8-K

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

It is anticipated that Registrant will file any financial statements or other financial data required to be filed as part of this Report on Form 8-K within sixty (60) days of filing with the Commission of this Report on Form 8-K.

Registrant is not required to file, and is not filing, this Report on Form 8-K pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934. Registrant is filing this Report on Form 8-K solely to fulfill its obligations under the Indenture, dated as of October 2, 1995, by and between Portola Packaging, Inc. and American Bank National Association.

On September 19, 2003, the Registrant, Portola Packaging, Inc., a Delaware corporation (“PPI), acquired all of the issued and outstanding capital stock of Tech Industries, Inc., a Rhode Island corporation (“TII”), in a stock purchase transaction pursuant to a Stock Purchase Agreement, dated as of September 1, 2003, by and among PPI, TII, and the shareholders of TII (the “TII Purchase Agreement”). In connection with this purchase, PPI also acquired (i) all of the issued and outstanding capital stock of Tech Industries U.K. Ltd., a Rhode Island corporation (“TIUK”), an affiliate of TII, pursuant to a Stock Purchase Agreement, dated as of September 1, 2003, by and among PPI, TIUK, and the shareholders of TIUK (the “TIUK Purchase Agreement”), and (ii) all the partnership interests in Fairmount Realty Associates and 84 Fairmount Street Limited Partnership (the “Partnerships”), the owners of certain land, buildings and fixtures (the “Property”) leased and used by TII in its manufacturing operations, pursuant to Equity Purchase Agreements, dated September 1, 2003, by and among PPI and the partners of Fairmount Realty Associates and 84 Fairmount Street Limited Partnership (the “Equity Purchase Agreements”). Certain material terms of the TII Purchase Agreement, the TIUK Purchase Agreement and the Equity Purchase Agreements were modified by a Closing Agreement, dated September 19, 2003, by and among PPI, the shareholders of TII, the shareholders of TIUK and the partners of the Partnerships (the “Closing Agreement”).

TII is a manufacturer of plastic closures and containers for the personal care and cosmetic industries. It will continue to operate as a wholly-owned subsidiary of PPI. TIUK will continue to operate as a wholly-owned subsidiary of PPI unless subsequently dissolved. If dissolved, it is anticipated that the assets of TIUK, which are immaterial to both TII and PPI, will be transferred to TII to be used in its manufacturing operations. The Partnerships were dissolved as a matter of law upon acquisition of the partnership interests by PPI, and the Property was acquired by TII. The Property will continue to be used for the manufacturing operations of TII.

Under the terms of the TII Purchase Agreement, the TIUK Purchase Agreement, the Equity Purchase Agreements and the Closing Agreement, the aggregate purchase price for the capital stock of TII and TIUK and the partnership interests of the Partnerships consisted of cash payments in the amount of approximately $35.7 million, of which approximately $34.3 million, including a working capital adjustment of $0.6 million, represented the purchase price for the TII stock; approximately $0.1 million represented the purchase price for the TIUK stock; and approximately $1.3 million, including a $0.1 million escrow account to be available to remediate any environmental issues with the Property, represented the purchase price for the partnership interests of the Partnerships.

The purchase price for the TII Stock, the TIUK Stock and the partnership interests of the Partnerships was paid in cash from borrowings under PPI’s credit facility with Heller Financial, Inc. (“Heller”) pursuant to that Consent and First Amendment to Third Amended and Restated Credit Agreement, dated September 19, 2003, by and between PPI and Heller (the “2003 Credit Agreement”). The 2003 Credit Agreement provides for a $54.0 million revolving line of credit, representing a $4.0 million increase in the $50.0 million credit facility available under the Third Amended and Restated Credit Agreement, dated September 29, 2000, by and between PPI and Heller (the “2000 Credit Agreement”).

Under the terms of the 2003 Credit Agreement and the Indenture, dated as of October 2, 1995, by and between PPI and American Bank National Association relating to PPI’s $110 million senior notes (the “Indenture”), TII has been designated a “Restricted Subsidiary” of PPI. “Restricted Subsidiary” status under these instruments generally affords PPI greater flexibility in financing the operations of the subsidiary. The consent of Heller to the TII Purchase Agreement, the TIUK Purchase Agreement and the Equity Purchase Agreements were obtained in connection with the 2003 Credit Agreement. No consent to the TII Purchase Agreement, the TIUK Purchase Agreement and the Equity Purchase Agreements was required to be obtained by PPI under the terms of the Indenture. Under the terms of the 2003 Credit Agreement, Heller has a security interest in all of the stock and equity of TII and TIUK acquired by PPI, all real, personal and intangible property held by those entities at the time of the acquisitions and the Property.

Under the 2003 Credit Agreement, any amount borrowed by PPI is secured by the assets of PPI located in the United States (with the exception of certain entities which are not wholly-owned subsidiaries of PPI), including real property, personal property, accounts receivable, inventory and intellectual property of PPI and by assets of PPI’s wholly-owned subsidiaries located in the United States, Canada, Mexico and the United Kingdom. These subsidiaries are Portola Allied Tool, Inc., a Delaware corporation headquartered in Michigan Center, Michigan; Tech Industries, Inc., a Rhode Island corporation headquartered in Woonsocket, Rhode Island; Portola Packaging Canada Ltd., a Yukon Territory corporation headquartered in Richmond, British Columbia; Portola Packaging, Inc. Mexico, a Mexico corporation headquartered in Guadalajara, Mexico; and Portola Limited and Portola Packaging Limited, corporations organized under the laws of England and Wales that are headquartered in Doncaster, South Yorkshire, England. In addition, PPI pledged all outstanding shares of the capital stock of the above-named subsidiaries of PPI as collateral for the loan. In connection with closing of the 2000 Credit Agreement, certain stockholders of PPI entered into negative pledge agreements with respect to equity holdings in PPI representing over 50% in the aggregate of the outstanding voting stock of PPI, and these agreements remain in effect.

Unless terminated earlier, the credit facility under the 2003 Credit Agreement will mature on August 31, 2004, the same date that the 2000 Credit Agreement provided for termination of the credit facility.

It is not practicable to provide the financial statements and the pro forma financial information concerning the business acquired under the TII Purchase Agreement, the TIUK Purchase Agreement and the Equity Purchase Agreements on the date that this Report on Form 8-K is being filed with the Securities and Exchange Commission. The required financial statements and pro forma financial information will be filed by amendment to this Report on Form 8-K as soon as practicable, but in any event not later than 60 days after this report is being filed.


Exhibit Number		Description

	2.01	Stock Purchase Agreement, dated as of September 1, 2003, by and
		among the Registrant, Tech Industries, Inc. and the shareholders of
		Tech Industries, Inc.

	2.02	Stock Purchase Agreement, dated as of September 1, 2003, by and
		among the Registrant, Tech Industries UK Ltd. and the shareholders of
		Tech Industries UK Ltd.

	2.03	Equity Purchase Agreement, dated as of September 1, 2003, by
		and among the Registrant and the partners of Fairmount Realty
		Associates.

	2.04	Equity Purchase Agreement, dated as of September 1, 2003, by
		and among the Registrant and the partners of 84 Fairmount Street
		Limited Partnership.

	2.05	Closing Agreement, dated as of September 19, 2003, by and among
		the Registrant, the shareholders of Tech Industries, Inc., the
		shareholders of Tech Industries UK Ltd. and the partners of Fairmount
		Realty Associates and 84 Fairmount Street Limited Partnership.

	10.1	Consent and First Amendment to Third Amended and Restated
		Credit Agreement dated as of September 19, 2003 by and among Portola
		Packaging, Inc., as Borrower and Heller Financial, Inc. as Agent and
		Lender.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Exhibit Number		Description

	2.01	Stock Purchase Agreement, dated as of September 1, 2003, by and
		among the Registrant, Tech Industries, Inc. and the shareholders of
		Tech Industries, Inc.

	2.02	Stock Purchase Agreement, dated as of September 1, 2003, by and
		among the Registrant, Tech Industries UK Ltd. and the shareholders of
		Tech Industries UK Ltd.

	2.03	Equity Purchase Agreement, dated as of September 1, 2003, by
		and among the Registrant and the partners of Fairmount Realty
		Associates.

	2.04	Equity Purchase Agreement, dated as of September 1, 2003, by
		and among the Registrant and the partners of 84 Fairmount Street
		Limited Partnership.

	2.05	Closing Agreement, dated as of September 19, 2003, by and among
		the Registrant, the shareholders of Tech Industries, Inc., the
		shareholders of Tech Industries UK Ltd. and the partners of Fairmount
		Realty Associates and 84 Fairmount Street Limited Partnership.

	10.1	Consent and First Amendment to Third Amended and Restated
		Credit Agreement dated as of September 19, 2003 by and among Portola
		Packaging, Inc., as Borrower and Heller Financial, Inc. as Agent and
		Lender.

