ASSET PURCHASE AGREEMENT
by and among
CRESTLINE PACKAGING SOLUTIONS LLC
(as Buyer)
ALLEGHENY VALLEY PACKAGING, INC.
(as Seller)
GERALD W. HORVATH, PATRICIA A. HORVATH, and MICHAEL G. HORVATH
(as Seller's Shareholders, solely for purposes of Article X)
and
RIDGEWAY CAPITAL PARTNERS FUND III, LP
(solely for limited purposes as indicated herein)
Dated as of June 15, 2025
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of June 15, 2025, by and among:
CRESTLINE PACKAGING SOLUTIONS LLC, an Ohio limited liability company, with its principal offices located at 4100 Commerce Parkway, Suite 800, Akron, OH 44308 ("Buyer");
ALLEGHENY VALLEY PACKAGING, INC., a Pennsylvania corporation, with its principal offices located at 250 Industrial Boulevard, Butler, PA 16001 ("Seller");
GERALD W. HORVATH, PATRICIA A. HORVATH, and MICHAEL G. HORVATH, each an individual (collectively, "Seller's Shareholders"), solely for purposes of the joinder provisions set forth in Article X hereof; and
RIDGEWAY CAPITAL PARTNERS FUND III, LP, a Delaware limited partnership (the "Sponsor"), solely for the limited purposes indicated herein.
Buyer, Seller, Seller's Shareholders, and the Sponsor are each referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Seller is engaged in the business of manufacturing corrugated packaging, folding cartons, and specialty coatings for food-grade and chemical-grade packaging (the "Business"), as more particularly described herein;
WHEREAS, Seller operates the Business from two manufacturing facilities: (i) a primary manufacturing plant consisting of approximately 285,000 square feet located at 250 Industrial Boulevard, Butler, Pennsylvania 16001, and (ii) a secondary manufacturing plant consisting of approximately 110,000 square feet located at 1480 Conneaut Lake Road, Meadville, Pennsylvania 16335;
WHEREAS, Buyer desires to purchase, acquire, and assume, and Seller desires to sell, assign, transfer, convey, and deliver to Buyer, substantially all of the assets of Seller used in or related to the Business, together with certain specified liabilities associated therewith, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Buyer is a portfolio company of the Sponsor, and the Sponsor has agreed, concurrently with the execution and delivery of this Agreement, to deliver to Seller (i) an Equity Commitment Letter dated as of the date hereof, committing to contribute $50,000,000 in equity capital to Buyer to fund a portion of the Purchase Price, and (ii) a Limited Guarantee in favor of Seller guaranteeing certain obligations of Buyer hereunder;
WHEREAS, the board of directors of Seller has determined that the transactions contemplated by this Agreement are fair and in the best interests of Seller and Seller's Shareholders, and has approved and authorized the execution, delivery, and performance of this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby;
WHEREAS, each of Seller's Shareholders, comprising all of the issued and outstanding shares of capital stock of Seller, has approved and authorized the execution, delivery, and performance of this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby; and
WHEREAS, certain capitalized terms used in this Agreement are defined in Article I hereof or as otherwise indicated throughout this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals (which are hereby incorporated into and made a part of this Agreement), the mutual representations, warranties, covenants, and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings ascribed to them below:
"Acquired Assets" has the meaning set forth in Section 2.1.
"Adjusted Closing Date Purchase Price" means the Purchase Price as adjusted in accordance with Section 2.5(b) and Section 2.6 of this Agreement.
"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreed Accounting Principles" means GAAP as applied by Seller consistently with the accounting principles, policies, methodologies, practices, estimation techniques, assumptions, and procedures used in the preparation of the audited financial statements of Seller for the fiscal year ended December 31, 2024, as further described on Exhibit A attached hereto.
"Agreement" has the meaning set forth in the preamble.
"Allocation" has the meaning set forth in Section 2.7.
"Assumed Contracts" means those Contracts of Seller listed on Schedule 2.1(d), including all amendments, modifications, supplements, and side letters thereto.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Basket" means One Million Three Hundred Fifty Thousand Dollars ($1,350,000), which is equal to 0.75% of the Purchase Price.
"Bill of Sale" means the Bill of Sale, substantially in the form of Exhibit F attached hereto, to be executed and delivered by Seller to Buyer at the Closing.
"Business" means the corrugated packaging, folding carton, and specialty coatings manufacturing business conducted by Seller, including all operations, activities, and functions associated therewith at the Butler Property and the Meadville Property.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which commercial banks located in New York, New York are authorized or required by Law to remain closed.
"Butler Property" means the real property and improvements thereon located at 250 Industrial Boulevard, Butler, Pennsylvania 16001, consisting of a manufacturing facility of approximately 285,000 square feet situated on approximately 22.5 acres, as more particularly described in the Deed attached hereto as Exhibit I-1, together with all buildings, structures, fixtures, systems, improvements, easements, rights-of-way, and appurtenances related thereto.
"Buyer" has the meaning set forth in the preamble.
"Buyer Indemnified Parties" has the meaning set forth in Section 10.2(a).
"Buyer's Closing Certificate" has the meaning set forth in Section 8.2(a).
