<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 1, 1998
---------------------------------
(Date of earliest event reported)
HUNTSMAN PACKAGING CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 333-40067 87-0496065
- ------------------------------- --------------------- -------------------
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 532-5200
-------------------------------------------------------------
(Address of principal executive offices and telephone number,
including area code)
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 1, 1998, Huntsman Container Corporation International ("HCCI"),
a wholly-owned subsidiary of Huntsman Packaging Corporation (the "Company"),
sold its entire interest in the capital stock of Huntsman Container Company
Limited ("HCCL") and Huntsman Container Company France SA ("HCCFSA") to
subsidiaries of Huhtamaki Oyj, Polarcup Limited and Huhtamaki Holdings France
Sarl (collectively, the "Purchasers"). Together, HCCL and HCCFSA comprised the
Company's foam products operations, which were operated exclusively in Europe.
The sale of the Company's interest in HCCL and HCCFSA (the "European
Foam Sale") was consummated pursuant to a Share Sale Agreement, dated as of June
1, 1998 (the "Share Sale Agreement"), by and between HCCI, the Company and the
Purchasers. Pursuant to the terms of the Share Sale Agreement, the Company sold
its entire interest in the capital stock of HCCL and HCCFSA (which represented
in excess of 99% of the capital stock of HCCL and HCCFSA) and procured the sale
of certain shares constituting the remaining minority interests in the capital
stock of HCCL and HCCFSA held by certain individual shareholders. The aggregate
sale price (including payment for the cash of the businesses), which was
determined on the basis of arms-length negotiations, was approximately
20,900,000 pounds sterling ($34.3 million U.S. dollars) in cash. The purchase
price is subject to adjustment based upon changes in stockholders' equity
between December 31, 1997 and June 1, 1998, such adjustment to be completed
within 60 days of the closing of the transaction.
Prior to the sale, there were no material relationships between the
Purchasers and the Company or its affiliates, directors or officers or any
associate of any director or officer of the Company.
The foregoing description is qualified in its entirety by reference to
the Share Sale Agreement, which is incorporated by reference as an Exhibit to
this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
1. Unaudited pro forma condensed consolidated balance sheet
as of March 31, 1998.
2. Unaudited pro forma condensed consolidated statements of
operations and other financial information for the year
ended December 31, 1997 and the three months ended March
31, 1998.
(c) Exhibits
2. Share Sale Agreement, dated as of June 1, 1998, between
Huntsman Container Corporation International, Huntsman
Packaging Corporation, Polarcup Limited and Huhtamaki
Holdings France Sarl.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUNTSMAN PACKAGING CORPORATION
/S/ RONALD G. MOFFITT
-----------------------------------------
Ronald G. Moffitt
Senior Vice President
Date: June 15, 1998
3
<PAGE> 4
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet
as of March 31, 1998, has been prepared to give pro forma effect to the European
Foam Sale as if it had occurred on March 31, 1998. The following unaudited pro
forma condensed consolidated statements of operations and other financial
information for the year ended December 31, 1997, and the three months ended
March 31, 1998, have been prepared to give pro forma effect to the European Foam
Sale as if it had occurred on January 1, 1997. The pro forma financial
information does not purport to be indicative of the financial position or
results of operations of future periods or indicative of results that would have
occurred had the transaction referred to above been consummated on the dates
indicated. The unaudited pro forma adjustments are based on available
information and certain assumptions that management of the Company believes are
reasonable.
The unaudited pro forma financial information should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto set forth in the Company's reports on Forms 10-K and 10-Q filed by the
Company with the Securities and Exchange Commission.
4
<PAGE> 5
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
HUNTSMAN PRO FORMA
PACKAGING ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents $ 23,289 $ (3,515)(1) $ 19,774
Receivables, net 76,051 (7,461)(1) 68,590
Inventories 69,938 (5,205)(1) 64,733
Prepaid expenses and other 3,052 (435)(1) 2,617
Deferred income taxes 1,271 1,271
---------- ---------- ----------
Total current assets 173,601 (16,616) 156,985
Plant and equipment, net 178,993 (11,556)(1) 167,437
Intangible assets, net 49,598 49,598
Other assets 21,165 (468)(1) 20,697
---------- ---------- ----------
Total $ 423,357 $ (28,640) $ 394,717
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 38,720 $ (2,386)(1) $ 36,334
Accrued liabilities 30,936 (2,129)(1) 28,807
Due to affiliates 9,744 (624)(1) 9,120
Income taxes payable 3,371 (1,561)(1) 1,810
---------- ---------- ----------
Total current liabilities 82,771 (6,700) 76,071
Long-term debt 256,000 (25,988)(2) 230,012
Other liabilities 8,901 8,901
Deferred income taxes 10,640 (1,216)(1) 9,424
Stockholders' equity 65,045 5,264(3) 70,309
---------- ---------- ----------
Total $ 423,357 $ (28,640) $ 394,717
========== ========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated balance
sheet.
5
<PAGE> 6
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) Adjustments to eliminate net assets sold in accordance with the Share
Sale Agreement.
(2) Adjustment to record the reduction of long-term debt due to the total
cash received as follows:
<TABLE>
<S> <C>
Cash purchase price $34,288
Less: Estimated selling expenses (1,000)
Estimated income tax expense (7,300)
-------
Net cash proceeds $25,988
=======
</TABLE>
(3) Adjustment to record the gain from the sale of net assets as if the sale
had occurred on March 31, 1998 calculated as follows (the actual gain on
the transaction date is expected to be $5,439):
<TABLE>
<S> <C>
Net cash proceeds $25,988
Less: Net assets sold (20,724)
-------
Net increase in stockholders' equity $ 5,264
=======
</TABLE>
6
<PAGE> 7
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND OTHER FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL
HUNTSMAN PRO FORMA
PACKAGING ADJUSTMENTS PRO FORMA
------------ ------------ ------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS:
Sales, net $ 491,163 $ (43,420)(1) $ 447,743
Cost of sales 424,868 (35,239)(1) 389,629
------------ ------------ ------------
Gross profit 66,295 (8,181) 58,114
Total operating expenses 49,209 (4,171)(1) 45,038
------------ ------------ ------------
Operating income 17,086 (4,010) 13,076
Interest expense, net (16,402) (184)(1)
2,079 (2) (14,507)
Other income, net 530 (194)(1) 336
------------ ------------ ------------
Income (loss) before income taxes 1,214 (2,309) (1,095)
Income tax provision (benefit) 839 (516)(1)(2) 323
------------ ------------ ------------
Net income (loss) $ 375 $ (1,793)(3) $ (1,418)
============ ============ ============
OTHER FINANCIAL INFORMATION:
Depreciation and amortization $ 16,442 $ (1,920)(4) $ 14,522
EBITDA (5) 34,058 (6,124)(4) 27,934
Adjusted EBITDA (6) 43,334(7) (6,124)(4) 37,210
Capital expenditures 17,861 (2,602)(4) 15,259
Ratio of Adjusted EBITDA
to interest expense, net 2.6x 2.6x
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated statements
of operations and other financial information.
7
<PAGE> 8
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND OTHER FINANCIAL INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
HUNTSMAN PRO FORMA
PACKAGING ADJUSTMENTS PRO FORMA
------------ ------------ ------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS:
Sales, net $ 147,803 $ (9,285)(1) $ 138,518
Cost of sales 124,761 (7,584)(1) 117,177
------------ ------------ ------------
Gross profit 23,042 (1,701) 21,341
Total operating expenses 13,062 (1,116)(1) 11,946
------------ ------------ ------------
Operating income 9,980 (585) 9,395
Interest expense, net (5,577) (40)(1)
520 (2) (5,097)
Other income, net 118 83 (1) 201
------------ ------------ ------------
Income before income taxes 4,521 (22) 4,499
Income tax provision 2,084 (8)(1)(2) 2,076
------------ ------------ ------------
Net income $ 2,437 $ (14)(3) $ 2,423
============ ============ ============
OTHER FINANCIAL INFORMATION:
Depreciation and amortization $ 4,942 $ (509)(4) $ 4,433
EBITDA(5) 15,040 (1,011)(4) 14,029
Capital expenditures 9,477 (531)(4) 8,946
Ratio of EBITDA
to interest expense, net 2.7x 2.8x
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated statements
of operations and other financial information.
8
<PAGE> 9
HUNTSMAN PACKAGING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER FINANCIAL INFORMATION
(1) Adjustments to eliminate sales and expenses related to the Company's
foam products operations. All overhead included in the expenses
eliminated were those expenses incurred only for the benefit of the
Company's foam products operations.
(2) Adjustment to reflect the reduction of interest expense and the related
income tax effect on borrowings assumed to be repaid from the net cash
received from the European Foam Sale.
(3) The pro forma net income (loss) does not reflect the gain from the
European Foam Sale. The estimated actual gain realized will be
approximately $5.4 million.
(4) Adjustments to state other financial information related to the
Company's foam products operations as if the transaction occurred on
January 1, 1997.
(5) EBITDA is defined as income before interest expense, taxes, depreciation
and amortization and extraordinary items. The Company's management
believes EBITDA information enhances an investor's understanding of a
company's ability to satisfy principal and interest obligations with
respect to its indebtedness and to utilize cash for other purposes.
However, there may be contractual, legal, economic or other reasons
which may prevent the Company from satisfying its principal and interest
obligations with respect to its indebtedness and may require the Company
to allocate funds for other purposes. EBITDA does not represent and
should not be considered as an alternative to net income or cash from
operations as determined by Generally Accepted Accounting Principles
("GAAP") and may not be comparable to other similarly titled measures of
other companies.
(6) Adjusted EBITDA is EBITDA as modified to reflect certain adjustments
which management believes are relevant to evaluating the future
operating performance of the Company. These adjustments, which eliminate
the impact of certain nonrecurring charges and reflect the estimated
impact of management's business and operating strategy, are based on
estimates and assumptions made and believed to be reasonable by the
Company, but are inherently uncertain and are subject to change.
Adjusted EBITDA should not be viewed as indicative of actual or future
results and is not computed in accordance with GAAP or with regulations
of the Securities and Exchange Commission.
(7) Includes aggregate nonrecurring charges of $9.3 million resulting from
the closing of the Company's Carrolton, Ohio facility in the year ended
December 31, 1997.
9
<PAGE> 10
INDEX TO EXHIBITS
Exhibits
2 Share Sale Agreement, dated as of June 1, 1998, between Huntsman
Container Corporation International, Huntsman Packaging Corporation,
Polarcup Limited and Huhtamaki Holdings France Sarl.