EX-2.01 3 j0327701exv2w01.txt EXHIBIT 2.01 EXHIBIT 2.01 TECH INDUSTRIES, INC. STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT is dated as of this 1st day of September, 2003, by and among (i) Portola Packaging, Inc., a Delaware corporation (the "Buyer"), and (ii) each of the parties listed on Schedule A hereto (collectively, the "Sellers," and each individually, a "Seller"). WHEREAS, the Sellers own all of the issued and outstanding shares of the capital stock (the "Stock") of Tech Industries, Inc., a Rhode Island corporation (the "Company"); and WHEREAS, the Sellers desire to sell all of the Stock to the Buyer, and the Buyer desires to purchase all of the Stock from the Sellers, upon the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto agree as follows: 1. PURCHASE AND SALE OF STOCK. 1.1. Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, the Sellers agree to sell to the Buyer, and the Buyer agrees to purchase from the Sellers, at the Closing (as defined to in Section 2 hereof), all of the Stock, in exchange for the payment of the Purchase Price (as defined in Section 1.2 hereof). 1.2. Delivery of Purchase Price. At the Closing, the Buyer shall pay to the Sellers, as the aggregate purchase price for the Stock (the "Purchase Price"), an amount equal to $33,742,329, subject to adjustment as provided in Section 3 hereof. The payment of the Purchase Price shall be made to the Sellers pro rata in accordance with the percentages specified as their respective pro rata shares opposite their names on Schedule A hereto (as to each Seller, such Seller's "Pro Rata Share"), by wire transfer of immediately available funds. 2. CLOSING. 2.1. Time and Place. The closing of the purchase and sale of the Stock (the "Closing") shall be held at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts, at 10:00 a.m. on September 15, 2003, or at such other time, date and place as the Buyer and the Sellers may agree. The date on which the Closing is actually held hereunder is referred to herein as the "Closing Date." 2.2. Transactions at Closing. At the Closing, in addition to any other instruments or documents referred to herein: (a) The Sellers shall deliver to the Buyer, free and clear of any lien, claim or encumbrance, certificates representing the Stock, duly endorsed in blank or with duly executed stock powers attached. (b) The Buyer shall deliver the Purchase Price to the Sellers by wire transfer of immediately available funds. 3. ADJUSTMENTS TO PURCHASE PRICE. (a) At least three (3) business days prior to the Closing, the Sellers shall prepare and deliver to the Buyer (i) an unaudited balance sheet (the "Calculation Date Balance Sheet") of the Company as of the close of business on August 24, 2003 (herein, the "Calculation Date"), prepared in accordance with generally accepted accounting principles applied on a basis consistent with the May 2003 Balance Sheet (as defined in Section 5.8 hereof) taking into account any possible exceptions to such accounting principles disclosed on Schedule 5.8 hereto, and (ii) a certificate signed by the President of the Company (the "Calculation Date Certificate"), certifying (A) that the Calculation Date Balance Sheet was prepared on the basis described in clause (i) above, and (B) as to the Net Working Capital (as defined in Section 11 hereof) as of the Calculation Date (the "Calculation Date Net Working Capital"). (b) If (i) the Calculation Date Net Working Capital is greater than $5,200,000, the Purchase Price shall be increased dollar-for-dollar by an amount equal to such excess, or (ii) the Calculation Date Net Working Capital is less than $5,200,000, the Purchase Price shall be decreased dollar-for-dollar by an amount equal to such deficiency. Such adjustment shall be calculated based on the Calculation Date Balance Sheet and the Calculation Date Certificate. The adjustment made at the Closing pursuant to this Section 3(b) is referred to herein as the "Initial Adjustment," and shall be subject to subsequent adjustment as provided in Sections 3(c), (d) and (e) hereof. (c) Within forty-five (45) days after the Closing Date, the Sellers shall prepare and deliver to the Buyer an unaudited balance sheet of the Company as of the close of business on the Closing Date immediately prior to -2- giving effect to the Closing, prepared in the same manner as the Calculation Date Balance Sheet has been prepared and utilizing the same accounting principles utilized in connection therewith (the "Closing Date Balance Sheet"). The Sellers and their accountants shall permit the Buyer and its accountants at the earliest practicable date to review and make copies of all work papers, schedules and calculations used in the preparation of the Closing Date Balance Sheet. (d) When the Sellers deliver the Closing Date Balance Sheet, the Sellers shall also deliver to the Buyer a certificate (i) certifying that the Closing Date Balance Sheet was prepared on the basis and in accordance with the applicable standards set forth in Section 3(c) above, and (ii) containing the Sellers' calculations based on the Closing Date Balance Sheet (the "Sellers' Proposed Calculations") of the Net Working Capital of the Company as of the Closing Date (the "Closing Date Net Working Capital"). Within thirty (30) days after receipt of the Closing Date Balance Sheet and the accompanying certificate, the Buyer shall notify the Sellers in writing of the Buyer's agreement or disagreement, as the case may be, with the Closing Date Balance Sheet and the accuracy of any of the Sellers' Proposed Calculations. If the Buyer notifies the Sellers that the Buyer disputes any aspect of the Closing Date Balance Sheet or the amount of any of the Sellers' Proposed Calculations, then the Buyer shall have the right to direct the Buyer's independent accountants, at the Buyer's expense, to review and test the Closing Date Balance Sheet. The Buyer's accountants shall complete their review and test within fifteen (15) days after the later of (A) the date the Buyer disputes the Sellers' Proposed Calculations, and (B) the date the Buyer actually receives the work papers, schedules and calculations described in the last sentence of Section 3(c) hereof. If the Buyer and the Buyer's independent accountants, after such review and test, still disagree with the Sellers' Proposed Calculations and so notify the Sellers thereof in writing, and the Sellers do not accept the Buyer's proposed alternative calculations (the "Buyer's Proposed Calculations") within fifteen (15) days after receipt of such written notice from the Buyer, then the Buyer and the Sellers shall select a third nationally recognized independent accounting firm (the "Independent Accounting Firm") to resolve the remaining disputed items (the "Remaining Disputed Items"), within thirty (30) days after the date of the Sellers' rejection of the Buyer's Proposed Calculations of the Remaining Disputed Items, by conducting its own review and test of the Closing Date Balance Sheet and thereafter selecting either the Sellers' Proposed Calculations of the Remaining Disputed Items or the Buyer's Proposed Calculations of the Remaining Disputed Items or an amount in between the two. Each of the Buyer and the Sellers agree that they shall be bound by the determination of the Remaining Disputed Items by the Independent Accounting Firm. The fees and expenses of the Independent Accounting Firm shall be paid jointly, one-half by the Buyer and one-half by the -3- Sellers; provided, that if the difference between the actual Final Adjustment (as determined in accordance with Section 3(e) hereof) and the Final Adjustment that would have resulted from the use of the proposed calculations of one of the parties hereto (the "Erroneous Party") is more than twice as great as the difference between such actual Final Adjustment and the Final Adjustment that would have resulted from the use of the other party's proposed calculations, the Erroneous Party shall pay all of the fees and expenses of the Independent Accounting Firm. (e) Upon the determination pursuant to Section 3(d) hereof of the Closing Date Balance Sheet and the Closing Date Net Working Capital, the Purchase Price shall be recalculated in accordance with the formula set forth in Section 3(b) hereof using the Closing Date Net Working Capital so determined pursuant to Section 3(d) hereof in lieu of the Calculation Date Net Working Capital used in the Initial Adjustment. If the Purchase Price as adjusted pursuant to this Section 3(e) (the "Final Adjustment") is greater than the Purchase Price as adjusted pursuant to the Initial Adjustment, the Buyer shall be liable to pay, and shall pay, the Sellers their respective Pro Rata Shares of the amount of such difference in cash. If the Purchase Price as adjusted pursuant to the Final Adjustment is less than the Purchase Price as adjusted pursuant to the Initial Adjustment, the Sellers shall be liable to pay, and shall pay, the Buyer the amount of such difference in cash (with the liability of the each of the Sellers therefor being joint and several). Any such payment shall be made within ten (10) days after the determination of the Final Adjustment pursuant to this Section 3(e). 4. ANCILLARY MATTERS. 4.1. Sale of Tech Industries U.K. Ltd. On the date hereof, the Buyer and Herbert Wang ("Wang") have entered into that certain Stock Purchase Agreement of even date herewith (the "Tech UK Purchase Agreement"), pursuant to which the Buyer has agreed to purchase, and Wang has agreed to sell, all of the issued and outstanding shares of capital stock (the "Tech UK Stock") of Tech Industries U.K. Ltd., a Rhode Island corporation. Pursuant to the terms of the Tech UK Purchase Agreement, the purchase and sale of the Tech UK Stock shall be consummated on the Closing Date contemporaneously with the transactions contemplated under this Agreement. 4.2. Sale of 84 Fairmount Street Limited Partnership. On the date hereof, Buyer and each of Tech Investments, Inc., a Rhode Island corporation ("Tech Investments"), and David M. Wang, Scott E. Wang and Beth A. Nast (the "Wang Children"), have entered into that certain Equity Purchase Agreement of even -4- date herewith (the "84 Fairmount Street Purchase Agreement"), pursuant to which the Buyer has agreed to purchase, and Tech Investments and the Wang Children have agreed to sell, all of the outstanding partnership interests (the "84 Fairmount Street Interests") in 84 Fairmount Street Limited Partnership, a Rhode Island limited partnership. Pursuant to the terms of the 84 Fairmount Street Purchase Agreement, the purchase and sale of the 84 Fairmount Street Interests shall be consummated on the Closing Date contemporaneously with the transactions contemplated under this Agreement. 4.3. Sale of Fairmount Realty Associates. On the date hereof, Buyer and each of Tech Investments and James J. Carria and Lawrence I. Silverstein, as trustees of The Herbert Wang 1988 Irrevocable Real Estate Trust (the "Wang Trustees"), have entered into that certain Equity Purchase Agreement of even date herewith (the "Fairmount Realty Purchase Agreement"), pursuant to which the Buyer has agreed to purchase, and Tech Investments and the Wang Trustees have agreed to sell, all of the outstanding partnership interests (the "Fairmount Realty Interests") in Fairmount Realty Associates, a Rhode Island limited partnership ("Fairmount Realty Associates"). Pursuant to the terms of the Fairmount Realty Purchase Agreement, the purchase and sale of the Fairmount Realty Interests shall be consummated on the Closing Date contemporaneously with the transactions contemplated under this Agreement. 4.4. Deferred Compensation Agreements. The Sellers shall cause the Company to pay on or before the Closing Date any and all amounts (collectively, the "Deferred Comp Payments") due and owing under and in respect of those two (2) certain Deferred Compensation Agreements, each dated November 26, 2001, by and between the Company and each of James J. Carria and William H. Nast (collectively, the "Deferred Comp Agreements"). In connection herewith, the Sellers and the Buyer agree that (a) the payment of all Deferred Comp Payments shall be properly allocable to the Company's business on the day immediately preceding the Closing Date for all purposes, including Tax (as defined in Section 11 hereof) purposes, and (b) prior to the Closing, the Company shall be permitted to borrow, on a demand basis, all or any portion of the aggregate amount necessary to pay the Deferred Comp Payments (herein, the "Deferred Comp Loan"), which Deferred Comp Loan shall be repayable without any premium. In the event that as of the Closing Date all or any portion of the Deferred Comp Loan remains outstanding, the amount thereof shall be taken into account in calculating the Closing Date Net Working Capital pursuant to Section 3(d) hereof. The Sellers' best estimate of the aggregate amount of the Deferred Comp Payments owing under the Deferred Comp Agreements is $700,000. -5- 5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers hereby jointly and severally represents and warrants to the Buyer as set forth in this Section 5. Notwithstanding any other provision of this Agreement or the Schedules to the contrary, each exception set forth in the Schedules will be deemed to qualify each representation and warranty set forth in this Section 5 (i) that is specifically identified (by cross-reference or otherwise) in the Schedules as being qualified by such exception, or (ii) with respect to which the relevance of such exception is reasonably apparent on the face of the disclosure of such exception set forth in the Schedules. 5.1. Organization; Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Rhode Island. The Company is duly qualified and in good standing as a foreign corporation in all jurisdictions in which the character of the properties owned or leased or the nature of the activities conducted by it makes such qualification necessary. The Sellers have delivered to the Buyer complete and correct copies of the Company's charter documents and Bylaws and all amendments thereto. The Company has all requisite power and authority to own or lease and operate its properties and to carry on its business as such business is now conducted. 5.2. Right to Sell Stock; Approvals; Binding Effect. Each Seller has all requisite power and full legal right to enter into the Agreement, and to perform all of such Seller's agreements and obligations hereunder. Any Seller that is not an individual has obtained all necessary authorizations and approvals required for the execution and delivery of the Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each Seller and constitutes the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as the enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 5.3. Non-Contravention. The execution and delivery by each Seller of this Agreement, and the consummation by such Seller of the transactions contemplated hereby, will not constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of such Seller or the Company pursuant to (a) any agreement or instrument to which such Seller or the Company is a party or by which such Seller or the Company or any of such Seller's or the Company's property is bound, or to which such Seller or the Company or any of such Seller's or the Company's property is subject, or (b) any statute, judgment, decree, order, -6- regulation or rule of any court or governmental authority to which such Seller or the Company is subject. 5.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by each Seller of this Agreement or for the consummation by each Seller of the transactions contemplated hereby. 5.5. Subsidiaries. Except as set forth on Schedule 5.5 hereto, the Company has no Subsidiaries (as defined in Section 11 hereof), beneficially owns or holds of record no shares or other securities of any class in the capital of any corporations, and owns no legal and/or beneficial interests in any partnerships, limited liability companies, business trusts or joint ventures or in any other unincorporated trade or business enterprises. 5.6. Capitalization. The authorized capital stock of the Company consists of (a) 392 shares of Class A Voting Common Stock, no par value per share, 392 shares of which are issued and outstanding on the date hereof and are owned of record by the Sellers as set forth on Schedule 5.6 hereto, and (b) 8,000 shares of Class B Non-Voting Common Stock, no par value per share, 7,448 shares of which are issued and outstanding on the date hereof and owned of record by the applicable Sellers as set forth on Schedule 5.6 hereto. All of the Stock will be sold by the Sellers to the Buyer pursuant hereto and is validly issued and outstanding, fully paid and non-assessable. There are no commitments for the purchase or sale of, and no options, warrants or other rights to subscribe for or purchase, any shares of capital stock or other securities of the Company. 5.7. Title to Stock, Liens. Each Seller has, and as of the consummation of the Closing the Buyer will have, sole record and beneficial ownership of all of the Stock set forth opposite such Seller's name on Schedule 5.6 hereto, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto. 5.8. Financial Statements. The Sellers have delivered the following financial statements (the "Financial Statements") to the Buyer, and there are attached as Schedule 5.8 hereto: (a) the audited balance sheet of the Company as of December 29, 2002, and the related statements of income, stockholders' equity and cash flows of the Company for the year then ended; and (b) the unaudited balance sheet of the Company as of May 25, 2003 (the "May 2003 Balance Sheet"), and the related statements of income, stockholders' equity and cash flows of the Company for the five-month period then ended (the financial statements referred -7- to in this clause (b) being referred to herein as the "May 2003 Financials"). Except as set forth on Schedule 5.8 hereto, each of the Financial Statements is true, complete and correct and has been prepared in accordance with generally accepted accounting principles consistently applied (subject, in the case of the May 2003 Financials, to the absence of footnotes and to normal recurring year-end audit adjustments); each of the balance sheets contained therein fairly and accurately presents the financial condition of the Company, as of its respective date; and the statements of income, stockholder's equity and cash flows contained therein fairly and accurately present the results of operations of the Company for the periods covered thereby. 5.9. Absence of Certain Changes. Except as set forth on Schedule 5.9 hereto or as permitted pursuant to Section 4.4, 7.2, and 7.4 hereof, since May 25, 2003, the Company has carried on its business only in the ordinary course, and, without limiting the generality of the foregoing, there has not been: (a) any change in the assets, liabilities, sales, income or business of the Company, other than changes which were both in the ordinary course of business and have not been, either in any case or in the aggregate, materially adverse; (b) any material acquisition or disposition by the Company of any asset or property other than in the ordinary course of business; (c) the incurrence by the Company of any indebtedness for borrowed money, or any guaranty by the Company of the obligations of any other Person (as defined in Section 11 hereof); or (d) any event or occurrence that has or would be reasonably expected to have a material adverse effect on the business or financial condition of the Company. 5.10. Litigation, Etc. Except as set forth on Schedule 5.10 hereto, (a) no action, suit, proceeding or investigation which is material to the business or financial condition of the Company is pending or, to the Knowledge of the Sellers (as defined in Section 11 hereof), threatened, against the Company or any of the Sellers, nor is there any basis therefor Known to the Sellers, and (b) the Company is not, and has not been within the past twelve (12) months ending on the date of this Agreement, subject to any order, judgment, decree or stipulation issued, promulgated or entered by or with any governmental agency or authority, court or tribunal. 5.11. Title to Property, Real Property Leases, etc. (a) Except as set forth on Schedule 5.11(a) hereto, the Company has good and marketable title to all of its properties and assets, including, without limitation, all those reflected in the May 2003 Balance Sheet (except for properties or assets sold or otherwise disposed of in the ordinary course of business since May 25, 2003), all free and clear of all liens, pledges, charges, -8- security interests, encumbrances or title retention agreements of any kind or nature. All such properties and assets are adequate and sufficient to carry on the business of the Company as presently conducted. (b) Schedule 5.11(b) hereto sets forth a summary list of all material capital assets of the Company, and a more detailed list of such assets has been made available by the Sellers to the Buyer. The Company owns no real property ("Real Property"). (c) Schedule 5.11(c) hereto sets forth a description of all leases of Real Property to which the Company (and Fairmount Realty Associates) is a party. The Real Property so leased by the Company (and Fairmount Realty Associates) as aforesaid constitutes the only Real Property utilized by the Company in the operation of its business, and is sufficient for such operation. Complete and correct copies of all such leases have been made available by the Sellers to the Buyer. Each such lease is valid and subsisting and no event or condition exists which constitutes, or after notice or lapse of time or both would constitute, a default by the Company or Fairmount Realty Associates, as the case may be, or, to the Knowledge of the Sellers, any lessor, thereunder, and no such lease will in any way be affected by, or terminate or lapse by reason of, the consummation of the transactions contemplated by this Agreement. 5.12. Environmental Matters. The Sellers have furnished to the Buyer a copy of the environmental report listed on Schedule 5.12 hereto (the "Environmental Report"). To the Knowledge of the Sellers, except as set forth in the Environmental Report, the Company (a) is not in violation or alleged violation of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment, and (b), except as listed on Schedule 5.12, has never used hazardous materials in its business or stored any such materials at or near the Company's facilities, including, without limitation, facilities located at or near any Real Property being acquired by the Buyer pursuant to the 84 Fairmont Street Purchase Agreement and the Fairmont Realty Purchase Agreement, in violation of any law or regulation or as to require clean-up or remediation under any applicable law or regulation. -9- 5.13. Insurance. Schedule 5.13 hereto lists all policies of fire, liability, workmen's compensation, life, property and casualty and other insurance owned or held by the Company or with respect to which the Company is a beneficiary thereunder, and all claims made by the Company under any such insurance policy whether or not currently in effect during the two (2) year period ending on the Closing Date. Such policies of insurance are maintained with financially sound and reputable insurance companies, funds or underwriters and are of the kinds and cover such risks and are in such amounts and with such deductibles and exclusions as are consistent with customary business practice for companies similar to the Company. All such policies (a) are in full force and effect, (b) are sufficient for compliance by the Company with all requirements of law and all agreements to which the Company is a party, (c) provide that they will remain in full force and effect through the respective dates set forth in such Schedule, and (d) will not in any way be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. The Company is not in default with respect to its obligations under any of such insurance policies, nor, except as set forth on Schedule 5.13 hereto, has it received any notification of cancellation of any such insurance policies or any increases in premiums thereunder (other than market increases occurring in the ordinary course as disclosed on Schedule 5.13 hereto). 5.14. Contracts. Schedule 5.14 hereto sets forth a complete and accurate list of all written contracts to which the Company is a party or by or to which it or any of its assets or properties is bound or subject, which are material, in the reasonable judgment of the Sellers, to the operation of the business or financial condition of the Company (collectively, the "Contracts"). The Sellers have made available to the Buyer true, correct and complete copies of all such Contracts, together with all modifications and supplements thereto. Other than as expressly provided in Schedule 5.14 hereto, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will constitute a breach of or default under the Contracts, nor is any consent of any third party required for the Sellers to consummate the transactions contemplated by this Agreement. Each of the Contracts listed on Schedule 5.14 hereto or any of the other Schedules hereto is in full force and effect. The Company is not in breach of any of the provisions of any such contract, nor, to the Knowledge of the Sellers, is any other party to any such contract in breach thereof, nor, to the Knowledge of the Sellers, does any event or condition exist which with notice or the passage of time or both would constitute a default thereunder, except for any such breach or default as is not material to such contract. The Company is also conducting business with certain Persons pursuant to Contracts which have not been executed as more particularly described on Schedule 5.14 hereto. To the Knowledge of the Sellers, the -10- Company is not subject to or bound by any material oral contract other than the unexecuted Contracts referenced in the previous sentence and the leases referred to in Schedule 5.11(c) hereto. 5.15. Employee Benefit Plans. (a) Except for the arrangements set forth on Schedule 5.15(a) hereto, the Company does not now maintain or contribute to, nor has it in the current or preceding five (5) calendar years maintained or contributed to, any pension, profit-sharing, deferred compensation, bonus, stock option, share appreciation right, severance, group or individual health, dental, medical, life insurance, survivor benefit, or similar plan, policy or arrangement, whether formal or informal, for the benefit of any director, officer, consultant or employee, whether active or terminated, of the Company. Each of the arrangements set forth on Schedule 5.15(a) hereto is hereinafter referred to as an "Employee Benefit Plan," except that any such arrangement which is a multi-employer plan shall be treated as an Employee Benefit Plan only for purposes of Sections 5.15(d)(iv), (vi) and (viii) hereof. (b) The Sellers have heretofore delivered to the Buyer true, correct and complete copies of each Employee Benefit Plan of the Company, and with respect to each such Plan (i) any associated trust, custodial, insurance or service agreements, (ii) any annual report, actuarial report, or disclosure materials (including specifically any summary plan descriptions) submitted to any governmental agency or distributed to participants or beneficiaries thereunder in the current or any of the five (5) preceding calendar years and (iii) the most recently received IRS determination letters and any governmental advisory opinions or rulings. (c) Except as set forth on Schedule 5.15(c) hereto, each Employee Benefit Plan is and has heretofore been maintained and operated in compliance with the terms of such Plan and with the requirements prescribed (whether as a matter of substantive law or as necessary to secure favorable tax treatment) by any and all statutes, governmental or court orders, or governmental rules or regulations in effect from time to time, including but not limited to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of 1986, as amended ("Code") and applicable to such Plan. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Code has been determined to be so qualified by the IRS and nothing has occurred since the date of the last such determination which has resulted or is likely to result in the revocation of such determination. Any Employee Benefit Plan which has been terminated and is no longer in effect has been so terminated in all material respects in accordance with all applicable law. -11- (d) To the Knowledge of the Sellers: (i) there is no pending or threatened legal action, proceeding or investigation, other than routine claims for benefits, concerning any Employee Benefit Plan, or, to the Knowledge of the Sellers, any fiduciary or service provider thereof and, to the Knowledge of the Sellers, there is no basis for any such legal action or proceeding; (ii) no liability (contingent or otherwise) to the Pension Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has been incurred by the Company or any affiliate thereof (other than insurance premiums satisfied in due course); (iii) no reportable event, or event or condition which presents a material risk of termination by the PBGC, has occurred with respect to any Employee Benefit Plan, or any retirement plan of an affiliate of the Company, which is subject to Title IV of ERISA; (iv) no Employee Benefit Plan nor any party in interest with respect thereof, has engaged in a prohibited transaction which could subject the Company directly or indirectly to liability under Section 409 or 502(i) of ERISA or Section 4975 of the Code; (v) no communication, report or disclosure has been made which, at the time made, did not accurately reflect the terms and operations of any Employee Benefit Plan; (vi) no Employee Benefit Plan provides welfare benefits subsequent to termination of employment to employees or their beneficiaries (except to the extent required by applicable state insurance laws and Title I, Part 6 of ERISA); (vii) no benefits due under any Employee Benefit Plan have been forfeited subject to the possibility of reinstatement (which possibility would still exist at or after Closing); and (viii) the Company has not undertaken to maintain any Employee Benefit Plan for any period of time and each such Plan is terminable at the sole discretion of the sponsor thereof, subject only to such constraints as may be imposed by applicable law. -12- (e) Except as set forth in Schedule 5.15(e) hereto, the execution of this Agreement and the consummation of the transactions contemplated hereby will not result in any payment (whether of severance pay or otherwise) becoming due from any Employee Benefit Plan to any current or former director, officer, consultant or employee of the Company or result in the vesting, acceleration of payment or increases in the amount of any benefit payable to or in respect of any such current or former director, officer, consultant or employee. (f) For purposes of this Section 5.15, "multi-employer plan", "party in interest", "current value", "accrued benefit", "reportable event" and "benefit liability" have the same meaning assigned such terms under Sections 3, 4043(b) or 4001(a) of ERISA, and "affiliate" means any entity which under Section 414 of the Code is treated as a single employer with the Company. 5.16. Labor Relations. The Company is in compliance in all material respects with all federal and state laws respecting employment and employment practices, terms and conditions of employment, wages and hours and nondiscrimination in employment, and is not engaged in any unfair labor practice. There is no charge pending or, to the Knowledge of the Sellers, threatened, against the Company alleging unlawful discrimination in employment practices before any court or agency, and there is no charge of or proceeding with regard to any unfair labor practice against the Company pending before the National Labor Relations Board. There is no labor strike, dispute, slow-down or work stoppage actually pending or, to the Knowledge of the Sellers, threatened against or involving the Company. To the Knowledge of the Sellers, no one is now petitioning for union representation of any of the employees of the Company. No grievance or arbitration proceeding arising out of or under any collective bargaining agreement is pending against the Company and no claim therefor has been asserted. None of the employees of the Company is covered by any collective bargaining agreement, and no collective bargaining agreement is currently being negotiated by the Company. The Company has not experienced any work stoppage or union organizational activity during the last five (5) years. 5.17. Intellectual Property. Schedule 5.17 hereto sets forth a complete and accurate list of (a) all patents, trademarks, trade names and copyrights registered in the name of the Company or used or proposed to be used by the Company, all applications therefor, and all licenses (as licensee or licensor) and other agreements relating thereto, and (b) all written agreements relating to other technology, know-how and processes which the Company is licensed or authorized by others to use or which the Company has licensed or authorized for use by others. Except to the extent set forth in Schedule 5.17 hereto, the -13- Company owns, or has the sole and exclusive right to use, all patents, trademarks, trade names and copyrights, and has the right to use all technology, know-how and processes, used or necessary for the ordinary course of its business as presently conducted or proposed to be conducted, and the consummation of the transactions contemplated hereby will not alter or impair any such right. No claims have been asserted, and no claims are pending, by any Person regarding the use of any such patents, trademarks, trade names, copyrights, technology, know-how or processes, or challenging or questioning the validity or effectiveness of any license or agreement, and, to the Knowledge of the Sellers, there is no basis for any such claim. To the Knowledge of the Sellers, the use by the Company of such patents, trademarks, trade names, copyrights, technology, know-how or processes in the ordinary course of business does not infringe on the rights of any Person. 5.18. Taxes. The Company has duly filed with the appropriate government agencies all of the income, sales, use, employment and other Tax Returns (as defined in Section 11 hereof) required to be filed by it. No waiver of any statute of limitations relating to Taxes of the Company is currently in effect, nor has any been sought. The Company has validly elected to be a subchapter S corporation (as currently defined in Section 1361 of the Code) and has continuously maintained its status as a subchapter S corporation since July 1, 1982. All such Tax Returns were true, correct and complete in al material respects, and were prepared and filed in substantial compliance with all applicable laws and regulations. All Taxes, assessments, fees and other governmental charges upon the Company or any of its Subsidiaries (as defined in Section 11 hereof), or any of its or their respective properties, assets, revenues, income and franchises which are owed by the Company or any such Subsidiary with respect to any period ending on or before the Closing Date have been paid, other than, as to the Company, those currently payable without penalty or interest which will be accurately reflected on the Closing Date Balance Sheet. The Company and each of its Subsidiaries has withheld and paid all Taxes required to be withheld or paid in connection with amounts paid or owing to any employee, creditor, independent contractor or third party. There are no liens for Taxes, other than Taxes not yet due and payable, affecting any assets of the Company or any of its Subsidiaries. No federal Tax Return of the Company or any of its Subsidiaries is currently under audit by the IRS (as defined in Section 11 hereof), and no other Tax Return of the Company or any of its Subsidiaries is currently under audit by any other taxing authority. Neither the IRS nor any other Taxing authority is now asserting or threatening to assert against the Company or any of its Subsidiaries any deficiency or claim for additional Taxes or interest thereon or penalties in connection therewith or any adjustment that would have an adverse effect on the Company or any of its Subsidiaries. The -14- Sellers are not aware of any claim that has ever been made by any authority in any jurisdiction where the Company or any of its Subsidiaries does not currently file Tax Returns that the Company or any of its Subsidiaries is or may be subject to any Tax in such jurisdiction. 5.19. Minute Books. The minute books of the Company made available to the Buyer for inspection accurately record therein in all material respects all actions taken by the Board of Directors and shareholders of the Company. 5.20. Broker. Except with respect to Edgeview Partners LLC, whose fees in connection with the transactions contemplated hereby shall be the sole responsibility of the Sellers, the Sellers have not retained, utilized or been represented by any broker, agent, finder or intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 5.21. No Undisclosed Liabilities. To the Knowledge of the Sellers, the Company does not have any material liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with generally accepted accounting principles), which individually or in the aggregate, (a) has not been reflected in the May 2003 Financials, or (b) has not arisen in the usual and ordinary course of the Company's business since May 25, 2003 consistent with past practices. 5.22. Restrictions on Business Activities. Except as set forth on Schedule 5.22 hereto, there is no agreement (noncompete or otherwise), commitment, judgment, injunction, order or decree to which the Company is a party or otherwise binding upon the Company which has had or reasonably could be expected to have the effect of prohibiting or impairing any business practice of the Company, any acquisition of property (tangible or intangible) by the Company, or the conduct of business by the Company. Without limiting the generality of the foregoing, except as set forth on Schedule 5.22 hereto, the Company has not entered into any agreement under which the Company is restricted from selling, licensing or otherwise distributing any of its products to any class of customers, in any geographic area, during any period of time or in any segment of the market. 5.23. Interested Party Transactions. Except as set forth on Schedule 5.23 hereto, no officer or director of the Company (nor any ancestor, sibling, descendant or spouse of any of such persons, or any trust, partnership or corporation in which any of such persons has or has had an economic interest), -15- has or has had, directly or indirectly, (a) an economic interest in any entity which furnished or sold, or furnishes or sells, services or products that the Company furnishes or sell, (b) an economic interest in any entity that purchases from, or sells or furnishes to, the Company, any goods or services, or (c) a beneficial interest in any Contract; provided, that ownership of less than five percent (5%) of the outstanding voting stock of a publicly-traded corporation shall not be deemed an "economic interest in any entity" for purposes of this Section 5.23. 5.24. Compliance with Laws. To the Knowledge of the Sellers, the Company has complied in all material respects with, is not in material violation of, and has not received any notices of violation with respect to, any foreign, federal, state or local statute, law or regulation applicable to the business of the Company. 5.25. Licenses and Permits. The Company possesses all material licenses and permits required to permit the Company to conduct its business as presently conducted. As of the date of this Agreement, all of the licenses and permits held by or issued to the Company are in full force and effect, and the Company is in material compliance with each such license and permit. 5.26. Accounts Receivable. The accounts receivable of the Company reflected in the May 2003 Financials, and all accounts receivable of the Company arising since May 25, 2003, represent bona fide claims against debtors for sales, services performed or other charges arising on or before the Closing, and all the services performed, sales or other charges which gave rise to said accounts were delivered or performed in all material respects in accordance with the applicable orders, contractors or customer requirements. 5.27. Customer List. The Company's customer list attached hereto as Schedule 5.27 is a true and accurate list of the Company's customers as of the date of this Agreement (herein, the "Customer List"). Except as set forth on Schedule 5.27, the Sellers are not aware of any customer appearing on the Customer List that has refused to (or threatened to refuse to) continue to do business with the Company, on materially the same terms and conditions (including price and volume except for changes in such terms and conditions made in the ordinary course of the Company's business) as the Company does business with such customer on the date hereof; provided, however, that nothing herein shall be or be deemed to be any representation or warranty by the Sellers that such customers will remain customers of the Company subsequent to the Closing. 5.28. Vendors List. The list attached hereto as Schedule 5.28 is a true and accurate list of all material vendors of raw materials, finished goods and other -16- products sold or placed in inventory by the Company as of the date of this Agreement (herein, the "Vendors List"). Except as set forth on Schedule 5.28 hereto, the Sellers are not aware of any vendor appearing on the Vendors List that has refused to (or threatened to refuse to) continue to do business with the Company, on materially the same terms and conditions (including price and volume, except for changes in such terms and conditions made in the ordinary course of the Company's business) as the Company does business with such vendors on the date hereof; provided, however, that nothing herein shall be or be deemed to be any representation or warranty by the Sellers that such vendors will remain vendors of the Company subsequent to the Closing. 