"Cap" means Forty-Five Million Dollars ($45,000,000), which is equal to 25% of the Purchase Price.
"CBA" means the Collective Bargaining Agreement between Seller and International Paperworkers Union Local 814, effective as of April 1, 2024, and expiring on March 31, 2027, as the same may be amended, modified, or supplemented from time to time in accordance with the terms thereof and the provisions of this Agreement.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Date Net Working Capital" has the meaning set forth in Section 2.6(a).
"Code" means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, together with all regulations, rulings, and interpretations thereof or thereunder issued by the Internal Revenue Service or the United States Department of the Treasury.
"Collar Amount" means Two Hundred Fifty Thousand Dollars ($250,000).
"Commitment Letter" means the commitment letter dated April 22, 2025 (Reference PCL-2025-04-1187), from Pinnacle National Bank, N.A., as Administrative Agent and Lead Arranger, addressed to Buyer, providing for a $130,000,000 incremental term loan under the Existing Credit Agreement, together with all exhibits, schedules, annexes, and fee letters attached thereto.
"Confidentiality Agreement" means the Mutual Non-Disclosure Agreement dated February 3, 2025, between Buyer and Seller, as amended.
"Consolidated Linerboard Contract" means the Supply Agreement dated March 1, 2023, between Seller and Consolidated Linerboard Corp., as amended from time to time.
"Contract" means any written or oral contract, agreement, lease, sublease, license, sublicense, purchase order, work order, commitment, arrangement, or understanding that is legally binding on any Person.
"De Minimis Amount" means Fifty Thousand Dollars ($50,000).
"Deeds" means the Special Warranty Deeds for the Butler Property and the Meadville Property, substantially in the forms attached hereto as Exhibit I-1 and Exhibit I-2, respectively.
"Environmental Laws" means all federal, state, and local Laws, regulations, rules, ordinances, codes, orders, judgments, decrees, permits, licenses, and authorizations relating to: (a) the protection, investigation, or restoration of the environment, health, or safety, or natural resources; (b) the handling, use, presence, disposal, release, or threatened release of, or exposure to, any Hazardous Substance; or (c) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination, or any injury or threat of injury to persons or property from environmental, health, or safety hazards, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, the Pennsylvania Clean Streams Law, the Pennsylvania Solid Waste Management Act, the Pennsylvania Hazardous Sites Cleanup Act, and the Pennsylvania Land Recycling and Environmental Remediation Standards Act (Act 2), each as amended.
"Environmental Permits" means (a) PA DEP Title V operating permit (Permit No. TV-10-00287) issued to Seller for the Butler Property by the Pennsylvania Department of Environmental Protection, and (b) PA DEP General Permit GP-3 issued to Seller for the Meadville Property by the Pennsylvania Department of Environmental Protection, together with all other permits, licenses, registrations, approvals, and authorizations issued under Environmental Laws and held by Seller in connection with the Business.
"Environmental Special Indemnity" has the meaning set forth in Section 10.2(d).
"Environmental Special Indemnity Cap" means Eight Million Dollars ($8,000,000).
"Equity Commitment Letter" means the letter agreement dated April 22, 2025, from Ridgeway Capital Partners Fund III, LP, addressed to Buyer and acknowledged by Seller, committing to contribute Fifty Million Dollars ($50,000,000) in equity capital to Buyer to fund a portion of the Purchase Price.
"Escrow Agent" means Atlantic Fiduciary Trust Company, having offices at 60 Wall Street, 22nd Floor, New York, NY 10005, or any successor escrow agent appointed in accordance with the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement, substantially in the form of Exhibit B attached hereto, among Buyer, Seller, and the Escrow Agent, to be entered into at the Closing.
"Escrow Amount" means Nine Million Dollars ($9,000,000), which is equal to 5% of the Purchase Price.
"Escrow Release Date" means the date that is eighteen (18) months after the Closing Date.
"Estimated Closing Date Net Working Capital" means Seller's good faith estimate of the Closing Date Net Working Capital, prepared and delivered in accordance with Section 2.6(b).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Existing Credit Agreement" means the Credit Agreement dated as of November 15, 2021, among Buyer, Pinnacle National Bank, N.A., as Administrative Agent, and the lenders from time to time party thereto, as amended, restated, supplemented, or otherwise modified from time to time.
"Final Closing Statement" has the meaning set forth in Section 2.6(c).
"FIRPTA Certificate" has the meaning set forth in Section 3.2(g).
"Fundamental Representations" means (a) with respect to Seller, the representations and warranties set forth in Section 4.1 (Organization and Good Standing), Section 4.2 (Authority and Enforceability), Section 4.7 (Title to Acquired Assets; Sufficiency), Section 4.11 (Tax Matters), Section 4.18 (Brokers), and Section 4.22 (S-Corporation Status), and (b) with respect to Buyer, the representations and warranties set forth in Section 5.1 (Organization and Good Standing), Section 5.2 (Authority and Enforceability), and Section 5.6 (Brokers).
"GAAP" means United States generally accepted accounting principles in effect from time to time, applied on a consistent basis.
