27 7.7 FULL ACCESS. The Company shall permit representatives of the Buyer to have full access at all reasonable times to all of the facilities, properties, personnel, books and records of the Company and each of its Subsidiaries to permit the Buyer to complete its due diligence examination of the Company and each of its Subsidiaries. Without limiting the generality of the foregoing sentence, (a) the Buyer and its representatives may conduct a Phase I environmental assessment of any of the facilities maintained by the Company or any of its Subsidiaries, and (b) the Company shall provide the Buyer with a copy of its monthly financial statements as promptly as possible following the preparation of such statements, all of which shall be prepared in accordance with GAAP applied on a consistent basis during the periods involved and shall present fairly, in all material respects, in accordance with applicable requirements of GAAP the consolidated financial position of the Company and its consolidated subsidiaries as of their respective dates and the consolidated results of operations and the consolidated cash flows of the Company and its consolidated subsidiaries for the periods presented therein. 7.8 EXCLUSIVITY. Neither the Seller nor any Affiliate of the Seller shall solicit, initiate, encourage the submission of, provide any information in connection with or negotiate any proposal or offer from any person or entity, or provide any information in connection with or negotiate any unsolicited offer or proposal, relating to any acquisition or purchase of the Purchase Shares or similar transaction or business combination 27 28 involving the Purchase Shares or the Company. The Seller shall notify the Buyer promptly if any person makes any proposal, offer, inquiry or contact with respect to any of the foregoing. 7.9 TAX MATTERS. The Company shall notify the IRS pursuant to Treas. Reg. Section 1.897-2(h)(2) informing the IRS that the Company has provided to the Seller a certificate indicating that the Purchase Shares do not constitute equity interests of a United States real property holding corporation. ARTICLE VIII POST-CLOSING COVENANTS ---------------------- 8.1 CONFIDENTIALITY. From and after the Closing Date, the Seller shall retain in confidence, and require its directors, officers, employees, consultants, professional representatives and agents to retain in confidence, all information, financial or otherwise, which it has received relating to the Company's business, assets, financial condition, operations or prospects. The Seller shall deliver promptly to the Company or destroy, at the request and option of the Company, all tangible embodiments (and all copies) of confidential information that is in its possession. Notwithstanding the foregoing provisions of this Section 8.1, the Seller shall not be precluded from disclosing any information specified in this Section 8.1 to the extent required by law. 8.2 BOARD OF DIRECTORS. (a) Promptly following the Closing Date, the Company shall (i) increase the size of the Board of Directors of the Company to up to seven persons and 28 29 (ii) subject to compliance with Section 14(f) of the Exchange Act, cause up to five persons designated by the Buyer (the "KCP Directors") to be nominated to the Company's Board of Directors. Promptly following the Closing Date and subject to compliance with Section 14(f) of the Exchange Act and any other applicable law, the Company shall take, at the Company's expense, all lawful action necessary to effect the nomination and election of the KCP Directors, including, without limitation, mailing to the Company's stockholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information Statement"). (b) None of the information supplied or to be supplied in writing by the Company expressly for inclusion or incorporation by reference in the Information Statement will, at the time the Information Statement is first published, sent or given to the holders of the Shares, and at any time it is amended or supplemented, 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, in light of the circumstances under which they are made, not misleading. 8.3 ADDITIONAL ASSISTANCE. From time to time after the Closing Date, the Seller and the Company, at their own expense, shall execute and deliver, or cause to be executed and delivered, such other instruments, conveyances and transfers and take, or cause to be taken, such other actions as the Buyer may reasonably request in order to fully carry out and consummate the transactions included or provided for in this Agreement. 29 30 ARTICLE IX CLOSING CONDITIONS ------------------ 9.1 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the Buyer to consummate the transactions contemplated hereby shall be subject to satisfaction of each of the following conditions: (a) the representations and warranties set forth in Articles III and IV hereof shall be true and correct in all material respects at and as of the Closing Date; (b) the Seller and the Company shall have performed and complied with all of their respective covenants and agreements contained herein in all material respects; (c) there shall not be any action, suit or proceeding pending or threatened before any court or quasijudicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (iii) affect materially and adversely, including through the imposition of any divestiture requirement, the right of the Buyer to own the Purchase Shares or to operate the business of the Company as presently operated and as presently proposed to be operated (and no such injunction, judgment, order, decree, ruling or charge shall be in effect); 30 31 (d) the Seller and the Company shall have delivered to the Buyer a certificate to the effect that each of the conditions specified in Section 9.1(a), (b) and (c) hereof have been satisfied in all respects; (e) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated without the objection of any of the relevant federal authorities; (f) the Buyer shall have completed and shall be satisfied, in its sole and absolute discretion, with the results of its due diligence examination of the Company and each of its Subsidiaries; (g) there shall not have occurred a material adverse change in the business, operations, properties or assets, liabilities, financial condition, results of operations or prospects of the Company and its Subsidiaries taken as a whole; (h) the Company shall have received notification from the New Jersey Department of Environmental Protection and Energy satisfactory to the Buyer in its sole discretion that the sale of the Purchase Shares may proceed in compliance with the provisions of the New Jersey Industrial Site Recovery Act without the imposition of any liability against the Company or the Buyer on account of the transactions contemplated