5.29. Employees. Attached hereto as Schedule 5.29 is a true and accurate list of the names of all officers, directors and employees, and all material agents, distributors and manufacturer's representatives, of the Company, and the rates of compensation (including annual bonuses) of each of the foregoing, together with the amount of all vacation, sick leave, bonuses and other compensation accrued and owing to such persons as of August 24, 2003. The Sellers are not aware of any individual employee listed on Schedule 5.29 hereto, or any group of employees listed thereon, who, in the case of any individual employee, is material to the Company's business, or, in the case of any group of employees, are in the aggregate material to the Company's business, who has (or have) refused to (or threatened to refuse to) continue his, her or their employment with the Company after the Closing on the same material terms and conditions (including, without limitation, terms applicable to salary, bonus and benefits) as in effect prior to the Closing. Except as set forth on Schedule 5.29 hereto, the Company does not have any employment contracts, representation agreements or consulting agreements currently in effect that are not terminable "at will. " 5.30. Bank Accounts. Attached hereto as Schedule 5.30 is a true and accurate list of each bank account, brokerage account, lock box and safe deposit box of the Company stating the name of the bank or other financial institution at which such item is maintained, and the names of all persons authorized to draw therefrom and to have access thereto. At the Closing, at Buyer's request, the Company shall deliver to Buyer appropriate documentation removing any or all such persons' authorization to draw upon such accounts and granting such authority to Buyer's designees. 5.31. Inventories. Attached hereto as Schedule 5.31 is an Inventory Report dated July 27, 2003 identifying all of the Company's inventory, raw materials and finished goods (which finished goods category includes work in progress) as of such date (collectively, the "Inventory"), which Inventory Report was based on a physical count of the Inventory. The value at which the Inventory is shown on the May 2003 Financials has been determined in accordance with the Company's -17- valuation policies consistently applied, pursuant to which Inventory is stated at the lower of cost (determined by a specific identification method) or market (determined on the basis of estimated realizable values), in accordance with generally accepted accounting principles. 5.32. Sales Quotes and Purchase Orders. Attached hereto as Schedule 5.32 is a true and accurate list of all material sales quotes, contracts of sale and purchase orders for the sale of the Company's products or services outstanding as of August 5, 2003. Each contract of sale and purchase order is a valid agreement pursuant to which no default of any material nature exists or, to the Knowledge of the Sellers, is contemplated thereunder, and no notice of cancellation thereof has been received by the Company, nor is the Company aware of any contemplated cancellation thereof by the customer thereunder. 5.33. Disclosure. No representation or warranty by either Seller in this Agreement or in any exhibit, schedule, written statement, certificate or other document delivered or to be delivered to the Buyer pursuant hereto or in connection with the consummation of the transactions contemplated hereby, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading. 5.34. Absence of Sensitive Payments. To the Knowledge of the Sellers, none of the Company's officers or key employees acting on behalf of the Company has (a) made any contributions, payments or gifts to or for the private use of any domestic or foreign governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the laws of the United States or any other jurisdiction, (b) established or maintained any unrecorded fund or asset for any purpose or made any false entries on its books, or (c) made any payments to any Persons with the intention or understanding that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment. 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Sellers as follows: 6.1. Organization; Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 6.2. Corporate Approval; Binding Effect. The Buyer has all requisite power and full legal right to enter into the Transaction Documents (as defined in Section 11 hereof), and to perform all of the Buyer's agreements and obligations thereunder, each in accordance with its respective terms. The Buyer has -18- obtained all necessary corporate or organizational authorizations and approvals required for the execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby. Each of the Transaction Documents has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 6.3. Non-Contravention. The execution and delivery by the Buyer of the Transaction Documents, and the consummation by the Buyer of the transactions contemplated thereby, will not (a) violate or conflict with any provisions of the charter documents or By-Laws or other constituent documents of the Buyer, each as amended to date; or (b) constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Buyer pursuant to (i) any agreement or instrument to which the Buyer is a party or by which the Buyer or any of its properties is bound, or to which the Buyer or any of its properties is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Buyer is subject. 6.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Buyer of the Transaction Documents or for the consummation by the Buyer of the transactions contemplated thereby. 6.5. Broker. The Buyer has not retained, utilized or been represented by any broker, agent, finder or other intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 7. CONDUCT OF BUSINESS BY THE COMPANY PENDING CLOSING. Each Seller covenants and agrees that, from and after the date of this Agreement and until the Closing, except as otherwise specifically consented to or approved by the Buyer in writing: 7.1. Access. The Sellers shall cause the Company to afford to the Buyer and its authorized representatives full access during normal business hours, upon reasonable advance notice from the Buyer and so long as such access does not cause any disruption to the operation of the Company's business, to all properties, books, records, contracts and documents of the Company, and a full -19- opportunity to make such reasonable investigations as they shall desire to make of the Company, and the Sellers shall furnish or cause to be furnished to the Buyer and its authorized representatives all such information with respect to the Company's business as the Buyer may reasonably request. In connection with the foregoing, and notwithstanding anything to the contrary set forth herein, the Buyer shall not communicate with employees of the Company, other than James J. Carria and William H. Nast, without the prior written consent of the Sellers, and the Sellers shall have the right to have a representative present (who shall be either James J. Carria or William H. Nast) at and to participate in any meetings, telephone discussions or other forms of communication between Buyer and any employee or other third party (including governmental agencies). 7.2. Carry on in Regular Course. The Sellers shall cause the Company to carry on its business diligently and substantially in the same manner consistent with past practice, and not make or institute any unusual or novel methods of manufacture, purchase, sale, lease, management, accounting or operation. Without limiting the generality of the foregoing, and consistent with the limitations and agreements set forth herein, the Sellers shall cause the Company to use its commercially reasonable efforts to retain all key employees of the Company through the Closing Date. 7.3. No Dividends. Except for and with respect to the Company's dividend or other distribution to the Sellers of (a) cash and cash equivalents of the Company, and (b) outstanding shares of capital stock or assets of the Company's Subsidiary, Tech Industries Holland, B.V. ("Tech Holland"), or Tech Industries Ireland Limited, a wholly-owned Subsidiary of Tech Holland, the Sellers shall not permit the Company to declare or pay any dividends on, or make any other distribution in respect of, any shares of its capital stock. 7.4. Contracts and Commitments. The Sellers shall not permit the Company to enter into any contract or commitment not in the usual and ordinary course of business or not consistent with the customary business practices of the Company; provided, that the foregoing restriction shall not prohibit the Company from (a) borrowing the Deferred Comp Loan as permitted under Section 4.4 hereof, and (b)(i) establishing and adopting a new bonus plan (the "New Bonus Plan") for the benefit of the Company's employees related to the consummation of the transactions contemplated hereby, and (ii) borrowing, on a demand basis, all or any portion of the aggregate amount necessary to pay the amounts due and owing under and in respect of the New Bonus Plan (herein, the "New Bonus Loan"), which New Bonus Loan shall be repayable without any premium. In the event that as of the Closing Date all or any portion of the New Bonus Loan remains outstanding, the amount thereof shall be taken into account -20- in calculating the Closing Date Net Working Capital pursuant to Section 3(d) hereof. The payment of all amounts pursuant to the New Bonus Plan shall be made on or before the Closing Date and shall be properly allocable to the Company's business on the day immediately preceding the Closing Date for all purposes, including Tax purposes. At or prior to the Closing, the Sellers shall provide the Buyer with a summary of the respective amounts to be paid to each Company employee (other than James J. Carria and William H. Nast) under the New Bonus Plan. 7.5. Tax Matters. The Sellers shall not permit the Company to make any Tax elections inconsistent with prior elections, make any changes in any accounting method for Tax purposes, or file any ruling request, without, in each case, the prior written consent of the Buyer. 8. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Buyer): 8.1. Representations and Warranties True at Closing. The representations and warranties made by the Sellers in or pursuant to this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 8.2. Compliance with Agreements. The Sellers shall have performed and complied with all of their obligations under this Agreement to be performed or complied with by them on or prior to the Closing Date. 8.3. Certificate of Sellers. The Sellers shall have delivered to the Buyer in writing, at and as of the Closing, a certificate duly executed by the Sellers, in form and substance reasonably satisfactory to the Buyer and its counsel, to the effect that the conditions in each of Sections 8.1 and 8.2 hereof have been satisfied. 8.4. No Litigation. No restraining order or injunction shall have prevented or materially adversely affected the transactions contemplated by this Agreement, and no action, suit or proceeding shall be pending or threatened before any court or administrative body that could materially adversely affect the business or financial condition of the Company, or in which it will be or is sought to restrain or prohibit or obtain damages or other relief in connection -21- with this Agreement or the consummation of the transactions contemplated hereby. 8.5. Resignations of Directors and Officers. All of the directors and officers of the Company listed on Schedule 8.5 hereto shall have resigned their positions with the Company, on or prior to the Closing Date, and prior thereto shall have executed such appropriate documents with respect to the transfer or establishment of bank accounts, signing authority, etc., as the Buyer shall have reasonably requested. 8.6. Consents of Third Parties. The Sellers will have obtained the consent to the consummation of the transactions contemplated by this Agreement by each party to any material contract, commitment or other obligation of the Company listed on Schedule 5.14 hereto, under which such transactions would constitute a default, would accelerate obligations of the Company or would permit cancellation of any such contract. 8.7. Closing of Fairmount Realty Purchase Agreement. The "closing" under the Fairmount Realty Purchase Agreement shall have occurred contemporaneously with the Closing. 8.8. No Material Adverse Change. There shall have been no material adverse change in the business or financial condition of the Company since May 25, 2003. 8.9. Deferred Comp Payments and Payments Under New Bonus Plan. All Deferred Comp Payments and amounts due and owing under the New Bonus Plan shall have been paid in full by the Company in accordance with Sections 4.4 and 7.4, respectively. 8.10. Section 338 Election. At and subject to the Buyer's timely written request, the Sellers shall have filed with the Internal Revenue Service Form 8023 with respect to the transactions contemplated by this Agreement. 8.12. Employment Agreements. The Company shall have entered into employment agreements with each of James J. Carria and William H. Nast substantially in the form attached hereto as Exhibit A. 8.13. Waiver of Right of First Refusal. The Company shall have waived its right of first refusal set forth in the Company's Articles of Incorporation, as amended, with respect to the sale of the Stock by the Sellers to the Buyer. -22- 8.14. Assignment of Patent Application and Inventions. William H. Nast shall have assigned to the Company all of his right, title and interest in and to (a) that certain Patent Application, Serial No. 09/538,198, with respect to the application for "A Method of Designing an Article of Packaging," and (b) any and all inventions discovered or conceived by Mr. Nast with respect to inventions relating to the Company's business and products. 8.15. Termination of Citizens Bank Credit Agreement. The Company shall have taken all necessary action in order to terminate and cancel that certain Credit Agreement, dated September 23, 1999, as renewed on June 26, 2002, between the Company and Citizens Bank of Rhode Island ("Citizens Bank"), and the Revolving Credit Note, dated September 23, 1999, in the original principal amount of $4,000,000, from the Company to Citizens Bank. 9. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The obligation of the Sellers to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Sellers): 9.1. Representations and Warranties True at Closing. The representations and warranties made by the Buyer in this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 9.2. Compliance with Agreements. The Buyer shall have performed and complied with all of its obligations under this Agreement and the Ancillary Agreements that are to be performed or complied with by it at or prior to the Closing. 9.3. Certificate of Buyer. The Buyer shall have delivered to the Sellers in writing, at and as of the Closing, a certificate duly executed by the President of the Buyer, in form and substance reasonably satisfactory to the Sellers and their counsel, to the effect that the conditions in each of Sections 9.1 and 9.2 hereof have been satisfied. 9.4. Closing of Ancillary Purchase Agreements. The "closing" under each Ancillary Purchase Agreement shall have occurred contemporaneously with the Closing. 9.5. . Employment Agreements. The Company shall have entered into employment agreements with each of James J. Carria and William H. Nast substantially in the form attached hereto as Exhibit A. -23- 10. CERTAIN COVENANTS. 10.1. Confidential Information. Any and all information disclosed by the Sellers to the Buyer as a result of the negotiations leading to the execution and delivery of this Agreement, or in furtherance thereof, which information was not already known to the Buyer, shall remain confidential to the Buyer, and its respective employees and agents, until the Closing Date. If the Closing does not take place for any reason, the Buyer agrees not to further divulge or disclose or use for its benefit or purposes any such information at any time in the future, unless it has otherwise become public or such disclosure has been ordered by a governmental agency, court or other tribunal with competent jurisdiction. The information intended to be protected hereby shall include, but not be limited to, financial information, customers, sales representatives, and anything else having an economic or pecuniary benefit to the Sellers and the Company. 10.2. Non-Competition and Non-Solicitation. Wang hereby agrees that for a period from the Closing Date until the fifth (5th) anniversary of the Closing Date, he shall not, without the prior written consent of the Buyer, (a) engage anywhere in the United States, directly or indirectly, alone or as a shareholder (other than as a holder of less than 5% of the capital stock of any publicly-traded corporation), member, partner, manager, officer, director, employee or consultant, in any business that is engaged or becomes engaged in the business of the Company as existing on the Closing Date, (b) divert or attempt to divert to any competitor of the Company or any Affiliate of any such competitor, any customer or client of the Company who was such as of the Closing Date, or (c) solicit or encourage, or attempt to solicit or encourage, any employee of the Company who was such as of the Closing Date to leave such employee's employ with the Company for employment by or with either Wang or his Affiliates, or any competitor of the Company or any of any such competitor's Affiliates. If at any time the provisions of this Section 10.2 shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this Section 10.2 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and Wang agrees that this Section 10.2 as so amended shall be valid and binding as though any invalid or unenforceable provisions had not been included therein. 10.3. Equitable Remedies. It is recognized by the parties hereto that damages for breaches or threatened breaches of covenants of the nature contained in Sections 10.1 and 10.2 hereof are difficult, if not impossible, to -24- ascertain. Accordingly, it is agreed that the covenants set forth in Sections 10.1 and 10.2 hereof may be enforceable by any party hereto by injunction, specific performance and/or equitable relief, in addition to any other remedies available to such party at law or in equity. 10.4. Section 338(h)(10) Election. The Sellers shall cause the Company to join with the Buyer, at Buyer's timely written request, in making a joint election pursuant to Section 338(h)(10) of the Code and similar provisions of state laws (the "Section 338(h)(10) Election") to treat the transactions contemplated by this Agreement as an acquisition of the Company's assets effective as of the Closing Date. If so treated, the allocation of the Purchase Price among the acquired assets shall be made in accordance with Code Sections 338 and 1060 and any comparable provisions of state, local or foreign law, as appropriate, and such allocation shall be made in accordance with the principles set forth in Schedule 10.4 hereto. If so treated, the Sellers and the Buyer shall report, act and file in all respects and for all purposes consistent with such allocation. At Buyer's written request, the Sellers shall execute and deliver to the Buyer such documents or forms (including Section 338 Forms, as defined below) as the Buyer shall reasonably request or as are required by applicable law for an effective Section 338(h)(10) Election. For purposes hereof, "Section 338 Forms" shall mean all returns, documents, statements, and other forms that are required to be submitted to any federal, state, county or other local taxing authority in connection with the Section 338(h)(10) Election, including, without limitation, any "statement of Section 338 election" and IRS Form 8023-A and Form 8883 (together with any schedules or attachments thereto) that are required pursuant to treasury regulations. The Sellers shall also provide at no cost to them any other assistance reasonably requested by the Buyer in making the Section 338(h)(10) Election. In connection with, and in consideration of, the Sellers causing the Company to make the Section 338(h)(10) Election, the Buyer shall have increased the amount of the Purchase Price dollar-for-dollar by the amount as is necessary to reimburse and compensate the Sellers for any increase in their tax liability on account of such election. 11. DEFINITIONS. As used herein the following terms not otherwise defined have the following respective meanings: "Affiliate": Any Person directly or indirectly controlling, controlled by or under direct or indirect common control with, the Company (or other specified Person) and shall include (a) any Person who is a director or beneficial holder of at least 10% of any class of the then outstanding capital stock (or other shares of beneficial interest) of the Company (or other specified Person) and Family Members of any such Person, (b) any Person of which the Company (or other -25- specified Person) or an Affiliate of the kind listed in clause (a) above of the Company (or other specified Person) shall, directly or indirectly, either beneficially own at least 10% of any class of the then outstanding capital stock (or other shares of beneficial interest) or constitute at least a 10% equity participant, and (c) in the case of a specified Person who is an individual, Family Members of such Person. "Ancillary Purchase Agreements": The Tech UK Purchase Agreement, the 84 Fairmount Street Purchase Agreement and the Fairmount Realty Purchase Agreement. "Family Member": As applied to any individual, any parent, spouse, child, spouse of a child, brother or sister of the individual, and each trust created for the benefit of one or more of such Persons, and each custodian of property of one or more such Persons. "IRS": The United States Internal Revenue Service. "Knowledge of the Sellers" or "Known to the Sellers" or words of similar meaning or import, shall mean the actual knowledge of any Seller, James J. Carria or William H. Nast without any independent investigation. "Net Working Capital": As of any date with respect to the Company, the difference between (i) all current assets of the Company, including, without limitation, all cash and cash equivalents, accounts receivable, inventory and prepaid expenses of the Company, minus (ii) all current liabilities of the Company, including, without limitation, all accrued current liabilities and trade payables of the Company, and all indebtedness (if any) under and with respect to the Deferred Comp Loan and the New Bonus Loan, but, subject to the provisions of Section 15.3 hereof, excluding any liabilities on account of expenses of the Sellers related to the transactions contemplated by this Agreement, all calculated in accordance with generally accepted accounting principles applied on a basis consistent with the May 2003 Balance Sheet taking into account any possible exceptions to such accounting principles disclosed on Schedule 5.8 hereto; provided, however, that (A) there shall be deducted from Net Working Capital as of any applicable determination date the average gross profit (calculated at the fixed rate of 17.8%) attributable to and derived from the so-called "Avon VMI Sales" giving rise to the corresponding accounts receivable (the "Avon VMI Receivables") owing to the Company from Avon Products, Inc. and its Subsidiaries (collectively, "Avon") as of such determination date, and (B) the Avon VMI Receivables shall be included as accounts receivable in the calculation of Net Working Capital. By way of example only, as of May 25, 2003, -26- the amount of Avon VMI Sales giving rise to the accounts receivable on the Company's May 25, 2003 balance sheet owing to the Company from Avon was $625,057.10, which when multiplied by an average gross profit rate of 17.8%, results in $111,260.16. "Person": A corporation, an association, a partnership, a limited liability company, an organization, a business, an individual, a government or political subdivision thereof or a governmental agency. "State or state": Any state or commonwealth of the United States of America; the District of Columbia; the Commonwealth of Puerto Rico; and any other dependency, possession or territory of the United States of America. "Subsidiary": With respect to any Person, any corporation a majority (by number of votes) of the outstanding shares of any class or classes of which shall at the time be owned by such Person or by a Subsidiary of such Person, if the holders of the shares of such class or classes (a) are ordinarily, in the absence of contingencies, entitled to vote for the election of a majority of the directors (or persons performing similar functions) of the issuer thereof, even though the right so to vote has been suspended by the happening of such a contingency, or (b) are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the issuer thereof, whether or not the right so to vote exists by reason of the happening of a contingency. "Tax": Any federal, state, local, foreign and other income, profits, franchise, capital, withholding, unemployment insurance, social security, occupational, production, severance, gross receipts, value added, sales, use, excise, real and personal property, ad valorem, occupancy, transfer, employment, disability, workers' compensation or other similar tax, duty or other governmental charge (including all interest and penalties thereon and additions thereto). "Tax Return": Any return, declaration, report, statement, information statement and other document required to be filed with respect to Taxes. "Transaction Documents": This Agreement and the Ancillary Purchase Agreements. 12. INDEMNIFICATION. 12.1. Indemnity by the Sellers. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 12.5 hereof, each -27- Seller agrees, jointly and severally, to indemnify and hold the Buyer and its directors, officers, employees and Affiliates harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including, without limitation, the fees and disbursements of counsel (collectively, "Losses"), related to or arising, directly or indirectly, out of any failure or any breach by any Seller of any representation or warranty, covenant, obligation or undertaking made by the Sellers in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. Notwithstanding anything contained in this Agreement to the contrary, if the Buyer as of the date of this Agreement and/or at any time from the date of this Agreement through the Closing Date has or obtains actual knowledge of any breach of any representation, warranty, covenant or agreement of the Sellers or the Company set forth in this Agreement, and elects, notwithstanding any such breach, to consummate the transactions contemplated by this Agreement, then the Buyer shall be deemed to have waived any such breach and shall not be entitled to make any claim for indemnification hereunder in connection therewith. 12.2. Indemnity by the Buyer. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 12.5 hereof, the Buyer agrees to indemnify and hold the Sellers and its Affiliates harmless from and with respect to any and all Losses related to or arising from, directly or indirectly, any failure or any breach by the Buyer of any representation or warranty, covenant, obligation or undertaking made by the Buyer in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. 12.3. Claims. (a) Notice. Any party seeking indemnification hereunder (the "Indemnified Party") shall notify the other party hereto (the "Indemnifying Party") of any action, suit, proceeding, demand or breach (a "Claim") with respect to which the Indemnified Party claims indemnification hereunder, which notification shall be made within ten (10) days after the Indemnified Party becomes aware of any such Claim. (b) Third Party Claims. If such Claim relates to any action, suit, proceeding or demand instituted against the Indemnified Party by a third party (a "Third Party Claim"), the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim after receipt of notice of such claim from the Indemnified Party. Within thirty (30) days after receipt of notice of a particular matter from the Indemnified Party, the Indemnifying Party may assume the defense of such Third Party Claim at its sole expense, in which case -28- the Indemnifying Party shall have the authority to negotiate, compromise and settle such Third Party Claim, if and only if the following conditions are satisfied: (i) the Indemnifying Party shall have confirmed in writing that it is obligated hereunder to indemnify the Indemnified Party with respect to such Third Party Claim; and (ii) such Third Party Claim involves only money damages and does not seek an injunction or other equitable relief. The Indemnified Party shall retain the right to employ its own counsel and to participate in the defense of any Third Party Claim, the defense of which has been assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party shall bear and shall be solely responsible for its own costs and expenses in connection with such participation. 12.4. Method and Manner of Paying Claims. With respect to any liquidated Claim or other Claim that has been the subject of a notice under Section 12.3(a) hereof, if within (30) thirty days after the receipt of such notice the Indemnifying Party has not contested such Claim in writing, the Indemnifying Party will pay the full amount thereof within ten (10) days after the expiration of such period. Any amount owed by an Indemnifying Party hereunder with respect to any Claim may be set-off by the Indemnified Party against any amounts owed by the Indemnified Party to any Indemnifying Party. -29- 12.5. Limitations on Indemnification. (a) No Indemnifying Party shall be required to indemnify an Indemnified Party hereunder except to the extent that the aggregate amount of Losses for which the Indemnified Party is otherwise entitled to indemnification pursuant to this Section 12 exceeds an amount equal to one percent (1%) of the Purchase Price (after giving effect to the Final Adjustment) (the "Indemnification Threshold"), whereupon the Indemnified Party shall be entitled to be paid the excess of the aggregate amount of all such Losses over the Indemnification Threshold, subject to the limitations on maximum amount of recovery set forth in Section 12.5(b) hereof; provided, that Losses related to or arising directly or indirectly out of any claims for indemnification made by the Buyer under Section 12.1 hereof with respect to (i) any inaccuracies in any representation or warranty made by the Sellers in Sections 5.1, 5.2, 5.6, 5.7 and 5.20 hereof, or (ii) any breach by the Sellers or the Buyer, as the case may be, of their respective payment obligations under Sections 1.2 and 3 hereof (collectively, "Purchase Price Limited Claims"), shall not be subject to the limitations set forth in this Section 12.5(a). (b) The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 12 with respect to all claims for indemnification (excluding Purchase Price Limited Claims) shall not exceed ten percent (10%) of the Purchase Price (after giving effect to the Final Adjustment). The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 12 with respect to all claims for indemnification, (including Purchase Price Limited Claims) shall not exceed the Purchase Price. (c) No Indemnifying Party shall be liable for any Losses pursuant to this Section 12 unless a written claim for indemnification in accordance with Section 12.4 hereof is given by the Indemnified Party to the Indemnifying Party with respect thereto within one (1) year after the Closing, except that this time limitation shall not apply to (i) any Losses related to or arising directly or indirectly out of any Purchase Price Limited Claims or any claim for indemnification made by the Buyer under Section 12.1 hereof with respect to any breach by Wang of Section 10.2 hereof, as to which in each case a written claim for indemnification in accordance with Section 12.3 hereof is given by the applicable Indemnified Party to the applicable Indemnifying Party with respect thereto within the applicable statute of limitations, and (ii) any Losses related to or arising directly or indirectly out of any claims for indemnification made by the Buyer under Section 12.1 hereof with respect to any inaccuracies in any representation or warranty made by the Sellers in Section 5.18 hereof, as to which a written claim for indemnification in accordance with Section 12.3 hereof is given by the Buyer to the Sellers with respect thereto within four (4) years after the Closing. -30- 13. TERMINATION. This Agreement may be terminated by either the Buyer or the Sellers in writing, without liability to the terminating party on account of such termination (provided the terminating party is not otherwise in default or in breach of this Agreement), if the Closing shall not have occurred on or before October 24, 2003, unless such failure to close is a consequence of the breach of this Agreement, or the default on its obligations hereunder, by the terminating party. 14. POST-CLOSING COOPERATION; TAX MATTERS. 14.1. Post-Closing Cooperation. The Sellers and the Buyer agree to cooperate with each other in connection with any tax inquiry, tax examination, tax-related legal proceeding or other tax-related matter relating to the pre-closing operation of the Company or in connection with a determination of any tax liability or treatment related thereto, and to make available to the other party(ies) within a reasonable amount of time, all documents, correspondence, reports and other materials bearing on any such tax inquiry, examination, proceeding or other matter; provided, that each party shall be reimbursed for any reasonable out-of-pocket expenses such party incurs in assisting the other party(ies) hereunder. 14.2. Filing of Tax Returns and Payment of Taxes. The Sellers shall prepare and file (or cause to be prepared and filed) on a timely basis all income Tax Returns of the Company for taxable periods ending on or prior to or including the Closing Date that are due (taking all applicable extensions into account) or may be filed after the Closing Date. Such Tax Returns shall be prepared on a basis consistent with the Company's prior Tax Returns to the extent appropriate and permitted under all applicable Tax laws, rules and regulations. With respect to each such Tax Return, the Buyer shall provide the Sellers with such powers of attorney as are necessary to enable the Sellers to file such Tax Return. In addition, the Buyer shall not act, make any filing or otherwise take any position which would be inconsistent in any manner with the treatment of the Company as an entity which has elected to be taxed under subchapter S of the Code with respect to the period commencing as of the date of the Company's filing of such election and ending on the Closing Date. 14.3. Audits. The Sellers shall be solely responsible for defending any audit, litigation or other proceeding with respect to income Taxes of the Company attributable to any taxable period (or portion thereof) prior to the -31- Closing Date, and shall have the exclusive authority to negotiate, compromise and settle any such audit, litigation or other proceeding. The Sellers shall keep the Buyer reasonably informed as to the progress of any such audit, litigation or other proceeding, and shall, if the Buyer so requests in writing, permit the Buyer at its expense to participate in any such audit, litigation or other proceeding. 14.4. Retention of Records. For a period of seven (7) years after the Closing Date or such longer period as may be required by law, the Buyer shall retain and not destroy or dispose of all Tax Returns (including supporting materials), books and records (including computer files) of, or with respect to the activities or Taxes of, the Company for all taxable periods or portions thereof ending on or prior to the Closing Date to the extent the Buyer or the Company received or had possession of such records on the Closing Date. Thereafter, the Buyer shall not destroy or dispose of any such Tax Returns, books or records unless it first offers such Tax Returns, books and records to the Sellers in writing and the Sellers fail to accept such offer within sixty (60) days of its being made. 15. GENERAL. 15.1. Survival of Representations and Warranties. Each representation and warranty made by the Sellers or the Buyer in this Agreement shall expire on the last day, if any, that Claims for breaches of such representation or warranty may be made pursuant to Section 12.5 hereof, except that any such representation or warranty that has been made the subject of a Claim prior to such expiration date shall survive with respect to such Claim until the final resolution of such Claim pursuant to Section 12 hereof. 15.2. Consent to Jurisdiction. The Sellers and the Buyer hereby irrevocably submit to the jurisdiction of any state or federal court sitting in the State of Rhode Island over any action or proceeding arising out of or relating to this Agreement, and the Sellers and the Buyer hereby irrevocably agree that all claims with respect to such action or proceeding may be heard and determined in such state or federal court. The Sellers and the Buyer hereby agree that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 15.3. Expenses. The Buyer shall pay all transfer and sales taxes payable in connection with the sale of the Stock. All expenses of the preparation, execution and consummation of this Agreement and of the transactions contemplated hereby, including, without limitation, attorneys', accountants' and outside advisers' fees and disbursements, shall be borne by the party incurring such expenses. -32- 15.4. Notices. All notices, demands and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid, or if sent by overnight courier, or sent by written telecommunication, as follows: If to any Seller, to: Mr. Herbert Wang Tech Industries, Inc. 85 Fairmount Street P.O. Box J Woonsocket, RI 02895 Fax: 401-766-4742 and Lawrence I. Silverstein, Esq. Bingham McCutchen LLP 150 Federal Street Boston, MA 02110 Fax: 617-951-8736 with a copy sent contemporaneously to: Mr. James J. Carria Mr. William H. Nast Tech Industries, Inc. 85 Fairmount Street P.O. Box J Woonsocket, RI 02895 Fax: 401-766-4742 If to the Buyer, to: Portola Packaging, Inc. 898-A Faulstich Court San Jose, CA 95112 Attention: Jim Taylor, President Fax: 408-452-0122 -33- with a copy sent contemporaneously to: Themistocles G. Michos, Esq. 720 York Street, Suite 103 San Francisco, CA 94110 Fax: 415-723-7203 Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by overnight courier, when receipted for, (c) if mailed, five (5) days after being mailed as described above, and (d) if sent by written telecommunication, when received. 15.5. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 15.6. Governing Law. The validity and construction of this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws (and not the choice-of-law rules) of the State of Rhode Island. 15.7. Sections and Section Headings. The headings of sections and subsections are for reference only and shall not limit or control the meaning thereof. 15.8. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other parties hereto. 15.9. Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein. 15.10. Further Assurances. The parties hereto agree to take such reasonable steps and execute such other and further documents as may be necessary or appropriate to cause the terms and conditions contained herein to be carried into effect. -34- 15.11. No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person, other than the Sellers and the Buyer and their respective shareholders or other equityholders, if any, any rights or remedies under or by reason of this Agreement. 15.12. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 15.13. Satisfaction of Conditions Precedent. Each of the Sellers and the Buyer will use his or its commercially reasonable good faith efforts to cause the satisfaction of the conditions precedent contained in this Agreement; provided, however, that nothing contained in this Section 15.13 shall obligate either party hereto to waive any right or condition under this Agreement. 15.14. Public Statements or Releases. Each of the parties hereto agrees that prior to the consummation of the Closing, no party to this Agreement will make, issue or release any public announcement, statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without first obtaining the consent of the other parties hereto. [Remainder of page intentionally left blank] -35- IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed and delivered as a sealed instrument as of the date and year first above written. BUYER: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR ----------------------------------------- James Taylor, President SELLERS: /s/ HERBERT WANG -------------------------------------------- Herbert Wang THE HERBERT WANG 1988-1 IRREVOCABLE TRUST (GST EXEMPT SHARE) By: /s/ JAMES J. CARRIA ----------------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN ----------------------------------------- Lawrence I. Silverstein, Trustee THE HERBERT WANG 1988-1 IRREVOCABLE TRUST (NON-GST EXEMPT SHARE) By: /s/ JAMES J. CARRIA ----------------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN ----------------------------------------- Lawrence I. Silverstein, Trustee -36- SCHEDULE A SELLERS' PRO RATA SHARES