10
<PAGE> 1
EXHIBIT 2
DATED 1 June 1998
- --------------------------------------------------------------------------------
HUNTSMAN CONTAINER CORPORATION INTERNATIONAL
- and -
HUNTSMAN PACKAGING CORPORATION
- and -
POLARCUP LIMITED
- and -
HUHTAMAKI HOLDINGS FRANCE SARL
- --------------------------------------------------------------------------------
AGREEMENT
- relating to -
the sale and purchase of the entire issued share capital of
Huntsman Container Company Limited and
Huntsman Container Company France SA
- --------------------------------------------------------------------------------
Lovell White Durrant
65 Holborn Viaduct
London EC1A 2DY
Ref: A4/JTH/NPLR
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
PAGE NO
<S> <C>
1. INTERPRETATION.......................................................1
2. SALE AND PURCHASE OF SHARES AND RIGHTS...............................5
3. CONSIDERATION........................................................6
4. COMPLETION...........................................................6
5. GUARANTEES, INDEMNITIES ETC..........................................9
6. WARRANTIES...........................................................9
7. LIMITATION ON CLAIMS................................................10
8. COMPETITION.........................................................13
9. GUARANTEE...........................................................15
10. ANNOUNCEMENTS.......................................................16
11. INTEREST............................................................16
12. COSTS...............................................................16
13. NOTICES ............................................................16
14. FURTHER ASSURANCE...................................................17
15. SEVERABILITY........................................................17
16. ENTIRE AGREEMENT....................................................17
17. VARIATION...........................................................17
18. GOVERNING LAW AND JURISDICTION......................................18
19. AGENT FOR SERVICE...................................................18
20. GENERAL.............................................................18
SCHEDULE I..................................................................20
THE VENDOR AND THE SHARES AND RIGHTS................................20
SCHEDULE II.................................................................22
THE COMPANIES.......................................................22
SCHEDULE III................................................................24
THE PROPERTIES......................................................24
SCHEDULE IV.................................................................25
WARRANTIES..........................................................25
SCHEDULE V..................................................................36
The Completion Accounts.............................................36
SCHEDULE VI.................................................................39
GUARANTEES AND INDEMNITIES..........................................39
SCHEDULE VII................................................................40
COMPETITION.........................................................40
SCHEDULE VIII...............................................................42
HUNTSMAN LOGOS......................................................42
</TABLE>
<PAGE> 3
SHARE SALE AGREEMENT
THIS AGREEMENT is made the 1st day of June 1998
BETWEEN:
(1) HUNTSMAN CONTAINER CORPORATION INTERNATIONAL, a company organised under
the laws of the State of Utah, whose registered office is at 500
Huntsman Way, Salt Lake City, Utah 84108, USA (the "Vendor"); and
(2) HUNTSMAN PACKAGING CORPORATION, a company organised under the laws of
the State of Utah, whose registered office is at 500 Huntsman Way, Salt
Lake City, Utah 84108, USA (the "Guarantor"); and
(2) POLARCUP LIMITED, a company registered in England and Wales whose
registered office is at Rowner Road, Gosport, Hampshire PO13 0PR
("Polarcup" or a "Purchaser"); and
(3) HUHTAMAKI HOLDINGS FRANCE SARL, a company organised under the laws of
France, whose registered office is at Route de Roinville, 28700 Auneau
("Huhtamaki France" or a "Purchaser", and together with Polarcup the
"Purchasers").
RECITALS:
(A) Huntsman Container Company Limited ("HCCL" or a "Company") is a company
registered in England under number 1285089, whose registered office is
at 1 Pikelaw Place, West Pimbo, Skelmersdale, Lancashire WN8 9PP, United
Kingdom and Huntsman Container Company France SA ("HCCFSA" or a
"Company" and, together with HCCL, (the "Companies") a company
registered in France under the number (Vannes) B352 841 068, whose
registered office is at Zone Industrielle de la Croix Blanche, Guegon,
56120 Josselin, France. Particulars of the Companies are set out in
Schedule II.
(B) The Vendors have agreed to sell and the Purchasers have agreed to
purchase all the Shares on and subject to the terms of this Agreement.
(C) The Guarantor has agreed to guarantee to the Purchasers the performance
by the Vendor of certain of its obligations under this Agreement and
under the Deed of Tax Covenant.
IT IS AGREED:
1. INTERPRETATION
1.1 In this Agreement (including its Recitals and Schedules), the following
words and expressions have the meanings respectively set opposite them:
"Accounts" the audited balance sheet and profit and loss
accounts of each Company as at and for the
period ended on 31 December 1997 (including the
notes), together with the reports and other
documents required by law to be annexed or
attached to them;
<PAGE> 4
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"Accounts Date" 31 December 1997;
"Articles of Association" in relation to HCCL, its articles of
association and in relation to HCCFSA, its
statutes;
"Business Day" any day (except any Saturday or Sunday) on
which banks in the City of London and Helsinki
are open for business;
"Claim" any claim for breach of any of the Warranties
or arising under the Deed of Tax Covenant;
"Companies" and "Company" have the meanings given in Recital (A);
"Competent Authority" includes any national or supra-national court,
the European Commission and any governmental
or local authority or other body exercising
powers pursuant to any Act of Parliament of
Royal Charter;
"Completion" completion of the sale and purchase of the
Shares pursuant to this Agreement in accordance
with its terms;
"Completion Accounts" the audited balance sheet and profit and loss
account of each Company as at and for the
period since the Accounts Date to 31 May 1998,
in each case as prepared in accordance with
clause 3 and Schedule V including all notes,
reports statements and other documents annexed
to them;
"Completion Cash and Assets" the aggregate of the Completion Net Assets and
the Free Cash;
"Completion Date" the date of this Agreement;
"Completion Net Assets" has the meaning given in paragraph 4 of
Schedule V;
"Contract Rate" in the case of any sum in French Francs to be
converted into Pounds Sterling or vice versa,
the Sterling/French Franc cross rate published
in the Financial Times on 29 May 1998 and for
the purposes of clause 7 of this Agreement, the
last such rate published in the Financial Times
prior to the date on which the Purchasers serve
notice of any Claim;
"Deed of Tax Covenant" the deed of tax covenant to be entered into by
the Vendor and the Purchasers at Completion;
"Descriptive Memorandum" the information memorandum produced by J P
Morgan relating to the Companies made available
to the Purchasers on 8th December 1997;
"Disclosure Letter" the letter of the same date as this Agreement
from the Vendor to the Purchasers referred to
in clause 6 including
<PAGE> 5
-3-
any document which is stated in that letter to
be deemed to be included in or attached to it;
"DTI Grant" the grant in an aggregate amount of pound
sterling 274,000 made available to HCCL by the
United Kingdom Department of Trade and Industry
pursuant to letters dated 13 January 1994 and
25 July 1997;
"Environment" air (including, without limitation, air within
buildings and natural or man made structures
above or below ground), water and land (and any
other meaning given to it under any
Environmental Law);
"Environmental Laws" all laws whether of the United Kingdom or
France relating to pollution or protection of
the Environment or human health and safety,
including laws relating to emissions, seepages,
spillages, discharges, escapes, releases or
threatened escapes or releases of pollutants,
contaminants, chemicals or toxic or hazardous
substances, wastes, materials or noise into the
Environment or otherwise relating to the
manufacture, processing, distribution, use,
keeping, treatment, disposal, deposit, storage,
transport or handling of the same;
"Free Cash" has the meaning given in paragraph 4 of
Schedule V;
"French Advance Rights" the right to repayment of the advance of
US$2,000,000 made by Huntsman Chemical
Corporation on behalf of the Vendor to HCCFSA
on 29 December 1989 as evidenced by the letter
dated 4 April 1991 addressed by Huntsman
Chemical Corporation to HCCFSA of which a copy
is annexed to the Disclosure Letter;
"French Properties" the Properties located in France;
"French Shares" the shares in the capital of HCCFSA described
in Schedule II;
"HCCL Schemes" the Huntsman Container Company Limited Pension
Scheme and the Huntsman Container Company Ltd.
Retirement Benefit Scheme governed by deeds
dated June 1991 (each as amended);
"ICTA 1988" the Income and Corporation Taxes Act 1988;
"Intellectual Property" inventions, patents, trade marks, service
marks, designs (whether registered or
unregistered), copyrights, confidential
information, know-how, business or trade names,
trading goodwill and all applications and right
to apply for, or for the protection of, any of
the foregoing and all similar rights and
properties;
<PAGE> 6
-4-
"Intellectual Property Rights" the Intellectual Property which is owned or
used by the Companies;
"J P Morgan" J P Morgan Securities Inc. of 60 Victoria
Embankment, London EC4Y 0JB;
"LIBOR" in respect of any currency and any period of
time, the mean offered rate in the London
interbank market for deposits of the duration
most closely corresponding to that period in
that currency;
"Properties" the properties, brief particulars of which are
set out in Schedule III;
"Purchasers' Auditors" in respect of HCCL, Coopers & Lybrand of Bull
Wharf Redcliff Street Bristol BS1 6QR, and in
respect of HCCFSA, KPMG Audit Immeuble KPMG of
1 Cours Valmy 92923 Paris la Defence Cedex;
"Purchasers' Solicitors" White & Case of 7-11 Moorgate, London EC2R 6HH;
"Resin Supply Agreement" the agreement in the agreed terms to be entered
into at or prior to Completion between Huntsman
Chemical Corporation (1) and HCCL(2) relating
to the supply of resin by Huntsman Chemical
Corporation to HCCL;
"Shares" the shares in the capital of the Companies
described in Schedule II being the entire
issued share capital of the Companies;
"Tax" has the same meaning as in the Deed of Tax
Covenant;
"TCGA" the Taxation of Chargeable Gains Act 1992;
"UK Properties" the Properties located in the United Kingdom;
"UK Shares" the issued shares in the capital of HCCL as
described in Schedule II;
"Vendor's Auditors" in respect of HCCL, Messrs Deloitte & Touche of
PO Box 500, 201 Deansgate, Manchester M60 2AT,
United Kingdom and, in respect of HCCFSA,
Messrs Deloitte Touche Tohmatsu of 185 Avenue
Charles de Gaulle, 92200 Neuilly-sur-Seine,
France;
"Vendor's Solicitors" Lovell White Durrant of 65 Holborn Viaduct,
London EC1A 2DY; and
"Warranties" the warranties set out in Schedule IV.
1.2 In this Agreement, unless the context otherwise requires:
<PAGE> 7
-5-
(a) references to this Agreement or any other document include this
Agreement or such other document as varied, modified or
supplemented in any manner from time to time;
(b) references to recitals, clauses and schedules and sub-divisions
of them are references to the recitals and clauses of, and
schedules to, this Agreement and sub-divisions of them
respectively;
(c) references to any enactment include references to such enactment
as re-enacted, amended or extended on or before the date of this
Agreement and any subordinate legislation made from time to time
under it;
(d) references to a "person" include any individual, company,
corporation, firm, partnership, joint venture, association,
organisation, institution, trust or agency, whether or not
having a separate legal personality;
(e) references to the one gender include all genders, and references
to the singular include the plural and vice versa;
(f) headings are inserted for convenience only and shall be ignored
in construing this Agreement; and
(g) the words "company", "subsidiary", "subsidiary undertaking" and
"holding company" have the meanings given to them by the
Companies Act 1985, as amended by the Companies Act 1989.
1.3 The Recitals and Schedules to this Agreement form part of it.
1.4 Any reference in this Agreement to a document being "in the agreed
terms" is to a document in the terms agreed between the parties and for
identification purposes only signed or initialled by them or on their
behalf on or before the date of this Agreement.
2. SALE AND PURCHASE OF SHARES AND RIGHTS
2.1 On and subject to the terms of this Agreement, the Vendor shall sell or
procure the sale with full title guarantee of all the Shares and the
assignment of the French Advance Rights, and the Purchasers shall
purchase all the Shares and accept the assignment of the French Advance
Rights on and with effect from Completion, in each case free from all
rights of pre-emption, charges, liens, equities, encumbrances, claims or
restrictions whatsoever and together with all rights which are now, or
at any time hereafter may become, attached to them (including without
limitation the right to receive all dividends and distributions
declared, made or paid on or after Completion).
2.2 The Vendor waives, and shall procure that any other person holding
Shares waives, any rights which may have been conferred on them under
the Articles of Association of either Company or otherwise or in any
other way to have any of the Shares offered to it for purchase at any
time on or before the transfer of the Shares pursuant to the provisions
of this Agreement.
2.3 The Purchasers shall not be bound to complete its purchase of any of the
Shares unless the Vendor completes the sale of all of the Shares
simultaneously.
<PAGE> 8
-6-
3. CONSIDERATION
3.1 The total consideration (the "Consideration") payable by the Purchasers
for the Shares and the French Advance Rights shall be the sum of pound
sterling 20,900,000 which amount shall be paid in full in cash on
Completion in accordance with the provisions of clause 4.5 and adjusted
after Completion in accordance with the provisions of clause 3.3.
3.2 The provisions of Schedule V shall apply to the drawing up and review of
the Completion Accounts and the report by the Purchaser's Auditors on
the amount of the Completion Net Assets and the Free Cash.