"Governmental Authority" means any federal, state, provincial, local, municipal, or foreign government, or any department, commission, board, bureau, agency, authority, instrumentality, regulatory body, court, arbitral tribunal, or other body exercising executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of, or pertaining to, government, including any self-regulatory organization.
"Hazardous Substance" means any substance, material, or waste that is listed, defined, designated, classified, or regulated as hazardous, toxic, radioactive, dangerous, a pollutant, a contaminant, or words of similar import under any Environmental Law, including petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, trichloroethylene, per- and polyfluoroalkyl substances, radon, and urea formaldehyde.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, with respect to any Person, without duplication: (a) all indebtedness for borrowed money or evidenced by bonds, debentures, notes, or similar instruments; (b) all obligations under acceptance, letter of credit, or similar facilities; (c) all obligations arising from cash/book overdrafts or under any interest rate, currency, or commodity swap, hedge, or similar agreement; (d) all obligations to pay the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business); (e) all capitalized lease obligations; (f) all guarantees of any of the foregoing; (g) all accrued and unpaid interest, premiums, penalties, fees, and expenses related to any of the foregoing; and (h) approximately $14,200,000 outstanding under Seller's revolving credit facility with Merchants & Traders Bank, N.A.
"Indemnified Party" has the meaning set forth in Section 10.4(a).
"Indemnifying Party" has the meaning set forth in Section 10.4(a).
"intellectual Property" means all intellectual property and proprietary rights of any kind or nature, including: (a) patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisions, revisions, extensions, and reexaminations thereof; (b) trademarks, service marks, trade dress, logos, trade names, corporate names, and domain names, together with all translations, adaptations, derivations, and combinations thereof, and all applications, registrations, and renewals in connection therewith, and all goodwill associated therewith; (c) copyrights and copyrightable works, and all applications, registrations, and renewals in connection therewith; (d) trade secrets, know-how, confidential business information, proprietary formulations, manufacturing processes, technical data, designs, drawings, specifications, customer lists, supplier lists, pricing information, and other proprietary information and technology; and (e) all other intellectual property rights of any kind or nature.
"Knowledge of Seller" or words of similar import means the actual knowledge of Gerald W. Horvath (President), Michael G. Horvath (Vice President of Operations), and Diane L. Pulaski (Chief Financial Officer), after reasonable inquiry of direct reports and review of files and records within their respective areas of responsibility.
"Law" means any federal, state, provincial, local, municipal, or foreign statute, law, ordinance, regulation, rule, code, order, judgment, decree, injunction, or governmental requirement enacted, issued, promulgated, enforced, or entered by any Governmental Authority, including common law.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest, lien (statutory or otherwise), charge, claim, option, right of first refusal, right of first offer, easement, servitude, restrictive covenant, encroachment, title defect, title retention agreement, or other restriction or limitation of any kind.
"Limited Guarantee" means the Limited Guarantee dated as of the date hereof, delivered by Ridgeway Capital Partners Fund III, LP in favor of Seller, guaranteeing Buyer's obligations under Section 9.3 of this Agreement.
"Losses" means any and all losses, damages, liabilities, claims, demands, actions, causes of action, suits, proceedings, judgments, awards, penalties, fines, costs, and expenses (including reasonable attorneys' fees and expenses, court costs, and costs of investigation and remediation), whether or not involving a Third-Party Claim; provided, however, that "Losses" shall not include any punitive, exemplary, consequential, special, or indirect damages, diminution in value, or lost profits, except to the extent such damages are actually awarded to a third party in connection with a Third-Party Claim.
"Material Adverse Effect" means any event, occurrence, fact, condition, change, development, or effect that, individually or in the aggregate, (a) is or would reasonably be expected to be materially adverse to the business, assets, properties, liabilities, financial condition, or results of operations of the Business, taken as a whole, or (b) would prevent or materially delay or materially impair the ability of Seller to consummate the transactions contemplated by this Agreement; provided, however, that none of the following, either alone or in combination, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Material Adverse Effect: (i) changes in general economic, financial, or market conditions; (ii) changes generally affecting the industries in which the Business operates; (iii) changes in applicable Law or GAAP or in the interpretation or enforcement thereof; (iv) changes resulting from natural disasters, acts of war, terrorism, pandemics, epidemics, or other force majeure events; (v) changes resulting from the announcement or pendency of the transactions contemplated hereby (including the impact on relationships with employees, customers, suppliers, distributors, or vendors); (vi) changes resulting from compliance with the terms of this Agreement or actions taken or omitted at the written request or with the written consent of Buyer; or (vii) any failure to meet any internal or published projections, forecasts, estimates, or predictions (provided that the underlying facts or circumstances causing such failure may be considered in determining whether a Material Adverse Effect has occurred); except, in the case of clauses (i) through (iv), to the extent such changes have a disproportionate adverse effect on the Business relative to similarly situated businesses in the same industries and geographic markets.
"Material Contracts" has the meaning set forth in Section 4.10.
"Meadville Property" means the real property and improvements thereon located at 1480 Conneaut Lake Road, Meadville, Pennsylvania 16335, consisting of a manufacturing facility of approximately 110,000 square feet situated on approximately 8.2 acres, as more particularly described in the Deed attached hereto as Exhibit I-2, together with all buildings, structures, fixtures, systems, improvements, easements, rights-of-way, and appurtenances related thereto.