EX-2.02 4 j0327701exv2w02.txt EXHIBIT 2.02 EXHIBIT 2.02 TECH INDUSTRIES U.K. LTD. STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT is dated as of this 1st day of September, 2003, by and between (i) Portola Packaging, Inc., a Delaware corporation (the "Buyer"), and (ii) Herbert Wang (the "Seller"). WHEREAS, the Seller owns all of the issued and outstanding shares of capital stock (the "Stock") of Tech Industries U.K. Ltd., a Rhode Island corporation (the "Company"); and WHEREAS, the Seller desires to sell all of the Stock to the Buyer, and the Buyer desires to purchase all of the Stock from the Seller, upon the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto agree as follows: 1. PURCHASE AND SALE OF STOCK. 1.1. Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, the Seller agrees to sell to the Buyer, and the Buyer agrees to purchase from the Seller, at the Closing (as defined to in Section 2 hereof), all of the Stock, in exchange for the payment of the Purchase Price (as defined in Section 1.2 hereof). 1.2. Delivery of Purchase Price. At the Closing, the Buyer shall pay to the Seller, as the purchase price for the Stock (the "Purchase Price"), an amount equal to $116,000, subject to increase as provided in Section 3 hereof. The payment of the Purchase Price shall be made to the Seller by wire transfer of immediately available funds. 2. CLOSING. 2.1. Time and Place. The closing of the sale and purchase of the Stock (the "Closing") shall be held at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts, at 10:00 a.m. on September 15, 2003, or at such other time, date and place as the Buyer and the Seller may agree. The date on which the Closing is actually held hereunder is referred to herein as the "Closing Date." 2.2. Transactions at Closing. At the Closing, in addition to any other instruments or documents referred to herein: (a) The Seller shall deliver to the Buyer, free and clear of any lien, claim or encumbrance, certificates representing the Stock, duly endorsed in blank or with duly executed stock powers attached. (b) The Buyer shall deliver the Purchase Price to the Seller by wire transfer of immediately available funds. 3. ADJUSTMENT TO PURCHASE PRICE. At the Closing, the Seller shall prepare and deliver to the Buyer a certificate signed by the President of the Company certifying as to the amount of (a) cash (in pounds sterling) of the Company on hand as of the Closing Date (the "Closing Date Cash"), and (b) accounts receivable (in pounds sterling) outstanding as of the Closing Date (the "Closing Date Receivables"). The aggregate amount of the Closing Date Cash and the Closing Date Receivables shall increase the Purchase Price on a dollar-for-dollar basis (by way of converting the Closing Date Cash and Closing Date Receivables in pounds sterling into US dollars at the then applicable exchange rate), and shall be paid by the Buyer to the Seller at the Closing. 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby represents and warrants to the Buyer as follows: 4.1. Organization; Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Rhode Island. The Seller has delivered to the Buyer complete and correct copies of the Company's charter documents and Bylaws and all amendments thereto. The Company has all requisite power and authority to own or lease and operate its properties and to carry on its business as such business is now conducted. 4.2. Right to Sell Stock; Approvals; Binding Effect. The Seller has all requisite power and full legal right to enter into this Agreement, and to perform all of his agreements and obligations hereunder. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, enforceable in accordance with its terms, except as the enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. -2- 4.3. Non-Contravention. The execution and delivery by the Seller of this Agreement, and the consummation by the Seller of the transactions contemplated hereby, will not constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Seller pursuant to (a) any agreement or instrument to which the Seller is a party or by which the Seller or any of the Seller's property is bound or to which the Seller or any of the Seller's property is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Seller is subject. 4.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Seller of this Agreement or for the consummation by the Seller of the transactions contemplated hereby. 4.5. Subsidiaries. The Company has no subsidiaries, and beneficially owns or holds of record no shares or other securities of any class in the capital of any corporations, and owns any legal and/or beneficial interests in any partnerships, limited liability companies, business trusts or joint ventures or in any other unincorporated trade or business enterprises. 4.6. Capitalization. The authorized capital stock of the Company consists of 4,000 shares of common stock, no par value per share, 200 shares of which are issued and outstanding on the date hereof and are owned of record by the Seller. All of the Stock will be sold by the Seller to the Buyer pursuant hereto and is validly issued and outstanding, fully paid and non-assessable. There are no commitments for the purchase or sale of, and no options, warrants or other rights to subscribe for or purchase, any shares of capital stock or other securities of the Company. 4.7. Title to Stock, Liens. The Seller has, and as of the consummation of the Closing the Buyer will have, sole record and beneficial ownership of all of the Stock, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto. 4.8. Minute Books. The minute books of the Company made available to the Buyer for inspection accurately record therein in all material respects all actions taken by the Board of Directors and shareholders of the Company. 4.9. Broker. Except with respect to Edgeview Partners LLC, whose fees in connection with the transactions contemplated hereby shall be the sole -3- responsibility of the Seller, the Seller has not retained, utilized or been represented by any broker, agent, finder or intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer hereby represents and warrants to the Seller as follows: 5.1. Organization; Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 5.2. Corporate Approval; Binding Effect. The Buyer has all requisite power and full legal right to enter into this Agreement, and to perform all of the Buyer's agreements and obligations hereunder, in accordance with its terms. The Buyer has obtained all necessary corporate or organizational authorizations and approvals required for the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 5.3. Non-Contravention. The execution and delivery by the Buyer of this Agreement, and the consummation by the Buyer of the transactions contemplated hereby, will not (a) violate or conflict with any provisions of the charter documents or By-Laws or other constituent documents of the Buyer, each as amended to date; or (b) constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Buyer pursuant to (i) any agreement or instrument to which the Buyer is a party or by which the Buyer or any of its properties is bound, or to which the Buyer or any of its properties is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Buyer is subject. 5.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Buyer of this Agreement or for the consummation by the Buyer of the transactions contemplated hereby. 5.5. Broker. The Buyer has not retained, utilized or been represented by any broker, agent, finder or other intermediary in connection with the -4- negotiation or consummation of the transactions contemplated by this Agreement. 6. CONDUCT OF BUSINESS BY THE COMPANY PENDING CLOSING. The Seller covenants and agrees that, from and after the date of this Agreement and until the Closing, except as otherwise specifically consented to or approved by the Buyer in writing: 6.1. Access. The Seller shall cause the Company to afford to the Buyer and its authorized representatives full access during normal business hours, upon reasonable advance notice from the Buyer and so long as such access does not cause any disruption to the operation of the Company's business, to all properties, books, records, contracts and documents of the Company, and a full opportunity to make such reasonable investigations as they shall desire to make of the Company, and the Seller shall furnish or cause to be furnished to the Buyer and its authorized representatives all such information with respect to the Company's business as the Buyer may reasonably request. 6.2. Carry on in Regular Course. The Seller shall cause the Company to carry on its business diligently and substantially in the same manner consistent with past practice, and not make or institute any unusual or novel methods of manufacture, purchase, sale, lease, management, accounting or operation. 6.3. Dividends. The Company shall be permitted to distribute to the Seller all cash and cash equivalents of the Company. 7. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Buyer): 7.1. Representations and Warranties True at Closing. The representations and warranties made by the Seller in or pursuant to this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 7.2. Compliance with Agreements. The Seller shall have performed and complied with all of his obligations under this Agreement to be performed or complied with by him on or prior to the Closing Date. -5- 7.3. Certificate of Seller. The Seller shall have delivered to the Buyer in writing, at and as of the Closing, a certificate duly executed by the Seller, in form and substance reasonably satisfactory to the Buyer and its counsel, to the effect that the conditions in each of Sections 7.1 and 7.2 hereof have been satisfied. 7.4. Resignations of Directors and Officers. All of the directors and officers of the Company listed on Schedule 7.4 hereto shall have resigned their positions with the Company, on or prior to the Closing Date, and prior thereto shall have executed such appropriate documents with respect to the transfer or establishment of bank accounts, signing authority, etc., as the Buyer shall have reasonably requested. 7.5. Closing of Tech Purchase Agreement. The "Closing" under that certain Stock Purchase Agreement, of even date herewith (the "Tech Purchase Agreement"), by and among the Seller, James J. Carria and Lawrence I. Silverstein, as trustees of The Herbert Wang 1988-1 Irrevocable Trust (GST Exempt Share) and The Herbert Wang 1988-1 Irrevocable Trust (Non-GST Exempt Share), and the Buyer, with respect to the purchase and sale of all of the outstanding capital stock of Tech Industries, Inc., a Rhode Island corporation, shall have occurred. 8. CONDITIONS PRECEDENT TO THE SELLER' OBLIGATIONS. The obligation of the Seller to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Seller): 8.1. Representations and Warranties True at Closing. The representations and warranties made by the Buyer in this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 8.2. Compliance with Agreements. The Buyer shall have performed and complied with all of its obligations under this Agreement that are to be performed or complied with by it at or prior to the Closing. 8.3. Certificate of Buyer. The Buyer shall have delivered to the Seller in writing, at and as of the Closing, a certificate duly executed by the President of the Buyer, in form and substance reasonably satisfactory to the Seller and his counsel, to the effect that the conditions in each of Sections 8.1 and 8.2 hereof have been satisfied. -6- 8.4. Closing of Tech Purchase Agreement. The "Closing" under the Tech Purchase Agreement shall have occurred. 9. LIMITATION ON LIABILITY. Notwithstanding anything to the contrary set forth in this Agreement, the maximum liability of the Seller to the Buyer under this Agreement with respect to any breach by the Seller of any representation, warranty, covenant, obligation or undertaking of the Seller under this Agreement, shall not exceed the Purchase Price (as it may be increased pursuant to Section 3 hereof). 10. TERMINATION. This Agreement may be terminated by either the Buyer or the Seller in writing, without liability to the terminating party on account of such termination (provided the terminating party is not otherwise in default or in breach of this Agreement), if the "Closing" under the Tech Purchase Agreement shall not have occurred on or before October 24, 2003, unless such failure to close is a consequence of the breach of this Agreement, or the default on its obligations hereunder, by the terminating party. 11. GENERAL. 11.1. Consent to Jurisdiction. The Seller and the Buyer hereby irrevocably submit to the jurisdiction of any state or federal court sitting in the State of Rhode Island over any action or proceeding arising out of or relating to this Agreement, and the Seller and the Buyer hereby irrevocably agree that all claims with respect to such action or proceeding may be heard and determined in such state or federal court. The Seller and the Buyer hereby agree that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 11.2. Expenses. The Buyer shall pay all transfer and sales taxes payable in connection with the sale of the Stock. All expenses of the preparation, execution and consummation of this Agreement and of the transactions contemplated hereby, including, without limitation, attorneys', accountants' and outside advisers' fees and disbursements, shall be borne by the party incurring such expenses. -7- 11.3. Notices. All notices, demands and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid, or if sent by overnight courier, or sent by written telecommunication, as follows: If to the Seller, to: Mr. Herbert Wang Tech Industries, Inc. 85 Fairmount Street P.O. Box J Woonsocket, RI 02895 Fax: 401-766-4742 with a copy sent contemporaneously to: Mr. James J. Carria Mr. William H. Nast Tech Industries, Inc. 85 Fairmount Street P.O. Box J Woonsocket, RI 02895 Fax: 401-766-4742 and Lawrence I. Silverstein, Esq. Bingham McCutchen LLP 150 Federal Street Boston, MA 02110 Fax: 617-951-8736 If to the Buyer, to: Portola Packaging, Inc. 898-A Faulstich Court San Jose, CA 95112 Attention: Jim Taylor, President Fax: 408-452-0122 -8- with a copy sent contemporaneously to: Themistocles G. Michos, Esq. 720 York Street, Suite 103 San Francisco, CA 94110 Fax: 415-723-7203 Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by overnight courier, when receipted for, (c) if mailed, five (5) days after being mailed as described above, and (d) if sent by written telecommunication, when received. 11.4. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 11.5. Governing Law. The validity and construction of this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws (and not the choice-of-law rules) of the State of Rhode Island. 11.6. Sections and Section Headings. The headings of sections and subsections are for reference only and shall not limit or control the meaning thereof. 11.7. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of either party hereunder shall be assignable or transferable by such party without the prior written consent of the other party hereto. 11.8. Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein. 11.9. Further Assurances. The parties hereto agree to take such reasonable steps and execute such other and further documents as may be necessary or appropriate to cause the terms and conditions contained herein to be carried into effect. -9- 11.10. No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person, other than the Seller and the Buyer and their respective shareholders or other equityholders, if any, any rights or remedies under or by reason of this Agreement. 11.11. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.12. Satisfaction of Conditions Precedent. Each of the Seller and the Buyer will use his or its commercially reasonable efforts to cause the satisfaction of the conditions precedent contained in this Agreement; provided, however, that nothing contained in this Section 11.12 shall obligate either party hereto to waive any right or condition under this Agreement. 11.13. Public Statements or Releases. Each of the parties hereto agrees that prior to the consummation of the Closing no party to this Agreement will make, issue or release any public announcement, statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without first obtaining the consent of the other party hereto. [Remainder of page intentionally left blank] -10- IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed and delivered as a sealed instrument as of the date and year first above written. BUYER: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR -------------------------------- James Taylor, President SELLER: /s/ HERBERT WANG ----------------------------------- Herbert Wang -11- Schedule 7.4 Directors and Officers of the Company Directors: The Company has no directors. Officers: James J. Carria President and Treasurer William H. Nast Secretary -12- EX-2.03 5 j0327701exv2w03.txt EXHIBIT 2.03 EXHIBIT 2.03 FAIRMOUNT REALTY ASSOCIATES EQUITY PURCHASE AGREEMENT THIS EQUITY PURCHASE AGREEMENT is dated as of this 1st day of September, 2003, by and among (i) Portola Packaging, Inc., a Delaware corporation (the "Buyer"), and (ii) each of the parties listed on Schedule A hereto (collectively, the "Sellers," and each individually, a "Seller"). WHEREAS, Fairmount Realty Associates, a Rhode Island limited partnership (the "Partnership"), is the owner of that certain parcel of land located at 85 Fairmount Street, Woonsocket, Rhode Island and more particularly described on Exhibit A hereto (the "Land"), together with the building(s), improvements and fixtures now situated on the Land (the "Improvements") as set forth on said Exhibit A (the Land, together with the Improvements, being referred to herein collectively as the "Property"); WHEREAS, the Sellers own all of the partnership interests in the Partnership (the "Interests"); and WHEREAS, the Sellers desire to sell all of the Interests to the Buyer, and the Buyer desires to purchase all of the Interests from the Sellers, upon the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto agree as follows: 1. PURCHASE AND SALE OF INTERESTS. 1.1. Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, the Sellers agree to sell to the Buyer, and the Buyer agrees to purchase from the Sellers, at the Closing (as defined to in Section 2 hereof), all of the Interests, in exchange for the payment of the Purchase Price (as defined in Section 1.2 hereof). 1.2. Delivery of Purchase Price. At the Closing, the Buyer shall pay to the Sellers, as the aggregate purchase price for the Interests (the "Purchase Price"), an amount equal to $646,013 (allocated for all tax purposes $225,114 to land and $420,899 to improvements) plus a $2,250 security deposit. The payment of the Purchase Price shall be made to the Sellers pro rata in accordance with the percentages specified as their respective pro rata shares opposite their names on Schedule A hereto (as to each Seller, such Seller's "Pro Rata Share"), by wire transfer of immediately available funds. 2. CLOSING. 2.1. Time and Place. The closing of the purchase and sale of the Interests (the "Closing") shall be held at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts, at 10:00 a.m. on September 15, 2003 or at such other time, date and place as the Buyer and the Sellers may agree. The date on which the Closing is actually held hereunder is referred to herein as the "Closing Date." 2.2. Transactions at Closing. At the Closing, in addition to any other instruments or documents referred to herein: (a) Each of the Sellers shall deliver to the Buyer, and the Buyer shall deliver to each of the Sellers, an executed Assignment and Assumption of Interests for and with respect to each of the Interests, in the form of Exhibit B hereto. The Interests shall be assigned and transferred to Buyer or to Buyer's nominee or nominees. (b) The Buyer shall deliver the Purchase Price to the Sellers by wire transfer of immediately available funds. 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers hereby jointly and severally represents and warrants to the Buyer as follows: 3.1. Organization; Authority. The Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Rhode Island. The Sellers have delivered to the Buyer complete and correct copies of the Partnership's certificate of limited partnership and limited partnership agreement and all amendments thereto. The Partnership has all requisite power and authority to own or lease and operate its properties and to carry on its business as such business is now conducted. 3.2. Right to Sell Interests; Approvals; Binding Effect. The Sellers have all requisite power and full legal right to enter into this Agreement, to perform all of their agreements and obligations hereunder in accordance with its terms, and to sell to the Buyer all of the Interests. Each Seller has obtained all necessary authorizations and approvals required for the execution and delivery of the Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each Seller and -2- constitutes the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as the enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 3.3. Non-Contravention. The execution and delivery by each Seller of this Agreement, and the consummation by such Seller of the transactions contemplated hereby, will not constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of such Seller pursuant to (a) any agreement or instrument to which such Seller is a party or by which such Seller or any of such Seller's property is bound or to which such Seller or any of such Seller's property is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which such Seller is subject. 3.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by each Seller of this Agreement or for the consummation by each Seller of the transactions contemplated hereby. 3.5. Capitalization. All of the outstanding partnership interests in the Partnership are owned of record by the Sellers as set forth on Schedule A hereto. All of the Interests will be sold by the Sellers to the Buyer pursuant hereto and are validly issued and outstanding. There are no commitments for the purchase or sale of, and no options, warrants or other rights to subscribe for or purchase, any securities of or interests in the Partnership. 3.6. Title to Interests, Liens. Each Seller has, and as of the consummation of the Closing the Buyer will have, sole record and beneficial ownership of all of the Interests set forth opposite such Seller's name on Schedule A hereto, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto. 3.7. Broker. Except with respect to Edgeview Partners LLC, whose fees in connection with the transactions contemplated hereby shall be the sole responsibility of the Sellers, the Sellers have not retained, utilized or been represented by any broker, agent, finder or intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 3.8. Litigation. There is no litigation pending or, to Sellers' actual knowledge, threatened, against or affecting the Partnership, Sellers, or the -3- Property or any part thereof (including eminent domain or condemnation proceedings), or which would prevent or materially hinder or impair Sellers' performance of its obligations under this Agreement. 3.9. Encumbrances. There are no possessory interests in, or obligations running with title to, the Property, other than the occupancy rights of Tech Industries, Inc., the easements, rights-of-way and other matters of record, any encroachments or boundary discrepancies that would be revealed by an accurate survey and all Permitted Encumbrances (as defined below). The Partnership is subject to no obligations or liabilities (fixed or contingent) that will survive the Closing other than those of record running with title to the Property, the Tech Industries, Inc. lease, property taxes and assessments that are not delinquent, all Permitted Encumbrances and the obligations under a certain New Jersey lease as described in Schedule 3.9 hereto. 3.10. Compliance. To Sellers' actual knowledge, the Property (including the Improvements) conforms in all material respects to, and is being operated in material compliance with, all applicable laws, regulations, permits and approvals, including laws governing zoning, land use and the subdivision of property. 3.11. Environmental Conditions. To Sellers' actual knowledge, other than as disclosed in the report identified in Section 5.12(a) of the Tech Purchase Agreement, no hazardous or toxic substance of any kind has been brought onto, stored or used at or upon, or released upon the Property or any part thereof, in violation of any law or regulation or as to require clean-up or remediation under any law or regulation. As used in this Section 3.11, a substance shall be deemed "hazardous" or "toxic" if liability for its removal or cleanup could or might be imposed under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) or any similar statute or law. 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer hereby represents and warrants to the Sellers as follows: 4.1. Organization; Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2. Corporate Approval; Binding Effect. The Buyer has all requisite power and full legal right to enter into this Agreement, and to perform all of the Buyer's agreements and obligations hereunder, in accordance with its terms. The Buyer has obtained all necessary corporate or organizational authorizations and approvals required for the execution and delivery of this Agreement and the -4- consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 4.3. Non-Contravention. The execution and delivery by the Buyer of this Agreement, and the consummation by the Buyer of the transactions contemplated hereby, will not (a) violate or conflict with any provisions of the charter documents or By-Laws or other constituent documents of the Buyer, each as amended to date; or (b) constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Buyer pursuant to (i) any agreement or instrument to which the Buyer is a party or by which the Buyer or any of its properties is bound, or to which the Buyer or any of its properties is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Buyer is subject. 4.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Buyer of this Agreement or for the consummation by the Buyer of the transactions contemplated hereby. 4.5. Broker. The Buyer has not retained, utilized or been represented by any broker, agent, finder or other intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 5. CONDUCT OF BUSINESS BY THE PARTNERSHIP PENDING CLOSING. Each Seller covenants and agrees that, from and after the date of this Agreement and until the Closing, except as otherwise specifically consented to or approved by the Buyer in writing: 5.1. Carry on in Regular Course. The Sellers shall cause the Partnership to operate and maintain the Property substantially in the same manner consistent with past practice, and to maintain in effect all current insurance it currently maintains affecting or covering the Property. Neither the Sellers nor the Partnership shall voluntarily impose upon the Property any new lien (including, without limitation, the extension or amendment of any lien on the Property existing as of the date of this Agreement), easement, or other encumbrance or obligation, nor shall the Sellers or the Partnership incur any additional debt -5- obligation with respect to the Partnership, whether or not secured by the Property, that will not be released and discharged on or before the Closing Date. 5.2 Distributions. The Partnership shall be permitted to distribute to the Sellers all cash and cash equivalents of the Partnership. 6. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Buyer): 6.1. Representations and Warranties True at Closing. The representations and warranties made by the Sellers in or pursuant to this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 6.2. Compliance with Agreements. The Sellers shall have performed and complied with all of their obligations under this Agreement to be performed or complied with by them on or prior to the Closing Date. 6.3. Certificate of Sellers. The Sellers shall have delivered to the Buyer in writing, at and as of the Closing, a certificate duly executed by the Sellers, in form and substance reasonably satisfactory to the Buyer and its counsel, to the effect that the conditions in each of Sections 6.1 and 6.2 hereof have been satisfied. 6.4. Closing of Tech Purchase Agreement. The "Closing" under that certain Stock Purchase Agreement, dated as of September 1, 2003 (the "Tech Purchase Agreement"), by and among Herbert Wang and James J. Carria and Lawrence I. Silverstein, as trustees of The Herbert Wang 1988-1 Irrevocable Trust, and the Buyer, with respect to the purchase and sale of all of the outstanding capital stock of Tech Industries, Inc., a Rhode Island corporation, shall have occurred. 