hereby; (i) the Company and the Seller shall have obtained the consents identified on SCHEDULES 3.3 and 4.4 attached hereto; 31 32 (j) the Seller shall have executed and delivered to the Buyer the documents identified in Section 6.1; and (k) the Company shall have executed and delivered to the Buyer the documents identified in Section 6.3. The Buyer may waive any condition specified in this Section 9.1 if it executes a writing so stating at or prior to the Closing Date. 9.2 CONDITIONS TO OBLIGATION OF THE SELLER AND THE COMPANY. The obligation of the Seller and the Company to consummate the transactions contemplated hereby shall be subject to satisfaction of the following conditions: (a) the representations and warranties set forth in Article V shall be true and correct in all material respects at and as of the Closing Date; (b) the Buyer shall have performed and complied with all of its covenants hereunder in all material respects; (c) there shall not be any action, suit or proceeding pending or threatened before any court or quasijudicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent the consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling or charge shall be in effect); 32 33 (d) the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified in Section 9.2 (a), (b) and (c) hereof have been satisfied in all respects; (e) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated without the objection of any of the relevant federal authorities; and (f) the Buyer shall have delivered to the Seller the Purchase Price. The Seller or the Company may waive any condition specified in this Section 9.2 if either executes a writing so stating at or prior to the Closing. ARTICLE X TERMINATION ----------- 10.1 TERMINATION OF AGREEMENT. This Agreement may be terminated as follows: (a) by the mutual written consent of the Buyer, the Seller and the Company at any time prior to the Closing Date; (b) the Buyer may terminate this Agreement by giving written notice to the Seller and the Company at any time prior to the Closing if the Closing has not occurred on or before December 15, 1996, by reason of the failure of any closing condition contained in Section 9.1 hereof (unless the failure results primarily from the Buyer itself breaching any of its representations, warranties, covenants or agreements contained in 33 34 this Agreement); provided, however, that the Buyer may not terminate this Agreement under this Section 10.1(b) on account of the failure of the conditions specified in Sections 9.1(e) or (h) until after December 31, 1996; (c) the Seller may terminate this Agreement by giving written notice to the Buyer any time prior to the Closing if the Closing has not occurred on or before December 15, 1996, by reason of the failure of any closing condition contained in Section 9.2 hereof (unless the failure results primarily from the Seller or the Company breaching any of their respective representations, warranties, covenants or agreements contained in this Agreement); provided, however, that the Seller may not terminate this Agreement under this Section 10.1(c) on account of the failure of the condition specified in Section 9.2(e) until after December 31, 1996; (d) the Buyer may terminate this Agreement if either the Seller or the Company commits a material breach of any of their respective representations, warranties, covenants or agreements contained herein; or (e) the Seller may terminate this Agreement if the Buyer commits a material breach of any of its representations, warranties, covenants or agreements contained herein. 10.2 EFFECT OF TERMINATION. If the Buyer, the Seller or the Company terminate this Agreement pursuant to Section 10.1, all obligations hereunder shall thereupon terminate without liability of any party hereto to any other party hereto (except 34 35 for any liability of any party then in breach); provided that the provisions of (a) Sections 11.2 and 11.3 hereof and (b) that certain Confidentiality Agreement, dated November 29, 1995, by and between the Company and KCC shall survive any such termination and shall remain in full force and effect thereafter. ARTICLE XI GENERAL 11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties contained in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing Date, except for the representations and warranties contained in Sections 3.4, 3.5, 4.13 and 5.4 hereof, each of which shall survive without limitation as to duration. The Seller shall indemnify the Buyer from and against any and all losses, costs, fees and expenses incurred by the Buyer on account of any breach or violation of the representations and warranties contained in Sections 3.4, 3.5 or 4.13 hereof. The Buyer shall indemnify the Seller and the Company from and against any and all losses, costs, fees and expenses incurred by the Seller or the Company on account of any breach or violation of the representation and warranty contained in Section 5.4 hereof. All of the covenants and agreements contained in this Agreement shall survive the Closing Date without limitation as to duration. 35 36 11.2 EXPENSES. The Seller, the Company and the Buyer shall each bear their separate expenses incurred in connection with this Agreement and the transactions contemplated hereby. 11.3 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. None of the Buyer, the Seller or the Company shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyer, the Seller and the Company. 11.4 WAIVER. Any failure of any party hereto to comply with any of its obligations, agreements, conditions or covenants herein contained may be waived only with the prior written consent of the party which is entitled to the benefits thereof. 11.5 NOTICES. All notices shall be in writing and shall be deemed to have been given three days after the registration if sent by registered mail, postage prepaid, return receipt requested, or upon delivery by a nationally recognized overnight courier service or upon confirmation of receipt if sent by electronic facsimile transmission to the following addresses: If to the Buyer: Kirtland Capital Partners II L.P. 2550 SOM Center Road Suite 105 Willoughby Hills, Ohio 44094 Attention: Raymond A. Lancaster Telecopy No.: (216) 585-9699 with a copy to: Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Charles W. Hardin, Jr. Telecopy No.: (216) 579-0212 If to the Seller: 36 37 Rimer Anstalt Am Schragen Weg 2 9490 Vaduz, Liechtenstein Liechtenstein Attention: Hubert Lampert Telecopy No.: 011 41 075 23228 37 with a copy to: Baer Marks & Upham LLP 805 Third Avenue New York, NY 10022-7513 Attention: Herbert S. Meeker Telecopy No.: (212) 702-5941 If to the Company: PVC Container Corporation 401 Industrial Way West Eatontown, New Jersey 07724 Attention: Phillip L. Friedman Telecopy No.: (908) 542-7706 with a copy to: Baer Marks & Upham LLP 805 Third Avenue New York, NY 10022-7513 Attention: Herbert S. Meeker Telecopy No.: (212) 702-5941 11.6 CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it. 11.7 ENTIRE AGREEMENT AND AMENDMENT. This Agreement embodies the entire understanding of the Buyer, the Seller and the Company, and there are no other agreements or understandings, written or oral, in effect among the Buyer, the Seller and the Company, relating to the subject matter hereof, unless expressly referred to by reference herein. This Agreement may be amended or modified only by an instrument of equal formality signed by 37 38 the Buyer, the Seller and the Company, or their duly authorized agents. 