3.3 If and to the extent that the aggregate of the Completion Net Assets and
the Free Cash of both Companies is:
(a) less than [pound sterling] 10,637,853:
(i) the amount of the Consideration shall be reduced by an
amount equal to the shortfall in the Completion Net
Assets and the Free Cash; and
(ii) the Vendor shall, within 7 days after the determination
of the aggregate Completion Net Assets and the Free Cash
of both Companies in accordance with the provisions of
Schedule V, repay to the Purchasers on a pound for pound
basis by way of reduction of the consideration for the
Shares an amount equal to such shortfall in cash;
(b) more than [pound sterling] 10,637,853:
(i) the amount of the Consideration shall be increased by an
amount equal to the excess over the Completion Net
Assets and the Free Cash; and
(ii) the relevant Purchasers shall, within 7 days after the
determination of the aggregate Completion Net Assets and
the Free Cash of both Companies in accordance with the
provisions of Schedule V, pay to the Vendor by way of
further consideration for the Shares an amount equal to
such excess in cash.
3.4 Any monies payable pursuant to Clause 3.3(a) (ii) or Clause 3.3(b)(ii)
shall accrue interest at the rate of 1% per annum over LIBOR from time
to time, calculated on a daily basis for the period from the day after
the Completion Date up to and including the date of actual payment. Such
interest shall be paid to the relevant payee together with the principal
amount due under Clause 3.3(a)(ii) or Clause 3.3(b)(ii) (as the case may
be).
3.5 The consideration shall be apportioned as set out in Schedule I and such
apportionment shall be adopted by the Vendor and the Purchasers for all
purposes including stamp duty and other Tax.
4. COMPLETION
4.1 Completion shall take place forthwith on the exchange of this Agreement
at the offices of the Vendor's Solicitors on the Completion Date or at
such other place and/or on such other date as may be agreed between the
parties.
4.2 On Completion the Vendor shall cause to be delivered to the Purchasers:
<PAGE> 9
-7-
(a) duly executed transfers of the UK Shares in favour of Polarcup
(or as it may direct) together with the share certificates
relating to such Shares;
(b) duly executed Ordres de Mouvement in respect of the French
Shares in favour of Huhtamaki France (or as it may direct),
together with the Registre des Mouvements de Titres and Comptes
d'Actionnaires of HCCFSA;
(c) A duly executed Acte de Cession de Creance effecting the
assignment of the French Advance Rights to Huhtamaki France; and
(d) such other documents (including any power of attorney) under
which any document required to be delivered by it under this
clause has been executed.
4.3 On Completion, the Vendor shall further cause to be delivered to the
Purchasers:
(a) the certificate of incorporation and the common seal (if any)
and statutory books of each Company;
(b) an unqualified letter of resignation from the auditors of each
Company complying in all respects with the requirements of
applicable legislation, accompanied by a written confirmation
that such auditors have no claims for unpaid fees or expenses;
(c) the title deeds to the UK Properties and French Properties
together with all deeds, certificates and other documents of
title to the assets of the Companies;
(d) the written resignations duly executed as deeds in the agreed
terms of such of the directors and, in the case of HCCL, the
Secretary of the Companies and the trustees of the HCCL Schemes
as the Purchasers may require;
(e) irrevocable powers of attorney in the agreed terms executed by
the Vendor in respect of all the UK Shares, in favour of
Polarcup appointing Polarcup to be its lawful attorney in
respect of the UK Shares; and
(f) certified copy of the minutes of a meeting of the Conseil
d'Administration of HCCFSA confirming acceptance of the sale of
the French Shares as contemplated herein in accordance with
Article 8 of the Articles of Association of HCCFSA;
(g) the Disclosure Letter and the Deed of Tax Covenant duly executed
as a deed by the Vendor;
(h) a copy of a notice from Huntsman Film Products UK Limited to be
served at Completion on the Trustees of that one of the HCCL
Schemes being the Huntsman Container Company Limited Retirement
Benefits Scheme having the effect of terminating Huntsman Film
Products UK Limited's participation in that scheme on and from
Completion;
(i) a copy of the Resin Supply Agreement, duly executed by Huntsman
Chemical Corporation and HCCL; and
<PAGE> 10
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(j) such other documents as the Purchasers may reasonably require in
order to achieve and evidence the transfer of title to the
Shares in accordance with the terms hereof and the authority of
the Vendor and the Guarantor to enter into the transactions
contemplated hereby.
4.4 On Completion or as soon as practicable thereafter, the Vendor and the
Purchasers shall cause board and/or members meetings (as appropriate) of
each of the Companies to be duly convened and held at which:
(a) the said transfers of the Shares shall be approved for
registration (subject only, in the case of the UK Shares, to
their being duly stamped by, and at the cost of, the
Purchasers);
(b) such persons as may be nominated by the Purchasers shall be
appointed directors and (in the case of HCCL) secretary of the
Companies (within the maximum number, if any, permitted under
their respective Articles of Association);
(c) the resignation of the directors referred to at 4.3(d) above are
accepted;
(d) all existing instructions to the Companies' bankers, bank
mandate forms and authorities shall be revoked and shall be
replaced with alternative instructions, bank mandates forms and
authorities in such form as the Purchasers may require;
(e) the name of HCCL is changed to "Polarcup Containers Limited" and
the name of HCCFSA is changed to "Polarcup Containers SA".
4.5 On Completion the Purchasers shall:
(a) pay the sum of [pound sterling] 20,900,000 by telegraphic
transfer into the account of the Vendor's Solicitors details of
which are Lovell White Durrant Client General Account, Barclays
Bank Plc, Lombard Street, London Sort Code: 20 00 00 Account No:
10610984 in full satisfaction of the consideration payable to
the Vendor, subject always to clause 3.3; and
(b) execute the Acte de Cession de Creance referred to in clause
4.2(c) above; and
(c) deliver to the Vendor a counterpart of the Deed of Tax Covenant
and a copy of the authority of the Purchasers to enter into the
transactions contemplated hereby.
4.6 The Vendor's Solicitors are hereby irrevocably authorised by the Vendor
to receive all amounts expressed to be payable to it pursuant to any
provision of this Agreement and the receipt by the Vendor's Solicitors
of each such amount shall be an absolute discharge to the Purchasers who
shall not be concerned to see to the application of any such amount
thereafter.
4.7 If any of the documents or acts required to be delivered, executed or
done at Completion pursuant to this clause 4, the Purchasers or the
Vendor (as the case may be) my nevertheless elect to proceed with
Completion , in which event the Vendor or the Purchasers (as the case
may be) shall procure that all relevant documents or acts shall be
delivered, executed or done as soon as practicable following Completion.
<PAGE> 11
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5. GUARANTEES, INDEMNITIES ETC
5.1 The Purchasers hereby undertake to use their best endeavours to procure
that the Vendor and each of the Vendor's associated companies (to the
extent relevant) shall be released as soon as is practicable after
Completion from the guarantees, indemnities and other actual or
contingent obligations and/or comfort letters given or undertaken by
them or any of them in respect of any and all actual or contingent
liabilities whatsoever of either Company details of which are set out in
Schedule VI, and pending such release the Purchasers shall indemnify and
keep indemnified each of the Vendor and its associated companies against
any liability which it may incur after Completion whatsoever, including
all costs, damages and expenses, suffered or incurred by them or any of
them in connection therewith.
5.2 The Purchasers shall not be obliged to make any monetary payment for
obtaining any release pursuant to clause 5.1 except for the payment of
legal costs reasonably incurred in connection with the release by the
person giving such release.
5.3 The Vendor undertakes to the Purchasers (for themselves and as trustee
for HCCL) to pay to the Purchasers on demand and on a full indemnity
basis the whole of the amount of any repayment which is required to be
made by HCCL of the DTI Grant as a result of the sale of HCCL Shares
contemplated hereby and the Vendor shall indemnify and keep indemnified
the Purchasers (for themselves and as trustee for the benefit of HCCL)
in respect of costs and expenses arising out of or in connection with
any such repayment, Provided that no payment shall be due from the
Vendor under this clause 5.3 in respect of:
(a) any such repayment which becomes necessary as a result of the
Purchasers failing to take any prudent or reasonable step in
order to secure the consent of the relevant authorities to the
sale of the HCCL Shares contemplated hereby; or
(b) any such repayment which becomes necessary as a result only of
any steps or decisions taken by the Purchasers or HCCL in
relation to the conduct of the business of HCCL after the
Completion Date.
5.4 The Vendor undertakes to Huhtamaki France (for itself and as trustee for
HCCFSA) to pay to Huhtamaki France on demand and on a full indemnity
basis an amount equal to any losses, liabilities, costs and expenses
which Huhtamaki France or HCCFSA may incur arising out of the assignment
of the French Advance Rights, Provided that all stamp, registration or
transfer duties payable in connection with such assignment, together
with all costs and expenses of perfecting the same shall be for the
account of Huhtamaki France.
5.5 The Vendor undertakes to Polarcup (for itself and as trustee for HCCL)
that, if and to the extent that it fails to provide to Polarcup the copy
letter of advice referred to in Clause 8.5, it will pay to HCCL on
demand an amount equal to the debts due from Huntsman Film Products UK
Limited to the trustees of the relevant HCCL Scheme and Polarcup
covenants with the Vendor to remit such amount to such trustees.
6. WARRANTIES
6.1 The Vendor hereby warrants to the Purchasers the terms of the Warranties
except as fairly disclosed by the Disclosure Letter.
6.2 The Purchasers confirm that they have not entered into this Agreement or
any document entered into hereunder or referred to herein in reliance
upon any representation, warranty or undertaking other than those
expressly contained in this Agreement or the Deed of Tax
<PAGE> 12
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Covenant and acknowledge that they have not relied on, and will make no
claim in respect of any such representation, warranty or undertaking
made or supplied by or on behalf of any Vendor or any other person
whatsoever. Without limiting the general nature of the foregoing, the
Purchasers confirm that subject to the terms of this Agreement they have
not relied on and will make no claim against the Vendor in respect of
any budget, forecast or other projection of any nature made or supplied
by or on behalf of the Vendor.
6.3 Where any statement set out in Schedule IV is expressed to be given or
made to the best of the Vendor's knowledge or is qualified by reference
to the Vendor's awareness or is qualified in some other manner having
substantially the same effect, such statement shall be deemed to include
an additional statement that the Vendor has made all reasonable
enquiries prior to the date hereof in respect of the subject matter of
the relevant statement of David Cromes, James Rafferty, Ron Hewitt, Paul
Fox and Gerard Lardiere, and the Vendor shall only be liable in respect
of any breach of Warranty on this basis.
6.4 The Vendor agrees with the Purchasers that it shall waive, and it hereby
waives, and it shall not enforce any right which it may have in respect
of any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by the Company or any officer or
employee of the Company (other than any such officer or employee who
ceases to hold such office or employment at Completion) for the purpose
of assisting the Vendor to give any of the Warranties or to prepare the
Disclosure Letter.
6.5 Each of the Warranties shall be construed as a separate and independent
warranty and shall not be limited or restricted by reference to or
inference from the terms of any other Warranty.
7. LIMITATION ON CLAIMS
7.1 The Vendor shall have no liability (subject to clause 7.19) in respect
of any Claim unless:
(a) the Purchasers have served on it a written notice of the
particulars of the Claim:
(i) in the case of a Claim relating to Tax before the date
being three months after the expiry of the period
specified by statute during which an assessment of that
liability to Tax may be issued by a Competent Authority
or, if there is no such period, on or before 31 March
2006; and
(ii) in any other case, before the second anniversary of the
Completion Date; and
(b) liability for the Claim is accepted by the Vendor in writing or
the Purchasers have issued and served proceedings in respect
thereof within six months of the date of such written notice.
7.2 The Vendor shall not, subject to clause 7.19 be liable for a Claim
arising in respect of a breach of Warranty unless the amount of that
Claim:
(a) in respect of an individual Claim or in respect of a series of
Claims arising in relation to the same subject matter, exceeds
[pound sterling] 25,000; and
(b) when taken with every other Claim in the aggregate exceeds
[pound sterling] 250,000 in which event the Vendor shall be
liable for the whole amount of each Claim and not only the
excess.
<PAGE> 13
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For the purpose of establishing whether the limitations set out in this
clause 7.2 apply, all claims shall be translated into Pounds Sterling at
the Contract Rate.