6.5. Due Diligence. Beginning on the date of this Agreement and continuing until September 10, 2003 (the "Due Diligence Period"), Buyer (and any agents and consultants retained by Buyer) shall have the right at such reasonable times as Buyer and the Sellers may determine to examine and inspect the Property, to investigate the condition of title, zoning, value and usefulness of the Property, to review and examine the Partnership's financial statements, books and records related to the Property (including maintenance thereof) and the operation of the Property, and to determine the suitability of the Property for the -6- use and further development contemplated by Buyer. It is anticipated that during this period Buyer, both directly and through its agents and consultants, including its structural engineer ("Buyer's Engineer"), will at such reasonable times and such reasonable manner as Buyer and Sellers may determine conduct physical examinations of the Property (including improvements thereto and facilities thereon, and also including environmental review, soil and ground water sampling, including ground penetrations required therefor, and any material and structural testing required to evaluate and inspect the improvements on the Property), and will examine the condition of title, zoning and the value of the Property. Buyer shall also have the right, during this period and at Buyer's expense, to obtain a current or updated survey of the Property. It is understood that Buyer and its agents and consultants shall have access to the Property and all books and records of the Partnership, in each case, at such reasonable times as Buyer and Sellers may determine, for the purpose of conducting its investigation. It shall be a condition of Closing and of Buyer's obligations to purchase the Property that Buyer, in its sole discretion, has approved the physical condition of the Property (including without limitation its environmental condition) and the condition of title and zoning, and has determined that the use, operation and development limitations and opportunities of the Property are reasonably satisfactory to Buyer (such conditions are referred to herein as the "Due Diligence Conditions"). Buyer shall have the right to notify Sellers in writing at any time prior to the expiration of the Due Diligence Period that the Due Diligence Conditions are not satisfied, in which event this Agreement shall automatically be terminated with no further liability of either party hereunder except as otherwise expressly provided in this Agreement. Notwithstanding the foregoing, (a) Buyer shall have no right to so notify Sellers that the Due Diligence Conditions are not satisfied unless the written report of Buyer's Engineer (the "Engineer's Report") delivered to Buyer and Sellers on or prior to the Closing Date has disclosed defects or problems with the physical condition of the Property which require at least, in any individual case or in the aggregate, $375,000 (the "Minimum Defects Amount") to remedy same (herein, "Material Physical Condition Defects") (exclusive of, and without regards to, for purposes of this calculation, each and every individual defect or problem relating to such physical condition less than $5,000), and (b) notwithstanding the existence of Material Physical Condition Defects, Buyer shall still not have the right to so notify Sellers that the Due Diligence Conditions are not satisfied on account thereof if Sellers deposit into escrow, pursuant to the terms of the Escrow Agreement substantially in the form of Exhibit C hereto (the "Structural Escrow Agreement"), an amount not to exceed $375,000 to be used to remedy the Material Physical Condition Defects in excess of the Minimum Defects Amount as reasonably specified in the Engineer's Report, upon the terms and conditions more particularly set forth in the Structural Escrow Agreement, upon which the Due Diligence Conditions shall be deemed satisfied. Should, -7- however, Buyer fail to so notify Sellers as aforesaid by the end of the Due Diligence Period, the Property shall be deemed satisfactory and the Due Diligence Conditions set forth herein shall be deemed satisfied. In connection with the foregoing, Buyer shall not communicate with employees of Tech Industries, Inc., other than James J. Carria and William Nast, without the prior written consent of Sellers, and Sellers shall have the right to have a representative present (who shall be either James J. Carria or William Nast) at and to participate in any meetings, telephone discussions or other forms of communication between Buyer and any employee or other third party (including governmental agencies) with respect to the Property. Buyer agrees that it will indemnify and hold Sellers harmless from and against all damage to persons or property and all related actions, claims, penalties, damages and expenses, including reasonable attorneys fees and court costs, based upon or arising out of the activities of Buyer and its agents and consultants or any of their respective inspectors, contractors, or affiliates while on or about the Property or the land adjacent thereto. Buyer agrees that all information in connection with the above-referenced inspections, examinations or tests shall be kept confidential by Buyer and its inspectors, consultants, contractors, agents, investors, lenders, and affiliates except to the extent otherwise required by applicable law. 6.6. Title. A title company reasonably designated by Buyer shall have issued or shall be fully prepared to issue an Owners ALTA policy or binder of title insurance (at Buyer's option) in form and substance reasonably satisfactory to Buyer, including a non-imputation endorsement and such other endorsements and additional coverages as Buyer may reasonably request, in the full amount of the Purchase Price, showing fee title fully vested in the Partnership subject only to (i) property taxes and assessments not delinquent, (ii) all matters which would be shown by an accurate survey , (iii) all matters of record and all Permitted Encumbrances other than deeds of trust, mortgages or other liens for security purposes (other than liens for non-delinquent taxes and assessments), (iv) the occupancy rights of Tech Industries, Inc., and (v) statutory or regulatory requirements affecting the Property. It is understood that Sellers shall, as a covenant and a condition to the Closing, remove all deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property. Notwithstanding Section 6.5 of this Agreement, if Buyer identifies any title matters, noted as exceptions on a title commitment which Buyer shall obtain during the Due Diligence Period (the "Title Commitment"), that are not acceptable to Buyer in Buyer's sole discretion, Buyer shall give written notice to Sellers (the "Title Notice") within the Due Diligence Period which identifies such title matters that are not acceptable. If Buyer fails to give the Title Notice to -8- Sellers within the Due Diligence Period then all such exceptions, excluding any deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property which Sellers are otherwise obligated to remove, shall be deemed Permitted Encumbrances. If the Title Notice sets forth title matters that are not acceptable to the Buyer, then the Sellers, subject to the limitations below shall use reasonable efforts to remedy the title matters raised by the Buyer in the Title Notice or to make arrangements pursuant to which such title matters will be remedied on the Closing Date (or promptly thereafter in accordance with customary conveyancing procedures). If despite such reasonable efforts, Sellers are unable either to remedy such title matters or make arrangements pursuant to which such title matters will be so remedied before the earlier of the Closing Date or fifteen (15) days after the Sellers' receipt of the Title Notice, then Sellers shall give notice to the Buyer identifying the title matters that Sellers will not be able to remedy before the Closing Date, and this Agreement shall terminate unless Buyer, within fifteen (15) days after the expiration of such period but in any event before the Closing Date, gives notice to Sellers waiving the objections to title set forth in the Title Notice that Sellers will not be able to remedy, in which event any such matter objected to that Sellers will not be able to remedy shall be deemed to be a Permitted Exception. Sellers shall not, however, be obligated to expend more than $10,000.00 to correct title defects hereunder, not including funds necessary to pay monetary encumbrances. 6.7. Closing Documents. Sellers shall have executed and delivered to Buyer, or shall be fully ready, willing and able to execute and deliver to Buyer at or before Closing, (i) the Assignment and Assumption of Interests contemplated in Section 2.2(a) above; (ii) a certificate certifying that Sellers are not foreign persons within the meaning of the Foreign Investment in Real Property Tax Act of 1980, and such other certificates as may reasonably be requested by Buyer for the purpose of confirming that Buyer is under no obligation to withhold any portion of the purchase price under federal or state law; and (iii) a standard affidavit indemnifying against claims of workmen and materialmen arising from activities undertaken prior to the Closing and (iv) such other assignments, transfer documents and certificates as Buyer may reasonably request. 6.8. Structural Escrow Agreement. If required pursuant to Section 6.5 hereof, the Sellers and the escrow agent under the Structural Escrow Agreement shall have entered into the Structural Escrow Agreement. 6.9. Environmental Escrow Agreement. The Sellers and the equityholders (the "84 Fairmount Street LP Sellers") of 84 Fairmount Street Limited Partnership ("84 Fairmount Street LP") shall have entered into the Escrow Agreement substantially in the form of Exhibit D hereto (the "Environmental Escrow -9- Agreement"), with the escrow agent thereunder, pursuant to which the Sellers and the 84 Fairmount Street LP Sellers shall have deposited into escrow the aggregate sum of $200,000 to be used to remedy environmental problems (if any) located at the Property and at the property owned by 84 Fairmount Street LP located at 84 Fairmount Street, Woonsocket, Rhode Island. 7. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The obligation of the Sellers to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Sellers): 7.1. Representations and Warranties True at Closing. The representations and warranties made by the Buyer in this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 7.2. Compliance with Agreements. The Buyer shall have performed and complied with all of its obligations under this Agreement that are to be performed or complied with by it at or prior to the Closing. 7.3 Certificate of Buyer. The Buyer shall have delivered to the Sellers in writing, at and as of the Closing, a certificate duly executed by the President of the Buyer, in form and substance reasonably satisfactory to the Sellers and their counsel, to the effect that the conditions in each of Sections 7.1 and 7.2 hereof have been satisfied. 7.4. Closing of Tech Purchase Agreement. The "Closing" under the Tech Purchase Agreement shall have occurred. 7.5. Structural Escrow Agreement. If required pursuant to Section 6.5 hereof, the Buyer and the escrow agent under the Structural Escrow Agreement shall have entered into the Structural Escrow Agreement. 7.6. Environmental Escrow Agreement. The Buyer and the escrow agent under the Environmental Escrow Agreement shall have entered into the Environmental Escrow Agreement. 8. LIMITATIONS REGARDING THE PROPERTY. 8.1. Limitations. The Buyer and the Sellers agree that, except for the express warranties, representations and agreements set forth in this Agreement or the Tech Purchase Agreement, the Buyer is acquiring the Property (indirectly through its acquisition of the Interests) in its "AS IS" condition, WITH ALL -10- FAULTS, IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED. Except for the express warranties, representations and agreements in this Agreement and the Tech Purchase Agreement, none of the Sellers nor any shareholders, beneficiaries, trustees, directors, officers, agents, representatives or employees of the Sellers, have made any representations or warranties, direct or indirect, oral or written, express or implied, to the Buyer or any agents, representatives or employees of the Buyer, with respect to the condition of the Property, its fitness for any particular purpose, or its compliance with any laws, and the Buyer is not aware of and does not rely upon any such representation to any other party. The Buyer expressly acknowledges that the Purchase Price reflects that, except for the express warranties, representations and agreements set forth in this Agreement or the Tech Purchase Agreement, the Buyer is acquiring the Property (indirectly through its acquisition of the Interests) in an "AS IS" condition. The Buyer acknowledges that it has had and will have under this Agreement the opportunity to make such inspections (or have such inspections made by consultants) as it desires of the Property and all factors relevant to its use, including, without limitation, the interior, exterior and structure of all Improvements, and the condition of soils and subsurfaces (particularly with respect to the presence or absence of hazardous substances). 8.2. Permitted Exceptions. Subject to Buyer's title due diligence and termination rights under Sections 6.5 and 6.6 of this Agreement, the Buyer hereby agrees it is acquiring the Property (indirectly through its acquisition of the Interests), subject to the following (each a "Permitted Encumbrance"): (a) All exception items not otherwise objected to by Buyer pursuant to Section 6.6 of this Agreement and as shown on the Title Commitment, possible title objections, survey objections, and any defects in or to title to the Property or other matters affecting or relating to the title to, or the survey of, or the condition of, the Property which existed as of the Closing Date, except to the extent any of the same are inconsistent with Sellers' warranties in Section 3.8 above, and except that Sellers shall (in accordance with Section 6.6) remove all deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property. Notwithstanding the foregoing, any material encumbrance to title (other than an encumbrance for a monetary obligation Sellers are obligated to remove) arising or recorded after the effective date of the Title Commitment and before the Closing Date shall give Buyer the option, on the Closing Date, to either (i) terminate this Agreement by written notice to Sellers or (ii) close hereunder, in which event such encumbrance will be a Permitted Encumbrance. (b) The lien of non-delinquent real and personal property taxes and assessments. -11- (c) Discrepancies, conflicts in boundary lines, shortages in area, encroachments, and any state of facts which an accurate survey of the Property would disclose and which are not shown by the public records. (d) Easements or claims of easements shown by the public records. 8.3. Release. Except for the warranties, representations, agreements and other obligations of Sellers under this Agreement or the Tech Purchase Agreement (all of which shall survive the Closing), Buyer hereby remises and releases the Sellers and their respective shareholders, beneficiaries, trustees, directors, officers, agents, representatives and employees, from any and all claims, liabilities, losses, damages, costs and expenses that the Buyer may have relating to or arising from (a) the condition of the Property at any time, whether before or after the Closing Date, including, without limitation, the presence of any asbestos, oil or hazardous substance, or (b) any other matter pertaining to the Property. The release set forth in this Section 8.3 shall survive the Closing or the termination of this Agreement for any reason whatsoever. 9. INDEMNIFICATION. 9.1. Indemnity by the Sellers. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 9.5 hereof, each Seller agrees to indemnify and hold the Buyer and its directors, officers, employees and Affiliates (as defined in the Tech Purchase Agreement) harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including, without limitation, the fees and disbursements of counsel (collectively, "Losses"), related to or arising, directly or indirectly, out of any failure or any breach by the Sellers of any representation or warranty, covenant, obligation or undertaking made by the Sellers in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. 9.2. Indemnity by the Buyer. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 9.5 hereof, the Buyer agrees to indemnify and hold the Sellers and its Affiliates harmless from and with respect to any and all Losses related to or arising from, directly or indirectly, any failure or any breach by the Buyer of any representation or warranty, covenant, obligation or undertaking made by the Buyer in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. -12- 9.3. Claims. (a) Notice. Any party seeking indemnification hereunder (the "Indemnified Party") shall notify the other party hereto (the "Indemnifying Party") of any action, suit, proceeding, demand or breach (a "Claim") with respect to which the Indemnified Party claims indemnification hereunder, which notification shall be made within ten (10) days after the Indemnified Party becomes aware of any such Claim. (b) Third Party Claims. If such Claim relates to any action, suit, proceeding or demand instituted against the Indemnified Party by a third party (a "Third Party Claim"), the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim after receipt of notice of such claim from the Indemnified Party. Within thirty (30) days after receipt of notice of a particular matter from the Indemnified Party, the Indemnifying Party may assume the defense of such Third Party Claim, provided it does so at its expense, in which case the Indemnifying Party shall have the authority to negotiate, compromise and settle such Third Party Claim, if and only if the following conditions are satisfied: (i) the Indemnifying Party shall have confirmed in writing that it is obligated hereunder to indemnify the Indemnified Party with respect to such Third Party Claim; and (ii) such Third Party Claim involves only money damages and does not seek an injunction or other equitable relief. The Indemnified Party shall retain the right to employ its own counsel and to participate in the defense of any Third Party Claim, the defense of which has been assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party shall bear and shall be solely responsible for its own costs and expenses in connection with such participation. 9.4. Method and Manner of Paying Claims. With respect to any liquidated Claim or other claim that has been the subject of a notice under Section 9.3(a) above, if within (30) thirty days after the receipt of written notice thereof under Section 9.3(a) hereof the Indemnifying Party has not contested such Claim in writing, the Indemnifying Party will pay the full amount thereof within ten (10) days after the expiration of such period. Any amount owed by an Indemnifying Party hereunder with respect to any Claim may be set-off by the Indemnified Party against any amounts owed by the Indemnified Party to any Indemnifying Party. -13- 9.5. Limitations on Indemnification. (a) No Indemnifying Party shall be required to indemnify an Indemnified Party hereunder except to the extent that the aggregate amount of Losses for which the Indemnified Party is otherwise entitled to indemnification pursuant to this Section 9 exceeds an amount equal to ten percent (10%) of the Indemnification Cap under Section 9.5(b) (the "Indemnification Threshold"), whereupon the Indemnified Party shall be entitled to be paid the excess of the aggregate amount of all such Losses over the Indemnification Threshold, subject to the limitations on maximum amount of recovery set forth in Section 9.5(b) hereof; provided, that Losses related to or arising directly or indirectly out of any claims for indemnification made by the Buyer under Section 9.1 hereof with respect to (i) any inaccuracies in any representation or warranty made by the Sellers in Sections 3.5 or 3.6 hereof, or (ii) any breach of any covenant, obligation or undertaking of the Sellers under this Agreement (collectively, "Purchase Price Limited Claims"), shall not be subject to the limitations set forth in this Section 9.5(a). (b) The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 9 with respect to all claims for indemnification (excluding Purchase Price Limited Claims) shall not exceed ten percent (10%) of the Purchase Price. The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 9 with respect to all claims for indemnification, (including Purchase Price Limited Claims) shall not exceed the Purchase Price. (c) No Indemnifying Party shall be liable for any Losses pursuant to this Section 9 unless a written claim for indemnification in accordance with Section 9.4 hereof is given by the Indemnified Party to the Indemnifying Party with respect thereto within one (1) year after the Closing, except that this time limitation shall not apply to any Losses related to or arising directly or indirectly out of any Purchase Price Limited Claims, as to which in each case the applicable statute of limitations shall apply. 10. CASUALTY OR CONDEMNATION. In the event that prior to the Closing Date either the Improvements are damaged or destroyed, in whole or in part, by fire or other cause, or any portion of the Land or the Improvements becomes the subject of a condemnation proceeding by a public or quasi-public authority having the power of eminent domain, then the parties hereto shall proceed with the purchase and sale of the Interests contemplated under this Agreement, in which event (i) the Partnership shall be entitled to receive any insurance proceeds or condemnation awards and (ii) in the case of damage by an uninsured casualty, any post-closing cost of repair shall be credited against -14- the Purchase Price. Anything above to the contrary notwithstanding, (i) in the event of any damage by an uninsured casualty where the cost of repair is expected to exceed $250,000, Sellers shall have the right to terminate this Agreement within 10 days after the occurrence of the damage (and provided, that if such uninsured damage occurs less than 10 days before the scheduled Closing Date, the Closing Date shall be delayed until seven days after Sellers have either waived their right of termination in writing or the 10-day period for termination has expired without Sellers exercising their right of termination); and (ii) in the event of any damage (whether by an insured or an uninsured casualty) where the cost of repair is expected to exceed $500,000, Buyer shall have the right to terminate this Agreement within 10 days after the occurrence of the damage (and provided, that if such damage occurs less than 10 days before the scheduled Closing Date, the Closing Date shall be delayed until seven days after Buyer has either waived its right of termination in writing or the 10-day period for termination has expired without Buyer exercising its right of termination). 11. RECORDING PROHIBITED. This Agreement shall not be recorded in any Registry of Deeds or other office or place of public record. If the Buyer shall record this Agreement or cause or permit the same to be recorded, the Sellers may, at their option, elect to treat such act as a default and breach by Buyer under this Agreement. 12. TERMINATION. This Agreement may be terminated by either the Buyer or the Sellers in writing, without liability to the terminating party on account of such termination (provided the terminating party is not otherwise in default or in breach of this Agreement), if the "Closing" under the Tech Purchase Agreement shall not have occurred on or before October 24, 2003, unless such failure to close is a consequence of the breach of this Agreement, or the default on its obligations hereunder, by the terminating party. 13. TAX MATTERS. 13.1. Filing of Tax Returns and Payment of Taxes. The Sellers shall prepare and file (or cause to be prepared and filed) on a timely basis all income tax returns of the Partnership for taxable periods ending on or prior to or including the Closing Date that are due (taking all applicable extensions into account) or may be filed after the Closing Date. Such tax returns shall be prepared on a basis consistent with the Partnership's prior tax returns to the extent appropriate and permitted under all applicable tax laws, rules and regulations. With respect to each such tax return, the Buyer shall provide the Sellers with such powers of attorney as are necessary to enable the Sellers to file such tax return. -15- 13.2. Audits. The Sellers shall be solely responsible for defending any audit, litigation or other proceeding with respect to income taxes of the Partnership attributable to any taxable period (or portion thereof) prior to the Closing Date, and shall have the exclusive authority to negotiate, compromise and settle any such audit, litigation or other proceeding. The Sellers shall keep the Buyer reasonably informed as to the progress of any such audit, litigation or other proceeding, and shall, if the Buyer so requests in writing, permit the Buyer, at its expense, to participate in any such audit, litigation or other proceeding. 13.3. Retention of Records. For a period of seven (7) years after the Closing Date or such longer period as may be required by law, the Buyer shall retain and not destroy or dispose of all income tax returns (including supporting materials), books and records (including computer files) of, or with respect to the activities or income taxes of, the Partnership for all taxable periods or portions thereof ending on or prior to the Closing Date to the extent the Buyer or the Partnership received or had possession of such records on the Closing Date. Thereafter, the Buyer shall not destroy or dispose of any such income tax returns, books or records unless it first offers such tax returns, books and records to the Sellers in writing and the Sellers fail to accept such offer within sixty (60) days of its being made. 14. GENERAL. 14.1. Consent to Jurisdiction. The Sellers and the Buyer hereby irrevocably submit to the jurisdiction of any state or federal court sitting in the State of Rhode Island over any action or proceeding arising out of or relating to this Agreement, and the Sellers and the Buyer hereby irrevocably agree that all claims in respect to such action or proceeding may be heard and determined in such state or federal court. The Sellers and the Buyer hereby agree that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 14.2. Expenses. The Buyer shall pay and be responsible for all settlement expenses, except as set forth in the following sentence, in connection with the transfer of the Interests (and indirectly the Property), including, without limitation, recording fees, the costs of obtaining a binder or commitment from a title insurance company, the premium for any title insurance policy procured by the Buyer with respect to the Property, the costs of municipal lien certificates and utility readings, and all other costs and expenses incidental to or in connection with the sale of the Interests. All expenses of the preparation, execution and consummation of this Agreement, including, without limitation, attorneys', accountants' and outside advisers' fees and disbursements, shall be borne by the -16- party incurring such expenses, and Sellers and Buyer shall each be responsible for one-half of all transfer and personal property sales taxes, if any. 14.3. Notices. All notices, demands and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid, or if sent by overnight courier, or sent by written telecommunication, as follows: If to any Seller, to: Mr. David M. Wang 762 Water Street Fitchburg, MA 01420 Fax: 978-345-6397 with a copy sent contemporaneously to: Mr. James J. Carria Mr. William H. Nast Tech Industries, Inc. 85 Fairmount Street Woonsocket, RI 02895 Fax: 401-766-4742 and Lawrence I. Silverstein, Esq. Bingham McCutchen LLP 150 Federal Street Boston, MA 02110 Fax: 617-951-8736 If to the Buyer, to: Portola Packaging, Inc. 890 Faulstich Court San Jose, CA 95112 Attn: Mr. Jim Taylor, President Fax: 408-452-0122 -17- with a copy sent contemporaneously to: Themistocles G. Michos Vice President and General Counsel Portola Packaging, Inc. 720 York Street #103 San Francisco, CA 94110 Fax: 415-723-7203 Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by overnight courier, when receipted for, (c) if mailed, five (5) days after being mailed as described above, and (d) if sent by written telecommunication, when received. 14.4. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 14.5. Governing Law. The validity and construction of this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws (and not the choice-of-law rules) of the State of Rhode Island. 14.6. Sections and Section Headings. The headings of sections and subsections are for reference only and shall not limit or control the meaning thereof. 14.7. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other party hereto, except that Buyer shall have the right (without Sellers' consent) to assign its rights under this Agreement to any corporation, limited liability company or other entity controlled by or under common control with Buyer. 14.8. Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein. -18- 14.9. Further Assurances. The parties hereto agree, whether before or after Closing, to take such reasonable steps and execute such other and further documents (at no cost to Sellers if the request is from Buyer and no cost to Buyer if the request is from Sellers) as the other party may reasonably request to cause the terms and conditions contained herein and the purpose of this transaction to be carried into effect. 14.10. No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person, other than the Sellers and the Buyer and their respective shareholders or other equity holders, if any, any rights or remedies under or by reason of this Agreement. 14.11. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14.12. Satisfaction of Conditions Precedent. Each of the Sellers and the Buyer will use his or its commercially reasonable efforts to cause the satisfaction of the conditions precedent contained in this Agreement; provided, however, that nothing contained in this Section 14.12 shall obligate either party hereto to waive any right or condition under this Agreement. 14.13. Public Statements or Releases. Each of the parties hereto agrees that prior to the consummation of the Closing no party to this Agreement will make, issue or release any public announcement, statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without first obtaining the consent of the other party hereto. [Remainder of page intentionally left blank] -19- IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed and delivered as a sealed instrument as of the date and year first above written. BUYER: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR --------------------------------------- James Taylor President SELLERS: TECH INVESTMENTS, INC. By: /s/ DAVID M. WANG --------------------------------------- David M. Wang President THE HERBERT WANG 1988 IRREVOCABLE REAL ESTATE TRUST By: /s/ JAMES J. CARRIA --------------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN --------------------------------------- Lawrence I. Silverstein, Trustee -20- SCHEDULE A SELLERS' PRO RATA SHARES