"Net Working Capital" means the current assets of the Business minus the current liabilities of the Business, in each case as of the applicable measurement date, calculated in accordance with the Agreed Accounting Principles, as further specified on Exhibit A attached hereto.
"Outside Date" means September 30, 2025.
"PA Bulk Sale Clearance" means the Tax Clearance Certificate issued by the Pennsylvania Department of Revenue pursuant to 72 P.S. § 1403 (or any successor provision) in connection with a bulk sale or transfer of assets.
"Party" or "Parties" has the meaning set forth in the preamble.
"Permitted Liens" means: (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (b) mechanics', carriers', workmen's, repairmen's, materialmen's, or similar Liens arising or incurred in the ordinary course of business securing amounts not yet due and payable; (c) easements, covenants, conditions, restrictions, and other similar matters of record that do not materially impair the use or occupancy of the Real Property for the purposes for which it is currently used in the Business; (d) zoning, building, and other similar restrictions that are not violated by the current use or occupancy of the Real Property; (e) Liens arising under workers' compensation, unemployment insurance, social security, or similar legislation; (f) purchase money Liens and Liens securing rental payments under capital lease arrangements incurred in the ordinary course of business and disclosed on Schedule 4.7; and (g) such other Liens as are set forth on Schedule 4.7.
"Person" means any individual, corporation, partnership, limited partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or any other entity or body.
"Pre-Closing Tax Period" means any Tax period ending on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date.
"Purchase Price" means One Hundred Eighty Million Dollars ($180,000,000).
"R&W Insurance Policy" means the representations and warranties insurance policy issued by Northbridge Specialty Insurance Company (Policy No. NSW-2025-07812) in favor of Buyer, providing coverage with respect to breaches of the representations and warranties of Seller set forth in Article IV of this Agreement.
"Real Property" means, collectively, the Butler Property and the Meadville Property.
"Representative" means, with respect to any Person, such Person's directors, officers, managers, members, partners, employees, agents, consultants, advisors, attorneys, accountants, investment bankers, and other representatives.
"Retained Name" means the name "Allegheny Valley Packaging, Inc." and all derivations, variations, and abbreviations thereof.
"Seller" has the meaning set forth in the preamble.
"Seller Indemnified Parties" has the meaning set forth in Section 10.3(a).
"Seller's Shareholders" means Gerald W. Horvath (holding approximately 72% of the issued and outstanding shares of capital stock of Seller), Patricia A. Horvath (holding approximately 18% of such shares), and Michael G. Horvath (holding approximately 10% of such shares).
"Sponsor" has the meaning set forth in the preamble.
"Straddle Period" means any Tax period that begins before and ends after the Closing Date.
"Target Net Working Capital" means Twelve Million Four Hundred Thousand Dollars ($12,400,000).
"Tax" or "Taxes" means any and all federal, state, provincial, local, municipal, or foreign taxes, charges, fees, imposts, levies, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental, customs duties, capital stock, paid-up capital, profits, withholding, social security, unemployment, disability, real property, personal property (tangible and intangible), value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto, and any amounts payable pursuant to any tax-sharing or indemnification agreement or any obligation to indemnify or otherwise assume or succeed to the liability of any other Person.
"Tax Return" means any return, declaration, report, claim for refund, information return, statement, or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"Third-Party Claim" has the meaning set forth in Section 10.4(b).
"Transaction Documents" means this Agreement and each of the Exhibits and Schedules hereto, the Bill of Sale, the Assignment and Assumption Agreement, the intellectual Property Assignment Agreement, the Deeds, the Escrow Agreement, the Transition Services Agreement, the Non-Competition and Non-Solicitation Agreements, the Consulting Agreement, the FIRPTA Certificate, the Closing Certificates, and each other agreement, certificate, instrument, and document to be executed and delivered in connection with the transactions contemplated by this Agreement.
"Transaction Expenses" means all fees, costs, and expenses incurred by or on behalf of a Party in connection with the negotiation, preparation, execution, and performance of this Agreement and the consummation of the transactions contemplated hereby, including fees and expenses of legal counsel, financial advisors, investment bankers, accountants, environmental consultants, and other advisors and service providers. For the avoidance of doubt, Seller's Transaction Expenses include, without limitation, fees and expenses of Broadmoor Strauss & Kline LLP (legal counsel to Seller) and Veltrano Hargrave & Co. (financial advisor to Seller), and all such Seller Transaction Expenses are Excluded Liabilities.
"Transfer Taxes" has the meaning set forth in Section 7.5(a).
"Transition Services Agreement" means the Transition Services Agreement, substantially in the form attached hereto as Exhibit D, to be entered into at the Closing between Buyer and Seller.
"Union" means International Paperworkers Union Local 814.
ARTICLE II — PURCHASE AND SALE
Section 2.1 — Acquired Assets.
Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey, and deliver to Buyer, and Buyer shall purchase, acquire, and accept from Seller, free and clear of all Liens other than Permitted Liens, all of Seller's right, title, and interest in, to, and under all of the assets, properties, and rights of every kind and nature, whether real, personal, or mixed, tangible or intangible, wherever located, that are owned, held, or used by Seller in connection with or related to the Business (collectively, the "Acquired Assets"), including the following:
(a) Tangible Personal Property. All machinery, equipment, furniture, furnishings, fixtures, tools, dies, molds, jigs, patterns, vehicles, rolling stock, forklifts, spare parts, supplies, computers, servers, telecommunications equipment, and other tangible personal property owned by Seller and located at or used in connection with the Butler Property and the Meadville Property, including the items listed on Schedule 2.1(a);
(b) Inventory. All inventory of the Business, wherever located, including all raw materials (including linerboard, medium, inks, coatings, adhesives, and other consumables), work-in-process, finished goods, packaging materials, and supplies, and all rights to any of the foregoing in the possession of third parties or in transit;
(c) Accounts Receivable. All accounts receivable, trade receivables, notes receivable, and other receivables of the Business as of the Closing Date, together with any security held by Seller for the payment thereof and any right to payment related thereto;
(d) Assumed Contracts. All right, title, and interest of Seller in, to, and under the Assumed Contracts, which include approximately forty-seven (47) material Contracts, including customer supply agreements, vendor and raw material supply agreements (including the Consolidated Linerboard Contract), equipment leases, and the CBA with International Paperworkers Union Local 814 (effective April 1, 2024, expiring March 31, 2027), all as set forth on Schedule 2.1(d);
(e) Real Property. All right, title, and interest of Seller in and to the Real Property, consisting of (i) the Butler Property (250 Industrial Boulevard, Butler, PA 16001, approximately 285,000 square feet on approximately 22.5 acres) and (ii) the Meadville Property (1480 Conneaut Lake Road, Meadville, PA 16335, approximately 110,000 square feet on approximately 8.2 acres), together with all buildings, structures, improvements, fixtures, systems, appurtenances, easements, rights-of-way, hereditaments, and other rights pertaining thereto;
(f) intellectual Property. All intellectual Property owned by Seller and used in or related to the Business, including all trademarks, trade names (other than the Retained Name), service marks, logos, patents, patent applications, copyrights, trade secrets, know-how, customer lists, supplier lists, proprietary formulations (including proprietary formulations for specialty chemical-resistant coatings and food-grade packaging), manufacturing processes, technical data, designs, drawings, specifications, and all goodwill associated with any of the foregoing, as further described on Schedule 2.1(f);
(g) Environmental Permits. All Environmental Permits, to the extent transferable under applicable Law, including PA DEP Title V operating permit (Permit No. TV-10-00287) for the Butler Property and PA DEP General Permit GP-3 for the Meadville Property;
(h) Books and Records. All books, records, files, papers, data, correspondence, and other documents (whether in hard copy, electronic, or other form) related to the Business, including customer and supplier files, production records, quality control records, environmental compliance records, maintenance records, and personnel records to the extent permitted by applicable Law, but excluding any items constituting Excluded Assets;
(i) Goodwill. All goodwill associated with the Business and the Acquired Assets;
(j) Prepaid Expenses. All prepaid expenses, deposits, advances, credits, and charges related to the Business, including security deposits, utility deposits, and prepaid insurance allocable to periods after the Closing Date;
(k) Claims and Rights. All claims, causes of action, counterclaims, rights of recovery, rights of set-off, rights of recoupment, and rights under and pursuant to all warranties, representations, and guarantees made by suppliers, manufacturers, contractors, and other third parties in connection with products or services furnished to the Business or the Acquired Assets, to the extent related to the Acquired Assets or the Business;
(l) Permits. All governmental permits, licenses, registrations, certificates, approvals, franchises, and authorizations related to the Business, to the extent transferable under applicable Law, including certificates of occupancy and all permits listed on Schedule 2.1(l); and
(m) Other Assets. All other assets, properties, and rights of Seller of every kind and nature used in or related to the Business, other than the Excluded Assets.
Section 2.2 — Excluded Assets.
Notwithstanding anything in Section 2.1 to the contrary, the Acquired Assets shall not include, and Seller shall retain all right, title, and interest in, to, and under, the following assets (collectively, the "Excluded Assets"):
(a) all cash, cash equivalents, bank accounts, certificates of deposit, money market accounts, and other similar instruments of Seller;
(b) all Tax refunds, Tax credits, and Tax deposits attributable to Pre-Closing Tax Periods (including any net operating loss carrybacks or carryforwards of Seller);
(c) Seller's minute books, stock ledgers, stock transfer books, corporate seal, certificates of incorporation, bylaws, shareholder agreements, corporate resolutions, and other organizational and governance documents of Seller;
(d) all insurance policies maintained by Seller and all rights thereunder (including any right to insurance proceeds, premium refunds, or retrospective premium adjustments), whether relating to periods before or after the Closing Date;
(e) the Retained Name ("Allegheny Valley Packaging, Inc."), including all trademarks, service marks, trade names, domain names, and logos incorporating or derived from the Retained Name, subject to the transitional license granted to Buyer pursuant to Section 7.9;
(f) all rights of Seller under this Agreement and the other Transaction Documents, and all rights arising from the consummation of the transactions contemplated hereby; and
(g) all assets listed on Schedule 2.2.