7.3 Subject to Clause 7.19, notwithstanding any other provision of this
Agreement or the Deed of Tax Covenant, the total amount of the liability
of the Vendor in respect of all Claims arising in respect of a breach of
Warranty shall be limited to and in no event exceed [pound
sterling] 10,000,000.
7.4 The Vendor shall not be liable in respect of any Claim if and to the
extent that the loss occasioned thereby (including any costs of the
Purchasers relating thereto) has been recovered under any other Claim.
7.5 The Vendor may require either the Company or the Purchasers to take all
such steps or proceedings as the Vendor may consider reasonably
necessary in order to mitigate any loss giving rise to any Claim arising
in respect of a breach of the Warranties provided always that such steps
do not, in the reasonable opinion of the Purchasers, interfere with the
operation of the business of the Companies in the ordinary course and
the Purchasers undertake to procure that each Company shall so act,
subject to the Purchasers and the relevant Company being indemnified to
their reasonable satisfaction against all costs and expenses properly
incurred by them as a result of so acting. For the purpose of enabling
the Vendor to exercise its rights under this clause 7.5, but without
prejudice to the Purchaser's right to make a claim against the Vendor
under the Warranties, the Purchasers shall:
(a) as soon as reasonably possible give written notice to the Vendor
following any breach or circumstance which gives rise to a Claim
coming to the notice of the Purchasers;
(b) make or procure to be made available to the Vendor or the duly
authorised representatives of Vendor, and (if so requested by,
and at the cost of, the Vendor) provide copies of, all relevant
books of account, records and correspondence of either Company
and permit the Vendor and its representatives and advisers to
ascertain or extract any relevant information therefrom; and
(c) not admit any liability or agree any claim which may give rise
or has given rise to a Claim without the prior written consent
of the Vendor (which shall not be unreasonably withheld or
delayed).
7.6 The Vendor shall not be liable in respect of a Claim arising in respect
of a breach of the Warranties to the extent of:
(a) any amount which is included as a liability; or
(b) any amount by which the valuation of any asset has been reduced
to take account of the subject matter of such Claim,
in the Accounts or the Completion Accounts. If any Claim is made the
Purchasers shall use their reasonable endeavours to procure that the
Vendor and its representatives and advisers are given reasonable access
to the working papers underlying the Accounts and/or the Completion
Accounts for the purposes of ascertaining whether any, and if so what,
amount is applicable to the Claim for the purposes of this clause 7.6.
The Vendor shall have no liability in respect of any Claim arising in
respect of a breach of Warranty to the extent that such Claim arises or
is increased solely as a result of any act or omission of the Purchasers
after Completion and which was not in the ordinary course of
<PAGE> 14
-12-
business and which the Purchasers actually knew would give rise to or
increase such Claim and a reasonable alternative course of action was
available to the Purchasers or the relevant Company which could be
expected not to have given rise to such Claim or not to have increased
the amount of such Claim.
7.7 Save to the extent of fraud or deceit on the part of the Vendor or any
of its officers, employees or agents, the Purchasers shall not be
entitled to rescind or repudiate this Agreement for any reason after
Completion.
7.8 The Vendor shall not be liable in respect of any Claim arising in
respect of a breach of Warranty in respect of any matters resulting
from:
(a) a change of accounting policy or practice or the length of any
accounting period of the Purchasers or either Company introduced
after Completion unless introduced to comply with any
requirement of law; or
(b) any material alteration to the terms on which either Company
trades with any significant supplier or customer as at the
Completion Date.
7.9 The Purchasers shall not be entitled to claim that any fact, matter or
circumstance constitutes or gives rise to a Claim arising in respect of
a breach of Warranty if or to the extent that such fact, matter or
circumstance has been fairly disclosed:
(i) in this Agreement; or
(ii) by the Disclosure Letter.
7.10 If the Vendor pays to the Purchasers or either Company an amount in
respect of any Claim and the Purchasers or that Company (as the case may
be) subsequently become entitled to recover from a third party
(including any insurer or any Competent Authority) a sum which is
referable to that Claim, the Purchasers shall forthwith repay to the
Vendor so much of the amount paid by the Vendor as does not exceed the
sum actually recovered from the third party less the amount of any
reasonable costs and expenses in obtaining that sum and of any Tax for
which the Purchasers or any of their subsidiaries may be liable by
reason of their receipt for that sum.
7.11 The Vendor shall not be liable to make any payment in respect of any
Claim arising in respect of a breach of the Warranties which arises in
respect of a contingent liability unless and until such contingent
liability becomes an actual liability.
7.12 If the Vendor pays any sum in respect of any Claim the amount of the
consideration paid by the Purchasers to the Vendor hereunder for the
Shares sold by the Vendor hereunder shall be deemed to be reduced by the
amount of any such payment.
7.13 The Vendor shall not be liable in respect of any Claim which arises in
respect of any breach of Warranty which is capable of remedy except to
the extent that the relevant breach remains unremedied after the expiry
of 30 days following receipt by the Vendor of a written notice from the
Purchasers giving full particulars of the relevant breach and requiring
it to be remedied (any such remedy to be at no cost to the Purchasers).
7.14 Nothing contained in this clause 7 shall limit the Purchasers
obligations at common law or the obligation of either Company to
mitigate any loss or damage resulting from or arising as a
<PAGE> 15
-13-
consequence of any circumstances giving rise to any Claim arising in
respect of a breach of the Warranties.
7.15 There is no Clause 7.15 in this Agreement.
7.16 The Purchasers may not assign or purport to assign any part of the
benefit of this Agreement, except that they may assign the benefit of
the Warranties or the Deed of Tax Covenant to a wholly owned subsidiary
of Huhtamaki Oyj (provided that the benefit of any such assignment shall
automatically cease and determine upon any such assignee ceasing to be a
wholly owned subsidiary of) Huhtamaki Oyj and only insofar as the
relevant assignee assumes all relevant subsisting obligations of such
Purchaser hereunder.
7.17 If the Purchasers make any Claim or give notice of any Claim to the
Vendor and subject to the Purchasers and the Companies being indemnified
to their reasonable satisfaction against all costs and expenses which
may be incurred by them the Purchasers shall, and shall procure that
either Company shall, on a confidential basis solely for the purpose of
enabling the Vendor to assess the Claim or potential Claim and without
prejudice to the Purchaser's right to make such Claim.
(a) make available to the Vendor and its representatives or advisers
such access to the personnel of the relevant Company and to any
relevant records and information as the Vendor or any of them
may request in connection with such Claim or potential Claim;
and
(b) use their reasonable endeavours to procure that the auditors
(past and present) of the relevant Company make available their
audit working papers in respect of audits of the relevant
Company's accounts for any relevant accounting period in
connection with such Claim or potential claim.
7.18 The Vendor shall not have any liability in respect of a Claim arising in
respect of a breach of the Warranties to the extent that the Purchasers
or either of the Companies would have been entitled to an indemnity from
their insurers had they maintained insurance coverage which was prudent
(as to both amount and type of cover) for a company conducting a
business of the kind conducted by the Companies.
7.19 The provisions of clauses 7.1, 7.2 and 7.3 shall not apply to any Claim
which arises from:
(a) fraud or deceit on the part of the Vendor or any of its
officers, employees, agents or advisers; or
(b) the imposition of any statutory fine or penalty.
The amount of any such Claim shall accordingly be disregarded for the
purpose of calculating the amount specified in clause 7.3.
8. COMPETITION AND OTHER POST COMPLETION OBLIGATIONS
8.1 In consideration of the purchase of the Shares the Vendor undertakes
with the Purchasers that the Vendor will, and will procure that every
undertaking which is at any time during the periods referred to in Part
2 of Schedule VII a subsidiary undertaking will, comply with the
provisions of Schedule VII.
<PAGE> 16
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8.2 The Vendor acknowledges that it considers the restrictions contained in
Schedule VII (each of which shall be construed as a separate
undertaking) are reasonable in the interests of both the Vendor and the
Purchasers and are necessary for the protection of the goodwill and
confidential information of the Companies; but if any such restriction
shall be void or voidable but would be valid and enforceable if some
part or parts of it were deleted, such restriction shall apply with such
modifications as may be necessary to make it valid and enforceable.
8.3 The Companies shall and the Purchasers shall procure that the Companies
shall use their best efforts, in accordance with reasonable commercial
practice, to cease using the name "Huntsman" and all related logograms
set out in Schedule VIII as soon as practicable after the Completion
Date and in any event at the latest four months following the Completion
Date (the "Transition Period") and shall indemnify the Vendor in respect
of any liabilities it may suffer arising from such use of such name or
related logograms after the Completion Date. For the avoidance of doubt,
this requirement shall not oblige the Companies to write down any stocks
as obsolete or replace or modify any plant and machinery during the
Transition Period.
8.4.1 With the exception of services provided pursuant to express provisions
of this Agreement all services provided by the Vendor and any Huntsman
company to the Companies shall cease on Completion and the Companies
shall not be obliged to make any payments after Completion in respect
thereof save to the extent that payment remains outstanding in respect
of services rendered up to Completion.
8.4.2 The Vendor shall use its reasonable endeavours to procure that J. Hallum
(the "Consultant") continues to make his services available to HCCL as
and when required up until the expiry of the Consultant's consulting
agreement with the Vendor on 31 December 1998. Until such time, the
Purchaser shall procure that HCCL pays to the Vendor for continued
provision of the Consultant the amount of US$ 400 per day worked plus
the Consultant's reasonable expenses.
8.4.3 The Purchasers shall use all reasonable endeavours to procure (and shall
procure that the Company gives any necessary consent or request) that:
(a) if within three months after Completion any member of that one
of the HCCL Schemes being the Huntsman Container Company Limited
Retirement Benefits Scheme who is in employment at Completion
with Huntsman Film Products UK Limited requests a transfer
payment therefrom to any other arrangement capable of accepting
that payment, the transfer payment shall be the greater of:
(i) the cash equivalent (as defined in and for the purposes
of Pension Schemes Act 1993) of that member's accrued
rights under the Huntsman Container Company Limited
Retirement Benefits Scheme; and
(ii) an amount equal to the value of that member's accrued
rights allowing for future increases in pensionable
earnings, calculated on the same actuarial basis as was
adopted for the valuation as at 1 November 1995 as a
continuing scheme of the Huntsman Container Company
Limited Retirement Benefits Scheme (as set out in the
report dated 18 March 1997 on that valuation); and
(b) if the Vendor so elects at any time after Completion, Mr J
Rafferty shall be entitled to retire early on immediate pension
under that one of the HCCL Schemes being the Huntsman Container
Company Limited Retirement Benefits Scheme on the terms
disclosed to the Purchasers prior to Completion and that Mr
Rafferty's benefits
<PAGE> 17
-15-
thereunder shall be augmented to such extent as the Vendor shall
direct (to a value not exceeding [pound sterling] 113,000 and
with benefits being calculated on the basis disclosed for this
purpose to the Purchasers prior to Completion).
8.4.4 If and to the extent that Mr Rafferty's benefits are augmented pursuant
to clause 8.4.1(b) above, the Purchasers shall procure that the Company
shall make any contribution required under the Huntsman Container
Company Limited Retirement Benefits Scheme and the Vendor shall
forthwith pay to the Purchasers by way of reduction of the consideration
under clause 3.1 an amount equal to 70% of the payment made by the
Company to the Huntsman Container Company Limited Retirement Benefits
Scheme.
8.4.5 The Vendor will procure that the IP/IT services currently made available
by Huntsman affiliated companies to the Companies (through work
performed by P Blackwell and A Maddock) will continue to be made
available for a period of one year following the Completion Date. Such
services shall be invoiced at a rate equivalent to that currently paid
by the Companies and the obligations of the Vendor in such regard shall
be limited to procuring the availability of the relevant personnel for
13 days in each period of three consecutive months. The Purchaser may
terminate any or all of these arrangements on one month's notice in
writing to the Vendor.