SCHEDULE 3.9 Fairmount Realty Associates is a tenant under a lease with Nina Jacuk, for an apartment located at 41 Willow Ave., 1st Floor, Wallington, NJ 07057. The apartment is utilized by Dan Carter and Brett Torngren, employees of Tech Industries, Inc., with a rent payment of $1,500 per month and a term beginning July 1, 2003 and ending June 30, 2004. EXHIBIT A DESCRIPTION OF LAND AND IMPROVEMENTS 85 FAIRMOUNT STREET, WOONSOCKET, RHODE ISLAND That certain tract or parcel of land with all buildings and improvements thereon, but not including the fixtures, equipment, machinery and furniture located therein, situated on that certain tract or parcel of land situated on the northerly side of Fairmount Street in the City of Woonsocket, County of Providence, State of Rhode Island, bounded and described as follows: Beginning at the point of intersection of the northerly line of Fairmount Street with the southerly line of the location of the Providence & Worcester Railroad; thence northwesterly with said line of said Railroad to a corner; thence running northerly bounded easterly by said Railroad land a distance of 22.15 feet to a corner; thence running northwesterly with said southerly line of said Railroad land to the Blackstone River; thence down said River bounding on said River to the northerly line of Fairmount Street; thence right 81 degrees - 43' E with said northerly line of Fairmount Street 580 feet, more or less, to an angle in said Fairmount Street; thence N 36 degrees - 30' E with the northerly line of Fairmount Street 500 feet, more or less, to the point of beginning. However bounded and described, being the same premises conveyed to United States Rubber Company by Deed from Woonsocket Rubber Company dated February 1, 1917, and recorded in the Land Evidence Records of said City of Woonsocket in Book 100 at page 273 and also by Deed from Providence & Worcester Railroad Co. dated February 19, 1951, and recorded in said Land Evidence Records of said City of Woonsocket in Book 268 at page 128. EXCEPTING, however, that portion of said premises taken by the State of Rhode Island for part of Fairmount Street shown as Parcel 10, Sheet 3, State Plat 1604; ALSO EXCEPTING that portion deeded by United States Rubber Company to the City of Woonsocket for Flood Control Project recorded in Book 297 at page 489; ALSO EXCEPTING that portion of said premises conveyed to the City of Woonsocket by United States Rubber Company by Deed dated July 6, 1938, and recorded in Book 220 at page 448; Being the same premises conveyed to Fairmount Realty Associates by Quitclaim Deed from Tech Industries, Inc., dated March 24, 1983, and recorded in the Land Evidence Records of said City of Woonsocket on April 29, 1992 in Book 856 at page 261 and by Corrective Quitclaim Deed from Tech Industries, Inc., dated May 1, 1992. EXHIBIT B [To be transferred to one or more assignees depending on whether buyer wishes to keep the partnership intact] FAIRMOUNT REALTY ASSOCIATES ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (this "Agreement") dated as of this ___ day of ________, 2003, by and among (i) Portola Packaging, Inc., a Delaware corporation (the "Assignee"), and (ii) each of the general partners and limited partners (collectively, the "Assignors," and each individually, an "Assignor") of Fairmount Realty Associates, a Rhode Island limited partnership (the "Partnership"). WITNESSETH: WHEREAS, Assignors are the holders of all of the general partnership interests and limited partnership interests (the "Assigned Interests") of the Partnership; WHEREAS, the parties hereto are parties to that certain Equity Purchase Agreement, dated as of September 1, 2003 (the "Purchase Agreement") pursuant to which the Assignors agreed to sell and assign the Assigned Interests to the Assignee; WHEREAS, each Assignor wishes to transfer and assign all of such Assignor's Assigned Interests to Assignee, and Assignee desires to acquire the Assigned Interests; and WHEREAS, each Assignor intends that Assignee shall become a substitute general partner and a substitute limited partner of the Partnership (a "Substitute Partner") pursuant to the terms of the limited partnership agreement of the Partnership, dated as of _______, ______ as amended from time to time (the "Partnership Agreement"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the covenants and agreements made in the Purchase Agreement to which this Agreement is a part, the parties hereby agree as follows: 1. Each Assignor hereby assigns and transfers such Assignor's Assigned Interest to Assignee effective the date hereof, intending that Assignee shall become a Substitute Partner. Each Assignor acknowledges receipt of the agreed payment for the Assigned Interests. 2. Assignee hereby joins and becomes a party to the Partnership Agreement and assumes all of the obligations of each Assignor under the Partnership Agreement. Assignee accepts (a) the Assigned Interests and (b) all of the terms and provisions of the Partnership Agreement. 3. Assignee and Assignor shall execute, deliver, acknowledge, file, and record such other instruments as they each may reasonably require in order to further evidence or effect the assignment of the Assigned Interests hereunder. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. ASSIGNEE: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR --------------------------------------- James Taylor President ASSIGNORS: TECH INVESTMENTS, INC. By: /s/ DAVID M. WANG --------------------------------------- David M. Wang President THE HERBERT WANG 1988 IRREVOCABLE REAL ESTATE TRUST By: /s/ JAMES J. CARRIA --------------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN --------------------------------------- Lawrence I. Silverstein, Trustee EXHIBIT C Structural Escrow Agreement EXHIBIT D Environmental Escrow Agreement EX-2.04 6 j0327701exv2w04.txt EXHIBIT 2.04 EXHIBIT 2.04 84 FAIRMOUNT STREET LIMITED PARTNERSHIP EQUITY PURCHASE AGREEMENT THIS EQUITY PURCHASE AGREEMENT is dated as of this 1st day of September, 2003, by and among (i) Portola Packaging, Inc., a Delaware corporation (the "Buyer"), and (ii) each of the parties listed on Schedule A hereto (collectively, the "Sellers," and each individually, a "Seller"). WHEREAS, 84 Fairmount Street Limited Partnership, a Rhode Island limited partnership (the "Partnership"), is the owner of that certain parcel of land located at 84 Fairmount Street, Woonsocket, Rhode Island and more particularly described on Exhibit A hereto (the "Land"), together with the building(s), improvements and fixtures now situated on the Land (the "Improvements") as set forth on said Exhibit A (the Land, together with the Improvements, being referred to herein collectively as the "Property"); WHEREAS, the Sellers own all of the partnership interests in the Partnership (the "Interests"); and WHEREAS, the Sellers desire to sell all of the Interests to the Buyer, and the Buyer desires to purchase all of the Interests from the Sellers, upon the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties hereto agree as follows: 1. PURCHASE AND SALE OF INTERESTS. 1.1. Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, the Sellers agree to sell to the Buyer, and the Buyer agrees to purchase from the Sellers, at the Closing (as defined to in Section 2 hereof), all of the Interests, in exchange for the payment of the Purchase Price (as defined in Section 1.2 hereof). 1.2. Delivery of Purchase Price. At the Closing, the Buyer shall pay to the Sellers, as the aggregate purchase price for the Interests (the "Purchase Price"), an amount equal to $626,350 (allocated for all tax purposes $242,310 to land and $384,040 to improvements) plus a $2,250 security deposit. The payment of the Purchase Price shall be made to the Sellers pro rata in accordance with the percentages specified as their respective pro rata shares opposite their names on Schedule A hereto (as to each Seller, such Seller's "Pro Rata Share"), by wire transfer of immediately available funds. 2. CLOSING. 2.1. Time and Place. The closing of the purchase and sale of the Interests (the "Closing") shall be held at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts, at 10:00 a.m. on September 15, 2003 or at such other time, date and place as the Buyer and the Sellers may agree. The date on which the Closing is actually held hereunder is referred to herein as the "Closing Date." 2.2. Transactions at Closing. At the Closing, in addition to any other instruments or documents referred to herein: (a) Each of the Sellers shall deliver to the Buyer, and the Buyer shall deliver to each of the Sellers, an executed Assignment and Assumption of Interests for and with respect to each of the Interests, in the form of Exhibit B hereto. The Interests shall be assigned and transferred to Buyer or to Buyer's nominee or nominees. (b) The Buyer shall deliver the Purchase Price to the Sellers by wire transfer of immediately available funds. 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers hereby jointly and severally represents and warrants to the Buyer as follows: 3.1. Organization; Authority. The Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Rhode Island. The Sellers have delivered to the Buyer complete and correct copies of the Partnership's certificate of limited partnership and limited partnership agreement and all amendments thereto. The Partnership has all requisite power and authority to own or lease and operate its properties and to carry on its business as such business is now conducted. 3.2. Right to Sell Interests; Approvals; Binding Effect. The Sellers have all requisite power and full legal right to enter into this Agreement, to perform all of their agreements and obligations hereunder in accordance with its terms, and to sell to the Buyer all of the Interests. Each Seller has obtained all necessary authorizations and approvals required for the execution and delivery of the Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each Seller and -2- constitutes the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as the enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 3.3. Non-Contravention. The execution and delivery by each Seller of this Agreement, and the consummation by such Seller of the transactions contemplated hereby, will not constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of such Seller pursuant to (a) any agreement or instrument to which such Seller is a party or by which such Seller or any of such Seller's property is bound or to which such Seller or any of such Seller's property is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which such Seller is subject. 3.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by each Seller of this Agreement or for the consummation by each Seller of the transactions contemplated hereby. 3.5. Capitalization. All of the outstanding partnership interests in the Partnership are owned of record by the Sellers as set forth on Schedule A hereto. All of the Interests will be sold by the Sellers to the Buyer pursuant hereto and are validly issued and outstanding. There are no commitments for the purchase or sale of, and no options, warrants or other rights to subscribe for or purchase, any securities of or interests in the Partnership. 3.6. Title to Interests, Liens. Each Seller has, and as of the consummation of the Closing the Buyer will have, sole record and beneficial ownership of all of the Interests set forth opposite such Seller's name on Schedule A hereto, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto. 3.7. Broker. Except with respect to Edgeview Partners LLC, whose fees in connection with the transactions contemplated hereby shall be the sole responsibility of the Sellers, the Sellers have not retained, utilized or been represented by any broker, agent, finder or intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 3.8. Litigation. There is no litigation pending or, to Sellers' actual knowledge, threatened, against or affecting the Partnership, Sellers, or the -3- Property or any part thereof (including eminent domain or condemnation proceedings), or which would prevent or materially hinder or impair Sellers' performance of its obligations under this Agreement. 3.9. Encumbrances. There are no possessory interests in, or obligations running with title to, the Property, other than the occupancy rights of Tech Industries, Inc., the easements, rights-of-way and other matters of record, any encroachments or boundary discrepancies that would be revealed by an accurate survey and all Permitted Encumbrances (as defined below). The Partnership is subject to no obligations or liabilities (fixed or contingent) that will survive the Closing other than those of record running with title to the Property, the Tech Industries, Inc. lease, property taxes and assessments that are not delinquent, all Permitted Encumbrances. 3.10. Compliance. To Sellers' actual knowledge, the Property (including the Improvements) conforms in all material respects to, and is being operated in material compliance with, all applicable laws, regulations, permits and approvals, including laws governing zoning, land use and the subdivision of property. 3.11. Environmental Conditions. To Sellers' actual knowledge, other than as disclosed in the report identified in Section 5.12(a) of the Tech Purchase Agreement, no hazardous or toxic substance of any kind has been brought onto, stored or used at or upon, or released upon the Property or any part thereof, in violation of any law or regulation or as to require clean-up or remediation under any law or regulation. As used in this Section 3.11, a substance shall be deemed "hazardous" or "toxic" if liability for its removal or cleanup could or might be imposed under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) or any similar statute or law. 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer hereby represents and warrants to the Sellers as follows: 4.1. Organization; Authority. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2. Corporate Approval; Binding Effect. The Buyer has all requisite power and full legal right to enter into this Agreement, and to perform all of the Buyer's agreements and obligations hereunder, in accordance with its terms. The Buyer has obtained all necessary corporate or organizational authorizations and approvals required for the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has -4- been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by general principles of equity. 4.3. Non-Contravention. The execution and delivery by the Buyer of this Agreement, and the consummation by the Buyer of the transactions contemplated hereby, will not (a) violate or conflict with any provisions of the charter documents or By-Laws or other constituent documents of the Buyer, each as amended to date; or (b) constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any lien upon any property of the Buyer pursuant to (i) any agreement or instrument to which the Buyer is a party or by which the Buyer or any of its properties is bound, or to which the Buyer or any of its properties is subject, or (ii) any statute, judgment, decree, order, regulation or rule of any court or governmental authority to which the Buyer is subject. 4.4. Governmental Consents. No consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery by the Buyer of this Agreement or for the consummation by the Buyer of the transactions contemplated hereby. 4.5. Broker. The Buyer has not retained, utilized or been represented by any broker, agent, finder or other intermediary in connection with the negotiation or consummation of the transactions contemplated by this Agreement. 5. CONDUCT OF BUSINESS BY THE PARTNERSHIP PENDING CLOSING. Each Seller covenants and agrees that, from and after the date of this Agreement and until the Closing, except as otherwise specifically consented to or approved by the Buyer in writing: 5.1. Carry on in Regular Course. The Sellers shall cause the Partnership to operate and maintain the Property substantially in the same manner consistent with past practice, and to maintain in effect all current insurance it currently maintains affecting or covering the Property. Neither the Sellers nor the Partnership shall voluntarily impose upon the Property any new lien (including, without limitation, the extension or amendment of any lien on the Property existing as of the date of this Agreement), easement, or other encumbrance or obligation, nor shall the Sellers or the Partnership incur any additional debt obligation with respect to the Partnership whether or not secured by the Property, that will not be released and discharged on or before the Closing Date. -5- 5.2. Distributions. The Partnership shall be permitted to distribute to the Sellers all cash and cash equivalents of the Partnership. 6. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Buyer): 6.1. Representations and Warranties True at Closing. The representations and warranties made by the Sellers in or pursuant to this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 6.2. Compliance with Agreements. The Sellers shall have performed and complied with all of their obligations under this Agreement to be performed or complied with by them on or prior to the Closing Date. 6.3. Certificate of Sellers. The Sellers shall have delivered to the Buyer in writing, at and as of the Closing, a certificate duly executed by the Sellers, in form and substance reasonably satisfactory to the Buyer and its counsel, to the effect that the conditions in each of Sections 6.1 and 6.2 hereof have been satisfied. 6.4. Closing of Tech Purchase Agreement. The "Closing" under that certain Stock Purchase Agreement, dated as of September 1, 2003 (the "Tech Purchase Agreement"), by and among Herbert Wang and James J. Carria and Lawrence I. Silverstein, as trustees of The Herbert Wang 1988-1 Irrevocable Trust, and the Buyer, with respect to the purchase and sale of all of the outstanding capital stock of Tech Industries, Inc., a Rhode Island corporation, shall have occurred. 6.5. Due Diligence. Beginning on the date of this Agreement and continuing until September 10, 2003 (the "Due Diligence Period"), Buyer (and any agents and consultants retained by Buyer) shall have the right at such reasonable times as Buyer and the Sellers may determine to examine and inspect the Property, to investigate the condition of title, zoning, value and usefulness of the Property, to review and examine the Partnership's financial statements, books and records related to the Property (including maintenance thereof) and the operation of the Property, and to determine the suitability of the Property for the use and further development contemplated by Buyer. It is anticipated that during this period Buyer, both directly and through its agents and consultants, -6- including its structural engineer ("Buyer's Engineer"), will at such reasonable times and such reasonable manner as Buyer and Sellers may determine conduct physical examinations of the Property (including improvements thereto and facilities thereon, and also including environmental review, soil and ground water sampling, including ground penetrations required therefor, and any material and structural testing required to evaluate and inspect the improvements on the Property), and will examine the condition of title, zoning and the value of the Property. Buyer shall also have the right, during this period and at Buyer's expense, to obtain a current or updated survey of the Property. It is understood that Buyer and its agents and consultants shall have access to the Property and all books and records of the Partnership, in each case, at such reasonable times as Buyer and Sellers may determine, for the purpose of conducting its investigation. It shall be a condition of Closing and of Buyer's obligations to purchase the Property that Buyer, in its sole discretion, has approved the physical condition of the Property (including without limitation its environmental condition) and the condition of title and zoning, and has determined that the use, operation and development limitations and opportunities of the Property are reasonably satisfactory to Buyer (such conditions are referred to herein as the "Due Diligence Conditions"). Buyer shall have the right to notify Sellers in writing at any time prior to the expiration of the Due Diligence Period that the Due Diligence Conditions are not satisfied, in which event this Agreement shall automatically be terminated with no further liability of either party hereunder except as otherwise expressly provided in this Agreement. Notwithstanding the foregoing, (a) Buyer shall have no right to so notify Sellers that the Due Diligence Conditions are not satisfied unless the written report of Buyer's Engineer (the "Engineer's Report") delivered to Buyer and Sellers on or prior to the Closing Date has disclosed defects or problems with the physical condition of the Property which require at least, in any individual case or in the aggregate, $375,000 (the "Minimum Defects Amount") to remedy same (herein, "Material Physical Condition Defects") (exclusive of, and without regards to, for purposes of this calculation, each and every individual defect or problem relating to such physical condition less than $5,000), and (b) notwithstanding the existence of Material Physical Condition Defects, Buyer shall still not have the right to so notify Sellers that the Due Diligence Conditions are not satisfied on account thereof if Sellers deposit into escrow, pursuant to the terms of the Escrow Agreement substantially in the form of Exhibit C hereto (the "Structural Escrow Agreement"), an amount not to exceed $375,000 to be used to remedy the Material Physical Condition Defects in excess of the Minimum Defects Amount as reasonably specified in the Engineer's Report, upon the terms and conditions more particularly set forth in the Structural Escrow Agreement, upon which the Due Diligence Conditions shall be deemed satisfied. Should, however, Buyer fail to so notify Sellers as aforesaid by the end of the Due -7- Diligence Period, the Property shall be deemed satisfactory and the Due Diligence Conditions set forth herein shall be deemed satisfied. In connection with the foregoing, Buyer shall not communicate with employees of Tech Industries, Inc., other than James J. Carria and William Nast, without the prior written consent of Sellers, and Sellers shall have the right to have a representative present (who shall be either James J. Carria or William Nast) at and to participate in any meetings, telephone discussions or other forms of communication between Buyer and any employee or other third party (including governmental agencies) with respect to the Property. Buyer agrees that it will indemnify and hold Sellers harmless from and against all damage to persons or property and all related actions, claims, penalties, damages and expenses, including reasonable attorneys fees and court costs, based upon or arising out of the activities of Buyer and its agents and consultants or any of their respective inspectors, contractors, or affiliates while on or about the Property or the land adjacent thereto. Buyer agrees that all information in connection with the above-referenced inspections, examinations or tests shall be kept confidential by Buyer and its inspectors, consultants, contractors, agents, investors, lenders, and affiliates except to the extent otherwise required by applicable law. 6.6. Title. A title company reasonably designated by Buyer shall have issued or shall be fully prepared to issue an Owners ALTA policy or binder of title insurance (at Buyer's option) in form and substance reasonably satisfactory to Buyer, including a non-imputation endorsement and such other endorsements and additional coverages as Buyer may reasonably request, in the full amount of the Purchase Price, showing fee title fully vested in the Partnership subject only to (i) property taxes and assessments not delinquent, (ii) all matters which would be shown by an accurate survey, (iii) all matters of record and all Permitted Encumbrances other than deeds of trust, mortgages or other liens for security purposes (other than liens for non-delinquent taxes and assessments), (iv) the occupancy rights of Tech Industries, Inc., and (v) statutory or regulatory requirements affecting the Property. It is understood that Sellers shall, as a covenant and a condition to the Closing, remove all deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property. Notwithstanding Section 6.5 of this Agreement, if Buyer identifies any title matters, noted as exceptions on a title commitment which Buyer shall obtain during the Due Diligence Period (the "Title Commitment"), that are not acceptable to Buyer in Buyer's sole discretion, Buyer shall give written notice to Sellers (the "Title Notice") within the Due Diligence Period which identifies such title matters that are not acceptable. If Buyer fails to give the Title Notice to Sellers within the Due Diligence Period then all such exceptions, excluding any -8- deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property which Sellers are otherwise obligated to remove, shall be deemed Permitted Encumbrances. If the Title Notice sets forth title matters that are not acceptable to the Buyer, then the Sellers, subject to the limitations below shall use reasonable efforts to remedy the title matters raised by the Buyer in the Title Notice or to make arrangements pursuant to which such title matters will be remedied on the Closing Date (or promptly thereafter in accordance with customary conveyancing procedures). If despite such reasonable efforts, Sellers are unable either to remedy such title matters or make arrangements pursuant to which such title matters will be so remedied before the earlier of the Closing Date or fifteen (15) days after the Sellers' receipt of the Title Notice, then Sellers shall give notice to the Buyer identifying the title matters that Sellers will not be able to remedy before the Closing Date, and this Agreement shall terminate unless Buyer, within fifteen (15) days after the expiration of such period but in any event before the Closing Date, gives notice to Sellers waiving the objections to title set forth in the Title Notice that Sellers will not be able to remedy, in which event any such matter objected to that Sellers will not be able to remedy shall be deemed to be a Permitted Exception. Sellers shall not, however, be obligated to expend more than $10,000.00 to correct title defects hereunder, not including funds necessary to pay monetary encumbrances. 6.7. Closing Documents. Sellers shall have executed and delivered to Buyer, or shall be fully ready, willing and able to execute and deliver to Buyer at or before Closing, (i) the Assignment and Assumption of Interests contemplated in Section 2.2(a) above; (ii) a certificate certifying that Sellers are not foreign persons within the meaning of the Foreign Investment in Real Property Tax Act of 1980, and such other certificates as may reasonably be requested by Buyer for the purpose of confirming that Buyer is under no obligation to withhold any portion of the purchase price under federal or state law; and (iii) a standard affidavit indemnifying against claims of workmen and materialmen arising from activities undertaken prior to the Closing and (iv) such other assignments, transfer documents and certificates as Buyer may reasonably request. 6.8. Structural Escrow Agreement. If required pursuant to Section 6.5 hereof, the Sellers and the escrow agent under the Structural Escrow Agreement shall have entered into the Structural Escrow Agreement. 6.9. Environmental Escrow Agreement. The Sellers and the equityholders (the "Fairmount Realty Sellers") of Fairmount Realty Associates ("Fairmount Realty Associates") shall have entered into the Escrow Agreement substantially in the form of Exhibit D hereto (the "Environmental Escrow Agreement"), with the escrow agent thereunder, pursuant to which the Sellers and the Fairmount -9- Realty Sellers shall have deposited into escrow the aggregate sum of $200,000 to be used to remedy environmental problems (if any) located at the Property and at the property owned by Fairmount Realty Associates located at 85 Fairmount Street, Woonsocket, Rhode Island. 7. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The obligation of the Sellers to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance thereof is not waived in writing by the Sellers): 7.1. Representations and Warranties True at Closing. The representations and warranties made by the Buyer in this Agreement shall be true and correct at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date. 7.2. Compliance with Agreements. The Buyer shall have performed and complied with all of its obligations under this Agreement that are to be performed or complied with by it at or prior to the Closing. 7.3. Certificate of Buyer. The Buyer shall have delivered to the Sellers in writing, at and as of the Closing, a certificate duly executed by the President of the Buyer, in form and substance reasonably satisfactory to the Sellers and their counsel, to the effect that the conditions in each of Sections 7.1 and 7.2 hereof have been satisfied. 7.4. Closing of Tech Purchase Agreement. The "Closing" under the Tech Purchase Agreement shall have occurred. 7.5. Structural Escrow Agreement. If required pursuant to Section 6.5 hereof, the Buyer and the escrow agent under the Structural Escrow Agreement shall have entered into the Structural Escrow Agreement. 7.6. Environmental Escrow Agreement. The Buyer and the escrow agent under the Environmental Escrow Agreement shall have entered into the Environmental Escrow Agreement. 8. LIMITATIONS REGARDING THE PROPERTY. 8.1. Limitations. The Buyer and the Sellers agree that, except for the express warranties, representations and agreements set forth in this Agreement or the Tech Purchase Agreement, the Buyer is acquiring the Property (indirectly through its acquisition of the Interests) in its "AS IS" condition, WITH ALL FAULTS, IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED. -10- Except for the express warranties, representations and agreements in this Agreement and the Tech Purchase Agreement, none of the Sellers nor any shareholders, beneficiaries, trustees, directors, officers, agents, representatives or employees of the Sellers, have made any representations or warranties, direct or indirect, oral or written, express or implied, to the Buyer or any agents, representatives or employees of the Buyer, with respect to the condition of the Property, its fitness for any particular purpose, or its compliance with any laws, and the Buyer is not aware of and does not rely upon any such representation to any other party. The Buyer expressly acknowledges that the Purchase Price reflects that, except for the express warranties, representations and agreements set forth in this Agreement or the Tech Purchase Agreement, the Buyer is acquiring the Property (indirectly through its acquisition of the Interests) in an "AS IS" condition. The Buyer acknowledges that it has had and will have under this Agreement the opportunity to make such inspections (or have such inspections made by consultants) as it desires of the Property and all factors relevant to its use, including, without limitation, the interior, exterior and structure of all Improvements, and the condition of soils and subsurfaces (particularly with respect to the presence or absence of hazardous substances). 8.2. Permitted Exceptions. Subject to Buyer's title due diligence and termination rights under Sections 6.5 and 6.6 of this Agreement, the Buyer hereby agrees it is acquiring the Property (indirectly through its acquisition of the Interests), subject to the following (each a "Permitted Encumbrance"): (a) All exception items not otherwise objected to by Buyer pursuant to Section 6.6 of this Agreement and as shown on the Title Commitment, possible title objections, survey objections, and any defects in or to title to the Property or other matters affecting or relating to the title to, or the survey of, or the condition of, the Property which existed as of the Closing Date, except to the extent any of the same are inconsistent with Sellers' warranties in Section 3.8 above, and except that Sellers shall (in accordance with Section 6.6) remove all deeds of trust, mortgages and other liens for monetary obligations of Sellers or the Partnership encumbering the Property. Notwithstanding the foregoing, any material encumbrance to title (other than an encumbrance for a monetary obligation Sellers are obligated to remove) arising or recorded after the effective date of the Title Commitment and before the Closing Date shall give Buyer the option, on the Closing Date, to either (i) terminate this Agreement by written notice to Sellers or (ii) close hereunder, in which event such encumbrance will be a Permitted Encumbrance. (b) The lien of non-delinquent real and personal property taxes and assessments. -11- (c) Discrepancies, conflicts in boundary lines, shortages in area, encroachments, and any state of facts which an accurate survey of the Property would disclose and which are not shown by the public records. (d) Easements or claims of easements shown by the public records. 8.3. Release. Except for the warranties, representations, agreements and other obligations of Sellers under this Agreement or the Tech Purchase Agreement (all of which shall survive the Closing), Buyer hereby remises and releases the Sellers and their respective shareholders, beneficiaries, trustees, directors, officers, agents, representatives and employees, from any and all claims, liabilities, losses, damages, costs and expenses that the Buyer may have relating to or arising from (a) the condition of the Property at any time, whether before or after the Closing Date, including, without limitation, the presence of any asbestos, oil or hazardous substance, or (b) any other matter pertaining to the Property. The release set forth in this Section 8.3 shall survive the Closing or the termination of this Agreement for any reason whatsoever. 9. INDEMNIFICATION. 9.1. Indemnity by the Sellers. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 9.5 hereof, each Seller agrees to indemnify and hold the Buyer and its directors, officers, employees and Affiliates (as defined in the Tech Purchase Agreement) harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including, without limitation, the fees and disbursements of counsel (collectively, "Losses"), related to or arising, directly or indirectly, out of any failure or any breach by the Sellers of any representation or warranty, covenant, obligation or undertaking made by the Sellers in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. 9.2. Indemnity by the Buyer. Subject to the overall limitations, minimum amounts and time limitations set forth in Section 9.5 hereof, the Buyer agrees to indemnify and hold the Sellers and its Affiliates harmless from and with respect to any and all Losses related to or arising from, directly or indirectly, any failure or any breach by the Buyer of any representation or warranty, covenant, obligation or undertaking made by the Buyer in this Agreement, any Schedule or Exhibit hereto, or any other certificate or other instrument delivered pursuant hereto. -12- 9.3. Claims. (a) Notice. Any party seeking indemnification hereunder (the "Indemnified Party") shall notify the other party hereto (the "Indemnifying Party") of any action, suit, proceeding, demand or breach (a "Claim") with respect to which the Indemnified Party claims indemnification hereunder, which notification shall be made within ten (10) days after the Indemnified Party becomes aware of any such Claim. (b) Third Party Claims. If such Claim relates to any action, suit, proceeding or demand instituted against the Indemnified Party by a third party (a "Third Party Claim"), the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim after receipt of notice of such claim from the Indemnified Party. Within thirty (30) days after receipt of notice of a particular matter from the Indemnified Party, the Indemnifying Party may assume the defense of such Third Party Claim, provided it does so at its expense, in which case the Indemnifying Party shall have the authority to negotiate, compromise and settle such Third Party Claim, if and only if the following conditions are satisfied: (i) the Indemnifying Party shall have confirmed in writing that it is obligated hereunder to indemnify the Indemnified Party with respect to such Third Party Claim; and (ii) such Third Party Claim involves only money damages and does not seek an injunction or other equitable relief. The Indemnified Party shall retain the right to employ its own counsel and to participate in the defense of any Third Party Claim, the defense of which has been assumed by the Indemnifying Party pursuant hereto, but the Indemnified Party shall bear and shall be solely responsible for its own costs and expenses in connection with such participation. 9.4. Method and Manner of Paying Claims. With respect to any liquidated Claim or other claim that has been the subject of a notice under Section 9.3(a) above, if within (30) thirty days after the receipt of written notice thereof under Section 9.3(a) hereof the Indemnifying Party has not contested such Claim in writing, the Indemnifying Party will pay the full amount thereof within ten (10) days after the expiration of such period. Any amount owed by an Indemnifying Party hereunder with respect to any Claim may be set-off by the Indemnified Party against any amounts owed by the Indemnified Party to any Indemnifying Party. -13- 9.5. Limitations on Indemnification. (a) No Indemnifying Party shall be required to indemnify an Indemnified Party hereunder except to the extent that the aggregate amount of Losses for which the Indemnified Party is otherwise entitled to indemnification pursuant to this Section 9 exceeds an amount equal to ten percent (10%) of the Indemnification Cap under Section 9.5(b) (the "Indemnification Threshold"), whereupon the Indemnified Party shall be entitled to be paid the excess of the aggregate amount of all such Losses over the Indemnification Threshold, subject to the limitations on maximum amount of recovery set forth in Section 9.5(b) hereof; provided, that Losses related to or arising directly or indirectly out of any claims for indemnification made by the Buyer under Section 9.1 hereof with respect to (i) any inaccuracies in any representation or warranty made by the Sellers in Sections 3.5 or 3.6 hereof, or (ii) any breach of any covenant, obligation or undertaking of the Sellers under this Agreement (collectively, "Purchase Price Limited Claims"), shall not be subject to the limitations set forth in this Section 9.5(a). (b) The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 9 with respect to all claims for indemnification (excluding Purchase Price Limited Claims) shall not exceed ten percent (10%) of the Purchase Price. The aggregate amount of Losses payable by the Sellers on the one hand, and the Buyer on the other hand, pursuant to this Section 9 with respect to all claims for indemnification, (including Purchase Price Limited Claims) shall not exceed the Purchase Price. (c) No Indemnifying Party shall be liable for any Losses pursuant to this Section 9 unless a written claim for indemnification in accordance with Section 9.4 hereof is given by the Indemnified Party to the Indemnifying Party with respect thereto within one (1) year after the Closing, except that this time limitation shall not apply to any Losses related to or arising directly or indirectly out of any Purchase Price Limited Claims, as to which in each case the applicable statute of limitations shall apply. 10. CASUALTY OR CONDEMNATION. In the event that prior to the Closing Date either the Improvements are damaged or destroyed, in whole or in part, by fire or other cause, or any portion of the Land or the Improvements becomes the subject of a condemnation proceeding by a public or quasi-public authority having the power of eminent domain, then the parties hereto shall proceed with the purchase and sale of the Interests contemplated under this Agreement, in which event (i) the Partnership shall be entitled to receive any insurance proceeds or condemnation awards and (ii) in the case of damage by an -14- uninsured casualty, any post-closing cost of repair shall be credited against the Purchase Price. Anything above to the contrary notwithstanding, (i) in the event of any damage by an uninsured casualty where the cost of repair is expected to exceed $250,000, Sellers shall have the right to terminate this Agreement within 10 days after the occurrence of the damage (and provided, that if such uninsured damage occurs less than 10 days before the scheduled Closing Date, the Closing Date shall be delayed until seven days after Sellers have either waived their right of termination in writing or the 10-day period for termination has expired without Sellers exercising their right of termination); and (ii) in the event of any damage (whether by an insured or an uninsured casualty) where the cost of repair is expected to exceed $500,000, Buyer shall have the right to terminate this Agreement within 10 days after the occurrence of the damage (and provided, that if such damage occurs less than 10 days before the scheduled Closing Date, the Closing Date shall be delayed until seven days after Buyer has either waived its right of termination in writing or the 10-day period for termination has expired without Buyer exercising its right of termination). 11. RECORDING PROHIBITED. This Agreement shall not be recorded in any Registry of Deeds or other office or place of public record. If the Buyer shall record this Agreement or cause or permit the same to be recorded, the Sellers may, at their option, elect to treat such act as a default and breach by Buyer under this Agreement. 12. TERMINATION. This Agreement may be terminated by either the Buyer or the Sellers in writing, without liability to the terminating party on account of such termination (provided the terminating party is not otherwise in default or in breach of this Agreement), if the "Closing" under the Tech Purchase Agreement shall not have occurred on or before October 24, 2003, unless such failure to close is a consequence of the breach of this Agreement, or the default on its obligations hereunder, by the terminating party. 13. TAX MATTERS. 13.1. Filing of Tax Returns and Payment of Taxes. The Sellers shall prepare and file (or cause to be prepared and filed) on a timely basis all income tax returns of the Partnership for taxable periods ending on or prior to or including the Closing Date that are due (taking all applicable extensions into account) or may be filed after the Closing Date. Such tax returns shall be prepared on a basis consistent with the Partnership's prior tax returns to the extent appropriate and permitted under all applicable tax laws, rules and regulations. With respect to each such tax return, the Buyer shall provide the Sellers with such powers of attorney as are necessary to enable the Sellers to file such tax return. -15- 13.2. Audits. The Sellers shall be solely responsible for defending any audit, litigation or other proceeding with respect to income taxes of the Partnership attributable to any taxable period (or portion thereof) prior to the Closing Date, and shall have the exclusive authority to negotiate, compromise and settle any such audit, litigation or other proceeding. The Sellers shall keep the Buyer reasonably informed as to the progress of any such audit, litigation or other proceeding, and shall, if the Buyer so requests in writing, permit the Buyer, at its expense, to participate in any such audit, litigation or other proceeding. 13.3. Retention of Records. For a period of seven (7) years after the Closing Date or such longer period as may be required by law, the Buyer shall retain and not destroy or dispose of all income tax returns (including supporting materials), books and records (including computer files) of, or with respect to the activities or income taxes of, the Partnership for all taxable periods or portions thereof ending on or prior to the Closing Date to the extent the Buyer or the Partnership received or had possession of such records on the Closing Date. Thereafter, the Buyer shall not destroy or dispose of any such income tax returns, books or records unless it first offers such tax returns, books and records to the Sellers in writing and the Sellers fail to accept such offer within sixty (60) days of its being made. 14. GENERAL. 14.1. Consent to Jurisdiction. The Sellers and the Buyer hereby irrevocably submit to the jurisdiction of any state or federal court sitting in the State of Rhode Island over any action or proceeding arising out of or relating to this Agreement, and the Sellers and the Buyer hereby irrevocably agree that all claims in respect to such action or proceeding may be heard and determined in such state or federal court. The Sellers and the Buyer hereby agree that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 14.2. Expenses. The Buyer shall pay and be responsible for all settlement expenses, except as set forth in the following sentence, in connection with the transfer of the Interests (and indirectly the Property), including, without limitation, recording fees, the costs of obtaining a binder or commitment from a title insurance company, the premium for any title insurance policy procured by the Buyer with respect to the Property, the costs of municipal lien certificates and utility readings, and all other costs and expenses incidental to or in connection with the sale of the Interests. All expenses of the preparation, execution and consummation of this Agreement, including, without limitation, attorneys', -16- accountants' and outside advisers' fees and disbursements, shall be borne by the party incurring such expenses, and Sellers and Buyer shall each be responsible for one-half of all transfer and personal property sales taxes, if any. 14.3. Notices. All notices, demands and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid, or if sent by overnight courier, or sent by written telecommunication, as follows: If to any Seller, to: Mr. David M. Wang 762 Water Street Fitchburg, MA 01420 Fax: 978-345-6397 with a copy sent contemporaneously to: Mr. James J. Carria Mr. William H. Nast Tech Industries, Inc. 85 Fairmount Street Woonsocket, RI 02895 Fax: 401-766-4742 and Lawrence I. Silverstein, Esq. Bingham McCutchen LLP 150 Federal Street Boston, MA 02110 Fax: 617-951-8736 If to the Buyer, to: Portola Packaging, Inc. 890 Faulstich Court San Jose, CA 95112 Attn: Mr. Jim Taylor, President Fax: 408-452-0122 -17- with a copy sent contemporaneously to: Themistocles G. Michos Vice President and General Counsel Portola Packaging, Inc. 720 York Street #103 San Francisco, CA 94110 Fax: 415-723-7203 Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by overnight courier, when receipted for, (c) if mailed, five (5) days after being mailed as described above, and (d) if sent by written telecommunication, when received. 14.4. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and shall not be amended except by a written instrument hereafter signed by all of the parties hereto. 14.5. Governing Law. The validity and construction of this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws (and not the choice-of-law rules) of the State of Rhode Island. 14.6. Sections and Section Headings. The headings of sections and subsections are for reference only and shall not limit or control the meaning thereof. 14.7. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other party hereto, except that Buyer shall have the right (without Sellers' consent) to assign its rights under this Agreement to any corporation, limited liability company or other entity controlled by or under common control with Buyer. 14.8. Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein. -18- 14.9. Further Assurances. The parties hereto agree, whether before or after Closing, to take such reasonable steps and execute such other and further documents (at no cost to Sellers if the request is from Buyer and no cost to Buyer if the request is from Sellers) as the other party may reasonably request to cause the terms and conditions contained herein and the purpose of this transaction to be carried into effect. 14.10. No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person, other than the Sellers and the Buyer and their respective shareholders or other equity holders, if any, any rights or remedies under or by reason of this Agreement. 14.11. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14.12. Satisfaction of Conditions Precedent. Each of the Sellers and the Buyer will use his or its commercially reasonable efforts to cause the satisfaction of the conditions precedent contained in this Agreement; provided, however, that nothing contained in this Section 14.12 shall obligate either party hereto to waive any right or condition under this Agreement. 14.13. Public Statements or Releases. Each of the parties hereto agrees that prior to the consummation of the Closing no party to this Agreement will make, issue or release any public announcement, statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without first obtaining the consent of the other party hereto. [Remainder of page intentionally left blank] -19- IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed and delivered as a sealed instrument as of the date and year first above written. BUYER: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR --------------------------------------- James Taylor President SELLERS: TECH INVESTMENTS, INC. By: /s/ DAVID M. WANG --------------------------------------- David M. Wang President /s/ DAVID M. WANG ------------------------------------------- David M. Wang /s/ SCOTT E. WANG ------------------------------------------- Scott E. Wang /s/ BETH A. NAST ------------------------------------------- Beth A. Nast -20- SCHEDULE A SELLERS' PRO RATA SHARES