11.8 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio without regard to the conflicts of law principles thereof. 11.9 SUBMISSION TO JURISDICTION. Any legal action or proceedings arising out of this Agreement may be brought only in the courts of the State of Ohio, or in the courts of the United States of America sitting in the State of Ohio and each of the Buyer, the Seller and the Company, hereto irrevocably submits to the exclusive jurisdiction of each such court, together with courts having appellate jurisdiction therefrom, and waives all requirements of personal jurisdiction or venue with respect thereto, and any writ, judgment or other notice of legal process shall be sufficiently served on it if delivered pursuant to Section 11.5 hereof. 11.10 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 11.11 BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Buyer, the Seller and the Company and their respective successors and assigns. The rights and obligations of the Buyer, the Seller and the Company hereunder may not be assigned, provided that the Buyer may assign its right (but not its obligation to pay the Purchase Price) to 38 39 acquire some or all of the Purchase Shares to one or more Affiliates of the Buyer. 11.12 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 11.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 39 40 IN WITNESS WHEREOF, the Buyer, the Seller and the Company have duly executed this Agreement on the date first above written. KIRTLAND CAPITAL PARTNERS II L.P. By: KIRTLAND CAPITAL CORPORATION, Its General Partner By: /s/ Raymond A. Lancaster --------------------------- Name: Raymond A. Lancaster Title: President RIMER ANSTALT By: /s/ Hubert Lampert --------------------------- Name: Hubert Lampert Title: Director PVC CONTAINER CORPORATION By: /s/ Phillip L. Friedman --------------------------- Name: Phillip L. Friedman Title: President 40 41 Schedule 3.3 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt Fleet Bank, N.A. Hart-Scott-Rodino Act Clearance New Jersey Department of Environmental Protection and Energy Clearance 42 Schedule 4.1 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt Delaware New Jersey Pennsylvania Illinois South Carolina 43 Schedule 4.2 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt
Authorized Shares Owned Name Capital Stock by PVC Jurisdiction ---- ------------- ------------- ------------ Airopak 1,500 Common 100** Delaware Corporation Stock, no par Novatec 1,000 Common 1,000 Delaware Plastics Stock, no par Chemicals Co, Inc. Edge Craft 1,000 Common 100* Delaware USA, Inc. Stock, $1 par PVC Container 1,000 Ordinary 1000 U.S.Virgin International Shares, $1 par Islands Sales Corp.
Airopak Corporation is authorized to do business in the States of Pennsylvania and New Jersey. Novatec Plastics & Chemicals Co., Inc. is authorized to do business in the State of New Jersey. Edge Craft USA, Inc. is authorized to do business in the State of New Jersey. * 100 shares owned by Edge Craft Ltd. ** only shares issued and outstanding 44 Schedule 4.4 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt Fleet Bank, N.A. Hart-Scott-Rodino Act Clearance New Jersey Department of Environmental Protection and Energy Clearance 45 Schedule 4.10(a) of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt None 46 Schedule 4.10(b) of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt Delaware New Jersey Pennsylvania Illinois South Carolina 47 Schedule 4.11 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt PVC Pension Plan for Union Employees PVC Profit Sharing Savings Plan 401-K PVC Employee Stock Option Trust Plan PVC Executive Deferred Compensation Plan PVC 1996 Incentive Stock Option Plan 48 Schedule 4.12 of Stock Purchase Agreement by and among Kirtland Capital Partners II, L.P., PVC Container Corporation and Rimer Anstalt None EX-99.2 3 EXHIBIT 99.2 1 Exhibit 99.2 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated as of December 12, 1996 by and between Phillip L. Friedman (the "SELLER"), having an address at 12 Laird Road, Middletown, New Jersey 07748, and Kirtland Capital Partners II, L.P. (the "Purchaser"), an Ohio limited partnership, having an address at 2550 SOM Center Road, Suite 150, Willoughby Hills, Ohio 44094 - Attention: Raymond A. Lancaster: W I T N E S S E T H: -------------------- WHEREAS, the Seller owns an aggregate of 496,666 shares of Common Stock, $.O1 par value of PVC Container Corporation's issued and outstanding Common Stock ("PVC"); and The Purchaser and the Seller have agreed on the terms upon which the Seller shall sell 100,000 shares of the Common Stock of PVC (the "PURCHASED SHARES") and Purchaser shall purchase the Purchased Shares. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the parties hereto agree as follows: 1. PURCHASE AND SALE. Subject to the terms, provisions and conditions contained in this Agreement, the Seller agrees to sell, assign, transfer and deliver to Purchaser at the Closing and Purchaser agrees to purchase the Purchased Shares. 2. CONSIDERATION. In consideration for the Purchased Shares, the Purchaser shall pay to the Seller the aggregate principal sum of $400,000 (the "PURCHASE 2 PRICE"). Such Purchase Price shall be payable subject to paragraph 3 hereof to the Seller on January 3, 1997 by wiring the Purchase Price to the Seller's account at: Summit Bank --------------------------------- Bank 977104737 --------------------------------- Acct. No. Hackensack, New Jersey --------------------------------- Address of Bank 021202162 --------------------------------- ABA Routing No. of Bank 3. CLOSING. The closing of the transactions contemplated hereby ("Closing") shall occur subject to and only in the event of the closing of a transaction by and among the Purchaser, PVC and Rimer Anstalt pursuant to the terms and conditions of a Stock Purchase Agreement dated December 3, 1996 among the Purchaser, PVC and Rimer Anstalt. 