8.5 As soon as practicable following Completion, the Vendor shall provide to
Polarcup a copy of written advice from the Scheme Actuary appointed for
the purposes of Pensions Act 1995 by the Trustees of that one of the
HCCL Schemes being the Huntsman Container Company Limited Retirement
Benefits Scheme confirming that at the Completion Date there was no debt
due from Huntsman Film Products UK Limited to the Trustees of that
scheme under Pensions Act 1995, section 75 or otherwise.
9. GUARANTEE
9.1 The Guarantor hereby unconditionally and irrevocably guarantees to the
Purchaser the full, due and punctual performance and observation by the
Vendor of all the payment obligations of the Vendor under this Agreement
and the Deed of Tax Covenant. In the event of any failure by the Vendor
to perform or observe such obligations, the Guarantor shall be liable
for the obligations of that Vendor arising thereunder as if it were a
primary obligor.
9.2 The obligations of the Guarantor under this clause:
(a) shall be continuing obligations and shall not be satisfied,
discharged or affected by any intermediate payment or settlement
of account or any change in the constitution or control of, or
the insolvency of, or any liquidation, winding up or analogous
proceedings relating to, the Vendor or any change in the terms,
conditions and undertakings on the part of any Vendor contained
in this Agreement or the Deed of Tax Covenant; and
(b) shall not be discharged, prejudiced, lessened, affected or
impaired by any act, omission, circumstance whatsoever which but
for this provision might operate to release or exonerate the
Vendor from all or any part of such obligations or in any way
discharged, prejudiced, lessened, affected or impaired the same.
9.3 The Guarantor shall be under no obligation to make payment under this
clause 9 unless the same is claimed with the applicable time limit for
any corresponding Claim against the Vendor.
<PAGE> 18
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10. ANNOUNCEMENTS
No announcement or statement about this Agreement or the subject matter
of, or any matter referred to in, this Agreement shall be made or issued
before, on or after Completion by or on behalf of any of the parties
without the prior written approval of the other parties, or by the
Vendor's Representative on behalf of the Vendor (such approval not to be
unreasonably withheld or delayed) PROVIDED that nothing shall restrict
the making by any party (even in the absence of agreement by the other
parties) of any statement or disclosure:
(a) which may be required by law or called for by the requirements
of any stock exchange; or
(b) which involves only a statement of the fact that the transaction
has occurred and which is limited to an accurate description of
the basic terms of that transaction.
11. INTEREST
If any amount required to be paid under this Agreement is not paid when
it is due, such amount shall bear interest at the rate of 2% per annum
over LIBOR from time to time, calculated on a daily basis for the period
from the relevant due date for payment up to and including the date of
actual payment, as well after as before any judgment. If any withholding
is required by applicable law to be applied to any interest payable
under this clause 11, then the sum so payable shall be increased by such
amount as is necessary to ensure that the payee receives the same net
amount as it would have received but for such withholding.
12. COSTS AND CONFIRMATIONS
12.1 Each party shall pay its own costs and expenses in relation to the
negotiation, preparation, and implementation of this Agreement (and the
documents referred to herein), including the fees and disbursements of
their respective legal, accountancy and other advisers.
12.2 The Vendor confirms that no professional or other expenses incurred by
it in connection with the transactions contemplated by this Agreement
will be paid by either Company.
12.3 The Purchasers confirm that, without prejudice to any of their rights
under this Agreement, at the date of entering into this Agreement they
have no actual knowledge of any breach of the Warranties.
13. NOTICES
13.1 Any notice or other communication to be given under this Agreement shall
be in writing and shall be deemed to have been duly served on, given to
or made in relation to a party if it is left at the authorised address
of that party or posted by registered post or despatched by a recognised
courier service, or by facsimile transmission addressed to that party at
such address and shall if:
(a) personally delivered or delivered by recognised courier service
(as evidenced by receipt records maintained by such service), be
deemed to have been received at the time of delivery; or
(b) posted to an inland address in the jurisdiction from which it is
dispatched, be deemed to have been received on the second
Business Day after the date of posting and if
<PAGE> 19
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posted to an overseas address, be deemed to have been received
on the fifth Business Day after the date of posting; or
(c) if transmitted by facsimile be deemed to have been received at
the time of receipt of the relevant transmission (as evidenced
by the appropriate message transmission acknowledgement received
by the sender),
provided that where, in the case of delivery by hand or by facsimile
transmission delivery occurs after 6 pm on a Business Day or on a day
which is not a Business Day, receipt shall be deemed to occur at 9 am on
the next following Business Day.
13.2 For the purposes of this clause the authorised address of each party
shall be the address set out on page 1 of this Agreement or such other
address as that party may notify to each of the others in writing from
time to time in accordance with the requirements of this clause.
14. FURTHER ASSURANCE
The Vendor shall from time to time at its own cost, or on being required
to do so by the Purchaser, now or at any time in the future, do or
procure the doing of all such acts and/or execute or procure the
execution of all such documents in a form satisfactory to the Purchaser
as the Purchaser may reasonably consider necessary for giving full
effect to this Agreement and securing to the Purchaser the full benefit
of the rights, powers and remedies conferred upon the Purchaser in this
Agreement.
15. SEVERABILITY
If any provision of this Agreement (or of any document referred to
herein) is held to be illegal, invalid or unenforceable in whole or in
part in any relevant jurisdiction, the legality, validity and
enforceability of the remaining provisions of this Agreement (or such
document) shall not in any way be affected or impaired thereby.
16. ENTIRE AGREEMENT
16.1 This Agreement (together with any documents referred to herein) contains
the entire agreement and understanding of the parties and supersedes all
prior agreements, understandings or arrangements (both oral and written)
relating to the subject matter of this Agreement (and any such
document).
16.2 Each of the parties acknowledges and agrees that:
(a) it does not enter into this Agreement and the documents referred
to herein on the basis of and does not rely, and has not relied,
upon any statement or representation (whether negligent or
innocent) or warranty or other provision (in any case whether
oral, written, express or implied) made, given or agreed to by
any person (whether a party to this Agreement or not) except
those expressly set out or referred to in this Agreement, the
Disclosure Letter, the Deed of Tax Covenant; and
(b) this clause 14.2 shall not apply to any statement,
representation or warranty made fraudulently or to any provision
of this Agreement which was induced by, or otherwise entered
into as a result of, fraud, for which the remedies shall be all
those available under the law governing this Agreement.
17. VARIATION
<PAGE> 20
-18-
No variation, supplement, deletion or replacement of or from this
Agreement or any of its terms shall be effective unless made in writing
and signed by or on behalf of each party.
18. GOVERNING LAW AND JURISDICTION
18.1 This Agreement (together with all documents to be entered into pursuant
to it which are not expressed to be governed by another law) shall be
governed by, construed and take effect in accordance with English law.
18.2 The courts of England shall have non-exclusive jurisdiction to settle
any claim, dispute or matter of difference which may arise out of or in
connection with this Agreement (including without limitation claims for
set-off or counterclaim) or the legal relationships established by this
Agreement.
19. AGENT FOR SERVICE
19.1 The parties irrevocably agree that any Service Document may be
sufficiently and effectively served on them in connection with
proceedings in England and Wales by service on their respective agents,
being:-
(a) in the case of the Vendor and the Guarantor, SISEC Limited of 21
Holborn Viaduct, London EC1A 2DY; and
(b) in the case of Huhtamaki France, Polarcup Limited at its
registered office from time to time.
19.2 Any document addressed to the relevant agent for service shall be deemed
to have been duly served if:
(a) left at the specified address, when it is left; or
(b) sent by first class post, two Business Days after the date of
posting.
19.3 If any agent referred to in this sub-clause (or any replacement agent
appointed pursuant to this sub clause) at any time ceases for any reason
to act as such, the relevant party shall appoint a replacement agent to
accept service having an address for service in England and Wales and
shall notify the other party of the name and address of the replacement
agent; failing such appointment and notification, such other party shall
be entitled by notice to the relevant party to appoint such a
replacement agent on the relevant party's behalf.
"Service Document" means a writ, summons, order, judgment or other
process issued out of Courts of England and Wales.
20. GENERAL
20.1 Any waiver of a breach of any of the terms of this Agreement or of any
default hereunder shall not be deemed to be a waiver of any subsequent
breach or default and shall in no way affect the other terms of this
Agreement.
20.2 No failure to exercise and no delay on the part of any party exercising
any right, remedy, power or privilege of that party under this Agreement
and no course of dealing between the parties shall be construed or
operate as a waiver thereof, nor shall any single or partial
<PAGE> 21
-19-
exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy,
power or privilege.
20.3 Each of the obligations, warranties, representations, indemnifies and
undertakings accepted or given by the Vendor or the Purchaser under this
Agreement or any document referred to herein shall continue in full
force and effect notwithstanding Completion taking place.
AS WITNESS the hands of the parties or their duly authorised representatives the
day and year first above written.
<PAGE> 22
-20-
SCHEDULE I
THE VENDOR AND THE SHARES AND RIGHTS
<TABLE>
<CAPTION>
====================================================================================================
NAME OF TRANSFEROR Number and Class of Allocation of Total
Shares to be Sold Consideration
to be Received
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Huntsman Container Corporation 4,162,877 ordinary 92.94%
International shares of [pound sterling] 1 each in the
capital of Huntsman Container Company
Limited
- ----------------------------------------------------------------------------------------------------
J M Huntsman 2 ordinary shares of [pound sterling]
1 each in the capital of N/A
Huntsman Container Company Limited
- ----------------------------------------------------------------------------------------------------
Huntsman Container Corporation 2,494 ordinary shares of 7.06%
International FRF 100 each in the
capital of Huntsman
Container Company
France SA
- The French Advance
Rights
- ----------------------------------------------------------------------------------------------------
Huntsman International Corporation 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
- ----------------------------------------------------------------------------------------------------
Huntsman Container Company Limited 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
- ----------------------------------------------------------------------------------------------------
Richard P Durham 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
- ----------------------------------------------------------------------------------------------------
David R Cromes 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
====================================================================================================
</TABLE>
<PAGE> 23
-21-
<TABLE>
<S> <C> <C>
==================================================================================================
Gerard Lardiere 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
- --------------------------------------------------------------------------------------------------
Ilsing Luyten 1 ordinary share of FRF N/A
100 in the capital of
Huntsman Container
Company France SA
==================================================================================================
</TABLE>
<PAGE> 24
-22-
SCHEDULE II
THE COMPANIES
<TABLE>
<S> <C>
1. HUNTSMAN CONTAINER COMPANY LIMITED
Company Number: 1285089
Date of Incorporation: 4.11.76
Registered Office: 1 Pikelaw Place, West Pimbo, Skelmersdale,
Lancashire WN8
9PP
Accounting Reference Date: 31 December
Secretary: James Francis Rafferty
Directors: David Ray Cromes
Richard P Durham
James Francis Rafferty
Ronald Kenneth Hewitt
Paul Jonathan Fox
Authorised share capital: [pound sterling] 6,000,000 divided into
6,000,000 shares of [pound sterling]
Issued share capital: 4, 162,879
Members: Huntsman Container Corporation
International (4,162,877 shares)
J M Huntsman (2 shares)
Subsidiaries: None
2. HUNTSMAN CONTAINER COMPANY FRANCE SA
Company number: (Vannes) B 352 841 068 (89 B 442)
Date of Incorporation: 30.12.89
Registered Office: Zone Industrielle de la Croix Blanche,
Guegon 56120 Josselin
Accounting Reference Date: 31 December
Directors: David Ray Cromes
Gerard Pierre Lardiere
Ilsing Luyten
Huntsman Container Corporation International
(represented by Richard P. Durham)
Issued Share Capital: 250,000F divided into 2,500 shares of 100F
</TABLE>
<PAGE> 25
-23-
<TABLE>
<S> <C>
Members: Huntsman Container Corporation
International (2,494 shares)
Huntsman International Corporation (1 share)
Huntsman Container Company Limited (1 share)
Richard P Durham (1 share)
David R Cromes (1 share)
Gerard Lardiere (1 share)
Ilsing Luyten (1 share)
Subsidiaries: None
</TABLE>
<PAGE> 26
-24-
SCHEDULE III
THE PROPERTIES
FREEHOLD PROPERTIES
<TABLE>
<CAPTION>
============================================================================
ADDRESS Title number and class of
title
- ----------------------------------------------------------------------------
<S> <C>
Guegon Plant Cadastral Number
Commune de Guegon Guegon 20148
Zone Industrielle de la Croix Blanche
Guegon, France
Guegon Plant Cadastral Number Section
Commune de Josselin AC
1 Rue des Forges
============================================================================
</TABLE>
LEASEHOLD PROPERTIES
<TABLE>
<CAPTION>
============================================================================
ADDRESS Title number and class of
title
- ----------------------------------------------------------------------------
<S> <C>
Pikelaw Place, Lancashire LA 648873
Glebe Road, Skelmersdale, Lancashire LA 450991
LA 362027
LA 521355
3rd Floor Beacon House unregistered leasehold
Pyrford Road
West Byfleet, Surrey
============================================================================
</TABLE>
<PAGE> 27
-25-
SCHEDULE IV
WARRANTIES
In this Schedule:
"Encumbrance" includes any charge, debenture, mortgage, pledge, lien,
assignment, hypothecation, security interest, title retention or other security
agreement or arrangement.