Section 2.3 — Assumed Liabilities.
At the Closing, subject to the terms and conditions of this Agreement, Buyer shall assume and agree to pay, perform, and discharge when due only the following liabilities and obligations of Seller (collectively, the "Assumed Liabilities"):
(a) Trade Payables and Accrued Expenses. All trade payables, accrued expenses, and accrued liabilities of the Business that were incurred in the ordinary course of business consistent with past practice and that remain unpaid as of the Closing Date;
(b) Post-Closing Contract Obligations. All obligations and liabilities arising under or relating to the Assumed Contracts to the extent such obligations and liabilities arise from and relate to the period from and after the Closing Date; provided, however, that Buyer shall not assume any obligation or liability arising from or relating to any breach, default, violation, or non-performance by Seller of any Assumed Contract occurring or existing prior to the Closing Date;
(c) Post-Closing Product Warranties. All warranty obligations and product return obligations for products manufactured and shipped by the Business on or after the Closing Date;
(d) Prorated Property Taxes. The current-period real and personal property taxes allocable to the period from and after the Closing Date, prorated as of the Closing Date in accordance with Section 7.5; and
(e) CBA Successor Obligations. All obligations of Buyer as successor employer under the CBA with International Paperworkers Union Local 814 arising from and after the Closing Date, including obligations relating to wages, benefits, working conditions, grievance procedures, and other terms of employment set forth therein.
Section 2.4 — Excluded Liabilities.
Except for the Assumed Liabilities expressly set forth in Section 2.3, Buyer shall not assume and shall not be deemed to have assumed, and Seller shall retain, pay, perform, and discharge when due, all debts, obligations, and liabilities of Seller of any kind or nature whatsoever, whether known or unknown, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, or otherwise, whether arising before, on, or after the Closing Date (collectively, the "Excluded Liabilities"), including the following:
(a) Pre-Closing Indebtedness. All Indebtedness of Seller outstanding as of the Closing Date, including approximately $14,200,000 outstanding under Seller's revolving credit facility with Merchants & Traders Bank, N.A. (having a total facility commitment of $20,000,000), together with all accrued and unpaid interest, fees, penalties, premiums, and other amounts payable in connection with the repayment and discharge thereof;
(b) Pre-Closing Tax Liabilities. All liabilities for Taxes of Seller attributable to Pre-Closing Tax Periods, including any Taxes arising from the consummation of the transactions contemplated by this Agreement and any obligation of Seller under any Tax-sharing or Tax-indemnification agreement;
(c) Pre-Closing Product Liability. All product liability claims, actions, suits, proceedings, and obligations arising from or relating to products manufactured, sold, or distributed by the Business prior to the Closing Date;
(d) Pension Obligations. All underfunded pension obligations and liabilities of Seller, estimated at approximately $3,100,000, including any liabilities arising under the Employee Retirement Income Security Act of 1974, as amended, or under any defined benefit pension plan sponsored, maintained, or contributed to by Seller;
(e) Transaction Expenses. All Transaction Expenses of Seller, including fees and expenses of Broadmoor Strauss & Kline LLP, Veltrano Hargrave & Co., and all other advisors retained by Seller in connection with the transactions contemplated by this Agreement;
(f) Pre-Closing Operational Liabilities. All liabilities and obligations arising from Seller's ownership, operation, or conduct of the Business prior to the Closing Date, except to the extent expressly assumed by Buyer as Assumed Liabilities pursuant to Section 2.3; and
(g) Scheduled Excluded Liabilities. All liabilities listed on Schedule 2.4.
Section 2.5 — Purchase Price; Payment.
(a) Purchase Price. The aggregate purchase price for the Acquired Assets shall be One Hundred Eighty Million Dollars ($180,000,000) (the "Purchase Price"), subject to adjustment as provided in Section 2.6.
(b) Payment at Closing. At the Closing, Buyer shall pay to Seller (or as directed by Seller) by wire transfer of immediately available funds to one or more accounts designated by Seller in writing not less than two (2) Business Days prior to the Closing Date, an aggregate amount (the "Adjusted Closing Date Purchase Price") equal to:
(i) the Purchase Price; minus
(ii) the Escrow Amount ($9,000,000); plus or minus
(iii) the Estimated Net Working Capital Adjustment, if any (i.e., the amount, if any, by which the Estimated Closing Date Net Working Capital exceeds or is less than the Target Net Working Capital, subject to the Collar Amount); minus
(iv) the aggregate amount of Indebtedness of Seller outstanding as of the Closing Date that is to be repaid and discharged at or immediately prior to the Closing, as set forth on the payoff letters delivered by Seller pursuant to Section 3.2(k); minus
(v) the aggregate amount of Seller's Transaction Expenses that remain unpaid as of the Closing Date and are to be paid at the Closing on behalf of Seller, as set forth in a certificate delivered by Seller not later than two (2) Business Days prior to the Closing Date.