4. DOCUMENTS DELIVERED AT CLOSING. At the Closing, the Seller will deliver, or cause to be delivered to Purchaser a certificate or certificates representing the Purchased Shares, with all necessary stock transfer tax stamps attached, duly endorsed or accompanied by stock powers duly executed in blank and the Purchaser will wire to the Seller's account the Purchase Price as provided for in paragraph 2 hereof. The Purchaser may, at is option, allocate a portion of the Purchased Shares to an affiliate thereof. 5. AUTHORITY RELATIVE TO THIS AGREEMENT. Each party hereto represents to the other that they have full power and authority to execute and deliver this Agreement and each agreement and instrument executed and/or delivered in connection herewith and to consummate the transactions contemplated hereby. -2- 3 6. TITLE TO PURCHASED SHARES. The Seller covenants and represents to Purchaser that, he now has, and at the Closing will have good title to the Purchased Shares free and clear of all pledges, security interests, liens, charges, encumbrances, equities, claims and options of whatever nature (collectively, "Liens"). The Seller additionally covenants that he shall take such further actions as may be necessary (or refrain from the taking of action) to ensure that at Closing there will be vested in Purchaser good title to the Purchased Shares free and clear of all Liens. 7. GOVERNING LAW. This Agreement shall be governed by the laws of the State of Ohio (regardless of the laws that might otherwise govern under applicable New York principles of conflicts of law). 8. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, and this Agreement supersedes all prior agreements and the understandings between the parties with respect to such subject matter. 9. WAIVER. Waiver by any party of any breach of this Agreement or failure to exercise any right hereunder shall not be deemed to be a waiver of any other breach or right. Failure of any party to take action by reason of any such breach or exercise any such right shall not deprive such party of the right to take action at any time while such breach or condition giving rise to such right to continues. 10. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, successors and assigns of the parties hereto. -3- 4 11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 12. SPECIFIC PERFORMANCE. The parties hereto agree and declare that remedies for monetary damages will be inadequate as a remedy for the breach of any provision of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of the Agreement. 13. NOTICES. All notices shall be in writing and shall be deemed to have been given three days after the registration if sent by registered mail, postage prepaid, return receipt requested, or upon delivery by courier or upon transmission by telecopy to the following addresses: If to Purchaser: Kirtland Capital Partners II, L.P. 2550 SOM Center Road Suite 105 Willoughby Hills, Ohio 44094 Attention: Raymond A. Lancaster Telecopy No. (216) 585-9699 with a copy to: Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Charles W. Hardin, Jr. Telecopy No. (216) 579-0212 -4- 5 If to Seller: Phillip L. Friedman 12 Laird Road Middletown, New Jersey 07748 with a copy to: Baer Marks & Upham LLP 805 Third Avenue New York, NY 10022-7513 Attention: Herbert S. Meeker Telecopy No. (212) 802-5941 IN WITNESS WHEREOF, each of the parties hereto have signed this Stock Purchase Agreement on the date first above written. /s/ Phillip L. Friedman ------------------------------ Phillip L. Friedman, Seller Kirtland Capital Partners II, L.P. by: Kirtland Capital Corporation Its General Partner BY: /s/ Michael DeGrandis ---------------------------- Name: Michael DeGrandis Title: Treasurer -5- EX-99.3 4 EXHIBIT 99.3 1 EXHIBIT 99.3 REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into this 12th day of December, 1996, by and among Kirtland Capital Partners II L.P., an Ohio limited partnership ("KCP"), Kirtland Capital Company II LLC, a Turks and Caicos Islands limited liability company ("KCC"), and PVC Container Corporation, a Delaware corporation (the "Company"). RECITALS -------- WHEREAS, KCP, the Company and Rimer Anstalt have entered into a Stock Purchase Agreement, dated as of December 3, 1996 (the "Stock Purchase Agreement"), pursuant to which KCP and KCC will, subject to the satisfaction of various conditions, purchase an aggregate of 4,367,415 shares (the "Purchase Shares") of common stock, par value $.01 per share of the Company. WHEREAS, as a condition to the consummation of the transactions contemplated by the Stock Purchase Agreement, the Company has agreed to provide Demand Registration Rights and Piggyback Registration Rights (each as hereinafter defined) to KCP and KCC. OPERATIVE PROVISIONS -------------------- NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained and intending to be legally bound, KCP, KCC and the Company hereto hereby agree as follows: ARTICLE I CERTAIN DEFINITIONS ------------------- As used in this Agreement, the following terms shall have the following meanings: 1.1 "SHARES" shall mean the common stock of the Company, par value $.01 per share. 1.2 "COVERED SHARES" shall mean, collectively, (i) the Purchase Shares and any and all equity securities of the Company into which the Purchase Shares may be converted; (ii) any and all equity securities which are distributed by the Company to holders of the Purchase Shares by reason of their ownership of the Purchase Shares; (iii) any and all equity securities received by holders of the Purchase Shares pursuant to a recapitalization, reclassification, stock split, merger, consolidation or other business combination or other similar transaction involving the 2 Company; and (iv) any other shares of capital stock issued by the Company to the Shareholders at any time hereafter. 1.3 "DEMAND REGISTRATION RIGHTS" shall mean the rights of the Shareholders to have a registration statement filed by the Company with respect to the Covered Shares in accordance with the provisions of Section 3 hereof. 1.4 "DEMANDING SHAREHOLDERS" shall have the meaning set forth in Section 3.1 hereof. 1.5 "PIGGYBACK REGISTRATION RIGHTS" shall mean the rights of the Shareholders to have their Covered Shares included in any registration statement filed by the Company with respect to the sale of equity or debt securities by the Company or by any other shareholders of the Company in accordance with the provisions of Section 2 hereof. 1.6 "REGISTRATION PERIOD" shall mean the period commencing on the date hereof and ending at such time as the Shareholders own less than 10% of the Covered Shares, PROVIDED, HOWEVER, that, on such date, the provisions of Rule 144(k) shall be available to the Shareholders in respect of all of the remaining Covered Shares. 1.7 "SEC" shall mean the Securities and Exchange Commission. 1.8 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. 