A. THE ACCOUNTS
A.1 The copy of the Accounts annexed to the Disclosure Letter is a true and
complete copy. The Accounts:
(a) give a true and fair view of the financial position and state of
affairs of each Company at the Accounts Date and of its profit
or loss for the period to which they relate;
(b) have been prepared in accordance with accounting principles,
standards and practices generally accepted in the jurisdiction
of incorporation of the relevant Company at the Accounts Date
and with applicable Companies legislation and other applicable
statutes;
(c) have been prepared, unless otherwise expressly stated therein,
under the historical cost convention and on a basis consistent
with the basis applied in the corresponding accounts for the
immediately preceding three financial years.
A.2 Save as set out in the Disclosure Letter, the profits of each Company
for the year ended on the Accounts Date as shown by the Accounts have
not been affected to a material extent by inconsistencies of accounting
practices, by the inclusion of non-recurring items of income or
expenditure or by transactions entered into otherwise than on normal
commercial terms.
A.3 Save as set out in the Disclosure Letter, the audited profit and loss
account of the Companies for each of the three consecutive financial
years ended on the Accounts Date and their audited balance sheets as at
the end of each of those years respectively give a true and fair view of
its results for the year and of its financial position at the end of the
year; and none of those results or financial positions were affected by
any extraordinary item or by any transaction entered into otherwise than
on terms appropriate to a bargain made at arm's length.
B. BUSINESS SINCE THE ACCOUNTS DATE
B.1 Since the Accounts Date:
(a) the Companies have carried on their respective businesses
prudently and in the ordinary course and so as to maintain the
same as going concerns and without any material interruption or
alteration in the nature, scope or manner of such businesses and
have not suffered any material adverse change in their financial
position taken as a whole;
(b) there has been no material change in the manner or time of
payment of creditors, or the issue of invoices or collection of
debts, or policy of reserving for debtors or in the amount of
stock bought or agreed to be bought or in stock;
(c) neither Company has entered into, or agreed to enter into, any
commitments involving capital expenditure exceeding [pound
sterling] 50,000 or the local currency equivalent thereof in the
aggregate;
<PAGE> 28
-26-
(d) neither Company has borrowed or lent or agreed to borrow or lend
any money and no share or loan capital has been issued or agreed
to be issued by either Company and no loan or loan capital or
preference capital of either Company has been repaid in whole or
part or has become liable to be repaid;
(e) no resolution of the members of either Company has been passed,
save for those representing the ordinary business of an annual
general meeting, and no dividend or other distribution has been
declared, made or paid by either Company;
(f) save as set out in the Disclosure Letter, no substantial
supplier to or customer of either Company (being a supplier or
customer accounting for more than 5% of the Companies' aggregate
purchases or sales (as the case may be)) has ceased or
substantially reduced its trade or has materially altered the
terms on which it trades with either Company or, so far as the
Vendor is aware, is reasonably likely to cease to trade or
substantially reduce its trade or materially alter the terms on
which it trades with either Company whether as a result of the
sale of the Shares or otherwise.
C. SHARE CAPITAL AND CONSTITUTION
C.1 The statutory books of the Companies contain complete and accurate
records of their members and all issues and transfers of shares in the
capital of the Companies have been registered in accordance with the
Articles of Association of the relevant Company from time to time in
force.
C.2 Each Company has complied in all material respects with the provisions
of Companies legislation applicable to it and is not liable to pay any
fines thereunder and all returns, particulars, resolutions and other
documents required under any legislation to be delivered on behalf of
either Company to any authority have been properly made and delivered.
C.3 The copy of the Articles of Association and (in the case of HCCL) the
Memorandum of Association annexed to the Disclosure Letter is up to
date, true and complete.
C.4 The Shares constitute all the shares in issue in the capital of the
Companies and are beneficially owned by the Vendor. There is no
outstanding option or right to acquire any share in the capital of
either Company.
C.5 No elective resolution of HCCL remains in force.
D. SUBSIDIARY UNDERTAKINGS AND RELATED OPERATIONS
D.1 Neither Company is the holder or beneficial owner of any shares or
securities of any other person and neither Company has agreed to acquire
any such shares or securities.
D.2 Neither Company is or has agreed to become a member of any partnership,
joint venture, consortium or other incorporated or unincorporated
association and has no branch, agency, place of business or
establishment outside its jurisdiction of incorporation.
D.3 No order has been made, resolution passed or petition presented for the
purpose of winding up either Company or for the appointment of any
provisional liquidator or for any administration order to be made in
relation to either Company and no other proceedings under any applicable
bankruptcy or insolvency legislation have been commenced in respect of
either Company. No receiver (including any administrative receiver) has
been appointed in respect of the whole or any part of the property of
either Company.
<PAGE> 29
-27-
D.4 There are no circumstances which are known, or would on reasonable
enquiry be known, to the Vendor and which would entitle any person to
present a petition for the winding up or administration of either
Company or to appoint a receiver of the whole or any part of its
undertaking or assets.
D.5 HCCL is not deemed unable to pay its debts within the meaning of section
123 of the Insolvency Act 1986.
D.6 No event analogous to any of the matters set out in this paragraph D has
occurred outside England and Wales.
E. ASSETS
E.1 Save for assets held subject to retention of title or similar
arrangements (details of which are set out in the Disclosure Letter),
leased assets and assets hired or rented on hire purchase (details of
which are set out in the Disclosure Letter) each Company is the absolute
owner of and is in actual possession of the material assets used in the
course of its business. Save as set out in the Disclosure Letter, no
person has the right to call for any payment in respect of any of those
assets and neither Company has created or agreed to create any
Encumbrance over any part of its undertaking or assets (other than
Encumbrances arising by the operation of law).
E.2 The Companies' stock complies with all applicable laws and regulations,
is in a condition rendering it capable of being sold by the Companies in
the ordinary course of their business.
E.3 Save for the current assets disposed of in the ordinary course of
trading, the assets included in the Accounts and any assets required or
agreed to be acquired since the Accounts Date together with the
Properties and the Intellectual Property comprise all the assets,
property and rights which the Companies own or which they use for the
purpose of carrying on their businesses.
E.4 Save as set out in the Disclosure Letter, all buildings, plant,
machinery, equipment and vehicles owned or used by the Companies comply
with all applicable laws and regulations.
E.5 Save for matters which are the subject of any provision or reserve in
the Accounts or are described in the Disclosure Letter, the Vendor is
not aware of any circumstances which render it unlikely that any debt
owed to either company in an amount exceeding [pound sterling] 50,000
will not be recoverable in the ordinary course of that company's
business.
F. PROPERTIES
F.1 The Properties comprise all of the land and premises owned, occupied or
otherwise used by the Companies for the purpose of their business. The
particulars of the Properties listed in Schedule III are true and
correct.
F.2 Neither Company has entered into any agreement to acquire or dispose of
any land or premises or any interest therein which has not been
completed.
F.3 The Properties are not subject to any outgoings other than local taxes
payable by business entities generally in the area in which each
property is located, water rates and insurance premiums and also in the
case of leasehold properties, rent and service charges and neither
Company is in arrears with any such outgoings.
<PAGE> 30
-28-
F.4 So far as the Vendor is aware, all agreements, covenants, restrictions
or other matters to which the Properties are subject have been complied
with and neither Company has received any claims or notices of disputes
or orders or notices affecting the Properties.
F.5 So far as the Vendor is aware, the present use of each of the Properties
and all development carried out on them complies with all relevant
planning legislation applicable thereto.
F.6 So far as the Vendor is aware, compliance has been made in all material
respects with all applicable statutory and bye-law requirements with
respect to the Properties.
F.7 The Properties are served by all means of access, services and other
facilities necessary for their current use.
F.8 So far as the Vendor is aware, there are no proposed schemes or orders
affecting any road or highway giving access to the Properties.
G. INSURANCE
G.1 All current insurance policies relating to the assets and business of
the Companies have been disclosed to the Purchasers and are adequately
summarised in or otherwise disclosed by the Disclosure Letter. All
premiums due in respect of such policies have been paid.
G.2 There are no presently existing circumstances which could reasonably be
expected to lead to any liability under such insurance being avoided by
the relevant insurers by virtue of any act or omission of either Company
or which might invalidate or affect the renewal of any of the policies
and there is no claim outstanding under any such policy and, so far as
the Vendor is aware, there are no circumstances likely to give rise to
such a claim.
H. COMMERCIAL AGREEMENTS AND ARRANGEMENTS
H.1 There are attached to the Disclosure Letter:
(a) all contracts, commitments and obligations of either Company now
outstanding or which will become capable of giving rise to a
contract by an order or acceptance by another party or parties
whether for the purchase of stock, ingredients or materials or
otherwise howsoever and which will either continue to be binding
upon the relevant Company for more than three months after the
Completion Date, or involve either aggregate expenditure or
aggregate revenues to either Company in excess of [pound
sterling] 50,000 or FRF 500,000, as the case may be, in any
twelve month period;
(b) the terms of all agency, distribution or licence agreements or
arrangements to which either Company is a party and which are
material to the business of the Companies as a whole;
(c) full details of all discounts, overriders, rebates, allowances
and other special terms or similar arrangements which are
material to the business of the Companies as a whole and offered
or granted to either Company by any supplier making supplies of
an aggregate annual value of at least ten per cent of the annual
turnover of either Company within a twelve month period; and
(d) full details of all agreements and arrangements for the
importing of goods, materials or ingredients from outside the
European Union together with full details of
<PAGE> 31
-29-
arrangements with overseas distributors, agents and commission houses
for such importing.
H.2 There are no outstanding liabilities or commitments of either Company
arising from any arrangements for the disposal of any shares, property
or other assets (other than in the ordinary course of business)
previously owned or occupied by the Company.
H.3 Neither Company has given any covenants limiting or excluding its right
to do business and/or compete in any area or field (whether limited by
reference to a geographical area or type of business) with any other
person.
H.4 So far as the Vendor is aware neither HCCL nor HCCFSA nor any other
party to any agreement or arrangement with either Company which is
material in the context of its business is in default to any material
extent thereunder such that the relevant agreement or agreements could
be immediately terminated without notice in advance of its stated term.
H.5 There have been disclosed to the Purchasers all powers of attorney given
by either Company and no person is entitled or authorised (whether as
agent or otherwise) to bind or commit either Company to any obligations
outside the ordinary course of its business.
H.6 Save as set out in the Disclosure Letter, neither Company is a party to
any contract involving revenue or expenditure of that Company in excess
of [pound sterling] 50,000 which:
(a) requires either Company to pay a commission, finders' fee or
royalty; or
(b) is dependant on any guarantee, covenant or security provided by
any other person.
H.7 Save as set out in the Disclosure Letter, neither company is a party to
any contract or arrangement under which any person has the exclusive
right to supply any description of goods or services to it of, as its
agent or distributor, to supply any description of goods or services
within any geographical area.