EXHIBIT A DESCRIPTION OF LAND AND IMPROVEMENTS 84 FAIRMOUNT STREET, WOONSOCKET, RHODE ISLAND A certain lot or parcel of land with all buildings and other improvements thereon situated on the southerly and easterly side of Fairmount Street, the southwesterly side of Water Street and the westerly side of Canal Street in the City of Woonsocket, County of Providence and State of Rhode Island bounded and described as follows: Said parcel is more particularly bounded and described as follows, viz; - Beginning at a point on the southerly side of aforesaid Fairmount Street at the northwesterly corner of former Edwards Street and being the most northwesterly corner of parcel herein described; - Thence: N 77-28'-00" E, with the aforesaid southerly side of Fairmount Street three hundred forty-three and twenty-seven one hundredths (343.27) feet; - Thence: N 30-14'-00" E, still continuing with the aforesaid Fairmount Street three hundred six and seventy-one one hundredths (306.71) feet to the intersection of the southwesterly side of aforesaid Water Street; - Thence: S 59-46'-00" E, with the southwesterly side of aforesaid Water Street three hundred ninety-four and thirty-three one hundredths (394.33) feet to the westerly side of aforesaid Canal Street; - Thence: S 30-14'-00" W, with the westerly side of aforesaid Canal Street eighty-three and thirty-two one hundredths (83.32) feet; - Thence: S 33-34'-00" E, crossing aforesaid Canal Street and land of Imperial Packaging Corporation two hundred ninety-four and eighty-four one hundredths (294.84) feet to land of City of Woonsocket; - Thence: S 64-31'-00" W, with aforesaid City of Woonsocket land one hundred ninety-three and eleven one hundredths (193.11) feet; - Thence: N 59-37'-00" W, forty-four and nineteen one hundredths (44.19) feet; - Thence: S 71-37'-00" W, one hundred seventy-nine and fifty-six one hundredths (179.56) feet; - Thence: N 60-10'-00" W, sixteen and seventy-five one hundredths (16.75) feet; - Thence: N 60-02'-26" W, fifty-four and fifty-three one hundredths (54.53) feet; - Thence: S 71-37'-00" W, one hundred eighty six and eighty-eight one hundredths (186.88) feet; - Thence: N 59-45'-00" W, four hundred seventy-four and forty-nine one hundredths (474.49) feet to the southerly side of aforesaid Fairmount Street and point of beginning, the last seven (7) lines bounded by aforesaid City of Woonsocket land; Being the same premises conveyed to 84 Fairmount Street Limited Partnership by Quitclaim Deed from Eastland Savings Bank, dated June 27, 1991. EXHIBIT B [To be transferred to one or more assignees depending on whether buyer wishes to keep the partnership intact] 84 FAIRMOUNT STREET LIMITED PARTNERSHIP ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (this "Agreement") dated as of this ___ day of ________, 2003, by and among (i) Portola Packaging, Inc., a Delaware corporation (the "Assignee"), and (ii) each of the general partners and limited partners (collectively, the "Assignors," and each individually, an "Assignor") of 84 Fairmount Street Limited Partnership, a Rhode Island limited partnership (the "Partnership"). WITNESSETH: WHEREAS, Assignors are the holders of all of the general partnership interests and limited partnership interests (the "Assigned Interests") of the Partnership; WHEREAS, the parties hereto are parties to that certain Equity Purchase Agreement, dated as of September 1, 2003 (the "Purchase Agreement") pursuant to which the Assignors agreed to sell and assign the Assigned Interests to the Assignee; WHEREAS, each Assignor wishes to transfer and assign all of such Assignor's Assigned Interests to Assignee, and Assignee desires to acquire the Assigned Interests; and WHEREAS, each Assignor intends that Assignee shall become a substitute general partner and a substitute limited partner of the Partnership (a "Substitute Partner") pursuant to the terms of the limited partnership agreement of the Partnership, dated as of _______, _____, as amended from time to time (the "Partnership Agreement"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the covenants and agreements made in the Purchase Agreement to which this Agreement is a part, the parties hereby agree as follows: 1. Each Assignor hereby assigns and transfers such Assignor's Assigned Interest to Assignee effective the date hereof, intending that Assignee shall become a Substitute Partner. Each Assignor acknowledges receipt of the agreed payment for the Assigned Interests. 2. Assignee hereby joins and becomes a party to the Partnership Agreement and assumes all of the obligations of each Assignor under the Partnership Agreement. Assignee accepts (a) the Assigned Interests and (b) all of the terms and provisions of the Partnership Agreement. 3. Assignee and Assignor shall execute, deliver, acknowledge, file, and record such other instruments as they each may reasonably require in order to further evidence or effect the assignment of the Assigned Interests hereunder. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. ASSIGNEE: PORTOLA PACKAGING, INC. By: /s/ JAMES TAYLOR --------------------------------------- James Taylor President ASSIGNORS: TECH INVESTMENTS, INC. By: /s/ DAVID M. WANG --------------------------------------- David M. Wang President /s/ DAVID M. WANG ------------------------------------------- David M. Wang /s/ SCOTT E. WANG ------------------------------------------- Scott E. Wang /s/ BETH A. NAST ------------------------------------------- Beth A. Nast EXHIBIT C Structural Escrow Agreement EXHIBIT D Environmental Escrow Agreement EX-2.05 7 j0327701exv2w05.txt EXHIBIT 2.05 Exhibit 2.05 CLOSING AGREEMENT This CLOSING AGREEMENT, dated as of September 19, 2003, is by and among (i) Herbert Wang and James J. Carria and Lawrence I. Silverstein, as Trustees of The Herbert Wang 1988-1 Irrevocable Trust (GST Exempt Share), and The Herbert Wang 1988-1 Irrevocable Trust (Non-GST Exempt Share) (collectively, the "Tech Industries Sellers"), (ii) Tech Investments, Inc., a Rhode Island corporation ("Tech Investments"), David M. Wang, Scott E. Wang and Beth A. Nast (collectively, the "84 Fairmount Street Sellers"), (iii) James J. Carria and Lawrence I. Silverstein, as Trustees of The Herbert Wang 1988 Irrevocable Real Estate Trust (collectively with Tech Investments, the "Fairmount Realty Sellers"), and (iv) Portola Packaging, Inc., a Delaware corporation (the "Buyer"). WHEREAS, the Buyer and the Tech Industries Sellers have entered into that certain Stock Purchase Agreement dated as of September 1, 2003 (the "Tech Industries Purchase Agreement"), pursuant to which the Buyer has agreed to purchase all of the issued and outstanding shares of capital stock (the "Tech Industries Stock") of Tech Industries, Inc., a Rhode Island corporation ("Tech Industries"); WHEREAS, the Buyer and Herbert Wang have entered into that certain Stock Purchase Agreement dated as of September 1, 2003 (the "Tech UK Purchase Agreement"), pursuant to which the Buyer has agreed to purchase all of the issued and outstanding shares of capital stock of Tech Industries U.K. Ltd., a Rhode Island corporation; WHEREAS, the Buyer and the Fairmount Realty Sellers have entered into that certain Equity Purchase Agreement dated as of September 1, 2003 (the "Fairmount Realty Purchase Agreement"), pursuant to which the Buyer has agreed to purchase all of the outstanding partnership interests (the "Fairmount Realty Interests") in Fairmount Realty Associates, a Rhode Island limited partnership, which owns all of the land, buildings, improvements and fixtures located at 85 Fairmount Street, Woonsocket, Rhode Island; WHEREAS, the Buyer and the 84 Fairmount Street Sellers have entered into that certain Equity Purchase Agreement dated as of September 1, 2003 (the "84 Fairmount Street Purchase Agreement"), pursuant to which the Buyer has agreed to purchase all of the outstanding partnership interests (the "84 Fairmount Street Interests," and together with the Fairmount Realty Interests, the "Real Estate Interests") in 84 Fairmount Street Limited Partnership, a Rhode Island limited partnership, which owns all of the land, buildings, improvements and fixtures located at 84 Fairmount Street, Woonsocket, Rhode Island; -2- WHEREAS, the Buyer is contemporaneously herewith purchasing all of the Tech Industries Stock pursuant to the terms of the Tech Industries Purchase Agreement; WHEREAS, immediately after the consummation of the purchase by the Buyer of the Tech Industries Stock as aforesaid, the Buyer is assigning its rights under the Fairmount Realty Purchase Agreement and the 84 Fairmount Street Purchase Agreement to Tech Industries to purchase the Real Estate Interests; WHEREAS, the Buyer and the Tech Industries Sellers have agreed to modify certain provisions of the Tech Industries Purchase Agreement, to set forth their agreement with respect to the effect on the provisions of the Tech Industries Purchase Agreement caused by the purchase by Tech Industries (in lieu of the Buyer) of the Real Estate Interests, and to provide for certain other matters, all as more particularly hereinafter set forth; WHEREAS, the consummation of the transactions contemplated under the Tech Industries Purchase Agreement, the Tech UK Purchase Agreement, the Fairmount Realty Purchase Agreement and the 84 Fairmount Street Purchase Agreement are referred to herein collectively as the "Transaction"; and WHEREAS, all capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Tech Industries Purchase Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Agreement, the parties hereto hereby agree as follows: 1. Reduction of Purchase Price Under Tech Industries Purchase Agreement. Reference is hereby made to Section 1.2 of the Tech Industries Purchase Agreement. The Tech Industries Sellers and the Buyer hereby agree that (a) the dollar amount therein of $33,742,329 shall be changed to $33,727,637, and (b) the provisions thereof shall be accordingly modified. 2. Modifications to Purchase Price Adjustment Provisions. Reference is hereby made to Section 3 of the Tech Industries Purchase Agreement. With respect thereto, the Tech Industries Sellers and the Buyer agree that: (a) notwithstanding the provisions of Sections 3(a) and (b) of the Tech Industries Purchase Agreement, in lieu of the Sellers preparing and delivering to the Buyer a Calculation Date Balance Sheet and a Calculation Date Certificate and making an initial adjustment to the Purchase Price based on the -3- amount of the Calculation Date Net Working Capital as required thereunder, the Sellers have prepared and delivered to the Buyer on the Closing occurring on the date hereof (i) an estimated projected balance sheet of Tech Industries as of the close of business on the Closing Date immediately prior to giving effect to the Closing (the "Estimated Closing Date Balance Sheet"), which Estimated Closing Date Balance Sheet has been prepared in accordance with generally accepted accounting principles applied on a basis consistent with the May 2003 Balance Sheet taking into account any possible exceptions to such accounting principles disclosed on Schedule 5.8 to the Tech Industries Purchase Agreement, and (ii) a certificate signed by the President of Tech Industries (the "Estimated Closing Date Certificate"), certifying (A) that the Estimated Closing Date Balance Sheet was prepared on the basis described in clause (i) above, and (B) as to the estimated and projected Net Working Capital as of the Closing Date (the "Estimated Closing Date Net Working Capital"); the Estimated Closing Date Certificate, together with the Estimated Closing Date Balance Sheet, is attached hereto as Exhibit A; (b) the Purchase Price payable at the Closing is being increased dollar-for-dollar by $590,826, which amount equals the amount that the Estimated Closing Date Net Working Capital is greater than $5,200,000 (with such amount being deemed the "Initial Adjustment" for purposes of Section 3(e) of the Tech Industries Purchase Agreement), thereby resulting in a Purchase Price payable at the Closing of $34,318,463 ($33,727,637 + the aforesaid $590,826); (c) all references in the Tech Industries Purchase Agreement to the terms "Calculation Date Balance Sheet," "Calculation Date Certificate" and "Calculation Date Net Working Capital," respectively, shall be deemed deleted and replaced with the terms "Estimated Closing Date Balance Sheet," "Estimated Closing Date Certificate" and "Estimated Closing Date Net Working Capital," respectively, and all references in the Tech Industries Purchase Agreement to the term "Calculation Date" shall be deemed deleted; (d) the provisions of the Tech Industries Purchase Agreement (including, without limitation, Section 3(e) thereof) shall be deemed modified by the provisions of this Section 1; and (e) the Calculation Date Certificate of the President of Tech Industries dated as of September 10, 2003 previously delivered to the Buyer shall be deemed null and void and of no force and effect. 3. Effect of Purchase by Tech Industries of Real Estate Interests. Notwithstanding that the Buyer is assigning its rights under the Fairmount Realty Purchase Agreement and the 84 Fairmount Street Purchase Agreement to Tech -4- Industries to purchase the Real Estate Interests, for purposes of the transactions contemplated by the Tech Industries Purchase Agreement and notwithstanding anything to the contrary set forth therein: (a) the purchase by Tech Industries of the Real Estate Interests shall have no effect of any nature whatsoever on, and shall not be considered a part of, the transactions contemplated by the Tech Industries Purchase Agreement; (b) the preparation of the Closing Date Balance Sheet and the determination of the Closing Date Net Working Capital shall be made without regards to, and shall give no effect to, the purchase by Tech Industries of the Real Estate Interests; and (c) the representations and warranties of the Sellers in Section 5 of the Tech Industries Purchase Agreement, for purposes of Section 8.1 of the Tech Industries Purchase Agreement, shall be made without regards to, and shall give no effect to, the purchase by Tech Industries of the Real Estate Interests. 4. Reduction of Purchase Price Under Tech UK Purchase Agreement. Reference is hereby made to Section 1.2 and 3 of the Tech UK Purchase Agreement. Herbert Wang and the Buyer agree that (a) the purchase price under Section 1.2 shall be changed to a fixed purchase price of $70,255 without adjustment, (b) the purchase price adjustment provisions of Section 3 shall be deemed deleted in their entirety, and (c) the provisions thereof shall be accordingly modified. 5. Reduction of Purchase Price Under 84 Fairmount Street Purchase Agreement. Reference is hereby made to Section 1.2 of the 84 Fairmount Street Purchase Agreement. The 84 Fairmount Street Sellers and the Buyer agree that (a) the reference therein to the $2,250 security deposit shall be deemed deleted, (b) the purchase price payable thereunder shall be accordingly reduced by such $2,250 amount, and (c) the provisions thereof shall be accordingly modified. 6. Flow of Funds. The Buyer shall make (or cause to be made) on the date hereof the following payments to the following parties in connection with the consummation of the Transaction in accordance with the applicable wire transfer instructions attached hereto as Schedule A: (a) In accordance with the terms of Section 2(b) hereof, at the Closing the Tech Industries Sellers are entitled under the Tech Industries Purchase Agreement to the aggregate amount of $34,318,463. The Buyer shall deduct from such amount (i) the amount of $1,122,293, and pay such amount for the account of the Tech Industries Sellers to EVP Securities LLC (as designee of Edgeview -5- Partners LLC), and (ii) the amount of $100,000, and pay such amount for the account of the 84 Fairmount Street Sellers to Citizens Bank of Rhode Island, as Escrow Agent (the "Escrow Agent") under the Environmental Escrow Agreement of even date herewith (the "Escrow Agreement"). (b) The balance of the purchase price payable to the Tech Industries Sellers at the Closing as referenced in Section 2(b) hereof is $33,096,170; such amount shall be paid to the Tech Industries Sellers as follows: Tech Industries Sellers Pro Rata Amount ----------------------- --------------- Herbert Wang $843,952 The Herbert Wang 1988-1 Irrevocable Trust (GST Exempt Share) $16,041,714 The Herbert Wang 1988-1 Irrevocable Trust (Non-GST Exempt Share) $16,210,504 (c) The purchase price to be paid on the date hereof to Herbert Wang under the Tech UK Purchase Agreement is $70,255. (d) The purchase price to be paid on the date hereof to the Fairmount Realty Sellers under the Fairmount Realty Purchase Agreement is $648,263; $100,000 of such amount shall be paid for the account of the Fairmount Realty Sellers to the Escrow Agent under the Escrow Agreement; $548,263, representing the balance of such purchase price, shall be paid to the Fairmount Realty Sellers as follows: Fairmount Realty Sellers Pro Rata Amount ------------------------ --------------- Tech Investments, Inc. $5,483 The Herbert Wang 1988 Irrevocable Real Estate Trust $542,780 (e) The purchase price to be paid on the date hereof to the 84 Fairmount Street Sellers under the 84 Fairmount Street Purchase Agreement is $626,350; such amount shall be paid entirely to Tech Investments, for the benefit of itself and the other 84 Fairmount Street Sellers, as follows: 84 Fairmount Street Sellers Pro Rata Amount --------------------------- --------------- Tech Investments, Inc. $6,262 David M. Wang $206,696 Scott E. Wang $206,696 Beth A. Nast $206,696 -6- 7. General. (a) Governing Law. The validity and construction of this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws (and not the choice-of-law rules) of the State of Rhode Island. (b) Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and shall not be amended except by a written instrument hereafter signed by all of the parties hereto. (c) Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other parties hereto. (d) Severability. In the event that any covenant, condition, or other provision herein contained is held to be invalid, void, or illegal by any court of competent jurisdiction, the same shall be deemed to be severable from the remainder of this Agreement and shall in no way affect, impair, or invalidate any other covenant, condition, or other provision contained herein. (e) Further Assurances. The parties hereto agree to take such reasonable steps and execute such other and further documents as may be necessary or appropriate to cause the terms and conditions contained herein to be carried into effect. (f) No Implied Rights or Remedies. Except as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person, other than the Sellers and the Buyer and their respective shareholders or other equityholders, if any, any rights or remedies under or by reason of this Agreement. (g) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [Signatures on Following Page] -7- IN WITNESS WHEREOF, the undersigned have executed this Agreement as an instrument under seal as of the day and year first written above. /s/ HERBERT WANG ----------------------------------- Herbert Wang THE HERBERT WANG 1988-1 IRREVOCABLE TRUST (GST EXEMPT SHARE) By: /s/ JAMES J. CARRIA ------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN ------------------------------- Lawrence I. Silverstein, Trustee THE HERBERT WANG 1988-1 IRREVOCABLE TRUST (NON-GST EXEMPT SHARE) By: /s/ JAMES J. CARRIA ------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN ------------------------------- Lawrence I. Silverstein, Trustee TECH INVESTMENTS, INC. By: /s/ DAVID M. WANG ------------------------------- David M. Wang President -8- /s/ DAVID M. WANG ----------------------------------- David M. Wang /s/ SCOTT E. WANG ----------------------------------- Scott E. Wang /s/ BETH A. NAST ----------------------------------- Beth A. Nast THE HERBERT WANG 1988 IRREVOCABLE REAL ESTATE TRUST By: /s/ JAMES J. CARRIA ------------------------------- James J. Carria, Trustee By: /s/ LAWRENCE I. SILVERSTEIN ------------------------------- Lawrence I. Silverstein, Trustee PORTOLA PACKAGING, INC. By: /s/ JACK L. WATTS ------------------------------- Jack L. Watts, Chairman and Chief Executive Officer Schedule A to the Closing Agreement WIRE TRANSFER INSTRUCTIONS Exhibit A to the Closing Agreement ESTIMATED CLOSING DATE CERTIFCATE WITH ATTACHED ESTIMATED CLOSING DATE BALANCE SHEET EX-10.1 8 j0327701exv10w1.txt EXHIBIT 10.1 Exhibit 10.1 CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT This Consent and First Amendment to Third Amended and Restated Credit Agreement (this "Agreement") is entered into this 19th day of September, 2003 among PORTOLA PACKAGING, INC., a Delaware corporation, as Borrower, and HELLER FINANCIAL, INC., a Delaware corporation ("Heller"), for itself, as Agent, Issuing Lender and Lender. W I T N E S S E T H: WHEREAS, Borrower and Heller, as Agent, Issuing Lender and a Lender, are parties to that certain Third Amended and Restated Credit Agreement dated as of September 29, 2000 (as heretofore amended, the "Credit Agreement"); WHEREAS, pursuant to those certain Stock Purchase Agreements and Equity Purchase Agreements dated as of September 1, 2003 among Borrower and the respective sellers thereunder (collectively, the "Tech Companies Acquisition Agreements" and, together with the other instruments and agreements executed and delivered pursuant thereto, but excluding the Loan Documents, the "Tech Companies Acquisition Documents"), Borrower has agreed to acquire (the "Tech Companies Acquisition") all of the outstanding capital stock and partnership or other equity interests of Tech Industries, Inc. ("Tech Industries"), Tech Industries U.K. Ltd. ("Tech Industries UK"), 84 Fairmount Street Limited Partnership ("84 Fairmount Street") and Fairmount Realty Associates ("Fairmount Realty" and, together with Tech Industries, Tech Industries UK and 84 Fairmount Street, the "Tech Companies"). WHEREAS, Borrower has requested that Heller, as Agent and Lender, consent to the Tech Companies Acquisition and that, in connection therewith, the Credit Agreement be amended as set forth herein, and Heller is willing to grant such consent and to amend the Credit Agreement upon the terms and subject to the conditions set forth herein; NOW THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein and in the Credit Agreement, the parties agree as follows: Section 1. DEFINITIONS. Capitalized terms used herein without definition and defined in the Credit Agreement are used herein as defined therein. Section 2. CONSENT. Subject to the satisfaction of the terms and conditions set forth herein, Heller, as Agent and Lender, hereby consents to the consummation of the Tech Companies Acquisition on the date hereof upon the terms set forth in the Tech Companies Acquisition Agreement as in effect on the date hereof. The consent set forth above shall be limited precisely as written and shall not be deemed or otherwise construed to constitute a waiver of any provisions of the Credit Agreement in connection with any other transaction. Section 3. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the terms and conditions set forth herein, the amendments to the Credit Agreement set forth in this SECTION 3 shall become effective as of the date hereof. 3.1 The first sentence of SUBSECTION 1.1(A) of the Credit Agreement is hereby amended to read as follows: Each Lender agrees, severally and not jointly, to lend to Borrower from the Closing Date to August 31, 2004 (the "Commitment Termination Date"), its Pro Rata Share of the Revolving Loans requested by Borrower to be made by Lenders under this SUBSECTION 1.1(A), up to an aggregate maximum for all Lenders of Fifty-Four Million Dollars ($54,000,000) (as the same may be reduced from time to time hereunder, the "Revolving Loan Commitment"). 3.2 The definitions of "Base Rate", "Base Rate Margin" and "LIBOR Margin" set forth in SUBSECTION 1.2(A) of the Credit Agreement are hereby amended to read as follows with respect to the calculation of interest accruing on the Loans from and after the First Amendment Date: "Base Rate" means, for any day, a floating rate equal to the higher of (i) the rate publicly quoted from time to time by THE WALL STREET JOURNAL as the "base rate on corporate loans posted by at least 75% of the nation's 30 largest banks" (or, if THE WALL STREET JOURNAL ceases quoting a base rate of the type described, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Effective Rate plus 50 basis points per annum. Each change in any interest rate provided for in the Agreement based upon the Base Rate shall take effect at the time of such change in the Base Rate. "Base Rate Margin" means 1.50% per annum. "LIBOR Margin" means 2.75% per annum. 3.3 SUBSECTION 1.2(A) of the Credit Agreement is hereby amended by deleting the two paragraphs immediately following the definition of "LIBOR Margin" set forth therein. 3.4 The first sentence of SUBSECTION 1.2(B) of the Credit Agreement is hereby amended to read as follows with respect to the calculation of commitment fees from and after the First Amendment Date: From the First Amendment Date, Borrower shall pay Agent, for the benefit of all Lenders committed to make Revolving Loans (based upon their respective Pro Rata Shares), a fee payable in US Dollars in an amount equal to (1)(a) the Revolving Loan Commitment LESS (b) the sum of (I) the average daily balance of the Revolving Loans PLUS (II) the 2 average daily aggregate amount of outstanding Letter of Credit Liability, in each case during the preceding month, MULTIPLIED BY (2) one-half of one percent (0.50%) per annum. 3.5 The first sentence of SUBSECTION 1.2(C) of the Credit Agreement is hereby amended to read as follows with respect to the calculation of Letter of Credit fees from and after the First Amendment Date: From the First Amendment Date, Borrower shall pay Agent a fee in US Dollars for each Letter of Credit from the date of issuance to the date of termination equal to the average daily aggregate amount of outstanding Letter of Credit Liability during the preceding month MULTIPLIED BY two and three-quarters percent (2.75%) per annum. 3.6 SUBSECTION 1.3(A) of the Credit Agreement is hereby amended to read as follows: (A) CERTAIN FEES. Borrower shall pay to Heller, individually, the fees specified in that certain letter agreement dated the First Amendment Date (the "Fee Letter"), between Borrower and Heller in the amounts and at the times specified therein. 3.7 SECTION 2 of the Credit Agreement is hereby amended by inserting the following as SUBSECTIONS 2.7 and 2.8: 2.7 ENVIRONMENTAL MATTERS. Borrower shall and shall cause each of its Subsidiaries to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent promptly after Borrower, any of its Subsidiaries or any other Person within its control becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in Environmental Liabilities to a Loan Party or its Subsidiaries in excess of $50,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or any communication or report received by Borrower, any of its Subsidiaries or any Person within its control in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of 3 $50,000, in each case whether or not the Environmental Protection Agency or any governmental authority has taken or threatened any action in connection with any such violation, Release or other matter. If Agent at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Loan Party or any other Person under the control of any Loan Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then each Loan Party and its Subsidiaries shall, upon Agent's written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrower's expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) permit Agent or its representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as Agent deems appropriate, including subsurface sampling of soil and groundwater. Borrower shall reimburse Agent for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder. Without limiting the generality of the foregoing, Borrower will cause Tech Industries to report, in accordance with the requirements of the Rhode Island Department of Environmental Management, elevated arsenic and TPH in ground water at Tech Industries' facilities in Woonsocket, Rhode Island. 2.8 DISSOLUTION OF CERTAIN SUBSIDIARIES. Within sixty (60) days following the First Amendment Date, Borrower shall cause each of Tech Industries U.K. Ltd., 84 Fairmount Street Limited Partnership and Fairmount Realty Associates to be dissolved and liquidated. 