1.9 "SELLING SHAREHOLDERS" when used with respect to a registration statement, shall mean those Shareholders whose Covered Shares are included in such registration statement pursuant to an exercise by such Shareholders of their Piggyback Registration Rights or their Demand Registration Rights. 1.10 "SHAREHOLDERS" shall mean KCP and KCC, and their successors and assigns, including any person who acquires the Covered Shares from any of such persons (or any transferee of such persons), other than the Covered Shares sold pursuant to the Piggyback and Demand Registration Rights but in each case only so long as such person holds any Covered Shares. 1.11 "UNDERWRITER(S)" shall mean any one or more investment banking or brokerage firms to or through whom the Shareholders or the Company, as the case may be, may offer and sell Shares pursuant to a transaction requiring the filing of a registration statement under the Securities Act, including one or more of such firms who shall manage such public offering through such Underwriters and who are referred to herein as "Managing Underwriter(s)." 2 3 ARTICLE II PIGGYBACK REGISTRATION RIGHTS ----------------------------- 2.1 If, at any time during the Registration Period, the Company proposes to file a registration statement under the Securities Act with respect to any proposed public offering by the Company or by any holders of any class of securities of the Company, the Company shall, not later than 60 days prior to the proposed date of filing of such registration statement with the SEC under the Securities Act, give written notice of the proposed filing to each of the Shareholders, which notice shall describe in detail the proposed registration and distribution (including those jurisdictions where registration under the securities or blue sky laws is intended). During the Registration Period, each Shareholder may elect, by written notice to the Company (which notice shall specify the aggregate number of the Covered Shares proposed to be offered and sold by such Shareholder pursuant to such registration statement, the identity of the proposed seller thereof, and a general description of the manner in which such person intends to offer and sell such Shares) given at least 30 days before the registration statement's anticipated effective date, to have any or all of the Covered Shares owned by it included in such registration statement, and the Company shall include such Covered Shares in such registration statement. If the Managing Underwriter(s) or the Underwriters (in the case of an underwritten registration) should reasonably object to the exercise of the Piggyback Registration Rights with respect to such registration statement, then in the discretion of the Company, either: (i) the Covered Shares owned by the Selling Shareholders shall nevertheless be included in such registration statement subject to the condition that the Selling Shareholders may not offer or sell their Covered Shares included therein for a period of at least 90 days after the initial effective date of such registration statement, whereupon the Company shall be obligated to file one or more post-effective amendments to such registration statement to permit the lawful offer and sale of such Covered Shares for a reasonable period thereafter; or (ii) if the Company, upon insistence of the Underwriter, should reasonably determine that the inclusion of such Covered Shares, notwithstanding the provisions of the preceding clause (i), would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Covered Shares owned by the Shareholders, then the number of the Covered Shares of the Shareholders included in such registration statement shall be reduced pro-rata (based upon the number of Covered Shares requested to be included in the registration), if the Company recommends the inclusion of fewer Shares; PROVIDED, HOWEVER, that 3 4 if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of securities intended to be offered by holders of the Covered Shares than the fraction of similar reductions imposed on such other persons or entities (other than the Company); PROVIDED ALSO that the Company shall register those Covered Shares excluded from the offering on a Form S-3 or any similar short form registration statement then in effect on behalf of the Shareholders at the request of the Shareholders 90 days after the completion of the underwritten offering. 2.2 Unless otherwise required by law, rule or regulation, if the Covered Shares owned by the Shareholders who have made the election provided in Section 2.1 are included in such registration statement, the Company shall bear and pay all fees, costs, and expenses incident to such inclusion, including, without limitation, registration fees, blue sky qualification fees and expenses, exchange listing fees and expenses, legal fees and expenses (including the legal fees and expenses of one law firm selected by the Shareholders), printing costs and costs of any special audits or accounting fees, but excluding the Selling Shareholder's pro rata share of underwriting discounts and commissions with respect to its Covered Shares included therein. 2.3 Once the registration process has been commenced, the Company shall complete the registration process. The Company shall take all necessary action (including, if required, the filing of any supplements or post-effective amendments to such registration statement) to keep such registration statement effective for one year after it first becomes effective. 2.4 The Shareholders shall have the right to exercise their Piggyback Registration Rights pursuant to the provisions of this Section 2 on any number of occasions that the Company shall determine to file any registration statement. 2.5 The Piggyback Registration Rights granted pursuant to this Section 2 shall apply to any registration statement except such rights shall not apply to (a) a registration relating solely to employee stock option, purchase or other employee plans, or (b) a registration on Form S-4. ARTICLE III DEMAND REGISTRATION RIGHTS -------------------------- 3.1 In addition to, and not in lieu of, the Piggyback Registration Rights set forth under Section 2, at any time during the Registration Period the Shareholders may deliver to the Company a written request (a "Demand Registration Request") that the Company register any or all of the Covered 4 5 Shares owned by such Demanding Shareholders (as hereinafter defined). The requisite Shareholders making such demand are hereinafter referred to from time to time as the "Demanding Shareholders." The Company shall, as soon as practicable following the Demand Registration Request, prepare and file a registration statement (on the then appropriate form or, if more than one form is available, on the appropriate form selected by the Shareholders) with the SEC under the Securities Act, covering such number of the Covered Shares as the Demanding Shareholders request to be included in such registration statement and to take all necessary steps to have such Covered Shares qualified for sale under state securities or blue sky laws. Further, the Company shall use its best efforts to have such registration statement declared effective by the SEC (within the meaning of the Securities Act) as soon as practicable thereafter and shall take all necessary action (including, if required, the filing of any supplements or post-effective amendments to such registration statement) to keep such registration statement effective to permit the lawful sale of such Covered Shares included thereunder for the period set forth in Section 5 hereof, subject, however, to the further terms and conditions set forth in Sections 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8 hereof. 