I. INTELLECTUAL PROPERTY RIGHTS
I.1 So far as the Vendor is aware, there is no subsisting infringement of
any of the Intellectual Property Rights by any third party and, so far
as the Vendor is aware, no claims concerning such infringement have been
made or considered by either Company within six years before the date of
this Agreement.
I.2 Neither Company is the registered owner of any Intellectual Property
Rights or is the applicant for the registration of any Intellectual
Property Rights.
I.3 So far as the Vendor is aware, the use of the Intellectual Property
Rights by the Companies does not infringe the rights of any third party.
I.4 Neither Company has granted licences of any of the Intellectual Property
Rights to any Person.
J. COMPLIANCE, LITIGATION AND ENVIRONMENT
J.1 So far as the Vendor is aware, each Company has conducted its businesses
in all material respects in accordance with all applicable laws and
regulations of the relevant jurisdiction, there is no order, decree or
judgment of any Court or any governmental agency outstanding against
either Company and each company is in possession of all licences,
permits or authorization
<PAGE> 32
-30-
necessary for the conduct of its business as presently conducted. This
Warranty shall not extend or apply to any of the Properties or to any
matters which do not have a material adverse effect upon the business of
the Companies taken as a whole.
J.2 Save as plaintiff in proceedings for the collection of debts (not
exceeding [pound sterling] 50,000 in the aggregate) arising in the
ordinary course of its business, neither Company is engaged in any
litigation or arbitration proceedings. There are no litigation or
arbitration proceedings pending or, so far as the Vendor is aware,
threatened by or against either Company and no injunction has been
granted against either Company and neither Company has given any
undertaking to any court or to any third party arising out of any legal
proceedings.
J.3 Neither HCCL nor HCCFSA nor any agreement, arrangement or practice to
which either is a party, has been the subject of any investigation or
inquiry by any governmental, administrative or regulatory body of which
the relevant Company has been notified.
J.4 Save as set out in the Disclosure Letter, the Vendor is aware of no
breaches of or liabilities caused or permitted to arise under any
Environmental Laws and the Vendor is aware of no matters which are
likely to give rise to any claims, actions, costs, proceedings,
expenses, demands or obligations concerning contamination or
decontamination or other remediation of the Properties or land adjoining
or in the vicinity of the Properties or concerning employee or third
party exposure to any material, substance, product, waste, air or noise
emission, hazard or contamination.
J.5 There are annexed to the Disclosure Letter accurate and complete copies
of any environmental audit reports relating to the Properties and copies
of all sampling and test results obtained from all environmental and/or
health samples and tests taken at and around the Properties, including
any obtained or taken in anticipation or as part of the transactions
contemplated by this Agreement.
J.6 There are no consents which are necessary for either Company to have
under any of the Environmental Laws for the purpose of carrying on its
business.
K. EMPLOYEES
K.1 Save as set out in the Disclosure Letter, the basis of the remuneration
payable to officers and employees of the Companies at the date hereof is
the same as that in force at the Accounts Date and neither Company is
under any contractual or other obligation to increase the rates of
remuneration of or make any bonus or incentive or other similar payment
to any of its officers or employees at any future date.
K.2 Save as set out in the Disclosure Letter, there are no employees of
either Company employed under contracts which cannot be terminated on
three months' notice or less without payment of compensation (other than
the statutory rights to payments of compensation).
K.3 Complete and accurate particulars of the details (name, age, length of
service, remuneration) and terms of the contracts of service of all
officers and employees of the Companies have been disclosed in writing
to the Purchasers.
K.4 Neither Company is engaged or involved in any dispute arising out of,
affected by or otherwise relating to the provisions of any employment
legislation, and neither Company has received notice of any
circumstances which could reasonably be expected to give rise to any
such dispute.
<PAGE> 33
-31-
K.5 There has not during the past two years been any actual or threatened
strike, work stoppage, work to rule, lock out or overtime ban which has
materially disrupted the Companies' business and save as described in
the Disclosure Letter neither Company is a party to any collective
bargaining or procedural or other agreement with any trade union or
similar associates.
K.6 No present employee of either Company, or other individuals whose
services are provided for the Company, has given or received notice of
termination of his employment or engagement and no former employee of
either Company has the right under any legislation to be re-instated or
reengaged and remuneration and benefits which the Companies were
contractually obliged to provide to their employees on or prior to the
Completion Date have been duly paid or provided.
L. PENSIONS
L.1 Apart from under the HCCL Schemes HCCL has no obligation (whether
legally enforceable or not) to provide or contribute to the provision of
any relevant benefit (as defined in ICTA 1988, s 612, but without the
exception of benefits payable solely by reason of accident) or like
benefit for or in respect of any of the employees or officers or former
employees or officers of HCCL nor has any proposal been announced to
establish or contribute to any arrangement providing such benefits.
L.2 Complete and accurate particulars of the HCCL Schemes have been
disclosed to the Purchasers, including (without limitation) true and
complete copies or particulars of the following:
(a) all trust deeds and rules relating to the HCCL Schemes
containing provisions applicable to its employees or the
benefits payable to or in respect of any of them;
(b) all explanatory booklets and announcements currently in force;
(c) any benefit improvement or other amendment which at the date of
this agreement is either treated as in force or is proposed or
under consideration but is not incorporated by the HCCL Schemes;
(d) the latest actuarial valuation reports and trustees' annual
reports (including the audited accounts of the HCCL Schemes);
(e) a list of those of the employees and officers of HCCL and former
employees and officers who are members of or have any rights to
benefits under the HCCL. Schemes together with sufficient data
to enable an actuarial assessment thereof.
L.3 No discretion or power has been exercised in the last three years by the
trustees or the Company under either HCCL Scheme in respect of any of
the employees, former employees or officers or former officers of HCCL.
L.4 All amounts due to the trustees of the HCCL Schemes from HCCL have been
paid.
L.5 The HCCL Schemes are approved as exempt approved schemes (within the
meaning of Chapter I of Part XIV of ICTA 1988) and there is in force a
contracting-out certificate issued under section 9(2B) of the Pension
Schemes Act 1993 in relation to HCCL in respect of that one of the HCCL
Schemes being the Huntsman Container Company Limited Pension Scheme and
the Vendor is not aware that any act has been done or omitted to be done
which will or may result in either HCCL Scheme ceasing to be an exempt
approved scheme or in any contracting-out certificate being cancelled,
surrendered or varied.
<PAGE> 34
-32-
L.6 There are no material actions, claims or suits (other than routine
claims for benefits) outstanding, pending or threatened against the
trustees or administrators of the HCCL Schemes or against HCCL in
respect of any act, event or omission or other matter arising out of or
in connection with the HCCL Schemes and the Vendor is not aware of any
circumstance which could reasonably be expected to give rise to such a
claim.
L.7 No dispute under the internal disputes resolution procedures of the
trustees of the HCCL Schemes remains unresolved.
The Company has not granted any ex gratia pension or other like payment
to any of its past or present officers, employees, consultants or their
dependants.
L.8 The Company and, so far as the Vendor is aware, the trustees of each of
the HCCL Schemes have complied with all requirements of the Pensions Act
1995.
L.9 So far as the Vendor is aware, the HCCL Schemes have been administered
in accordance with the Pension Schemes Act 1993 and with all other
applicable legislation, regulations and rules of law.
L.10 All benefits under the HCCL Schemes payable on death before normal
retirement age are fully insured with a reputable insurance company at
the rates normally applied by that insurance company to those in good
health; and there has been no act or omission by the Company or the
trustees of the HCCL Schemes which would give grounds to such insurance
company legitimately to refuse any claim made under such insurance.
L.11 The trustees of the HCCL Schemes are not treated as carrying on
investment business under the terms of section 191 of the Financial
Services Act 1986 ("FSA").
L.12 No civil or criminal penalties have been imposed on the Trustees or the
Company in relation to the HCCL Schemes and the Vendor is not aware of
any act, omission or circumstance which would or might give rise to the
imposition of such penalties.
L.13 Lists of the investments held by the trustees of the HCCL Schemes are
contained in or attached to the Disclosure Letter.
L.14 No payment out of the resources of the HCCL Schemes has been made to the
Company or to any other employer participating in the HCCL Schemes.
L.15 All amendments to the HCCL Schemes on or after 6 April 1997 have
complied with the requirements of section 67 of the Pensions Act 1995
and where applicable, of section 37 of the Pension Schemes Act 1993 and
any relevant actuarial certificates are attached to the Disclosure
Letter.
M. TAX
M.1 All necessary information, notices, computations and returns which ought
to have been made have been submitted by each Company within the
relevant time limits to any relevant Tax or excise authorities, and all
information, notices, computations and returns to be submitted are true
and accurate in all material respects and are not the subject of any
material dispute with such authorities.
<PAGE> 35
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M.2 All Tax for which either Company is liable to account has been duly paid
(insofar as such Tax ought to have been paid).
M.3 INTERPRETATION
In this Part:
"ICTA 1988" means the Income and Corporation Taxes Act 1988;
"TCGA 1992" means the Taxation of Chargeable Gains Act 1992;
"VATA 1994" means the Value Added Tax Act 1994;
"Base Cost" means, in relation to any asset, the amount which
(disregarding any indexation allowance pursuant to section 53 of TCGA
1992) would be available as a deduction under any Legislation relating
to chargeable gains in computing the amount of any chargeable gain
arising on a disposal of that asset; and
any expression or word which is defined in or to which a meaning is
assigned for the purpose of ICTA 1988 or TCGA 1992 has the same meaning.
M.4 CLOSE COMPANY
"HCCL":
(a) has not made any transfers of value within Section 94 of the
Inheritance Tax Act 1984;
(b) is not, and never has been, a close investment holding company
as defined in Section 13A ICTA 1988; and
(c) has not incurred any expense which is treated as a distribution
under Section 418 ICTA 1988, or done anything which gives rise
to any change to tax under Section 419 ICTA 1988.
M.5 VALUE ADDED TAX
(a) Each Company:
(i) is registered as a taxable person for the purpose of
value added tax;
(ii) has maintained and obtained full, complete, correct and
up-to-date records, invoices and other documents
appropriate or requisite for that purpose; and
(iii) has fully complied with all provisions of any
Legislation relating to value added tax and all
directions and conditions made or imposed pursuant to
any of those provisions.
M.6 STAMP DUTY
All instruments executed by the Company under which it seeks to enforce
rights have been properly stamped.
M.7 OVERSEAS
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The Company has not traded or carried on any activity or owns any asset
outside the United Kingdom or France.
N. FINANCIAL ARRANGEMENTS
N.1 Neither Company has any liability (present or future or ascertained or
contingent) in respect of any guarantee, indemnity, bond or similar
obligation created or given or agreed to be created or given by it or in
respect of any claim against it by the Vendor or any of its subsidiary
undertakings.
N.2 Since the Accounting Date neither Company has:
(a) borrowed any money except from bankers in the ordinary course of
its trading;
(b) lent any money (including loans to employees) which has not been
repaid in full; or
(c) factored any of its debts or engaged in any financing
arrangement of a kind (including those of the kind not required
to be shown in audited accounts).
N.3 Save for the DTI Grant, neither Company is in receipt of any grant made
available by any public body which would become capable of repayment
(whether in whole or in part) as a result of the transfer of the Shares
contemplated hereby.
O. THE BUSINESS
O.1 The Companies have not received any notification or any indication that
they may require, in order to carry on their business or to use any
information, process or computer programme or sales or promotional
materials or any other item or required to be used for the purpose of
their business:
(a) any consent of any governmental or other authority or of any
other person; or
(b) any proprietary right or interest except those to which it is
entitled by virtue of its own Intellectual Property,
nor, so far as the Vendor is aware is any such consent or right required
for any such purpose.
O.2 All computer software required for the business of the Companies is in
the possession of the Companies and has been properly maintained and
updated, and its performance is adequate for the purposes of the
business of the Companies.