3.8 SUBSECTION 3.1(F) of the Credit Agreement is hereby amended to read as follows: (F) Indebtedness outstanding at the First Amendment Date and shown on SCHEDULE 3.1; and 3.9 CLAUSE (10) of the definition of "Permitted Encumbrances" contained in SUBSECTION 3.2(A) of the Credit Agreement is hereby amended to read as follows: (10) Liens existing on the Closing Date (and, in the case of Tech Industries, Liens existing on the First Amendment Date) and renewals and extensions thereof, which Liens are set forth on SCHEDULE 3.2(A)(10) hereto; 4 3.10 SUBSECTION 3.3(D) of the Credit Agreement is hereby amended to read as follows: (D) Investments existing on the First Amendment Date and set forth in SUBSCHEDULE 7.4 and extensions and renewals thereof, including promotional loans of equipment to customers pursuant to the terms of SUBSECTION 3.7(C); 3.11 SUBSECTION 3.4(E) of the Credit Agreement is hereby amended to read as follows: (E) those existing on the First Amendment Date and described in SCHEDULE 3.4 annexed hereto; 3.12 SECTION 3 of the Credit Agreement is hereby amended by adding the following new SUBSECTIONS 3.17 and 3.18 at the end thereof: 3.17 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Borrower agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure, including any prospectus, proxy statement or other materials filed with any governmental authority relating to a public offering of the stock of any Loan Party, using the name of Heller or General Electric Capital Corporation ("GE Capital") or its affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions Documents without at least two (2) Business Days' prior notice to Heller and without the prior written consent of Heller unless (and only to the extent that) such Loan Party or Affiliate is required to do so under law and then, in any event, such Loan Party or Affiliate will consult with Heller before issuing such press release or other public disclosure. 3.18 HAZARDOUS MATERIALS. Borrower shall not and shall not cause or permit its Subsidiaries to cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities by the Loan Parties or any of their Subsidiaries under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the Real Estate or any of the Collateral, other than such violations or Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect. 3.13 SUBSECTIONS 4.1, 4.2, 4.3 and 4.4 of the Credit agreement are hereby amended to read as follows with respect to periods ending after August 31, 2003: 4.1 LEASE LIMITS; CAPITAL EXPENDITURES. (A) Borrower will not and will not permit any of its Restricted Subsidiaries directly or indirectly to become or remain liable in any way, 5 whether directly or by assignment or as a guarantor or other surety, for the obligations of the lessee under any operating lease, synthetic lease or similar off-balance sheet financing, if the aggregate amount of all rents (or substantially equivalent payments) paid by Borrower and its Restricted Subsidiaries under all such leases would exceed $4,750,000 (or the equivalent thereof in another currency) in any fiscal year of Borrower. (B) Borrower and its Subsidiaries on a consolidated basis shall not make Capital Expenditures during any fiscal year of Borrower that exceed $17,500,000 in the aggregate for any such fiscal year. 4.2 FIXED CHARGE COVERAGE. Borrower shall not permit the Fixed Charge Coverage for any twelve (12) month period ending on the last day of each fiscal quarter set forth below to be less than the ratio set forth below for such period. DATE RATIO November 30, 2003 1.15 February 28, 2004 1.00 May 31, 2004 1.10 August 31, 2004 and each fiscal 1.20 quarter end thereafter 4.3 TOTAL INDEBTEDNESS TO EBITDA RATIO. Borrower shall not permit the ratio of Total Indebtedness, minus Borrower's total cash and Cash Equivalents, calculated as of any date set forth below, to EBITDA for the twelve (12) month period ending on such day to be greater than the ratio set forth below for such date. DATE RATIO November 30, 2003 5.00 February 28, 2004 5.00 May 31, 2004 4.75 August 31, 2004 and the last day 4.25 of each fiscal quarter thereafter 4.4 MAINTENANCE OF MINIMUM AVAILABILITY. Borrower shall maintain an aggregate Availability of at least (a) $3,000,000 at all times during the period from the First Amendment Date through February 29, 2004, (b) $1,000,000 at all times during the period from March 1, 2004 through March 31, 2004, (c) $1,500,000 at all times during the period from April 1, 2004 through April 30, 2004, (d) $2,000,000 at all times during the period from May 1, 2004 through May 31, 2004 and (e) $3,000,000 at all times from and after June 1, 2004. 6 3.14 SUBSECTION 6.1(C) of the Credit Agreement is hereby amended to read as follows: (C) BREACH OF CERTAIN PROVISIONS. (1) Failure of Borrower to perform or comply with any term or condition contained in that portion of SUBSECTION 2.2 relating to Borrower's obligation to maintain insurance, SUBSECTION 2.3, SECTION 3 or SECTION 4 or (2) failure of either Borrower or Tech Industries to perform or comply with any term or condition contained in SECTION 7 of the Security Agreement to which it is a party or (3) failure of either Canadian Restricted Subsidiary to perform or comply with any term or condition contained in SECTION 7 of the Security Agreement to which it is a party or (4) failure of the UK Restricted Subsidiary to perform or comply with any term or condition contained in CLAUSE 5.1(b) of the debenture forming part of the UK Security Documents; or 3.15 SUBSECTION 10.1 of the Credit Agreement is hereby amended by inserting the following new definitions in their proper alphabetical order: "ENVIRONMENTAL LAWS" means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include CERCLA; the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C.ss.ss.5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 et seq.); the Solid Waste Disposal Act (42 U.S.C.ss.ss. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss.7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.ss.ss.1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.ss.ss.651 et seq.); and the Safe Drinking Water Act (42 U.S.C.ss.ss. 300(f) et seq.), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes related in any manner to environmental, natural resource or human health and safety matters. "ENVIRONMENTAL LIABILITY" means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs 7 and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property. "ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations, certificates, approvals or registrations required by any governmental authority under any Environmental Laws. "FIRST AMENDMENT" shall mean that Consent and First Amendment to Credit Agreement dated as of September __, 2003 among the Borrower, the Agent and the Lenders. "FIRST AMENDMENT DATE" shall mean September __, 2003. "MEXICAN RESTRICTED SUBSIDIARY" means Portola Packaging Inc. Mexico, S.A. de C.V., a corporation organized under the laws of Mexico. "MEXICAN SECURITY DOCUMENTS" means all instruments, documents and agreements executed by or on behalf of Mexican Restricted Subsidiary or any other Person to guaranty or provide collateral security with respect to the Obligations of Borrower including, without limitation, the Security Agreement, any other security agreement or pledge agreement, any guaranty of the Obligations, any mortgage or deed of trust, and all instruments, documents and agreements executed pursuant to the terms of the foregoing. "RELEASE" means any release, known threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property. "TECH COMPANIES" means Tech Industries. "TECH INDUSTRIES" means Tech Industries, Inc., a Rhode Island corporation. 3.16 The definitions of "Security Agreement" and "Security Documents" set forth in SUBSECTION 10.1 of the Credit Agreement are hereby amended to read as follows: 8 "SECURITY AGREEMENT" means those separate security agreements, hypothecs, debentures and floating lien pledges, each dated on or about the date hereof or the First Amendment Date, as applicable, executed by Borrower and its Restricted Subsidiaries in favor of Agent, and securing Borrower's Obligations hereunder and under the Loan Documents. "SECURITY DOCUMENTS" means, collectively, the US Security Documents, the UK Security Documents, the Canadian Security Documents and the Mexican Security Documents. 3.17 EXHIBIT 4.5(F) (BORROWING BASE CERTIFICATE) to the Credit Agreement are hereby replaced with EXHIBIT 4.5(F) attached hereto. 3.18 SCHEDULE 1.2 (PRICING TABLE) to the Credit Agreement is hereby deleted. SCHEDULES 3.1 (EXISTING INDEBTEDNESS), 3.2(A)(10) (LIENS), 3.4 (CONTINGENT OBLIGATIONS), 5.4(A) (JURISDICTIONS OF ORGANIZATION AND QUALIFICATIONS), 5.4(B) (CAPITALIZATION), 5.6 (TITLE TO PROPERTIES, ETC.), 5.7 (INTELLECTUAL PROPERTY), 5.8 (INVESTIGATIONS AND AUDITS) and 5.9 (EMPLOYEE MATTERS) to the Credit Agreement are hereby amended pursuant to the Addenda to SCHEDULES 3.1, 3.2(A)(10), 3.4, 5.4(A), 5.4(B), 5.6, 5.7, 5.8 and 5.9 attached hereto. SUBSCHEDULES 7.1 (LITIGATION), 7.2 (EMPLOYEE BENEFIT PLANS), 7.4 (DERIVATIVES), 7.6 (BANK ACCOUNTS) and 7.7 (SUBSIDIARIES) to SCHEDULE 7.1 to the Credit Agreement are hereby amended pursuant to the Addenda to with SUBSCHEDULES 7.1, 7.2, 7.4, 7.6 and 7.7 attached hereto. SCHEDULE 10.1(A) (PRO RATE SHARES AND COMMITMENT AMOUNTS) to the Credit Agreement is hereby amended pursuant to SCHEDULE 10.1(A) attached hereto. 3.19 ADDBACK OF CERTAIN NON-RECURRING RESTRUCTURING CHARGES TO EBITDA. Heller hereby approves adding back to EBITDA for any period during Borrower's 2004 fiscal year the following non-recurring restructuring charges to be incurred in connection with (a) relocating operations from Borrower's two California facilities to its facility in Tolleson, Arizona and (b) relocating operations from Borrower's South Carolina facility to its facilities in Kingsport, Tennessee and elsewhere, to the extent such restructuring charges are deducted in determining Net Income for any such period: (1) Severance and relocation costs not exceeding $3,500,000 in the aggregate for all such periods. Section 4. DESIGNATION OF RESTRICTED SUBSIDIARIES. Borrower hereby designates each of Tech Industries and Portola Packaging Inc. Mexico, S.A. de C.V. as a Restricted Subsidiary. Section 5. CONDITIONS. The effectiveness of this Agreement is subject to Borrowers' satisfaction of the following conditions on or before the date hereof in a manner satisfactory to the Agent: 5.1 DELIVERIES. The Agent shall have received, on or prior to the date hereof, all of the documents set forth on ANNEX A hereto, in form and substance satisfactory to the Agent, duly executed by all parties thereto. 9 5.2 CONTINUATION OF REPRESENTATIONS AND WARRANTIES. After giving effect to the replacement Schedules delivered herewith, the representations and warranties made by the Loan Parties contained in the Credit Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date hereto with the same effect as if made on and as of the date hereof (except to the extent such representations and warranties expressly relate to an earlier date). 5.3 NO EXISTING DEFAULT. As of the date hereof, no Default or Event of Default shall have occurred and be continuing or shall result from the consummation of the transactions contemplated hereunder (including without limitation the consummation of the Tech Companies Acquisition). Section 6. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and warrants that: (i) the execution, delivery and performance by the Borrower of this Agreement have been duly authorized by all necessary corporate action and this Agreement is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms; (ii) each of the representations and warranties contained in the Credit Agreement is true and correct in all material respects on and as of the date hereof as if made on the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date; and (iii) neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated hereby (including without limitation the consummation of the Tech Companies Acquisition) does or shall contravene, result in a breach of, or violate (i) any provision of any Loan Party's certificate or articles of incorporation or bylaws, (ii) any law or regulation, or any order or decree of any court or government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or other instrument to which any Loan Party or any of its Subsidiaries is a party or by which any Loan Party or any of its Subsidiaries or any of their property is bound. Section 7. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT. (i) Except as specifically provided herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (ii) The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of Agent or any Lender under the Credit Agreement or any Loan Document, nor constitute a waiver of any provision of the Credit Agreement or any Loan Document, except as specifically set forth herein. Section 8. COSTS AND EXPENSES. Borrower agrees to reimburse Agent for all fees, costs and expenses, including the fees, costs and expenses of counsel or other advisors for advice, assistance, or other representation in connection with this Agreement. 10 Section 9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. Section 10. HEADINGS. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purposes. Section 11. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed an original, but all such counterparts shall constitute one and the same instrument. [signature page follows] 11 IN WITNESS WHEREOF, the parties hereto hereupon set their hands as of the date first written above. PORTOLA PACKAGING, INC. By: /s/ Dennis L. Berg ------------------------------------ Dennis L. Berg Title: VP and Chief Financial Officer ---------------------------------- HELLER FINANCIAL, INC., as Agent, Issuing Lender and Lender By: /s/ Woodrow Broaders ------------------------------------ Woodrow Broaders Title: Dually Authorized Signatory ---------------------------------- (Signature Page to Consent Agreement) S-1 CONSENT AND REAFFIRMATION (SUBSIDIARY GUARANTORS) Each of the undersigned hereby (i) acknowledges receipt of a copy of the foregoing Consent and First Amendment to Credit Agreement; (ii) consents to Borrower's execution and delivery thereof; (iii) affirms that nothing contained therein shall modify in any respect whatsoever its guaranty of the obligations of Borrower to Agent and Lenders and reaffirms that such guaranty is and shall continue to remain in full force and effect and that each Loan Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible, the payment and performance of all obligations under or in respect of such guaranty and such other Loan Documents; and (iv) confirms that, as of the date hereof, it does not have, and hereby waives, remises and releases any claims or causes of action of any kind against Agent or any of the Lenders or any of their officers, directors, employees, agents, attorneys, or any of the Lenders or any of their officers, directors, employees, agents, attorneys or representatives, or against any of their respective predecessors, successors, or assigns relating in any way to any event, circumstance, action, or omission relative to any of the Loan Documents or any transaction contemplated thereby, from the beginning of time through the date hereof. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and consented to same, each of the undersigned understands that Agent and Lenders have no obligation to inform it of such matters in the future or to seek its acknowledgment or consent to future Agreements or waivers, and nothing herein shall create such a duty. IN WITNESS WHEREOF, the undersigned have executed this Consent and Reaffirmation on and as of the date of such Agreement. PORTOLA PACKAGING LTD. By: /s/ Dennis L. Berg ------------------------------------- Name: Dennis L. Berg ----------------------------------- Title: VP and Chief Financial Officer ----------------------------------- PORTOLA PACKAGING CANADA LTD./ EMBALLAGES PORTOLA CANADA LTEE By: /s/ Dennis L. Berg ------------------------------------- Name: Dennis L. Berg ----------------------------------- Title: VP and Chief Financial Officer ----------------------------------- PORTOLA ALLIED TOOL, INC. By: /s/ Dennis L. Berg ------------------------------------- Name: Dennis L. Berg ----------------------------------- Title: VP and Chief Financial Officer ----------------------------------- PORTOLA PACKAGING LIMITED (U.K.) By: /s/ Dennis L. Berg ------------------------------------- Name: Dennis L. Berg ----------------------------------- Title: VP and Chief Financial Officer ----------------------------------- ATLANTIC PACKAGING SALES LLC By: /s/ Dennis L. Berg ------------------------------------- Name: Dennis L. Berg ----------------------------------- Title: VP and Chief Financial Officer ----------------------------------- (Signature Page to Affirmation to Consent Agreement by Subsidiary Guarantors) S-1 ANNEX A TO CONSENT AND FIRST AMENDMENT DELIVERIES (a) ASSIGNMENT AND ACCEPTANCE AGREEMENT. A duly executed Assignment and Acceptance Agreement between Heller and Bank of America, N.A. pursuant to which Bank of America, N.A. shall have assigned all of its Revolving Loans and Commitments to Heller. (b) AGREEMENT. This Agreement duly executed by the Loan Parties, together with all Exhibits and Addenda to Schedules hereto. (c) REPLACEMENT REVOLVING NOTE. A replacement Revolving Note executed by Borrower in favor of Heller. (d) TECH INDUSTRIES GUARANTY AND SECURITY AGREEMENT. Guaranty executed by Tech Industries. Security Agreement duly executed by Tech Industries, and acknowledged by Agent, together with Schedules to the Security Agreement. (e) BORROWER PLEDGE AMENDMENT. A Pledge Amendment to the Borrower Pledge Agreement duly executed by Borrower, pledging to Agent all of the capital stock of Tech Industries, together with share certificates representing all of the outstanding capital stock of Tech Industries and stock powers for such share certificates executed in blank. (f) CODE SEARCH REPORTS. Copies of Code search reports listing all effective financing statements that name any of the Tech Companies as a debtor from the following jurisdictions: Secretary of State of Rhode Island (g) UCC-1 FINANCING STATEMENTS. Copies of UCC-1 financing statements executed by Tech Industries as debtor in favor of Agent, together with evidence that such UCC-1 financing statements have been filed in the following jurisdictions: Secretary of State of Rhode Island (h) PAYOFF LETTER; TERMINATION STATEMENTS. Duly executed pay-off and release letter from Citizens Bank, evidencing repayment in full of all Indebtedness of Tech Industries to Citizens Bank and the release of all Liens granted by Tech Industries in favor of Citizens Bank, together with UCC-3 termination statements signed by Citizens Bank and all other Lien releases required in order to terminate such Liens. (i) INTELLECTUAL PROPERTY SECURITY AGREEMENTS. A Trademark Security Agreement and Patent Security Agreement duly executed by Tech Industries with respect to all trademarks and patents owned by Tech Industries. Annex A-1 (j) BANK AGENCY AGREEMENTS. Bank agency agreements for each bank designated by Agent at which Tech Industries maintains depository accounts. (k) INSURANCE. Evidence that all insurance policies required by Agent with respect to Tech Industries are in full force and effect, together with loss payable and/or additional insured clauses as requested by Agent, in favor of Agent on behalf of Lenders. (l) TECH COMPANIES ACQUISITION DOCUMENTS. Executed or conformed copies of the Tech Companies Acquisition Documents, together with evidence that the Tech Companies Acquisition has been consummated in accordance therewith, and including without limitation: (i) the Tech Companies Acquisition Agreement; (ii) Employment Agreements with each of James J. Carria and William H. Nast; and (iii) documentation evidencing that (1) all partnership interests of 84 Fairmount Street and Fairmount Realty have been assigned to Tech Industries, (2) Tech Industries has been designated as the general partner of each of 84 Fairmount Street and Fairmount Realty and (3) all Real Estate owned by 84 Fairmount Street and Fairmount Realty has been conveyed to Tech Industries; together with evidence satisfactory to Agent that the aggregate purchase price (inclusive of fees and closing costs, including those payable to Agent) for the Tech Companies Acquisition does not exceed $36,750,000. (m) ASSIGNMENT OF RIGHTS. An Assignment of Rights with respect to Borrower's rights under the Tech Companies Acquisition Documents duly executed by Borrower and acknowledged by the Tech Companies Sellers. (n) MORTGAGES; MORTGAGE MODIFICATIONS. (i) A Mortgage with respect to Tech Industries' owned Real Estate in Rhode Island, in form and substance satisfactory to Agent, duly executed by Tech Industries, together with A.L.T.A. mortgagee policies of title insurance satisfactory to Agent, and current A.L.T.A. surveys and surveyors' certifications as to such property in form and substance satisfactory to Agent. (ii) a Mortgage Modification with respect to each existing Mortgage on Borrower's owned Real Estate, in form and substance satisfactory to Agent, and with respect to all existing title policies insuring Agent's Lien on the Mortgaged Real Property, endorsements issued by the Title Company insuring that Agent's Lien (and the priority thereof) is not impacted by this Agreement. (o) AMENDED AND RESTATED SECURITY AGREEMENTS. Amended and Restated Security Agreements executed by each of Borrower, Portola Allied Tool, Inc. and Atlantic Packaging Sales LLC< together with Schedules to the Security Agreements and Powers of Attorney duly executed by each such Persons. Annex A-2 (p) MEXICAN SECURITY DOCUMENTS. (a) Floating Lien Pledge Agreement (Contralto de Prenda Sin Transmision de Posesion) duly executed and delivered by Portola Packaging Inc. Mexico, S.A. de C.V. and Agent in the presence of a Mexican notary public and recorded in the appropriate public registry of commerce for perfection purposes, granting to Agent a perfected first priority security interest in and to all of the movable property of Portola Packaging Inc. Mexico, S.A. de C.V.; (b) Stock Pledge Agreement duly executed and delivered by Borrower, Portola Packaging Holding, B.V. and Agent, granting to Agent a perfected first priority security interest in and to all of the issued and outstanding capital stock of Portola Packaging Inc. Mexico, S.A. de C.V., together with the endorsement and delivery to the Agent of all stock certificates and entries in the stock registry book of Portola Packaging Inc. Mexico, S.A. de C.V.; (c) Guaranty duly executed and delivered by Portola Packaging Inc. Mexico, S.A. de C.V., together with a special irrevocable power of attorney granted in the presence of a Mexican notary public in favor of an agent for service of process acceptable to the Agent; and (d) an opinion of counsel to Portola Packaging Inc. Mexico, S.A. de C.V., addressed to Agent and Lenders. (q) THIRD PARTY CONSENTS AND WAIVERS. Copies of all third party or governmental waivers and consents relating to the Tech Companies Acquisition. (r) MAXIMUM LEVERAGE RATIO; MAXIMUM TOTAL INDEBTEDNESS. The ratio of Total Indebtedness to EBITDA (subject to pro forma adjustments approved by Agent), determined as of July 31, 2003 for the twelve-month period then ended, shall not exceed 4.80 on a pro forma basis after giving effect to the Tech Companies Acquisition and the funding of the Revolving Loan in connection therewith. Total Indebtedness, determined as of the date hereof, shall not exceed $160,000,000 after giving effect to the Tech Companies Acquisition and the funding of the Revolving Loans in connection therewith. (s) OPENING AVAILABILITY; MAXIMUM REVOLVING LOAN. (i) Availability after giving effect to the Revolving Loan advance made on the date hereof and the consummation of the Tech Companies Acquisition (on a pro forma basis, with trade payables being paid currently, and expenses and liabilities being paid in the ordinary course of business and without acceleration of sales) shall be at least $3,000,000 and (ii) the aggregate outstanding balance of the Revolving Loan shall not exceed $48,000,000. (t) DUE DILIGENCE. Agent shall have completed its business and legal due diligence (including without limitation Agent's receipt of appraisals with respect to the Tech Companies' owned Real Estate, Equipment and Inventory) with results reasonably satisfactory to Agent. (u) FINANCIAL CONDITION. A pro forma balance sheet of Borrower and its Subsidiaries and revised Projections for Borrower and its Subsidiaries, certified by Borrowers Chief Financial Officer, in each case taking into account the Tech Companies Acquisition, and a certificate of the Chief Financial Officer of Borrower, based on such pro forma balance sheet and Projections, to the effect that (a) Borrower and its Subsidiaries will be Solvent upon the consummation of the transactions contemplated herein; (b) the pro forma balance sheet fairly presents the financial condition of Borrowers and its Subsidiaries as of the date thereof after giving effect to the transactions contemplated by the Loan Documents; (c) the Projections are Annex A-3 based upon estimates and assumptions stated therein, all of which Borrower believe to be reasonable and fair in light of conditions and facts known to Borrower at the time of preparation of such Projections and, as of the date hereof, reflect Borrower's good faith and reasonable estimates of its future financial performance and of the other information projected therein for the period set forth therein, provided that the Projections are not to be viewed as facts and that actual results during the periods covered by the Projections will differ from the projected results; and (d) containing such other statements with respect to the solvency of Borrower and its Subsidiaries and matters related thereto as Agent shall request. (v) ENVIRONMENTAL REPORTS. Environmental review and audit reports, including Phase II reports, with respect to the Real Estate of the Tech Companies as Agent shall have requested, and Agent shall be satisfied, in its sole discretion, with the contents of all such environmental reports. Agent shall have received letters executed by the environmental firms preparing such environmental reports, in form and substance reasonably satisfactory to Agent, authorizing Agent and Lenders to rely on such reports. (w) OFFICER'S CERTIFICATE. A Certificate of Chief Financial Officer of Borrower. (x) BORROWING BASE CERTIFICATE. A duly executed Borrowing Base Certificate from Borrower reflecting its calculation of the Borrowing Base as of the date hereof, taking into account the Tech Companies Acquisition and the designation of Tech Industries and Portola Packaging Mexico Inc., S.A. de C.V. as Restricted Subsidiaries. (y) LETTER OF DIRECTION. A letter of direction duly executed by Borrower addressed to Agent with respect to the disbursement of the proceeds of the Revolving Loan to be made on the date hereof. (z) SECRETARY'S CERTIFICATES. A certificate of the Secretary or Assistant Secretary of each Loan Party, certifying copies of resolutions of the Board of Directors or partners (as applicable) of such Loan Party approving and authorizing the execution, delivery and performance by such Loan Party of, as applicable, this Agreement and the other Loan Documents to be delivered by such Loan Party hereunder and, in the case of Borrower, designating Portola Packaging Mexico Inc., S.A. de C.V. and each of the Tech Companies as "Restricted Subsidiaries" under the Credit Agreement and the Senior Notes Indenture; and (aa) ORGANIZATIONAL DOCUMENTS AND GOOD STANDING CERTIFICATES OF TECH INDUSTRIES. Each of: (i) the Articles of Incorporation of Tech Industries as in effect on the date hereof, certified by the Secretary of State of Rhode Island; (ii) the By-Laws of Tech Industries as in effect on the date hereof, certified by the Secretary or Assistant Secretary of Tech Industries; and (iii) a good standing certificate for Tech Industries from the Secretary of State of Rhode Island and each state where Tech Industries is required to qualify to do business as a foreign corporation, each as of a recent date. Annex A-4 (bb) OPINIONS OF BORROWER'S COUNSEL. An opinion of Tomilson Zisko LLP, counsel to the Credit Parties, together with any local counsel opinions requested by Agent, addressed to Agent and Lenders. (cc) SENIOR NOTES INDENTURE. Evidence satisfactory to Agent that (i) after giving effect to the transactions contemplated hereunder and under the Tech Companies Acquisition Agreement, no default or event of default exists under the Senior Notes Indenture and the terms of the Credit Agreement (including the Borrowing Base), as amended by this Agreement, comply with the restrictions set forth in the Senior Notes Indenture and (b) the Tech Companies have been designated as "Restricted Subsidiaries" under the Senior Note Indenture. (dd) FEE LETTER. Duly executed originals of that certain fee letter of even date herewith among Borrower and Heller, together with payment of all fees specified therein. (ee) OTHER DOCUMENTS. Such additional documents as Agent may reasonably require. Annex A-5 -----END PRIVACY-ENHANCED MESSAGE-----


Delaware	033-95318	94-1582719
(State or Other	(Commission File	(IRS Employer
Jurisdiction of	Number)	Identification No.)
Incorporation)


		Portola Packaging, Inc. a Delaware corporation


Date: October 6, 2003		By: /s/ Dennis L. Berg

		Dennis L. Berg
		Vice President and
		Chief Financial Officer