3.2 No later than 10 days after the receipt of the Demand Registration Request, the Company shall notify all the Shareholders who have not joined in such request of the proposed filing, and such Shareholders may, if they desire to sell any of the Covered Shares owned by them, by notice in writing to the Company given within 30 days after receipt of such notice from the Company, elect to have all or any portion of their Covered Shares included in the registration statement. 3.3 The Shareholders, in the aggregate, may exercise the Demand Registration Rights in this Section 3 three times. 3.4 In the event that preparation of a registration statement is commenced by the Company in response to the exercise by the Demanding Shareholders of the Demand Registration Right, but such registration statement is not filed with the SEC, either at the instance or request of the Company or at the request of the Demanding Shareholders for any reason, the Demanding Shareholders shall not be deemed to have exercised the Demand Registration Right pursuant to this Section 3. 3.5 In the event that any registration statement filed by the Company with the SEC pursuant to the provisions of this Section 3 is withdrawn prior to the completion of the sale or other disposition of the Covered Shares included thereunder, then the following provisions, whichever applicable, shall govern: (a) If such withdrawal is effected at the instance or upon the request of the Company for any reason other 5 6 than the failure of all of the Demanding Shareholders to comply with their obligations hereunder with respect to such registration, then the filing thereof by the Company shall be excluded in determining whether the Shareholders have exercised any of their Demand Registration Rights hereunder with respect to the filing of such registration statement. (b) If such withdrawal is effected at the instance or upon the request of the Demanding Shareholders, then the filing thereof by the Company shall be deemed an exercise of the Demand Registration Right with respect to the filing of such registration statement. 3.6 The Company shall bear and pay all fees, costs and expenses incident to such registration statement and incident to keeping it effective and in compliance with all federal and state securities laws, rules and regulations for the period set forth in Section 5 hereof (including, without limitation, registration fees, blue sky qualification fees and expenses, exchange listing fees and expenses, legal fees and expenses (including the legal fees and expenses of one law firm selected by the Selling Shareholders), printing costs, costs of any special audits or accounting fees), but excluding the Selling Shareholder's pro rata share of underwriting discounts and commissions with respect to its Covered Shares included therein. The Selling Shareholders shall have the right to select the Underwriter and selling agents in connection with such registration. 3.7 In the event of the exercise by the Shareholders of their Demand Registration Right, if the Company after receipt of the Demand Registration Request determines to include other securities of the Company for offer and sale by the Company, for its own account, in the registration statement to be filed pursuant to the exercise by the Shareholders of their Demand Registration Right, then the filing of such registration statement by the Company with the SEC shall be deemed an exercise by the Shareholders of their Piggyback Registration Rights under Section 2 of this Agreement and not an exercise of their Demand Registration Right under this Section 3. 3.8 Whenever a decision or election is required to be made hereunder by the Demanding Shareholders or the Selling Shareholders, such decision or election shall be made by a majority vote of the Covered Shares owned by such Demanding Shareholders or the Selling Shareholders, as the case may be. ARTICLE IV INFORMATION TO BE FURNISHED --------------------------- In the event any of the Covered Shares are to be included in a registration statement under Section 2 or 3, the 6 7 Selling Shareholders and the Company shall furnish the following information and documents: 4.1 The Selling Shareholders will furnish to the Company all information required by the Securities Act to be furnished by sellers of securities for inclusion in the registration statement, together with all such information that the Selling Shareholders have or can reasonably obtain and that may reasonably be required by the Company in order to have such registration statement become effective and such Covered Shares qualified for sale under applicable state securities laws. 4.2 The Company, before filing a registration statement, amendment or supplement thereto, shall furnish, within a reasonable time before filing, copies of such documents to legal counsel selected by the Selling Shareholders. In addition, the Company shall make available for inspection by any Selling Shareholder or by any Underwriter, attorney or other agent of any Selling Shareholder or Underwriter all information requested by such persons. 4.3 The Company shall promptly notify each Selling Shareholder of the occurrence of any event which renders any prospectus then being circulated among prospective purchasers misleading because such prospectus contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, and the Company will amend the prospectus so that it does not contain any material misstatements or omissions and deliver the number of copies of such amendments to each Selling Shareholder as each Selling Shareholder may require. 4.4 The Company shall obtain all legal opinions, auditors' consents, comfort letters and expert cooperation necessary or desirable by the Shareholders to complete the registration process. 4.5 The Company shall, at the Shareholders' or the Underwriter's request, participate in a road show or similar marketing efforts to further the registration process. 