(c) Escrow Deposit. At the Closing, Buyer shall deposit the Escrow Amount in the sum of Nine Million Dollars ($9,000,000) (which is equal to 5% of the Purchase Price) with the Escrow Agent (Atlantic Fiduciary Trust Company) by wire transfer of immediately available funds, to be held, invested, and disbursed in accordance with the terms and conditions of the Escrow Agreement. The Escrow Amount shall serve as partial security for the indemnification obligations of Seller and Seller's Shareholders under Article X of this Agreement. The Escrow Amount (together with all interest and earnings thereon) shall be released on the Escrow Release Date (eighteen (18) months after the Closing Date), net of the aggregate amount of any pending and unresolved indemnification claims made by any Buyer Indemnified Party prior to such date.
(d) Escrow Agreement. At the Closing, Buyer, Seller, and the Escrow Agent shall execute and deliver the Escrow Agreement in substantially the form attached hereto as Exhibit B.
Section 2.6 — Net Working Capital Adjustment.
(a) Definitions. For purposes of this Section 2.6, "Closing Date Net Working Capital" means the Net Working Capital of the Business as of 11:59 P.M. Eastern Time on the day immediately preceding the Closing Date, calculated using the Agreed Accounting Principles consistent with GAAP as applied by Seller in the preparation of its historical financial statements, and using the methodology, line items, and calculation principles set forth on Exhibit A.
(b) Estimated Closing Statement. Not later than three (3) Business Days prior to the Closing Date, Seller shall prepare and deliver to Buyer a written statement (the "Estimated Closing Statement") setting forth Seller's good faith estimate of the Closing Date Net Working Capital (the "Estimated Closing Date Net Working Capital"), together with reasonable supporting documentation and work papers. The Estimated Closing Statement shall be prepared in accordance with the Agreed Accounting Principles and in a manner consistent with Exhibit A. Buyer and its Representatives shall have reasonable access to Seller's books, records, and personnel to review the Estimated Closing Statement prior to the Closing.
(c) Post-Closing Final Determination. Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller a written statement (the "Final Closing Statement") setting forth Buyer's calculation of the Closing Date Net Working Capital, prepared in accordance with the Agreed Accounting Principles and consistent with Exhibit A, together with reasonable supporting documentation and work papers. Buyer shall provide Seller and its Representatives with reasonable access during normal business hours to the books, records, and personnel of the Business as reasonably necessary to review the Final Closing Statement.
(d) Review Period; Dispute Notice. Seller shall have thirty (30) days after receipt of the Final Closing Statement (the "Review Period") to review the Final Closing Statement and deliver to Buyer a written notice of disagreement (a "Dispute Notice") specifying in reasonable detail each item or amount that Seller disputes and the basis for such dispute, together with Seller's proposed calculation of each disputed item. Any component of the Final Closing Statement not specifically disputed in the Dispute Notice delivered within the Review Period shall be deemed accepted by Seller and shall be final and binding on the Parties. If Seller does not deliver a Dispute Notice within the Review Period, the Final Closing Statement as delivered by Buyer shall be deemed accepted by Seller in its entirety and shall be final and binding on the Parties.
(e) Resolution of Disputes. If Seller delivers a Dispute Notice in accordance with Section 2.6(d), the Parties shall attempt in good faith to resolve the disputed items during the fifteen (15)-day period commencing on the date Buyer receives the Dispute Notice (the "Negotiation Period"). If the Parties are unable to resolve all disputed items within the Negotiation Period, the remaining unresolved disputed items shall be submitted for final resolution to a nationally recognized independent accounting firm mutually agreed upon by Buyer and Seller (the "Accounting Referee"); provided, that if the Parties are unable to agree on the Accounting Referee within ten (10) days after the expiration of the Negotiation Period, either Party may request the American Arbitration Association to appoint an independent accounting firm of national standing to serve as the Accounting Referee. The Accounting Referee shall act as an expert, not an arbitrator, and shall determine only the unresolved disputed items in accordance with the Agreed Accounting Principles and the methodology set forth on Exhibit A. The Accounting Referee's determination of each disputed item shall not be greater than the highest value for such item claimed by either Party or less than the lowest value for such item claimed by either Party. The determination of the Accounting Referee shall be final, binding, and conclusive on the Parties, absent manifest error. The fees and expenses of the Accounting Referee shall be borne by the Parties in inverse proportion to the extent to which the Accounting Referee's determination favors such Party's position.
(f) Adjustment Mechanics. The Closing Date Net Working Capital, as finally determined pursuant to this Section 2.6 (the "Final Net Working Capital"), shall be compared to the Target Net Working Capital, and the following adjustments shall be made:
(i) If the Final Net Working Capital exceeds the Target Net Working Capital by more than the Collar Amount (i.e., the Final Net Working Capital exceeds $12,650,000), then Buyer shall pay to Seller an amount in cash equal to the excess of the Final Net Working Capital over the Target Net Working Capital (inclusive of the Collar Amount);
(ii) If the Target Net Working Capital exceeds the Final Net Working Capital by more than the Collar Amount (i.e., the Final Net Working Capital is less than $12,150,000), then Seller shall pay to Buyer an amount in cash equal to the excess of the Target Net Working Capital over the Final Net Working Capital (inclusive of the Collar Amount); and
(iii) If the Final Net Working Capital is within the range of the Target Net Working Capital plus or minus the Collar Amount (i.e., within the range of $12,150,000 to $12,650,000, inclusive), no post-closing adjustment shall be made.