O.3 So far as the Vendor is aware, neither Company has manufactured, sold or
supplied any product in the course of its business which does not in all
material respects comply with all applicable laws, regulations and
statutory standards, or which is dangerous or materially defective or is
not in accordance in all material respects with any representation or
warranty given or implied in respect of it.
O.4 There is attached to the Disclosure Letter a complete list of all
current customers and suppliers of each Company.
O.5 There are appended to the Disclosure Letter copies of all brochures,
catalogues and other publicity or advertising material currently used by
either Company in the course of its business.
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P. ACCURACY OF INFORMATION
Particulars contained in Schedules I, II, III, VI, VII, and the replies
given to any enquiries made by the Purchasers' Solicitors in respect of
either Company or their property, business or affairs are accurate in
all material respects and are not materially misleading.
<PAGE> 38
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SCHEDULE V
THE COMPLETION ACCOUNTS
1. The Purchasers shall use its reasonable endeavours to procure that draft
Completion Accounts are drawn up by each of the Companies and delivered,
report by the Purchasers' Auditors on the amount of the Completion Net
Assets and the Free Cash as derived from such draft Completion Accounts,
to the Vendor as soon as practicable after Completion and in any event
by not later than 60 days after the Completion Date.
2. The Completion Accounts shall be drawn up in accordance with
consistently applied accounting policies and with the following
principles:
(a) under the historic cost accounting convention and in accordance
with UK generally accepted accounting principles regarding HCCL
and French generally accepted accounting principles regarding
HCCFSA; and, subject thereto and without prejudice to this sub-
paragraph (a).
(b) on the same basis and in accordance with consistently applied
accounting principles and policies as have been applied in the
audited Accounts; and
(c) following in any event the principles set out in paragraph 3,
but so that if the provisions of paragraph 3 and the provisions
of this paragraph 2 conflict with each other, the provisions of
paragraph 3 shall prevail.
3.1 For the avoidance of doubt, in the Completion Accounts:
(a) full provision for Corporate tax and deferred tax liabilities
(whether of the United Kingdom or France) in accordance with
each Company's normal accounting policies consistently applied
shall be made on the assumption that an accounting period of
that Company ends on the Completion Date;
(b) the costs of drawing up and reviewing the Completion Accounts
shall be excluded;
(c) other fixed assets shall be included at the value (historic cost
less accumulated depreciation) at which they were included in
the Accounts (or, if acquired after the Accounting Date, their
cost) after charging depreciation on a pro rata basis at the
rates used in the Accounts;
(d) stock shall be determined and valued in accordance with
generally accepted UK accounting principles for HCCL and
generally accepted French accounting principles for HCCFSA; and
(e) to the extent that it is not capable of being set off against
the liability of the Companies for corporation tax for the
current financial year or any previous financial year, full
provision shall be made for the advance corporation tax payable
on any distribution declared or paid before Completion.
3.2 The quantities, value, description and provisioning of the stock
(including the establishment of the cost ad net realisable value of the
stock) shall be determined by reference to a stocktaking to be taken on
1 June 1998 in respect of HCCL and 2 June 1998 in respect of HCCFSA at
each location where the stock is physically located jointly by a
representative
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appointed by the Vendor and the Purchasers and their auditors; and for
the purpose of computing the cost to the Company of any stock:
(a) any description of stock acquired by the Company at an earlier
time shall be treated as being disposed of before any stock of
the same description acquired by it at a later time; and
(b) any stock acquired by the Company from the Vendor or any Member
of the Vendor's Group shall be treated as having been so
acquired at its market value by way of a bargain made at arm's
length; and
(c) stocks held by third parties shall be confirmed by these parties
following a stock take to be held on the same date as above.
4. For the purposes of this Agreement:
(a) "Free Cash" means the aggregate of "cash at bank and in hand"
for HCCL and of "disponibilites" for HCCFSA; and
(b) "Completion Net Assets" means the aggregate amount of the total
assets less the total liabilities and Free Cash of each Company,
(adjusted if necessary in accordance with paragraph 3 and converted ,
where applicable, into Pounds Sterling at the Contract Rate) in each
case on the Completion Date and as shown by the Completion Accounts once
final and binding between the parties. The Completion Accounts for
HCCFSA shall exclude all fiscal provisions ("Provisions Reglementees").
5.1 The Vendor may review, and may instruct the Vendor's Auditors to assist
it in reviewing, the draft Completion Accounts and statement of the
Completion Net Assets and the Free Cash in order to satisfy itself that
the same have been prepared and audited in accordance with the
provisions of this Schedule.
5.2 The Purchasers shall, and shall use its reasonable endeavours to procure
that the Companies shall, co-operate promptly and diligently, in any
such review and shall give to the Vendor and the Vendor's Auditors all
such information and explanations as they may reasonably require in
relation thereto.
6.1 Unless within 21 days of the receipt of the same (inclusive of the day
of receipt) the Vendor gives notice in writing of any respect in which
it is not satisfied either that the draft Completion Accounts have been
prepared in accordance with the provisions of this Schedule or that the
statement of the Completion Net Assets and the Free Cash is correct, the
Completion Accounts and the said statement shall be final and binding
between the parties (as they shall be if within the period of 21 days
the Vendor agrees that it is so satisfied).
6.2 If the Vendor does give notice to Purchasers in writing that it is not
so satisfied and if the matter or matters in dispute are not resolved by
the parties within 21 days of the Vendor receiving the draft Completion
Accounts and statement (inclusive of the day of receipt) the matter
shall be referred to an Umpire, who shall act as an expert and not as an
arbitrator, and the decision of the Umpire as to any matter so in
dispute and as to the proper contents of the Completion Accounts and of
the said statement shall be final and binding between the parties. The
provisions of paragraphs 8 and 9 of this Schedule shall apply in
relation to any reference to such Umpire.
<PAGE> 40
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7. The Umpire shall be a Chartered Accountant or firm of Chartered
Accountants agreed on by the Vendors and the Purchasers or, if they
cannot agree on such within seven days of any party giving notice in
writing to the others that it desires an Umpire to be appointed, such
Chartered Accountant or firm of Chartered Accountants as may be
nominated on the application of any of them by the President or other
senior officer for the time being of the Institute of Chartered
Accountants in England and Wales.
8. The parties hereby agree and undertake that if any disagreement or
dispute under this Agreement is referred to the Umpire:
(a) the parties will each use all reasonable endeavours to
co-operate with the Umpire in resolving such disagreement or
dispute, and for that purpose will provide to him all such
information and documentation as he may reasonably require;
(b) the Umpire shall have the right to seek such professional
assistance and advice as he may require in fulfilling his
duties; and
(c) the fees of the Umpire (and any professional fees incurred by
him) shall be borne as to half by the Purchasers and as to half
by the Vendor provided that if either party fails to pay its
share of any such fee within seven days of the relative invoice
being rendered to the parties or either of them the other party
shall be entitled to pay the full amount of the fee and
thereupon to recover one half thereof from the first-mentioned
party as a debt due and payable on demand.
9. Upon the resolution of any dispute concerning the contents of the draft
Completion Accounts or the statement of Completion Net Assets and the
Free Cash (howsoever resolved) the draft Completion Accounts and the
statement shall be amended to accord with the resolution of any such
dispute and such Completion Accounts and such statement so amended shall
be final and binding between the parties.
10. Subject to the provisions of paragraph 8(c) of this Schedule, each party
shall bear its own costs (including, without limitation the fees of the
auditors appointed by it) incurred in the preparation of the Completion
Accounts and the statement of Completion Net Assets and the Free Cash.
<PAGE> 41
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SCHEDULE VI
GUARANTEES AND INDEMNITIES
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<PAGE> 42
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SCHEDULE VII
COMPETITION
PART 1 - INTERPRETATION
1. In this Schedule:
"Restricted Business" means the business of manufacturing and selling
polystyrene foam packaging products which is on the date of Completion,
or was at any time within two years before that date, carried on by
either Company.
"the Restricted Territory" means the United Kingdom, France, Denmark,
Finland, Norway and Sweden.
"Retained Mark" means the trade marks or logograms reproduced in
Schedule VIII.
PART 2 - RESTRICTIONS
2. With respect to the Restricted Business, the Vendor will not and every
undertaking which is for the time being its subsidiary undertaking will
not:
(a) for a period of 3 years from the date of Completion within the
Restricted Territory directly or indirectly carry on or be
engaged or interested in any way in any Restricted Business,
except as provided by Part 3 of this Schedule;
(b) for a period of 3 years from the date of Completion directly or
indirectly (whether in conjunction with or on behalf of some
other person) solicit or entice, or endeavour to solicit or
entice, away from the Company any of its directors or employees
other than David Cromes;
(c) for a period of 3 years from the date of Completion directly or
indirectly (whether in conjunction with or on behalf of some
other person) solicit, or endeavour to solicit, from any person
who at any time within 3 years before the date of Completion was
a customer of the Company any business of a nature carried on by
the Company at the date of Completion or at any time within 3
years before that date;
(d) for a period of 3 years from the date of Completion directly or
indirectly (whether in conjunction with or on behalf of some
other person) endeavour to entice away any person who at any
time within 3 years before the date of Completion was a supplier
of the Company;
(e) at any time after Completion disclose or directly or indirectly
use, or attempt so to use, for any purpose any information
concerning the Company or its business or affairs, except:
(i) to the extent required by law or any Competent
Authority;
(ii) to its professional advisers under circumstances or
confidentiality and only to the extent necessary for any
lawful purpose of the Vendor or any of its subsidiaries;
or
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(iii) to the extent that the information is on the date of
this Agreement or hereafter becomes public knowledge
otherwise than through improper disclosure by any
person; or
(f) at any time after Completion directly or indirectly use, or
attempt to use, for any purpose any trade mark or logogram
(whether or not forming part of the Intellectual Property) which
is identical to or confusingly or deceptively similar to any
trade mark or logogram used by the Company at any time within
twelve months before the date of Completion. Provided that this
paragraph 2(f) shall not apply to the Retained Marks.
3. The Vendor will and every undertaking which is for the time being its
subsidiary undertaking will take all such steps as shall from time to
time be necessary to ensure compliance with paragraph 2 by its and their
respective employees and agents.
PART 3 - EXEMPTION
4. Nothing contained in Part 2 of this Schedule shall prevent the Vendor or
any of its subsidiary undertakings from:
(a) owning or acquiring for the purposes of investment not more than
5 per cent of any class of shares or other securities of any
undertaking listed on a recognised stock exchange; or
(b) acquiring and retaining any business or the shares or other
securities of any undertaking if:
(i) not more than a minor part of that business or that
undertaking's business is a Restricted Business; and
(ii) the sole or principal reason for doing so is not the
acquisition of an interest in a Restricted Business in
question,
Provided that, if it acquires control of any such business
during the period of three years following the Completion Date
and such part of that business as is a Restricted Business has
an annual turnover in excess of [pound sterling] 5,000,000 (as
evidenced by the last audited accounts of each relevant
undertaking), the Vendor shall be obliged (but only during such
period of three years) to use its reasonable endeavours to sell
such part of that business as is Restricted Business to a third
party purchaser within a reasonable time following the Vendor's
acquisition of the same (such sale to be on terms reasonably
acceptable to the Vendor)
(c) conducting business other than Restricted Business with past,
present or future customers or suppliers of either Company.
<PAGE> 44
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SCHEDULE VIII
HUNTSMAN LOGOS
[Huntsman logo]
[Huntsman Packaging logo]
<PAGE> 45
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<TABLE>
<S> <C>
Signed by Ronald G. Moffitt )
for and on behalf of ) /s/ Ronald G. Moffitt
Huntsman Container Corporation International )
in the presence of: J.T. Harry )
65 Holborn Viaduct
London, Solicitor
Signed by Ronald G. Moffitt )
for and on behalf of ) /s/ Ronald G. Moffitt
Huntsman Packaging Corporation )
in the presence of J.T. Harry )
(as above)
Signed by )
for and on behalf of ) /s/
Polarcup Limited )
in the presence of: )
Signed by )
for and on behalf of ) /s/
Huhtamaki Holdings France Sarl )
in the presence of: )
</TABLE>