4.6 The Company shall, at the Underwriter's request, include in a Form S-3 registration statement such information as the Underwriter reasonably requests for marketing reasons, whether or not such information is required to be included. 7 8 ARTICLE V REGISTRATION TO BE KEPT EFFECTIVE --------------------------------- 5.1 In connection with any registration of the Covered Shares pursuant to this Agreement, the Company shall, at its sole expense, keep effective and maintain such registration and any related qualifications of the Covered Shares under state securities laws for such period as may be necessary for the Selling Shareholders, the Underwriters and selling agents to dispose of such shares, from time to time to amend or supplement the prospectus used in connection therewith to the extent necessary to comply with applicable laws, and to furnish to such Selling Shareholders such number of copies of the registration statement, the prospectus constituting a part thereof, and any amendment or supplement thereto as such Selling Shareholders request in order to facilitate the disposition of the registered Covered Shares. ARTICLE VI CONDITIONS TO THE COMPANY'S OBLIGATIONS --------------------------------------- 6.1 The obligations of the Company to cause the Covered Shares owned by the Shareholders to be registered under the Act are subject to each of the following limitations, conditions and qualifications: (a) The Company may require, as a condition to fulfilling its obligations to register the Covered Shares under Sections 2 or 3 hereof, that the Shareholders execute reasonable and customary indemnification agreements for the benefit of the Underwriters of the registration; PROVIDED, HOWEVER, that a Shareholder may not be required as such a condition to indemnify the Underwriters except with respect to information relating to such Shareholder furnished by such Shareholder for use in such registration statement. (b) The Company shall not be required to fulfill any registration obligations under this Agreement if the Company provides the Shareholders with an opinion of counsel acceptable to the Shareholders stating that the Shareholders are free to sell in the manner proposed by them the Covered Shares that they desired to register without registering such Covered Shares. ARTICLE VII EXCHANGE LISTING ---------------- 7.1 In the event any Covered Shares are included in a registration statement under Section 2 or 3 hereof, the Company shall use its best efforts to cause all such shares to be 8 9 listed on any exchange or admitted to trading on the NASDAQ Small Capital Market where the Shares of the Company are then listed or traded. ARTICLE VIII REGISTRATION UNDER STATE SECURITIES LAWS ---------------------------------------- 8.1 The Company shall use its best efforts to register or qualify any Covered Shares included in a registration statement pursuant to Section 2 or 3 hereof under state "blue sky" or similar securities laws in such jurisdictions as the Selling Shareholders reasonably request and to take such other action as may be reasonably necessary to enable the Selling Shareholders to sell their Covered Shares in the jurisdiction where such registration or qualification was made, PROVIDED, HOWEVER, that the Company will not be required to qualify to do business in any jurisdiction in which it is not so qualified or to execute a general consent to service of process in any jurisdiction in which it has not executed such a consent. ARTICLE IX INDEMNIFICATION --------------- 9.1 The Company will indemnify and hold each Selling Shareholder, its officers, directors and agents (including sales agents and the Underwriters) and each person, if any, who controls (within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Selling Shareholder or any of the foregoing, harmless to the maximum extent permitted by law, from and against any loss, claim, liability, damage or expense (including attorneys' fees) resulting from a claim that any registration statement, prospectus or amendment thereof or supplement thereto, which includes the Covered Shares to be sold by such Selling Shareholder, contains a material misstatement or omission, unless such claim is based upon information furnished by and with respect to such Selling Shareholder in writing for use in the registration statement or the prospectus; and each such Selling Shareholder will indemnify and hold harmless the Company, its directors, officers and agents and each person, if any, who controls (within the meaning of the Securities Act or the Exchange Act) the Company against any loss, claim, liability, damage or expense (including attorneys' fees) resulting from any such claim relating to information furnished in writing by or on behalf of such Selling Shareholder for use in the registration statement or prospectus, PROVIDED, HOWEVER, that a Selling Shareholder's liability under this Section 9 with respect to a registration statement shall be limited to the total proceeds (less commissions) from the sale of such Selling Shareholder's Covered Shares included in such registration statement. 9 10 9.2 Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party in writing of the commencement thereof; but the failure to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 9 or otherwise to the extent such failure did not materially prejudice the indemnifying party. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there exists a conflict of interest between the indemnifying party and any indemnified party or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to, and inconsistent or in conflict with, those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense of thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). No settlement of an action against any party under this Section 9 shall bind the other party unless such other party agrees in writing to the terms of such settlement (which agreement will not be unreasonably withheld). 9.3 The obligation of the indemnifying party to indemnify the indemnified party under this Section 9 shall, in each case, be in addition to any liability which the indemnifying party may otherwise have hereunder or otherwise at law or in equity. 10 11 9.4 If the indemnification provided for in this Section 9 from the indemnifying party is applicable in accordance with its terms but for any reason is held to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative faults of the indemnifying party and indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative faults of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relevant intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Sections 9.1 and 9.2 hereof, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 9.4 were determined by PRO RATA allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person. ARTICLE X RULE 144 -------- 10.1 The Company covenants that it shall file any and all reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder, and that it shall take such further action as any holder of the Covered Shares may request, all to the extent required from time to time to enable such holder to sell the Covered Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. The Company shall, upon the request of any holder of the Covered Shares, deliver to such holder a written statement as to whether it has complied with such requirements. 