(g) Payment of Adjustments. Any post-closing adjustment payment required by this Section 2.6 shall be made within five (5) Business Days after the final determination of the Closing Date Net Working Capital, by wire transfer of immediately available funds. If the adjustment is payable by Buyer to Seller, Buyer shall pay such amount directly to Seller. If the adjustment is payable by Seller to Buyer, Seller shall pay such amount directly to Buyer; provided, however, that Buyer may elect, by written notice to the Escrow Agent and Seller, to satisfy all or any portion of an adjustment owed by Seller from the Escrow Amount in accordance with the terms of the Escrow Agreement. Any adjustment payment shall bear interest from the Closing Date through the date of payment at the rate of the prime rate published in The Wall Street Journal on the Closing Date, calculated on the basis of a 365-day year for the actual number of days elapsed.
(h) Methodology. The detailed methodology and components for computing Net Working Capital, including the specific line items, accounting classifications, and calculation conventions, are set forth on Exhibit A attached hereto and incorporated herein by reference.
Section 2.7 — Purchase Price Allocation.
(a) Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller a proposed allocation of the Purchase Price (and any other amounts treated as consideration for federal income Tax purposes, including Assumed Liabilities to the extent required) among the Acquired Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (including Treasury Regulation § 1.1060-1) (the "Allocation").
(b) Seller shall have thirty (30) days after receipt of the proposed Allocation to review the same and to notify Buyer in writing of any objections thereto, together with a reasonably detailed explanation of the basis for such objections. If Seller does not deliver an objection notice within such thirty (30)-day period, the Allocation as proposed by Buyer shall be deemed accepted by Seller. If Seller delivers a timely objection notice, Buyer and Seller shall negotiate in good faith to resolve any disagreements within fifteen (15) days after Buyer's receipt of such objection notice. If the Parties are unable to resolve any remaining disagreements within such period, the disputed items shall be resolved by the Accounting Referee in accordance with the procedures set forth in Section 2.6(e), mutatis mutandis.
(c) Once the Allocation has been finally determined, each Party shall (i) prepare and file IRS Form 8594 (Asset Acquisition Statement Under Section 1060) and all federal, state, and local Tax Returns in a manner consistent with the Allocation, and (ii) not take any position on any Tax Return, in any Tax proceeding, or otherwise that is inconsistent with the Allocation, unless required by a final "determination" (within the meaning of Section 1313 of the Code) or by applicable Law.
(d) Neither Buyer nor Seller shall take any Tax position inconsistent with the agreed Allocation unless required by applicable Law or a final determination by a Governmental Authority of competent jurisdiction.
ARTICLE III — CLOSING
Section 3.1 — Closing Date and Location.
The closing of the transactions contemplated by this Agreement (the "Closing") shall take place on the date (the "Closing Date") that is five (5) Business Days after the date on which all of the conditions to the obligations of the Parties set forth in Article VIII have been satisfied or waived (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or on such other date as Buyer and Seller may mutually agree in writing. The Parties anticipate that the Closing Date will occur on or about July 31, 2025. The Closing shall be conducted remotely via the electronic exchange of executed documents and signatures, or, if any Party so requests, at the offices of Calderwood & Harkness LLP, 600 Lexington Avenue, 30th Floor, New York, New York 10022, or at such other location as the Parties may mutually agree in writing. The Closing shall be deemed effective as of 12:01 A.M. Eastern Time on the Closing Date.
Section 3.2 — Deliverables at Closing by Seller.
At the Closing, Seller shall deliver or cause to be delivered to Buyer (or, as applicable, to the Escrow Agent or to a title company) the following, each duly executed and delivered (where applicable) by Seller or the appropriate party:
(a) the Bill of Sale, duly executed by Seller, substantially in the form of Exhibit F;
(b) the Assignment and Assumption Agreement, duly executed by Seller, substantially in the form of Exhibit G;
(c) the intellectual Property Assignment Agreement, duly executed by Seller, substantially in the form of Exhibit H;
(d) the Special Warranty Deed for the Butler Property (250 Industrial Boulevard, Butler, PA 16001), duly executed and acknowledged by Seller, substantially in the form of Exhibit I-1;
(e) the Special Warranty Deed for the Meadville Property (1480 Conneaut Lake Road, Meadville, PA 16335), duly executed and acknowledged by Seller, substantially in the form of Exhibit I-2;
(f) the Escrow Agreement, duly executed by Seller;
(g) a certificate of non-foreign status (the "FIRPTA Certificate"), duly executed by Seller, certifying that Seller is not a "foreign person" as defined in Section 1445 of the Code, in accordance with Treasury Regulation § 1.1445-2(b)(2), setting forth Seller's name (Allegheny Valley Packaging, Inc.), address (250 Industrial Boulevard, Butler, PA 16001), and federal employer identification number (25-1784632), substantially in the form of Exhibit J;
(h) the Seller's Closing Certificate, duly executed by an authorized officer of Seller, certifying as to the satisfaction of the conditions set forth in Section 8.1(a) and Section 8.1(b), substantially in the form of Exhibit K;