11 12 ARTICLE XI MISCELLANEOUS ------------- 11.1 ENTIRE AGREEMENT AND AMENDMENT. This Agreement embodies the entire understanding of KCC, KCP and the Company, and there are no other agreements or understandings, written or oral, in effect among KCC, KCP and the Company, relating to the subject matter hereof. This Agreement may be amended or modified only by an instrument signed by KCC, KCP and the Company. 11.2 WAIVER. Any failure of KCC, KCP or the Company hereto to comply with any of its obligations, agreements, conditions or covenants herein contained may be waived only with the prior written consent of the party which is entitled to the benefits thereof. 11.3 SURVIVAL OF AGREEMENTS. All agreements, representations and warranties contained herein or made in writing by or on behalf of the Company in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement. 11.4 BINDING EFFECT AND BENEFITS. This Agreement shall be binding upon and shall inure to the benefit of KCC, KCP and the Company and their respective successors and assigns. 11.5 SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 11.6 NOTICES. All notices shall be in writing and shall be deemed to have been given three days after the registration if sent by registered mail, postage prepaid, return receipt requested, or upon delivery by a nationally recognized overnight courier service or upon transmission by telecopy to the following addresses: If to KCP or KCC: Kirtland Capital Partners II L.P. 2550 SOM Center Road Suite 105 Willoughby Hills, Ohio 44094 Attention: Raymond A. Lancaster Telecopy No. (216) 585-9699 with a copy to: 12 13 Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Charles W. Hardin, Jr. Telecopy No. (216) 579-0212 If to the Company: PVC Container Corporation 401 Industrial Way West Eatontown, New Jersey 07724 Attention: Phillip L. Friedman Telecopy No. (908) 542-7706 with a copy to: Baer Marks & Upham LLP 805 Third Avenue New York, NY 10022-7513 Attention: Herbert S. Meeker Telecopy No. (212) 702-5941 11.7 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio without regard to the conflicts of law principles thereof. 11.8 ASSIGNMENT. Except as otherwise provided in Section 1.10 hereof, the rights of KCP, KCC and the Company hereunder may not be assigned without the prior written consent of the other parties hereto. 13 14 IN WITNESS WHEREOF, KCP, KCC and the Company have duly executed this Agreement as of the day and year first above written. KIRTLAND CAPITAL PARTNERS II L.P. By: KIRTLAND CAPITAL CORPORATION Its General Partner By: /s/ Raymond A. Lancaster ---------------------------------- Name: Raymond A. Lancaster Title: Executive Vice President KIRTLAND CAPITAL COMPANY II LLC By: EVERGREEN PARTNERS II L.P. Its Managing Member By: /s/ Raymond A. Lancaster ---------------------------------- Name: Raymond A. Lancaster Title: PVC CONTAINER CORPORATION By: /s/ Phillip L. Friedman ---------------------------------- Name: Phillip L. Friedman Title: 14 EX-99.4 5 EXHIBIT 99.4 1 EXHIBIT 99.4 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (this "Agreement") is made as of December 12th, 1996, by and between PVC Container Corporation, a Delaware corporation ("Company"), and Kirtland Capital Corporation, an Ohio corporation ("KCC"). RECITALS -------- WHEREAS, Kirtland Capital Partners II L.P., the Company and Rimer Anstalt, have entered into a Stock Purchase Agreement, dated as of December 3, 1996 (the "Stock Purchase Agreement"), pursuant to which KCP will, subject to the satisfaction of various conditions, purchase 4,367,415 shares of common stock, par value $.01 per share, of the Company (the "Common Stock"). WHEREAS, as a condition to the consummation of the transactions contemplated by the Stock Purchase Agreement, KCC has agreed to provide consulting services to the Company. AGREEMENTS ---------- NOW, THEREFORE, in consideration of the mutual covenants in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. TERM OF SERVICE. During the Term (as hereinafter defined), KCC shall provide such consulting services to the Company from time to time as may be agreed upon by the Company and KCC. This Agreement shall remain in full force and effect for a period (the "Term") beginning on the date hereof and ending on the later of (a) the date that Kirtland Capital Partners II L.P. or any Affiliate (as defined in the Stock Purchase Agreement) or partner thereof shall cease to own, directly or indirectly, at least 40% of the issued and outstanding shares of Common Stock, and (b) the Board of Directors of the Company (the "Board") shall adopt a resolution approved by a majority of the entire Board authorizing the termination of this Agreement. 2. COMPENSATION. (a) During the Term, the Company shall pay KCC an annual consulting fee equal to Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Consulting Fee") in accordance with the terms of Section 2(b) of this Agreement. 2 (b) The Company shall pay the Consulting Fee on a monthly basis in arrears by the 10th day following the end of each calendar month beginning February 10, 1997. 3. MISCELLANEOUS. (a) ENTIRE AGREEMENT AND AMENDMENT. This Agreement embodies the entire understanding of KCC and the Company, and there are no other agreements or understandings, written or oral, in effect between KCC and the Company, relating to the subject matter hereof. This Agreement may be amended or modified only by an instrument signed by KCC and the Company. (b) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio without regard to the conflicts of law principles thereof. (c) WAIVERS. Any waiver by either KCC or the Company of any violation of, breach of or default under any provision of this Agreement by the other party hereto shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement. (d) COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (e) ASSIGNMENT. The rights and obligations of KCC and the Company hereunder shall not be assigned. IN WITNESS WHEREOF, each of KCC and the Company has duly executed and delivered this Agreement as of the date first written above. PVC CONTAINER CORPORATION By: /s/ Phillip Friedman ------------------------------ Name: Phillip Friedman Title: President KIRTLAND CAPITAL CORPORATION By: /s/ Raymond A. Lancaster ------------------------------ Name: Raymond A. Lancaster Title: President 2 -----END PRIVACY-ENHANCED MESSAGE-----